8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

__________________________

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): April 25, 2008

__________________________

FIREPOND, INC.

(Exact Name of Registrant as Specified in its Charter)

__________________________

Delaware	000-28515	20-3446646
(State or Other Jurisdiction of	(Commission File Number)	(I.R.S. Employer
Incorporation or Organization)		Identification No.)

205 Newbury Street, Suite 204, Framingham, MA 01701

(Address of Principal Executive Offices) (Zip Code)

(508) 420-4300

(Registrant’s telephone number,

including area code)

__________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

A.           On April 24, 2008, Firepond, Inc., a Delaware corporation (the “Company”), entered into an Amendment and Exchange Agreement (the “Amendment and Exchange Agreement”) with each of the Investors listed on Exhibit A attached thereto (the “Investors”). Pursuant to the Amendment and Exchange Agreement, effective April 25, 2008, the Company exchanged with the Investors all of its outstanding (i) Senior Secured Convertible Notes Due January 2009 (the “CAP Notes”), in the aggregate principal amount of $5,264,000, issued under an Indenture with The Bank of New York, dated January 24, 2007, as amended (the “Indenture”); (ii) Warrants to purchase an aggregate of 1,214,285 shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”) at an exercise price of $7.00 per share through January 24, 2012; and (iii) Senior Secured Subordinated Notes Due May 2008 (the “Bridge Notes”), in the aggregate principal amount of $3,337,500, for the following aggregate consideration:

CAP NOTES:

·   A new issue of Amended and Restated Senior Secured Convertible Notes Due December 2009 in the aggregate principal amount of $5,264,000 (the “Exchanged CAP Notes”);

·   Termination of the Indenture and related Registration Rights Agreement;

·   Termination of the Letter of Credit from Wells Fargo Bank, National Association, in favor of The Bank of New York, as trustee under the Indenture, securing interest payments on the CAP Notes and  payment of pre-paid interest on the Exchanged CAP Notes through January 23, 2009 in the aggregate amount of $514,117 from the account underlying the Letter of Credit; and

·   Amended and Restated Warrants to purchase an aggregate of 1,214,285 shares of Common Stock at an exercise price of $7.00 per share through January 23, 2014 (“New CAP Warrants”).

The indebtedness evidenced by the Exchanged CAP Notes is senior secured indebtedness of the Company, and ranks superior to the Company’s other indebtedness. As security for the Company’s obligations under the Exchanged CAP Notes, the Company executed an Amended and Restated Collateral and  Security Agreement dated as of April 24, 2008 (the “CAP Security Agreement”), pursuant to which the Company granted a security interest in substantially all assets of the Company in favor of The Bank of New York, in its capacity as collateral agent for the holders of the Exchanged CAP Notes.

On April 25, 2008, the Company also exchanged with Rodman & Renshaw LLC, Portside Growth and Opportunity Fund and Smithfield Fiduciary LLC (the “Warrant Holders”) outstanding warrants previously issued to the Warrant Holders to purchase an aggregate of 144,286 shares of Common Stock at an exercise price of $7.00 per share through January 24, 2012 for new Amended and Restated Warrants to purchase 144,286 shares of Common Stock at an exercise price $7.00 per share through January 23, 2014.

Additional Terms of the Exchanged CAP Notes

The following are certain additional material terms of the Exchanged CAP Notes (capitalized terms used but not defined in the following discussion have the meanings ascribed to such terms in the Exchanged CAP Notes):

1.   Interest Rate. Interest on the Exchanged CAP Notes accrues at a rate of 12% per annum.  Interest accruing after January 23, 2009 is due at maturity.

2.   Redemption at the Option of the Investor. The Company may become obligated, at the option of each Investor, to redeem the Exchanged CAP Notes upon the request of such Investor after an Event of Default.   Events of Default include failure to (i) attain EBITDA Thresholds, and (ii) close timely the July Financing (as defined below).

3.   Repurchase at the Option of the Investor Upon a Fundamental Change. The Company may become obligated, at the option of each Investor, to repurchase the Exchanged CAP Notes if a Fundamental Change occurs at any time prior to the stated maturity of the Exchanged CAP Notes at the Change in Control Redemption Price.

4.   Optional Conversion. Subject to certain terms and conditions, an Investor may optionally convert at any time the Conversion Amount of an Exchanged CAP Note into shares of Common Stock at a conversion price of $7.00 per share, subject to adjustment as provided in the Exchanged CAP Note.

5.   Prepayment.  The Exchanged CAP Notes may be prepaid upon notice to the Investors.

6.   Event of Default. If an Event of Default will occur and be continuing, the Principal plus accrued and unpaid interest, and Late Charges, if any, through such date on all the Exchanged CAP Notes may be declared due and payable in the manner and with the effect provided in the Exchanged CAP Notes.

7.   CWC Distributions.  The net cash proceeds of any CWC Distributions (defined below) will be paid pro rata to the holders of the Exchanged CAP Notes and the Exchanged Bridge Notes (defined below) until all such notes are paid in full.

8.   Subsequent Financings. The net cash proceeds of any Subsequent Financings will be paid to the holders of the Exchanged Bridge Notes until such obligations are paid in full and then to the holders of the Exchanged CAP Notes until such obligations are paid in full.

BRIDGE NOTES:

·   A new issue of Amended and Restated Senior Secured Subordinated Notes Due July 2009 in the aggregate principal amount of $3,921,563 (the “Exchanged Bridge Notes”); and

·   180,000 fully-paid shares of Common Stock (the “New Shares”).

The indebtedness evidenced by the Exchanged Bridge Notes is senior secured indebtedness of the Company, and ranks superior to the Company’s other indebtedness except for the Exchange CAP Notes. As security for the Company’s obligations under the Exchanged Bridge Notes, the Company executed an Amended and Restated Security Agreement dated as of April 24, 2008 (the “Bridge Security Agreement”), pursuant to which the Company granted a security interest in substantially all assets of the Company in favor of Radcliffe SPC, Ltd., for and on behalf of the Class A Segregated Portfolio, in its capacity as collateral agent for the holders of the Exchanged Bridge Notes.

Additional Terms of the Exchanged Bridge Notes

The following are certain additional material terms of the Exchanged Bridge Notes (capitalized terms used but not defined in the following discussion have the meanings ascribed to such terms in the Exchanged Bridge Notes):

1.   Interest Rate. Interest on the Exchanged Bridge Notes accrues at a rate of 15% per annum. Interest is reflected in the face value of the note through the date of maturity.

2.   Redemption at the Option of the Investor. The Company may become obligated, at the option of each Investor, to redeem the Exchanged Bridge Notes upon the request of such Investor after an Event of Default.   Events of Default include failure to (i) attain EBITDA Thresholds, and (ii) close timely the July Financing.

3.   Repurchase at the Option of the Investor Upon a Fundamental Change. The Company may become obligated, at the option of each Investor, to repurchase the Exchanged Bridge Notes if a Fundamental Change occurs at any time prior to the stated maturity of the Exchanged Bridge Notes at the Change in Control Redemption Price.

4.   Prepayment. The Exchanged Bridge Notes may be prepaid, subject to the terms of the Exchanged CAP Notes.

5.   Event of Default. If an Event of Default will occur and be continuing, the Principal plus accrued and unpaid interest, and Late Charges, if any, through such date on all the Exchanged Bridge Notes may be declared due and payable in the manner and with the effect provided in the Exchanged Bridge Notes.

8.   CWC Distributions.  The net cash proceeds of any CWC Distributions will be paid pro rata to the holders of the Exchanged CAP Notes and the Exchanged Bridge Notes until all such notes are paid in full.

9.   Subsequent Financings. The net cash proceeds of any Subsequent Financings will be paid to the holders of the Exchanged Bridge Notes until such obligations are paid in full.

B.           Effective April 25, 2008, the Company entered into a Common Stock Purchase Agreement (“Stock Purchase Agreement”) with FP Tech Holdings, LLC (“FP Tech”), a Texas limited liability company and, in conjunction with its affiliates, the largest shareholder of the Company.  Pursuant to the Stock Purchase Agreement, effective with entering the Amendment and Exchange Agreements and the CWC Operating Agreement (defined below), the Company and FP Tech agreed the following (capitalized terms used but not defined in the following discussion have the meanings ascribed to such terms in the Stock Purchase Agreement):

1.   Sale of Common Stock.  The Company sold to FP Tech 1,071,429 shares of Common Stock for a purchase price of $1.40 per share, or for a total price of $1,500,000.

2.   Conversion of CAP Notes.  FP Tech has converted the outstanding principal and accrued interest on certain CAP Notes held by FP Tech into 241,840 shares of Common Stock.  The conversion amount was approximately $338,576.  The conversion rate was $1.40 per share.   The CAP Notes converted by FP Tech have been cancelled.

3.   Conversion of Equipment Lease Agreement.  FP Tech has converted the outstanding principal and accrued interest on the Equipment Lease Agreement, dated as of February 11, 2008, into 72,572 shares of Common Stock.  The conversion amount was approximately $101,601.  The conversion rate was $1.40 per share.

4.   Option to Purchase. The Company has provided FP Tech the option to purchase an additional 357,143 shares of Common Stock for a purchase price of $1.40 per share, or a total price of $500,000 (the “July Financing”).   The option to purchase must be exercised, if at all, no later than July 31, 2008.  Failure of FP Tech to consummate the July Financing will result in an Event of Default pursuant to both the Exchanged CAP Notes and the Exchanged Bridge Notes.

5.   Grant of Preemptive Right. In the event of a Qualified Financing, FP Tech has agreed, if necessary to complete such financing, to purchase at least $1,000,000 of the securities issued in the Qualified Financing and has the right to purchase up to an aggregate of 25% of the securities issued in such Qualified Financing.

C.           Effective April 25, 2008, the Company and TechDev Holdings, LLC, a Texas limited liability company (“TechDev”), entered into a Company Agreement of CWC Holdings, LLC (the “CWC Operating Agreement”), a Texas limited liability company (“CWC”), as members of CWC.  Capitalized terms used but not defined in the following discussion have the meanings ascribed to such terms in the CWC Operating Agreement.

The Company, as sole Class B member, is entitled to receive 10% of the profits, losses and distributions of CWC (the “Class B Interest”), subject to certain adjustments.   In return, the Company has issued 6,000,000 shares of Common Stock to CWC.  The Class B Interest is a non-voting interest.

TechDev, as sole Class A member, is entitled to receive 90% of the profits, losses and distributions of CWC (the “Class A Interest”), subject to certain adjustments.  In return, TechDev has contributed certain property interests to CWC.  The Class A Interest is a voting interest.

TechDev may forego all or any portions of its pro rata distributions from CWC which the Company may in turn accept (the “Declined Distribution”).  If accepted by the Company, TechDev will receive from CWC the Common Stock Distribution.  The Common Stock Distribution will be equal to the quotient of (i) the total amount of the Declined Distribution divided by (ii) for any time prior to the Exchanged Bridge Notes and Exchanged Cap Notes being paid in full, 1.40 and thereafter, the higher of (A) the product of (x) 0.8 times (y) the arithmetic average of the closing price for the Common Stock for each of the twenty (20) trading days ending on the trading day immediately preceding the date of the Declined Distribution and (B) 1.40.

Failure by the Company to accept the Declined Distribution during a period that either any of the Exchanged CAP Notes or Exchanged Bridge Notes remains outstanding will result in an Event of Default pursuant to both the Exchanged CAP Notes and the Exchanged Bridge Notes.

Upon either (i) an Event of Default Threshold Condition (as defined in the Exchanged CAP Notes and the Exchanged Bridge Notes) or (ii) failure by the Company to accept the Declined Distribution two consecutive times, CWC has the right to repurchase the Company’s Class B Interest for $10,000 and return of 90% of the Remaining Shares.  The Remaining Shares equal the initial shares of Common Stock issued to CWC by the Company minus the aggregate number of such shares issued to TechDev as a Common Stock Distribution.

The securities issued under the Amendment and Exchange Agreements, the Stock Purchase Agreement or the CWC Operating Agreement were not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon Section 3(a)(9) of the Securities Act, Section 4(2) of the Securities Act, and/or Regulation D promulgated thereunder.

The following agreements are attached as exhibits to this Report: (i) Amendment and Exchange Agreement; (ii) Form of New CAP Warrants; (iii) CAP Security Agreement; (iv) Bridge Security Agreement; (v) Stock Purchase Agreement, and (vi) the CWC Operating Agreement. The foregoing descriptions of these agreements are summary only and are qualified in their entirety by reference to the copies thereof attached hereto as exhibits.

Item 2.03  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Reference is made to the disclosure set forth under Item 1.01 above, which is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities

Reference is made to the disclosure set forth under Item 1.01 above, which is incorporated herein by reference.

Item 5.01  Changes in Control of Registrant.

Reference is made to the disclosure set forth under Item 1.01 above, which is incorporated herein by reference.

Item 5.02   Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

(b)           Effective April 29, 2008, Douglas Croxall, former Chairman of the Board of Directors, resigned from the Board of Directors.

Mr. Croxall’s resignation has been submitted as part of the transaction set forth under Item 1.01 above and the sale of his entire equity interest in the Company to FP Tech in January 2008.  There are no known disagreements with Mr. Croxall.

(d)           On April 15, 2008, the Board of Directors voted to extend invitations to join the Board of Directors of the Company to Scott Kline and Francis Knuettel II, effective with the Closing of the transactions described in Item 1.01 above.   Mr. Kline and Mr. Knuettel accepted the Board’s invitations on April 24, 2008.   Mr. Kline’s and Mr. Knuettel’s membership on the Board of Directors, effective April 25, 2008, fills two vacancies on the Board.

On April 25, 2008, the Board of Directors determined that the number of directors shall be five and voted to add Audrey Spangenberg as a member of the Board of Directors.  Ms. Spangenberg was appointed to serve as Chairman of the Board.

Audrey Spangenberg is the managing member of Acclaim Financial Group, LLC (a private investment firm), a position she has held since 1999, where she is primarily responsible for investment decisions.  She is also the manager of FP Tech Holdings, LLC, an affiliate of Acclaim Financial Group and the majority shareholder in the Company.   Ms. Spangenberg has over twenty years experience in finance and accounting, including holding positions with various energy, pharmaceutical and real estate companies.  Ms. Spangenberg served on the Board of Directors of the College of the Desert Foundation from 2005-2007.  In addition to being active in the local community, Ms. Spangenberg is the Chairperson of the Spangenberg Family Foundation for the Benefit of Children’s Education and Healthcare to support charitable efforts in education and medical research.  Ms. Spangenberg is a graduate of Mount Mercy College with a BS degree in accounting and business administration.   

Scott Kline is a graduate of Yale University (B.A., summa cum laude, 1985) and of Harvard Law School (J.D., cum laude, 1988).  He is currently a founding member of Caprock International, LLC, an international financial company based in Dallas, Texas and London, England.  Mr. Kline has twenty years experience as an executive officer and legal advisor to corporations throughout the United States. He also manages a significant law practice specializing in intellectual property and corporate transactions. He resides in Dallas, Texas with his wife and 3 children. Mr. Kline also serves as a Director of The Gladney Center for Adoption in Fort Worth, Texas.

Francis Knuettel II is a financial and operations executive with extensive experience in the capital markets.  He currently serves as the Chief Financial Officer of IP Commerce, Inc.  IP Commerce is the creator of the world's first open commerce network, delivering on-demand access to the next generation of commerce services.  Prior to joining IP Commerce, Mr. Knuettel was Chief Financial Officer of InfoSearch Media (ISHM), a publicly listed online search engine marketing firm located in Los Angeles.  During his tenure at InfoSearch, Mr. Knuettel managed the acquisition of numerous private companies, multiple PIPE transactions and the filing of registration statements associated with the PIPE transactions and the initial reverse merger.  Prior to InfoSearch, Mr. Knuettel was at Internet Machines Corporation, a fables semiconductor company located in Los Angeles, where he served on the Board of Directors and held several positions, including Chief Executive Officer and Chief Financial Officer. At Internet Machines, Mr. Knuettel raised almost $90 million in equity and debt and managed the sale of the business to IDT Corp. in 2004. Prior to Internet Machines, he was Chief Financial and Operating Officer for Viking Systems, Inc., a Boston-based producer of enterprise software systems for non-profit fundraising institutions.  At Viking Systems he restructured the company and managed the recapitalization of the firm.  Before that, he was Vice President of Operations and Chief Financial Officer for Fightertown Entertainment in Irvine, California, where he was instrumental in growing the company’s revenues through acquisition of competitors and internal growth. Mr. Knuettel received his BA with honors in Economics from Tufts University and holds an MBA in Finance and Entrepreneurial Management from The Wharton School at the University of Pennsylvania.

Ms. Spangenberg, Mr. Kline and Mr. Knuettel will serve an initial term until the next annual meeting of stockholders, with re-nomination and reelection to the Board of Directors to occur yearly at the annual meeting of the stockholders, in accordance with and subject to the terms of the Company’s charter, bylaws and Delaware law.

On April 25, 2008, the Board of Directors appointed the following individuals to the committees of the Board of Directors:

Audit Committee -	Francis Knuettel II (Chair) and Audrey Spangenberg
Nominating Committee –	Scott Kline (Chair) and Francis Knuettel II
Compensation Committee –	Scott Kline (Chair) and Francis Knuettel II

Our Board of Directors has determined that Mr. Knuettel is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation SB-2. The designation does not impose on Mr. Knuettel any duties, obligations or liability that are greater than are generally imposed on him as a member of our audit committee and our Board of Directors.

On April 25, 2008, the Board granted an option to purchase 108,387 common shares pursuant to the Company’s 2006 Stock Incentive Plan to both Mr. Kline and Mr. Knuettel vesting pro rata 1/18th monthly over an eighteen month period and other conditions to be set forth in a written stock agreement.  The strike price of the options is the closing price on the last trading day prior to approval, or in the event the Company’s common stock does not trade on such day, the last bid price for the Company’s common stock on such day.  The options have a ten year term.  In addition, the granted options become fully vested upon a “change in control” (as defined in the 2006 Stock Incentive Plan) or such director’s death.  In the event a non-employee director ceases to be a director for any reason (other than death), such director may exercise his or her then vested options for six months.  In the event of death, his or her options shall remain exercisable for a period of twelve months.

Each member of the Board of Directors who is not either (i) an employee (each a “non-employee director”) or (ii) Chairman of the Board will receive an annual retainer of $10,000 (payable in equal quarterly installments).  Board members will be reimbursed for reasonable travel expenses associated with attending any meetings of the Board of Directors or committees of the Board of Directors.  Mr. Kline and Mr. Knuettel will be compensated as non-employee directors.

Item 9.01  Financial Statements and Exhibits

(d) Exhibit index.

Exhibit No.	Description
99.1	Amendment and Exchange Agreement, dated as of April 24, 2008, by and among the Registrant and the various Investors listed on Exhibit A attached thereto.
99.2	Form of New CAP Warrants issued by registrant as of April 24, 2008.
99.3	CAP Security Agreement, dated as of April 24, 2008, by and between the Registrant and The Bank of New York, in its capacity as Collateral Agent.
99.4	Bridge Security Agreement, dated as of April 24, 2008, by and between the Registrant and Radcliffe SPC, Ltd., for and on behalf of the Class A Segregated Portfolio, in its capacity as Collateral Agent.
99.5	Stock Purchase Agreement, dated as of April 24, 2008 by and between the Registrant and FP Tech Holdings, LLC.
99.6	CWC Operating Agreement, dated as of April 24, 2008 by and between the Registrant and TechDev Holdings, LLC.
99.7	Press Release, dated April 29, 2008

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIREPOND, INC.
Date: April 29, 2008	By:	/s/ Stephen Peary
		Stephen Peary
		Chief Financial Officer

EX-99.1

AMENDMENT AND EXCHANGE AGREEMENT

AMENDMENT AND EXCHANGE AGREEMENT (the “Agreement”), dated as of April 24, 2008, by and among Firepond, Inc. (formerly known as FP Technology, Inc.), a Delaware corporation, with headquarters located at 205 Newbury Street, Suite 204, Framingham, MA 01701  (the ”Company”) and _________________________________________ (the “Investor”).

WHEREAS:

A.Pursuant to that certain Securities Purchase Agreement, dated March 29, 2006 (the “Original CAP Purchase Agreement”), by and among the Investor (or its predecessors in interest) and certain other investors signatory thereto (or their predecessors in interest) (the “Other Investors”, and together with the Investor, the “Investors”) and the Company’s predecessor, AFG Enterprises USA, Inc., the Investors acquired (i) certain Senior Secured Notes Due 2011 in the aggregate principal amount of $50,000,000 (the “Original CAP Notes”) issued under an Indenture with The Bank of New York, as Trustee, dated March 29, 2006 (the “Original CAP Indenture”); and (ii) certain warrants (the “Original CAP Warrants”) to purchase shares of the Company’s common stock, par value $.001 per share (the “Common Stock”).

B.Pursuant to that certain Master Exchange Agreement, dated as of January 24, 2007 (the “CAP Exchange Agreement”), by and among each of the Investors (or their predecessors in interest) and the Company, the Investors exchanged all of the Original CAP Notes and Original CAP Warrants in the aggregate for (i) $45,000,000 in cash plus certain accrued interest on the Original CAP Notes, (ii) certain Senior Secured Convertible Notes Due 2009 in an aggregate principal amount of $5,600,000 (the “Second CAP Notes”) issued under that certain Indenture with The Bank of New York, as Trustee (the “Trustee”), dated January 24, 2007 (as amended and supplemented from time to time, the “Second CAP Indenture”), which are convertible into shares of Common Stock (the “Second CAP Conversion Shares”), (iii) certain warrants to purchase shares of Common Stock (the “Second CAP Warrants”, and as exercised, the “Second CAP Warrant Shares”) and (iv) 1,500,000 additional shares of Common Stock (the “Second CAP Common Shares”).

C.The Second CAP Notes are secured by a security interest in all of the assets of the Company pursuant to that Security Agreement, dated January 24, 2007 (the “CAP Security Agreement”), by and between the Company and The Bank of New York, as collateral agent (the “CAP Collateral Agent”).

D.The Company and certain of the Investors (the “Bridge Purchasers”) are parties to that certain Securities Purchase Agreement, dated as of August 2, 2007 (the “Existing Bridge Securities Purchase Agreement”), pursuant to which, among other things, certain Investors purchased from the Company certain senior secured notes in an aggregate principal amount of $3,337,500 (the “Existing Bridge Notes”).

E.The Existing Bridge Notes are secured by a security interest in substantially all of the assets of the Company and in substantially all of the assets of certain subsidiaries of the Company, if any (the “Future Subsidiaries”), as evidenced by (and as defined in) (i) the Security Agreement, dated August 2, 2007 (the “Bridge Security Agreement”), by and among the Company and Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio, in its capacity as collateral agent (the “Bridge Collateral Agent”) for the other holders of the Existing Bridge Notes, (ii) a pledge of the securities of any Future Subsidiaries of the Company (the “Bridge Pledge Agreement”) and (iii) the Guaranty of each of any Future Subsidiaries.  On August 2, 2007, the Bridge Collateral Agent and the CAP Collateral Agent entered into that certain Intercreditor and Subordination Agreement, pursuant to which the obligations under the Bridge Notes were subordinated to the obligations under the Second CAP Indenture (the “Intercreditor Agreement”).

F.The Company, and the Investor desires to enter into this Agreement, pursuant to which, among other things, on the Closing Date (as defined below), (i) the Second CAP Indenture, the Existing Bridge Securities Purchase Agreement, the CAP Exchange Agreement and the Registration Rights Agreement, dated January 24, 2007 (the “Registration Rights Agreement”), by and among the Company and certain investors signatory thereto, shall terminate and be of no further force and effect; (ii) the Company shall prepay interest on the Second CAP Notes held by the Investor, if any, by paying to the Investor such cash amount set forth opposite the Investor’s name in column (3) of the Schedule of Investors (the “Cash Interest Prepayment Amount”), which cash amount to all the Investors, in the aggregate, shall equal $514,117.33, which amount shall represent a prepayment of all interest due and owing under the Second CAP Notes through and including January 23, 2009; (iii) the Company and the Investor shall exchange the Investor’s Second CAP Note, if any, in such principal amount set forth opposite the Investor's name in column (4) of the Schedule of Investors, for an Amended and Restated Senior Secured Convertible Note in such principal amount set forth opposite the Investor's name in column (5) of the Schedule of Investors and in the form attached hereto as Exhibit A (the “Exchanged CAP Notes”), which are convertible into shares of Common Stock (the “Exchanged CAP Conversion Shares”), (iv) the Company and the Investor shall exchange the Investor’s Second CAP Warrant, if any, exercisable into such number of shares of Common Stock set forth opposite the Investor's name in column (6) of the Schedule of Investors, for an Amended and Restated Warrant to Purchase Common Stock exercisable into such number of shares of Common Stock set forth opposite the Investor's name in column (7) of the Schedule of Investors and in the form attached hereto as Exhibit B (the “Exchanged CAP Warrants”, and as exercised, the “Exchanged Cap Warrant Shares”), and (v) if the Investor is a Bridge Purchaser, the Company and the Investor shall exchange the Investor’s Existing Bridge Note in such principal amount set forth opposite the Investor's name in column (8) of the Schedule of Investors for (x) an Amended and Restated Senior Secured Subordinated Note in an aggregate principal amount as is set forth opposite the Investor’s name in column (9) of the Schedule of Investors attached hereto and in the form attached hereto as Exhibit C (the “Exchanged Bridge Notes”) and (y) such number of shares of Common Stock as is set forth opposite the Investor’s name in column (10) of the Schedule of Investors attached hereto (the “Exchanged Common Shares”).

G.The exchange of (i) the Existing Bridge Notes of the Investor for the Exchanged Bridge Notes and Exchanged Common Shares, (ii) the Second CAP Notes of the Investor for the Exchanged CAP Notes, and (iii) the Second Cap Warrants of the Investor for the Exchanged CAP Warrants is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the 1933 Act.

H.Concurrently herewith each of the Other Investors are also entering into agreements identical to this Agreement (the “Other Agreements”) other than proportional changes (the “Proportionate Changes”) (i) in the numbers reflecting the different principal amount of such Other Investor’s Second CAP Notes and Exchanged CAP Notes, (ii) in the numbers reflecting the Cash Interest Prepayment Amount, (iii) in the numbers reflecting the different number of shares of Common Stock issuable upon exercise of the Second CAP Warrants and the Exchanged CAP Warrants and (iv) if such Other Investor is a Bridge Purchaser, in the numbers reflecting the different principal amount of such Other Investor’s Existing Bridge Notes, Exchanged Bridge Notes and Exchanged Common Shares.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the Company and the Investor hereby agree as follows:

1.   EXCHANGE; INDENTURE; RELEASE OF LETTER OF CREDIT; WAIVER.

(a)Exchange. Subject to satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, at the Closing:

(i)the Investor shall surrender to the Company its Second CAP Note (or such other documentation reasonably satisfactory to the Company and the Trustee that the Investor’s Second CAP Note has been lost or destroyed) with an aggregate principal amount as is set forth opposite the Investor’s name in column (4) of the Schedule of Investors attached hereto and the Company shall issue and deliver to the Investor an Exchanged CAP Note with an aggregate principal amount as is set forth opposite the Investor’s name in column (5) of the Schedule of Investors attached hereto.

(ii)the Investor shall surrender to the Company its Second Cap Warrant (or such other documentation reasonably satisfactory to the Company that the Investor’s Second Cap Warrant has been lost or destroyed) exercisable into such number of shares of Common Stock set forth opposite the Investor's name in column (6) of the Schedule of Investors and the Company shall issue and deliver to the Investor an Exchanged CAP Warrant exercisable into such number of shares of Common Stock set forth opposite the Investor's name in column (7) of the Schedule of Investors.

(iii)if the Investor is a Bridge Purchaser, (x) the Investor shall surrender to the Company its Existing Bridge Note (or such other documentation reasonably satisfactory to the Company that the Investor’s Existing Bridge Note has been lost or destroyed) in an aggregate principal amount as set forth opposite the Investor’s name in column (8) on the Schedule of Investors attached hereto and the Company shall issue and deliver to the Investor (x) an Exchanged Bridge Note with that aggregate principal amount set forth opposite the Investor’s name in column (9) of the Schedule of Investors attached hereto and (y) such number of Exchange Common Shares as set forth opposite the Investor’s name in column (10) of the Schedule of Investors attached hereto.

(b)Termination of Indenture.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7below, upon the occurrence of the Closing, the Investor hereby consents to and approves the transactions contemplated hereby, hereby further consents to the termination of the Second Cap Indenture, authorizes and directs the Trustee to enter into the Termination Agreement (as defined below), dated the date hereof, between the Company and the Trustee, and hereby agrees that the Second Cap Indenture is hereby terminated in all respects as of the Closing.

(c)Termination of Securities Purchase Agreement.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7below, upon the occurrence of the Closing, the Investor hereby consents to and approves the transactions contemplated hereby, hereby further consents to the termination of the Original CAP Purchase Agreement and hereby agrees that the Original CAP Purchase Agreement is hereby terminated in all respects as of the Closing.

(d)Termination of Securities Purchase Agreement.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7below, upon the occurrence of the Closing, the Investor, if the Investor is a Bridge Purchaser, hereby consents to and approves the transactions contemplated hereby, hereby further consents to the termination of the Existing Bridge Securities Purchase Agreement, and hereby agrees that the Existing Bridge Securities Purchase Agreement is hereby terminated in all respects as of the Closing.

(e)Termination of Master Exchange Agreement.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7below, upon the occurrence of the Closing, the Investor hereby consents to and approves the transactions contemplated hereby, hereby further consents to the termination of the CAP Exchange Agreement and hereby agrees that the CAP Exchange Agreement is hereby terminated in all respects as of the Closing.

(f)Termination of the Registration Rights Agreement.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7below, upon the occurrence of the Closing, the Investor hereby consents to and approves the transactions contemplated hereby, hereby further consents to the termination of the Registration Rights Agreement and agrees that the Registration Rights Agreement is hereby terminated in all respects as of the Closing.

