EX-4.9 CONVERTIBLE REDEEMABLE EXCHANGEABLE

EXHIBIT 4.9

WEBMD CORPORATION

CONVERTIBLE REDEEMABLE EXCHANGEABLE
PREFERRED STOCK

PURCHASE AGREEMENT
MARCH 4, 2004

PURCHASE AGREEMENT

March 4, 2004

CalPERs/PCG Corporate Partners, LLC
c/o Pacific Corporate Group LLC
1200 Prospect Street, Suite 200
La Jolla, CA 92037
        as Investor

Dear Sirs and Mesdames:

          WebMD Corporation, a Delaware corporation (the “Company”), has duly authorized the sale and issuance to the investor named in Schedule A hereto (the “Investor”) up to 10,000 shares of its Convertible Redeemable Exchangeable Preferred Stock, par value $0.0001 per share (the “Preferred Stock”), having the rights, restrictions, privileges and preferences set forth in the Certificate of Designations in the form attached hereto as Exhibit A (the “Certificate”) filed concurrently with the Secretary of State of the State of Delaware.

          The shares of Preferred Stock will be convertible in accordance with their terms and the terms of the Certificate into shares of the common stock, par value $0.0001 per share (the “Common Stock”), of the Company, and the Company has reserved a sufficient number of its authorized but unissued shares of Common Stock in order to satisfy the rights upon conversion of the shares of Preferred Stock. The shares of Preferred Stock also will be exchangeable for the Company’s 10% Subordinated Notes due 2010 (the “Subordinated Notes”), which will be issued pursuant to an Indenture to be entered into between the Company and the trustee to be named therein (the “Trustee”), substantially in the form attached hereto as Exhibit B (the “Indenture”). The Investor will be entitled to the benefits of the registration rights set forth in Exhibit C with respect to the shares of Common Stock issuable upon conversion of the shares of Preferred Stock, which terms contained in Exhibit C shall be deemed to be incorporated by reference in and to constitute a part of this Agreement.

          In consideration of the representations, warranties, covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Investor agree as follows:

          1. Sale and Purchase. Upon the basis of the warranties and representations and subject to the other terms and conditions herein set forth, the Company hereby sells to the Investor, and the Investor hereby purchases from the Company, the aggregate number of shares of Preferred Stock set forth opposite its name in Schedule A hereto at a purchase price of $10,000 per share of Preferred Stock, for an aggregate purchase price of $100,000,000.

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          2. Payment and Delivery. Payment of the purchase price for the shares of Preferred Stock shall be made by wire transfer made payable to the order of the Company or as it shall direct in federal (same day) funds, against delivery of the certificates representing the number of shares of Preferred Stock to be purchased to the Investor, at the offices of Shearman & Sterling LLP, in New York, New York, or at such other place as may be agreed upon by the parties hereto, at 10:00 A.M., eastern standard time, on March 19, 2004 (the “Settlement Date”), concurrently with the delivery of the legal opinions of Shearman & Sterling LLP, counsel to the Company, and Richards, Layton & Finger, P.A., special Delaware counsel to the Company.

          3. Use of Proceeds. The proceeds received by the Company from the sale of the Preferred Stock pursuant to the terms hereof will be used for general corporate purposes, which may include strategic acquisitions.

          4. Representations and Warranties of the Company. The Company represents and warrants to the Investor that as of the date hereof:

               (a) Each document filed by the Company with the U.S. Securities and Exchange Commission (the “Commission”) since March 27, 2003, as listed in Schedule B hereto, (i) complied when so filed in all material respects with the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the applicable rules and regulations of Commission thereunder and (ii) when so filed did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The documents listed in Schedule B hereto, exclusive of any portions of the respective filings that were furnished rather than filed under applicable rules and regulations of the Commission, shall hereinafter be referred to as, the “Specified Exchange Act Documents.” The Company has provided or made available to the Investor such other information, as set forth Schedule C hereto, which, together with the Specified Exchange Act Documents, shall hereinafter referred to as the “Company Information”;

               (b) The statements in the Company’s draft Annual Report on Form 10-K, dated March 4, 2004, under the caption “Part I. Item 1. Business—Government Regulation” as of the date hereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

               (c) As of December 31, 2003, the Company had an authorized and outstanding capitalization as set forth in the Capitalization table (including the footnotes thereto describing options, warrants and instruments convertible into equity of the Company) attached hereto as Schedule D (the “Capitalization Table”); all of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and, except as described or incorporated by reference in the Company Information, are free of statutory or contractual preemptive and similar rights; since December 31, 2003, through and including March 2, 2004, there has been no issuances of any shares of capital stock of the Company, or any options, warrants or securities exercisable for or convertible into capital stock of the Company, other than such

