Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of August 31,
2007 between Advanced Cell Technology, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively the
“Purchasers”).

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 each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

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 Company and each Purchaser 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 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(j).

“Actual Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
exercise or conversion in full of all Warrants and the Debentures, ignoring any
conversion or exercise limits set forth therein.

“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 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.

 “Closing” means the closing of the purchase and sale of the Securities pursuant
to Section 2.1.

“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions

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precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and
(ii) the Company’s obligations to deliver the Securities have been satisfied or
waived.

“Closing Price” means on any particular date (a) the last reported closing bid
price per share of Common Stock on such date on the Trading Market (as reported
by Bloomberg L.P. at 4:15 PM (New York time), or (b) if there is no such price
on such date, then the closing bid price on the Trading Market on the date
nearest preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York
time) for the closing bid price for regular session trading on such day), or
(c) 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 (d) if the shares of Common Stock are not then
publicly traded the fair market value of a share of Common Stock as determined
by a qualified independent appraiser selected in good faith by the Purchasers of
a majority in interest of the then outstanding Principal Amount of the
Debentures.

 “Commission” means the Securities and Exchange Commission.

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

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, 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.

“Company Counsel” means Pierce Atwood LLP.

“Conversion Price” shall have the meaning ascribed to such term in the
Debentures.

“Debentures” means the Amortizing Senior Secured Convertible Debentures issued
by the Company to the Purchasers hereunder, in the form of Exhibit A.

“Disclosure Schedules” shall have the meaning ascribed to such term in Section
3.1.

“Effective Date” means the date that the initial Registration Statement filed by
the Company pursuant to the Registration Rights Agreement is first declared
effective by the Commission.

“Evaluation Date” shall have the meaning ascribed to such term in Section
3.1(r).

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“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) options to employees, officers,
directors or consultants (provided, however, that issuances to consultants shall
not exceed 500,000 shares in any 12 month period, subject to adjustment for
reverse and forward stock splits, stock interests, stock combinations and other
similar transactions that occur after the date of this Agreement; provided,
further, that the issuance price of such shares shall be equal to or greater
than the Market Price on the date of such issuance) of the Company pursuant to
any stock or option plan currently in effect or hereafter duly adopted by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non-employee directors established
for such purpose, provided that the exercise price of such options shall not be
less than the VWAP on the Trading Day immediately prior to the grant of such
option), (b) securities upon the exercise or conversion of any securities issued
pursuant to this Agreement, convertible securities, options or warrants 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 except in accordance with their terms as in effect as of the
date hereof, and (c) securities issued pursuant to acquisitions or strategic
transactions, provided any such issuance shall only be made in connection with a
transaction involving a Person which 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 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.

“Exempt Redemptions” means redemption of shares by the Company solely as a
result of a redemption of a de minimus number of shares from employees, officers
or directors of the Company pursuant to termination of employment or resolution
of employment disputes with any such Persons, which issuances are approved by
the Board of Directors.

“Force Majeure”  shall mean any unusual event arising from causes reasonably
beyond the control of the Company that could not be reasonably anticipated that
causes a delay in or prevents the performance of any obligation under this
Agreement or the Transaction Documents, including but not limited to: acts of
God; fire; war; terrorism; insurrection; civil disturbance; explosion; adverse
weather conditions that could not be reasonably anticipated; unusual delay in
transportation; strikes or other labor disputes; restraint by court order or
order of public authority but not including delays solely caused by any action
of, or failure to act by, the Commission or the Company’s transfer agent.

“FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington
Avenue, Suite 2620, New York, New York 10170-0002.

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

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

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

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

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

 “Market Price” shall mean $0.34, subject to adjustment for reverse and forward
stock splits, stock interests, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement

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

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

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

“Participation Maximum” shall have the meaning ascribed to such term in Section
4.13.

“Person” means an individual or 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.

“Pre-Notice” shall have the meaning ascribed to such term in Section 4.13.

“Principal Amount” shall mean, as to each Purchaser, the amounts set forth below
such Purchaser’s signature block on the signature pages hereto and next to the
heading “Principal Amount”, in United States Dollars, which shall equal such
Purchaser’s Subscription Amount multiplied by 1.255.

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

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.11.

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“Registration Rights Agreement” means the Registration Rights Agreement, dated
the date hereof, among the Company and the Purchasers, in the form of Exhibit B
attached hereto.

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale of  that
portion of the Underlying Shares by each Purchaser as are required to be
registered at the time of filing the registration statement, as provided for in
the Registration Rights Agreement.

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(e).

“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.

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

“Securities” means the Debentures, the Warrants, the Warrant Shares and the
Underlying Shares.

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

“Security Agreement” means the Security Agreement, dated the date hereof, among
the Company and the Purchasers, in the form of Exhibit E attached hereto.

“Security Documents” shall mean the Security Agreement, the Subsidiary
Guarantees and any other documents and filing required thereunder in order to
grant the Purchasers a first priority security interest in the assets of the
Company and the Subsidiaries as provided in the Security Agreement, including
all UCC-1 filing receipts.

 “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

“Subscription Amount” means, as to each Purchaser, the amount to be paid for
Debentures and Warrants purchased hereunder as specified below such Purchaser’s
name on the signature page of this Agreement, in United States Dollars.

“Subsequent Financing” shall have the meaning ascribed to such term in Section
4.13.

“Subsequent Financing Notice” shall have the meaning ascribed to such term in
Section 4.13.

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“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a)
and shall, where applicable, include any direct or indirect subsidiary of the
Company formed or acquired after the date hereof.

“Subsidiary Guarantee” means the Subsidiary Guarantee, dated the date hereof, by
each Subsidiary in favor of the Purchasers, in the form of Exhibit F attached
hereto.

“Trading Day” means a day on which the Common Stock is traded on the principal
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
SmallCap Market, the American Stock Exchange, the New York Stock Exchange, the
Nasdaq National Market or the OTC Bulletin Board.

“Transaction Documents” means this Agreement, the Debentures, the Security
Agreement, the Subsidiary Guarantee, the Warrants, the Registration Rights
Agreement and the other documents or agreements listed on Schedule A attached
hereto.

“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion or redemption of the Debenture and upon exercise of the Warrants and
issued and issuable in lieu of the cash payment of interest on the Debentures in
accordance with the terms of the Debentures.

“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 Financial
L.P. (based on a Trading Day from 9:30 a.m. EST 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 Purchasers holding a
majority of the Principal Amount of the Debentures then outstanding.

 “Warrants” means collectively the Common Stock purchase warrants, in the form
of Exhibit C delivered to the Purchasers at the Closing in accordance with
Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have
a term of exercise equal to five years.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

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ARTICLE II

PURCHASE AND SALE

2.1                                 CLOSING.  ON THE CLOSING DATE, UPON THE
TERMS AND SUBJECT TO THE CONDITIONS SET FORTH HEREIN, CONCURRENT WITH THE
EXECUTION AND DELIVERY OF THIS AGREEMENT BY THE PARTIES HERETO, THE COMPANY
AGREES TO SELL, AND THE PURCHASERS AGREE TO PURCHASE, IN THE AGGREGATE,
SEVERALLY AND NOT JOINTLY, UP TO $12,550,000 PRINCIPAL AMOUNT OF DEBENTURES AND
WARRANTS AS DETERMINED PURSUANT TO SECTION 2.2(A).  EACH PURCHASER SHALL DELIVER
TO THE COMPANY VIA WIRE TRANSFER OR A CERTIFIED CHECK OF IMMEDIATELY AVAILABLE
FUNDS EQUAL TO THEIR SUBSCRIPTION AMOUNT AND THE COMPANY SHALL DELIVER TO EACH
PURCHASER THEIR RESPECTIVE DEBENTURES AND WARRANTS AS DETERMINED PURSUANT TO
SECTION 2.2(A) AND THE OTHER ITEMS SET FORTH IN SECTION 2.2 ISSUABLE AT THE
CLOSING.  UPON SATISFACTION OF THE CONDITIONS SET FORTH IN SECTIONS 2.2 AND 2.3,
THE CLOSING SHALL OCCUR AT THE OFFICES OF FWS, OR SUCH OTHER LOCATION AS THE
PARTIES SHALL MUTUALLY AGREE.

2.2                                 DELIVERIES.

A)                                      ON THE CLOSING DATE, THE COMPANY SHALL
DELIVER OR CAUSE TO BE DELIVERED TO EACH PURCHASER THE FOLLOWING:

(I)                                     THIS AGREEMENT DULY EXECUTED BY THE
COMPANY;

(II)                                  A LEGAL OPINION OF COMPANY COUNSEL, IN THE
FORM OF EXHIBIT D ATTACHED HERETO;

(III)                               A DEBENTURE WITH A PRINCIPAL AMOUNT EQUAL TO
SUCH PURCHASER’S PRINCIPAL AMOUNT, REGISTERED IN THE NAME OF SUCH PURCHASER;

(IV)                              A WARRANT REGISTERED IN THE NAME OF SUCH
PURCHASER TO PURCHASE UP TO A NUMBER OF SHARES OF COMMON STOCK EQUAL TO 100% OF
SUCH PURCHASER’S PRINCIPAL AMOUNT DIVIDED BY THE MARKET PRICE, WITH AN EXERCISE
PRICE EQUAL TO $0.38, SUBJECT TO ADJUSTMENT THEREIN;

(V)                                 THE SECURITY AGREEMENT, DULY EXECUTED BY THE
COMPANY AND EACH SUBSIDIARY, ALONG WITH ALL OF THE SECURITY DOCUMENTS;

(VI)                              THE SUBSIDIARY GUARANTEE, DULY EXECUTED BY THE
PARTIES THERETO;

(VII)                           IRREVOCABLE LOCK-UP AGREEMENT, IN THE FORM OF
EXHIBIT G ATTACHED HERETO, DULY EXECUTED FROM EACH OFFICER AND DIRECTOR OF THE
COMPANY THAT HOLDS 1,000,000 OR MORE SHARES OF COMMON STOCK OR COMMON STOCK
EQUIVALENTS; AND

(VIII)                        THE REGISTRATION RIGHTS AGREEMENT DULY EXECUTED BY
THE COMPANY.

B)                                     ON THE CLOSING DATE, EACH PURCHASER SHALL
DELIVER OR CAUSE TO BE DELIVERED TO THE COMPANY THE FOLLOWING:

(I)                                     THIS AGREEMENT DULY EXECUTED BY SUCH
PURCHASER;

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(II)                                  SUCH PURCHASER’S SUBSCRIPTION AMOUNT BY
WIRE TRANSFER TO THE ACCOUNT AS SPECIFIED IN WRITING BY THE COMPANY;

(III)                               THE SECURITY AGREEMENT DULY EXECUTED BY SUCH
PURCHASER; AND

(IV)                              THE REGISTRATION RIGHTS AGREEMENT DULY
EXECUTED BY SUCH PURCHASER.

2.3                                 CLOSING CONDITIONS.

A)                                      THE OBLIGATIONS OF THE COMPANY HEREUNDER
IN CONNECTION WITH THE CLOSING ARE SUBJECT TO THE FOLLOWING CONDITIONS BEING
MET:

(I)                                     THE ACCURACY IN ALL MATERIAL RESPECTS
WHEN MADE AND ON THE CLOSING DATE OF THE REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS CONTAINED HEREIN;

(II)                                  ALL OBLIGATIONS, COVENANTS AND AGREEMENTS
OF EACH PURCHASER REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL
HAVE BEEN PERFORMED; AND

(III)                               THE DELIVERY BY EACH PURCHASER OF THE ITEMS
SET FORTH IN SECTION 2.2(B) OF THIS AGREEMENT.

B)                                     THE RESPECTIVE OBLIGATIONS OF EACH
PURCHASER HEREUNDER IN CONNECTION WITH THE CLOSING ARE SUBJECT TO THE FOLLOWING
CONDITIONS BEING MET:

(I)                                     THE ACCURACY IN ALL MATERIAL RESPECTS ON
THE CLOSING DATE OF THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY CONTAINED
HEREIN;

(II)                                  ALL OBLIGATIONS, COVENANTS AND AGREEMENTS
OF THE COMPANY REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL
HAVE BEEN PERFORMED;

(III)                               THE DELIVERY BY THE COMPANY OF THE ITEMS SET
FORTH IN SECTION 2.2(A) OF THIS AGREEMENT;

(IV)                              THERE SHALL HAVE BEEN NO MATERIAL ADVERSE
EFFECT WITH RESPECT TO THE COMPANY SINCE THE DATE HEREOF; AND

(V)                                 FROM THE DATE HEREOF TO THE CLOSING DATE,
TRADING IN THE COMMON STOCK SHALL NOT HAVE BEEN SUSPENDED BY THE COMMISSION
(EXCEPT FOR ANY SUSPENSION OF TRADING OF LIMITED DURATION AGREED TO BY THE
COMPANY, WHICH SUSPENSION SHALL BE TERMINATED PRIOR TO THE CLOSING), AND, AT ANY
TIME PRIOR TO THE CLOSING DATE, TRADING IN SECURITIES GENERALLY AS REPORTED BY
BLOOMBERG L.P. SHALL NOT HAVE BEEN SUSPENDED OR LIMITED, OR MINIMUM PRICES SHALL
NOT HAVE BEEN ESTABLISHED ON SECURITIES WHOSE TRADES ARE REPORTED BY SUCH
SERVICE, OR ON ANY TRADING MARKET, NOR SHALL A BANKING MORATORIUM HAVE BEEN
DECLARED EITHER BY THE UNITED STATES OR NEW YORK STATE AUTHORITIES NOR SHALL
THERE HAVE OCCURRED ANY

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MATERIAL OUTBREAK OR ESCALATION OF HOSTILITIES OR OTHER NATIONAL OR
INTERNATIONAL CALAMITY OF SUCH MAGNITUDE IN ITS EFFECT ON, OR ANY MATERIAL
ADVERSE CHANGE IN, ANY FINANCIAL MARKET WHICH, IN EACH CASE, IN THE REASONABLE
JUDGMENT OF EACH PURCHASER, MAKES IT IMPRACTICABLE OR INADVISABLE TO PURCHASE
THE DEBENTURES AT THE CLOSING.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1                                 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.  EXCEPT AS SET FORTH UNDER THE CORRESPONDING SECTION OF THE DISCLOSURE
SCHEDULES DELIVERED TO THE PURCHASERS CONCURRENTLY HEREWITH (THE “DISCLOSURE
SCHEDULES”) WHICH DISCLOSURE SCHEDULES SHALL BE DEEMED A PART HEREOF, THE
COMPANY HEREBY MAKES THE REPRESENTATIONS AND WARRANTIES (AND, WHERE APPLICABLE,
COVENANTS) SET FORTH BELOW TO EACH PURCHASER.

(A)                                  SUBSIDIARIES.  ALL OF THE DIRECT AND
INDIRECT SUBSIDIARIES OF THE COMPANY ARE 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.  IF THE COMPANY HAS NO SUBSIDIARIES, THEN
REFERENCES IN THE TRANSACTION DOCUMENTS TO THE SUBSIDIARIES WILL BE DISREGARDED.

(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 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, COULD NOT
HAVE OR REASONABLY BE EXPECTED TO RESULT IN (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 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”) 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.  THE COMPANY
HAS THE REQUISITE CORPORATE POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED BY EACH OF THE TRANSACTION DOCUMENTS AND OTHERWISE
TO CARRY OUT ITS OBLIGATIONS HEREUNDER

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AND THEREUNDER.  THE EXECUTION AND DELIVERY OF EACH OF THE TRANSACTION DOCUMENTS
BY THE COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED
HEREBY AND 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 ITS STOCKHOLDERS IN CONNECTION THEREWITH OTHER THAN IN CONNECTION
WITH THE REQUIRED APPROVALS.  EACH TRANSACTION DOCUMENT HAS BEEN (OR UPON
DELIVERY WILL HAVE BEEN) 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 THE COMPANY IN ACCORDANCE
WITH ITS TERMS EXCEPT (I) AS LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION AFFECTING
ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND (II) AS LIMITED BY LAWS RELATING
TO THE AVAILABILITY OF SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF, GENERAL
PRINCIPLES OF EQUITY (REGARDLESS OF WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN
A PROCEEDING IN EQUITY OR AT LAW) AND EXCEPT AS THE INDEMNIFICATION AGREEMENTS
AND PENALTY PROVISIONS HEREOF MAY BE LEGALLY UNENFORCEABLE.

