Exhibit 10.44

 

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of August 1,
2007, by and among SENESCO TECHNOLOGIES, INC., a Delaware corporation (the
“Company”), and the Buyers listed on Schedule I attached hereto (individually, a
“Buyer” or collectively “Buyers”).

WITNESSETH

WHEREAS, the Company and the Buyer(s) are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by
the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933, as amended (the “Securities Act”);

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Buyer(s), as provided
herein, and the Buyer(s) shall purchase (i) up to Five Million Dollars
($5,000,000) of secured convertible debentures in the form attached hereto as
“Exhibit A” (the “Convertible Debentures”), which shall be convertible into
shares of the Company’s common stock, par value $0.01 (the “Common Stock”) (as
converted, the “Conversion Shares”), and (ii) Series A warrants substantially in
the form attached hereto as “Exhibit B” and Series B warrants substantially in
the form attached hereto as “Exhibit C” (collectively, the “Warrants”), to
acquire up to that number of additional shares of Common Stock set forth
opposite such Buyer’s name on Schedule I (as exercised, the “Warrant Shares”),
of which One Million Five Hundred Thousand Dollars ($1,500,000) shall be funded
within two (2) business days following the date hereof (the “First Closing”),
One Million Five Hundred Thousand Dollars ($1,500,000) shall be funded on the
date the registration statement (the “Registration Statement”) is filed,
pursuant to the Registration Rights Agreement dated the date hereof, with the
SEC (the “Second Closing”), and Two Million Dollars ($2,000,000) shall be funded
on the date that is the later of (i) Stockholders Approval (as defined below);
or (ii) the Registration Statement is declared effective by the SEC (the “Third
Closing”) (individually referred to as a “Closing” collectively referred to as
the “Closings”), for a total purchase price of up to Five Million Dollars
($5,000,000), (the “Purchase Price”) in the respective amounts set forth
opposite each Buyer(s) name on Schedule I (the “Subscription Amount”);

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
(the “Registration Rights Agreement”) pursuant to which the Company has agreed
to provide certain registration rights under the Securities Act and the rules
and regulations promulgated there under, and applicable state securities laws;

WHEREAS, the Convertible Debentures are secured by (i) a security interest in
all of the assets of the Company and of each of the Company’s subsidiaries as
evidenced by the security agreement of even date herewith (the “Security
Agreement”) and (ii) a security interest in all of the intellectual property of
the Company and of each of the Company’s subsidiaries as evidenced by the patent
security agreement of even date herewith (the “Patent Security Agreement” and
together with the Security Agreement collectively the “Security Documents”);

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WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering Irrevocable Transfer Agent
Instructions (the “Irrevocable Transfer Agent Instructions”); and

WHEREAS, the Convertible Debentures, the Conversion Shares, the Warrants, and
the Warrants Shares collectively are referred to herein as the “Securities”).

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Buyer(s) hereby agree as
follows:

1.               PURCHASE AND SALE OF CONVERTIBLE DEBENTURES.

(A)                                  PURCHASE OF CONVERTIBLE DEBENTURES. 
SUBJECT TO THE SATISFACTION (OR WAIVER) OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT, EACH BUYER AGREES, SEVERALLY AND NOT JOINTLY, TO PURCHASE AT EACH
CLOSING AND THE COMPANY AGREES TO SELL AND ISSUE TO EACH BUYER, SEVERALLY AND
NOT JOINTLY, AT EACH CLOSING, CONVERTIBLE DEBENTURES IN AMOUNTS CORRESPONDING
WITH THE SUBSCRIPTION AMOUNT SET FORTH OPPOSITE EACH BUYER’S NAME ON SCHEDULE I
HERETO AND THE WARRANTS TO ACQUIRE UP TO THAT NUMBER OF WARRANT SHARES AS SET
FORTH OPPOSITE SUCH BUYER’S NAME IN COLUMN (5) ON SCHEDULE I.

(B)                                 CLOSING DATES.  THE FIRST CLOSING OF THE
PURCHASE AND SALE OF THE CONVERTIBLE DEBENTURES AND WARRANTS SHALL TAKE PLACE AT
10:00 A.M. EASTERN STANDARD TIME ON THE SECOND (2ND) BUSINESS DAY FOLLOWING THE
DATE HEREOF, SUBJECT TO NOTIFICATION OF SATISFACTION OF THE CONDITIONS TO THE
FIRST CLOSING SET FORTH HEREIN AND IN SECTIONS 6 AND 7 BELOW (OR SUCH LATER DATE
AS IS MUTUALLY AGREED TO BY THE COMPANY AND THE BUYER(S)) (THE “FIRST CLOSING
DATE”), THE SECOND CLOSING OF THE PURCHASE AND SALE OF THE CONVERTIBLE
DEBENTURES SHALL TAKE PLACE AT 4:00 P.M. EASTERN STANDARD TIME ON THE DATE THE
REGISTRATION STATEMENT IS FILED WITH THE SEC, SUBJECT TO NOTIFICATION OF
SATISFACTION OF THE CONDITIONS TO THE SECOND CLOSING SET FORTH HEREIN AND IN
SECTIONS 6 AND 7 BELOW (OR SUCH LATER DATE AS IS MUTUALLY AGREED TO BY THE
COMPANY AND THE BUYER(S)) (THE “SECOND CLOSING DATE”), AND THE THIRD CLOSING OF
THE PURCHASE AND SALE OF THE CONVERTIBLE DEBENTURES SHALL TAKE PLACE AT 10:00
A.M. EASTERN STANDARD TIME ON THE LATER OF (I) STOCKHOLDER APPROVAL (AS DEFINED
BELOW), OR (II) THE DATE THE REGISTRATION STATEMENT IS DECLARED EFFECTIVE BY THE
SEC, SUBJECT TO NOTIFICATION OF SATISFACTION OF THE CONDITIONS TO THE THIRD
CLOSING SET FORTH HEREIN AND IN SECTIONS 6 AND 7 BELOW (OR SUCH EARLIER DATE AS
IS MUTUALLY AGREED TO BY THE COMPANY AND THE BUYER(S)) (THE “THIRD CLOSING
DATE”) (COLLECTIVELY REFERRED TO A THE “CLOSING DATES”).  THE CLOSINGS SHALL
OCCUR ON THE RESPECTIVE CLOSING DATES AT THE OFFICES OF YORKVILLE ADVISORS, LLC,
3700 HUDSON STREET, SUITE 3700, JERSEY CITY, NEW JERSEY 07302 (OR SUCH OTHER
PLACE AS IS MUTUALLY AGREED TO BY THE COMPANY AND THE BUYER(S)).

(C)                                  FORM OF PAYMENT.  SUBJECT TO THE
SATISFACTION OF THE TERMS AND CONDITIONS OF THIS AGREEMENT, ON EACH CLOSING
DATE, (I) THE BUYERS SHALL DELIVER TO THE COMPANY SUCH AGGREGATE PROCEEDS FOR
THE CONVERTIBLE DEBENTURES AND WARRANTS TO BE ISSUED AND SOLD TO SUCH BUYER AT
SUCH CLOSING, MINUS THE FEES TO BE PAID DIRECTLY FROM THE PROCEEDS OF SUCH
CLOSING AS SET FORTH HEREIN, VIA IRREVOCABLE WIRE TRANSFER, AND (II) THE COMPANY
SHALL DELIVER TO EACH BUYER, CONVERTIBLE DEBENTURES AND WARRANTS WHICH SUCH
BUYER IS PURCHASING AT SUCH CLOSING IN AMOUNTS INDICATED OPPOSITE SUCH BUYER’S
NAME ON SCHEDULE I, DULY EXECUTED ON BEHALF OF THE COMPANY.

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(D)                                 STANFORD AGREEMENT.  IN ADDITION TO THE
FOREGOING, BUYER HEREBY AGREES TO THE COMPANY’S SALE AND ISSUANCE OF AN
ADDITIONAL $5,000,000 OF CONVERTIBLE DEBENTURES TO STANFORD VENTURE CAPITAL
HOLDINGS, INC. (“STANFORD”) ON SUBSTANTIALLY SIMILAR TERMS HEREUNDER SUBJECT TO
STOCKHOLDER APPROVAL AS SET FORTH IN SECTION 1(E) BELOW (THE “STANFORD
CLOSING”).

(E)                                  STOCKHOLDERS APPROVAL.  WITHIN NINETY (90)
DAYS OF THE DATE HEREOF AND PRIOR TO THE CONSUMMATION OF THE THIRD CLOSING AND
STANFORD CLOSING, THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO CALL AND
HOLD A SPECIAL MEETING OF THE SHAREHOLDERS, FOR THE PURPOSE OF (I) APPROVING THE
TRANSACTIONS CONTEMPLATED HEREIN AND THE STANFORD CLOSING, AND (II) INCREASING
THE AUTHORIZED COMMON STOCK OF THE COMPANY TO AT LEAST 100,000,000 SHARES OF
COMMON STOCK (SUCH AFFIRMATIVE APPROVAL BEING REFERRED TO HEREIN AS THE
“STOCKHOLDER APPROVAL”).  THE COMPANY’S BOARD SHALL RECOMMEND TO THE
SHAREHOLDERS TO VOTE IN FAVOR OF APPROVING THE TRANSACTIONS CONTEMPLATED HEREIN
AND THE STANFORD CLOSING AND THE INCREASE OF THE COMPANY’S AUTHORIZED COMMON
STOCK; PROVIDED, HOWEVER THAT THE BOARD SHALL NOT BE OBLIGATED TO MAKE SUCH A
RECOMMENDATION IF THE BOARD DETERMINES IN GOOD FAITH, AFTER RECEIVING THE ADVICE
OF ITS INDEPENDENT LEGAL AND FINANCIAL ADVISORS, THAT SUCH A RECOMMENDATION
WOULD CAUSE THE BOARD TO BREACH ITS FIDUCIARY DUTIES.

2.               BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer represents and warrants, severally and not jointly, that:

(A)                                  INVESTMENT PURPOSE.  EACH BUYER IS
ACQUIRING THE SECURITIES FOR ITS OWN ACCOUNT FOR INVESTMENT ONLY AND NOT WITH A
VIEW TOWARDS, OR FOR RESALE IN CONNECTION WITH, THE PUBLIC SALE OR DISTRIBUTION
THEREOF, EXCEPT PURSUANT TO SALES REGISTERED OR EXEMPTED UNDER THE SECURITIES
ACT; PROVIDED, HOWEVER, THAT BY MAKING THE REPRESENTATIONS HEREIN, SUCH BUYER
RESERVES THE RIGHT TO DISPOSE OF THE SECURITIES AT ANY TIME IN ACCORDANCE WITH
OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SECURITIES OR
AN AVAILABLE EXEMPTION UNDER THE SECURITIES ACT.  SUCH BUYER DOES NOT PRESENTLY
HAVE ANY AGREEMENT OR UNDERSTANDING, DIRECTLY OR INDIRECTLY, WITH ANY PERSON TO
DISTRIBUTE ANY OF THE SECURITIES.

(B)                                 ACCREDITED INVESTOR STATUS.  EACH BUYER IS
AN “ACCREDITED INVESTOR” AS THAT TERM IS DEFINED IN RULE 501(A)(3) OF REGULATION
D.

(C)                                  RELIANCE ON EXEMPTIONS.  EACH BUYER
UNDERSTANDS THAT THE SECURITIES ARE BEING OFFERED AND SOLD TO IT IN RELIANCE ON
SPECIFIC EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF UNITED STATES FEDERAL
AND STATE SECURITIES LAWS AND THAT THE COMPANY IS RELYING IN PART UPON THE TRUTH
AND ACCURACY OF, AND SUCH BUYER’S COMPLIANCE WITH, THE REPRESENTATIONS,
WARRANTIES, AGREEMENTS, ACKNOWLEDGMENTS AND UNDERSTANDINGS OF SUCH BUYER SET
FORTH HEREIN IN ORDER TO DETERMINE THE AVAILABILITY OF SUCH EXEMPTIONS AND THE
ELIGIBILITY OF SUCH BUYER TO ACQUIRE THE SECURITIES.

(D)                                 INFORMATION.  EACH BUYER AND ITS ADVISORS
(AND HIS, OR ITS, COUNSEL), IF ANY, HAVE BEEN FURNISHED WITH ALL MATERIALS
RELATING TO THE BUSINESS, FINANCES AND OPERATIONS OF THE COMPANY AND INFORMATION
HE DEEMED MATERIAL TO MAKING AN INFORMED INVESTMENT DECISION REGARDING HIS
PURCHASE OF THE SECURITIES, WHICH HAVE BEEN REQUESTED BY SUCH BUYER.  EACH BUYER
AND ITS ADVISORS, IF ANY, HAVE BEEN AFFORDED THE OPPORTUNITY TO ASK QUESTIONS OF
THE COMPANY AND

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ITS MANAGEMENT.  NEITHER SUCH INQUIRIES NOR ANY OTHER DUE DILIGENCE
INVESTIGATIONS CONDUCTED BY SUCH BUYER OR ITS ADVISORS, IF ANY, OR ITS
REPRESENTATIVES SHALL MODIFY, AMEND OR AFFECT SUCH BUYER’S RIGHT TO RELY ON THE
COMPANY’S REPRESENTATIONS AND WARRANTIES CONTAINED IN SECTION 3 BELOW.  EACH
BUYER UNDERSTANDS THAT ITS INVESTMENT IN THE SECURITIES INVOLVES A HIGH DEGREE
OF RISK.  EACH BUYER IS IN A POSITION REGARDING THE COMPANY, WHICH, BASED UPON
EMPLOYMENT, FAMILY RELATIONSHIP OR ECONOMIC BARGAINING POWER, ENABLED AND
ENABLES SUCH BUYER TO OBTAIN INFORMATION FROM THE COMPANY IN ORDER TO EVALUATE
THE MERITS AND RISKS OF THIS INVESTMENT.  EACH BUYER 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.

(E)                                  NO GOVERNMENTAL REVIEW.  EACH BUYER
UNDERSTANDS THAT NO UNITED STATES FEDERAL OR STATE AGENCY OR ANY OTHER
GOVERNMENT OR GOVERNMENTAL AGENCY HAS PASSED ON OR MADE ANY RECOMMENDATION OR
ENDORSEMENT OF THE SECURITIES, OR THE FAIRNESS OR SUITABILITY OF THE INVESTMENT
IN THE SECURITIES, NOR HAVE SUCH AUTHORITIES PASSED UPON OR ENDORSED THE MERITS
OF THE OFFERING OF THE SECURITIES.