(g)Release of Letter of Credit.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7 below, on the Closing Date the Trustee will deliver to Wells Fargo Bank (“WFB”) the original copy of that certain letter of credit issued by WFB for the benefit of the Trustee (the “Letter of Credit”) and a letter from the Trustee in the form attached hereto as Exhibit D-1, requesting the early cancellation of the Letter of Credit, and the Company shall instruct WFB (the “WFB Instructions”) to immediately release cash in the amount of $549,117.33 in account number 12944054 in the name of the Company with WFB (the “Account”), which as of the date hereof holds an aggregate amount of approximately $597,000 (the “Letter of Credit Collateral”), to the Trustee who shall then (i) wire $514,117.33 of such funds to the Investors in accordance with the wire instructions set forth on Exhibit D-2, which amount to be wired to the Investor shall equal the Cash Interest Prepayment Amount set forth opposite the Investor's name in column (3) of the Schedule of Investors; and (ii) apply the remaining $35,000.00 to the outstanding fees and expenses of The Bank of New York.  On the Closing Date, the approximately $48,000 thereafter remaining under the Letter of Credit Collateral shall be distributed by WFB in accordance with the WFB Instructions and the Account shall be closed.  Effective as of the Closing Date, the Investor hereby (i) authorizes the Trustee to request the early cancellation of the Letter of Credit and (ii) consents to the release of the Letter of Credit Collateral in accordance with this Section 1(g).

(h)Waiver of Existing Defaults.  Subject to satisfaction (or waiver) of the conditions to the Closing, as set forth in Sections 6 and 7below, upon the occurrence of the Closing, the Investor hereby irrevocably waives and fully releases the Company from any damages it has suffered relating to any breach, default, Default (as defined in the Second CAP Indenture), Event of Default (as defined in the Second CAP Indenture) or Event of Default (as defined in the Existing Bridge Notes) arising prior to the Closing Date.  The Investors do not, by this instrument, waive any provision of the Exchanged Bridge Notes or Exchanged CAP Notes.  Notwithstanding anything herein to the contrary, nothing herein shall be deemed to constitute a waiver by the Investor of any Event of Default (as defined in the Exchanged Bridge Notes) or Event of Default (as defined in the Exchanged CAP Notes) arising after the Closing Date.

(i)Closing Date.  The date and time of the closing (the “Closing”) of the transactions contemplated hereby (the “Closing Date”) shall be 10:00 a.m., New York Time, on April __, 2008, subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 6 and 7 below (or such earlier or later date as is mutually agreed to by the Company and the Investor).  The Closing shall occur on the Closing Date at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.

2.   AMENDMENTS.

(a)CAP Security Documents.  On the Closing Date, the Company and the CAP Collateral Agent shall amend and restate the CAP Security Agreement in the form attached hereto as Exhibit E (the “Amended CAP Security Agreement”).

(b)Bridge Security Documents.  On the Closing Date, the Company and the Bridge Collateral Agent shall amend and restate the Bridge Security Agreement in the form attached hereto as Exhibit F(the “Amended Bridge Security Agreement”).

(c)Amended Intercreditor Agreement.  On the Closing Date, the CAP Collateral Agent and the Bridge Collateral Agent shall amend and restate the Intercreditor Agreement in the form attached hereto as Exhibit G (the “Amended Intercreditor Agreement”, and together with the Amended Bridge Security Agreement and any ancillary documents related thereto and the Amended CAP Security Agreement and any ancillary documents related thereto, the “Amended Security Documents”).

3.   REPRESENTATIONS AND WARRANTIES

(a)Investor Representations.  The Investor hereby represents and warrants to the Company:

(i)Validity; Enforcement.  This Agreement has been duly and validly authorized, executed and delivered on behalf of the Investor and shall constitute the legal, valid and binding obligations of the Investor enforceable against the Investor in accordance with its terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

(ii)No Conflicts.  The execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated hereby will not (x) result in a violation of the organizational documents of the Investor or (y) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (z) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Investor, except in the case of clauses (y) and (z) above, for such conflicts, defaults, rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Investor to perform its obligations hereunder.

(iii)No Public Sale or Distribution.  The Exchanged Bridge Notes, Exchanged CAP Notes, Exchanged CAP Warrants, Exchanged CAP Warrant Shares, Exchanged CAP Conversion Shares and Exchanged Common Shares (the “Securities”), as applicable, being acquired by the Investor are being acquired for the Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same.  By executing this Agreement, the Investor further represents that the Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities.

(iv)Accredited Investor.  The Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), as such rule is presently in effect, and a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act.

(v)Information.  The Investor and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the issuance of the Securities which have been requested by the Investor.  The Investor and its advisors, if any, have been afforded the opportunity to ask questions of the Company.  Neither such inquiries nor any other due diligence investigations conducted by the Investor or its advisors, if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained herein.  The Investor understands that its investment in the Securities involves a high degree of risk.  The Investor has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision in respect of its acquisition of the Securities.

(vi)Transfer or Resale.  The Investor understands that: (i) the Securities have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, (B) the Investor shall have delivered to the Company an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the Securities Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) 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 Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the person (as defined in Section 3(s)) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Securities and Exchange Commission (the “SEC”) thereunder; and (iii) neither the Company nor any other person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.  Notwithstanding the foregoing, the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement.

(vii)Residency.  The Investor is a resident of that jurisdiction specified in the Schedule of Investors attached hereto.

(viii)Tax Liability.  The Investor has reviewed with its own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Investor relies solely on such advisors and not on any statements or representations of the Company, the Company’s counsel, or any of the Company’s agents.  The Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

(ix)Legends.  The Investor understands that the certificates or other instruments representing the Exchanged Cap Warrant Shares, the Exchanged Bridge Notes and the Exchanged Common Shares, except as set forth below, shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue to such holder by electronic delivery at the applicable balance account at The Depository Trust Company ("DTC"), if, unless otherwise required by state securities laws, (i) such Exchanged Cap Warrant Shares, Exchanged Bridge Notes and Exchanged Common Shares are registered for resale under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel in a form reasonably acceptable to the Company to the effect that such sale, assignment or transfer of the Exchanged Cap Warrant Shares, the Exchanged Bridge Notes and the Exchanged Common Shares may be made without registration under the applicable requirements of the Securities Act and that such legend is no longer required, or (iii) such holder provides the Company with reasonable assurance that the Exchanged Cap Warrant Shares, the Exchanged Bridge Notes and the Exchanged Common Shares can be sold, assigned or transferred pursuant to Rule 144.  The Company shall be responsible for the fees of its transfer agent and all DTC fees associated with such issuance.

(b)Company Representations.  The Company hereby represents and warrants to the Investor:

(i)Subsidiaries.  The Company has no subsidiaries and does not own directly or indirectly, any capital or other equity interest of any other entity, other than, upon Closing, a 10% interest in CWC Holdings, LLC (“CWC”).

(ii)No Event of Default.  To the knowledge of the Company, no Default (as defined in the Second CAP Indenture), Event of Default (as defined in the Second CAP Indenture) or Event of Default (as defined in the Existing Bridge Notes) has occurred and is continuing as of the date hereof.

(iii)Organization and Qualification.  The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware, and has the requisite corporate power and authorization to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect.  As used in this Agreement, "Material Adverse Effect" means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company, taken as a whole, or on the transactions contemplated hereby and the other Transaction Documents or by the agreements and instruments to be entered into in connection herewith or therewith, or on the authority or ability of the Company to perform its obligations under the Transaction Documents.

(iv)Authorization; Enforcement; Validity.  The Company has the requisite power and authority to enter into and perform its obligations under this Agreement, the Other Agreements, the Exchanged Cap Notes, the Exchanged Bridge Notes, the Amended Security Documents, the Termination Agreement and each of the other agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively, the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof.  The execution and delivery of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation, the exchange and issuance of the Exchanged Cap Notes, the Exchanged Bridge Notes, the Exchanged CAP Warrants and the Exchanged Common Shares, and the reservation and issuance of the Exchanged CAP Conversion Shares upon conversion of the Exchanged CAP Notes and the Exchanged CAP Warrant Shares upon exercise of the Exchanged CAP Warrants, have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders.  This Agreement and the other Transaction Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

(v)No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the exchange and issuance of the Exchanged Cap Notes, the Exchanged Bridge Notes, the Exchange CAP Warrants and the Exchanged Common Shares, and the reservation and issuance of the Exchanged CAP Conversion Shares upon conversion of the Exchanged CAP Notes and the Exchanged CAP Warrant Shares upon exercise of the Exchanged CAP Warrants) will not (i) result in a violation of the Certificate of Incorporation of the Company, any capital stock of the Company or the Bylaws of the Company or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of Pink Sheets LLC or the OTC Bulletin Board (as applicable, the “Initial Principal Market”)) applicable to the Company or by which any property or asset of the Company is bound or affected.

(vi)Consents.  The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other person in order for it to execute, deliver or perform any of its obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof.  All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the Closing Date, and the Company and is unaware of any facts or circumstances which might prevent the Company from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.  The Company is not in violation of the listing requirements of the Initial Principal Market and has no knowledge of any facts which would reasonably lead to delisting or suspension of the Common Stock in the foreseeable future.

(vii)Absence of Litigation.  There is no action, suit, proceeding, inquiry or investigation before or by either Initial Principal Market, any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company, the Common Stock or any of the Company’s officers or directors in their capacities as such, that is expected to have a Material Adverse Effect.

(viii)Disclosure.  To the Company’s knowledge, neither this Agreement, the other Transaction Documents, nor any other written statements or certificates made or delivered in connection herewith, when taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading in light of the circumstances under which they were made.

4.   COVENANTS

(a)Reasonable Best Efforts.  Each party shall use its reasonable best efforts timely to satisfy each of the covenants and the conditions to be satisfied by it as provided in Sections 6 and 7 of this Agreement.

(b)Form D and Blue Sky.  If required by applicable law, the Company agrees to file a Form D in respect of the Securities and to provide a copy thereof to each Investor promptly after such filing, if any.  The Company, on or before the Closing Date, shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for issuance to the Investor at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification).  The Company shall make all filings and reports relating to the issuance of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.

(c)Pledge of Securities.  The Company acknowledges and agrees that the Securities may be pledged by the Investor in connection with a bona fide margin agreement or other loan or financing arrangement that is secured by the Securities.  The pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Investor shall not be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction Document, including, without limitation, Section 3(a)(vi) hereof.  The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of the Securities to such pledgee by the Investor.

(d)Restriction on Redemption and Cash Dividends.  So long as any Exchanged Bridge Notes or Exchanged CAP Notes are outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash dividend or distribution on, the Common Stock without the prior express written consent of the holders of Exchanged Bridge Notes and Exchanged CAP Notes representing not less than a majority of the aggregate principal amount of the then outstanding Exchanged Bridge Notes and Exchanged CAP Notes.

(e)Corporate Existence.  So long as the Investor beneficially owns any Exchanged Bridge Notes or Exchanged CAP Notes, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except upon the terms set forth in the Exchanged Bridge Notes and the Exchanged CAP Notes.

(f)Future Guaranties and Pledges.  In addition, if the Company shall hereafter own, create or acquire any subsidiary that is not a party to a guaranty, then the Company shall promptly notify, in writing, the Bridge Collateral Agent and the CAP Collateral Agent thereof, and the Company shall, no later than ten (10) Trading Days (as defined in the Exchanged CAP Notes) after such notice cause such subsidiary (A) to become a party to (i) a guaranty, guaranteeing all the obligations of the Company hereunder, (ii) a pledge agreement, pledging all right and interest in any collateral covered by the CAP Security Documents and the Bridge Security Documents, as applicable, (iii) the Amended Bridge Security Agreement, as applicable, and (iv) the Amended CAP Security Agreement, as applicable, and (B) to duly execute and/or deliver such opinions of counsel and other documents, in form and substance reasonably acceptable to the Bridge Collateral Agent and the CAP Collateral Agent.

(g)CAP Collateral Agent.  The Investor hereby (a) reaffirms, acknowledges and appoints The Bank of New York, a New York banking corporation, as the CAP Collateral Agent hereunder and under the Amended CAP Security Agreement and any ancillary documents related thereto, and (b) authorizes the CAP Collateral Agent (and its officers, directors, employees and agents) to take such action on the Investor’s behalf in accordance with the terms hereof and thereof.  The CAP Collateral Agent shall not have, by reason hereof or the Amended CAP Security Agreement and any ancillary documents related thereto (collectively, the “CAP Security Documents”), a fiduciary relationship in respect of the Investor.  Neither the CAP Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to the Investor for any action taken or omitted to be taken in connection herewith or any other CAP Security Document except to the extent caused by its own gross negligence or willful misconduct, and the Investor agrees to defend, protect, indemnify and hold harmless the CAP Collateral Agent and all of its officers, directors, employees and agents (collectively, the “CAP Indemnitees”) from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such CAP Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such CAP Indemnitee of the duties and obligations of CAP Collateral Agent pursuant hereto or any of the CAP Security Documents.  The CAP Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the holders of a majority in principal amount of the Exchanged CAP Notes then outstanding, and such instructions shall be binding upon all holders of Exchanged CAP Notes; provided, however, that the CAP Collateral Agent shall not be required to take any action which, in the reasonable opinion of the CAP Collateral Agent, exposes the CAP Collateral Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law.  The CAP Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.  The Investor hereby acknowledges and agrees that the CAP Collateral Agent shall be entitled to all of the rights, privileges and immunities set forth in the CAP Security Agreement (including, but not limited to, the provisions of Section 9 of the CAP Security Agreement).

(h)Successor CAP Collateral Agent.

(i)The CAP Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other CAP Security Documents at any time by giving at least thirty (30) Business Days’ prior written notice to the Company and each holder of Exchanged CAP Notes.  Such resignation shall take effect upon the acceptance by a successor CAP Collateral Agent of appointment pursuant to clauses (ii) and (iii) below or as otherwise provided below.

(ii)Upon any such notice of resignation, the holders of two-thirds in principal amount of the Exchanged CAP Notes then outstanding shall appoint a successor collateral agent.  Upon the acceptance of any appointment as collateral agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the CAP Collateral Agent shall be discharged from its duties and obligations under this Agreement and the other CAP Security Documents.  After the CAP Collateral Agent’s resignation hereunder as the collateral agent, the provisions of this Section 4(h) shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the CAP Collateral Agent under this Agreement and the other CAP Security Documents.

(iii)If a successor collateral agent shall not have been so appointed within said thirty (30) Business Day period, the CAP Collateral Agent shall then appoint a successor collateral agent who shall serve as the collateral agent until such time, if any, as the holders of a majority in principal amount of the Exchanged CAP Notes then outstanding appoint a successor collateral agent as provided above.

(i)Bridge Collateral Agent.  The Investor hereby (a) reaffirms, acknowledges and appoints Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio, as the Bridge Collateral Agent hereunder and under the Amended Bridge Security Agreement and any ancillary documents related thereto, and (b) authorizes the Bridge Collateral Agent (and its officers, directors, employees and agents) to take such action on the Investor’s behalf in accordance with the terms hereof and thereof.  The Bridge Collateral Agent shall not have, by reason hereof or the Amended Bridge Security Agreement and any ancillary documents related thereto (collectively, the “Bridge Security Documents”), a fiduciary relationship in respect of the Investor.  Neither the Bridge Collateral Agent nor any of its officers, directors, employees and agents shall have any liability to the Investor for any action taken or omitted to be taken in connection herewith or any other CAP Security Document except to the extent caused by its own gross negligence or willful misconduct, and the Investor agrees to defend, protect, indemnify and hold harmless the Bridge Collateral Agent and all of its officers, directors, employees and agents (collectively, the “Bridge Indemnitees”) from and against any losses, damages, liabilities, obligations, penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses) incurred by such Bridge Indemnitee, whether direct, indirect or consequential, arising from or in connection with the performance by such Bridge Indemnitee of the duties and obligations of Bridge Collateral Agent pursuant hereto or any of the Bridge Security Documents.  The Bridge Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the holders of a majority in principal amount of the Exchanged Bridge Notes then outstanding, and such instructions shall be binding upon all holders of Exchanged Bridge Notes; provided, however, that the Bridge Collateral Agent shall not be required to take any action which, in the reasonable opinion of the Bridge Collateral Agent, exposes the Bridge Collateral Agent to liability or which is contrary to this Agreement or any other Transaction Document or applicable law.  The Bridge Collateral Agent shall be entitled to rely upon any written notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct and to have been signed, sent or made by the proper person, and with respect to all matters pertaining to this Agreement or any of the other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.  The Investor hereby acknowledges and agrees that the Bridge Collateral Agent shall be entitled to all of the rights, privileges and immunities set forth in the Bridge Security Agreement (including, but not limited to, the provisions of Section 9 of the Bridge Security Agreement).

(j)Successor Bridge Collateral Agent.

(i)The Bridge Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Bridge Security Documents at any time by giving at least thirty (30) Business Days’ prior written notice to the Company and each holder of Exchanged Bridge Notes.  Such resignation shall take effect upon the acceptance by a successor Bridge Collateral Agent of appointment pursuant to clauses (ii) and (iii) below or as otherwise provided below.

(ii)Upon any such notice of resignation, the holders of two-thirds in principal amount of the Exchanged Bridge Notes then outstanding shall appoint a successor collateral agent.  Upon the acceptance of any appointment as collateral agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the collateral agent, and the Bridge Collateral Agent shall be discharged from its duties and obligations under this Agreement and the other Bridge Security Documents.  After the Bridge Collateral Agent’s resignation hereunder as the collateral agent, the provisions of this Section 4(j) shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Bridge Collateral Agent under this Agreement and the other Bridge Security Documents.

(iii)If a successor collateral agent shall not have been so appointed within said thirty (30) Business Day period, the Bridge Collateral Agent shall then appoint a successor collateral agent who shall serve as the collateral agent until such time, if any, as the holders of a majority in principal amount of the Exchanged Bridge Notes then outstanding appoint a successor collateral agent as provided above.

(k)Public Information.  At any time during the period commencing on the Closing Date and ending at such time that all of the Exchanged Common Shares, Exchanged CAP Conversion Shares and Exchanged CAP Warrant Shares can be sold without the requirement to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if a registration statement is not available for the resale of all of the Exchanged Common Shares, Exchanged CAP Conversion Shares and Exchanged CAP Warrant Shares and the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c)(1) (a “Public Information Failure”) then, as partial relief for the damages to any holder of Exchanged Common Shares, Exchanged CAP Conversion Shares and Exchanged CAP Warrant Shares by reason of any such delay in or reduction of its ability to sell the Exchanged Common Shares, Exchanged CAP Conversion Shares and Exchanged CAP Warrant Shares (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to two percent (2.0%) of the aggregate Purchase Price of such holder’s Exchanged Common Shares, Exchanged CAP Conversion Shares and Exchanged CAP Warrant Shares on the day of a Public Information Failure and on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such Public Information Failure is cured and (ii) such time that such public information is no longer required pursuant to Rule 144.  The payments to which a holder shall be entitled pursuant to this Section 4(k) are referred to herein as “Public Information Failure Payments.”  Public Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the Public Information Failure Payments is cured.  In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full.  For the purpose of this Section 4(k), "Purchase Price" means, (x) with respect to the Exchanged Common Shares, $1.40 per share (as adjusted to reflect any stock dividend, stock split, combination, recapitalization and other similar event with respect to each such share), (y) with respect to each Exchanged CAP Conversion Share, the conversion price of such Exchanged CAP Conversion Share on the date the holder of the Exchanged CAP Note delivered the Conversion Notice (as defined in the Exchanged CAP Note) with respect to such Exchange CAP Conversion Share, and (z) with respect to each Exchanged CAP Warrant Share, the exercise price of such Exchanged CAP Warrant Share on the date the holder of the Exchanged CAP Warrant delivered the Exercise Notice (as defined in the Exchanged CAP Warrant) with respect to such Exchange CAP Warrant Share.

(l)Holding Period.  For the purposes of Rule 144(d), the Company acknowledges that the holding period of the Existing Bridge Notes may be tacked onto the holding period of the Exchanged Bridge Notes and the Exchanged Common Shares, the holding period of the Second CAP Notes may be tacked onto the holding period of the Exchanged CAP Notes and Exchanged CAP Conversion Shares, the holding period of the Second CAP Warrants may be tacked onto the holding period of the Exchanged CAP Warrants and the Exchanged CAP Warrants Shares.  The Company agrees not to take a position contrary to this Section 4(l).

5.   FEES AND EXPENSES

At the Closing, the Company shall reimburse Radcliffe SPC, Ltd., for and on behalf of the Class A Segregated Portfolio, for its legal and due diligence fees and expenses, not to exceed $50,000.00, in connection with the preparation and negotiation of this Agreement and the related documents by paying such amount to Schulte Roth & Zabel LLP (the “Investor Counsel Expense”).  Except as otherwise set forth in this Agreement, each party (other than the Trustee and the CAP Collateral Agent) shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all stamp and other non-income taxes and duties levied in connection with the issuance of the Securities.

6.   CONDITIONS TO COMPANY’S OBLIGATIONS HEREUNDER.

The obligations of the Company to the Investor hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing the Investor with prior written notice thereof:

(a)The Investor shall have executed this Agreement and delivered the same to the Company.

(b)Each Other Investor shall have executed the Other Agreements and delivered the same to the Company.

(c)The Investor and each Other Investor shall have delivered to the Company its Second CAP Note being exchanged at the Closing or such other documentation reasonably satisfactory to the Company and the Trustee that the Investor’s Second CAP Note has been lost or destroyed.

(d)The Investor and each Other Investor shall have delivered to the Company its Second Cap Warrant being exchanged at the Closing or such other documentation reasonably satisfactory to the Company that the Investor’s Second CAP Warrant has been lost or destroyed.

(e)Any Investor that is a Bridge Purchaser shall have delivered to the Company its Existing Bridge Note being exchanged at the Closing or such other documentation reasonably satisfactory to the Company that the Investor’s Existing Bridge Note has been lost or destroyed.

(f)The representations and warranties of the Investors in Section 3(a) hereof shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date).

(g)The CAP Collateral Agent shall have executed and delivered to the Company a copy of the Amended and Restated CAP Security Agreement and Amended and Restated Intercreditor Agreement.

(h)The Bridge Collateral Agent shall have executed and delivered to the Company a copy of the Amended and Restated Bridge Security Agreement and Amended and Restated Intercreditor Agreement.

(i)The Trustee shall have executed and delivered to the Company the Termination Agreement, in the form attached hereto as Exhibit H (the "Termination Agreement").

7.   CONDITIONS TO THE INVESTOR’S OBLIGATIONS HEREUNDER.

The obligations of the Investor hereunder are subject to the satisfaction of each of the following conditions, provided that these conditions are for the Investor’s sole benefit and may be waived by the Investor at any time in its sole discretion by providing the Company with prior written notice thereof:

(a)The Company shall have duly executed and delivered to the Investor (i) this Agreement, (ii) the Amended Security Documents, (iii) the Exchanged CAP Notes, (iv) the Exchanged Cap Warrants, and (v) if the Investor is a Bridge Purchaser, the Exchanged Bridge Notes (as set forth on the Schedule of Investors attached hereto) being issued to the Investor at the Closing pursuant to this Agreement.

(b)The Company shall have duly executed and delivered to the Investor, if a Bridge Purchaser, the Exchanged Common Shares in accordance with the instructions set forth opposite the Investor’s name in column (11) of the Schedule of Investors.

(c)Each of the Other Investors shall have (i) executed the Other Agreements, (ii) satisfied or waived all conditions to the closings contemplated by such agreements, (iii) surrendered such principal amount of their Second CAP Notes being exchanged at the Closing or such other documentation reasonably satisfactory to the Company and the Trustee that such Other Investor’s Second CAP Note has been lost or destroyed and (iv) if such Other Investors are Bridge Investors, surrendered such principal amount of their Existing Bridge Notes being exchanged at the Closing or such other documentation reasonably satisfactory to the Company that such Other Purchaser’s Existing Bridge Note has been lost or destroyed.

(d)The Investors shall have received the opinion of Vorys, Sater, Seymour and Pease LLP, the Company’s counsel, dated as of the Closing Date, in substantially the form of Exhibit I attached hereto.

(e)The Trustee shall have executed and delivered to the Investor a copy of the letter in the form of Exhibit D-1 attached hereto and the Termination Agreement in the form of Exhibit H attached hereto.

(f)The CAP Collateral Agent shall have executed and delivered to the Investors a copy of the Amended CAP Security Agreement and Amended Intercreditor Agreement.

(g)The Bridge Collateral Agent shall have executed and delivered to the Investors a copy of the Amended Bridge Security Agreement and Amended Intercreditor Agreement.

(h)The Company shall have delivered to the Investors a certificate evidencing the formation and good standing of the Company issued by the Secretary of State of the State of Delaware, as of a date within seven (7) days of the Closing Date.

(i)The Company shall have delivered to the Investors a certificate evidencing the Company’s qualification as a foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company is qualified to do business as a foreign corporation, as of a date within three (3) days of the Closing Date.

(j)The Company shall have delivered to the Investors a certified copy of the Certificate of Incorporation as certified by the Secretary of State of the State of Delaware (or a fax or pdf copy of such certificate) within ten (10) days of the Closing Date.

(k)The Company shall have delivered to the Investors a certificate, executed by the Secretary of the Company and dated as of the Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s Board of Directors in a form reasonably acceptable to the Investor, (ii) the Certificate of Incorporation, in the form attached hereto as Exhibit J, and (iii) the Bylaws, in the form attached hereto as Exhibit K, each as in effect at the Closing,.

(l)The representations and warranties of the Company in Section 3(b) shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date) and the Company shall have performed, satisfied and complied in all material respects with the covenants and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to the Closing Date.  The Investors shall have received a certificate, executed by the Chief Executive Officer or Chief Financial Officer of the Company, dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit L

(m)The Company shall have delivered to the Investors a letter from the Company’s transfer agent certifying the number of shares of Common Stock outstanding as of a date within five days of the Closing Date.

(n)The Common Stock (I) shall be designated for quotation or listed on the OTC Bulletin Board (the “Principal Market”) and (II) shall not have been suspended, as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor, except as set forth in the Company’s filings with the SEC, shall suspension by the SEC or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum listing maintenance requirements of the Principal Market.

(o)In accordance with the terms of the Amended CAP Security Agreement, the Company shall have delivered to the CAP Collateral Agent (i) certificates representing the Company’s subsidiaries’ shares of capital stock to the extent such subsidiary is a corporation or otherwise has certificated capital stock, along with duly executed blank stock powers, (ii) appropriate financing statements on Form UCC-I to be duly filed by the Company in such office or offices as may be necessary or, in the opinion of the CAP Collateral Agent, desirable to perfect the security interests purported to be created by the Amended CAP Security Agreement.

(p)In accordance with the terms of the Amended Bridge Security Agreement, the Company shall have delivered to the Bridge Collateral Agent appropriate financing statements on Form UCC-I to be duly filed in such office or offices as may be necessary or, in the opinion of the Bridge Collateral Agent, desirable to perfect the security interests purported to be created by the Amended Bridge Security Agreement.

(q)Within two (2) Business Days prior to the Closing, the Company shall have delivered or caused to be delivered to the Investors (i) true copies of UCC search results, listing all effective financing statements which name as debtor the Company or any of its subsidiaries filed in the prior five years to perfect an interest in any assets thereof, together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Investor, shall cover any of the Collateral (as defined in the Amended Security Documents) and the results of searches for any tax lien and judgment lien filed against such person or its property, which results, except as otherwise agreed to in writing by the Investors and except with respect to any Permitted Liens (as defined in the Exchanged Bridge Notes and the Exchanged CAP Notes) shall not show any such Liens (as defined in the Exchanged Bridge Notes and the Exchanged CAP Notes).

(r)On or prior to the Closing Date, (i) FP Tech Holdings, LLC (“FP Tech”) shall have entered into an agreement to convert into shares of Common Stock at a conversion price of $1.40 per share all amounts outstanding, including, without limitation, any principal and interest, pursuant to (x) $336,000 in aggregate principal amount of Second CAP Notes held by FP Tech and (y) that certain equipment financing agreement, dated February 11, 2008, by and between the Company and FP Tech (which amount, including all principal and interest accrued thereon, equals $101,444.51 as of April 17, 2008, and accrues interest at the rate of $22.22 per day); and (ii) FP Tech shall have entered into an agreement to purchase 1,071,429 shares of Common Stock from the Company at a price of $1.40 per share in cash, in each case, pursuant to agreements reasonably satisfactory to the holders of a majority of the Exchanged CAP Notes.

(s)On or prior to the Closing Date, the Company will enter into a transaction, pursuant to an agreement reasonably satisfactory to the holders of a majority of the Second CAP Notes, with CWC.

(t)On or prior to the Closing Date, the Company shall have appointed Scott Kline and Frank Knuettel to the Board of Directors of the Company.

(u)On or prior to the Closing Date, the Company shall have delivered evidence to the Investors that any employment agreement by and between the Company and any of its executive officers (or their affiliates) shall have been amended to make such executive officers “at will” employees.

(v)The Company shall have delivered to the Investor such other documents relating to the transactions contemplated by this Agreement as the Investor or its counsel may reasonably request.

8.   MISCELLANEOUS.

(a)Disclosure of Transactions and Other Material Information.  On or before 8:30 a.m., New York City time, on the second Business Day following the date of this Agreement (the “8-K Filing Time”), the Company shall file a Current Report on Form 8-K describing the terms of the transactions contemplated hereby (including, without limitation, the transactions referenced in Section 7(r) and (s) above) in the form required by the Securities and Exchange Act of 1934, as amended (the “1934 Act”), and attaching the material transaction documents that have not previously been filed with the SEC by the Company (including, without limitation, this Agreement, the Amended Security Documents, the Termination Agreement and the form of the Exchanged CAP Notes, Exchanged CAP Warrants and Exchanged Bridge Notes) as exhibits to such filing (including all attachments, the “8-K Filing”).  From and after the filing of the 8-K Filing with the SEC, the Investor shall not be in possession of any material, nonpublic information received from the Company, any of its subsidiaries or any of its respective officers, directors, employees or agents that is not disclosed in the 8-K Filing.  The Company shall not, and shall cause each of its subsidiaries and its and each of their respective officers, directors, employees and agents, not to, provide the Investors with any material, nonpublic information regarding the Company or any of its subsidiaries from and after the filing of the 8-K Filing with the SEC without the express written consent of the Investors.  In the event of a breach of the foregoing covenant by the Company, any of its subsidiaries, or any of its or their respective officers, directors, employees and agents, in addition to any other remedy provided herein or in the Transaction Documents, the Investors shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise, of such material, nonpublic information without the prior approval by the Company, its subsidiaries, or any of its or their respective officers, directors, employees or agents.  The Investors shall not have any liability to the Company, its subsidiaries, or any of its or their respective officers, directors, employees, stockholders or agents for any such disclosure.  Subject to the foregoing, neither the Company nor the Investors shall issue any press releases or any other public statements in respect of the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Investors, to make any press release or other public disclosure in respect of such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) the Investor shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release).  Without the prior written consent of the Investor and other than as required by applicable law, including the 1934 Act and the 8-K Filing, neither the Company, its subsidiaries or anyone acting on their behalf shall disclose the name of the Investor in any filing, amendment or otherwise.

