Exhibit 10.1
Execution Version
 
PREFERRED STOCK PURCHASE AGREEMENT
 
This Preferred Stock Purchase Agreement (“Agreement”) is entered into and
effective as of September 24, 2009 (“Effective Date”), by and among Advaxis,
Inc., a Delaware corporation (“Company”), and Optimus Capital Partners, LLC, a
Delaware limited liability company, dba Optimus Life Sciences Capital Partners,
LLC (including its designees, successors and assigns, “Investor”).
 
RECITALS
 
A.           The parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue to Investor, and Investor
shall purchase from the Company, from time to time as provided herein, up to
$5,000,000.00 of Preferred Shares (as defined below); and
 
B.           The offer and sale of the Securities provided for herein are being
made without registration under the Act (as defined below), in reliance upon the
provisions of Section 4(2) of the Act, Regulation D promulgated under the Act,
and such other exemptions from the registration requirements of the Act as may
be available with respect to any or all of the purchases of Securities to be
made hereunder.
 
AGREEMENT
 
In consideration of the premises, the mutual provisions of this Agreement, and
other good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, Company and Investor agree as follows:
 
ARTICLE 1
DEFINITIONS
 
In addition to the terms defined elsewhere in this Agreement: (a) capitalized
terms that are not otherwise defined herein have the meanings given to such
terms in the Certificate of Designations, and (b) the following terms have the
meanings indicated in this ARTICLE 1:
 
“Act” means the Securities Act of 1933, as amended.
 
“Action” has the meaning set forth in Section 4.1(j).
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
Person, as such terms are used in and construed under Rule 144 under the
Act.  With respect to Investor, without limitation, any Person owning, owned by,
or under common ownership with Investor, and any investment fund or managed
account that is managed on a discretionary basis by the same investment manager
as Investor will  be deemed to be an Affiliate.
 
“Agreement” means this Preferred Stock Purchase Agreement.
 
“Automatic Termination” has the meaning set forth in Section 3.1.

 
 

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“Certificate of Designations” means the certificate to be filed with the
Secretary of State of the State of Delaware, in the form attached hereto as
Exhibit B.
 
“Closing” means any one of (i) the Commitment Closing and (ii) each Tranche
Closing.
 
“Commitment Closing” has the meaning set forth in Section 2.2(a).
 
“Commitment Fee” means a non-refundable fee of $250,000.00, payable by the
Company to Investor, at the Company’s option, either (i) in cash, by wire
transfer of immediately available funds to an account designated by Investor,
with $125,000.00 due on or before October 28, 2009 and $125,000.00 due on or
before the first Tranche Closing Date (and if paid on the first Tranche Closing
Date, payable by offset from the first Tranche Amount), or (ii) by issuance and
delivery of unregistered shares of Common Stock, issued on or before October 28,
2009 and valued based upon 82% of the VWAP for the Common Stock on the 5 Trading
Days immediately preceding such date, which shares must be included in the
Registration Statement filed by the Company pursuant to Section 4.1(hh)(i)
hereof; provided, however, that if the Company elects to pay the Commitment Fee
in shares of Common Stock pursuant to clause (ii) above and, on the earlier of
the effective date of the Registration Statement or six months from the issuance
date, the VWAP for the Common Stock falls below the payment date VWAP, then all
of the shares of Common Stock that were paid as the Commitment Fee shall be
repriced at 82% of the VWAP for the 5 Trading Days immediately preceding such
repricing date.
 
“Common Stock” means the common stock, par value $0.001 per share, of the
Company, and any replacement or substitute thereof, or any share capital into
which such Common Stock shall have been changed or any share capital resulting
from a reclassification of such Common Stock.
 
“Company” means Advaxis, Inc., a Delaware corporation.
 
“Company Parties” and “Company Party” have the meanings set forth in Section
5.8(b).
 
“Company Termination” has the meaning set forth in Section 3.2.
 
“Conditions to Commitment Closing” has the meaning set forth in Section 2.2(b).
 
“Delisting Event” means any time during the term of this Agreement, that the
Common Stock is not listed for trading or quoted on a Trading Market, or is
suspended or delisted with respect to the trading of shares of Common Stock on a
Trading Market.
 
“Disclosure Schedules” means the disclosure schedules of the Company delivered
concurrently herewith and attached hereto.
 
“DTC” means The Depository Trust Company, or any successor performing
substantially the same function for Company.

 
 

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“DWAC Shares” means Warrant Shares issued to Investor or any Affiliate,
successor or assign of Investor pursuant to any exercise of the Warrant in
electronic form, which Warrant Shares do not require the imprinting of the
restrictive legend(s) referred to in Section 5.1 as set forth therein at the
time of issuance of such Warrant Shares, and are without restriction on resale
at the time of issuance, and delivered by the Company to the specified
Deposit/Withdrawal at Custodian (DWAC) account with DTC under its Fast Automated
Securities Transfer (FAST) Program or any similar program hereafter adopted by
DTC performing substantially the same function, in accordance with irrevocable
instructions issued to and countersigned by the Transfer Agent, in the form
attached hereto as Exhibit C.
 
“Effective Date” has the meaning set forth in the Preamble.
 
“Evaluation Date” has the meaning set forth in Section 4.1(r).
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“FINRA” has the meaning set forth in Section 4.1(e).
 
“Fundamental Transaction” means and shall be deemed to have occurred at such
time upon any of the following events:
 
(a)           the Company shall, directly or indirectly, in one or more related
transactions, (i) consolidate or merge with or into (whether or not the Company
is the surviving corporation) another Person or Persons, (ii) sell, assign,
transfer, convey or otherwise dispose of all or substantially all of the assets
of the Company to another Person, other than in the ordinary course of business,
(iii) allow another Person to make a tender or exchange offer that is accepted
by the holders of more than 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase or
other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby
such other Person acquires more than the 50% of the outstanding shares of Common
Stock (not including any shares of Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with the other
Persons making or party to, such stock purchase agreement or other business
combination) (other than, in the case of clause (i) above, (A) any such
transaction pursuant to which holders of Common Stock immediately prior to such
transaction (x) continue to hold more than 50% of the outstanding shares of
Common Stock or (y) have the ability to elect a majority of the board of
directors of the Company or (B) any merger or consolidation which is effected
solely to change the jurisdiction of incorporation of the Company, and in the
case of clauses (iii) and (iv) above, any transaction which is effected solely
to change the jurisdiction of incorporation of the Company); or
 
(b)           any “person” or “group” (as these terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 50% of the aggregate Common Stock, other than persons or groups
who exceed such ownership level as of the Effective Date and other than in
connection with a transaction which is effected solely to change the
jurisdiction of incorporation of the Company.

 
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“Funding Default” means a failure by Investor to accept a Tranche Notice
delivered by the Company, provided such Tranche Notice was delivered in
accordance with the terms and conditions of this Agreement (including the timely
and full satisfaction of the conditions to the obligation of Investor to accept
a Tranche Notice set forth in Section 2.3(c) of this Agreement), and to acquire
and pay for the Preferred Shares in accordance therewith upon delivery of such
Preferred Shares to the Investor in accordance with the terms of this Agreement
(and the timely delivery by the Company of the other Required Tranche Deliveries
required to be delivered by it and the timely and full satisfaction by the
Company of all other conditions for the Tranche Closing required to be satisfied
by it as set forth in Sections 2.3(d) and (e) of this Agreement).
 
“GAAP” means United States generally accepted accounting principles applied on a
consistent basis during the periods involved.
 
“Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $100,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the same are or
should be reflected in the Company’s balance sheet (or the notes thereto),
except guaranties by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business; and (c)
the present value of any lease payments in excess of $100,000 due under leases
required to be capitalized in accordance with GAAP.
 
“Intellectual Property Rights” has the meaning set forth in Section 4.1(o).
 
“Investor” means Optimus Capital Partners, LLC, a Delaware limited liability
company, dba Optimus Life Sciences Capital Partners, LLC (including its
designees, successors and assigns).
 
“Investor Parties” and “Investor Party” have the meanings set forth in Section
5.8.
 
“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction (excluding restrictions on
transfer of securities under applicable U.S. federal or state securities or
“blue sky” laws).
 
“Lock-Up Agreements” means an agreement in the form attached as Exhibit D,
executed by each of the Company’s executive officers, directors and beneficial
owners of 10% or more of the Common Stock, precluding each such Person from
participating in any sale of the Common Stock from the Tranche Notice Date
through the Tranche Closing Date.
 
“Losses” has the meaning set forth in Section 5.8.
 
“Luce Forward” has the meaning set forth in Section 5.1(a).

 
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“Material Adverse Effect” means a material adverse effect on (i) the legality,
validity or enforceability of any Transaction Document, (ii) the results of
operations, assets, business or financial condition of the Company, or (iii) the
Company’s ability to perform in any material respect its obligations under any
Transaction Document; provided, however, that none of the following,
individually or in the aggregate, shall be taken into account in determining
whether a Material Adverse Effect has occurred: (a) changes in conditions in the
U.S. or global capital, credit or financial markets generally, including changes
in the availability of capital or currency exchange rates; (b) changes generally
affecting the biotechnology or pharmaceutical industries; (c) any deterioration
in the results of operations, assets, business or financial condition of the
Company substantially resulting from (1) circumstances, conditions or risks
(including, without limitation, the section entitled “Risk Factors” contained in
the Company’s Form 10-KSB for its fiscal year ended October 31, 2008) existing
as of the Effective Date that are set forth in any of the SEC Reports or (2) any
of the matters set forth in the Disclosure Schedule (as the same may be updated
pursuant to Section 2.3(c)(ii)); (d) any effect of the announcement of this
Agreement or the consummation of the transactions contemplated by this Agreement
on the Company’s relationships, contractual or otherwise, with customers,
suppliers, vendors, bank lenders, strategic venture partners or employees; and
(e) any decrease in the market price of the Common Stock (but excluding herefrom
any condition, occurrence, state of facts or event underlying such decrease to
the extent that such condition, occurrence, state of facts or event otherwise
would constitute a Material Adverse Effect).
 
“Material Agreement” includes any material loan agreement, financing agreement,
equity investment agreement or securities instrument to which Company is a
party, any material agreement or instrument to which Company and Investor or any
Affiliate of Investor is a party, and any other material agreement listed, or
required to be listed, on any of Company’s reports filed or required to be filed
with the SEC, including without limitation Forms 10-K, 10-Q or 8-K.
 
“Material Permits” has the meaning set forth in Section 4.1(m).
 
“Maximum Placement” means $5,000,000.00.
 
“Maximum Tranche Amount” means, subject to any other applicable limitations set
forth in this Agreement, the Maximum Placement less the amount of any previously
noticed and funded Tranches.
 
“Officer’s Closing Certificate” means a certificate in customary form reasonably
acceptable to the Investor, executed by an authorized officer of the Company.
 
“Opinion” means an opinion from Company’s independent legal counsel, in the form
attached as Exhibit E, to be delivered in connection with the Commitment Closing
and any Tranche Closing.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“Preferred Shares” means shares of Series A Preferred Stock of the Company
provided for in the Certificate of Designations, to be issued to Investor
pursuant to this Agreement.
 
“Prospectus” includes each prospectus (within the meaning of the Act) related to
the sale or offering of any Warrant Shares, including without limitation any
prospectus contained within the Registration Statement.

 
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“Registration Statement” means a valid, current and effective registration
statement registering for resale the Warrant Shares, and except where the
context otherwise requires, means the registration statement, as amended,
including (i) all documents filed as a part thereof, and (ii) any information
contained in a prospectus filed with the SEC in connection with such
registration statement, to the extent such information is deemed under the Act
to be part of the registration statement.
 
“Regulation D” means Regulation D promulgated under the Act.
 
“Required Tranche Deliveries” has the meaning set forth in Section 2.3(d).
 
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect.
 
“Rule 144 Eligible” means eligible for immediate resale under Rule 144 without
limitation on the amount of securities sold under Rule 144(e) and
without  requiring discharge by payment in full of any promissory notes given to
Company prior to the sale of the securities under Rule 144(d)(2)(iii).
 
“SEC” means the United States Securities and Exchange Commission.
 
“SEC Reports” includes all reports required to be filed by the Company under the
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the Effective Date (or such shorter period as the
Company was required by law to file such material).
 
“Securities” includes the Warrants, Warrant Shares and Preferred Shares issuable
pursuant to this Agreement.
 
“Subsidiary” means any Person the Company owns or controls, or in which the
Company, directly or indirectly, owns a majority of the capital stock or similar
interest that would be disclosable pursuant to Regulation S-K, Item 601(b)(21).
 
“Termination Date” means the earlier of (i) the date that is three years after
the Effective Date, or (ii) the Tranche Closing Date on which the sum of the
aggregate Tranche Purchase Price for all Tranche Shares equals the Maximum
Placement.
 
“Termination Notice” has the meaning as set forth in Section 3.2.
 
“Trading Day” means any day on which the Common Stock is traded on the Trading
Market; provided that it shall not include any day on which the Common Stock is
(a) scheduled to trade for less than 5 hours, or (b) suspended from trading.
 
“Trading Market” means the OTC Bulletin Board, the NASDAQ Capital Market, the
NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE Amex, or the New
York Stock Exchange, whichever is at the time the principal trading exchange or
market for the Common Stock.
 
“Tranche” has the meaning set forth in Section 2.3(a).

 
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“Tranche Amount” means the amount of any individual put purchase, as specified
by the Company, and shall not exceed the Maximum Tranche Amount.
 
“Tranche Closing” has the meaning set forth in Section 2.3(e).
 
“Tranche Closing Date” has the meaning set forth in Section 2.3(e).
 
“Tranche Notice” has the meaning set forth in Section 2.3(b).
 
“Tranche Notice Date” has the meaning set forth in Section 2.3(b).
 
“Tranche Purchase Price” has the meaning set forth in Section 2.3(b), and shall
be specified in writing by the Company.
 
“Tranche Share Price” means $10,000.00 per Preferred Share. Company may not put
fractional Preferred Shares.
 
“Tranche Shares” means the Preferred Shares that are purchased by Investor
pursuant to a Tranche.
 
“Transaction Documents” include this Agreement and the Exhibits hereto and
thereto.
 
“Transfer Agent” means Securities Transfer Corporation, or any successor
transfer agent for the Common Stock.
 
“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrant.
 
“Warrant” means the warrant issuable under this Agreement, in the form attached
hereto as Exhibit A, to purchase 33,750,000 shares of Common Stock, at an
initial exercise price of $0.20 per share, subject to adjustment after the
Commitment Closing as provided therein.
 
ARTICLE 2
PURCHASE AND SALE
 
2.1          Agreement to Purchase.  Subject to the terms and conditions herein
and the satisfaction of the conditions to Closing set forth in this ARTICLE 2:
 
(a)           Investor hereby agrees to purchase such amounts of Preferred
Shares as the Company may, in its sole and absolute discretion, from time to
time elect to issue and sell to Investor according to one or more Tranches
pursuant to Section 2.3 below; and
 
(b)           The Company agrees to pay the Commitment Fee and issue the Warrant
to Investor in accordance with the terms of this Agreement.
 
2.2         Investment Commitment.
 
(a)           Investment Commitment. The closing of this Agreement (the
“Commitment Closing”) shall be deemed to occur when this Agreement has been duly
executed by both Investor and the Company, and the other Conditions to the
Commitment Closing set forth in Section 2.2(b) have been met.

