EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

        SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of April 19,
2004, by and among Integrated BioPharma, Inc., a Delaware corporation, with
headquarters located at 225 Long Avenue, Hillside, New Jersey 07205 (the
“Company”), and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and collectively, the “Buyers”).

      WHEREAS:

A.     The Company has authorized a new series of convertible preferred shares
of the Company designated as Series B Redeemable Convertible Preferred Stock,
the terms of which are set forth in the certificate of designations for such
series of preferred shares (the “Certificate of Designations”) in the form
attached hereto as Exhibit A (together with any convertible preferred shares
issued in replacement thereof in accordance with the terms thereof, the
“Preferred Shares”), which Preferred Shares shall be convertible into shares of
the Company’s Common Stock, par value $.002 per share (the “Common Stock”) (as
converted, the “Conversion Shares”), in accordance with the terms of the
Certificate of Designations.

B.     Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) that aggregate number of
Preferred Shares set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers (which aggregate number for all Buyers shall be 850), (ii) a
warrant, in substantially the form attached hereto as Exhibit B (collectively,
the “Initial Warrants”), to acquire that number of shares of Common Stock set
forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (as
exercised, collectively, the “Initial Warrant Shares”) and (iii) additional
investment rights, in substantially the form attached hereto as Exhibit C (the
“AIR”), pursuant to which each Buyer may have the right to purchase, and the
Company shall be required to sell (A) up to that number of Preferred Shares set
forth opposite such Buyer’s name in column (5) of the Schedule of Buyers (which
aggregate principal amount for all Buyers shall be up to 400) and (B) warrants,
in substantially the form attached hereto as Exhibit B (the “Additional
Warrants” and together with the Initial Warrants, the “Warrants”), (as
exercised, collectively, the “Additional Warrant Shares” and collectively with
the Initial Warrant Shares, the “Warrant Shares”).

C.     The Company and each Buyer is executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506 of
Regulation D (“Regulation D”) as promulgated by the United States Securities and
Exchange Commission (the “SEC”) under the 1933 Act to the extent necessary to
issue the Preferred Shares, the Conversion Shares, the Warrants and the Warrant
Shares.

D.     Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit D (the “Registration Rights
Agreement”), pursuant to which the Company will agree to provide certain
registration rights with respect to the Registrable Securities (as defined in
the Registration Rights Agreement) under the 1933 Act and the rules and
regulations promulgated thereunder, and applicable state securities laws.

E.     The Preferred Shares, the Conversion Shares, the Dividend Shares (as
defined in the Certificate of Designations), the Warrants, the Warrant Shares
and the AIR collectively are referred to herein as the “Securities”.

        NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

1.

PURCHASE AND SALE OF PREFERRED SHARES AND WARRANTS.

(a)

Purchase of Preferred Shares, Initial Warrants and AIR.

(i)

Preferred Shares, Initial Warrants and AIR. Subject to the satisfaction (or
waiver) of the conditions set forth in Sections 6 and 7 below, the Company shall
issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees
to purchase from the Company on the Closing Date (as defined below), the number
of Preferred Shares, as is set forth opposite such Buyer’s name in column (3) on
the Schedule of Buyers, along with Initial Warrants to acquire that number of
Initial Warrant Shares set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers and the AIR as is set forth opposite such Buyer’s name in
column (5) on the Schedule of Buyers (the “Closing”).

(ii)

Closing. The Closing shall occur on the Closing Date at the offices of Schulte
Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022.

(iii)

Purchase Price. The purchase price for each Buyer (the “Purchase Price”) of the
Preferred Shares and related Initial Warrants and AIR to be purchased by each
such Buyer at the Closing shall be equal to $10,000 for each Preferred Share and
related Initial Warrants and AIR being purchased by such Buyer at the Closing.

(b)

Closing Date. The date and time of the Closing (the “Closing Date”) shall be
10:00 a.m., New York City Time, on the date of this Agreement, subject to
notification of satisfaction (or waiver) of the conditions to the Closing set
forth in Sections 6 and 7 below (or such later date as is mutually agreed to by
the Company and each Buyer).

(c)

Form of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase
Price to the Company for the Preferred Shares, Initial Warrants and AIR to be
issued and sold to such Buyer at the Closing, by wire transfer of immediately
available funds in accordance with the Company’s written wire instructions, and
(ii) the Company shall deliver to each Buyer the Preferred Shares (in the
denominations as such Buyer shall reasonably request) which such Buyer is then
purchasing hereunder along with the Initial Warrants and AIR (in the amounts as
such Buyer shall request) such Buyer is purchasing, duly executed on behalf of
the Company and registered in the name of such Buyer or its designee.

2.

BUYER’S REPRESENTATIONS AND WARRANTIES. Each Buyer represents and warrants with
respect to only itself that:

(a)

No Public Sale or Distribution. Such Buyer is (i) acquiring the Preferred
Shares, Initial Warrants and AIR, (ii) upon exercise of the AIR will acquire the
Preferred Shares thereunder and Additional Warrants and (iii) upon conversion of
the Preferred Shares and exercise of the Warrants will acquire the Conversion
Shares issuable upon conversion of the Preferred Shares and the Warrant Shares
issuable upon exercise of the Warrants, for its own account and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the 1933 Act;
provided, however, that by making the representations herein, such Buyer does
not agree to hold any of the Securities for any minimum or other specific term
and reserves the right to dispose of the Securities at any time in accordance
with or pursuant to a registration statement or an exemption under the 1933 Act.
Such Buyer is acquiring the Securities hereunder in the ordinary course of its
business. Such Buyer presently does not have any agreement or understanding,
directly or indirectly, with any Person to distribute any of the Securities.

(b)

Accredited Investor Status. Such Buyer is an “accredited investor” as that term
is defined in Rule 501(a) of Regulation D.

(c)

Reliance on Exemptions. Such Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of such Buyer to acquire the
Securities.

(d)

Information. Such Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Securities which have been
requested by such Buyer. Such Buyer and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. Neither such inquiries nor any
other due diligence investigations conducted by such Buyer or its advisors, if
any, or its representatives shall modify, amend or affect such Buyer’s right to
rely on the Company’s representations and warranties contained herein; provided,
however that in answering such questions the Company shall not be deemed to be
making any representations and warranties other than those contained herein.

(e)

No Governmental Review. Such Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities passed
upon or endorsed the merits of the offering of the Securities.

(f)

Transfer or Resale. Such Buyer understands that except as provided in the
Registration Rights Agreement: (i) the Securities have not been and are not
being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently
registered thereunder, (B) such Buyer shall have delivered to the Company an
opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration, or (C) such Buyer
shall have satisfied the requirements of Rule 144(k) promulgated under the 1933
Act, as amended (or a successor rule thereto); (ii) any sale of the Securities
made in reliance on Rule 144 or Rule 144A promulgated under the 1933 Act, as
amended (or a successor rule thereto) (collectively, “Rule 144”), may be made
only in accordance with the terms of Rule 144 and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other Person is under any obligation to
register the Securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.

