SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT
      (the
      "Agreement"),
      dated
      as of December 31, 2007, by and among RxElite, Inc., a Delaware
      corporation, with headquarters located at 1404 North Main, Suite 200, Meridian,
      Idaho 83642 (the "Company"),
      and
      the investors listed on the Schedule of Buyers attached hereto (individually,
      a
      "Buyer"
      and
      collectively, the "Buyers").

     

    WHEREAS:

     

    A. The
      Company and each Buyer are executing and delivering this Agreement in reliance
      upon the exemption from securities registration afforded by Section 4(2) of
      the
      Securities Act of 1933, as amended (the "1933
      Act"),
      and
      Rule 506 of Regulation D ("Regulation D")
      as
      promulgated by the United States Securities and Exchange Commission (the
      "SEC")
      under
      the 1933 Act.

     

    B. The
      Company has authorized a new series of senior secured convertible notes of
      the
      Company which notes shall be convertible into the Company's common stock, par
      value $0.001 per share (the "Common
      Stock"),
      in
      accordance with the terms of the Notes (as defined below).

     

    C. Each
      Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
      conditions stated in this Agreement, (i) that aggregate principal amount of
      the
      Notes, in substantially the form attached hereto as Exhibit
      A
      (the
      "Notes"),
      set
      forth opposite such Buyer's name in column (3) on the Schedule of Buyers
      attached hereto (which aggregate amount for all Buyers shall be $10,500,000)
      (as
      converted, collectively, the "Conversion
      Shares"),
      (ii)
      that aggregate number of shares (the "Common
      Shares")
      of the
      Common Stock, set forth opposite such Buyer's name in column (4) on the Schedule
      of Buyers (which aggregate amount for all Buyers shall be five million five
      hundred ninety four thousand thirty three (5,594,033)), (iii) warrants, in
      substantially the form attached hereto as Exhibit
      B-1
      (the
      "Series
      A Warrants"),
      to
      acquire up to that number of shares of Common Stock set forth opposite such
      Buyer's name in column (5) on the Schedule of Buyers (as exercised,
      collectively, the "Series
      A Warrant
      Shares")
      and
      (iv) warrants, in substantially the form attached hereto as Exhibit
      B-2
      (the
      "Series
      B Warrants"
      and
      collectively with the Series A Warrants, the "Warrants")),
      to
      acquire up to that number of shares of Common Stock set forth opposite such
      Buyer's name in column (6) on the Schedule of Buyers (as exercised,
      collectively, the "Series
      B Warrant
      Shares"
      and
      collectively with the Series A Warrant Shares, the "Warrants
      Shares").

     

    D. Contemporaneously
      with the execution and delivery of this Agreement, the parties hereto are
      executing and delivering a Registration Rights Agreement, substantially in
      the
      form attached hereto as Exhibit
      C
      (the
      "Registration
      Rights Agreement"),
      pursuant to which the Company has agreed to provide certain registration rights
      with respect to the Registrable Securities (as defined in the Registration
      Rights Agreement) under the 1933 Act and the rules and regulations promulgated
      thereunder, and applicable state securities laws.

     

    E. The
      Notes, the Conversion Shares, the Common Shares, the Warrants and the Warrant
      Shares collectively are referred to herein as the "Securities".

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    F. The
      Notes
      will rank senior to all outstanding and future indebtedness of the Company
      and
      will be secured by a first priority perfected security interest in all of the
      assets of the Company and the stock, equity interests and assets of each of
      the
      Company's subsidiaries, as evidenced by (i) pledge agreement, in the form
      attached hereto as Exhibit
      D
      (as
      amended or modified from time to time in accordance with its terms, the
      "Pledge
      Agreement"),
      (ii)
      a security agreement, in the form attached hereto as Exhibit
      E
      (as
      amended or modified from time to time in accordance with its terms, the
      "Security
      Agreement"),
      and
      (iii) the guaranties of the subsidiaries of the Company in the form attached
      hereto as Exhibit
      F
      (as
      amended or modified from time to time in accordance with its terms, the
      "Guaranty"
      and,
      together with the Pledge Agreement, the Security Agreement and any ancillary
      documents related thereto, collectively the "Security
      Documents").

     

    NOW,
      THEREFORE,
      the
      Company and each Buyer hereby agree as follows:

     

    1. PURCHASE
      AND SALE OF NOTES AND WARRANTS.

     

    (a) Purchase
      of Notes and Warrants.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
      7
      below, the Company shall issue and sell to each Buyer, and each Buyer severally,
      but not jointly, agrees to purchase from the Company on the Closing Date (as
      defined below), (w) a principal amount of Notes as is set forth opposite such
      Buyer's name in column (3) on the Schedule of Buyers, (x) the number of Common
      Shares as is set forth opposite such Buyer's name in column (4) on the Schedule
      of Buyers, (y) Series A Warrants to acquire up to that number of Warrant Shares
      as is set forth opposite such Buyer's name in column (5) on the Schedule of
      Buyers and (z) Series B Warrants to acquire up to that number of Warrant Shares
      as is set forth opposite such Buyer's name in column (6) on the Schedule of
      Buyers (the "Closing").

     

    (b) Closing.
      The
      date and time of the Closing (the "Closing
      Date")
      shall
      be 10:00 a.m., New York City time, on the date hereof (or such later date as
      is
      mutually agreed to by the Company and each Buyer) after notification of
      satisfaction (or waiver) of the conditions to the Closing set forth in Sections
      6 and 7 below at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue,
      New York, New York 10022.

     

    (c) Purchase
      Price.

     

    (i) The
      aggregate purchase price for the Notes, the Common Shares and the Warrants
      to be
      purchased by each such Buyer at the Closing (the "Purchase
      Price")
      shall
      be the amount set forth opposite each Buyer's name in column (7) of the Schedule
      of Buyers. Each Buyer shall pay $1,000 for each $1,000 of principal amount
      of
      Notes and related Common Shares and Warrants to be purchased by such Buyer
      at
      the Closing.

     

    (ii) The
      Buyers and the Company agree that the Notes, the Warrants and the Common Shares
      constitute an "investment unit" for purposes of Section 1273(c)(2) of the
      Internal Revenue Code of 1986, as amended (the "Code").
      The
      Buyers and the Company mutually agree that the allocation of the issue price
      of
      such investment unit between the Notes, the Warrants and the Common Shares
      in
      accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section
      1.1273-2(h) shall be (i) an amount equal to the black scholes value allocated
      to
      the Warrants, (ii) an aggregate amount of $0.85 per share allocated to the
      Common Shares and (iii) the balance of the Purchase Price allocated to the
      Notes.

     

    
      
        
        

      

      
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    (d) Form
      of Payment.
      On the
      Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for
      the
      Notes, the Common Shares and the Warrants to be issued and sold to such Buyer
      at
      the Closing, by wire transfer of immediately available funds in accordance
      with
      the Company's written wire instructions and (ii) the Company shall deliver
      to each Buyer the Notes (allocated in the principal amounts as such Buyer shall
      request) which such Buyer is then purchasing hereunder along with the Common
      Shares (allocated in the amounts as such Buyer shall request) and Warrants
      (allocated in the amounts as such Buyer shall request) which such Buyer is
      purchasing, in each case duly executed on behalf of the Company and registered
      in the name of such Buyer or its designee (so long as any such designee is
      an
      "accredited investor" as that term is defined in Rule 501(d) of Regulation
      D).

     

    2. BUYER'S
      REPRESENTATIONS AND WARRANTIES.
      Each
      Buyer, severally and not jointly, represents and warrants with respect to only
      itself that:

     

    (a) No
      Public Sale or Distribution.
      Such
      Buyer is (i) acquiring the Notes, the Common Shares and the Warrants and (ii)
      upon conversion of the Notes and exercise of the Warrants (other than pursuant
      to a Cashless Exercise (as defined in the Warrants)) will acquire the Conversion
      Shares issuable upon conversion of the Notes and the Warrant Shares issuable
      upon exercise of the Warrants, for its own account and not with a view towards,
      or for resale in connection with, the public sale or distribution thereof,
      except pursuant to sales registered or exempted under the 1933 Act; provided,
      however,
      that by
      making the representations herein, such Buyer does not agree to hold any of
      the
      Securities for any minimum or other specific term and reserves the right to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act. Such Buyer is
      acquiring the Securities hereunder in the ordinary course of its business.
      Such
      Buyer does not presently have any agreement or understanding, directly or
      indirectly, with any Person to distribute any of the Securities.

     

    (b) Accredited
      Investor Status.
      Such
      Buyer is an "accredited investor" as that term is defined in Rule 501(a) of
      Regulation D.

     

    (c) Reliance
      on Exemptions.
      Such
      Buyer understands that the Securities are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying in
      part
      upon the truth and accuracy of, and such Buyer's compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire the
      Securities.

     

    (d) Information.
      Such
      Buyer and its advisors, if any, have been furnished with all materials relating
      to the business, finances and operations of the Company and materials relating
      to the offer and sale of the Securities which have been requested by such Buyer.
      Such Buyer and its advisors, if any, have been afforded the opportunity to
      ask
      questions of the Company. Neither such inquiries nor any other due diligence
      investigations conducted by such Buyer or its advisors, if any, or its
      representatives shall modify, amend or affect such Buyer's right to rely on
      the
      Company's representations and warranties contained herein. Such Buyer
      understands that its investment in the Securities involves a high degree of
      risk. Such Buyer has sought such accounting, legal and tax advice as it has
      considered necessary to make an informed investment decision with respect to
      its
      acquisition of the Securities.

     

    
      
        
        

      

      
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    (e) No
      Governmental Review.
      Such
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities or the fairness or suitability of the investment
      in the Securities nor have such authorities passed upon or endorsed the merits
      of the offering of the Securities.

     

    (f) Transfer
      or Resale.
      Such
      Buyer understands that except as provided in the Registration Rights Agreement:
      (i) the Securities have not been and are not being registered under the 1933
      Act
      or any state securities laws, and may not be offered for sale, sold, assigned
      or
      transferred unless (A) subsequently registered thereunder, (B) such Buyer shall
      have delivered to the Company an opinion of counsel, in a generally acceptable
      form, to the effect that such Securities to be sold, assigned or transferred
      may
      be sold, assigned or transferred pursuant to an exemption from such
      registration, or (C) such Buyer provides the Company with reasonable assurance
      that such Securities can be sold, assigned or transferred pursuant to Rule
      144
      or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule
      thereto) (collectively, "Rule
      144");
      (ii)
      any sale of the Securities made in reliance on Rule 144 may be made only in
      accordance with the terms of Rule 144 and further, if Rule 144 is not
      applicable, any resale of the Securities under circumstances in which the seller
      (or the Person (as defined in Section 3(s)) through whom the sale is made)
      may
      be deemed to be an underwriter (as that term is defined in the 1933 Act) may
      require compliance with some other exemption under the 1933 Act or the rules
      and
      regulations of the SEC thereunder; and (iii) neither the Company nor any other
      Person is under any obligation to register the Securities under the 1933 Act
      or
      any state securities laws or to comply with the terms and conditions of any
      exemption thereunder. The Securities may be pledged in connection with a bona
      fide margin account or other loan or financing arrangement secured by the
      Securities and such pledge of Securities shall not be deemed to be a transfer,
      sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
      of Securities shall be required to provide the Company with any notice thereof
      or otherwise make any delivery to the Company pursuant to this Agreement or
      any
      other Transaction Document (as defined in Section 3(b)), including, without
      limitation, this Section 2(f).

     

    (g) Legends.
      Such
      Buyer understands that the certificates or other instruments representing the
      Notes and the Warrants and, until such time as the resale of the Conversion
      Shares, the Common Shares and the Warrant Shares have been registered under
      the
      1933 Act as contemplated by the Registration Rights Agreement, the stock
      certificates representing the Conversion Shares, the Common Shares and the
      Warrant Shares, except as set forth below, shall bear any legend as required
      by
      the "blue sky" laws of any state and a restrictive legend in substantially
      the
      following form (and a stop-transfer order may be placed against transfer of
      such
      stock certificates):

     

    
      
        
        

      

      
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    [NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE]
      HAVE
      BEEN][THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN]
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
      SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
      OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
      THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
      OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
      UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER
      SAID
      ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
      BY THE SECURITIES.

     

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities upon which
      it is
      stamped or issue to such holder by electronic delivery at the applicable balance
      account at DTC (as defined below), unless otherwise required by state securities
      laws, (i) such Securities are registered for resale under the 1933 Act, (ii)
      in
      connection with a sale, assignment or other transfer, such holder provides
      the
      Company with an opinion of counsel, in a generally acceptable form, to the
      effect that such sale, assignment or transfer of the Securities may be made
      without registration under the applicable requirements of the 1933 Act, or
      (iii
      such holder provides the Company with reasonable assurance that the Securities
      can be sold, assigned or transferred pursuant to Rule 144 or Rule
      144A.

