RECAPITALIZATION AGREEMENT

Exhibit 10.1

RECAPITALIZATION AGREEMENT

This RECAPITALIZATION AGREEMENT, dated March      , 2008 (this “ Agreement ) is an amendment to the Securities Purchase Agreement, dated as of October 31, 2005, as amended prior to the date hereof (as amended, the “ SPA ”), among SendTec Acquisition Corp., a Delaware corporation (“ STAC ”), SendTec, Inc. (formerly known as RelationServe Media, Inc.), a Delaware corporation (the “ Company ”), each Holder identified on the signature pages hereto (each, including its successors and assigns, a “ Holder ” and collectively the “ Holders ”), and Christiana Corporate Services, Inc., a Delaware corporation, in its capacity as administrative agent for the Holders (together with its successors and assigns in such capacity, the “ Agent ”).

WHEREAS, the parties hereto desire to enter into this Agreement in order to provide for the exchange of the Original Debentures (as defined herein) into Series B Preferred (as defined herein) of the Company, subject to the terms and conditions set forth in this Agreement and for certain rights and obligations of the parties from and after the date hereof.

WHEREAS, the Holders have agreed that the Original Debentures shall be exchanged for a combination of Series B Preferred, Debentures (as defined herein) and Residual Debentures (as defined herein), subject to the terms and conditions set forth in this Agreement and for certain rights and obligations of the parties from and after the date hereof, and that the Debentures and Residual Debentures shall not bear interest.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Original Debentures (as defined herein), and (b) the following terms have the meanings indicated in this Section 1.1 :

“ Action ” shall have the meaning ascribed to such term in Section 3.1(h) .

“ Affiliate ” means any Person 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. With respect to a Holder, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as such Holder will be deemed to be an Affiliate of such Holder.

“ Bloomberg ” means Bloomberg Financial L.P. or any successor thereto, or, if it is not then reporting such prices, by a comparable reporting service of national reputation selected by the Company.

“ Certificate of Amendment ” means the Certificate of Amendment of the Certificate of Incorporation of the Company, as amended to date providing for the changes set forth in Section 4.1 hereof.

“ Certificate of Designation ” means the Certificate of Designation for the Series B Preferred, a copy of which is attached as Exhibit B hereto.

“ Commission ” means the Securities and Exchange Commission.

“ Common Stock Equivalents ” means any securities of a Person that would entitle the holder thereof to acquire at any time common stock of such Person, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, common stock.

“ Common Stock ” means the common stock, par value $0.001 per share, of the Company and any other class of securities into which such securities may hereafter have been reclassified or changed into.

“ Company Counsel ” means Holland & Knight LLP.

“ Concurrent Offering ” means the sale of shares of Common Stock at the Concurrent Offering Price per share, or if Series B Preferred, on such terms as specified in the Concurrent Purchase Agreements and Certificate of Designation, in an aggregate amount of up to $7,000,000, pursuant to one or more Concurrent Purchase Agreements, which shares may be acquired in one or more transactions as contemplated herein, during the period terminating one (1) year after the earlier to occur of either of the following: (a) the Second Closing Date; or (b) 150 days after the date of the First Closing.

“ Concurrent Offering Price ” means a price of: (a) $0.12 per share for Concurrent Offering sales made no later than three (3) months after the Second Closing Date; and (b) the greater of $0.12 per share or that price per share equal to a 35% discount to market (i.e., the 5-day VWAP as reported by Bloomberg immediately preceding the date of issuance) for Concurrent Offering sales made after three (3) months after the Second Closing Date.

“ Concurrent Offering Target ” means at least $5,000,000 in aggregate gross proceeds raised by the Company in the Concurrent Offering.

“ Concurrent Purchase Agreements ” means one or more Subscription Agreements for Common Stock or Series B Preferred, between the Company and the investors identified therein (each, a “ New Holder ” and collectively, the “ New Holders ”) in connection with the Concurrent Offering.

“ Concurrent Shares ” means the shares of Common Stock or Series B Preferred being issued in the Concurrent Offering.

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“ Conversion Price ” means $0.17 per share, as such price may be adjusted pursuant to the Debentures or the Certificate of Designation, as applicable.

