ex10-1.htm


    Exhibit
      10.1

     

    SECURITIES
      PURCHASE
      AGREEMENT

    


    THISSECURITIES
      PURCHASE AGREEMENT
      (this “Agreement”), dated
      as
      of January 3, 2008, by and among IR BIOSCIENCES HOLDINGS,
      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 Three Million Dollars ($3,000,000) 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 $0.001 (the “Common Stock”) (as
      converted, the “Conversion Shares”),
      and (ii) warrants substantially in the form attached hereto as “Exhibit B” (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 Two Million Dollars ($2,000,000) shall be funded within five (5) business
      day following the date hereof (the “First Closing”) and
      the Company shall have the right (subject to the satisfaction of certain
      conditions) to issue and sell to the Buyers an additional One Million Dollars
      ($1,000,000) on the six month anniversary of the date hereof (the “Second Closing”)
      (individually referred to as a “Closing” collectively
      referred to as the “Closings”), for a
      total purchase price of up to Three Million Dollars ($3,000,000), (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, (i) the Buyer, the Company, and each
      subsidiary of the Company are executing and delivering a Security Agreement
      (the
“Security
      Agreement”) pursuant to which the Company and its wholly owned
      subsidiaries agree to provide the Buyer a security interest in Pledged Property
      (as this term is defined in the Security Agreement), (ii) the Buyer, the
      Company, and each subsidiary of the Company are executing and delivering a
      Patent Security Agreement (the “Patent Security
      Agreement”) pursuant to which the Company and its wholly owned
      subsidiaries agree to provide the Buyer a security interest in Patent Collateral
      (as this term is defined in the Patent Security Agreement), and (iii) each
      subsidiary of the Company is executing and delivering a Guaranty dated the
      date
      hereof (the “Guaranty” and
      collectively with the Security Agreement and the Patent Security Agreement,
      the
“Security
      Documents”) in favor of the Buyer;

     

    WHEREAS,
      contemporaneously
      with the execution and delivery of this Agreement, the Company is delivering
      Irrevocable Transfer Agent Instructions (the “Irrevocable Transfer
      Agent
      Instructions”) to the Company’s transfer agent, which will acknowledge
      and execute such instructions upon receipt, and the parties hereto are entering
      into an agreement (the “Transfer Instructions
      Agreement”) with respect to 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, the Buyer agrees to purchase at the
      First Closing and the Company agrees to sell and issue to the Buyer at the
      First
      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 that number of Warrant Shares as set forth opposite
      the
      Buyer’s name on Schedule I.  Subject to the satisfaction (or waiver)
      of the terms and conditions of this Agreement, the Company at its sole option
      may elect to sell and issue to the Buyer at the Second Closing, and the Buyer
      agrees to purchase at the Second Closing, Convertible Debentures in amounts
      corresponding with the Subscription Amount set forth opposite the Buyer’s name
      on Schedule I hereto by providing the Buyer with fifteen business days’ advance
      written notice that it wishes to exercise such option.

     

    (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 fifth (5th)
      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)
      (the “First Closing
      Date”) and, if the Company exercises its option with respect to the
      Second Closing, 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 six month
      anniversary of the date hereof, 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)
      (the
“Second 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, 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.

     

    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 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: (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
      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
      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.

     

    (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-KSB/A for the fiscal year ended December 31, 2006;
      (iv) the Company’s Form 10-QSB for the fiscal quarter ended September 30, 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 which
      Disclosure Schedules 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 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 Irrevocable Transfer Agent Instructions, the Transfer
      Instructions Agreement, 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 perform any
      of
      the Company’s obligations under the Transaction Documents.

     

    (d) Capitalization.  The
      authorized capital stock of the Company consists of 250,000,000 shares of Common
      Stock and 10,000,000 shares of Preferred Stock, par value $0.001 (“Preferred Stock”) of
      which 114,322,539 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) or in the
      Company’s filings with the SEC,: (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; (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.  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 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 National
      Association of Securities Dealers Inc.’s OTC Bulletin Board) 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 violation of which would
      have a Material Adverse Effect.  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 in accordance with the
      terms
      hereof.  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.  Except as disclosed on Schedule 3(g), 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.  Except as disclosed on Schedule 3(g), all of the Company’s
      SEC Documents have been amended to respond to all written comment letters
      received by the Company from the SEC relating to the SEC
      Documents.  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.  Except as set forth on Schedule 3(g). 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).  The Company knows of knows reason that would prevent it
      from continuing to timely file its SEC Documents.