     

    (h) Validity;
      Enforcement.
      This
      Agreement, the Registration Rights Agreement and the Security Documents to
      which
      such Buyer is a party have been duly and validly authorized, executed and
      delivered on behalf of such Buyer and shall constitute the legal, valid and
      binding obligations of such Buyer enforceable against such Buyer in accordance
      with their respective terms, except as such enforceability may be limited by
      general principles of equity or to applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors' rights and
      remedies.

     

    (i) No
      Conflicts.
      The
      execution, delivery and performance by such Buyer of this Agreement, the
      Registration Rights Agreement and the Security Documents to which such Buyer
      is
      a party and the consummation by such Buyer of the transactions contemplated
      hereby and thereby will not (i) result in a violation of the organizational
      documents of such Buyer or (ii) conflict with, or constitute a default (or
      an
      event which with notice or lapse of time or both would become a default) under,
      or give to others any rights of termination, amendment, acceleration or
      cancellation of, any agreement, indenture or instrument to which such Buyer
      is a
      party, or (iii) result in a violation of any law, rule, regulation, order,
      judgment or decree (including federal and state securities laws) applicable
      to
      such Buyer, except in the case of clauses (ii) and (iii) above, for such
      conflicts, defaults, rights or violations which would not, individually or
      in
      the aggregate, reasonably be expected to have a material adverse effect on
      the
      ability of such Buyer to perform its obligations hereunder.

     

    
      
        
        

      

      
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    (j) Residency.
      Such
      Buyer is a resident of that jurisdiction specified below its address on the
      Schedule of Buyers.

     

    (k) Organization
      and Standing of the Buyers.
      If the
      Buyer is an entity, such Buyer is a corporation, limited liability company
      or
      partnership duly incorporated or organized, validly existing and in good
      standing under the laws of the jurisdiction of its incorporation or
      organization.

     

    (l) No
      General Solicitation.
      Each
      Buyer acknowledges that the Notes, the Common Shares and the Warrants were
      not
      offered to such Buyer by means (i) any advertisement, article, notice or other
      communication published in any newspaper, magazine, or similar media, or
      broadcast over television or radio or (ii) any seminar or meeting to which
      such
      Buyer was invited by any of the foregoing means of communications.

     

    (m) Trading
      Activities.
      Other
      than consummating the transactions contemplated hereunder, such Buyer has not
      directly or indirectly, nor has any person acting on behalf of or pursuant
      to
      any understanding with such Buyer, executed any purchases or sales, including
      short sales, of the securities of the Company during the period commencing
      from
      the time that such Buyer first received from the Company or any other person
      (i)
      a term sheet (written or oral) or (ii) a draft of any Transaction Document,
      in
      each case setting forth the material terms of the transactions contemplated
      hereunder, until the date hereof.

     

    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants to each of the Buyers that:

     

    (a) Organization
      and Qualification.
      Each of
      the Company and its "Subsidiaries"
      (which
      for purposes of this Agreement means any entity in which the Company directly
      or
      indirectly, owns any of the capital stock or holds an equity or similar
      interests) are entities duly organized and validly existing in good standing
      under the laws of the jurisdiction in which they are formed, and have the
      requisite power and authorization to own their properties and to carry on their
      business as now being conducted. Each of the Company and its Subsidiaries is
      duly qualified as a foreign entity to do business and is in good standing in
      every jurisdiction in which its ownership of property or the nature of the
      business conducted by it makes such qualification necessary, except to the
      extent that the failure to be so qualified or be in good standing would not
      have
      a Material Adverse Effect. As used in this Agreement, "Material
      Adverse Effect"
      means
      any material adverse effect on the business, properties, assets, operations,
      results of operations, condition (financial or otherwise) or prospects of the
      Company and its Subsidiaries, taken as a whole, or on the transactions
      contemplated hereby and the other Transaction Documents or by the agreements
      and
      instruments to be entered into in connection herewith or therewith, or on the
      authority or ability of the Company to perform its obligations under the
      Transaction Documents (as defined below). The Company has no Subsidiaries except
      as set forth on Schedule
      3(a).

     

    
      
        
        

      

      
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    (b) Authorization;
      Enforcement; Validity.
      The
      Company has the requisite power and authority to enter into and perform its
      obligations under this Agreement, the Notes, the Registration Rights Agreement,
      the Security Documents, the Irrevocable Transfer Agent Instructions (as defined
      in Section 5(b)), the Warrants, and each of the other agreements entered into
      by
      the parties hereto in connection with the transactions contemplated by this
      Agreement (collectively, the "Transaction
      Documents")
      and to
      issue the Securities in accordance with the terms hereof and thereof. The
      execution and delivery of the Transaction Documents by the Company and the
      consummation by the Company of the transactions contemplated hereby and thereby,
      including, without limitation, the issuance of the Notes, the Common Shares
      and
      the Warrants, the reservation for issuance and the issuance of the Conversion
      Shares issuable
      upon conversion of the Notes, the reservation for issuance and issuance of
      Warrant Shares issuable upon exercise of the Warrants, and the granting of
      a
      security interest in the Collateral (as defined in the Security Documents)
      have
      been duly authorized by the Company's Board of Directors and (other than (i)
      the
      filing of appropriate UCC financing statements with the appropriate states
      and
      other authorities pursuant to the Security Agreement, and (ii) the filing with
      the SEC of a Form D, one or more Current Reports on Form 8-K as
      contemplated by Section 4(i) or as otherwise required by applicable law after
      the Closing Date and one or more Registration Statements in accordance with
      the
      requirements of the Registration Rights Agreement) no further filing, consent,
      or authorization is required by the Company, its Board of Directors or its
      stockholders. This Agreement and the other Transaction Documents of even date
      herewith have been duly executed and delivered by the Company, and constitute
      the legal, valid and binding obligations of the Company, enforceable against
      the
      Company in accordance with their respective terms, except as such enforceability
      may be limited by general principles of equity or applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation or similar laws relating
      to,
      or affecting generally, the enforcement of applicable creditors' rights and
      remedies.

     

    (c) Issuance
      of Securities.
      The
      issuance of the Notes, the Common Shares and the Warrants are duly authorized
      and are free from all taxes, liens and charges with respect to the issue
      thereof. As of the applicable Closing, a number of shares of Common Stock shall
      have been duly authorized and reserved for issuance which equals or exceeds
      130%
      of the aggregate of the maximum number of shares of Common Stock (i) issuable
      upon conversion of the Notes, and (ii) upon exercise of the Warrants, without
      taking into account any limitations on the Conversion of the Notes or exercise
      of the Warrants set forth in the Notes and Warrants, respectively). Upon
      conversion or payment in accordance with the Notes or exercise in accordance
      with the Warrants, as the case may be, the Conversion Shares and the Warrant
      Shares, respectively, will be validly issued, fully paid and nonassessable
      and
      free from all preemptive or similar rights, taxes, liens and charges with
      respect to the issue thereof, with the holders being entitled to all rights
      accorded to a holder of Common Stock. The offer and issuance by the Company
      of
      the Securities is exempt from registration under the 1933 Act.

     

    
      
        
        

      

      
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    (d) No
      Conflicts.
      Notwithstanding anything to the contrary contained in Schedule
      3(d),
      the
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby (including, without limitation, the issuance of the Notes, the Common
      Shares and the Warrants, the granting of a security interest in the Collateral
      and reservation for issuance and issuance of the Conversion Shares and the
      Warrant Shares) will not (i) result in a violation of any certificate of
      incorporation, certificate of formation, any certificate of designations or
      other constituent documents of the Company or any of its Subsidiaries, any
      capital stock of the Company or any of its Subsidiaries or the bylaws of the
      Company or any of its Subsidiaries or (ii) conflict with, or constitute a
      default (or an event which with notice or lapse of time or both would become
      a
      default) in any respect under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which the Company or any of its Subsidiaries is a party
      (including, without limitation, the Conversion Agreement specified in
Schedule
      3(d)),
      or
      (iii) result in a violation of any law, rule, regulation, order, judgment or
      decree (including foreign, federal and state securities laws and regulations
      and
      the rules and regulations of the OTC Bulletin Board (the "Principal
      Market"))
      applicable to the Company or any of its Subsidiaries or by which any property
      or
      asset of the Company or any of its Subsidiaries is bound or affected, except
      in
      the cases of clauses (ii) and (iii) above, for such conflicts, defaults, rights
      or violations which would not, individually or in the aggregate, reasonably
      be
      expected to have a Material Adverse Effect.

     

    (e) Consents.
      Neither
      the Company nor any of its Subsidiaries is required to obtain any consent,
      authorization or order of, or make any filing or registration with, any court,
      governmental agency or any regulatory or self-regulatory agency or any other
      Person in order for it to execute, deliver or perform any of its obligations
      under or contemplated by the Transaction Documents, in each case in accordance
      with the terms hereof or thereof. All consents, authorizations, orders, filings
      and registrations which the Company is required to obtain pursuant to the
      preceding sentence have been obtained or effected on or prior to the Closing
      Date, and the Company and its Subsidiaries are unaware of any facts or
      circumstances which might prevent the Company from obtaining or effecting any
      of
      the registration, application or filings pursuant to the preceding sentence.
      The
      Company is not in violation of the listing requirements of the Principal Market
      and has no knowledge of any facts which would reasonably lead to delisting
      or
      suspension of the Common Stock in the foreseeable future.

     

    (f) Acknowledgment
      Regarding Buyer's Purchase of Securities.
      The
      Company acknowledges and agrees that each Buyer is acting solely in the capacity
      of an arm's-length purchaser with respect to the Transaction Documents and
      the
      transactions contemplated hereby and thereby and that no Buyer is (i) an officer
      or director of the Company, (ii) to the Company's knowledge, an "affiliate"
      of
      the Company or any of its Subsidiaries (as defined in Rule 144) or (iii) to
      the
      knowledge of the Company, a "beneficial owner" of more than 10% of the shares
      of
      Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange
      Act of 1934, as amended (the "1934
      Act")).
      The
      Company further acknowledges that no Buyer is acting as a financial advisor
      or
      fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
      with respect to the Transaction Documents and the transactions contemplated
      hereby and thereby, and any advice given by a Buyer or any of its
      representatives or agents in connection with the Transaction Documents and
      the
      transactions contemplated hereby and thereby is merely incidental to such
      Buyer's purchase of the Securities. The Company further represents to each
      Buyer
      that the Company's decision to enter into the Transaction Documents has been
      based solely on the independent evaluation by the Company and its
      representatives.

     

    
      
        
        

      

      
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    (g) No
      General Solicitation; Fees.
      Neither
      the Company, nor any of its Subsidiaries or affiliates, nor any Person acting
      on
      its or their behalf, has engaged in any form of general solicitation or general
      advertising (within the meaning of Regulation D) in connection with the offer
      or
      sale of the Securities. The Company shall be responsible for the payment of
      any
      placement agent's fee, finder's fees, financial advisory fees, or brokers'
      commissions (other than for persons engaged by any Buyer or its investment
      advisor) relating to or arising out of the transactions contemplated hereby.
      The
      Company shall pay, and hold each Buyer harmless against, any liability, loss
      or
      expense (including, without limitation, attorney's fees and out-of-pocket
      expenses) arising in connection with any such claim. The Company has not engaged
      any placement agent, finder or other agent in connection with the sale of the
      Securities.

     

    (h) No
      Integrated Offering.
      None of
      the Company, its Subsidiaries, any of their affiliates, and any Person acting
      on
      their behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances that
      would require registration of any of the Securities under the 1933 Act or cause
      this offering of the Securities to be integrated with prior offerings by the
      Company for purposes of the 1933 Act or any applicable stockholder 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. None of the Company, its Subsidiaries, their
      affiliates and any Person acting on their behalf will take any action or steps
      referred to in the preceding sentence that would require registration of any
      of
      the Securities under the 1933 Act or cause the offering of the Securities to
      be
      integrated with other offerings.

     

    (i) Dilutive
      Effect.
      The
      Company understands and acknowledges that the number of Conversion Shares
      issuable upon conversion of the Notes and the Warrant Shares issuable upon
      exercise of the Warrants will increase in certain circumstances. The Company
      further acknowledges that its obligation to issue Conversion Shares upon
      conversion of the Notes in accordance with this Agreement and the Notes and
      its
      obligation to issue the Warrant Shares upon exercise of the Warrants in
      accordance with this Agreement and the Warrants in each case, is absolute and
      unconditional regardless of the dilutive effect that such issuance may have
      on
      the ownership interests of other stockholders of the Company.

     

    (j) Application
      of Takeover Protections; Rights Agreement.
      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 Certificate of Incorporation
      (as defined in Section 3(r)) or the laws of the jurisdiction of its formation
      which is or could become applicable to any Buyer as a result of the transactions
      contemplated by this Agreement, including, without limitation, the Company's
      issuance of the Securities and any Buyer's ownership of the Securities. The
      Company has not adopted a stockholder rights plan or similar arrangement
      relating to accumulations of beneficial ownership of Common Stock or a change
      in
      control of the Company.