“ Debentures ” means the Amended and Restated Senior Secured Convertible Debentures issued by STAC to the Holders at the First Closing pursuant to Section 2.1(a)(iii) , in substantially the form of the attached Exhibit C hereto.

“ Disclosure Schedule ” has the meaning ascribed to such term in Section 3.1 .

“ Discussion Time ” shall have the meaning set forth in Section 3.2(f) .

“ Effective Date ” means the date that the Registration Statement filed by Company pursuant to Section 4.17 and the Registration Rights Agreement to register the full initial Required Minimum of Underlying Shares and Warrant Shares is first declared effective by the Commission.

“ Evaluation Date ” has the meaning ascribed to such term in Section 3.2(k) .

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Exempt Issuance ” means the issuance of (a) the Concurrent Shares, (b) shares of Common Stock or options to employees, consultants, officers or directors of the Company pursuant to any stock or option plan duly adopted by a majority of the independent directors of the Board of Directors of the Company or a majority of the members of a committee of independent directors established for such purpose; provided that the number of shares directly or upon exercise of options to be issued to consultants shall not exceed 100,000 in the aggregate; (c) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement; provided , that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise, exchange or conversion price of any such securities; (d) securities issued pursuant to acquisitions of other companies; provided, that any such issuance (1) shall only be to a Person that is, itself or through its subsidiaries, an operating company in a business synergistic with the business of the Company and in which the Company receives substantial benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (2) shall only be to a Person that is not an Affiliate of the Company or its Subsidiaries and (3) has been approved by a majority of the independent directors of the Company; and (e) securities issued at any time pursuant to the Sunrise Settlement. For purposes hereof, the independence of directors is determined by the rules of the Commission.

“ Existing Registration Statement ” means the Registration Statement on Form SB-2 (File No. 333-132586) pursuant to which an aggregate of 38,487,272 shares of Common Stock issuable upon conversion of the Original Debentures or exercise of the Warrants (as originally issued pursuant to the SPA) are registered.

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“ First Closing ” means the transactions occurring simultaneously herewith as set forth in Section 2.1.

“ GAAP ” has the meaning ascribed to such term in Section 3.2(b) .

“ Guarantors Ratification ” means the Guarantors’ Ratification and Amendment to Guarantor Security Agreement between certain of the Subsidiaries and the Agent dated the date hereof.

“ Indebtedness ” means (a) any liabilities for borrowed money or amounts owed in excess of $75,000 (other than trade accounts payable, accrued liabilities and deferred revenues incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in a Person’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $75,000 due under leases required to be capitalized in accordance with GAAP.

“ Intellectual Property Rights ” shall have the meaning ascribed to such term in Section 3.2(h) .

“ Legend Removal Date ” shall have the meaning ascribed to such term in Section 4.2(d) .

“ Liens ” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“ Material Adverse Effect ” shall have the meaning ascribed to such term in Section 3.1(b) .

“ Material Permits ” shall have the meaning ascribed to such term in Section 3.2(f) .

“ Morrison ” means Morrison & Foerster LLP with offices at 1290 Avenue of the Americas, New York, New York 10104-0050.

“ Original Debentures ” means the Senior Secured Convertible Debentures due March 31, 2008, issued by STAC to the Holders pursuant to the SPA, in the current outstanding principal amount of $32,730,000.

“ Permitted Indebtedness ” shall mean (i) a working capital credit facility, term loan, or a combination thereof, up to an aggregate amount of $2,000,000, which may have a second priority security interest in the accounts receivable of the Company of the Company and its Subsidiaries (subordinate, for so long as any Debentures or Residual Debentures remain outstanding, to the security interest of the Holders in such assets), (ii) trade payables and indebtedness consisting of capitalized lease obligations and purchase money indebtedness incurred in connection with acquisition of capital assets and obligations under sale-leaseback arrangements with respect to newly acquired or leased assets (including, but not limited to equipment financing transactions), (iii) deferred revenues and (iv) accrued liabilities.

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“ Permitted Liens ” means the following Liens: (i) Liens for taxes, assessments or other governmental charges or levies not yet due or that are being contested in good faith by appropriate proceedings and for which adequate reserves have been made; (ii) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, repairmen and other Liens imposed by law for amounts not yet due; (iii) Liens incurred or deposits made in the ordinary course of business in connection with worker’s compensation, unemployment insurance or other types of social security; (iv) non-monetary Liens that do not impair the marketability of the property subject thereto in any material respect; and (v) Liens pursuant to the Security Documents.

