Convertible Note Purchase Agreement between GlobalOptions Group, Inc. and Purchasers (June 28, 2006)

 Exhibit 10.1 - -------------------------------------------------------------------------------- CONVERTIBLE NOTE PURCHASE AGREEMENT by and among GlobalOptions Group, Inc., as Issuer and Company and the other parties named herein, as Purchasers June 28, 2006 - --------------------------------------------------------------------------------  CONVERTIBLE NOTE PURCHASE AGREEMENT (the "AGREEMENT") dated as of June 28, 2006, by and among GlobalOptions Group, Inc., a Nevada corporation (the "COMPANY"), and each of the other persons listed on SCHEDULE 1 hereto (each is individually referred to as a "PURCHASER" and collectively, the "PURCHASERS"). RECITALS: WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES ACT"), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company up to an aggregate original principal amount of up to $31,500,000 of convertible Promissory Notes (the "NOTES") convertible into (i) the Company's Series B Convertible Preferred Stock, par value $0.001 (the "PREFERRED STOCK") and (ii) two series of Common Stock Purchase Warrants (the "WARRANTS") entitling the holders thereof to purchase, in the aggregate, up to 11,025,000 shares of the Company's common stock, par value $0.001 (the "COMMON STOCK"), as more fully set forth herein. NOW THEREFORE, in consideration of the mutual promises and representations, warranties, covenants and agreements set forth herein, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE I - PURCHASE AND SALE 1.1 PURCHASE AND SALE. (a) On the terms and subject to the conditions set forth in this Agreement, at the Closing (as defined in Section 2.2(a)), the Company will sell and each of the Purchasers will purchase the Notes in the amounts set forth on SCHEDULE 1 hereto. (b) The shares of Preferred Stock issued or issuable upon conversion of the Notes are referred to herein as "PREFERRED CONVERSION SHARES", the shares of Common Stock issued or issuable upon conversion of the Preferred Stock are referred to herein as the "CONVERSION SHARES," and the shares of Common Stock issued or issuable upon exercise of the Warrants are referred to herein as the "WARRANT SHARES." 1.2 TERMS OF THE NOTES, PREFERRED STOCK AND WARRANTS. The terms and provisions of the Notes are more fully set forth in the form of convertible Promissory Note attached hereto as EXHIBIT A. The terms and provisions of the Preferred Stock are set forth in the form of Certificate of Designation of Series B Convertible Preferred Stock, attached hereto as EXHIBIT B (the "CERTIFICATE OF DESIGNATION"). The terms and provisions of the Warrants are more fully set forth in the form of Common Stock Purchase Warrant, attached as EXHIBIT 1 to the Notes. ARTICLE II - PURCHASE PRICE AND CLOSING 2.1 PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") to be paid by each Purchaser to the Company to acquire the Notes shall be the amount set forth beside the name of each Purchaser on SCHEDULE 1 hereto. 1  2.2 THE CLOSING. (a) The closing of the transactions contemplated under this Agreement (the "CLOSING") will take place as promptly as practicable, but no later than five (5) business days following satisfaction or waiver of the conditions set forth in Articles 6.1(a) and (b) and 6.2(a) (other than those conditions which by their terms are not to be satisfied or waived until the Closing), at the offices of Wiggin and Dana LLP, 400 Atlantic Street, Stamford, CT 06901 (or remotely via exchange of documents and signatures) or at such other place or day as may be mutually acceptable to the Purchasers and the Company. The date on which the Closing occurs is the "CLOSING DATE". (b) At the Closing, the Purchasers shall purchase, severally and not jointly, and the Company shall issue and sell, in the aggregate, up to $31,500,000 principal amount of Notes. At the Closing, each Purchaser shall purchase from the Company, and the Company shall issue and sell to each Purchaser, Notes having an original principal amount equal to such Purchaser's Purchase Price as set forth next to such Purchaser's name on SCHEDULE 1. ARTICLE III - REPRESENTATIONS AND WARRANTIES OF THE SELLER The Company's representations and warranties below are qualified in their entirety by the SEC Documents (as defined in Section 3.6). The Company represents and warrants to the Purchasers as follows: 3.1 CORPORATE EXISTENCE AND POWER; SUBSIDIARIES. The Company and its Subsidiaries (as defined below) are corporations duly incorporated, validly existing and in good standing under the laws of the state in which they are incorporated, and have all corporate powers required to carry on their business as now conducted. The Company and its Subsidiaries are duly qualified to do business as a foreign corporation and are in good standing in each jurisdiction where the character of the property owned or leased by them or the nature of their activities makes such qualification necessary, except for those jurisdictions where the failure to be so qualified would not have or result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document (as defined below), (ii) a material adverse effect on the business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company's ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a "MATERIAL ADVERSE EFFECT"). True and complete copies of the Company's Articles of Incorporation, as amended (the "CERTIFICATE"), and Bylaws, as amended (the "BYLAWS"), as currently in effect and as will be in effect on the Closing Date (collectively, the "CERTIFICATE AND BYLAWS"), have previously been made available to the Purchasers. For purposes of this Agreement, the term "SUBSIDIARY" or "SUBSIDIARIES" means, with respect to any entity, any corporation or other organization of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such entity or of which such entity is a partner or is, directly or indirectly, the beneficial owner of 50% or more of any class of equity securities or equivalent profit participation interests. 3.2 CORPORATE AUTHORIZATION. The execution, delivery and performance by the Company of this Agreement, the Notes, the Warrants, the Certificate of 2  Designation, the Investor Rights Agreement, and each of the other documents executed pursuant to and in connection with this Agreement (collectively, the "TRANSACTION DOCUMENTS"), and the consummation of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the Notes, and the subsequent issuance of the Preferred Conversion Shares and Warrants upon conversion of the Notes, the Conversion Shares upon conversion of the Preferred Conversion Shares and the Warrant Shares upon exercise of the Warrants) have been duly authorized, and no additional corporate or stockholder action is required for the approval thereof. The Preferred Conversion Shares, the Conversion Shares and the Warrant Shares have been duly reserved for issuance by the Company. This Agreement and the other Transaction Documents have been or, to the extent contemplated hereby or by the Transaction Documents, will be duly executed and delivered and constitute, or will constitute (as applicable), the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with their terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of its obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.3 CHARTER, BYLAWS AND CORPORATE RECORDS. The minute books of the Company and its Subsidiaries contain, in all material respects, complete and accurate records of all meetings and other corporate actions of the board of directors, committees of the board of directors, incorporators and stockholders of the Company and its Subsidiaries to the date hereof. All material corporate decisions and actions have been validly made or taken. All corporate books, including without limitation the share transfer register, comply with applicable laws and regulations in all material respects and have been regularly updated. Such books correctly reflect all the decisions of the stockholders in all material respects. 3.4 GOVERNMENTAL AUTHORIZATION. Except as otherwise specifically contemplated in this Agreement and the other Transaction Documents, and except for: (i) the filings referenced in Section 5.12; (ii) the filing of a Form D with respect to the Notes under Regulation D under the Securities Act; (iii) the filing of the Registration Statement (as defined in the Investor Rights Agreement) with the Commission; (iv) the application(s) to each trading market for the listing of the Conversion Shares and the Warrant Shares for trading thereon; and (v) any filings required under state securities laws that are permitted to be made after the date hereof, the execution, delivery and performance by the Company of this Agreement and the other Transaction Documents, and the consummation of the transactions contemplated hereby and thereby (including, but not limited to, the sale and delivery of the Notes and the subsequent issuance of the Preferred Conversion Shares and Warrants upon conversion of the Notes, the Conversion Shares upon conversion of the Preferred Conversion Shares and Warrant Shares upon the exercise of the Warrants) by the Company require no action (including, without limitation, stockholder approval) by or in respect of, or filing with, any governmental or regulatory body, agency, official or authority (including, without limitation, Nasdaq), except as would not cause a Material Adverse Effect. 3.5 NON-CONTRAVENTION. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents, and the consummation by the Company of the transactions contemplated hereby and thereby (including the issuance of the Notes, Warrants, Preferred Conversion Shares, Conversion Shares and Warrant Shares) do not and will not (a) contravene or 3  conflict with the Certificate (as amended by the Certificate of Designation) and Bylaws of the Company and its Subsidiaries or any material agreement to which the Company is a party or by which it is bound; (b) contravene or conflict with or constitute a violation of any material provision of any law, regulation, judgment, injunction, order or decree binding upon or applicable to the Company or its Subsidiaries; (c) constitute a default (or would constitute a default with notice or lapse of time or both) under or give rise to a right of termination, cancellation or acceleration or loss of any benefit under any material agreement, contract or other instrument binding upon the Company or its Subsidiaries or under any material license, franchise, permit or other similar authorization held by the Company or its Subsidiaries; or (d) result in the creation or imposition of any Lien (as defined below) on any asset of the Company or its Subsidiaries. For purposes of this Agreement, the term "LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest, claim or encumbrance of any kind in respect of such asset. 