     

    
      
        
        

      

      
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    (k) SEC
      Documents; Financial Statements.
      Except
      as disclosed in Schedule
      3(k),
      since
      July 13, 2007, the Company has filed all reports, schedules, forms, statements
      and other documents required to be filed by it with the SEC pursuant to the
      reporting requirements of the 1934 Act (all of the foregoing filed prior to
      the
      date hereof and all exhibits included therein and financial statements, notes
      and schedules thereto and documents incorporated by reference therein being
      hereinafter referred to as the "SEC
      Documents").
      The
      Company has delivered to the Buyers or their respective representatives true,
      correct and complete copies of the SEC Documents not available on the EDGAR
      system. Except as disclosed in Schedule
      3(k)
      as of
      their respective dates, the SEC Documents complied in all material respects
      with
      the requirements of the 1934 Act and the rules and regulations of the SEC
      promulgated thereunder applicable to the SEC Documents, and none of the SEC
      Documents, at the time they were filed with the SEC, contained any untrue
      statement of a material fact or omitted to state a material fact required to
      be
      stated therein or necessary in order to make the statements therein, in the
      light of the circumstances under which they were made, not misleading. Except
      as
      disclosed in Schedule
      3(k),
      as of
      their respective dates, the financial statements of the Company included in
      the
      SEC Documents complied as to form in all material respects with applicable
      accounting requirements and the published rules and regulations of the SEC
      with
      respect thereto. Such financial statements have been prepared in accordance
      with
      generally accepted accounting principles, consistently applied, during the
      periods involved (except (i) as may be otherwise indicated in such financial
      statements or the notes thereto, or (ii) in the case of unaudited interim
      statements, to the extent they may exclude footnotes or may be condensed or
      summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of its
      operations and cash flows for the periods then ended (subject, in the case
      of
      unaudited statements, to normal year-end audit adjustments). No other
      information provided by or on behalf of the Company to the Buyers which is
      not
      included in the SEC Documents, including, without limitation, information
      referred to in Section 2(d) of this Agreement, contains any untrue statement
      of
      a material fact or omits to state any material fact necessary in order to make
      the statements therein, in the light of the circumstance under which they are
      or
      were made, not misleading.

     

    (l) Absence
      of Certain Changes.
      Except
      as disclosed in Schedule
      3(l),
      since
      December 31, 2006, there has been no material adverse change and no material
      adverse development in the business, properties, operations, condition
      (financial or otherwise), results of operations or prospects of the Company
      or
      its Subsidiaries. Except as disclosed in Schedule
      3(l),
      since
      December 31, 2006, the Company has not (i) declared or paid any dividends,
      (ii)
      sold any assets, individually or in the aggregate, in excess of $100,000 outside
      of the ordinary course of business or (iii) had capital expenditures,
      individually or in the aggregate, in excess of $100,000. Neither the Company
      nor
      any of its Subsidiaries has taken any steps to seek protection pursuant to
      any
      bankruptcy law nor does the Company have any knowledge or reason to believe
      that
      its creditors intend to initiate involuntary bankruptcy proceedings or any
      actual knowledge of any fact which would reasonably lead a creditor to do so.
      The Company is not as of the date hereof, and after giving effect to the
      transactions contemplated hereby to occur at the Closing, will not be Insolvent
      (as defined below). For purposes of this Section 3(l), "Insolvent"
      means,
      with respect to any Person, (i) the present fair saleable value of such Person's
      assets is less than the amount required to pay such Person's total Indebtedness
      (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and
      liabilities, subordinated, contingent or otherwise, as such debts and
      liabilities become absolute and matured, (iii) the Company intends to incur
      or
      believes that it will incur debts that would be beyond its ability to pay as
      such debts mature or (iv) such Person has unreasonably small capital with which
      to conduct the business in which it is engaged as such business is now conducted
      and is proposed to be conducted.

     

    (m) No
      Undisclosed Events, Liabilities, Developments or Circumstances.
      Except
      as contemplated by this Agreement or the Transactions Documents, no event,
      liability, development or circumstance has occurred or currently exists, or
      is
      contemplated to occur with respect to the Company, its Subsidiaries or their
      respective business, properties, prospects, operations or financial condition,
      that would be required to be disclosed by the Company under applicable
      securities laws on a registration statement on Form SB-2 filed with the SEC
      relating to an issuance and sale by the Company of its Common Stock and which
      has not been publicly announced.

     

    
      
        
        

      

      
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    (n) Conduct
      of Business; Regulatory Permits.
      Neither
      the Company nor its Subsidiaries is in violation of any term of or in default
      under any certificate of designations of any outstanding series of preferred
      stock of the Company, its Certificate of Incorporation or Bylaws or their
      organizational charter or certificate of incorporation or bylaws, respectively.
      Neither the Company nor any of its Subsidiaries is in violation of any judgment,
      decree or order or any statute, ordinance, rule or regulation applicable to
      the
      Company or its Subsidiaries, and neither the Company nor any of its Subsidiaries
      will conduct its business in violation of any of the foregoing, except for
      possible violations which would not, individually or in the aggregate, have
      a
      Material Adverse Effect. Without limiting the generality of the foregoing,
      the
      Company is not in violation of any of the rules, regulations or requirements
      of
      the Principal Market and has no knowledge of any facts or circumstances which
      would reasonably lead to delisting or suspension of the Common Stock by the
      Principal Market in the foreseeable future. Since July 13, 2007, the Common
      Stock has been designated for quotation on the Principal Market. Since July,
      13
      2007, (i) trading in the Common Stock has not been suspended by the SEC or
      the
      Principal Market and (ii) the Company has received no communication, written
      or
      oral, from the SEC or the Principal Market regarding the suspension or delisting
      of the Common Stock from the Principal Market. The Company and its Subsidiaries
      possess all certificates, authorizations and permits issued by the appropriate
      regulatory authorities necessary to conduct their respective businesses, except
      where the failure to possess such certificates, authorizations or permits would
      not have, individually or in the aggregate, a Material Adverse Effect, and
      neither the Company nor any such Subsidiary has received any notice of
      proceedings relating to the revocation or modification of any such certificate,
      authorization or permit.

     

    (o) Foreign
      Corrupt Practices.
      Neither
      the Company, nor any of its Subsidiaries, nor any director, officer, agent,
      employee or other Person acting on behalf of the Company or any of its
      Subsidiaries has, in the course of its actions for, or on behalf of, the Company
      or any of its Subsidiaries (i) used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; (ii) made any direct or indirect unlawful payment to any
      foreign or domestic government official or employee from corporate funds; (iii)
      violated or is in violation of any provision of the U.S. Foreign Corrupt
      Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
      payoff, influence payment, kickback or other unlawful payment to any foreign
      or
      domestic government official or employee.

     

    (p) Sarbanes-Oxley
      Act.
      The
      Company is in compliance with any and all applicable requirements of the
      Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any
      and
      all applicable rules and regulations promulgated by the SEC thereunder that
      are
      effective as of the date hereof.

     

    (q) 
      Transactions With Affiliates.
      Except
      as set forth on Schedule
      3(q),
      none of
      the officers, directors or employees of the Company is presently a party to
      any
      transaction with the Company or any of its Subsidiaries (other than for ordinary
      course services as employees, officers or 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 such officer, director or employee or, to
      the
      knowledge of the Company or any of its Subsidiaries, any corporation,
      partnership, trust or other entity in which any such officer, director, or
      employee has a substantial interest or is an officer, director, trustee or
      partner.

     

    
      
        
        

      

      
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    (r) Equity
      Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of (i)
      200,000,000 shares of Common Stock, of which as of the date hereof, 91,088,887
      are issued and outstanding, 14,873,883 shares are reserved for issuance pursuant
      to the Company's stock option and purchase plans and 25,177,817 shares are
      reserved for issuance pursuant to securities (other than the aforementioned
      options, the Notes and the Warrants) exercisable or exchangeable for, or
      convertible into, shares of Common Stock and (ii) 1,000,000 shares
      of
      preferred stock, par value $0.001 per share, of which as of the date hereof,
      none are issued and outstanding. All of such outstanding shares have been,
      or
      upon issuance will be, validly issued and are fully paid and nonassessable.
      Except as disclosed in Schedule
      3(r):
      (i)
      none of the Company's capital stock is subject to preemptive rights or any
      other
      similar rights or any liens or encumbrances suffered or permitted by the
      Company; (ii) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, or exercisable or exchangeable for,
      any
      capital stock of the Company or any of its Subsidiaries, or contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      Subsidiaries is or may become bound to issue additional capital stock of the
      Company or any of its Subsidiaries or options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, or exercisable or exchangeable for,
      any
      capital stock of the Company or any of its Subsidiaries; (iii) there are no
      outstanding debt securities, notes, credit agreements, credit facilities or
      other agreements, documents or instruments evidencing Indebtedness of the
      Company or any of its Subsidiaries or by which the Company or any of its
      Subsidiaries is or may become bound; (iv) there are no financing statements
      securing obligations in any material amounts, either singly or in the aggregate,
      filed in connection with the Company or any of its Subsidiaries; (v) there
      are
      no agreements or arrangements under which the Company or any of its Subsidiaries
      is obligated to register the sale of any of their securities under the 1933
      Act
      (except pursuant to the Registration Rights Agreement); (vi) there are no
      outstanding securities or instruments of the Company or any of its Subsidiaries
      which contain any redemption or similar provisions, and there are no contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      Subsidiaries is or may become bound to redeem a security of the Company or
      any
      of its Subsidiaries; (vii) there are no securities or instruments containing
      anti-dilution or similar provisions that will be triggered by the issuance
      of
      the Securities; (viii) the Company does not have any stock appreciation rights
      or "phantom stock" plans or agreements or any similar plan or agreement; and
      (ix) the Company and its Subsidiaries have no liabilities or obligations
      required to be disclosed in the SEC Documents but not so disclosed in the SEC
      Documents, other than those incurred in the ordinary course of the Company's
      or
      its Subsidiaries' respective businesses and which, individually or in the
      aggregate, do not or would not have a Material Adverse Effect. The Company
      has
      furnished to the Buyers true, correct and complete copies of the Company's
      Certificate of Incorporation, as amended and as in effect on the date hereof
      (the " Certificate
      of Incorporation"),
      and
      the Company's Bylaws, as amended and as in effect on the date hereof (the
      "Bylaws"),
      and
      the terms of all securities convertible into, or exercisable or exchangeable
      for, shares of Common Stock and the material rights of the holders thereof
      in
      respect thereto.

     

    
      
        
        

      

      
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    (s) Indebtedness
      and Other Contracts.
      Except
      as disclosed in Schedule
      3(s),
      neither
      the Company nor any of its Subsidiaries (i) has any outstanding Indebtedness
      (as
      defined below), (ii) is a party to any contract, agreement or instrument, the
      violation of which, or default under which, by the other party(ies) to such
      contract, agreement or instrument would result in a Material Adverse Effect,
      (iii) is in violation of any term of or in default under any contract, agreement
      or instrument relating to any Indebtedness, except where such violations and
      defaults would not result, individually or in the aggregate, in a Material
      Adverse Effect, or (iv) is a party to any contract, agreement or instrument
      relating to any Indebtedness, the performance of which, in the judgment of
      the
      Company's officers, has or is expected to have a Material Adverse Effect.
Schedule
      3(s)
      provides
      a detailed description of the material terms of any such outstanding
      Indebtedness. For purposes of this Agreement: (x) "Indebtedness"
      of any
      Person means, without duplication (A) all indebtedness for borrowed money,
      (B)
      all obligations issued, undertaken or assumed as the deferred purchase price
      of
      property or services, including, without limitation, "capital leases" in
      accordance with generally accepted accounting principles (other than trade
      payables entered into in the ordinary course of business), (C) all reimbursement
      or payment obligations with respect to letters of credit, surety bonds and
      other
      similar instruments, (D) all obligations evidenced by notes, bonds, debentures
      or similar instruments, including obligations so evidenced incurred in
      connection with the acquisition of property, assets or businesses, (E) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement, or incurred as financing, in either case with respect
      to
      any property or assets acquired with the proceeds of such indebtedness (even
      though the rights and remedies of the seller or bank under such agreement in
      the
      event of default are limited to repossession or sale of such property), (F)
      all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (G) all
      indebtedness referred to in clauses (A) through (F) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
      or obligations of others of the kinds referred to in clauses (A) through (G)
      above; (y) "Contingent
      Obligation"
      means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    (t) Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by the
      Principal Market, any court, public board, government agency, self-regulatory
      organization or body pending or, to the knowledge of the Company, threatened
      against or affecting the Company or any of its Subsidiaries, the Common Stock
      or
      any of the Company's Subsidiaries or any of the Company's or its Subsidiaries'
      officers or directors in their capacities as such, except as set forth in
Schedule
      3(t).