(F)                                    TRANSFER OR RESALE.  EACH BUYER
UNDERSTANDS THAT EXCEPT AS PROVIDED IN THE REGISTRATION RIGHTS AGREEMENT: (I)
THE SECURITIES HAVE NOT BEEN AND ARE NOT BEING REGISTERED UNDER THE SECURITIES
ACT OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD,
ASSIGNED OR TRANSFERRED UNLESS (A) SUBSEQUENTLY REGISTERED THEREUNDER, (B) SUCH
BUYER SHALL HAVE DELIVERED TO THE COMPANY AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, TO THE EFFECT THAT SUCH SECURITIES TO BE SOLD, ASSIGNED OR
TRANSFERRED MAY BE SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO AN EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS, OR (C) SUCH BUYER PROVIDES THE COMPANY WITH
REASONABLE ASSURANCES (IN THE FORM OF SELLER AND BROKER REPRESENTATION LETTERS)
THAT SUCH SECURITIES CAN BE SOLD, ASSIGNED OR TRANSFERRED PURSUANT TO RULE 144,
RULE 144(K), OR RULE 144A PROMULGATED UNDER THE SECURITIES ACT, AS AMENDED (OR A
SUCCESSOR RULE THERETO) (COLLECTIVELY, “RULE 144”), IN EACH CASE FOLLOWING THE
APPLICABLE HOLDING PERIOD SET FORTH THEREIN; (II) ANY SALE OF THE SECURITIES
MADE IN RELIANCE ON RULE 144 MAY BE MADE ONLY IN ACCORDANCE WITH THE TERMS OF
RULE 144 AND FURTHER, IF RULE 144 IS NOT APPLICABLE, ANY RESALE OF THE
SECURITIES UNDER CIRCUMSTANCES IN WHICH THE SELLER (OR THE PERSON THROUGH WHOM
THE SALE IS MADE) MAY BE DEEMED TO BE AN UNDERWRITER (AS THAT TERM IS DEFINED IN
THE SECURITIES ACT) MAY REQUIRE COMPLIANCE WITH SOME OTHER EXEMPTION UNDER THE
SECURITIES ACT OR THE RULES AND REGULATIONS OF THE SEC THEREUNDER; AND (III)
NEITHER THE COMPANY NOR ANY OTHER PERSON IS UNDER ANY OBLIGATION TO REGISTER THE
SECURITIES UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAWS OR TO COMPLY
WITH THE TERMS AND CONDITIONS OF ANY EXEMPTION THEREUNDER.

(G)                                 LEGENDS.  EACH BUYER AGREES TO THE
IMPRINTING, SO LONG AS IS REQUIRED BY THIS SECTION 2(G), OF A RESTRICTIVE LEGEND
IN SUBSTANTIALLY THE FOLLOWING FORM:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. 
THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION

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STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.

Certificates evidencing the Conversion Shares or Warrant Shares shall not
contain any legend (including the legend set forth above), (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Conversion Shares or Warrant Shares pursuant to Rule 144, (iii)
if such Conversion Shares or Warrant Shares are eligible for sale under Rule
144(k), or (iv) if such legend is not required under applicable requirements of
the Securities Act (including judicial interpretations and pronouncements issued
by the staff of the SEC).  The Company shall cause its counsel to issue a legal
opinion to the Company’s transfer agent promptly after the effective date (the
“Effective Date”) of a Registration Statement if required by the Company’s
transfer agent to effect the removal of the legend hereunder.  If all or any
portion of the Convertible Debentures or Warrants are exercised by a Buyer that
is not an Affiliate of the Company (a “Non-Affiliated Buyer”) at a time when
there is an effective registration statement to cover the resale of the
Conversion Shares or the Warrant Shares, such Conversion Shares or Warrant
Shares shall be issued free of all legends.  The Company agrees that following
the Effective Date or at such time as such legend is no longer required under
this Section 2(g), it will, no later than three (3) Trading Days following the
delivery by a Non-Affiliated Buyer to the Company or the Company’s transfer
agent of a certificate representing Conversion Shares or Warrant Shares, as the
case may be, issued with a restrictive legend (such third Trading Day, the
“Legend Removal Date”), deliver or cause to be delivered to such Non-Affiliated
Buyer a certificate representing such shares that is free from all restrictive
and other legends.  The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions
on transfer set forth in this Section.  Each Buyer acknowledges that the
Company’s agreement hereunder to remove all legends from Conversion Shares or
Warrant Shares is not an affirmative statement or representation that such
Conversion Shares or Warrant Shares are freely tradable.  Each Buyer, severally
and not jointly with the other Buyers, agrees that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 3(g) is predicated upon the Company’s reliance that the buyer will
sell any Securities pursuant to either the registration requirements of the
Securities Act, including any applicable prospectus delivery requirements, or an
exemption therefrom, and that if Securities are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein.

(H)                                 AUTHORIZATION, ENFORCEMENT.  THIS AGREEMENT
HAS BEEN DULY AND VALIDLY AUTHORIZED, EXECUTED AND DELIVERED ON BEHALF OF SUCH
BUYER AND IS A VALID AND BINDING AGREEMENT OF SUCH BUYER ENFORCEABLE IN
ACCORDANCE WITH ITS TERMS, EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY
GENERAL PRINCIPLES OF EQUITY OR APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM, LIQUIDATION AND OTHER SIMILAR LAWS RELATING TO, OR
AFFECTING GENERALLY, THE ENFORCEMENT OF APPLICABLE CREDITORS’ RIGHTS AND
REMEDIES.

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(I)                                     RECEIPT OF DOCUMENTS.  EACH BUYER AND
HIS OR ITS COUNSEL HAS RECEIVED AND READ IN THEIR ENTIRETY:  (I) THIS AGREEMENT
AND EACH REPRESENTATION, WARRANTY AND COVENANT SET FORTH HEREIN AND THE
TRANSACTION DOCUMENTS (AS DEFINED HEREIN); (II) ALL DUE DILIGENCE AND OTHER
INFORMATION NECESSARY TO VERIFY THE ACCURACY AND COMPLETENESS OF SUCH
REPRESENTATIONS, WARRANTIES AND COVENANTS; (III) THE COMPANY’S FORM 10-K FOR THE
FISCAL YEAR ENDED JUNE 30, 2006; (IV) THE COMPANY’S FORM 10-Q FOR THE FISCAL
QUARTER ENDED MARCH 31, 2007 AND (V) ANSWERS TO ALL QUESTIONS EACH BUYER
SUBMITTED TO THE COMPANY REGARDING AN INVESTMENT IN THE COMPANY; AND EACH BUYER
HAS RELIED ON THE INFORMATION CONTAINED THEREIN AND HAS NOT BEEN FURNISHED ANY
OTHER DOCUMENTS, LITERATURE, MEMORANDUM OR PROSPECTUS.

(J)                                     DUE FORMATION OF CORPORATE AND OTHER
BUYERS.  IF THE BUYER(S) IS A CORPORATION, TRUST, PARTNERSHIP OR OTHER ENTITY
THAT IS NOT AN INDIVIDUAL PERSON, IT HAS BEEN FORMED AND VALIDLY EXISTS AND HAS
NOT BEEN ORGANIZED FOR THE SPECIFIC PURPOSE OF PURCHASING THE SECURITIES AND IS
NOT PROHIBITED FROM DOING SO.

(K)                                  NO LEGAL ADVICE FROM THE COMPANY.  EACH
BUYER ACKNOWLEDGES, THAT IT HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT WITH HIS OR ITS OWN LEGAL COUNSEL
AND INVESTMENT AND TAX ADVISORS.  EACH BUYER IS RELYING SOLELY ON SUCH COUNSEL
AND ADVISORS AND NOT ON ANY STATEMENTS OR REPRESENTATIONS OF THE COMPANY OR ANY
OF ITS REPRESENTATIVES OR AGENTS FOR LEGAL, TAX OR INVESTMENT ADVICE WITH
RESPECT TO THIS INVESTMENT, THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
THE SECURITIES LAWS OF ANY JURISDICTION.

3.               REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

Except as set forth under the corresponding section of the Disclosure Schedules
or in the Company’s SEC Documents (as defined below) which Disclosure Schedules
and/or SEC Documents shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of such
disclosure, the Company hereby makes the representations and warranties set
forth below to each Buyer:

(A)                                  SUBSIDIARIES.  ALL OF THE DIRECT AND
INDIRECT SUBSIDIARIES OF THE COMPANY ARE SET FORTH ON SCHEDULE 3(A).  THE
COMPANY OWNS, DIRECTLY OR INDIRECTLY, ALL OF THE CAPITAL STOCK OR OTHER EQUITY
INTERESTS OF EACH SUBSIDIARY FREE AND CLEAR OF ANY LIENS, AND ALL THE ISSUED AND
OUTSTANDING SHARES OF CAPITAL STOCK OF EACH SUBSIDIARY ARE VALIDLY ISSUED AND
ARE FULLY PAID, NON-ASSESSABLE AND FREE OF PREEMPTIVE AND SIMILAR RIGHTS TO
SUBSCRIBE FOR OR PURCHASE SECURITIES.

(B)                                 ORGANIZATION AND QUALIFICATION.  THE COMPANY
AND ITS SUBSIDIARIES ARE CORPORATIONS DULY ORGANIZED AND VALIDLY EXISTING IN
GOOD STANDING UNDER THE LAWS OF THE JURISDICTION IN WHICH THEY ARE INCORPORATED,
AND HAVE THE REQUISITE CORPORATE POWER TO OWN THEIR PROPERTIES AND TO CARRY ON
THEIR BUSINESS AS NOW BEING CONDUCTED.  EACH OF THE COMPANY AND ITS SUBSIDIARIES
IS DULY QUALIFIED AS A FOREIGN CORPORATION TO DO BUSINESS AND IS IN GOOD
STANDING IN EVERY JURISDICTION IN WHICH THE NATURE OF THE BUSINESS CONDUCTED BY
IT MAKES SUCH QUALIFICATION NECESSARY, EXCEPT TO THE EXTENT THAT THE FAILURE TO
BE SO QUALIFIED OR BE IN GOOD STANDING WOULD NOT HAVE OR REASONABLY BE EXPECTED
TO RESULT IN (I) A MATERIAL ADVERSE EFFECT ON THE LEGALITY, VALIDITY OR
ENFORCEABILITY OF ANY TRANSACTION DOCUMENT, (II) A MATERIAL ADVERSE EFFECT ON
THE RESULTS OF

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OPERATIONS, ASSETS, BUSINESS OR CONDITION (FINANCIAL OR OTHERWISE) OF THE
COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE, OR (III) A MATERIAL ADVERSE
EFFECT ON THE COMPANY’S ABILITY TO PERFORM IN ANY MATERIAL RESPECT ON A TIMELY
BASIS ITS OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT (ANY OF (I), (II) OR (III),
A “MATERIAL ADVERSE EFFECT”) AND NO PROCEEDING HAS BEEN INSTITUTED IN ANY SUCH
JURISDICTION REVOKING, LIMITING OR CURTAILING OR SEEKING TO REVOKE, LIMIT OR
CURTAIL SUCH POWER AND AUTHORITY OR QUALIFICATION.

(C)                                  AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH
OTHER INSTRUMENTS.  (I) THE COMPANY HAS THE REQUISITE CORPORATE POWER AND
AUTHORITY TO ENTER INTO AND PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT, THE
CONVERTIBLE DEBENTURES, THE WARRANTS, THE SECURITY DOCUMENTS, THE REGISTRATION
RIGHTS AGREEMENT, THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS, AND EACH OF THE
OTHER AGREEMENTS ENTERED INTO BY THE PARTIES HERETO IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (COLLECTIVELY THE “TRANSACTION
DOCUMENTS”) AND TO ISSUE THE SECURITIES IN ACCORDANCE WITH THE TERMS HEREOF AND
THEREOF, (II) THE EXECUTION AND DELIVERY OF THE TRANSACTION DOCUMENTS BY THE
COMPANY AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY, INCLUDING, WITHOUT LIMITATION, THE ISSUANCE OF THE SECURITIES, THE
RESERVATION FOR ISSUANCE AND THE ISSUANCE OF THE CONVERSION SHARES, AND THE
RESERVATION FOR ISSUANCE AND THE ISSUANCE OF THE WARRANT SHARES, HAVE BEEN DULY
AUTHORIZED BY THE COMPANY’S BOARD OF DIRECTORS AND NO FURTHER CONSENT OR
AUTHORIZATION IS REQUIRED BY THE COMPANY, ITS BOARD OF DIRECTORS OR ITS
STOCKHOLDERS, (III) THE TRANSACTION DOCUMENTS HAVE BEEN DULY EXECUTED AND
DELIVERED BY THE COMPANY, (IV) THE TRANSACTION DOCUMENTS CONSTITUTE THE VALID
AND BINDING OBLIGATIONS OF THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN
ACCORDANCE WITH THEIR TERMS, EXCEPT AS SUCH ENFORCEABILITY MAY BE LIMITED BY
GENERAL PRINCIPLES OF EQUITY OR APPLICABLE BANKRUPTCY, INSOLVENCY,
REORGANIZATION, MORATORIUM, LIQUIDATION OR SIMILAR LAWS RELATING TO, OR
AFFECTING GENERALLY, THE ENFORCEMENT OF CREDITORS’ RIGHTS AND REMEDIES.  THE
AUTHORIZED OFFICER OF THE COMPANY EXECUTING THE TRANSACTION DOCUMENTS KNOWS OF
NO REASON WHY THE COMPANY CANNOT FILE THE REGISTRATION STATEMENT AS REQUIRED
UNDER THE REGISTRATION RIGHTS AGREEMENT OR PERFORM ANY OF THE COMPANY’S OTHER
OBLIGATIONS UNDER THE TRANSACTION DOCUMENTS.

