Exhibit
      10.1

     

    [Letterhead
      of Rodman & Renshaw, LLC]

     

    July
      14,
      2008

    


    STRICTLY
      CONFIDENTIAL

    


    Peter
      Biere

    Vice
      President – Chief Financial Officer and Treasurer

    Lumera
      Corporation

    19910
      North Creek Parkway, Suite 100

    Bothell,
      WA 98011

    


    Dear
      Mr.
      Biere:

    


    This
      letter (the “Agreement”) constitutes the agreement between Lumera Corporation
      (the “Company”) and Rodman & Renshaw, LLC (“Rodman”) that Rodman shall serve
      as the exclusive placement agent (the “Services”) for the Company, on a “best
      efforts” basis, in connection with the proposed offer and placement (the
“Offering”) by the Company of securities of the Company (the “Securities”). The
      terms of the Offering and the Securities shall be mutually agreed upon by the
      Company and the investors and nothing herein implies that Rodman would have
      the
      power or authority to bind the Company or an obligation for the Company to
      issue
      any Securities or complete the Offering. The Company expressly acknowledges
      and
      agrees that Rodman’s obligations hereunder are on a reasonable best efforts
      basis only and that the execution of this Agreement does not constitute a
      commitment by Rodman to purchase the Securities and does not ensure the
      successful placement of the Securities or any portion thereof or the success
      of
      Rodman with respect to securing any other financing on behalf of the Company.
      If
      Rodman and the Company choose to have the Offering consist of registered
      securities, then the provisions of Annex A will apply in addition to the
      provisions set forth herein.

    


    A. Fees
      and Expenses.
      In
      connection with the Services described above, the Company shall pay to Rodman
      the following compensation:

    


    1. Placement
      Agent’s Fee.
      The
      Company shall pay to Rodman a cash placement fee (the “Placement Agent’s Fee”)
      equal to 7% of the aggregate purchase price paid by each purchaser of Securities
      that are placed in the Offering. The Placement Agent’s Fee shall be paid at the
      closing of the Offering (the “Closing”) from the gross proceeds of the
      Securities sold.

    


    2. Warrants.
      As
      additional compensation for the Services, the Company shall issue to Rodman
      or
      its designees at the closing of the Offering (the “Closing”), warrants (the
“Rodman Warrants”) to purchase that number of shares of common stock of the
      Company (“Shares”) equal to 7% of the aggregate number of Shares placed in the
      Offering. The Rodman Warrants shall have the same terms, including exercise
      price and registration rights (or registered status) as the warrants issued
      to
      investors (“Investors”) in the Offering. If no warrants are issued to Investors,
      the Rodman Warrants shall have an exercise price equal to 120% of the price
      at
      which Shares are issued to Investors, an exercise period of five years and
      registration rights (or registered status) for the Shares underlying the Rodman
      Warrants equivalent to those granted with respect to the Shares.

    


    3. Expenses.
      In
      addition to any fees payable to Rodman hereunder, but only if an Offering is
      consummated, the Company hereby agrees to reimburse Rodman for all reasonable
      travel and other out-of-pocket expenses incurred in connection with Rodman’s
      engagement, including the reasonable fees and expenses of Rodman’s counsel. Such
      reimbursement shall be limited to $25,000 without prior written approval by
      the
      Company and shall be paid at the Closing from the gross proceeds of the
      Securities sold.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    B. Term
      and Termination of Engagement.
      The
      term (the “Term”) of Rodman’s engagement will begin on the date hereof and end
      on the earlier of the consummation of the Offering or 15 days after the receipt
      by either party hereto of written notice of termination; provided that no such
      notice may be given by the Company for a period of 30 days after the date
      hereof. Notwithstanding anything to the contrary contained herein, the
      provisions concerning confidentiality, indemnification, contribution and the
      Company’s obligations to pay fees and reimburse expenses contained herein will
      survive any expiration or termination of this Agreement.

    


    C. Use
      of
      Information.
      The
      Company will furnish Rodman such written information as Rodman reasonably
      requests in connection with the performance of its services hereunder. The
      Company understands, acknowledges and agrees that, in performing its services
      hereunder, Rodman will use and rely entirely upon such information as well
      as
      publicly available information regarding the Company and other potential parties
      to an Offering and that Rodman does not assume responsibility for independent
      verification of the accuracy or completeness of any information, whether
      publicly available or otherwise furnished to it, concerning the Company or
      otherwise relevant to an Offering, including, without limitation, any financial
      information, forecasts or projections considered by Rodman in connection with
      the provision of its services.

    


    D. Confidentiality.
      In
      connection with the offering contemplated in this Agreement, the Company may
      provide Rodman with non-public information regarding the Company and its
      operations. Rodman
      agrees not to use any confidential information concerning the Company provided
      to Rodman by the Company for any purposes other than those contemplated under
      this Agreement,
      and
      agrees to keep all such non-public information confidential until the first
      anniversary of this Agreement or until it otherwise becomes public through
      no
      fault of Rodman, except as required by law. Notwithstanding anything to the
      contrary, Rodman may disclose such non-public information to its agents and
      advisors, who shall also be bound by the terms of this paragraph, whenever
      Rodman determines that such disclosure is necessary or appropriate to provide
      the services contemplated in this Agreement. In
      the
      event of the consummation or public announcement of any Offering, Rodman shall
      have the right to disclose its participation in such Offering, including,
      without limitation, the placement at its cost of “tombstone” advertisements in
      financial and other newspapers and journals. Notwithstanding the above, Rodman
      may disclose non-public information pursuant to any governmental, judicial
      or
      administrative order, subpoena or discovery request or request or inquiry of
      a
      regulatory or self-regulatory body, provided that Rodman, to the extent legally
      permitted, uses reasonable efforts to notify the Company sufficiently in advance
      of such order, inquiry, subpoena or discovery or other request so that the
      Company may seek to object to such order, subpoena, inquiry or request, or
      to
      make such disclosure subject to a protective order or confidentiality
      agreement.

    


    E. Securities
      Matters.
      The
      Company shall be responsible for any and all compliance with the securities
      laws
      applicable to it, including Regulation D and the Securities Act of 1933, and
      Rule 506 promulgated thereunder, and unless otherwise agreed in writing, all
      state securities (“blue sky”) laws. Rodman agrees to cooperate with counsel to
      the Company in that regard.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    F. Indemnity.