 
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(b)           Conditions to Investment Commitment. As a condition precedent to
the Commitment Closing, all of the following (the “Conditions to Commitment
Closing”) shall have been satisfied prior to or concurrently with the parties’
execution and delivery of this Agreement:
 
 (i)           the following documents shall have been delivered to
Investor:  (A) this Agreement, executed by the Company; (B) a Secretary’s
Certificate as to (x) the resolutions of the Company’s board of directors
authorizing this Agreement and the Transaction Documents, and the transactions
contemplated hereby and thereby, (y) a copy of the Company’s current Certificate
of Incorporation, and (z) a copy of the Company’s current Bylaws; (C) the
Certificate of Designations executed by the Company and accepted by the
Secretary of State of Delaware; (D) the Opinion; and (E) a copy of the press
release announcing the transactions contemplated by this Agreement and Current
Report on Form 8-K of the Company describing the transactions contemplated by,
and attaching a complete copy of, the Transaction Documents;
 
 (ii)           other than for losses incurred in the ordinary course of
business, there shall have been no Material Adverse Effect since the date of the
last SEC Report filed by the Company;
 
 (iii)           the representations and warranties of the Company in this
Agreement shall be true and correct in all material respects and the Company
shall have delivered an Officer’s Closing Certificate to such effect to
Investor, signed by an officer of the Company; and
 
 (iv)           the representations and warranties of Investor in this Agreement
shall be true and correct in all material respects.
 
(c)           Delivery of the Warrant.  Simultaneously with the Commitment
Closing, the Company shall deliver the Warrant to the Investor.
 
(d)           Investor’s Obligation to Purchase. Subject to the prior
satisfaction of all conditions set forth in this Agreement, following the
Investor’s receipt of a validly delivered Tranche Notice, the Investor shall be
required to purchase from the Company a number of Tranche Shares equal to the
permitted Tranche Share Amount, in the manner described below.
 
2.3         Tranches to Investor.
 
(a)           Procedure to Elect a Tranche. Subject to the Maximum Tranche
Amount, the Maximum Placement and the other conditions and limitations set forth
in this Agreement, at any time beginning on the Effective Date, the Company may,
in its sole and absolute discretion, elect to exercise one or more tranches of
puts (each a “Tranche”) according to the following procedure, provided that each
subsequent Tranche Notice Date (defined below) after the first Tranche Notice
Date shall be no sooner than five (5) Trading Days following the preceding
Tranche Notice Date.

 
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(b)           Delivery of Tranche Notice. The Company shall deliver an
irrevocable written notice (the “Tranche Notice”) the form of which is attached
hereto as Exhibit F (the date of such Tranche Notice being the “Tranche Notice
Date”), to Investor stating that the Company shall exercise a Tranche and
stating the number of Preferred Shares which the Company will sell to Investor
at the Tranche Share Price, and the aggregate purchase price for such Tranche
(the “Tranche Purchase Price”).  A Tranche Notice may be delivered by the
Company to Investor before 5:00 p.m., New York City time, on any Trading Day via
facsimile or electronic mail, with confirming copy by overnight carrier.  A
Tranche Notice delivered after such time or on a non-Trading Day shall be deemed
delivered on the following Trading Day.  The Company may not give a Tranche
Notice unless the Tranche Closing for the prior Tranche has occurred.
 
(c)           Conditions Precedent to a Tranche Notice.  The right of the
Company to deliver a Tranche Notice and the obligation of the Investor to accept
a Tranche Notice and to acquire and pay for the Preferred Shares are subject to
the satisfaction (or where legally permissible, the waiver), on the Tranche
Notice Date, of each of the conditions set forth below. Other than the
conditions set forth in clause (iii) below, which are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion (if
legally permissible), and the conditions set forth in clause (viii) below, which
are for the Company’s and the Investor’s benefit and may be waived by both the
Company and the Investor in their discretion (if legally permissible) by mutual
written agreement, the remaining conditions set forth in this Section 2.3(c) are
for the Investor’s sole benefit and may be waived by the Investor at any time in
its sole discretion (if legally permissible).
 
 (i)           the Common Stock shall be listed for trading or quoted on the
Trading Market, and to the Company’s knowledge there is no notice of any
suspension or delisting with respect to the trading or quotation of the shares
of Common Stock on the Trading Market;
 
 (ii)           the representations and warranties of the Company set forth in
this Agreement shall be true and correct in all material respects as if made on
such date, except for representations and warranties that are expressly made as
of a particular date in which case, such representations and warranties shall be
true and correct as of such particular date (provided, however, that any
information disclosed by the Company in a filing with the SEC after the
Effective Date but prior to the date of the Tranche Notice shall be deemed to
update the Disclosure Schedules automatically and without any further action on
the part of the Company), the Company shall have performed, satisfied and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed, satisfied or complied with by the Company at or
prior to such date, and the Company shall deliver an Officer’s Closing
Certificate to such effect to Investor, signed by an officer of the Company;
 
 (iii)           the representations and warranties of the Investor set forth in
this Agreement shall be true and correct in all material respects as if made on
such date, except for representations and warranties that are expressly made as
of a particular date in which case, such representations and warranties shall be
true and correct as of such particular date, and the Investor shall have
performed, satisfied and complied in all material respects with all covenants
and agreements required by this Agreement to be performed, satisfied or complied
with by the Investor at or prior to such date;

 
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(iv)           other than losses incurred in the ordinary course of business,
there shall have been no Material Adverse Effect since the Commitment Closing;
 
(v)            all Warrant Shares shall have been timely delivered pursuant to
any Exercise Notice properly delivered to the Company under the terms of the
Warrant prior to the applicable Tranche Notice Date;
 
(vi)           to the extent required under the terms of the Warrant and Section
5.1 of this Agreement, all previously-issued Warrant Shares are DWAC Shares in
electronic form without restriction on resale;
 
(vii)          the Company is not, and will not be as a result of the applicable
Tranche, in default of any Material Agreement (it being hereby acknowledged and
agreed that for purposes of this paragraph (vii), the trigger of any
antidilution, price-reset or similar provisions in any outstanding warrants or
other derivative securities of the Company as a result of the applicable Tranche
shall not be deemed a default of any Material Agreement);
 
(viii)        there is not then in effect any law, rule or regulation
prohibiting the transactions contemplated by any of the Transaction Documents,
or requiring any consent or approval which shall not have been obtained, nor is
there any pending proceeding or investigation which may have the effect of
prohibiting or adversely affecting any of the transactions contemplated by this
Agreement; no statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or adopted by any court
or governmental authority of competent jurisdiction that prohibits the
transactions contemplated by this Agreement, and no actions, suits or
proceedings shall be in progress or pending by any person (other than Investor
or any Affiliate of Investor) that seek to enjoin or prohibit the transactions
contemplated by this Agreement (it being hereby acknowledged and agreed that for
purposes of this paragraph (viii), no proceeding shall be deemed pending unless
one of the parties hereto has received written notification thereof prior to the
applicable Tranche Notice Date);
 
(ix)           the Company is in compliance with all reporting requirements
under the Exchange Act in order to maintain listing on its then current Trading
Market;
 
(x)            either (A) the Company has a current, valid and effective
Registration Statement covering the lawful resale of all Warrant Shares then
issued or issuable upon exercise of the Warrant, or (B) all of such Warrant
Shares are Rule 144 Eligible (assuming cashless exercise of the Warrant);
 
(xi)           Company has a sufficient number of duly authorized shares of
Common Stock reserved for issuance in such amount as may be required to issue
all Warrant Shares issuable upon exercise of the Warrant based on the then
current anticipated exercise price(s) of the Warrant;
 
(xii)         the Company has provided notice of its delivery of the Tranche
Notice to all signatories of a Lock-Up Agreement as required under the Lock-Up
Agreement; and

 
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 (xiii)        the aggregate number of Warrant Shares issuable upon exercise of
the Warrant based on the then-current anticipated exercise price(s) of the
Warrant, aggregated with all other shares of Common Stock deemed beneficially
owned by the Investor and its Affiliates would not result in the Investor
beneficially owning more than 9.99% of the Common Stock outstanding on the
Tranche Notice Date, as determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
 
(d)           Deliveries at Tranche Closing. The Closing of any Tranche and the
parties’ obligations hereunder shall additionally be conditioned upon the
delivery of each of the following (the “Required Tranche Deliveries”), except as
otherwise indicated, on or before the applicable Tranche Closing Date:
 
 (i)            a number of Preferred Shares equal to the Tranche Purchase Price
divided by the Tranche Share Price shall have been delivered to Investor or an
account specified by Investor for the Tranche Shares;
 
 (ii)           the Tranche Purchase Price shall have been paid by the Investor
to the Company by wire transfer of immediately available funds to an account
designated by the Company prior to the applicable Tranche Closing Date;
 
 (iii)           Investor shall have received that portion of the Commitment
Fee, if any, that is payable as set forth in the definition of Commitment Fee
set forth in Article I hereof;
 
 (iv)           the following executed documents shall have been delivered to
Investor: the Opinion and the Officer’s Closing Certificate;
 
 (v)            with respect to the first Tranche Closing only, the Lock-Up
Agreements shall have been delivered to Investor;
 
 (vi)           a “Use of Proceeds” certificate, signed by an officer of the
Company, and setting forth how the Tranche Purchase Price will be applied by the
Company, shall have been delivered to Investor;
 
 (vii)          all Warrant Shares shall have been timely delivered to Investor
in accordance with any Exercise Notice properly delivered to Company under the
terms of the Warrant prior to the applicable Tranche Closing Date;
 
 (viii)        all documents, instruments and other writings required to be
delivered by the parties on or before the Tranche Closing Date pursuant to any
provision of this Agreement in order to implement and effect the transactions
contemplated herein; and
 
 (ix)           payment of a $5,000.00 non-refundable administrative fee to
Investor’s counsel, by offset against the Tranche Amount, or wire transfer of
immediately available funds.

 
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 (e)           Mechanics of Tranche Closing.  Each of the Company and Investor
shall deliver all Required Tranche Deliveries required to be delivered by either
of them pursuant to Section 2.3(d) of this Agreement, as applicable, at or prior
to each Tranche Closing. Subject to such delivery and the satisfaction (or where
legally permissible, the waiver) of the conditions set forth in Section 2.3(d)
as of the Tranche Closing Date, the closing of the purchase by Investor of
Preferred Shares shall occur by 5:00 p.m., New York City time, on the date which
is 10 Trading Days following the Tranche Notice Date (each a “Tranche Closing
Date”) at the offices of Investor; provided, however, that if any Warrant Shares
are not timely delivered in accordance with Section 1.1 of the Warrant, with
respect to any portion of the Warrant exercised before the Tranche Closing Date,
then the Tranche Closing Date shall be extended one Trading Day for each Trading
Day that such delivery is not made; and provided, further, that if any Warrant
Shares are not DWAC Shares upon delivery, then the Tranche Closing Date shall be
extended one Trading Day for each Trading Day that the Warrant Shares are not
DWAC Shares.  On or before each Tranche Closing Date, Investor shall pay to the
Company the Tranche Purchase Price to be paid for such Tranche Shares by wire
transfer of immediately available funds to an account designated by the Company
prior to the applicable Tranche Closing Date.  The closing (each a “Tranche
Closing”) for each Tranche shall occur on the date that all Required Tranche
Deliveries, as applicable, have been delivered to the applicable party pursuant
to Section 2.3(d) of this Agreement.
 
 (f)           Limitation on Obligations to Purchase and Sell.  Notwithstanding
anything herein to the contrary, in the event the average closing price of the
Common Stock during the nine (9) Trading Days following the Tranche Notice Date
falls below 75.0% of the closing bid price of the Common Stock on the Trading
Day immediately prior to the Tranche Notice Date:  (i) Investor may, at its
option, and without penalty, decline to purchase the applicable Tranche Shares
on the Tranche Closing Date; or (ii) Company may, at its option, and without
penalty, terminate the Tranche Notice and decline to sell the applicable Tranche
Shares on the Tranche Closing Date.
 
2.4           Maximum Placement.  Investor shall not be obligated to purchase
any additional Tranche Shares once the aggregate Tranche Purchase Price paid by
Investor equals the Maximum Placement.
 
ARTICLE 3
TERMINATION
 
3.1           Automatic Termination.  This Agreement shall terminate
automatically (each, an “Automatic Termination”) upon the occurrence of any of
the following:
 
 (a)           if, at any time after the Effective Date, either the Company or
the Investor, or any director or executive officer of the Company or the
Investor, has engaged in a transaction or conduct related to the Company or the
Investor, as applicable, that has resulted in (i) a SEC enforcement action, or
(ii) a civil judgment or criminal conviction for fraud or misrepresentation, or
for any other offense that, if prosecuted criminally, would constitute a felony
under applicable law;
 
 (b)           on any date after a Delisting Event that lasts for an aggregate
of 20 Trading Days during any calendar year;

 
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  (c)           if at any time the Company has filed for and/or is subject to
any bankruptcy, insolvency, reorganization or liquidation proceedings or other
proceedings for relief under any bankruptcy law or any law for the relief of
debtors instituted by or against the Company or any subsidiary of the Company;
 
  (d)           upon the occurrence of a Fundamental Transaction;
 
  (e)           so long as any Preferred Shares are outstanding, the Company (i)
creates or publicly announces its intention to create a class of Common Stock or
series of preferred stock senior to the Series A Preferred Stock with respect to
liquidation rights (other than a series of preferred stock that the Company
intends to cause to be listed for trading or quoted on any Trading Market other
than the OTC Bulletin Board) or (ii) substantially alters or publicly announces
its intention to substantially alter the capital structure of the Company in a
manner that materially adversely effects the rights or preferences of the Series
A Preferred Stock (other than in connection with the creation of a series of
preferred stock that the Company intends to cause to be listed for trading or
quoted on any Trading Market other than the OTC Bulletin Board), in each case
without the prior approval of the holders or a majority of the Preferred Shares
then outstanding; and
 
  (f)           on the Termination Date.
 
3.2           Company Termination.  The Company may at any time in its sole
discretion terminate (a “Company Termination”) this Agreement by providing 30
days’ advanced written notice (“Termination Notice”) to Investor.
 
3.3           Other Termination.  The Investor may terminate this Agreement by
providing three days’ advanced written notice to the Company, if the Company is
in breach or default of any Material Agreement which would reasonably be
expected to have a Material Adverse Effect, and such breach or default is not
cured within 20 Trading Days after notice of such breach or default is delivered
to the Company. The Company or the Investor may terminate this Agreement by
providing three days’ advanced written notice to the other, if the other party
is in material breach or default of this Agreement or any Transaction Document,
and such material breach or default is not cured within 10 Trading Days after
notice of such material breach or default is delivered to the breaching party.
This Agreement may be terminated at any time by the mutual written consent of
both the Company and the Investor, effective as of the date of such mutual
written consent unless otherwise provided in such written consent.
 
3.4           Effect of Termination.  In the event of termination by the Company
or the Investor pursuant to Section 3.2 or 3.3, as applicable, written notice
thereof shall forthwith be given to the other party as provided in Section 6.2
and the transactions contemplated by this Agreement shall be terminated without
further action by either party. If this Agreement is terminated as provided in
Section 3.1, 3.2 or 3.3 herein, this Agreement shall become void and of no
further force and effect, except as provided in Section 6.8 hereof. Nothing in
this Section 3.4 shall be deemed to release the Company or the Investor from any
liability for any breach or default under this Agreement or any of the other
Transaction Documents occurring prior to such termination, or to impair the
rights of the Company and the Investor to compel specific performance by the
other party of its obligations under this Agreement arising prior to such
termination, or to impair rights of indemnification under this Agreement or any
other Transaction Document. The termination of this Agreement will have no
effect on any Preferred Shares, Warrant (except as provided therein in the event
of a Funding Default) or Warrant Shares previously issued or delivered, or on
any rights of any holder thereof. Notwithstanding any other provision, all fees
paid to Investor or its counsel are non-refundable.

 
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES
 
4.1           Representations and Warranties of the Company.  Except as set
forth under the corresponding section of the Disclosure Schedules (as the same
may be updated pursuant to Section 2.3(c)(ii)), which shall be deemed a part
hereof, or as set forth in the SEC Reports, the Company hereby represents and
warrants to, and as applicable covenants with, Investor as follows:
 
 (a)           No Subsidiaries.  The Company does not own, directly or
indirectly, any capital stock or other equity interests in any Subsidiary.
 