3.6 SEC DOCUMENTS. The Company is obligated under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") to file reports pursuant to Sections 13 or 15(d) thereof (all such reports filed or required to be filed by the Company, including all exhibits thereto or incorporated therein by reference, and all documents filed by the Company under the Securities Act hereinafter called the "SEC DOCUMENTS"). The Company has filed all reports or other documents required to be filed under the Exchange Act. All SEC Documents filed by the Company (i) were prepared in all material respects in accordance with the requirements of the Exchange Act and (ii) did not at the time they were filed (or, if amended or superseded by a filing prior to the date hereof, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company has previously made available to each Purchaser a correct and complete copy of each report which the Company filed with the Securities and Exchange Commission (the "SEC" or the "COMMISSION") under the Exchange Act for any period ending on or after December 31, 2005 (the "RECENT REPORTS"). None of the information about the Company or any of its Subsidiaries which has been disclosed to the Purchasers herein or in the course of discussions and negotiations with respect hereto which is not disclosed in the Recent Reports is or was required to be so disclosed, and no material non-public information has been disclosed to the Purchasers. 3.7 FINANCIAL STATEMENTS. Each of the Company's (i) audited consolidated balance sheet and related consolidated statements of income, cash flows and changes in stockholders' equity (including the related notes) as of and for the years ended December 31, 2005 and December 31, 2004, (ii) the Company's unaudited consolidated balance sheet and related consolidated statements of income, cash flows and changes in stockholders' equity as of and for the three months ended March 31, 2006, (iii) the financial statements of entities acquired by the Company, in each case as contained in the Recent Reports (each of (i), (ii) and (iii), collectively, the "COMPANY'S FINANCIAL STATEMENTS" or the "FINANCIAL STATEMENTS") (x) present fairly in all material respects the financial position of the Company and its Subsidiaries or such other entities on a consolidated basis as of the dates thereof and the results of operations, cash flows and stockholders' equity as of and for each of the periods then ended, except that the unaudited financial statements are subject to normal year-end adjustments, and (y) were prepared in accordance with United States generally 4  accepted accounting principals ("GAAP") applied on a consistent basis throughout the periods involved, in each case, except as otherwise indicated in the notes thereto. 3.8 COMPLIANCE WITH LAW. The Company and its Subsidiaries are in compliance and have conducted their business so as to comply with all laws, rules and regulations, judgments, decrees or orders of any court, administrative agency, commission, regulatory authority or other governmental authority or instrumentality, domestic or foreign, applicable to their operations, the violation of which would cause a Material Adverse Effect. There are no judgments or orders, injunctions, decrees, stipulations or awards (whether rendered by a court or administrative agency or by arbitration), including any such actions relating to affirmative action claims or claims of discrimination, against the Company or its Subsidiaries or against any of their properties or businesses that would be reasonably likely to have a Material Adverse Effect. 3.9 NO DEFAULTS. The Company and its Subsidiaries are not, nor have they received notice that they would be with the passage of time, giving of notice, or both, (i) in violation of any provision of their Certificate and Bylaws (ii) in default or violation of any term, condition or provision of (A) any judgment, decree, order, injunction or stipulation applicable to the Company or its Subsidiaries or (B) any material agreement, note, mortgage, indenture, contract, lease or instrument, permit, concession, franchise or license to which the Company or its Subsidiaries are a party or by which the Company or its Subsidiaries or their properties or assets may be bound, and, to the knowledge of the Company, no circumstances exist which would entitle any party to any material agreement, note, mortgage, indenture, contract, lease or instrument to which such Company or its Subsidiaries are a party, to terminate such as a result of such Company or its Subsidiaries, having failed to meet any material provision thereof including, but not limited to, meeting any applicable milestone under any material agreement or contract. 3.10 LITIGATION. Except as disclosed in the Recent Reports or on SCHEDULE 3.10, there is no action, suit, proceeding, judgment, claim or investigation pending or, to the best knowledge of the Company, threatened against the Company and its Subsidiaries which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company or its Subsidiaries or which in any manner challenges or seeks to prevent, enjoin, materially alter or materially delay any of the transactions contemplated hereby, and, to the knowledge of the Company, there is no basis for the assertion of any of the foregoing. There are no material claims or complaints existing or, to the knowledge of the Company or its Subsidiaries, threatened for product liability in respect of any product of the Company or its Subsidiaries, and the Company and its Subsidiaries are not aware of any basis for the assertion of any such claim. 3.11 ABSENCE OF CERTAIN CHANGES. Since December 31, 2005, the Company has conducted its business only in the ordinary course and there has not occurred, except as set forth in the Recent Reports or any exhibit thereto or incorporated by reference therein: (a) Any event that could reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries; (b) Any amendments or changes in the Certificate or Bylaws of the Company and its Subsidiaries, other than on account of the filing of the Certificate of Designation; 5  (c) Any damage, destruction or loss, whether or not covered by insurance, that would, individually or in the aggregate, have or would be reasonably likely to have, a Material Adverse Effect on the Company and its Subsidiaries; (d) Except as set forth on SCHEDULE 3.11(D), any (i) incurrence, assumption or guarantee by the Company or its Subsidiaries of any debt for borrowed money other than for equipment leases in the ordinary course of business; (ii) issuance or sale of any securities convertible into or exchangeable for securities of the Company other than to directors, employees and consultants pursuant to existing equity compensation or stock purchase plans of the Company; (iii) issuance or sale of options or other rights to acquire from the Company or its Subsidiaries, directly or indirectly, securities of the Company or any securities convertible into or exchangeable for any such securities, other than options issued to directors, employees and consultants in the ordinary course of business in accordance with past practice; (iv) issuance or sale of any stock, bond or other corporate security; (v) discharge or satisfaction of any material Lien, other than current liabilities incurred since December 31, 2005 in the ordinary course of business; (vi) declaration or making any payment or distribution to stockholders or purchase or redemption of any share of its capital stock or other security; (vii) sale, assignment or transfer of any of its intangible assets except in the ordinary course of business, or cancellation of any debt or claim except in the ordinary course of business; (viii) waiver of any right of substantial value whether or not in the ordinary course of business; (ix) material change in officer compensation except in the ordinary course of business and consistent with past practices; or (x) other commitment (contingent or otherwise) to do any of the foregoing. (e) Any creation, sufferance or assumption by the Company or any of its Subsidiaries of any Lien on any material asset (other than Liens in connection with equipment leases and working capital lines of credit set forth on SCHEDULE 3.11(E)) or any making of any loan, advance or capital contribution to or investment in any Person in an aggregate amount which exceeds $50,000 outstanding at any time; (f) Any entry into, amendment of, relinquishment, termination or non-renewal by the Company or its Subsidiaries of any material contract, license, lease, transaction, commitment or other right or obligation, other than in the ordinary course of business; or 6  (g) Any transfer or grant of a material right with respect to the trademarks, trade names, service marks, trade secrets, copyrights or other intellectual property rights owned or licensed by the Company or its Subsidiaries, except as among the Company and its Subsidiaries. 3.12 NO UNDISCLOSED LIABILITIES. Except as set forth in the Recent Reports, and except for liabilities and obligations incurred in the ordinary course of business since December 31, 2005, as of the date hereof, (i) the Company and its Subsidiaries do not have any material liabilities or obligations (absolute, accrued, contingent or otherwise) which, and (ii) to the knowledge of the Company, there has not been any aspect of the prior or current conduct of the business of the Company or its Subsidiaries which is likely to form the basis for any material claim by any third party which if asserted could result in any such material liabilities or obligations which, are not fully reflected, reserved against or disclosed in the balance sheet of the Company as at December 31, 2005. 