    


    1. In
      connection with the Company’s engagement of Rodman as placement agent, the
      Company hereby agrees to indemnify and hold harmless Rodman and its Affiliates,
      and the respective controlling persons, directors, officers, shareholders,
      agents and employees of any of the foregoing (collectively the “Indemnified
      Persons”), from and against any and all claims, actions, suits, proceedings
      (including those of shareholders), damages, liabilities and expenses incurred
      by
      any of them (including the reasonable fees and expenses of counsel),
      (collectively a “Claim”), which (A)
      are
      related
      to or arise out of (i) any actions taken or omitted to be taken (including
      any
      untrue statements made or any statements omitted to be made) by the Company,
      or
      (ii) any actions taken or omitted to be taken by any Indemnified Person in
      connection with the Company’s engagement of Rodman, or (B) otherwise relate to
      or arise out of Rodman’s activities on the Company’s behalf under Rodman’s
      engagement, and the Company shall reimburse any Indemnified Person for all
      expenses (including the reasonable fees and expenses of counsel) incurred by
      such Indemnified Person in connection with investigating, preparing or defending
      any such claim, action, suit or proceeding.
      The
      Company will not, however, be responsible for any Claim, which is finally
      judicially determined to have resulted from
      the
      gross negligence or willful misconduct of any person seeking indemnification
      for
      such Claim. The Company further agrees that no Indemnified Person shall have
      any
      liability to the Company for or in connection with the Company’s engagement of
      Rodman except for any Claim incurred by the Company as a
      result
      of such Indemnified Person’s gross negligence or willful
      misconduct.

    


    2. The
      Company further agrees that it will not, without the prior written consent
      of
      Rodman
      (such
      consent not to be unreasonably withheld),
      settle,
      compromise or consent to the entry of any judgment in any pending or threatened
      Claim in respect of which indemnification may be sought hereunder (whether
      or
      not any Indemnified Person is an actual or potential party to such Claim),
      unless such settlement, compromise or consent includes an unconditional,
      irrevocable release of each Indemnified Person from any and all liability
      arising out of such Claim.
      No
      Indemnified Person seeking indemnification, reimbursement or contribution under
      this Agreement will, without the Company’s prior written consent (such consent
      not to be unreasonably withheld), settle, compromise consent to the entry of
      any
      judgment in or otherwise seek to terminate any action, claim, suit or proceeding
      referred to herein; provided that if at
      any
      time an Indemnified Person shall have requested the Company to reimburse him,
      her or it for reasonable fees and expenses of counsel, and the Company has
      not
      reimbursed the Indemnified Person in accordance with such request prior to
      the
      date of such settlement, then such Indemnified Person may settle without the
      Company’s written consent if (i) such settlement is entered into more than 45
      days after receipt by the Company of the aforesaid request, (ii) the Company
      shall have received notice of the terms of such settlement at least 30 days
      prior to such settlement being entered into and (iii) the Company shall not
      have
      reimbursed the Indemnified Person in accordance with such request prior to
      the
      date of such settlement.

    


    3. Promptly
      upon receipt by an Indemnified Person of notice of any complaint or the
      assertion or institution of any Claim with respect to which indemnification
      is
      being sought hereunder, such Indemnified Person shall notify the Company in
      writing of such complaint or of such assertion or institution but failure to
      so
      notify the Company shall not relieve the Company from any obligation it may
      have
      hereunder, except and only to the extent such failure results in the forfeiture
      by the Company of substantial rights and defenses. If the Company so elects
      or
      is requested by such Indemnified Person, the Company will assume the defense
      of
      such Claim, including the employment of counsel reasonably satisfactory to
      such
      Indemnified Person and the payment of the fees and expenses of such counsel.
      In
      the event, however, that legal counsel to such Indemnified Person reasonably
      determines that having common counsel would present such counsel with a conflict
      of interest or if the defendant in, or target of, any such Claim, includes
      an
      Indemnified Person and the Company, and legal counsel to such Indemnified Person
      reasonably concludes that there may be legal defenses available to it or other
      Indemnified Persons different from or in addition to those available to the
      Company, then such Indemnified Person may employ its own separate counsel to
      represent or defend him, her or it in any such Claim and the Company shall
      pay
      the reasonable fees and expenses of such counsel. Notwithstanding anything
      herein to the contrary, if the Company fails timely or diligently to defend,
      contest, or otherwise protect against any Claim, the relevant Indemnified Party
      shall have the right, but not the obligation, to defend, contest, compromise,
      settle, assert crossclaims, or counterclaims or otherwise protect against the
      same, and shall be fully indemnified by the Company therefor, including without
      limitation, for the reasonable fees and expenses of its counsel and all amounts
      paid as a result of such Claim or the compromise or settlement thereof. In
      addition, with respect to any Claim in which the Company assumes the defense,
      the Indemnified Person shall have the right to participate in such Claim and
      to
      retain his, her or its own counsel therefor at his, her or its own
      expense.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4. The
      Company agrees that if any indemnity sought by an Indemnified Person hereunder
      is held by a court to be unavailable for any reason,
      other
      than Rodman’s gross negligence or willful misconduct,
      then
      (whether or not Rodman is the Indemnified Person), the Company and Rodman shall
      contribute to the Claim for which such indemnity is held unavailable in such
      proportion as is appropriate to reflect the relative benefits to the Company,
      on
      the one hand, and Rodman on the other, in connection with Rodman’s engagement
      referred to above, subject to the limitation that in no event shall the amount
      of Rodman’s contribution to such Claim exceed the amount of fees actually
      received by Rodman from the Company pursuant to Rodman’s engagement. The Company
      hereby agrees that the relative benefits to the Company, on the one hand, and
      Rodman on the other, with respect to Rodman’s engagement shall be deemed to be
      in the same proportion as (a) the total value paid or proposed to be paid or
      received by the Company or its stockholders as the case may be, pursuant to
      the
      Offering (whether or not consummated) for which Rodman is engaged to render
      services bears to (b) the fee paid or proposed to be paid to Rodman in
      connection with such engagement.

    


    5. The
      Company’s indemnity, reimbursement and contribution obligations under this
      Agreement (a) shall be in addition to, and shall in no way limit or otherwise
      adversely affect any rights that any Indemnified Party may have at law or at
      equity and (b) shall be effective whether or not the Company is at fault in
      any
      way.

    