 (b)           Organization and Qualification.  The Company is an entity duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.  The
Company is not in violation or default of any of the provisions of its
certificate of incorporation or bylaws as currently in effect, except where such
violation or default would not, individually or in the aggregate, constitute a
Material Adverse Effect. The Company is duly qualified to conduct business and
is in good standing as a foreign corporation in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not have or reasonably be expected to result
in a Material Adverse Effect, and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification, except as would not have or
reasonably be expected to result in a Material Adverse Effect.
 
 (c)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder or thereunder.  The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary corporate action on the part of the Company and no further consent or
authorization of the Company or its board of directors or stockholders is
required.  Each of the Transaction Documents has been, or upon delivery will be,
duly executed by the Company and, when delivered in accordance with the terms
hereof, will constitute the valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies.

 
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(d)           No Conflicts.  Assuming each of the filings, consents and
approvals referred to in Section 4.1(e) are obtained, given or made on a timely
basis, as applicable, the execution, delivery and performance of the Transaction
Documents by the Company, the issuance and sale of the Securities and the
consummation by the Company of the other transactions contemplated thereby do
not and will not (i) conflict with or violate any provision of the Company’s
certificate of incorporation or bylaws as currently in effect, or (ii) conflict
with, or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company debt or otherwise) or other understanding to
which the Company is a party or by which any property or asset of the Company is
bound or affected, or (iii) conflict with or result in a violation of any law,
rule, regulation, order, judgment, injunction, decree or other restriction of
any court or governmental authority to which the Company is subject (including
U.S. federal and state securities laws and regulations), or by which any
property or asset of the Company is bound or affected; except in the case of
each of clauses (ii) and (iii), such as would not have or reasonably be expected
to result in a Material Adverse Effect.
 
(e)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than (i) the filing of the Certificate of Designations, (ii) such as may
be required under the Act (including, without limitation, the filing of a Form D
with the SEC and any Registration Statement required to be filed pursuant to
this Agreement) or the Exchange Act (including, without limitation, the filing
of a Current Report on Form 8-K of the Company describing the transactions
contemplated by, and attaching a complete copy of, the Transaction Documents),
(iii) such as may be required under applicable state securities or “blue sky”
laws, (iv) such as may be required under the rules and regulations of the
Trading Market or the Financial Industry Regulatory Authority (the “FINRA”) and
(v) such consents, waivers, authorizations, order, notices, filings or
registrations, the failure of which to obtain, give or make would not,
individually or in the aggregate, result in a Material Adverse Effect; provided,
that, for purposes of the representation made in this Section 4.1(e), the
Company is assuming and relying upon the accuracy of the representations and
warranties of the Investor contained in Sections 4.2(d) through and including
4.2(m), and the full performance of and compliance with the covenants and
agreements of the Investor contained in Section 5.1 of this Agreement.
 
(f)           Issuance of the Securities.  Subject to Section 5.13, the
Securities are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, and subject to, and in reliance on, the
representations, warranties, covenants and agreements made herein by the
Investor, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens.  The Company has reserved from its duly authorized
capital stock a number of shares of Common Stock and Preferred Stock for
issuance of the Securities at least equal to the number of Securities which
could be issued pursuant to the terms of this Agreement based on the
then-current anticipated exercise price(s) of the Warrant.

 
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(g)           Capitalization.  The authorized capital stock of the Company as of
July 31, 2009 and the number of shares of Common Stock issued and outstanding as
of August 31, 2009 is as described in the Company’s Quarterly Report on Form
10-Q for its fiscal quarter ended July 31, 2009.  No Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction Documents.  As
of the Effective Date, except as a result of the purchase and sale of the
Securities and for stock options issued by the Company to its employees,
directors and consultants, there are no outstanding options, warrants, script
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock or securities convertible into or
exercisable for shares of Common Stock. All of the outstanding shares of capital
stock of the Company are validly issued, fully paid and nonassessable, have been
issued in compliance with all U.S. federal and state securities laws, and none
of such outstanding shares was issued in violation of any preemptive rights or
similar rights to subscribe for or purchase securities.  As of the Effective
Date, there are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.
 
(h)           SEC Reports; Financial Statements.  Except as set forth in
Schedule 4.1(h) of the Disclosure Schedules, the Company has filed all required
SEC Reports for the two years preceding the Effective Date (or such shorter
period as the Company was required by law to file such material) on a timely
basis or has received a valid extension of such time of filing and has filed any
such SEC Reports prior to the expiration of any such extension.  As of their
respective dates, the SEC Reports complied in all material respects with the
requirements of the Act and the Exchange Act and the rules and regulations of
the SEC promulgated thereunder, as applicable, and none of the SEC Reports, when
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the SEC with respect thereto as in effect at
the time of filing.  Such financial statements have been prepared in accordance
with GAAP, except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company and its consolidated subsidiaries as of and
for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.
 
(i)           Material Changes.  Since the date of the latest audited financial
statements included within the SEC Reports, except as disclosed in the SEC
Reports, (i) there has been no event, occurrence or development that has had or
that would reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or required to
be disclosed in filings made with the SEC, (iii) the Company has not altered its
method of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company equity incentive
plans.  The Company does not have pending before the SEC any request for
confidential treatment of information.

 
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(j)           Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”), which (i) adversely affects or challenges the legality, validity
or enforceability of any of the Transaction Documents or the Securities, or (ii)
would, if there were an unfavorable decision, have or reasonably be expected to
result in a Material Adverse Effect.  Neither the Company, nor to the knowledge
of the Company any director or officer of the Company, is or has been during the
past five years the subject of any Action involving a claim of violation of or
liability under U.S. federal or state securities laws or a claim of breach of
fiduciary duty.  During the past five years, there has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the SEC involving the Company or any current or former director
or officer of the Company in their capacity as a director or officer of the
Company.  During the past five years, the SEC has not issued any stop order or
other order suspending the effectiveness of any registration statement filed by
the Company under the Exchange Act or the Act.
 
(k)           Labor Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which would reasonably be expected to result in a Material Adverse
Effect.
 
(l)           Compliance.  The Company (i) is not in default under or in
violation of (and, to the Company’s knowledge, no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a
default by the Company under), nor has the Company received written notice of a
claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other similar agreement or instrument to which
it is a party or by which it or any of its properties is bound (whether or not
such default or violation has been waived), (ii) is in violation of any order of
any court, arbitrator or governmental body applicable to the Company, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority applicable to the Company, including without limitation
all foreign, federal, state and local laws applicable to its business, except in
each of the cases referenced in clauses (i), (ii) and (iii) above as would not
have a Material Adverse Effect.
 
(m)           Regulatory Permits.  The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits would not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any written
notice of proceedings relating to the revocation or modification of any Material
Permit.

 
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(n)           Title to Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties.  Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and
enforceable leases of which the Company and the Subsidiaries are in compliance.
 
(o)           Patents and Trademarks.  The Company has, or has rights to use,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and other similar rights that are
necessary or material for use in connection with their respective businesses as
described in the SEC Reports and which the failure to so have would have a
Material Adverse Effect (collectively, the “Intellectual Property Rights”).  The
Company has not received a written notice that the Intellectual Property Rights
used by the Company violates or infringes upon the rights of any Person. To the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another Person of any of the
Intellectual Property Rights of the Company.
 
(p)           Insurance.  The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
are prudent and customary in the businesses in which the Company is
engaged.  The Company has no reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.
 
(q)           Transactions With Affiliates and Employees.  Except as set forth
in the SEC Reports, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company is presently a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $120,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any equity incentive plan of the
Company.

 
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(r)           Sarbanes-Oxley; Internal Accounting Controls.  The Company is in
material compliance with all provisions of the Sarbanes-Oxley Act of 2002, which
are applicable to it as of the date of the Commitment Closing.  The Company and
the Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.  The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
Company and designed such disclosure controls and procedures to ensure that
material information relating to the Company, including its Subsidiaries, is
made known to the certifying officers by others within those entities,
particularly during the period in which the Company’s most recently filed
periodic report under the Exchange Act, as the case may be, is being
prepared.  The Company’s certifying officers have evaluated the effectiveness of
the Company’s controls and procedures as of the date prior to the filing date of
the most recently filed periodic report under the Exchange Act (such date, the
“Evaluation Date”).  The Company presented in its most recently filed periodic
report under the Exchange Act the conclusions of the certifying officers about
the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date.  Since the Evaluation Date, there have
been no significant changes in the Company’s internal controls (as such term is
defined in Item 307(b) of Regulation S-K under the Exchange Act) or, to the
Company’s knowledge, in other factors that could materially affect the Company’s
internal controls.
 
(s)           Certain Fees.  Except for the payment of the Commitment Fee, the
issuance of the Warrant and the other payments to be made pursuant to the
Transaction Documents, no brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement.  Except as a result of any
agreements or arrangements made by the Investor or its representatives or
Affiliates, to the Company’s knowledge, Investor shall have no obligation with
respect to any such fees or commissions of a type contemplated in this Section
4.1(s) that may be due in connection with the transactions contemplated by this
Agreement.
 
(t)           Private Placement. Assuming the accuracy of Investor
representations and warranties set forth in Section 4.2, no registration under
the Act is required for the offer and sale of the Securities by the Company to
Investor as contemplated hereby. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the OTC Bulletin
Board.
 
(u)           Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act.
 
(v)           Registration Rights.  No Person has any right to cause the Company
to effect the registration under the Act of any securities of the Company.

 
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(w)           Listing and Maintenance Requirements.  The Common Stock is
registered pursuant to Section 12 of the Exchange Act, and the Company has taken
no action designed to, or which to its knowledge is likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act nor,
to the Company’s knowledge, is the SEC contemplating terminating such
registration.  The Company has not, in the 12 months preceding the Effective
Date, received notice from any Trading Market on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market. The Company
is, and has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements.
 
(x)           Application of Takeover Protections.  The Company and its Board of
Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti
takeover provision under the Company’s Certificate of Incorporation or the laws
of its state of incorporation that is or could become applicable to Investor as
a result of Investor and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including without limitation the
Company’s issuance of the Securities and Investor’s ownership of the Securities.
 
(y)           Disclosure.  Except with respect to (i) the transactions
contemplated by the Transaction Documents, (ii) the information contained in the
Disclosure Schedules and (iii) the information that will be publicly disclosed
by the Company pursuant to Section 2.2(b)(i)E and Section 5.4, the Company
confirms that neither the Company nor any other Person acting on its behalf has
provided Investor or its agents or counsel with any information that constitutes
material, non-public information that, according to applicable law, rule or
regulation, should have been disclosed publicly by the Company prior to the
Effective Date but which has not been so publicly disclosed. The Company
understands and confirms that Investor will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company.  All disclosure provided to Investor regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf of
the Company with respect to the representations and warranties made herein are
true and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
 
(z)           No Integrated Offering. Neither the Company, nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
the Act.

 
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(aa)           Financial Condition.  Based on the financial condition of the
Company as of the date of the Commitment Closing: (i) the fair saleable market
value of the Company’s assets exceeds the amount that will be required to be
paid on or in respect of the Company’s existing debts and other liabilities
(including known contingent liabilities) as they mature; (ii) the Company’s
assets do not constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be conducted
including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid.  The Company does not intend to incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be payable on or in respect of its debt). The
Company has no knowledge of any facts or circumstances, which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the date of the
Commitment Closing.  The Company’s Quarterly Report on Form 10-Q for its fiscal
quarter ended July 31, 2009 sets forth as of July 31, 2009 all outstanding
secured and unsecured Indebtedness of the Company, or for which the Company has
commitments.  The Company is not in default with respect to any Indebtedness.
 
(bb)           Tax Status.  The Company and each of its Subsidiaries has made or
filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and 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 has set aside on its books provisions 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.  The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, statue or local tax.  None of the Company’s
tax returns is presently being audited by any taxing authority.
 
(cc)           No General Solicitation or Advertising.  Except for the
Registration Statement to be filed as contemplated by this Agreement, neither
the Company nor, to the knowledge of the Company, any of its directors or
officers (i) has conducted or will conduct any general solicitation (as that
term is used in Rule 502(c) of Regulation D) or general advertising with respect
to the sale of the Securities, or (ii) made any offers or sales of any security
or solicited any offers to buy any security under any circumstances that would
require registration of the Securities under the Act or made any “directed
selling efforts” as defined in  rule 902 of Regulation S.
 
(dd)           Foreign Corrupt Practices.  Neither the Company, nor to the
knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any corrupt funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is  in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

 
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(ee)           Acknowledgment Regarding Investor’s Purchase of Securities.  The
Company acknowledges and agrees that Investor is acting solely in the capacity
of arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby.  The Company further acknowledges that Investor is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any statement made by Investor or any of its representatives or
agents in connection with this Agreement and the transactions contemplated
hereby is not advice or a recommendation and is merely incidental to Investor’s
purchase of the Securities.  The Company further represents to Investor that the
Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.
 
(ff)           Accountants.  The Company’s accountants are set forth in the SEC
Reports.  To the Company’s knowledge, such accountants are an independent
registered public accounting firm as required by the Act.
 
(gg)         No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the accountants and lawyers formerly or presently
employed by the Company, and the Company is current with respect to any fees
owed to its accountants.
 
(hh)         Registration Statements and Prospectuses.
 
  (i)           Company will use its commercially reasonable efforts to file
within 30 calendar days after the Effective Date (or as soon as possible
thereafter), cause to become effective as soon as possible thereafter, and
remain effective until the earlier of (A) the first date on which all Warrant
Shares covered thereby have been sold or are Rule 144 Eligible (assuming
cashless exercise of the Warrant by the holder thereof at all times after such
first date) or (B) in the event that no Tranche Closing ever occurs, the
Termination Date, a Registration Statement covering the public resale by the
Investor of all Common Shares issued in payment of the Commitment Fee and all
Warrant Shares.  Such Registration Statement, on the date it is filed with the
SEC and on the date it becomes effective, and, as amended or supplemented, at
the time of any Tranche Notice Date, Tranche Closing Date, or issuance of any
Warrant Shares, will comply as to form, in all material respects, with the
requirements of the Act.
 
  (ii)           Such Registration Statement, as of its effective date, will not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided that this representation and warranty does not apply to
statements in or omissions from the Registration Statement made in reliance upon
and in conformity with information relating to the Investor furnished to the
Company in writing by or on behalf of the Investor expressly for use therein,
which to the Company’s knowledge are not false or misleading.
 
  (iii)           The Prospectus, on the date it is filed with the SEC and as of
its date, and, at the time of any Tranche Notice Date, Tranche Closing Date, or
issuance of any Warrant Shares, and at all times during which a prospectus is
required by the Act to be delivered in connection with any sale of Warrant
Shares covered thereby, will comply as to form, in all material respects, with
the requirements of the Act.

 
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  (iv)           The Prospectus and any amendment or supplement thereto, as of
its date, will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that this representation and warranty does not apply to statements in or
omissions from the Prospectus or any amendment or supplement thereto made in
reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly
for use therein, which to the Company’s knowledge are not false or misleading.
 
  (v)           The Registration Statement, as of its effective date, will meet
the requirements of subsections (a)(1)(i) and/or (a)(1)(iii) of Rule 415 under
the Act or any other applicable subsections thereof.
 
4.2           Representations and Warranties of Investor. Investor hereby
represents and warrants to, and as applicable covenants with, the Company as
follows:
 
 (a)           Organization; Authority.  Investor is an entity duly formed,
validly existing and in good standing under the laws of the State of Delaware,
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Investor has the requisite
company power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder.  The execution and delivery of this Agreement by Investor and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary company action on the part of Investor and no
further consent or authorization of Investor or its members is required.  Each
Transaction Document to which it is a party has been (or will be) duly executed
by Investor, and when delivered by Investor in accordance with the terms hereof,
will constitute the valid and legally binding obligation of Investor,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies.
 
 (b)           No Conflicts.  The execution, delivery and performance of this
Agreement by Investor do not and will not conflict with or violate any provision
of Investor’s certificate of formation or operating agreement (or similar
organizational documents) as currently in effect.
 