3.13 TAXES. All material tax returns and tax reports required to be filed with respect to the income, operations, business or assets of the Company and its Subsidiaries have been timely filed (or appropriate extensions have been obtained) in all material respects with the appropriate governmental agencies in all jurisdictions in which such returns and reports are required to be filed, and all of the foregoing as filed are correct and complete in all material respects and, in all material respects, reflect accurately all liability for taxes of the Company and its Subsidiaries for the periods to which such returns relate, and all amounts shown as owing thereon have been paid. All material income, profits, franchise, sales, use, value added, occupancy, property, excise, payroll, withholding, FICA, FUTA and other taxes (including interest and penalties), if any, collectible or payable by the Company and its Subsidiaries or relating to or chargeable against any of its material assets, revenues or income or relating to any employee, independent contractor, creditor, stockholder or other third party through the Closing Date, were fully collected and paid by such date if due by such date or provided for by adequate reserves in the Financial Statements as of and for the period ended December 31, 2005 (other than taxes accruing after such date) and all similar items due through the Closing Date will have been fully paid by that date or provided for by adequate reserves, whether or not any such taxes were reported or reflected in any tax returns or filings. No taxation authority has notified the Company in writing of its intent to audit the records of the Company or any of its Subsidiaries for the purpose of verifying or disputing any tax returns, reports or related information and disclosures provided to such taxation authority, or for the Company's or any of its Subsidiaries' alleged failure to provide any such tax returns, reports or related information and disclosure. No material claims or deficiencies have been asserted against or inquiries raised with the Company or any of its Subsidiaries with respect to any taxes or other governmental charges or levies which have not been paid or otherwise satisfied, including claims that, or inquiries whether, the Company or any of its Subsidiaries has not filed a tax return that it was required to file, and, to the best of the Company's knowledge, there exists no reasonable basis for the making of any such claims or inquiries. Neither the Company nor any of its Subsidiaries has waived any restrictions on assessment or collection of taxes or consented to the extension of any statute of limitations relating to taxation. 3.14 INTERESTS OF OFFICERS, DIRECTORS AND OTHER AFFILIATES. The description of any interest held, directly or indirectly, by any officer, director or other 7  Affiliate (as defined below) of the Company or its Subsidiaries (other than the interests of the Company and its Subsidiaries in such assets) in any property, real or personal, tangible or intangible, used in or pertaining to the Company's business, including any interest in the Intellectual Property (as defined in Section 3.15 hereof), as set forth in the Recent Reports, is true and complete in all material respects, and no officer, director or other Affiliate of the Company or its Subsidiaries has any interest in any property, real or personal, tangible or intangible, used in or pertaining to the Company's business, including the Company's Intellectual Property, other than as set forth in the Recent Reports. As used in this Agreement, "AFFILIATE" means any Person (as such term is defined below) that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Purchaser will be deemed to be an Affiliate of such Purchaser. As used in this Agreement, "Person" means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision of any thereof) or other entity of any kind. 3.15 INTELLECTUAL PROPERTY. Other than as set forth in the Recent Reports: (a) the Company or a Subsidiary thereof has the right to use or is the sole and exclusive owner of all right, title and interest in and to all material foreign and domestic patents, patent rights, trademarks, service marks, trade names, brands and copyrights (whether or not registered and, if applicable, including pending applications for registration) owned, used or controlled by the Company and its Subsidiaries (collectively, the "RIGHTS") and in and to each material invention, software, trade secret, technology, product, composition, formula, method of process used by the Company or its Subsidiaries (the Rights and such other items, the "INTELLECTUAL PROPERTY"), and, to the Company's knowledge, has the right to use the same, free and clear of any claim or conflict with the rights of others; (b) no royalties or fees (license or otherwise) are payable by the Company or its Subsidiaries to any Person by reason of the ownership or use of any of the Intellectual Property except as set forth on SCHEDULE 3.15; (c) there have been no claims made against the Company or its Subsidiaries asserting the invalidity, abuse, misuse, or unenforceability of any of the Intellectual Property, and, to its knowledge, there are no reasonable grounds for any such claims; (d) neither the Company nor its Subsidiaries have made any claim of any violation or infringement by others of its rights in the Intellectual Property, and to the best of the Company's knowledge, no reasonable grounds for such claims exist; and (e) neither the Company nor its Subsidiaries have received written notice that it is in conflict with or infringing upon the asserted rights of others in connection with the Intellectual Property. 3.16 RESTRICTIONS ON BUSINESS ACTIVITIES. Other than as set forth in the Recent Reports, there is no agreement, judgment, injunction, order or decree 8  binding upon the Company or its Subsidiaries which has or could reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or its Subsidiaries, any material acquisition of property by the Company or its Subsidiaries or the conduct of business by the Company or its Subsidiaries as currently conducted or as currently proposed to be conducted by the Company. 3.17 PREEMPTIVE RIGHTS. Except for such rights which have been duly waived by the appropriate persons, none of the stockholders of the Company possess any preemptive rights in respect of the Notes, the Warrants, the Preferred Conversion Shares, Conversion Shares or Warrant Shares to be issued to the Purchasers upon conversion of the Notes or the Preferred Stock or exercise of the Warrants, as applicable. 3.18 INSURANCE. The insurance policies providing insurance coverage to the Company or its Subsidiaries including for product liability are adequate for the business conducted by the Company and its Subsidiaries (currently limited to the testing phase) and are sufficient for compliance by the Company and its Subsidiaries with all requirements of law and all material agreements to which the Company or its Subsidiaries are a party or by which any of their assets are bound in all material respects. All of such policies are in full force and effect and are valid and enforceable in accordance with their terms, and the Company and its Subsidiaries have complied with all material terms and conditions of such policies, including premium payments. None of the insurance carriers has provided written notice to the Company or its Subsidiaries of an intention to cancel any such policy. 3.19 SUBSIDIARIES AND INVESTMENTS. Except as set forth in the Recent Reports or on SCHEDULE 3.19, the Company has no Subsidiaries or Investments. For purposes of this Agreement, the term "INVESTMENTS" shall mean, with respect to any Person, all advances, loans or extensions of credit to any other Person, all purchases or commitments to purchase any stock, bonds, notes, debentures or other securities of any other Person, and any other investment in any other Person, including partnerships or joint ventures (whether by capital contribution or otherwise) or other similar arrangement (whether written or oral) with any Person, including but not limited to arrangements in which (i) the Person shares profits and losses, (ii) any such other Person has the right to obligate or bind the Person to any third party, or (iii) the Person may be wholly or partially liable for the debts or obligations of such partnership, joint venture or other arrangement. 3.20 CAPITALIZATION. (a) The authorized capital stock of the Company consists of 85,000,000 shares of common stock, $0.001 par value per share, of which [15,310,254] shares are issued and outstanding as of the date hereof, and 15,000,000 shares of preferred stock, issuable in one or more classes or series, with such relative rights and preferences as the Board of Directors may determine, of which (i) 16,000 shares have been designated as "Series A Convertible Preferred Stock", 7,750 of which are issued and outstanding and (ii) 60,000 shares will be, immediately prior to the Closing under this Agreement, designated as the "Series B Convertible Preferred Stock", of which no shares are issued and outstanding immediately prior to the execution of this Agreement. (b) All shares of the Company's issued and outstanding capital stock have been duly authorized, are validly issued and outstanding, and are fully paid and 9  nonassessable. No securities issued by the Company from the date of its incorporation to the date hereof were issued in violation of any statutory or common law preemptive rights. There are no dividends which have accrued or been declared but are unpaid on the capital stock of the Company. All material taxes required to be paid by Company in connection with the issuance and any transfers by the Company of the Company's capital stock have been paid. All material permits or authorizations required to be obtained from or registrations required to be effected with any Person in connection with any and all issuances of securities of the Company from the date of the Company's incorporation to the date hereof have been obtained or effected, and all securities of the Company have been issued in accordance with the provisions of all applicable securities or other laws except as could not cause a Material Adverse Effect. 3.21 OPTIONS, WARRANTS, RIGHTS. Except as set forth on SCHEDULE 3.21, there are no outstanding (a) securities, notes or instruments convertible into or exercisable for any of the capital stock or other equity interests of the Company or its Subsidiaries; (b) options, warrants, subscriptions or other rights to acquire capital stock or other equity interests of the Company or its Subsidiaries; or (c) commitments, agreements or understandings of any kind, including employee benefit arrangements, relating to the issuance or repurchase by the Company or its Subsidiaries of any capital stock or other equity interests of the Company or its Subsidiaries, any such securities or instruments convertible or exercisable for securities or any such options, warrants or rights. Other than the rights of the Purchasers under the Preferred Stock and the Warrants, and except as set forth on SCHEDULE 3.21, neither the Company nor the Subsidiaries have granted anti-dilution rights to any person or entity in connection with any outstanding option, warrant, subscription or any other instrument convertible or exercisable for the securities of the Company or any of its Subsidiaries ("ANTI-DILUTION RIGHTS"). SCHEDULE 3.21 accurately describes all of the adjustments that will occur pursuant to existing Anti-Dilution Rights as a result of the transactions contemplated by this Agreement and the other Transaction Documents. Other than the rights granted to the Purchasers under the Investor Rights Agreement, there are no outstanding rights which permit the holder thereof to cause the Company or the Subsidiaries to file a registration statement under the Securities Act or which permit the holder thereof to include securities of the Company or any of its Subsidiaries in a registration statement filed by the Company or any of its Subsidiaries under the Securities Act, and there are no outstanding agreements or other commitments which otherwise relate to the registration of any securities of the Company or any of its Subsidiaries for sale or distribution in any jurisdiction, except as set forth on SCHEDULE 3.21. 