Filed by Automated Filing Services Inc. (604) 609-0244 - Cyberkinetics Neurotechnology Systems, Inc. - Exhibit 10.1






EXHIBIT 10.1 

 SECURITIES PURCHASE AGREEMENT 

                                         This
  Securities Purchase Agreement (this "Agreement") is dated as of November
  4, 2004, among Cyberkinetics Neurotechnology Systems, Inc., a Delaware corporation
  (the "Company"), and each purchaser identified on the signature pages
  hereto (each, including its successors and assigns, a "Purchaser" and
  collectively the "Purchasers"); and 

                                         WHEREAS,
  subject to the terms and conditions set forth in this Agreement and pursuant
  to Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
  thereunder, the Company desires to issue and sell to each Purchaser, and each
  Purchaser, severally and not jointly, desires to purchase from the Company in
  the aggregate, up to $10,000,000 of shares of Common Stock and Warrants on the
  Closing Date. 

                                         NOW,
  THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
  and for other good and valuable consideration the receipt and adequacy of which
  are hereby acknowledged, the Company and each Purchaser agrees as follows: 

 ARTICLE I. 

  DEFINITIONS 

                     1.1                
  Definitions. In addition to the terms defined elsewhere in this Agreement,
  for all purposes of this Agreement, the following terms have the meanings indicated
  in this Section 1.1:

                    "Action"
  shall have the meaning ascribed to such term in Section 3.1(j) . 

                    "Affiliate"
  means any Person that, directly or indirectly through one or more intermediaries,
  controls or is controlled by or is under common control with a Person as such
  terms are used in and construed under Rule 144. With respect to a Purchaser,
  any investment fund or managed account that is managed on a discretionary basis
  by the same investment manager as such Purchaser will be deemed to be an Affiliate
  of such Purchaser. 

                    "Closing"
  means the closing of the purchase and sale of the Common Stock and the Warrants
  pursuant to Section 2.1. 

                    "Closing
  Date" means the Trading Day when all of the Transaction Documents have been
  executed and delivered by the applicable parties thereto, and all conditions
  precedent to (i) the Purchasers' obligations to pay the Subscription Amount
  and (ii) the Company's obligations to deliver the Securities have been satisfied
  or waived. 

                    "Closing
  Price" means on any particular date (a) the last reported closing bid price
  per share of Common Stock on such date on the Trading Market (as reported by
  Bloomberg L.P. at 4:15 PM (New York time), or (b) if there is no such price
  on such date, then the closing bid price on the Trading Market on the date nearest
  preceding such date (as reported by Bloomberg L.P. at 4:15 PM (New York time)
  for the closing bid price for regular session trading on such day), or (c) if
  the Common Stock is not then 

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listed or quoted on the Trading Market
  and if prices for the Common Stock are then reported in the "pink sheets" published
  by the National Quotation Bureau Incorporated (or a similar organization or
  agency succeeding to its functions of reporting prices), the most recent bid
  price per share of the Common Stock so reported, or (d) if the shares of Common
  Stock are not then publicly traded the fair market value of a share of Common
  Stock as determined by a qualified independent appraiser selected in good faith
  by the Purchasers of a majority in interest of the Shares then outstanding.

                    "Commission"
  means the Securities and Exchange Commission. 

                    "Common
  Stock" means the common stock of the Company, par value $0.001 per share,
  and any securities into which such common stock may hereafter be reclassified.

                    "Common
  Stock Equivalents" means any securities of the Company or the Subsidiaries
  which would entitle the holder thereof to acquire at any time Common Stock,
  including without limitation, any debt, preferred stock, rights, options, warrants
  or other instrument that is at any time convertible into or exchangeable for,
  or otherwise entitles the holder thereof to receive, Common Stock. 

                    "Company
  Counsel" means Kirkpatrick & Lockhart LLP. 

                    "Disclosure
  Schedules" means the Disclosure Schedules of the Company delivered concurrently
  herewith.

                    "Effective
  Date" means the date that the Registration Statement is first declared effective
  by the Commission. 

                    "Evaluation
  Date" shall have the meaning ascribed to such term in Section 3.1(r) .

                    "Exchange
  Act" means the Securities Exchange Act of 1934, as amended. 

                    "Exempt
  Issuance" means the issuance of (a) shares of Common Stock or options to
  employees, officers or directors of the Company pursuant to any stock or option
  plan duly adopted by a majority of the non-employee members of the Board of
  Directors of the Company or a majority of the members of a committee of non-employee
  directors established for such purpose, (b) securities upon the exercise of
  or conversion of any securities issued hereunder, or convertible securities,
  options or warrants issued and outstanding on the date of this Agreement, provided
  that such securities have not been amended since the date of this Agreement
  to increase the number of such securities, and (c) securities issued pursuant
  to strategic transactions with an operating company in a business synergistic
  with the business of the Company and in which the Company receives benefits
  in addition to the investment of funds or pursuant to acquisitions, but shall
  not include a transaction in which the Company is issuing securities primarily
  for the purpose of raising capital or to an entity whose primary business is
  investing in securities. 

                    "FW"
  means Feldman Weinstein LLP with offices located at 420 Lexington Avenue, Suite
  2620, New York, New York 10170-0002. 

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                    "GAAP"
  shall have the meaning ascribed to such term in Section 3.1(h) . 

                    "Intellectual
  Property Rights" shall have the meaning ascribed to such term in Section
  3.1(o) . 

                    "Legend
  Removal Date" shall have the meaning ascribed to such term in Section 4.1(c)
  .

                    "Liens"
  means a lien, charge, security interest, encumbrance, right of first refusal,
  preemptive right or other restriction. 

                    "Material
  Adverse Effect" shall have the meaning ascribed to such term in Section
  3.1(b) . 

                    "Material
  Permits" shall have the meaning ascribed to such term in Section 3.1(m)
  . 

                    "Participation
  Maximum" shall have the meaning ascribed to such term in Section 4.13.

                    "Per
  Share Purchase Price" equals $3.00, subject to adjustment for reverse
  and forward stock splits, stock dividends, stock combinations and other similar
  transactions of the Common Stock that occur after the date of this Agreement.


                     "Person"
  means an individual or corporation, partnership, trust, incorporated or unincorporated
  association, joint venture, limited liability company, joint stock company,
  government (or an agency or subdivision thereof) or other entity of any kind.


                     "Pre-Notice"
  shall have the meaning ascribed to such term in Section 4.13.

                    "Proceeding"
  means an action, claim, suit, investigation or proceeding (including, without
  limitation, an investigation or partial proceeding, such as a deposition), whether
  commenced or threatened. 

                    "Purchaser
  Party" shall have the meaning ascribed to such term in Section 4.9. 

                    "Registration
  Rights Agreements" means collectively the Registration Rights Agreements,
  dated as of the date of this Agreement, among the Company and each Purchaser,
  providing for the registration of the Shares in the form of Exhibit A
  hereto and providing for the registration of the Warrant Shares which agreement
  shall be in the form of Exhibit D attached hereto. 

                    "Registration
  Statement" means a registration statement meeting the requirements set forth
  in the Registration Rights Agreements and covering the resale by the Purchasers
  of the Shares and the Warrant Shares. 

                    "Required
  Approvals" shall have the meaning ascribed to such term in Section 3.1(e)
  . 

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                    "Rule
  144" means Rule 144 promulgated by the Commission pursuant to the Securities
  Act, as such Rule may be amended from time to time, or any similar rule or regulation
  hereafter adopted by the Commission having substantially the same effect as
  such Rule.

                    "SEC
  Reports" shall have the meaning ascribed to such term in Section 3.1(h)
  . 

                    "Securities"
  means the Shares, the Warrants and the Warrant Shares. 

                    "Securities
  Act" means the Securities Act of 1933, as amended. 

                    "Shares"
  means the shares of Common Stock issued or issuable to each Purchaser pursuant
  to this Agreement. 

                    "Subscription
  Amount" means, as to each Purchaser, the amounts set forth below such Purchaser's
  signature block on the signature page hereto, in United States dollars and in
  immediately available funds. 

                    "Subsequent
  Financing" shall have the meaning ascribed to such term in Section 4.13.

                    "Subsequent
  Financing Notice" shall have the meaning ascribed to such term in Section
  4.13.

                    "Subsidiary"
  shall mean the subsidiaries of the Company, if any, set forth on Schedule
  3.1(a). 

                    "Trading
  Day" means a day on which the Common Stock is traded on a Trading Market.