(b)Proposed Financing.  On or prior to January 1, 2009, the Company shall have engaged an investment banking firm reasonably acceptable to (i) the Investors holding Exchanged CAP Notes representing a majority of the aggregate outstanding principal amount of the Exchanged CAP Notes; (ii) the Investors holding Exchanged Bridge Notes representing a majority of the aggregate outstanding principal amount of the Exchanged Bridge Notes; and (iii) FP Tech, with respect to a proposed financing of debt or equity of the Company with net proceeds in an amount that is adequate to pay off in full the Exchanged Bridge Notes and the Exchanged CAP Notes to be consummated prior to June 30, 2009.

(c)Governing Law; Jurisdiction; Jury Trial.  All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.  Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(d)Counterparts.  This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature.

(e)Headings.  The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.

(f)Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties.  The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

(g)No Third Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto, the Trustee, the CAP Collateral Agent and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

(h)Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

(i)Indemnification. In consideration of the Investor's execution and delivery of the Transaction Documents and acquiring the Securities thereunder and in addition to all of the Company's other obligations under the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless the Investor and each other holder of the Securities and all of their stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the foregoing Persons' agents or other representatives (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (x) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (y) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby or (z) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the status of the Investor or holder of the Securities as an investor in the Company.  To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

(j)No Strict 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.

(k)Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns.

(l)Notices.  Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered:  (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one Business Day after deposit with an overnight courier service, in each case properly addressed to the party to receive the same.  The addresses and facsimile numbers for such communications shall be:

If to the Company:

Firepond, Inc.

205 Newbury Street, Suite 204

Framingham, MA 01701

Telephone:                              866 826 6344 x 2011

Facsimile:                                508-820-4303

Attention:                               William Santo, CEO

with a copy (for informational purposes only) to:

Vorys, Sater, Seymour and Pease LLP

2100 One Cleveland Center

1375 East Ninth Street

Cleveland, OH 44114-1724

Telephone:                              (216) 479-6120

Facsimile:                                (216) 937-3741

Attention:                               John M. Saganich, Esq.

If to the Transfer Agent:

Corporate Stock Transfer

Denver, Colorado  80302

Telephone:  (303) 282-4800

Facsimile:  (303) 282-5800

Attention:  Carolyn Bell

If to an Investor, to its address and facsimile number set forth on the Schedule of Investors, with copies to the Investor’s representatives as set forth on

the Schedule of Investors with a copy (for informational purposes only) to:

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York  10022

Telephone:                             (212) 756-2000

Facsimile:                                (212) 593-5955

Attention:                               Eleazer N. Klein, Esq.

or to such other address and/or facsimile number and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness of such change.  Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.

(m)Remedies.  The Investor shall have all rights and remedies set forth in this Agreement and all of the rights which the Investor has under any law.  Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law.  Furthermore, the Company recognizes that in the event that it fails to perform, observe, or discharge any or all of its obligations under this Agreement, any remedy at law may prove to be inadequate relief to the Investor.  The Company therefore agrees that the Investor shall be entitled to seek temporary and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or other security.

(n)Independent Nature of Investor’s Obligations and Rights.  The obligations of the Investor under this Agreement are several and not joint with the obligations of any Other Investor, and the Investor shall not be responsible in any way for the performance of the obligations of any Other Investor.  Nothing contained herein, and no action taken by the Investor pursuant hereto, shall be deemed to constitute the Investor and the Other Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement and the Company acknowledges that the Investors are not acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement.  The Company and the Investor confirms that the Investor has independently participated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors.  The Investor shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any Other Investor to be joined as an additional party in any proceeding for such purpose.

(o)Most Favored Nation.  The Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereof that none of the terms offered to any person with respect to any amendment, settlement or waiver (each a “Settlement Document”) relating to the terms, conditions and transactions contemplated hereby, is or will be more favorable to such person than those of the Investor and this Agreement shall be, without any further action by the Investor or the Company, deemed amended and modified in an economically and legally equivalent manner such that the Investor shall receive the benefit of the more favorable terms contained in such Settlement Document.  Notwithstanding the foregoing, the Company agrees, at its expense, to take such other actions (such as entering into amendments to the Transaction Documents) as the Investor may reasonably request to further effectuate the foregoing.

[Signature Page Follows]

IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page to this Amendment and Exchange Agreement to be duly executed as of the date first written above.

COMPANY:

FIREPOND, INC.

By:

Name:

Title:

IN WITNESS WHEREOF, the Investor and the Company have caused their respective signature page to this Amendment and Exchange Agreement to be duly executed as of the date first written above.

INVESTOR:

(Name of Investor as it should appear on Securities)

By:

By:

Name:

Title:

EX-99.2

[FORM OF WARRANT]

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

FIREPOND, INC.

Amended and Restated Warrant To Purchase Common Stock

Warrant No.: _______

Initial Number of Shares of Common Stock: _______

Original Date of Issuance: January 24, 2007 (“Original Issuance Date”)

Date of Issuance: April ___, 2008 (“Amendment Date”)

Firepond, Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, ______________, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price then in effect, upon surrender of this Amended and Restated Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the Amendment Date, but not after 11:59 P.M., New York City time, on the Expiration Date, such number of fully paid non-assessable shares of Common Stock as are specified above (the “Warrant Shares”).  This Warrant is one of an issue of Warrants to Purchase Common Stock (including additional warrants and replacement warrants issued pursuant to the Amendment and Exchange Agreements (as defined below), the “Exchanged CAP Warrants”) issued pursuant to Section 1 of those certain Amendment and Exchange Agreements, dated as of the Amendment Date, by and between each of the Buyers (as defined in the Securities Purchase Agreement) and the Company (the “Amendment and Exchange Agreements”).  This Warrant amends, supplements, modifies and completely restates and supersedes the warrant, dated as of the Original Issuance Date (the “Original Warrant”), issued by the Company to the Holder for the exercise of [___________] shares of Common Stock pursuant to Section 2.2(a)(iv) of that certain Master Exchange Agreement, dated as of January 24, 2007, by and among the Company and the purchasers referred to therein, but shall not, except as specifically amended hereby or as set forth in the Holder’s Amendment and Exchange Agreement, constitute a release, satisfaction or novation of any of the obligations under the Original Warrant or any other Transaction Document (as defined in the Amendment and Exchange Agreements).  Except as otherwise defined herein, capitalized terms in this Warrant shall have the meanings set forth in the Amendment and Exchange Agreements.

1.EXERCISE OF WARRANT.

(a)Mechanics of Exercise. Subject to the terms and conditions hereof (including, without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by the Holder on any day on or after the Original Issuance Date in whole or in part, by (i) delivery of a written notice, in the form attached hereto as Exhibit A (the “Exercise Notice”), of the Holder’s election to exercise this Warrant and (ii) (A) payment to the Company of an amount equal to the applicable Exercise Price multiplied by the number of Warrant Shares as to which this Warrant is being exercised (the “Aggregate Exercise Price”) in cash or by wire transfer of immediately available funds or (B) by notifying the Company that this Warrant is being exercised pursuant to a Cashless Exercise (as defined in Section 1(d)). The Holder shall not be required to deliver the original Warrant in order to effect an exercise hereunder. Execution and delivery of the Exercise Notice with respect to less than all of the Warrant Shares shall have the same effect as cancellation of the original Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number of Warrant Shares. On or before the first Business Day following the date on which the Company has received each of the Exercise Notice and the Aggregate Exercise Price (or notice of a Cashless Exercise) (the “Exercise Delivery Documents”), the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of the Exercise Delivery Documents to the Holder and the Company’s transfer agent (the “Transfer Agent”). On or before the third Business Day following the date on which the Company has received all of the Exercise Delivery Documents (the “Share Delivery Date”), the Company shall (X) provided that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and dispatch by overnight courier to the address as specified in the Exercise Notice, a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise. Upon delivery of the Exercise Delivery Documents or notification to the Company of a Cashless Exercise referred to in Section 1(d), the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares in respect of which this Warrant has been exercised, irrespective of the date of delivery of the certificates evidencing such Warrant Shares. If this Warrant is submitted in connection with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired upon an exercise, then the Company shall as soon as practicable and in no event later than three (3) Business Days after any exercise and at its own expense, issue a new Warrant (in accordance with Section 7(d)) representing the right to purchase the number of Warrant Shares purchasable immediately prior to such exercise under this Warrant, less the number of Warrant Shares in respect of which this Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of this Warrant, but rather the Company shall in lieu thereof make payment to the Holder of cash in the amount of such fraction multiplied by the Closing Sale Price of one (1) share of Common Stock on the date of exercise. The Company shall pay any and all taxes, including without limitation, all documentary stamp, transfer or similar taxes, or other incidental expense that may be payable with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.

(b)Exercise Price. For purposes of this Warrant, “Exercise Price” means Seven Dollars ($7.00), subject to any and all adjustment as expressly provided herein.

(c)Company’s Failure to Timely Deliver Securities. If within three (3) Trading Days after the Company’s receipt of the facsimile copy of Exercise Delivery Documents, the Company fails to issue and deliver a certificate for that number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s share register or credit the Holder’s balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such Holder’s exercise hereunder, and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of shares of Common Stock issuable upon such exercise that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such shares of Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the date of exercise.

(d)Cashless Exercise. Notwithstanding anything contained herein to the contrary, the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless Exercise”):

Net Number =  (A x B) - (A x C)

          B

For purposes of the foregoing formula:

A = the total number of shares in respect of which this Warrant is then being exercised.

B = the Closing Sale Price of the shares of Common Stock (as reported by Bloomberg) on the date immediately preceding the date of the Exercise Notice.

C = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

(e)Disputes. In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall promptly issue to the Holder the number of Warrant Shares that are not disputed and resolve such dispute in accordance with Section 12.

(f)Beneficial Ownership; Limitations on Exercises. The Company shall not effect the exercise of this Warrant, and the Holder shall not have the right to exercise this Warrant, to the extent that after giving effect to such exercise, such Person (together with such Person’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Person and its affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, unexercised portion of this Warrant beneficially owned by such Person and its affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by such Person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this Warrant, in  determining the number of outstanding shares of Common Stock, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (1) the Company’s most recent Form 10-KSB or 10-K, as applicable, Form 10-QSB or 10-Q, as applicable, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission, as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Holder, the Company shall within one Business Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Exchanged CAP Notes (as defined in the Amendment and Exchange Agreements) and the Exchanged CAP Warrants, by the Holder and its affiliates since the date as of which such number of outstanding shares of Common Stock was reported. By written notice to the Company, the Holder may from time to time increase or decrease the Maximum Percentage to any other percentage not in excess of 9.99% specified in such notice; provided that (i) any such increase will not be effective until the sixty-first (61st) day after such notice is delivered to the Company, and (ii) any such increase or decrease will apply only to the Holder and not to any other holder of Exchanged CAP Warrants.

(g)Insufficient Authorized Shares. If at any time while any of the Exchanged CAP Warrants remain outstanding the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon exercise of the Exchanged CAP Warrants at least a number of shares of Common Stock equal to 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of all of the Exchanged CAP Warrants then outstanding (the “Required Reserve Amount”) (an “Authorized Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Exchanged CAP Warrants then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such proposal.

2.ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.

The Exercise Price and the number of Warrant Shares shall be adjusted from time to time as follows:

(a)Adjustment upon Issuance of Shares of Common Stock. If and whenever on or after the Original Issuance Date the Company issues or sells, or in accordance with this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding any Excluded Securities and shares of Common Stock issued or deemed to have been issued by the Company in connection with any Excluded Securities) for a consideration per share less than a price (the “Applicable Price”) equal to the Exercise Price in effect immediately prior to such issue or sale or deemed issuance or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price then in effect shall be reduced to an amount equal to the product of (A) the Exercise Price in effect immediately prior to such Dilutive Issuance and (B) the quotient determined by dividing (1) the sum of (I) the product derived by multiplying the Exercise Price in effect immediately prior to such Dilutive Issuance and the number of shares of Common Stock Deemed Outstanding immediately prior to such Dilutive Issuance plus (II) the consideration, if any, received by the Company upon such Dilutive Issuance, by (2) the product derived by multiplying (I) the Exercise Price in effect immediately prior to such Dilutive Issuance by (II) the number of shares of Common Stock Deemed Outstanding immediately after such Dilutive Issuance. Upon each such adjustment of the Exercise Price hereunder, the number of Warrant Shares shall be adjusted to the number of shares of Common Stock determined by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares acquirable upon exercise of this Warrant immediately prior to such adjustment and dividing the product thereof by the Exercise Price resulting from such adjustment. For purposes of determining the adjusted Exercise Price under this Section 2(a), the following shall be applicable:

(i)Issuance of Options. If the Company in any manner grants any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section 2(a)(i), the “lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Options or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the granting or sale of the Option, upon exercise of the Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities.

(ii)Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section 2(a)(ii), the “lowest price per share for which one share of Common Stock is issuable upon the conversion, exercise or exchange thereof” shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale of the Convertible Security and  upon conversion, exercise or exchange of such Convertible Security. No further adjustment of the Exercise Price or number of Warrant Shares shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of this Warrant has been or is to be made pursuant to other provisions of this Section 2(a), no further adjustment of the Exercise Price or number of Warrant Shares shall be made by reason of such issue or sale.

(iii)Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time, the Exercise Price and the number of Warrant Shares in effect at the time of such increase or decrease shall be adjusted to the Exercise Price and the number of Warrant Shares which would have been in effect at such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration or increased or decreased conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section 2(a)(iii), if the terms of any Option or Convertible Security that was outstanding as of the date of issuance of this Warrant are increased or decreased in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 2(a) shall be made if such adjustment would result in an increase of the Exercise Price then in effect or a decrease in the number of Warrant Shares.

(iv)Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities of the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for a consideration of $0.01. If any shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Sale Price of such security on the date of receipt. If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Required Holders.  If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5) Business Days after the tenth day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Required Holders. The determination of such appraiser shall be final and binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

(v)Record Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)Adjustment upon Subdivision or Combination of Common Stock. If the Company at any time on or after the Original Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision will be proportionately reduced and the number of Warrant Shares will be proportionately increased. If the Company at any time on or after the Original Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect immediately prior to such combination will be proportionately increased and the number of Warrant Shares will be proportionately decreased. Any adjustment under this Section 2(b) shall become effective at the close of business on the date the subdivision or combination becomes effective.

(c)Adjustment upon Tender Offer.  In case the Company or any of its Subsidiaries shall purchase any shares of the Company’s Common Stock by means of a tender offer, then, effective immediately prior to the opening of business on the day after the last date (the “Tender Offer Expiration Date”) tenders could have been made pursuant to such tender offer (as it may be amended) (the last time at which such tenders could have been made on the Tender Offer Expiration Date is hereinafter sometimes called the “Tender Offer Expiration Time”):

(i)the Exercise Price shall be adjusted so that the same shall equal the price determined by multiplying the Exercise Price in effect immediately prior to the close of business on the Tender Offer Expiration Date by a fraction of which: (A) the numerator shall be the product of the number of shares of Common Stock outstanding (including Purchased Shares but excluding any shares held in the treasury of the Company) immediately prior to the Tender Offer Expiration Time multiplied by the Current Market Price per share of the Common Stock; and (B) the denominator shall be the sum of (x) the aggregate consideration (determined as set forth below) payable to stockholders of the Company based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Tender Offer Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the “Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares and excluding any shares held in the treasury of the Company) immediately prior to the Tender Offer Expiration Time and the Current Market Price per share of Common Stock; and

(ii)the number of Warrant shares shall be adjusted so that the same shall equal the number of Warrant Shares in effect immediately prior to the closing of business on the Tender Offer Expiration Date multiplied by the reciprocal of the fraction described in the preceding paragraph (i).

For purposes of this clause (c) of Section 2, the aggregate consideration in any such tender offer shall equal the sum of the aggregate amount of cash consideration and the aggregate fair market value (as determined by the Board of Directors, whose determination shall be conclusive evidence thereof and which shall be evidenced by an Officers’ Certificate delivered to Holder) of any other consideration payable in such tender offer. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Exercise Price and number of Warrant Shares shall again be adjusted to be the Exercise Price and number of Warrant Shares which would have been in effect based upon the number of shares actually purchased. If the application of this clause (c) of Section 2 to any tender offer would result in an increase in the Exercise Price or a decrease in the number of Warrant Shares, no adjustment shall be made for such tender offer under this Section 2. For purposes of this clause (c) of Section 2, the term “tender offer” shall mean and include both tender offers and exchange offers, all references to “purchases” of shares in tender offers (and all similar references) shall mean and include both the purchase of shares in tender offers and the acquisition of shares pursuant to exchange offers, and all references to “tendered shares” (and all similar references) shall mean and include shares tendered in both tender offers and exchange offers.

(d)Other Events. If any event occurs of the type contemplated by the provisions of this Section 2 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company’s Board of Directors will make an appropriate adjustment in the Exercise Price and the number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant to this Section 2(c) will increase the Exercise Price or decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2.

3.RIGHTS UPON DISTRIBUTION OF ASSETS.

If the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case:

(a)any Exercise Price in effect immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution shall be reduced, effective as of the close of business on such record date, to a price determined by multiplying such Exercise Price by a fraction of which (i) the numerator shall be the Closing Bid Price of the shares of Common Stock on the Trading Day immediately preceding such record date minus the value of the Distribution (as determined in good faith by the Company’s Board of Directors) applicable to one share of Common Stock, and (ii) the denominator shall be the Closing Bid Price of the shares of Common Stock on the trading day immediately preceding such record date; and

(b)the number of Warrant Shares shall be increased to a number of shares equal to the number of shares of Common Stock obtainable immediately prior to the close of business on the record date fixed for the determination of holders of shares of Common Stock entitled to receive the Distribution multiplied by the reciprocal of the fraction set forth in the immediately preceding paragraph (a); provided that in the event that the Distribution is of shares of Common Stock (or common stock) (“Other Shares of Common Stock”) of a company whose common shares are traded on a national securities exchange or a national automated quotation system, then the Holder may elect to receive a warrant to purchase Other Shares of Common Stock in lieu of an increase in the number of Warrant Shares, the terms of which shall be identical to those of this Warrant, except that such warrant shall be exercisable into the number of shares of Other Shares of Common Stock that would have been payable to the Holder pursuant to the Distribution had the Holder exercised this Warrant immediately prior to such record date and with an aggregate exercise price equal to the product of the amount by which the exercise price of this Warrant was decreased with respect to the Distribution pursuant to the terms of the immediately preceding paragraph (a) and the number of Warrant Shares calculated in accordance with the first part of this paragraph (b).

4.PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS

(a)Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(b)Fundamental Transactions.  If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “Alternate Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder’s option and request made prior to the consummation of a Fundamental Transaction, any successor to the Company or surviving entity in such Fundamental Transaction shall, either (1) issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof, or (2) purchase the Warrant from the Holder for a purchase price, payable in cash within five Trading Days after such request (or, if later, on the effective date of the Fundamental Transaction), equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of such request. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

5.NONCIRCUMVENTION.

The Company hereby covenants and agrees that the Company will not, by amendment of its Certificate of Incorporation, Bylaws or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, and will at all times in good faith carry out all the provisions of this Warrant and take all action as may be reasonably required to protect the rights of the Holder. Without limiting the generality of the foregoing, the Company (i) shall not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) shall, so long as any of the Exchanged CAP Warrants are outstanding, take all action necessary to reserve and keep available out of its authorized and unissued shares of Common Stock, solely for the purpose of effecting the exercise of the Exchanged CAP Warrants, 130% of the number of shares of Common Stock as shall from time to time be necessary to effect the exercise of the Exchanged CAP Warrants then outstanding (without regard to any limitations on exercise).

6.WARRANT HOLDER NOT DEEMED A STOCKHOLDER.

Except as  otherwise specifically provided herein, the Holder, solely in such Person’s capacity as a holder of this Warrant, shall not be entitled to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in such Person’s capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares which such Person is then entitled to receive upon the due exercise of this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with copies of the same notices and other information given to the stockholders of the Company generally, contemporaneously with the giving thereof to the stockholders.

7.REISSUANCE OF WARRANTS.

(a)Transfer of Warrant. If this Warrant is to be transferred, the Holder shall surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder may request, representing the right to purchase the number of Warrant Shares being transferred by the Holder and, if less then the total number of Warrant Shares then underlying this Warrant is being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the right to purchase the number of Warrant Shares not being transferred.

(b)Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase the Warrant Shares then underlying this Warrant.

(c)Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Warrant or Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of such surrender; provided, however, that no Warrants for fractional shares of Common Stock shall be given.

(d)Issuance of New Warrants. Whenever the Company is required to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when added to the number of shares of Common Stock underlying the other new Warrants issued in connection with such issuance, does not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall have an original issuance date, as indicated on the face of such new Warrant which is the same as the Original Issuance  Date (iv) shall have an amendment date, as indicated on the face of such new Warrant which is the same as the Amendment Date, and (v) shall have the same rights and conditions as this Warrant.

8.NOTICES.

Whenever notice is required to be given under this Warrant, unless otherwise provided herein, such notice shall be given pursuant to the notice provisions of the Amendment and Exchange Agreements. The Company shall provide the Holder with prompt written notice of all actions taken pursuant to this Warrant, including in reasonable detail a description of such action and the reason therefor. Without limiting the generality of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Exercise Price, setting forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property to holders of shares of Common Stock, other than any grant, issuance or sale of any Excluded Securities (C) for determining rights to vote with respect to any Fundamental Transaction, dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with such notice being provided to the Holder.

9.AMENDMENT AND WAIVER.

Except as otherwise provided herein, the provisions of this Warrant may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Required Holders; provided that no such action may increase the exercise price of any Exchanged CAP Warrant or decrease the number of shares or class of stock obtainable upon exercise of any Exchanged CAP Warrant without the written consent of the Holder.  No such amendment shall be effective to the extent that it applies to less than all of the holders of the Exchanged CAP Warrants then outstanding.

10.GOVERNING LAW.

This Warrant shall be governed by and construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation and performance of this Warrant shall be governed by, the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of New York.

11.CONSTRUCTION; HEADINGS.

This Warrant shall be deemed to be jointly drafted by the Company and all the Purchasers and shall not be construed against any Person as the drafter hereof. The headings of this Warrant are for convenience of reference and shall not form part of, or affect the interpretation of, this Warrant.

12.DISPUTE RESOLUTION.

 In the case of a dispute as to the determination of the Exercise Price or the arithmetic calculation of the Warrant Shares, the Company shall submit the disputed determinations or arithmetic calculations via facsimile within two Business Days of receipt of the Exercise Notice giving rise to such dispute, as the case may be, to the Holder. If the Holder and the Company are unable to agree upon such determination or calculation of the Exercise Price or the Warrant Shares within three Business Days of such disputed determination or arithmetic calculation being submitted to the Holder, then the Company shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the Exercise Price to an independent, reputable investment bank selected by the Company and approved by the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company shall cause at its expense the investment bank or the accountant, as the case may be, to perform the determinations or calculations and notify the Company and the Holder of the results no later than ten Business Days from the time it receives the disputed determinations or calculations. Such investment bank’s or accountant’s determination or calculation, as the case may be, shall be binding upon all parties absent demonstrable error.

13.REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.

The remedies provided in this Warrant shall be cumulative and in addition to all other remedies available under this Warrant and the other Transaction Documents or held at law or in equity (including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the right of the Holder right to pursue actual damages for any failure by the Company to comply with the terms of this Warrant. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

14.TRANSFER.

This Warrant may be offered for sale, sold, transferred or assigned without the consent of the Company, except as may otherwise be required by the Amendment and Exchange Agreements.

15.CERTAIN DEFINITIONS.

For purposes of this Warrant, the following terms shall have the following meanings:

(a)“Approved Stock Plan” means any equity incentive plan or arrangement which has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued to employees, officers, directors or consultants for services provided to the Company or any Subsidiaries thereof.

(b) “Black Scholes Value” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg determined as of the day immediately following the public announcement of the applicable Fundamental Transaction and reflecting (i) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of such date of request and (ii) an expected volatility equal to the greater of 60% and the 100 day volatility obtained from the HVT function on Bloomberg.

(c)“Bloomberg” means Bloomberg Financial Markets.

(d)“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized or required by law to remain closed.

(e)“Closing Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and last closing trade price, respectively, for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last bid price or last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the case may be, of such security on such date shall be the fair market value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 12. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period.

(f)“Common Stock” means (i) the Company’s shares of Common Stock, par value $0.001 per share, and (ii) any share capital into which such Common Stock shall have been changed or any share capital resulting from a reclassification of such Common Stock.

(g)“Common Stock Deemed Outstanding” means, at any given time, the number of shares of Common Stock actually outstanding at such time, plus the number of shares of Common Stock deemed to be outstanding pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the Options or Convertible Securities are actually exercisable at such time, but excluding any shares of Common Stock owned or held by or for the account of the Company or issuable upon conversion of the Exchanged CAP Notes and exercise of the Exchanged CAP Warrants.

(h)“Common Stock Equivalents” means any Convertible Securities and Options.

(i)“Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock.

(j)“Current Market Price” means, on any date, the average of the daily Closing Sale Price per Share for the ten (10) consecutive Trading Days commencing on the record date in respect of distributions, issuances or other events requiring such computation.

(k)“Excluded Securities” means any Common Stock issued or issuable: (i) pursuant to any Approved Stock Plan; (ii) pursuant to an underwritten public offering with a nationally recognized underwriter which generates gross proceeds to the Company in excess of $10,000,000 (other than an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933 and “equity lines”); (iii) in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies the primary purpose of which is not to raise equity capital, (iv) pursuant to the Amendment and Exchange Agreements; (v) pursuant to the July Financing (as defined in the Exchanged CAP Notes); (vi) upon exercise of the Exchanged CAP Warrants; (vii) pursuant to any CWC Common Stock Distribution (as defined in the Exchanged CAP Notes); (viii) upon exercise of any Common Stock Equivalents which are outstanding on the day immediately preceding the Amendment Date; provided that the terms of such Common Stock Equivalents are not amended or modified in any manner after the date hereof; (ix) pursuant to the Common Stock Purchase Agreement by and between the Company and FP Tech Holdings, LLC dated as of the Amendment Date, not to exceed 1,071,429 shares of Common Stock issued at a price of $1.40 per share (as adjusted to reflect any stock dividend, stock split, combination, recapitalization and other similar event with respect to each such share); (x) upon conversion of the Exchanged CAP Notes; (xi) upon the conversion of all principal and interest outstanding as of the Amendment Date under that certain Equipment Lease Agreement between the Company and FP Tech Holdings, LLC dated February 11, 2008 at a conversion price of $1.40 per share (as adjusted to reflect any stock dividend, stock split, combination, recapitalization and other similar event with respect to each such share); (xii) upon exchange of the sum of (A) $336,000 in aggregate principal amount and (B) any accrued and unpaid interest thereon of those certain Second CAP Notes (as defined in the Amendment and Exchange Agreement) held by FP Tech Holdings, LLC or its affiliates for Common Stock of the Company at a price of $1.40 per share (as adjusted to reflect any stock dividend, stock split, combination, recapitalization and other similar event with respect to each such share), (xiii) upon conversion of up to $2 million of the Exchanged CAP Notes and Exchanged Bridge Notes (as defined in the Amendment and Exchange Agreements) into shares of Common Stock at a conversion price of $2.00 (as adjusted to reflect any stock dividend, stock split, combination, recapitalization and other similar event with respect to each such share) on the Closing Date (as defined in the Amendment and Exchange Agreements); and (xiv) in connection with a Subsequent Placement (as defined in the Exchanged CAP Notes) in which the Net Cash Proceeds (as defined in the Exchanged CAP Notes) are used to either (A) pay off the Senior Notes and the Subordinated Notes (as defined in the Exchanged CAP Notes) or (B) pay down at least $1,000,000 in the aggregate of the Senior Notes and/or Subordinated Notes.

(l)“Expiration Date” means January 23, 2014; provided that if such date falls on a day other than a Business Day or on which trading does not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.

(m)“Fundamental Transaction” means that the Company shall, directly or indirectly, in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company to another Person, or (iii) allow another Person or Persons to make a purchase, tender or exchange offer that is accepted by the holders of more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the Person or Persons making or party to, or associated or affiliated with the Person or Persons making or party to, such purchase, tender or exchange offer), or (iv) consummate a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the 50% of the outstanding shares of Voting Stock (not including any shares of Voting Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock purchase agreement or other business combination), or (v) reorganize, recapitalize or reclassify its Common Stock, (vi) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 15(d) of the Exchange Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the issued and outstanding Common Stock or the aggregate ordinary voting power represented by issued and outstanding Common Stock, or (vii) consummate a going-private transaction with any Person, whether pursuant to Rule 13e-3 of the Exchange Act or otherwise; provided, however, that none of the foregoing transactions shall constitute a Fundamental Transaction if the transaction involves the CWC Transaction (as defined in the Exchanged CAP Notes), the July Financing (as defined in the Exchanged CAP Notes) or otherwise is a transaction in which FP Tech Holdings, LLC or its affiliates is the “Person,” “person” or “group” referenced above.

(n)“Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(o)“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

(p)“Principal Market” means the OTC Bulletin Board.

(q)“Required Holders” means the holders of the Exchanged CAP Warrants representing at least a majority of shares of Common Stock underlying the Exchanged CAP Warrants then outstanding.