    G. Limitation
      of Engagement to the Company.
      The
      Company acknowledges that Rodman has been retained only by the Company, that
      Rodman is providing services hereunder as an independent contractor (and not
      in
      any fiduciary or agency capacity) and that the Company’s engagement of Rodman is
      not deemed to be on behalf of, and is not intended to confer rights upon, any
      shareholder, owner or partner of the Company or any other person not a party
      hereto as against Rodman or any of its affiliates, or any of its or their
      respective officers, directors, controlling persons (within the meaning of
      Section 15 of the Act or Section 20 of the Securities Exchange Act of 1934),
      employees or agents. Unless otherwise expressly agreed in writing by Rodman,
      no
      one other than the Company is authorized to rely upon this Agreement or any
      other statements or conduct of Rodman, and no one other than the Company is
      intended to be a beneficiary of this Agreement. The Company acknowledges that
      any recommendation or advice, written or oral, given by Rodman to the Company
      in
      connection with Rodman’s engagement is intended solely for the benefit and use
      of the Company’s management and directors in considering a possible Offering,
      and any such recommendation or advice is not on behalf of, and shall not confer
      any rights or remedies upon, any other person or be used or relied upon for
      any
      other purpose. Rodman shall not have the authority to make any commitment
      binding on the Company. The Company, in its sole discretion, shall have the
      right to reject any investor introduced to it by Rodman. The Company agrees
      that
      it will perform and comply with the covenants and other obligations set forth
      in
      the purchase agreement and related transaction documents between the Company
      and
      the investors in the Offering (the “Transaction
      Documents”),
      and
      that Rodman will be entitled to rely on the representations, warranties,
      agreements and covenants of the Company contained in the Transaction Documents
      as if such representations, warranties, agreements and covenants were made
      directly to Rodman by the Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    H. Limitation
      of Rodman’s Liability to the Company.
      Rodman
      and the Company further agree that neither Rodman nor any of its affiliates
      or
      any of its their respective officers, directors, controlling persons (within
      the
      meaning of Section 15 of the Act or Section 20 of the Exchange Act of 1934),
      employees or agents shall have any liability to the Company, its security
      holders or creditors, or any person asserting claims on behalf of or in the
      right of the Company (whether direct or indirect, in contract, tort, for an
      act
      of negligence or otherwise) for any losses, fees, damages, liabilities, costs,
      expenses or equitable relief arising out of or relating to this Agreement or
      the
      Services rendered hereunder, except for losses, fees, damages, liabilities,
      costs or expenses that arise out of or are based on any action of or failure
      to
      act by Rodman and that are finally judicially determined to have resulted solely
      from the gross negligence or willful misconduct of Rodman.

    


    I. Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York applicable to agreements made and to be fully performed
      therein. Any disputes which arise under this Agreement, even after the
      termination of this Agreement, will be heard only in the state or federal courts
      located in the City of New York, State of New York. The parties hereto expressly
      agree to submit themselves to the jurisdiction of the foregoing courts in the
      City of New York, State of New York. The parties hereto expressly waive any
      rights they may have to contest the jurisdiction, venue or authority of any
      court sitting in the City and State of New York. In the event of the bringing
      of
      any action, or suit by a party hereto against the other party hereto, arising
      out of or relating to this Agreement, the party in whose favor the final
      judgment or award shall be entered shall be entitled to have and recover from
      the other party the costs and expenses incurred in connection therewith,
      including its reasonable attorneys’ fees. Any rights to trial by jury with
      respect to any such action, proceeding or suit are hereby waived by Rodman
      and
      the Company. 

    


    J. Notices.
      All
      notices hereunder will be in writing and sent by certified mail, hand delivery,
      overnight delivery or fax, if sent to Rodman, to Rodman & Renshaw, LLC, 1251
      Avenue of the Americas, 20th Floor, New York, NY 10020, fax number (212)
      356-0536, Attention: General Counsel, and if sent to the Company, to Lumera
      Corporation, 19910 North Creek Parkway Suite 100, Bothell, WA 98011, fax number
      (425) 398-6599, Attention: Peter Bierre. Notices sent by certified mail shall
      be
      deemed received five days thereafter, notices sent by hand delivery or overnight
      delivery shall be deemed received on the date of the relevant written record
      of
      receipt, and notices delivered by fax shall be deemed received as of the date
      and time printed thereon by the fax machine.

    


    K. Miscellaneous.
      This
      Agreement shall not be modified or amended except in writing signed by Rodman
      and the Company. This Agreement shall be binding upon and inure to the benefit
      of both Rodman and the Company and their respective assigns, successors, and
      legal representatives. This Agreement constitutes the entire agreement of Rodman
      and the Company with respect to the subject matter hereof and supersedes any
      prior agreements. If any provision of this Agreement is determined to be invalid
      or unenforceable in any respect, such determination will not affect such
      provision in any other respect, and the remainder of the Agreement shall remain
      in full force and effect. This Agreement may be executed in counterparts
      (including facsimile counterparts), each of which shall be deemed an original
      but all of which together shall constitute one and the same
      instrument.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    In
      acknowledgment that the foregoing correctly sets forth the understanding reached
      by Rodman and the Company, please sign in the space provided below, whereupon
      this letter shall constitute a binding Agreement as of the date indicated
      above.

    

      
        	
                Very
                  truly yours,

              
	 
	
                RODMAN
                  & RENSHAW, LLC

              
	 
	
                By 

              	
                /s/
                  Gregory R. Dow

              
	
                Name:
                  Gregory R. Dow

              
	
                Title:
                  General Counsel

              


      

    

     

    Accepted
      and Agreed:

    


    LUMERA
      CORPORATION

    


    
      	
              By 

            	/s/
              Peter Biere
	
              Name:
                Peter Biere

            
	
              Title:
                CFO

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Annex
      A

    


    Additional
      Provisions With Respect to a Registered Offering

    


    If
      the
      Offering is registered under the Securities Act of 1933, the following
      additional provisions will apply in addition to those otherwise set forth in
      the
      Engagement Agreement:

    


    SECTION
      1.  REGISTRATION The
      Company represents and warrants to, and agrees with, the Placement Agent
      that:

     