“ Person ” means an individual, corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition).

“ Registration Rights Agreement ” means the Registration Rights Agreement dated February 3, 2006 among the Company and the Holders.

“ Registration Statement ” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of, among other securities, the Transaction Shares by each Holder as provided for in the Registration Rights Agreement.

“ Required Holders ” means the holders of 75% of the principal amount then outstanding of the Debentures or Residual Debentures, as applicable, or the then outstanding shares of Series B Preferred (excluding any shares of Series B Preferred that may be issued to a New Holder) ;  provided , however , that so long as LB I Group Inc. or any of its Affiliates own any Debentures, Residual Debentures, or Series B Preferred, such holders must include LB I Group Inc. and such Affiliates.

“ Required Minimum ” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable as Underlying Shares issuable upon conversion in full of all then outstanding Debentures, Residual Debentures, or shares of Series B Preferred, and any Warrant Shares issuable upon exercise in full of the Warrants, ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price or Exercise Price (as defined in the Warrants), as applicable, is at all times on and after the date of determination 90% of the then applicable Conversion Price on the Trading Day immediately prior to the date of determination.

“ Residual Debentures ” means the Residual Senior Secured Convertible Debentures issued by STAC to the Holders at the Second Closing pursuant to Section 2.2(b) if the Concurrent Offering gross proceeds to the Company by the Second Closing Date are not at least $5,000,000, in substantially the form of the attached Exhibit K hereto.

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“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Second Closing Date ” means the third Trading Day following the satisfaction or waiver of all other conditions to the obligations of the parties set forth in Section 2.3 or such other time or on such other date or at such other place as the parties may mutually agree upon in writing.

“ SEC Reports ” shall have the meaning ascribed to such term in Section 3.1(q) .

“ Securities ” means the Debentures, the Residual Debentures, the Series B Preferred, and the Underlying Shares.

“ Securities Act ” means the Securities Act of 1933, as amended.

“ Security Agreement Amendments ” means an Amendment to STAC Security Agreement and an Amendment to IP Security Agreement between certain of the Subsidiaries and the Agent dated the date hereof.

“ Security Documents ” shall mean the Security Agreement, the Transaction Guaranty, the Guarantor Security Agreement (each as defined in the SPA), Guarantors Ratification, the Security Agreement Amendments, stock certificates and any other documents and filings required thereunder in order to grant the Holders a security interest in all of the assets of the Company and its Subsidiaries, including all UCC-1 filing receipts and medallion guaranteed stock powers as to any pledged securities.

“ Series B Preferred ” means the Series B preferred stock, par value $0.001 per share, of the Company with the designations, terms and rights as set forth in the Certificate of Designation.

“ Short Sales ” shall include all “short sales” of the Common Stock as defined in Rule 200 of Regulation SHO under the Exchange Act.

“ Special Meeting ” means the special meeting of the stockholders of the Company to be called as provided in Section 4.1.

“ Stockholder Matters ” means the proposals to be presented to the stockholders of the Company at the Special Meeting as provided in Section 4.1.

“ Subsidiary ” means any subsidiary of the Company as set forth on Schedule 3.1(a) .

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“ Sunrise Settlement ” means the proposed Settlement Agreement between the Company and Sunrise Equity Partners, L.P.

“ Trading Day ” means a day on which the Common Stock is traded on a Trading Market.

“ Trading Market ” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the American Stock Exchange, the New York Stock Exchange, the Nasdaq Global Market or the OTC Bulletin Board.

“ Transaction Documents ” means this Agreement, the Certificate of Designation, the SPA, the Debentures, the Residual Debentures, the Security Agreement Amendments, the Guarantors Ratification, the Registration Rights Agreement (as amended hereby), the Concurrent Purchase Agreement and any other agreements or documents executed in connection with the transactions contemplated hereunder.

“ Transaction Shares ” means, collectively, the shares of Series B Preferred and the Underlying Shares.

“ Underlying Shares ” means the shares of Common Stock issuable upon conversion of any outstanding Debentures, Residual Debentures, and/or of the Series B Preferred.

“ Variable Rate Transaction ” shall have the meaning ascribed to such term in Section 4.22 .

“ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the primary Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a Trading Day from 9:30 a.m. Eastern Time to 4:02 p.m., Eastern Time) using the VAP function; (b) if the Common Stock is not then listed or quoted on the Trading Market and if prices for the Common Stock are then reported in the “Pink Sheets” published by the Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (c) in all other cases, the fair market value of a share of Common Stock as determined by a nationally recognized-independent appraiser selected in good faith by Holders holding a majority of the principal amount of Debentures or Residual Debentures then outstanding.

“ Warrants ” means, collectively, the Common Stock purchase warrants issued on February 3, 2007 in connection with the issuance of the Original Debentures of which warrants to purchase 3,230,730 shares are still outstanding.

“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrants, excluding all shares of Common Stock issued upon exercise of the Warrants prior to the date hereof.

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ARTICLE II

EXCHANGE OF DEBENTURES INTO SERIES B PREFERRED

2.1 Initial Exchange of Debentures; First Closing . Simultaneously with the execution and delivery hereof and the transactions set forth below in this Section 2.1 (collectively, the “ First Closing ”), each of the Holders is exchanging the principal amount of Original Debentures set forth opposite its name in Schedule I , Column A hereto and will receive upon such exchange the number of shares of Series B Preferred set forth under Schedule I , Column B hereto. In addition to the execution and delivery of this Agreement by the parties hereto, the following documents and instruments are being executed and delivered and transactions being effected:

(a) Each Holder shall receive

(i) Payment by wire transfer to the account designated by the Holder on the signature page hereto of all accrued and unpaid interest through November 16, 2007 on the full outstanding principal amount of its respective Original Debentures as set forth under the column entitled “Aggregate Principal Amount of Original Debentures” on Schedule I hereto;

(ii) a certificate and/or certificates representing the number of shares of Series B Preferred being issued to such Holder upon partial exchange of the Original Debentures;

(iii) upon delivery to the Agent of the Holder’s Original Debenture, an amended and restated Debenture in the form of Exhibit C hereto with a principal amount equal to the principal amount set forth opposite such Holder’s name in Schedule I , Column C hereto, which amount is equal to the amount of such Holder’s Original Debenture remaining outstanding after issuance of Series B Preferred to such Holder at the First Closing ;

(iv) a legal opinion of Company Counsel, in the form of Exhibit D hereto, with respect to certain corporate matters and with respect to Rule 144;

(v) evidence that the wire transfer of the purchase price payable pursuant to any Concurrent Purchase Agreements entered into in satisfaction of the conditions set forth in Section 2.1(e) has been received by the Company and that the Company has issued certificates for the shares of Common Stock being purchased thereunder;

(vi) a copy of the executed employment agreement between the Company and Paul Soltoff in the form of Exhibit E hereto;

(vii) a certificate of the Secretary of STAC with respect to customary matters including resolutions approving and authorizing this Agreement, the Debentures and the Residual Debentures (and all other Transaction Documents to which STAC is a party), and a certificate of the Company with respect to customary matters including resolutions approving and authorizing: (1) this

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Agreement, (2) the Concurrent Offering and related Concurrent Purchase Agreements, (3) the issuance of the Series B Preferred and the filing of the Certificate of Designation, (4) setting a record date and holding the Special Meeting for the purpose of approving the Stockholder Matters, (5) the filing of any additional Registration Statement to register additional Underlying Shares, (6) approval of the new employment agreement with Paul Soltoff in the form of Exhibit E hereto, (7) approval of the engagement of a restructuring consultant, as provided in Section 2.1(a)(ix), (8) the appointment of new directors pursuant to Section 2.1(f) and the acceptance of the resignation of any applicable directors pursuant to Section 2.1(f) and (9) certain other matters related to this Agreement;

(viii) an executed copy of the voting agreement in the form of Exhibit F hereto;

(ix) a copy of the executed engagement letter with between the Company and Marotta Gund Budd & Dzera, LLC (the “ CRO ”);

(x) a copies of the amendments to security agreements in the form of Exhibit L hereto; and

(xi) a copy of the guarantor ratification and amendment in the form of Exhibit M hereto.

(b) The Company shall pay the fees and expenses identified on Exhibit G hereto by wire transfer of immediately available funds to the persons entitled thereto.