(g)

Legends. Such Buyer understands that the certificates or other instruments
representing the Preferred Shares, AIR and the Warrants and, until such time as
the resale of the Registrable Securities have been registered under the 1933 Act
as contemplated by the Registration Rights Agreement, the stock certificates
representing the Registrable Securities, except as set forth below, shall bear
any legend as required by the “blue sky” laws of any state and a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):

  [NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS, OR (B) AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of the Securities upon which it is
stamped, if, unless otherwise required by state securities laws, (i) such
Securities are registered for resale under the 1933 Act, (ii) in connection with
a sale, assignment or other transfer, such holder provides the Company with an
opinion of counsel, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration
under the 1933 Act, or (iii) such holder provides the Company with reasonable
assurance that the Securities can be sold, assigned or transferred pursuant to
Rule 144.

(h)

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

(i)

Residency. Such Buyer is a resident of that country or state specified below its
address on the Schedule of Buyers.

(j)

Organization. Such Buyer is validly existing and in good standing under the laws
of the jurisdiction of its organization, and has the requisite power and
authorization to execute and deliver this Agreement and to consummate the
transaction contemplated hereby.

3.

REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to each of the Buyers that:

(a)

Organization and Qualification. The Company and its “Subsidiaries” (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns at least 20% of the capital stock or holds a comparable equity
or similar interest) are entities duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are organized, and
have the requisite corporate or other power and authorization to own their
properties and to carry on their business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which its ownership of
property or the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing could not reasonably be expected to have a Material Adverse
Effect. As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on the business, properties, assets, operations, results of
operations, condition (financial or otherwise) or prospects of the Company and
its Subsidiaries, taken as a whole, or on the transactions contemplated hereby
and the other Transaction Documents or by the agreements and instruments to be
entered into in connection herewith or therewith, or on the authority or ability
of the Company to perform its obligations under the Transaction Documents. The
Company has no Subsidiaries except as set forth on Schedule 3(a).

(b)

Authorization; Enforcement; Validity. The Company has the requisite corporate
power and authority to enter into and perform its obligations under this
Agreement, the Certificate of Designations, the Registration Rights Agreement,
the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)), the
Warrants, the AIR, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively, the “Transaction Documents”) and to issue the Securities in
accordance with the terms hereof and thereof. The execution and delivery of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Preferred Shares, the AIR and the Warrants and the reservation
for issuance and the issuance of the Preferred Shares, Warrants, Conversion
Shares and the Warrant Shares issuable upon conversion or exercise thereof, as
the case may be, have been duly authorized by the Company’s Board of Directors
and no further consent or authorization is required by the Company, its Board of
Directors or its stockholders. This Agreement and the other Transaction
Documents of even date herewith have been duly executed and delivered by the
Company, and constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies. As of the Closing, the Transaction Documents
dated after the date hereof and required to have been executed and delivered
with respect to the Closing shall have been duly executed and delivered by the
Company, and shall constitute the legal, valid and binding obligations of the
Company enforceable against the Company in accordance with their respective
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of applicable creditor’s rights and remedies. As of the Closing, the Certificate
of Designations in the form attached as Exhibit A shall have been filed on or
prior to the Closing Date with the Secretary of State of the State of Delaware
and shall be in full force and effect, enforceable against the Company in with
its terms and shall not have been amended.

(c)

Issuance of Securities. The Preferred Shares, AIR and Warrants are duly
authorized and, upon issuance in accordance with the terms hereof, shall be
validly issued, free from all taxes, liens and charges with respect to the issue
thereof, and the Preferred Shares shall be entitled to the rights and
preferences as set forth in the Certificate of Designations. As of the Closing,
a number of shares of Common Stock shall have been duly authorized and reserved
for issuance which equals 100% of the maximum number of shares of Common Stock
issuable upon conversion or exercise of the Preferred Shares and Warrants to be
issued at the Closing and upon exercise of the AIR. Upon conversion or exercise
in accordance with the Preferred Shares or the Warrants, as the case may be, the
Conversion Shares and the Warrant Shares, respectively, will be validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with
respect to the issue thereof, with the holders being entitled to all rights
accorded to a holder of Common Stock. Assuming the accuracy of each of the
representations and warranties of Buyer contained in Section 2, the issuance by
the Company of the Securities is exempt from registration under the 1933 Act.

(d)

No Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of
the Preferred Shares, AIR and Warrants and reservation for issuance and issuance
of the Conversion Shares and the Warrant Shares) will not (i) result in a
violation of the certificate of incorporation, any certificate of designations,
preferences and rights of any outstanding series of preferred stock or bylaws of
the Company or any Subsidiary, (ii) conflict with, or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the
Company or any of its Subsidiaries is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
American Stock Exchange (the “Principal Market”)) applicable to the Company or
any of its Subsidiaries.

(e)

Consents. All consents, authorizations, orders, filings and registrations which
the Company is required as of the Closing Date to obtain to execute, deliver or
perform any of its obligations under or contemplated by the Transaction
Documents in accordance with their terms have been obtained or effected on or
prior to the Closing Date. The Company and its Subsidiaries are unaware of any
facts or circumstances which might reasonably be expected to prevent the Company
from obtaining or effecting any of the foregoing. The Company is not in
violation of the listing requirements of the Principal Market and has no
knowledge of any facts which could reasonably lead to delisting or suspension of
the Common Stock in the foreseeable future.

(f)

Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that each Buyer is acting solely in the capacity of an
arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby, and that no Buyer is an officer or
director of the Company. The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated hereby and thereby, and any advice given by a Buyer or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to such
Buyer’s purchase of the Securities. The Company further represents to each Buyer
that the Company’s decision to enter into the Transaction Documents has been
based solely on the independent evaluation by the Company and its
representatives.

(g)

No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of
its affiliates, nor any Person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities. The
Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, or brokers’ commissions (other than for persons engaged
by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim. The Company acknowledges that it has engaged Griffin Securities as
placement agent (the “Agent”) in connection with the sale of the Preferred
Shares and the Warrants. Other than the Agent, the Company has not engaged any
placement agent or other agent in connection with the sale of the Preferred
Shares, the AIR and the Warrants.

(h)

No Integrated Offering. None of the Company, its Subsidiaries, any of their
affiliates, and any Person acting on 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 require registration of any of the
Securities under the 1933 Act or cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the 1933 Act or
any applicable stockholder approval provisions, including, without limitation,
under the rules and regulations of the Principal Market. None of the Company,
its Subsidiaries, their affiliates and any Person acting on their behalf will
take any action or steps referred to in the preceding sentence that would
require registration of any of the Securities under the 1933 Act (other than
entering into the Transaction Documents) or cause the offering of the Securities
to be integrated with other offerings.