                     "Trading
  Market" means the following markets or exchanges on which the Common Stock
  is listed or quoted for trading on the date in question: the American Stock
  Exchange, the New York Stock Exchange, the Nasdaq National Market, the Nasdaq
  SmallCap Market or the OTC Bulletin Board. 

                    "Transaction
  Documents" means this Agreement, the Warrants and the Registration Rights
  Agreements and any other documents or agreements executed in connection with
  the transactions contemplated hereunder. 

                    "Warrants"
  means the Common Stock Purchase Warrants, in the form of Exhibit B,
  delivered to the Purchasers at the Closing in accordance with Section 2.2(a)(iii)
  hereof, which warrants shall be exercisable immediately upon issuance for a
  term of five years and have an exercise price equal to $6.00, subject
  to adjustment as provided therein. 

                    "Warrant
  Shares" means the shares of Common Stock issuable upon exercise of the Warrants.


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 ARTICLE II. 

  PURCHASE AND SALE 

                     2.1                
  Closing. On the Closing Date, each Purchaser shall purchase from the
  Company, severally and not jointly with the other Purchasers, and the Company
  shall issue and sell to each Purchaser, (a) a number of Shares equal to such
  Purchaser's Subscription Amount divided by the Per Share Purchase Price and
  (b) the Warrants as determined pursuant to Section 2.2(a)(iii) . The aggregate
  Subscription Amounts for the Shares sold hereunder shall be up to $10,000,000.
  Upon satisfaction of the conditions set forth in Section 2.3, the Closing shall
  occur at the offices of FW or such other location as the parties shall mutually
  agree. 

                     2.2                
  Deliveries.

                    (a)           
  On the Closing Date, the Company shall deliver or cause to be delivered to each
  Purchaser the following: 

                    (i)           
  this Agreement duly executed by the Company; 

                    (ii)          
  a copy of the irrevocable instructions to the Company's transfer agent instructing
  the transfer agent to deliver, on an expedited basis, a certificate evidencing
  a number of Shares equal to such Purchaser's Subscription Amount divided by
  the Per Share Purchase Price, registered in the name of such Purchaser; 

                    (iii)         
  within 3 Trading Days of the date hereof, a Warrant, registered in the name
  of such Purchaser, pursuant to which such Purchaser shall have the right to
  acquire up to the number of shares of Common Stock equal to 33% of the Shares
  to be issued to such Purchaser,

                    (iv)          
  the Registration Rights Agreements duly executed by the Company; and 

                    (v)           
  a legal opinion of Company Counsel, in the form of Exhibit C attached
  hereto. 

                    (b)           
  On the Closing Date, each Purchaser shall deliver or cause to be delivered to
  the Company the following: 

                    (i)           
  this Agreement duly executed by such Purchaser; 

                    (ii)          
  such Purchaser's Subscription Amount by wire transfer of same day funds to the
  account as specified in writing by the Company; and 

                    (iii)         
  the Registration Rights Agreements duly executed by such Purchaser. 

                     2.3                
  Closing Conditions.

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                    (a)           
  The obligations of the Company hereunder in connection with the Closing are
  subject to the following conditions being met: 

                    (i)           
  the accuracy in all material respects when made and on the Closing Date of the
  representations and warranties of the Purchasers contained herein;

                    (ii)          
  all obligations, covenants and agreements of the Purchasers required to be performed
  at or prior to the Closing Date shall have been performed; and 

                    (iii)         
  the delivery by the Purchasers of the items set forth in Section 2.2(b) of this
  Agreement. 

                    (b)           
  The respective obligations of the Purchasers hereunder in connection with the
  Closing are subject to the following conditions being met: 

                    (i)           
  the accuracy in all material respects on the Closing Date of the representations
  and warranties of the Company contained herein; 

                    (ii)          
  all obligations, covenants and agreements of the Company required to be performed
  at or prior to the Closing Date shall have been performed;

                    (iii)         
  the delivery by the Company of the items set forth in Section 2.2(a) of this
  Agreement;

                    (iv)          
  there shall have been no Material Adverse Effect with respect to the Company
  since the date hereof; and 

                    (v)           
  From the date hereof to the Closing Date, trading in the Common Stock shall
  not have been suspended by the Commission (except for any suspension of trading
  of limited duration agreed to by the Company, which suspension shall be terminated
  prior to the Closing), and, at any time prior to the Closing Date, trading in
  securities generally as reported by Bloomberg Financial Markets shall not have
  been suspended or limited, or minimum prices shall not have been established
  on securities whose trades are reported by such service, or on any Trading Market,
  nor shall a banking moratorium have been declared either by the United States
  or New York State authorities nor shall there have occurred any material outbreak
  or escalation of hostilities or other national or international calamity of
  such magnitude in its effect on, or any material adverse change in, any financial
  market which, in each case, in the reasonable judgment of each Purchaser, makes
  it impracticable or inadvisable to purchase the Shares at the Closing. 

 ARTICLE III. 

  REPRESENTATIONS AND WARRANTIES 

                     3.1                
  Representations and Warranties of the Company. Except as set forth under
  the corresponding section of the Disclosure Schedules which Disclosure Schedules
  shall be deemed 

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 a part hereof, the Company hereby makes the representations and warranties
  set forth below to each Purchaser:

                    (a)           
  Subsidiaries. All of the direct and indirect subsidiaries of the Company
  are set forth on Schedule 3.1(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.
  If the Company has no subsidiaries, then references in the Transaction Documents
  to the Subsidiaries will be disregarded. 

                    (b)           
  Organization and Qualification. Each of the Company and the Subsidiaries
  is an entity duly incorporated or otherwise organized, validly existing and
  in good standing under the laws of the jurisdiction of its incorporation or
  organization (as applicable), with the requisite power and authority to own
  and use its properties and assets and to carry on its business as currently
  conducted. Neither the Company nor any Subsidiary is in violation or default
  of any of the provisions of its respective certificate or articles of incorporation,
  bylaws or other organizational or charter documents. Each of the Company and
  the Subsidiaries is duly qualified to conduct business and is in good standing
  as a foreign corporation or other entity in each jurisdiction in which the nature
  of the business conducted or property owned by it makes such qualification necessary,
  except where the failure to be so qualified or in good standing, as the case
  may be, could not have or reasonably be expected to result in (i) a material
  adverse effect on the legality, validity or enforceability of any Transaction
  Documents, (ii) a material adverse effect on the results of operations, assets,
  business, prospects or financial condition 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 Documents (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. The Company has the requisite corporate power
  and authority to enter into and to consummate the transactions contemplated
  by each of the Transaction Documents and otherwise to carry out its obligations
  thereunder. The execution and delivery of each of the Transaction Documents
  by the Company and the consummation by it of the transactions contemplated thereby
  have been duly authorized by all necessary action on the part of the Company
  and no further action is required by the Company in connection therewith other
  than in connection with the Required Approvals. Each Transaction Documents has
  been (or upon delivery will have been) duly executed by the Company and, when
  delivered in accordance with the terms hereof, will constitute the valid and
  binding obligation of the Company enforceable against the Company in accordance
  with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization,
  moratorium and other laws of general application affecting enforcement of creditors'
  rights generally, (ii) as limited by laws relating to the availability of specific
  performance, injunctive relief or other equitable remedies and (iii) insofar
  as indemnification and contribution provisions may be limited by applicable
  law. 

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

                    (e)           
  Filings, Consents and Approvals. The Company is not required to obtain
  any consent, waiver, authorization or order of, give any notice to, or make
  any filing or registration with, any court or other federal, state, local or
  other governmental authority or other Person in connection with the execution,
  delivery and performance by the Company of the Transaction Documents, other
  than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the
  filing with the Commission of the Registration Statement, (iii) application(s)
  to each applicable Trading Market for the listing of the Shares and Warrant
  Shares for trading thereon in the time and manner required thereby, and (iv)
  the filing of Form D with the Commission and such filings as are required to
  be made under applicable state securities laws (collectively, the "Required
  Approvals"). 

                    (f)           
  Issuance of the Securities. The Shares and Warrants are duly authorized
  and, when issued and paid for in accordance with the Transaction Documents,
  will be duly and validly issued, fully paid and nonassessable, free and clear
  of all Liens imposed by the Company other than restrictions on transfer provided
  for in the Transaction Documents. The Warrant Shares, when issued in accordance
  with the terms of the Transaction Documents, will be validly issued, fully paid
  and nonassessable, free and clear of all Liens imposed by the Company. The Company
  has reserved from its duly authorized capital stock the maximum number of shares
  of Common Stock issuable pursuant to this Agreement and the Warrants. 