    (A) The
      Company has filed with the Securities and Exchange Commission (the “Commission”)
      a registration statement on Form S-3 (Registration File No.
      333-144674)
      under
      the Securities Act of 1933, as amended (the “Securities Act”), which became
      effective on
      December
      5, 2007,
      for the
      registration under the Securities Act of the Shares. At the time of such filing,
      the Company met the requirements of Form S-3 under the Securities Act. Such
      registration statement meets the requirements set forth in Rule 415(a)(1)(x)
      under the Securities Act and complies with said Rule. The Company will file
      with
      the Commission pursuant to Rule 424(b) under the Securities Act, and the rules
      and regulations (the “Rules and Regulations”) of the Commission promulgated
      thereunder, a supplement to the form of prospectus included in such registration
      statement relating to the placement of the Shares and the plan of distribution
      thereof and has advised the Placement Agent of all further information
      (financial and other) with respect to the Company required to be set forth
      therein. Such registration statement, including the exhibits thereto, as amended
      at the date of this Agreement, is hereinafter called the “Registration
      Statement”; such prospectus in the form in which it appears in the Registration
      Statement is hereinafter called the “Base Prospectus”; and the supplemented form
      of prospectus, in the form in which it will be filed with the Commission
      pursuant to Rule 424(b) (including the Base Prospectus as so supplemented)
      is
      hereinafter called the “Prospectus Supplement.” Any reference in this Agreement
      to the Registration Statement, the Base Prospectus or the Prospectus Supplement
      shall be deemed to refer to and include the documents incorporated by reference
      therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3 which
      were filed under the Securities Exchange Act of 1934, as amended (the “Exchange
      Act”), on or before the date of this Agreement, or the issue date of the Base
      Prospectus or the Prospectus Supplement, as the case may be; and any reference
      in this Agreement to the terms “amend,” “amendment” or “supplement” with respect
      to the Registration Statement, the Base Prospectus or the Prospectus Supplement
      shall be deemed to refer to and include the filing of any document under the
      Exchange Act after the date of this Agreement, or the issue date of the Base
      Prospectus or the Prospectus Supplement, as the case may be, deemed to be
      incorporated therein by reference. All references in this Agreement to financial
      statements and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
      Statement, the Base Prospectus or the Prospectus Supplement (and all other
      references of like import) shall be deemed to mean and include all such
      financial statements and schedules and other information which is or is deemed
      to be incorporated by reference in the Registration Statement, the Base
      Prospectus or the Prospectus Supplement, as the case may be. No stop order
      suspending the effectiveness of the Registration Statement or the use of the
      Base Prospectus or the Prospectus Supplement has been issued, and no proceeding
      for any such purpose is pending or, to the Company's knowledge, has been
      initiated or is threatened by the Commission. For purposes of this Agreement,
      “free writing prospectus” has the meaning set forth in Rule 405 under the
      Securities Act and the “Time of Sale Prospectus” means the preliminary
      prospectus, if any, together with the free writing prospectuses, if any, used
      in
      connection with the Placement, including any documents incorporated by reference
      therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (B) The
      Registration Statement (and any further documents to be filed with the
      Commission) contains all exhibits and schedules as required by the Securities
      Act. Each of the Registration Statement and any post-effective amendment
      thereto, each at the time it became effective, complied in all material respects
      with the Securities Act and the Exchange Act and the applicable Rules and
      Regulations and did not and, as amended or supplemented, if applicable, will
      not, contain
      any untrue statement of a material fact or omit to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading. The Base Prospectus, the Time of Sale Prospectus, if any, and the
      Prospectus Supplement, each as of its respective date, comply in all material
      respects with the Securities Act and the Exchange Act and the applicable Rules
      and Regulations. Each of the Base Prospectus, the Time of Sale Prospectus,
      if
      any, and the Prospectus Supplement, as amended or supplemented, did
      not
      and will not contain as of the date thereof any untrue statement of a material
      fact or omit to state a material fact necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. The Incorporated Documents, when they were filed with the
      Commission, conformed in all material respects to the requirements of the
      Exchange Act and the applicable Rules and Regulations, and none of such
      documents, when they were filed with the Commission, contained any untrue
      statement of a material fact or omitted to state a material fact necessary
      to
      make the statements therein (with respect to Incorporated Documents incorporated
      by reference in the Base Prospectus or Prospectus Supplement), in light of
      the
      circumstances under which they were made not misleading; and any further
      documents so filed and incorporated by reference in the Base Prospectus, the
      Time of Sale Prospectus, if any, or Prospectus Supplement, when such documents
      are filed with the Commission, will conform in all material respects to the
      requirements of the Exchange Act and the applicable Rules and Regulations,
      as
      applicable, and will not contain any untrue statement of a material fact or
      omit
      to state a material fact necessary to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. No post-effective
      amendment to the Registration Statement reflecting any facts or events arising
      after the date thereof which represent, individually or in the aggregate, a
      fundamental change in the information set forth therein is required to be filed
      with the Commission. There are no documents required to be filed with the
      Commission in connection with the transaction contemplated hereby that (x)
      have
      not been filed as required pursuant to the Securities Act or (y) will not be
      filed within the requisite time period. There are no contracts or other
      documents required to be described in the Base Prospectus, the Time of Sale
      Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
      schedules to the Registration Statement, which have not been described or filed
      as required. 

     

    (C) The
      Company is eligible to use free writing prospectuses in connection with the
      Placement pursuant to Rules 164 and 433 under the Securities Act. Any free
      writing prospectus that the Company is required to file pursuant to Rule 433(d)
      under the Securities Act has been, or will be, filed with the Commission in
      accordance with the requirements of the Securities Act and the applicable rules
      and regulations of the Commission thereunder. Each free writing prospectus
      that
      the Company has filed, or is required to file, pursuant to Rule 433(d) under
      the
      Securities Act or that was prepared by or behalf of or used by the Company
      complies or will comply in all material respects with the requirements of the
      Securities Act and the applicable rules and regulations of the Commission
      thereunder. The Company will not, without the prior consent of the Placement
      Agent, prepare, use or refer to, any free writing prospectus.

     

    (D) The
      Company has delivered, or will as promptly as practicable deliver, to the
      Placement Agent complete conformed copies of the Registration Statement and
      of
      each consent and certificate of experts, as applicable, filed as a part thereof,
      and conformed copies of the Registration Statement (without exhibits), the
      Base
      Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement,
      as amended or supplemented, in such quantities and at such places as the
      Placement Agent reasonably requests. Neither the Company nor any of its
      directors and officers has distributed and none of them will distribute, prior
      to the Closing Date, any offering material in connection with the offering
      and
      sale of the Shares other than the Base Prospectus, the Time of Sale Prospectus,
      if any, the Prospectus Supplement, the Registration Statement, copies of the
      documents incorporated by reference therein and any other materials permitted
      by
      the Securities Act. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      2. REPRESENTATIONS
      AND WARRANTIES Except
      as
      set forth under the corresponding section of the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to the Placement
      Agent.

     

    (A) Organization
      and Qualification. All of the direct and indirect subsidiaries
      (individually, a “Subsidiary”) 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”
(which for purposes of this Agreement shall mean a lien, charge, security
      interest, encumbrance, right of first refusal, preemptive right or other
      restriction), 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. The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Company and the
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
      Company’s 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” (which for purposes
      of this Agreement shall mean any action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened) has been
      instituted in any such jurisdiction revoking, limiting or curtailing or seeking
      to revoke, limit or curtail such power and authority or
      qualification.

    


    (B) Authorization;
      Enforcement. The Company has the requisite corporate power and authority to
      enter into and to consummate the transactions contemplated by each of the
      Transaction Documents and otherwise to carry out its obligations hereunder
      and
      thereunder. The execution and delivery of each of the Transaction Documents
      by
      the Company and the consummation by it of the transactions contemplated thereby
      have been duly authorized by all necessary action on the part of the Company
      and
      no further action is required by the Company, its board of directors or its
      stockholders in connection therewith other than in connection with the
“Required Approvals” (as defined in subsection 2(D) below). Each
      Transaction Document to which the Company is a party has been (or upon delivery
      will have been) duly executed by the Company and, when delivered in accordance
      with the terms hereof and thereof, will constitute the valid and binding
      obligation of the Company enforceable against the Company in accordance with
      its
      terms except (i) as limited by applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally and (ii) as limited by laws relating
      to the availability of specific performance, injunctive relief or other
      equitable remedies.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (C) No
      Conflicts. The execution, delivery and performance of the Transaction
      Documents by the Company, the issuance and sale of the Securities and the
      consummation by the Company of the other transactions contemplated hereby and
      thereby do not and will not (i) conflict with or violate any provision of the
      Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
      or other organizational or charter documents, or (ii) conflict with, or
      constitute a default (or an event that with notice or lapse of time or both
      would become a default) under, result in the creation of any Lien upon any
      of
      the properties or assets of the Company or any Subsidiary, or give to others
      any
      rights of termination, amendment, acceleration or cancellation (with or without
      notice, lapse of time or both) of, any agreement, credit facility, debt or
      other
      instrument (evidencing a Company or Subsidiary debt or otherwise) or other
      understanding to which the Company or any Subsidiary is a party or by which
      any
      property or asset of the Company or any Subsidiary is bound or affected, or
      (iii) subject to the Required Approvals, conflict with or result in a violation
      of any law, rule, regulation, order, judgment, injunction, decree or other
      restriction of any court or governmental authority to which the Company or
      a
      Subsidiary is subject (including federal and state securities laws and
      regulations), or by which any property or asset of the Company or a Subsidiary
      is bound or affected; except in the case of each of clauses (ii) and (iii),
      such
      as could not have or reasonably be expected to result in a Material Adverse
      Effect.