(D)                                 NO CONFLICTS.  THE EXECUTION, DELIVERY AND
PERFORMANCE OF THE TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY
THE COMPANY 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, OR
(III) SUBJECT TO THE REQUIRED APPROVALS, CONFLICT WITH OR RESULT IN A 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; EXCEPT IN THE CASE OF EACH OF CLAUSES (II) AND (III), SUCH
AS COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.

(E)                                  FILINGS, CONSENTS AND APPROVALS.  THE
COMPANY IS NOT 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 OF THE
TRANSACTION DOCUMENTS, OTHER THAN (I) FILINGS REQUIRED PURSUANT TO SECTION 4.6,
(II) THE FILING WITH THE COMMISSION OF THE REGISTRATION STATEMENT, (III) THE
NOTICE AND/OR APPLICATION(S) TO EACH APPLICABLE TRADING MARKET FOR THE ISSUANCE
AND SALE OF THE DEBENTURES AND WARRANTS AND THE LISTING OF THE UNDERLYING SHARES
FOR TRADING THEREON IN THE TIME AND MANNER REQUIRED THEREBY AND (IV) THE FILING
OF FORM D WITH THE

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COMMISSION AND SUCH FILINGS AS ARE REQUIRED TO BE MADE UNDER APPLICABLE STATE
SECURITIES LAWS (COLLECTIVELY, THE “REQUIRED APPROVALS”).

(F)                                    ISSUANCE OF THE SECURITIES.  THE
SECURITIES ARE DULY AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH
THE APPLICABLE TRANSACTION DOCUMENTS, WILL BE DULY AND VALIDLY ISSUED, FULLY
PAID AND NONASSESSABLE, FREE AND CLEAR OF ALL LIENS IMPOSED BY THE COMPANY OTHER
THAN RESTRICTIONS ON TRANSFER PROVIDED FOR IN THE TRANSACTION DOCUMENTS.  THE
UNDERLYING SHARES, WHEN ISSUED IN ACCORDANCE WITH THE TERMS OF THE TRANSACTION
DOCUMENTS, WILL BE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, FREE AND CLEAR
OF ALL LIENS IMPOSED BY THE COMPANY.  THE COMPANY HAS RESERVED FROM ITS DULY
AUTHORIZED CAPITAL STOCK A NUMBER OF SHARES OF COMMON STOCK FOR ISSUANCE OF THE
UNDERLYING SHARES AT LEAST EQUAL TO THE ACTUAL MINIMUM ON THE DATE HEREOF.

(G)                                 CAPITALIZATION.  THE LIST OF THE
SHAREHOLDERS OF THE COMPANY HOLDING IN EXCESS OF FIVE PERCENT (5%) OF THE ISSUED
AND OUTSTANDING STOCK OF THE COMPANY AS OF JUNE 30, 2006, AND STATING IN THE
AGGREGATE THE NUMBER OF SHARES HELD BY SHAREHOLDERS HOLDING LESS THAN FIVE
PERCENT (5%) OF THE OUTSTANDING STOCK OF THE COMPANY AND LISTING THE NUMBER OF
SHARES OF COMMON STOCK OWNED BENEFICIALLY, AND OF RECORD, BY AFFILIATES OF THE
COMPANY AS OF THE DATE HEREOF IS SET FORTH ON SCHEDULE 3.1(G).  THE COMPANY HAS
NOT ISSUED ANY CAPITAL STOCK SINCE ITS MOST RECENTLY FILED PERIODIC REPORT UNDER
THE EXCHANGE ACT, OTHER THAN AS SET FORTH ON SCHEDULE 3.1(G).  THE
CAPITALIZATION OF THE COMPANY IS AS SET FORTH ON SCHEDULE 3.1(G).  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 A RESULT OF THE PURCHASE AND SALE OF THE SECURITIES, THERE
ARE NO OUTSTANDING OPTIONS, WARRANTS, SCRIPT RIGHTS TO SUBSCRIBE TO, CALLS OR
COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR
OBLIGATIONS CONVERTIBLE INTO OR 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 PURCHASERS) 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.  NO FURTHER APPROVAL OR
AUTHORIZATION OF ANY STOCKHOLDER, THE BOARD OF DIRECTORS OF THE COMPANY OR
OTHERS IS REQUIRED FOR THE ISSUANCE AND SALE OF THE SECURITIES.  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)                                 SEC REPORTS; FINANCIAL STATEMENTS.  THE
COMPANY HAS FILED ALL REPORTS, SCHEDULES, FORMS, STATEMENTS AND OTHER DOCUMENTS
REQUIRED TO BE FILED BY IT UNDER THE

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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, BEING COLLECTIVELY REFERRED TO HEREIN AS THE “SEC REPORTS”)
ON A TIMELY BASIS OR HAS RECEIVED A VALID EXTENSION OF SUCH TIME OF FILING AND
HAS FILED ANY SUCH SEC REPORTS PRIOR TO THE EXPIRATION OF ANY SUCH EXTENSION. 
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 PREPARED IN ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT BASIS DURING THE PERIODS INVOLVED
(“GAAP”), EXCEPT AS MAY BE OTHERWISE SPECIFIED IN SUCH FINANCIAL STATEMENTS OR
THE NOTES THERETO AND EXCEPT THAT UNAUDITED FINANCIAL STATEMENTS MAY NOT CONTAIN
ALL FOOTNOTES REQUIRED BY GAAP, AND FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE
FINANCIAL POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS OF AND
FOR THE DATES THEREOF AND THE RESULTS OF OPERATIONS AND CASH FLOWS FOR THE
PERIODS THEN ENDED, SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL,
IMMATERIAL, YEAR-END AUDIT ADJUSTMENTS.

(I)                                     MATERIAL CHANGES.  SINCE THE DATE OF THE
LATEST AUDITED FINANCIAL STATEMENTS INCLUDED WITHIN THE SEC REPORTS, EXCEPT AS
DISCLOSED IN THE SEC REPORTS, (I) THERE HAS BEEN NO EVENT, OCCURRENCE OR
DEVELOPMENT THAT HAS HAD OR THAT COULD REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT, (II) THE COMPANY HAS NOT INCURRED ANY LIABILITIES
(CONTINGENT OR OTHERWISE) OTHER THAN (A) TRADE PAYABLES AND ACCRUED EXPENSES
INCURRED IN THE ORDINARY COURSE OF BUSINESS CONSISTENT WITH PAST PRACTICE AND
(B) LIABILITIES NOT REQUIRED TO BE REFLECTED IN THE COMPANY’S FINANCIAL
STATEMENTS PURSUANT TO GAAP OR REQUIRED TO BE DISCLOSED IN FILINGS MADE WITH THE
COMMISSION, (III) THE COMPANY HAS NOT ALTERED ITS METHOD OF ACCOUNTING, (IV) THE
COMPANY HAS NOT DECLARED OR MADE ANY INTEREST OR DISTRIBUTION OF CASH OR OTHER
PROPERTY TO ITS STOCKHOLDERS OR PURCHASED, REDEEMED OR MADE ANY AGREEMENTS TO
PURCHASE OR REDEEM ANY SHARES OF ITS CAPITAL STOCK AND (V) THE COMPANY HAS NOT
ISSUED ANY EQUITY SECURITIES TO ANY OFFICER, DIRECTOR OR AFFILIATE, EXCEPT FOR
EXEMPT ISSUANCES.  THE COMPANY DOES NOT HAVE PENDING BEFORE THE COMMISSION ANY
REQUEST FOR CONFIDENTIAL TREATMENT OF INFORMATION. EXCEPT FOR THE ISSUANCE OF
THE SECURITIES CONTEMPLATED BY THIS AGREEMENT OR AS SET FORTH ON SCHEDULE
3.1(I), NO EVENT, LIABILITY OR DEVELOPMENT HAS OCCURRED OR EXISTS WITH RESPECT
TO THE COMPANY OR ITS SUBSIDIARIES OR THEIR RESPECTIVE BUSINESS, PROPERTIES,
OPERATIONS OR FINANCIAL CONDITION, THAT WOULD BE REQUIRED TO BE DISCLOSED BY THE
COMPANY UNDER APPLICABLE SECURITIES LAWS AT THE TIME THIS REPRESENTATION IS MADE
OR DEEMED MADE THAT HAS NOT BEEN PUBLICLY DISCLOSED AT LEAST ONE TRADING DAY
PRIOR TO THE DATE THAT THIS REPRESENTATION IS MADE.

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(J)                                     LITIGATION.  THERE IS NO ACTION, SUIT,
INQUIRY, NOTICE OF VIOLATION, 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”) WHICH (I)
ADVERSELY AFFECTS OR CHALLENGES THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY
OF THE TRANSACTION DOCUMENTS OR THE SECURITIES OR (II) COULD, IF THERE WERE AN
UNFAVORABLE DECISION, HAVE OR REASONABLY BE EXPECTED TO 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.

(K)                                  LABOR RELATIONS.  NO MATERIAL LABOR DISPUTE
EXISTS OR, TO THE KNOWLEDGE OF THE COMPANY, IS IMMINENT WITH RESPECT TO ANY OF
THE EMPLOYEES OF THE COMPANY WHICH COULD REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT. NONE OF THE COMPANY’S OR ITS SUBSIDIARIES’ EMPLOYEES IS
A MEMBER OF A UNION THAT RELATES TO SUCH EMPLOYEE’S RELATIONSHIP WITH THE
COMPANY OR SUCH SUBSIDIARY, AND NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES
IS A PARTY TO A COLLECTIVE BARGAINING AGREEMENT, AND THE COMPANY AND ITS
SUBSIDIARIES BELIEVE THAT THEIR RELATIONSHIPS WITH THEIR EMPLOYEES ARE GOOD.  NO
EXECUTIVE OFFICER, TO THE KNOWLEDGE OF THE COMPANY, IS, OR IS NOW EXPECTED TO
BE, IN VIOLATION OF ANY MATERIAL TERM OF ANY EMPLOYMENT CONTRACT,
CONFIDENTIALITY, DISCLOSURE OR PROPRIETARY INFORMATION AGREEMENT OR
NON-COMPETITION AGREEMENT, OR ANY OTHER CONTRACT OR AGREEMENT OR ANY RESTRICTIVE
COVENANT IN FAVOR OF ANY THIRD PARTY, AND THE CONTINUED EMPLOYMENT OF EACH SUCH
EXECUTIVE OFFICER DOES NOT SUBJECT THE COMPANY OR ANY OF ITS SUBSIDIARIES TO ANY
LIABILITY WITH RESPECT TO ANY OF THE FOREGOING MATTERS.  THE COMPANY AND ITS
SUBSIDIARIES ARE IN COMPLIANCE WITH ALL U.S. FEDERAL, STATE, LOCAL AND FOREIGN
LAWS AND REGULATIONS RELATING TO EMPLOYMENT AND EMPLOYMENT PRACTICES, TERMS AND
CONDITIONS OF EMPLOYMENT AND WAGES AND HOURS, EXCEPT WHERE THE FAILURE TO BE IN
COMPLIANCE COULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED
TO HAVE A MATERIAL ADVERSE EFFECT.

(L)                                     COMPLIANCE.  NEITHER THE COMPANY NOR ANY
SUBSIDIARY (I) IS IN DEFAULT UNDER OR IN VIOLATION OF (AND NO EVENT HAS OCCURRED
THAT HAS NOT BEEN WAIVED THAT, WITH NOTICE OR LAPSE OF TIME OR BOTH, WOULD
RESULT IN A DEFAULT BY THE COMPANY OR ANY SUBSIDIARY UNDER), NOR HAS THE COMPANY
OR ANY SUBSIDIARY RECEIVED NOTICE OF A CLAIM THAT IT IS IN DEFAULT UNDER OR THAT
IT IS IN VIOLATION OF, ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER
MATERIAL AGREEMENT OR INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF
ITS PROPERTIES IS BOUND (WHETHER OR NOT SUCH DEFAULT OR VIOLATION HAS BEEN
WAIVED), (II) IS IN VIOLATION OF ANY ORDER OF ANY COURT, ARBITRATOR OR
GOVERNMENTAL BODY, OR (III) IS OR HAS BEEN IN VIOLATION OF ANY STATUTE, RULE OR
REGULATION OF ANY GOVERNMENTAL AUTHORITY,

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INCLUDING WITHOUT LIMITATION ALL FOREIGN, FEDERAL, STATE AND LOCAL LAWS
APPLICABLE TO ITS BUSINESS EXCEPT IN EACH CASE AS COULD NOT HAVE A MATERIAL
ADVERSE EFFECT.

(M)                               REGULATORY PERMITS.  THE COMPANY AND THE
SUBSIDIARIES POSSESS ALL CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE
APPROPRIATE FEDERAL, STATE, LOCAL OR FOREIGN REGULATORY AUTHORITIES NECESSARY TO
CONDUCT THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS, EXCEPT
WHERE THE FAILURE TO POSSESS SUCH PERMITS COULD NOT HAVE OR REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT (“MATERIAL PERMITS”), AND
NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS RECEIVED ANY NOTICE OF PROCEEDINGS
RELATING TO THE REVOCATION OR MODIFICATION OF ANY MATERIAL PERMIT.

(N)                                 TITLE TO ASSETS.  THE COMPANY AND THE
SUBSIDIARIES HAVE GOOD AND MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY
OWNED BY THEM THAT IS MATERIAL TO THE BUSINESS OF THE COMPANY AND THE
SUBSIDIARIES AND GOOD AND MARKETABLE TITLE IN ALL PERSONAL PROPERTY OWNED BY
THEM THAT IS MATERIAL TO THE BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, IN
EACH CASE FREE AND CLEAR OF ALL LIENS, EXCEPT FOR LIENS AS DO NOT MATERIALLY
AFFECT THE VALUE OF SUCH PROPERTY AND DO NOT MATERIALLY INTERFERE WITH THE USE
MADE AND PROPOSED TO BE MADE OF SUCH PROPERTY BY THE COMPANY AND THE
SUBSIDIARIES AND LIENS FOR THE PAYMENT OF FEDERAL, STATE OR OTHER TAXES, THE
PAYMENT OF WHICH IS NEITHER DELINQUENT NOR SUBJECT TO PENALTIES, EXCEPT IN EACH
CASE AS COULD NOT HAVE A MATERIAL ADVERSE EFFECT.  ANY REAL PROPERTY AND
FACILITIES HELD UNDER LEASE BY THE COMPANY AND THE SUBSIDIARIES ARE HELD BY THEM
UNDER VALID, SUBSISTING AND ENFORCEABLE LEASES OF WHICH THE COMPANY AND THE
SUBSIDIARIES ARE IN COMPLIANCE, EXCEPT IN EACH CASE AS COULD NO HAVE A MATERIAL
ADVERSE EFFECT.

(O)                                 PATENTS AND TRADEMARKS.  THE COMPANY AND THE
SUBSIDIARIES HAVE, OR HAVE RIGHTS TO USE, ALL PATENTS, PATENT APPLICATIONS,
TRADEMARKS, TRADEMARK APPLICATIONS, SERVICE MARKS, TRADE NAMES, COPYRIGHTS,
LICENSES AND OTHER SIMILAR RIGHTS NECESSARY OR MATERIAL FOR USE IN CONNECTION
WITH THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS AND WHICH THE
FAILURE TO SO HAVE COULD HAVE A MATERIAL ADVERSE EFFECT (COLLECTIVELY, THE
“INTELLECTUAL PROPERTY RIGHTS”).  NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS
RECEIVED A WRITTEN NOTICE THAT THE INTELLECTUAL PROPERTY RIGHTS USED BY THE
COMPANY OR ANY SUBSIDIARY IN CONNECTION WITH THEIR RESPECTIVE BUSINESSES AS
DESCRIBED IN THE SEC REPORTS VIOLATES OR INFRINGES UPON THE RIGHTS OF ANY
PERSON. TO THE KNOWLEDGE OF THE COMPANY, ALL SUCH INTELLECTUAL PROPERTY RIGHTS
ARE ENFORCEABLE AND THERE IS NO EXISTING INFRINGEMENT BY ANOTHER PERSON OF ANY
OF THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. THE COMPANY AND ITS SUBSIDIARIES
HAVE TAKEN REASONABLE SECURITY MEASURES TO PROTECT THE SECRECY AND
CONFIDENTIALITY AND VALUE OF ALL OF THEIR INTELLECTUAL PROPERTIES, EXCEPT WHERE
FAILURE TO DO SO COULD NOT, INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE
EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT.