(r)“Trading Day” means (a) if the applicable security is listed or admitted for trading on the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market or another national security exchange, a day on which the New York Stock Exchange, The NASDAQ Global Select Market, The NASDAQ Global Market or such other national security exchange is open for business, (b) if the applicable security is quoted on the American Stock Exchange, a day during which trades may be made thereon or (c) if the applicable security is not so listed, admitted for trading or quoted, any Business Day.

(s)“Voting Stock” of a Person means capital stock of such Person of the class or classes pursuant to which the holders thereof have the general voting power to elect, or the general power to appoint, at least a majority of the board of directors, managers or trustees of such Person (irrespective of whether or not at the time capital stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).

[Signature Page Follows]

IN WITNESS WHEREOF, the Company has caused this Amended and Restated Warrant to Purchase Common Stock to be duly executed as of the Amendment Date set out above.

FIREPOND, INC.

By:

Name: Stephen Peary

Title: Chief Financial Officer

EXHIBIT A

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

AMENDED AND RESTATED WARRANT TO PURCHASE COMMON STOCK

FIREPOND, INC.

The undersigned holder hereby exercises the right to purchase ___________________ of the shares of Common Stock (“Warrant Shares”) of Firepond, Inc., a Delaware corporation (the “Company”), evidenced by the attached Amended and Restated Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

1.           Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

__________ a “Cash Exercise” in respect of __________ Warrant Shares; and/or

__________ a “Cashless Exercise” in respect of __________ Warrant Shares.

2.           Payment of Exercise Price. In the event that the holder has elected a Cash Exercise in respect of some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $____________________ to the Company in accordance with the terms of the Warrant.

3.           Delivery of Warrant Shares. The Company shall deliver to the holder Warrant Shares in accordance with the terms of the Warrant.

Date: __________________ __,                                                                           

  Name of Registered Holder

By:           

Name:

Title:

ACKNOWLEDGMENT

The Company hereby acknowledges this Exercise Notice and hereby directs Corporate Stock Transfer to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated ____________________ from the Company and acknowledged and agreed to by Corporate Stock Transfer.

FIREPOND, INC.

By:

Name:

Title:

EX-99.3

AMENDED AND RESTATED COLLATERAL AGENCY AND SECURITY AGREEMENT

AMENDED AND RESTATED COLLATERAL AGENCY AND SECURITY AGREEMENT, dated as of April 24, 2008 (this “Agreement”) made by Firepond, Inc., a Delaware corporation (the “Company”), in favor of THE BANK OF NEW YORK, a New York banking corporation, in its capacity as collateral agent for the Holders (as defined below) (in such capacity and together with its successors in such capacity, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, the Company and The Bank of New York, as Trustee (the “Trustee”) are parties to an Indenture, dated as of January 24, 2007 (as the same was amended and modified by Supplemental Indenture No. 1 dated August 1, 2007 and Supplemental Indenture No. 2 dated February 5, 2008, the “Indenture”), providing, subject to the terms and conditions thereof, for the issuance by the Company of certain “Notes” (as defined in the Indenture) (as such Notes may be amended, restated, replaced, or otherwise modified from time to time in accordance with the terms thereof, collectively, the “Existing Notes”);

WHEREAS, the Company is entering into (i) the Amended and Restated Senior Secured Convertible Notes (the “Amended Cap Notes”) and (ii) the Amendment and Exchange Agreements, dated as of the date hereof with each Investor (as defined therein) (each as amended, restated or otherwise modified from time to time, an “Exchange Agreement” or collectively the “Exchange Agreements”), pursuant to which, among other things, the Company shall exchange such Investor’s Existing Notes for the “Amended Cap Notes” (as such Amended Cap Notes may be amended, restated, replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the “Notes”) and the Indenture shall be terminated;

WHEREAS, contemporaneously with the consummation of the transactions contemplated by the Indenture, the Company entered into a Security Agreement, dated as of January 24, 2007, in favor of the Collateral Agent (the “Existing Security Agreement”); and

WHEREAS, it is a condition precedent to the Investor exchanging the Existing Notes for the Amended Cap Notes pursuant to the Exchange Agreement that the Company shall amend and restate the Existing Security Agreement to secure all of the Company’s obligations under the Notes.

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Investors to enter into the Exchange Agreements, the Company agrees with the Collateral Agent, for the benefit of the Investors and the Holders, as follows:

SECTION 1.Definitions.

(a)All terms used in this Agreement and the recitals hereto which are defined in the Exchange Agreements, the Notes or in Articles 8 or 9 of the Uniform Commercial Code (the “Code”) as in effect from time to time in the State of New York, and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute.

(b)The following terms shall have the respective meanings provided for in the Code: “Accounts”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”, “Record”, “Security Account”, “Software”, and “Supporting Obligations”.

(c)As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

“Cash Interest Prepayment Amount” means the amount of interest prepaid on the Notes pursuant to the Exchange Agreements.

“Copyright Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Company as licensee or licensor and providing for the grant of any right to use or sell any works covered by any copyright (including, without limitation, all Copyright Licenses set forth in Schedule II hereto).

“Copyrights” means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by the Company, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“CWC” means CWC Holdings, LLC, a Texas limited liability company.

“Event of Default” shall have the meaning set forth in the Notes.

“Holders” means the holders of the Notes.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Intellectual Property” means the Copyrights, Trademarks and Patents.

“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.

“Patent Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Company as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses set forth in Schedule II hereto).

“Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how and formulae described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“Permitted Liens” means (i) Liens for taxes not yet due and payable; (ii) unrecorded workmen’s and servicemen’s liens in the ordinary course of business; (iii) Liens securing purchase money security obligations not in excess of $500,000 in the aggregate; (iv) Liens held by the Collateral Agent to secure the Obligations; or (v) Liens in support of the Permitted Indebtedness (as defined in the Notes).

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and a government or any department or agency thereof.

“Required Holders” means the holders of the Notes representing at least a majority of the aggregate principal amount of the Notes then outstanding.

“Special Purpose Acquisition Subsidiary” means any Subsidiary that has been acquired by the Company, or any Subsidiary of the Company that is formed for the purpose of making an acquisition.

“Subsidiary” means, in respect of any Person, (a) any corporation or other business entity of which 50% or more of the total voting power of shares of capital stock or other equity interest entitled (without regard to the occurrence of any contingence) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the subsidiaries of that Person (or a combination thereof) and (b) any partnership (i) the sole partner or managing general partner of which is such Person or a subsidiary of such Person or (ii) the only general partners of which are such Person or of one or more subsidiaries of such Person (or any combination thereof); provided, however, that in no event shall CWC be deemed a Subsidiary of the Company.

“Trademark Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Company as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by the Company and now or hereafter covered by such licenses (including, without limitation, all Trademark Licenses described in Schedule II hereto).

“Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by the Company (including, without limitation, all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of the Company relating to the distribution of products and services in connection with which any of such marks are used.

“Transaction Documents” shall have the meaning provided to such term in the Exchange Agreement.

SECTION 2.Grant of Security Interest.

As collateral security for all of the “Obligations” (as defined in Section 3 hereof), the Company hereby pledges and assigns to the Collateral Agent for the benefit of the Holders, and grants to the Collateral Agent for the benefit of the Holders a continuing security interest in, all personal property of the Company, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible (collectively, the “Collateral”), including, without limitation, the following:

(a)all Accounts, except as otherwise provided for in this Agreement;

(b)all equity interests in Subsidiaries of the Company after the date hereof;

(c)all Chattel Paper (whether tangible or electronic);

(d)the Commercial Tort Claims specified on Schedule VI hereto;

(e)all Deposit Accounts, all cash, and all other property from time to time deposited therein and the monies and property in the possession or under the control of the Collateral Agent or any Holder or any affiliate, representative, agent or correspondent of the Collateral Agent or Holder;

(f)all Documents;

(g)all Equipment;

(h)all Fixtures;

(i)all General Intangibles (including, without limitation, all Payment Intangibles);

(j)all Goods;

(k)all Instruments (including, without limitation, Promissory Notes and each certificated Security);

(l)all Inventory;

(m)all Investment Property;

(n)all Copyrights, Patents and Trademarks, and all Licenses;

(o)all Letter-of-Credit Rights;

(p)all Supporting Obligations;

(q)all other tangible and intangible personal property of the Company (whether or not subject to the Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of the Company described in the preceding clauses of this Section 2 (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by the Company in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of the Company or any other Person from time to time acting for the Company that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 2 or are otherwise necessary or helpful in the collection or realization thereof; and

(r)all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;

in each case howsoever the Company’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

Notwithstanding the foregoing, the parties agree that “Collateral” shall exclude the following: (i) any cash amounts paid to the Collateral Agent on the date hereof, (ii) any Cash Interest Prepayment Amount paid on the date hereof to any of the investors signatory to the Exchange Agreements (the “Investors”) and (iii) the Company’s interest in CWC.

SECTION 3.Security for Obligations.

The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (collectively, the “Obligations”):

(a)the payment by the Company, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Notes and the other Transaction Documents, and

(b)the due performance and observance by the Company of all of its other obligations from time to time existing in respect of any of the Transaction Documents, including without limitation, with respect to any conversion or redemption rights of the Holders under the Notes, for so long as the Notes are outstanding.

SECTION 4.Representations and Warranties.

The Company represents and warrants as follows:

(a)Schedule I hereto sets forth (i) the exact legal name of the Company, and (ii) the organizational identification number of the Company or states that no such organizational identification number exists.

(b)There is no pending or notice threatening any action, suit, proceeding or claim affecting the Company before any governmental authority or any arbitrator, or any order, judgment or award by any governmental authority or arbitrator, that may adversely affect the grant by the Company, or the perfection, of the security interest purported to be created hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.

(c)All Federal, state and local tax returns and other reports required by applicable law to be filed by the Company have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon the Company or any property of the Company (including, without limitation, all federal income and social security taxes on employees’ wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with generally accepted accounting principles consistently applied (“GAAP”).

(d)All Equipment, Fixtures, Goods and Inventory of the Company now existing are, and all Equipment, Fixtures, Goods and Inventory of the Company hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto, except that the Company will give the Collateral Agent not less than 30 days’ prior written notice of any change of the location of any such Collateral, other than to locations set forth on Schedule III and with respect to which the Company, on behalf of the Collateral Agent, has filed financing statements and otherwise fully perfected the Collateral Agent’s Liens thereon. The Company’s chief place of business and chief executive office, the place where the Company keeps its Records concerning Accounts and all originals of all Chattel Paper are located at the addresses specified therefor in Schedule III hereto. None of the Accounts is evidenced by Promissory Notes or other Instruments. Set forth in Schedule IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) each Promissory Note and other Instrument owned by the Company and (ii) each Deposit Account, Securities Account and Commodities Account of the Company, together with the name and address of each institution at which each such Account is maintained, the account number for each such Account and a description of the purpose of each such Account. Set forth in Schedule I hereto is a complete and correct list of each trade name used by the Company and the name of, and each trade name used by, each person from which the Company has acquired any substantial part of the Collateral.

(e)The Company has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II hereto, including all schedules and exhibits thereto, which represents all of the Licenses existing on the date of this Agreement. Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of the Company or any of its affiliates in respect thereof. Each material License now existing is, and any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms. No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party.

(f)The Company owns and controls, or otherwise possesses adequate rights to use, all Trademarks, Patents and Copyrights, which are the only trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity necessary to conduct its business in substantially the same manner as conducted as of the date hereof. Schedule II hereto sets forth a true and complete list of all registered Copyrights, issued Patents, Trademarks, and Licenses actually owned or used by the Company as of the date hereof. To the best knowledge of the Company except as otherwise disclosed on Schedule II hereto, all such Intellectual Property of the Company is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual Property is the subject of any licensing or franchising agreement. The Company has no knowledge of any conflict with the rights of others to any Intellectual Property and, to the best knowledge of the Company, the Company is not now infringing or in conflict with any such rights of others in any material respect, and to the best knowledge of the Company, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by the Company. The Company has not received any notice that it is violating or has violated the trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.

(g)The Company is the sole and exclusive owner of, or otherwise has and will have adequate rights in, the Collateral free and clear of any Liens, except for Permitted Liens on any Collateral. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as may have been filed in favor of the Collateral Agent relating to this Agreement or with respect to Permitted Liens.

(h)The exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual restriction binding on or otherwise affecting the Company or any of its properties and will not result in or require the creation of any Lien, upon or with respect to any of its properties.

(i)No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body, or any other Person, is required for (i) the grant by the Company, or the perfection, of the security interest purported to be created hereby in the Collateral, or (ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements, all of which financing statements, have been duly filed and are in full force and effect, (B) with respect to the perfection of the security interest created hereby in the Intellectual Property, for the recording of the appropriate Assignment for Security, substantially in the form of Exhibit A hereto, as applicable, in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and (C) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to the Intellectual Property and Licenses.

(j)This Agreement creates in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral, as security for the Obligations.

(k)As of the date hereof, the Company does not hold any Commercial Tort Claims nor is aware of any such pending claims, except for such claims described in Schedule VI.

SECTION 5.Covenants as to the Collateral»

. So long as any of the Obligations shall remain outstanding, unless the Collateral Agent shall otherwise consent in writing, after the approval of the Required Holders:

(a)Further Assurances.  The Company will at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action as is necessary or otherwise as the Collateral Agent may reasonably request (such request to be made at the written direction of the Required Holders) in order to: (i) perfect and protect the security interest purported to be created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) otherwise effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously all Chattel Paper and each License and each of its Records pertaining to the Collateral with a legend, indicating that such Chattel Paper, License or Collateral is subject to the security interest created hereby, (B) delivering and pledging to the Collateral Agent hereunder each Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter owned by the Company, duly endorsed and accompanied by executed instruments of transfer or assignment, (C) executing and filing (to the extent, if any, that the Company’s signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, as may be necessary or desirable or that the Collateral Agent may request in order to perfect and preserve the security interest purported to be created hereby, (D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request, all in reasonable detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral Agent’s security interest created hereby and obtaining a written acknowledgment from such Person that such Person holds possession of the Collateral for the benefit of the Collateral Agent, (F) if at any time after the date hereof, the Company acquires or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by the Company setting forth a brief description of such Commercial Tort Claim and granting to the Collateral Agent a security interest therein and in the proceeds thereof, which writing shall incorporate the provisions hereof, (G) upon the acquisition after the date hereof by the Company of any motor vehicle or other Equipment subject to a certificate of title or ownership (other than a motor vehicle or Equipment that is subject to a purchase money security interest), causing the Collateral Agent to be listed as the lienholder on such certificate of title or ownership and delivering evidence of the same to the Collateral Agent; and (H) taking all actions required by any earlier versions of the Code or by other law, as applicable, in any relevant Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

(b)Location of Equipment and Inventory. The Company will keep the Equipment and Inventory at the locations specified therefor in Schedule III hereof or, at such other locations in the United States; provided that the Company shall provide the Collateral Agent with a new Schedule V hereto indicating each new location of the Equipment and Inventory within five (5) business days of any such change in location.

(c)Condition of Equipment.  The Company will maintain or cause the Equipment (necessary or useful to its business) to be maintained and preserved in good condition, repair and working order, ordinary wear and tear and insured casualty excepted, and will forthwith, or in the case of any loss or damage to any Equipment of the Company within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Collateral Agent may request to such end. The Company will promptly furnish to the Collateral Agent a written statement describing in reasonable detail any such loss or damage in excess of $150,000 to any Equipment.

(d)Taxes, Etc.  The Company agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.

(e)Insurance.

(i)The Company will, at its own expense, maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated. Each such policy for liability insurance shall provide for all losses to be paid on behalf of the Collateral Agent and the Company as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent. Each such policy shall in addition (A) name the Collateral Agent as an additional insured party thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as its interests may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding any action, inaction or breach of representation or warranty by the Company, (C) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that at least 30 days’ prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the Collateral Agent by the insurer. The Company will, if so requested by the Collateral Agent, deliver to the Collateral Agent original or duplicate policies of such insurance and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance. The Company will also, at the request of the Collateral Agent, following a written request to the Collateral Agent by the Required Holders, execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.

(ii)Reimbursement under any liability insurance maintained by the Company pursuant to this Section 5(e) may be paid directly to the Person who shall have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment or Inventory, any proceeds of insurance maintained by the Company pursuant to this Section 5(e) shall be paid to the Collateral Agent (except as to which paragraph (iii) of this Section 5(e) is not applicable), the Company will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by the Company pursuant to this Section 5(e) shall be paid by the Collateral Agent to the Company, at the written request of the Company, as reimbursement for the costs of such repairs or replacements.

(iii)All insurance payments in respect of such Equipment or Inventory shall be paid to the Collateral Agent and applied as specified in Section 7(b) hereof.

(f)Provisions Concerning the Accounts and the Licenses.

(i)The Company will (A) give the Collateral Agent at least 30 days’ prior written notice of any change in the Company’s name, identity or organizational structure, (B) maintain its jurisdiction of incorporation as set forth in Schedule I hereto, (C) immediately notify the Collateral Agent, in writing, upon obtaining an organizational identification number, if on the date hereof the Company did not have such identification number, and (D) keep adequate records concerning the Accounts and Chattel Paper and permit representatives of the Collateral Agent during normal business hours on reasonable notice to the Company, to inspect and make abstracts from such Records and Chattel Paper.

(ii)The Company will, except as otherwise provided in this subsection (f), continue to collect, at its own expense, all amounts due or to become due under the Accounts. In connection with such collections, the Company may (and, at the Collateral Agent’s direction (such direction to be given at the written request of the Required Holders), will) take such action as the Company or the Collateral Agent may reasonably deem necessary or advisable to enforce collection or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default, to notify the account debtors or obligors under any Accounts of the assignment of such Accounts to the Collateral Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Company thereunder directly to the Collateral Agent or its designated agent and, upon such notification and at the expense of the Company and to the extent permitted by law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Company might have done. After receipt by the Company of a notice from the Collateral Agent that an Event of Default has occurred and that the Collateral Agent has notified, intends to notify, or has enforced or intends to enforce the Company ‘s rights against the account debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received by the Company in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of the Company and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash collateral and applied as specified in Section 7(b) hereof, and (B) the Company will not adjust, settle or compromise the amount or payment of any Account or release wholly or partly any account debtor or obligor thereof or allow any credit or discount thereon. In addition, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may and, at the written request of the Required Holders, shall direct any or all of the banks and financial institutions with which the Company either maintains a Deposit Account or a lockbox or deposits the proceeds of any Accounts to send immediately to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all or a portion of such securities, cash, investments and other items held by such institution. Any such securities, cash, investments and other items so received by the Collateral Agent shall (in the sole and absolute discretion of the Collateral Agent) be held as additional Collateral for the Obligations or distributed in accordance with Section 7 hereof.

(iii)Upon the occurrence and during the continuance of any breach or default under any material License referred to in Schedule II hereto by any party thereto other than the Company, the Company will, promptly after obtaining knowledge thereof, give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such breach or default, or will obtain or acquire an appropriate substitute License.

(iv)The Company will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights or affect any of its obligations thereunder, together with a copy of any reply by the Company thereto.

(v)The Company will exercise promptly and diligently each and every right which it may have under each material License (other than any right of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take all action reasonably necessary to maintain such Licenses in full force and effect. The Company will not, without the prior written consent of the Collateral Agent (to be given at the written direction of the Required Holders), cancel, terminate, amend or otherwise modify in any respect, or waive any provision of, any material License referred to in Schedule II hereto.

(g)Transfers and Other Liens.

(i)The Company will not sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral, except (A) Inventory in the ordinary course of business, and (B) worn-out or obsolete assets not necessary to the business.

(ii)The Company will not create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.

(h)Intellectual Property.

(i)If applicable, the Company shall, upon the Collateral Agent’s written request, following a request to the Collateral Agent by the Required Holders, duly execute and deliver the applicable Assignment for Security in the form attached hereto as Exhibit A. The Company (either itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual Property in full force and effect, including, without limitation, using the proper statutory notices and markings and using the Trademarks on each applicable trademark class of goods in order to so maintain the Trademarks in full force and free from any claim of abandonment for non-use, and the Company will not (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Intellectual Property may become invalidated; provided, however, that so long as no Event of Default has occurred and is continuing, the Company shall not have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement or (C) that is substantially the same as another Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement. The Company will cause to be taken all necessary steps in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to maintain each registration of the Intellectual Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees. If any Intellectual Property (other than Intellectual Property described in the proviso to the first sentence of subsection (i) of this clause (h)) is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Company shall (x) upon learning of such infringement, misappropriation, dilution or other violation, promptly notify the Collateral Agent, in writing, and (y) to the extent the Company shall deem appropriate under the circumstances, promptly sue for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as the Company shall deem appropriate under the circumstances to protect such Intellectual Property. The Company shall furnish to the Collateral Agent from time to time upon its request statements and schedules further identifying and describing the Intellectual Property and Licenses and such other reports in connection with the Intellectual Property and Licenses as the Collateral Agent may reasonably request (such request to be made at the written request of any Holder), all in reasonable detail and promptly upon request of the Collateral Agent, following receipt by the Collateral Agent of any such statements, schedules or reports, the Company shall modify this Agreement by amending Schedule II hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which becomes part of the Collateral under this Agreement and shall execute and authenticate such documents and do such acts as shall be necessary to subject such Intellectual Property and Licenses to the Lien and security interest created by this Agreement. Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, the Company may not abandon or otherwise permit any Intellectual Property to become invalid without the prior written consent of the Collateral Agent (to be given at the written direction of the Required Holders), and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Company will take such action as appropriate under the circumstances to protect such Intellectual Property.

(ii)In no event shall the Company, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Collateral Agent prior written notice thereof. Upon request of the Collateral Agent, the Company shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably request, following a request to the Collateral Agent by the Required Holders, to evidence the Collateral Agent’s security interest hereunder in such Intellectual Property and the General Intangibles of the Company relating thereto or represented thereby, and the Company hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until the indefeasible payment in full in cash of all of the Obligations in full and the termination of each of the Transaction Documents.

(i)Deposit, Commodities and Securities Accounts. Upon the Collateral Agent’s written request, following a request to the Collateral Agent by the Required Holders, the Company shall cause each bank and other financial institution with an account referred to in Schedule IV hereto to execute and deliver to the Collateral Agent a control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly executed by the Company and such bank or financial institution, or enter into other arrangements, pursuant to which such institution shall irrevocably agree, inter alia, that (i) it will comply at any time with the instructions originated by the Collateral Agent to such bank or financial institution directing the disposition of cash, Commodity Contracts, Securities, Investment Property and other items from time to time credited to such account, without further consent of the Company, which instructions the Collateral Agent will not give to such bank or other financial institution in the absence of a continuing Event of Default, (ii) all cash, Commodity Contracts, securities, Investment Property and other items of the Company deposited with such institution shall be subject to a perfected, first priority security interest in favor of the Collateral Agent, (iii) any right of set off, banker’s Lien or other similar Lien, security interest or encumbrance shall be fully waived as against the Collateral Agent, and (iv) upon receipt of written notice from the Collateral Agent during the continuance of an Event of Default, such bank or financial institution shall immediately send to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all such cash, the value of any Commodity Contracts, Securities, Investment Property and other items held by it. The Company shall not make or maintain any Deposit Account, Commodity Account or Securities Account except for the accounts set forth in Schedule IV hereto. The provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts for which the Collateral Agent is the depositary and (ii) Deposit Accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Company’s salaried employees.

(j)Motor Vehicles.

(i)The Company shall deliver to the Collateral Agent originals of the certificates of title or ownership for all motor vehicles owned by it with a blue book value equal or in excess of $50,000, with the Collateral Agent listed as lienholder, for the benefit of the Holders.

(ii)The Company hereby appoints the Collateral Agent as its attorney-in-fact, effective the date hereof and terminating upon the termination of this Agreement, for the purpose of (A) executing on behalf of the Company title or ownership applications for filing with appropriate state agencies to enable motor vehicles now owned or hereafter acquired by the Company to be retitled and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such state agencies, and (C) executing such other documents and instruments on behalf of, and taking such other action in the name of, the Company as may be necessary or advisable to accomplish the purposes hereof (including, without limitation, for the purpose of creating in favor of the Collateral Agent a perfected Lien on the motor vehicles and exercising the rights and remedies of the Collateral Agent hereunder). This appointment as attorney-in-fact is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash and after all Transaction Documents have been terminated.

(iii)Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements for each motor vehicle covered thereby.

(iv)So long as no Event of Default shall have occurred and be continuing, upon the request of the Company, the Collateral Agent shall execute and deliver to the Company such instruments as the Company shall reasonably request, in form and substance satisfactory to the Collateral Agent, to remove the notation of the Collateral Agent as lienholder on any certificate of title for any motor vehicle; provided, however, that any such instruments shall be delivered, and the release effective, only upon receipt by the Collateral Agent of a certificate from the Company stating that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto passing to the casualty insurance company therefor in settlement of the claim for such loss) and the amount that the Company will receive as sale proceeds or insurance proceeds. Any proceeds of such sale or casualty loss shall be paid to the Collateral Agent hereunder immediately upon receipt, to be applied to the Obligations then outstanding.

(k)Control. The Company hereby agrees to take any or all action that may be necessary or desirable or that the Collateral Agent may reasonably request (such request to be made at the written direction of the Required Holders) in order for the Collateral Agent to obtain control in accordance with Sections 9-105 - 9-107 of the Code with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.

(l)Intentionally Deleted.

(m)Future Subsidiaries. If the Company shall hereafter create or acquire any Subsidiary, simultaneously with the creation or acquisition of such Subsidiary, the Company shall cause such Subsidiary to become a party to this Agreement as a grantor hereunder, and to duly execute and deliver a guaranty of the Obligations in favor of the Holders in form and substance reasonably acceptable to the Required Holders and to duly execute and/or deliver such opinions of counsel and other documents, in form and substance reasonably acceptable to the Required Holders, as the Required Holders shall reasonably request with respect thereto; provided, however, that this subsection (m) shall not apply to any Subsidiary for which the Company has provided notice to the Holders at the time of the formation thereof that such Subsidiary is a Special Purpose Acquisition Subsidiary. The Company hereby agrees that it shall not make capital contributions in excess of $10,000 in cash or property of equivalent value (or some combination thereof) to any such Special Purpose Acquisition Subsidiary.

SECTION 6.Additional Provisions Concerning the Collateral.

(a)The Company hereby (i) authorizes the Collateral Agent to cause the filing of one or more Code financing or continuation statements, and amendments thereto, relating to the Collateral and (ii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. Notwithstanding the foregoing, the Company shall at all times maintain perfected the security interest granted hereunder without further act on the part of the Collateral Agent.

(b)The Company hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead of the Company and in the name of the Company or otherwise, so long as an Event of Default shall have occurred and is continuing, to take any action and to execute any instrument, from time to time, which the Required Holders may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Company under Section 5 hereof), including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings which the Required Holders may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Collateral Agent and the Holders with respect to any Collateral, and (v) to execute assignments, licenses and other documents to enforce the rights of the Collateral Agent and the Holders with respect to any Collateral. This power is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash.

(c)For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, the Company hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to the Company) to use, assign, license or sublicense any Intellectual Property now owned or hereafter acquired by the Company, wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof. Notwithstanding anything contained herein to the contrary, but subject to any provisions of the Notes that limit the right of the Company to dispose of its property and Section 5(h) hereof, so long as no Event of Default shall have occurred and be continuing, the Company may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business. In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of the Company, execute and deliver any instruments, certificates or other documents, in the form and substance satisfactory to the Collateral Agent, which the Company shall have certified are appropriate (in the Company’s judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property). Further, upon the indefeasible payment in full in cash of all of the Obligations, the Collateral Agent (subject to Section 10(e) hereof) shall release and reassign to the Company all of the Collateral Agent’s right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever. The exercise of rights and remedies hereunder by the Collateral Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Company in accordance with the second sentence of this clause (c). The Company hereby releases the Collateral Agent from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Collateral Agent’s own gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.

(d)If the Company fails to perform any agreement contained herein, the Collateral Agent may (but is under no obligation to) itself perform, or cause performance of, such agreement or obligation, in the name of the Company or the Collateral Agent, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Company pursuant to Section 8 hereof and shall be secured by the Collateral.

(e)The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

(f)Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, the Collateral Agent shall have no duty to act outside of the United States in respect of any Collateral located in a jurisdiction other than the United States.

SECTION 7.Remedies Upon Event of Default.

If any Event of Default shall have occurred and be continuing:

(a)The Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent the Collateral Agent has not theretofore done so) and thereafter receive, for the benefit of the Collateral Agent, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require the Company to, and the Company hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient to both parties, and the Collateral Agent may enter into and occupy any premises owned or leased by the Company where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Collateral Agent’s rights and remedies hereunder or under law, without obligation to the Company in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable. The Company agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days’ notice to the Company of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Company hereby waives any claims against the Collateral Agent and the Holders arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that such the Company may have to require that all or any part of such Collateral be marshalled upon any sale (public or private) thereof. The Company hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty, (ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely effect the commercial reasonableness of any such sale of Collateral. In addition to the foregoing, (1) upon written notice to the Company from the Collateral Agent (to be given at the direction of the Required Holders), the Company shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time, upon 10 days’ prior notice to the Company, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole discretion determine; and (3) the Collateral Agent may, at any time, pursuant to the authority granted in Section 6 hereof (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of the Company, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.

(b)Any cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall, at the written direction of the Required Holders, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Collateral Agent pursuant to Section 8 hereof) in whole or in part by the Collateral Agent against, all or any part of the Obligations in such order as the Required Holders shall direct, in writing. Any surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

(c)In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Collateral Agent and the Holders are legally entitled, the Company shall be liable for the deficiency, together with interest thereon at the highest rate specified in any of the applicable Transaction Documents for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Collateral Agent to collect such deficiency.

(d)The Company hereby acknowledges that if the Collateral Agent complies with any applicable state, provincial or federal law requirements in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.

(e)The Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent that the Company lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Company hereby irrevocably waives the benefits of all such laws.

SECTION 8.Indemnity and Expenses.

(a)The Company agrees, to defend, protect, indemnify and hold the Collateral Agent, and each of its officers, directors, employees and agents, and each of the Holders harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting solely and directly from such Person’s own gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.