3.22 EMPLOYEES, EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS. Except as set forth in the Recent Reports or on SCHEDULE 3.22, there are no employment, consulting, severance or indemnification arrangements, agreements, or understandings between the Company and any officer, director, consultant or employee of the Company or its Subsidiaries (the "EMPLOYMENT AGREEMENTS"). No Employment Agreement provides for the acceleration or change in the award, grant, vesting or determination of options, warrants, rights, severance payments, or other contingent obligations of any nature whatsoever of the Company or its Subsidiaries in favor of any such parties in connection with the transactions contemplated by this Agreement. Except as disclosed in the Recent Reports or on SCHEDULE 3.22 and except to the extent not involving annual payments by the Company in excess of $500,000, the terms of employment or 10  engagement of all directors, officers, employees, agents, consultants and professional advisors of the Company and its Subsidiaries are such that their employment or engagement may be terminated upon not more than two weeks' notice given at any time without liability for payment of compensation or damages and the Company and its Subsidiaries have not entered into any agreement or arrangement for the management of their business or any part thereof other than with their directors or employees. 3.23 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company or any Subsidiary, nor, to the knowledge of the Company, any Affiliate of the Company, any agent or employee of the Company, any other Person acting on behalf of or associated with the Company, or any individual related to any of the foregoing Persons, acting alone or together, has: (a) received, directly or indirectly, any rebates, payments, commissions, promotional allowances or any other economic benefits, regardless of their nature or type, from any customer, supplier, trading company, shipping company, governmental employee or other Person with whom the Company has done business directly or indirectly; or (b) directly or indirectly, given or agreed to give any gift or similar benefit to any customer, supplier, trading company, shipping company, governmental employee or other Person who is or may be in a position to help or hinder the business of the Company (or assist the Company in connection with any actual or proposed transaction) which (i) may subject the Company to any damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not given in the past, may have had an adverse effect on the Company or (iii) if not continued in the future, may adversely affect the assets, business, operations or prospects of the Company or subject the Company to suit or penalty in any private or governmental litigation or proceeding. 3.24 PRODUCTS AND SERVICES. To the knowledge of the Company and except as disclosed in the Recent Reports, there exists no set of facts (i) which could furnish a basis for the withdrawal, suspension or cancellation of any registration, license, permit or other governmental approval or consent of any governmental or regulatory agency with respect to any product or service developed or provided by the Company or its Subsidiaries, (ii) which could furnish a basis for the withdrawal, suspension or cancellation by order of any state, federal or foreign court of law of any product or service, or (iii) which could have a material adverse effect on the continued operation of any facility of the Company or its Subsidiaries or which could otherwise cause the Company or its Subsidiaries to withdraw, suspend or cancel any such product or service from the market or to change the marketing classification of any such product or service. Each product or service provided by Company or its Subsidiaries has been provided in accordance in all material respects with the specifications under which such product or service normally is and has been provided and the provisions of all applicable laws or regulations. 3.25 ENVIRONMENTAL MATTERS. None of the premises or any properties owned, occupied or leased by the Company or its Subsidiaries (the "PREMISES") has been used by the Company or the Subsidiaries or, to the Company's knowledge, by any other Person, to manufacture, treat, store, or dispose of any substance that has been designated to be a "HAZARDOUS SUBSTANCE" under applicable Environmental Laws (hereinafter defined) ("HAZARDOUS SUBSTANCES") in violation of any applicable Environmental Laws. To its knowledge, the Company and its Subsidiaries have not disposed of, discharged, emitted or released any Hazardous Substances which would require, under applicable Environmental Laws, remediation, investigation or similar response activity. No Hazardous Substances are present as a result of the actions of the Company or its Subsidiaries or, to the Company's knowledge, any other Person, in, on or under the Premises which 11  would give rise to any liability or clean-up obligations of the Company or its Subsidiaries under applicable Environmental Laws. The Company and, to the Company's knowledge, any other Person for whose conduct it may be responsible pursuant to an agreement or by operation of law, are in compliance in all material respects with all laws, regulations and other federal, state or local governmental requirements, and all applicable judgments, orders, writs, notices, decrees, permits, licenses, approvals, consents or injunctions in effect on the date of this Agreement relating to the generation, management, handling, transportation, treatment, disposal, storage, delivery, discharge, release or emission of any Hazardous Substance (the "ENVIRONMENTAL LAWS"). Neither the Company nor, to the Company's knowledge, any other Person for whose conduct it may be responsible pursuant to an agreement or by operation of law has received any written complaint, notice, order, or citation of any actual, threatened or alleged noncompliance with any of the Environmental Laws, and there is no proceeding, suit or investigation pending or, to the Company's knowledge, threatened against the Company or, to the Company's knowledge, any such Person with respect to any violation or alleged violation of the Environmental Laws, and, to the knowledge of the Company, there is no basis for the institution of any such proceeding, suit or investigation. 3.26 LICENSES; COMPLIANCE WITH REGULATORY REQUIREMENTS. Except as disclosed in the Recent Reports, the Company holds all material authorizations, consents, approvals, franchises, licenses and permits required under applicable law or regulation for the operation of the business of the Company and its Subsidiaries as presently operated (the "GOVERNMENTAL AUTHORIZATIONS"). All the Governmental Authorizations have been duly issued or obtained and are in full force and effect, and the Company and its Subsidiaries are in material compliance with the terms of all the Governmental Authorizations. The Company and its Subsidiaries have not engaged in any activity that, to their knowledge, would cause revocation or suspension of any such Governmental Authorizations. The Company has no knowledge of any facts which could reasonably be expected to cause the Company to believe that the Governmental Authorizations will not be renewed by the appropriate governmental authorities in the ordinary course. Neither the execution, delivery nor performance of this Agreement shall adversely affect the status of any of the Governmental Authorizations. 3.27 BROKERS. Except as set forth on SCHEDULE 3.27, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the transactions contemplated by this Agreement, based upon any arrangement made by or on behalf of the Company, which would make any Purchaser liable for any fees or commissions. 3.28 SECURITIES LAWS. Neither the Company nor its Subsidiaries nor any agent acting on behalf of the Company or its Subsidiaries has taken or will take any action which might cause this Agreement or the Notes, Preferred Conversion Shares, Conversion Shares, Warrants and Warrant Shares (collectively, the "SECURITIES") to violate the Securities Act or the Exchange Act or any rules or regulations promulgated thereunder, as in effect on the Closing Date. Assuming that all of the representations and warranties of the Purchasers set forth in Article IV are true, the offer and sale of the Notes is being conducted and completed in compliance with the Securities Act. All shares of capital stock and other securities issued by the Company and its Subsidiaries prior to the date hereof have been issued in transactions that were either registered offerings or were exempt from the registration requirements under the Securities Act and all applicable state securities or "BLUE SKY" laws and in compliance in all material respects with all applicable corporate laws, except as could not cause a Material Adverse Effect. 12  3.29 DISCLOSURE. No representation or warranty made by the Company in this Agreement, nor in any Transaction Document schedule or exhibit prepared and furnished by the Company or the representatives of the Company pursuant hereto or in connection with the transactions contemplated hereby, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements or facts contained herein or therein not misleading in light of the circumstances under which they were furnished. 3.30 POISON PILL. The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company's Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under this Agreement and the other Transaction Documents, including without limitation the Company's issuance of the Securities and the Purchasers' ownership of the Securities. ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS Each Purchaser, for itself only, hereby severally and not jointly, represents and warrants to the Company as follows: 4.1 EXISTENCE AND POWER. The Purchaser, if not a natural person, is duly organized, validly existing and in good standing under the laws of the jurisdiction of such Purchaser's organization. Such Purchaser has all powers required to bind it to the representations, warranties and covenants set forth herein. 