(i)

Dilutive Effect. The Company understands and acknowledges that the number of
Conversion Shares issuable upon conversion of the Preferred Shares and the
Warrant Shares issuable upon exercise of the Warrants will increase in certain
circumstances. The Company further acknowledges that, subject to the terms and
conditions of the Transaction Documents, its obligation to issue Conversion
Shares upon conversion of the Preferred Shares in accordance with this Agreement
and the Preferred Shares and its obligation to issue the Warrant Shares upon
exercise of the Warrants in accordance with this Agreement and the Warrants is,
in each case, absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.

(j)

Application of Takeover Protections; Rights Agreement. The Company and its board
of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Certificate of Incorporation (as defined in
Section 3(q)) or the laws of the state of its incorporation which is or could
become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities. The Company has not
adopted a stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of Common Stock or a change in control of
the Company.

(k)

SEC Documents; Financial Statements. Since February 1, 2002, the Company has
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the
foregoing filed prior to the date hereof, or in connection with the Closing
subsequent to the date hereof, filed prior to the date of the Closing, and all
exhibits included therein and financial statements and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
“SEC Documents”). The Company has delivered to the Buyers or their respective
representatives true, correct and complete copies of the SEC Documents not
available on the EDGAR system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the 1934 Act and the
rules and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, 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. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii)
in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other written information, if any, provided by or on behalf of
the Company to the Buyers which is not included in the SEC Documents contains
any untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made and, taken together with the
information set forth in the SEC Documents, not misleading.

(l)

Absence of Certain Changes. Since December 31, 2003, there has been no material
adverse change and no material adverse development in the business, properties,
operations, condition (financial or otherwise), results of operations or
prospects of the Company or its Subsidiaries. Except as disclosed in Schedule
3(l), since December 31, 2003, the Company has not (i) declared or paid any
dividends, (ii) sold any assets, individually or in the aggregate, in excess of
$500,000 outside of the ordinary course of business or (iii) had capital
expenditures, individually or in the aggregate, in excess of $500,000. The
Company has not taken any steps to seek protection pursuant to any bankruptcy
law nor does the Company have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy proceedings or any actual
knowledge of any fact which would reasonably lead a creditor to do so. The
Company is not as of the date hereof, and after giving effect to the
transactions contemplated hereby to occur at the Closing, will not be Insolvent
(as defined below). For purposes of this Section 3(l), “Insolvent” means (i) the
present fair saleable value of the Company’s assets is less than the amount
required to pay the Company’s total indebtedness, contingent or otherwise, (ii)
the Company is unable to pay its debts and liabilities, subordinated, contingent
or otherwise, as such debts and liabilities become absolute and matured, (iii)
the Company intends to incur or believes that it will incur debts that would be
beyond its ability to pay as such debts mature or (iv) the Company has
unreasonably small capital with which to conduct the business in which it is
engaged as such business is now conducted and is proposed to be conducted. For
the purposes of this Section 3(l) to the extent a liability is deemed
“contingent” in the determination of whether the Company is Insolvent, any
assets that would be realized upon the occurrence of the contingency and
satisfaction of the contingent liability (by way of example, such as the right
of the Company to realize subrogation, reimbursement or contribution rights
after fully satisfying obligations to a third party), shall be included as
assets in such determination.

(m)

No Undisclosed Events, Liabilities, Developments or Circumstances. To the best
of the Company’s knowledge, no event, liability, development or circumstance has
occurred or exists, or is contemplated to occur, with respect to the Company or
its Subsidiaries or their respective business, properties, prospects, operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws on a registration statement on Form S-1 filed
with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced.

(n)

Conduct of Business; Regulatory Permits. Neither the Company nor its
Subsidiaries is in violation of any term of or in default under its Certificate
of Incorporation, any Certificate of Designations, Preferences and Rights of any
outstanding series of preferred stock of the Company or Bylaws or their
organizational charter or bylaws, respectively (except for violations that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or its Subsidiaries, and neither the Company nor any
of its Subsidiaries will conduct its business in violation of any of the
foregoing, except for possible violations which could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation of any
of the material rules, regulations or requirements of the Principal Market and
has no knowledge of any facts or circumstances which would reasonably lead to
delisting or suspension of the Common Stock by the Principal Market in the
foreseeable future. Since July 1, 2003, (i) the Common Stock has been designated
for quotation or listed on the Principal Market, (ii) trading in the Common
Stock has not been suspended by the SEC or the Principal Market and (iii) the
Company has received no communication, written or oral, from the SEC or the
Principal Market regarding the suspension or delisting of the Common Stock from
the Principal Market. The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits could
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

(o)

Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor
any director, officer, agent, employee or other Person acting on behalf of the
Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

(p)

Transactions With Affiliates. Except as set forth in the SEC Documents, none of
the officers, directors or employees of the Company is presently a party to any
transaction with the Company or any of its Subsidiaries (other than for ordinary
course services as employees, officers or 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 such officer, director or employee or, to the
knowledge of the Company, any corporation, partnership, trust or other entity in
which any such officer, director, or employee has a substantial interest or is
an officer, director, trustee or partner.

(q)

Equity Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of (x) 25,000,000 shares of Common Stock, of which as of
the date hereof, 10,646,690 are issued and outstanding (with 25,800 additional
treasury shares), 5,910,367 shares are reserved for issuance pursuant to the
Company’s stock option and purchase plans and 1,362,500 shares are reserved for
issuance pursuant to securities (other than the aforementioned options, the
Preferred Shares and the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock, and (y) 20,000 shares of preferred
stock designated as Series A Convertible Preferred Stock, of which as of the
date hereof, 9,500 are issued and outstanding. All of such outstanding shares
have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as set forth in the SEC Documents: (i) no shares of the
Company’s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (ii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, or exercisable or exchangeable for, any
shares of capital stock of the Company or any of its Subsidiaries; (iii) there
are no outstanding debt securities, notes, credit agreements, credit facilities
or other agreements, documents or instruments evidencing Indebtedness (as
defined in Section 3(r)) of the Company or any of its Subsidiaries or by which
the Company or any of its Subsidiaries is or may become bound; (iv) there are no
financing statements securing obligations in any material amounts, either singly
or in the aggregate, filed in connection with the Company; (v) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is
obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement); (vi) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to redeem a security of the Company or any
of its Subsidiaries; (vii) the Company does not have any stock appreciation
rights or “phantom stock” plans or agreements or any similar plan or agreement;
and (viii) the Company and its Subsidiaries have no liabilities or obligations
required to be disclosed in the SEC Documents (as defined herein) but not so
disclosed in the SEC Documents, other than those incurred in the ordinary course
of the Company’s or its Subsidiaries’ respective businesses and which,
individually or in the aggregate, do not or could not reasonably be expected to
have a Material Adverse Effect. There are no securities or instruments
containing anti-dilution, pre-emptive or similar provisions that will be
triggered by the issuance of the Securities. The Company has furnished to the
Buyer true, correct and complete copies of the Company’s Amended and Restated
Certificate of Incorporation, as amended and as in effect on the date hereof
(together with any certificate of designations of any outstanding series of
preferred stock of the Company, the “Certificate of Incorporation”), and the
Company’s Amended and Restated Bylaws, as amended and as in effect on the date
hereof (the “Bylaws”), and the terms of all securities convertible into, or
exercisable or exchangeable for, Common Stock and the material rights of the
holders thereof in respect thereto.