                    (g)           
  Capitalization. The capitalization of the Company is as described in
  the Company's most recent periodic report filed with the Commission. The Company
  has not issued any capital stock since such filing other than pursuant to the
  exercise of employee stock options under the Company's stock option plans, the
  issuance of shares of Common Stock to employees pursuant to the Company's employee
  stock purchase plan and pursuant to the conversion or exercise of outstanding
  Common Stock 

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

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

 9





                    (i)           
  Material Changes. Since the date of the latest audited financial statements
  included within the SEC Reports, except as specifically disclosed in the SEC
  Reports, (i) there has been no event, occurrence or development that has had
  or that could reasonably be expected to result in a Material Adverse Effect,
  (ii) the Company has not incurred any liabilities (contingent or otherwise)
  other than (A) trade payables and accrued expenses incurred in the ordinary
  course of business consistent with past practice and (B) liabilities not required
  to be reflected in the Company's financial statements pursuant to GAAP or required
  to be disclosed in filings made with the Commission, (iii) the Company has not
  altered its method of accounting, (iv) the Company has not declared or made
  any dividend or distribution of cash or other property to its stockholders or
  purchased, redeemed or made any agreements to purchase or redeem any shares
  of its capital stock and (v) the Company has not issued any equity securities
  to any officer, director or Affiliate, except pursuant to existing Company stock
  option plans. The Company does not have pending before the Commission any request
  for confidential treatment of information.

                    (j)           
  Litigation. There is no action, suit, inquiry, notice of violation, proceeding
  or investigation pending or, to the knowledge of the Company, threatened against
  or affecting the Company, any Subsidiary or any of their respective properties
  before or by any court, arbitrator, governmental or administrative agency or
  regulatory authority (federal, state, county, local or foreign) (collectively,
  an "Action") which (i) adversely affects or challenges the legality,
  validity or enforceability of any of the Transaction Documents or the Securities
  or (ii) could, if there were an unfavorable decision, have or reasonably be
  expected to result in a Material Adverse Effect. Neither the Company nor any
  Subsidiary, nor any current director or officer thereof, is or has been the
  subject of any Action involving a claim of violation of or liability under federal
  or state securities laws or a claim of breach of fiduciary duty. There has not
  been, and to the knowledge of the Company, there is not pending or contemplated,
  any investigation by the Commission involving the Company or any current director
  or officer of the Company. The Commission has not issued any stop order or other
  order suspending the effectiveness of any registration statement filed by the
  Company or any Subsidiary under the Exchange Act or the Securities Act. 

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

                    (l)           
  Compliance. Neither the Company nor any Subsidiary (i) is in default
  under or in violation of (and no event has occurred that has not been waived
  that, with notice or lapse of time or both, would result in a default by the
  Company or any Subsidiary under), nor has the Company or any Subsidiary received
  notice of a claim that it is in default under or that it is in violation of,
  any indenture, loan or credit agreement or any other agreement or instrument
  to which it is a party or by which it or any of its properties is bound (whether
  or not such default or violation has been waived), (ii) is in violation of any
  order of any court, arbitrator or governmental body, or (iii) is or has been
  in violation of any statute, rule or regulation of any governmental authority,
  including 

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without limitation all foreign, federal, state and local
  laws applicable to its business except in each case as could not have a Material
  Adverse Effect. 

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

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

                    (o)           
  Patents and Trademarks. The Company and the Subsidiaries have, or have
  rights to use, all patents, patent applications, trademarks, trademark applications,
  service marks, trade names, copyrights, licenses and other similar rights necessary
  or material for use in connection with their respective businesses as described
  in the SEC Reports and which the failure to so have could have a Material Adverse
  Effect (collectively, the "Intellectual Property Rights"). Neither the
  Company nor any Subsidiary has received a written notice that the Intellectual
  Property Rights used by the Company or any Subsidiary violates or infringes
  upon the rights of any Person. To the knowledge of the Company, all such Intellectual
  Property Rights are enforceable and there is no existing infringement by another
  Person of any of the Intellectual Property Rights of others. 

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

                    (q)           
  Transactions With Affiliates and Employees. Except as set forth in the
  SEC Reports, none of the current officers or directors of the Company and, to
  the 

 11





knowledge of the Company, none of the
  current employees of the Company is presently a party to any transaction with
  the Company or any Subsidiary (other than for services as employees, officers
  and directors), including any contract, agreement or other arrangement providing
  for the furnishing of services to or by, providing for rental of real or personal
  property to or from, or otherwise requiring payments to or from any officer,
  director or such employee or, to the knowledge of the Company, any entity in
  which any officer, director, or any such employee has a substantial interest
  or is an officer, director, trustee or partner, in each case in excess of $60,000
  other than (i) for payment of salary or consulting fees for services rendered,
  (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
  for other employee benefits, including stock option agreements under any stock
  option plan of the Company. 

                    (r)           
  Sarbanes-Oxley; Internal Accounting Controls. The Company is in material
  compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable
  to it as of the Closing Date. The Company and the Subsidiaries maintain a system
  of internal accounting controls sufficient to provide reasonable assurance that
  (i) transactions are executed in accordance with management's general or specific
  authorizations, (ii) transactions are recorded as necessary to permit preparation
  of financial statements in conformity with GAAP and to maintain asset accountability,
  (iii) access to assets is permitted only in accordance with management's general
  or specific authorization, and (iv) the recorded accountability for assets is
  compared with the existing assets at reasonable intervals and appropriate action
  is taken with respect to any differences. The Company has established disclosure
  controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
  for the Company and designed such disclosure controls and procedures to ensure
  that material information relating to the Company, including its Subsidiaries,
  is made known to the certifying officers by others within those entities, particularly
  during the period in which the Company's most recently filed periodic report
  under the Exchange Act, as the case may be, is being prepared. The Company's
  certifying officers have evaluated the effectiveness of the Company's controls
  and procedures as of the date prior to the filing date of the most recently
  filed periodic report under the Exchange Act (such date, the "Evaluation
  Date"). The Company presented in its most recently filed periodic report
  under the Exchange Act the conclusions of the certifying officers about the
  effectiveness of the disclosure controls and procedures based on their evaluations
  as of the Evaluation Date. Since the Evaluation Date, there have been no significant
  changes in the Company's internal controls (as such term is defined in Item
  307(b) of Regulation S-K under the Exchange Act) or, to the Company's knowledge,
  in other factors that could significantly affect the Company's internal controls.

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

 12





                    (t)           
  Private Placement. Assuming the accuracy of the Purchasers representations
  and warranties set forth in Section 3.2, no registration under the Securities
  Act is required for the offer and sale of the Securities by the Company to the
  Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder
  does not contravene the rules and regulations of the Trading Market. 

                    (u)           
  Investment Company. The Company is not, and is not an Affiliate of, and
  immediately after receipt of payment for the Shares, will not be or be an Affiliate
  of, an "investment company" within the meaning of the Investment Company Act
  of 1940, as amended. The Company shall conduct its business in a manner so that
  it will not become subject to the Investment Company Act. 

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


                     (w)           
  Listing and Maintenance Requirements. The Company's Common Stock is registered
  pursuant to Section 12(g) of the Exchange Act, and the Company has taken no
  action designed to, or which to its knowledge is likely to have the effect of,
  terminating the registration of the Common Stock under the Exchange Act nor
  has the Company received any notification that the Commission is contemplating
  terminating such registration. The Company has not, in the 12 months preceding
  the date hereof, received notice from any Trading Market on which the Common
  Stock is or has been listed or quoted to the effect that the Company is not
  in compliance with the listing or maintenance requirements of such Trading Market.
  The Company is, and has no reason to believe that it will not in the foreseeable
  future continue to be, in compliance with all such listing and maintenance requirements.


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

                    (y)           
  Disclosure. The Company confirms that, neither the Company nor any other
  Person acting on its behalf has provided any of the Purchasers or their agents
  or counsel with any information that constitutes or might constitute material,
  non-public information. The Company understands and confirms that the Purchasers
  will rely on the foregoing representations and covenants in effecting transactions
  in securities of the Company. All disclosure contained in the Transaction Documents
  do not contain any untrue statement of a material fact or omit to state any
  material fact necessary in order to make the statements made therein, in light
  of the circumstances under which they were made, not misleading. The Company
  acknowledges and agrees that no Purchaser makes 

 13





or has made any representations or warranties
  with respect to the transactions contemplated hereby other than those specifically
  set forth in Section 3.2 hereof. 