(P)                                 INSURANCE.  THE COMPANY AND THE SUBSIDIARIES
ARE INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY AGAINST SUCH
LOSSES AND RISKS AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY IN THE
BUSINESSES IN WHICH THE COMPANY AND THE SUBSIDIARIES ARE ENGAGED, INCLUDING, BUT
NOT LIMITED TO, DIRECTORS AND OFFICERS INSURANCE COVERAGE AT LEAST EQUAL TO THE
AGGREGATE SUBSCRIPTION AMOUNT.  TO THE BEST KNOWLEDGE OF THE

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COMPANY, SUCH INSURANCE CONTRACTS AND POLICIES ARE ACCURATE AND COMPLETE. 
NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS ANY REASON TO BELIEVE THAT IT WILL
NOT BE ABLE TO RENEW ITS EXISTING INSURANCE COVERAGE AS AND WHEN SUCH COVERAGE
EXPIRES OR TO OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS AS MAY BE NECESSARY
TO CONTINUE ITS BUSINESS WITHOUT A SIGNIFICANT INCREASE IN COST.

(Q)                                 TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. 
EXCEPT AS SET FORTH IN THE SEC REPORTS, NONE OF THE OFFICERS OR DIRECTORS OF THE
COMPANY AND, TO THE KNOWLEDGE OF THE COMPANY, NONE OF THE EMPLOYEES OF THE
COMPANY IS PRESENTLY A PARTY TO ANY TRANSACTION WITH THE COMPANY OR ANY
SUBSIDIARY (OTHER THAN FOR SERVICES AS EMPLOYEES, OFFICERS AND DIRECTORS),
INCLUDING ANY CONTRACT, AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE
FURNISHING OF SERVICES TO OR BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL
PROPERTY TO OR FROM, OR OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY OFFICER,
DIRECTOR OR SUCH EMPLOYEE OR, TO THE KNOWLEDGE OF THE COMPANY, ANY ENTITY IN
WHICH ANY OFFICER, DIRECTOR, OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR
IS AN OFFICER, DIRECTOR, TRUSTEE OR PARTNER, IN EACH CASE IN EXCESS OF $60,000
OTHER THAN (I) FOR PAYMENT OF SALARY OR CONSULTING FEES FOR SERVICES RENDERED,
(II) REIMBURSEMENT FOR EXPENSES INCURRED ON BEHALF OF THE COMPANY AND (III) FOR
OTHER EMPLOYEE BENEFITS, INCLUDING STOCK OPTION AGREEMENTS UNDER ANY STOCK
OPTION PLAN OF THE COMPANY.

(R)                                    SARBANES-OXLEY; INTERNAL ACCOUNTING
CONTROLS.  THE COMPANY IS IN MATERIAL COMPLIANCE WITH ALL PROVISIONS OF THE
SARBANES-OXLEY ACT OF 2002 WHICH ARE APPLICABLE TO IT AS OF THE CLOSING DATE. 
THE COMPANY AND THE SUBSIDIARIES MAINTAIN A SYSTEM OF INTERNAL ACCOUNTING
CONTROLS SUFFICIENT TO PROVIDE REASONABLE ASSURANCE THAT (I) TRANSACTIONS ARE
EXECUTED IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS,
(II) TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL
STATEMENTS IN CONFORMITY WITH GAAP AND TO MAINTAIN ASSET ACCOUNTABILITY, (III)
ACCESS TO ASSETS IS PERMITTED ONLY IN ACCORDANCE WITH MANAGEMENT’S GENERAL OR
SPECIFIC AUTHORIZATION, AND (IV) THE RECORDED ACCOUNTABILITY FOR ASSETS IS
COMPARED WITH THE EXISTING ASSETS AT REASONABLE INTERVALS AND APPROPRIATE ACTION
IS TAKEN WITH RESPECT TO ANY DIFFERENCES. THE COMPANY HAS ESTABLISHED DISCLOSURE
CONTROLS AND PROCEDURES (AS DEFINED IN EXCHANGE ACT RULES 13A-15(E) AND
15D-15(E)) FOR THE COMPANY AND DESIGNED SUCH DISCLOSURE CONTROLS AND PROCEDURES
TO ENSURE THAT INFORMATION REQUIRED TO BE DISCLOSED BY THE COMPANY IN THE
REPORTS IT FILES OR SUBMITS UNDER THE EXCHANGE ACT IS RECORDED, PROCESSED,
SUMMARIZED AND REPORTED, WITHIN THE TIME PERIODS SPECIFIED IN THE COMMISSION’S
RULES AND FORMS.  THE COMPANY’S CERTIFYING OFFICERS HAVE EVALUATED THE
EFFECTIVENESS OF THE COMPANY’S DISCLOSURE CONTROLS AND PROCEDURES AS OF THE END
OF THE PERIOD COVERED BY THE COMPANY’S MOST RECENTLY FILED PERIODIC REPORT UNDER
THE EXCHANGE ACT (SUCH DATE, THE “EVALUATION DATE”).  THE COMPANY PRESENTED IN
ITS MOST RECENTLY FILED PERIODIC REPORT UNDER THE EXCHANGE ACT THE CONCLUSIONS
OF THE CERTIFYING OFFICERS ABOUT THE EFFECTIVENESS OF THE DISCLOSURE CONTROLS
AND PROCEDURES BASED ON THEIR EVALUATIONS AS OF THE EVALUATION DATE.  SINCE THE
EVALUATION DATE, THERE HAVE BEEN NO CHANGES IN THE COMPANY’S INTERNAL CONTROL
OVER FINANCIAL REPORTING (AS SUCH TERM IS DEFINED IN THE EXCHANGE ACT) THAT HAS
MATERIALLY AFFECTED, OR IS REASONABLY LIKELY TO MATERIALLY AFFECT, THE COMPANY’S
INTERNAL CONTROL OVER FINANCIAL REPORTING.

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(S)                                  CERTAIN FEES.  EXCEPT AS SET FORTH ON
SCHEDULE 3.1(S), NO BROKERAGE OR FINDER’S FEES OR COMMISSIONS ARE OR WILL BE
PAYABLE BY THE COMPANY 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 PURCHASERS 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.

(T)                                    PRIVATE PLACEMENT. ASSUMING THE ACCURACY
OF THE PURCHASERS REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 3.2, NO
REGISTRATION UNDER THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE
SECURITIES BY THE COMPANY TO THE PURCHASERS AS CONTEMPLATED HEREBY. THE ISSUANCE
AND SALE OF THE SECURITIES HEREUNDER DOES NOT CONTRAVENE THE RULES AND
REGULATIONS OF THE TRADING MARKET.

(U)                                 INVESTMENT COMPANY. THE COMPANY IS NOT, AND
IS NOT AN AFFILIATE OF, AND IMMEDIATELY AFTER RECEIPT OF PAYMENT FOR THE
SECURITIES, WILL NOT BE OR BE AN AFFILIATE OF, AN “INVESTMENT COMPANY” WITHIN
THE MEANING OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED.  THE COMPANY
SHALL CONDUCT ITS BUSINESS IN A MANNER SO THAT IT WILL NOT BECOME SUBJECT TO THE
INVESTMENT COMPANY ACT.

(V)                                 REGISTRATION RIGHTS.  OTHER THAN EACH OF THE
PURCHASERS, NO PERSON HAS ANY RIGHT TO CAUSE THE COMPANY TO EFFECT THE
REGISTRATION UNDER THE SECURITIES ACT OF ANY SECURITIES OF THE COMPANY.

(W)                               LISTING AND MAINTENANCE REQUIREMENTS.  THE
COMPANY’S COMMON STOCK IS REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE
ACT, AND THE COMPANY HAS TAKEN NO ACTION DESIGNED TO, OR WHICH TO ITS KNOWLEDGE
IS LIKELY TO HAVE THE EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON
STOCK UNDER THE EXCHANGE ACT NOR HAS THE COMPANY RECEIVED ANY NOTIFICATION THAT
THE COMMISSION IS CONTEMPLATING TERMINATING SUCH REGISTRATION.  THE COMPANY HAS
NOT, IN THE 12 MONTHS PRECEDING THE DATE HEREOF, RECEIVED NOTICE FROM ANY
TRADING MARKET ON WHICH THE COMMON STOCK IS OR HAS BEEN LISTED OR QUOTED TO THE
EFFECT THAT THE COMPANY IS NOT IN COMPLIANCE WITH THE LISTING OR MAINTENANCE
REQUIREMENTS OF SUCH TRADING MARKET. THE COMPANY IS, AND HAS NO REASON TO
BELIEVE THAT IT WILL NOT IN THE FORESEEABLE FUTURE CONTINUE TO BE, IN COMPLIANCE
WITH ALL SUCH LISTING AND MAINTENANCE REQUIREMENTS.

(X)                                   APPLICATION OF TAKEOVER PROTECTIONS.  THE
COMPANY AND ITS BOARD OF DIRECTORS HAVE NOT TAKEN ANY AFFIRMATIVE MEASURES OR
ACTION, TO INSTITUTE 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 THE
TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION AS A RESULT OF THE COMPANY’S
ISSUANCE OF THE SECURITIES AND THE PURCHASERS’ OWNERSHIP OF THE SECURITIES,
OTHER THAN THOSE PROVISIONS OF DELAWARE LAW GENERALLY APPLICABLE TO CORPORATIONS
ORGANIZED UNDER THE LAWS OF THAT STATE.

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(Y)                                 DISCLOSURE.  EXCEPT WITH RESPECT TO THE
MATERIAL TERMS AND CONDITIONS OF THE TRANSACTION CONTEMPLATED BY THE TRANSACTION
DOCUMENTS, THE COMPANY CONFIRMS THAT NEITHER IT NOR ANY OTHER PERSON ACTING ON
ITS BEHALF HAS PROVIDED ANY OF THE PURCHASERS OR THEIR AGENTS OR COUNSEL WITH
ANY INFORMATION THAT CONSTITUTES OR MIGHT CONSTITUTE MATERIAL, NONPUBLIC
INFORMATION.  THE COMPANY UNDERSTANDS AND CONFIRMS THAT THE PURCHASERS WILL RELY
ON THE FOREGOING REPRESENTATIONS AND COVENANTS IN EFFECTING TRANSACTIONS IN
SECURITIES OF THE COMPANY.  ALL DISCLOSURE PROVIDED TO THE PURCHASERS REGARDING
THE COMPANY, ITS BUSINESS AND THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING
THE DISCLOSURE SCHEDULES TO THIS AGREEMENT, FURNISHED BY OR ON BEHALF OF THE
COMPANY WITH RESPECT TO THE REPRESENTATIONS AND WARRANTIES MADE HEREIN ARE TRUE
AND CORRECT WITH RESPECT TO SUCH REPRESENTATIONS AND WARRANTIES 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 PURCHASER 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 HEREOF.

(Z)                                   NO INTEGRATED OFFERING. ASSUMING THE
ACCURACY OF THE PURCHASERS’ 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 THIS OFFERING OF THE SECURITIES TO BE INTEGRATED WITH PRIOR
OFFERINGS BY THE COMPANY FOR PURPOSES OF THE SECURITIES ACT OR ANY APPLICABLE
SHAREHOLDER 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.

(AA)                            SOLVENCY.  BASED ON THE FINANCIAL CONDITION OF
THE COMPANY AS OF THE CLOSING DATE AFTER GIVING EFFECT TO THE RECEIPT BY THE
COMPANY OF THE PROCEEDS FROM THE SALE OF THE SECURITIES HEREUNDER AND ASSUMING
FOR PURPOSES OF THIS REPRESENTATION THAT THE SECURITIES ARE ALL CONVERTED INTO
EQUITY, (I) THE COMPANY’S FAIR SALEABLE VALUE OF ITS ASSETS EXCEEDS THE AMOUNT
THAT WILL BE REQUIRED TO BE PAID ON OR IN RESPECT OF THE COMPANY’S EXISTING
DEBTS AND OTHER LIABILITIES (INCLUDING KNOWN CONTINGENT LIABILITIES) AS THEY
MATURE; (II) THE COMPANY’S ASSETS DO NOT CONSTITUTE UNREASONABLY SMALL CAPITAL
TO CARRY ON ITS BUSINESS FOR THE CURRENT FISCAL YEAR AS NOW CONDUCTED AND AS
PROPOSED TO BE CONDUCTED INCLUDING ITS CAPITAL NEEDS TAKING INTO ACCOUNT THE
PARTICULAR CAPITAL REQUIREMENTS OF THE BUSINESS CONDUCTED BY THE COMPANY, AND
PROJECTED CAPITAL REQUIREMENTS AND CAPITAL AVAILABILITY THEREOF; AND (III) THE
CURRENT CASH FLOW OF THE COMPANY, TOGETHER WITH THE PROCEEDS THE COMPANY WOULD
RECEIVE, WERE IT TO LIQUIDATE ALL OF ITS ASSETS, AFTER TAKING INTO ACCOUNT ALL
ANTICIPATED USES OF THE CASH, WOULD BE SUFFICIENT TO PAY ALL AMOUNTS ON OR IN
RESPECT OF ITS DEBT WHEN SUCH AMOUNTS ARE REQUIRED TO BE PAID.  THE COMPANY DOES
NOT INTEND TO INCUR DEBTS BEYOND ITS ABILITY TO PAY SUCH DEBTS AS THEY MATURE
(TAKING INTO ACCOUNT THE TIMING AND AMOUNTS OF CASH TO BE PAYABLE ON OR IN
RESPECT OF ITS DEBT).  THE COMPANY HAS NO KNOWLEDGE OF ANY FACTS OR
CIRCUMSTANCES WHICH LEAD IT TO BELIEVE THAT IT WILL FILE FOR REORGANIZATION OR
LIQUIDATION UNDER THE BANKRUPTCY OR REORGANIZATION LAWS OF ANY JURISDICTION
WITHIN ONE YEAR FROM THE CLOSING DATE.  THE SEC REPORTS SET FORTH AS OF

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THE DATES THEREOF ALL OUTSTANDING SECURED AND UNSECURED INDEBTEDNESS OF THE
COMPANY OR ANY SUBSIDIARY, OR FOR WHICH THE COMPANY OR ANY SUBSIDIARY HAS
COMMITMENTS.  FOR THE PURPOSES OF THIS AGREEMENT, “INDEBTEDNESS” SHALL MEAN (A)
ANY LIABILITIES FOR BORROWED MONEY OR AMOUNTS OWED IN EXCESS OF $50,000 (OTHER
THAN TRADE ACCOUNTS PAYABLE 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
THE COMPANY’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 $50,000 DUE UNDER LEASES REQUIRED TO BE
CAPITALIZED IN ACCORDANCE WITH GAAP.  NEITHER THE COMPANY NOR ANY SUBSIDIARY IS
IN DEFAULT WITH RESPECT TO ANY INDEBTEDNESS.

(BB)                          TAX STATUS.  EXCEPT FOR MATTERS THAT WOULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A
MATERIAL ADVERSE EFFECT, THE COMPANY AND EACH SUBSIDIARY HAS FILED ALL NECESSARY
FEDERAL, STATE AND FOREIGN INCOME AND FRANCHISE TAX RETURNS AND HAS PAID OR
ACCRUED ALL TAXES SHOWN AS DUE THEREON, AND THE COMPANY HAS NO KNOWLEDGE OF A
TAX DEFICIENCY WHICH HAS BEEN ASSERTED OR THREATENED AGAINST THE COMPANY OR ANY
SUBSIDIARY.