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shares that were issued pursuant to the Company’s employee benefits, compensation or stock option plans (including stock option agreements under any stock option plan of the Company) or that were issued upon the exercise of securities described in Schedule D;

               (d) The Company has no significant subsidiaries (as defined in Rule 1-02 of Regulation S-X under the Exchange Act) except as listed in an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2002 (such significant subsidiaries of the Company, collectively, the “Subsidiaries”); (i)(A) each of Porex Corporation, WebMD Inc., Medical Manager Health Systems, Inc. and Envoy Corporation (collectively, the “Material Subsidiaries”) and the Company has been duly incorporated and is validly existing as a corporation under the laws of the jurisdiction of its incorporation, with all requisite corporate power and authority to own its properties and conduct its business as described in the Company Information and (B) with respect to each of the Subsidiaries other than the Material Subsidiaries, such Subsidiary has been duly incorporated and is validly existing as a corporation under the laws of the jurisdiction of its incorporation, with all requisite corporate power and authority to own its properties and conduct its business as described in the Company Information except where such failure to be so duly incorporated, validly existing and with all requisite corporate power and authority would not have a Material Adverse Effect (as defined below); (ii)(A) all of the issued shares of capital stock of each Material Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and to the extent indicated in such exhibit are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except (x) for those encumbrances disclosed in the Company Information, (y) for interests or liens held by others as security for indebtedness of the Company or any Subsidiary, such interests or liens as disclosed in the Company Information, and (x) for transfer restrictions under applicable federal and state securities laws and (B) with respect to each Subsidiary other than the Material Subsidiaries, except to the extent that it would not have a Material Adverse Effect (as defined below), all of the issued shares of capital stock of each Subsidiary have been duly and validly authorized and issued, are fully paid and non-assessable and to the extent indicated in such exhibit are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except (x) for those encumbrances disclosed in the Company Information, (y) for interests or liens held by others as security for indebtedness of the Company or any Subsidiary, such interests or liens as disclosed in the Company Information, and (z) for transfer restrictions under applicable federal and state securities laws;

               (e) The Company and each of its Subsidiaries are duly qualified or licensed to do business as foreign corporations and are in good standing in each jurisdiction in which the conduct of their respective businesses or their ownership or leasing of property requires such qualification or license or good standing, except to the extent that the failure, individually or in the aggregate, to be so qualified or licensed or be in good standing would not have a material adverse effect on the operations, business, prospects or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole (a “Material Adverse Effect”);

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               (f) Neither the Company nor any of the Subsidiaries is in material breach of, or in default under (nor has any event occurred which with notice, lapse of time, or both would constitute a material breach of, or default under), its respective charter or by-laws, or any material license, indenture, mortgage, deed of trust, bank loan or credit agreement or other material evidence of indebtedness, or any material lease, contract or other material agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or their respective properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or any decree, judgment or order applicable to the Company or any of the Subsidiaries, and the execution, delivery and performance of this Agreement and the execution and filing of the Certificate, and the consummation of the transactions contemplated hereby and thereby, including the issuance of the shares of Preferred Stock, and any redemption thereof, the issuance of the shares of Common Stock upon conversion of the Preferred Stock and the issuance of the Subordinated Notes upon exchange of the Preferred Stock, will not conflict with, or result in any material breach of or constitute a default under (nor constitute any event which with notice, lapse of time, or both would constitute a breach of, or default under), any provisions of the charter or by-laws of the Company or any of the Subsidiaries or under any provision of any material license, indenture, mortgage, deed of trust, bank loan or credit agreement or other material evidence of indebtedness, or any material lease, contract or other material agreement or instrument to which the Company or any of the Subsidiaries is a party or by which any of them or their respective properties may be bound or affected, or under any federal, state, local or foreign law, regulation or rule or, to the knowledge of the Company, any decree, judgment or order applicable to the Company or any of the Subsidiaries;

               (g) This Agreement has been duly authorized, executed and delivered by the Company;

               (h) The Indenture has been duly authorized by the Company and when executed and delivered by the Company and the other parties thereto will be a legal, valid and binding agreement of the Company, enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general principles of equity;

               (i) The shares of Preferred Stock to be sold to the Investor pursuant to the provisions of this Agreement have been duly authorized and, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable, and will be issued free of statutory and contractual preemptive rights;

               (j) The shares of Common Stock issuable upon conversion of the Preferred Stock have been duly authorized and validly reserved for issuance upon conversion of the Preferred Stock, and upon conversion of the Preferred Stock in accordance with their terms and the terms of the Certificate will be issued free of statutory and contractual preemptive rights, and such Common Stock, when so issued upon such conversion in accordance with the terms of the Preferred Stock and the Certificate, will be duly and validly issued and fully paid and nonassessable;