                    (z)           
  No Integrated Offering. Assuming the accuracy of the Purchasers' representations
  and warranties set forth in Section 3.2, neither the Company, nor any of its
  affiliates, nor any Person acting on its or their behalf has, directly or indirectly,
  made any offers or sales of any security or solicited any offers to buy any
  security, under circumstances that would cause this offering of the Securities
  to be integrated with prior offerings by the Company for purposes of the Securities
  Act or any applicable shareholder approval provisions, including, without limitation,
  under the rules and regulations of any exchange or automated quotation system
  on which any of the securities of the Company are listed or designated.

                    (aa)         
  Solvency. Based on the financial condition of the Company as of the Closing
  Date after giving effect to the receipt by the Company of the proceeds from
  the sale of the Securities hereunder, (i) the Company's fair saleable value
  of its assets exceeds the amount that will be required to be paid on or in respect
  of the Company's existing debts and other liabilities (including known contingent
  liabilities) as they mature; (ii) the Company's assets do not constitute unreasonably
  small capital to carry on its business for the current fiscal year as now conducted
  and as proposed to be conducted including its capital needs taking into account
  the particular capital requirements of the business conducted by the Company,
  and projected capital requirements and capital availability thereof; and (iii)
  the current cash flow of the Company, together with the proceeds the Company
  would receive, were it to liquidate all of its assets, after taking into account
  all anticipated uses of the cash, would be sufficient to pay all amounts on
  or in respect of its debt when such amounts are required to be paid. The Company
  does not intend to incur debts beyond its ability to pay such debts as they
  mature (taking into account the timing and amounts of cash to be payable on
  or in respect of its debt). The Company has no knowledge of any facts or circumstances
  which lead it to believe that it will file for reorganization or liquidation
  under the bankruptcy or reorganization laws of any jurisdiction within one year
  from the Closing Date. The SEC Reports set forth as of the dates thereof all
  outstanding secured and unsecured Indebtedness of the Company or any Subsidiary,
  or for which the Company or any Subsidiary has commitments. For the purposes
  of this Agreement, "Indebtedness" shall mean (a) any liabilities for
  borrowed money or amounts owed in excess of $50,000 (other than trade accounts
  payable incurred in the ordinary course of business), (b) all guaranties, endorsements
  and other contingent obligations in respect of Indebtedness of others, whether
  or not the same are or should be reflected in the Company's balance sheet (or
  the notes thereto), except guaranties by endorsement of negotiable instruments
  for deposit or collection or similar transactions in the ordinary course of
  business; and (c) the present value of any lease payments in excess of $50,000
  due under leases required to be capitalized in accordance with GAAP. Neither
  the Company nor any Subsidiary is in default with respect to any Indebtedness.


                     (bb)         
  THE COMPANY IS NOT EILIGIBE TO REGISTER THE RESALE OF ITS COMMON STOCK
  BY THE PURCHASERS UNDER FORM S-3. 

 14





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

                    (dd)         
  General Solicitation. Neither the Company nor any person acting on behalf
  of the Company has offered or sold any of the Shares by any form of general
  solicitation or general advertising. The Company has offered the Shares for
  sale only to the Purchasers and certain other "accredited investors" within
  the meaning of Rule 501 under the Securities Act. 

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

                    (ff)         
  Accountants. The Company's accountants are set forth on Schedule
  3.1(ff) of the Disclosure Schedule. To the Company's knowledge, such
  accountants, who the Company expects will express their opinion with respect
  to the financial statements to be included in the Company's Annual Report on
  Form 10-KSB for the year ended December 31, 2004, are a registered public accounting
  firm as required by the Securities Act. 

                    (gg)         
  Acknowledgment Regarding Purchasers' Purchase of Shares. The Company
  acknowledges and agrees that each of the Purchasers is acting solely in the
  capacity of an arm's length purchaser with respect to the Transaction Documents
  and the transactions contemplated hereby. The Company further acknowledges that
  no Purchaser is 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 any Purchaser or any of their respective
  representatives or agents in connection with this Agreement and the transactions
  contemplated hereby is merely incidental to the Purchasers' purchase of the
  Shares. The Company further represents to each Purchaser that the Company's
  decision to enter into this Agreement has been based solely on the independent
  evaluation of the transactions contemplated hereby by the Company and its representatives
  and the representations and warranties given by the Purchasers. 

                    3.2                
  Representations and Warranties of the Purchasers. Each Purchaser hereby,
  for itself and for no other Purchaser, represents and warrants as of the date
  hereof and as of the Closing Date to the Company as follows: 

 15





                    (a)           
  Organization; Authority. Such Purchaser is an entity duly organized,
  validly existing and in good standing under the laws of the jurisdiction of
  its organization with full right, corporate or partnership power and authority
  to enter into and to consummate the transactions contemplated by the Transaction
  Documents and otherwise to carry out its obligations thereunder. The execution,
  delivery and performance by such Purchaser of the transactions contemplated
  by this Agreement have been duly authorized by all necessary corporate or similar
  action on the part of such Purchaser. Each Transaction Documents to which it
  is a party has been duly executed by such Purchaser, and when delivered by such
  Purchaser in accordance with the terms hereof, will constitute the valid and
  legally binding obligation of such Purchaser, enforceable against it in accordance
  with its terms, except (i) as limited by general equitable principles and applicable
  bankruptcy, insolvency, reorganization, moratorium and other laws of general
  application affecting enforcement of creditors' rights generally, (ii) as limited
  by laws relating to the availability of specific performance, injunctive relief
  or other equitable remedies and (iii) insofar as indemnification and contribution
  provisions may be limited by applicable law. 

                    (b)           
  Investment Intent. Such Purchaser understands that the Securities are
  "restricted securities" and have not been registered under the Securities Act
  or any applicable state securities law and is acquiring the Securities as principal
  for its own account and not with a view to or for distributing or reselling
  such Securities or any part thereof, has no present intention of distributing
  any of such Securities and has no arrangement or understanding with any other
  persons regarding the distribution of such Securities (this representation and
  warranty not limiting such Purchaser's right to sell the Securities pursuant
  to the Registration Statement or otherwise in compliance with applicable federal
  and state securities laws). Such Purchaser is acquiring the Securities hereunder
  in the ordinary course of its business. Such Purchaser does not have any agreement
  or understanding, directly or indirectly, with any Person to distribute any
  of the Securities. 

                    (c)           
  Purchaser Status. At the time such Purchaser was offered the Securities,
  it was, and at the date hereof it is, and on each date on which it exercises
  any Warrants, it will be either: (i) an "accredited investor" as defined in
  Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or
  (ii) a "qualified institutional buyer" as defined in Rule 144A(a) under the
  Securities Act. Such Purchaser is not required to be registered as a broker-dealer
  under Section 15 of the Exchange Act.

                    (d)           
  Experience of Such Purchaser. Such Purchaser, either alone or together
  with its representatives, has such knowledge, sophistication and experience
  in business and financial matters so as to be capable of evaluating the merits
  and risks of the prospective investment in the Securities, and has so evaluated
  the merits and risks of such investment. Such Purchaser is able to bear the
  economic risk of an investment in the Securities and, at the present time, is
  able to afford a complete loss of such investment. 

                    (e)           
  General Solicitation. Such Purchaser is not purchasing the Securities
  as a result of any advertisement, article, notice or other communication regarding
  the Securities published in any newspaper, magazine or similar media or broadcast
  over 

 16





television or radio or presented at any seminar or any
  other general solicitation or general advertisement. 

                    (f)           
  Short Sales. Each Purchaser represents that prior to 8:30 a.m. ET on
  the Trading Day immediately following the date of this Agreement, neither it
  nor any Person over which the Purchaser has direct control, have made any purchases
  or sales of, or granted any option for the purchase of or entered into any hedging
  or similar transaction with the same economic effect as a short sale, of the
  Common Stock. 

                     The
  Company acknowledges and agrees that each Purchaser does not make or has not
  made any representations or warranties with respect to the transactions contemplated
  hereby other than those specifically set forth in this Section 3.2. 

 ARTICLE IV. 