4.2 AUTHORIZATION. The execution, delivery and performance by the Purchaser of this Agreement, the Transaction Documents to which such Purchaser is a party, and the consummation by the Purchaser of the transactions contemplated hereby and thereby have been duly authorized, and no additional action is required for the approval of this Agreement or the other Transaction Documents. This Agreement and the other Transaction Documents to which the Purchaser is a party have been or, to the extent contemplated hereby, will be duly executed and delivered and constitute valid and binding agreements of the Purchaser, enforceable against such Purchaser in accordance with their terms, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors and except that enforceability of their obligations thereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 4.3 INVESTMENT. The Purchaser is acquiring the securities described herein for its own account and not with a view to, or for sale in connection with, any distribution thereof, nor with the intention of distributing or reselling the same, provided, however, that by making the representation herein, the Purchaser does not agree to hold any of the securities for any minimum or other specific term and reserves the right to dispose of the securities at any time in accordance with or pursuant to a registration statement or an exemption under 13  the Securities Act. The Purchaser is aware that none of the securities has been registered under the Securities Act or under applicable state securities or blue sky laws. The Purchaser is an "ACCREDITED INVESTOR" as such term is defined in Rule 501 of Regulation D, as promulgated under the Securities Act. 4.4 RELIANCE ON EXEMPTIONS. The Purchaser understands that the Securities are being offered and sold to such Purchaser in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and such Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of such Purchaser to acquire the securities. 4.5 EXPERIENCE OF THE PURCHASER. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the securities and, at the present time, is able to afford a complete loss of such investment. 4.6 GENERAL SOLICITATION. The Purchaser is not purchasing the securities as a result of any advertisement, article, notice or other communication regarding the securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. ARTICLE V - COVENANTS OF THE SELLER AND PURCHASERS 5.1 INSURANCE. The Company and its Subsidiaries shall, from time to time upon the written request of any Purchaser, promptly furnish or cause to be furnished to such Purchaser evidence, in form and substance reasonably satisfactory to the Purchaser, of the maintenance of all insurance maintained by it for loss or damage by fire and other hazards, damage or injury to persons and property, including from product liability, and under workmen's compensation laws. 5.2 REPORTING OBLIGATIONS. So long as any of the Notes or Preferred Conversion Shares are outstanding, and so long as any Warrant has not been exercised and has not expired by its terms, the Company shall furnish to the Purchasers, or any other persons who hold any of the Notes, Preferred Conversion Shares or Warrants (provided that such subsequent holders give notice to the Company that they hold Notes, Preferred Conversion Shares or Warrants and furnish their addresses) promptly upon their becoming available one copy of (A) each report, notice or proxy statement sent by the Company to its stockholders generally, and of each regular or periodic report (pursuant to the Exchange Act) and (B) any registration statement, prospectus or written communication pursuant to the Securities Act relating to the issuance or registration of Conversion Shares and the Warrant Shares and filed by the Company with the Commission or any securities market or exchange on which shares of Common Stock are listed; provided, however, that the Company shall have no obligation to deliver periodic reports (pursuant to the Exchange Act) under this Section 5.2 to the extent such reports are publicly available. 14  The Purchasers are hereby authorized to deliver a copy of any financial statement or any other information relating to the business, operations or financial condition of the Company which may have been furnished to the Purchasers hereunder, to any regulatory body or agency having jurisdiction over the Purchasers or to any Person which shall, or shall have right or obligation to succeed to all or any part of the Purchasers' interest in the Company or this Agreement. 5.3 INVESTIGATION. The representations, warranties, covenants and agreements set forth in this Agreement shall not be affected or diminished in any way by any investigation (or failure to investigate) at any time by or on behalf of the party for whose benefit such representations, warranties, covenants and agreements were made. Without limiting the generality of the foregoing, the inability or failure of the Purchasers to discover any breach, default or misrepresentation by the Company under this Agreement or the other Transaction Documents (including under any certificate furnished pursuant to this Agreement), notwithstanding the exercise by the Purchasers or other holders of the Notes or Preferred Conversion Shares of their rights hereunder to conduct an investigation shall not in any way diminish any liability hereunder. 5.4 FURTHER ASSURANCES. The Company shall, at its cost and expense, upon written request of the Purchasers, duly execute and deliver, or cause to be duly executed and delivered, to the Purchasers such further instruments and do and cause to be done such further acts as may be necessary, advisable or proper, in the reasonable discretion of the Purchasers, to carry out more effectually the provisions and purposes of this Agreement. The parties shall use their reasonable best efforts to timely satisfy each of the conditions described in Article VI of this Agreement. 5.5 USE OF PROCEEDS. The Company covenants and agrees that the proceeds of the Purchase Price shall be used by the Company for working capital and general corporate purposes, including the funding of strategic acquisitions approved by the Board of Directors of the Company; under no circumstances shall any portion of the proceeds be applied to: (i) accelerated repayment of debt existing on the date hereof, except in connection with the payment of indebtedness related to acquisition of Safir Rosetti, LLC and the Company's credit line with Silicon Valley Bank; (ii) the payment of dividends or other distributions on any capital stock of the Company other than the Preferred Stock; (iii) increased executive compensation or loans to officers, employees, stockholders or directors, unless approved by a disinterested majority of the Board of Directors; (iv) the purchase of debt or equity securities of any person, including the Company and its Subsidiaries, except in connection with investment of excess cash in high quality (A1/P1 or better) money market instruments having maturities of one year or less and except in connection with strategic acquisitions approved by the Board of Directors of the Company; or 15  (v) any expenditure not directly related to the business of the Company. 5.6 CORPORATE EXISTENCE. So long as a Purchaser owns Securities, the Company shall preserve and maintain and cause its Subsidiaries to preserve and maintain their corporate existence and good standing in the jurisdiction of their incorporation and the rights, privileges and franchises of the Company and its Subsidiaries (except, in each case, in the event of a merger or consolidation in which the Company or its Subsidiaries, as applicable, is not the surviving entity) in each case where failure to so preserve or maintain could have a Material Adverse Effect. 5.7 LICENSES. The Company shall, and shall cause its Subsidiaries to, maintain at all times all material licenses or permits necessary to the conduct of its business and as required by any governmental agency or instrumentality thereof. 5.8 LIKE TREATMENT OF PURCHASERS AND HOLDERS. Neither the Company nor any of its affiliates shall, directly or indirectly, pay or cause to be paid any consideration (immediate or contingent), whether by way of interest, fee, payment for redemption, conversion or exercise of the Securities, or otherwise, to any Purchaser or holder of Securities, for or as an inducement to, or in connection with the solicitation of, any consent, waiver or amendment to any terms or provisions of this Agreement or the other Transaction Documents, unless such consideration is required to be paid to all Purchasers or holders of Securities bound by such consent, waiver or amendment. In order to treat all of the Purchasers and holders of Securities equitably, the Company shall not, directly or indirectly, redeem any Securities unless such offer of redemption is made pro rata to all Purchasers or holders of Securities, as the case may be, on identical terms. 5.9 TAXES AND CLAIMS. The Company and its Subsidiaries shall duly pay and discharge (a) all material taxes, assessments and governmental charges upon or against the Company or its properties or assets prior to the date on which penalties attach thereto, unless and to the extent that such taxes are being diligently contested in good faith and by appropriate proceedings, and appropriate reserves therefor have been established, and (b) all material lawful claims, whether for labor, materials, supplies, services or anything else which might or could, if unpaid, become a lien or charge upon the properties or assets of the Company or its Subsidiaries unless and to the extent only that the same are being diligently contested in good faith and by appropriate proceedings and appropriate reserves therefor have been established. 5.10 PERFORM COVENANTS. The Company shall (a) make full and timely payment of any and all payments on the Notes, Preferred Conversion Shares, Warrants and all other obligations of the Company to the Purchasers in connection therewith, whether now existing or hereafter arising, and (b) duly comply with all the terms and covenants contained herein and in each of the instruments and documents given to the Purchasers in connection with or pursuant to this Agreement, all at the times and places and in the manner set forth herein or therein. 