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               (k) The Subordinated Notes have been duly authorized by the Company for issuance to the Investor upon exchange of their shares of Preferred Stock in accordance with the terms of the Indenture and the terms of the Certificate and, when executed and delivered by the Company and duly authenticated by the Trustee in accordance with the terms of the Indenture, and delivered to the Investor in accordance with the terms of the Certificate and the Indenture, will constitute legal, valid and binding obligations of the Company, enforceable in accordance with their terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and general principles of equity, and will be entitled to the benefits of the Indenture;

               (l) Assuming the accuracy of the Investor’s representations and warranties and compliance by the Investor with its covenants set forth herein, no approval, authorization, consent or order of or filing with any national, state or local governmental or regulatory commission, board, body, authority or agency is required in connection with the issuance and sale by the Company of the Preferred Stock, the shares of Common Stock issuable upon conversion of the Preferred Stock and the Subordinated Notes issuable upon exchange of the Preferred Stock, in each case as contemplated hereby, other than (i) as may be required by federal and state securities laws with respect to the Company’s obligations with respect to the Investor’s registration rights set forth in Exhibit C hereto and (ii) as have been made or obtained on or prior to the applicable time of purchase;

               (m) Ernst & Young LLP, whose reports on the consolidated financial statements of the Company and the Subsidiaries are included in the Company Information, are independent public accountants with respect to the Company as required by the Securities Act of 1933, as amended (the “Securities Act”), and the applicable published rules and regulations thereunder;

               (n) Each of the Company and the Subsidiaries has all necessary licenses, authorizations, consents and approvals (collectively, “Consents”) and has made all necessary filings required under any federal, state, local or foreign law, regulation or rule (collectively, “Filings”) and has obtained all necessary Consents from other persons, in order to conduct its respective business, except where the failure to have any such Consent or to have made any such Filing would not have a Material Adverse Effect; neither the Company nor any of its Subsidiaries is in violation of, or in default under, any such Consent or any federal, state, local or foreign law, regulation or rule or, to the knowledge of the Company, any decree, order or judgment applicable to the Company or any of the Subsidiaries which violation or default would have a Material Adverse Effect;

               (o) Except as described or incorporated by reference in the Company Information, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company or any of the Subsidiaries or any of their respective properties, at law or in equity, or before or by any federal, state, local or foreign governmental or regulatory commission, board, body, authority or agency which, if determined in a manner adverse to the Company or any Subsidiary, would result in a judgment, decree or order having a Material Adverse Effect;

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               (p) Except as would not reasonably be expected to have a Material Adverse Effect, the Company and each Subsidiary have filed on a timely basis all necessary federal, state and foreign income, franchise and other tax returns (other than returns being contested in good faith) and have paid all taxes shown thereon as due (other than those being contested in good faith or which are currently payable without penalty or interest), and the Company has no knowledge of any tax deficiency which has been or might be asserted against the Company or any Subsidiary; all material tax liabilities are adequately provided for within the financial statements of the Company in accordance with generally accepted accounting principles (“GAAP”);

               (q) The Company and the Subsidiaries maintain insurance of the types and in the amounts reasonably believed to be adequate for their business and, to the knowledge of the Company, consistent with insurance coverage maintained by similar companies in similar businesses, all of which insurance is in full force and effect, except where the failure of any of such insurance coverage to be in full force and effect would not have a Material Adverse Effect;

               (r) Neither the Company nor the Subsidiaries are involved in any labor dispute or disturbance nor, to the knowledge of the Company, is any such dispute or disturbance threatened except, in each case, for disputes or disturbances which would not, individually or in the aggregate, have a Material Adverse Effect;

               (s) Except as described or incorporated by reference in the Company Information, the Company and each Subsidiary owns or possesses such licenses or other rights to use all patents, patent applications, trademarks, trademark applications, service marks, service mark applications, trade names, copyrights, manufacturing processes, formulae, trade secrets, know-how, franchises, and other material intangible property and assets (collectively, “Intellectual Property”) necessary to the conduct of their respective businesses as conducted and as proposed to be conducted as described or incorporated by reference in the Company Information, except where the failure to do so would not have a Material Adverse Effect; the Company has no knowledge that it or any Subsidiary lacks or will be unable to obtain any rights or licenses to use any of the Intellectual Property necessary to conduct the business now conducted or proposed to be conducted by it as described or incorporated by reference in the Company Information, except as described or incorporated by reference in the Company Information and except where the failure to have or obtain such rights or licenses would not have a Material Adverse Effect; neither the Company nor any Subsidiary has received any written notice of infringement or of conflict with rights or claims of others with respect to any Intellectual Property which infringement or conflict would have a Material Adverse Effect, except as described or incorporated by reference in the Company Information, and the Company is not aware of any patents of others which are infringed by the Company or any Subsidiaries in such a manner as would have a Material Adverse Effect, except as described or incorporated by reference in the Company Information;