(CC)                            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 PURCHASERS AND CERTAIN
OTHER “ACCREDITED INVESTORS” WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES
ACT.

(DD)                          FOREIGN CORRUPT PRACTICES.  NEITHER THE COMPANY,
NOR TO THE KNOWLEDGE OF THE COMPANY, ANY AGENT OR OTHER PERSON ACTING ON BEHALF
OF THE COMPANY, HAS (I) DIRECTLY OR INDIRECTLY, USED ANY FUNDS FOR UNLAWFUL
CONTRIBUTIONS, GIFTS, ENTERTAINMENT OR OTHER UNLAWFUL EXPENSES RELATED TO
FOREIGN OR DOMESTIC POLITICAL ACTIVITY, (II) MADE ANY UNLAWFUL PAYMENT TO
FOREIGN OR DOMESTIC GOVERNMENT OFFICIALS OR EMPLOYEES OR TO ANY FOREIGN OR
DOMESTIC POLITICAL PARTIES OR CAMPAIGNS FROM CORPORATE FUNDS, (III) FAILED TO
DISCLOSE FULLY ANY CONTRIBUTION MADE BY THE COMPANY (OR MADE BY ANY PERSON
ACTING ON ITS BEHALF OF WHICH THE COMPANY IS AWARE) WHICH IS  IN VIOLATION OF
LAW, OR (IV) VIOLATED IN ANY MATERIAL RESPECT ANY PROVISION OF THE FOREIGN
CORRUPT PRACTICES ACT OF 1977, AS AMENDED.

(EE)                            ACCOUNTANTS.  THE COMPANY’S ACCOUNTANTS ARE SET
FORTH ON SCHEDULE 3.1(EE) OF THE DISCLOSURE SCHEDULE.  TO THE KNOWLEDGE OF THE
COMPANY, SUCH ACCOUNTANTS, WHO THE COMPANY EXPECTS WILL EXPRESS THEIR OPINION
WITH RESPECT TO THE FINANCIAL STATEMENTS TO BE INCLUDED IN THE COMPANY’S ANNUAL
REPORT ON FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31, 2006 ARE A REGISTERED
PUBLIC ACCOUNTING FIRM AS REQUIRED BY THE SECURITIES ACT.

(FF)                                SENIORITY.  AS OF THE CLOSING DATE, NO
INDEBTEDNESS OR OTHER EQUITY OF THE COMPANY IS SENIOR TO THE DEBENTURES IN RIGHT
OF PAYMENT, WHETHER WITH RESPECT TO INTEREST OR UPON LIQUIDATION OR DISSOLUTION,
OR OTHERWISE, OTHER THAN GENERAL UNSECURED INDEBTEDNESS INCURRED IN CONNECTION
WITH EQUIPMENT AND REAL ESTATE FINANCING CUSTOMARY

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FOR RESEARCH AND DEVELOPMENT COMPANIES, ACCOUNTS PAYABLES AND INDEBTEDNESS
SECURED BY PURCHASE MONEY SECURITY INTERESTS (WHICH IS SENIOR ONLY AS TO
UNDERLYING ASSETS COVERED THEREBY) AND CAPITAL LEASE OBLIGATIONS (WHICH IS
SENIOR ONLY AS TO THE PROPERTY COVERED THEREBY), WHICH INDEBTEDNESS IS SET FORTH
ON SCHEDULE 3.1(FF).

(GG)                          NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS. 
THERE ARE NO DISAGREEMENTS OF ANY KIND PRESENTLY EXISTING, OR REASONABLY
ANTICIPATED BY THE COMPANY TO ARISE, BETWEEN THE ACCOUNTANTS AND LAWYERS
FORMERLY OR PRESENTLY EMPLOYED BY THE COMPANY AND THE COMPANY HAS FULLY ACCRUED
ALL AMOUNTS OWED TO ITS ACCOUNTANTS AND LAWYERS.

(HH)                          ACKNOWLEDGMENT REGARDING PURCHASERS’ PURCHASE OF
SECURITIES.  THE COMPANY ACKNOWLEDGES AND AGREES THAT EACH OF THE PURCHASERS IS
ACTING SOLELY IN THE CAPACITY OF AN ARM’S LENGTH PURCHASER WITH RESPECT TO THE
TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY
FURTHER ACKNOWLEDGES THAT NO PURCHASER IS ACTING AS A FINANCIAL ADVISOR OR
FIDUCIARY OF THE COMPANY (OR IN ANY SIMILAR CAPACITY) WITH RESPECT TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND ANY ADVICE GIVEN BY ANY
PURCHASER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR AGENTS IN CONNECTION
WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS MERELY
INCIDENTAL TO THE PURCHASERS’ PURCHASE OF THE SECURITIES.  THE COMPANY FURTHER
REPRESENTS TO EACH PURCHASER THAT THE COMPANY’S DECISION TO ENTER INTO THIS
AGREEMENT HAS BEEN BASED SOLELY ON THE INDEPENDENT EVALUATION OF THE
TRANSACTIONS CONTEMPLATED HEREBY BY THE COMPANY AND ITS REPRESENTATIVES.

(II)                                  ACKNOWLEDGEMENT REGARDING PURCHASERS’
TRADING ACTIVITY.  ANYTHING IN THIS AGREEMENT OR ELSEWHERE HEREIN TO THE
CONTRARY NOTWITHSTANDING (EXCEPT FOR SECTION 4.16 HEREOF), IT IS UNDERSTOOD AND
AGREED BY THE COMPANY (I) THAT NONE OF THE PURCHASERS HAVE BEEN ASKED TO AGREE,
NOR HAS ANY PURCHASER AGREED, TO DESIST FROM 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 PURCHASER,
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 PURCHASER, AND COUNTER
PARTIES IN “DERIVATIVE” TRANSACTIONS TO WHICH ANY SUCH PURCHASER IS A PARTY,
DIRECTLY OR INDIRECTLY, PRESENTLY MAY HAVE A “SHORT” POSITION IN THE COMMON
STOCK, AND (IV) THAT EACH PURCHASER 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 PURCHASERS 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 UNDERLYING 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.

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(JJ)                                  MANIPULATION OF PRICE.  THE COMPANY HAS
NOT, AND TO ITS KNOWLEDGE NO ONE 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, (II) SOLD, BID FOR, PURCHASED, OR, PAID ANY
COMPENSATION FOR SOLICITING PURCHASES OF, ANY OF THE SECURITIES (OTHER THAN FOR
THE PLACEMENT AGENT’S PLACEMENT OF THE SECURITIES), OR (III) PAID OR AGREED TO
PAY TO ANY PERSON ANY COMPENSATION FOR SOLICITING ANOTHER TO PURCHASE ANY OTHER
SECURITIES OF THE COMPANY.

(KK)                            FDA.  AS TO EACH PRODUCT SUBJECT TO THE
JURISDICTION OF THE U.S. FOOD AND DRUG ADMINISTRATION (“FDA”) UNDER THE FEDERAL
FOOD, DRUG AND COSMETIC ACT, AS AMENDED, AND THE REGULATIONS THEREUNDER (“FDCA”)
THAT IS MANUFACTURED, PACKAGED, LABELED, TESTED, DISTRIBUTED, SOLD, AND/OR
MARKETED BY THE COMPANY OR ANY OF ITS SUBSIDIARIES (EACH SUCH PRODUCT, A
“PHARMACEUTICAL PRODUCT”), SUCH PHARMACEUTICAL PRODUCT IS BEING MANUFACTURED,
PACKAGED, LABELED, TESTED, DISTRIBUTED, SOLD AND/OR MARKETED BY THE COMPANY IN
COMPLIANCE WITH ALL APPLICABLE REQUIREMENTS UNDER FDCA AND SIMILAR LAWS, RULES
AND REGULATIONS RELATING TO REGISTRATION, INVESTIGATIONAL USE, PREMARKET
CLEARANCE, LICENSURE, OR APPLICATION APPROVAL, GOOD MANUFACTURING PRACTICES,
GOOD LABORATORY PRACTICES, GOOD CLINICAL PRACTICES, PRODUCT LISTING, QUOTAS,
LABELING, ADVERTISING, RECORD KEEPING AND FILING OF REPORTS, EXCEPT WHERE THE
FAILURE TO BE IN COMPLIANCE WOULD NOT HAVE A MATERIAL ADVERSE EFFECT.  THERE IS
NO PENDING, COMPLETED OR, TO THE COMPANY’S KNOWLEDGE, THREATENED, ACTION
(INCLUDING ANY LAWSUIT, ARBITRATION, OR LEGAL OR ADMINISTRATIVE OR REGULATORY
PROCEEDING, CHARGE, COMPLAINT, OR INVESTIGATION) AGAINST THE COMPANY OR ANY OF
ITS SUBSIDIARIES, AND NONE OF THE COMPANY OR ANY OF ITS SUBSIDIARIES HAS
RECEIVED ANY NOTICE, WARNING LETTER OR OTHER COMMUNICATION FROM THE FDA OR ANY
OTHER GOVERNMENTAL ENTITY, WHICH (I) CONTESTS THE PREMARKET CLEARANCE,
LICENSURE, REGISTRATION, OR APPROVAL OF, THE USES OF, THE DISTRIBUTION OF, THE
MANUFACTURING OR PACKAGING OF, THE TESTING OF, THE SALE OF, OR THE LABELING AND
PROMOTION OF ANY PHARMACEUTICAL PRODUCT, (II) WITHDRAWS ITS APPROVAL OF,
REQUESTS THE RECALL, SUSPENSION, OR SEIZURE OF, OR WITHDRAWS OR ORDERS THE
WITHDRAWAL OF ADVERTISING OR SALES PROMOTIONAL MATERIALS RELATING TO, ANY
PHARMACEUTICAL PRODUCT, (III) IMPOSES A CLINICAL HOLD ON ANY CLINICAL
INVESTIGATION BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, (IV) ENJOINS PRODUCTION
AT ANY FACILITY OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, (V) ENTERS OR
PROPOSES TO ENTER INTO A CONSENT DECREE OF PERMANENT INJUNCTION WITH THE COMPANY
OR ANY OF ITS SUBSIDIARIES, OR (VI) OTHERWISE ALLEGES ANY VIOLATION OF ANY LAWS,
RULES OR REGULATIONS BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, AND WHICH,
EITHER INDIVIDUALLY OR IN THE AGGREGATE, WOULD HAVE A MATERIAL ADVERSE EFFECT. 
THE PROPERTIES, BUSINESS AND OPERATIONS OF THE COMPANY HAVE BEEN AND ARE BEING
CONDUCTED IN ALL MATERIAL RESPECTS IN ACCORDANCE WITH ALL APPLICABLE LAWS, RULES
AND REGULATIONS OF THE FDA.  THE COMPANY HAS NOT BEEN INFORMED BY THE FDA THAT
THE FDA WILL PROHIBIT THE MARKETING, SALE, LICENSE OR USE IN THE UNITED STATES
OF ANY PRODUCT PROPOSED TO BE DEVELOPED, PRODUCED OR MARKETED BY THE COMPANY NOR
HAS THE FDA EXPRESSED ANY CONCERN AS TO APPROVING OR CLEARING FOR MARKETING ANY
PRODUCT BEING DEVELOPED OR PROPOSED TO BE DEVELOPED BY THE COMPANY.

3.2                                 REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS.  EACH PURCHASER HEREBY, FOR ITSELF AND FOR NO OTHER PURCHASER,
REPRESENTS AND WARRANTS AS OF THE DATE HEREOF AND AS OF THE

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CLOSING DATE TO THE COMPANY AS FOLLOWS:

(A)                                  ORGANIZATION; AUTHORITY.  SUCH PURCHASER IS
AN ENTITY DULY ORGANIZED, VALIDLY EXISTING AND IN GOOD STANDING UNDER THE LAWS
OF THE JURISDICTION OF ITS ORGANIZATION WITH FULL RIGHT, CORPORATE OR
PARTNERSHIP POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS
OBLIGATIONS HEREUNDER AND THEREUNDER. THE EXECUTION, DELIVERY AND PERFORMANCE BY
SUCH PURCHASER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT HAVE BEEN DULY
AUTHORIZED BY ALL NECESSARY CORPORATE OR SIMILAR ACTION ON THE PART OF SUCH
PURCHASER.  EACH TRANSACTION DOCUMENT TO WHICH IT IS A PARTY HAS BEEN DULY
EXECUTED BY SUCH PURCHASER, AND WHEN DELIVERED BY SUCH PURCHASER IN ACCORDANCE
WITH THE TERMS HEREOF, WILL CONSTITUTE THE VALID AND LEGALLY BINDING OBLIGATION
OF SUCH PURCHASER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, EXCEPT
(I) AS LIMITED BY GENERAL EQUITABLE PRINCIPLES AND 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.

(B)                                 OWN ACCOUNT.  SUCH PURCHASER UNDERSTANDS
THAT THE SECURITIES ARE “RESTRICTED SECURITIES” AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW AND IS ACQUIRING
THE SECURITIES AS PRINCIPAL FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO OR FOR
DISTRIBUTING OR RESELLING SUCH SECURITIES OR ANY PART THEREOF IN VIOLATION OF
THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW, HAS NO PRESENT
INTENTION OF DISTRIBUTING ANY OF SUCH SECURITIES IN VIOLATION OF THE SECURITIES
ACT OR ANY APPLICABLE STATE SECURITIES LAW AND HAS NO ARRANGEMENT OR
UNDERSTANDING WITH ANY OTHER PERSONS REGARDING THE DISTRIBUTION OF SUCH
SECURITIES (THIS REPRESENTATION AND WARRANTY NOT LIMITING SUCH PURCHASER’S RIGHT
TO SELL THE SECURITIES PURSUANT TO THE REGISTRATION STATEMENT OR OTHERWISE IN
COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS) IN VIOLATION OF
THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW.  SUCH PURCHASER IS
ACQUIRING THE SECURITIES HEREUNDER IN THE ORDINARY COURSE OF ITS BUSINESS. SUCH
PURCHASER DOES NOT HAVE ANY AGREEMENT OR UNDERSTANDING, DIRECTLY OR INDIRECTLY,
WITH ANY PERSON TO DISTRIBUTE ANY OF THE SECURITIES.

 (C)                               PURCHASER STATUS.  AT THE TIME SUCH PURCHASER
WAS OFFERED THE SECURITIES, IT WAS, AND AT THE DATE HEREOF IT IS, AND ON EACH
DATE ON WHICH IT CONVERTS ANY DEBENTURES OR EXERCISES ANY WARRANTS, IT WILL BE
EITHER: (I) AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(A)(1), (A)(2),
(A)(3), (A)(7) OR (A)(8) UNDER THE SECURITIES ACT OR (II) A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A(A) UNDER THE SECURITIES ACT.  SUCH
PURCHASER IS NOT REQUIRED TO BE REGISTERED AS A BROKER-DEALER UNDER SECTION 15
OF THE EXCHANGE ACT.

(D)                                 EXPERIENCE OF SUCH PURCHASER.  SUCH
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

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INVESTMENT.  SUCH 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.

(E)                                  GENERAL SOLICITATION.  SUCH 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.