 (c)           Investor Status.  At the time Investor was offered the
Securities, it was, and it is: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Act.
 
 (d)           Experience of Investor.  Investor, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment.  Investor is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

 
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(e)           Information. The Investor 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 the Investor. The Investor and its advisors, if
any, have been afforded the opportunity to ask questions of the Company;
provided, however, that neither such inquiries nor any other due diligence
investigations conducted by Investor or its representatives shall modify, amend
or affect Investor’s right to rely on the Company’s representations and
warranties contained in Section 4.1. The Investor has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities. The
Investor understands that it (and not the Company) shall be responsible for its
own tax liabilities that may arise as a result of this investment or the
transactions contemplated by this Agreement.
 
(f)           General Solicitation.  Investor is not purchasing the Securities
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
 
(g)           No Public Sale or Distribution.  Investor is acquiring the
Securities for its own account, and not as a nominee or agent.  Investor is
acquiring the Preferred Shares and the Warrant for investment purposes, and not
with a view towards, or for resale in connection with, the public sale or
distribution of any part thereof, except pursuant to transactions registered
under the Act or exempt from such registration; provided, however, that the
disposition of its property shall at all times be within its control.  Investor
does not presently have any contract, agreement, undertaking, arrangement or
understanding, directly or indirectly, with any non-Affiliate of Investor to
sell, transfer, pledge, assign or otherwise distribute any of the Securities.
 
(h)           Acknowledgement of Private Placement.  Investor understands that
the offer and sale of the Securities provided for herein is being made without
registration under the Act, in reliance upon the provisions of Section 4(2) of
the Act, Regulation D promulgated under the Act, and such other exemptions from
the registration requirements of the Act as may be available with respect to any
or all of the purchases of Securities to be made hereunder, and that the Company
is relying in part upon the truth and accuracy of, and such Investor’s
compliance with, the representations, warranties, agreements, covenants,
acknowledgments and understandings of such Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire the Securities.
 
(i)           Transfer or Resale. Investor understands that: (i) the Preferred
Shares and the Warrants have not been and are not being registered under the Act
or any state securities or “blue sky” laws, (ii) as of the Effective Date the
Warrant Shares have not been registered under the Act or any state securities or
“blue sky” laws and (iii) except as expressly provided in the Transaction
Documents with respect to the Warrant Shares, neither the Company nor any other
Person is under any obligation to register the Securities under the Act or any
state securities or “blue sky” laws or to comply with the terms and conditions
of any exemption thereunder.
 
(j)           Trading Restrictions; Compliance with Securities Laws.  The
Investor covenants and agrees that during the period beginning on the Trading
Day immediately preceding the Effective Date and ending on the Trading Day next
following the termination of this Agreement, neither the Investor nor any of its
Affiliates nor any entity managed or controlled by the Investor will, directly
or indirectly, enter into or execute or cause or assist any Person to enter into
or execute any “short sale” (as such term is defined in Rule 200 of Regulation
SHO, or any successor regulation, promulgated by the SEC under the Exchange Act)
of the Common Stock.

 
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(k)         Not an Affiliate.  The Investor is not an officer, director or
Affiliate of the Company.
 
(l)           No Governmental Review. Investor 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.
 
(m)        Public Resale of Warrant Shares.  The Investor agrees that unless the
Warrant Shares covered by any Registration Statement are Rule 144 Eligible, it
will publicly resell such Warrant Shares only pursuant to such Registration
Statement, in a manner described under the caption “Plan of Distribution” in the
Registration Statement, and in a manner in compliance with any applicable
prospectus delivery requirements of the Securities Act.
 
The Company acknowledges and agrees that Investor does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 4.2.
 
ARTICLE 5
OTHER AGREEMENTS OF THE PARTIES
 
5.1           Transfer Restrictions.
 
 (a)          The Securities constitute “restricted securities” as such term is
defined in Rule 144(a)(3) under the Act and may only be disposed of in
compliance with U.S. federal securities laws and applicable state securities or
“blue sky” laws.  Without limiting the generality of the foregoing, except for a
transfer to an Affiliate of Investor or a bona fide pledge of the Securities,
the Securities may not be offered for sale, sold, transferred, assigned, pledged
or otherwise distributed unless (i) subsequently registered thereunder, (ii)
Investor shall have delivered to the Company an opinion of counsel reasonably
acceptable to the Company (which may be Luce Forward Hamilton & Scripps LLP
(“Luce Forward”)), in a form generally acceptable to the Company, to the effect
that such Securities to be offered for sale, sold, transferred, assigned,
pledged or otherwise distributed may be offered for sale, sold, transferred,
assigned, pledged or otherwise distributed pursuant to an exemption from such
registration, or (iii) such Securities can be offered for sale, sold,
transferred, assigned, pledged or otherwise distributed pursuant to Rule 144 or
Rule 144A promulgated under the Act, as applicable.
 
 (b)          The parties acknowledge and agree that the Warrant Shares will be
issued without any restrictive legends.  Investor agrees to the imprinting, for
so long as is required by this Section 5.1, upon the certificates or other
instruments representing the Preferred Shares and Warrants of any legends
required by applicable state securities or “blue sky” laws, in addition to the
following restrictive legend (and that a stop transfer order shall be placed
against transfer of such certificates):

 
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NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
5.2           Furnishing of Information.  As long as Investor owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the Effective Date pursuant to the Exchange Act.  Upon the
request of Investor, the Company shall deliver to Investor a written
certification of a duly authorized officer as to whether it has complied with
the preceding sentence. As long as Investor owns Securities, if the Company is
not required to file reports pursuant to such laws, it will prepare and furnish
to Investor and make publicly available in accordance with Rule 144(c) such
information as is required for Investor to sell the Securities under Rule 144
until such time as Investor may sell all such Securities without restriction
under Rule 144.  The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, all to the extent
required from time to time to enable such Person to sell Securities without
registration under the Act within the limitation of the exemptions provided by
Rule 144.
 
5.3           Integration.  The Company shall not sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the Act
of the sale of the Securities to Investor.
 
5.4           Securities Laws Disclosure; Publicity.  The Company shall, by 8:30
a.m., New York City time, on the Trading Day immediately following the Effective
Date, issue a press release and shall, by 5:30 p.m., New York City time, on the
Trading Day immediately following the Effective Date, file a Current Report on
Form 8-K describing the transactions contemplated by, and attaching a complete
copy of, the Transaction Documents. Such press release and Current Report on
Form 8-K shall be reasonably acceptable to Investor. The Company and Investor
shall consult with each other in issuing any additional press releases with
respect to the transactions contemplated hereby, and neither the Company nor
Investor shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to any such
press release of Investor, or without the prior consent of Investor, with
respect to any such press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, Trading Market regulations or judicial process, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.  The Company shall provide Investor with
prior notice of any public disclosure of the name of Investor in any filing with
the SEC or any regulatory agency or Trading Market (it being hereby acknowledged
and agreed by Investor that Investor’s name shall be disclosed in any Current
Report on Form 8-K of the Company describing the transactions contemplated by
the Transaction Documents, in any Registration Statement and Prospectus covering
any Warrant Shares, and in other reports of the Company required to be filed by
the Company under the Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof).

 
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5.5           Shareholders Rights Plan.  No claim will be made or enforced by
the Company or, to the knowledge of the Company, any other Person that Investor
is an “Acquiring Person” under any shareholders rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that Investor
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and Investor. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act of 1040, as amended.
 
5.6           Non-Public Information.  The Company covenants and agrees that
neither it nor any Person acting on its behalf will provide, Investor or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto Investor shall have
executed a written agreement regarding the confidentiality and use of such
information.  The Company understands and confirms that Investor shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.
 
5.7           Reimbursement.  If Investor becomes involved in any capacity in
any proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
Investor to or with any current stockholder), solely as a result of Investor’s
acquisition of the Securities under this Agreement, the Company will reimburse
Investor for its reasonable legal and other expenses (including the cost of any
investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred, or will assume the defense
of Investor in such matter.  The reimbursement obligations of the Company under
this paragraph shall be in addition to any liability which the Company may
otherwise have, shall extend upon the same terms and conditions to any
Affiliates of Investor who are actually named in such action, proceeding or
investigation, and partners, directors, agents, employees and controlling
persons (if any), as the case may be, of Investor and any such Affiliate, and
shall be binding upon and inure to the benefit of any successors, assigns, heirs
and personal representatives of the Company, Investor and any such Affiliate and
any such Person.

 
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5.8           Indemnification.
 
 (a)           Indemnification by Company.  Subject to the provisions of this
Section 5.8(a), the Company will indemnify and hold Investor and any Warrant
holder, their Affiliates and attorneys, and each of their directors, officers,
shareholders, partners, employees, agents, and any Person who controls Investor
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(collectively, the “Investor Parties” and each an “Investor Party”), harmless
from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”) that any Investor Party may suffer or
incur as a result of or relating to (a) any breach of any of the
representations, warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents, (b) any action instituted
against any Investor Party, or any of them or their respective Affiliates, by
any stockholder of the Company who is not an Affiliate of an Investor Party,
with respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of Investor’s
representation, warranties or covenants or agreements under the Transaction
Documents or any agreements or understandings Investor may have with any such
stockholder or any violations by Investor of state or federal securities laws or
any conduct by Investor which constitutes fraud, gross negligence, willful
misconduct or malfeasance), (c)  any untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement (or in a
Registration Statement as amended by any post-effective amendment thereof by the
Company) or arising out of or based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, and/or (d) any untrue statement or alleged
untrue statement of a material fact included in any Prospectus ( or any
amendments or supplements to any Prospectus ), or arising out of or based upon
any omission or alleged omission to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that (i) the Company shall not be
obligated to indemnify any Investor Party for any Losses finally adjudicated to
have been caused solely by an untrue statement of a material fact or an omission
to state a material fact made in reliance upon and conformity with information
furnished to the Company in writing by or on behalf of such Person expressly for
use in the Registration Statement or the Prospectus (or any amendment or
supplement thereto) and (ii) the foregoing indemnity shall not inure to the
benefit of any Investor Party from whom the Person asserting any Losses
purchased Securities, if a copy of the Prospectus (as then supplemented) was not
sent or given by or on behalf of such Investor Party to such Person, if required
by law to have been delivered, at or prior to the written confirmation of the
sale of such Securities to such person, and if delivery of the Prospectus (as
then supplemented) would have cured the defect giving rise to such Losses. The
parties intend that any Losses subject to indemnification under this Section
5.8(a) will be net of insurance proceeds (which Investor agrees to use
commercially reasonable efforts to recover or cause any Investor Party to
recover).  Accordingly, the amount which the Company is required to pay any
Investor Party under this Section 5.8(a) will be reduced by any insurance
proceeds actually recovered by or on behalf of any Investor Party in reduction
of the related Losses.  In addition, if an Investor Party receives
indemnification from the Company under this Section 5.8(a) in respect of any
Losses and subsequently receives any such insurance proceeds, then Investor will
pay, or will cause such other Investor Party to pay, to the Company an amount
equal to the indemnification payment received under this Section 5.8(a) less the
amount of the indemnification payment that would have been due if the insurance
proceeds had been received, realized or recovered before such indemnification
payment was made.  However, no provision herein regarding insurance proceeds
shall delay payment by the Company to any Investor Party for any indemnified
Losses.

 
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(b)           Indemnification by Investor.  Subject to the provisions of this
Section 5.8(b), Investor will indemnify and hold the Company, its Affiliates and
attorneys, and each of the Company’s directors, officers, shareholders,
employees, agents, and any Person who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act (collectively, the
“Company Parties” and each an “Company Party”), harmless from any and all Losses
that any Company Party has been finally adjudicated to have suffered or incurred
solely as a result of (a) any unexcused material breach of any material
representations, warranties, covenants or agreements made by Investor in this
Agreement or in the other Transaction Documents, (b) any conduct by Investor
which constitutes fraud, willful misconduct or malfeasance, (c) any untrue
statement of a material fact contained in a Registration Statement (or in a
Registration Statement as amended by any post-effective amendment thereof by the
Company) based upon any omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case, to the extent the untrue statement or omission was made in reliance upon,
and in conformity with, information furnished to the Company in writing by or on
behalf of any Investor Party expressly for use in the Registration Statement (or
any amendment thereto) and/or (d) any untrue statement of a material fact
included in any Prospectus (or any amendments or supplements to any Prospectus
), or based upon any omission to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, in each case, to the extent the untrue statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Company in writing by or on behalf of any Investor Party
expressly for use in the Prospectus (or any supplement thereto). The parties
intend that any Losses subject to indemnification under this Section 5.8(b) will
be net of insurance proceeds (which the Company agrees to use commercially
reasonable efforts to recover or cause any Company Party to
recover).  Accordingly, the amount which Investor is required to pay any Company
Party under this Section 5.8(b) will be reduced by any insurance proceeds
actually recovered by or on behalf of any Company Party in reduction of the
related Losses.  In addition, if a Company Party receives indemnification from
Investor under this Section 5.8(b) in respect of any Losses and subsequently
receives any such insurance proceeds, then the Company will pay, or will cause
such other Company Party to pay, to Investor an amount equal to the
indemnification payment received under this Section 5.8(b) less the amount of
the indemnification payment that would have been due if the insurance proceeds
had been received, realized or recovered before such indemnification payment was
made. However, no provision herein regarding insurance proceeds shall delay
payment by Investor to any Company Party for any indemnified Losses.
 
(c)           Procedure for Indemnification Claims.  Promptly after a Person
receives notice of a claim or the commencement of an action for which the Person
intends to seek indemnification under this Section 5.8, the Person will notify
the indemnifying party in writing of the claim or commencement of the action,
suit or proceeding; provided, however, that failure to notify the indemnifying
party will not relieve the indemnifying party from liability under this Section
5.8, except to the extent it has been materially prejudiced by the failure to
give notice.  The indemnifying party will be entitled to participate in the
defense of any claim, action, suit or proceeding as to which indemnification is
being sought, and if the indemnifying party is the Company, the indemnifying
party may (but will not be required to) assume the defense against the claim,
action, suit or proceeding with counsel satisfactory to it.  Subject to the
immediately following sentence, if the Company notifies an indemnified party
that it wishes to assume the defense of a claim, action, suit or proceeding, the
Company will not be liable for any legal or other expenses incurred by the
indemnified party in connection with the defense against the claim, action, suit
or proceeding. The indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such indemnified party,
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel, or (iii)
in such action there is, in the reasonable opinion of such separate counsel, a
material conflict with respect to the dispute in question on any material issue
between the position of the Company and the position of the indemnified party
such that it would be inappropriate for one counsel to represent both
parties.  No indemnifying party will be liable to any indemnified party under
this Agreement for any settlement by such indemnified party of any action
effected by such indemnified party without the indemnifying party’s prior
written consent, which shall not be unreasonably withheld or delayed.

 
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5.9           Reservation of Securities.  The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents.
 
5.10         Limited Standstill.  The Company will use reasonable efforts to
deliver to Investor on or before the first Tranche Closing Date, and will
thereafter honor and enforce the provisions of, the Lock-Up Agreements with the
Company’s executive officers, directors and beneficial owners of 10% or more of
the Common Stock.
 
5.11         Issuance of Additional Securities.  The Company shall not issue
additional Common Stock or securities convertible into Common Stock to any
Person (other than Investor, an Affiliate of Investor, or in connection with an
incentive compensation plan), if such issuance would reduce the number of
remaining authorized shares of Common Stock that could be issued by the Company
below the number of remaining authorized shares issuable upon exercise of the
Warrant, without previously amending its Certificate of Incorporation to
increase the number of duly authorized shares of Common Stock by at least the
amount necessary to assume a sufficient number of shares to permit the exercise
in full of the Warrant.  However, nothing in this Section 5.11 shall diminish
the obligation of the Company to issue the Securities to the Investor in
accordance with this Agreement and the Warrant.
 