               (t) The audited financial statements and related notes thereto of the Company included or incorporated by reference in the Specified Exchange Act Documents

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present fairly in all material respects the consolidated financial position of the Company and its Subsidiaries as of the dates indicated and the results of operations and cash flows of the Company and its Subsidiaries for the periods specified; such financial statements have been prepared in conformity with GAAP applied on a consistent basis during the periods involved;

               (u) As of the date hereof, subsequent to the respective dates as of which information is stated or incorporated by reference in the Company Information, there has not been (A) any material and unfavorable change in the business, properties, prospects, regulatory environment, results of operations or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, (B) any transaction entered into by the Company or any of its subsidiaries, which is material to the Company and its subsidiaries, taken as a whole, or (C) any obligation, contingent or otherwise, directly or indirectly, incurred by the Company or any of its subsidiaries which is material to the Company and its subsidiaries, taken as a whole;

               (v) Except as described or incorporated by reference in the Company Information, the Company and the Subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively, “Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not have a Material Adverse Effect.

               (w) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an “Affiliate”) of the Company has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act) which is or will be integrated with the sale of the Preferred Stock in a manner that would require the registration under the Securities Act of the Preferred Stock or (ii) offered, solicited offers to buy or sold the Preferred Stock by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act;

               (x) Assuming the accuracy of the representations and warranties of each of the Investor contained herein and compliance by the Investor with its covenants set forth herein, it is not necessary in connection with the offer, sale and delivery of the Preferred Stock to the Investor pursuant to this Agreement, the issuance of shares of Common Stock issuable upon conversion of the Preferred Stock or the issuance of Subordinated Notes upon exchange of the Preferred Stock, to register the Preferred Stock, such Common Stock or the Subordinated Notes under the Securities Act;

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               (y) The Company is not and, after giving effect to the offering and sale of the Preferred Stock and the application of the proceeds thereof as described above in Section 3, will not be, required to register as an “investment company” as defined in the Investment Company Act of 1940, as amended;

               (z) Except as set forth in Exhibit D hereto and except for the Investor’s registration rights set forth in Exhibit C hereto, there are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to register any securities with the Commission;

               (aa) Prior to the date hereof, neither the Company nor any of its Affiliates has taken any action which is designed to or which has constituted or which might have been expected to cause or result in stabilization or manipulation of the price of any security of the Company in connection with the sale of the Preferred Stock contemplated hereby; and

               (bb) Within the preceding six months, neither the Company nor any other person acting on behalf of the Company has offered or sold to any person any shares of Preferred Stock, or any securities of the same or a similar class as the shares of Preferred Stock, other than the shares of Preferred Stock offered or sold to the Investor hereunder.

          5. Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company as follows:

               (a) Power and Authority. It has all necessary limited liability company power and authority under all applicable provisions of law to execute and deliver this Agreement to carry out its obligations hereunder. All action on the Investor’s part required for the lawful execution and delivery of this Agreement have been taken. Upon the execution and delivery of this Agreement by the Investor, this Agreement will be the legal, valid and binding agreement of such Investor;

               (b) No Registration. It understands that none of the shares of Preferred Stock, or the shares of Common Stock issuable upon conversion of the Preferred Stock or the Subordinated Notes issuable upon exchange of the Preferred Stock has been registered under the Securities Act. It also understands that the shares of Preferred Stock are being offered and sold pursuant to an exemption from registration contained in the Securities Act based in part upon the Investor’s representations contained in this Agreement;

               (c) Standstill. It will not, during the period commencing the date hereof through and including the sooner of (i) the date immediately succeeding such date that the Company files its Annual Report on Form 10-K for the year ended December 31, 2003 and (ii) April 5, 2004, directly or indirectly, alone on in concert with any other person, other than the shares of Preferred Stock to be purchased hereby, acquire or sell, offer to acquire or sell, or agree to acquire or sell whether through market purchases, tender or exchange offer, acquisition of control or otherwise, record or beneficial ownership, or any right to acquire or vote, any of the Company’s shares of Common Stock;