(D)                                 CAPITALIZATION.  THE AUTHORIZED CAPITAL
STOCK OF THE COMPANY CONSISTS OF 60,000,000 SHARES OF COMMON STOCK AND 5,000,000
SHARES OF PREFERRED STOCK, PAR VALUE $0.01 (“PREFERRED STOCK”) OF WHICH
17,473,694 SHARES OF COMMON STOCK AND ZERO SHARES OF PREFERRED STOCK ARE ISSUED
AND OUTSTANDING.  ALL OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF THE COMPANY
ARE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, HAVE BEEN ISSUED IN COMPLIANCE
WITH ALL FEDERAL AND STATE SECURITIES LAWS, AND NONE OF SUCH OUTSTANDING SHARES
WAS ISSUED IN VIOLATION OF ANY PREEMPTIVE RIGHTS OR SIMILAR RIGHTS TO SUBSCRIBE
FOR OR PURCHASE SECURITIES.  EXCEPT AS DISCLOSED IN SCHEDULE 3(D): (I) NONE OF
THE COMPANY’S CAPITAL STOCK IS SUBJECT TO PREEMPTIVE RIGHTS OR ANY OTHER SIMILAR
RIGHTS OR ANY LIENS OR ENCUMBRANCES SUFFERED OR PERMITTED BY THE COMPANY; (II)
THERE ARE NO OUTSTANDING OPTIONS, WARRANTS, SCRIP, RIGHTS TO SUBSCRIBE TO, CALLS
OR COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES OR RIGHTS
CONVERTIBLE INTO, OR EXERCISABLE OR EXCHANGEABLE FOR, ANY CAPITAL STOCK OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES, OR CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR
ARRANGEMENTS BY WHICH THE COMPANY OR ANY OF ITS SUBSIDIARIES IS OR MAY BECOME
BOUND TO ISSUE ADDITIONAL CAPITAL STOCK OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OR OPTIONS, WARRANTS, SCRIP, RIGHTS TO SUBSCRIBE TO, CALLS OR
COMMITMENTS OF ANY CHARACTER WHATSOEVER RELATING TO, OR SECURITIES OR RIGHTS
CONVERTIBLE INTO, OR EXERCISABLE OR EXCHANGEABLE FOR, ANY CAPITAL STOCK OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES;

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(III) THERE ARE NO OUTSTANDING DEBT SECURITIES, NOTES, CREDIT AGREEMENTS, CREDIT
FACILITIES OR OTHER AGREEMENTS, DOCUMENTS OR INSTRUMENTS EVIDENCING INDEBTEDNESS
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR BY WHICH THE COMPANY OR ANY OF ITS
SUBSIDIARIES IS OR MAY BECOME BOUND; (IV) THERE ARE NO FINANCING STATEMENTS
SECURING OBLIGATIONS IN ANY MATERIAL AMOUNTS, EITHER SINGLY OR IN THE AGGREGATE,
FILED IN CONNECTION WITH THE COMPANY OR ANY OF ITS SUBSIDIARIES; (V) THERE ARE
NO OUTSTANDING SECURITIES OR INSTRUMENTS OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES WHICH CONTAIN ANY REDEMPTION OR SIMILAR PROVISIONS, AND THERE ARE
NO CONTRACTS, COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY
OR ANY OF ITS SUBSIDIARIES IS OR MAY BECOME BOUND TO REDEEM A SECURITY OF THE
COMPANY OR ANY OF ITS SUBSIDIARIES; (VI) THERE ARE NO SECURITIES OR INSTRUMENTS
CONTAINING ANTI-DILUTION OR SIMILAR PROVISIONS THAT WILL BE TRIGGERED BY THE
ISSUANCE OF THE SECURITIES; (VII) THE COMPANY DOES NOT HAVE ANY STOCK
APPRECIATION RIGHTS OR “PHANTOM STOCK” PLANS OR AGREEMENTS OR ANY SIMILAR PLAN
OR AGREEMENT; AND (VIII) THE COMPANY AND ITS SUBSIDIARIES HAVE NO LIABILITIES OR
OBLIGATIONS REQUIRED TO BE DISCLOSED IN THE SEC DOCUMENTS BUT NOT SO DISCLOSED
IN THE SEC DOCUMENTS, OTHER THAN THOSE INCURRED IN THE ORDINARY COURSE OF THE
COMPANY’S OR ITS SUBSIDIARIES’ RESPECTIVE BUSINESSES AND WHICH, INDIVIDUALLY OR
IN THE AGGREGATE, DO NOT OR WOULD NOT HAVE A MATERIAL ADVERSE EFFECT.  THE
COMPANY HAS FURNISHED TO THE BUYERS TRUE, CORRECT AND COMPLETE COPIES OF THE
COMPANY’S CERTIFICATE OF INCORPORATION, AS AMENDED AND AS IN EFFECT ON THE DATE
HEREOF (THE “CERTIFICATE OF INCORPORATION”), AND THE COMPANY’S BYLAWS, AS
AMENDED AND AS IN EFFECT ON THE DATE HEREOF (THE “BYLAWS”), AND THE TERMS OF ALL
SECURITIES CONVERTIBLE INTO, OR EXERCISABLE OR EXCHANGEABLE FOR, SHARES OF
COMMON STOCK AND THE MATERIAL RIGHTS OF THE HOLDERS THEREOF IN RESPECT THERETO. 
EXCEPT FOR STOCKHOLDER APPROVAL OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, NO FURTHER APPROVAL OR AUTHORIZATION OF ANY STOCKHOLDER, THE BOARD OF
DIRECTORS OF THE COMPANY OR OTHERS IS REQUIRED FOR THE ISSUANCE AND SALE OF THE
SECURITIES.  THERE ARE NO STOCKHOLDERS AGREEMENTS, VOTING AGREEMENTS OR OTHER
SIMILAR AGREEMENTS WITH RESPECT TO THE COMPANY’S CAPITAL STOCK TO WHICH THE
COMPANY IS A PARTY OR, TO THE KNOWLEDGE OF THE COMPANY, BETWEEN OR AMONG ANY OF
THE COMPANY’S STOCKHOLDERS.

(E)                                  ISSUANCE OF SECURITIES.  THE ISSUANCE OF
THE CONVERTIBLE DEBENTURES AND THE WARRANTS IS DULY AUTHORIZED AND FREE FROM ALL
TAXES, LIENS AND CHARGES WITH RESPECT TO THE ISSUE THEREOF.  UPON CONVERSION IN
ACCORDANCE WITH THE TERMS OF THE CONVERTIBLE DEBENTURES OR EXERCISE IN
ACCORDANCE WITH THE WARRANTS, AS THE CASE MAY BE, THE CONVERSION SHARES AND
WARRANT SHARES, RESPECTIVELY, WHEN ISSUED WILL BE VALIDLY ISSUED, FULLY PAID AND
NONASSESSABLE, FREE FROM ALL TAXES, LIENS AND CHARGES WITH RESPECT TO THE ISSUE
THEREOF.  THE COMPANY HAS RESERVED FROM ITS DULY AUTHORIZED CAPITAL STOCK THE
APPROPRIATE NUMBER OF SHARES OF COMMON STOCK AS SET FORTH IN THIS AGREEMENT.

(F)                                    NO CONFLICTS.   THE EXECUTION, DELIVERY
AND PERFORMANCE OF THE TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION
BY THE COMPANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY (INCLUDING,
WITHOUT LIMITATION, THE ISSUANCE OF THE CONVERTIBLE DEBENTURES AND THE WARRANTS,
AND RESERVATION FOR ISSUANCE AND ISSUANCE OF THE CONVERSION SHARES AND THE
WARRANT SHARES) WILL NOT (I) RESULT IN A VIOLATION OF ANY CERTIFICATE OF
INCORPORATION, CERTIFICATE OF FORMATION, ANY CERTIFICATE OF DESIGNATIONS OR
OTHER CONSTITUENT DOCUMENTS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES, ANY
CAPITAL STOCK OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR BYLAWS OF THE COMPANY
OR ANY OF ITS SUBSIDIARIES OR (II) CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN
EVENT WHICH WITH NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME A DEFAULT) IN ANY
RESPECT UNDER, OR GIVE TO OTHERS ANY RIGHTS OF TERMINATION, AMENDMENT,
ACCELERATION OR CANCELLATION OF, ANY AGREEMENT, INDENTURE OR INSTRUMENT TO WHICH
THE COMPANY OR

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ANY OF ITS SUBSIDIARIES IS A PARTY, OR (III) RESULT IN A VIOLATION OF ANY LAW,
RULE, REGULATION, ORDER, JUDGMENT OR DECREE (INCLUDING FOREIGN, FEDERAL AND
STATE SECURITIES LAWS AND REGULATIONS AND THE RULES AND REGULATIONS OF THE
PRIMARY MARKET) APPLICABLE TO THE COMPANY OR ANY OF ITS SUBSIDIARIES OR BY WHICH
ANY PROPERTY OR ASSET OF THE COMPANY OR ANY OF ITS SUBSIDIARIES IS BOUND OR
AFFECTED; EXCEPT IN THE CASE OF EACH OF CLAUSES (II) AND (III), SUCH AS COULD
NOT, INDIVIDUALLY OR IN THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT
IN A MATERIAL ADVERSE EFFECT.  THE BUSINESS OF THE COMPANY AND ITS SUBSIDIARIES
IS NOT BEING CONDUCTED, AND SHALL NOT BE CONDUCTED IN VIOLATION OF ANY MATERIAL
LAW, ORDINANCE, OR REGULATION OF ANY GOVERNMENTAL ENTITY.  EXCEPT AS
SPECIFICALLY CONTEMPLATED BY THIS AGREEMENT AND AS REQUIRED UNDER THE SECURITIES
ACT AND ANY APPLICABLE STATE SECURITIES LAWS, THE COMPANY IS NOT REQUIRED TO
OBTAIN ANY CONSENT, AUTHORIZATION OR ORDER OF, OR MAKE ANY FILING OR
REGISTRATION WITH, ANY COURT OR GOVERNMENTAL AGENCY IN ORDER FOR IT TO EXECUTE,
DELIVER OR PERFORM ANY OF ITS OBLIGATIONS UNDER OR CONTEMPLATED BY THIS
AGREEMENT OR THE REGISTRATION RIGHTS AGREEMENT IN ACCORDANCE WITH THE TERMS
HEREOF OR THEREOF.  ALL CONSENTS, AUTHORIZATIONS, ORDERS, FILINGS AND
REGISTRATIONS WHICH THE COMPANY IS REQUIRED TO OBTAIN PURSUANT TO THE PRECEDING
SENTENCE HAVE BEEN OBTAINED OR EFFECTED ON OR PRIOR TO THE DATE HEREOF.  THE
COMPANY AND ITS SUBSIDIARIES ARE UNAWARE OF ANY FACTS OR CIRCUMSTANCE, WHICH
MIGHT GIVE RISE TO ANY OF THE FOREGOING.

(G)                                 SEC DOCUMENTS; FINANCIAL STATEMENTS.  THE
COMPANY HAS FILED ALL REPORTS, SCHEDULES, FORMS, STATEMENTS AND OTHER DOCUMENTS
REQUIRED TO BE FILED BY IT WITH THE SEC UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED (THE “EXCHANGE ACT”), FOR THE TWO YEARS PRECEDING THE DATE
HEREOF (OR SUCH SHORTER PERIOD AS THE COMPANY WAS REQUIRED BY LAW OR REGULATION
TO FILE SUCH MATERIAL) (ALL OF THE FOREGOING FILED PRIOR TO THE DATE HEREOF OR
AMENDED AFTER THE DATE HEREOF AND ALL EXHIBITS INCLUDED THEREIN AND FINANCIAL
STATEMENTS AND SCHEDULES THERETO AND DOCUMENTS INCORPORATED BY REFERENCE
THEREIN, BEING HEREINAFTER REFERRED TO AS THE “SEC DOCUMENTS”) ON TIMELY BASIS
OR HAS RECEIVED A VALID EXTENSION OF SUCH TIME OF FILING AND HAS FILED ANY SUCH
SEC DOCUMENT PRIOR TO THE EXPIRATION OF ANY SUCH EXTENSION.  THE COMPANY HAS
DELIVERED TO THE BUYERS OR THEIR REPRESENTATIVES, OR MADE AVAILABLE THROUGH THE
SEC’S WEBSITE AT HTTP://WWW.SEC.GOV., TRUE AND COMPLETE COPIES OF THE SEC
DOCUMENTS.  AS OF THEIR RESPECTIVE DATES, THE SEC DOCUMENTS COMPLIED IN ALL
MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE EXCHANGE ACT AND THE RULES AND
REGULATIONS OF THE SEC PROMULGATED THEREUNDER APPLICABLE TO THE SEC DOCUMENTS,
AND NONE OF THE SEC DOCUMENTS, AT THE TIME THEY WERE FILED WITH THE SEC,
CONTAINED ANY UNTRUE STATEMENT OF A MATERIAL FACT OR OMITTED TO STATE A MATERIAL
FACT REQUIRED TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS
THEREIN, IN THE LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT
MISLEADING.  AS OF THEIR RESPECTIVE DATES, THE FINANCIAL STATEMENTS OF THE
COMPANY INCLUDED IN THE SEC DOCUMENTS COMPLIED AS TO FORM IN ALL MATERIAL
RESPECTS WITH APPLICABLE ACCOUNTING REQUIREMENTS AND THE PUBLISHED RULES AND
REGULATIONS OF THE SEC WITH RESPECT THERETO.  SUCH FINANCIAL STATEMENTS HAVE
BEEN PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,
CONSISTENTLY APPLIED, DURING THE PERIODS INVOLVED (EXCEPT (I) AS MAY BE
OTHERWISE INDICATED IN SUCH FINANCIAL STATEMENTS OR THE NOTES THERETO, OR (II)
IN THE CASE OF UNAUDITED INTERIM STATEMENTS, TO THE EXTENT THEY MAY EXCLUDE
FOOTNOTES OR MAY BE CONDENSED OR SUMMARY STATEMENTS) AND FAIRLY PRESENT IN ALL
MATERIAL RESPECTS THE FINANCIAL POSITION OF THE COMPANY AS OF THE DATES THEREOF
AND THE RESULTS OF ITS OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN ENDED
(SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL YEAR-END AUDIT
ADJUSTMENTS).  NO OTHER INFORMATION PROVIDED BY OR ON BEHALF OF THE COMPANY TO
THE BUYERS WHICH IS NOT INCLUDED IN THE SEC DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, INFORMATION REFERRED TO IN SECTION 2(I) OF THIS AGREEMENT, CONTAINS
ANY UNTRUE STATEMENT OF A

9

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MATERIAL FACT OR OMITS TO STATE ANY MATERIAL FACT NECESSARY IN ORDER TO MAKE THE
STATEMENTS THEREIN, IN THE LIGHT OF THE CIRCUMSTANCE UNDER WHICH THEY ARE OR
WERE MADE AND NOT MISLEADING.

(H)                                 10(B)-5.  THE SEC DOCUMENTS DO NOT INCLUDE
ANY UNTRUE STATEMENTS OF MATERIAL FACT, NOR DO THEY OMIT TO STATE ANY MATERIAL
FACT REQUIRED TO BE STATED THEREIN NECESSARY TO MAKE THE STATEMENTS MADE, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING.

(I)                                     ABSENCE OF LITIGATION.  THERE IS NO
ACTION, SUIT, PROCEEDING, INQUIRY OR INVESTIGATION BEFORE OR BY ANY COURT,
PUBLIC BOARD, GOVERNMENT AGENCY, SELF-REGULATORY ORGANIZATION OR BODY PENDING
AGAINST OR AFFECTING THE COMPANY, THE COMMON STOCK OR ANY OF THE COMPANY’S
SUBSIDIARIES, WHEREIN AN UNFAVORABLE DECISION, RULING OR FINDING WOULD (I) HAVE
A MATERIAL ADVERSE EFFECT.

(J)                                     ACKNOWLEDGMENT REGARDING BUYER’S
PURCHASE OF THE CONVERTIBLE DEBENTURES.  THE COMPANY ACKNOWLEDGES AND AGREES
THAT EACH BUYER IS ACTING SOLELY IN THE CAPACITY OF AN ARM’S LENGTH PURCHASER
WITH RESPECT TO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.  THE
COMPANY FURTHER ACKNOWLEDGES THAT EACH BUYER 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 ADVICE GIVEN BY
EACH BUYER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR AGENTS IN CONNECTION
WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY IS MERELY
INCIDENTAL TO SUCH BUYER’S PURCHASE OF THE SECURITIES.  THE COMPANY FURTHER
REPRESENTS TO EACH BUYER THAT THE COMPANY’S DECISION TO ENTER INTO THIS
AGREEMENT HAS BEEN BASED SOLELY ON THE INDEPENDENT EVALUATION BY THE COMPANY AND
ITS REPRESENTATIVES.