     

    (h) RESERVED.

     

    (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 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, 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”)
      the violation of which would have a Material Adverse Effect, (ii) have received
      all permits, licenses or other approvals required of them under applicable
      Environmental Laws to conduct their respective businesses the failure of which
      to obtain would not have a Material Adverse Effect and (iii) are in compliance
      with all terms and conditions of any such permit, license or approval the
      violation of which would have a Material Adverse Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (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 have
      a
      Material Adverse Effect, 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 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 in the judgment of the
      Company’s officers has or is expected in the future to have a Material Adverse
      Effect.  Neither the Company nor any of its subsidiaries is in breach
      of any contract or agreement which breach, in the judgment of the Company’s
      officers, has or is expected to have a Material Adverse Effect.

     

    (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.

     

    (y) Registration
      Rights.  Except as disclosed on Schedule 3(y), 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.  The Company does not owe any liquidated
      damages or have any liabilities to any person for failing to obtain the
      effectiveness of any registration statements.

     

    (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.

     

    (dd) The
      Company has not received any correspondence or letters from the SEC’s
      enforcement division or from anyone other regulatory entity concerning actions
      of the Company or its officers or directors and has no reason to believe that
      any inquiry or investigation has begun.

     

    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.

     

    (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.  With a view to making available to the Buyer the
      benefits of Rule 144 promulgated under the Securities Act or any similar rule
      or
      regulation of the SEC that may at any time permit the Buyer to sell securities
      of the Company to the public without registration (“Rule 144”), and as
      a
      material inducement to the Buyer’s purchase of the Securities, the Company
      represents, warrants, and covenants to the following:

     

    (i) The
      Company is subject to the reporting requirements of section 13 or 15(d) of
      the
      Exchange Act and has filed all required reports under section 13 or 15(d) of
      the
      Exchange Act during the 12 months prior to the date hereof (or for such shorter
      period that the issuer was required to file such reports), other than Form
      8-K
      reports;

     

    (ii) from
      the
      date hereof until all the Securities either have been sold by the Buyer, or
      may
      permanently be sold by the Buyer without any restrictions pursuant to Rule
      144,
      (the “Registration
      Period”) the Company shall file with the SEC in a timely manner all
      required reports under section 13 or 15(d) of the Exchange Act and such reports
      shall conform to the requirement of the Exchange Act and the SEC for filing
      thereunder;

     

    (iii) The
      Company shall furnish to the Buyer so long as the Buyer owns Securities,
      promptly upon request, (i) a written statement by the Company that it has
      complied with the reporting requirements of Rule 144, (ii) a copy of the most
      recent annual or quarterly report of the Company and such other reports and
      documents so filed by the Company, and (iii) such other information as may
      be
      reasonably requested to permit the Buyers to sell such securities pursuant
      to
      Rule 144 without registration; and

     

    (iv) During
      the Registration Period 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 50,000,000 shares for issuance upon conversions of the
      Convertible Dentures and exercise of the Warrants (collectively, the “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.  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, the
      Company shall call and hold a special meeting of the shareholders within thirty
      (30) days of such occurrence, for the sole purpose of increasing the number
      of
      shares authorized.  The Company’s management shall recommend to the
      shareholders to vote in favor of increasing the number of shares of Common
      Stock
      authorized.  Management shall also vote all of its shares in favor of
      increasing the number of authorized shares of Common Stock.

     

    (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
      Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Capital Market, or (e)
      the Nasdaq OTC Bulletin Board (which does not include the Pink Sheets LLC)
      (“OTCBB”)
      (each, a “Primary
      Market”).  The Company shall promptly secure the listing of all
      of the Conversion Shares and Warrant Shares 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 Conversion Shares and Warrant Shares from time to time issuable
      under
      the terms of the Transaction Documents.