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               (d) Investor Bears Economic Risk. The Investor has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to the Company so that it is capable of evaluating the merits and risks of its investment in the Company and has the capacity to protect its own interests. The Investor understands that it must bear the economic risk of this investment indefinitely unless the shares of Preferred Stock are registered pursuant to the Securities Act, or an exemption from registration is available. The Investor understands that the Company has no present intention of registering the shares of Preferred Stock. The Investor also understands that there is no assurance that any exemption from registration under the Securities Act will be available and that, even if available, such exemption may not allow the Investor to transfer all or any portion of shares of Preferred Stock under the circumstances, in the amounts or at the times the Investor might propose;

               (e) Acquisition for Own Account. The Investor is acquiring the Preferred Stock (and the shares of Common Stock issuable upon conversion of the Preferred Stock or the Subordinated Notes issuable upon exchange of the Preferred Stock, if applicable) for the Investor’s own account for investment only, and not with a view towards its distribution, other than in accordance with applicable law;

               (f) Investor Can Protect Its Interest. The Investor represents that by reason of its, or of its management’s, business or financial experience, the Investor has the capacity to protect its own interests in connection with the transactions contemplated in this Agreement. Further, the Investor has not undertaken any publication of any advertisement in connection with the transactions contemplated in the Agreement;

               (g) Accredited Investor. The Investor represents that it is an accredited investor (“Accredited Investor”) within the meaning of Regulation D under the Securities Act;

               (h) Company Information. The Investor has had an opportunity to discuss the Company’s business, management and financial affairs with certain members of management of the Company. The Investor has also had the opportunity to ask questions of the Company and its management regarding the terms and conditions of this investment;

               (i) Residence. If the Investor is an individual, then the Investor resides in the state or province identified in the address of the Investor set forth on Schedule A; if the Investor is a partnership, corporation, limited liability company or other entity, then the office or offices of the Investor in which its investment decision was made is located at the address or addresses of the Investor set forth on Schedule A;

               (j) Rule 144. The Investor understands that the shares of Preferred Stock it is purchasing are 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 presently in

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effect thereunder, and understands the resale limitations imposed thereby and by the Securities Act;

               (k) No Broker Fee. The Investor represents and warrants that, other than the fee payable to CalPERs/PCG Corporate Partners, LLC as set forth in Schedule E hereof, no agent, broker, investment banker, person or firm acting on behalf of or under the authority of such party hereto is or will be entitled to any broker’s or finder’s fee or any other commission directly or indirectly in connection with the transactions contemplated herein; and

               (l) Hart-Scott-Rodino Act. The Investor will not hold (within the meaning of the Hart-Scott-Rodino Antitrust Improvements Act of 1975, as amended (the “HSR Act”)) any shares in the capital stock of the Company other than the shares of Preferred Stock to be issued to the Investor hereunder. The Investor intends to acquire such shares of Preferred Stock solely for the purpose of investment and has no present intention of participating in the formulation, determination or direction of the basic business decisions of the Company under Subsection (c)(9) of the HSR Act and rules promulgated thereunder.

          6. Certain Covenants of the Company. The Company hereby agrees that:

               (a) The Company will reserve and keep available at all times, free of preemptive rights, such number of shares of Common Stock for the purpose of enabling the Company to satisfy any obligations to issue such shares of Common Stock upon conversion of the shares of Preferred Stock in accordance with its terms;

               (b) Neither the Company nor any Affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the shares of Preferred Stock in a manner which would require the registration under the Securities Act of the shares of Preferred Stock;

               (c) The Company will not solicit or agree to solicit any offer to buy or offer or sell the shares of Preferred Stock by means of any form of general solicitation or general advertising (as those terms are used in Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act;

               (d) The Company will not take any action prohibited by Regulation M under the Exchange Act in connection with the distribution of the shares of Preferred Stock contemplated hereby;

               (e) So long as any other shares of Common Stock shall then be so listed and so long as any shares of Preferred Stock are then outstanding, the Company shall (i) use its reasonable best efforts to secure the listing of the shares of Common Stock issuable upon conversion of the Preferred Stock (collectively, the “Conversion Shares”) upon each national securities exchange and automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and (ii) maintain, so

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long as any other shares of Common Stock shall then be so listed, such listing of all Conversion Shares from time to time issuable under the terms of the Preferred Stock. So long as any other shares of Common Stock shall then be so listed and so long as any shares of Preferred Stock are then outstanding, the Company shall maintain the Common Stock’s authorization for quotation or listing on The New York Stock Exchange, the American Stock Exchange, Inc. or The Nasdaq National Market or SmallCap Market, as applicable. The Company shall pay all fees and expenses in connection with satisfying its obligations under this Section 6(e); and

               (f) The Company will not, without the prior written consent of holders of 75% of the shares of Preferred Stock then outstanding, (i) issue any additional shares of Preferred Stock, (ii) create any other class or series of Capital Stock, the terms of which expressly provide that such class or series ranks senior to the Preferred Stock as to rights upon liquidation, winding-up, dividends or dissolution of the Company or (iii) create any class or series of Parity Stock (as such term is defined in the Certificate).