     

    
      
        
        

      

      
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    (u) Insurance.
      The
      Company and each of its Subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its Subsidiaries are engaged. Neither the Company
      nor
      any such Subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such Subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and when
      such coverage expires or to obtain similar coverage from similar insurers as
      may
      be necessary to continue its business at a cost that would not have a Material
      Adverse Effect.

     

    (v) Employee
      Relations.
      (i)
      Neither the Company nor any of its Subsidiaries is a party to any collective
      bargaining agreement or employs any member of a union. The Company and its
      Subsidiaries believe that their relations with their employees are good. No
      executive officer of the Company or any of its Subsidiaries has notified the
      Company or any such Subsidiary that such officer intends to leave the Company
      or
      any such Subsidiary or otherwise terminate such officer's employment with the
      Company or any such Subsidiary. No executive officer of the Company or any
      of
      its Subsidiaries, to the knowledge of the Company, is, or is now expected to
      be,
      in violation of any material term of any employment contract, confidentiality,
      disclosure or proprietary information agreement, non-competition agreement,
      or
      any other contract or agreement or any restrictive covenant, and the continued
      employment of each such executive officer does not subject the Company or any
      of
      its Subsidiaries to any liability with respect to any of the foregoing
      matters.

     

    (ii) The
      Company and its Subsidiaries are in compliance with all applicable federal,
      state, local and foreign laws and regulations respecting labor, employment
      and
      employment practices and benefits, terms and conditions of employment and wages
      and hours, except where failure to be in compliance would not, either
      individually or in the aggregate, reasonably be expected to result in a Material
      Adverse Effect.

     

    (w) Title.
      Neither
      the Company nor any of its Subsidiaries own any real property. The Company
      and
      its Subsidiaries have good and marketable title to all personal property owned
      by them which is material to the business of the Company and its Subsidiaries,
      in each case free and clear of all liens, encumbrances and defects except such
      as do not materially affect the value of such property and do not interfere
      with
      the use made and proposed to be made of such property by the Company and any
      of
      its Subsidiaries. Any real property and facilities held under lease by the
      Company and any of its Subsidiaries are held by them under valid, subsisting
      and
      enforceable leases with such exceptions as are not material and do not interfere
      with the use made and proposed to be made of such property and buildings by
      the
      Company and its Subsidiaries.

     

    
      
        
        

      

      
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    (x) Intellectual
      Property Rights.
      The
      Company and its Subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets and other intellectual property
      rights ("Intellectual
      Property Rights")
      necessary to conduct their respective businesses as now conducted. Except as
      set
      forth in Schedule
      3(x),
      none of
      the Company's Intellectual Property Rights have expired or terminated, or are
      expected to expire or terminate, within three years from the date of this
      Agreement. The Company does not have any knowledge of any infringement by the
      Company or its Subsidiaries of Intellectual Property Rights of others. There
      is
      no claim, action or proceeding being made or brought, or to the knowledge of
      the
      Company or its Subsidiaries, being threatened, against the Company or its
      Subsidiaries regarding its Intellectual Property Rights. The Company is unaware
      of any facts or circumstances which would reasonably be expected to give rise
      to
      any of the foregoing infringements or claims, actions or proceedings. The
      Company and its Subsidiaries have taken reasonable security measures to protect
      the secrecy, confidentiality and value of all of their intellectual
      properties.

     

    (y) Environmental
      Laws.
      The
      Company and its Subsidiaries (i) are in compliance with any and all
      Environmental Laws (as hereinafter defined), (ii) have received all permits,
      licenses or other approvals required of them under applicable Environmental
      Laws
      to conduct their respective businesses and (iii) are in compliance with all
      terms and conditions of any such permit, license or approval where, in each
      of
      the foregoing clauses (i), (ii) and (iii), the failure to so comply could be
      reasonably expected to have, individually or in the aggregate, a Material
      Adverse Effect. The term "Environmental
      Laws"
      means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, "Hazardous
      Materials") into
      the
      environment, or otherwise relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of Hazardous Materials,
      as well as all authorizations, codes, decrees, demands or demand letters,
      injunctions, judgments, licenses, notices or notice letters, orders, permits,
      plans or regulations issued, entered, promulgated or approved
      thereunder.

     

    (z) Subsidiary
      Rights.
      Except
      as set forth in Schedule
      3(z),
      the
      Company or one of its Subsidiaries has the unrestricted right to vote, and
      (subject to limitations imposed by applicable law) to receive dividends and
      distributions on, all capital securities of its Subsidiaries as owned by the
      Company or such Subsidiary.

     

    (aa) Investment
      Company Status.
      The
      Company is not, and upon consummation of the sale of the Securities will not
      be,
      an "investment company," a company controlled by an "investment company" or
      an
      "affiliated person" of, or "promoter" or "principal underwriter" for, an
      "investment company" as such terms are defined in the Investment Company Act
      of
      1940, as amended.

     

    (bb) Tax
      Status.
      The
      Company and each of its Subsidiaries (i) has made or filed all foreign, federal
      and state income and all other tax returns, reports and declarations required
      by
      any jurisdiction to which it is subject, (ii) has paid all taxes and other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and (iii) has set aside on its books provision
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim.

     

    
      
        
        

      

      
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    (cc) Internal
      Accounting and Disclosure Controls.
      The
      Company and each of its 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 generally accepted accounting principles and
      to
      maintain asset and liability accountability, (iii) access to assets or
      incurrence of liabilities is permitted only in accordance with management's
      general or specific authorization and (iv) the recorded accountability for
      assets and liabilities is compared with the existing assets and liabilities
      at
      reasonable intervals and appropriate action is taken with respect to any
      difference. The Company maintains disclosure controls and procedures (as such
      term is defined in Rule 13a-14 under the 1934 Act) that are effective in
      ensuring that information required to be disclosed by the Company in the reports
      that it files or submits under the 1934 Act is recorded, processed, summarized
      and reported, within the time periods specified in the rules and forms of the
      SEC, including, without limitation, controls and procedures designed to ensure
      that information required to be disclosed by the Company in the reports that
      it
      files or submits under the 1934 Act is accumulated and communicated to the
      Company's management, including its principal executive officer or officers
      and
      its principal financial officer or officers, as appropriate, to allow timely
      decisions regarding required disclosure. During the twelve months prior to
      the
      date hereof neither the Company nor any of its Subsidiaries have received any
      notice or correspondence from any accountant relating to any material weakness
      in any part of the system of internal accounting controls of the Company or
      any
      of its Subsidiaries

     

    (dd) Off
      Balance Sheet Arrangements.
      There
      is no transaction, arrangement, or other relationship between the Company and
      an
      unconsolidated or other off balance sheet entity that is required to be
      disclosed by the Company in its Exchange Act filings and is not so disclosed
      or
      that otherwise would be reasonably likely to have a Material Adverse Effect.
      

     

    (ee) Ranking
      of Notes.
      Except
      as set forth on Schedule
      3(ee),
      no
      Indebtedness of the Company is senior to or ranks pari
      passu
      with the
      Notes in right of payment, whether with respect of payment of redemptions,
      interest, damages or upon liquidation or dissolution or otherwise.

     

    
      
        
        

      

      
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    (ff) Eligibility
      for Registration.
      The
      Company is eligible to register the Conversion Shares, the Common Shares and
      the
      Warrant Shares for resale by the Buyers using Form SB-2 promulgated under the
      1933 Act, subject to the cutbacks pursuant to Rule 415 of the 1933 Act
      contemplated in the Registration Rights Agreement.

     

    (gg) Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other taxes (other than income or similar
      taxes) which are required to be paid in connection with the sale and transfer
      of
      the Securities to be sold to each Buyer hereunder will be, or will have been,
      fully paid or provided for by the Company, and all applicable laws imposing
      such
      taxes will be or will have been complied with.

     

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

     

    (ii) Acknowledgement
      Regarding Buyers' Trading Activity.
      It is
      understood and acknowledged by the Company that (i) none of the Buyers have
      been
      asked to agree, nor has any Buyer agreed, to desist from purchasing or selling,
      long and/or short, securities of the Company, or "derivative" securities based
      on securities issued by the Company or to hold the Securities for any specified
      term; (ii) any Buyer, and counter parties in "derivative" transactions to which
      any such Buyer is a party, directly or indirectly, presently may have a "short"
      position in the Common Stock, and (iii) each Buyer shall not be deemed to have
      any affiliation with or control over any arm's length counter-party in any
      "derivative" transaction. The Company further understands and acknowledges
      that
      (a) one or more Buyers may engage in hedging and/or trading activities at
      various times during the period that the Securities are outstanding, including,
      without limitation, during the periods that the value of the Conversion Shares
      and the Warrant Shares are being determined and (b) such hedging and/or trading
      activities, if any, can reduce the value of the existing stockholders' equity
      interest in the Company both at and after the time the hedging and/or trading
      activities are being conducted. The Company acknowledges that such
      aforementioned hedging and/or trading activities do not constitute a breach
      of
      this Agreement, the Notes, the Warrants or any of the documents executed in
      connection herewith.

     

    (jj) U.S.
      Real Property Holding Corporation.
      The
      Company is not, nor has ever been, a U.S. real property holding corporation
      within the meaning of Section 897 of the Internal Revenue Code of 1986, as
      amended, and the Company shall so certify upon any Buyer's request.

     

    (kk) Bank
      Holding Company Act.
      Neither
      the Company nor any of its Subsidiaries is subject to the Bank Holding Company
      Act of 1956, as amended (the "BHCA")
      and to
      regulation by the Board of Governors of the Federal Reserve System (the
      "Federal
      Reserve").
      Neither the Company nor any of its Subsidiaries or affiliates owns or controls,
      directly or indirectly, five percent (5%) or more of the outstanding shares
      of
      any class of voting securities or twenty-five percent (25%) or more of the
      total
      equity of a bank or any entity that is subject to the BHCA and to regulation
      by
      the Federal Reserve. Neither the Company nor any of its Subsidiaries or
      affiliates exercises a controlling influence over the management or policies
      of
      a bank or any entity that is subject to the BHCA and to regulation by the
      Federal Reserve. 

     

    
      
        
        

      

      
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    (ll) Disclosure.
      The
      Company confirms that neither it, nor any other Person acting on its behalf
      has
      provided any of the Buyers or their agents or counsel with any information
      that
      constitutes or could reasonably be expected to constitute material, nonpublic
      information. The Company understands and confirms that each of the Buyers will
      rely on the foregoing representations in effecting transactions in securities
      of
      the Company. All disclosure provided by the Company, its Subsidiaries, its
      officers or directors, its agents or its counsel to the Buyers regarding the
      Company, or any of its Subsidiaries, their business and the transactions
      contemplated hereby, including the Schedules to this Agreement, is true and
      correct and does 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 the light of the circumstances under which they were made, not misleading.
      Each press release issued by the Company or any of its Subsidiaries during
      the
      twelve (12) months preceding the date of this Agreement did not at the time
      of
      release contain any untrue statement of a material fact or omit to state a
      material fact required to be stated therein or necessary in order to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading. No event or circumstance has occurred or information
      exists with respect to the Company or any of its Subsidiaries or its or their
      business, properties, prospects, operations or financial conditions, which,
      under applicable law, rule or regulation, requires public disclosure or
      announcement by the Company but which has not been so publicly announced or
      disclosed. 

     

    4. COVENANTS.

     

    (a) Best
      Efforts.
      Each
      party shall use its best efforts timely to satisfy each of the conditions to
      be
      satisfied by it as provided in Sections 6 and 7 of this Agreement.

     

    (b) Form
      D
      and Blue Sky.
      The
      Company agrees to file a Form D with respect to the Securities as required
      under
      Regulation D and to provide a copy thereof to each Buyer reasonably promptly
      after such filing. The Company shall, reasonably promptly (and in no event
      later
      than 15 days) after the Closing Date, take such action as the Company shall
      reasonably determine is necessary in order to obtain an exemption for or to
      qualify the Securities for sale to the Buyers at the Closing pursuant to this
      Agreement under applicable securities or "Blue Sky" laws of the states of the
      United States (or to obtain an exemption from such qualification), and shall
      provide evidence of any such action so taken to the Buyers reasonably promptly
      after such filing. The Company shall make all filings and reports relating
      to
      the offer and sale of the Securities required under applicable securities or
      "Blue Sky" laws of the states of the United States following the Closing Date.
      

     

    (c) Reporting
      Status.
      Until
      the date on which the Investors (as defined in the Registration Rights
      Agreement) shall have sold all the Conversion Shares and Warrant
      Shares and
      none
      of the Notes or Warrants
      is outstanding (the "Reporting
      Period"),
      the
      Company shall timely file all reports required to be filed with the SEC pursuant
      to the 1934 Act, and the Company shall not terminate its status as an issuer
      required to file reports under the 1934 Act even if the 1934 Act or the rules
      and regulations thereunder would permit such termination.