(c) INTENTIONALLY OMITTED .

(d) The Certificate of Designation shall have been filed with the Delaware Secretary of State.

(e) The Company shall have received or shall receive concurrently therewith at least $1,000,000 of gross proceeds pursuant to the Concurrent Offering; provided , however , that in connection with the Concurrent Offering: (i) executive management of the Company shall purchase a minimum of $500,000 in the aggregate of Common Stock toward the fulfillment of this condition; and (ii) Paul Soltoff shall individually purchase at least $300,000 of such $500,000 amount.

(f) The Company’s board of directors shall consist of the following: (i) Paul Soltoff; (ii) Vincent Addonisio; (iii) Anthony Abate; (iv) Paul Dzera; and (v) Steve Marotta.

(g) The Company shall have paid to the Agent the fees payable pursuant to the Transaction Documents through December 31, 2008.

2.2 Second Exchange of Debentures; Second Closing . Upon satisfaction of all conditions to the Second Closing as set forth in Section 2.3 , on the Second Closing Date, each Holder shall exchange the entire remaining principal amount of Debentures then owned by it

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into the number of shares of Series B Preferred set forth in Schedule I , Column C , and a cash settlement for any fractional shares in the amount set forth in Schedule II . Notwithstanding the foregoing, if all conditions to the Second Closing as set forth in Section 2.3 are satisfied but the Concurrent Offering Target has not been satisfied, then on the Second Closing Date each Holder shall exchange only the principal amount of Debentures set forth opposite its name in Schedule I , Column E hereto, and shall receive a combination of Series B Preferred and a Residual Debenture as provided in Section 2.2(a), and a cash settlement for any fractional shares in the amount set forth in Schedule II ; and in such case the aggregate principal amount of Debentures so exchanged shall equal $3,370,000 and the aggregate amount of Residual Debentures issued by STAC shall equal $11,000,000. At the Second Closing, the following documents and instruments will also be executed and delivered or transactions will be effected:

(a) Each Holder shall receive

(i) INTENTIONALLY LEFT BLANK .

(ii) a certificate or certificates representing the number of shares of Series B Preferred being issued to such Holder upon exchange of the Debentures and set forth in Schedule I Column D or F , as applicable;

(iii) a “bring down” legal opinion of Company Counsel, in the form of Exhibit D hereto;

(iv) a “bring down” certificate of the Secretary of the Company with respect to customary matters, including the resolutions referenced in Section 2.1(a)(vii);

(v) a certificate of the Chief Executive Officer and Chief Financial Officer of each of the Company and STAC certifying to the satisfaction of the closing conditions set forth in clauses (i) through (iii) of Section 2.3(b); and

(vi) if the Concurrent Offering Target is not satisfied at the Second Closing Date, a Residual Debenture with a principal amount equal to the residual amount set forth opposite its name in Schedule I , Column G hereto.

(b) Any Residual Debentures issued at the Second Closing shall be in substantially the form of the attached Exhibit K hereto and shall: (i) have a term of three (3) years from the Second Closing Date, (ii) not bear interest, (iii) convert into Common Stock at the Conversion Price per share, (iv) contain no financial covenants, (v) be a senior and secured obligation of the Company, (vi) have pari-passu antidilution protection to the Series B Preferred and (viii) automatically convert into Series B Preferred when and if the Concurrent Offering Target is satisfied, subject to and all as more specifically set forth in the Residual Debentures.

2.3 Conditions to Second Closing .

(a) Company Conditions . The obligations of the Company hereunder in connection with the Second Closing are subject to the following conditions being met:

(i) The approval by the stockholders of the Company of the Stockholder Matters, and the filing of the Certificate of Amendment with the Delaware Secretary of State;

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(ii) the accuracy in all material respects (except for those representations and warranties that are qualified by materiality, which shall be true and correct in all respects) when made and on the Second Closing Date of the representations and warranties of the Holders contained herein; and

(iii) all obligations, covenants and agreements of the Holders required to be performed at or prior to the Second Closing Date as set forth in this Agreement shall have been performed.