(r)

Indebtedness and Other Contracts. Neither the Company nor any of its
Subsidiaries (i) has any outstanding Indebtedness (as defined below) other than
(A) as disclosed in the SEC Documents or (B) aggregate Indebtedness of less than
$100,000 to any individual creditor, (ii) is in violation of any term of or in
default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults could not reasonably be
expected to result, individually or in the aggregate, in a Material Adverse
Effect, or (iii) is a party to any contract, agreement or instrument relating to
any Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect. For purposes of
this Agreement: (x) “Indebtedness” of any Person means, without duplication, and
not including trade payables entered into in the ordinary course of business (A)
all indebtedness for borrowed money, (B) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (C) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses,
(E) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all
monetary obligations under any leasing or similar arrangement which, in
connection with generally accepted accounting principles, consistently applied
for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any mortgage, lien, pledge, charge, security
interest or other encumbrance (each, a “Lien”) upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; (y) “Contingent Obligation” means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; and
(z) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

(s)

Absence of Litigation. Except as set forth in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation, whether criminal, civil or
otherwise, before or by the Principal Market, any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company, the
Common Stock or any of the Company’s Subsidiaries or any of the Company’s or the
Company’s Subsidiaries’ officers or directors in their capacities as such,
except such as are not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. To the knowledge of the Company, none of
the directors or officers of the Company have been a party to any securities
related litigation during the past five years, other than as disclosed in the
SEC Documents.

(t)

Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as management of the Company believes to be prudent and customary in the
businesses in which the Company and its Subsidiaries are engaged. Neither the
Company nor any such Subsidiary has been refused any insurance coverage sought
or applied for and neither the Company nor any such 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 at a cost that could not have a
Material Adverse Effect.

(u)

Employee Relations. Except as set forth in the SEC Documents, neither the
Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or employs any member of a union. No executive officer of the Company
(as defined in Rule 501(f) of the 1933 Act) has notified the Company that such
officer intends to leave the Company or otherwise terminate such officer’s
employment with the Company. No executive officer of the Company, 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, non-competition agreement, or any other
contract or agreement or any restrictive covenant, and, to the knowledge of the
Company, the continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any material liability with
respect to any of the foregoing matters. The Company and its Subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance could
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

(v)

Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens, encumbrances and defects
such as are described in Schedule 3(v) or such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
Subsidiaries.

(w)

Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
other intellectual property rights (“Intellectual Property Rights”) necessary to
conduct their respective businesses as now conducted, except where the failure
to own or possess such rights or licenses could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. None of the
Company’s Intellectual Property Rights have expired or terminated, or are
expected to expire or terminate within two years from the date of this
Agreement, except for those which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. The Company does
not have any knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company, being threatened,
against the Company or its Subsidiaries regarding its Intellectual Property
Rights. The Company does not have any knowledge of any facts or circumstances
which might give rise to any of the foregoing infringements or claims, actions
or proceedings. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties.

(x)

Environmental Laws. Except as set forth in the SEC Documents, the Company and
its Subsidiaries (i) are in compliance with any and all Environmental Laws (as
hereinafter defined), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions
of any such permit, license or approval where, in each of the foregoing clauses
(i), (ii) and (iii), the failure to so comply could be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. The term
“Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, laws relating to emissions, discharges,
releases or threatened releases of chemicals, pollutants, contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders, permits,
plans or regulations issued, entered, promulgated or approved thereunder.

(y)

Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive
dividends and distributions on, all capital securities of its material
Subsidiaries as owned by the Company or such Subsidiary.

(z)

Tax Status. The Company and each of its Subsidiaries (i) has made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has paid all taxes and
other governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and (iii) has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.

(aa)

Internal Accounting Controls. The Company and each of its 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 generally
accepted accounting principles and to maintain asset and liability
accountability, (iii) access to assets or incurrence of liabilities is permitted
only in accordance with management’s general or specific authorization and (iv)
the recorded accountability for assets and liabilities is compared with the
existing assets and liabilities at reasonable intervals and appropriate action
is taken with respect to any difference. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15 under the 1934
Act) that seeks to ensure that information required to be disclosed by the
Company in the reports that it files or submits under the 1934 Act is recorded,
processed, summarized and reported, within the time periods specified in the
rules and forms of the SEC, including, without limitation, controls and
procedures designed in to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the 1934 Act is
accumulated and communicated to the Company’s management, including its
principal executive officer or officers and its principal financial officer or
officers, as appropriate, to allow timely decisions regarding required
disclosure.

(bb)

Sarbanes-Oxley Act. To the best of the Company’s knowledge, the Company is in
compliance with any and all applicable requirements of the Sarbanes-Oxley Act of
2002 that are effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the SEC thereunder that are effective as of the
date hereof, except where such noncompliance could not have a Material Adverse
Effect.

(cc)

Investment Company Status. The company is not, and upon consummation of the sale
of the Securities will not be, an “investment company,” a company controlled by
an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company” as such terms are defined
in the Investment Company Act of 1940, as amended.

(dd)

Form S-3 Eligibility. The Company is eligible to register the Securities for
resale by the Buyers using Form S-3 promulgated under the Securities Act of
1933, as amended.

4.

COVENANTS.

(a)

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

(b)

Form D and Blue Sky. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Buyer promptly after such filing. The Company shall, on or before the Closing
Date, 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
Buyers at the Closing pursuant to this Agreement under applicable securities or
“Blue Sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. The Company shall make all
filings and reports relating to the offer and sale of the Securities required
under applicable securities or “Blue Sky” laws of the states of the United
States following the Closing Date.

(c)

Reporting Status. Until the date on which the Investors (as defined in the
Registration Rights Agreement) shall have sold all the Conversion Shares and
Warrant Shares and none of the Preferred Shares or Warrants or AIR is
outstanding, (the “Reporting Period”), the Company shall file all reports
required to be filed with the SEC pursuant to the 1934 Act, and the Company
shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would
otherwise permit such termination.

(d)

Use of Proceeds. The Company will use the proceeds from the sale of the
Securities for working capital purposes and not for the repayment of any
outstanding Indebtedness of the Company or any of its Subsidiaries in an amount
greater than $2,000,000 or redemption or repurchase of any of its equity
securities, except in connection with an acquisition of assets or securities by
the Company not for capital raising purposes.

(e)

Financial Information. The Company agrees to send the following to each Investor
during the Reporting Period (i) unless the following are filed with the SEC
through EDGAR and are available to the public through the EDGAR system, within
one (1) Business Day after the filing thereof with the SEC, a copy of its Annual
Reports on Form 10-K, its Quarterly Reports on Form 10-Q, any Current Reports on
Form 8-K and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release thereof,
facsimile copies of all press releases issued by the Company or any of its
Subsidiaries, and (iii) copies of any notices and other information made
available or given to the stockholders of the Company generally,
contemporaneously with the making available or giving thereof to the
stockholders. As used herein, “Business Day” means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.