(K)                                  NO GENERAL SOLICITATION.  NEITHER THE
COMPANY, NOR ANY OF ITS AFFILIATES, NOR ANY PERSON ACTING ON ITS OR THEIR
BEHALF, HAS ENGAGED IN ANY FORM OF GENERAL SOLICITATION OR GENERAL ADVERTISING
(WITHIN THE MEANING OF REGULATION D UNDER THE SECURITIES ACT) IN CONNECTION WITH
THE OFFER OR SALE OF THE SECURITIES.

(L)                                     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 REQUIRE
REGISTRATION OF THE SECURITIES UNDER THE SECURITIES ACT OR CAUSE THIS OFFERING
OF THE SECURITIES TO BE INTEGRATED WITH PRIOR OFFERINGS BY THE COMPANY FOR
PURPOSES OF THE SECURITIES ACT.

(M)                               EMPLOYEE RELATIONS.  NEITHER THE COMPANY NOR
ANY OF ITS SUBSIDIARIES IS INVOLVED IN ANY LABOR DISPUTE OR, TO THE KNOWLEDGE OF
THE COMPANY OR ANY OF ITS SUBSIDIARIES, IS ANY SUCH DISPUTE THREATENED.  NONE OF
THE COMPANY’S OR ITS SUBSIDIARIES’ EMPLOYEES IS A MEMBER OF A UNION AND THE
COMPANY AND ITS SUBSIDIARIES BELIEVE THAT THEIR RELATIONS WITH THEIR EMPLOYEES
ARE GOOD.

(N)                                 INTELLECTUAL PROPERTY RIGHTS.  THE COMPANY
AND ITS SUBSIDIARIES OWN OR POSSESS ADEQUATE RIGHTS OR LICENSES TO USE ALL
TRADEMARKS, TRADE NAMES, SERVICE MARKS, SERVICE MARK REGISTRATIONS, SERVICE
NAMES, PATENTS, PATENT RIGHTS, COPYRIGHTS, INVENTIONS, LICENSES,

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APPROVALS, GOVERNMENTAL AUTHORIZATIONS, TRADE SECRETS AND RIGHTS NECESSARY TO
CONDUCT THEIR RESPECTIVE BUSINESSES AS NOW CONDUCTED.  THE COMPANY AND ITS
SUBSIDIARIES DO NOT HAVE ANY KNOWLEDGE OF ANY INFRINGEMENT BY THE COMPANY OR ITS
SUBSIDIARIES OF TRADEMARK, TRADE NAME RIGHTS, PATENTS, PATENT RIGHTS,
COPYRIGHTS, INVENTIONS, LICENSES, SERVICE NAMES, SERVICE MARKS, SERVICE MARK
REGISTRATIONS, TRADE SECRET OR OTHER SIMILAR RIGHTS OF OTHERS, AND, TO THE
KNOWLEDGE OF THE COMPANY THERE IS NO CLAIM, ACTION OR PROCEEDING BEING MADE OR
BROUGHT AGAINST, OR TO THE COMPANY’S KNOWLEDGE, BEING THREATENED AGAINST, THE
COMPANY OR ITS SUBSIDIARIES REGARDING TRADEMARK, TRADE NAME, PATENTS, PATENT
RIGHTS, INVENTION, COPYRIGHT, LICENSE, SERVICE NAMES, SERVICE MARKS, SERVICE
MARK REGISTRATIONS, TRADE SECRET OR OTHER INFRINGEMENT; AND THE COMPANY AND ITS
SUBSIDIARIES ARE UNAWARE OF ANY FACTS OR CIRCUMSTANCES WHICH MIGHT GIVE RISE TO
ANY OF THE FOREGOING.

(O)                                 ENVIRONMENTAL LAWS.  THE COMPANY AND ITS
SUBSIDIARIES ARE (I) IN COMPLIANCE WITH ANY AND ALL APPLICABLE FOREIGN, FEDERAL,
STATE AND LOCAL LAWS AND REGULATIONS RELATING TO THE PROTECTION OF HUMAN HEALTH
AND SAFETY, THE ENVIRONMENT OR HAZARDOUS OR TOXIC SUBSTANCES OR WASTES,
POLLUTANTS OR CONTAMINANTS (“ENVIRONMENTAL LAWS”), (II) HAVE RECEIVED ALL
PERMITS, LICENSES OR OTHER APPROVALS REQUIRED OF THEM UNDER APPLICABLE
ENVIRONMENTAL LAWS TO CONDUCT THEIR RESPECTIVE BUSINESSES AND (III) ARE IN
COMPLIANCE WITH ALL TERMS AND CONDITIONS OF ANY SUCH PERMIT, LICENSE OR
APPROVAL.

(P)                                 TITLE.  ALL REAL PROPERTY AND FACILITIES
HELD UNDER LEASE BY THE COMPANY AND ITS SUBSIDIARIES ARE HELD BY THEM UNDER
VALID, SUBSISTING AND ENFORCEABLE LEASES WITH SUCH EXCEPTIONS AS ARE NOT
MATERIAL AND DO NOT INTERFERE WITH THE USE MADE AND PROPOSED TO BE MADE OF SUCH
PROPERTY AND BUILDINGS BY THE COMPANY AND ITS SUBSIDIARIES.

(Q)                                 INSURANCE.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES IS INSURED BY INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY
AGAINST SUCH LOSSES AND RISKS AND IN SUCH AMOUNTS AS MANAGEMENT OF THE COMPANY
BELIEVES TO BE PRUDENT AND CUSTOMARY IN THE BUSINESSES IN WHICH THE COMPANY AND
ITS SUBSIDIARIES ARE ENGAGED.  NEITHER THE COMPANY NOR ANY SUCH SUBSIDIARY HAS
BEEN REFUSED ANY INSURANCE COVERAGE SOUGHT OR APPLIED FOR AND NEITHER THE
COMPANY NOR ANY SUCH SUBSIDIARY HAS ANY REASON TO BELIEVE THAT IT WILL NOT BE
ABLE TO RENEW ITS EXISTING INSURANCE COVERAGE AS AND WHEN SUCH COVERAGE EXPIRES
OR TO OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS AS MAY BE NECESSARY TO
CONTINUE ITS BUSINESS AT A COST THAT WOULD NOT MATERIALLY AND ADVERSELY AFFECT
THE CONDITION, FINANCIAL OR OTHERWISE, OR THE EARNINGS, BUSINESS OR OPERATIONS
OF THE COMPANY AND ITS SUBSIDIARIES, TAKEN AS A WHOLE.

(R)                                    REGULATORY PERMITS.  THE COMPANY AND ITS
SUBSIDIARIES POSSESS ALL MATERIAL CERTIFICATES, AUTHORIZATIONS AND PERMITS
ISSUED BY THE APPROPRIATE FEDERAL, STATE OR FOREIGN REGULATORY AUTHORITIES
NECESSARY TO CONDUCT THEIR RESPECTIVE BUSINESSES, AND NEITHER THE COMPANY NOR
ANY SUCH SUBSIDIARY HAS RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE
REVOCATION OR MODIFICATION OF ANY SUCH CERTIFICATE, AUTHORIZATION OR PERMIT.

(S)                                  INTERNAL ACCOUNTING CONTROLS.  THE COMPANY
AND EACH OF ITS SUBSIDIARIES MAINTAINS A SYSTEM OF INTERNAL ACCOUNTING CONTROLS
SUFFICIENT TO PROVIDE REASONABLE ASSURANCE THAT (I) TRANSACTIONS ARE EXECUTED IN
ACCORDANCE WITH MANAGEMENT’S GENERAL OR SPECIFIC AUTHORIZATIONS, (II)
TRANSACTIONS ARE RECORDED AS NECESSARY TO PERMIT PREPARATION OF FINANCIAL
STATEMENTS IN CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND TO
MAINTAIN ASSET

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ACCOUNTABILITY, AND (III) THE RECORDED AMOUNTS FOR ASSETS ARE COMPARED WITH THE
EXISTING ASSETS AT REASONABLE INTERVALS AND APPROPRIATE ACTION IS TAKEN WITH
RESPECT TO ANY DIFFERENCES.

(T)                                    NO MATERIAL ADVERSE BREACHES, ETC. 
NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS SUBJECT TO ANY CHARTER,
CORPORATE OR OTHER LEGAL RESTRICTION, OR ANY JUDGMENT, DECREE, ORDER, RULE OR
REGULATION WHICH HAS OR WOULD REASONABLY BE EXPECTED IN THE FUTURE TO HAVE A
MATERIAL ADVERSE EFFECT ON THE BUSINESS, PROPERTIES, OPERATIONS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS OR PROSPECTS OF THE COMPANY OR ITS
SUBSIDIARIES.  NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS IN BREACH OF
ANY CONTRACT OR AGREEMENT WHICH HAS OR WOULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT ON THE BUSINESS, PROPERTIES, OPERATIONS, FINANCIAL
CONDITION, RESULTS OF OPERATIONS OR PROSPECTS OF THE COMPANY OR ITS
SUBSIDIARIES.

(U)                                 TAX STATUS.  THE COMPANY AND EACH OF ITS
SUBSIDIARIES HAS MADE AND FILED ALL FEDERAL AND STATE INCOME AND ALL OTHER TAX
RETURNS, REPORTS AND DECLARATIONS REQUIRED BY ANY JURISDICTION TO WHICH IT IS
SUBJECT AND (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) 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 PROVISION
REASONABLY ADEQUATE FOR THE PAYMENT OF ALL TAXES FOR PERIODS SUBSEQUENT TO THE
PERIODS TO WHICH SUCH RETURNS, REPORTS OR DECLARATIONS APPLY.  THERE ARE NO
UNPAID TAXES IN ANY MATERIAL AMOUNT CLAIMED TO BE DUE BY THE TAXING AUTHORITY OF
ANY JURISDICTION, AND THE OFFICERS OF THE COMPANY KNOW OF NO BASIS FOR ANY SUCH
CLAIM.

(V)                                 CERTAIN TRANSACTIONS.  EXCEPT FOR ARM’S
LENGTH TRANSACTIONS PURSUANT TO WHICH THE COMPANY MAKES PAYMENTS IN THE ORDINARY
COURSE OF BUSINESS UPON TERMS NO LESS FAVORABLE THAN THE COMPANY COULD OBTAIN
FROM THIRD PARTIES AND OTHER THAN THE GRANT OF STOCK OPTIONS DISCLOSED IN THE
SEC DOCUMENTS, NONE OF THE OFFICERS, DIRECTORS, OR EMPLOYEES OF THE COMPANY IS
PRESENTLY A PARTY TO ANY TRANSACTION WITH THE COMPANY (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 CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY IN WHICH ANY
OFFICER, DIRECTOR, OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN
OFFICER, DIRECTOR, TRUSTEE OR PARTNER.

(W)                               FEES AND RIGHTS OF FIRST REFUSAL.  THE COMPANY
IS NOT OBLIGATED TO OFFER THE SECURITIES OFFERED HEREUNDER ON A RIGHT OF FIRST
REFUSAL BASIS OR OTHERWISE TO ANY THIRD PARTIES INCLUDING, BUT NOT LIMITED TO,
CURRENT OR FORMER SHAREHOLDERS OF THE COMPANY, UNDERWRITERS, BROKERS, AGENTS OR
OTHER THIRD PARTIES.

(X)                                   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.

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(Y)                                 REGISTRATION RIGHTS.  OTHER THAN EACH OF THE
BUYERS, NO PERSON HAS ANY RIGHT TO CAUSE THE COMPANY TO EFFECT THE REGISTRATION
UNDER THE SECURITIES ACT OF ANY SECURITIES OF THE COMPANY.  THERE ARE NO
OUTSTANDING REGISTRATION STATEMENTS NOT YET DECLARED EFFECTIVE AND THERE ARE NO
OUTSTANDING COMMENT LETTERS FROM THE SEC OR ANY OTHER REGULATORY AGENCY.

(Z)                                   PRIVATE PLACEMENT. ASSUMING THE ACCURACY
OF THE BUYERS’ REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 2, NO
REGISTRATION UNDER THE SECURITIES ACT IS REQUIRED FOR THE OFFER AND SALE OF THE
SECURITIES BY THE COMPANY TO THE BUYERS AS CONTEMPLATED HEREBY. THE ISSUANCE AND
SALE OF THE SECURITIES HEREUNDER DOES NOT CONTRAVENE THE RULES AND REGULATIONS
OF THE PRIMARY MARKET.

(AA)                            LISTING AND MAINTENANCE REQUIREMENTS.  THE
COMPANY’S COMMON STOCK IS REGISTERED PURSUANT TO SECTION 12(B) OR 12(G) OF THE
EXCHANGE ACT, AND THE COMPANY HAS TAKEN NO ACTION DESIGNED TO TERMINATE, OR
WHICH TO ITS KNOWLEDGE IS LIKELY TO HAVE THE EFFECT OF, TERMINATING THE
REGISTRATION OF THE COMMON STOCK UNDER THE EXCHANGE ACT NOR HAS THE COMPANY
RECEIVED ANY NOTIFICATION THAT THE SEC IS CONTEMPLATING TERMINATING SUCH
REGISTRATION.  THE COMPANY HAS NOT, IN THE TWELVE (12) MONTHS PRECEDING THE DATE
HEREOF, RECEIVED NOTICE FROM ANY PRIMARY 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 PRIMARY 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.

(BB)                          MANIPULATION OF PRICE.  THE COMPANY HAS NOT, AND
TO ITS KNOWLEDGE NO ONE ACTING ON ITS BEHALF HAS, (I) TAKEN, DIRECTLY OR
INDIRECTLY, ANY ACTION DESIGNED TO CAUSE OR TO RESULT IN THE STABILIZATION OR
MANIPULATION OF THE PRICE OF ANY SECURITY OF THE COMPANY TO FACILITATE THE SALE
OR RESALE OF ANY OF THE SECURITIES, (II) SOLD, BID FOR, PURCHASED, OR, PAID ANY
COMPENSATION FOR SOLICITING PURCHASES OF, ANY OF THE SECURITIES, OR (III) PAID
OR AGREED TO PAY TO ANY PERSON ANY COMPENSATION FOR SOLICITING ANOTHER TO
PURCHASE ANY OTHER SECURITIES OF THE COMPANY, OTHER THAN, IN THE CASE OF CLAUSES
(II) AND (III), COMPENSATION PAID TO THE COMPANY’S PLACEMENT AGENT IN CONNECTION
WITH THE PLACEMENT OF THE SECURITIES.