(F)                                    SHORT SALES AND CONFIDENTIALITY PRIOR TO
THE DATE HEREOF.  OTHER THAN CONSUMMATING THE TRANSACTIONS CONTEMPLATED
HEREUNDER, SUCH PURCHASER HAS NOT DIRECTLY OR INDIRECTLY, NOR HAS ANY PERSON
ACTING ON BEHALF OF OR PURSUANT TO ANY UNDERSTANDING WITH SUCH PURCHASER,
EXECUTED ANY PURCHASES OR SALES, INCLUDING SHORT SALES, OF THE SECURITIES OF THE
COMPANY DURING THE PERIOD COMMENCING FROM THE TIME THAT SUCH PURCHASER FIRST
RECEIVED A TERM SHEET (WRITTEN OR ORAL) FROM THE COMPANY OR ANY OTHER PERSON
REPRESENTING THE COMPANY SETTING FORTH THE MATERIAL TERMS OF THE TRANSACTIONS
CONTEMPLATED HEREUNDER UNTIL THE DATE HEREOF (“DISCUSSION TIME”). 
NOTWITHSTANDING THE FOREGOING, IN THE CASE OF A PURCHASER THAT IS A
MULTI-MANAGED INVESTMENT VEHICLE WHEREBY SEPARATE PORTFOLIO MANAGERS MANAGE
SEPARATE PORTIONS OF SUCH PURCHASER’S ASSETS AND THE PORTFOLIO MANAGERS HAVE NO
DIRECT KNOWLEDGE OF THE INVESTMENT DECISIONS MADE BY THE PORTFOLIO MANAGERS
MANAGING OTHER PORTIONS OF SUCH PURCHASER’S ASSETS, THE REPRESENTATION SET FORTH
ABOVE SHALL ONLY APPLY WITH RESPECT TO THE PORTION OF ASSETS MANAGED BY THE
PORTFOLIO MANAGER THAT MADE THE INVESTMENT DECISION TO PURCHASE THE SECURITIES
COVERED BY THIS AGREEMENT.  OTHER THAN TO OTHER PERSONS PARTY TO THIS AGREEMENT,
SUCH PURCHASER HAS MAINTAINED THE CONFIDENTIALITY OF ALL DISCLOSURES MADE TO IT
IN CONNECTION WITH THIS TRANSACTION (INCLUDING THE EXISTENCE AND TERMS OF THIS
TRANSACTION).

The Company acknowledges and agrees that each Purchaser does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1                                 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 OR RULE 144, TO THE COMPANY OR TO AN AFFILIATE OF A PURCHASER OR IN
CONNECTION WITH A PLEDGE AS CONTEMPLATED IN SECTION 4.1(B), THE COMPANY MAY
REQUIRE THE TRANSFEROR THEREOF TO PROVIDE TO THE COMPANY AN OPINION OF COUNSEL
SELECTED BY THE TRANSFEROR AND REASONABLY ACCEPTABLE TO THE COMPANY, THE FORM
AND SUBSTANCE OF WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO THE COMPANY,
TO THE EFFECT THAT SUCH TRANSFER DOES NOT REQUIRE REGISTRATION OF SUCH
TRANSFERRED SECURITIES UNDER THE SECURITIES ACT.  AS A CONDITION OF TRANSFER,
ANY SUCH TRANSFEREE SHALL AGREE IN WRITING TO BE

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BOUND BY THE TERMS OF THIS AGREEMENT AND SHALL HAVE THE RIGHTS OF A PURCHASER
UNDER THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT.

(B)                                 THE PURCHASERS AGREE TO THE IMPRINTING, SO
LONG AS IS REQUIRED BY THIS SECTION 4.1(B), OF A LEGEND ON ANY OF THE SECURITIES
SUBSTANTIALLY IN THE FOLLOWING FORM:

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

The Company acknowledges and agrees that a 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 who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties.  Such 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.  Further, no
notice shall be required of such pledge.  At the appropriate Purchaser’s
expense, the Company will execute and deliver such reasonable documentation as a
pledgee or secured party of Securities may reasonably request in connection with
a pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, 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 UNDERLYING
SHARES SHALL NOT CONTAIN ANY LEGEND (INCLUDING THE LEGEND SET FORTH IN SECTION
4.1(B) HEREOF): (I) WHILE A REGISTRATION STATEMENT (INCLUDING THE REGISTRATION
STATEMENT) COVERING THE RESALE OF SUCH SECURITY IS EFFECTIVE UNDER THE
SECURITIES ACT, OR (II) FOLLOWING ANY SALE OF SUCH UNDERLYING SHARES PURSUANT TO

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RULE 144, OR (III) IF SUCH UNDERLYING SHARES ARE ELIGIBLE FOR SALE UNDER RULE
144(K), OR (IV) IF SUCH 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 AFTER THE EFFECTIVE DATE
IF REQUIRED BY THE COMPANY’S TRANSFER AGENT TO EFFECT THE REMOVAL OF THE LEGEND
HEREUNDER. IF ALL OR ANY DEBENTURES OR ANY PORTION OF A WARRANT IS CONVERTED OR
EXERCISED (AS APPLICABLE) AT A TIME WHEN THERE IS AN EFFECTIVE REGISTRATION
STATEMENT TO COVER THE RESALE OF THE UNDERLYING SHARES, OR IF SUCH UNDERLYING
SHARES MAY BE SOLD UNDER RULE 144(K) OR IF SUCH LEGEND IS NOT OTHERWISE REQUIRED
UNDER APPLICABLE REQUIREMENTS OF THE SECURITIES ACT (INCLUDING JUDICIAL
INTERPRETATIONS THEREOF) THEN SUCH UNDERLYING SHARES SHALL BE ISSUED FREE OF ALL
LEGENDS.  THE COMPANY AGREES THAT FOLLOWING THE EFFECTIVE DATE OR AT SUCH TIME
AS SUCH LEGEND IS NO LONGER REQUIRED UNDER THIS SECTION 4.1(C), IT WILL, NO
LATER THAN THREE TRADING DAYS FOLLOWING THE DELIVERY BY A PURCHASER TO THE
COMPANY OR THE COMPANY’S TRANSFER AGENT OF A CERTIFICATE REPRESENTING UNDERLYING
SHARES, AS APPLICABLE, ISSUED WITH A RESTRICTIVE LEGEND (SUCH THIRD TRADING DAY,
THE “LEGEND REMOVAL DATE”), DELIVER OR CAUSE TO BE DELIVERED TO SUCH PURCHASER A
CERTIFICATE REPRESENTING SUCH 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.  CERTIFICATES FOR SECURITIES SUBJECT TO
LEGEND REMOVAL HEREUNDER SHALL BE TRANSMITTED BY THE TRANSFER AGENT OF THE
COMPANY TO THE PURCHASERS BY CREDITING THE ACCOUNT OF THE PURCHASER’S PRIME
BROKER WITH THE DEPOSITORY TRUST COMPANY SYSTEM.

(d)                                 In addition to such Purchaser’s other
available remedies, the Company shall pay to a Purchaser, in cash, as partial
liquidated damages and not as a penalty, for each $1,000 of Underlying Shares
(based on the VWAP of the Common Stock on the date such Securities are submitted
to the Company’s transfer agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per
Trading Day 5 Trading Days after such damages have begun to accrue) for each
Trading Day after the Legend Removal Date until such certificate is delivered
without a legend.  Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Company’s failure to deliver certificates representing
any Securities as required by the Transaction Documents, and such Purchaser
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief.

(e)                                  Each Purchaser, severally and not jointly
with the other Purchasers, agrees that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 4.1 is
predicated upon the Company’s reliance that the Purchaser will sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom.

(f)                                    No liquidated damages, financial penalty
or other remedies provided for

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under this Agreement, or any of the other Transaction Documents, in the event of
delay in delivery of share certificates or delay in the de-legending of share
certificates beyond any applicable deadline provided for herein, or therein, by
the Company, shall apply as to a Purchaser in the event such delay is the result
of (i) solely the fault of such Purchaser or (ii) any Force Majeure, provided
that the Company shall continue to use best efforts to cause such delivery or
de-legending as soon as possible.

4.2                                 ACKNOWLEDGMENT OF DILUTION.  THE COMPANY
ACKNOWLEDGES THAT THE ISSUANCE OF THE SECURITIES MAY RESULT IN DILUTION OF THE
OUTSTANDING SHARES OF COMMON STOCK, WHICH DILUTION MAY BE SUBSTANTIAL UNDER
CERTAIN MARKET CONDITIONS.  THE COMPANY FURTHER ACKNOWLEDGES THAT ITS
OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION ITS
OBLIGATION TO ISSUE THE UNDERLYING SHARES PURSUANT TO THE TRANSACTION DOCUMENTS,
ARE UNCONDITIONAL AND ABSOLUTE AND NOT SUBJECT TO ANY RIGHT OF SET OFF,
COUNTERCLAIM, DELAY OR REDUCTION, REGARDLESS OF THE EFFECT OF ANY SUCH DILUTION
OR ANY CLAIM THE COMPANY MAY HAVE AGAINST ANY PURCHASER AND REGARDLESS OF THE
DILUTIVE EFFECT THAT SUCH ISSUANCE MAY HAVE ON THE OWNERSHIP OF THE OTHER
STOCKHOLDERS OF THE COMPANY.

4.3                                 FURNISHING OF INFORMATION.  AS LONG AS ANY
PURCHASER OWNS SECURITIES, THE COMPANY COVENANTS TO TIMELY FILE (OR OBTAIN
EXTENSIONS IN RESPECT THEREOF AND FILE WITHIN THE APPLICABLE GRACE PERIOD) ALL
REPORTS REQUIRED TO BE FILED BY THE COMPANY AFTER THE DATE HEREOF PURSUANT TO
THE EXCHANGE ACT.  AS LONG AS ANY PURCHASER OWNS SECURITIES, IF THE COMPANY IS
NOT REQUIRED TO FILE REPORTS PURSUANT TO THE EXCHANGE ACT, IT WILL PREPARE AND
FURNISH TO THE PURCHASERS AND MAKE PUBLICLY AVAILABLE IN ACCORDANCE WITH RULE
144(C) SUCH INFORMATION AS IS REQUIRED FOR THE PURCHASERS TO SELL THE SECURITIES
UNDER RULE 144.  THE COMPANY FURTHER COVENANTS THAT IT WILL TAKE SUCH FURTHER
ACTION AS ANY HOLDER OF SECURITIES MAY REASONABLY REQUEST, ALL TO THE EXTENT
REQUIRED FROM TIME TO TIME TO ENABLE SUCH PERSON TO SELL SUCH SECURITIES WITHOUT
REGISTRATION UNDER THE SECURITIES ACT WITHIN THE LIMITATION OF THE EXEMPTIONS
PROVIDED BY RULE 144.

4.4                                 INTEGRATION.  THE COMPANY SHALL NOT SELL,
OFFER FOR SALE OR SOLICIT OFFERS TO BUY OR OTHERWISE NEGOTIATE IN RESPECT OF ANY
SECURITY (AS DEFINED IN SECTION 2 OF THE SECURITIES ACT) THAT WOULD BE
INTEGRATED WITH THE OFFER OR SALE OF THE SECURITIES IN A MANNER THAT WOULD
REQUIRE THE REGISTRATION UNDER THE SECURITIES ACT OF THE SALE OF THE SECURITIES
TO THE PURCHASERS OR THAT WOULD BE INTEGRATED WITH THE OFFER OR SALE OF THE
SECURITIES FOR PURPOSES OF THE RULES AND REGULATIONS OF ANY TRADING MARKET.

4.5                                 CONVERSION AND EXERCISE PROCEDURES.  THE
FORM OF NOTICE OF EXERCISE INCLUDED IN THE WARRANTS AND THE FORM OF NOTICE OF
CONVERSION INCLUDED IN THE DEBENTURES SET FORTH THE TOTALITY OF THE PROCEDURES
REQUIRED OF THE PURCHASERS IN ORDER TO EXERCISE THE WARRANTS OR CONVERT THE
DEBENTURES.  NO ADDITIONAL LEGAL OPINION OR OTHER INFORMATION OR INSTRUCTIONS
SHALL BE REQUIRED OF THE PURCHASERS TO EXERCISE THEIR WARRANTS OR CONVERT THEIR
DEBENTURES.  THE COMPANY SHALL HONOR EXERCISES OF THE WARRANTS AND CONVERSIONS
OF THE DEBENTURES AND SHALL DELIVER UNDERLYING SHARES IN ACCORDANCE WITH THE
TERMS, CONDITIONS AND TIME PERIODS SET FORTH IN THE TRANSACTION DOCUMENTS.

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4.6                                 SECURITIES LAWS DISCLOSURE; PUBLICITY.  THE
COMPANY SHALL, BY 8:30 A.M. EASTERN TIME ON THE TRADING DAY FOLLOWING THE DATE
HEREOF, ISSUE A CURRENT REPORT ON FORM 8-K, REASONABLY ACCEPTABLE TO THE
PLACEMENT AGENTS DISCLOSING THE MATERIAL TERMS OF THE TRANSACTIONS CONTEMPLATED
HEREBY, AND SHALL ATTACH THE TRANSACTION DOCUMENTS THERETO.  THE COMPANY AND
EACH PURCHASER SHALL CONSULT WITH EACH OTHER IN ISSUING ANY OTHER 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 EACH PURCHASER,
WITH RESPECT TO ANY PRESS RELEASE OF THE COMPANY, WHICH CONSENT SHALL NOT
UNREASONABLY BE WITHHELD, 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.  NOTWITHSTANDING THE
FOREGOING, THE COMPANY SHALL NOT PUBLICLY DISCLOSE THE NAME OF ANY PURCHASER, OR
INCLUDE THE NAME OF ANY PURCHASER IN ANY FILING WITH THE COMMISSION OR ANY
REGULATORY AGENCY OR TRADING MARKET, WITHOUT THE PRIOR WRITTEN CONSENT OF SUCH
PURCHASER, EXCEPT (I) AS REQUIRED BY FEDERAL SECURITIES LAW IN CONNECTION WITH
THE REGISTRATION STATEMENT CONTEMPLATED BY THE REGISTRATION RIGHTS AGREEMENT AND
(II) TO THE EXTENT SUCH DISCLOSURE IS REQUIRED BY LAW OR TRADING MARKET
REGULATIONS, IN WHICH CASE THE COMPANY SHALL PROVIDE THE PURCHASERS WITH PRIOR
NOTICE OF SUCH DISCLOSURE PERMITTED UNDER SUBCLAUSE (I) OR (II).

4.7                                 Shareholder Rights Plan.  No claim will be
made or enforced by the Company or, to the knowledge of the Company, any other
Person that any Purchaser is an “Acquiring Person” under any shareholder rights
plan or similar plan or arrangement in effect or hereafter adopted by the
Company, or that any Purchaser could be deemed to trigger the provisions of any
such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers. The Company shall conduct its business in a manner so that it will
not become subject to the Investment Company Act.

4.8                               NON-PUBLIC INFORMATION.  THE COMPANY COVENANTS
AND AGREES THAT, EXCEPT AS SPECIFICALLY REQUIRED TO COMPLY WITH THE TERMS OF THE
TRANSACTION DOCUMENTS, 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
IN EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY.

4.9                                 USE OF PROCEEDS.  EXCEPT AS SET FORTH ON
SCHEDULE 4.9 ATTACHED HERETO, THE COMPANY SHALL USE THE NET PROCEEDS FROM THE
SALE OF THE SECURITIES HEREUNDER FOR WORKING CAPITAL PURPOSES AND NOT FOR THE
SATISFACTION OF ANY PORTION OF THE COMPANY’S DEBT (OTHER THAN PAYMENT OF TRADE
PAYABLES IN THE ORDINARY COURSE OF THE COMPANY’S BUSINESS AND PRIOR PRACTICES),
TO REDEEM COMMON STOCK OR COMMON STOCK EQUIVALENTS OR TO SETTLE ANY OUTSTANDING
LITIGATION.