5.11 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, within four business days following the date of this Agreement, file a Current Report on Form 8-K, disclosing the transactions contemplated hereby and make such other filings and notices prior to and following the Closing Date in the manner and time required by the Commission with respect thereto. The Company and North Sound Capital LLC ("NORTH SOUND") shall consult with each other in issuing any 16  press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of North Sound, with respect to any press release of the Company, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. The Company shall issue such a press release disclosing the transactions contemplated hereby no later than the Business Day following the Closing Date. 5.12 SECURITIES LAW COMPLIANCE. (a) SECURITIES ACT. The Company shall timely prepare and file with the Commission the form of notice of the sale of securities pursuant to the requirements of Regulation D regarding the sale of the Notes under this Agreement. (b) STATE SECURITIES LAW COMPLIANCE -- SALE. The Company shall timely prepare and file such applications, consents to service of process (but not including a general consent to service of process) and similar documents and take such other steps and perform such further acts as shall be required by the state securities law requirements of each jurisdiction where a Purchaser resides, as indicated on SCHEDULE 1, with respect to the sale of the Notes under this Agreement provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to general service of process in any jurisdiction where it is not then so subject or subject the Company to any material tax in any such jurisdiction where it is not then so subject. (c) STATE SECURITIES LAW COMPLIANCE --RESALE. Beginning no later than 30 days following any date, from time to time, on which the Common Stock is no longer a "covered security" under Section 18(b)(1)(A) of the Securities Act and continuing until either (i) the Purchasers have sold all of their Conversion Shares and Warrant Shares under a registration statement pursuant to the Investor Rights Agreement or (ii) the Common Stock becomes a "covered security" under Section 18(b)(1)(A) of the Securities Act, the Company shall maintain within either Moody's Industrial Manual or Standard and Poor's Standard Corporation Descriptions (or any successors to these manuals which are similarly qualified as "recognized securities manuals" under state Blue Sky laws) an updated listing containing (i) the names of the officers and directors of the Company, (ii) a balance sheet of the Company as of a date that is at no time older than eighteen months and (iii) a profit and loss statement of the Company for either the preceding fiscal year or the most recent year of operations. 5.13 NON-PUBLIC INFORMATION. (a) The Company agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations and agreement in effecting transactions in securities of the Company. 17  (b) In the event of a breach of the covenant set forth in Section 5.13(a) by the Company or any other Person acting on its behalf, the Company shall promptly, but no later than 48 hours after becoming aware of such breach or being notified by the Purchaser in writing of such breach, disclose such information by filing a Current Report on Form 8-K, unless the Company shall promptly, but no later than 24 hours after receiving such notice from the Purchaser, notify the Purchaser in writing that it has determined in good faith that the applicable information does not constitute material non-public information. (c) In addition to any other remedy provided herein or in the other Transaction Documents, if, following a breach of Section 5.13(a), the Company fails to comply with Section 5.13(b), then a Purchaser 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. No Purchaser shall have any liability to the Company, its Subsidiaries, or any of its or their respective officers, directors, employees, shareholders or agents for any such disclosure pursuant to this Section 5.13(c). 5.14 LISTING OF COMMON STOCK. The Company agrees that, if the Company applies to have the Common Stock listed or re-listed on any of the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq Capital Market (each a "TRADING MARKET"), it will include in such application the Conversion Shares and the Warrant Shares, and will take such other action as is necessary to cause the Conversion Shares and Warrant Shares to be listed on such Trading Market as promptly as possible. 5.15 TRANSFER RESTRICTIONS. (a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement, to the Company, to an Affiliate of the Purchaser (who is an accredited investor and executes a customary representation letter) or in connection with a pledge as contemplated in Section 5.15(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer does not require registration of the transferred Securities under the Securities Act, PROVIDED, HOWEVER, that in the case of a transfer pursuant to Rule 144, no opinion shall be required if the transferor provides the Company with a customary seller's representation letter, and if the sale is not pursuant to subsection (k) of Rule 144, a customary broker's representation letter and a Form 144. Any transferee that agrees in writing to be bound by the terms of this Agreement and the Investor Rights Agreement shall have the rights of a Purchaser under this Agreement and the Investor Rights Agreement. Except as required by federal securities laws and the securities law of any state or other jurisdiction within the United States, the Securities may be transferred, in whole or in part, by a Purchaser to any person at any time. The Company shall reissue certificates evidencing the Securities upon surrender of certificates evidencing the Securities being transferred in accordance with this Section 5.15(a). (b) Each Purchaser agrees to the imprinting, so long as is required by this Section 5.15(b), of a legend on any of the Securities in substantially the following form: 18  THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO THIS EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT. The Company acknowledges and agrees that each Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an "accredited investor" as defined in Rule 501(a) under the Securities Act and, if required under the terms of the arrangement, each Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. The a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith; provided, however, that the Purchaser shall provide the Company with the documentation as is reasonably requested by the Company to ensure that the pledge is pursuant to a bona fide margin agreement with a registered broker-dealer or a security interest in some or all of the Securities to a financial institution that is an "accredited investor" as defined in Rule 501(a) under the Securities Act. The Company will execute and deliver the documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. (c) Certificates evidencing the Conversion Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 5.15(b)), (i) following any sale of the Conversion Shares or Warrant Shares pursuant to Rule 144 or pursuant to an effective registration statement, or (ii) if the Conversion Shares or Warrant Shares are eligible for sale under Rule 144(k), provided that the Purchaser shall provide the Company with such information about such shares and such Purchaser as is reasonably necessary to permit the Company to conclude that such shares are so eligible, or (iii) if the legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Company's transfer agent promptly upon the occurrence of any of the events in clauses (i), (ii) or (iii) above to effect the removal of the legend hereunder and shall also cause its counsel to issue a "blanket" legal opinion to the Company's transfer agent promptly after the Effective Date (as defined in the Investor Rights Agreement), if required by the Company's transfer agent, to allow sales pursuant to an effective Registration Statement, which opinion may be subject to customary qualifications. The Company agrees that at the time as 19  the legend is no longer required under this Section 5.15(c), it will, no later than three trading days following the delivery by the Purchaser to the Company or the Company's transfer agent of a certificate representing Conversion Shares or Warrant Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to the Purchaser a certificate representing the Conversion Shares or Warrant Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section 5.15. (d) Each Purchaser agrees that the removal of the restrictive legend from certificates representing Conversion Shares or Warrant Shares as set forth in this Section 5.15 is predicated upon the Company's reliance on, and such Purchaser's agreement that it will not sell any Securities except pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom. 5.16 ISSUANCE OF ADDITIONAL SECURITIES. From the date of the Closing until such date as all of the Notes have been converted into Preferred Stock and Warrants pursuant to the terms thereof, the Company shall not issue or sell any shares of Common Stock or any warrants or other rights to subscribe for or purchase any additional shares of Common Stock or any securities convertible, directly or indirectly, into shares of Common Stock ("COMMON STOCK EQUIVALENTS"), other than (a) the issuance of the Notes pursuant hereto, (b) the issuance of the Preferred Stock and Warrants upon conversion of the Notes, (c) the issuance of Preferred Stock and Warrants to the holders of the promissory notes of the Company set forth on SCHEDULE 5.16 (the "EXISTING NOTES") and (d) any Exempt Issuance (as defined in the Certificate of Designation). 5.17 ISSUANCE OF ADDITIONAL PREFERRED STOCK. Upon the prior written consent of North Sound, the Company may issue any shares of Preferred Stock that are authorized as of the date hereof (and following the filing of the Certificate of Designation) but not otherwise issued upon conversion of the Notes or the Existing Notes pursuant to such terms and conditions as are acceptable to North Sound in its sole discretion. 5.18 CONSENT TO DILUTIVE ISSUANCES. From the date of this Agreement until the Expiration Date (as defined below), the Company shall not, without the prior written consent of North Sound, issue, sell or enter into an agreement to issue or sell any shares of Common Stock or any options, warrants or other rights to subscribe for or purchase any shares of Common Stock or any securities convertible into shares of Common Stock (in each case, a "TRANSACTION") if such Transaction would result in an adjustment (that has not been waived by all holders of the Series A Preferred Stock) pursuant to Section 6(d) of the Company's Certificate of Designations, Powers, Preferences and other rights and Qualifications of the Series A Convertible Preferred Stock (the "SERIES A DESIGNATION" and such Series A Convertible Preferred Stock, the "SERIES A PREFERRED STOCK") to the Conversion Rate (as defined in the Series A Designation) of the Series A Preferred Stock (an "ANTI-DILUTION ADJUSTMENT"). Notwithstanding the foregoing, from the date of this Agreement until the Expiration Date, the Company shall not, without the prior written consent of North Sound, engage in any Transaction pursuant to which the Company or any Affiliate or Person acting on the Company's behalf, provides any consideration of any kind whatsoever to the holders of the Series A Preferred Stock in 20  exchange for any of such holders' waiver of their right to an Anti-dilution Adjustment to which they would otherwise be entitled in connection with such Transaction. "EXPIRATION DATE" shall mean such time as any of the following occur: (a) North Sound holds less than 25% of the shares of Preferred Stock issued to North Sound upon conversion of the Note, (b) less than 25% of the shares of Series A Preferred Stock outstanding on the date of this Agreement remain outstanding or (c) the Series A Designation is amended such that the Conversion Rate of the Series A Preferred Stock will be adjusted pursuant to a weighted average anti-dilution formula equivalent to that by which the Conversion Value (as defined in the Certificate of Designation) of the Series B Preferred Stock is adjusted pursuant to Section 5(i) of the Certificate of Designation.. ARTICLE VI -- CONDITIONS TO CLOSING 6.1 CONDITIONS TO OBLIGATIONS OF PURCHASERS TO EFFECT THE CLOSING. The obligations of a Purchaser to effect the Closing and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing, of each of the following conditions, any of which may be waived, in writing, by a Purchaser: (a) The Company shall deliver or cause to be delivered to each of the Purchasers the following: 1. An original Note in the original principal amount as is indicated on SCHEDULE 1 to be purchased at the Closing by such Purchaser, registered in the name of such Purchaser. 