(f)

Listing. The Company shall promptly secure the listing of all of the Registrable
Securities (as defined in the Registration Rights Agreement) upon the Principal
Market (subject to official notice of issuance) and shall maintain, so long as
any other shares of Common Stock shall be so listed, such listing of all
Registrable Securities from time to time issuable under the terms of the
Transaction Documents. The Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market. Neither the Company nor any
of its Subsidiaries shall take any action which could be reasonably expected to
result in the delisting or suspension of the Common Stock on the Principal
Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section 4(f).

(g)

Fees. At the Closing, the Company shall pay the reasonable fees and expenses of
Alexandra Global Master Fund Ltd. (“Alexandra”) incurred in connection with the
preparation and negotiation of the Transaction Documents in an amount not to
exceed $100,000. In lieu of the foregoing payment, Alexandra may withhold such
amount from its Purchase Price at the Closing. The Company shall be responsible
for the payment of any placement agent’s fees, financial advisory fees, or
broker’s commissions relating to or arising out of the transactions contemplated
hereby, including, without limitation, any fees or commissions payable to the
Agent. The Company shall pay, and hold each Buyer harmless against, any
liability, loss or expense (including, without limitation, reasonable attorney’s
fees and out-of-pocket expenses) arising in connection with claim relating to
any such payment. Except as otherwise set forth in this Agreement or in the
Registration Rights Agreement, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the Buyers.

(h)

Pledge of Securities. The Company acknowledges and agrees that the Securities
may be pledged by an Investor (as defined in the Registration Rights Agreement)
in connection with a bona fide margin agreement or other loan or financing
arrangement that is secured by such Securities; provided, however, that if such
other loan or financing arrangement results in a transfer of the Securities to a
transferee other than an institutional lender, such transferee shall not be
entitled to enforce the covenants set forth in Article 4 hereof against the
Company. The pledge of the Securities shall not be deemed to be a transfer, sale
or assignment of the Securities hereunder, and no Investor effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document, including, without limitation, Section 2(f) of this
Agreement; provided that an Investor and its pledgee shall be required to comply
with the provisions of Section 2(f) hereof in order to effect a sale, transfer
or assignment of Securities to such pledgee. The Company hereby agrees to
execute and deliver such documentation as a pledgee of Securities may reasonably
request in connection with a pledge of such Securities to such pledgee by an
Investor.

(i)

Disclosure of Transactions and Other Material Information. On or before 8:30
a.m., New York City Time, on the first Business Day following execution of this
Agreement, the Company shall file a Current Report on Form 8-K describing the
terms of the transactions contemplated by the Transaction Documents in the form
required by the 1934 Act, and attaching the material Transaction Documents
(including, without limitation, this Agreement, the form of the Certificate of
Designations, the form of Warrant, the form of AIR and the form of the
Registration Rights Agreement) as exhibits to such filing (including all
attachments, the “8-K Filing”). From and after the filing of the 8-K Filing with
the SEC, no Buyer shall be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of its respective
officers, directors, employees or agents, that is not disclosed in the 8-K
Filing unless such Buyer is subject to an agreement to keep such information
confidential. The Company shall not, and shall cause each of its Subsidiaries
and its and each of their respective officers, directors, employees and agents,
not to, provide any Buyer with any material nonpublic information regarding the
Company or any of its Subsidiaries from and after the filing of the 8-K Filing
with the SEC without the express written consent of such Buyer. In the event of
a breach of the foregoing covenant by the Company, any of its Subsidiaries, or
any of its or their respective officers, directors, employees and agents, in
addition to any other remedy provided herein or in the Transaction Documents, a
Buyer shall have the right to make a public disclosure, in the form of a press
release, public advertisement or otherwise, of such material nonpublic
information without the prior approval by the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees or agents. No Buyer
shall have any liability to the Company, its Subsidiaries, or any of its or
their respective officers, directors, employees, stockholders or agents for any
such disclosure. Subject to the foregoing, neither the Company nor any Buyer
shall issue any press releases or any other public statements with respect to
the transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of any Buyer, to make any press release
or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by applicable law and regulations, including the applicable rules and
regulations of the Principal Market (provided that in the case of clause (i)
each Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release).

(j)

Restriction on Redemption and Cash Dividends. So long as any Preferred Shares
are outstanding, the Company shall not, directly or indirectly, redeem, or
declare or pay any cash dividend or distribution on, the Common Stock without
the prior express written consent of the holders of at least a majority of the
Preferred Shares.

(k)

Additional Securities; Additional Indebtedness; Additional Registration
Statements. For so long as any Buyer beneficially owns any Securities, the
Company will not issue any Preferred Shares other than to the Buyers as
contemplated hereby. Until such time as the Registration Statement (as defined
in the Registration Rights Agreement) is declared effective by the SEC, the
Company shall not issue any other securities or incur or suffer to exist any
Indebtedness other than Permitted Indebtedness and Permitted Securities
described on Schedule 4(k) and Excluded Securities (as defined in the
Certificate of Designations) without the prior express written consent of the
holders of not less than a majority of the aggregate face amount of the then
outstanding Preferred Shares, except that the Company may issue up to 500,000
shares of Common Stock for a purchase price of $10.00 per share and 50,000
warrants with any exercise price of $14 per share, to Carl DeSantis or an
affiliate of Carl DeSantis without such approval. Until such time as the
Registration Statement (as defined in the Registration Rights Agreement) is
declared effective by the SEC, the Company will not file a registration
statement under the 1933 Act relating to securities that are not the Securities.
For purposes of this Agreement, “Permitted Indebtedness” means Indebtedness of
the Company and the Subsidiaries in an amount not to exceed at any one time
outstanding $10,000,000 in the aggregate.

(l)

Variable Securities. So long as any Preferred Shares or AIRs are outstanding,
the Company shall not, in any manner, issue or sell any rights, warrants or
options to subscribe for or purchase Common Stock or directly or indirectly
convertible into or exchangeable or exercisable for Common Stock at a price
which varies or may vary with the market price of the Common Stock, including by
way of one or more reset(s) to any fixed price unless the conversion, exchange
or exercise price of any such security cannot be less than the then applicable
Conversion Price (as defined in the Certificate of Designations) with respect to
the Common Stock under any Preferred Share.

(m)

Corporate Existence. So long as any Buyer beneficially owns any Securities, the
Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company’s assets, except in the event of a merger or
consolidation or sale of all or substantially all of the Company’s assets, where
the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose common stock
is quoted on or listed for trading on the Principal Market, the New York Stock
Exchange or the American Stock Exchange.

(n)

Reservation of Shares. The Company shall take all action necessary to at all
times have authorized, and reserved for the purpose of issuance, no less than
100% of the sum of (1) the number of shares of Common Stock issuable upon
conversion of the Preferred Shares issued at the Closing and upon exercise of
the AIR and (2) the number of shares of Common Stock issuable upon exercise of
the Warrants issued at the Closing and upon exercise of the AIR.