4.10                           REIMBURSEMENT.  IF ANY PURCHASER BECOMES INVOLVED
IN ANY CAPACITY IN ANY PROCEEDING BY OR AGAINST ANY PERSON WHO IS A STOCKHOLDER
OF THE COMPANY (EXCEPT AS A RESULT OF SALES, PLEDGES, MARGIN SALES AND SIMILAR
TRANSACTIONS BY SUCH PURCHASER TO OR WITH ANY CURRENT STOCKHOLDER), SOLELY AS A
RESULT OF SUCH PURCHASER’S ACQUISITION OF THE SECURITIES UNDER THIS AGREEMENT,
THE COMPANY WILL REIMBURSE SUCH PURCHASER FOR ITS REASONABLE LEGAL AND OTHER

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EXPENSES (INCLUDING THE COST OF ANY INVESTIGATION PREPARATION AND TRAVEL IN
CONNECTION THEREWITH) INCURRED IN CONNECTION THEREWITH, AS SUCH EXPENSES ARE
INCURRED.  THE REIMBURSEMENT OBLIGATIONS OF THE COMPANY UNDER THIS PARAGRAPH
SHALL BE IN ADDITION TO ANY LIABILITY WHICH THE COMPANY MAY OTHERWISE HAVE,
SHALL EXTEND UPON THE SAME TERMS AND CONDITIONS TO ANY AFFILIATES OF THE
PURCHASERS WHO ARE ACTUALLY NAMED IN SUCH ACTION, PROCEEDING OR INVESTIGATION,
AND PARTNERS, DIRECTORS, AGENTS, EMPLOYEES AND CONTROLLING PERSONS (IF ANY), AS
THE CASE MAY BE, OF THE PURCHASERS AND ANY SUCH AFFILIATE, AND SHALL BE BINDING
UPON AND INURE TO THE BENEFIT OF ANY SUCCESSORS, ASSIGNS, HEIRS AND PERSONAL
REPRESENTATIVES OF THE COMPANY, THE PURCHASERS AND ANY SUCH AFFILIATE AND ANY
SUCH PERSON.  THE COMPANY ALSO AGREES THAT NEITHER THE PURCHASERS NOR ANY SUCH
AFFILIATES, PARTNERS, DIRECTORS, AGENTS, EMPLOYEES OR CONTROLLING PERSONS SHALL
HAVE ANY LIABILITY TO THE COMPANY OR ANY PERSON ASSERTING CLAIMS ON BEHALF OF OR
IN RIGHT OF THE COMPANY SOLELY AS A RESULT OF ACQUIRING THE SECURITIES UNDER
THIS AGREEMENT. THE PURCHASER SHALL NOT BE ENTITLED TO REIMBURSEMENT FOR ANY
CLAIMS THAT RESULT FROM OR RELATE TO THE PURCHASER’S, ITS AGENTS’ OR EMPLOYEES’
WILLFUL MISCONDUCT, VIOLATION OF LAW, RULE OR REGULATION OR VIOLATION OF ANY OF
THE TERMS OR PROVISIONS OF THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.

4.11                           INDEMNIFICATION OF PURCHASERS.   SUBJECT TO THE
PROVISIONS OF THIS SECTION 4.11, THE COMPANY WILL INDEMNIFY AND HOLD EACH
PURCHASER AND ITS DIRECTORS, OFFICERS, SHAREHOLDERS, MEMBERS, PARTNERS,
EMPLOYEES AND AGENTS (AND ANY OTHER PERSONS WITH A FUNCTIONALLY EQUIVALENT ROLE
OF A PERSON HOLDING SUCH TITLES NOTWITHSTANDING A LACK OF SUCH TITLE OR ANY
OTHER TITLE), EACH PERSON WHO CONTROLS SUCH PURCHASER (WITHIN THE MEANING OF
SECTION 15 OF THE SECURITIES ACT AND SECTION 20 OF THE EXCHANGE ACT), AND THE
DIRECTORS, OFFICERS, SHAREHOLDERS, AGENTS, MEMBERS, PARTNERS OR EMPLOYEES (AND
ANY OTHER PERSONS WITH A FUNCTIONALLY EQUIVALENT ROLE OF A PERSON HOLDING SUCH
TITLES NOTWITHSTANDING A LACK OF SUCH TITLE OR ANY OTHER TITLE) OF SUCH
CONTROLLING PERSON (EACH, A “PURCHASER PARTY”) HARMLESS FROM ANY AND ALL LOSSES,
LIABILITIES, OBLIGATIONS, CLAIMS, CONTINGENCIES, DAMAGES, COSTS AND EXPENSES,
INCLUDING ALL JUDGMENTS, AMOUNTS PAID IN SETTLEMENTS, COURT COSTS AND REASONABLE
ATTORNEYS’ FEES AND COSTS OF INVESTIGATION THAT ANY SUCH PURCHASER PARTY MAY
SUFFER OR INCUR AS A RESULT OF OR RELATING TO (A) ANY BREACH OF ANY OF THE
REPRESENTATIONS, WARRANTIES, COVENANTS OR AGREEMENTS MADE BY THE COMPANY IN THIS
AGREEMENT OR IN THE OTHER TRANSACTION DOCUMENTS OR (B) ANY ACTION INSTITUTED
AGAINST A PURCHASER, OR ANY OF THEM OR THEIR RESPECTIVE AFFILIATES, BY ANY
STOCKHOLDER OF THE COMPANY WHO IS NOT AN AFFILIATE OF SUCH PURCHASER, WITH
RESPECT TO ANY OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS
(UNLESS SUCH ACTION IS BASED UPON A BREACH OF SUCH PURCHASER’S REPRESENTATIONS,
WARRANTIES OR COVENANTS UNDER THE TRANSACTION DOCUMENTS OR ANY AGREEMENTS OR
UNDERSTANDINGS SUCH PURCHASER MAY HAVE WITH ANY SUCH STOCKHOLDER OR ANY
VIOLATIONS BY THE PURCHASER OF STATE OR FEDERAL SECURITIES LAWS OR ANY CONDUCT
BY SUCH PURCHASER WHICH CONSTITUTES FRAUD, GROSS NEGLIGENCE, WILLFUL MISCONDUCT
OR MALFEASANCE).  IF ANY ACTION SHALL BE BROUGHT AGAINST ANY PURCHASER PARTY IN
RESPECT OF WHICH INDEMNITY MAY BE SOUGHT PURSUANT TO THIS AGREEMENT, SUCH
PURCHASER PARTY SHALL PROMPTLY NOTIFY THE COMPANY IN WRITING, AND THE COMPANY
SHALL HAVE THE RIGHT TO ASSUME THE DEFENSE THEREOF WITH COUNSEL OF ITS OWN
CHOOSING.  ANY PURCHASER PARTY SHALL HAVE THE RIGHT TO EMPLOY SEPARATE COUNSEL
IN ANY SUCH ACTION AND PARTICIPATE IN THE DEFENSE THEREOF, BUT THE FEES AND
EXPENSES OF SUCH COUNSEL SHALL BE AT THE EXPENSE OF SUCH PURCHASER PARTY EXCEPT
TO THE EXTENT THAT (I) THE EMPLOYMENT THEREOF HAS BEEN SPECIFICALLY AUTHORIZED
BY THE COMPANY IN WRITING, (II) THE COMPANY HAS FAILED AFTER A REASONABLE PERIOD
OF TIME TO ASSUME SUCH DEFENSE AND TO EMPLOY COUNSEL OR (III) IN SUCH ACTION
THERE IS, IN THE REASONABLE OPINION OF SUCH SEPARATE COUNSEL, A MATERIAL
CONFLICT ON ANY MATERIAL ISSUE BETWEEN THE POSITION OF THE

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COMPANY AND THE POSITION OF SUCH PURCHASER PARTY.  THE COMPANY WILL NOT BE
LIABLE TO ANY PURCHASER PARTY UNDER THIS AGREEMENT (I) FOR ANY SETTLEMENT BY A
PURCHASER PARTY EFFECTED WITHOUT THE COMPANY’S PRIOR WRITTEN CONSENT, WHICH
SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED; OR (II) TO THE EXTENT, BUT ONLY
TO THE EXTENT THAT A LOSS, CLAIM, DAMAGE OR LIABILITY IS ATTRIBUTABLE TO ANY
PURCHASER PARTY’S BREACH OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS OR
AGREEMENTS MADE BY THE PURCHASERS IN THIS AGREEMENT OR IN THE OTHER TRANSACTION
DOCUMENTS.

4.12                           RESERVATION AND LISTING OF SECURITIES.

(A)                                  THE COMPANY SHALL MAINTAIN A RESERVE FROM
ITS DULY AUTHORIZED SHARES OF COMMON STOCK FOR ISSUANCE PURSUANT TO THE
TRANSACTION DOCUMENTS IN SUCH AMOUNT AS MAY BE REQUIRED TO FULFILL ITS
OBLIGATIONS IN FULL UNDER THE TRANSACTION DOCUMENTS.

(B)                                 IF, ON ANY DATE, THE NUMBER OF AUTHORIZED
BUT UNISSUED (AND OTHERWISE UNRESERVED) SHARES OF COMMON STOCK IS LESS THAN 130%
OF (I) THE ACTUAL MINIMUM ON SUCH DATE, MINUS (II) THE NUMBER OF SHARES OF
COMMON STOCK PREVIOUSLY ISSUED PURSUANT TO THE TRANSACTION DOCUMENTS, THEN THE
BOARD OF DIRECTORS OF THE COMPANY SHALL USE COMMERCIALLY REASONABLE EFFORTS TO
AMEND THE COMPANY’S CERTIFICATE OR ARTICLES OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED BUT UNISSUED SHARES OF COMMON STOCK TO AT LEAST THE ACTUAL
MINIMUM AT SUCH TIME (MINUS THE NUMBER OF SHARES OF COMMON STOCK PREVIOUSLY
ISSUED PURSUANT TO THE TRANSACTION DOCUMENTS), AS SOON AS POSSIBLE AND IN ANY
EVENT NOT LATER THAN THE 75TH DAY AFTER SUCH DATE; PROVIDED THAT THE COMPANY
WILL NOT BE REQUIRED AT ANY TIME TO AUTHORIZE A NUMBER OF SHARES OF COMMON STOCK
GREATER THAN THE MAXIMUM REMAINING NUMBER OF SHARES OF COMMON STOCK THAT COULD
POSSIBLY BE ISSUED AFTER SUCH TIME PURSUANT TO THE TRANSACTION DOCUMENTS.

(C)                                  THE COMPANY SHALL, IF APPLICABLE: (I) IN
THE TIME AND MANNER REQUIRED BY THE TRADING MARKET, PREPARE AND FILE WITH SUCH
TRADING MARKET AN ADDITIONAL SHARES LISTING APPLICATION COVERING A NUMBER OF
SHARES OF COMMON STOCK AT LEAST EQUAL TO THE ACTUAL MINIMUM ON THE DATE OF SUCH
APPLICATION, (II) TAKE ALL STEPS NECESSARY TO CAUSE SUCH SHARES OF COMMON STOCK
TO BE APPROVED FOR LISTING ON THE TRADING MARKET AS SOON AS POSSIBLE THEREAFTER,
(III) PROVIDE TO THE PURCHASERS EVIDENCE OF SUCH LISTING, AND (IV) MAINTAIN THE
LISTING OF SUCH COMMON STOCK ON ANY DATE AT LEAST EQUAL TO THE ACTUAL MINIMUM ON
SUCH DATE ON SUCH TRADING MARKET OR ANOTHER TRADING MARKET.

4.13                           PARTICIPATION IN FUTURE FINANCING.

(a)                                  From the date hereof until a Purchaser of
Debentures (or their permitted assigns) holds less than 25% of the Principal
Amount of Debenture initially purchased pursuant to this Agreement, upon any
financing by the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents (a “Subsequent Financing”), each Purchaser shall have the
right to participate in up to an amount of the Subsequent Financing equal to
100% of the Subsequent Financing (the “Participation Maximum”).

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(b)                                 At least 5 Trading Days prior to the closing
of the Subsequent Financing, the Company shall deliver to each Purchaser a
written notice of its intention to effect a Subsequent Financing (“Pre-Notice”),
which Pre-Notice shall ask such Purchaser if it wants to review the details of
such financing (such additional notice, a “Subsequent Financing Notice”).  Upon
the request of a Purchaser, and only upon a request by such Purchaser, for a
Subsequent Financing Notice, the Company shall promptly, but no later than 1
Trading Day after such request, deliver a Subsequent Financing Notice to such
Purchaser.  The Subsequent Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder, the Person with whom such Subsequent Financing is
proposed to be effected, and attached to which shall be a term sheet or similar
document relating thereto.

(c)                                  Any Purchaser desiring to participate in
such Subsequent Financing must provide written notice to the Company by not
later than 5:30 p.m. (New York City time) on the 5th Trading Day after all of
the Purchasers have received the Pre-Notice that the Purchaser is willing to
participate in the Subsequent Financing, the amount of the Purchaser’s
participation, and that the Purchaser has such funds ready, willing, and
available for investment on the terms set forth in the Subsequent Financing
Notice.  If the Company receives no notice from a Purchaser as of such
5th Trading Day, such Purchaser shall be deemed to have notified the Company
that it does not elect to participate.

(d)                                 If by 5:30 p.m. (New York City time) on the
5th Trading Day after all of the Purchasers have received the Pre-Notice,
notifications by the Purchasers of their willingness to participate in the
Subsequent Financing (or to cause their designees to participate) is, in the
aggregate, less than the total amount of the Subsequent Financing, then the
Company may effect the remaining portion of such Subsequent Financing on the
terms and to the Persons set forth in the Subsequent Financing Notice.

(e)                                  If by 5:30 p.m. (New York City time) on the
5th Trading Day after all of the Purchasers have received the Pre-Notice, the
Company receives responses to a Subsequent Financing Notice from Purchasers
seeking to purchase more than the aggregate amount of the Participation Maximum,
each such Purchaser shall have the right to purchase its Pro Rata Portion (as
defined below) of the Participation Maximum.  “Pro Rata Portion” is the ratio of
(x) the Subscription Amount of Securities purchased on the Closing Date by a
Purchaser participating under this Section 4.13 and (y) the sum of the aggregate
Subscription Amounts of Securities purchased on the Closing Date by all
Purchasers participating under this Section 4.13.

(f)                                    The Company must provide the Purchasers
with a second Subsequent Financing Notice, and the Purchasers will again have
the right of participation set forth above in this Section 4.13, if the
Subsequent Financing subject to the initial Subsequent Financing Notice is not
consummated for any reason on the terms not materially more favorable to the
investors in the Subsequent Financing than set forth in such Subsequent
Financing Notice within 60 Trading Days after the date of the initial Subsequent
Financing Notice.

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(g)                                 Notwithstanding the foregoing, this Section
4.13 shall not apply in respect of an Exempt Issuance or a bona fide firm
commitment public underwritten offering of the Common Stock by a nationally
recognized investment bank.

4.14                           Subsequent Equity Sales.

(a)                                  From the date hereof until 90 days after
the Effective Date, neither the Company nor any Subsidiary shall issue shares of
Common Stock or Common Stock Equivalents; provided, however, the 90 day period
set forth in this Section 4.14 shall be extended for the number of Trading Days
during such period in which (i) trading in the Common Stock is suspended by any
Trading Market, or (ii) following the Effective Date, the Registration Statement
is not effective or the prospectus included in the Registration Statement may
not be used by the Purchasers for the resale of the Underlying Shares.

(b)                                 From the date hereof until such time as no
Purchaser holds any of the Securities, the Company shall be prohibited from
effecting or entering into an agreement to effect any Subsequent Financing
involving a “Variable Rate Transaction”.  The term “Variable Rate Transaction”
shall mean a transaction in which the Company issues or sells (i) any debt or
equity securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (A) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the shares of Common Stock
at any time after the initial issuance of such debt or equity securities, or (B)
with a conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity line of
credit, whereby the Company may sell securities at a future determined price.

(c)                                  From the date hereof until such time as no
Purchaser holds any of the Securities, in the event the Company issues or sells
any shares of Common Stock or Common Stock Equivalents, if a Purchaser
reasonably believes that any of the terms and conditions thereunder are more
favorable to such investors as the terms and conditions granted hereunder, upon
notice to the Company by such Purchaser the Company shall amend the terms of
this transaction as to such Purchaser only so as to give such Purchaser the
benefit of such more favorable terms or conditions.

(d)                                 Notwithstanding the foregoing, this Section
4.14 shall not apply in respect of (i) an Exempt Issuance, except that no
Variable Rate Transaction shall be an Exempt Issuance or (ii) an issuance of
Common Stock or Common Stock Equivalents occurring after the Effective Date
where the proceeds of such issuance are used to redeem the Debentures in full.