(CC)                            DILUTIVE EFFECT.  THE COMPANY UNDERSTANDS AND
ACKNOWLEDGES THAT THE NUMBER OF CONVERSION SHARES ISSUABLE UPON CONVERSION OF
THE CONVERTIBLE DEBENTURES AND THE WARRANT SHARES ISSUABLE UPON EXERCISE OF THE
WARRANTS WILL INCREASE IN CERTAIN CIRCUMSTANCES.  THE COMPANY FURTHER
ACKNOWLEDGES THAT ITS OBLIGATION TO ISSUE CONVERSION SHARES UPON CONVERSION OF
THE CONVERTIBLE DEBENTURES IN ACCORDANCE WITH THIS AGREEMENT AND THE CONVERTIBLE
DEBENTURES AND ITS OBLIGATION TO ISSUE THE WARRANT SHARES UPON EXERCISE OF THE
WARRANTS IN ACCORDANCE WITH THIS AGREEMENT AND THE WARRANTS, IN EACH CASE, IS
ABSOLUTE AND UNCONDITIONAL REGARDLESS OF THE DILUTIVE EFFECT THAT SUCH ISSUANCE
MAY HAVE ON THE OWNERSHIP INTERESTS OF OTHER STOCKHOLDERS OF THE COMPANY.

4.               COVENANTS.

(A)                                  BEST EFFORTS.  EACH PARTY SHALL USE ITS
BEST EFFORTS TO TIMELY SATISFY EACH OF THE CONDITIONS TO BE SATISFIED BY IT AS
PROVIDED IN SECTIONS 6 AND 7 OF THIS AGREEMENT.

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(B)                                 FORM D.  THE COMPANY AGREES TO FILE A FORM D
WITH RESPECT TO THE SECURITIES AS REQUIRED UNDER REGULATION D AND TO PROVIDE A
COPY THEREOF TO EACH BUYER PROMPTLY AFTER SUCH FILING.  THE COMPANY SHALL, ON OR
BEFORE THE CLOSING DATE, TAKE SUCH ACTION AS THE COMPANY SHALL REASONABLY
DETERMINE IS NECESSARY TO QUALIFY THE SECURITIES, OR OBTAIN AN EXEMPTION FOR THE
SECURITIES FOR SALE TO THE BUYERS AT THE CLOSING PURSUANT TO THIS AGREEMENT
UNDER APPLICABLE SECURITIES OR “BLUE SKY” LAWS OF THE STATES OF THE UNITED
STATES, AND SHALL PROVIDE EVIDENCE OF ANY SUCH ACTION SO TAKEN TO THE BUYERS ON
OR PRIOR TO THE CLOSING DATE.

(C)                                  REPORTING STATUS.  UNTIL THE EARLIER OF (I)
THE DATE AS OF WHICH THE BUYER(S) MAY SELL ALL OF THE SECURITIES WITHOUT
RESTRICTION PURSUANT TO RULE 144(K) PROMULGATED UNDER THE SECURITIES ACT (OR
SUCCESSOR THERETO), OR (II) THE DATE ON WHICH (A) THE BUYERS SHALL HAVE SOLD ALL
THE SECURITIES AND (B) NONE OF THE CONVERTIBLE DEBENTURES OR WARRANTS ARE
OUTSTANDING (THE “REGISTRATION PERIOD”), THE COMPANY SHALL FILE IN A TIMELY
MANNER ALL REPORTS REQUIRED TO BE FILED WITH THE SEC PURSUANT TO THE EXCHANGE
ACT AND THE REGULATIONS OF THE SEC   THEREUNDER, AND THE COMPANY SHALL NOT
TERMINATE ITS STATUS AS AN ISSUER REQUIRED TO FILE REPORTS UNDER THE EXCHANGE
ACT EVEN IF THE EXCHANGE ACT OR THE RULES AND REGULATIONS THEREUNDER WOULD
OTHERWISE PERMIT SUCH TERMINATION.

(D)                                 USE OF PROCEEDS.  THE COMPANY WILL USE THE
PROCEEDS FROM THE SALE OF THE CONVERTIBLE DEBENTURES FOR GENERAL CORPORATE AND
WORKING CAPITAL PURPOSES.

(E)                                  RESERVATION OF SHARES.  ON THE DATE HEREOF,
THE COMPANY SHALL RESERVE FOR ISSUANCE TO THE BUYERS 20,500,000 SHARES FOR
ISSUANCE UPON CONVERSIONS OF THE CONVERTIBLE DENTURES AND ISSUANCE UPON EXERCISE
OF THE WARRANTS (THE “INITIAL SHARE RESERVE”).  THE COMPANY REPRESENTS THAT IT
HAS SUFFICIENT AUTHORIZED AND UNISSUED SHARES OF COMMON STOCK AVAILABLE TO
CREATE THE SHARE RESERVE AFTER CONSIDERING ALL OTHER COMMITMENTS THAT MAY
REQUIRE THE ISSUANCE OF COMMON STOCK.  IF THE COMPANY OBTAINS STOCKHOLDER
APPROVAL, THE COMPANY SHALL PROMPTLY INCREASE THE INITIAL SHARE RESERVE BY
10,000,000 SHARES TO A TOTAL RESERVE OF 30,500,000 SHARES FOR ISSUANCE UPON
CONVERSIONS OF THE CONVERTIBLE DEBENTURES AND UPON EXERCISE OF THE WARRANTS
(COLLECTIVELY, THE “SHARE RESERVE”)  THE COMPANY SHALL TAKE ALL ACTION
REASONABLY NECESSARY TO AT ALL TIMES HAVE AUTHORIZED, AND RESERVED FOR THE
PURPOSE OF ISSUANCE, SUCH NUMBER OF SHARES OF COMMON STOCK AS SHALL BE NECESSARY
TO EFFECT THE FULL CONVERSION OF THE CONVERTIBLE DEBENTURES AND THE FULL
EXERCISE OF THE WARRANTS.  IF AT ANY TIME THE SHARE RESERVE IS INSUFFICIENT TO
EFFECT THE FULL CONVERSION OF THE CONVERTIBLE DEBENTURES OR THE FULL EXERCISE OF
THE WARRANTS, THE COMPANY SHALL INCREASE THE SHARE RESERVE ACCORDINGLY.  IF THE
COMPANY DOES NOT HAVE SUFFICIENT AUTHORIZED AND UNISSUED SHARES OF COMMON STOCK
AVAILABLE TO INCREASE THE SHARE RESERVE, PRIOR TO THE CONSUMMATION OF THE THIRD
CLOSING, THE COMPANY SHALL USE ITS REASONABLE BEST EFFORTS TO CALL AND HOLD A
SPECIAL MEETING OF THE SHAREHOLDERS WITHIN NINETY (90) DAYS OF SUCH OCCURRENCE,
FOR THE PURPOSE OF INCREASING THE NUMBER OF SHARES AUTHORIZED.  THE COMPANY’S
BOARD SHALL RECOMMEND TO THE SHAREHOLDERS TO VOTE IN FAVOR OF INCREASING THE
NUMBER OF SHARES OF COMMON STOCK AUTHORIZED; PROVIDED, HOWEVER THAT THE BOARD
SHALL NOT BE OBLIGATED TO MAKE SUCH A RECOMMENDATION IF THE BOARD DETERMINES IN
GOOD FAITH, AFTER RECEIVING THE ADVICE OF ITS INDEPENDENT LEGAL AND FINANCIAL
ADVISORS, THAT SUCH A RECOMMENDATION WOULD CAUSE THE BOARD TO BREACH ITS
FIDUCIARY DUTIES.

(F)                                    LISTINGS OR QUOTATION.  THE COMPANY’S
COMMON STOCK SHALL BE LISTED OR QUOTED FOR TRADING ON ANY OF (A) THE AMERICAN
STOCK EXCHANGE, (B) NEW YORK STOCK

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EXCHANGE, (C) THE NASDAQ GLOBAL MARKET, (D) THE NASDAQ CAPITAL MARKET, OR (E)
THE NASD OTC BULLETIN BOARD (“OTCBB”) (EACH, A “PRIMARY MARKET”).  THE COMPANY
SHALL PROMPTLY SECURE THE LISTING OF ALL OF THE REGISTRABLE SECURITIES (AS
DEFINED IN THE REGISTRATION RIGHTS AGREEMENT) UPON EACH NATIONAL SECURITIES
EXCHANGE AND AUTOMATED QUOTATION SYSTEM, IF ANY, UPON WHICH THE COMMON STOCK IS
THEN LISTED (SUBJECT TO OFFICIAL NOTICE OF ISSUANCE) AND SHALL MAINTAIN SUCH
LISTING OF ALL REGISTRABLE SECURITIES FROM TIME TO TIME ISSUABLE UNDER THE TERMS
OF THE TRANSACTION DOCUMENTS.

(G)                                 FEES AND EXPENSES.

(I)                                     EACH OF THE COMPANY AND THE BUYER(S)
SHALL PAY ALL COSTS AND EXPENSES INCURRED BY SUCH PARTY IN CONNECTION WITH THE
NEGOTIATION, INVESTIGATION, PREPARATION, EXECUTION AND DELIVERY OF THE
TRANSACTION DOCUMENTS.

(II)                                  THE COMPANY SHALL SET ASIDE $75,000 FROM
THE PROCEEDS OF THE FIRST CLOSING, $75,000 FROM THE PROCEEDS OF THE SECOND
CLOSING, AND $100,000 FROM THE PROCEEDS OF THE THIRD CLOSING WHICH SHALL BE USED
TO COMPENSATE YORKVILLE ADVISORS LLC (“YORKVILLE”) FOR MONITORING AND MANAGING
THE INVESTMENT BY YA GLOBAL INVESTMENTS, L.P. (“YA GLOBAL”) DESCRIBED HEREIN,
PURSUANT TO YORKVILLE’S EXISTING ADVISORY OBLIGATIONS TO YA GLOBAL.

(III)                               THE COMPANY SHALL PAY A STRUCTURING AND DUE
DILIGENCE FEE TO YORKVILLE ADVISORS, LLC OF THIRTY THOUSAND DOLLARS ($30,000),
OF WHICH FIFTEEN THOUSAND DOLLARS ($15,000) HAS BEEN PAID AND THE REMAINING
FIFTEEN THOUSAND DOLLARS ($15,000) SHALL BE PAID DIRECTLY FROM THE PROCEEDS OF
THE FIRST CLOSING.

(H)                                 CORPORATE EXISTENCE.  SO LONG AS ANY OF THE
CONVERTIBLE DEBENTURES REMAIN OUTSTANDING, THE COMPANY SHALL NOT DIRECTLY OR
INDIRECTLY CONSUMMATE ANY MERGER, REORGANIZATION, RESTRUCTURING, REVERSE STOCK
SPLIT CONSOLIDATION, SALE OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS OR
ANY SIMILAR TRANSACTION OR RELATED TRANSACTIONS (EACH SUCH TRANSACTION, AN
“ORGANIZATIONAL CHANGE”) UNLESS, PRIOR TO THE CONSUMMATION AN ORGANIZATIONAL
CHANGE, THE COMPANY OBTAINS THE WRITTEN CONSENT OF EACH BUYER.  IN ANY SUCH
CASE, THE COMPANY WILL MAKE APPROPRIATE PROVISION WITH RESPECT TO SUCH HOLDERS’
RIGHTS AND INTERESTS TO INSURE THAT THE PROVISIONS OF THIS SECTION 4(H) WILL
THEREAFTER BE APPLICABLE TO THE CONVERTIBLE DEBENTURES.

(I)                                     TRANSACTIONS WITH AFFILIATES.  SO LONG
AS ANY CONVERTIBLE DEBENTURES ARE OUTSTANDING, THE COMPANY SHALL NOT, AND SHALL
CAUSE EACH OF ITS SUBSIDIARIES NOT TO, ENTER INTO, AMEND, MODIFY OR SUPPLEMENT,
OR PERMIT ANY SUBSIDIARY TO ENTER INTO, AMEND, MODIFY OR SUPPLEMENT ANY
AGREEMENT, TRANSACTION, COMMITMENT, OR ARRANGEMENT WITH ANY OF ITS OR ANY
SUBSIDIARY’S OFFICERS, DIRECTORS, PERSON WHO WERE OFFICERS OR DIRECTORS AT ANY
TIME DURING THE PREVIOUS TWO (2) YEARS, STOCKHOLDERS WHO BENEFICIALLY OWN FIVE
PERCENT (5%) OR MORE OF THE COMMON STOCK, OR AFFILIATES (AS DEFINED BELOW) OR
WITH ANY INDIVIDUAL RELATED BY BLOOD, MARRIAGE, OR ADOPTION TO ANY SUCH
INDIVIDUAL OR WITH ANY ENTITY IN WHICH ANY SUCH ENTITY OR INDIVIDUAL OWNS A FIVE
PERCENT (5%) OR MORE BENEFICIAL INTEREST (EACH A “RELATED PARTY”), EXCEPT FOR
(A) CUSTOMARY EMPLOYMENT ARRANGEMENTS AND BENEFIT PROGRAMS ON REASONABLE TERMS,
(B) ANY INVESTMENT IN AN AFFILIATE OF THE COMPANY,  (C) ANY AGREEMENT,
TRANSACTION, COMMITMENT, OR ARRANGEMENT ON AN ARMS-LENGTH BASIS ON TERMS NO LESS
FAVORABLE THAN TERMS WHICH WOULD HAVE

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BEEN OBTAINABLE FROM A PERSON OTHER THAN SUCH RELATED PARTY, OR (D) ANY
AGREEMENT, TRANSACTION, COMMITMENT, OR ARRANGEMENT WHICH IS APPROVED BY A
MAJORITY OF THE DISINTERESTED DIRECTORS OF THE COMPANY; FOR PURPOSES HEREOF, ANY
DIRECTOR WHO IS ALSO AN OFFICER OF THE COMPANY OR ANY SUBSIDIARY OF THE COMPANY
SHALL NOT BE A DISINTERESTED DIRECTOR WITH RESPECT TO ANY SUCH AGREEMENT,
TRANSACTION, COMMITMENT, OR ARRANGEMENT.  “AFFILIATE” FOR PURPOSES HEREOF MEANS,
WITH RESPECT TO ANY PERSON OR ENTITY, ANOTHER PERSON OR ENTITY THAT, DIRECTLY OR
INDIRECTLY, (I) HAS A TEN PERCENT (10%) OR MORE EQUITY INTEREST IN THAT PERSON
OR ENTITY, (II) HAS TEN PERCENT (10%) OR MORE COMMON OWNERSHIP WITH THAT PERSON
OR ENTITY, (III) CONTROLS THAT PERSON OR ENTITY, OR (IV) SHARES COMMON CONTROL
WITH THAT PERSON OR ENTITY.  “CONTROL” OR “CONTROLS” FOR PURPOSES HEREOF MEANS
THAT A PERSON OR ENTITY HAS THE POWER, DIRECT OR INDIRECT, TO CONDUCT OR GOVERN
THE POLICIES OF ANOTHER PERSON OR ENTITY.

(J)                                     TRANSFER AGENT.  THE COMPANY COVENANTS
AND AGREES THAT, IN THE EVENT THAT THE COMPANY’S AGENCY RELATIONSHIP WITH THE
TRANSFER AGENT SHOULD BE TERMINATED FOR ANY REASON PRIOR TO A DATE WHICH IS TWO
(2) YEARS AFTER THE CLOSING DATE, THE COMPANY SHALL IMMEDIATELY APPOINT A NEW
TRANSFER AGENT AND SHALL REQUIRE THAT THE NEW TRANSFER AGENT EXECUTE AND AGREE
TO BE BOUND BY THE TERMS OF THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS (AS
DEFINED HEREIN).