(b)The Company agrees to upon demand pay to the Collateral Agent the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without limitation, any Person which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder (including, but not limited to, any fees and expenses incurred by the Collateral Agent in connection with any bankruptcy proceeding), or (iv) the failure by the Company to perform or observe any of the provisions hereof.

(c)The agreements in this Section 8 shall survive repayment of the Obligations and removal or resignation of the Collateral Agent.

SECTION 9.Immunities of the Collateral Agent.

(a)No Implied Duty.  The Collateral Agent will not have any fiduciary duties nor will it have responsibilities or obligations other than those expressly assumed by it in this Agreement and the other Transaction Documents.  The Collateral Agent will not be required to take any action that is contrary to applicable law or any provision of this Agreement or the other Transaction Documents.

(b)Appointment of Agents and Advisors.  The Collateral Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, accountants, appraisers or other experts or advisors selected by it in good faith as it may reasonably require and will not be responsible for any misconduct or negligence on the part of any of them.  The Collateral Agent may consult with counsel of its selection and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c)Other Agreements.  The Collateral Agent has accepted and is bound by the Transaction Documents executed by the Collateral Agent as of the date of this Agreement and, as directed in writing by the Required Holders, the Collateral Agent shall execute additional Transaction Documents delivered to it after the date of this Agreement; provided, however, that such additional Transaction Documents do not adversely affect the rights, privileges, benefits and immunities of the Collateral Agent.  The Collateral Agent will not otherwise be bound by, or be held obligated by, the provisions of any credit agreement, indenture or other agreement governing the Obligations (other than this Agreement and the other Transaction Documents to which the Collateral Agent is a party).

(d)Solicitation of Instructions.

(i)The Collateral Agent may at any time solicit written confirmatory instructions from the Required Holders, an Officers’ Certificate of the Company or an order of a court of competent jurisdiction, as to any action that it may be requested or required to take, or that it may propose to take, in the performance of any of its obligations under this Agreement or the other Transaction Documents.

(ii)No written direction given to the Collateral Agent by the Required Holders or the Company that in the sole judgment of the Collateral Agent imposes, purports to impose or might reasonably be expected to impose upon the Collateral Agent any obligation or liability not set forth in or arising under this Agreement and the other Transaction Documents will be binding upon the Collateral Agent unless the Collateral Agent elects, at its sole option, to accept such direction.

(e)Limitation of Liability.  The Collateral Agent will not be responsible or liable for any action taken or omitted to be taken by it hereunder or under any other Transaction Document, except for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction.  In no event shall the Collateral Agent be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(f)Documents in Satisfactory Form.  The Collateral Agent will be entitled to require that all agreements, certificates, opinions, instruments and other documents at any time submitted to it, including those expressly provided for in this Agreement, be delivered to it in a form and with substantive provisions reasonably satisfactory to it.

(g)Entitled to Rely.  The Collateral Agent may seek and conclusively rely upon, and shall be fully protected in conclusively relying upon, any judicial order or judgment, upon any advice, opinion or statement of legal counsel, independent consultants and other experts selected by it in good faith and upon any certification, instruction, notice or other writing delivered to it by the Company or the Required Holders in compliance with the provisions of this Agreement without being required to determine the authenticity thereof or the correctness of any fact stated therein or the propriety or validity of service thereof.  The Collateral Agent may act in reliance upon any instrument comporting with the provisions of this Agreement or any signature reasonably believed by it to be genuine and may assume that any person purporting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof or the other Transaction Documents has been duly authorized to do so.

(h)Event of Default.  The Collateral Agent will not be required to inquire as to the occurrence or absence of any Event of Default and will not be affected by or required to act upon any notice or knowledge as to the occurrence of any Event of Default unless and until it is directed, in writing, by the Required Holders.

(i)Actions by Collateral Agent.  As to any matter not expressly provided for by this Agreement or the other Transaction Documents, the Collateral Agent will act or refrain from acting as directed by the Required Holders and will be fully protected if it does so, and any action taken, suffered or omitted pursuant to hereto or thereto shall be binding on all Holders.

(j)Security or Indemnity in favor of the Collateral Agent.  The Collateral Agent will not be required to advance or expend any funds or otherwise incur any financial liability in the performance of its duties or the exercise of its powers or rights hereunder unless it has been provided with security or indemnity reasonably satisfactory to it against any and all liability or expense which may be incurred by it by reason of taking or continuing to take such action.  The Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Holders pursuant to this Agreement, unless such Holders shall have offered to the Collateral Agent security or indemnity satisfactory to the Collateral Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

(k)Rights of the Collateral Agent.  In the event of any conflict between any terms and provisions set forth in this Agreement and those set forth in any other Transaction Document, the terms and provisions of this Agreement shall supersede and control the terms and provisions of such other Transaction Document.  In the event there is any bona fide, good faith disagreement between the other parties to this Agreement or any of the other Transaction Documents resulting in adverse claims being made in connection with Collateral held by the Collateral Agent and the terms of this Agreement or any of the other Transaction Documents do not unambiguously mandate the action the Collateral Agent is to take or not to take in connection therewith under the circumstances then existing, or the Collateral Agent is in doubt as to what action it is required to take or not to take hereunder or under the other Transaction Documents, it will be entitled to refrain from taking any action (and will incur no liability for doing so) until directed otherwise in writing by the Required Holders or by order of a court of competent jurisdiction.

(l)Limitations on Duty of Collateral Agent in Respect of Collateral.

(i)Beyond the exercise of reasonable care in the custody of Collateral in its possession, the Collateral Agent will have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Collateral Agent will not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any liens on the Collateral.  The Collateral Agent will be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and the Collateral Agent will not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.

(ii)The Collateral Agent will not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Collateral Agent, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of any Pledgor to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral.  The Collateral Agent hereby disclaims any representation or warranty to the present and future holders of the Obligations concerning the perfection of the Liens granted hereunder or in the value of any of the Collateral.

(m)Assumption of Rights, Not Assumption of Duties.  Notwithstanding anything to the contrary contained herein:

(i)each of the parties thereto will remain liable under each of the Transaction Documents (other than this Agreement) to the extent set forth therein to perform all of their respective duties and obligations thereunder to the same extent as if this Agreement had not be executed;

(ii)the exercise by the Collateral Agent of any of its rights, remedies or powers hereunder will not release such parties from any of their respective duties or obligations under the other Transaction Documents; and

(iii)the Collateral Agent will not be obligated to perform any of the obligations or duties of any of the parties thereunder other than the Collateral Agent.

(n)No Liability for Clean Up of Hazardous Materials.  In the event that the Collateral Agent is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Collateral Agent’s sole discretion may cause the Collateral Agent to be considered an “owner or operator” under any environmental laws or otherwise cause the Collateral Agent to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver.  The Collateral Agent will not be liable to any person for any environmental liability or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

SECTION 10.Resignation or Removal of Collateral Agent.

(a)Resignation or Removal of Collateral Agent.  Subject to the appointment of a successor Collateral Agent as provided in clause (b) below and the acceptance of such appointment by the successor Collateral Agent:

(i)the Collateral Agent may resign at any time by giving not less than 30 days’ notice of resignation to each Holder and the Company; and

(ii)the Collateral Agent may be removed at any time, with or without cause, by notice, in writing, from the Required Holders.

(b)Appointment of Successor Collateral Agent.  Upon any such resignation or removal, a successor Collateral Agent may be appointed by the Required Holders.  If no successor Collateral Agent has been so appointed and accepted such appointment within 30 days after the predecessor Collateral Agent gave notice of resignation or was removed, the retiring Collateral Agent may (at the expense of the Company), at its option, petition a court of competent jurisdiction for appointment of a successor Collateral Agent.  The Collateral Agent will fulfill its obligations hereunder until a successor Collateral Agent has accepted its appointment as Collateral Agent and the provisions of clause (c) have been satisfied.

(c)Succession.  When the Person so appointed as successor Collateral Agent accepts such appointment:

(i)such Person will succeed to and become vested with all the rights, powers, privileges and duties of the predecessor Collateral Agent, and the predecessor Collateral Agent will be discharged from its duties and obligations hereunder; and

(ii)the predecessor Collateral Agent will (at the expense of the Company) upon payment of all amounts owed it hereunder, promptly transfer all liens and collateral security and other property within its possession or control to the possession or control of the successor Collateral Agent and will execute instruments and assignments as may be necessary or desirable or reasonably requested by the successor Collateral Agent to transfer to the successor Collateral Agent all liens, interests, rights, powers and remedies of the predecessor Collateral Agent in respect of the Transaction Documents. Thereafter the predecessor Collateral Agent will remain entitled to enforce the immunities granted to it in Section 9 and the provisions set forth in Section 8.

(d)Merger, Conversion or Consolidation of Collateral Agent.  Any person into which the Collateral Agent may be merged or converted or with which it may be consolidated, or any person resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any person succeeding to all or substantially all the corporate trust business of the Collateral Agent shall be the successor of the Collateral Agent pursuant to clause (d) above, provided that (i) without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto, except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.

SECTION 11.Notices, Etc.

All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail, postage prepaid and return receipt requested), telecopied or delivered, if to the Company at its address specified below and if to the Collateral Agent to it, at its address specified below; or as to any such Person, at such other address as shall be designated by such Person in a written notice to such other Person complying as to delivery with the terms of this Section 11. All such notices and other communications shall be effective if sent by certified mail, return receipt requested, when received.

SECTION 12.Miscellaneous.

(a)No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the parties hereto, and no waiver of any provision of this Agreement, and no consent to any departure by the Company therefrom, shall be effective unless it is in writing and signed by the Collateral Agent and the Required Holders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b)No failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right hereunder or under any of the other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Collateral Agent or any Holder provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Collateral Agent or any Holder under any of the other Transaction Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights under any of the other Transaction Documents against such party or against any other Person, including but not limited to, the Company.

(c)All rights of the Collateral Agent hereunder, the security interest created hereby and all obligations of the Company hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any Transaction Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Transaction Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company in respect of the Obligations or this Agreement.

(d)Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(e)This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the indefeasible payment in full in cash of the Obligations, and (ii) be binding on the Company and all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of the Collateral Agent and the Holders hereunder, to the benefit of the Collateral Agent and the Holders and their respective permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, without notice to the Company, the Collateral Agent and the Holders may assign or otherwise transfer their rights and obligations under this Agreement and any of the other Transaction Documents to any other Person (subject to the terms of the Transaction Documents) and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Collateral Agent and the Holders herein or otherwise. Upon any such assignment or transfer, all references in this Agreement to the Collateral Agent or any such Holder shall mean the assignee of the Collateral Agent or such Holder. None of the rights or obligations of the Company hereunder may be assigned or otherwise transferred and any such assignment or transfer without the consent of the Collateral Agent shall be null and void.

(f)Upon the indefeasible payment in full in cash of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the Company, and (ii) the Collateral Agent will, upon the Company’s written request and at the Company’s expense, (A) return to the Company such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to the Company such documents as the Company shall reasonably request (in form and substance satisfactory to the Collateral Agent) to evidence such termination, all without any representation, warranty or recourse whatsoever.

(g)THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

(h)ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

(i)EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

(j)The Company irrevocably consents to the service of process of any of the aforesaid courts in any such action, suit or proceeding by the mailing of copies thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address provided herein, such service to become effective ten (10) days after such mailing.

(k)Nothing contained herein shall affect the right of the Collateral Agent to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Company or any property of the Company in any other jurisdiction.

(l)The Company irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

(m)Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(n)This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together constitute one in the same Agreement.

(o)In connection with its appointment and acting hereunder, the Collateral Agent is entitled to all rights, privileges, protections, benefits, immunities and indemnities provided to it as Collateral Agent under the other Transaction Documents.

(p)In no event shall the Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of god, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Collateral Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

(q)The parties hereto hereby acknowledge and agree that this Agreement shall amend, restate, modify, extend, renew and continue the terms and provisions contained in the Existing Security Agreement and shall not extinguish or release the Company from any liability under the Existing Security Agreement or otherwise constitute a novation of its obligations thereunder.

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EX-99.4

AMENDED AND RESTATED SECURITY AGREEMENT

AMENDED AND RESTATED SECURITY AGREEMENT, dated as of April 24, 2008 (this “Agreement”) made by Firepond, Inc. (formerly, FP Technology, Inc., a Delaware Corporation) (the “Company”), in favor of Radcliffe SPC, Ltd. for and on behalf of the Class A Segregated Portfolio, a Cayman Islands segregated portfolio company, in its capacity as collateral agent for the Holders (as defined below) (in such capacity and together with its successors in such capacity, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, the Company and each party listed as a “Buyer” on the Schedule of Buyers attached to the Securities Purchase Agreement (as defined below) (collectively, the “Buyers”) are parties to the Securities Purchase Agreement, dated as of August 1, 2007 (the “Existing Securities Purchase Agreement” and as amended by the Exchange Agreement (defined below) and as may be further amended, restated, replaced or otherwise modified from time to time, the “Securities Purchase Agreement”), pursuant to which the Company sold, and the Buyers purchased certain “Notes” (as defined therein) to be issued pursuant thereto (as such Notes may be amended, restated, replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the “Original Notes”);

WHEREAS, the Company and each Investor (as defined in the Exchange Agreements) are entering into a Amendment and Exchange Agreement, dated as of the date hereof (as amended, restated or otherwise modified from time to time, each an “Exchange Agreement” and collectively, the “Exchange Agreements”), pursuant to which, among other things, the Company shall exchange the Original Notes held by such Investor for the “Exchanged Bridge Notes” (as defined in the Exchange Agreements) (as such Notes may be amended, restated, replaced or otherwise modified from time to time in accordance with the terms thereof, collectively, the “Notes”);

WHEREAS, contemporaneously with the consummation of the transactions contemplated by the Existing Securities Purchase Agreement, the Company entered into a Security Agreement, dated as of August 2, 2007, in favor of the Collateral Agent (the “Existing Security Agreement”); and

WHEREAS, it is a condition precedent to the Investor exchanging the Existing Notes for the Exchanged Bridge Notes pursuant to the Exchange Agreement that the Company shall amend and restate the Existing Security Agreement to secure all of the Company’s obligations under the Notes and the “Transaction Documents” (as defined in the Exchange Agreements); and

WHEREAS, the Company has determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best interest of, the Company.

NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Investors to enter into the Exchange Agreements, the Company agrees with the Collateral Agent, for the benefit of the Holders, as follows:

Section 1.Definitions.

(a)Reference is hereby made to the Exchange Agreement and the Notes for a statement of the terms thereof.  All terms used in this Agreement and the recitals hereto which are defined inthe Exchange Agreement, the Notes or in Articles 8 or 9 of the Uniform Commercial Code (the “Code”) as in effect from time to time in the State of New York, and which are not otherwise defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the Code as in effect in the State of New York on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of such statute except as the Collateral Agent may otherwise determine.

(b)The following terms shall have the respective meanings provided for in the Code:  “Accounts”, “Cash Proceeds”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”, “Record”, “Security Account”, “Software”, and “Supporting Obligations”.

(c)As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:

“Copyright Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Company as licensee or licensor and providing for the grant of any right to use or sell any works covered by any copyright (including, without limitation, all Copyright Licenses set forth in Schedule II hereto).

“Copyrights” means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression, acquired or used by the Company, all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“CWC” means CWC Holdings, LLC, a Texas limited liability Company.

“Event of Default” shall have the meaning set forth in the Notes.

“Holders” means the holders of the Notes.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code (Chapter 11 of Title 11 of the United States Code) or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Intellectual Property” means the Copyrights, Trademarks and Patents.

“Licenses” means the Copyright Licenses, the Trademark Licenses and the Patent Licenses.

“Lien” means any mortgage, deed of trust, pledge, lien (statutory or otherwise), security interest, charge or other encumbrance or security or preferential arrangement of any nature, including, without limitation, any conditional sale or title retention arrangement, any capitalized lease and any assignment, deposit arrangement or financing lease intended as, or having the effect of, security.

“Patent Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Company as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses set forth in Schedule II hereto).

“Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how and formulae described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.

“Permitted Liens” means (i) Liens for taxes not yet due and payable; (ii) unrecorded workmen’s and servicemen’s liens in the ordinary course of business; (iii) Liens securing purchase money security obligations not in excess of $500,000 in the aggregate; (iv) Liens held by the Collateral Agent to secure the Obligations; or (v) Liens in support of the Permitted Indebtedness (as defined in the Notes).

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity  and a government or any department or agency thereof.

“Required Holders” means the holders of the Notes representing at least a majority of the aggregate principal amount of the Notes then outstanding.

“Special Purpose Acquisition Subsidiary” means any Subsidiary that has been acquired by the Company, or any Subsidiary of the Company that is formed for the purpose of making an acquisition.

“Subsidiary” means, in respect of any Person, (a) any corporation or other business entity of which 50% or more of the total voting power of shares of capital stock or other equity interest entitled (without regard to the occurrence of any contingence) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the subsidiaries of that Person (or a combination thereof) and (b) any partnership (i) the sole partner or managing general partner of which is such Person or a subsidiary of such Person or (ii) the only general partners of which are such Person or of one or more subsidiaries of such Person (or any combination thereof); provided, however, that in no event shall CWC be deemed a Subsidiary of the Company.

“Trademark Licenses” means all licenses, contracts or other agreements, whether written or oral, naming the Company as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by the Company and now or hereafter covered by such licenses (including, without limitation, all Trademark Licenses described in Schedule II hereto).

“Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles of like nature, now or hereafter owned, adopted, acquired or used by the Company (including, without limitation, all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and all customer lists, formulae and other Records of the Company relating to the distribution of products and services in connection with which any of such marks are used.

“Transaction Documents” shall have the meaning provided to such term in the Exchange Agreements.

Section 2.Grant of Security Interest.  As collateral security for all of the “Obligations” (as defined in Section 3 hereof), the Company hereby pledges and assigns to the Collateral Agent for the benefit of the Holders, and grants to the Collateral Agent for the benefit of the Holders a continuing security interest in, all personal property of the Company, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible (collectively, the “Collateral”), including, without limitation, the following:

(a)all Accounts, except as otherwise provided for in this Agreement;

(b)all equity interests in Subsidiaries of the Company after the date hereof;

(c)all Chattel Paper (whether tangible or electronic);

(d)the Commercial Tort Claims specified on Schedule VI hereto;

(e)all Deposit Accounts, all cash, and all other property from time to time deposited therein and the monies and property in the possession or under the control of the Collateral Agent or any Holder or any affiliate, representative, agent or correspondent of the Collateral Agent or Holder;

(f)all Documents;

(g)all Equipment;

(h)all Fixtures;

(i)all General Intangibles (including, without limitation, all Payment Intangibles);

(j)all Goods;

(k)all Instruments (including, without limitation, Promissory Notes and each certificated Security);

(l)all Inventory;

(m)all Investment Property;

(n)all Copyrights, Patents and Trademarks, and all Licenses;

(o)all Letter-of-Credit Rights;

(p)all Supporting Obligations;

(q)all other tangible and intangible personal property of the Company (whether or not subject to the Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of the Company described in the preceding clauses of this Section 2 (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by the Company in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of the Company or any other Person from time to time acting for the Company that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 2 or are otherwise necessary or helpful in the collection or realization thereof; and

(r)all Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral;

in each case howsoever the Company’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

Notwithstanding the foregoing, the parties agree that “Collateral” shall exclude the following: (i) any cash amounts paid to the CAP Collateral Agent (as defined in the Exchange Agreements) on the Closing Date (as defined in the Exchange Agreements), (ii) any Cash Interest Prepayment Amount (as defined in the Exchange Agreements) paid to any of the Investors (as defined in the Exchange Agreements) on the Closing Date and (iii) the Company’s interest in CWC Holdings LLC.

Section 3.Security for Obligations.  The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (collectively, the “Obligations”):

(a)the payment by the Company, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise), of all amounts from time to time owing by it in respect of the Notes and the other Transaction Documents, and

(b)the due performance and observance by the Company of all of its other obligations from time to time existing in respect of any of the Transaction Documents, including without limitation, with respect to any conversion or redemption rights of the Holders under the Notes, for so long as the Notes are outstanding.

Section 4.Representations and Warranties.  The Company represents and warrants as follows:

(a)Schedule I hereto sets forth (i) the exact legal name of the Company, and (ii) the organizational identification number of the Company or states that no such organizational identification number exists.

(b)There is no pending or notice threatening any action, suit, proceeding or claim affecting the Company before any governmental authority or any arbitrator, or any order, judgment or award by any governmental authority or arbitrator, that may adversely affect the grant by the Company, or the perfection, of the security interest purported to be created hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.

(c)All Federal, state and local tax returns and other reports required by applicable law to be filed by the Company have been filed, or extensions have been obtained, and all taxes, assessments and other governmental charges imposed upon the Company or any property of the Company (including, without limitation, all federal income and social security taxes on employees’ wages) and which have become due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have been set aside for the payment thereof in accordance with generally accepted accounting principles consistently applied (“GAAP”).

(d)All Equipment, Fixtures, Goods and Inventory of the Company now existing are, and all Equipment, Fixtures, Goods and Inventory of the Company hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto, except that the Company will give the Collateral Agent not less than 30 days’ prior written notice of any change of the location of any such Collateral, other than to locations set forth on Schedule III and with respect to which the Company, on behalf of the Collateral Agent has filed financing statements and otherwise fully perfected the Collateral Agent’s Liens thereon.  The Company’s chief place of business and chief executive office, the place where the Company keeps its Records concerning Accounts and all originals of all Chattel Paper are located at the addresses specified therefor in Schedule III hereto.  None of the Accounts is evidenced by Promissory Notes or other Instruments.  Set forth in Schedule IV hereto is a complete and accurate list, as of the date of this Agreement, of (i) each Promissory Note and other Instrument owned by the Company and (ii) each Deposit Account, Securities Account and Commodities Account of the Company, together with the name and address of each institution at which each such Account is maintained, the account number for each such Account and a description of the purpose of each such Account.  Set forth in Schedule I hereto is a complete and correct list of each trade name used by the Company and the name of, and each trade name used by, each person from which the Company has acquired any substantial part of the Collateral.

(e)The Company has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II hereto, including all schedules and exhibits thereto, which represents all of the Licenses existing on the date of this Agreement.  Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of the Company or any of its affiliates in respect thereof.  Each material License now existing is, and any material License entered into in the future will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms.  No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party.

(f)The Company owns and controls, or otherwise possesses adequate rights to use, all Trademarks, Patents and Copyrights, which are the only trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity necessary to conduct its business in substantially the same manner as conducted as of the date hereof.  Schedule II hereto sets forth a true and complete list of all registered Copyrights, issued Patents, Trademarks, and Licenses actually owned or used by the Company as of the date hereof.  To the best knowledge of the Company except as otherwise disclosed on Schedule II hereto, all such Intellectual Property of the Company is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not been abandoned in whole or in part.  Except as set forth in Schedule II, no such Intellectual Property is the subject of any licensing or franchising agreement.  The Company has no knowledge of any conflict with the rights of others to any Intellectual Property and, to the best knowledge of the Company, the Company is not now infringing or in conflict with any such rights of others in any material respect, and to the best knowledge of the Company, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by the Company.  The Company has not received any notice that it is violating or has violated the trademarks, patents, copyrights, inventions, trade secrets, proprietary information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.

(g)The Company is the sole and exclusive owner of, or otherwise has and will have adequate rights in, the Collateral free and clear of any Liens, except for Permitted Liens on any Collateral.  No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as may have been filed in favor of the Collateral Agent relating to this Agreement or with respect to Permitted Liens.

(h)The exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual restriction binding on or otherwise affecting the Company or any of its properties and will not result in or require the creation of any Lien, upon or with respect to any of its properties.

(i)No authorization or approval or other action by, and no notice to or filing with, any governmental authority or other regulatory body, or any other Person, is required for (i) the grant by the Company, or the perfection, of the security interest purported to be created hereby in the Collateral, or (ii) the exercise by the Collateral Agent of any of its rights and remedies hereunder, except (A) for the filing under the Uniform Commercial Code as in effect in the applicable jurisdiction of the financing statements, all of which financing statements, have been duly filed and are in full force and effect, (B) with respect to the perfection of the security interest created hereby in the Intellectual Property, for the recording of the appropriate Assignment for Security, substantially in the form of Exhibit A hereto, as applicable, in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and (C) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to the Intellectual Property and Licenses.

(j)This Agreement creates in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral, as security for the Obligations.

(k)As of the date hereof, the Company does not hold any Commercial Tort Claims nor is aware of any such pending claims, except for such claims described in Schedule VI.

Section 5.Covenants as to the Collateral.  So long as any of the Obligations shall remain outstanding, unless the Collateral Agent shall otherwise consent in writing after the approval of the Required Holders:

(a)Further Assurances.  The Company will at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action as is necessary or otherwise as the Collateral Agent may reasonably request (such request to be made at the written direction of the Required Holders in order to:  (i) perfect and protect the security interest purported to be created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) otherwise effect the purposes of this Agreement, including, without limitation:  (A) marking conspicuously all Chattel Paper and each License and each of its Records pertaining to the Collateral with a legend, indicating that such Chattel Paper, License or Collateral is subject to the security interest created hereby, (B)  delivering and pledging to the Collateral Agent hereunder each Promissory Note, Security, Chattel Paper or other Instrument, now or hereafter owned by the Company, duly endorsed and accompanied by executed instruments of transfer or assignment, (C) executing and filing (to the extent, if any, that the Company’s signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, as may be necessary or desirable or that the Collateral Agent may request in order to perfect and preserve the security interest purported to be created hereby, (D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request, all in reasonable detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral Agent’s security interest created hereby and obtaining a written acknowledgment from such Person that such Person holds possession of the Collateral for the benefit of the Collateral Agent, (F) if at any time after the date hereof, the Company acquires or holds any Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by the Company setting forth a brief description of such Commercial Tort Claim and granting to the Collateral Agent a security interest therein and in the proceeds thereof, which writing shall incorporate the provisions hereof, (G) upon the acquisition after the date hereof by the Company of any motor vehicle or other Equipment subject to a certificate of title or ownership (other than a motor vehicle or Equipment that is subject to a purchase money security interest), causing the Collateral Agent to be listed as the lienholder on such certificate of title or ownership and delivering evidence of the same to the Collateral Agent; and (H) taking all actions required by any earlier versions of the Code or by other law, as applicable, in any relevant Code jurisdiction, or by other law as applicable in any foreign jurisdiction.

(b)Location of Equipment and Inventory.  The Company will keep the Equipment and Inventory at the locations specified therefor in Schedule III hereof or, at such other locations in the United States; provided that the Company shall provide the Collateral Agent with a new Schedule V hereto indicating each new location of the Equipment and Inventory within five (5) business days of any such change in location.

(c)Condition of Equipment.  The Company will maintain or cause the Equipment (necessary or useful to its business) to be maintained and preserved in good condition, repair and working order, ordinary wear and tear and insured casualty excepted, and will forthwith, or in the case of any loss or damage to any Equipment of the Company within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Collateral Agent may request to such end.  The Company will promptly furnish to the Collateral Agent a written statement describing in reasonable detail any such loss or damage in excess of $150,000to any Equipment.

(d)Taxes, Etc.  The Company agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.

(e)Insurance.

(i)The Company will, at its own expense, maintain insurance (including, without limitation, commercial general liability and property insurance) with respect to the Equipment and Inventory in such amounts, against such risks, in such form and with responsible and reputable insurance companies or associations as is required by any governmental authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated.  Each such policy for liability insurance shall provide for all losses to be paid on behalf of the Collateral Agent and the Company as their respective interests may appear, and each policy for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent.  Each such policy shall in addition (A) name the Collateral Agent as an additional insured party thereunder (without any representation or warranty by or obligation upon the Collateral Agent) as its interests may appear, (B) contain an agreement by the insurer that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding any action, inaction or breach of representation or warranty by the Company, (C) provide that there shall be no recourse against the Collateral Agent for payment of premiums or other amounts with respect thereto, and (D) provide that at least 30 days’ prior written notice of cancellation, lapse, expiration or other adverse change shall be given to the Collateral Agent by the insurer.  The Company will, if so requested by the Collateral Agent, deliver to the Collateral Agent original or duplicate policies of such insurance and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker with respect to such insurance.  The Company will also, at the request of the Collateral Agent, following a written request to the Collateral Agent by the Required Holders, execute and deliver instruments of assignment of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.

(ii)Reimbursement under any liability insurance maintained by the Company pursuant to this Section 5(e) may be paid directly to the Person who shall have incurred liability covered by such insurance.  In the case of any loss involving damage to Equipment or Inventory, any proceeds of insurance maintained by the Company pursuant to this Section 5(e) shall be paid to the Collateral Agent (except as to which paragraph (iii) of this Section 5(e) is not applicable), the Company will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds of insurance maintained by the Company pursuant to this Section 5(e) shall be paid by the Collateral Agent to the Company, at the written request of the Company, as reimbursement for the costs of such repairs or replacements.

(iii)All insurance payments in respect of such Equipment or Inventory shall be paid to the Collateral Agent and applied as specified in Section 7(b) hereof.

(f)Provisions Concerning the Accounts and the Licenses.

(i)The Company will (A) give the Collateral Agent at least 30 days’ prior written notice of any change in the Company’s name, identity or organizational structure, (B) maintain its jurisdiction of incorporation as set forth in Schedule I hereto, (C) immediately notify the Collateral Agent, in writing, upon obtaining an organizational identification number, if on the date hereof the Company did not have such identification number, and (D) keep adequate records concerning the Accounts and Chattel Paper and permit representatives of the Collateral Agent during normal business hours on reasonable notice to the Company, to inspect and make abstracts from such Records and Chattel Paper.