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4.15                           EQUAL TREATMENT OF PURCHASERS.  NO CONSIDERATION
SHALL BE OFFERED OR PAID TO ANY PERSON TO AMEND OR CONSENT TO A WAIVER OR
MODIFICATION OF ANY PROVISION OF ANY OF THE TRANSACTION DOCUMENTS UNLESS THE
SAME CONSIDERATION IS ALSO OFFERED TO ALL OF THE PARTIES TO THE TRANSACTION
DOCUMENTS.  FURTHER, THE COMPANY SHALL NOT MAKE ANY PAYMENT OF PRINCIPAL ON THE
DEBENTURE IN AMOUNTS WHICH ARE DISPROPORTIONATE TO THE RESPECTIVE PRINCIPAL
AMOUNTS OUTSTANDING ON THE DEBENTURES AT ANY APPLICABLE TIME.  FOR CLARIFICATION
PURPOSES, THIS PROVISION CONSTITUTES A SEPARATE RIGHT GRANTED TO EACH PURCHASER
BY THE COMPANY AND NEGOTIATED SEPARATELY BY EACH PURCHASER, AND IS INTENDED FOR
THE COMPANY TO TREAT THE PURCHASERS AS A CLASS AND SHALL NOT IN ANY WAY BE
CONSTRUED AS THE PURCHASERS ACTING IN CONCERT OR AS A GROUP WITH RESPECT TO THE
PURCHASE, DISPOSITION OR VOTING OF SECURITIES OR OTHERWISE.

4.16                           SHORT SALES AND CONFIDENTIALITY.  EACH PURCHASER,
SEVERALLY AND NOT JOINTLY WITH THE OTHER PURCHASERS, COVENANTS THAT NEITHER IT
NOR ANY AFFILIATE ACTING ON ITS BEHALF OR PURSUANT TO ANY UNDERSTANDING WITH IT
WILL EXECUTE ANY SHORT SALES DURING THE PERIOD COMMENCING AT THE DISCUSSION TIME
AND ENDING AT THE TIME THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE
FIRST PUBLICLY ANNOUNCED AS DESCRIBED IN SECTION 4.6.  EACH PURCHASER, SEVERALLY
AND NOT JOINTLY WITH THE OTHER PURCHASERS, COVENANTS THAT UNTIL SUCH TIME AS THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE PUBLICLY DISCLOSED BY THE
COMPANY AS DESCRIBED IN SECTION 4.6, SUCH PURCHASER WILL MAINTAIN THE
CONFIDENTIALITY OF THE EXISTENCE AND TERMS OF THIS TRANSACTION AND THE
INFORMATION INCLUDED IN THE DISCLOSURE SCHEDULES.  EACH PURCHASER SEVERALLY AND
NOT JOINTLY WITH ANY OTHER PURCHASER UNDERSTANDS AND ACKNOWLEDGES, AND AGREES,
TO ACT IN A MANNER THAT WILL NOT VIOLATE THE POSITIONS OF THE COMMISSION AS SET
FORTH IN ITEM 65, SECTION A, OF THE MANUAL OF PUBLICLY AVAILABLE TELEPHONE
INTERPRETATIONS, DATED JULY 1997, COMPILED BY THE OFFICE OF CHIEF COUNSEL,
DIVISION OF CORPORATION FINANCE. NOTWITHSTANDING THE FOREGOING, NO PURCHASER
MAKES ANY REPRESENTATION, WARRANTY OR COVENANT HEREBY THAT IT WILL NOT ENGAGE IN
SHORT SALES IN THE SECURITIES OF THE COMPANY AFTER THE TIME THAT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE FIRST PUBLICLY ANNOUNCED AS
DESCRIBED IN SECTION 4.6.  NOTWITHSTANDING THE FOREGOING, IN THE CASE OF A
PURCHASER THAT IS A MULTI-MANAGED INVESTMENT VEHICLE WHEREBY SEPARATE PORTFOLIO
MANAGERS MANAGE SEPARATE PORTIONS OF SUCH PURCHASER’S ASSETS AND THE PORTFOLIO
MANAGERS HAVE NO DIRECT KNOWLEDGE OF THE INVESTMENT DECISIONS MADE BY THE
PORTFOLIO MANAGERS MANAGING OTHER PORTIONS OF SUCH PURCHASER’S ASSETS, THE
COVENANT SET FORTH ABOVE SHALL ONLY APPLY WITH RESPECT TO THE PORTION OF ASSETS
MANAGED BY THE PORTFOLIO MANAGER THAT MADE THE INVESTMENT DECISION TO PURCHASE
THE SECURITIES COVERED BY THIS AGREEMENT.

4.17                           STOCK OPTION PLANS.  SO LONG AS ANY DEBENTURES
REMAIN OUTSTANDING, THE COMPANY SHALL NOT ISSUE SHARES OF COMMON STOCK OR
OPTIONS TO EMPLOYEES, OFFICERS, DIRECTORS OR CONSULTANTS OF THE COMPANY PURSUANT
TO ANY STOCK OR OPTION PLAN IN EXCESS OF, IN THE AGGREGATE, 14,654,785 SHARES OR
SHARES UNDERLYING OPTIONS, SUBJECT TO ADJUSTMENT FOR REVERSE AND FORWARD STOCK
SPLITS, STOCK INTERESTS, STOCK COMBINATIONS AND OTHER SIMILAR TRANSACTIONS OF
THE COMMON STOCK THAT OCCUR AFTER THE DATE OF THIS AGREEMENT.  EXCEPT AS SET
FORTH ON SCHEDULE 4.17, THE COMPANY SHALL NOT ISSUE SHARES OF COMMON STOCK OR
OPTIONS TO EMPLOYEES, OFFICERS OR DIRECTORS OF THE COMPANY PURSUANT TO ANY STOCK
OR OPTION PLAN UNTIL SUCH STOCK OR OPTION PLAN IS DULY AUTHORIZED BY A MAJORITY
OF THE NON-EMPLOYEE MEMBERS OF THE BOARD OF DIRECTORS OF THE COMPANY OR A
MAJORITY OF THE MEMBERS OF A COMMITTEE OF NON-EMPLOYEE DIRECTORS ESTABLISHED FOR
SUCH PURPOSE.

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4.18                           FORM D; BLUE SKY FILINGS.  THE COMPANY AGREES TO
TIMELY FILE A FORM D WITH RESPECT TO THE SECURITIES AS REQUIRED UNDER REGULATION
D AND TO PROVIDE A COPY THEREOF, PROMPTLY UPON REQUEST OF ANY PURCHASER. THE
COMPANY SHALL TAKE SUCH ACTION AS THE COMPANY SHALL REASONABLY DETERMINE IS
NECESSARY IN ORDER TO OBTAIN AN EXEMPTION FOR, OR TO QUALIFY THE SECURITIES FOR,
SALE TO THE PURCHASERS AT THE CLOSING UNDER APPLICABLE SECURITIES OR “BLUE SKY”
LAWS OF THE STATES OF THE UNITED STATES, AND SHALL PROVIDE EVIDENCE OF SUCH
ACTIONS PROMPTLY UPON REQUEST OF ANY PURCHASER.

4.19                           CAPITAL CHANGES.  SO LONG AS ANY DEBENTURES
REMAIN OUTSTANDING, THE COMPANY SHALL NOT UNDERTAKE A REVERSE OR FORWARD STOCK
SPLIT OR RECLASSIFICATION OF THE COMMON STOCK WITHOUT THE PRIOR WRITTEN CONSENT
OF THE PURCHASERS HOLDING A MAJORITY IN PRINCIPAL AMOUNT OUTSTANDING OF THE
DEBENTURES.

4.20                           CASH BURN RATE.  FROM THE DATE HEREOF UNTIL AND
INCLUDING SEPTEMBER 30, 2007, THE CONSOLIDATED ACTUAL CASH DISBURSEMENTS AND
COMMITMENTS OF THE COMPANY AND ITS SUBSIDIARIES (“CASH BURN”) SHALL NOT EXCEED
$1,700,000, IN THE AGGREGATE, DURING SUCH PERIOD.  AFTER SEPTEMBER 30, 2007, THE
CASH BURN SHALL NOT EXCEED $1 MILLION (THE “CASH BURN RATE CAP”) DURING ANY
CALENDAR MONTH (THE “FUTURE CASH BURN PERIOD”); PROVIDED, HOWEVER, CASH
EXPENDITURES FUNDED WITH THE PROCEEDS OF GRANTS, AWARDS, FOUNDATION SUPPORT,
RESEARCH COLLABORATIONS, OR STRATEGIC INVESTMENT BY JOINT VENTURE PARTNERS IN
SPECIFIC PROGRAMS OR PRODUCTS UNDER DEVELOPMENT BY THE COMPANY SHALL NOT BE
INCLUDED WHEN CALCULATING THE CASH BURN RATE CAP. PRIOR TO ISSUING ANY SINGLE
CASH EXPENDITURE GREATER THAN $500,000 DURING THE FUTURE CASH BURN PERIOD, THE
COMPANY MUST RECEIVE APPROVAL FROM THE PURCHASERS HOLDING A MAJORITY OF THE THEN
OUTSTANDING SECURITIES. TO RECEIVE SUCH APPROVAL, THE COMPANY SHALL PROVIDE
PRIOR WRITTEN NOTICE TO EACH PURCHASER (THE “CASH BURN NOTICE”) AND SUCH CASH
BURN NOTICE SHALL BE LIMITED TO THE REQUEST FOR SUCH SINGLE CASH EXPENDITURE AND
PROVIDE EACH PURCHASER THE OPTION TO RECEIVE ADDITIONAL INFORMATION ABOUT SUCH
CASH EXPENDITURE BUT SHALL NOT SET FORTH THE PURPOSE OF SUCH CASH EXPENDITURE.
EACH PURCHASER SHALL HAVE 5 TRADING DAYS (THE “CASH BURN NOTICE PERIOD”) FROM
RECEIPT OF THE CASH BURN NOTICE TO NOTIFY THE COMPANY, IN WRITING, WHETHER THE
COMPANY SHALL PROVIDE SUCH ADDITIONAL INFORMATION ABOUT THE CASH EXPENDITURE;
PROVIDED, HOWEVER, THAT IF SUCH PURCHASER DOES NOT NOTIFY THE COMPANY DURING THE
CASH BURN NOTICE PERIOD, SUCH PURCHASER IS DEEMED TO HAVE WAIVED THE NOTICE AND
APPROVED SUCH SINGLE CASH EXPENDITURE.  WITHIN 5 TRADING DAYS OF THE REQUEST OF
ANY PURCHASER, AND SUBJECT TO SUCH PURCHASER ENTERING INTO A REASONABLE AND
CUSTOMARY CONFIDENTIALITY AGREEMENT IF SUCH INFORMATION IS MATERIAL NON-PUBLIC
INFORMATION (ANY SUCH INFORMATION THAT IS CALCULATED DURING ANY PERIOD FOR WHICH
FINANCIAL STATEMENTS ARE PUBLICLY FILED WITH THE COMMISSION SHALL NOT BE DEEMED
MATERIAL, NON-PUBLIC INFORMATION AND THE COMPANY SHALL ENSURE THAT ANY PERIODIC
REPORTS FILED WITH THE COMMISSION ADEQUATELY PUBLICIZE SUCH INFORMATION), THE
COMPANY SHALL DELIVER TO SUCH INVESTOR A CONSOLIDATED STATEMENT OF CASH FLOW FOR
ANY PRIOR PERIODS REQUESTED BY SUCH PURCHASER.

ARTICLE V

MISCELLANEOUS

5.1                                 TERMINATION.  THIS AGREEMENT MAY BE
TERMINATED BY ANY PURCHASER, AS TO SUCH PURCHASER’S OBLIGATIONS HEREUNDER ONLY
AND WITHOUT ANY EFFECT WHATSOEVER ON THE OBLIGATIONS

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BETWEEN THE COMPANY AND THE OTHER PURCHASERS, BY WRITTEN NOTICE TO THE OTHER
PARTIES, IF THE CLOSING HAS NOT BEEN CONSUMMATED ON OR BEFORE AUGUST 31, 2007;
PROVIDED, HOWEVER, THAT NO SUCH TERMINATION WILL AFFECT THE RIGHT OF ANY PARTY
TO SUE FOR ANY BREACH BY THE OTHER PARTY (OR PARTIES).

5.2                                 FEES AND EXPENSES.   AT THE CLOSING, THE
COMPANY HAS AGREED TO REIMBURSE BRISTOL INVESTMENT FUND, LTD. (“BRISTOL”) THE
NON-ACCOUNTABLE SUM OF $25,000, FOR ITS OUT-OF-POCKET LEGAL FEES AND EXPENSES,
$5,000 OF WHICH HAS BEEN PAID PRIOR TO THE CLOSING. ACCORDINGLY, IN LIEU OF THE
FOREGOING PAYMENTS, THE AGGREGATE AMOUNT THAT BRISTOL IS TO PAY FOR THE
SECURITIES AT THE CLOSING SHALL BE REDUCED BY $20,000 IN LIEU THEREOF.  THE
COMPANY SHALL DELIVER, PRIOR TO THE CLOSING, A COMPLETED AND EXECUTED COPY OF
THE CLOSING STATEMENT, ATTACHED HERETO AS ANNEX A.  EXCEPT AS EXPRESSLY SET
FORTH IN THE TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY SHALL PAY THE
FEES AND EXPENSES OF ITS ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER EXPERTS, IF
ANY, AND ALL OTHER EXPENSES INCURRED BY SUCH PARTY INCIDENT TO THE NEGOTIATION,
PREPARATION, EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT.  THE COMPANY
SHALL PAY ALL TRANSFER AGENT FEES, STAMP TAXES AND OTHER TAXES AND DUTIES LEVIED
IN CONNECTION WITH THE DELIVERY OF ANY SECURITIES.

5.3                                 ENTIRE AGREEMENT.  THE TRANSACTION
DOCUMENTS, TOGETHER WITH THE EXHIBITS AND SCHEDULES THERETO, CONTAIN THE ENTIRE
UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND
SUPERSEDE ALL PRIOR REPRESENTATIONS, AGREEMENTS AND UNDERSTANDINGS, ORAL OR
WRITTEN, WITH RESPECT TO SUCH MATTERS, WHICH THE PARTIES ACKNOWLEDGE HAVE BEEN
MERGED INTO SUCH DOCUMENTS, EXHIBITS AND SCHEDULES.

5.4                                 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 SET FORTH ON THE SIGNATURE PAGES ATTACHED
HERETO PRIOR TO 5:30 P.M. (NEW YORK CITY TIME) ON A TRADING DAY, (B) THE NEXT
TRADING DAY AFTER THE DATE OF TRANSMISSION, IF SUCH NOTICE OR COMMUNICATION IS
DELIVERED VIA FACSIMILE AT THE FACSIMILE NUMBER SET FORTH ON THE SIGNATURE PAGES
ATTACHED HERETO ON A DAY THAT IS NOT A TRADING DAY OR LATER THAN 5:30 P.M. (NEW
YORK CITY TIME) ON ANY TRADING DAY, (C) THE 2ND TRADING DAY FOLLOWING THE DATE
OF MAILING, IF SENT BY U.S. NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OR
(D) UPON ACTUAL RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED TO BE
GIVEN.  THE ADDRESS FOR SUCH NOTICES AND COMMUNICATIONS SHALL BE AS SET FORTH ON
THE SIGNATURE PAGES ATTACHED HERETO.

5.5                                 AMENDMENTS; WAIVERS.  NO PROVISION OF THIS
AGREEMENT MAY BE WAIVED OR AMENDED EXCEPT IN A WRITTEN INSTRUMENT SIGNED, IN THE
CASE OF AN AMENDMENT, BY THE COMPANY AND PURCHASERS OF AT LEAST 67% IN INTEREST
OF THE SECURITIES THEN HELD BY THE PURCHASERS OR, IN THE CASE OF A WAIVER, BY
THE PARTY AGAINST WHOM ENFORCEMENT OF ANY SUCH WAIVER IS SOUGHT.  NO WAIVER OF
ANY DEFAULT WITH RESPECT TO ANY PROVISION, CONDITION OR REQUIREMENT OF THIS
AGREEMENT SHALL BE DEEMED TO BE A CONTINUING WAIVER IN THE FUTURE OR A WAIVER OF
ANY SUBSEQUENT DEFAULT OR A WAIVER OF ANY OTHER PROVISION, CONDITION OR
REQUIREMENT HEREOF, NOR SHALL ANY DELAY OR OMISSION OF EITHER PARTY TO EXERCISE
ANY RIGHT HEREUNDER IN ANY MANNER IMPAIR THE EXERCISE OF ANY SUCH RIGHT.