  OTHER AGREEMENTS OF THE PARTIES 

                     4.1                
  Transfer Restrictions.

                    (a)           
  The Securities may only be disposed of in compliance with state and federal
  securities laws. In connection with any transfer of Securities other than pursuant
  to an effective registration statement or Rule 144, to the Company or to an
  affiliate of a Purchaser or in connection with a pledge as contemplated in Section
  4.1(b), the Company may require the transferor thereof to provide to the Company
  an opinion of counsel selected by the transferor and reasonably acceptable to
  the Company, the form and substance of which opinion shall be reasonably satisfactory
  to the Company, to the effect that such transfer does not require registration
  of such transferred Securities under the Securities Act. As a condition of transfer,
  any such transferee shall agree in writing to be bound by the terms of this
  Agreement and shall have the rights of a Purchaser under this Agreement and
  the Registration Rights Agreements. 

                         (b)           
  The Purchasers agree to the imprinting, so long as is required by this Section
  4.1(b), of a legend on any of the Securities in the following form: 

THESE SECURITIES HAVE NOT BEEN REGISTERED
  WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
  ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
  ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
  OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
  THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
  NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
  WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
  TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
  ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE 

 17





PLEDGED IN CONNECTION WITH A BONA FIDE
  MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
  INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER
  THE SECURITIES ACT. 

                    The
  Company acknowledges and agrees that a Purchaser may from time to time pledge
  pursuant to a bona fide margin agreement with a registered broker-dealer or
  grant a security interest in some or all of the Securities to a financial institution
  that is an "accredited investor" as defined in Rule 501(a) under the Securities
  Act and who agrees to be bound by the provisions of this Agreement and the Registration
  Rights Agreements and, if required under the terms of such arrangement, such
  Purchaser may transfer pledged or secured Securities to the pledgees or secured
  parties. Such a pledge or transfer would not be subject to approval of the Company
  and no legal opinion of legal counsel of the pledgee, secured party or pledgor
  shall be required in connection therewith. Further, no notice shall be required
  of such pledge. At the appropriate Purchaser's expense, the Company will execute
  and deliver such reasonable documentation as a pledgee or secured party of Securities
  may reasonably request in connection with a pledge or transfer of the Securities,
  including, if the Securities are subject to registration pursuant to the Registration
  Rights Agreements, the preparation and filing of any required prospectus supplement
  under Rule 424(b)(3) under the Securities Act or other applicable provision
  of the Securities Act to appropriately amend the list of Selling Stockholders
  thereunder. 

                    (c)           
  Certificates evidencing the Shares and Warrant Shares shall not contain any
  legend (including the legend set forth in Section 4.1(b)), (i) while a registration
  statement (including the Registration Statement) covering the resale of such
  security is effective under the Securities Act provided that at the time a Purchaser
  requests a removal of the legend on any certificate evidencing all or any portion
  of any of the Securities, such Purchaser (or a broker acting on such Purchaser's
  behalf) provides to the Company (or to the transfer agent on the Company's behalf),
  a representation that any of the Securities, sold or to be sold by such Purchaser
  have been, or will be, sold in accordance with the plan of distribution set
  forth in the Prospectus and in compliance with the prospectus delivery requirements
  under the Securities Act, or (ii) following any sale of such Shares or Warrant
  Shares pursuant to Rule 144, or (iii) if such 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 Commission). If all or any portion of a Warrant is
  exercised at a time when there is an effective registration statement to cover
  the resale of the Warrant Shares, such 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 4.1(c), it will,
  no later than three Trading Days following the delivery by a Purchaser to the
  Company or the Company's transfer agent of a certificate representing Shares
  or Warrant Shares, as the case may be, issued with a restrictive legend (such
  date, the "Legend Removal Date"), deliver or cause to be delivered to
  such Purchaser a certificate representing such Securities that is free from
  all restrictive and other legends. The Company may not make 

 18





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. 

                    (d)           
  In addition to such Purchaser's other available remedies, the Company shall
  pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty,
  for each $1,000 of Shares or Warrant Shares (based on the Closing Price of the
  Common Stock on the date such Securities are submitted to the Company's transfer
  agent) subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per
  Trading Day five (5) Trading Days after such damages have begun to accrue) for
  each Trading Day after the second Trading Day following Legend Removal Date
  until such certificate is delivered. Nothing herein shall limit such Purchaser's
  right to pursue actual damages for the Company's failure to deliver certificates
  representing any Securities as required by the Transaction Documents, and such
  Purchaser shall have the right to pursue all remedies available to it at law
  or in equity including, without limitation, a decree of specific performance
  and/or injunctive relief. 

                    (e)           
  Each Purchaser, severally and not jointly with the other Purchasers, agrees
  that the removal of the restrictive legend from certificates representing Securities
  as set forth in this Section 4.1 is predicated upon the Company's reliance that
  the Purchaser will sell any Securities pursuant to either the registration requirements
  of the Securities Act, including any applicable prospectus delivery requirements,
  or an exemption therefrom. 

                    (f)           
  Until the date which is 30 days after the Effective Date, the Company shall
  not undertake a reverse or forward stock split or reclassification of the Common
  Stock without the prior written consent of the Purchasers holding a majority
  in interest of the Shares. 

                     4.2                
  Furnishing of Information. As long as any Purchaser owns Securities,
  the Company will use best efforts to timely file (or obtain extensions in respect
  thereof and file within the applicable grace period) all reports required to
  be filed by the Company after the date hereof pursuant to the Exchange Act.
  As long as any Purchaser owns Securities, if the Company is not required to
  file reports pursuant to the Exchange Act, it will prepare and furnish to the
  Purchasers and make publicly available in accordance with Rule 144(c) such information
  as is required for the Purchasers to sell the Securities under Rule 144. The
  Company further covenants that it will take such further action as any holder
  of Securities may reasonably request, all to the extent required from time to
  time to enable such Person to sell such Securities without registration under
  the Securities Act within the limitation of the exemptions provided by Rule
  144. 

                     4.3                
  Integration. The Company shall not sell, offer for sale or solicit offers
  to buy or otherwise negotiate in respect of any security (as defined in Section
  2 of the Securities Act) that would be integrated with the offer or sale of
  the Securities in a manner that would require the registration under the Securities
  Act of the sale of the Securities to the Purchasers or that would be integrated
  with the offer or sale of the Securities for purposes of the rules and regulations
  of any Trading Market such that it would require shareholder approval prior
  to the closing of such other transaction unless shareholder approval is obtained
  before the closing of such subsequent transaction. 

 19





                     4.4                
  Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
  Eastern time on the Trading Day following the date hereof, issue a Current Report
  on Form 8-K, disclosing the material terms of the transactions contemplated
  hereby, and shall attach the Transaction Documents thereto. The Company and
  each Purchaser shall consult with each other in issuing any other press releases
  with respect to the transactions contemplated hereby, and neither the Company
  nor any Purchaser shall issue any such press release or otherwise make any such
  public statement without the prior consent of the Company, with respect to any
  press release of any Purchaser, or without the prior consent of each Purchaser,
  with respect to any press release of the Company, which consent shall not unreasonably
  be withheld, except if such disclosure is required by law, in which case the
  disclosing party shall promptly provide the other party with prior notice of
  such public statement or communication. Notwithstanding the foregoing, the Company
  shall not publicly disclose the name of any Purchaser, or include the name of
  any Purchaser in any filing with the Commission or any regulatory agency or
  Trading Market, without the prior written consent of such Purchaser, except
  (i) as required by federal securities law and (ii) to the extent such disclosure
  is required by law or Trading Market regulations. 

                     4.5                
  Shareholder Rights Plan. No claim will be made or enforced by the Company
  or, to the knowledge of the Company, any other Person that any Purchaser is
  an "Acquiring Person" under any shareholder rights plan or similar plan or arrangement
  in effect or hereafter adopted by the Company, or that any Purchaser could be
  deemed to trigger the provisions of any such plan or arrangement, by virtue
  of receiving Securities under the Transaction Documents or under any other agreement
  between the Company and the Purchasers. The Company shall conduct its business
  in a manner so that it will not become subject to the Investment Company Act.


                     4.6                
  Non-Public Information. The Company covenants and agrees that neither
  it nor any other Person acting on its behalf will provide any Purchaser or its
  agents or counsel with any information that the Company believes constitutes
  material non-public information, unless prior thereto such Purchaser shall have
  executed a written agreement regarding the confidentiality and use of such information.
  The Company understands and confirms that each Purchaser shall be relying on
  the foregoing representations in effecting transactions in securities of the
  Company. 

                     4.7                
  Use of Proceeds. Except as set forth on Schedule 4.7 attached
  hereto, the Company shall use the net proceeds from the sale of the Securities
  hereunder for working capital purposes and not for the satisfaction of any portion
  of the Company's debt (other than payment of trade payables in the ordinary
  course of the Company's business and prior practices), to redeem any Common
  Stock or Common Stock Equivalents or to settle any litigation outstanding as
  of the date hereof. 