(ii)The Company will, except as otherwise provided in this subsection (f), continue to collect, at its own expense, all amounts due or to become due under the Accounts.  In connection with such collections, the Company may (and, at the Collateral Agent’s direction, (such direction to be given at the written request of the Required Holders), will) take such action as the Company or the Collateral Agent may reasonably deem necessary or advisable to enforce collection or performance of the Accounts; provided, however, that the Collateral Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default, to notify the account debtors or obligors under any Accounts of the assignment of such Accounts to the Collateral Agent and to direct such account debtors or obligors to make payment of all amounts due or to become due to the Company thereunder directly to the Collateral Agent or its designated agent and, upon such notification and at the expense of the Company and to the extent permitted by law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as the Company might have done.  After receipt by the Company of a notice from the Collateral Agent that an Event of Default has occurred and that the Collateral Agent has notified, intends to notify, or has enforced or intends to enforce the Company ‘s rights against the account debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received by the Company in respect of the Accounts shall be received in trust for the benefit of the Collateral Agent hereunder, shall be segregated from other funds of the Company and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary endorsement) to be held as cash collateral and applied as specified in Section 7(b) hereof, and (B) the Company will not adjust, settle or compromise the amount or payment of any Account or release wholly or partly any account debtor or obligor thereof or allow any credit or discount thereon.  In addition, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may and, at the written request of the Required Holders, shall direct any or all of the banks and financial institutions with which the Company either maintains a Deposit Account or a lockbox or deposits the proceeds of any Accounts to send immediately to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all or a portion of such securities, cash, investments and other items held by such institution.  Any such securities, cash, investments and other items so received by the Collateral Agent shall (in the sole and absolute discretion of the Collateral Agent) be held as additional Collateral for the Obligations or distributed in accordance with Section 7 hereof.

(iii)Upon the occurrence and during the continuance of any breach or default under any material License referred to in Schedule II hereto by any party thereto other than the Company, the Company will, promptly after obtaining knowledge thereof, give the Collateral Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such breach or default, or will obtain or acquire an appropriate substitute License.

(iv)The Company will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by it by which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights or affect any of its obligations thereunder, together with a copy of any reply by the Company thereto.

(v)The Company will exercise promptly and diligently each and every right which it may have under each material License (other than any right of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take all action reasonably necessary to maintain such Licenses in full force and effect.  The Company will not, without the prior written consent of the Collateral Agent (to be given at the written direction of the Required Holders), cancel, terminate, amend or otherwise modify in any respect, or waive any provision of, any material License referred to in Schedule II hereto.

(g)Transfers and Other Liens.

(i)The Company will not sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral, except (A) Inventory in the ordinary course of business, and (B) worn-out or obsolete assets not necessary to the business.

(ii)The Company will not create, suffer to exist or grant any Lien upon or with respect to any Collateral other than a Permitted Lien.

(h)Intellectual Property.

(i)If applicable, the Company shall, upon the Collateral Agent’s written request, following a request to the Collateral Agent by the Required Holders duly execute and deliver the applicable Assignment for Security in the form attached hereto as Exhibit A.  The Company (either itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual Property in full force and effect, including, without limitation, using the proper statutory notices and markings and using the Trademarks on each applicable trademark class of goods in order to so maintain the Trademarks in full force and free from any claim of abandonment for non-use, and the Company will not (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any Intellectual Property may become invalidated; provided, however, that so long as no Event of Default has occurred and is continuing, the Company shall not have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement or (C) that is substantially the same as another Intellectual Property that is in full force, so long the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement.  The Company will cause to be taken all necessary steps in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to maintain each registration of the Intellectual Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees.  If any Intellectual Property (other than Intellectual Property described in the proviso to the first sentence of subsection (i) of this clause (h)) is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Company shall (x) upon learning of such infringement, misappropriation, dilution or other violation, promptly notify the Collateral Agent, in writing, and (y) to the extent the Company shall deem appropriate under the circumstances, promptly sue for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as the Company shall deem appropriate under the circumstances to protect such Intellectual Property.  The Company shall furnish to the Collateral Agent from time to time upon its request statements and schedules further identifying and describing the Intellectual Property and Licenses and such other reports in connection with the Intellectual Property and Licenses as the Collateral Agent may reasonably request (such request to be made at the written request of any Holder), all in reasonable detail and promptly upon request of the Collateral Agent, following receipt by the Collateral Agent of any such statements, schedules or reports, the Company shall modify this Agreement by amending Schedule II hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which becomes part of the Collateral under this Agreement and shall execute and authenticate such documents and do such acts as shall be necessary to subject such Intellectual Property and Licenses to the Lien and security interest created by this Agreement.  Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, the Company may not abandon or otherwise permit any Intellectual Property to become invalid without the prior written consent of the Collateral Agent (to be given at the written direction of the Required Holders), and if any Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Company will take such action as appropriate under the circumstances to protect such Intellectual Property.

(ii)In no event shall the Company, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Trademark or Copyright or the issuance of any Patent with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Collateral Agent prior written notice thereof.  Upon request of the Collateral Agent, the Company shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably request, following a request to the Collateral Agent by the Required Holders, to evidence the Collateral Agent’s security interest hereunder in such Intellectual Property and the General Intangibles of the Company relating thereto or represented thereby, and the Company hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until the indefeasible payment in full in cash of all of the Obligations in full and the termination of each of the Transaction Documents.

(i)Deposit, Commodities and Securities Accounts.  Upon the Collateral Agent’s written request, following a request to the Collateral Agent by the Required Holders, the Company shall cause each bank and other financial institution with an account referred to in Schedule IV hereto to execute and deliver to the Collateral Agent a control agreement, in form and substance reasonably satisfactory to the Collateral Agent, duly executed by the Company and such bank or financial institution, or enter into other arrangements, pursuant to which such institution shall irrevocably agree, inter alia, that (i) it will comply at any time with the instructions originated by the Collateral Agent to such bank or financial institution directing the disposition of cash, Commodity Contracts, Securities, Investment Property and other items from time to time credited to such account, without further consent of the Company, which instructions the Collateral Agent will not give to such bank or other financial institution in the absence of a continuing Event of Default, (ii) all cash, Commodity Contracts, securities, Investment Property and other items of the Company deposited with such institution shall be subject to a perfected, first priority security interest in favor of the Collateral Agent, (iii) any right of set off, banker’s Lien or other similar Lien, security interest or encumbrance shall be fully waived as against the Collateral Agent, and (iv) upon receipt of written notice from the Collateral Agent during the continuance of an Event of Default, such bank or financial institution shall immediately send to the Collateral Agent by wire transfer (to such account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct) all such cash, the value of any Commodity Contracts, Securities, Investment Property and other items held by it.  The Company shall not make or maintain any Deposit Account, Commodity Account or Securities Account except for the accounts set forth in Schedule IV hereto.  The provisions of this paragraph 5(i) shall not apply to (i) Deposit Accounts for which the Collateral Agent is the depositary and (ii) Deposit Accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Company ‘s salaried employees.

(j)Motor Vehicles.

(i)The Company shall deliver to the Collateral Agent originals of the certificates of title or ownership for all motor vehicles owned by it with a blue book value equal or in excess of $50,000, with the Collateral Agent listed as lienholder, for the benefit of the Holders.

(ii)The Company hereby appoints the Collateral Agent as its attorney-in-fact, effective the date hereof and terminating upon the termination of this Agreement, for the purpose of (A) executing on behalf of the Company title or ownership applications for filing with appropriate state agencies to enable motor vehicles now owned or hereafter acquired by the Company to be retitled and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such state agencies, and (C) executing such other documents and instruments on behalf of, and taking such other action in the name of, the Company as may be necessary or advisable to accomplish the purposes hereof (including, without limitation, for the purpose of creating in favor of the Collateral Agent a perfected Lien on the motor vehicles and exercising the rights and remedies of the Collateral Agent hereunder).  This appointment as attorney-in-fact is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash and after all Transaction Documents have been terminated.

(iii)Any certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by odometer statements for each motor vehicle covered thereby.

(iv)So long as no Event of Default shall have occurred and be continuing, upon the request of the Company, the Collateral Agent shall execute and deliver to the Company such instruments as the Company shall reasonably request, in form and substance satisfactory to the Collateral Agent, to remove the notation of the Collateral Agent as lienholder on any certificate of title for any motor vehicle; provided, however, that any such instruments shall be delivered, and the release effective, only upon receipt by the Collateral Agent of a certificate from the Company stating that such motor vehicle is to be sold or has suffered a casualty loss (with title thereto passing to the casualty insurance company therefor in settlement of the claim for such loss) and the amount that the Company will receive as sale proceeds or insurance proceeds.  Any proceeds of such sale or casualty loss shall be paid to the Collateral Agent hereunder immediately upon receipt, to be applied to the Obligations then outstanding.

(k)Control.  The Company hereby agrees to take any or all action that may be necessary or desirable or that the Collateral Agent may reasonably request (such request to be made at the written direction of the Required Holders) in order for the Collateral Agent to obtain control in accordance with Sections 9-105 – 9-107 of the Code with respect to the following Collateral:  (i) Electronic Chattel Paper, (ii) Investment Property, and (iii) Letter-of-Credit Rights.

(l)Intentionally Deleted.

(m)Future Subsidiaries.  If the Company shall hereafter create or acquire any Subsidiary, simultaneously with the creation or acquisition of such Subsidiary, the Company shall cause such Subsidiary to become a party to this Agreement as a grantor hereunder, and to duly execute and deliver a guaranty of the Obligations in favor of the Holders in form and substance reasonably acceptable to the Required Holders and to duly execute and/or deliver such opinions of counsel and other documents, in form and substance reasonably acceptable to the Required Holders, as the Required Holders shall reasonably request with respect thereto; provided, however, that this subsection (m) shall not apply to any Subsidiary for which the Company has provided notice to the Holders at the time of the formation thereof that such Subsidiary is a Special Purpose Acquisition Subsidiary.  The Company hereby agrees that it shall not make capital contributions in excess of $10,000 in cash or property of equivalent value (or some combination thereof) to any such Special Purpose Acquisition Subsidiary.

Section 6.Additional Provisions Concerning the Collateral.

(a)The Company hereby (i) authorizes the Collateral Agent to cause the filing of one or more Code financing or continuation statements, and amendments thereto, relating to the Collateral and (ii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation statements, or amendments thereto, prior to the date hereof.  A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.  Notwithstanding the foregoing, the Company shall at all times maintain perfected the security interest granted hereunder without further act on the part of the Collateral Agent.

(b)The Company hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead of the Company and in the name of the Company or otherwise, so long as an Event of Default shall have occurred and is continuing, to take any action and to execute any instrument, from time to time, which the Required Holders may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Company under Section 5 hereof), including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 5(e) hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings which the Required Holders may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of the Collateral Agent and the Holders with respect to any Collateral, and (v) to execute assignments, licenses and other documents to enforce the rights of the Collateral Agent and the Holders with respect to any Collateral.  This power is coupled with an interest and is irrevocable until all of the Obligations are indefeasibly paid in full in cash.

(c)For the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, the Company hereby grants to the Collateral Agent, to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to the Company) to use, assign, license or sublicense any Intellectual Property now owned or hereafter acquired by the Company, wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.  Notwithstanding anything contained herein to the contrary, but subject to any provisions of the Notes that limit the right of the Company to dispose of its property and Section 5(h) hereof, so long as no Event of Default shall have occurred and be continuing, the Company may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business.  In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Collateral Agent shall from time to time, upon the request of the Company, execute and deliver any instruments, certificates or other documents, in the form and substance satisfactory to the Collateral Agent, which the Company shall have certified are appropriate (in the Company’s judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property).  Further, upon the indefeasible payment in full in cash of all of the Obligations, the Collateral Agent (subject to Section 10(e) hereof) shall release and reassign to the Company all of the Collateral Agent’s right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever.  The exercise of rights and remedies hereunder by the Collateral Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by the Company in accordance with the second sentence of this clause (c).  The Company hereby releases the Collateral Agent from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Collateral Agent’s own gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.

(d)If the Company fails to perform any agreement contained herein, the Collateral Agent may (but is under no obligation to) itself perform, or cause performance of, such agreement or obligation, in the name of the Company or the Collateral Agent, and the expenses of the Collateral Agent incurred in connection therewith shall be payable by the Company pursuant to Section 8 hereof and shall be secured by the Collateral.

(e)The powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.

(f)Notwithstanding anything in this Agreement to the contrary and for the avoidance of doubt, the Collateral Agent shall have no duty to act outside of the United States in respect of any Collateral located in a jurisdiction other than the United States.

Section 7.Remedies Upon Event of Default.  If any Event of Default shall have occurred and be continuing:

(a)The Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent the Collateral Agent has not theretofore done so) and thereafter receive, for the benefit of the Collateral Agent, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require the Company to, and the Company hereby agrees that it will at its expense and upon request of the Collateral Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient to both parties, and the Collateral Agent may enter into and occupy any premises owned or leased by the Company where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Collateral Agent’s rights and remedies hereunder or under law, without obligation to the Company in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or (B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially reasonable.  The Company agrees that, to the extent notice of sale or any other disposition of its respective Collateral shall be required by law, at least ten (10) days’ notice to the Company of the time and place of any public sale or the time after which any private sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification.  The Collateral Agent shall not be obligated to make any sale or other disposition of any Collateral regardless of notice of sale having been given.  The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.  The Company hereby waives any claims against the Collateral Agent and the Holders arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that such the Company may have to require that all or any part of such Collateral be marshalled upon any sale (public or private) thereof.  The Company hereby acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty, (ii) the Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions set forth in clauses (i) and (ii) above shall not adversely effect the commercial reasonableness of any such sale of Collateral.  In addition to the foregoing, (1) upon written notice to the Company from the Collateral Agent (to be given at the direction of the Required Holders), the Company shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time, upon 10 days’ prior notice to the Company, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions, and in such manner, as the Collateral Agent shall in its sole discretion determine; and (3) the Collateral Agent may, at any time, pursuant to the authority granted in Section 6 hereof (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of the Company, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.

(b)Any cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral shall, at the written direction of the Required Holders, be held by the Collateral Agent as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Collateral Agent pursuant to Section 8 hereof) in whole or in part by the Collateral Agent against, all or any part of the Obligations in such order as the Required Holders shall direct, in writing.  Any surplus of such cash or Cash Proceeds held by the Collateral Agent and remaining after the indefeasible payment in full in cash of all of the Obligations shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.

(c)In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Collateral Agent and the Holders are legally entitled, the Company shall be liable for the deficiency, together with interest thereon at the highest rate specified in any of the applicable Transaction Documents for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Collateral Agent to collect such deficiency.

(d)The Company hereby acknowledges that if the Collateral Agent complies with any applicable state, provincial or federal law requirements in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.

(e)The Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising.  To the extent that the Company lawfully may, the Company hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s rights under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, the Company hereby irrevocably waives the benefits of all such laws.

Section 8.Indemnity and Expenses.

(a)The Company agrees to defend, protect, indemnify and hold the Collateral Agent and each of its officers, directors, employees and agents, and each of the Holders harmless from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except claims, losses or liabilities resulting solely and directly from such Person’s own gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.

(b)The Company agrees to upon demand pay to the Collateral Agent the amount of any and all costs and expenses, including the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without limitation, any Person which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder (including, but not limited to, any fees and expenses incurred by the Collateral Agent in connection with any bankruptcy proceeding), or (iv) the failure by the Company to perform or observe any of the provisions hereof.

(c)The agreements in this Section 8 shall survive repayment of the Obligations and removal or resignation of the Collateral Agent.

Section 9.Immunities of the Collateral Agent.

(a)No Implied Duty.  The Collateral Agent will not have any fiduciary duties nor will it have responsibilities or obligations other than those expressly assumed by it in this Agreement and the other Transaction Documents.  The Collateral Agent will not be required to take any action that is contrary to applicable law or any provision of this Agreement or the other Transaction Documents.

(b)Appointment of Agents and Advisors.  The Collateral Agent may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, accountants, appraisers or other experts or advisors selected by it in good faith as it may reasonably require and will not be responsible for any misconduct or negligence on the part of any of them.  The Collateral Agent may consult with counsel of its selection and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c)Other Agreements.  The Collateral Agent has accepted and is bound by the Transaction Documents executed by the Collateral Agent as of the date of this Agreement and, as directed in writing by the Required Holders, the Collateral Agent shall execute additional Transaction Documents delivered to it after the date of this Agreement; provided, however, that such additional Transaction Documents do not adversely affect the rights, privileges, benefits and immunities of the Collateral Agent.  The Collateral Agent will not otherwise be bound by, or be held obligated by, the provisions of any credit agreement, indenture or other agreement governing the Obligations (other than this Agreement and the other Transaction Documents to which the Collateral Agent is a party).

(d)Solicitation of Instructions.  (i) The Collateral Agent may at any time solicit written confirmatory instructions from the Required Holders, an Officers’ Certificate of the Company or an order of a court of competent jurisdiction, as to any action that it may be requested or required to take, or that it may propose to take, in the performance of any of its obligations under this Agreement or the other Transaction Documents.

(ii)No written direction given to the Collateral Agent by the Required Holders or the Company that in the sole judgment of the Collateral Agent imposes, purports to impose or might reasonably be expected to impose upon the Collateral Agent any obligation or liability not set forth in or arising under this Agreement and the other Transaction Documents will be binding upon the Collateral Agent unless the Collateral Agent elects, at its sole option, to accept such direction.

(e)Limitation of Liability.  The Collateral Agent will not be responsible or liable for any action taken or omitted to be taken by it hereunder or under any other Transaction Document, except for its own gross negligence or willful misconduct as determined by a court of competent jurisdiction.  In no event shall the Collateral Agent be responsible or liable for special, indirect, or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Collateral Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

(f)Documents in Satisfactory Form.  The Collateral Agent will be entitled to require that all agreements, certificates, opinions, instruments and other documents at any time submitted to it, including those expressly provided for in this Agreement, be delivered to it in a form and with substantive provisions reasonably satisfactory to it.

(g)Entitled to Rely.  The Collateral Agent may seek and conclusively rely upon, and shall be fully protected in conclusively relying upon, any judicial order or judgment, upon any advice, opinion or statement of legal counsel, independent consultants and other experts selected by it in good faith and upon any certification, instruction, notice or other writing delivered to it by the Company or the Required Holders in compliance with the provisions of this Agreement without being required to determine the authenticity thereof or the correctness of any fact stated therein or the propriety or validity of service thereof.  The Collateral Agent may act in reliance upon any instrument comporting with the provisions of this Agreement or any signature reasonably believed by it to be genuine and may assume that any person purporting to give notice or receipt or advice or make any statement or execute any document in connection with the provisions hereof or the other Transaction Documents has been duly authorized to do so.

(h)Event of Default.  The Collateral Agent will not be required to inquire as to the occurrence or absence of any Event of Default and will not be affected by or required to act upon any notice or knowledge as to the occurrence of any Event of Default unless and until it is directed, in writing, by the Required Holders.

(i)Actions by Collateral Agent.  As to any matter not expressly provided for by this Agreement or the other Transaction Documents, the Collateral Agent will act or refrain from acting as directed by the Required Holders and will be fully protected if it does so, and any action taken, suffered or omitted pursuant to hereto or thereto shall be binding on all Holders.

(j)Security or Indemnity in favor of the Collateral Agent.  The Collateral Agent will not be required to advance or expend any funds or otherwise incur any financial liability in the performance of its duties or the exercise of its powers or rights hereunder unless it has been provided with security or indemnity reasonably satisfactory to it against any and all liability or expense which may be incurred by it by reason of taking or continuing to take such action.  The Collateral Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Holders pursuant to this Agreement, unless such Holders shall have offered to the Collateral Agent security or indemnity satisfactory to the Collateral Agent against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.

(k)Rights of the Collateral Agent.  In the event of any conflict between any terms and provisions set forth in this Agreement and those set forth in any other Transaction Document, the terms and provisions of this Agreement shall supersede and control the terms and provisions of such other Transaction Document.  In the event there is any bona fide, good faith disagreement between the other parties to this Agreement or any of the other Transaction Documents resulting in adverse claims being made in connection with Collateral held by the Collateral Agent and the terms of this Agreement or any of the other Transaction Documents do not unambiguously mandate the action the Collateral Agent is to take or not to take in connection therewith under the circumstances then existing, or the Collateral Agent is in doubt as to what action it is required to take or not to take hereunder or under the other Transaction Documents, it will be entitled to refrain from taking any action (and will incur no liability for doing so) until directed otherwise in writing by the Required Holders or by order of a court of competent jurisdiction.

(l)Limitations on Duty of Collateral Agent in Respect of Collateral.  (i) Beyond the exercise of reasonable care in the custody of Collateral in its possession, the Collateral Agent will have no duty as to any Collateral in its possession or control or in the possession or control of any agent or bailee or any income thereon or as to preservation of rights against prior parties or any other rights pertaining thereto and the Collateral Agent will not be responsible for filing any financing or continuation statements or recording any documents or instruments in any public office at any time or times or otherwise perfecting or maintaining the perfection of any liens on the Collateral.  The Collateral Agent will be deemed to have exercised reasonable care in the custody of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which it accords its own property, and the Collateral Agent will not be liable or responsible for any loss or diminution in the value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency or other agent or bailee selected by the Collateral Agent in good faith.

(ii)The Collateral Agent will not be responsible for the existence, genuineness or value of any of the Collateral or for the validity, perfection, priority or enforceability of the liens in any of the Collateral, whether impaired by operation of law or by reason of any action or omission to act on its part hereunder, except to the extent such action or omission constitutes gross negligence or willful misconduct on the part of the Collateral Agent, for the validity or sufficiency of the Collateral or any agreement or assignment contained therein, for the validity of the title of any Pledgor to the Collateral, for insuring the Collateral or for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral.  The Collateral Agent hereby disclaims any representation or warranty to the present and future holders of the Obligations concerning the perfection of the Liens granted hereunder or in the value of any of the Collateral.

(m)Assumption of Rights, Not Assumption of Duties.  Notwithstanding anything to the contrary contained herein:

(i)each of the parties thereto will remain liable under each of the Transaction Documents (other than this Agreement) to the extent set forth therein to perform all of their respective duties and obligations thereunder to the same extent as if this Agreement had not be executed;

(ii)the exercise by the Collateral Agent of any of its rights, remedies or powers hereunder will not release such parties from any of their respective duties or obligations under the other Transaction Documents; and

(iii)the Collateral Agent will not be obligated to perform any of the obligations or duties of any of the parties thereunder other than the Collateral Agent.

(n)No Liability for Clean Up of Hazardous Materials.  In the event that the Collateral Agent is required to acquire title to an asset for any reason, or take any managerial action of any kind in regard thereto, in order to carry out any fiduciary or trust obligation for the benefit of another, which in the Collateral Agent’s sole discretion may cause the Collateral Agent to be considered an “owner or operator” under any environmental laws or otherwise cause the Collateral Agent to incur, or be exposed to, any environmental liability or any liability under any other federal, state or local law, the Collateral Agent reserves the right, instead of taking such action, either to resign as Collateral Agent or to arrange for the transfer of the title or control of the asset to a court appointed receiver.  The Collateral Agent will not be liable to any person for any environmental liability or any environmental claims or contribution actions under any federal, state or local law, rule or regulation by reason of the Collateral Agent’s actions and conduct as authorized, empowered and directed hereunder or relating to any kind of discharge or release or threatened discharge or release of any hazardous materials into the environment.

Section 10.Resignation or Removal of Collateral Agent.

(a)Resignation or Removal of Collateral Agent.  Subject to the appointment of a successor Collateral Agent as provided in clause (b) below and the acceptance of such appointment by the successor Collateral Agent:

(i)the Collateral Agent may resign at any time by giving not less than 30 days’ notice of resignation to each Holder and the Company; and

(ii)the Collateral Agent may be removed at any time, with or without cause, by notice, in writing, from the Required Holders.

(b)Appointment of Successor Collateral Agent.  Upon any such resignation or removal, a successor Collateral Agent may be appointed by the Required Holders.  If no successor Collateral Agent has been so appointed and accepted such appointment within 30 days after the predecessor Collateral Agent gave notice of resignation or was removed, the retiring Collateral Agent may (at the expense of the Company), at its option, petition a court of competent jurisdiction for appointment of a successor Collateral Agent.  The Collateral Agent will fulfill its obligations hereunder until a successor Collateral Agent has accepted its appointment as Collateral Agent and the provisions of clause (c) have been satisfied.

(c)Succession.  When the Person so appointed as successor Collateral Agent accepts such appointment:

(i)such Person will succeed to and become vested with all the rights, powers, privileges and duties of the predecessor Collateral Agent, and the predecessor Collateral Agent will be discharged from its duties and obligations hereunder; and

(ii)the predecessor Collateral Agent will (at the expense of the Company) upon payment of all amounts owed it hereunder, promptly transfer all liens and collateral security and other property within its possession or control to the possession or control of the successor Collateral Agent and will execute instruments and assignments as may be necessary or desirable or reasonably requested by the successor Collateral Agent to transfer to the successor Collateral Agent all liens, interests, rights, powers and remedies of the predecessor Collateral Agent in respect of the Transaction Documents. Thereafter the predecessor Collateral Agent will remain entitled to enforce the immunities granted to it in Section 9 and the provisions set forth in Section 8.

(d)Merger, Conversion or Consolidation of Collateral Agent.  Any person into which the Collateral Agent may be merged or converted or with which it may be consolidated, or any person resulting from any merger, conversion or consolidation to which the Collateral Agent shall be a party, or any person succeeding to all or substantially all the corporate trust business of the Collateral Agent shall be the successor of the Collateral Agent pursuant to clause (d) above, provided that without the execution or filing of any paper with any party hereto or any further act on the part of any of the parties hereto, except where an instrument of transfer or assignment is required by law to effect such succession, anything herein to the contrary notwithstanding.

Section 11.Notices, Etc.  All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail, postage prepaid and return receipt requested), telecopied or delivered, if to the Company at its address specified below and if to the Collateral Agent to it, at its address specified below; or as to any such Person, at such other address as shall be designated by such Person in a written notice to such other Person complying as to delivery with the terms of this Section 11.  All such notices and other communications shall be effective if sent by certified mail, return receipt requested, when received.

Section 12.Miscellaneous.

(a)No amendment of any provision of this Agreement shall be effective unless it is in writing and signed by the parties hereto, and no waiver of any provision of this Agreement, and no consent to any departure by the Company therefrom, shall be effective unless it is in writing and signed by the Collateral Agent and the Required Holders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

(b)No failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right hereunder or under any of the other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right.  The rights and remedies of the Collateral Agent or any Holder provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law.  The rights of the Collateral Agent or any Holder under any of the other Transaction Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights under any of the other Transaction Documents against such party or against any other Person, including but not limited to, the Company.

(c)All rights of the Collateral Agent hereunder, the security interest created hereby and all obligations of the Company hereunder shall be absolute and unconditional irrespective of (a) any lack of validity or enforceability of any Transaction Document, any agreement with respect to any of the Obligations or any other agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Transaction Document or any other agreement or instrument, (c) any exchange, release or non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or (d) any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company in respect of the Obligations or this Agreement.

(d)Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.

(e)This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until the indefeasible payment in full in cash of the Obligations, and (ii) be binding on the Company and all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of the Collateral Agent and the Holders hereunder, to the benefit of the Collateral Agent and the Holders and their respective permitted successors, transferees and assigns.  Without limiting the generality of clause (ii) of the immediately preceding sentence, without notice to the Company, the Collateral Agent and the Holders may assign or otherwise transfer their rights and obligations under this Agreement and any of the other Transaction Documents to any other Person (subject to the terms of the Transaction Documents) and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Collateral Agent and the Holders herein or otherwise.  Upon any such assignment or transfer, all references in this Agreement to the Collateral Agent or any such Holder shall mean the assignee of the Collateral Agent or such Holder.  None of the rights or obligations of the Company hereunder may be assigned or otherwise transferred and any such assignment or transfer without the consent of the Collateral Agent shall be null and void.

(f)Upon the indefeasible payment in full in cash of the Obligations, (i) this Agreement and the security interests created hereby shall terminate and all rights to the Collateral shall revert to the Company, and (ii) the Collateral Agent will, upon the Company’s written request and at the Company’s expense, (A) return to the Company such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof, and (B) execute and deliver to the Company such documents as the Company shall reasonably request (in form and substance satisfactory to the Collateral Agent) to evidence such termination, all without any representation, warranty or recourse whatsoever.

(g)THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

(h)ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS THEREOF, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  THE COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION, SUIT OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

(i)EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, VERBAL OR WRITTEN STATEMENT OR OTHER ACTION OF THE PARTIES HERETO.

(j)The Company irrevocably consents to the service of process of any of the aforesaid courts in any such action, suit or proceeding by the mailing of copies thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Company at its address provided herein, such service to become effective ten (10) days after such mailing.

(k)Nothing contained herein shall affect the right of the Collateral Agent to serve process in any other manner permitted by law or commence legal proceedings or otherwise proceed against the Company or any property of the Company in any other jurisdiction.

(l)The Company irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

(m)Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

(n)This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together constitute one in the same Agreement.

(o)In connection with its appointment and acting hereunder, the Collateral Agent is entitled to all rights, privileges, protections, benefits, immunities and indemnities provided to it as Collateral Agent under the other Transaction Documents.

(p)In no event shall the Collateral Agent be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of god, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Collateral Agent shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

(q)Notwithstanding anything herein to the contrary, the security interest granted to the Collateral Agent pursuant to this Agreement and the exercise of any right or remedy by the Collateral Agent hereunder are subject to the provisions of any subordination agreement entered into by the Collateral Agent in favor of any holder of Senior Indebtedness or the Trustee under the Indenture (as such terms are defined in the Notes).  In the event of any conflict between the terms of such subordination agreement and this Agreement, the terms of such subordination agreement shall control.  Prior to the discharge of the Senior Indebtedness, the requirements of this Agreement to deliver Collateral to the Collateral Agent shall be deemed satisfied by delivery of such Collateral to the Trustee, in its capacity as collateral agent for the holders of the Senior Indebtedness, under any security documents entered into by the Company in connection therewith.

(r)The parties hereto hereby acknowledge and agree that this Agreement shall amend, restate, modify, extend, renew and continue the terms and provisions contained in the Existing Security Agreement and shall not extinguish or release the Company from any liability under the Existing Security Agreement or otherwise constitute a novation of its obligations thereunder.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.

THE COMPANY:

 FIREPOND, INC.

By: 

Name: 

 Title: 

 Address: 

ACCEPTED BY:

RADCLIFFE SPC, LTD. for and on behalf of

the Class A Segregated Portfolio,

as Collateral Agent

By: RG Capital Management, L.P.