5.12         Prospectus Availability and Changes.  The Company will make
available to Investor upon request, and thereafter from time to time will
furnish Investor, as many copies of any Prospectus (or of the Prospectus as
amended or supplemented if the Company shall have made any amendments or
supplements thereto after the effective date of the applicable Registration
Statement) as Investor may request for the purposes contemplated by the Act; and
in case Investor is required to deliver a prospectus after the nine-month period
referred to in Section 10(a)(3) of the Act in connection with the sale of the
Warrant Shares, or after the time a post-effective amendment to the applicable
Registration Statement is required pursuant to Item 512(a) of Regulation S-K
under the Act, the Company will prepare, at its expense, promptly upon request
such amendment or amendments to the Registration Statement and the Prospectus as
may be necessary to permit compliance with the requirements of Section 10(a)(3)
of the Act or Item 512(a) of Regulation S-K under the Act, as the case may be.

 
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The Company will advise Investor promptly of the happening of any event within
the time during which a Prospectus is required to be delivered by Investor under
the Act which, in the good faith judgment of the Company, following consultation
with its independent legal counsel, would require the making of any change in
the Prospectus then being used so that the Prospectus would not include an
untrue statement of material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading, and to advise Investor promptly if, during
such period, in the good faith judgment of the Company, following consultation
with its independent legal counsel, it shall become necessary to amend or
supplement any Prospectus to cause such Prospectus to comply with the
requirements of the Act, and in each case, during such time, to prepare and
furnish, at the Company’s expense, to Investor promptly such amendments or
supplements to such Prospectus as may be necessary to reflect any such change or
to effect such compliance. The Company shall not be required to disclose to the
Investor the substance or specific reasons of any of the events referred to in
the immediately preceding sentence, but rather, shall only be required to
disclose that the event has occurred. Notwithstanding anything herein to the
contrary, the Company need not advise the Investor regarding any supplement to
the Prospectus the purpose of which is to update the Prospectus and the
Registration Statement to include information the Company has previously filed
with the SEC pursuant to Section 13 or 15(d) or 14(a) of the Exchange Act and
the rules and regulations promulgated thereunder.
 
5.13           Activity Restrictions.  For so long as Investor or any of its
Affiliates holds any Securities, neither Investor nor any Affiliate will:  (i)
vote any shares of Common Stock owned or controlled by it, solicit any proxies,
or seek to advise or influence any Person with respect to any voting securities
of the Company; (ii) engage or participate in any actions, plans or proposals
which relate to or would result in (a) acquiring additional securities of the
Company, alone or together with any other Person, which would result in
beneficially owning or controlling more than 9.99% of the total outstanding
Common Stock or other voting securities of the Company, (b) an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving Company or any of its subsidiaries, (c) a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, (d) any
change in the present board of directors or management of the Company, including
any plans or proposals to change the number or term of directors or to fill any
existing vacancies on the board, (e) any material change in the present
capitalization or dividend policy of the Company, (f) any other material change
in the Company’s business or corporate structure, including but not limited to,
if the Company is a registered closed-end investment company, any plans or
proposals to make any changes in its investment policy for which a vote is
required by Section 13 of the Investment Company Act of 1940, (g) changes in the
Company’s charter, bylaws or instruments corresponding thereto or other actions
which may impede the acquisition of control of the Company by any Person, (h)
causing a class of securities of the Company to be delisted from a national
securities exchange or to cease to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association, (i) a class of
equity securities of the Company becoming eligible for termination of
registration pursuant  to Section 12(g)(4) of the Act, or (j) any action,
intention, plan or arrangement similar to any of those enumerated above; or
(iii) request the Company or its directors, officers, employees, agents or
representatives to amend or waive any provision of this Section 5.13.

 
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ARTICLE 6
MISCELLANEOUS
 
6.1           Fees and Expenses.  Except for the $20,000.00 non-refundable
document preparation fee previously paid by the Company to counsel for Investor,
the receipt of which is hereby acknowledged by Investor, and the $5,000.00
non-refundable administrative fee payable to counsel for Investor at each
Tranche Closing, and as may be otherwise provided in this Agreement, each party
shall pay the fees and expenses of its own advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents.  The Company acknowledges and agrees that Luce Forward
solely represents Investor, and does not represent the Company or its interests
in connection with the Transaction Documents or the transactions contemplated
thereby.  The Company shall pay all stamp and other taxes and duties levied in
connection with the sale of the Securities, if any, to Investor by the Company.
 
6.2           Notices.  Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of:  (a) the date of
transmission, if such notice or communication is delivered via facsimile or
electronic mail prior to 5:30 p.m., New York City time, on a Trading Day and an
electronic confirmation of delivery is received by the sender, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered later than 5:30 p.m., New York City time, or on a day that is not a
Trading Day, (c) three Trading Days following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given.  The addresses for
such notices and communications are those set forth following the signature page
hereof, or such other address as may be designated in writing hereafter, in the
same manner, by such Person.
 
6.3           Amendments; Waivers.  No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and Investor or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought.  No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.
 
6.4           Headings.  The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
 
6.5           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or obligations
hereunder without the prior written consent of Investor, which consent will not
be unreasonably withheld or delayed.  Investor may assign any or all of its
rights under this Agreement to any Affiliate or to any Person to whom Investor
assigns or transfers any Securities, provided such transferee agrees in writing
to be bound, with respect to the transferred Securities, by the provisions
hereof that apply to the “Investor”.

 
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6.6           No Third-Party Beneficiaries.  This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise expressly set forth in Section 5.8
hereof.
 
6.7           Governing Law.  All questions concerning the construction,
validity, enforcement and interpretation of the Transaction Documents shall be
governed by and construed and enforced in accordance with the internal laws of
the State of New York, without regard to the principles of conflicts of law
thereof.  Each party agrees that all legal proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective affiliates, directors, officers, shareholders,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York.  Each party hereby irrevocably submits
to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or inconvenient venue for such proceeding.  Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof.  Nothing contained herein shall be deemed to limit
in any way any right to serve process in any manner permitted by law.  The
parties hereby waive all rights to a trial by jury.  If either party shall
commence an action or proceeding to enforce any provisions of the Transaction
Documents, then the prevailing party in such action or proceeding shall be
reimbursed by the other party for its attorneys’ fees and other costs and
expenses reasonably incurred in connection with the investigation, preparation
and prosecution of such action or proceeding.
 
6.8           Survival.  The representations and warranties and covenants
contained herein shall survive the Closing and the delivery, exercise and/or
conversion of the Securities, as applicable.
 
6.9           Execution.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.
 
6.10         Severability.  If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 
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6.11           Replacement of Securities.  If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.
 
6.12           Remedies.  In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of
Investor and the Company will be entitled to specific performance under the
Transaction Documents.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations under the Transaction Documents and hereby agrees to waive in any
action for specific performance of any such obligation the defense that a remedy
at law would be adequate.
 
6.13           Payment Set Aside.  To the extent that the Company makes a
payment or payments to Investor pursuant to any Transaction Document or Investor
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.
 
6.14           Liquidated Damages.  The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.
 
6.15           Time of the Essence.  Time is of the essence with respect to all
provisions of this Agreement that specify a time for performance.
 
6.16           Construction.  The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

 
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6.17           Entire Agreement.  The Transaction Documents contain the entire
agreement and understanding of the parties, and supersede all prior and
contemporaneous agreements, term sheets, letters, discussions, communications
and understandings, both oral and written, which the parties acknowledge have
been merged into the Transaction Documents.  Neither party has relied upon any
agreement, assurance, promise, understanding or representation not expressly set
forth in the Transaction Documents and each party agrees that it may only rely
on the agreements, assurances, promises, understandings and representations set
forth therein.
 
6.18           Further Assurances.  From and after the Effective Date, upon the
request of Investor or the Company, each of the Company and Investor shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
 

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized signatories as of the date first
indicated above.
 
ADVAXIS, INC.
 
By:
/s/ Thomas A. Moore

Name: Thomas A. Moore
Title: Chairman and CEO
 
OPTIMUS LIFE SCIENCES CAPITAL PARTNERS, LLC
 
By:
/s/ Terry Peizer

Name: Terry Peizer
Title: Managing Member

 
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Addresses for Notice
 
To Company:
 
Advaxis, Inc.
The Technology Centre of New Jersey
675 Route 1, Suite 119
North Brunswick, NJ 08902
Fax No.:  (732) 545-1084
Email: moore@advaxis.com
 
with a copy to:
 
Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue
New York, NY 10166
Attention:  Robert H. Cohen, Esq.
Fax No.:  (212) 801-6400
Email:  cohenr@gtlaw.com

 
To Investor:
     
Optimus Life Sciences Capital Partners, LLC
 
11150 Santa Monica Boulevard, Suite 1500
 
Los Angeles, CA 90025
 
Fax No.:  (310) 444-5300
 
Email:  info@optimuscg.com
     
with a copy to:
     
Luce Forward Hamilton & Scripps LLP
 
601 South Figueroa Street, Suite 3900
 
Los Angeles, CA 90017
 
Attention:  John C. Kirkland, Esq.
 
Fax No.:  (213) 452-8035
 
Email:  jkirkland@luce.com

 
 

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Exhibit A
 
Form of Warrant
 
 
 

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NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE 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, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), 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.
 
Advaxis, Inc.
 
Warrant To Purchase Common Stock
 
Warrant No.: 2009-1
Issuance Date:  September 24, 2009
   
Number of Warrant Shares:  33,750,000
Initial Exercise Price:  $0.20

 
Advaxis, Inc., a Delaware corporation (“Company”), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Optimus CG II, LLC, the holder hereof, or its designees or assigns
(“Holder”), is entitled, subject to the terms set forth below, to purchase from
the Company, at the Exercise Price (as defined below) then in effect, upon
surrender of this Warrant to Purchase Common Stock (including any Warrants to
Purchase Common Stock issued in exchange, transfer or replacement hereof, the
“Warrant”), at any time or times during the Exercise Period (as defined below),
that number of duly authorized, validly issued, fully paid and non-assessable
shares of Common Stock set forth above (the “Warrant Shares”).

 
 

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ARTICLE 1
EXERCISE OF WARRANT.
 
1.1           Mechanics of Exercise.  Subject to the terms and conditions
hereof, this Warrant may be exercised by the Holder on any day during the
Exercise Period, in whole or in part, by (i) delivery of a written notice to the
Company, in the form attached hereto as Appendix 1 (the “Exercise Notice”), of
the Holder’s election to exercise this Warrant and (ii) payment to the Company
of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the “Aggregate
Exercise Price”) in cash or by wire transfer of immediately available funds, by
the issuance and delivery of a recourse promissory note substantially in the
form attached hereto as Appendix 2 (each, a “Recourse Note”), or, if applicable,
by cashless exercise pursuant to Section 1.3.  The Holder shall not be required
to deliver the original Warrant in order to effect an exercise
hereunder.  Execution and delivery of the Exercise Notice with respect to less
than all of the Warrant Shares shall have the same effect as cancellation of the
original Warrant and issuance of a new Warrant evidencing the right to purchase
the remaining number of Warrant Shares.  On the same Trading Day on which the
Company has received each of the Exercise Notice and the Aggregate Exercise
Price (the “Exercise Delivery Documents”) by 10:30 a.m. Eastern time, or the
following Trading Day if received after such time or on a non-Trading Day, the
Company shall transmit by facsimile an acknowledgment of confirmation of receipt
of the Exercise Delivery Documents to the Holder and the Company’s transfer
agent (the “Transfer Agent”) and (i) provided that the Transfer Agent is
participating in The Depository Trust Company (DTC) Fast Automated Securities
Transfer (FAST) Program, upon the request of the Holder, credit such aggregate
number of Warrant Shares to which the Holder is entitled pursuant to such
exercise to the Holder’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian (DWAC) system, or (ii) if the Transfer Agent is
not participating in the DTC FAST Program, issue and deliver to the Holder or,
at the Holder’s instruction pursuant to the Exercise Notice, the Holder’s agent
or designee, in each case, sent by reputable overnight courier to the address as
specified in the applicable Exercise Notice, a certificate, registered in the
Company’s share register in the name of the Holder or its designee (as indicated
in the applicable Exercise Notice), for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise, which certificate shall not be
imprinted with any restrictive legends and no stop transfer order shall be
placed against the transfer thereof.  Upon delivery of the Exercise Delivery
Documents, the Holder shall be deemed for all corporate purposes to have become
the holder of record of the Warrant Shares with respect to which this Warrant
has been exercised, irrespective of the date such Warrant Shares are credited to
the Holder’s DTC account or the date of delivery of the certificate(s)
evidencing the Warrant Shares (as the case may be). If this Warrant is submitted
in connection with any exercise pursuant to this Section 1.1 and the number of
Warrant Shares represented by this Warrant submitted for exercise is greater
than the number of Warrant Shares being acquired upon an exercise, then the
Company shall as soon as practicable and in no event later than three Trading
Days after any exercise and return of the previously issued Warrant, at its own
expense issue a new Warrant representing the right to purchase the number of
Warrant Shares purchasable immediately prior to such exercise under this
Warrant, less the number of Warrant Shares with respect to which this Warrant is
exercised. No fractional shares of Common Stock are to be issued upon the
exercise of this Warrant, but rather the number of shares of Common Stock to be
issued shall be rounded up to the nearest whole number. The Company shall pay
any and all taxes which may be payable with respect to the issuance and delivery
of Warrant Shares upon exercise of this Warrant.
 
1.2           Exercise Price.
 
  (a)           For purposes of this Warrant, “Exercise Price” means $0.20,
subject to adjustment as provided in paragraph (b) below and subject to
adjustment as provided in Article II hereof.
 
  (b)           Immediately following each Tranche Closing, the Exercise Price
applicable to a number of Warrant Shares equal to the product of (i) the total
number of Warrant Shares issuable upon exercise of this Warrant on the day of
the applicable Tranche Closing multiplied by (ii) the quotient of (1) the
aggregate Tranche Purchase Price paid by the Holder to the Company on the day of
the applicable Tranche Closing divided by (2) the Maximum Placement shall be
automatically adjusted to equal the Closing Sale Price of a share of Common
Stock on the Trading Day immediately preceding the applicable Tranche Notice
Date, and such adjusted Exercise Price and such number of Warrant Shares to
which it applies shall be set forth on Schedule 1 attached hereto (subject to
adjustment as provided in Article II hereof after the initial issuance date
hereof).  Once the Exercise Price applicable to a Warrant Share is adjusted
pursuant to the foregoing, no further adjustment to the Exercise Price
applicable to such Warrant Share shall be made pursuant to this paragraph.

 
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1.3           Cashless Exercise.  Notwithstanding anything contained herein to
the contrary (other than Section 1.5 below), if at any time a registration
statement is not effective (or the prospectus contained therein is not available
for use) for the resale by the Holder of the Warrant Shares that are the subject
of the Exercise Notice (the “Unavailable Warrant Shares”), the Holder may, in
its sole discretion, exercise this Warrant in whole or in part and, in lieu of
making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless Exercise”):
 
Net Number = (B-C) x A
 
    B
 
For purposes of the foregoing formula:

A = the total number of shares with respect to which this Warrant is then being
exercised.
 
B = the average of the Closing Sale Prices of the shares of Common Stock (as
reported by Bloomberg) for the five (5) consecutive Trading Days ending on the
date immediately preceding the date of the Exercise Notice.
 
C = the Exercise Price then in effect for the applicable Warrant Shares at the
time of such exercise.
 