(K)                                  SUBSEQUENT OFFERINGS.

(I)                                     EXCEPT AS PERMITTED PURSUANT TO SECTION
4(K)(III), WITHOUT THE WRITTEN CONSENT OF THE BUYER SO LONG AS ANY PORTION OF
THE CONVERTIBLE DEBENTURES ARE OUTSTANDING THE COMPANY SHALL NOT (A) GRANT,
ISSUE OR SELL ANY COMMON STOCK OR OTHER EQUITY SECURITIES, ANY SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR ANY COMMON STOCK OR OTHER EQUITY SECURITIES
OR TAKE ANY OTHER ACTION THAT MAY RESULT IN THE ISSUANCE OF ANY OF THE
FOREGOING, OTHER THAN TO ISSUE OPTIONS OR SIMILAR RIGHTS TO PURCHASE COMMON
STOCK GRANTED PURSUANT TO COMPENSATION, BENEFIT, SEVERANCE OR SIMILAR PLANS OR
EMPLOYMENT AGREEMENTS OF THE COMPANY AS IN EFFECT ON THE DATE OF THIS AGREEMENT,
OR (B) FILE ANY REGISTRATION STATEMENTS ON FORM S-8.

(II)                                  EXCEPT AS PERMITTED PURSUANT TO SECTION
4(K)(III), WITHOUT THE WRITTEN CONSENT OF THE BUYER SO LONG AS ANY PORTION OF
THE CONVERTIBLE DEBENTURES ARE OUTSTANDING THE COMPANY SHALL NOT CONSUMMATE ANY
MERGER, REORGANIZATION, RESTRUCTURING, REVERSE STOCK SPLIT CONSOLIDATION, SALE
OF ALL OR SUBSTANTIALLY ALL OF THE COMPANY’S ASSETS OR ANY SIMILAR TRANSACTION
OR RELATED TRANSACTIONS, OR TAKE ANY OTHER ACTION THAT MAY RESULT IN ANY OF THE
FOREGOING, EXCEPT THAT ANY WHOLLY-OWNED SUBSIDIARY OF THE COMPANY MAY MERGE WITH
THE COMPANY, PROVIDED THAT, THE COMPANY SHALL BE THE CONTINUING OR SURVIVING
ENTITY.

(III)                               NOTWITHSTANDING THE FOREGOING, THIS
SECTION 4(K) SHALL NOT APPLY TO EXCLUDED SECURITIES (AS DEFINED IN THE
CONVERTIBLE DEBENTURE).

(L)                                     NOTWITHSTANDING THE RESTRICTIONS SET
FORTH IN SECTION 4(K)(I) AND SECTION 4(K)(II) ABOVE, THE COMPANY MAY ISSUE
SECURITIES OF THE COMPANY PROVIDED THAT (A) ANY SUCH ISSUANCE IS FOR
CONSIDERATION NOT LESS THAN NINETY PERCENT (90%) OF THE MARKET PRICE OF THE
COMMON STOCK ON THE DATE OF SUCH ISSUANCE.

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(M)          NEITHER THE BUYER(S) NOR ANY OF ITS AFFILIATES HAVE AN OPEN SHORT
POSITION IN THE COMMON STOCK OF THE COMPANY, AND THE BUYER(S) AGREES THAT IT
SHALL NOT, AND THAT IT WILL CAUSE ITS AFFILIATES NOT TO, ENGAGE IN ANY SHORT
SALES OF OR HEDGING TRANSACTIONS WITH RESPECT TO THE COMMON STOCK AS LONG AS ANY
CONVERTIBLE DEBENTURES SHALL REMAIN OUTSTANDING. 

(N)           RIGHTS OF FIRST REFUSAL.  SO LONG AS ANY PORTION OF CONVERTIBLE
DEBENTURES ARE OUTSTANDING, IF THE COMPANY INTENDS TO RAISE ADDITIONAL CAPITAL
BY THE ISSUANCE OR SALE OF CAPITAL STOCK OF THE COMPANY, INCLUDING WITHOUT
LIMITATION SHARES OF ANY CLASS OF COMMON STOCK, ANY CLASS OF PREFERRED STOCK,
OPTIONS, WARRANTS, CONVERTIBLE DEBT OR ANY OTHER SECURITIES CONVERTIBLE OR
EXERCISABLE INTO SHARES OF COMMON STOCK (WHETHER THE OFFERING IS CONDUCTED BY
THE COMPANY, UNDERWRITER, PLACEMENT AGENT OR ANY THIRD PARTY) THE COMPANY SHALL
BE OBLIGATED TO OFFER TO THE BUYERS SUCH ISSUANCE OR SALE OF CAPITAL STOCK, BY
PROVIDING IN WRITING THE PRINCIPAL AMOUNT OF CAPITAL IT INTENDS TO RAISE AND
OUTLINE OF THE MATERIAL TERMS OF SUCH CAPITAL RAISE, PRIOR TO THE OFFERING SUCH
ISSUANCE OR SALE OF CAPITAL STOCK TO ANY THIRD PARTIES INCLUDING, BUT NOT
LIMITED TO, CURRENT OR FORMER OFFICERS OR DIRECTORS, CURRENT OR FORMER
SHAREHOLDERS AND/OR INVESTORS OF THE OBLIGOR, UNDERWRITERS, BROKERS, AGENTS OR
OTHER THIRD PARTIES.  THE BUYERS SHALL HAVE FIVE (5) BUSINESS DAYS FROM RECEIPT
OF SUCH NOTICE OF THE SALE OR ISSUANCE OF CAPITAL STOCK TO ACCEPT OR REJECT ALL
OR A PORTION OF SUCH CAPITAL RAISING OFFER.  ANY OFFER MADE TO BUYER PURSUANT TO
THIS SECTION SHALL SIMULTANEOUSLY BE MADE ON THE SAME TERMS TO STANFORD ON A
PRO-RATA BASIS.

(O)           LOCK UP AGREEMENTS.  ON THE DATE HEREOF, THE COMPANY SHALL OBTAIN
FROM EACH OFFICER AND DIRECTOR A LOCK UP AGREEMENT IN THE FORM ATTACHED HERETO
AS EXHIBIT D.

(P)           ADDITIONAL REGISTRATION STATEMENTS.  UNTIL THE EFFECTIVE DATE OF
THE INITIAL REGISTRATION STATEMENT, THE COMPANY WILL NOT FILE A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT RELATING TO SECURITIES THAT ARE NOT THE
SECURITIES.

(Q)           REVIEW OF PUBLIC DISCLOSURES.  ALL SEC FILINGS (INCLUDING, WITHOUT
LIMITATION, ALL FILINGS REQUIRED UNDER THE EXCHANGE ACT, WHICH INCLUDE FORMS
10-Q AND 10-QSB, 10-K AND 10K-SB, 8-K, ETC) AND OTHER PUBLIC DISCLOSURES MADE BY
THE COMPANY, INCLUDING, WITHOUT LIMITATION, ALL PRESS RELEASES, INVESTOR
RELATIONS MATERIALS, AND SCRIPTS OF ANALYSTS MEETINGS AND CALLS, SHALL BE
REVIEWED AND APPROVED FOR RELEASE BY THE COMPANY’S ATTORNEYS AND, IF CONTAINING
FINANCIAL INFORMATION, THE COMPANY’S INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.

(R)            DISCLOSURE OF TRANSACTION.  WITHIN FOUR BUSINESS DAYS FOLLOWING
THE DATE OF THIS AGREEMENT, THE COMPANY SHALL FILE A CURRENT REPORT ON FORM 8-K
DESCRIBING THE TERMS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS IN THE FORM REQUIRED BY THE EXCHANGE ACT AND ATTACHING THE MATERIAL
TRANSACTION DOCUMENTS (INCLUDING, WITHOUT LIMITATION, THIS AGREEMENT, THE FORM
OF THE CONVERTIBLE DEBENTURE, THE FORM OF WARRANT AND THE FORM OF THE
REGISTRATION RIGHTS AGREEMENT) AS EXHIBITS TO SUCH FILING.

5.     TRANSFER AGENT INSTRUCTIONS.

(A)           THE COMPANY SHALL ISSUE THE IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS TO ITS TRANSFER AGENT, AND ANY SUBSEQUENT TRANSFER AGENT,
IRREVOCABLY APPOINTING DAVID GONZALEZ, ESQ. AS THE COMPANY’S AGENT FOR PURPOSE
INSTRUCTING ITS TRANSFER AGENT TO ISSUE

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CERTIFICATES OR CREDIT SHARES TO THE APPLICABLE BALANCE ACCOUNTS AT THE
DEPOSITORY TRUST COMPANY (“DTC”), REGISTERED IN THE NAME OF EACH BUYER OR ITS
RESPECTIVE NOMINEE(S), FOR THE CONVERSION SHARES AND THE WARRANT SHARES ISSUED
UPON CONVERSION OF THE CONVERTIBLE DEBENTURES OR EXERCISE OF THE WARRANTS AS
SPECIFIED FROM TIME TO TIME BY EACH BUYER TO THE COMPANY UPON CONVERSION OF THE
CONVERTIBLE DEBENTURES OR EXERCISE OF THE WARRANTS.  THE COMPANY SHALL NOT
CHANGE ITS TRANSFER AGENT WITHOUT THE EXPRESS WRITTEN CONSENT OF THE BUYERS,
WHICH MAY BE WITHHELD BY THE BUYERS IN THEIR SOLE DISCRETION.  THE COMPANY
WARRANTS THAT NO INSTRUCTION OTHER THAN THE IRREVOCABLE TRANSFER AGENT
INSTRUCTIONS REFERRED TO IN THIS SECTION 5, AND STOP TRANSFER INSTRUCTIONS TO
GIVE EFFECT TO SECTION 2(G) HEREOF (IN THE CASE OF THE CONVERSION SHARES OR
WARRANT SHARES PRIOR TO REGISTRATION OF SUCH SHARES UNDER THE SECURITIES ACT)
WILL BE GIVEN BY THE COMPANY TO ITS TRANSFER AGENT, AND THAT THE SECURITIES
SHALL OTHERWISE BE FREELY TRANSFERABLE ON THE BOOKS AND RECORDS OF THE COMPANY
AS AND TO THE EXTENT PROVIDED IN THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS.  IF A BUYER EFFECTS A SALE, ASSIGNMENT OR TRANSFER OF THE SECURITIES
IN ACCORDANCE WITH SECTION 2(F), THE COMPANY SHALL PROMPTLY INSTRUCT ITS
TRANSFER AGENT TO ISSUE ONE OR MORE CERTIFICATES OR CREDIT SHARES TO THE
APPLICABLE BALANCE ACCOUNTS AT DTC IN SUCH NAME AND IN SUCH DENOMINATIONS AS
SPECIFIED BY SUCH BUYER TO EFFECT SUCH SALE, TRANSFER OR ASSIGNMENT AND, WITH
RESPECT TO ANY TRANSFER, SHALL PERMIT THE TRANSFER.  IN THE EVENT THAT SUCH
SALE, ASSIGNMENT OR TRANSFER INVOLVES CONVERSION SHARES OR WARRANT SHARES SOLD,
ASSIGNED OR TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
PURSUANT TO RULE 144, THE TRANSFER AGENT SHALL ISSUE SUCH SECURITIES TO THE
BUYER, ASSIGNEE OR TRANSFEREE, AS THE CASE MAY BE, WITHOUT ANY RESTRICTIVE
LEGEND.    NOTHING IN THIS SECTION 5 SHALL AFFECT IN ANY WAY THE BUYER’S
OBLIGATIONS AND AGREEMENT TO COMPLY WITH ALL APPLICABLE SECURITIES LAWS UPON
RESALE OF CONVERSION SHARES.  THE COMPANY ACKNOWLEDGES THAT A BREACH BY IT OF
ITS OBLIGATIONS HEREUNDER WILL CAUSE IRREPARABLE HARM TO THE BUYER BY VITIATING
THE INTENT AND PURPOSE OF THE TRANSACTION CONTEMPLATED HEREBY.  ACCORDINGLY, THE
COMPANY ACKNOWLEDGES THAT THE REMEDY AT LAW FOR A BREACH OF ITS OBLIGATIONS
UNDER THIS SECTION 5 WILL BE INADEQUATE AND AGREES, IN THE EVENT OF A BREACH OR
THREATENED BREACH BY THE COMPANY OF THE PROVISIONS OF THIS SECTION 5, THAT THE
BUYER(S) SHALL BE ENTITLED, IN ADDITION TO ALL OTHER AVAILABLE REMEDIES, TO AN
INJUNCTION RESTRAINING ANY BREACH AND REQUIRING IMMEDIATE ISSUANCE AND TRANSFER,
WITHOUT THE NECESSITY OF SHOWING ECONOMIC LOSS AND WITHOUT ANY BOND OR OTHER
SECURITY BEING REQUIRED.

6.     CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

The obligation of the Company hereunder to issue and sell the Convertible
Debentures to the Buyer(s) at the Closings is subject to the satisfaction, at or
before the Closing Dates, of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:

(A)           EACH BUYER SHALL HAVE EXECUTED THE TRANSACTION DOCUMENTS AND
DELIVERED THEM TO THE COMPANY.

(B)           THE BUYER(S) SHALL HAVE DELIVERED TO THE COMPANY THE PURCHASE
PRICE FOR THE CONVERTIBLE DEBENTURES AND WARRANTS IN THE RESPECTIVE AMOUNTS AS
SET FORTH NEXT TO EACH BUYER AS SET FORTH ON SCHEDULE I ATTACHED HERETO, MINUS
ANY FEES TO BE PAID DIRECTLY FROM THE PROCEEDS THE CLOSINGS AS SET FORTH HEREIN,
BY WIRE TRANSFER OF IMMEDIATELY AVAILABLE U.S. FUNDS PURSUANT TO THE WIRE
INSTRUCTIONS PROVIDED BY THE COMPANY.

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(C)           THE REPRESENTATIONS AND WARRANTIES OF THE BUYER(S) SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS AS OF THE DATE WHEN MADE AND AS OF THE
CLOSING DATES AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE), AND THE BUYER(S) SHALL HAVE
PERFORMED, SATISFIED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED
OR COMPLIED WITH BY THE BUYER(S) AT OR PRIOR TO THE CLOSING DATES. 

7.     CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.

(A)           THE OBLIGATION OF THE BUYER(S) HEREUNDER TO PURCHASE THE
CONVERTIBLE DEBENTURES AT THE FIRST CLOSING IS SUBJECT TO THE SATISFACTION, AT
OR BEFORE THE FIRST CLOSING DATE, OF EACH OF THE FOLLOWING CONDITIONS:

(I)            THE COMPANY SHALL HAVE EXECUTED THE TRANSACTION DOCUMENTS AND
DELIVERED THE SAME TO THE BUYERS.