(b) Holder Conditions . The respective obligations of the Holders hereunder in connection with the Second Closing are subject to the following conditions being met:

(i) The approval by the stockholders of the Company of the Stockholder Matters and the filing of the Certificate of Amendment with the Delaware Secretary of State;

(ii) the accuracy in all material respects (except for those representations and warranties that are qualified by materiality, which shall be true and correct in all respects) on the Second Closing Date of the representations and warranties of the Company and STAC contained herein;

(iii) all obligations, covenants and agreements of the Company and STAC required to be performed at or prior to the Second Closing Date as set forth in this Agreement shall have been performed; and

(iv) the delivery by the Company and STAC of the items required to be delivered by it pursuant to Section 2.2 .

ARTICLE III

REPRESENTATIONS, WARRANTIES AND COVENANTS

3.1 Representations, Warranties and Covenants of the Company . Except as set forth under the corresponding section of the disclosure schedules delivered to the Holders concurrently herewith (collectively, the “ Disclosure Schedule ”), which Disclosure Schedule shall be deemed a part hereof, the Company makes the representations, warranties and covenants set forth below to each Holder as of the date hereof and as of the Second Closing Date.

(a) Subsidiaries . All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a) . Except as set forth on Schedule 3.1(a) , the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

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(b) Organization and Qualification . The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not have (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s and the Subsidiaries’ respective abilities to perform in any material respect on a timely basis their respective obligations under any Transaction Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”), and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c) Authorization; Enforcement . (1) The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company to which it is a party and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or stockholders in connection therewith other than in connection with the Required Approvals (as defined in Section 3.1(e) ). Each Transaction Document to which the Company is a party has been (or upon delivery will be) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against it in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(2) Each Subsidiary has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company to which it is a party and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of such Subsidiary and no further action is required by such Subsidiary, its board of directors (or other managing body) or stockholders (or other equity holders) in

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connection therewith other than in connection with the Required Approvals. Each Transaction Document to which such Subsidiary is a party has been (or upon delivery will be) duly executed by such Subsidiary and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of such Subsidiary enforceable against it in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d) No Conflicts . The execution, delivery and performance of the Transaction Documents by the Company and certain of its Subsidiaries to which it is a party and the consummation by the Company and such Subsidiaries of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, except for any such conflict, default, of creation of a lien or rights of termination, amendment, acceleration or cancellation as could not cause a Material Adverse Effect, and except for certain customer agreements entered in the ordinary course of business regarding change of control, or (iii) subject to the Required Approvals, result in a material violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected.

(e) Filings, Consents and Approvals . Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company or any Subsidiary of the Transaction Documents, other than (i) filings required pursuant to Section 4.6, (ii) the filing with the Delaware Secretary of State of (A) the Certificate of Designation prior to or on the date hereof and (b) assuming approval of the Stockholder Matters by the stockholders of the Company, on or prior to the Second Closing Date, the Certificate of Amendment, (iii) the filing of the Proxy Statement (as defined in Section 4.1 ) with the Commission, (iv) the filing with the Commission pursuant to the Registration Rights Agreement of one or more Registration Statements with respect to Underlying Shares that are not currently registered pursuant to an effective Registration Statement, (v) the notice and/or application(s) to each applicable Trading Market for the listing of the Underlying Shares for trading thereon in the time

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and manner required thereby, and (vi) the approval by the Company’s and the Subsidiaries’ boards of directors, which have been received (collectively, the “ Required Approvals ”).

(f) Issuance of the Securities . (A) All shares of Series B Preferred issuable pursuant to this Agreement, the Underlying Shares related to the shares of Series B Preferred issuable at the First Closing, and the Warrant Shares are duly authorized and, when issued in accordance with this Agreement, the Certificate of Designation or the Warrant will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company and will have been issued in compliance with all federal and state securities laws. Subject to (i) approval of the Stockholder Matters by the stockholders of the Company as provided in Section 4.1 and the filing of the Certificate of Amendment with the Delaware Secretary of State, the Underlying Shares in respect of the shares of Series B Preferred issuable on the Second Closing Date will be duly authorized and, when issued in accordance with this Agreement and the Certificate of Designation will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company and will have been issued in compliance with all federal and state securities laws. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Warrant Shares and of the Underlying Shares with respect to the shares of Series B Preferred being issued on the date hereof at the First Closing. On or prior to the Second Closing Date, the Company shall have reserved from its duly authorized capital stock a number of shares of Common Stock equal to at least the Required Minimum. As of the date hereof, 38,487,272 of the Underlying Shares are registered for resale pursuant to Existing Registration Statement, which are effective within the meaning of the rules and regulations of the Commission.