1.4           Company’s Failure to Timely Deliver Securities.  If the Company
shall fail for any reason or for no reason to timely issue to the Holder or its
designee a certificate for the number of Warrant Shares to which the Holder is
entitled and register such Warrant Shares on the Company’s share register or to
credit the Holder’s balance account with DTC for such number of Warrant Shares
to which the Holder is entitled upon the Holder’s exercise of this Warrant (as
the case may be), then, in addition to all other remedies available to the
Holder, the Company shall pay in cash to the Holder on each day that the
issuance of such Warrant Shares is not timely effected an amount equal to 1.5%
of the product of (A) the sum of the number of Warrant Shares not issued to the
Holder on a timely basis and to which the Holder is entitled and (B) the Closing
Sale Price of the shares of Common Stock on the Trading Day immediately
preceding the last possible date which the Company could have issued such
Warrant Shares to the Holder without violating Section 1.1.  In addition to the
foregoing, if after the Company’s receipt of the applicable Exercise Delivery
Documents the Company shall fail to timely issue to the Holder or its designee a
certificate for the number of Warrant Shares to which the Holder is entitled and
register such Warrant Shares on the Company’s share register or to credit the
Holder’s balance account with DTC for the number of Warrant Shares to which the
Holder is entitled upon the Holder’s exercise hereunder (as the case may be),
and the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of Warrant
Shares issuable upon such exercise that the Holder anticipated receiving from
the Company (a “Buy-In”), then the Company shall, within three Trading Days
after the Holder’s request and in the Holder’s discretion, either (i) pay cash
to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s obligation to deliver such
certificate or credit such Holder’s balance account with DTC for the number of
Warrant Shares to which the Holder is entitled upon the Holder’s exercise
hereunder (as the case may be) and to issue such Warrant Shares shall terminate,
or (ii) promptly honor its obligation to deliver to the Holder or its designee a
certificate or certificates representing such Warrant Shares or credit such
Holder’s balance account with DTC for the number of Warrant Shares to which the
Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and
pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (A) such number of shares of Common Stock sold by
Holder in satisfaction of its obligations, times (B) the Closing Bid Price on
the date of exercise.

 
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1.5           Exercise Limitation.  Notwithstanding any other provision, at no
time may the Holder exercise this Warrant such that the number of Warrant Shares
to be received pursuant to such exercise aggregated with all other shares of
Common Stock then owned by the Holder beneficially or deemed beneficially owned
by the Holder would result in the Holder owning more than 4.99% of all of such
Common Stock as would be outstanding on such Exercise Date, as determined in
accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder.  In addition, as of any date, the aggregate number of
shares of Common Stock into which this Warrant is exercisable within 61 days,
together with all other shares of Common Stock then beneficially owned (as such
term is defined in Rule 13(d) under the Exchange Act) by Holder and its
affiliates, shall not exceed 9.99% of the total outstanding shares of Common
Stock as of such date.  At no time when the number of Warrant Shares then owned
by the Holder, when aggregated with all other shares of Common Stock then owned
by the Holder beneficially or deemed beneficially owned by the Holder, would
result in the Holder owning more than 1.0% of all outstanding Common Stock will
Holder vote or cause to be voted any such shares.
 
1.6           Restrictions.  For so long as Holder holds this Warrant or any
Warrant Shares, Holder will not:  (i) vote any shares of Common Stock owned or
controlled by it, solicit any proxies, or seek to advise or influence any Person
with respect to any voting securities of the Company; (ii) engage or participate
in any actions, plans or proposals which relate to or would result in (a)
acquiring additional securities of the Company, alone or together with any other
Person, which would result in beneficially owning or controlling more than 9.99%
of the total outstanding Common Stock or other voting securities of the Company,
(b) an extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving Company or any of its subsidiaries, (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, (e) any material
change in the present capitalization or dividend policy of the Company, (f) any
other material change in the Company’s business or corporate structure,
including but not limited to, if the Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any Person, (h) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) a class of equity securities of the Company
becoming eligible for termination of registration pursuant  to Section 12(g)(4)
of the Act, or (j) any action, intention, plan or arrangement similar to any of
those enumerated above; or (iii) request the Company or its directors, officers,
employees, agents or representatives to amend or waive any provision of this
Section 1.6.

 
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1.7           Disputes.  In the case of a dispute as to the determination of the
Exercise Price or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 12.
 
1.8           Insufficient Authorized Shares.  If at any time while this Warrant
(or any portion thereof) remains outstanding the Company does not have a
sufficient number of authorized and unreserved shares of Common Stock to satisfy
its obligation to reserve for issuance upon exercise of this Warrant at least a
number of shares of Common Stock equal to 110% of the number of shares of Common
Stock as shall from time to time be necessary to effect the exercise in full of
any unexercised portion of this Warrant (the “Required Reserve Amount”) (an
“Authorized Share Failure”), then the Company shall immediately take all action
necessary to increase the Company’s authorized shares of Common Stock to an
amount sufficient to allow the Company to reserve the Required Reserve Amount
for the unexercised portion of the Warrant then outstanding.  Without limiting
the generality of the foregoing sentence, as soon as practicable after the date
of the occurrence of an Authorized Share Failure, but in no event later than 90
days after the occurrence of such Authorized Share Failure, the Company shall
use commercially reasonable efforts to hold a meeting of its stockholders for
the approval of an increase in the number of authorized shares of Common
Stock.  In connection with such meeting, the Company shall provide each
stockholder with a proxy statement and shall use its commercially reasonable
efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.
 
ARTICLE 2
ADJUSTMENT UPON SUBDIVISION OR COMBINATION OF COMMON STOCK.
 
If the Company at any time on or after the Issuance Date subdivides (by any
stock split, stock dividend, recapitalization or otherwise) one or more classes
of its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of Warrant Shares will be proportionately
increased.  If the Company at any time on or after the Issuance Date combines
(by combination, reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately
decreased.  Any adjustment under this ARTICLE 2 shall become effective at the
close of business on the date the subdivision or combination becomes effective.

 
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ARTICLE 3
PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS
 
3.1           Purchase Rights.  In addition to any adjustments pursuant to
ARTICLE 2 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon
the terms applicable to such Purchase Rights, the aggregate Purchase Rights
which the Holder could have acquired if the Holder had held the number of shares
of Common Stock acquirable upon complete exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) immediately before
the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the grant, issue or
sale of such Purchase Rights.
 
3.2           Fundamental Transactions.  The Company shall not enter into or be
party to a Fundamental Transaction unless the Successor Entity assumes in
writing all of the obligations of the Company under this Warrant in accordance
with the provisions of this Section 3.2 pursuant to written agreements in form
and substance satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements to deliver
to each holder of Warrants in exchange for such Warrants a security of the
Successor Entity evidenced by a written instrument substantially similar in form
and substance to this Warrant, including, without limitation, an adjusted
exercise price equal to the value for the shares of Common Stock reflected by
the terms of such Fundamental Transaction, and exercisable for a corresponding
number of shares of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without regard to any
limitations on the exercise of this Warrant) prior to such Fundamental
Transaction, and satisfactory to the Required Holders.  Upon the occurrence of
any Fundamental Transaction, the Successor Entity shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power
of the Company and shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been named as the
Company herein.  Upon consummation of the Fundamental Transaction, the Successor
Entity shall deliver to the Required Holders confirmation that there shall be
issued upon exercise of this Warrant at any time after the consummation of the
Fundamental Transaction, in lieu of the shares of the Common Stock (or other
securities, cash, assets or other property) purchasable upon the exercise of
this Warrant prior to such Fundamental Transaction, such shares of stock,
securities, cash, assets or any other property whatsoever (including warrants or
other purchase or subscription rights) which the Required Holders would have
been entitled to receive upon the happening of such Fundamental Transaction had
this Warrant been converted immediately prior to such Fundamental Transaction,
as adjusted in accordance with the provisions of this Warrant.  In addition to
and not in substitution for any other rights hereunder, prior to the
consummation of any Fundamental Transaction pursuant to which holders of shares
of Common Stock are entitled to receive securities or other assets with respect
to or in exchange for shares of Common Stock (a “Corporate Event”), the Company
shall make appropriate provision to insure that the Required Holders will
thereafter have the right to receive upon an exercise of this Warrant at any
time after the consummation of the Fundamental Transaction, in lieu of the
shares of the Common Stock (or other securities, cash, assets or other property)
purchasable upon the exercise of this Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or subscription
rights) which the Required Holders would have been entitled to receive upon the
happening of such Fundamental Transaction had this Warrant been exercised
immediately prior to such Fundamental Transaction.  Provision made pursuant to
the preceding sentence shall be in a form and substance reasonably satisfactory
to the Required Holders.  The provisions of this Section 3.2  shall apply
similarly and equally to successive Fundamental Transactions and Corporate
Events and shall be applied without regard to any limitations on the exercise of
this Warrant.

 
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3.3           Notwithstanding the foregoing, in the event of a Fundamental
Transaction other than one in which the Successor Entity is a Public Successor
Entity that assumes this Warrant such that this Warrant shall be exercisable for
the publicly traded common stock of such Public Successor Entity, at the request
of the Holder delivered before the 90th day after such Fundamental Transaction,
the Company (or the Successor Entity) shall purchase this Warrant from the
Holder by paying to the Holder, within five (5) Trading Days after such request
(or, if later, on the effective date of the Fundamental Transaction), cash in an
amount equal to the value of the remaining unexercised portion of this Warrant
on the date of such consummation, which value shall be determined by use of the
Black Scholes Option Pricing Model using a volatility equal to the 100 day
average historical price volatility prior to the date of the public announcement
of such Fundamental Transaction.
 
ARTICLE 4
NONCIRCUMVENTION
 
The Company hereby covenants and agrees that the Company will not, by amendment
of its Certificate of Incorporation, Bylaws or through any reorganization,
transfer of assets, consolidation, merger, scheme of arrangement, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, and
will at all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder.  Without
limiting the generality of the foregoing, the Company (i) shall not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) shall take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, so long as the Warrant is
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the purpose of
effecting the exercise of the Warrant, 110% of the number of shares of Common
Stock as shall from time to time be necessary to effect the exercise of the
unexercised portion of the Warrant then outstanding (without regard to any
limitations on exercise).
 
 
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ARTICLE 5
WARRANT HOLDER NOT DEEMED A STOCKHOLDER
 
Except as otherwise specifically provided herein, the Holder, solely in such
Person’s capacity as a holder of this Warrant, shall not be entitled to vote or
receive dividends or be deemed the holder of share capital of the Company for
any purpose, nor shall anything contained in this Warrant be construed to confer
upon the Holder, solely in such Person’s capacity as the Holder of this Warrant,
any of the rights of a stockholder of the Company or any right to vote, give or
withhold consent to any corporate action (whether any reorganization, issue of
stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
which such Person is then entitled to receive upon the due exercise of this
Warrant.  In addition, nothing contained in this Warrant shall be construed as
imposing any liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the
Company.  Notwithstanding this ARTICLE 5, the Company shall provide the Holder
with copies of the same notices and other information given to the stockholders
of the Company generally, contemporaneously with the giving thereof to the
stockholders.
 
ARTICLE 6
REISSUANCE OF WARRANTS; COMPANY CALL RIGHT
 
6.1           Transfer of Warrant.
 
  a.           This Warrant and the Warrant Shares constitute “restricted
securities” as such term is defined in Rule 144(a)(3) under the Securities Act
of 1933, as amended (the “Act”) and may only be disposed of in compliance with
U.S. federal securities laws and applicable state securities or “blue sky”
laws.  Without limiting the generality of the foregoing, except in connection
with a bona fide pledge or transfer to an affiliate of Holder, (i) the Warrant
and the Warrant Shares may not be offered for sale, sold, transferred, assigned,
pledged or otherwise distributed unless (A) subsequently registered thereunder,
(B) Investor shall have delivered to the Company an opinion of counsel
reasonably acceptable to the Company (which may be Luce Forward Hamilton &
Scripps LLP (“Luce Forward”)), in a form generally acceptable to the Company, to
the effect that the Warrant or the Warrant Shares, as applicable, to be offered
for sale, sold, transferred, assigned, pledged or otherwise distributed may be
offered for sale, sold, transferred, assigned, pledged or otherwise distributed
pursuant to an exemption from such registration, or (C) the Warrant or the
Warrant Shares, as applicable, can be offered for sale, sold, transferred,
assigned, pledged or otherwise distributed pursuant to Rule 144 or Rule 144A
promulgated under the Act, as applicable.
 
  b.           So long as is required by this Section 6.1, the certificates or
other instruments representing the Warrant shall bear any legends as required by
applicable state securities or “blue sky” laws, in addition to the restrictive
legend set forth on the front page of this Warrant.  The parties acknowledge and
agree that the Warrant Shares will be issued without any restrictive legends.

 
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  c.           If this Warrant is to be transferred, in accordance with this
Section 6.1, the Holder shall surrender this Warrant to the Company, whereupon
the Company will forthwith issue and deliver upon the order of the Holder a new
Warrant, registered as the Holder may request, representing the right to
purchase the number of Warrant Shares being transferred by the Holder and, if
less then the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant to the Holder representing the right to
purchase the number of Warrant Shares not being transferred.
 
6.2           Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of
evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Warrant, and, in the case of loss, theft or destruction,
of any indemnification undertaking by the Holder to the Company in customary
form and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant
representing the right to purchase the Warrant Shares then underlying this
Warrant.
 
6.3           Exchangeable for Multiple Warrants.  This Warrant is exchangeable,
upon the surrender hereof by the Holder at the principal office of the Company,
for a new Warrant or Warrants representing in the aggregate the right to
purchase the number of Warrant Shares then underlying this Warrant, and each
such new Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such surrender;
provided, however, that no Warrants for fractional shares of Common Stock shall
be given.
 
6.4           Issuance of New Warrants.  Whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i)
shall be of like tenor with this Warrant, (ii) shall represent, as indicated on
the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 6.1 or Section 6.3, the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.
 
6.5           Company Call Right. If a Funding Default occurs and the Holder has
not previously exercised this Warrant in full, the Company shall have the right
to demand the surrender of this Warrant, or any remaining portion thereof, from
the Holder without compensation, and the Holder shall promptly surrender this
Warrant, or remaining portion thereof. Following such demand for surrender, this
Warrant shall automatically be canceled and shall have no further force or
effect.

 
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ARTICLE 7
NOTICES
 
Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 6.2 of
the Purchase Agreement.  The Company shall provide the Holder with prompt
written notice of all actions taken pursuant to this Warrant, including in
reasonable detail a description of such action and the reason
therefore.  Without limiting the generality of the foregoing, the Company will
give written notice to the Holder (i) as soon as practicable upon any adjustment
of the Exercise Price, setting forth in reasonable detail, and certifying, the
calculation of such adjustment and (ii) at least fifteen days prior to the date
on which the Company closes its books or takes a record (A) with respect to any
dividend or distribution upon the shares of Common Stock, (B) with respect to
any grants, issuances or sales of any Options, Convertible Securities or rights
to purchase stock, warrants, securities or other property to holders of shares
of Common Stock as such or (C) for determining rights to vote with respect to
any Fundamental Transaction, dissolution or liquidation, provided in each case
that such information shall be made known to the public prior to or in
conjunction with such notice being provided to the Holder.
 
ARTICLE 8
AMENDMENT AND WAIVER
 
Except as otherwise provided herein, the provisions of this Warrant may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company has
obtained the written consent of the Holder; provided that except as provided
herein, no such action may increase the exercise price of the Warrant or
decrease the number of shares or class of stock obtainable upon exercise of the
Warrant without the written consent of the Holder.  No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Warrants then outstanding
 
ARTICLE 9
GOVERNING LAW
 
This Warrant shall be governed by and construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and
performance of this Warrant 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.
 
ARTICLE 10
CONSTRUCTION; HEADINGS
 
This Warrant shall be deemed to be jointly drafted by the Company and the Holder
and shall not be construed against any person as the drafter hereof.  The
headings of this Warrant are for convenience of reference and shall not form
part of, or affect the interpretation of, this Warrant.