                     4.8                
  Reimbursement. If any Purchaser becomes involved in any capacity in any
  Proceeding by or against any Person who is a stockholder of the Company (except
  as a result of sales, pledges, margin sales and similar transactions by such
  Purchaser to or with any current stockholder), solely as a result of such Purchaser's
  acquisition of the Securities under this Agreement, the Company will reimburse
  such Purchaser for its reasonable legal and other expenses (including the cost
  of any investigation preparation and travel in connection therewith) incurred
  in connection therewith, as such expenses are incurred. The reimbursement obligations
  of the Company under this paragraph shall be in addition to any liability which
  the Company 

 20








 may otherwise have, shall extend upon the same terms and conditions
  to any Affiliates of the Purchasers who are actually named in such action, proceeding
  or investigation, and partners, directors, agents, employees and controlling
  persons (if any), as the case may be, of the Purchasers and any such Affiliate,
  and shall be binding upon and inure to the benefit of any successors, assigns,
  heirs and personal representatives of the Company, the Purchasers and any such
  Affiliate and any such Person. The Company also agrees that neither the Purchasers
  nor any such Affiliates, partners, directors, agents, employees or controlling
  persons shall have any liability to the Company or any Person asserting claims
  on behalf of or in right of the Company solely as a result of acquiring the
  Securities under this Agreement. 

                     4.9                
  Indemnification of Purchasers. Subject to the provisions of this Section
  4.9, the Company will indemnify and hold the Purchasers and their directors,
  officers, shareholders, partners, employees and agents (each, a "Purchaser
  Party") harmless from any and all losses, liabilities, obligations, claims,
  contingencies, damages, costs and expenses, including all judgments, amounts
  paid in settlements, court costs and reasonable attorneys' fees and costs of
  investigation that any such Purchaser Party may suffer or incur as a result
  of or relating to (a) any breach of any of the representations, warranties,
  covenants or agreements made by the Company in this Agreement or in the other
  Transaction Documents or (b) any action instituted against a Purchaser, or any
  of them or their respective Affiliates, by any stockholder of the Company who
  is not an Affiliate of such Purchaser, with respect to any of the transactions
  contemplated by the Transaction Documents (unless such action is based upon
  a breach of such Purchaser's representations, warranties or covenants under
  the Transaction Documents or any agreements or understandings such Purchaser
  may have with any such stockholder or any violations by the Purchaser of state
  or federal securities laws or any conduct by such Purchaser which constitutes
  fraud, gross negligence, willful misconduct or malfeasance). If any action shall
  be brought against any Purchaser Party in respect of which indemnity may be
  sought pursuant to this Agreement, such Purchaser Party shall promptly notify
  the Company in writing, and the Company shall have the right to assume the defense
  thereof with counsel of its own choosing. Any Purchaser Party shall have the
  right to employ separate counsel in any such action and participate in the defense
  thereof, but the fees and expenses of such counsel shall be at the expense of
  such Purchaser Party except to the extent that (i) the employment thereof has
  been specifically authorized by the Company in writing, (ii) the Company has
  failed after a reasonable period of time to assume such defense and to employ
  counsel or (iii) in such action there is, in the reasonable opinion of such
  separate counsel, a material conflict on any material issue between the position
  of the Company and the position of such Purchaser Party. The Company will not
  be liable to any Purchaser Party under this Agreement (i) for any settlement
  by a Purchaser Party effected without the Company's prior written consent, which
  shall not be unreasonably withheld or delayed; or (ii) to the extent, but only
  to the extent that a loss, claim, damage or liability is attributable to any
  Purchaser Party's breach of any of the representations, warranties, covenants
  or agreements made by the Purchasers in this Agreement or in the other Transaction
  Documents. 

                     4.10                Reservation
  of Common Stock. As of the date hereof, the Company has reserved and the
  Company shall continue to reserve and keep available at all times, free of preemptive
  rights, a sufficient number of shares of Common Stock for the purpose of enabling
  the Company to issue Shares pursuant to this Agreement and Warrant Shares pursuant
  to any exercise of the Warrants.

 21





                     4.11                Listing
  of Common Stock. The Company hereby agrees to use best efforts to maintain
  the listing of the Common Stock on a Trading Market, and as soon as reasonably
  practicable following the Closing (but not later than the earlier of the Effective
  Date and the first anniversary of the Closing Date) to list all of the Shares
  and Warrant Shares on such Trading Market. The Company further agrees, if the
  Company applies to have the Common Stock traded on any other Trading Market,
  it will include in such application all of the Shares and Warrant Shares, and
  will take such other action as is necessary to cause all of the Shares and Warrant
  Shares to be listed on such other Trading Market as promptly as possible. The
  Company will take all action reasonably necessary to continue the listing and
  trading of its Common Stock on a Trading Market and will comply in all respects
  with the Company's reporting, filing and other obligations under the bylaws
  or rules of the Trading Market. 

                     4.12                Equal
  Treatment of Purchasers. No consideration shall be offered or paid to any
  person to amend or consent to a waiver or modification of any provision of any
  of the Transaction Documents unless the same consideration is also offered to
  all of the parties to the Transaction Documents. For clarification purposes,
  this provision constitutes a separate right granted to each Purchaser by the
  Company and negotiated separately by each Purchaser, and is intended to treat
  for the Company the Purchasers as a class and shall not in any way be construed
  as the Purchasers acting in concert or as a group with respect to the purchase,
  disposition or voting of Securities or otherwise. 

                     4.13                Participation
  in Future Financing. From the date hereof until 12 months after the Effective
  Date, upon any financing by the Company of its Common Stock or Common Stock
  Equivalents (a "Subsequent Financing"), each Purchaser shall have the
  right to participate in up to 100% of such Subsequent Financing (the "Participation
  Maximum"). At least 5 Trading Days prior to the closing of the Subsequent
  Financing, the Company shall deliver to each Purchaser a written notice of its
  intention to effect a Subsequent Financing ("Pre-Notice"), which Pre-Notice
  shall ask such Purchaser if it wants to review the details of such financing
  (such additional notice, a "Subsequent Financing Notice"). Upon the request
  of a Purchaser, and only upon a request by such Purchaser, for a Subsequent
  Financing Notice, the Company shall promptly, but no later than 1 Trading Day
  after such request, deliver a Subsequent Financing Notice to such Purchaser.
  The Subsequent Financing Notice shall describe in reasonable detail the proposed
  terms of such Subsequent Financing, the amount of proceeds intended to be raised
  thereunder, the Person with whom such Subsequent Financing is proposed to be
  effected, and attached to which shall be a term sheet or similar document relating
  thereto. If by 6:30 p.m. (New York City time) on the second Trading Day after
  all of the Purchasers have received the Pre-Notice, notifications by the Purchasers
  of their willingness to participate in the Subsequent Financing (or to cause
  their designees to participate) is, in the aggregate, less than the total amount
  of the Subsequent Financing, then the Company may effect the remaining portion
  of such Subsequent Financing on the terms and to the Persons set forth in the
  Subsequent Financing Notice. If the Company receives no notice from a Purchaser
  as of such 2nd Trading Day, such Purchaser shall be deemed to have
  notified the Company that it does not elect to participate. The Company must
  provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers
  will again have the right of participation set forth above in this Section 4.13,
  if the Subsequent Financing subject to the initial Subsequent Financing Notice
  is not consummated for any reason on the terms set forth in such Subsequent
  Financing Notice within 60 Trading Days after the date of the initial Subsequent
  Financing Notice. In the event the Company receives responses to 

 22








 Subsequent Financing Notices from Purchasers seeking to purchase
  more than the aggregate amount of the Subsequent Financing, each such Purchaser
  shall have the right to purchase their Pro Rata Portion (as defined below) of
  the Participation Maximum. "Pro Rata Portion" is the ratio of (x) the
  Subscription Amount of Securities purchased by a participating Purchaser and
  (y) the sum of the aggregate Subscription Amount of all participating Purchasers.
  Notwithstanding the foregoing, this Section 4.13 shall not apply in respect
  of an Exempt Issuance. 