     

    (g) Fees
      and
      Expenses.

     

    (i) The
      Company shall pay all of its costs and expenses incurred by it connection with
      the negotiation, investigation, preparation, execution and delivery of the
      Transaction Documents.

     

    (ii) The
      Company shall place into escrow $175,000 upon the First Closing, and, if the
      Company elects to close the Second Closing, shall place an additional $75,000
      into escrow directly from the proceeds of each Closing (collectively, the “Monitoring Fees,” and
      as deposited into escrow, the “Escrow Funds”) which
      shall be used to compensate Yorkville Advisors LLC (“Investment Manager”)
      for monitoring and managing the purchase and investment made by YA Global
      Investments, L.P. (“YA
      Global”) described herein, pursuant to the Investment Manager’s existing
      advisory obligations to YA Global.  The Company, Investment Manager,
      and YA Global shall enter into an Escrow Agreement of even date herewith in
      the
      form attached hereto as Exhibit D (the “Escrow Agreement”)
      appointing David Gonzalez, Esq. as escrow agent (the “Escrow Agent”) to
      hold the Escrow Funds and to periodically disburse portions of such Escrow
      Funds
      to the Investment Manager from escrow in accordance with the terms of the Escrow
      Agreement.  The Investment Manager shall periodically receive portions
      of the Escrow Funds in accordance with the Escrow Agreement until either: (1)
      the Escrow Funds shall have been fully disbursed pursuant the Escrow Agreement
      or (2) the Securities shall have been Fully Retired.  “Fully Retired”
shall mean that the Buyer shall have fully disposed of all the Securities issued
      or issuable hereunder, shall no longer have any investment in, or ownership
      of,
      any of the Securities, all amounts owed to YA Global under the Transaction
      Documents shall have been paid, and the Transaction Documents shall have been
      terminated.  When the Securities are Fully Retired, the remaining
      Escrow Funds shall be returned to the Company or otherwise disbursed in
      accordance with the Escrow Agreement.

     

    (iii) The
      Company shall pay a structuring fee to Yorkville of Twenty Thousand Dollars
      ($20,000), of which Ten Thousand Dollars ($10,000) has been paid and the
      remaining Ten Thousand Dollars ($10,000) shall be paid directly from the
      proceeds of the First Closing.  The structuring shall be nonrefundable
      and payable whether or not any Closing occurs.

     

    (h) Corporate
      Existence.
      So long as any of the Convertible Debentures remain outstanding, the Company
      or
      any subsidiary of the Company shall not be party to any Change of Control
      Transaction (as defined in the Convertible Debentures) unless, prior to the
      consummation an such Change of Control Transaction, the Company offers the
      Buyer
      the right to either (i) be redeemed of all amounts outstanding under the
      Convertible Debentures, or (ii) exercise its rights to convert the Convertible
      Debentures, in each case, in accordance with the terms and conditions of the
      Convertible Debentures.

     

    (i) RESERVED.

     