     

    
      
        
        

      

      
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    (d) Use
      of
      Proceeds.
      The
      Company will use up to $6,500,000 the proceeds from the sale of the Securities
      for mergers and acquisitions, and the remainder of the proceeds shall be used
      for general corporate and for working capital purposes and not for except as
      set
      forth on Schedule
      4(d),
      (i) the
      repayment of any outstanding Indebtedness of the Company or any of its
      Subsidiaries, (ii) the redemption or repurchase of any of its or its
      Subsidiaries' equity securities or (iii) the settlement of any claims, actions
      or proceedings against the Company or any of its Subsidiaries.

     

    (e) Financial
      Information.
      The
      Company agrees to send the following to each Investor (as defined in the
      Registration Rights Agreement) during the Reporting Period (i) unless the
      following are filed with the SEC through EDGAR and are available to the public
      through the EDGAR system, within one (1) Business Day after the filing thereof
      with the SEC, a copy of its Annual Reports and Quarterly Reports on Form 10-K,
      10-KSB, 10-Q or 10-QSB, any Current Reports on Form 8-K and any registration
      statements (other than on Form S-8) or amendments filed pursuant to the 1933
      Act, and (ii) copies of any notices and other information made available or
      given to the stockholders of the Company generally, contemporaneously with
      the
      making available or giving thereof to the stockholders. As used herein,
      "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (f) Listing.
      The
      Company shall promptly secure the listing of all of the Registrable Securities
      (as defined in the Registration Rights Agreement) upon each national securities
      exchange and automated quotation system, if any, upon which the Common Stock
      is
      then listed (subject to official notice of issuance) and shall maintain such
      listing of all Registrable Securities from time to time issuable under the
      terms
      of the Transaction Documents. The Company shall maintain the Common Stocks'
      authorization for quotation on the Principal Market. Neither the Company nor
      any
      of its Subsidiaries shall take any action which would be reasonably expected
      to
      result in the delisting or suspension of the Common Stock on the Principal
      Market. The Company shall pay all fees and expenses in connection with
      satisfying its obligations under this Section 4(f).

     

    (g) Fees.
      The
      Company shall reimburse Castlerigg Master Investments Ltd. (a Buyer) or its
      designee(s) (in addition to any other expense amounts paid to any Buyer prior
      to
      the date of this Agreement) for all reasonable costs and expenses incurred
      in
      connection with the transactions contemplated by the Transaction Documents
      (including all reasonable legal fees and disbursements in connection therewith,
      documentation and implementation of the transactions contemplated by the
      Transaction Documents and due diligence in connection therewith), which amount
      shall be withheld by such Buyer from its Purchase Price at the Closing. The
      Company shall be responsible for the payment of any placement agent's fees,
      finder's fees, financial advisory fees, or broker's commissions (other than
      for
      Persons engaged by any Buyer) relating to or arising out of the transactions
      contemplated hereby. The Company shall pay, and hold each Buyer harmless
      against, any liability, loss or expense (including, without limitation,
      reasonable attorney's fees and out-of-pocket expenses) arising in connection
      with any claim relating to any such payment, other than for Persons engaged
      by
      any Buyer. Except as otherwise set forth in the Transaction Documents, each
      party to this Agreement shall bear its own expenses in connection with the
      sale
      of the Securities to the Buyers.

     

    
      
        
        

      

      
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          19
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    (h) Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Securities may be pledged by an
      Investor in connection with a bona fide margin agreement or other loan or
      financing arrangement that is secured by the Securities. The pledge of
      Securities shall not be deemed to be a transfer, sale or assignment of the
      Securities hereunder, and no Investor effecting a pledge of Securities shall
      be
      required to provide the Company with any notice thereof or otherwise make any
      delivery to the Company pursuant to this Agreement or any other Transaction
      Document, including, without limitation, Section 2(f) hereof; provided that
      an
      Investor and its pledgee shall be required to comply with the provisions of
      Section 2(f) hereof in order to effect a sale, transfer or assignment of
      Securities to such pledgee. The Company hereby agrees to execute and deliver
      such documentation as a pledgee of the Securities may reasonably request in
      connection with a pledge of the Securities to such pledgee by an
      Investor.

     

    (i) Disclosure
      of Transactions and Other Material Information.
      On or
      before 8:30 a.m., New York City time, on the second Business
      Day following the date of this Agreement, the Company shall issue a press
      release and file a Current Report on Form 8-K describing the terms of the
      transactions contemplated by the Transaction Documents in the form required
      by
      the 1934 Act and attaching the material Transaction Documents (including,
      without limitation, this Agreement, the form of the Notes, the form of Warrant,
      the form the Registration Rights Agreement and the form of Security Documents
      as
      exhibits to such filing (including all attachments, the "8-K
      Filing").
      No
      later than two (2) months after the Closing date, the Company shall file a
      Current Report on Form 8-K disclosing all information disclosed in Schedule
      4(i)
      (the
      "Second
      8-K Filing").
      From
      and after the filing of the Second 8-K Filing with the SEC, no Buyer shall
      be in
      possession of any material, nonpublic information received from the Company,
      any
      of its Subsidiaries or any of their respective officers, directors, employees
      or
      agents, that is not disclosed in the 8-K Filing. The Company shall not, and
      shall cause each of its Subsidiaries and its and each of their respective
      officers, directors, employees and agents, not to, provide any Buyer with any
      material, nonpublic information regarding the Company or any of its Subsidiaries
      from and after the filing of the 8-K Filing with the SEC without the express
      written consent of such Buyer. If a Buyer has, or believes it has, received
      any
      such material, nonpublic information regarding the Company or any of its
      Subsidiaries, it shall provide the Company with written notice thereof. The
      Company shall, within three (3) Trading Days (as defined in the Notes) of
      receipt of such notice, make public disclosure of such material, nonpublic
      information. In the event of a breach of the foregoing covenant by the Company,
      any of its Subsidiaries, or any of its or their respective officers, directors,
      employees and agents, in addition to any other remedy provided herein or in
      the
      Transaction Documents, a Buyer shall have the right to make a public disclosure,
      in the form of a press release, public advertisement or otherwise, of such
      material, nonpublic information without the prior approval by the Company,
      its
      Subsidiaries, or any of its or their respective officers, directors, employees
      or agents. No Buyer shall have any liability to the Company, its Subsidiaries,
      or any of its or their respective officers, directors, employees, stockholders
      or agents for any such disclosure except where, as a result of the willful
      misconduct or gross negligence of such Buyer, any such disclosure contains
      an
      untrue statement of a material fact or omits 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. Subject
      to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall
      issue any press releases or any other public statements with respect to the
      transactions contemplated hereby; provided, however, that the Company shall
      be
      entitled, without the prior approval of any Buyer, to make any press release
      or
      other public disclosure with respect to such transactions (i) in substantial
      conformity with the 8-K Filing and contemporaneously therewith and (ii) as
      is
      required by applicable law and regulations (provided that in the case of clause
      (i) each Buyer shall be consulted by the Company in connection with any such
      press release or other public disclosure prior to its release). Without the
      prior written consent of any applicable Buyer, and except as contemplated by
      the
      prior subsection (i) or as required by applicable law or regulation, neither
      the
      Company nor any of its Subsidiaries or affiliates shall disclose the name of
      such Buyer in any filing, announcement, release or otherwise.

     

    
      
        
        

      

      
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    (j) Restriction
      on Redemption and Cash Dividends.
      Except
      for the redemption of up to 350,000 shares of Common Stock held by the former
      holders of the Series A Preferred Stock of RxElite Holdings, Inc. that is due
      within fifty (50) days of December 31, 2008 at a redemption price of $4.00
      per
      share, so long as any Notes are outstanding, the Company shall not, directly
      or
      indirectly, redeem, or declare or pay any cash dividend or distribution on,
      the
      Common Stock without the prior express written consent of the holders of Notes
      representing not less than a majority of the aggregate principal amount of
      the
      then outstanding Notes.

     

    (k) Additional
      Notes; Variable Securities; Dilutive Issuances.
      So long
      as any Buyer beneficially owns any Securities, the Company will not issue any
      Notes other than to the Buyers as contemplated hereby, and the Company shall
      not
      issue any other securities that would cause a breach or default under the Notes.
      For so long as any Notes or Warrants remain outstanding, the Company shall
      not,
      in any manner, issue or sell any rights, warrants or options to subscribe for
      or
      purchase Common Stock or directly or indirectly convertible into or exchangeable
      or exercisable for Common Stock at a price which varies or may vary with the
      market price of the Common Stock, including by way of one or more reset(s)
      to
      any fixed price unless the conversion, exchange or exercise price of any such
      security cannot be less than the then applicable Conversion Price (as defined
      in
      the Notes) with respect to the Common Stock into which any Note is convertible
      or the then applicable Exercise Price (as defined in the Warrants) with respect
      to the Common Stock into which any Warrant is exercisable. For so long as any
      Notes or Warrants remain outstanding, the Company shall not, in any manner,
      enter into or affect any Dilutive Issuance (as defined in the Notes) if the
      effect of such Dilutive Issuance is to cause the Company to be required to
      issue
      upon conversion of any Note or exercise of any Warrant any shares of Common
      Stock in excess of that number of shares of Common Stock which the Company
      may
      issue upon conversion of the Notes and exercise of the Warrants without
      breaching the Company's obligations under the rules or regulations of the
      Principal Market or any applicable Eligible Market (as defined in the
      Registration Rights Agreement). 

     

    (l) Corporate
      Existence.
      So long
      as any Buyer beneficially owns any Securities, the Company shall not be party
      to
      any Fundamental Transaction (as defined in the Notes) unless the Company is
      in
      compliance with the applicable provisions governing Fundamental Transactions
      set
      forth in the Notes and the Warrants.

     

    (m) Reservation
      of Shares.
      So long
      as any Buyer owns any Securities, the Company shall take all action necessary
      to
      at all times have authorized, and reserved for the purpose of issuance, no
      less
      than 130% of the sum of the number of shares of Common Stock
      issuable
      (i) upon conversion of the Notes and (ii) upon exercise of the Warrants then
      outstanding (without taking into account any limitations on the conversion
      of
      the Notes or exercise of the Warrants set forth in the Notes and Warrants,
      respectively).

     

    
      
        
        

      

      
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    (n) Conduct
      of Business.
      The
      business of the Company and its Subsidiaries shall not be conducted in violation
      of any law, ordinance or regulation of any governmental entity, except where
      such violations would not result, either individually or in the aggregate,
      in a
      Material Adverse Effect.

     

    (o) Additional
      Issuances of Securities.

     

    (i) For
      purposes of this Section 4(o), the following definitions shall
      apply.

     

    (1) "Convertible
      Securities"
      means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for shares of Common
      Stock.

     

    (2) "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of
Common
      Stock or
      Convertible Securities.

     

    (3) "Common
      Stock Equivalents"
      means,
      collectively, Options and Convertible Securities.

     

    (ii) Except
      with respect to the Company's Registration Statement on Form SB-2 (File No.
      333-146641) originally filed with the SEC on October 30, 2007 (which may be
      amended or supplemented, but not to register more securities), from the date
      hereof until the earlier of the date when all Registrable Securities (as defined
      in the Registration Rights Agreement) have been registered or may be sold
      without the requirement to be in compliance with Rule 144(c)(1) and otherwise
      without restriction or limitation pursuant to Rule 144 (the "Trigger
      Date"),
      the
      Company will not, directly or indirectly, file any registration statement with
      the SEC other than the Registration Statement (as defined in the Registration
      Rights Agreement). From the date hereof until the Trigger Date, the Company
      will
      not, (i) directly or indirectly, offer, sell, grant any option to purchase,
      or
      otherwise dispose of (or announce any offer, sale, grant or any option to
      purchase or other disposition of) any of its or its Subsidiaries' equity or
      equity equivalent securities, including without limitation any debt, preferred
      stock or other instrument or security that is, at any time during its life
      and
      under any circumstances, convertible into or exchangeable or exercisable for
      shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant,
      disposition or announcement being referred to as a "Subsequent
      Placement")
      or
      (ii) be party to any solicitations, negotiations or discussions with regard
      to
      the foregoing. Solely for the purpose of the immediately preceding sentence,
      "Subsequent Placement" shall exclude (i) any Common Stock issued or issuable
      upon conversion or exercise of equity securities in connection with any
      strategic acquisition by the Company, the primary purpose of which is not to
      raise equity capital and (ii) any debt, preferred stock, Common Stock or Common
      Stock Equivalents issued in connection with the full redemption of the Notes
      issued to the Buyers.

     

    
      
        
        

      

      
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    (iii) From
      the
      Trigger Date until the second anniversary of the Closing Date, the Company
      will
      not, directly or indirectly, effect any Subsequent Placement unless the Company
      shall have first complied with this Section 4(o)(iii).