(o)

Conduct of Business. The business of the Company and its Subsidiaries shall not
be conducted in violation of any law, ordinance or regulation of any
governmental entity, except where such violations could not result, either
individually or in the aggregate, in a Material Adverse Effect.

(p)

Proxy Statement. Within fifteen (15) days from and after the time that the
number of shares of Common Stock issued and issuable pursuant to the Transaction
Documents exceeds 1,500,000 (subject to adjustment for stock splits, stock
dividends, recapitalizations, combinations, reverse stock splits or other
similar events) (the “Trigger Date”), the Company shall provide each stockholder
entitled to vote at a meeting of stockholders of the Company, which shall not be
later than sixty (60) days after the Trigger Date (the “Stockholder Meeting
Deadline”), a proxy statement, which has been previously reviewed by the Buyers
and a counsel of their choice, soliciting each such stockholders affirmative
vote at such stockholder meeting for approval of the Company’s issuance of all
of the Securities as described in the Transaction Documents in accordance with
applicable law and the rules and regulations of the Principal Market (such
affirmative approval being referred to herein as the ‘“Stockholder Approval”),
and the Company shall use its best efforts to solicit its stockholders’ approval
of such issuance of the Securities and to cause the Board of Directors of the
Company to recommend to the stockholders that they approve such proposal. The
Company shall be obligated to seek to obtain the Stockholder Approval by the
Stockholder Meeting Deadline.

(q)

Additional Issuances of Securities.

(i)

From the date hereof until fifteen (15) days after the date the Registration
Statement (as defined in the Registration Rights Agreement) is declared
effective (such date of effectiveness, the “Effective Date”), other than the
issuance of up to 500,000 shares of Common Stock for a purchase price of $10.00
per share and 50,000 warrants with any exercise price of $14 per share, to Carl
DeSantis or an affiliate of Carl DeSantis, the Company will not, directly or
indirectly, offer, sell, grant any option to purchase, or otherwise dispose of
(or announce any offer, sale, grant or any option to purchase or other
disposition of) any of its or the Subsidiaries’ equity or equity equivalent
securities, including without limitation any debt, preferred stock or other
instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for Common Stock
or Common Stock Equivalents (any such offer, sale, grant, disposition or
announcement being referred to as a “Subsequent Placement”). “Common Stock
Equivalents” means, collectively, Options and Convertible Securities, each as
defined in the Certificate of Designations.

(ii)

From the Effective Date until the one year anniversary of the Closing Date, the
Company will not, directly or indirectly, effect any Subsequent Placement unless
the Company shall have first complied with this Section 4(q)(ii).

    (1)        The Company shall deliver to each Buyer a written notice (the
“Offer”) of any proposed or intended issuance or sale or exchange of the
securities being offered (the “Offered Securities”) in a Subsequent Placement,
which Offer shall (w) identify and describe the Offered Securities, (x) describe
the price and other terms upon which they are to be issued, sold or exchanged,
and the number or amount of the Offered Securities to be issued, sold or
exchanged, (y) identify the persons or entities (if known) to which or with
which the Offered Securities are to be offered, issued, sold or exchanged and
(z) offer to issue and sell to or exchange with Buyers a pro rata portion of the
greater of (A) 20% of the Offered Securities and (B) $5,000,000, in each case
allocated among the Buyers (a) based on such Buyer’s pro rata portion of the
aggregate Preferred Shares purchased hereunder (the “Basic Amount”), and (b)
with respect to each Buyer that elects to purchase its Basic Amount, any
additional portion of the Offered Securities attributable to the Basic Amounts
of other Buyers as such Buyer shall indicate it will purchase or acquire should
the other Buyers subscribe for less than their Basic Amounts (the
“Undersubscription Amount”).

    (2)        To accept an Offer, in whole or in part, a Buyer must deliver a
written notice to the Company prior to the end of the five (5) Business Day
period after receipt of the Offer (the “Offer Period”), setting forth the
portion of the Buyer’s Basic Amount that such Buyer elects to purchase and, if
such Buyer shall elect to purchase all of its Basic Amount, the
Undersubscription Amount, if any, that such Buyer elects to purchase (in either
case, the “Notice of Acceptance”). If the Basic Amounts subscribed for by all
Buyers are less than the total of all of the Basic Amounts, then each Buyer who
has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the
Undersubscription Amount it has subscribed for; provided, however, that if the
Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the “Available
Undersubscription Amount”), each Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to
the total Basic Amounts of all Buyers that have subscribed for Undersubscription
Amounts, subject to rounding by the Board of Directors to the extent its deems
reasonably necessary.

    (3)        The Company shall have thirty (30) Business Days from the
expiration of the Offer Period above to offer, issue, sell or exchange all or
any part of such Offered Securities as to which a Notice of Acceptance has not
been given by the Buyers (the “Refused Securities”), but only to the offerees
described in the Offer (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that
are not more favorable to the acquiring person or persons or less favorable to
the Company than those set forth in the Offer.

    (4)        In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in Section 4(q)(ii)(3) above), then each Buyer may, at its sole option and in
its sole discretion, reduce the number or amount of the Offered Securities
specified in its Notice of Acceptance to an amount that shall be not less than
the number or amount of the Offered Securities that the Buyer elected to
purchase pursuant to Section 4(q)(ii)(2) above multiplied by a fraction, (i) the
numerator of which shall be the number or amount of Offered Securities the
Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Buyers pursuant to Section 4(q)(ii)(3) above
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Buyer so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Buyers in accordance with Section 4(q)(ii)(1) above.

    (5)        Upon the closing of the issuance, sale or exchange of all or less
than all of the Refused Securities, the Buyers shall acquire from the Company,
and the Company shall issue to the Buyers, the number or amount of Offered
Securities specified in the Notices of Acceptance, as reduced pursuant to
Section 4(q)(ii)(3) above if the Buyers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Buyers of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Buyers of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Buyers and their
respective counsel.

    (6)        Any Offered Securities not acquired by the Buyers or other
persons in accordance with Section 4(q)(ii)(3) above may not be issued, sold or
exchanged until they are again offered to the Buyers under the procedures
specified in this Agreement.

(iii)

The restrictions contained in subsections (ii) and (iii) of this Section 4(r)
shall not apply to Excluded Securities (as defined in the Certificate of
Designations).

(r)

Indebtedness. Prior to the Effective Date, without the prior written consent of
holders of a majority of the Preferred Shares outstanding, the Company shall not
incur or suffer to exist any additional Indebtedness other than Permitted
Indebtedness; provided that such Permitted Indebtedness incurred shall not
include any Indebtedness that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exerciseable for Common Stock
or Common Stock Equivalents.