 
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ARTICLE 11
DISPUTE RESOLUTION
 
In the case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall submit the
disputed determinations or arithmetic calculations via facsimile within 2
Trading Days of receipt of the Exercise Notice giving rise to such dispute, as
the case may be, to the Holder.  If the Holder and the Company are unable to
agree upon such determination or calculation of the Exercise Price or the
Warrant Shares within three Trading Days of such disputed determination or
arithmetic calculation being submitted to the Holder, then the Company shall,
within 2 Trading Days submit via facsimile (a) the disputed determination of the
Exercise Price or arithmetic calculation to an independent, reputable investment
bank or independent registered public accounting firm selected by Holder subject
to Company’s approval, which may not be unreasonably withheld or delayed, or (b)
the disputed arithmetic calculation of the Warrant Shares to the Company’s
independent registered public accounting firm.  The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than 3 Trading Days from the time it receives the disputed
determinations or calculations.  Such investment bank’s or accountant’s
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
 
ARTICLE 12
REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF
 
The remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing
herein shall limit the right of the Holder right to pursue actual damages for
any failure by the Company to comply with the terms of this Warrant.  The
Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate.  The Company therefore agrees that, in the event of any such
breach or threatened breach, the holder of this Warrant shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.
 
ARTICLE 13
DEFINITIONS
 
For purposes of this Warrant, the following terms shall have the following
meanings:
 
13.1           “Bloomberg” means Bloomberg Financial Markets.
 
13.2           “Closing Bid Price” and “Closing Sale Price” means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Trading Market, as reported by
Bloomberg, or, if the Trading Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00 p.m., Eastern time, as reported by Bloomberg, or,
if the Trading Market is not the principal securities exchange or trading market
for such security, the last closing bid price or last trade price, respectively,
of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg, or if the foregoing
do not apply, the last closing bid price or last trade price, respectively, of
such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, or, if no closing bid price or last
trade price, respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any market makers
for such security as reported in the “pink sheets” by Pink Sheets LLC (formerly
the National Quotation Bureau, Inc.).  If the Closing Bid Price or the Closing
Sale Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Closing Bid Price or the Closing Sale Price, as the
case may be, of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder.  If the Company and the
Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to ARTICLE 11.  All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.

 
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13.3           “Common Stock” means (i) the Company’s shares of Common Stock,
par value $0.001 per share, and (ii) any share capital into which such Common
Stock shall have been changed or any share capital resulting from a
reclassification of such Common Stock.
 
13.4           “Convertible Securities” means any stock or securities (other
than Options) directly or indirectly convertible into or exercisable or
exchangeable for shares of Common Stock.
 
13.5           “Exercise Period” means that period beginning on the Trading Day
immediately following the effective date of the Registration Statement (or, in
the case of a cashless exercise pursuant to Section 1.3 hereof, the first date
on which Warrant Shares are eligible for resale without limitation under Rule
144) and continuing until the earlier of (i) 11:59 p.m., Eastern time, on the
third (3rd) anniversary of the effective date of the Registration Statement, or
(ii) a Funding Default; provided, however, that the Exercise Period shall be
suspended for any period during which either (A) the effectiveness of the
Registration Statement lapses for any reason (including, without limitation, the
issuance of a stop order by the SEC) or the Registration Statement or prospectus
included therein is otherwise unavailable for the resale of Warrant Shares, or
(B) Warrant Shares are not eligible for resale without limitation under Rule 144
under the Securities Act (it being understood that the Holder shall not be
permitted to exercise all or any portion of this Warrant during any such
suspension period).
 
13.6           “Fundamental Transaction” means that the (A) Company shall,
directly or indirectly, in one or more related transactions, (i) consolidate or
merge with or into (whether or not the Company is the surviving corporation)
another Person or Persons, or (ii) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Company
to another Person, or (iii) allow another Person to make a purchase, tender or
exchange offer that is accepted by the holders of more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock
held by the Person or Persons making or party to, or associated or affiliated
with the Persons making or party to, such purchase, tender or exchange offer),
(iv) consummate a stock purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another Person whereby such other Person acquires
more than the 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other Person or other Persons making or party
to, or associated or affiliated with the other Persons making or party to, such
stock purchase agreement or other business combination), or (v) reorganize,
recapitalize or reclassify its Common Stock, or (B) any “person” or “group” (as
these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
Act) is or shall become the “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of 50% of the aggregate Common Stock
of the Company, other than persons or groups who exceed such ownership level as
of the date of issuance of this Warrant.

 
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13.7           “Funding Default” means a failure by Investor to accept a Tranche
Notice delivered by the Company, provided such Tranche Notice was delivered in
accordance with the terms and conditions of the Purchase Agreement (including
the timely and full satisfaction of the conditions to the obligation of Investor
to accept a Tranche Notice set forth in Section 2.3(c) of the Purchase
Agreement), and to acquire and pay for the Preferred Shares in accordance
therewith upon delivery of such Preferred Shares to the Investor in accordance
with the terms of the Purchase Agreement (and the timely delivery by the Company
of the other Required Tranche Deliveries required to be delivered by it and the
timely and full satisfaction by the Company of all other conditions for the
Tranche Closing required to be satisfied by it as set forth in Sections 2.3(d)
and (e) of the Purchase Agreement).
 
13.8           “Investor” means Optimus Capital Partners, LLC, a Delaware
limited liability company, dba Optimus Life Sciences Capital Partners, LLC
(including its designees, successors and assigns).
 
13.9           “Maximum Placement” means $5,000,000.00.
 
13.10         “Options” means any rights, warrants or options to subscribe for
or purchase shares of Common Stock or Convertible Securities.
 
13.11         “Parent Entity” of a Person means an entity that, directly or
indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on a Trading Market, or, if there is more
than one such Person or Parent Entity, the Person or Parent Entity with the
largest public market capitalization as of the date of consummation of the
Fundamental Transaction.
 
13.12         “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.
 
13.13         “Preferred Shares” means shares of Series A Preferred Stock of the
Company provided for in the Certificate of Designations, to be issued to
Investor pursuant to the Purchase Agreement.
 
13.14         “Purchase Agreement” means the Preferred Stock Purchase Agreement
dated September 24, 2009, by and among the Company and the investors referred to
therein.
 
13.15         “Registration Statement” means a registration statement
registering for resale the Warrant Shares, and except where the context
otherwise requires, means the registration statement, as amended, including (i)
all documents filed as a part thereof and (ii) any information contained in a
prospectus filed with the Securities and Exchange Commission in connection with
such registration statement, to the extent such information is deemed under the
Act to be part of the registration statement.

 
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13.16         “Required Holders” means the Holders of the Warrants representing
at least a majority of shares of Warrant Shares underlying the Warrants then
outstanding.
 
13.17         “Trading Market” means the OTC Bulletin Board, the NASDAQ Capital
Market, the NASDAQ Global Market, the NASDAQ Global Select Market, the NYSE
Amex, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.
 
13.18         “Public Successor Entity” means a Successor Entity that is a
publicly traded corporation whose stock is quoted or listed for trading on a
Trading Market.
 
13.19         “Successor Entity” means the Person (or, if so elected by the
Required Holders, the Parent Entity) formed by, resulting from or surviving any
Fundamental Transaction or the Person (or, if so elected by the Required
Holders, the Parent Entity) with which such Fundamental Transaction shall have
been entered into.
 
13.20         “Trading Day” means any day on which the Common Stock is traded on
a Trading Market; provided that it shall not include any day on which the Common
Stock (a) is suspended from trading, or (b) is scheduled to trade on such
exchange or market for less than 5 hours.
 
13.21         “Tranche Closing” has the meaning set forth in the Purchase
Agreement.

 
14

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock
to be duly executed as of the Issuance Date set out above.
 

ADVAXIS, INC.    
By:
 
Name:
 
Title:
     
By:
 
Name:
 
Title:
 

 
15

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SCHEDULE  1
 
EXERCISE PRICES AS ADJUSTED
 
Exercise Price
 
Number of Warrant Shares at Exercise Price
     

 
 
 

--------------------------------------------------------------------------------

 

APPENDIX 1
 
EXERCISE NOTICE
 
ADVAXIS, INC.
 
The undersigned hereby exercises the right to purchase ________________ shares
of Common Stock (“Warrant Shares”) of Advaxis, Inc., a Delaware corporation
(“Company”), evidenced by the attached Warrant to Purchase Common Stock
(“Warrant”).  Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.  The Holder intends that
payment of the Exercise Price shall be made as:
 
___           Cash Exercise with respect to ____________ Warrant Shares having
an exercise price of $______ per share ___
 
___           Cashless Exercise with respect to ____________ Warrant Shares
having an exercise price of $______ per share ___
 
___           Recourse Note Exercise with respect to ____________ Warrant Shares
having an exercise price of $______ per share
 
Please issue:
 
___           A certificate or certificates representing said shares of Common
Stock in the name specified below
 
___           Said shares in electronic form to the Deposit/Withdrawal at
Custodian (DWAC) account with Depository Trust Company (DTC) specified below.
 

     
By:
 
Name:
 
Title:
 

 
 

--------------------------------------------------------------------------------

 
 
ACKNOWLEDGMENT
 
The Company hereby acknowledges the foregoing Exercise Notice and hereby directs
[_______________________________] to issue the above indicated number of shares
of Common Stock as specified above, in accordance with the Transfer Agent
Instructions dated [_______________________________] from the Company, and
acknowledged and agreed to by the transfer agent.
 
ADVAXIS, INC.
   
By:
 
Name:
 
Title:
 

 
 
 

--------------------------------------------------------------------------------

 

APPENDIX 2
 
FORM OF NOTE
 
SECURED PROMISSORY NOTE
 
$[_____________]
 
Date: [________], 20[__]

 
FOR VALUE RECEIVED, [_____________] (“Borrower”) promises to pay to the order of
Advaxis, Inc. (“Lender”), at [________], or at such other place as Lender may
from time to time designate in writing, the principal sum of $[________], with
interest, as follows:
 
1.           Interest.  The principal balance outstanding, from time to time,
shall bear interest from and after the date hereof at the rate of 2.0% per
year.  Interest shall be calculated on a simple interest basis and the number of
days elapsed during the period for which interest is being calculated.  Interest
not paid when due shall be added to the principal.
 
2.           Payments.  If not sooner paid, the entire unpaid principal balance,
interest thereon and any other charges due and payable under this Note shall be
due and payable on the fourth anniversary of the date of this Note (“Maturity
Date”); provided, however, that in no event shall this Note be due or payable at
any time that (a) Lender is in default of any preferred stock purchase agreement
for Series A Preferred Stock or any Warrant issued pursuant thereto, any loan
agreement or other material agreement, or (b) there are any shares of Series A
Preferred Stock of Lender issued or outstanding.  Borrower shall have the right
to prepay all or any part of the principal balance of this Note at any time
without penalty or premium.  In the event that Lender redeems all or a portion
of any shares of Series A Preferred Stock then held by Borrower, Borrower shall
apply, and Lender may offset, the proceeds of any such redemption to pay down
the accrued interest and outstanding principal of this Note.  All payments shall
be first be applied to interest, then to reduce the outstanding principal.
 
3.           Full Recourse Note.  THIS IS A FULL RECOURSE PROMISSORY
NOTE.  Accordingly, notwithstanding that Borrower’s obligations under this Note
are secured by the Collateral, in the event of a material default hereunder,
Lender shall have full recourse to all the other assets of Borrower.  Moreover,
Lender shall not be required to proceed against or exhaust any Collateral, or to
pursue any Collateral in any particular order, before Lender pursues any other
remedies against Borrower or against any of Borrower’s assets.
 
4.           Security
 
a.           Pledge.  As security for the due and prompt payment and performance
of all payment obligations under this Note and any modifications, replacements
and extensions hereof (collectively, “Secured Obligations”), Borrower hereby
pledges and grants a security interest to Lender in all of Borrower’s right,
title, and interest in and to all of the following, now owned or hereafter
acquired or arising (together the “Collateral”):
 
i.           Publicly traded shares of common stock, preferred stock, bonds,
notes and/or debentures (collectively, “Pledged Securities”) with a fair market
value on the date hereof at least equal to the principal amount of this Note,
based upon the trading price of such securities on the Pink Sheets, OTC Bulletin
Board, NASDAQ Capital Market, NASDAQ Global Market, NASDAQ Global Select Market,
NYSE Amex, or New York Stock Exchange;

 
 

--------------------------------------------------------------------------------

 
 
ii.           all rights of Borrower with respect to or arising out of the
Pledged Securities, including voting rights, and all equity and debt securities
and other property distributed or distributable with respect thereto as a result
of merger, consolidation, dissolution, reorganization, recapitalization, stock
split, stock dividend, reclassification, exchange, redemption, or other change
in capital structure; and
 
iii.           all proceeds, replacements, substitutions, accessions and
increases in any of the Collateral.
 
b.           Replacement Securities.  So long as any Secured Obligations remain
outstanding, in the event that Borrower sells or disposes of any Pledged
Securities, Borrower shall promptly provide replacement securities of equal or
greater value.
 
c.           Rights With Respect to Distributions.  So long as no default shall
have occurred and be continuing under this Note, Borrower shall be entitled to
receive any and all dividends and distributions made with respect to the Pledged
Securities and any other Collateral.  However, upon the occurrence and during
the continuance of any default, Lender shall have the sole right (unless
otherwise agreed by Lender) to receive and retain dividends and distributions
and apply them to the outstanding balance of this Note or hold them as
Collateral, at Lender’s election.
 
d.           Voting Rights.  So long as no default shall have occurred and be
continuing under this Note, Borrower shall be entitled to exercise all voting
rights pertaining to the Pledged Securities and any other Collateral.  However,
upon the occurrence and during the continuance of any default, all rights of
Borrower to exercise the voting rights that Borrower would otherwise be entitled
to exercise with respect to the Collateral shall cease and (unless otherwise
agreed by Lender) all such rights shall thereupon become vested in Lender, which
shall thereupon have the sole right to exercise such rights.
 
e.           Financing Statement; Further Assurances.  Borrower agrees,
concurrently with executing this Note, that Lender may file a UCC-1 financing
statement relating to the Collateral in favor of Lender, and any similar
financing statements in any jurisdiction in which Lender reasonably determines
such filing to be necessary.  Borrower further agrees that at any time and from
time to time Borrower shall promptly execute and deliver all further instruments
and documents that Lender may request in order to perfect and protect the
security interest granted hereby, or to enable Lender to exercise and enforce
its rights and remedies with respect to any Collateral, including, following an
event of default, delivering the Collateral to Lender to hold as secured party.

 
2

--------------------------------------------------------------------------------

 
 
f.           Powers of Lender.  Borrower hereby appoints Lender as Borrower’s
true and lawful attorney-in-fact to perform any and all of the following acts,
which power is coupled with an interest, is irrevocable until the Secured
Obligations are paid and performed in full, and may be exercised from time to
time by Lender in its discretion:  To take any action and to execute any
instrument which Lender may deem reasonably necessary or desirable to accomplish
the purposes of this Section 4(f) and, more broadly, this Note including,
without limitation:  (i) to exercise voting and consent rights with respect to
Collateral in accordance with this Note, (ii) during the continuance of any
default hereunder, to receive, endorse and collect all instruments or other
forms of payment made payable to Borrower in respect of the Collateral or any
part thereof and to give full discharge for the same, (iii) to perform or cause
the performance of any obligation of Borrower hereunder in Borrower’s name or
otherwise, (iv) during the continuance of any default hereunder, to liquidate
any Collateral pledged to Lender hereunder and to apply proceeds thereof to the
payment of the Secured Obligations or to place such proceeds into a cash
collateral account or to transfer the Collateral into the name of Lender, all at
Lender’s sole discretion, (v)  to enter into any extension, reorganization or
other agreement relating to or affecting the Collateral, and, in connection
therewith, to deposit or surrender control of the Collateral, (vi) to accept
other property in exchange for the Collateral, (vii) to make any compromise or
settlement Lender deems desirable or proper, and (viii) to execute on Borrower’s
behalf and in Borrower’s name any documents required in order to give Lender a
continuing first lien upon the Collateral or any part thereof.
 