    (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) Restriction
      on Issuance of
      the Capital Stock. So long as any Convertible Debentures are outstanding,
      the Company shall be prohibited from effecting or entering into an agreement
      to
      effect any issuance by the Company or any of its subsidiaries of Common Stock
      or
      securities or instruments convertible or exercisable into Common Stock involving
      a “Variable Rate Transaction.”  The term “Variable Rate
      Transaction” shall mean a transaction in which the Company issues or
      sells (i) any debt or equity securities that are convertible into, exchangeable
      or exercisable for, or include the right to receive additional shares of Common
      Stock either (A) at a conversion, exercise or exchange rate or other price
      that
      is based upon and/or varies with the trading prices of or quotations for the
      shares of Common Stock at any time after the initial issuance of such debt
      or
      equity securities, or (B) with a conversion, exercise or exchange price that
      is
      subject to being reset at some future date after the initial issuance of such
      debt or equity security or upon the occurrence of specified or contingent events
      directly or indirectly related to the business of the Company or the market
      for
      the Common Stock or (ii) enters into any agreement, including, but not limited
      to, an equity line of credit, whereby the Company may sell securities at a
      future determined price.   Notwithstanding the foregoing, this
      Section shall not apply in respect of (i) any Excluded Securities or (ii) any
      transaction with the Buyer.  “Excluded Securities” shall mean, (a)
      shares or options issued or deemed to have been issued by the Company pursuant
      to an means a stock option plan that has been approved by the Board of Directors
      of the Company, (b) shares of Common Stock issued or deemed to be issued by
      the
      Company upon the conversion, exchange or exercise of any right, option,
      obligation or security outstanding on the date prior to date of this Agreement,
      provided that the terms of such right, option, obligation or security are not
      amended or otherwise modified on or after the date of this Agreement, and
      provided that the conversion price, exchange price, exercise price or other
      purchase price is not reduced, adjusted or otherwise modified and the number
      of
      shares of Common Stock issued or issuable is not increased (whether by operation
      of, or in accordance with, the relevant governing documents or otherwise) on
      or
      after the date of this Agreement, (c) shares issued in connection with any
      acquisition or strategic transaction by the Company, whether through an
      acquisition of stock or a merger of any business, assets or technologies,
      leasing arrangement or any other transaction the primary purpose of which is
      not
      to raise equity capital, and (d) the shares of Common Stock issued or
      deemed to be issued by the Company upon conversion of the Convertible Debentures
      or the Warrants.

     

    (l) 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.

     

    (m) 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
      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) but excluding any Excluded Securities, 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 ten (10) 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.

     

    (n) Lockup
      Agreements.  On the date hereof, the Company shall obtain from
      each officer and director a lockup agreement in the form attached hereto as
      Exhibit
      C.

     

    (o) RESERVED.

     

    (p) 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.

     

    (q) 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) as exhibits to such
      filing.

     

    (r) No
      Adjustment to Convertible
      Securities.   For so long as the Convertible Debentures
      remain outstanding, the Company shall not adjust any terms of any Convertible
      Securities, including, without limitation, reducing the conversion price,
      exchange price, exercise price or other purchase price, or increasing the number
      of shares of Common Stock issued or issuable under such Convertible Securities.
      “Convertible Securities” shall mean any right, obligation, or security directly
      or indirectly convertible into or exchangeable for Common Stock.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5. TRANSFER
      AGENT
      INSTRUCTIONS.

     

    (a) The
      Company shall enter into the Transfer Instructions Agreement and 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 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.

     

    (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, provided that these conditions are
      for the Buyer’s sole benefit and may be waived by the Buyer at any time in its
      sole discretion:

     

    (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.

     

    (viii) The
      Company or the Buyer shall have filed a form UCC-1 or such other forms as may
      be
      required to perfect the Buyer’s interest in the Pledged Property as detailed in
      the Security Agreement dated the date hereof and provided proof of such filing
      to the Buyer(s).

     

    (ix) The
      Company shall have provided to the Buyer an acknowledgement, to the satisfaction
      of the Buyer, from the Company’s independent certified public accountants as to
      its ability to provide all consents required in order to file a registration
      statement in connection with this transaction.

     

    (x) The
      Company shall have created the 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 and Transfer Instructions Agreement shall have been
      executed.

     

    (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, provided that these conditions are
      for the Buyer’s sole benefit and may be waived by the Buyer at any time in its
      sole discretion:

     

    (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 increased the Share Reserve by at least a number of shares
      of
      Common Stock equal to the $1,000,000 divided the one half of the closing price
      of the Common Stock on the last Trading Day immediately prior to the Second
      Closing Date.

     

    (v) No
      event
      or series of events shall have occurred that would, individually or in the
      aggregate, have any effect that is material and adverse to the Company and
      such
      subsidiaries, taken as a whole, or that would prohibit or otherwise interfere
      with the ability of the Company to perform any of its obligations under the
      Transaction Documents.

     

    (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.

     

    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 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  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.

     

    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:

     

    
      	
              If
                to the Company, to:

            	
              IR
                Biosciences Holdings, Inc.