               (g) The Company agrees to use its reasonable best efforts to amend, subject to the approval thereof by the holders of (i) a majority of the shares of Common Stock then outstanding, voting as a separate class, and (ii) a majority of the shares of Preferred Stock then outstanding, voting as a separate class, the Certificate of Incorporation of the Company at the next meeting of the stockholders of the Company to provide that the shares of Preferred Stock shall have the right to vote, on an as-converted basis, on matters that are put to vote of holders of shares of Common Stock of the Company with such number of votes as the Holders shall have had the right to receive had such Holder converted its Preferred Stock into Common Stock immediately prior to the event date, and to provide that the Company will not, without the prior written consent of holders of 75% of the shares of Preferred Stock then outstanding, voting as a separate class, undertake any of the actions set forth in Section 6(f) above. In the event that such amendments to the Certificate of Incorporation are not obtained at such meeting of stockholders, the Company agrees that it will pay to the Investor $250,000.

               (h) The Company agrees that it will pay to CalPERs/PCG Corporate Partners, LLC the fees set forth in Schedule E hereof.

               (i) In the event of any offer made by the Company or any Affiliate of the Company, at the option of the Company, to repurchase or acquire less than all of the shares of Preferred Stock (a “Repurchase Offer”), the Investor shall be entitled to written notice of such Repurchase Offer no less than 15 days prior to the effective date of the repurchase that is the subject of the Repurchase Offer. Such notice shall state the price and all other terms and conditions upon which the Repurchase Offer is made, and the Investor shall be entitled to accept such Repurchase Offer and participate, on a pro rata basis, in such repurchase.

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               (iv) otherwise in compliance with and subject to the terms and conditions set forth in this Section 7, including the right of the Company to effect a repurchase pursuant to Section 7(c) below;

               (b) in the event that the Investor intends to effect any Transfer, it shall provide prior written notice (the “Transfer Notice”) thereof to the Company, at least 5 trading days prior to the date of the proposed Transfer (the “Transfer Date”), which Transfer Notice shall state the aggregate number of shares, aggregate dollar amount and the stock certificate number of the Preferred Stock proposed to be Transferred (the “Transfer Shares”);

               (c) from and after the Transfer Date, the Company shall have the option to repurchase, at any time and from time to time, out of lawfully available funds, all or a portion of the shares of Preferred Stock then outstanding that are Transfer Shares (other than Transfer Shares subject to Schedule F and other than Transfer Shares acquired by members or partners of the Investor who are Accredited Investors in accordance with this Section 7), at a repurchase price per share equal to 105% of the Liquidation Preference of the Preferred Stock, as set forth in the Certificate;

               (d) shares of Common Stock issued upon conversion of the Preferred Stock, and Subordinated Notes issued upon exchange of the Preferred Stock, shall bear appropriate legends as to restrictions on transfer (a “Restrictive Legend”);

               (e) upon the transfer, exchange or replacement of any Common Stock or Subordinated Notes bearing the Restrictive Legend, the Company (or its transfer agent or registrar) shall deliver only Common Stock or Subordinated Notes, as applicable, that bear the Restrictive Legend until such time as there shall have been delivered to the Company an opinion of counsel reasonably satisfactory to the Company to the effect that the Restrictive Legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act; and

               (f) the Investor will not provide, disclose or otherwise divulge any “Confidential Information” (as such term is defined in the Confidentiality Agreement, dated January 5, 2004, between the Company and Pacific Corporate Group (the “Confidentiality Agreement”)) to any transferee or potential transferee of any shares of Preferred Stock or shares of Common Stock held by it without the prior written consent of the Company.

          The Company agrees that nothing in the provisions of this Section 7 shall be deemed to prohibit or restrict any outright sale of both record and beneficial ownership of the Common Stock issuable upon conversion of the Preferred Stock, subject only to applicable law.

          8. Indemnification.

               (a) The Company agrees to indemnify, defend and hold harmless the Investor, its respective directors and officers, and any person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, an “Investor Indemnified Party”), from and against any loss, damage, expense,

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liability or claim (including the reasonable cost of investigation) which such Investor Indemnified Party may incur under the Securities Act, the Exchange Act or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any misrepresentation or breach of any representation, warranty, covenant or agreement by the Company in this Agreement.

               (b) The Investor agrees to indemnify, defend and hold harmless the Company, its directors and officers, and any person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a “Company Indemnified Party”), from and against any loss, damage, expense, liability or claim (including the reasonable cost of investigation) which such Company Indemnified Party may incur under the Securities Act, the Exchange Act or otherwise, insofar as such loss, damage, expense, liability or claim arises out of or is based upon any misrepresentation or breach of any representation, warranty, covenant or agreement by the Investor in this Agreement.