    


    (D) Filings,
      Consents and Approvals. The Company is not required to obtain any consent,
      waiver, authorization or order of, give any notice to, or make any filing or
      registration with, any court or other federal, state, local or other
      governmental authority or other “Person” (defined as an individual or
      corporation, partnership, trust, incorporated or unincorporated association,
      joint venture, limited liability company, joint stock company, government (or
      an
      agency or subdivision thereof) or other entity of any kind, including, without
      limitation, any Trading Market) in connection with the execution, delivery
      and
      performance by the Company of the Transaction Documents, other than such filings
      as are required to be made under applicable Federal and state securities laws
      (collectively, the “Required Approvals”).

    


    (E) Issuance
      of the Securities; Registration. The Securities are duly authorized and,
      when issued and paid for in accordance with the applicable Transaction
      Documents, will be duly and validly issued, fully paid and nonassessable, free
      and clear of all Liens imposed by the Company other than restrictions on
      transfer provided for in the Transaction Documents. The Company has reserved
      from its duly authorized capital stock the maximum number of shares of Common
      Stock issuable pursuant to the Transaction Documents. The issuance by the
      Company of the Securities has been registered under the Securities Act and
      all
      of the Securities are freely transferable and tradable by the Purchasers without
      restriction (other than any restrictions arising solely from an act or omission
      of a Purchaser). The Securities are being issued pursuant to the Registration
      Statement and the issuance of the Securities has been registered by the Company
      under the Securities Act. The Registration Statement is effective and available
      for the issuance of the Securities thereunder and the Company has not received
      any notice that the Commission has issued or intends to issue a stop-order
      with
      respect to the Registration Statement or that the Commission otherwise has
      suspended or withdrawn the effectiveness of the Registration Statement, either
      temporarily or permanently, or intends or has threatened in writing to do so.
      The "Plan of Distribution" section under the Registration Statement permits
      the
      issuance and sale of the Securities hereunder. Upon receipt of the Securities,
      the Purchasers will have good and marketable title to such Securities and the
      Securities will be freely tradable on the “Trading Market” (which, for
      purposes of this Agreement shall mean means the following markets or exchanges
      on which the Common Stock is listed or quoted for trading on the date in
      question: the Nasdaq Capital Market, the American Stock Exchange, the New York
      Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board).


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (F) Capitalization.
      The capitalization of the Company is as set forth on Schedule 3(F). The Company
      has not issued any capital stock since its most recently filed periodic report
      under the Exchange Act, other than pursuant to the exercise of employee stock
      options under the Company’s stock option plans, the issuance of shares of Common
      Stock to employees pursuant to the Company’s employee stock purchase plan and
      pursuant to the conversion or exercise of securities exercisable, exchangeable
      or convertible into Common Stock (“Common Stock Equivalents”). No Person
      has any right of first refusal, preemptive right, right of participation, or
      any
      similar right to participate in the transactions contemplated by the Transaction
      Documents. Except as a result of the purchase and sale of the Securities, there
      are no outstanding options, warrants, script rights to subscribe to, calls
      or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exercisable or exchangeable for, or giving
      any
      Person any right to subscribe for or acquire, any shares of Common Stock, or
      contracts, commitments, understandings or arrangements by which the Company
      or
      any Subsidiary is or may become bound to issue additional shares of Common
      Stock
      or Common Stock Equivalents. The issuance and sale of the Securities will not
      obligate the Company to issue shares of Common Stock or other securities to
      any
      Person (other than the Purchasers) and will not result in a right of any holder
      of Company securities to adjust the exercise, conversion, exchange or reset
      price under such securities. All of the outstanding shares of capital stock
      of
      the Company are validly issued, fully paid and nonassessable, have been issued
      in compliance with all federal and state securities laws, and none of such
      outstanding shares was issued in violation of any preemptive rights or similar
      rights to subscribe for or purchase securities. No further approval or
      authorization of any stockholder, the Board of Directors of the Company or
      others is required for the issuance and sale of the Securities. There are no
      stockholders agreements, voting agreements or other similar agreements with
      respect to the Company’s capital stock to which the Company is a party or, to
      the knowledge of the Company, between or among any of the Company’s
      stockholders.

    


    (G) SEC
      Reports; Financial Statements. The Company has complied in all material
      respects with requirements to file all reports, schedules, forms, statements
      and
      other documents required to be filed by it under the Securities Act and the
      Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
      two
      years preceding the date hereof (or such shorter period as the Company was
      required by law to file such material) (the foregoing materials together with
      the Base Prospectus and the Prospectus Supplement, including the exhibits
      thereto and documents incorporated by reference therein, being collectively
      referred to herein as the “SEC Reports”) on a timely basis or has
      received a valid extension of such time of filing and has filed any such SEC
      Reports prior to the expiration of any such extension. As of their respective
      dates, the SEC Reports complied in all material respects with the requirements
      of the Securities Act and the Exchange Act and the rules and regulations of
      the
      Commission promulgated thereunder, and none of the SEC Reports, when filed,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading. The financial statements of the Company included in the SEC Reports
      comply in all material respects with applicable accounting requirements and
      the
      rules and regulations of the Commission with respect thereto as in effect at
      the
      time of filing. Such financial statements have been prepared in accordance
      with
      United States generally accepted accounting principles applied on a consistent
      basis during the periods involved (“GAAP”), except as may be otherwise
      specified in such financial statements or the notes thereto and except that
      unaudited financial statements may not contain all footnotes required by GAAP,
      and fairly present in all material respects the financial position of the
      Company and its consolidated subsidiaries as of and for the dates thereof and
      the results of operations and cash flows for the periods then ended, subject,
      in
      the case of unaudited statements, to normal, immaterial, year-end audit
      adjustments.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (H) Material
      Changes; Undisclosed Events, Liabilities or Developments. Since the date of
      the last quarterly financial statements included within the SEC Reports, except
      as specifically disclosed in a subsequent SEC Report filed prior to the date
      hereof, (i) there has been no event, occurrence or development that has had
      or
      that could reasonably be expected to result in a Material Adverse Effect, (ii)
      the Company has not incurred any material liabilities (contingent or otherwise)
      other than (A) trade payables and accrued expenses incurred in the ordinary
      course of business consistent with past practice and (B) liabilities not
      required to be reflected in the Company’s financial statements pursuant to GAAP
      or required to be disclosed in filings made with the Commission, (iii) the
      Company has not altered its method of accounting, (iv) the Company has not
      declared or made any dividend or distribution of cash or other property to
      its
      stockholders or purchased, redeemed or made any agreements to purchase or redeem
      any shares of its capital stock and (v) the Company has not issued any equity
      securities to any officer, director or “Affiliate” (defined as any Person
      that, directly or indirectly through one or more intermediaries, controls or
      is
      controlled by or is under common control with a Person, as such terms are used
      in and construed under Rule 144 under the Securities Act), except pursuant
      to
      existing Company stock option plans. The Company does not have pending before
      the Commission any request for confidential treatment of information. Other
      than
      the transactions contemplated hereby, no event, liability or development has
      occurred or exists with respect to the Company or its Subsidiaries or their
      respective business, properties, operations or financial condition, that would
      be required to be disclosed by the Company under applicable securities laws
      at
      the time this representation is made that has not been publicly disclosed 1
      Trading Day prior to the date that this representation is made.