(II)           THE COMMON STOCK SHALL BE AUTHORIZED FOR QUOTATION OR TRADING ON
THE PRIMARY MARKET, TRADING IN THE COMMON STOCK SHALL NOT HAVE BEEN SUSPENDED
FOR ANY REASON, AND ALL THE CONVERSION SHARES ISSUABLE UPON THE CONVERSION OF
THE CONVERTIBLE DEBENTURES SHALL BE APPROVED FOR LISTING OR TRADING ON THE
PRIMARY MARKET.   

(III)          THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS (EXCEPT TO THE EXTENT THAT ANY OF SUCH
REPRESENTATIONS AND WARRANTIES IS ALREADY QUALIFIED AS TO MATERIALITY IN SECTION
3 ABOVE, IN WHICH CASE, SUCH REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND
CORRECT WITHOUT FURTHER QUALIFICATION) AS OF THE DATE WHEN MADE AND AS OF THE
FIRST CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE) AND THE COMPANY SHALL HAVE
PERFORMED, SATISFIED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED
OR COMPLIED WITH BY THE COMPANY AT OR PRIOR TO THE FIRST CLOSING DATE.

(IV)          THE COMPANY SHALL HAVE EXECUTED AND DELIVERED TO THE BUYER(S) THE
CONVERTIBLE DEBENTURES AND WARRANTS IN THE RESPECTIVE AMOUNTS SET FORTH OPPOSITE
EACH BUYER’S NAME ON SCHEDULE I ATTACHED HERETO.

(V)           THE BUYERS SHALL HAVE RECEIVED AN OPINION OF COUNSEL FROM COUNSEL
TO THE COMPANY IN A FORM SATISFACTORY TO THE BUYERS.

(VI)          THE COMPANY SHALL HAVE PROVIDED TO THE BUYERS A TRUE COPY OF A
CERTIFICATE OF GOOD STANDING EVIDENCING THE FORMATION AND GOOD STANDING OF THE
COMPANY FROM THE SECRETARY OF STATE (OR COMPARABLE OFFICE) FROM THE JURISDICTION
IN WHICH THE COMPANY IS INCORPORATED, AS OF A DATE WITHIN 10 DAYS OF THE FIRST
CLOSING DATE.

(VII)         THE COMPANY SHALL HAVE DELIVERED TO THE BUYERS A CERTIFICATE,
EXECUTED BY THE SECRETARY OF THE COMPANY AND DATED AS OF THE FIRST CLOSING DATE,
AS TO (I) THE RESOLUTIONS CONSISTENT WITH SECTION 3(C) AS ADOPTED BY THE
COMPANY’S BOARD OF DIRECTORS IN A FORM REASONABLY ACCEPTABLE TO SUCH BUYER, (II)
THE CERTIFICATE OF INCORPORATION AND (III) THE BYLAWS, EACH AS IN EFFECT AT THE
FIRST CLOSING.

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(VIII)        THE COMPANY SHALL HAVE PROVIDED TO THE BUYER AN ACKNOWLEDGEMENT,
TO THE SATISFACTION OF THE BUYER, FROM THE COMPANY’S INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS. 

(IX)           A FORM UCC-1, ANY APPROPRIATE FILINGS TO BE MADE WITH THE PATENT
AND TRADEMARK OFFICE, OR SUCH OTHER FORMS AS MAY BE REQUIRED TO PERFECT THE
BUYER’S INTEREST IN THE PLEDGED PROPERTY AS DETAILED IN THE SECURITY AGREEMENT
AND THE PATENT SECURITY AGREEMENT SHALL HAVE BEEN FILED.

(X)            THE COMPANY SHALL HAVE CREATED THE INITIAL SHARE RESERVE.

(XI)           THE IRREVOCABLE TRANSFER AGENT INSTRUCTIONS, IN FORM AND
SUBSTANCE SATISFACTORY TO THE BUYER, SHALL HAVE BEEN DELIVERED TO AND
ACKNOWLEDGED IN WRITING BY THE COMPANY’S TRANSFER AGENT.

(XII)          THE COMPANY SHALL HAVE ENTERED INTO DEFINITIVE DOCUMENTS WITH
RESPECT TO THE STANFORD CLOSING FOR AN ADDITIONAL INVESTMENT OF $5,000,000
SUBJECT TO THE CONDITIONS THEREIN AND IN THE EVENT THE STANFORD CLOSING OCCURS,
THE BUYER AND STANFORD SHALL HAVE ENTERED INTO AN INTERCREDITOR AGREEMENT IN A
FORM SATISFACTORY TO THE BUYER.

(B)           THE OBLIGATION OF THE BUYER(S) HEREUNDER TO ACCEPT THE CONVERTIBLE
DEBENTURES AT THE SECOND CLOSING IS SUBJECT TO THE SATISFACTION, AT OR BEFORE
THE SECOND CLOSING DATE, OF EACH OF THE FOLLOWING CONDITIONS:

(I)            THE COMMON STOCK SHALL BE AUTHORIZED FOR QUOTATION OR TRADING ON
THE PRIMARY MARKET, TRADING IN THE COMMON STOCK SHALL NOT HAVE BEEN SUSPENDED
FOR ANY REASON, AND ALL THE CONVERSION SHARES ISSUABLE UPON THE CONVERSION OF
THE CONVERTIBLE DEBENTURES SHALL BE APPROVED FOR LISTING OR TRADING ON THE
PRIMARY MARKET. 

(II)           THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS (EXCEPT TO THE EXTENT THAT ANY OF SUCH
REPRESENTATIONS AND WARRANTIES IS ALREADY QUALIFIED AS TO MATERIALITY IN SECTION
3 ABOVE, IN WHICH CASE, SUCH REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND
CORRECT WITHOUT FURTHER QUALIFICATION) AS OF THE DATE WHEN MADE AND AS OF THE
SECOND CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE) AND THE COMPANY SHALL HAVE
PERFORMED, SATISFIED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED
OR COMPLIED WITH BY THE COMPANY AT OR PRIOR TO THE SECOND CLOSING DATE.

(III)          THE COMPANY SHALL HAVE EXECUTED AND DELIVERED TO THE BUYERS THE
CONVERTIBLE DEBENTURES IN THE RESPECTIVE AMOUNTS SET FORTH OPPOSITE EACH BUYERS
NAME ON SCHEDULE I ATTACHED HERETO.

(IV)          THE COMPANY SHALL HAVE FILED THE REGISTRATION STATEMENT WITH THE
SEC MATERIALLY IN COMPLIANCE WITH THE RULES AND REGULATIONS PROMULGATED BY THE
SEC FOR FILING THEREOF.

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(V)           THE COMPANY SHALL HAVE FILED A PRELIMINARY PROXY STATEMENT SEEKING
TO OBTAIN THE SHAREHOLDER APPROVAL WITH THE SEC MATERIALLY IN COMPLIANCE WITH
THE RULES AND REGULATIONS PROMULGATED BY THE SEC FOR FILING THEREOF. 

(VI)          THE COMPANY SHALL HAVE CERTIFIED, IN A CERTIFICATE EXECUTED BY TWO
OFFICERS OF THE COMPANY AND DATED AS OF THE SECOND CLOSING DATE, THAT ALL
CONDITIONS TO THE SECOND CLOSING HAVE BEEN SATISFIED.

(C)           THE OBLIGATION OF THE BUYERS HEREUNDER TO ACCEPT THE CONVERTIBLE
DEBENTURES AT THE THIRD CLOSING IS SUBJECT TO THE SATISFACTION, AT OR BEFORE THE
THIRD CLOSING DATE, OF EACH OF THE FOLLOWING CONDITIONS:

(I)            THE COMMON STOCK SHALL BE AUTHORIZED FOR QUOTATION OR TRADING ON
THE PRIMARY MARKET, TRADING IN THE COMMON STOCK SHALL NOT HAVE BEEN SUSPENDED
FOR ANY REASON, AND ALL THE CONVERSION SHARES ISSUABLE UPON THE CONVERSION OF
THE CONVERTIBLE DEBENTURES SHALL BE APPROVED FOR LISTING OR TRADING ON THE
PRIMARY MARKET.

(II)           THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY SHALL BE TRUE
AND CORRECT IN ALL MATERIAL RESPECTS (EXCEPT TO THE EXTENT THAT ANY OF SUCH
REPRESENTATIONS AND WARRANTIES IS ALREADY QUALIFIED AS TO MATERIALITY IN SECTION
3 ABOVE, IN WHICH CASE, SUCH REPRESENTATIONS AND WARRANTIES SHALL BE TRUE AND
CORRECT WITHOUT FURTHER QUALIFICATION) AS OF THE DATE WHEN MADE AND AS OF THE
THIRD CLOSING DATE AS THOUGH MADE AT THAT TIME (EXCEPT FOR REPRESENTATIONS AND
WARRANTIES THAT SPEAK AS OF A SPECIFIC DATE) AND THE COMPANY SHALL HAVE
PERFORMED, SATISFIED AND COMPLIED IN ALL MATERIAL RESPECTS WITH THE COVENANTS,
AGREEMENTS AND CONDITIONS REQUIRED BY THIS AGREEMENT TO BE PERFORMED, SATISFIED
OR COMPLIED WITH BY THE COMPANY AT OR PRIOR TO THE THIRD CLOSING DATE. 

(III)          THE COMPANY SHALL HAVE EXECUTED AND DELIVERED TO THE BUYERS THE
CONVERTIBLE DEBENTURES IN THE RESPECTIVE AMOUNTS SET FORTH OPPOSITE EACH BUYERS
NAME ON SCHEDULE I ATTACHED HERETO.

(IV)          THE REGISTRATION STATEMENT SHALL HAVE BEEN DECLARED EFFECTIVE BY
THE SEC. 

(V)           THE COMPANY SHALL HAVE OBTAINED SHAREHOLDER APPROVAL. 

(VI)          THE COMPANY SHALL HAVE CREATED THE SHARE RESERVE. 

(VII)         THE COMPANY SHALL HAVE CERTIFIED, IN A CERTIFICATE EXECUTED BY TWO
OFFICERS OF THE COMPANY AND DATED AS OF THE THIRD CLOSING DATE, THAT ALL
CONDITIONS TO THE THIRD CLOSING HAVE BEEN SATISFIED.

8.     INDEMNIFICATION.

(A)           IN CONSIDERATION OF THE BUYER’S EXECUTION AND DELIVERY OF THIS
AGREEMENT AND ACQUIRING THE CONVERTIBLE DEBENTURES AND THE CONVERSION SHARES
HEREUNDER, AND IN ADDITION TO ALL OF THE COMPANY’S OTHER OBLIGATIONS UNDER THIS
AGREEMENT, THE COMPANY SHALL DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE
BUYER(S) AND EACH OTHER HOLDER OF THE

21

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CONVERTIBLE DEBENTURES AND THE CONVERSION SHARES, AND ALL OF THEIR OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS (INCLUDING, WITHOUT LIMITATION, THOSE RETAINED
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT)
(COLLECTIVELY, THE “BUYER INDEMNITEES”) FROM AND AGAINST ANY AND ALL ACTIONS,
CAUSES OF ACTION, SUITS, CLAIMS, LOSSES, COSTS, PENALTIES, FEES, LIABILITIES AND
DAMAGES, AND EXPENSES IN CONNECTION THEREWITH (IRRESPECTIVE OF WHETHER ANY SUCH
BUYER INDEMNITEE IS A PARTY TO THE ACTION FOR WHICH INDEMNIFICATION HEREUNDER IS
SOUGHT), AND INCLUDING REASONABLE ATTORNEYS’ FEES AND DISBURSEMENTS (THE
“INDEMNIFIED LIABILITIES”), INCURRED BY THE BUYER INDEMNITEES OR ANY OF THEM AS
A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY MISREPRESENTATION OR
BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY THE COMPANY IN THIS AGREEMENT,
THE CONVERTIBLE DEBENTURES OR THE OTHER TRANSACTION DOCUMENTS OR ANY OTHER
CERTIFICATE, INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY OR THEREBY, (B) ANY
BREACH OF ANY COVENANT, AGREEMENT OR OBLIGATION OF THE COMPANY CONTAINED IN THIS
AGREEMENT, OR THE OTHER TRANSACTION DOCUMENTS OR ANY OTHER CERTIFICATE,
INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY OR THEREBY, OR (C) ANY CAUSE OF
ACTION, SUIT OR CLAIM BROUGHT OR MADE AGAINST SUCH BUYER INDEMNITEE AND ARISING
OUT OF OR RESULTING FROM THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF
THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED PURSUANT
HERETO BY ANY OF THE PARTIES HERETO, ANY TRANSACTION FINANCED OR TO BE FINANCED
IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, WITH THE PROCEEDS OF THE ISSUANCE
OF THE CONVERTIBLE DEBENTURES OR THE STATUS OF THE BUYER OR HOLDER OF THE
CONVERTIBLE DEBENTURES AND THE CONVERSION SHARES, AS A BUYER OF CONVERTIBLE
DEBENTURES IN THE COMPANY.  TO THE EXTENT THAT THE FOREGOING UNDERTAKING BY THE
COMPANY MAY BE UNENFORCEABLE FOR ANY REASON, THE COMPANY SHALL MAKE THE MAXIMUM
CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE INDEMNIFIED
LIABILITIES, WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.

(B)           IN CONSIDERATION OF THE COMPANY’S EXECUTION AND DELIVERY OF THIS
AGREEMENT, AND IN ADDITION TO ALL OF THE BUYER’S OTHER OBLIGATIONS UNDER THIS
AGREEMENT, THE BUYER SHALL DEFEND, PROTECT, INDEMNIFY AND HOLD HARMLESS THE
COMPANY AND ALL OF ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS (INCLUDING,
WITHOUT LIMITATION, THOSE RETAINED IN CONNECTION WITH THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT) (COLLECTIVELY, THE “COMPANY INDEMNITEES”) FROM
AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES INCURRED BY THE INDEMNITEES OR
ANY OF THEM AS A RESULT OF, OR ARISING OUT OF, OR RELATING TO (A) ANY
MISREPRESENTATION OR BREACH OF ANY REPRESENTATION OR WARRANTY MADE BY THE
BUYER(S) IN THIS AGREEMENT, INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY OR
THEREBY EXECUTED BY THE BUYER, (B) ANY BREACH OF ANY COVENANT, AGREEMENT OR
OBLIGATION OF THE BUYER(S) CONTAINED IN THIS AGREEMENT,  THE TRANSACTION
DOCUMENTS OR ANY OTHER CERTIFICATE, INSTRUMENT OR DOCUMENT CONTEMPLATED HEREBY
OR THEREBY EXECUTED BY THE BUYER, OR (C) ANY CAUSE OF ACTION, SUIT OR CLAIM
BROUGHT OR MADE AGAINST SUCH COMPANY INDEMNITEE BASED ON MATERIAL
MISREPRESENTATIONS OR DUE TO A MATERIAL BREACH AND ARISING OUT OF OR RESULTING
FROM THE EXECUTION, DELIVERY, PERFORMANCE OR ENFORCEMENT OF THIS AGREEMENT, THE
TRANSACTION DOCUMENTS OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED
PURSUANT HERETO BY ANY OF THE PARTIES HERETO.  TO THE EXTENT THAT THE FOREGOING
UNDERTAKING BY EACH BUYER MAY BE UNENFORCEABLE FOR ANY REASON, EACH BUYER SHALL
MAKE THE MAXIMUM CONTRIBUTION TO THE PAYMENT AND SATISFACTION OF EACH OF THE
INDEMNIFIED LIABILITIES, WHICH IS PERMISSIBLE UNDER APPLICABLE LAW.