(B) The Debentures and the Residual Debentures have been duly authorized by STAC and when duly executed and delivered in accordance with the terms hereof, will constitute the valid and binding obligation of STAC enforceable against it in accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(g) Capitalization Matters . The capitalization of the Company is as set forth on Schedule 3.1(g) . Except with respect to the Concurrent Offering and any Exempt Issuance: (a) the Company has not issued any capital stock since September 30, 2007, other than pursuant to the exercise of employee stock options under the Company’s stock option plans and pursuant to the conversion or exercise of outstanding Common Stock Equivalents; and (b) no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 3.1(g) , other than the Securities and pursuant to the Concurrent Offering or any Exempt Issuance, there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or

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exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Holders) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. Except as set forth on Schedule 3.1(g) , there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

(h) Litigation . Except as set forth in Schedule 3.1(h), there is no Proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) that (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) would, if there were an unfavorable decision, result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. Neither the Company nor, to the Company’s knowledge, any executive officer, director, or Affiliate of any of them has been contacted in writing or orally by the Federal Bureau of Investigation for any reason whatsoever since February 3, 2006.

(i) Certain Fees . Other than an aggregate fee of $450,000 to Burnham Hill Partners, and any fees payable to the CRO, no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person with respect to the transactions contemplated by the Transaction Documents. The Holders shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. The Company has delivered to the Holders a copy of a letter from Burnham Hill Partners confirming the nature and amounts of all fees and other payments due to it in connection with the transactions contemplated by this Agreement and the Concurrent Purchase Agreements.

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(j) Private Placement . Assuming the accuracy of the Holders’ representations and warranties set forth in Section 3.2 , no registration under the Securities Act is or will be required for the issuance of the Series B Preferred or the related Underlying Shares by the Company to the Holders as contemplated hereby or for the issuance and sale of the Concurrent Shares pursuant to the Concurrent Offering. The issuance and sale of the Concurrent Shares pursuant to the Concurrent Purchase Agreements does not contravene the rules and regulations of the Trading Market.

(k) Registration Rights . Except as set forth in Schedule 3.1(k) , other than each of the Holders, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

(l) Disclosure . The Company confirms that neither it nor, to its knowledge, any other Person acting on its behalf has provided any of the Holders or their agents or counsel or any of the New Holders pursuant to the Concurrent Offering, with any information that will constitute material, nonpublic information following the issuance of the press release and the filing of the Current Report on Form 8-K as contemplated in accordance with Section 4.7 . The Company understands and confirms that the Holders will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to the Holders by the Company or, to the Company’s knowledge, Burnham Hill Partners, regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules and Exhibits to this Agreement, furnished by or on behalf of the Company with respect to the representations and warranties made herein are true and correct in all material respects (except for those representations and warranties that are qualified by materiality, which shall be true and correct in all respects) and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Holder makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 .

(m) No Integrated Offering . Assuming the accuracy of the Holders’ representations and warranties set forth in Section 3.2 , neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause the issuance of the Securities pursuant to this Agreement to fail to be entitled to the exemptions afforded by Regulation D under, or Section 4(2) of, the Securities Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market on which any of the securities of the Company are listed or designated, if any.

(n) No General Solicitation . Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Holders.

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(o) Acknowledgement Regarding Holders’ Trading Activity . The Company acknowledges and agrees that (i) except for a Holder’s representation and warranty in Section 3.2(f) and its covenant in Section 4.12 , such Holder is not making any representation, warranty or covenant with respect to purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other transactions by any Holder, including Short Sales, and specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities; (iii) that any Holder, and counter parties in “derivative” transactions to which any such Holder is a party, directly or indirectly, presently may have a “short” position in the Common Stock; and (iv) that each Holder shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (a) one or more Holders may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Transaction Shares deliverable with respect to Securities are being determined and (b) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

(p) Manipulation of Price . Neither the Company nor to the Company’s knowledge, anyone acting on its behalf has (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities or (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities.

(q) SEC Reports; Financial Statements . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein filed on or after December 31, 2005 being collectively referred to herein as the “ SEC Reports ”). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prep