    


    (I) Litigation.
      Except as specifically disclosed in the SEC Reports, there is no action, suit,
      inquiry, notice of violation, Proceeding or investigation pending or, to the
      knowledge of the Company, threatened against or affecting the Company, any
      Subsidiary or any of their respective properties before or by any court,
      arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which (i) adversely affects or challenges the legality, validity or
      enforceability of any of the Transaction Documents or the Securities or (ii)
      could, if there were an unfavorable decision, have or reasonably be expected
      to
      result in a Material Adverse Effect. Neither the Company nor any Subsidiary,
      nor
      any director or officer thereof, is or has been the subject of any Action
      involving a claim of violation of or liability under federal or state securities
      laws or a claim of breach of fiduciary duty that could have or reasonably be
      expected to result in a Material Adverse Effect. There has not been, and to
      the
      knowledge of the Company, there is not pending or contemplated, any
      investigation by the Commission involving the Company or any current or former
      director or officer of the Company. The Commission has not issued any stop
      order
      or other order suspending the effectiveness of any registration statement filed
      by the Company or any Subsidiary under the Exchange Act or the Securities Act.
      None of the Company’s or its Subsidiaries’ employees is a member of a union that
      relates to such employee’s relationship with the Company, and neither the
      Company or any of its Subsidiaries is a party to a collective bargaining
      agreement, and the Company and its Subsidiaries believe that their relationships
      with their employees are good. No executive officer, to the knowledge of the
      Company, is, or is now expected to be, in violation of any material term of
      any
      employment contract, confidentiality, disclosure or proprietary information
      agreement or non-competition agreement, or any other contract or agreement
      or
      any restrictive covenant, and the continued employment of each such executive
      officer does not subject the Company or any of its Subsidiaries to any liability
      with respect to any of the foregoing matters, except, in each case, matters
      that, individually or in the aggregate, could not reasonably be expected to
      have
      a Material Adverse Effect. The Company and its Subsidiaries are in compliance
      with all U.S. federal, state, local and foreign laws and regulations relating
      to
      employment and employment practices, terms and conditions of employment and
      wages and hours, except where the failure to be in compliance could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

    


    (J) Labor
      Relations. No material labor dispute exists or, to the knowledge of the
      Company, is imminent with respect to any of the employees of the Company which
      could reasonably be expected to result in a Material Adverse
      Effect.

    


    (K) Compliance.
      Neither the Company nor any Subsidiary (i) is in default under or in violation
      of (and no event has occurred that has not been waived that, with notice or
      lapse of time or both, would result in a default by the Company or any
      Subsidiary under), nor has the Company or any Subsidiary received notice of
      a
      claim that it is in default under or that it is in violation of, any indenture,
      loan or credit agreement or any other agreement or instrument to which it is
      a
      party or by which it or any of its properties is bound (whether or not such
      default or violation has been waived), (ii) is in violation of any order of
      any
      court, arbitrator or governmental body, or (iii) is or has been in violation
      of
      any statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      and all such laws that affect the environment, except in each case as could
      not
      have or reasonably be expected to result in a Material Adverse
      Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (L) Regulatory
      Permits. The Company and the Subsidiaries possess all certificates,
      authorizations and permits issued by the appropriate federal, state, local
      or
      foreign regulatory authorities necessary to conduct their respective businesses
      as described in the SEC Reports, except where the failure to possess such
      permits could not have or reasonably be expected to result in a Material Adverse
      Effect (“Material Permits”), and neither the Company nor any Subsidiary
      has received any notice of proceedings relating to the revocation or
      modification of any Material Permit.

    


    (M) Title
      to Assets. The Company and the Subsidiaries have good and marketable title
      in fee simple to all real property owned by them that is material to the
      business of the Company and the Subsidiaries and good and marketable title
      in
      all personal property owned by them that is material to the business of the
      Company and the Subsidiaries, in each case free and clear of all Liens, except
      for Liens as do not materially affect the value of such property and do not
      materially interfere with the use made and proposed to be made of such property
      by the Company and the Subsidiaries and Liens for the payment of federal, state
      or other taxes, the payment of which is neither delinquent nor subject to
      penalties. Any real property and facilities held under lease by the Company
      and
      the Subsidiaries are held by them under valid, subsisting and enforceable leases
      of which the Company and the Subsidiaries are in compliance except
      as
      would not reasonably be expected to result in a Material Adverse
      Effect.

    


    (N) Patents
      and Trademarks. The Company and the Subsidiaries have, or have rights to
      use, all patents, patent applications, trademarks, trademark applications,
      service marks, trade names, trade secrets, inventions, copyrights, licenses
      and
      other similar intellectual property rights necessary or material for use in
      connection with their respective businesses as described in the SEC Reports
      and
      which the failure to so have could have a Material Adverse Effect (collectively,
      the “Intellectual Property Rights”). Neither the Company nor any
      Subsidiary has received a notice (written or otherwise) that the Intellectual
      Property Rights used by the Company or any Subsidiary violates or infringes
      upon
      the rights of any Person. To the knowledge of the Company, all such Intellectual
      Property Rights are enforceable in all material respects and there is no
      existing infringement by another Person of any of the Intellectual Property
      Rights of others. The Company and its Subsidiaries have taken reasonable
      security measures to protect the secrecy, confidentiality and value of all
      of
      their intellectual properties, except where failure to do so could not,
      individually or in the aggregate, reasonably be expected to have a Material
      Adverse Effect.