By: RGC Management Company, LLC

By:     

Name:Gerald F. Stahlecker

Title: Managing Director

Address: c/o RG Capital Management, LP

3 Bala Plaza-East, Suite 501

Bala Cynwyd, PA 19004

Attention: Gerald F. Stahlecker

EX-99.5

FIREPOND, INC.

COMMON STOCK PURCHASE AGREEMENT

APRIL 24, 2008

FIREPOND, INC.

COMMON STOCK PURCHASE AGREEMENT

THIS COMMON STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of April 24, 2008 by and between Firepond, Inc., a Delaware corporation (the “Company”), and FP Tech Holdings, LLC, a Texas limited liability company (the “Investor”).

R E C I T A L S:

WHEREAS, the Company desires to sell and the Investor desires to purchase the total number of shares of the common stock of the Company (“Common Stock”) as is set forth  on Schedule I attached hereto at a price of $1.40 per share;

WHEREAS, the Company desires to sell and the Investor desires to purchase an option (the “Option”) to purchase up to 357,143 shares of Common Stock at any time on or before July 30, 2008 (the “Option Period”) at an exercise price of $1.40 per share;

WHEREAS, pursuant to that certain Equipment Lease Agreement dated February 11, 2008, the Investor maintains for the benefit of the Company an equipment line of financing (the “Equipment Line”);

WHEREAS, in lieu of cash payment for the aggregate outstanding balance (including principal and interest owing) under the Equipment Line, as is set forth on Schedule I attached hereto, the Investor has requested, and the Company has agreed, to convert the outstanding balance under the Equipment Line into shares of Common Stock of the Company at a price of $1.40 per share;

WHEREAS, the Investor holds certain Senior Secured Convertible Notes of the Company, due January 24, 2009, issued in the aggregate amounts (including principal and interest owing) as is set forth on Schedule I attached hereto (the “Notes”);

WHEREAS, in lieu of cash payment of the outstanding balances of the Notes, the Investor has requested, and the Company has agreed, to convert the aggregate outstanding balances, including principal and interest accrued as of date hereof, of the Notes into shares of Common Stock at a price of $1.40 per share; and

WHEREAS, the Company and the Investor desire to set forth certain agreements and certain terms and conditions regarding (i) the purchase and sale of the Common Stock of the Company; (ii) the purchase and sale of the Option; (iii) the satisfaction of the outstanding aggregate balance under the Equipment Line and the issuance of Common Stock related thereto; and (iv) the cancellation of the Notes and the issuance of Common Stock related thereto.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the foregoing premises, the respective representations, warranties and covenants contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE OF COMMON STOCK AND OPTION

1.1   Issuance and Sale of Common Stock to Investor.

.  Subject to the terms and conditions of this Agreement, the Investor agrees to purchase, and the Company agrees to sell and issue to the Investor, at a price of $1.40 per share, that number of shares of Common Stock set forth on Schedule I hereto for the aggregate purchase price set forth thereon.

1.2   Delivery of Certificates; Payment of Purchase Price.

.  At the Closing, the Company shall deliver to the Investor a certificate registered in the Investor’s name representing that number of shares of Common Stock set forth on Schedule I against payment of the purchase price therefor by check, wire transfer, cancellation or conversion of indebtedness, or any combination thereof.  The Investor shall surrender to the Company for cancellation at the Closing its original Notes or shall execute an instrument of cancellation in form and substance acceptable to the Company.

1.3   Grant of Option to Investor.

.  Subject to the terms and conditions of this Agreement, the Investor agrees to purchase, and the Company agrees to grant to the Investor, at an exercise price of $1.40 per share, that certain Option to purchase on or before the end of the Option Period, 357,143 shares of Common Stock.

1.4   Closing.

.  Subject to the terms and conditions of this Agreement, the closing (the “Closing”) of the purchase and sale of the Common Stock described in this Section shall take place at the offices of Andrews Kurth LLP, 111 Congress Avenue, Suite 1700, Austin, Texas 78701, at 10:00 a.m., Austin, Texas time, on the date hereof, or at such other time and place as the Company and Investor mutually may agree.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to the Investor as of the date hereof that:

2.1   Organization, Good Standing and Qualification; Corporate Power.

.

(a)The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.

(b)The Company has all requisite corporate power and authority (i) to own and operate its properties and assets and to carry on its business as now conducted and as presently proposed to be conducted, (ii) to execute and deliver this Agreement, (iii) to sell and issue the Common Stock pursuant to this Agreement, (iv) to grant the Option pursuant to this Agreement, and (v) to carry out and perform the provisions of this Agreement.

2.2   Authorization.

.  All corporate action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution, delivery and performance of this Agreement and (ii) the authorization, sale and issuance of the Common Stock being sold hereunder has been taken or will be taken prior to the Closing.  This Agreement constitutes the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies.

2.3   Valid Issuance of Common Stock.

.  The Common Stock that is being purchased by the Investor hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly authorized, validly issued, fully paid and nonassessable, and will be free of restrictions on transfer other than restrictions under applicable state and federal securities laws.

2.4   Offering.

.  Subject in part to the truth and accuracy of each Investor’s representations set forth in ARTICLE III of this Agreement, the offer, sale and issuance of the Common Stock as contemplated by this Agreement are exempt from the registration or qualification requirements of the Securities Act, and any applicable state securities laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor hereby represents and warrants to the Company that:

3.1   Authorization.

.  All action on the part of the Investor and, as applicable, its officers, directors, partners, members, managers and stockholders necessary for the authorization, execution and delivery of this Agreement and the performance of all of its obligations hereunder, have been taken or will be taken prior to the Closing.  The Investor has full power and authority to enter into this Agreement, and each such agreement constitutes its valid and legally binding obligation, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

3.2   Purchase Entirely for Own Account.

.  The Common Stock to be purchased by the Investor (the “Securities”), will be acquired for investment for the Investor’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, the Investor further represents that the Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person, with respect to any of the Securities.

3.3   Investment Experience.

.  The Investor has experience with investments in securities of companies and acknowledges that it is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities.  If other than an individual, the Investor also represents it has not been organized for the purpose of acquiring the Securities.

3.4   Accredited Investor.

.  The Investor is an “accredited investor” within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as such rule is presently in effect.

3.5   Brokers.

.  The Investor has no contract, arrangement or understanding with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement.

3.6   Residency.

.  In the case the Investor is an individual, the state of the Investor’s residency, or, in the case the Investor is a corporation, partnership or other entity, the state of the Investor’s principal place of business, is correctly set forth on Schedule I.

3.7   Restricted Securities.

.  The Investor understands that immediately following its purchase of the Securities hereunder, such Securities will be characterized as “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the Securities Act, only in certain limited circumstances.  In this connection, the Investor represents that it is familiar with Rule 144 as promulgated by the SEC (“Rule 144”) under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.

3.8   Tax Liability.

.  The Investor has reviewed with its own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Investor relies solely on such advisors and not on any statements or representations of the Company, the Company’s counsel, or any of the Company’s agents.  The Investor understands that it (and not the Company) shall be responsible for its own tax liability that may arise as a result of this investment or the transactions contemplated by this Agreement.

3.9   Legends.

.  It is understood that the certificates evidencing the Securities shall bear one or all of the following legends:

(a)“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

(b)Any legend required by the laws of the State of Delaware, or any other applicable jurisdiction.

ARTICLE IV

CONDITIONS TO CLOSING

4.1   Conditions to the Investor’s Obligations at Closing.

.  The obligations of the Investor to consummate the Closing are subject to the fulfillment on or before the Closing of each of the following conditions, the waiver of which shall not be effective against the Investor without its consent in writing thereto:

(a)Debt Restructuring.  Prior to or simultaneous with the Closing, the Company shall have entered into that certain Amendment and Exchange Agreement with the holders of the Amended and Restated Senior Secured Subordinated Notes of the Company, due July 1, 2009, as may be amended from time to time (the “Bridge Notes”), and the Senior Secured Convertible Notes of the Company, due December 31, 2009, as may be amended from time to time (the “Cap Notes”).

(b)Operating Agreement.  Prior to or simultaneous with the Closing, the Company shall have entered into that certain Operating Agreement with CWC Holdings, LLC, a Texas limited liability company.

(c)Legal Opinion.The Investor shall have received the opinion of Vorys, Sater, Seymour and Pease, LLP, the Company’s counsel, dated as of the date hereof, in form and substance reasonably satisfactory to the Investor.

(d)Representations and Warranties.  The representations and warranties of the Company contained in ARTICLE II shall be true and correct on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

(e)Performance.  The Company shall have performed and complied in all respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing.

4.2   Conditions to the Company’s Obligations.

.  The obligations of the Company to the Investor under this Agreement are subject to the fulfillment or waiver in writing on or before the Closing of each of the following conditions by that Investor:

(a)Representations and Warranties.  The representations and warranties of the Investor contained in ARTICLE III shall be true and correct on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing.

(b)Performance.  The Investor shall have performed and complied in all respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by the Investor on or before the Closing.

(c)Payment of Purchase Price.  The Investor shall have delivered the purchase price set forth on Schedule I, including the tender for cancellation the Notes or an affidavit of loss thereof in form acceptable to the Company with respect to any shares of Common Stock the Investor is purchasing in the Closing.

ARTICLE V

FUTURE OFFERINGS

5.1   Grant of Preemptive Right.

.  In the event of a Qualified Financing (as defined below), the Investor shall, if necessary to complete such financing, purchase at least $1,000,000 of the securities issued in the Qualified Financing and shall have the right, but not the obligation, to purchase up to an aggregate of 25% of the securities issued in such Qualified Financing.  For purposes of this Section, a “Qualified Financing” is a transaction or series of related transactions after the date of this Agreement in which the Company issues and sells equity or debt securities in exchange for aggregate gross proceeds of an amount equal to or greater than the aggregate amount outstanding (including principal and interest owing) under the Bridge Notes and Cap Notes, as amended from time to time (excluding amounts received upon conversion of indebtedness).  

ARTICLE VI

MISCELLANEOUS

6.1   Note Cancellation.

.  Effective immediately upon the issuance of the shares of Common Stock to the Investor in the amount set forth on Schedule I hereto, the Notes shall be deemed cancelled, terminated and of no further force or effect.

6.2   Satisfaction of Amount Outstanding Under Equipment Line.

.  Effective immediately upon the issuance of the shares of Common Stock to the Investor in the amount set forth on Schedule I hereto, the amount outstanding under the Equipment Line shall be deemed satisfied, forgiven and paid in full.

6.3   Successors and Assigns.

.  Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

6.4   Governing Law.

.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

6.5   Notices.

.  All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, by commercial delivery service, mailed by registered or certified mail (return receipt requested), sent via facsimile (with confirmation of receipt) or electronic mail to the parties at the address for such party set forth herein (or at such other address for a party as such party may designate pursuant to this Section 6.5):

(a)If to the Company:

Firepond, Inc.

205 Newbury Street, Suite 204

Framingham, MA  01701

Fax:  508 820 4301

Attn:  William Santo

Email:  bill.santo@firepond.com

            stephen@firepond.com

(b)If to the Investor:

At the address set forth below the Investor’s name on Schedule I hereto.

Notice given by facsimile shall be effective upon actual receipt if received during the recipient’s normal business hours, or at the beginning of the recipient’s next business day after receipt if not received during the recipient’s normal business hours.  All notices by facsimile shall be confirmed in writing by the sender promptly after transmission by certified mail or personal delivery.  Any party may change any address to which notice is to be given to it by giving notice as provided above of such change of address.

An electronic communication (“Electronic Notice”) shall be deemed written notice for purposes of this Section 6.5 if sent with return receipt requested to the electronic mail address specified by the receiving party in a signed writing in a nonelectronic form.  Electronic Notice shall be deemed received at the time the party sending Electronic Notice receives verification of receipt by the receiving party.  Any party receiving Electronic Notice may request and shall be entitled to receive the notice on paper, in a nonelectronic form (“Nonelectronic Notice”) which shall be sent to the requesting party within ten (10) days of receipt of the written request for Nonelectronic Notice.

6.6   Amendments and Waivers.

.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived, either generally or in a particular instance and either retroactively or prospectively, only with the written consent of the Company and the Investor.

6.7   Entire Agreement.

.  This Agreement, including the schedule attached to this Agreement, and the other documents delivered pursuant to this Agreement constitute the full and entire understanding and agreement among the parties with regard to the subject matter hereof and thereof, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

6.8   Telecopy Execution and Delivery.

.  A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties to this Agreement, and an executed copy of this Agreement may be delivered by one or more parties to this Agreement by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes.  At the request of any party to this Agreement, all parties to this Agreement agree to execute an original of this Agreement as well as any facsimile, telecopy or other reproduction of this Agreement.

6.9   Counterparts.

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

[Signature pages follow]

IN WITNESS WHEREOF, the undersigned have executed this Common Stock Purchase Agreement as of the date first above written.

 COMPANY

 FIREPOND, INC.

By:

Name:

Title:

IN WITNESS WHEREOF, the undersigned have executed this Common Stock Purchase Agreement as of the date first above written.

 INVESTOR:

 FP TECH HOLDINGS, LLC

By:

Name:

Title:

EX-99.6

COMPANY AGREEMENT

OF

CWC HOLDINGS, LLC

Dated Effective as of April 24, 2008

COMPANY AGREEMENT

OF

CWC HOLDINGS, LLC

This Company Agreement (this “Company Agreement”) of CWC Holdings, LLC (the “Company”) is entered into by TechDev Holdings, LLC and Firepond, Inc., as the member(s) (the “Members,” whether one or more) of the Company.  In consideration of the covenants, conditions and agreements contained herein, the Members hereby adopt the following provisions:

1.           Definitions.

1.1“Adjusted Capital Account Deficit” means, with respect to any Member, the deficit balance, if any, in such Member’s Capital Account as of the end of the relevant fiscal year, after giving effect to the following adjustments:

Add to such Capital Account the following items:

(a)The amount that such Member is obligated to contribute to the Company; and

(b)The amount that such Member is deemed to be obligated to restore to the Company pursuant to the penultimate sentence of each of Regulations Sections 1.704-2(i)(5) and 1.704-2(g); and

Subtract from such Capital Account such Member’s share of the items described in Regulations Sections 1.704-1(b)(2)(ii)(d)(4),(5) and (6).

1.2“Board of Advisors” shall have the meaning set forth in Section 8.

1.3“Bridge Notes” shall have the meaning set forth in Section 18.1.2.

1.4“Cap Notes” shall have the meaning set forth in Section 18.1.2.

1.5“Capital Account” means, with respect to each Member, an account maintained for such Member on the Company’s books and records in accordance with the following provisions:

(a)To each Member’s Capital Account there shall be added (a) such Member’s Capital Contributions, and (b) such Member’s distributive share of (i) Profits and (ii) any items in the nature of income or gain that are specially allocated pursuant to Section 12 of this Agreement and (c) the amount of any Company liabilities assumed by such Member or that are secured by any Company property distributed to such Member.

(b)From each Member’s Capital Account there shall be subtracted (a) the amount of (i) cash and (ii) the Gross Asset Value of any Company property, that in either case is distributed to such Member pursuant to any provision of this Agreement (other than amounts paid as interest or in repayment of principal on any loan by a Member to the Company), and (b) such Member’s distributive share of (i) Losses and (ii) any items in the nature of expenses or losses that are specially allocated pursuant to Section 12 of this Agreement, and (c) the amount of any liabilities of such Member that are either assumed by the Company or secured by any property contributed by such Member to the Company.

(c)In determining the amount of any liability for purposes of determining a Member’s Capital Account, there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and the Regulations.

(d)If any Membership Interest is transferred, the transferee shall succeed to a pro rata share of the transferor’s Capital Account, based on the ratio that the portion of the Interest transferred bears to the total Interest of the transferor immediately before the transfer.

(e)The Managers shall increase or decrease the Capital Accounts of the Members to reflect adjustments to the Gross Asset Values of all Company assets.  The adjustments shall reflect the manner in which the unrealized income, gain, loss or deduction inherent in such property (that has not been reflected in Capital Accounts previously) would be allocated among the Members under Section 12 of this Agreement if there were a taxable disposition of such property for such fair market value on such date.  The Members’ shares of depreciation, depletion, amortization, and gain or loss, as computed for tax purposes, with respect to such property shall be determined so as to take account of the variation of the adjusted tax basis and book value of such property in the same manner as under Code Section 704(c) and the applicable Regulations.

(f)Additional adjustments shall be made to the Members’ Capital Accounts as required by Regulations Sections 1.704-1(b) and 1.704-2 or, as permitted but not required by such Regulations, in the discretion of the Managers.  Adjustments to Capital Accounts in respect of Company income, gain, loss, deduction and non-deductible expenditures (or items thereof) shall be made with reference to the federal tax treatment of such items (and, in the case of book items, with reference to the federal tax treatment of the corresponding tax items) at the Company level, without regard to any required or elective tax treatment of such items at the Member level.

(g)The provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Sections 1.704-1(b) and 1.704-2 and shall be interpreted and applied in a manner consistent with such Regulations.  If the Managers shall determine that it is prudent to modify the manner in which Capital Accounts, or any additions or subtractions thereto (including, without limitation, adjustments relating to liabilities that are secured by contributed or distributed property or that are assumed by the Company or the Members), are computed to comply with such Regulations, the Managers shall be entitled to make such modification; provided, however, that it is not likely to have a material effect on the amounts distributable to any Member pursuant to Section 17 of this Agreement upon dissolution of the Company.  The Managers shall also make (a) any adjustments that are necessary or appropriate to maintain equality between the Capital Accounts of the Members and the amount of Company capital reflected on the Company’s balance sheet, as computed for book purposes, in accordance with Regulations Section 1.704-1(b)(2)(iv)(g), and (b) any appropriate modifications if unanticipated events might otherwise cause this Agreement not to comply with Regulations Section 1.704-1(b) and 1.704-2.

1.6“Capital Contribution” means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property (other than money) contributed to the Company by such Member.

1.7“Certificate of Formation” shall have the meaning set forth in Section 2.

1.8“Change in Control” with respect to any Member shall mean a change in ownership or control of such member effected through any of the following transactions:

(a)a merger, consolidation or other reorganization approved by the Member’s owners, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Member’s outstanding voting securities immediately prior to such transaction, or

(b)an owner-approved sale, transfer or other disposition of all or substantially all of the Member’s assets in liquidation or dissolution of the Member, or

(c)the acquisition, directly or indirectly by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of securities possessing more than fifty percent (50%) of the total combined voting power of the Member’s outstanding securities pursuant to a stock purchase transaction or a tender or exchange offer made directly to the Member’s owners (except that the sale by the Member of shares of its capital stock to investors in bona fide capital raising transactions shall not be deemed to be a Change in Control for this purpose).

In no event shall any public offering of the Member’a securities be deemed to constitute a Change in Control.

1.9“Change in Control Repurchase Price” shall have the meaning set forth in Section 18.1.3.

1.10“Change in Control Repurchase Right” shall have the meaning set forth in Section 18.1.3.

1.11“Class A Interests” shall have the meaning set forth in Section 7.1.

1.12“Class B Interests” shall have the meaning set forth in Section 7.1.

1.13“Class A Member” shall have the meaning set forth in Section 7.2.

1.14“Class B Member” shall have the meaning set forth in Section 7.3.

1.15“Code” means the Internal Revenue Code of 1986, as amended (or any corresponding provision or provisions of succeeding law).

1.16“Common Stock Distribution” shall have the meaning set forth in Section 7.2

1.17“Company” shall have the meaning set forth in the Introduction.

1.18“Company Agreement” shall have the meaning given in the Introduction.

1.19“Company Minimum Gain” has the meaning set forth in Regulations Sections 1.704-2(d) for the phrase “partnership minimum gain”.

1.20“Declination Repurchase Price” shall have the meaning set forth in Section 18.1.2.

1.21“Declination Repurchase Right” shall have the meaning set forth in Section 18.1.2.

1.22“Declined Distribution” shall have the meaning set forth in Section 7.2.

1.23“Distributable Cash” means all cash on hand less Reserves.

1.24“Event of Default” shall have the meaning set forth in Section 18.1.1.

1.25“Event of Default Repurchase Price” shall have the meaning set forth in Section 18.1.1.

1.26“Event of Default Repurchase Right” shall have the meaning set forth in Section 18.1.1.

1.27“Gross Asset Value” means, with respect to any asset, the asset’s adjusted basis for federal income tax purposes; except as follows:

(a)The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the fair market value of such asset, as determined by the Managers.

(b)The Gross Asset Values of all Company assets shall be adjusted to equal their respective fair market values, as determined by the Managers, as of the following times:

(i)the acquisition of an additional Interest in the Company (other than in connection with the execution of this Agreement) by a new or existing Member in exchange for more than a de minimis Capital Contribution, if the Managers determine that such adjustment is necessary or appropriate to reflect the relative economic interest of the Members in the Company;

(ii)the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an Interest in the Company, if the Managers determine that such adjustment is necessary or appropriate to reflect the relative economic interests of the Members in the Company;

(iii)the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); and

(iv)at such other times as the Managers shall determine necessary or advisable to comply with Regulations Sections 1.704-1(b) and 1.704-2.

(c)The Gross Asset Value of any Company asset distributed to a Member shall be the gross fair market value of such asset on the date of distribution, as determined by the Managers.

(d)The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided, however, that Gross Asset Values shall not be adjusted to the extent that the Managers determines that an adjustment pursuant to this Agreement is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment to the Gross Asset Value of Company assets.

(e)If the Gross Asset Value of a Company asset has been determined or adjusted pursuant to this Agreement, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses.

1.28“Initial Class B Member” shall mean Firepond, Inc., a Delaware corporation.

1.29“Initial Shares” shall have the meaning given in Section 7.2.

1.30“Interest” or “Membership Interest” means the entire ownership interest of a Member in the Company at any time, including such Member’s limited liability company interest and the right of such Member to any and all benefits to which a Member may be entitled as provided in this Agreement, together with the obligations of such Member to comply with all of the terms and provisions of this Agreement; provided, however, that the direct or indirect interest of any Person in the Member shall be considered Member equity and not an Interest.

1.31“Managers” shall have the meaning set forth in Section 8.

1.32“Member Minimum Gain” means minimum gain attributable to a Member Nonrecourse Debt determined in accordance with Regulations Section 1.704-2(i) with respect to “partner minimum gain.”

1.33“Member Nonrecourse Debt” has the meaning set forth in Regulations Section 1.704-2(b)(4) for the phrase “partner nonrecourse debt.”

1.34“Member Nonrecourse Deduction” has the meaning set forth in Regulations Section 1.704-2(i)(2) for the phrase “partner nonrecourse deduction”.  The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a Company fiscal year equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during such fiscal year over the aggregate amount of any distributions during such fiscal year to the Member who bears the economic risk of loss for such Member Nonrecourse Debt to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(2).

1.35“Members” shall have the meaning set forth in the Introduction.

1.36“Nonrecourse Deductions” has the meaning set forth in Regulations Section 1.704-2(c).  The amount of Nonrecourse Deductions for a Company fiscal year equals the excess, if any, of the net increase, if any, in the amount of Company Minimum Gain during such fiscal year over the aggregate amount of any distributions during such fiscal year of proceeds of a Nonrecourse Liability that are allocable to an increase in Company Minimum Gain, determined in accordance with Regulations Section 1.704-2(c).

1.37“Nonrecourse Liability” has the meaning set forth in Regulations Section 1.704-2(b)(3).

1.38“Profits” and “Losses” means an amount equal to the Company’s taxable income or loss with respect to the relevant period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be in taxable income or loss), with the following adjustments:

(a)Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits and Losses shall be added to such taxable income or loss;

(b)Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.704-1(b)(2)(iv)(i), not otherwise taken into account in computing Profits or Losses, shall be subtracted from such taxable income or loss;

(c)Gain or loss resulting from any disposition of Company property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of, notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value;

(d)In lieu of the depreciation, amortization and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account depreciation for such fiscal year or other period, computed in accordance with this Agreement; and

(e)Notwithstanding any other provision of this Agreement, any items that are specially allocated pursuant to Section 12.2 of this Agreement shall not be taken into account in computing Profits or Losses.

1.39“Regulations” means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such Regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

1.40“Regulatory Allocations” shall have the meaning given in Section 12.2.10.

1.41“Remaining Shares” shall have the meaning set forth in Section 18.1.1.

1.42“Reserves” means, with respect to any fiscal period, funds set aside or amount allocated during such period to reserves that shall be maintained in amounts deemed sufficient by the Managers, in their sole discretion, to provide working capital, to pay taxes, insurance, debt service, payments required to be made by the Company pursuant to any operating agreement, repairs, replacements or renewals, to provide capital for anticipated or possible construction or acquisition costs, capital expenditures and other outlays.

1.43“Texas Business Organizations Code” or “TBOC” shall have the meaning set forth in Section 2.

1.44“Regulatory Allocations” shall have the meaning set forth in Section 2.

1.45“Texas Limited Liability Company Law” or “TLLCL” shall have the meaning set forth in Section 2.

1.46“Transfer” or “Transferred” shall have the meaning set forth in Section 16.1.

2.   Formation.

CWC Holdings, LLC is a limited liability company organized under the provisions of the Texas Business Organizations Code (the “TBOC”) and the Texas Limited Liability Company Law, part of the TBOC, as amended from time to time (the “TLLCL”).  The Certificate of Formation (the “Certificate of Formation”) was filed on April14th, 2008 with the Secretary of State of the State of Texas.

3.   Name.

The name of the Company is, and the business of the Company shall be conducted under the name of, “CWC Holdings, LLC.”  The Company may transact business under an assumed name by filing an assumed name certificate in the manner prescribed by applicable law.

4.   Continuation and Term.

The Company was formed upon the issuance by the Secretary of State of the State of Texas of the Certificate of Filing for the Company.  The Company’s existence shall be perpetual unless it is earlier terminated by the Members (hereinafter, “Members” refers to the initial Member, and any additional members, if any, admitted to the Company in accordance with the provisions of this Company Agreement).

5.   Office.

The registered office of the Company required by the TBOC to be maintained in the State of Texas shall be at 350 N. St. Paul Street, Dallas, Texas  75201.  The registered agent for service of process at such address shall be CT Corporation System.

6.   Purpose.

The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which a limited liability company may be formed under the TBOC and engaging in any and all activities necessary or incidental to the foregoing.

7.   Members.

The name and business and mailing address of each Member are as follows:

TechDev Holdings, LLC

207B N. Washington Ave.

Marshall, Texas  75670

Firepond, Inc.

205 Newbury Street, Suite 204

Framingham, Massachusetts  01701

7.1Relative Rights.  Each Member’s relative rights, privileges, preferences and obligations with respect to the Company are represented by that Member’s Membership Interests.  There shall be two classes of Interests - “Class A Interests” and “Class B Interests.”  A Member’s relative rights, privileges, preferences and obligations with respect to the Company will be determined under this Company Agreement.

7.2Class A Interests.  Class A Interests have all the rights, privileges, preferences, and obligations generally provided to a Member under applicable law, and as are otherwise applicable to Class A Interests pursuant to this Agreement.  Except as specifically provided in this Agreement, the holder of the Class A Interests will be entitled to share in distributions of Distributable Cash based on the percentage of total Membership Interests issued and outstanding at such time held by the holder of the Class A Interests (the “Class A Member”) as of the relevant date, which percentage is set forth on Exhibit A and may be amended or adjusted from time to time.  Notwithstanding Section 13, the Class A Member may choose to forgo all, or any portion thereof, of its share of any distribution of Distributable Cash (the “Declined Distribution”) in favor of a Common Stock Distribution; provided the Class B Member agrees to accept such Declined Distribution.  Prior to making a distribution of Distributable Cash to the Members, the Managers must notify the Members of such distribution.  The Class A Member shall have two (2) business days from the date of such notification to notify the Managers whether it shall accept or decline such distribution.  Failure to notify the Managers within such time period shall be deemed an acceptance of such distribution by the Class A Member.  In the event the Class A Member declines such distribution in favor of the Common Stock Distribution, the Managers shall notify the Class B Member, and the Class B Member shall have two (2) business days from the date of such notification to notify the Managers in writing whether it will accept or decline the Declined Distribution.  Failure to notify the Managers in writing within such time period shall be deemed an acceptance of such Declined Distribution by the Class B Member.  “Common Stock Distribution” shall mean the number of shares of common stock of Firepond, Inc., initially contributed by the Class B Members as set forth on Exhibit A hereto (the “Initial Shares”), equal to the quotient of (i) the total amount of the Declined Distribution by the Class A Member divided by (ii) for any time prior to the Bridge Notes  and Cap Notes being paid in full, 1.40 and thereafter, the higher of (A) the product of (x) 0.8 times (y) the arithmetic average of the closing price for the Common Stock for each of the twenty (20) trading days ending on the trading day immediately preceding the date of the Declined Distribution and (B) 1.40.

7.3Class B Interests.  Class B Interests have only the rights, privileges, preferences, and obligations specifically provided for in this Agreement.  Without limiting the foregoing, the Class B Interests shall have no voting rights other than those voting rights specifically required under the TLLCL.  Except as specifically provided in this Agreement, the holder of the Class B Interests shall be entitled to share in distributions of Distributable Cash based on the percentage of total Membership Interests issued and outstanding at such time held the holder of the Class B Interests (the “Class B Member”) as of the relevant date, which percentage is set forth on Exhibit A as it may be amended or adjusted from time to time, except that the Class B Member may be entitled to more than its share of such distribution of Distributable Cash in the event the Class B Member accepts a Declined Distribution in accordance with Section 7.2. The Class B Interests will be issued by the Company and held by the Class B Member subject to the repurchase rights and other terms and conditions of this Agreement and any other written agreement entered into between the Class B Member and the Company.

8.   Management.

The powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction of, one or more managers (“Managers,” whether one or more).  In addition to the powers and authorities expressly conferred upon them by this Company Agreement, the Managers may exercise all such powers of the Company and do all such lawful acts and things as are not by law or by the Certificate of Formation or by this Company Agreement directed or required to be exercised or done by the Members.  The initial number of Managers shall be one (1), and shall be Erich Spangenberg, until his earlier death, resignation or removal.  The number of Managers may be increased or decreased, provided such decrease does not shorten the term of any incumbent Manager, from time to time by the vote or approval of a majority of the outstanding Class A Interests.  Removal of any Manager from office and the appointment of any Manager to fill any vacancies shall likewise be determined by the vote or approval of a majority of the outstanding Class A Interests.