               (c) If any action, suit or proceeding (each, a “Proceeding”) is brought against any person in respect of which indemnity may be sought pursuant to subsection (a) or (b) of this Section 7, such person (the “Indemnified Party”) shall promptly notify the person against whom such indemnity may be sought (the “Indemnifying Party”) in writing of the institution of such Proceeding and such Indemnifying Party shall assume the defense of such Proceeding, including the employment of counsel reasonably satisfactory to such Indemnified Party and payment of all fees and expenses; provided, however, that the omission to so notify such Indemnifying Party shall not relieve such Indemnifying Party from any liability which it may have to such Indemnified Party or otherwise. Such Indemnified Party shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless the employment of such counsel shall have been authorized in writing by such Indemnifying Party in connection with the defense of such Proceeding or such Indemnifying Party shall not have employed counsel to have charge of the defense that is reasonably satisfactory to the Indemnified Party of such Proceeding within 60 days of the receipt of notice thereof or such Indemnified Party shall have reasonably concluded upon written advice of counsel that there may be defenses available to it that are different from, additional to, or in conflict with those available to such Indemnifying Party (in which case such Indemnifying Party shall not have the right to direct that portion of the defense of such Proceeding on behalf of such Indemnified Party, but such Indemnifying Party may employ counsel and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Indemnifying Party), in any of which events such reasonable fees and expenses shall be borne by such Indemnifying Party and paid as incurred (it being understood, however, that such Indemnifying Party shall not be liable for the expenses of more than one separate counsel in any one Proceeding or series of related Proceedings together with reasonably necessary local counsel representing the Indemnified Parties who are parties to such Proceeding). An Indemnifying Party shall not be liable for any settlement or compromise of any such Proceeding effected without its written consent, but if settled or compromised with the written consent of such Indemnifying Party, such Indemnifying Party agrees to indemnify and hold harmless an Indemnified Party from and against any loss or liability by

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reason of such settlement. An Indemnifying Party shall not, without the prior written consent of any Indemnified Party, effect any settlement of any pending or threatened Proceeding in respect of which such Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such Indemnified Party.

               (d) The indemnity agreements contained in this Section 7 and the covenants, warranties and representations of the Company and the Investors contained in this Agreement shall remain in full force and effect (regardless, with respect to representations and warranties of the Company, of any investigation made by on behalf of the Investor, its respective directors or officers or any person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on behalf of the Company, its directors and officers or any person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act), and shall survive any termination of this Agreement and the issuance and delivery of the shares of Preferred Stock.

          9. Effectiveness. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. The respective indemnities, agreements, representations, warranties and other statements of the Company and the Investor, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of the Investor or any controlling person of the Investor, or the Company, or any officer or director or controlling person of the Company, and shall survive delivery of and payment for the shares of Preferred Stock.

          10. Fees and Expenses. Each party shall pay all costs and expenses that it incurs with respect to the negotiation, execution, delivery and performance of the Agreement; provided, however, that the Company shall reimburse the Investor for reasonable and documented out-of-pocket expenses incurred in connection with the due diligence and legal review related to the transaction contemplated herein, not to exceed $750,000, on the Settlement Date.

          11. Amendment and Waiver.

               (a) This Agreement may be amended or modified only upon the written consent of the Company and holders of at least a majority of the shares of Preferred Stock outstanding (treated as if converted and including any shares of Common Stock into which the Preferred Stock have been converted).

               (b) The obligations of the Company and the rights of the holders of the shares of Preferred Stock under the Agreement may be waived only with the written consent of the holders of at least a majority of the shares of Preferred Stock outstanding (treated as if converted and including any shares of Common Stock into which the Preferred Stock have been converted).

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          12. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on any Investor’s part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of the Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.

          13. Headings. The titles of the sections and subsections of the Agreement are for convenience of reference only and are not to be considered in construing this Agreement.

          14. Parties in Interest. The Agreement herein set forth has been and is made solely for the benefit of the Investor and the Company and the controlling persons, directors and officers referred to in Section 7 hereof, and their respective successors, assigns, executors and administrators. No other person, partnership, association or corporation (other than a purchaser who acquires Preferred Stock or Common Stock pursuant to Section 7 hereof) shall acquire or have any right under or by virtue of this Agreement.