    


    (O) Insurance.
      The Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to the aggregate subscription amount under the
      Transaction Documents. Neither the Company nor any Subsidiary has any reason
      to
      believe that it will not be able to renew its existing insurance coverage as
      and
      when such coverage expires or to obtain similar coverage from similar insurers
      as may be necessary to continue its business without a significant increase
      in
      cost.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (P) Transactions
      With Affiliates and Employees. Except as set forth in the SEC Reports, none
      of the officers or directors of the Company and, to the knowledge of the
      Company, none of the employees of the Company is presently a party to any
      transaction with the Company or any Subsidiary (other than for services as
      employees, officers and directors), including any contract, agreement or other
      arrangement providing for the furnishing of services to or by, providing for
      rental of real or personal property to or from, or otherwise requiring payments
      to or from any officer, director or such employee or, to the knowledge of the
      Company, any entity in which any officer, director, or any such employee has
      a
      substantial interest or is an officer, director, trustee or partner, other
      than
      (i) for payment of salary or consulting fees for services rendered, (ii)
      reimbursement for expenses incurred on behalf of the Company and (iii) for
      other
      employee benefits, including stock option agreements under any stock option
      plan
      of the Company.

    


    (Q) Sarbanes-Oxley.
      The Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act of 2002 which are applicable to it as of the date hereof and of the closing
      date of the Placement. 

    


    (R)
       Certain
      Fees. Except as otherwise provided in this Agreement, no brokerage or
      finder’s fees or commissions are or will be payable by the Company to any
      broker, financial advisor or consultant, finder, placement agent, investment
      banker, bank or other Person with respect to the transactions contemplated
      by
      the Transaction Documents. The Purchasers shall have no obligation with respect
      to any fees or with respect to any claims made by or on behalf of other Persons
      for fees of a type contemplated in this Section that may be due in connection
      with the transactions contemplated by the Transaction Documents.

    


    (S) Trading
      Market Rules. The issuance and sale of the Securities hereunder does not
      contravene the rules and regulations of the Trading Market.

    


    (T) 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.

    


    (U) Registration
      Rights. No Person has any right to cause the Company to effect the
      registration under the Securities Act of any securities of the
      Company.

    


    (V) 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, or which to its knowledge is likely to have the
      effect of, terminating the registration of the Common Stock under the Exchange
      Act nor has the Company received any notification that the Commission is
      contemplating terminating such registration. Except as specifically disclosed
      in
      the SEC Reports, the Company has not, in the 12 months preceding the date
      hereof, received notice from any Trading Market on which the Common Stock is
      or
      has been listed or quoted to the effect that the Company is not in compliance
      with the listing or maintenance requirements of such Trading Market. The Company
      is, and has no reason to believe that it will not in the foreseeable future
      continue to be, in compliance with all such listing and maintenance
      requirements.

    


    (W) Application
      of Takeover Protections. The Company and its Board of Directors have taken
      all necessary action, if any, in order to render inapplicable any control share
      acquisition, business combination, poison pill (including any distribution
      under
      a rights agreement) or other similar anti-takeover provision under the Company’s
      Certificate of Incorporation (or similar charter documents) or the laws of
      its
      state of incorporation that is or could become applicable to the Purchasers
      as a
      result of the Purchasers and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including without
      limitation as a result of the Company’s issuance of the Securities and the
      Purchasers’ ownership of the Securities.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (X) Solvency.
      Based on the financial condition of the Company as of the Closing Date after
      giving effect to the receipt by the Company of the proceeds from the sale of
      the
      Securities hereunder, (i) the Company’s fair saleable value of its assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business for the current fiscal
      year
      as now conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its debt when such amounts
      are
      required to be paid. The Company does not intend to incur debts beyond its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt). The SEC Reports
      set
      forth as of the date thereof all material outstanding secured and unsecured
      Indebtedness of the Company or any Subsidiary, or for which the Company or
      any
      Subsidiary has commitments, required to be included therein under the applicable
      rules and regulations of the Exchange Act (“Indebtedness”). Neither the Company
      nor any Subsidiary is in default with respect to any Indebtedness.

    


    (Y) Tax
      Status. Except for matters that would not, individually or in the aggregate,
      have or reasonably be expected to result in a Material Adverse Effect, the
      Company and each Subsidiary has filed all necessary federal, state and foreign
      income and franchise tax returns and has paid or accrued all taxes shown as
      due
      thereon, and the Company has no knowledge of a tax deficiency which has been
      asserted or threatened against the Company or any Subsidiary.

    


    (Z) Foreign
      Corrupt Practices. Neither the Company, nor to the knowledge of the Company,
      any agent or other person acting on behalf of the Company, has (i) directly
      or
      indirectly, used any funds for unlawful contributions, gifts, entertainment
      or
      other unlawful expenses related to foreign or domestic political activity,
      (ii)
      made any unlawful payment to foreign or domestic government officials or
      employees or to any foreign or domestic political parties or campaigns from
      corporate funds, (iii) failed to disclose fully any contribution made by the
      Company (or made by any person acting on its behalf of which the Company is
      aware) which is in violation of law, or (iv) violated in any material respect
      any provision of the Foreign Corrupt Practices Act of 1977, as
      amended.

    


    (AA) Accountants.
      The Company’s accountants are PriceWaterhouseCoopers LLP. To the knowledge of
      the Company, such accountants, who the Company expects will express their
      opinion with respect to the financial statements to be included in the Company’s
      next Annual Report on Form 10-K, are a registered public accounting firm as
      required by the Securities Act.

    


    (BB) Regulation
      M Compliance. The Company has not, and to its knowledge no one acting on its
      behalf has, (i) taken, directly or indirectly, any action designed to cause
      or
      to result in the stabilization or manipulation of the price of any security
      of
      the Company to facilitate the sale or resale of any of the Securities, (ii)
      sold, bid for, purchased, or, paid any compensation for soliciting purchases
      of,
      any of the Securities (other than for the placement agent’s placement of the
      Securities), or (iii) paid or agreed to pay to any person any compensation
      for
      soliciting another to purchase any other securities of the Company.

    


    (CC) Approvals.
      The issuance and listing on the Nasdaq Capital Market of the Shares requires
      no
      further approvals, including but not limited to, the approval of
      shareholders.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (DD) NASD
      Affiliations.
      There
      are no affiliations with any NASD member firm among the Company’s officers,
      directors or, to the knowledge of the Company, any five percent (5%) or greater
      stockholder of the Company, except as set forth in the Base
      Prospectus.

     

    SECTION
      3.  CLOSING.
      The
      obligations of the Placement Agent and the Purchasers, and the closing of the
      sale of the Securities hereunder are subject to the accuracy, when made and
      on
      the Closing Date, of the representations and warranties on the part of the
      Company and its Subsidiaries contained herein, to the accuracy of the statements
      of the Company and its Subsidiaries made in any certificates pursuant to the
      provisions hereof, to the performance by the Company and its Subsidiaries of
      their obligations hereunder, and to each of the following additional terms
      and
      conditions:

     

    (A) No
      stop
      order suspending the effectiveness of the Registration Statement shall have
      been
      issued and no proceedings for that purpose shall have been initiated or
      threatened by the Commission, and any request for additional information on
      the
      part of the Commission (to be included in the Registration Statement, the Base
      Prospectus or the Prospectus Supplement or otherwise) shall have been complied
      with to the reasonable satisfaction of the Placement Agent. Any filings required
      to be made by the Company in shall have been timely filed with the
      Commission.