(s)

Lock-Up Agreements. The Company shall obtain from each director and executive
officer of the Company and its Subsidiaries, executed lock-up agreements
substantially in form of Exhibit I to this Agreement, prohibiting such directors
and officers from, directly or indirectly, offering, selling, granting any
option to purchase, or otherwise dispose of (or announcing any offer, sale,
grant or any option to purchase or other disposition of) any of the Company’s or
its Subsidiaries’ equity or equity equivalent securities, including without
limitation any debt, preferred stock or other instrument or security that is, at
any time during its life and under any circumstances, convertible into or
exchangeable or exercisable for Common Stock or Common Stock Equivalents.
Notwithstanding the foregoing, such directors and executive officers shall not
be prohibited from conducting sales conducted as program trades up to an
aggregate of $500,000.

5.

REGISTER; TRANSFER AGENT INSTRUCTIONS.

(a)

Register. The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each
holder of Preferred Shares, AIR or Warrants), a register for the Preferred
Shares, AIR and the Warrants, in which the Company shall record the name and
address of the Person in whose name the Preferred Shares, AIR and the Warrants
have been issued (including the name and address of each transferee), the face
amount of Preferred Shares held by such Person, the number of Warrant Shares
issuable upon exercise of the Warrants held by such Person and the number of
Preferred Shares and the number of Warrants issuable upon exercise of the AIR
held by such Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its legal
representatives.

(b)

Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent, and any subsequent transfer agent, to issue certificates or
credit shares to the applicable balance accounts at DTC, registered in the name
of each Buyer or its respective nominee(s), for the Conversion Shares and the
Warrant Shares in such amounts as specified from time to time by each Buyer to
the Company upon conversion of the Preferred Shares or exercise of the Warrants
in the form of Exhibit E attached hereto (the “Irrevocable Transfer Agent
Instructions”). The Company warrants that no instruction other than the
Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and
stop transfer instructions to give effect to Sections 2(f) and 2(g) hereof, will
be given by the Company to its transfer agent, and that the Securities shall
otherwise be freely transferable on the books and records of the Company as and
to the extent provided in this Agreement and the other Transaction Documents. If
a Buyer effects a sale, assignment or transfer of the Securities in accordance
with Section 2(f), the Company shall permit the transfer and shall promptly
instruct its transfer agent to issue one or more certificates or credit shares
to the applicable balance accounts at DTC in such name and in such denominations
as specified by such Buyer to effect such sale, transfer or assignment. In the
event that such sale, assignment or transfer involves Conversion Shares or
Warrant Shares sold, assigned or transferred pursuant to an effective
registration statement or in compliance with Rule 144, the transfer agent shall
issue such Securities to the Buyer, assignee or transferee, as the case may be,
without any restrictive legend. The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to a Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations
under this Section 5(b) will be inadequate and agrees, in the event of a breach
or threatened breach by the Company of the provisions of this Section 5(b), that
a Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required.

6.

CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL. The obligation of the Company
hereunder to issue and sell the Preferred Shares and the related AIR and
Warrants to each Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing each Buyer with prior
written notice thereof:

(a)

Such Buyer and each other Buyer shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company

(b)

Such Buyer and each other Buyer shall have delivered to the Company the Purchase
Price (less, in the case of Alexandra, the amounts withheld pursuant to Section
4(g)) for the Preferred Shares, AIR and the related Warrants being purchased by
such Buyer and each other Buyer at the Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.

(c)

The representations and warranties of such Buyer shall be true and correct as of
the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date),
and such Buyer shall have performed, satisfied and complied in all material
respects (except for covenants, agreements and conditions that are qualified by
materiality, which shall be complied with in all respects) with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by such Buyer at or prior to the Closing Date.

7.

CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE. The obligation of each Buyer
hereunder to purchase the Preferred Shares, AIR and the related Warrants at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for each Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion
by providing the Company with prior written notice thereof:

(a)

The Company shall have executed and delivered to such Buyer (i) each of the
Transaction Documents and (ii) certificates representing the Preferred Shares
(in such denominations as such Buyer shall request), the related Warrants (in
such amounts as such Buyer shall request) and the AIR (in such amounts as such
Buyer shall request) being purchased by such Buyer at the Closing pursuant to
this Agreement.

(b)

Such Buyer shall have received the opinion of Greenberg Traurig LLP, the
Company’s counsel, dated as of the Closing Date, in substantially the form of
Exhibit F attached hereto.

(c)

The Company shall have delivered to such Buyer a copy of the Irrevocable
Transfer Agent Instructions, in the form of Exhibit E attached hereto, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.

(d)

The Company shall have delivered to such Buyer a certificate evidencing the
incorporation and good standing of the Company in such corporation’s state of
incorporation issued by the Secretary of State of such state of incorporation as
of a date within 10 days of the Closing Date.

(e)

The Company shall have delivered to such Buyer a certificate evidencing the
Company’s qualification as a foreign corporation and good standing issued by the
Secretary of State of the State of New Jersey as of a date within 10 days of the
Closing Date.

(f)

The Company shall have delivered to such Buyer a certified copy of the
Certificate of Incorporation as certified by the Secretary of State of the State
of Delaware within 10 days of the Closing Date.

(g)

The Company shall have delivered to such Buyer a certificate in the form
attached hereto as Exhibit G, executed by an executive officer of the Company
and dated as of the Closing Date, as to (i) the resolutions consistent with
Section 3(b) as adopted by the Company’s Board of Directors in a form reasonably
acceptable to such Buyer (the “Resolutions”), (ii) the Certificate of
Incorporation and (iii) the Bylaws, each as in effect at the Closing.

(h)

The representations and warranties of the Company shall be true and correct as
of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that speak as of a specific date) and
the Company shall have performed, satisfied and complied in all material
respects (except for covenants, agreements and conditions that are qualified by
materiality, which shall be complied with in all respects) with the covenants,
agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied with by the Company at or prior to the Closing Date. Such
Buyer shall have received a certificate, executed by the Chief Executive Officer
of the Company, dated as of the Closing Date, to the foregoing effect and as to
such other matters as may be reasonably requested by such Buyer in the form
attached hereto as Exhibit H.

(i)

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

(j)

The Company shall have delivered to such Buyer the Lock-up Agreements, each in
the form attached hereto as Exhibit I, executed by each director and executive
officer of the Company; such agreements shall not have been amended or revoked;
and such agreements shall be in full force and effect.

(k)

The Common Stock (I) shall be designated for quotation or listed on the
Principal Market and (II) shall not have been suspended by the SEC or the
Principal Market from trading on the Principal Market nor shall suspension by
the SEC or the Principal Market have been threatened either (A) in writing by
the SEC or the Principal Market or (B) by falling below the minimum listing
maintenance requirements of the Principal Market.

(l)

The Company shall have obtained all governmental, regulatory or third party
consents and approvals, if any, necessary for the sale of the Securities.

(m)

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

8.

TERMINATION. In the event that the Closing shall not have occurred with respect
to a Buyer on or before five (5) days from the date hereof due to the Company’s
or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7
above (and the nonbreaching party’s failure to waive such unsatisfied
condition(s)), the nonbreaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party; provided, however, that
if this Agreement is terminated pursuant to this Section 8, due to the Company’s
failure or breach, the Company shall remain obligated to reimburse the Buyers
for the expenses described in Section 4(g) above.