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5.6                                 HEADINGS.  THE HEADINGS HEREIN ARE FOR
CONVENIENCE ONLY, DO NOT CONSTITUTE A PART OF THIS AGREEMENT AND SHALL NOT BE
DEEMED TO LIMIT OR AFFECT ANY OF THE PROVISIONS HEREOF.  THE LANGUAGE USED IN
THIS AGREEMENT WILL BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO
EXPRESS THEIR MUTUAL INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED
AGAINST ANY PARTY.

5.7                                 SUCCESSORS AND ASSIGNS.  THIS AGREEMENT
SHALL BE BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES AND THEIR
SUCCESSORS AND PERMITTED ASSIGNS.  THE COMPANY MAY NOT ASSIGN THIS AGREEMENT OR
ANY RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF EACH
PURCHASER.  ANY PURCHASER MAY ASSIGN ANY OR ALL OF ITS RIGHTS UNDER THIS
AGREEMENT TO ANY PERSON TO WHOM SUCH PURCHASER ASSIGNS OR TRANSFERS ANY
SECURITIES, PROVIDED SUCH TRANSFEREE AGREES IN WRITING TO BE BOUND, WITH RESPECT
TO THE TRANSFERRED SECURITIES, BY THE PROVISIONS HEREOF THAT APPLY TO THE
“PURCHASERS”.

5.8                                 NO THIRD-PARTY BENEFICIARIES.  THIS
AGREEMENT IS INTENDED FOR THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE
SUCCESSORS AND PERMITTED ASSIGNS AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY
PROVISION HEREOF BE ENFORCED BY, ANY OTHER PERSON, EXCEPT AS OTHERWISE SET FORTH
IN SECTION 4.11.

5.9                                 GOVERNING LAW.  ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE TRANSACTION
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICTS OF LAW THEREOF.  EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS
CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT AND ANY OTHER TRANSACTION DOCUMENTS (WHETHER
BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS,
OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN
THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK.  EACH PARTY HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY
TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO
THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY
WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM
THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT
SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER OR INCONVENIENT VENUE FOR SUCH
PROCEEDING.  EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY
MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY
(WITH EVIDENCE OF DELIVERY) 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 CONTAINED HEREIN
SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER
PERMITTED BY LAW.  THE PARTIES HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.  IF
EITHER PARTY SHALL COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF
THE TRANSACTION DOCUMENTS, THEN THE PREVAILING PARTY IN SUCH ACTION OR
PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS ATTORNEYS’ FEES AND
OTHER COSTS AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND
PROSECUTION OF SUCH ACTION OR PROCEEDING.

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5.10                           SURVIVAL.  THE REPRESENTATIONS AND WARRANTIES
CONTAINED HEREIN SHALL SURVIVE THE CLOSING AND THE DELIVERY, EXERCISE AND/OR
CONVERSION OF THE SECURITIES, AS APPLICABLE FOR THE APPLICABLE STATUE OF
LIMITATIONS.

5.11                           EXECUTION.  THIS AGREEMENT MAY BE EXECUTED IN TWO
OR MORE COUNTERPARTS, ALL OF WHICH WHEN TAKEN TOGETHER SHALL BE CONSIDERED ONE
AND THE SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN
SIGNED BY EACH PARTY AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT
BOTH PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT THAT ANY
SIGNATURE IS DELIVERED BY FACSIMILE TRANSMISSION OR BY E-MAIL DELIVERY OF A
“.PDF” FORMAT DATA FILE, 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 FACSIMILE OR “.PDF”
SIGNATURE PAGE WERE AN ORIGINAL THEREOF.

5.12                           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT
IS HELD TO BE INVALID OR UNENFORCEABLE IN ANY RESPECT, THE VALIDITY AND
ENFORCEABILITY OF THE REMAINING TERMS AND PROVISIONS OF THIS AGREEMENT SHALL NOT
IN ANY WAY BE AFFECTED OR IMPAIRED THEREBY AND THE PARTIES WILL ATTEMPT TO AGREE
UPON A VALID AND ENFORCEABLE PROVISION THAT IS A REASONABLE SUBSTITUTE HEREFOR,
AND UPON SO AGREEING, SHALL INCORPORATE SUCH SUBSTITUTE PROVISION IN THIS
AGREEMENT.

5.13                           RESCISSION AND WITHDRAWAL RIGHT.  NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED IN (AND WITHOUT LIMITING ANY SIMILAR
PROVISIONS OF) THE TRANSACTION DOCUMENTS, WHENEVER ANY PURCHASER EXERCISES A
RIGHT, ELECTION, DEMAND OR OPTION UNDER A TRANSACTION DOCUMENT AND THE COMPANY
DOES NOT TIMELY PERFORM ITS RELATED OBLIGATIONS WITHIN THE PERIODS THEREIN
PROVIDED, THEN SUCH PURCHASER MAY RESCIND OR WITHDRAW, IN ITS SOLE DISCRETION
FROM TIME TO TIME UPON WRITTEN NOTICE TO THE COMPANY, ANY RELEVANT NOTICE,
DEMAND OR ELECTION IN WHOLE OR IN PART WITHOUT PREJUDICE TO ITS FUTURE ACTIONS
AND RIGHTS; PROVIDED, HOWEVER, IN THE CASE OF A RESCISSION OF A CONVERSION OF
THE DEBENTURES OR EXERCISE OF A WARRANT, THE PURCHASER SHALL BE REQUIRED TO
RETURN ANY SHARES OF COMMON STOCK SUBJECT TO ANY SUCH RESCINDED CONVERSION OR
EXERCISE NOTICE.

5.14                           REPLACEMENT OF SECURITIES.  IF ANY CERTIFICATE OR
INSTRUMENT EVIDENCING ANY SECURITIES IS MUTILATED, LOST, STOLEN OR DESTROYED,
THE COMPANY SHALL ISSUE OR CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR
AND UPON CANCELLATION THEREOF, OR IN LIEU OF AND SUBSTITUTION HEREFOR, A NEW
CERTIFICATE OR INSTRUMENT, BUT ONLY UPON RECEIPT OF EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY OF SUCH LOSS, THEFT OR DESTRUCTION AND CUSTOMARY AND
REASONABLE INDEMNITY, IF REQUESTED.  THE APPLICANTS FOR A NEW CERTIFICATE OR
INSTRUMENT UNDER SUCH CIRCUMSTANCES SHALL ALSO PAY ANY REASONABLE THIRD-PARTY
COSTS ASSOCIATED WITH THE ISSUANCE OF SUCH REPLACEMENT SECURITIES.

5.15                           REMEDIES.  IN ADDITION TO BEING ENTITLED TO
EXERCISE ALL RIGHTS PROVIDED HEREIN OR GRANTED BY LAW, INCLUDING RECOVERY OF
DAMAGES, EACH OF THE PURCHASERS AND THE COMPANY WILL BE ENTITLED TO SPECIFIC
PERFORMANCE UNDER THE TRANSACTION DOCUMENTS.  THE PARTIES AGREE THAT MONETARY
DAMAGES MAY NOT BE ADEQUATE COMPENSATION FOR ANY LOSS INCURRED BY REASON OF ANY
BREACH OF OBLIGATIONS DESCRIBED IN THE FOREGOING SENTENCE AND HEREBY AGREES TO
WAIVE IN ANY ACTION FOR SPECIFIC PERFORMANCE OF ANY SUCH OBLIGATION THE DEFENSE
THAT A REMEDY AT LAW WOULD BE ADEQUATE.

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5.16                           PAYMENT SET ASIDE. TO THE EXTENT THAT THE COMPANY
MAKES A PAYMENT OR PAYMENTS TO ANY PURCHASER PURSUANT TO ANY TRANSACTION
DOCUMENT OR A PURCHASER ENFORCES OR EXERCISES ITS RIGHTS THEREUNDER, AND SUCH
PAYMENT OR PAYMENTS OR THE PROCEEDS OF SUCH ENFORCEMENT OR EXERCISE OR ANY PART
THEREOF ARE SUBSEQUENTLY INVALIDATED, DECLARED TO BE FRAUDULENT OR PREFERENTIAL,
SET ASIDE, RECOVERED FROM, DISGORGED BY OR ARE REQUIRED TO BE REFUNDED, REPAID
OR OTHERWISE RESTORED TO THE COMPANY, A TRUSTEE, RECEIVER OR ANY OTHER PERSON
UNDER ANY LAW (INCLUDING, WITHOUT LIMITATION, ANY BANKRUPTCY LAW, STATE OR
FEDERAL LAW, COMMON LAW OR EQUITABLE CAUSE OF ACTION), THEN TO THE EXTENT OF ANY
SUCH RESTORATION THE OBLIGATION OR PART THEREOF ORIGINALLY INTENDED TO BE
SATISFIED SHALL BE REVIVED AND CONTINUED IN FULL FORCE AND EFFECT AS IF SUCH
PAYMENT HAD NOT BEEN MADE OR SUCH ENFORCEMENT OR SETOFF HAD NOT OCCURRED.

5.17                           USURY.  TO THE EXTENT IT MAY LAWFULLY DO SO, THE
COMPANY HEREBY AGREES NOT TO INSIST UPON OR PLEAD OR IN ANY MANNER WHATSOEVER
CLAIM, AND WILL RESIST ANY AND ALL EFFORTS TO BE COMPELLED TO TAKE THE BENEFIT
OR ADVANTAGE OF, USURY LAWS WHEREVER ENACTED, NOW OR AT ANY TIME HEREAFTER IN
FORCE, IN CONNECTION WITH ANY CLAIM, ACTION OR PROCEEDING THAT MAY BE BROUGHT BY
ANY PURCHASER IN ORDER TO ENFORCE ANY RIGHT OR REMEDY UNDER ANY TRANSACTION
DOCUMENT.  NOTWITHSTANDING ANY PROVISION TO THE CONTRARY CONTAINED IN ANY
TRANSACTION DOCUMENT, IT IS EXPRESSLY AGREED AND PROVIDED THAT THE TOTAL
LIABILITY OF THE COMPANY UNDER THE TRANSACTION DOCUMENTS FOR PAYMENTS IN THE
NATURE OF INTEREST SHALL NOT EXCEED THE MAXIMUM LAWFUL RATE AUTHORIZED UNDER
APPLICABLE LAW (THE “MAXIMUM RATE”), AND, WITHOUT LIMITING THE FOREGOING, IN NO
EVENT SHALL ANY RATE OF INTEREST OR DEFAULT INTEREST, OR BOTH OF THEM, WHEN
AGGREGATED WITH ANY OTHER SUMS IN THE NATURE OF INTEREST THAT THE COMPANY MAY BE
OBLIGATED TO PAY UNDER THE TRANSACTION DOCUMENTS EXCEED SUCH MAXIMUM RATE.  IT
IS AGREED THAT IF THE MAXIMUM CONTRACT RATE OF INTEREST ALLOWED BY LAW AND
APPLICABLE TO THE TRANSACTION DOCUMENTS IS INCREASED OR DECREASED BY STATUTE OR
ANY OFFICIAL GOVERNMENTAL ACTION SUBSEQUENT TO THE DATE HEREOF, THE NEW MAXIMUM
CONTRACT RATE OF INTEREST ALLOWED BY LAW WILL BE THE MAXIMUM RATE APPLICABLE TO
THE TRANSACTION DOCUMENTS FROM THE EFFECTIVE DATE FORWARD, UNLESS SUCH
APPLICATION IS PRECLUDED BY APPLICABLE LAW.  IF UNDER ANY CIRCUMSTANCES
WHATSOEVER, INTEREST IN EXCESS OF THE MAXIMUM RATE IS PAID BY THE COMPANY TO ANY
PURCHASER WITH RESPECT TO INDEBTEDNESS EVIDENCED BY THE TRANSACTION DOCUMENTS,
SUCH EXCESS SHALL BE APPLIED BY SUCH PURCHASER TO THE UNPAID PRINCIPAL BALANCE
OF ANY SUCH INDEBTEDNESS OR BE REFUNDED TO THE COMPANY, THE MANNER OF HANDLING
SUCH EXCESS TO BE AT SUCH PURCHASER’S ELECTION.

5.18                           INDEPENDENT NATURE OF PURCHASERS’ OBLIGATIONS AND
RIGHTS.  THE OBLIGATIONS OF EACH PURCHASER UNDER ANY TRANSACTION DOCUMENT 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 TRANSACTION DOCUMENT.  NOTHING CONTAINED HEREIN
OR IN ANY TRANSACTION DOCUMENT, 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 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 THE
TRANSACTION DOCUMENTS.  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 HAS BEEN REPRESENTED BY ITS OWN
SEPARATE LEGAL COUNSEL IN THEIR REVIEW AND NEGOTIATION OF THE TRANSACTION
DOCUMENTS.  FOR

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REASONS OF ADMINISTRATIVE CONVENIENCE ONLY, THE PURCHASERS AND THEIR RESPECTIVE
COUNSEL HAVE CHOSEN TO COMMUNICATE WITH THE COMPANY THROUGH FWS.  FWS DOES NOT
REPRESENT ALL OF THE PURCHASERS BUT ONLY BRISTOL.  THE COMPANY HAS ELECTED TO
PROVIDE ALL PURCHASERS WITH THE SAME TERMS AND TRANSACTION DOCUMENTS FOR THE
CONVENIENCE OF THE COMPANY AND NOT BECAUSE IT WAS REQUIRED OR REQUESTED TO DO SO
BY THE PURCHASERS.

5.19                           LIQUIDATED DAMAGES.  THE COMPANY’S OBLIGATIONS TO
PAY ANY PARTIAL LIQUIDATED DAMAGES OR OTHER AMOUNTS OWING UNDER THE TRANSACTION
DOCUMENTS IS A CONTINUING OBLIGATION OF THE COMPANY AND SHALL NOT TERMINATE
UNTIL ALL UNPAID PARTIAL LIQUIDATED DAMAGES AND OTHER AMOUNTS HAVE BEEN PAID
NOTWITHSTANDING THE FACT THAT THE INSTRUMENT OR SECURITY PURSUANT TO WHICH SUCH
PARTIAL LIQUIDATED DAMAGES OR OTHER AMOUNTS ARE DUE AND PAYABLE SHALL HAVE BEEN
CANCELED.

5.20                           CONSTRUCTION. THE PARTIES AGREE THAT EACH OF THEM
AND/OR THEIR RESPECTIVE COUNSEL HAS REVIEWED AND HAD AN OPPORTUNITY TO REVISE
THE TRANSACTION DOCUMENTS AND, THEREFORE, THE NORMAL RULE OF CONSTRUCTION TO THE
EFFECT THAT ANY AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY SHALL
NOT BE EMPLOYED IN THE INTERPRETATION OF THE TRANSACTION DOCUMENTS OR ANY
AMENDMENTS HERETO.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

ADVANCED CELL TECHNOLOGY, INC.

Address for Notice:

 

 

By:

/s/ WILLIAM M. CALDWELL, IV

 

1201 Bay Harbor Parkway,   

 

Name:William M. Caldwell, IV

Alameda, California 94502

 

Title: Chief Executive Officer

Attn:

 

Fax:

With a copy to (which shall not constitute notice):

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

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[PURCHASER SIGNATURE PAGES TO ACTC SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

Name of Purchaser:

 

 

Signature of Authorized Signatory of Purchaser:

 

 

Name of Authorized Signatory:

 

 

Title of Authorized Signatory:

 

 

Email Address of Purchaser:

 

 

 

 

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount (0.7968 x Principal Amount):

Principal Amount (1.255 x Subscription Amount):

Warrant Shares:

[SIGNATURE PAGES CONTINUE]

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