                     4.14                Subsequent
  Equity Sales. From the date hereof until 30 days after the Effective Date,
  neither the Company nor any Subsidiary shall issue shares of Common Stock or
  Common Stock Equivalents; provided, however, the 30 day period
  set forth in this Section 4.14 shall be extended for the number of Trading Days
  during such period in which (y) trading in the Common Stock is suspended by
  any Trading Market, or (z) following the Effective Date, the Registration Statement
  is not effective or the prospectus included in the Registration Statement may
  not be used by the Purchasers for the resale of the Shares and Warrant Shares.
  In addition to the limitations set forth herein, from the date hereof until
  30 days after the Effective Date, the Company shall be prohibited from effecting
  or entering into an agreement to effect any Subsequent Financing 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. Notwithstanding the foregoing, this Section 4.14 shall not apply in respect
  of an Exempt Issuance, except that no Variable Rate Transaction shall be an
  Exempt Issuance. 

                     4.15                Delivery
  of Securities After Closing. The Company shall deliver, or cause to be delivered,
  the respective Shares and Warrants purchased by each Purchaser to such Purchaser
  within 3 Trading Days of the Closing Date. 

 ARTICLE V. 

  MISCELLANEOUS 

                     5.1                
  Termination. This Agreement may be terminated by any Purchaser, by written
  notice to the other parties, if the Closing has not been consummated on or before
  November ___, 2004; provided that no such termination will affect the
  right of any party to sue for any breach by the other party (or parties). 

                     5.2                
  Fees and Expenses. The Company shall deliver, prior to the Closing, a
  completed and executed copy of the Closing Statement, attached hereto as Annex
  A. Except as otherwise set forth in this Agreement, each party shall pay the
  fees and expenses of its advisers, counsel, accountants and other experts, if
  any, and all other expenses incurred by such party incident to the negotiation,
  preparation, execution, delivery and performance of this Agreement. The 

 23








 Company shall pay all stamp and other taxes and duties levied
  in connection with the sale of the Securities. 

                     5.3                
  Entire Agreement. The Transaction Documents, together with the exhibits
  and schedules thereto, contain the entire understanding of the parties with
  respect to the subject matter hereof and supersede all prior agreements and
  understandings, oral or written, with respect to such matters, which the parties
  acknowledge have been merged into such documents, exhibits and schedules. 

                     5.4                
  Notices. Any and all notices or other communications or deliveries required
  or permitted to be provided hereunder shall be in writing and shall be deemed
  given and effective on the earliest of (a) the date of transmission, if such
  notice or communication is delivered via facsimile at the facsimile number set
  forth on the signature pages attached hereto prior to 6:30 p.m. (New York City
  time) on a Trading Day, (b) the next Trading Day after the date of transmission,
  if such notice or communication is delivered via facsimile at the facsimile
  number set forth on the signature pages attached hereto on a day that is not
  a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day,
  (c) the second Trading Day following the date of mailing, if sent by U.S. nationally
  recognized overnight courier service, or (d) upon actual receipt by the party
  to whom such notice is required to be given. The address for such notices and
  communications shall be as set forth on the signature pages attached hereto.


                     5.5                
  Amendments; Waivers. No provision of this Agreement may be waived or
  amended except in a written instrument signed, in the case of an amendment,
  by the Company and Purchasers holding at least 66% Shares and Warrant Shares
  (exercised and unexercised) at such time or, in the case of a waiver, by the
  party against whom enforcement of any such waiver is sought. No waiver of any
  default with respect to any provision, condition or requirement of this Agreement
  shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
  default or a waiver of any other provision, condition or requirement hereof,
  nor shall any delay or omission of either party to exercise any right hereunder
  in any manner impair the exercise of any such right. 

                     5.6                
  Construction. The headings herein are for convenience only, do not constitute
  a part of this Agreement and shall not be deemed to limit or affect any of the
  provisions hereof. 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. 

                     5.6                
  Successors and Assigns. This Agreement shall be binding upon and inure
  to the benefit of the parties and their successors and permitted assigns. The
  Company may not assign this Agreement or any rights or obligations hereunder
  without the prior written consent of each Purchaser. Any Purchaser may assign
  any or all of its rights under this Agreement to any Person to whom such Purchaser
  assigns or transfers any Securities, provided such transferee agrees in writing
  to be bound, with respect to the transferred Securities, by the provisions hereof
  that apply to the "Purchasers". 

                     5.7                
  No Third-Party Beneficiaries. This Agreement is intended for the benefit
  of the parties hereto and their respective successors and permitted assigns
  and is not for the benefit of, 

 24








 nor may any provision hereof be enforced by, any other Person,
  except as otherwise set forth in Section 4.9. 

                     5.8                
  Governing Law. All questions concerning the construction, validity, enforcement
  and interpretation of the Transaction Documents shall be governed by and construed
  and enforced in accordance with the internal laws of the State of New York,
  without regard to the principles of conflicts of law thereof. Each party agrees
  that all legal proceedings concerning the interpretations, enforcement and defense
  of the transactions contemplated by this Agreement and any other Transaction
  Documents (whether brought against a party hereto or its respective affiliates,
  directors, officers, shareholders, employees or agents) shall be commenced exclusively
  in the state and federal courts sitting in the City of New York. Each party
  hereby irrevocably submits to the exclusive jurisdiction of the state and federal
  courts sitting in the City of New York, borough of Manhattan for the adjudication
  of any dispute hereunder or in connection herewith or with any transaction contemplated
  hereby or discussed herein (including with respect to the enforcement of any
  of the Transaction Documents), and hereby irrevocably waives, and agrees not
  to assert in any suit, action or proceeding, any claim that it is not personally
  subject to the jurisdiction of any such court, that such suit, action or proceeding
  is improper or inconvenient venue for such proceeding. Each party hereby irrevocably
  waives personal service of process and consents to process being served in any
  such suit, action or proceeding by mailing a copy thereof via registered or
  certified mail or overnight delivery (with evidence of delivery) to such party
  at the address in effect for notices to it under this Agreement and agrees that
  such service shall constitute good and sufficient service of process and notice
  thereof. Nothing contained herein shall be deemed to limit in any way any right
  to serve process in any manner permitted by law. The parties hereby waive all
  rights to a trial by jury. If either party shall commence an action or proceeding
  to enforce any provisions of the Transaction Documents, then the prevailing
  party in such action or proceeding shall be reimbursed by the other party for
  its attorneys' fees and other costs and expenses incurred with the investigation,
  preparation and prosecution of such action or proceeding. 

                     5.9                
  Survival. The representations and warranties herein shall survive the
  Closing and delivery of the Shares and Warrant Shares for two years from the
  date hereof. 

                     5.10                Execution.
  This Agreement may be executed in two or more counterparts, all of which when
  taken together shall be considered one and the same agreement and shall become
  effective when counterparts have been signed by each party and delivered to
  the other party, it being understood that both parties need not sign the same
  counterpart. In the event that any signature is delivered by facsimile transmission,
  such signature shall create a valid and binding obligation of the party executing
  (or on whose behalf such signature is executed) with the same force and effect
  as if such facsimile signature page were an original thereof. 

                     5.11                Severability.
  If any provision of this Agreement is held to be invalid or unenforceable in
  any respect, the validity and enforceability of the remaining terms and provisions
  of this Agreement shall not in any way be affected or impaired thereby and the
  parties will attempt to agree upon a valid and enforceable provision that is
  a reasonable substitute therefor, and upon so agreeing, shall incorporate such
  substitute provision in this Agreement. 

 25





                     5.12                Rescission
  and Withdrawal Right. Notwithstanding anything to the contrary contained
  in (and without limiting any similar provisions of) the Transaction Documents,
  whenever any Purchaser exercises a right, election, demand or option under a
  Transaction Documents and the Company does not timely perform its related obligations
  within the periods therein provided, then such Purchaser may rescind or withdraw,
  in its sole discretion from time to time upon written notice to the Company,
  any relevant notice, demand or election in whole or in part without prejudice
  to its future actions and rights. 

                     5.13                Replacement
  of Securities. If any certificate or instrument evidencing any Securities
  is mutilated, lost, stolen or destroyed, the Company shall issue or cause to
  be issued in exchange and substitution for and upon cancellation thereof, or
  in lieu of and substitution therefor, a new certificate or instrument, but only
  upon receipt of evidence reasonably satisfactory to the Company of such loss,
  theft or destruction and customary and reasonable indemnity, if requested. The
  applicants for a new certificate or instrument under such circumstances shall
  also pay any reasonable third-party costs associated with the issuance of such
  replacement Securities. 

                     5.14                Remedies.
  In addition to being entitled to exercise all rights provided herein or granted
  by law, including recovery of damages, each of the Purchasers and the Company
  will be entitled to specific performance under the Transaction Documents. The
  parties agree that monetary damages may not be adequate compensation for any
  loss incurred by reason of any breach of obligations described in the foregoing
  sentence and hereby agrees to waive in any action for specific performance of
  any such obligation the defense that a remedy at law would be adequate. 