    
       

    

    (1) The
      Company shall deliver to each Buyer an irrevocable written notice
      (the "Offer
      Notice"),
      of
      any proposed or intended issuance or sale or exchange (the "Offer")
      of the
      securities being offered (the "Offered
      Securities")
      in a
      Subsequent Placement, which Offer Notice shall (w) identify and describe the
      Offered Securities, (x) describe the price and other terms upon which they
      are to be issued, sold or exchanged, and the number or amount of the Offered
      Securities to be issued, sold or exchanged, (y) identify the persons or
      entities (if known) to which or with which the Offered Securities are to be
      offered, issued, sold or exchanged and (z) offer to issue and sell to or
      exchange with such Buyers all of the Offered Securities, allocated among such
      Buyers (a) based on such Buyer's pro rata portion of the aggregate principal
      amount of Notes purchased hereunder (the "Basic
      Amount"),
      and
      (b) with respect to each Buyer that elects to purchase its Basic Amount, any
      additional portion of the Offered Securities attributable to the Basic Amounts
      of other Buyers as such Buyer shall indicate it will purchase or acquire should
      the other Buyers subscribe for less than their Basic Amounts (the "Undersubscription
      Amount").
      Notwithstanding the foregoing, if the Company would be required to disclose
      material non-pubic information to any Buyer in connection with the delivery
      of
      any Offer Notice, the Company shall first ask such Buyer if it would be willing
      to receive material non-public information (without disclosing any material
      non-public information to such Buyer). If such Buyer elects to receive material
      non-public information in connection with an Offer Notice, upon delivery of
      such
      Offer Notice, such Buyer shall maintain the confidentiality of the information
      identified as material non-public information contained in such Offer Notice
      until such information is publicly disclosed (other than disclosure to its
      officers, director, partners, members, agents or advisors or as required to
      be
      disclosed by law or legal process). If such Buyer elects not to receive material
      non-public information, the Company shall not be required to deliver any Offer
      Notice that contains material non-public information.

     

    (2) To
      accept
      an Offer, in whole or in part, such Buyer must deliver a written notice to
      the
      Company prior to the end of the tenth (10th)
      Business Day after such Buyer's receipt of the Offer Notice (the "Offer
      Period"),
      setting forth the portion of such Buyer's Basic Amount that such Buyer elects
      to
      purchase and, if such Buyer shall elect to purchase all of its Basic Amount,
      the
      Undersubscription Amount, if any, that such Buyer elects to purchase (in either
      case, the "Notice
      of Acceptance").
      If
      the Basic Amounts subscribed for by all Buyers are less than the total of all
      of
      the Basic Amounts, then each Buyer who has set forth an Undersubscription Amount
      in its Notice of Acceptance shall be entitled to purchase, in addition to the
      Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
      for; provided,
      however,
      that if
      the Undersubscription Amounts subscribed for exceed the difference between
      the
      total of all the Basic Amounts and the Basic Amounts subscribed for (the
      "Available
      Undersubscription Amount"),
      each
      Buyer who has subscribed for any Undersubscription Amount shall be entitled
      to
      purchase only that portion of the Available Undersubscription Amount as the
      Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that
      have subscribed for Undersubscription Amounts, subject to rounding by the
      Company to the extent it deems reasonably necessary. Notwithstanding
      anything to the contrary contained herein, if the Company desires to modify
      or
      amend the terms and conditions of the Offer prior to the expiration of the
      Offer
      Period, the Company may deliver to the Buyers a new Offer Notice and the Offer
      Period shall expire on the tenth (10th) Business Day after such Buyer's receipt
      of such new Offer Notice. 

     

    
      
        
        

      

      
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    (3) The
      Company shall have five (5) Business Days from the expiration of the Offer
      Period above to offer, issue, sell or exchange all or any part of such Offered
      Securities as to which a Notice of Acceptance has not been given by the Buyers
      (the "Refused
      Securities"),
      but
      only to the offerees described in the Offer Notice (if so described therein)
      and
      only upon terms and conditions (including, without limitation, unit prices
      and
      interest rates) that are not more favorable to the acquiring person or persons
      or less favorable to the Company than those set forth in the Offer Notice and
      (ii) to publicly announce (a) the execution of such Subsequent Placement
      Agreement, and (b) either (x) the consummation of the transactions contemplated
      by such Subsequent Placement Agreement or (y) the termination of such Subsequent
      Placement Agreement, which shall be filed with the SEC on a Current Report
      on
      Form 8-K with such Subsequent Placement Agreement and any documents contemplated
      therein filed as exhibits thereto.

     

    (4) In
      the
      event the Company shall propose to sell less than all the Refused Securities
      (any such sale to be in the manner and on the terms specified in Section
      4(o)(iii)(3) above), then each Buyer may, at its sole option and in its sole
      discretion, reduce the number or amount of the Offered Securities specified
      in
      its Notice of Acceptance to an amount that shall be not less than the number
      or
      amount of the Offered Securities that such Buyer elected to purchase pursuant
      to
      Section 4(o)(iii)(2) above multiplied by a fraction, (i) the numerator of which
      shall be the number or amount of Offered Securities the Company actually
      proposes to issue, sell or exchange (including Offered Securities to be issued
      or sold to Buyers pursuant to Section 4(o)(iii)(3) above prior to such
      reduction) and (ii) the denominator of which shall be the original amount of
      the
      Offered Securities. In the event that any Buyer so elects to reduce the number
      or amount of Offered Securities specified in its Notice of Acceptance, the
      Company may not issue, sell or exchange more than the reduced number or amount
      of the Offered Securities unless and until such securities have again been
      offered to the Buyers in accordance with Section 4(o)(iii)(1)
      above.

     

    (5) Upon
      the
      closing of the issuance, sale or exchange of all or less than all of the Refused
      Securities, the Buyers shall acquire from the Company, and the Company shall
      issue to the Buyers, the number or amount of Offered Securities specified in
      the
      Notices of Acceptance, as reduced pursuant to Section 4(o)(iii)(3) above if
      the
      Buyers have so elected, upon the terms and conditions specified in the Offer.
      The purchase by the Buyers of any Offered Securities is subject in all cases
      to
      the preparation, execution and delivery by the Company and the Buyers of a
      purchase agreement relating to such Offered Securities reasonably satisfactory
      in form and substance to the Buyers and their respective counsel.

     

    
      
        
        

      

      
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    (6) Any
      Offered Securities not acquired by the Buyers or other persons in accordance
      with Section 4(o)(iii)(3) above may not be issued, sold or exchanged until
      they
      are again offered to the Buyers under the procedures specified in this
      Agreement.

     

    (7) The
      Company and the Buyers agree that if any Buyer elects to participate in the
      Offer, neither the agreement regarding the Subsequent Placement (the
      "Subsequent
      Placement Agreement")
      with
      respect to such Offer nor any other transaction documents related thereto
      (collectively, the "Subsequent
      Placement Documents")
      shall
      include any term or provisions whereby any Buyer shall be required to agree
      to
      any restrictions in trading as to any securities of the Company owned by such
      Buyer prior to such Subsequent Placement.

     

    (8) Notwithstanding
      anything to the contrary in this Section 4(o) and unless otherwise agreed to
      by
      the Buyers, the Company shall either confirm in writing to the Buyers that
      the
      transaction with respect to the Subsequent Placement has been abandoned or
      shall
      publicly disclose its intention to issue the Offered Securities, in either
      case
      in such a manner such that the Buyers will not be in possession of material
      non-public information, by the fifteenth (15th)
      Business Day following delivery of the Offer Notice. If by the fifteenth
      (15th)
      Business Day following delivery of the Offer Notice no public disclosure
      regarding a transaction with respect to the Offered Securities has been made,
      and no notice regarding the abandonment of such transaction has been received
      by
      the Buyers, such transaction shall be deemed to have been abandoned and the
      Buyers shall not be deemed to be in possession of any material, non-public
      information with respect to the Company. Should the Company decide to pursue
      such transaction with respect to the Offered Securities, the Company shall
      provide each Buyer with another Offer Notice and each Buyer will again have
      the
      right of participation set forth in this Section 4(o)(iii). The Company shall
      not be permitted to deliver more than one such Offer Notice to the Buyers in
      any
      60-day period.

     

    (iv) The
      restrictions contained in subsections (ii) and (iii) of this Section 4(o) shall
      not apply in connection with the issuance of any Excluded Securities (as defined
      in the Notes).

     

    (p) Collateral
      Agent.

     

    (i) Each
      Buyer hereby (a) appoints Castlerigg Master Investments Ltd., as the collateral
      agent hereunder and under the other Security Documents (in such capacity, the
      "Collateral
      Agent"),
      and
      (b) authorizes the Collateral Agent (and its officers, directors, employees
      and
      agents) to take such action on such Buyer's behalf in accordance with the terms
      hereof and thereof. The Collateral Agent shall not have, by reason hereof or
      any
      of the other Security Documents, a fiduciary relationship in respect of any
      Buyer. Neither the Collateral Agent nor any of its officers, directors,
      employees and agents shall have any liability to any Buyer for any action taken
      or omitted to be taken in connection hereof or any other Security Document
      except to the extent caused by its own gross negligence or willful misconduct,
      and each Buyer agrees to defend, protect, indemnify and hold harmless the
      Collateral Agent and all of its officers, directors, employees and agents
      (collectively, the "Indemnitees")
      from
      and against any losses, damages, liabilities, obligations, penalties, actions,
      judgments, suits, fees, costs and expenses (including, without limitation,
      reasonable attorneys' fees, costs and expenses) incurred by such Indemnitee,
      whether direct, indirect or consequential, arising from or in connection with
      the performance by such Indemnitee of the duties and obligations of Collateral
      Agent pursuant hereto or any of the Security Documents. The Collateral Agent
      shall not be required to exercise any discretion or take any action, but shall
      be required to act or to refrain from acting (and shall be fully protected
      in so
      acting or refraining from acting) upon the instructions of the holders of at
      least a majority in principal amount of the Notes then outstanding, and such
      instructions shall be binding upon all holders of Notes; provided,
      however,
      that
      the Collateral Agent shall not be required to take any action which, in the
      reasonable opinion of the Collateral Agent, exposes the Collateral Agent to
      liability or which is contrary to this Agreement or any other Transaction
      Document or applicable law.

     

    
      
        
        

      

      
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    (ii) The
      Collateral Agent shall be entitled to rely upon any written notices, statements,
      certificates, orders or other documents or any telephone message believed by
      it
      in good faith to be genuine and correct and to have been signed, sent or made
      by
      the proper Person, and with respect to all matters pertaining to this Agreement
      or any of the other Transaction Documents and its duties hereunder or
      thereunder, upon advice of counsel selected by it.

     

    (iii) The
      Collateral Agent may resign from the performance of all its functions and duties
      hereunder and under the Notes and the Security Documents at any time by giving
      at least ten (10) Business Days prior written notice to the Company and each
      holder of the Notes. Such resignation shall take effect upon the acceptance
      by a
      successor Collateral Agent of appointment as provided below. Upon any such
      notice of resignation, the holders of a majority of the outstanding principal
      under the Notes shall appoint a successor Collateral Agent. Upon the acceptance
      of the appointment as Collateral Agent, such successor Collateral Agent shall
      succeed to and become vested with all the rights, powers, privileges and duties
      of the retiring Collateral Agent, and the retiring Collateral Agent shall be
      discharged from its duties and obligations under this Agreement, the Notes
      and
      the other Security Documents. After any Collateral Agent's resignation hereunder
      , the provisions of this Section 4(p) shall inure to its benefit. If a successor
      Collateral Agent shall not have been so appointed within said ten (10) Business
      Day period, the retiring Collateral Agent shall then appoint a successor
      Collateral Agent who shall serve until such time, if any, as the holders of
      a
      majority of the outstanding principal under the Notes appoint a successor
      Collateral Agent as provided above.

     

    (q) Trading
      in Common Stock.
      From
      the date hereof and through the earlier of (i) the Initial Effective Date (as
      defined in the Registration Rights Agreement) and (ii) the Initial Effectiveness
      Deadline, each Buyer agrees that it shall not, directly or indirectly in its
      own
      capacity or through an agent, engage in any short sales (as defined in Rule
      200
      of Regulation SHO under the 1934 Act) with respect to the Common Stock, or
      any
      hedging transaction or securitization, including obtaining shares of Common
      Stock to borrow, which establishes any short position with respect to the Common
      Stock, whether on a U.S. domestic exchange or any foreign exchange, provided
      that the foregoing shall not restrict any Buyer from selling any or all of
      the
      Common Shares during such time period, which shall not be by a short sale.
      Furthermore, for so long as such Buyer owns any Notes, such Buyer shall not
      maintain a Net Short Position. For purposes of this Section, a "Net
      Short Position"
      by a
      Buyer means a position whereby such Buyer has executed one or more sales of
      Common Stock that is marked as a short sale and that is executed at a time
      when
      such Buyer has no equivalent offsetting long position in the Common Stock or
      contract for the foregoing. For purposes of determining whether a Buyer has
      an
      equivalent offsetting long position in the Common Stock, all Common Stock (i)
      that is owned by such Buyer or (ii) that would be issuable upon conversion
      or
      exercise in full of all Securities then held by such Buyer (assuming that such
      Securities were then fully convertible or exercisable, notwithstanding any
      provisions to the contrary, and giving effect to any conversion or exercise
      price adjustments that would take effect given only the passage of time) shall
      be deemed to be held long by such Buyer.