    


    (B) All
      corporate proceedings and other legal matters incident to the authorization,
      form, execution, delivery and validity of each of this Agreement, the
      Securities, the Registration Statement, the Base Prospectus and the Prospectus
      Supplement and all other legal matters relating to this Agreement and the
      transactions contemplated hereby shall be reasonably satisfactory in all
      material respects to counsel for the Placement Agent, and the Company shall
      have
      furnished to such counsel all documents and information that they may reasonably
      request to enable them to pass upon such matters.

     

    (C) The
      Placement Agent shall have received from outside counsel to the Company such
      counsel’s written opinion, addressed to the Placement Agent and the Purchasers
      dated as of the Closing Date, in form and substance reasonably satisfactory
      to
      the Placement Agent, which opinion shall include a “10b-5” representation from
      such counsel.

     

    (D) Neither
      the Company nor any of its Subsidiaries shall have sustained since the date
      of
      the latest audited financial statements included or incorporated by reference
      in
      the Base Prospectus
      or the
      Prospectus Supplement,
      any
      loss or interference with its business from fire, explosion, flood, terrorist
      act or other calamity, whether or not covered by insurance, or from any labor
      dispute or court or governmental action, order or decree, otherwise than as
      set
      forth in or contemplated by the Base Prospectus or
      the
      Prospectus Supplement and
      (ii)
      since such date there shall not have been any change in the capital stock or
      long-term debt of the Company or any of its Subsidiaries or any change, or
      any
      development involving
      a prospective change, in or affecting the business, general affairs, management,
      financial position, stockholders’ equity, results of operations or prospects of
      the Company and its Subsidiaries,
      otherwise than as set forth in or contemplated by the Base
      Prospectus
      or the
      Prospectus Supplement,
      the
      effect of which, in any such case described in clause (i) or (ii), is, in the
      judgment of the Placement Agent, so material and adverse as to make it
      impracticable or inadvisable to proceed with the sale or delivery of the
      Securities on the terms and in the manner contemplated by the Base Prospectus,
      the Time of Sale Prospectus, if any, and the Prospectus Supplement.

     

    (E) The
      Common Stock is registered under the Exchange Act and, as of the Closing Date,
      the Shares shall be listed and admitted and authorized for trading on
the
      NASDAQ Global
      Market,
      and
      satisfactory evidence of such actions shall have been provided to the Placement
      Agent. The Company shall have taken no action designed to, or likely to have
      the
      effect of terminating the registration of the Common Stock under the Exchange
      Act or delisting or suspending from trading the Common Stock from the
      NASDAQ Global
      Market,
      nor has
      the Company received any information suggesting that the Commission or
the
      NASDAQ Global
      Market
      is
      contemplating terminating such registration or listing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (F) Subsequent
      to the execution and delivery of this Agreement, there shall not have occurred
      any of the following (each, a “Material Adverse Change”): (i) trading in
      securities generally on the New York Stock Exchange, the NASDAQ
      Global
      Market
      or the American Stock Exchange or in the over-the-counter market, or trading
      in
      any securities of the Company on any exchange or in the over-the-counter market,
      shall have been suspended or minimum or maximum prices or maximum ranges for
      prices shall have been established on any such exchange or such market by the
      Commission, by such exchange or by any other regulatory body or governmental
      authority having jurisdiction, (ii) a banking moratorium shall have been
      declared by federal or state authorities or a material disruption has occurred
      in commercial banking or securities settlement or clearance services in the
      United States, (iii) the United States shall have become engaged in hostilities
      in which it is not currently engaged, the subject of an act of terrorism, there
      shall have been an escalation in hostilities involving the United States, or
      there shall have been a declaration of a national emergency or war by the United
      States, or (iv) there shall have occurred any other calamity or crisis or any
      change in general economic, political or financial conditions in the United
      States or elsewhere, if the effect of any such event in clause (iii) or (iv)
      makes it, in the sole judgment of the Placement Agent, impracticable or
      inadvisable to proceed with the sale or delivery of the Securities on the terms
      and in the manner contemplated by the Base Prospectus and the Prospectus
      Supplement.

     

    (G) No
      action
      shall have been taken and no statute, rule, regulation or order shall have
      been
      enacted, adopted or issued by any governmental agency or body which would,
      as of
      the Closing Date, prevent the issuance or sale of the Securities or materially
      and adversely affect or potentially and adversely affect the business or
      operations of the Company; and no injunction, restraining order or order of
      any
      other nature by any federal or state court of competent jurisdiction shall
      have
      been issued as of the Closing Date which would prevent the issuance or sale
      of
      the Securities or materially and adversely affect or potentially and adversely
      affect the business or operations of the Company.

     

    (H) The
      Company shall have,
      to the
      extent required under the relevant Rules and Regulations,
      prepared
      and filed with the Commission a Current Report on Form 8-K with respect to
      the
      Placement, including as an exhibit thereto this Agreement.

     

    (I) The
      Company shall have entered into purchase agreements with each of the Purchasers
      and such agreements shall be in full force and effect and shall contain
      representations and warranties of the Company as agreed between the Company
      and
      the Purchasers.

     

    (J) Financial
      Industry Regulatory Authority (“FINRA”) shall have raised no objection to the
      fairness and reasonableness of the terms and arrangements of this Agreement.
      In
      addition, the Company shall, if requested by the Placement Agent, make or
      authorize Placement Agent’s counsel to make on the Company’s behalf, an Issuer
      Filing with FINRA's Corporate Financing Department pursuant to Financial FINRA
      Rule 2710 with respect to the Registration Statement and pay all filing fees
      required in connection therewith. 

     

    (K) Prior
      to
      the Closing Date, the Company shall have furnished to the Placement Agent such
      further information, certificates and documents as the Placement Agent may
      reasonably request.

     

    All
      opinions, letters, evidence and certificates mentioned above or elsewhere in
      this Agreement shall be deemed to be in compliance with the provisions hereof
      only if they are in form and substance reasonably satisfactory to counsel for
      the Placement Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(A)

     

    Subsidiaries

     

    Plexera
      Bioscience LLC

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Schedule
      3(F)


     

    Capitalization


     

    

      The
        authorized capital stock of the Company consists of 120,000,000 shares of
        Common
        Stock and 30,000,000 shares of preferred stock, par value $0.001 per share.
        As
        of July 11, 2008 there were 20,088,352 shares of Common Stock and no shares
        of
        preferred stock issued and outstanding. As of June 30, 2008, the Company
        had
        reserved (i) 2,644,980 shares of Common Stock for issuance under compensation
        plans approved by shareholders and (ii) 1,630,546 shares of Common Stock
        for
        issuance pursuant to outstanding warrants to purchase Common
        Stock.