            
	 	
              8767
                E. Via De Ventura, Suite 190

            
	 	
              Scottsdale,
                AZ 85258

            
	 	
              Attention:  Chief
                Executive Officer

            
	 	
              Telephone:                         (480)
                922-4781

            
	 	
              Facsimile:                            (602)
                684-2677

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Preston Gates Ellis, LLP

            
	 	
              10100
                Santa Monica Blvd., 7th
                Floor

            
	 	
              Los
                Angeles, CA 90067

            
	 	
              Attention:                            Thomas
                J. Poletti

            
	 	
              Telephone:                          (310)
                552-5045

            
	 	
              Facsimile:                             (310)
                552-5001

            
	 	 
	 	 


    

    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 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 (other than
      the amounts set forth in Section 4(g)(ii)).

     

    (m) Brokerage.  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.

     

    


    [REMAINDER
      PAGE INTENTIONALLY LEFT BLANK]

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    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:

            
	 	
              IR
                BIOSCIENCES HOLDINGS, INC.

            
	 	 
	 	
              By:  /s/
                Michael
                Wilhem                            
                

            
	 	
              Name:  
                Michael Wilhelm

            
	 	
              Title:    
                President and Chief Executive Officer

            
	 	 


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    


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

     

    


    
      	 	
              BUYERS:

            
	 	
              YA
                GLOBAL INVESTMENTS, L.P.

            
	 	 
	 	
              By:           
                Yorkville Advisors, LLC

            
	 	
              Its:           
                Investment Manager

            
	 	 
	 	 
	 	
              By:           /s/
                Mark
                Angelo                        
                

            
	 	
              Name:       Mark
                Angelo

            
	 	
              Its:           
                Portfolio Manager

            


    

     

    
 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      I

     

    SCHEDULE
      OF
      BUYERS

     

    


    


    
      	
              (1)

            	
              (2)

            	
              (3)

            	
              (4)

            	
              (5)

            	
              (6)

            	
              (7)

            	
              (8)

            
	
              Buyer

            	
              Subscription
                Amount

            	
              Number
                of Warrant Shares

            	 	 	
              Legal
                Representative’s Address and Facsimile Number

            
	 	
              First
                Closing

            	
              Second
                Closing

            	 	
              First
                Closing

            	 	 	 
	 	 	 	 	 	 	 	 
	
              YA
                Global Investments, L.P.

              
              

              101
                Hudson Street, Suite 3700

              Jersey
                City, NJ  07302

              Attention:
                Mark Angelo

              Telephone:
                (201) 985-8300

              Facsimile:
                (201) 985-8266

              Residence:  Cayman
                Islands

            	
              $2,000,000

            	
              $1,000,000

            	 	
              7,500,000

            	 	 	
              Troy
                Rillo, Esq.

              101
                Hudson Street, Suite 3700

              Jersey
                City, New Jersey 07302

              Telephone:
                (201) 985-8300

              Facsimile:
                (201) 985-8266

              
              

            
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 


    

    


    


     

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    


    LIST
      OF
      EXHIBITS:

    


    Disclosure
      Schedule

    


    Exhibit
      A
– Form of Convertible Debentures

    


    Exhibit
      B
– Form of Warrant

    


    Exhibit
      C
– Form of Lockup Agreement

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


     

    EXHIBIT
      C

     

     

    LOCKUP
      AGREEMENT

     

    The
      undersigned hereby agrees that for a period commencing on January 3, 2008 and
      expiring on the date thirty (30) days after the date that all amounts owed
      to YA
      Global Investments, L.P. (the “Buyer”), under
      the
      Secured Convertible Debentures issued to the Buyer pursuant to the Securities
      Purchase Agreement between IR Biosciences Holdings, Inc. (the “Company”) and the
      Buyer dated January 3, 2008 have been paid (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
      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.

     

    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:
      January 3, 2008

    


    Signature

    


    


    


    Name:
      ____________________________________

    Address:                                                                           
      

    City,
      State, Zip Code:

    


    


    


    Print
      Social Security Number

    or
      Taxpayer I.D. Number