2. The Investor Rights Agreement, in the form attached hereto as EXHIBIT D (the "INVESTOR RIGHTS AGREEMENT"), duly executed by the Company. 3. A legal opinion of Olshan Grundman Frome Rosenzweig & Wolosky LLP ("COMPANY'S Counsel"), counsel to the Company, in the form attached hereto as EXHIBIT E. 4. A certificate of the Secretary of the Company (the "SECRETARY'S CERTIFICATE"), as of the Closing Date, in form and substance satisfactory to the Purchasers, certifying as follows: (i) that the Certificate of Designation authorizing the Preferred Stock has been duly filed in the office of the Secretary of State of the State of Nevada, and that attached to the Secretary's Certificate is true and complete copy of the Articles of Incorporation of the Company, as amended, and the Certificate of Designation; (ii) that a true copy of the Bylaws of the Company, as amended to the Closing Date, is attached to the Secretary's Certificate; (iii) that attached thereto are true and complete copies of the resolutions of the Board of Directors of the Company authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents, instruments and certificates required to be executed by it in connection herewith and approving the consummation 21  of the transactions in the manner contemplated hereby including, but not limited to, the authorization and issuance of the Notes and the Preferred Stock and that such resolutions are in full force and effect and that there are no other resolutions of the Board of Directors with respect to the subject matter thereof; (iv) the names and true signatures of the officers of the Company signing this Agreement and all other documents to be delivered in connection with this Agreement; (v) such other matters as required by this Agreement; and (vi) such other matters as the Purchasers may reasonably request. 5. A wire transfer representing the Purchasers' reasonable legal fees and other expenses as described in Section 8.2 hereof; such fee may, at the election of the Purchasers, be paid out of the funds due from the Purchasers at the Closing. 6. Proof of due filing with the Secretary of State of the State of Nevada of the Certificate of Designation authorizing the Preferred Stock. 7. Company shall have applied to each U.S. securities exchange, interdealer quotation system and other trading market, if any, where its Common Stock is currently listed or qualified for trading or quotation for the listing or qualification of the Conversion Shares and the Warrant Shares for trading or quotation thereon in the time and manner required thereby. 8. A good standing certificate of the Company, of recent date, certified by the Secretary of State of the State of Nevada. 9. Such other documents as the Purchasers shall reasonably request. (b) All of the Purchasers, the Company and Silicon Valley Bank shall have entered into a Subordination Agreement in the form attached hereto as EXHIBIT F (the "SUBORDINATION AGREEMENT"). (c) As of the Closing Date, there shall have been no Material Adverse Effect with respect to the Company since the date hereof. 6.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE CLOSING. The obligations of the Company to effect the Closing and the transactions contemplated by this Agreement shall be subject to the satisfaction at or prior to the Closing of each of the following conditions, any of which may be waived, in writing, by the Company: Each of the Purchasers shall deliver or cause to be delivered to the Company (i) payment of the Purchase Price set forth opposite such Purchaser's name on SCHEDULE 1, in cash by wire transfer of immediately available funds to the account of the Company designated in writing by the Company prior to the date hereof; (ii) an executed copy of this Agreement; (iii) an executed copy of 22  the Investor Rights Agreement; (iv) an executed copy of the Subordination Agreement; and (v) such other documents as the Company shall reasonably request. ARTICLE VII - INDEMNIFICATION, TERMINATION AND DAMAGES 7.1 SURVIVAL OF REPRESENTATIONS. Except as otherwise provided herein, the representations and warranties of the Company and the Purchasers contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing Date and shall continue in full force and effect for a period of two (2) years from the Closing Date; provided, however, that the Company's warranties and representations under Sections 3.13 (Taxes), 3.19 (Subsidiaries and Investments), 3.20 (Capitalization), and 3.21 (Options, Warrants, Rights), shall survive the Closing Date and continue in full force and effect until the expiration of all applicable statutes of limitation; and further provided that the Company's warranties and representations under Section 3.25 (Environmental Matters) shall survive the Closing Date and continue in full force and effect for a period of six (6) years from the Closing Date. The Company's and the Purchasers' warranties and representations shall in no way be affected or diminished in any way by any investigation of the subject matter thereof made by or on behalf of the Company or the Purchasers. 7.2 INDEMNIFICATION. (a) The Company agrees to indemnify and hold harmless the Purchasers, their Affiliates, each of their officers, directors, partners, employees and agents and their respective successors and assigns, from and against any losses, damages, or expenses which are caused by or arise out of (i) any breach or default in the performance by the Company of any covenant or agreement made by the Company in this Agreement or in any of the Transaction Documents; (ii) any breach of warranty or representation made by the Company in this Agreement or in any of the Transaction Documents (iii) any and all third party actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to any of the foregoing. (b) Each of the Purchasers, severally and not jointly, agree to indemnify and hold harmless the Company, its Affiliates, each of their officers, directors, partners, employees and agents and their respective successors and assigns, from and against any losses, damages, or expenses which are caused by or arise out of (A) any breach or default in the performance by such Purchaser of any covenant or agreement made by such Purchaser in this Agreement or in any of the Transaction Documents; (B) any breach of warranty or representation made by such Purchaser in this Agreement or in any of the Transaction Documents; and (C) any and all third party actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to any of the foregoing; provided, however, that a Purchaser's liability under this Section 7.2(b) shall not exceed the Purchase Price paid by such Purchaser hereunder. 7.3 INDEMNITY PROCEDURE. A party or parties hereto agreeing to be responsible for or to indemnify against any matter pursuant to this Agreement is referred to herein as the "INDEMNIFYING PARTY" and the other party or parties claiming indemnity is referred to as the "INDEMNIFIED PARTY". An Indemnified 23  Party under this Agreement shall, with respect to claims asserted against such party by any third party, give written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity under this Agreement within sixty (60) business days of the receipt of any written claim from any such third party, but not later than twenty (20) days prior to the date any answer or responsive pleading is due, and with respect to other matters for which the Indemnified Party may seek indemnification, give prompt written notice to the Indemnifying Party of any liability which might give rise to a claim for indemnity; provided, however, that any failure to give such notice will not waive any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are materially adversely prejudiced. The Indemnifying Party shall have the right, at its election, to take over the defense or settlement of such claim by giving written notice to the Indemnified Party at least fifteen (15) days prior to the time when an answer or other responsive pleading or notice with respect thereto is required. If the Indemnifying Party makes such election, it may conduct the defense of such claim through counsel of its choosing (subject to the Indemnified Party's approval of such counsel, which approval shall not be unreasonably withheld), shall be solely responsible for the expenses of such defense and shall be bound by the results of its defense or settlement of the claim. The Indemnifying Party shall not settle any such claim without prior notice to and consultation with the Indemnified Party, and no such settlement involving any equitable relief or which might have an adverse effect on the Indemnified Party may be agreed to without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld). So long as the Indemnifying Party is diligently contesting any such claim in good faith, the Indemnified Party may pay or settle such claim only at its own expense and the Indemnifying Party will not be responsible for the fees of separate legal counsel to the Indemnified Party, unless the named parties to any proceeding include both parties or representation of both parties by the same counsel would be inappropriate due to conflicts of interest or otherwise. If the Indemnifying Party does not make such election, or having made such election does not, in the reasonable opinion of the Indemnified Party proceed diligently to defend such claim, then the Indemnified Party may (after written notice to the Indemnifying Party), at the expense of the Indemnifying Party, elect to take over the defense of and proceed to handle such claim in its discretion and the Indemnifying Party shall be bound by any defense or settlement that the Indemnified Party may make in good faith with respect to such claim. In connection therewith, the Indemnifying Party will fully cooperate with the Indemnified Party should the Indemnified Party elect to take over the defense of any such claim. The parties agree to cooperate in defending such third party claims and the Indemnified Party shall provide, at the expense of the Indemnifying Party, such cooperation and such access to its books, records and properties as the Indemnifying Party shall reasonably request with respect to any matter for which indemnification is sought hereunder; and the parties hereto agree to cooperate with each other in order to ensure the proper and adequate defense thereof. With regard to claims of third parties for which indemnification is payable hereunder, such indemnification shall be paid by the Indemnifying Party upon the earlier to occur of: (i) the entry of a judgment against the Indemnified Party and the expiration of any applicable appeal period, or if earlier, five (5) days prior to the date that the judgment creditor has the right to execute the judgment; (ii) the entry of an unappealable judgment or final appellate decision against the Indemnified Party; or (iii) a settlement of the claim. 