22

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9.     GOVERNING LAW: MISCELLANEOUS.

(A)           GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS.  THE PARTIES FURTHER AGREE THAT
ANY ACTION BETWEEN THEM SHALL BE HEARD IN HUDSON COUNTY, NEW JERSEY, AND
EXPRESSLY CONSENT TO THE JURISDICTION AND VENUE OF THE SUPERIOR COURT OF NEW
JERSEY, SITTING IN HUDSON COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF NEW JERSEY SITTING IN NEWARK, NEW JERSEY FOR THE ADJUDICATION OF ANY
CIVIL ACTION ASSERTED PURSUANT TO THIS PARAGRAPH.

(B)           COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
IDENTICAL COUNTERPARTS, ALL OF WHICH SHALL BE CONSIDERED ONE AND THE SAME
AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN SIGNED BY EACH
PARTY AND DELIVERED TO THE OTHER PARTY.  IN THE EVENT ANY SIGNATURE PAGE IS
DELIVERED BY FACSIMILE TRANSMISSION, THE PARTY USING SUCH MEANS OF DELIVERY
SHALL CAUSE FOUR (4) ADDITIONAL ORIGINAL EXECUTED SIGNATURE PAGES TO BE
PHYSICALLY DELIVERED TO THE OTHER PARTY WITHIN FIVE (5) DAYS OF THE EXECUTION
AND DELIVERY HEREOF.

(C)           HEADINGS.  THE HEADINGS OF THIS AGREEMENT ARE FOR CONVENIENCE OF
REFERENCE AND SHALL NOT FORM PART OF, OR AFFECT THE INTERPRETATION OF, THIS
AGREEMENT.

(D)           SEVERABILITY.  IF ANY PROVISION OF THIS AGREEMENT SHALL BE INVALID
OR UNENFORCEABLE IN ANY JURISDICTION, SUCH INVALIDITY OR UNENFORCEABILITY SHALL
NOT AFFECT THE VALIDITY OR ENFORCEABILITY OF THE REMAINDER OF THIS AGREEMENT IN
THAT JURISDICTION OR THE VALIDITY OR ENFORCEABILITY OF ANY PROVISION OF THIS
AGREEMENT IN ANY OTHER JURISDICTION.

(E)           ENTIRE AGREEMENT, AMENDMENTS.  THIS AGREEMENT SUPERSEDES ALL OTHER
PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN THE BUYER(S), THE COMPANY, THEIR
AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH RESPECT TO THE MATTERS
DISCUSSED HEREIN, AND THIS AGREEMENT AND THE INSTRUMENTS REFERENCED HEREIN
CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE MATTERS
COVERED HEREIN AND THEREIN AND, EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR
THEREIN, NEITHER THE COMPANY NOR ANY BUYER MAKES ANY REPRESENTATION, WARRANTY,
COVENANT OR UNDERTAKING WITH RESPECT TO SUCH MATTERS.  NO PROVISION OF THIS
AGREEMENT MAY BE WAIVED OR AMENDED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED
BY THE PARTY TO BE CHARGED WITH ENFORCEMENT.

(F)            NOTICES.  ANY NOTICES, CONSENTS, WAIVERS, OR OTHER COMMUNICATIONS
REQUIRED OR PERMITTED TO BE GIVEN UNDER THE TERMS OF THIS AGREEMENT MUST BE IN
WRITING AND WILL BE DEEMED TO HAVE BEEN DELIVERED (I) UPON RECEIPT, WHEN
DELIVERED PERSONALLY; (II) UPON CONFIRMATION OF RECEIPT, WHEN SENT BY FACSIMILE;
(III) THREE (3) DAYS AFTER BEING SENT BY U.S. CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, OR (IV) ONE (1) DAY AFTER DEPOSIT WITH A NATIONALLY RECOGNIZED
OVERNIGHT DELIVERY SERVICE, IN EACH CASE PROPERLY ADDRESSED TO THE PARTY TO
RECEIVE THE SAME.  THE ADDRESSES AND FACSIMILE NUMBERS FOR SUCH COMMUNICATIONS
SHALL BE:

23

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If to the Company, to:

Senesco Technologies, Inc.

 

303 George Street, Suite 420

 

New Brunswick, NJ 08901

 

Attention:

Chief Executive Officer

 

Telephone:

732-296-8400

 

Facsimile:

732-296-9292

 

 

With a copy to:

Morgan, Lewis & Bockius LLP

 

502 Carnegie Center

 

Princeton, NJ 08540

 

Attention:

Emilio Ragosa, Esq.

 

Telephone:

(609) 919-6633

 

Facsimile:

(609) 919-6701

 

If to the Buyer(s), to its address and facsimile number on Schedule I, with
copies to the Buyer’s counsel as set forth on Schedule I.  Each party shall
provide five (5) days’ prior written notice to the other party of any change in
address or facsimile number.

(G)           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF THE PARTIES AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS.  NEITHER THE COMPANY NOR ANY BUYER SHALL ASSIGN THIS AGREEMENT OR ANY
RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE OTHER
PARTY HERETO.

(H)           NO THIRD PARTY BENEFICIARIES.  THIS AGREEMENT IS INTENDED FOR THE
BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE PERMITTED SUCCESSORS AND
ASSIGNS, AND IS NOT FOR THE BENEFIT OF, NOR MAY ANY PROVISION HEREOF BE ENFORCED
BY, ANY OTHER PERSON.

(I)            SURVIVAL.  UNLESS THIS AGREEMENT IS TERMINATED UNDER SECTION
9(L), THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE BUYER(S)
CONTAINED IN SECTIONS 2 AND 3, THE AGREEMENTS AND COVENANTS SET FORTH IN
SECTIONS 4, 5 AND 9, AND THE INDEMNIFICATION PROVISIONS SET FORTH IN SECTION 8,
SHALL SURVIVE THE CLOSING FOR A PERIOD OF TWO (2) YEARS FOLLOWING THE DATE ON
WHICH THE CONVERTIBLE DEBENTURES ARE CONVERTED IN FULL.  THE BUYER(S) SHALL BE
RESPONSIBLE ONLY FOR ITS OWN REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS HEREUNDER.

(J)            PUBLICITY.  THE COMPANY AND THE BUYER(S) SHALL HAVE THE RIGHT TO
APPROVE, BEFORE ISSUANCE ANY PRESS RELEASE OR ANY OTHER PUBLIC STATEMENT WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY MADE BY ANY PARTY; PROVIDED,
HOWEVER, THAT THE COMPANY SHALL BE ENTITLED, WITHOUT THE PRIOR APPROVAL OF THE
BUYER(S), TO ISSUE ANY PRESS RELEASE OR OTHER PUBLIC DISCLOSURE WITH RESPECT TO
SUCH TRANSACTIONS REQUIRED UNDER APPLICABLE SECURITIES OR OTHER LAWS OR
REGULATIONS (THE COMPANY SHALL USE ITS BEST EFFORTS TO CONSULT THE BUYER(S) IN
CONNECTION WITH ANY SUCH PRESS RELEASE OR OTHER PUBLIC DISCLOSURE PRIOR TO ITS
RELEASE AND BUYER(S) SHALL BE PROVIDED WITH A COPY THEREOF UPON RELEASE
THEREOF).

(K)           FURTHER ASSURANCES.  EACH PARTY SHALL DO AND PERFORM, OR CAUSE TO
BE DONE AND PERFORMED, ALL SUCH FURTHER ACTS AND THINGS, AND SHALL EXECUTE AND
DELIVER ALL SUCH OTHER AGREEMENTS, CERTIFICATES, INSTRUMENTS AND DOCUMENTS, AS
THE OTHER PARTY MAY REASONABLY

24

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

REQUEST IN ORDER TO CARRY OUT THE INTENT AND ACCOMPLISH THE PURPOSES OF THIS
AGREEMENT AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY.

(L)            TERMINATION.  IN THE EVENT THAT THE FIRST CLOSING SHALL NOT HAVE
OCCURRED WITH RESPECT TO THE BUYERS ON OR BEFORE FIVE (5) BUSINESS DAYS FROM THE
DATE HEREOF DUE TO THE COMPANY’S OR THE BUYER’S FAILURE TO SATISFY THE
CONDITIONS SET FORTH IN SECTIONS 6 AND 7 ABOVE (AND THE NON-BREACHING PARTY’S
FAILURE TO WAIVE SUCH UNSATISFIED CONDITION(S)), THE NON-BREACHING PARTY SHALL
HAVE THE OPTION TO TERMINATE THIS AGREEMENT WITH RESPECT TO SUCH BREACHING PARTY
AT THE CLOSE OF BUSINESS ON SUCH DATE WITHOUT LIABILITY OF ANY PARTY TO ANY
OTHER PARTY; PROVIDED, HOWEVER, THAT IF THIS AGREEMENT IS TERMINATED BY THE
COMPANY PURSUANT TO THIS SECTION 9(L), THE COMPANY SHALL REMAIN OBLIGATED TO
REIMBURSE THE BUYER(S) FOR THE FEES AND EXPENSES OF YORKVILLE ADVISORS LLC
DESCRIBED IN SECTION 4(G) ABOVE.

(M)          BROKERAGE.  EXCEPT FOR H.C. WAINRIGHT & CO., INC., THE COMPANY
REPRESENTS THAT NO BROKER, AGENT, FINDER OR OTHER PARTY HAS BEEN RETAINED BY IT
IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY AND THAT NO OTHER FEE OR
COMMISSION HAS BEEN AGREED BY THE COMPANY TO BE PAID FOR OR ON ACCOUNT OF THE
TRANSACTIONS CONTEMPLATED HEREBY. 

(N)           NO STRICT CONSTRUCTION.  THE LANGUAGE USED IN THIS AGREEMENT WILL
BE DEEMED TO BE THE LANGUAGE CHOSEN BY THE PARTIES TO EXPRESS THEIR MUTUAL
INTENT, AND NO RULES OF STRICT CONSTRUCTION WILL BE APPLIED AGAINST ANY PARTY.

(O)           ACCOUNTING PROVISION.  FOR PURPOSES OF CLARITY, THE COMPANY SHALL
NOT BE OBLIGATED TO SETTLE ANY CONVERSION OF THE DEBENTURES OR EXERCISE OF THE
WARRANTS IN CASH, EXCEPT AS A RESULT OF THE NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE COMPANY, THEN IN SUCH CASE, ANY CASH SETTLEMENT SHALL BE AS PER THE TERMS OF
THE DEBENTURE OR WARRANT, AS APPLICABLE.

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

25

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

COMPANY:

 

SENESCO TECHNOLOGIES, INC.

 

 

 

By:

      /s/ Bruce C. Galton

 

 

Name: Bruce C. Galton

 

Title:   President and Chief Executive Officer

 

26

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

BUYERS:

 

YA GLOBAL INVESTMENTS, L.P.

 

 

 

By:      Yorkville Advisors, LLC

 

Its:       Investment Manager

 

 

 

 

 

By:      /s/ Troy Rillo

 

 

Name: Troy Rillo

 

 

Its:       Senior Managing Director

 

27

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

SCHEDULE I

SCHEDULE OF BUYERS

(1)

 

(2)

 

(3)

 

(4)

 

(5)

 

(6)

 

(7)

 

(8)

 

 

Subscription Amount

 

Number of Warrant Shares

 

Legal Representative’s
Address and Facsimile

Buyer

 

First Closing

 

Second Closing

 

Third Closing

 

First Closing

 

Second Closing

 

Third Closing

 

Number

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

YA Global Investments, L.P.

101 Hudson Street, Suite
3700
Jersey City, NJ  07303
Attention: Mark Angelo
Telephone: (201) 985-8300
Facsimile: (201) 985-8266
Residence:  Cayman Islands

 

$

1,500,000

 

$

1,500,000

 

$

2,000,000

 

1,387,500 shares of Series A Warrants with an exercise price of $1.01.

 

1,387,500 shares of Series A Warrants with an exercise price of $1.01.

 

2,775,000 shares of Series B Warrants with an exercise price of $0.90.

 

David Gonzalez, Esq. 101 Hudson Street, Suite 3700 Jersey City, New Jersey
07302  Telephone: (201) 985-8300  Facsimile: (201) 985-8266

 

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

DISCLOSURE SCHEDULE

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

EXHIBIT A

FORM OF CONVERTIBLE DEBENTURE

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

EXHIBIT B

FORM OF SERIES A WARRANT

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

EXHIBIT C

FORM OF SERIES B WARRANT

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

EXHIBIT D

LOCK UP AGREEMENT

The undersigned hereby agrees that for a period commencing on August 1, 2007 and
expiring on the earlier of (a) the date that all amounts owed to YA Global
Investments, L.P. under the Secured Convertible Debentures issued pursuant to
the Securities Purchase Agreement have been repaid, (b) the date ninety (90)
days after the Third Closing (as defined in the Securities Purchase Agreement),
or (c) if the Company has not obtained Stockholder Approval, eighteen months
from the First Closing (as defined in the Securities Purchase Agreement) (the
“Lock-up Period”), he, she or it will not, directly or indirectly, without the
prior written consent of the Buyer, issue, offer, agree or offer to sell, sell,
grant an option for the purchase or sale of, transfer, pledge, assign,
hypothecate, distribute or otherwise encumber or dispose of any securities of
the Company, including common stock or options, rights, warrants or other
securities underlying, convertible into, exchangeable or exercisable for or
evidencing any right to purchase or subscribe for any common stock (whether or
not beneficially owned by the undersigned), or any beneficial interest therein
(collectively, the “Securities”), except (i) in accordance with the volume
limitations set forth in Rule 144(e) of the General Rules and Regulations under
the Securities Act of 1933, as amended, or (ii) either during his or her
lifetime or upon death, by gift, will or intestacy, to his or her immediate
family or to a trust or limited partnership the beneficiaries or members of
which are exclusively the undersigned and/or a member or members of his or her
immediate family; provided, however, it shall be a condition to the transfer
that the transferee execute an agreement stating that the transferee is
receiving and holding the Securities subject to the provisions of this Lock-up
Agreement.

In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of legends and/or stop-transfer orders with the
transfer agent of the Company’s securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned’s investment in
the Company.

Dated:                       , 2007

 

 

 

 

Signature

 

 

 

 

 

 

 

Name:

 

 

Address:

 

 

City, State, Zip Code:

 

 

 

 

 

 

 

 

Print Social Security Number

 

or Taxpayer I.D. Number

 

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