     

    
      
        
        

      

      
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    (r) Public
      Information.
      At any
      time during the period commencing from the six (6) month anniversary of the
      Closing Date and ending at such time that all of the Securities can be sold
      without the requirement to be in compliance with Rule 144(c)(1) and otherwise
      without restriction or limitation pursuant to Rule 144, if a registration
      statement is not available for the resale of all of the Securities
      and the
      Company shall fail for any reason to satisfy the current public information
      requirement under Rule 144 (a "Public
      Information Failure")
      then,
      as partial relief for the damages to any holder of Securities by reason of
      any
      such delay in or reduction of its ability to sell the Securities (which remedy
      shall not be exclusive of any other remedies available at law or in equity),
      the
      Company shall pay to each such holder an amount in cash equal to one percent
      (1.0%) of the aggregate Purchase Price of such holder's Securities on the day
      of
      a Public Information Failure and on every thirtieth day (pro rated for periods
      totaling less than thirty days) thereafter until the earlier of (i) the date
      such Public Information Failure is cured and (ii) such time that such public
      information is no longer required pursuant to Rule 144. The payments to which
      a
      holder shall be entitled pursuant to this Section 4(r) are referred to herein
      as
      "Public
      Information Failure Payments."
      Public
      Information Failure Payments
      shall be paid on the earlier of (I) the last day of the calendar month during
      which such Public Information Failure Payments
      are incurred and (II) the third Business Day after the event or failure giving
      rise to the Public Information Failure Payments
      is cured. In the event the Company fails to make Public Information
      Failure Payments
      in a timely manner, such Public Information Failure Payments
      shall bear interest at the rate of 1.5% per month (prorated for partial months)
      until paid in full. 

     

    (s) Additional
      Relief.
      If the
      Company shall fail for any reason or for no reason to issue to the Buyer
      unlegended certificates or issue such Common Shares to such Buyer by electronic
      delivery at the applicable balance account at DTC within three (3) Trading
      Days
      after the receipt of documents necessary for the removal of the legend set
      forth
      in Section 2(g) above (the "Removal
      Date"),
      then
      in addition to all other remedies available to the Buyer, if on or after the
      Trading Day immediately following such three Trading Day period, the Buyer
      purchases (in an open market transaction or otherwise) shares of Common Stock
      to
      deliver in satisfaction of a sale by the Buyer of such Common Shares that the
      Buyer anticipated receiving without legend from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Business Days after the Buyer's request
      and
      in the Buyer's discretion, either (i) pay cash to the Buyer in an amount equal
      to the Buyer's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased (the "Buy-In
      Price"),
      at
      which point the Company's obligation to deliver such unlegended Common Shares
      shall terminate, or (ii) promptly honor its obligation to deliver to the Buyer
      such unlegended Common Shares as provided above and pay cash to the Buyer in
      an
      amount equal to the excess (if any) of the Buy-In Price over the product of
      (A)
      such number of shares of Common Stock, times (B) the Closing Bid Price (as
      defined in the Warrants) on the Removal Date. 


    
      
        
        

      

      
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    (t) Closing
      Documents.
      On or
      prior to fourteen (14) calendar days after the Closing Date, the Company agrees
      to deliver, or cause to be delivered, to each Buyer and Schulte Roth & Zabel
      LLP executed copies of the Transaction Documents, Securities and other document
      required to be delivered to any party pursuant to Section 7 hereof.


     

    (u) Deposit
      Account Control Agreements.
      Within
      forty-five (45) days following the Closing Date, the Company shall deliver
      to
      the Collateral Agent, deposit account control agreements in a form satisfactory
      to the Collateral Agent in its reasonable discretion duly executed by the
      Company and the depositary institution, for each of the following accounts
      of
      the Company: (1) account No. 22559413 maintained at Bank of America, N.A. and
      (ii) account No.224-25380-1-1-OCY maintained at Bank of America Securities,
      LLC.

     

    (v) Assignment
      for Security.
      Within
      ten (10) days following the Closing Date, the Company shall deliver to the
      Collateral Agent duly executed Assignments for Security in the form attached
      as
      Exhibit A to the Security Agreement with respect to the trademarks and patents
      reflected on Schedule II to the Security Agreement.

     

    (w) Tacking.
      The
      Company hereby acknowledges and agrees that for purposes of Rule 144 holding
      periods, upon foreclosure of the shares of Common Stock pursuant to the Tiburon
      Pledge Agreement (as defined below) in accordance with its terms, the
      recipient(s) of those shares will be entitled to tack their holding period
      such
      that the holding period will begin no later than the Closing Date, and for
      so
      long as any holder of such shares represents that it is not an affiliate of
      the
      Company at the time of any proposed sale of such shares pursuant to Rule 144
      and
      was not an affiliate of the Company for the previous three months, the Company
      shall not require a legal opinion in connection with (i) legend removal under
      Rule 144 so long as the holder has held, including any applicable tacking
      periods, such shares of Common Stock for at least one (1) year, or (ii) legend
      removal upon a resale in compliance with Rule 144 so long as the holder has
      held, including any applicable tacking period, such shares of Common Stock
      for
      at least six (6) months.

     

    (x) Legal
      Opinion.
      No
      later than ten (10) Business Days after the Closing Date, the Company shall
      cause one or more law firms reasonably acceptable to the Buyers to deliver
      legal
      opinions with respect to the Put Option Agreement and the Tiburon Pledge
      Agreement that are reasonably acceptable to the Buyers. 

     

    (y) Delivery
      of Pledged Shares.
      No
      later than five (5) Business Days after the Closing Date, the Company hereby
      covenants and agrees to cause Tiburon LLC to deliver to the Collateral Agent
      the
      shares of Common Stock required to be delivered to the Collateral Agent pursuant
      to the Tiburon Pledge Agreement along with duly executed blank stock
      powers.

     

    5. REGISTER;
      TRANSFER AGENT INSTRUCTIONS.

     

    (a) Register.
      The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to each holder of
      Securities), a register for the Notes and the Warrants in which the Company
      shall record the name and address of the Person in whose name the Notes
      and the
      Warrants have been issued (including the name and address of each transferee),
      the principal amount of Notes held by such Person, the number of Conversion
      Shares issuable upon conversion of the Notes and Warrant Shares issuable upon
      exercise of the Warrants held by such Person. The Company shall keep the
      register open and available at all times during business hours for inspection
      of
      any Buyer or its legal representatives.


    
      
        
        

      

      
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    (b) Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates or credit shares to the
      applicable balance accounts at The Depository Trust Company ("DTC"),
      registered in the name of each Buyer or its respective nominee(s), for the
      Conversion Shares, the Common Shares and the Warrant Shares issued at the
      Closing or upon conversion of the Notes or exercise of the Warrants in such
      amounts as specified from time to time by each Buyer to the Company upon
      conversion of the Notes or exercise of the Warrants in the form of Exhibit
      G
      (the
      "Irrevocable
      Transfer Agent Instructions").
      The
      Company warrants that no instruction other than the Irrevocable Transfer Agent
      Instructions referred to in this Section 5(b), and stop transfer instructions
      to
      give effect to Section 2(g) hereof, will be given by the Company to its transfer
      agent, and that the Securities shall otherwise be freely transferable on the
      books and records of the Company as and to the extent provided in this Agreement
      and the other Transaction Documents. If a Buyer effects a sale, assignment
      or
      transfer of the Securities in accordance with Section 2(f), the Company shall
      permit the transfer and shall promptly instruct its transfer agent to issue
      one
      or more certificates or credit shares to the applicable balance accounts at
      DTC
      in such name and in such denominations as specified by such Buyer to effect
      such
      sale, transfer or assignment. In the event that such sale, assignment or
      transfer involves the Common Shares, Conversion Shares or Warrant Shares sold,
      assigned or transferred pursuant to an effective registration statement or
      pursuant to Rule 144, the transfer agent shall issue such Securities to the
      Buyer, assignee or transferee, as the case may be, without any restrictive
      legend. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to a Buyer. Accordingly, the Company
      acknowledges that the remedy at law for a breach of its obligations under this
      Section 5(b) will be inadequate and agrees, in the event of a breach or
      threatened breach by the Company of the provisions of this Section 5(b), that
      a
      Buyer shall be entitled, in addition to all other available remedies, to an
      order and/or injunction restraining any breach and requiring immediate issuance
      and transfer, without the necessity of showing economic loss and without any
      bond or other security being required.

     

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

     

    The
      obligation of the Company hereunder to issue and sell the Notes and the related
      Common Shares and Warrants to each Buyer at the Closing is subject to the
      satisfaction, at or before the Closing Date, of each of the following
      conditions, provided that these conditions are for the Company's sole benefit
      and may be waived by the Company at any time in its sole discretion by providing
      each Buyer with prior written notice thereof:

     

    (i) Such
      Buyer shall have executed each of the Transaction Documents to which it is
      a
      party and delivered the same to the Company.


    
      
        
        

      

      
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    (ii) Such
      Buyer and each other Buyer shall have delivered to the Company the Purchase
      Price set forth opposite such Buyer's and each other Buyer's name in column
      (7)
      of the Schedule of Buyers (less, in the case of Castlerigg Master Investments
      Ltd., the amounts withheld pursuant to Section 4(g)) for the Notes and the
      related Common Shares and Warrants being purchased by such Buyer at the Closing
      by wire transfer of immediately available funds pursuant to the wire
      instructions provided by the Company.

     

    (iii) The
      representations and warranties of such Buyer shall be true and correct in all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date which shall be true and correct as of such specified date), and
      such Buyer shall have performed, satisfied and complied in all material respects
      with the covenants, agreements and conditions required by this Agreement to
      be
      performed, satisfied or complied with by such Buyer at or prior to the Closing
      Date.

     

    7. CONDITIONS
      TO EACH BUYER'S OBLIGATION TO PURCHASE.

     

    The
      obligation of each Buyer hereunder to purchase the Notes and
      the
      related Common Shares and Warrants at the Closing is subject to the
      satisfaction, at or before the Closing Date, of each of the following
      conditions, provided that these conditions are for each Buyer's sole benefit
      and
      may be waived by such Buyer at any time in its sole discretion by providing
      the
      Company with prior written notice thereof:

     

    (i) The
      Company shall have duly executed and delivered to such Buyer (A) each of the
      Transaction Documents and, (B) the Notes (in such principal amounts as set
      forth
      opposite such Buyer's name in column (3) of the Schedule of Buyers), being
      purchased by such Buyer at the Closing pursuant to this Agreement, (C) the
      related Common Shares (in such amounts as set forth opposite such Buyer's name
      in Column (4) of the Schedule of Buyers) and (D) the related Warrants (in such
      amounts as set forth opposite such Buyer's name in Columns (5) and (6) of the
      Schedule of Buyers) being purchased by such Buyer at the Closing pursuant to
      this Agreement.

     

    (ii) Such
      Buyer shall have received the opinion of Haynes and Boone, LLP, the Company's
      outside counsel, dated as of the Closing Date, in substantially the form of
      Exhibit H
      attached
      hereto.

     

    (iii) The
      Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
      Agent Instructions, in the form of Exhibit G
      attached
      hereto, which instructions shall have been delivered to and acknowledged in
      writing by the Company's transfer agent.

     

    (iv) The
      Company shall have delivered to such Buyer a certificate evidencing the
      formation and good standing of the Company and each of its Subsidiaries in
      such
      entity's jurisdiction of formation issued by the Secretary of State (or
      comparable office) of such jurisdiction, as of a date within 10 days of the
      Closing Date.

     

    (v) The
      Company shall have delivered to such Buyer a certificate evidencing the
      Company's qualification as a foreign corporation and good standing issued by
      the
      Secretary of State (or comparable office) of each jurisdiction in which the
      Company conducts is required to be so qualified, as of a date within 10 days
      of
      the Closing Date.


    
      
        
        

      

      
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    (vi) The
      Company shall have delivered to such Buyer a certified copy of the Certificate
      of Incorporation as certified by the Secretary of State of the State (or
      comparable office of Delaware within ten (10) days of the Closing
      Date.

     

    (vii) The
      Company shall have delivered to such Buyer a certificate, executed by the
      Secretary of the Company and dated as of the Closing Date, as to (i) the
      resolutions consistent with Section 3(b) as adopted by the Company's Board
      of
      Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate
      of
      Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
      form attached hereto as Exhibit I.