9.

MISCELLANEOUS.

(a)

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

(b)

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

(c)

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

(d)

Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

(e)

Entire Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyers, the Company, their affiliates and Persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be amended other than by an
instrument in writing signed by the Company and the holders of at least a
majority of the Preferred Shares or, if prior to the Closing Date, the Company
and the Buyers listed on the Schedule of Buyers as being obligated to purchase
at least a majority of the Preferred Shares. No provision hereof may be waived
other than by an instrument in writing signed by the party against whom
enforcement is sought. No such amendment shall be effective to the extent that
it applies to less than all of the holders of the Preferred Shares then
outstanding. 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 also is offered to all of the parties to
the Transaction Documents, holders of Preferred Shares, AIR or holders of the
Warrants, as the case may be. The Company has not, directly or indirectly, made
any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in
the Transaction Documents.

(f)

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

If to the Company:

Integrated BioPharma, Inc.
225 Long Avenue
Hillside, New Jersey 07205
Telephone: (973)926-0816
Facsimile: (973) 926-1735
Attention: Eric Friedman, Chief Financial Officer

with a copy to:

Greenberg Traurig LLP
MetLife Building
200 Park Avenue
New York, New York 101166
Telephone: (212) 801-9200
Facsimile: (212) 801-6400
Attention: Alan I. Annex, Esq.

If to the Transfer Agent:

Continental Stock Transfer and Trust Company
17 Battery Place
New York, New York 10004
Telephone: (212) 509-4000
Facsimile: (212) 509-5150
Attention: Richard Viscovich

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers, with a copy (for informational purposes) to:

Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Telephone: (212) 756-2000
Facsimile: (212) 593-5955
Attention: Eleazer Klein, Esq.

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

(g)     Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Preferred Shares or the Warrants. The Company
shall not assign this Agreement or any rights or obligations hereunder without
the prior written consent of the holders of at least a majority of the Preferred
Shares then outstanding, including by merger or consolidation, except pursuant
to a Change of Control (as defined in the Certificate of Designations) with
respect to which the Company is in compliance with the Certificate of
Designations and Section 4(b) of the Warrants. A Buyer may assign some or all of
its rights hereunder without the consent of the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned
rights.

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

(i)     Survival. Unless this Agreement is terminated under Section 8, the
representations and warranties of the Company and the Buyers contained in
Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9
shall survive the Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder. After the 6
month anniversary following the Effective Date, all covenants contained in
Section 4 hereto shall only continue to apply to the extent that Buyer continues
to hold at least 25% of the Preferred Shares purchased on the Closing Date.

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

(k)     Indemnification. In consideration of each Buyer’s execution and delivery
of the Transaction Documents and acquiring the Securities thereunder and in
addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each other holder of the Securities and all of their stockholders,
partners, members, officers, directors, employees and direct or indirect
investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents (when made), (b) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents, or (c) any cause of action, suit or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative
action brought on behalf of the Company) and arising out of or resulting from
(i) the Company’s execution, delivery, performance or enforcement of the
Transaction Documents, (ii) any transaction financed or to be financed in whole
or in part, directly or indirectly, with the proceeds of the issuance of the
Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or
(iv) the status of such Buyer or holder of the Securities as an investor in the
Company (other than in connection with any action such Buyer may have taken). To
the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. Except as otherwise set forth herein, the mechanics and
procedures with respect to the rights and obligations under this Section 9(k)
shall be the same as those set forth in Section 6 of the Registration Rights
Agreement.

(l)     No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

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

(n)     Payment Set Aside. To the extent that the Company makes a payment or
payments to the Buyers hereunder or pursuant to any of the other Transaction
Documents or the Buyers enforce or exercise their rights hereunder or
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.

(o)     Independent Nature of Buyers’ Obligations and Rights. The obligations of
each Buyer under any Transaction Document are several and not joint with the
obligations of any other Buyer, and no Buyer shall be responsible in any way for
the performance of the obligations of any other Buyer under any Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Buyers 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 Buyer confirms that
it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer
shall be entitled to independently protect and enforce its rights, including,
without limitations, the rights arising out of this Agreement or out of any
other Transaction Documents, and it shall not be necessary for any other Buyer
to be joined as an additional party in any proceeding for such purpose.

[SIGNATURE PAGE FOLLOWS]

        IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

COMPANY: INTEGRATED BIOPHARMA, INC. By: /s/ E. Gerald Kay Name: E. Gerald Kay
Title:Chief Executive Officer

        IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

BUYERS: ALEXANDRA GLOBAL MASTER FUND LTD. By: /s/ Mikahil Filimonov Name:
Mikahil Filimonov Title: Director

        IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

BUYERS: IIG EQUITY OPPORTUNITIES FUND LTD By: Name: Title:

        IN WITNESS WHEREOF, each Buyer and the Company have caused their
respective signature page to this Securities Purchase Agreement to be duly
executed as of the date first written above.

BUYERS: TAKELEY INVESTMENTS LIMITED By: /s/ Clive Dakin Name: Clive Dakin Title:
President

SCHEDULE OF BUYERS

(1) (2) (3) (4) (5) (6) Buyer Address and Facsimile Number Aggregate Number of
Preferred Shares Aggregate Number of Initial Warrants Aggregate Number of AIRs
Legal Representatives Address and Facsimile Number Alexandra Global c/o
Alexandra Investment 650 325,000 325 Schulte Roth and Zabel LLP Master Fund Ltd.
Management LLC 919 Third Avenue 767 Third Avenue New York, New York 10022 39th
Floor Attention: Eleazer Klein, Esq. New York, New York 10017 Facsimile: (212)
593-5955 Attention: Slava Volman Telephone: (212) 756-2376 Facsimile: (212)
202-4293 Telephone: (212) 301-1818 IIG Equity Opportunities c/o IIG Capital LLC
50 25,000 25 Fund Ltd. 1500 Broadway, 17th Floor New York, New York 10036
Attention: Martin Silver Facsimile: (212) 806-5199 Residence: Bermuda Takeley
Investments Limited 9 Columbus Centre 150 75,000 75 Pelican Town Tortola British
Virgin Islands Attention: Clive Dakin Facsimile: (441) 292-2323 Telephone: (441)
295-1885 Residence: BVI

EXHIBITS

Exhibit A - Form of Certificate of Designations
Exhibit B - Form of Warrant
Exhibit C - Form of AIR
Exhibit D - Form of Registration Rights Agreement
Exhibit E - Form of Irrevocable Transfer Agent Instructions
Exhibit F - Form of Opinion
Exhibit G - Form of Secretary's Certificate
Exhibit H - Form of Officers Certificate
Exhibit I - Form of Lock-Up Agreement

SCHEDULES

Schedule 3(a) - Subsidiaries
Schedule 3(l) - Absence of Certain Changes
Schedule 3(v) - Title
Schedule 4(k) - Permitted Issuances of Securities