The Managers shall be advised by a board of advisors (the “Board of Advisors”), such Board of Advisors to consist of the Managers, an individual designated by Firepond, Inc., and an appointee of TechDev Holdings, LLC.  Notwithstanding the foregoing, the power and authority of the Managers shall not be superseded or limited by the Board of Advisors.

9.   Meetings.

In connection with any meeting of the Members or Managers, the following provisions shall apply:

9.1Place of Meeting.  Any regular or special meeting of the Members or Managers shall be held at the principal place of business of the Company, unless the notice of such meeting specifies a different place, which need not be in the State of Texas.  Actions by the Company requiring a vote or approval of the Members will be permitted by a vote or approval of a majority of the outstanding Class A Interests and actions by the Company requiring a vote or approval of the Managers will be permitted by vote or approval of a majority of the Managers.

9.2Action by Written Consent of the Members.  Any action required or authorized to be taken at an annual or special meeting of the Members may be taken without holding a meeting, providing notice or taking a vote if a written consent or consents stating the action to be taken is signed by the number of the Members necessary to have at least the minimum number of votes that would be necessary to take the action at a meeting at which each of the Members entitled to vote on the action is present and votes.

9.3Action by Written Consent of the Managers.  Any action required or authorized to be taken at an annual or special meeting of the Managers may be taken without holding a meeting, providing notice or taking a vote if a written consent or consents stating the action to be taken is signed by the number of the Managers necessary to have at least the minimum number of votes that would be necessary to take the action at a meeting at which each of the Managers entitled to vote on the action is present and votes.

10.   Officers.

10.1The Managers may elect a President, one (1) or more Vice Presidents, a Secretary, a Treasurer, one (1) or more Assistant Secretaries and one (1) or more Assistant Treasurers.  One (1) person may hold any two (2) or more of these offices.  Each officer so elected shall hold office until his successor shall have been duly elected and qualified or until his death, resignation or removal in the manner hereinafter provided.

10.2Every officer is an agent of the Company for the purpose of its business.  The act of an officer, including the execution in the name of the Company of any instrument for apparently carrying on in the usual way the business of the Company, binds the Company unless the officer so acting otherwise lacks authority to act for the Company and the person with whom the officer is dealing has knowledge of the fact that the officer has no such authority.

10.3The Managers may appoint such other officers and agents as they shall deem necessary who shall hold their offices for such terms, have such authority and perform such duties as the Managers may from time to time determine.  The Managers may delegate to any committee or officer the power to appoint any such subordinate officer or agent.  No subordinate officer appointed by any committee or superior officer as aforesaid shall be considered as an officer of the Company, the officers of the Company being limited to the officers elected or appointed as such by the Managers.

10.4Any officer may resign at any time by giving written notice thereof to the Managers, the President or the Secretary of the Company.  Any such resignation shall take effect at the time specified therein and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.  Any officer elected or appointed by the Managers or any other officer may be removed at any time with or without cause by the Managers.  The removal of any officer shall be without prejudice to the contract rights, if any, of the person so removed.  Election or appointment of an officer or agent shall not of itself create any contract rights.  A vacancy in any office shall be filled for the unexpired portion of the term by the Managers, but in case of a vacancy occurring in an office filled by a committee or superior officer in accordance with this Company Agreement, such vacancy may be filled by such committee or superior officer.

10.5The President shall be the chief executive officer of the Company and shall have general and active management of the business of the Company.  The President shall have the general supervision and direction of all other officers of the Company with full power to see that their duties are properly performed and shall see that all orders and resolutions of the Members and the Managers of the Company are carried into effect.  The President shall preside at all meetings of the Members and Managers of the Company.  He may sign certificates for units of Membership Interests of the Company and any deeds, bonds, mortgages, contracts and other documents which the Managers of the Company have authorized to be executed, except where required by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the Managers of the Company or this Company Agreement to some other officer or agent of the Company.  In addition, the President shall perform whatever duties and shall exercise all the powers that are given to him by the Managers of the Company.

10.6The Vice Presidents shall perform the duties as are given to them by this Company Agreement and as may from time to time be assigned to them by the Managers of the Company or by the President and may sign certificates for units of Membership Interests of the Company.  At the request of the President, or in his absence or disability, the Vice President, designated by the President (or in the absence of such designation, the senior Vice President), shall perform the duties and exercise the powers of the President.

10.7The Secretary shall keep or cause to be kept at the principal office of the Company, or such other place as the Managers may direct, a book of minutes of all meetings and actions of the Managers and Members and any committees or other delegates of the Managers and Members.  The Secretary shall also keep or cause to be kept at the principal office of the Company those records required for the conduct of the business and affairs of the Company.  The Secretary shall give or cause to be given notice of all meetings of the Managers and Members, and shall have such other powers and perform such other duties as may be prescribed by the Managers, the President, or this Company Agreement.

10.8The Treasurer shall be the chief financial officer of the Company and shall keep and maintain or cause to be kept and maintained adequate and correct books and records of accounts of the properties and business transactions of the Company.  The books of account shall at all reasonable times be open to inspection by any Manager or Member.  The Treasurer shall deposit all monies and other valuables in the name and to the credit of the Company with such depositories as may be designated by the Managers or the President.  The Treasurer shall disburse the funds of the Company as may be ordered by the Managers, shall render to the President, the Managers and the Members, whenever they request it, an account of all of the Treasurer’s transactions as chief financial officer and of the financial conditions of the Company and shall have other powers and perform such other duties as may be prescribed by the Managers or the President or this Company Agreement.

10.9The salary or other compensation of officers shall be fixed from time to time by the Managers of the Company.  The Managers may delegate to any committee or officer the power to fix from time to time the salary or other compensation of subordinate officers and agents appointed in accordance with the provisions of this Company Agreement.

11.   Capital Contribution.

The Members have contributed to the Company the assets described on Exhibit A attached hereto.

           The Members are not required to make any additional capital contributions to the Company.

12.   Allocations.

12.1Profits and Losses.  Except as otherwise provided in this Agreement, Profits and Losses (and, to the extent necessary, individual items of income, gain, loss, deduction or credit) of the Company shall be allocated among the Members in a manner such that, after giving effect to the special allocations set forth in Section 12.2 and Section 12.3, the Capital Account of each Member, immediately after making such allocation, is, as nearly as possible, equal (proportionately) to (i) the distributions that would be made to such Members pursuant to Article 18 as if the Event of Default Repurchase Right or Declination Repurchase Right were exercised, the assets of the Company were sold for cash equal to their Gross Asset Value, all Company liabilities were satisfied (limited with respect to each Nonrecourse Liability to the Gross Asset Value of the assets securing such liability), and $10,000 plus 90% of the Remaining Shares were distributed to the Initial Class B Member and the remaining net assets of the Company were distributed to the Class A Member immediately after making such allocation, minus (ii) such Member’s share of Company Minimum Gain and Member Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets.

12.2Regulatory Allocations and Curative Provisions.  The following special allocations shall be made in the following order and priority:

12.2.1Minimum Gain Chargeback.  Notwithstanding any other provisions of this Section 12, if there is a net decrease in Company Minimum Gain during any Company fiscal year, each Member shall be specially allocated items of Company income and gain for such year (and, if necessary, subsequent years) in an amount equal to the greater of:

(a)the portion of such Member’s share of the net decrease in Company Minimum Gain, determined in accordance with Regulations Section 1.704-2(g)(2), that is allocable to the disposition of Company property subject to Nonrecourse Liabilities, determined in accordance with Regulations Section 1.704-2(i)(4); and

(b)if such Member would otherwise have an Adjusted Capital Account Deficit at the end of such fiscal year, an amount sufficient to eliminate such Adjusted Capital Account Deficit.

The items of income and gain to be so specially allocated pursuant to this Section 12.2.1 shall be determined in accordance with Regulations Section 1.704-2(f).  This Section 12.2.1 is intended to comply with the minimum gain chargeback requirement of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.  To the extent permitted by Regulations Section 1.704-2(f), and for purposes of this Section 12.2.1 only, each Member’s Adjusted Capital Account Deficit shall be determined prior to any other allocations pursuant to this Section 12 with respect to such fiscal year and without regard to any net decrease in Member Minimum Gain during such fiscal year.

12.2.2Member Minimum Gain Chargeback.  Notwithstanding any provision of this Section 12 to the contrary (except Section 12.2.1), if there is a net decrease in Member Minimum Gain attributable to a Member Nonrecourse Debt during any Company fiscal year, each Member who has a share of the Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), shall be specially allocated items of Company income and gain for such fiscal year (and, if necessary, subsequent years) in an amount equal to the greater of:

(a)the portion of such Member’s share of the net decrease in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(5), that is allocable to the disposition of Company property subject to such Member Nonrecourse Debt, determined in accordance with Regulations Section 1.704-2(i)(4), and

(b)if such Member would otherwise have an Adjusted Capital Account Deficit at the end of such fiscal year, an amount sufficient to eliminate such Adjusted Capital Account Deficit.

The items of income and gain to be so specially allocated pursuant to this Section 12.2.2 shall be determined in accordance with Regulations Section 1.704-2(f).  This Section 12.2.2 is intended to comply with the minimum gain chargeback requirement of Regulations Section 1.704-2(f) and shall be interpreted consistently therewith.  Solely for purposes of this Section 12.2.2, each Member’s Adjusted Capital Account Deficit shall be determined prior to any other allocations pursuant to this Section 12 with respect to such fiscal year, other than allocations pursuant to Section 12.2.1 of this Agreement.

12.2.3Qualified Income Offset.  If any Member unexpectedly receives any adjustment, allocation or distribution described in Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Company income and gain shall be specially allocated to such Member in an amount and manner sufficient to eliminate, to the extent required by Regulations Sections 1.704-1(b)(2)(ii)(d), the Adjusted Capital Account Deficit of such Member as quickly as possible; provided, however, that an allocation pursuant to this Section 12.2.3 shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Section 12 have been tentatively made as if this Section 12.2.3 were not in this Agreement.  It is intended that this Section 12.2.3 qualify and be construed as a “qualified income offset” within the meaning of Regulations Section 1.704-1(b)(2)(ii)(d).

12.2.4Gross Income Allocation.  If any Member has an Adjusted Capital Account Deficit at the end of any Company fiscal year that is in excess of the sum of (a) the amount such Member is obligated to contribute to the Company upon liquidation of such Member’s Interest, and (b) the amount such Member is deemed to be obligated to restore to the Company pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5), such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible; provided, however, that an allocation pursuant to this Section 12.2.4 shall be made if and only to the extent that such Member would have an Adjusted Capital Account Deficit in excess of such sum after all other allocations provided for in this Section 12 have been tentatively made as if Section 12.2.3 and this Section 12.2.4 were not in this Agreement.

12.2.5Nonrecourse Deductions.  Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Members in accordance with the allocation set forth in Section 12.1.

12.2.6Member Nonrecourse Deductions.  Member Nonrecourse Deductions for any fiscal year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(i).

12.2.7Section 754 Adjustment.  To the extent that an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset), and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted Regulations Section 1.704-1(b)(2)(iv)(m).

12.2.8Excess Nonrecourse Liabilities.  Solely for purposes of determining a Member’s proportionate share of the “excess nonrecourse liabilities” of the Company within the meaning of Regulations Section 1.752-3(a)(3), the Member’s Interest in Company Profits are as provided for in Section 12.1.

12.2.9Best Efforts Regarding Distributions.  To the extent permitted by Regulations Sections 1.704-2(h) and 1.704-2(i)(6), the Managers shall use their best efforts to treat distributions of Distributable Cash as having been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt only to the extent that such distributions would not cause or increase an Adjusted Capital Account Deficit for any Member.

12.2.10Curative Allocations.  The Members acknowledge that all distributions of Distributable Cash (including distributions upon liquidation of the Company) are intended to be made in accordance with the priorities set forth in Section 13 of this Agreement and that the Members’ Capital Accounts are intended to reflect the manner in which such distributions are intended to be made.  The allocations set forth in Sections 12.2.1, 12.2.2, 12.2.3, 12.2.4, 12.2.5 and 12.2.6 of this Agreement (the “Regulatory Allocations”) are intended to comply with pertain requirements of Regulations Sections 1.704-1(b) and 1.704-2, but may result in distortions of the Member’s Capital Accounts in relation to the distributions that each Member is intended to receive from the Company.  Notwithstanding any other provisions of Section 12.2 (other than the Regulatory Allocations), the Regulatory Allocations shall be taken into account in allocating other Profits, Losses and items of income, gain, loss and deduction to the Members so that, to the maximum extent possible, at any time the Members’ Capital Accounts shall reflect the manner in which distributions would be made to the Members, if the Company were liquidated and the proceeds of such liquidation were distributed to the Members in accordance with Section 13 of this Agreement.

12.2.11Other Allocations.  If, and to the extent that, in any fiscal years, (a) any item of constructive or imputed income is deemed recognized for federal income tax purposes by the Company or (b) any item of constructive or imputed expense or payment is deemed incurred or made, as the case may be, by the Company, for federal income tax purposes, in respect of any transaction (including a Loan) between a Member (or any Affiliate or Person related to such Member) and the Company, any such item of constructive of imputed income or any such item of constructive or imputed expense or payment, as the case may be, shall be allocated to such Member to the extent that the Managers, acting reasonably, determine such allocation to be consistent with the Interests of the Member in the Company.  Any allocations made to a Member pursuant to this Section 12.2.11 shall be reflected as an increase (or reduction) in such Member’s Capital Account.

12.3Tax Allocations - Code Section 704(c).

12.3.1Except as provided in Section 12.2, the income, gains, losses, deductions and expenses of the Company shall be allocated, for federal, state and local income tax purposes, among the Members in accordance with the allocation of such income, gains, losses, deductions and expenses among the Members for computing their Capital Accounts, except that if any such allocation is not permitted by the Code or other applicable law, the Company’s subsequent income, gains, losses, deductions and expenses shall be allocated among the Members so as to reflect as nearly as possible the allocation set forth herein in computing their Capital Accounts.

12.3.2In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, deduction and expense with respect to any property contributed to the capital of the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its fair market value at the time of contribution using the method determined by the Managers.

12.3.3If the Gross Asset Value of any Company asset is adjusted pursuant to this Agreement, subsequent allocations of items of taxable income, gain, loss, deduction and expense with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) using the method determined by the Managers.

12.3.4Any elections or other decisions relating to such allocations shall be made by the Managers in any manner that reasonably reflects the purpose and intent of this Agreement.  Allocations pursuant to this Section 12.3 are solely for purposes of federal, state and local taxes and shall not affect, or in any way be taken into account in computing, any Member’s Capital Account or share of Profits, Losses, other items or distributions pursuant to any provisions of this Agreement.

13.   Distributions.

Subject to the provisions of Section 7, Section 17 and Section 18 of this Agreement:

13.1The Managers shall have sole discretion regarding the amounts and timing of distributions of Distributable Cash to the Members, in each case subject to the retention of, or payment to third parties of, such Distributable Cash as it deems necessary with respect to the reasonable business needs of the Company which shall include (but not be limited to) the payment or the making of provision for the payment when due of the Company’s obligations and expenses.

13.2All distributions shall be made among the Members ratably based on their respective percentage interests as set forth on Exhibit A.

14.   Governing Law.

This Company Agreement shall be governed by, and construed under, the laws of the State of Texas, all rights and remedies being governed by said laws.

15.   Indemnification.

15.1No Member, Manager or officer of the Company shall be liable to the Company for any act or omission based upon errors of judgment or other fault in connection with the business or affairs of the Company if such Member’s, Manager’s or officer’s conduct shall not have constituted gross negligence or willful misconduct.

15.2To the fullest extent permitted by law, the Members, Managers and officers of the Company shall be indemnified and held harmless by the Company from and against any and all losses, claims, damages, settlements and other amounts (collectively, “Indemnified Losses”) arising from any and all claims (including attorneys’ fees and expenses, as such fees and expenses are incurred), demands, actions, suits or proceedings (civil, criminal, administrative or investigative), in which he may be involved, as a party or otherwise, by reason of the management of the affairs of the Company, whether or not he continued to be a Member, Manager or officer of the Company or involved in management of the affairs of the Company at the time any such liability or expense is paid or incurred; provided that a Member, Manager or officer of the Company shall not be entitled to the foregoing indemnification if a court of competent jurisdiction shall have determined that such Indemnified Losses resulted primarily from the gross negligence or willful misconduct of such Member, Manager or officer.  The termination of a proceeding by judgment, order, settlement or conviction under a plea of nolo contendere, or its equivalent, shall not, of itself, create any presumption that such Indemnified Losses resulted primarily from the gross negligence or willful misconduct of a Member, Manager or officer of the Company or that the conduct giving rise to such liability was not in the best interest of the Company.  The Company shall also indemnify each of the Members, Managers and officers of the Company if he is or was a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the Company to procure a judgment in its favor by reason of the fact that such Member, Manager or officer of the Company is or was an agent of the Company, against any Indemnified Losses incurred by such Member, Manager or officer of the Company in connection with the defense or settlement of such action; provided that such Member, Manager or officer of the Company shall not be entitled to the foregoing indemnification if a court of competent jurisdiction shall have determined that any such Indemnified Losses resulted from the gross negligence or willful misconduct of such Member, Manager or officer.  The Company may advance a Member, Manager or officer of the Company any expenses (including, without limitation, attorneys’ fees and expenses) incurred as a result of any demand, action, suit or proceeding referred to in this paragraph (b) provided that (i) the legal action relates to the performance of duties or services by such Member, Manager or officer of the Company on behalf of the Company; and (ii) such Member, Manager or officer of the Company provides a written undertaking to repay to the Company the amounts of such advances in the event that such Member, Manager or officer of the Company is determined to be not entitled to indemnification hereunder.

15.3The indemnification provided by this Section 15 shall not be deemed to be exclusive of any other rights to which a Member, Manager or officer of the Company may be entitled under any agreement, as a matter of law, in equity or otherwise, and shall inure to the benefit of the heirs, successors and administrators of such Member, Manager or officer.

15.4Any indemnification pursuant to this Section 15 will be payable only from the assets of the Company.

16.   Transfer of Membership Interests; Withdrawal; Admission of New Members.

16.1“Transfer” or “Transferred” means to sell, assign, pledge, hypothecate, give, create a security interest in or lien on, place in trust (voting or otherwise), assign or in any other way encumber or dispose of, directly or indirectly and whether or not by operation of law or for value, any Interest.

16.2Transfer of Membership Interest.  Class B Interests shall be neither transferable nor assignable by a Member.  No Class B Member, nor its successors, transferees or assigns, shall, directly or indirectly, voluntarily or involuntarily, Transfer all or any portion of its Class B Interest without the approval of the Managers and compliance with the terms and conditions of this Agreement and any additional agreement entered into in writing between the Class B Member and the Company.  Any attempted Transfer of a Class B Interest that is not made in accordance with these terms shall be null and void and shall have no effect.  In addition, without the prior consent of the Managers, no Class B Member that is a corporation, partnership or limited liability company may cause or permit a Class B Interest to be Transferred in connection with a Change in Control of such Class B Member.  Any such Transfer shall be null and void and shall have no effect.  The Class A Member may transfer Interests without the consent of the Managers.

16.3Operation of Transfer.  Notwithstanding that a Member has the right to Transfer any Interest in any manner provided in this Section 16 or otherwise, such Transfer shall not be permitted unless and until the purchaser, assignee, donee or transferee thereof agrees in writing to take and accept such Interest subject to all of the restrictions, terms and conditions contained in this Agreement, the same as if it were a signatory party hereto.  The Company will not be required to recognize any permitted assignment of an Interest until the instrument conveying such Interest and assuming all obligations under this Agreement has been delivered to the Company and is satisfactory to the Company in its reasonable discretion.

16.4Admission of New Members.  A person may become a new Member of the Company upon (i) receiving the consent of the Managers to such admission and to the amount of the Capital Contribution, if any, to be made by such new Member, (ii) making the required Capital Contribution, if any, to the Company and (iii) executing an addendum to this Company Agreement that by its terms (a) binds such new Member to the terms and conditions set forth herein, (b) recites the Capital Contribution, if any, to be made by such new Member and (c) sets forth the Membership Interest to be received by such new Member in exchange for the Capital Contribution.  At the time of admission of a new Member, the Members shall amend Exhibit A to reflect the percentage interests of all of the Members.  Such revised Exhibit A shall be effective as of the date of admission of the new Member.

17.   Dissolution.

17.1Events Requiring Dissolution.  The Company shall be dissolved upon the occurrence of any of the following events:

17.1.1the written consent of a majority of the outstanding Class A Interests; or

17.1.2an event specified under the TBOC as one causing dissolution.

17.2Election to Carry on Business.  Upon the occurrence of an event described in Section 17.1 hereof that would cause a dissolution of the Company by operation of law, the Members may, within ninety (90) days of such event, elect to carry on the business of the Company by the affirmative vote of a majority of the outstanding Class A Interests.  In the event that all of the Class A Interests do not elect to carry on the business within such ninety (90) day period, the holders of the Class A Interests who do not vote to carry on the business shall, jointly and severally, indemnify the Company for any and all costs incurred by the Company in connection with or as a result of the dissolution of the Company.

17.3Distribution Upon Liquidation.  Upon dissolution of the Company, the affairs of the Company shall be wound up in accordance with this Section 17.3.  The fair market value of the assets of the Company (other than cash) shall be determined by the Managers.  Any Profits or Losses from disposition (including unrealized Profits and Losses from property to be distributed in kind) shall be allocated among the Members as provided in Section 12.  Thereafter, the assets of the Company shall be distributed in the following manner and order:  (a) first, to the claims of all creditors of the Company, including Members who are creditors, to the extent permitted by law, in satisfaction of liabilities of the Company, and (b) second, to the Members in accordance with the positive balances in their respective Capital Accounts.

18.   Right of Repurchase.

18.1Grant of Repurchase Right.

18.1.1Event of Default.   Upon an Event of Default Threshold Condition, the Company shall have an irrevocable, exclusive right to repurchase (the “Event of Default Repurchase Right”) all of the outstanding Class B Interests from the Initial Class B Member in exchange for (i) $10,000 and (ii) distributing 90% of the Remaining Shares (the “Event of Default Repurchase Price”) to the Initial Class B Member.  An “Event of Default Threshold Condition” shall have the meaning given such term in the Bridge Notes (as defined below) and the Cap Notes (as defined below).  The “Remaining Shares” means the Initial Shares minus the aggregate number of such shares issued to the Class A Member pursuant to the Common Stock Distributions.

18.1.2Declination of Distribution.  If prior to the payment of all principal, interest and late charges due under the Bridge Notes and the Cap Notes, the Initial Class B Member should decline to accept the Declined Distribution two consecutive times, the Company shall have an irrevocable, exclusive right to repurchase (the “Declination Repurchase Right”) all of the outstanding Class B Interests from the Initial Class B Member in exchange for (i) $10,000 and (ii) distributing 90% of the Remaining Shares (the “Declination Repurchase Price”) to the Initial Class B Member.  “Bridge Notes” refer to those certain senior secured subordinated notes of Firepond, Inc. due July 1, 2009, as amended from time to time.  “Cap Notes” refer to those certain senior secured convertible notes of Firepond, Inc. due December 31, 2009, as amended from time to time.

18.1.3Change in Control of Class B Member.   Upon a Change in Control of the Initial Class B Member, the Company shall have an irrevocable, exclusive right to repurchase (the “Change in Control Repurchase Right”) all of the outstanding Class B Interests from the Initial Class B Member in exchange for (i) $10,000 and (ii) distributing 90% of the Remaining Shares (the “Change in Control Repurchase Price”) to the Initial Class B Member.

18.2Exercise of the Repurchase Right.  In the event the Company exercises the Event of Default Repurchase Right or the Declination Repurchase Right and such Event of Default Repurchase Price or Declination Repurchase Right is paid as set forth above, the Class A Member shall become the legal and beneficial owner of the Class B Interests repurchased and all related rights and interests therein.

19.   Application of Texas Law.

This Company Agreement, and the application or interpretation hereof, shall be governed exclusively by the laws of the State of Texas, and specifically the TLLCL.

20.   No Action for Partition.

No Member shall have any right to maintain any action for partition with respect to the property of the Company.

21.   Headings and Sections.

The headings in this Company Agreement are inserted for convenience only and are in no way intended to describe, interpret, define, or limit the scope, extent or intent of this Company Agreement or any provision hereof.  Unless the context requires otherwise, all references in this Company Agreement to Sections shall be deemed to mean and refer to Sections of this Company Agreement.

22.   Numbers and Gender.

Where the context so indicates, the masculine shall include feminine and neuter, and the neuter shall include the masculine and feminine, the singular shall include the plural and any reference to a “person” shall mean a natural person or a corporation, limited liability company, association, partnership, joint venture, estate, trust or any other entity.

23.   Binding Effect.

Except as herein otherwise provided to the contrary, this Company Agreement shall be binding upon and inure to the benefit of the Members, their spouses, distributees, heirs, legal representatives, executors, administrators, successors and permitted assigns.

24.   Amendment of Certificate of Formation and Company Agreement.

Except as otherwise expressly set forth in this Company Agreement, the Certificate of Formation and this Company Agreement may be amended, supplemented or restated only by the vote of a majority of the outstanding Class A Interests.  Upon obtaining the approval of any amendment to the Certificate of Formation, the Managers shall cause a Certificate of Amendment in accordance with the TBOC to be prepared, and such Certificate of Amendment shall be executed by not less than one (1) Manager and shall be filed in accordance with the TBOC.

[Signature Page Follows]

IN WITNESS WHEREOF, the undersigned have executed this Company Agreement effective as of the _____ day of April, 2008.

TECHDEV HOLDINGS, LLC

Name:

By:

Title:

FIREPOND, INC.

Name:

By:

Title:

EX-99.7

Firepond Announces Completion of Financial Restructuring

Increases liquidity through equity, restructuring of debt

Framingham, MA, April 29, 2008 – Firepond, Inc. (OTCBB: FPND) announced today that it has completed a financial restructuring that increases liquidity through a new equity investment, converts some outstanding senior debt, extends the maturity of all other existing senior debt and positions Firepond to continue building its active user base and considerable pipeline.

“In this challenging financial market, we are elated to be able to complete a transaction that will permit Firepond to focus exclusively on its customers, prospects and market leading CPQ solutions,” stated Bill Santo, CEO of Firepond.  “We thank our senior creditors and lead investor for working with us to achieve this goal.  We look forward to growing our business and doing it in a much more comfortable and certain financial environment.”

The transaction includes the following key elements:

·   Extension of Maturities of CAP and Bridge Notes: The Company’s Senior Secured Convertible Notes (now totaling $5.3 million) are now scheduled to mature on December 31, 2009 and the Company’s zero coupon Senior Secured Subordinated Notes (now totaling $3.9 million) are now scheduled to mature on July 1, 2009.  In addition, the holders of these instruments agreed to revise the terms that remove virtually all restrictions on the Company’s ability to refinance these obligations and operate its business.

·   New Equity Funding: FP Tech Holdings, LLC (an entity that is affiliated with the private investment firm Acclaim Financial Group, LLC and TechDev Holdings, LLC) invested $1.5 million in newly issued common equity on the close of this transaction and has indicated its commitment to invest another $0.5 million in common equity in July 2008. In addition, FP Tech Holdings, LLC has agreed to invest an additional $1.0 million as part of a larger subsequent equity offering intended to refinance the senior debt and provide additional expansion capital.  In recognition of Firepond’s progress, FP Tech agreed to convert $0.44 million of senior and other debt held by it into common stock.

“We view the underlying product, customer list and business plan that Firepond is pursuing very favorably and are happy to have completed this deal giving the Company the time and stability to execute on their business plan.  With this critical step behind them, we believe that management can make a considerable success of their efforts,” stated a spokesperson for FP Tech, Firepond’s largest stockholder.

Said Santo, “Firepond’s technological advantage, US-based group of long tenured employees, 25-year operating history, deep sales pipeline and customer enthusiasm for our products are key attributes that FP Tech and our senior lenders recognized when they expressed this confidence in Firepond.  In the last twelve months, Firepond has added 17 net new customers and had 11 existing customers renew their contracts. With this critical financing behind us, we will continue to expand Firepond’s market position delivering the most innovative CPQ products and the highest level of customer service. Over the course of the next twelve months, we will evaluate whether and when to seek any additional financing. Right now, we have critical customer facing work to do.”

The Company will make a filing with the Securities and Exchange Commission within the prescribed period that will contain all of the material documents related to this restructuring and readers are urged to review this filing for more detailed information.

About Firepond, Inc.

Firepond (OTCBB: FPND) is the leading provider of multi-tenant, CPQ as a Service applications that automate and simplify product pricing and configuration for companies and helps these enterprises improve order accuracy while reducing their cost of sales. Firepond’s sales applications help companies to optimize their sales processes whether their need is to solve complex product or pricing configuration, create product catalogs or provide an interactive selling system and dramatically improve response time. Firepond CPQ as a Service applications provide a rapid ROI through improved order accuracy (100% of submitted orders have accurate specifications and pricing), improved proposal generation time and high user acceptance. For additional information about Firepond, visit www.firepond.com or call 1-866-UCONFIG (826-6344).

Forward-Looking Statement

This press release may contain forward looking statements that involve risks and uncertainties, including statements regarding our business strategy and development plans, plans for entering into new businesses, anticipated sources and uses of funds and other statements regarding our plans, objectives, expectations and intentions that are not historical facts. Because these forward-looking statements involve risks and uncertainties, actual results could differ materially from those discussed in this press release. These risks and uncertainties are described in greater detail in the reports that we file with the Securities and Exchange Commission. Our actual results, performance or achievements may vary materially from those expressed or implied in any forward-looking statements. All forward-looking statements reflect our beliefs and expectations as of the date of this press release and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements publicly at some point in the future, we specifically disclaim any obligation to do so, whether as a result of new information, future events or otherwise.

Contact

Bill Santo

bill.santo@firepond.com

1-866-826-6344 x2011