24  Notwithstanding the foregoing, the reasonable expenses of counsel to the Indemnified Party shall be reimbursed on a current basis by the Indemnifying Party. With regard to other claims for which indemnification is payable hereunder, such indemnification shall be paid promptly by the Indemnifying Party upon demand by the Indemnified Party. ARTICLE VIII - MISCELLANEOUS 8.1 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances as may be reasonably requested by any other party to better evidence and reflect the transactions described herein and contemplated hereby and to carry into effect the intents and purposes of this Agreement, and further agrees to take promptly, or cause to be taken, all actions, and to do promptly, or cause to be done, all things necessary, proper or advisable under applicable law to consummate and make effective the transactions contemplated hereby, to obtain all necessary waivers, consents and approvals, to effect all necessary registrations and filings, and to remove any injunctions or other impediments or delays, legal or otherwise, in order to consummate and make effective the transactions contemplated by this Agreement for the purpose of securing to the parties hereto the benefits contemplated by this Agreement. 8.2 FEES AND EXPENSES. The Company shall be responsible for the payment of the Purchasers' reasonable legal fees and other third-party expenses relating to the preparation and negotiation of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated herein and therein, up to $45,000. This Section 8.2 shall not limit or modify the Company's obligation to pay any amounts pursuant to Section 4 of the Investor Rights Agreement. 8.3 NOTICES. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 5:00 p.m. (New York City time) on a business day, (b) the next business day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a business day or later than 5:00 p.m. (New York City time) on any business day, or (c) the business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service such as Federal Express with next day delivery specified. The address for such notices and communications shall be as follows: If to the Purchasers at each Purchaser's address set forth under its name on SCHEDULE 1 attached hereto, or with respect to the Company, addressed to: GlobalOptions Group, Inc. 75 Rockefeller Plaza 27th Floor New York, New York 10019 Attention: Chief Financial Officer Facsimile No.: 212 ###-###-#### or to such other address or addresses or facsimile number or numbers as any such 25  party may most recently have designated in writing to the other parties hereto by such notice. Copies of notices to the Company shall be sent to Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue Tower, 65 East 55th Street, New York, NY 10019, Attn: Robert H. Friedman, Esq., Facsimile No. 212 ###-###-####. Copies of notices to any Purchaser shall be sent to the addresses, if any, listed on SCHEDULE 1 attached hereto. Unless otherwise stated above, such communications shall be effective when they are received by the addressee thereof in conformity with this Section 8.3. Any party may change its address for such communications by giving notice thereof to the other parties in conformity with this Section. 8.4 GOVERNING LAW. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and enforced in accordance with the laws of the State of New York without reference to the conflicts of laws principles thereof. 8.5 JURISDICTION AND VENUE. This Agreement shall be subject to the exclusive jurisdiction of the Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York. The parties to this Agreement agree that any breach of any term or condition of this Agreement shall be deemed to be a breach occurring in the State of New York by virtue of a failure to perform an act required to be performed in the State of New York and irrevocably and expressly agree to submit to the jurisdiction of the Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York for the purpose of resolving any disputes among the parties relating to this Agreement or the transactions contemplated hereby. The parties irrevocably waive, to the fullest extent permitted by law, any objection which they may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement, or any judgment entered by any court in respect hereof brought in New York County, New York, and further irrevocably waive any claim that any suit, action or proceeding brought in Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York has been brought in an inconvenient forum. Each of the parties hereto consents to process being served in any such suit, action or proceeding, by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 8.5 shall affect or limit any right to serve process in any other manner permitted by law. 8.6 SUCCESSORS AND ASSIGNS. This Agreement is personal to each of the parties and may not be assigned without the written consent of the other parties; provided, however, that any of the Purchasers shall be permitted to assign this Agreement to any Person to whom it assigns or transfers securities issued or issuable pursuant to this Agreement. Any assignee must be an "ACCREDITED INVESTOR" as defined in Rule 501(a) promulgated under the Securities Act. 8.7 SEVERABILITY. If any provision of this Agreement, or the application thereof, shall for any reason or to any extent be invalid or unenforceable, the remainder of this Agreement and application of such provision to other persons or circumstances shall continue in full force and effect and in no way be affected, impaired or invalidated. 26  8.8 ENTIRE AGREEMENT. This Agreement and the other agreements and instruments referenced herein constitute the entire understanding and agreement of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings. 8.9 OTHER REMEDIES. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party shall be deemed cumulative with and not exclusive of any other remedy conferred hereby or by law, or in equity on such party, and the exercise of any one remedy shall not preclude the exercise of any other. 8.10 AMENDMENT AND WAIVERS. Any term or provision 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 by a writing signed by the Company and the holders of at least a majority-in-interest of the Securities then outstanding, and such waiver or amendment, as the case may be, shall be binding upon all Purchasers. The waiver by a party of any breach hereof or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. No amendment shall be effected to impact a holder of Securities in a disproportionately adverse fashion without the consent of such individual holder. 8.11 NO WAIVER. The failure of any party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such party thereafter to enforce such provisions. 8.12 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. For purposes of this Agreement, the term "KNOWLEDGE," when used in reference to a corporation means the knowledge of the directors and executive officers of such corporation (including, if applicable, any person designated as a chief scientific, medical or technical officer) assuming such persons shall have made inquiry that is customary and appropriate under the circumstances to which reference is made, and when used in reference to an individual means the knowledge of such individual assuming the individual shall have made inquiry that is customary and appropriate under the circumstances to which reference is made. Whenever any form of the word "include" is used in this Agreement, it shall be interpreted as if it were followed by the phrase "without limitation". 8.13 COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be an original as against any party whose signature appears thereon and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as signatories. In the event that any signature is delivered by facsimile or other electronic image transmission technology, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof. 8.14 NO THIRD PARTY BENEFICIARY. Except as expressly set forth in Article VII, nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon or give any person other than the parties hereto and their respective heirs, personal representatives, legal representatives, successors and permitted assigns, any rights or remedies under or by reason of this Agreement. 27  8.15 WAIVER OF TRIAL BY JURY. THE PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 8.16 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The obligations of each Purchaser under this Agreement or any Transaction Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any such agreement. Nothing contained herein or in any Transaction Documents, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by such agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser represents that it has been represented by its own separate legal counsel in its review and negotiation of this Agreement and the other Transaction Documents. For reasons of administrative convenience only, the Purchasers acknowledge and agree that they and their respective counsel have chosen to communicate with the Company through Wiggin and Dana LLP, but Wiggin and Dana LLP does not represent any of the Purchasers in this transaction other than North Sound Capital LLC. [SIGNATURE PAGE FOLLOWS] 28  IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. SELLER: GLOBALOPTIONS GROUP, INC. By:________________________________ Name: Title: 29  OMNIBUS SIGNATURE PAGE TO GLOBALOPTIONS GROUP, INC. CONVERTIBLE NOTE PURCHASE AGREEMENT The undersigned hereby executes and delivers the Convertible Note Purchase Agreement to which this signature page is attached, which, together with all counterparts of the Agreement and signature pages of the other parties named in said Agreement, shall constitute one and the same document in accordance with the terms of the Agreement. Print Name: _______________________________ By: _______________________________ Name: _______________________________ Title: _______________________________ Address: _______________________________ _______________________________ _______________________________ Telephone: _______________________________ Facsimile: _______________________________ SOC/EIN#: _______________________________ Original Principal Amount of Notes Purchased: _______________________________