                     5.15                Payment
  Set Aside. To the extent that the Company makes a payment or payments to
  any Purchaser pursuant to any Transaction Documents or a Purchaser enforces
  or exercises its rights thereunder, and such payment or payments or the proceeds
  of such enforcement or exercise or any part thereof are subsequently invalidated,
  declared to be fraudulent or preferential, set aside, recovered from, disgorged
  by or are required to be refunded, repaid or otherwise restored to the Company,
  a trustee, receiver or any other person under any law (including, without limitation,
  any bankruptcy law, state or federal law, common law or equitable cause of action),
  then to the extent of any such restoration the obligation or part thereof originally
  intended to be satisfied shall be revived and continued in full force and effect
  as if such payment had not been made or such enforcement or setoff had not occurred.


                     5.16                Independent
  Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser
  under any Transaction Documents are several and not joint with the obligations
  of any other Purchaser, and no Purchaser shall be responsible in any way for
  the performance of the obligations of any other Purchaser under any Transaction
  Documents. Nothing contained herein or in any Transaction Documents, and no
  action taken by any Purchaser pursuant thereto, shall be deemed to constitute
  the Purchasers as a partnership, an association, a joint venture or any other
  kind of entity, or create a presumption that the Purchasers are in any way acting
  in concert or as a group with respect to such obligations or the transactions
  contemplated by the Transaction Documents. Each Purchaser shall be entitled
  to independently protect and enforce its rights, including without limitation,
  the rights arising out of this Agreement or out of the other Transaction Documents,
  and it shall not be necessary for any other Purchaser to be joined as an 

 26








 additional party in any proceeding for such purpose. Each
  Purchaser has been represented by its own separate legal counsel in their review
  and negotiation of the Transaction Documents. For reasons of administrative
  convenience only, Purchasers and their respective counsel have chosen to communicate
  with the Company through FW. FW does not represent all of the Purchasers but
  only Rodman & Renshaw, Inc., the placement agent in the transaction. The
  Company has elected to provide all Purchasers with the same terms and Transaction
  Documents for the convenience of the Company and not because it was required
  or requested to do so by the Purchasers. 

                     5.17                Liquidated
  Damages. The Company's obligations to pay any partial liquidated damages
  or other amounts owing under the Transaction Documents is a continuing obligation
  of the Company and shall not terminate until all unpaid partial liquidated damages
  have been paid notwithstanding the fact that the instrument or security pursuant
  to which such partial liquidated damages or other amounts are due and payable
  shall have been canceled. 


(Signature Page Follows) 


27





                     IN
  WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement
  to be duly executed by their respective authorized signatories as of the date
  first indicated above. 

	 CYBERKINETICS NEUROTECHNOLOGY  SYSTEMS,
      INC.  	 Address for Notice:  
	 	  	  
	 	  	 
	By:	 	  
	 	 Name:  	  
	 	 Title:  	  




 With a copy to (which shall not constitute notice): 

 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 

  SIGNATURE PAGES FOR PURCHASERS FOLLOW] 


28








 [PURCHASER SIGNATURE PAGES TO CYKN SECURITIES PURCHASE AGREEMENT]


                     IN
  WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
  to be duly executed by their respective authorized signatories as of the date
  first indicated above. 

	 Name of Investing Entity:  _____________________________________________________________________________________________________________________________
	 Signature of Authorized Signatory of Investing
      Entity:  ______________________________________________________________________________________________________
	 Name of Authorized Signatory:  ________________________________________________________________________________________________________________________
    
	 Title of Authorized Signatory:  _________________________________________________________________________________________________________________________
	 Email Address of Authorized Entity:_____________________________________________________________________________________________________________________ 
    


 Address for Notice of Investing Entity: 

 

 

 Address for Delivery of Securities for Investing Entity (if not same as above):


 

 

 Subscription Amount: 

  Shares: 

  Warrant Shares: 

  EIN Number: [PROVIDE THIS UNDER SEPARATE COVER] 

 [SIGNATURE PAGES CONTINUE] 

 29








 Annex A

 CLOSING STATEMENT 

 Pursuant to the attached Securities Purchase Agreement, dated
  as of the date hereto, the purchasers shall purchase up to $___________ of Common
  Stock and Warrants from Cyberkinetics Neurotechnology Systems, Inc., a Delaware
  corporation (the "Company"). All funds will be wired into a trust account
  maintained by ____________ , counsel to the Company. All funds will be disbursed
  in accordance with this Closing Statement.

 Disbursement Date: November ____, 2004

	 I.     PURCHASE PRICE 
    	  	  
	 	 	 
	 Gross Proceeds to be Received in Trust  	$ 	 
	 	 	 
	 II.    DISBURSEMENTS 
    	  	 
	  	$ 	 
	  	$ 	 
	  	$ 	 
	  	$ 	 
	  	$ 	 
	 	 	 
	 Total Amount Disbursed:  	$ 	 
	  	 	 
	 	 	 
	 	 	 
	 WIRE INSTRUCTIONS :  	  	  
	 	 	 
	 	 	 
	 To:  ______________________________________________________________________	  	  
	  	 	 
	  	 	 
	 To:  ______________________________________________________________________	  	  



30





 Schedule of Purchasers

	 Purchaser's Name  	 Share Amount  	 Warrant Amount  	 Purchase Amount  
	 American High Growth Equities  

      Retirement Trust  	 166,667.00  	 55,000.00  	 $500,000.00  
	 Andesite Life Sciences I, L.P.  	 30,000.00  	 9,900.00  	 $90,000.00  
	 Andesite Life Sciences II, L.P. 
    	 16,000.00  	 5,280.00  	 $48,000.00  
	 Andesite Life Sciences, LTD  	 54,000.00  	 17,820.00  	 $162,000.00  
	 Basso Multi-Strategy Holding Fund Ltd. 
    	 65,000.00  	 21,450.00  	 $195,000.00  
	 Basso Private Opportunity Holding Fund Ltd. 
    	 18,333.00  	 6,050.00  	 $55,000.00  
	 Clarion Capital Corporation  	 83,333.00  	 27,500.00  	 $249,999.00  
	 Cranshire Capital, L.P.  	 83,333.00  	 27,500.00  	 $249,999.00  
	 Crescent International Ltd.  	 69,000.00  	 22,770.00  	 $207,000.00  
	 Imre Eszenyi  	 16,500.00  	 5,445.00  	 $49,500.00  
	 Omicron Master Trust  	 166,666.00  	 55,000.00  	 $499,998.00  
	 Panacea Fund, LLC  	 166,667.00  	 55,000.00  	 $500,001.00  
	 SIBEX Capital Fund Inc  	 40,584.00  	 13,393.00  	 $121,749.00  
	 Smithfield Fiduciary LLC  	 100,000.00  	 33,000.00  	 $300,000.00  
	 Spectra Capital Management, LLC 
    	 100,000.00  	 33,000.00  	 $300,000.00  
	 SRG Capital LLC  	 66,667.00  	 22,000.00  	 $200,000.00  
	 TCMP3 Partners  	 33,333.00  	 11,000.00  	 $100,000.00  
	 Madeline L. Gregory And  
 Caleb
      Loring III, Trustees  	 40,000.00  	 13,200.00  	 $120,000.00  
	 Ursus Capital, L.P.  	 68,000.00  	 22,440.00  	 $204,000.00  
	 Ursus Offshore Ltd.  	 32,000.00  	 10,560.00  	 $96,000.00  
	 Whalehaven Capital Fund Limited 
    	 83,333.00  	 27,500.00  	 $250,000.00  
	 The Global Life Science  
 Ventures
      Fund II L.P.  	 45,500.00  	 15,015.00  	 $136,500.00  
	 The Global Life Science  
 Ventures
      GMBH  	 58,500.00  	 19,305.00  	 $175,500.00  
	 mRNA Fund II L.P.  	 3,164.00  	 1,044.00  	 $9,492.00  
	 NeuroVentures Fund, LP  	 25,000.00  	 8,250.00  	 $75,000.00  
	 GDH Partners, LP  	 53,083.00  	 17,517.00  	 $159,251.00  
	 Oxford Bioscience Partners IV L.P. 
    	 315,337.00  	 104,061.00  	 $946,011.00  
	

        TOTAL:  
	 2,000,000.00 
    	 660,000.00  	 $6,000,000