          15. Entire Agreement. This Agreement, the Exhibits and Schedules hereto, and the other documents delivered pursuant hereto or referred to herein, including the terms and provisions of the Confidentiality Agreement, constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

          16. Counterparts. This Agreement may be signed by the parties in any number of counterparts that together shall constitute one and the same agreement among the parties. Delivery of an executed counterpart by facsimile shall be effective as delivery of a manually executed counterpart thereof.

          17. Notices. Except as otherwise herein provided, all statements, requests, notices and agreements shall be in writing or by facsimile and, if to the Investor, shall be sufficient in all respects if delivered or sent to CalPERs/PCG Corporate Partners, LLC, c/o Pacific Corporate Group LLC, 1200 Prospect Street, Suite 200, La Jolla, CA 92037, Direct Phone: + ###-###-####, Direct Fax: +1 (858)  ###-###-####, Attention: Monte Brem, with a copy to Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los Angeles, California 90071, Attention Jennifer Bellah Maguire, Partner, facsimile no. (213) 229-7520, and, if to the Company, shall be sufficient in all respects if delivered or sent to the Company at the offices of the Company at 669 River Drive, Center 2, Elmwood Park, New Jersey ###-###-####, Attention: Andrew C. Corbin, Executive Vice-President and Chief Financial Officer, facsimile no. (201)  ###-###-####, with a copy to Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York 10022, Attention: Creighton O’M Condon, Partner, facsimile no.: (212)  ###-###-####.

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          18. Governing Law and Construction. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. THE SECTION HEADINGS IN THIS AGREEMENT HAVE BEEN INSERTED AS A MATTER OF CONVENIENCE OF REFERENCE AND ARE NOT A PART OF THIS AGREEMENT.

          19. Submission to Jurisdiction. Except as set forth below, no Proceeding may be commenced, prosecuted or continued in any court other than the courts of the State of New York located in the City and County of New York or in the United States District Court for the Southern District of New York, which courts shall have jurisdiction over the adjudication of such matters, and the Company hereby consents to the jurisdiction of such courts and personal service with respect thereto. The Company hereby consents to personal jurisdiction, service and venue in any court in which any Proceeding arising out of or in any way relating to this Agreement is brought by any third party against the Investor. The Company and the Investor hereby waive all right to trial by jury in any Proceeding (whether based upon contract, tort or otherwise) in any way arising out of or relating to this Agreement. The Company agrees that a final judgment in any such Proceeding brought in any such court shall be conclusive and binding thereupon and may be enforced in any other court in the jurisdiction to which the Company is or may be subject by suit upon such judgment.

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          If the foregoing correctly sets forth the understanding between the Company and the Investor, please so indicate in the space provided below for the purpose, whereupon this letter and your acceptance shall constitute a binding agreement between the Company and the Investor.

Accepted and agreed to as of the date first above written:

CALPERS/PCG CORPORATE PARTNERS, LLC

By:  PCG Corporate Partners Investments LLC
Its:  Manager

     By:  Pacific Corporate Group Holdings, LLC
     Its:  Managing Member

              /s/ Christopher Bower

EXHIBIT A

Certificate of Designation

[See Exhibit 3.2 to this Annual Report on Form 10-K]

A-1

Exhibit B

Form of Indenture

[See Exhibit 3.2 to this Annual Report on Form 10-K]

B-1

Exhibit C

Registration Rights of the Investor
With Respect to Shares of Common Stock Underlying the Preferred Stock

ARTICLE 1
DEFINITIONS

     1.1 Certain Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Purchase Agreement of which this Exhibit C is a part. As used in this Exhibit C:

          (a) “Affiliate” means, with respect to any Person, any other Person which directly or indirectly, by itself or through one or more intermediaries, controls, or is controlled by, or is under direct or indirect common control with, such Person. For purposes of this Exhibit C, none of the Investors nor any of their Affiliates shall be deemed an Affiliate of the Company, and neither the Company nor any of its Affiliates shall be deemed an Affiliate of any Investor.

          (b) “Business Day” is a day other than a Legal Holiday.

          (c) “Certificate” means the Certificate of Designations pursuant to which the Preferred Stock is issued.

          (d) “Common Stock” means the shares of common stock, par value $0.0001 per share, of the Company.

          (e) “control” (including the term “controlled by”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly or as trustee, personal representative or executor, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, as trustee, personal representative or executor, by contract or otherwise, including, without limitation, the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.

          (f) “Demand Requests” shall have the meaning set forth in Section 2.1(a) hereof.

          (g) “Demand Registration Statement” shall have the meaning set forth in Section 2.1(a) hereof.

          (h) “Effectiveness Period” shall have the meaning set forth in Section 2.2(c) hereof.

          (i) “Exchange Act” means the Exchange Act of 1934, as amended.

          (j) “Form S-3” means such form under the Securities Act as in effect on the date hereof or any registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.