5.           Additional Terms
 
a.           No Waiver.  The acceptance by Lender of payment of a portion of any
installment when due or an entire installment but after it is due shall neither
cure nor excuse the default caused by the failure of Borrower timely to pay the
whole of such installment and shall not constitute a waiver of Lender’s right to
require full payment when due of any future or succeeding installments.
 
b.           Default.  Any one or more of the following shall constitute a
“default” under this Note:  (i) a default in the payment when due of any amount
hereunder, (ii) Borrower’s refusal to perform any material term, provision or
covenant under this Note, (iii) the commencement of any liquidation,
receivership, bankruptcy, assignment for the benefit of creditors or other
debtor-relief proceeding by or against Borrower, or subject to Section 4(b), the
Collateral is transferred by Borrower without being replaced by Pledged
Securities of equal or greater fair market value on the date of transfer, and
(iv) the levying of any attachment, execution or other process against Borrower,
or subject to Section 4(b) the Collateral or any material portion thereof.
 
c.           Default Rights
 
i.           Upon the occurrence of any payment default Lender may, at its
election, declare the entire balance of principal and interest under this Note
immediately due and payable.  A delay by Lender in exercising any right of
acceleration after a default shall not constitute a waiver of the default or the
right of acceleration or any other right or remedy for such default.  The
failure by Lender to exercise any right of acceleration as a result of a default
shall not constitute a waiver of the right of acceleration or any other right or
remedy with respect to any other default, whenever occurring.
 
ii.           Further, upon the occurrence of any material non-monetary default,
following 30 days notice from Lender to Borrower specifying the default and
demanded manner of cure for any non-monetary default, Lender shall thereupon and
thereafter have any and all of the rights and remedies to which a secured party
is entitled after a default under the applicable Uniform Commercial Code, as
then in effect.  In addition to its other rights and remedies, Borrower agrees
that, upon the occurrence of default, Lender may in its sole discretion do or
cause to be done any one or more of the following:

 
3

--------------------------------------------------------------------------------

 
 
d.           Proceed to realize upon the Collateral or any portion thereof as
provided by law, and without liability for any diminution in price which may
have occurred, sell the Collateral or any part thereof, in such manner, whether
at any public or private sale, and whether in one lot as an entirety, or in
separate portions, and for such price and other terms and conditions as is
commercially reasonable given the nature of the Collateral.
 
e.           If notice to Borrower is required, give written notice to Borrower
at least ten days before the date of sale of the Collateral or any portion
thereof.
 
f.           Transfer all or any part of the Collateral into Lender’s name or in
the name of its nominee or nominees.
 
g.           Vote all or any part of the Collateral (whether or not transferred
into the name of Lender) and give all consents, waivers and ratifications in
respect of the Collateral and otherwise act with respect thereto, as though
Lender were the outright owner thereof.
 
i.           Borrower acknowledges that all or part of foreclosure of the
Collateral may be restricted by state or federal securities laws, Lender may be
unable to effect a public sale of all or part of the Collateral, that a public
sale is or may be impractical and inappropriate and that, in the event of such
restrictions, Lender thus may be compelled to resort to one or more private
sales to a restricted group of purchasers who will be obliged to agree, among
other things, to acquire the Collateral for their own account, for investment
and not with a view to its distribution or resale.  Borrower agrees that if
reasonably necessary Lender may resort to one or more sales to a single
purchaser or a restricted or limited group of purchasers.  Lender shall not be
obligated to make any sale or other disposition, unless the terms thereof shall
be satisfactory to it.
 
ii.           If, in the opinion of Lender based upon written advice of counsel,
any consent, approval or authorization of any federal, state or other
governmental agency or authority should be necessary to effectuate any sale or
other disposition of any Collateral, Borrower shall execute all such
applications and other instruments as may reasonably be required in connection
with securing any such consent, approval or authorization, and will otherwise
use its commercially reasonable best efforts to secure the same.
 
iii.           The rights, privileges, powers and remedies of Lender shall be
cumulative, and no single or partial exercise of any of them shall preclude the
further or other exercise of any of them.  Any waiver, permit, consent or
approval of any kind by Lender of any default hereunder, or any such waiver of
any provisions or conditions hereof, must be in writing and shall be effective
only to the extent set forth in writing.  Any proceeds of any disposition of the
Collateral, or any part thereof, may be applied by Lender to the payment of
expenses incurred by Lender in connection with the foregoing, and the balance of
such proceeds shall be applied by Lender toward the payment of the Secured
Obligations.

 
4

--------------------------------------------------------------------------------

 
 
h.           No Oral Waivers or Modifications.  No provision of this Note may be
waived or modified orally, but only in a writing signed by Lender and Borrower.
 
i.           Attorney Fees.  The prevailing party in any action by Lender to
collect any amounts due under this Note shall be entitled to recover its
reasonable attorneys fees and costs.
 
j.           Governing Law.  This Note has been executed and delivered in, and
is to be construed, enforced, and governed according to the internal laws of,
the State of New York without regard to its principles of conflict of laws.
 
k.           Severability.  Whenever possible, each provision of this Note shall
be interpreted in such manner as to be effective and valid under applicable
law.  However, if any provision of this Note shall be held to be prohibited by
or invalid under applicable law, it shall be ineffective only to the extent of
such prohibition or invalidity without invalidating the remainder of that
provision or the other provisions of this Note.
 
l.           Entire Agreement.  This Note contain the entire understanding of
the parties with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters.
 

 
By:
 
Name:
 
Title:
 

 
 
5

--------------------------------------------------------------------------------

 

Exhibit B
 
Certificate of Designations

 
 

--------------------------------------------------------------------------------

 
 
Exhibit C
 
Transfer Agent Instructions

 
 

--------------------------------------------------------------------------------

 
 
 [___________], 2009
 
_________________________
_________________________
_________________________
 
Re:  Advaxis, Inc Ladies and Gentlemen:
 
In accordance with the Preferred Stock Purchase Agreement (“Purchase
Agreement”), dated September 24, 2009, by and between Advaxis, Inc., a Delaware
corporation (“Company”), and Optimus Life Sciences Capital Partners, LLC, a
Delaware limited liability company (“Buyer”), pursuant to which the Company has
issued and delivered a warrant (“Warrant”) to purchase shares (“Warrant Shares”)
of the Company’s common stock, par value $0.001 per share (“Common Stock”), this
shall serve as our irrevocable authorization and direction to you (provided that
you are the transfer agent of the Company at such time), in the event the holder
of the Warrant elects or has elected to exercise all or any portion of the
Warrant in accordance with the terms and conditions of the Warrant, from time to
time, upon surrender to you of a notice of exercise of the Warrant, to issue the
Warrant Shares. Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Purchase Agreement.
 
Specifically, this shall constitute an irrevocable instruction to you to process
any notice of exercise of the Warrant that has been properly made in accordance
with the terms and conditions of the Warrant and in accordance with the terms of
these instructions as soon as practicable.
 
Upon your receipt of a notice of exercise of the Warrant, provided that (i) you
receive written confirmation from the Company’s legal counsel that either (a) a
registration statement covering the resale of the Warrant Shares has been
declared effective by the Securities and Exchange Commission (“SEC”) under the
Securities Act of 1933, as amended (the “Act”), and that to such counsel’s
knowledge, no stop transfer order suspending its effectiveness has been issued
or that any proceedings therefor are pending before or threatened by the SEC or
(b) the Warrant Shares may be resold without restriction under Rule 144 under
the Act and (ii) you are participating in The Depository Trust Company (DTC)
Fast Automated Securities Transfer (FAST) Program, then, you shall use your
commercially reasonable efforts to, on the same trading day of receipt thereof,
credit the number of shares of Common Stock for which the Warrant has been
exercised to the balance account with DTC’s FAST Program through its
Deposit/Withdrawal at Custodian (DWAC) system specified by the holder of the
Warrant. The Company hereby confirms that, provided a registration statement
covering the resale of the Warrant Shares has been declared effective by the SEC
under the Act and remains effective, the Warrant Shares should not be subject to
any stop-transfer restrictions and shall otherwise be freely transferable on the
books and records of the Company.
 
If, upon your receipt of a notice of exercise of the Warrant, either (i) you do
not receive written confirmation from the Company’s legal counsel referred to in
the immediately preceding sentence (or we otherwise notify you in writing that
the prospectus contained therein is not current or is otherwise not available
for use for the resale by the holder of the Warrant Shares) or (ii) you are not
participating in the DTC FAST Program, then, you shall use your commercially
reasonable efforts to issue on the same trading day of receipt thereof and
deliver to the holder of the Warrant or, at the instruction of the holder of the
Warrant, the Warrant holder’s agent or designee, in each case, by reputable
overnight courier to the address as specified in the applicable notice of
exercise, a certificate, registered in the Company’s share register in the name
of the Warrant holder or its designee (as indicated in the applicable notice of
exercise), for the number of shares of Common Stock for which the Warrant has
been exercised, which certificate (A) in the case of clause (ii) of this
paragraph, shall not be imprinted with any restrictive legends and no stop
transfer order shall be placed against the transfer thereof and (B) in the case
of clause (i) of this paragraph, shall be imprinted with the following
restrictive legend (in addition to any restrictive legend(s) required by
applicable state securities or “blue sky” laws), and a stop transfer order shall
be placed against transfer thereof:

 
 

--------------------------------------------------------------------------------

 
 
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
The Company hereby confirms that no instructions other than as contemplated
herein will be given to you by the Company with respect to the Warrant Shares.
The Company hereby agrees that it shall not replace you as the Company’s
transfer agent, until such time as the Company provides written notice to you
and Buyer that a suitable replacement has agreed to serve as transfer agent and
to be bound by the terms and conditions of these Irrevocable Transfer Agent
Instructions.
 
The Company and you hereby acknowledge and confirm that complying with the terms
of this agreement does not and shall not prohibit you from satisfying any and
all fiduciary responsibilities and duties you may owe to the Company.
 
The Company and you acknowledge that the Buyer is relying on the representations
and covenants made by the Company and you hereunder and are a material
inducement to the Buyer to enter into the Purchase Agreement. The Company and
you further acknowledge that without such representations and covenants made
hereunder, the Buyer would not enter into the Purchase Agreement and purchase
Securities pursuant thereto.
 
Each party hereto specifically acknowledges and agrees that a breach or
threatened breach of any provision hereof will cause irreparable damage and that
damages at law would be an inadequate remedy if these Irrevocable Transfer Agent
Instructions were not specifically enforced.  Therefore, in the event of a
breach or threatened breach by a party hereto, including, without limitation,
the attempted termination of the agency relationship created by this instrument,
in addition to all other rights or remedies, an injunction restraining such
breach and granting specific performance of the provisions of these Irrevocable
Transfer Agent Instructions should issue without any requirement to show any
actual damage or to post any bond or other security.
 

 
2

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the parties have caused this letter agreement regarding
Irrevocable Transfer Agent Instructions to be duly executed and delivered as of
the date first written above.
 
ADVAXIS, INC.
   
By:
  
Name:
  
Title:
  

 
THE FOREGOING INSTRUCTIONS ARE ACKNOWLEDGED AND AGREED TO:
 

 
By:
 
Name:
 
Title:
 

 
 
3

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Exhibit D
 
Lock-Up Agreement

 
 

--------------------------------------------------------------------------------

 
 
               [___________], 2009
 
Optimus Life Sciences Capital Partners, LLC
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, CA 90025
 
Ladies and Gentlemen:
 
This Lock-Up Agreement is being delivered to you in connection with the
Preferred Stock Purchase Agreement dated as of September 24, 2009 (“Purchase
Agreement”) and entered into by and among Advaxis, Inc., a Delaware  corporation
(the “Company”), and Optimus Life Sciences Capital Partners, LLC, a Delaware
limited liability company (“Investor”), with respect to the purchase without
registration under the Securities Act of 1933, as amended (the “Act”), in
reliance on Section 4(2) of the Act and Rule 506 of Regulation D promulgated
thereunder, of shares of the Company’s Series A Preferred Stock and related
Securities.  Capitalized terms used herein without definition shall have the
respective meanings ascribed to them in the Purchase Agreement.
 
In order to induce Investor to enter into the Purchase Agreement, the
undersigned agrees that, for a period of ten Trading Days beginning on each date
the Company delivers a Tranche Notice to Investor (the “Tranche Notice Date”)
and ending on the Tranche Closing Date pursuant to the terms of the Purchase
Agreement (the “Lock-up Period”), the undersigned will not, without the prior
written consent of Investor, (a) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or
agree to dispose of, directly or indirectly, in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder (the “Exchange Act”) with respect to, any Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock, or
warrants or other rights to purchase Common Stock or any such securities, or any
securities substantially similar to the Common Stock, (b) enter into any swap or
other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or any such securities, or
warrants or other rights to purchase Common Stock, whether any such transaction
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise or (c) publicly announce an intention to effect any transaction
specified in clause (a) or (b).
 
The foregoing sentence shall not apply to (a) bona fide gifts, provided the
recipient thereof agrees in writing to be bound by the terms of this Lock-Up
Agreement, (b) dispositions to any trust for the direct or indirect benefit of
the undersigned and/or the immediate family of the undersigned, provided that
such trust agrees in writing to be bound by the terms of this Lock-Up Agreement,
(c) sales made pursuant to any written sales plans established prior to the date
of this Lock-Up Agreement in conformity with the requirements of Rule 10b5-1(c)
promulgated under the Exchange Act or (d) exercise of options for Common Stock
and the disposition (whether by sale, gift or otherwise) of Common Stock
underlying such options.  Notwithstanding subsection (a) above, the undersigned
may make a bona fide gift of up to 10,000 shares of Common Stock to a charity or
other non-profit entity and such charity or entity shall not be required to be
bound by the terms of this Lock-Up Agreement; provided, however, that in the
event the undersigned exercises options during the Lock-Up Period, the
undersigned may not, during the Lock-Up Period, dispose of the number of shares
of Common Stock underlying such exercised options equal to the number of shares
of Common Stock gifted by the undersigned pursuant to this sentence during the
Lock-Up Period.  For purposes of this paragraph, “immediate family” shall mean
the undersigned and the spouse, any lineal descendent, father, mother, brother
or sister of the undersigned.

 
 

--------------------------------------------------------------------------------

 
 
The Company agrees to provide the undersigned with notice that the Company has
delivered a Tranche Notice to Investor prior to, or simultaneous with, its
delivery of the Tranche Notice to Investor.  Such notice shall provide the
undersigned with the Tranche Notice Date and clearly indicate the beginning of
the Lock-up Period.
 
Upon the termination of the Purchase Agreement, this Lock-Up Agreement shall be
terminated and the undersigned shall be released from its obligations hereunder.
 
Sincerely,
   
Stockholder

Acknowledged and Agreed:
 
Advaxis, Inc.
   
By:
   
Name:
  
Title:
  

 
 
2

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Exhibit E
 
Opinion

 
 

--------------------------------------------------------------------------------

 

Exhibit F
 
Tranche Notice

 
 

--------------------------------------------------------------------------------

 
 
Dated: [________], 20[__]
 
Optimus Life Sciences Capital Partners, LLC
11150 Santa Monica Boulevard, Suite 1500
Los Angeles, CA 90025
 
Re:           Tranche Notice Ladies & Gentlemen:
 
Pursuant to the September 24, 2009 Preferred Stock Purchase Agreement
(“Agreement”) between Advaxis, Inc., a Delaware corporation (“Company”), and
Optimus Life Sciences Capital Partners, LLC (“Investor”), Company hereby elects
to exercise a Tranche.  Capitalized terms not otherwise defined herein shall
have the meanings defined in the Agreement.
 
At the Tranche Closing, Company will sell to Investor [___________] Preferred
Shares at $10,000.00 per share for a Tranche Amount of $[___________].
 
On behalf of Company, the undersigned hereby certifies to Investor as follows:
 
1.           The undersigned is a duly authorized officer of Company;
 
2.           The above Tranche Amount does not exceed the Maximum Tranche
Amount; and
 
3.           All of the conditions precedent to the right of the Company to
deliver a Tranche Notice set forth in Section 2.3(d) of the Agreement have been
satisfied.
 
IN WITNESS WHEREOF, the Company has executed and delivered this Tranche Notice
as of the date first written above.
 
ADVAXIS, INC.
   
By:
 
Name:
 
Title:
 

 
 

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