     

    (viii) The
      representations and warranties of the Company shall be true and correct as
      of
      the date when made and as of the Closing Date as though made at that time
      (except for representations and warranties that speak as of a specific date
      which shall be true and correct as of such specified date) and the Company
      shall
      have performed, satisfied and complied in all respects with the covenants,
      agreements and conditions required by the Transaction Documents to be performed,
      satisfied or complied with by the Company at or prior to the Closing Date.
      Such
      Buyer shall have received a certificate, executed by the Chief Executive Officer
      of the Company, dated as of the Closing Date, to the foregoing effect and as
      to
      such other matters as may be reasonably requested by such Buyer in the form
      attached hereto as Exhibit
      J.

     

    (ix) The
      Company shall have delivered to such Buyer a letter from the Company's transfer
      agent certifying the number of shares of Common Stock outstanding as of a date
      within five days of the Closing Date.

     

    (x) The
      Company shall have caused Tiburon LLC to execute and deliver to the Buyer the
      Put Option Agreement by and between the Buyers and Tiburon LLC in the form
      attached hereto as Exhibit
      K
      (the
      "Put
      Option Agreement").

     

    (xi) The
      Company shall have caused Tiburon LLC to execute and deliver to the Collateral
      Agent the Pledge Agreement by and between the Collateral Agent and Tiburon
      LLC
      in the form attached hereto as Exhibit
      L
      (the
      "Tiburon
      Pledge Agreement").

     

    (xii) The
      Common Stock (I) shall be designated for quotation or listed on the Principal
      Market and (II) shall not have been suspended, as of the Closing Date, by the
      SEC or the Principal Market from trading on the Principal Market nor shall
      suspension by the SEC or the Principal Market have been threatened, as of the
      Closing Date, either (A) in writing by the SEC or the Principal Market or (B)
      by
      falling below the minimum listing maintenance requirements of the Principal
      Market.

     

    (xiii) The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities.

     

    (xiv) In
      accordance with the terms of the Security Documents, the Company shall have
      delivered to the Collateral Agent (i) certificates representing the
      Subsidiaries' shares of capital stock, along with duly executed blank stock
      powers and (ii) appropriate financing statements on Form UCC-1 to be duly filed
      in such office or offices as may be necessary or, in the opinion of the
      Collateral Agent, desirable to perfect the security interests purported to
      be
      created by each Security Document.


    
      
        
        

      

      
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    (xv) Within
      one (1) Business Day prior to the Closing, the Company shall have delivered
      or
      caused to be delivered to each Buyer (A) certified copies of UCC search results,
      listing all effective financing statements which name as debtor the Company
      or
      any of its Subsidiaries filed in the prior five years to perfect an interest
      in
      any assets thereof, together with copies of such financing statements, none
      of
      which, except as otherwise agreed in writing by the Buyers, shall cover any
      of
      the Collateral (as defined in the Security Documents) and the results of
      searches for any tax lien and judgment lien filed against such Person or its
      property, which results, except as otherwise agreed to in writing by the Buyers
      shall not show any such Liens (as defined in the Security Documents); and (B)
      a
      perfection certificate, duly completed and executed by the Company and each
      of
      its Subsidiaries, in form and substance satisfactory to the Buyers.

     

    (xvi) The
      Company shall have delivered to such Buyer such other documents relating to
      the
      transactions contemplated by this Agreement as such Buyer or its counsel may
      reasonably request.

     

    8. TERMINATION.
      In
      the
      event that the Closing shall not have occurred with respect to a Buyer on or
      before five (5) Business Days from the date hereof due to the Company's or
      such
      Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above
      (and the nonbreaching party's failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on such date without
      liability of any party to any other party; provided,
      however,
      that if
      this Agreement is terminated pursuant to this Section 8 due to the Company's
      failure to satisfy the conditions set forth in Section 7 above, the Company
      shall remain obligated to reimburse the non-breaching Buyers for the expenses
      described in Section 4(g) above.

     

    9. MISCELLANEOUS.

     

    (a) Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. 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, 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 brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. 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 to such party at the address for such 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.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY. 


    
      
        
        

      

      
        -
          32
          -

        
          

        

      

      
        
        

      

    


    (b) Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      shall be considered one and the same agreement and shall become effective when
      counterparts have been signed by each party and delivered to the other party;
      provided that a facsimile signature shall be considered due execution and shall
      be binding upon the signatory thereto with the same force and effect as if
      the
      signature were an original, not a facsimile signature.

     

    (c) Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d) Severability.
      If any
      provision of this Agreement is prohibited by law or otherwise determined to
      be
      invalid or unenforceable by a court of competent jurisdiction, the provision
      that would otherwise be prohibited, invalid or unenforceable shall be deemed
      amended to apply to the broadest extent that it would be valid and enforceable,
      and the invalidity or unenforceability of such provision shall not affect the
      validity of the remaining provisions of this Agreement so long as this Agreement
      as so modified continues to express, without material change, the original
      intentions of the parties as to the subject matter hereof and the prohibited
      nature, invalidity or unenforceability of the provision(s) in question does
      not
      substantially impair the respective expectations or reciprocal obligations
      of
      the parties or the practical realization of the benefits that would otherwise
      be
      conferred upon the parties. The parties will endeavor in good faith negotiations
      to replace the prohibited, invalid or unenforceable provision(s) with a valid
      provision(s), the effect of which comes as close as possible to that of the
      prohibited, invalid or unenforceable provision(s).

     

    (e) Entire
      Agreement; Amendments.
      This
      Agreement and the other Transaction Documents supersede all other prior oral
      or
      written agreements between the Buyers, the Company, their affiliates and Persons
      acting on their behalf with respect to the matters discussed herein, and this
      Agreement, the other Transaction Documents and the instruments referenced herein
      and therein contain the entire understanding of the parties with respect to
      the
      matters covered herein and therein and, except as specifically set forth herein
      or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be amended other than by an instrument in writing signed
      by
      the Company and the holders of at least a majority of the aggregate number
      of
      Registrable Securities issued and issuable hereunder and under the Notes, and
      any amendment to this Agreement made in conformity with the provisions of this
      Section 9(e) shall be binding on all Buyers and holders of Securities, as
      applicable. No provision hereof may be waived other than by an instrument in
      writing signed by the party against whom enforcement is sought. No such
      amendment shall be effective to the extent that it applies to less than all
      of
      the holders of the applicable Securities then outstanding. 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 also is offered to all of the parties to the Transaction
      Documents, holders of Notes or holders of the Warrants, as the case may be.
      The
      Company has not, directly or indirectly, made any agreements with any Buyers
      relating to the terms or conditions of the transactions contemplated by the
      Transaction Documents except as set forth in the Transaction Documents. Without
      limiting the foregoing, the Company confirms that, except as set forth in this
      Agreement, no Buyer has made any commitment or promise or has any other
      obligation to provide any financing to the Company or
      otherwise.


    
      
        
        

      

      
        -
          33
          -

        
          

        

      

      
        
        

      

    


    (f) Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one Business Day after deposit with an overnight courier service,
      in
      each case properly addressed to the party to receive the same. The addresses
      and
      facsimile numbers for such communications shall be:

     

    
      	
              If
                to the Company:

            
	 
	 	
              RxElite,
                Inc.

            	 
	 	
              1404
                North Main

            
	 	
              Suite
                200

            
	 	
              Meridian,
                Idaho 83642

            
	 	
              Telephone:

            	
              208-288-5550

            
	 	
              Facsimile:

            	
              208-288-1191

            
	 	
              Attention:

            	
              Jonathan
                Houssian

            
	
              With
                a copy to:

            
	 
	 	
              Haynes
                and Boone, LLP

            
	 	
              153
                East 53rd Street, Suite 4900

            
	 	
              New
                York, NY 10022

            
	 	
              Telephone:

            	
              212-659-7300

            
	 	
              Facsimile:

            	
              212-918-8989

            
	 	
              Attention:

            	
              Harvey
                J. Kesner, Esq.

            
	 	 	 
	
              If
                to the Transfer Agent:

            
	 
	 	
              Empire
                Stock Transfer Inc.

            
	 	
              2470
                Saint Rose Parkway, Suite 304

            
	 	
              Henderson,
                Nevada 89074

            
	 	
              Telephone:

            	
              702-818-5898

            
	 	
              Facsimile:

            	
              702-974-1444

            
	 	
              Attention:

            	
              Patrick
                Mokros

            
	 	 	 


    

    If
      to a
      Buyer, to its address and facsimile number set forth on the Schedule of Buyers,
      with copies to such Buyer's representatives as set forth on the Schedule of
      Buyers,

     

    with
      a
      copy (for informational purposes only) to:

     

    
      	
              Schulte
                Roth & Zabel LLP

            
	
              919
                Third Avenue

            
	
              New
                York, New York 10022

            
	
              Telephone:

            	
              (212)
                756-2000

            
	
              Facsimile:

            	
              (212)
                593-5955

            
	
              Attention:

               

            	
              Eleazer
                N. Klein, Esq.

               

            


    


    
      
        
        

      

      
        -
          34
          -

        
          

        

      

      
        
        

      

    


    or
      to
      such other address and/or facsimile number and/or to the attention of such
      other
      Person as the recipient party has specified by written notice given to each
      other party five (5) days prior to the effectiveness of such change. Written
      confirmation of receipt (A) given by the recipient of such notice, consent,
      waiver or other communication, (B) mechanically or electronically generated
      by
      the sender's facsimile machine containing the time, date, recipient facsimile
      number and an image of the first page of such transmission or (C) provided
      by an
      overnight courier service shall be rebuttable evidence of personal service,
      receipt by facsimile or receipt from an overnight courier service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    (g) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns, including any purchasers of the Notes
      or the Warrants. The Company shall not assign this Agreement or any rights
      or
      obligations hereunder without the prior written consent of the holders of at
      least a majority of the aggregate number of Registrable Securities issued and
      issuable hereunder, including by way of a Fundamental Transaction (unless the
      Company is in compliance with the applicable provisions governing Fundamental
      Transactions set forth in the Notes and the Warrants). A Buyer may assign some
      or all of its rights hereunder without the consent of the Company, in which
      event such assignee shall be deemed to be a Buyer hereunder with respect to
      such
      assigned rights.

     

    (h) No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    (i) Survival.
      Unless
      this Agreement is terminated under Section 8, the representations and warranties
      of the Company and the Buyers contained in Sections 2 and 3, and the agreements
      and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each
      Buyer shall be responsible only for its own representations, warranties,
      agreements and covenants hereunder.

     

    (j) Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (k) Indemnification.
      In
      consideration of each Buyer's execution and delivery of the Transaction
      Documents and acquiring the Securities thereunder and in addition to all of
      the
      Company's other obligations under the Transaction Documents, the Company shall
      defend, protect, indemnify and hold harmless each Buyer and each other holder
      of
      the Securities and all of their stockholders, partners, members, officers,
      directors, employees and direct or indirect investors and any of the foregoing
      Persons' agents or other representatives (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the "Indemnitees")
      from
      and against any and all actions, causes of action, suits, claims, losses, costs,
      penalties, fees, liabilities and damages, and expenses in connection therewith
      (irrespective of whether any such Indemnitee is a party to the action for which
      indemnification hereunder is sought), and including reasonable attorneys' fees
      and disbursements (the "Indemnified
      Liabilities"),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (a)
      any misrepresentation or breach of any representation or warranty made by the
      Company in the Transaction Documents or any other certificate, instrument or
      document contemplated hereby or thereby, (b) any breach of any covenant,
      agreement or obligation of the Company contained in the Transaction Documents
      or
      any other certificate, instrument or document contemplated hereby or thereby
      or
      (c) any cause of action, suit or claim brought or made against such Indemnitee
      by a third party (including for these purposes a derivative action brought
      on
      behalf of the Company) and arising out of or resulting from (i) the execution,
      delivery, performance or enforcement of the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby, (ii) any
      transaction financed or to be financed in whole or in part, directly or
      indirectly, with the proceeds of the issuance of the Securities, (iii) any
      disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status
      of
      such Buyer or holder of the Securities as an investor in the Company pursuant
      to
      the transactions contemplated by the Transaction Documents. To the extent that
      the foregoing undertaking by the Company may be unenforceable for any reason,
      the Company shall make the maximum contribution to the payment and satisfaction
      of each of the Indemnified Liabilities that is permissible under applicable
      law.
      Except as otherwise set forth herein, the mechanics and procedures with respect
      to the rights and obligations under this Section 9(k) shall be the same as
      those
      set forth in Section 6 of the Registration Rights Agreement. This Section 9(k)
      shall not apply to any Indemnified Liabilities to the extent that such
      Indemnified Liabilities result from the willful misconduct or gross negligence
      of any Buyer.


    
      
        
        

      

      
        -
          35
          -

        
          

        

      

      
        
        

      

    


    (l) No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    (m) Remedies.
      Each
      Buyer and each holder of the Securities shall have all rights and remedies
      set
      forth in the Transaction Documents and all rights and remedies which such
      holders have been granted at any time under any other agreement or contract
      and
      all of the rights which such holders have under any law. Any Person having
      any
      rights under any provision of this Agreement shall be entitled to enforce such
      rights specifically (without posting a bond or other security), to recover
      damages by reason of any breach of any provision of this Agreement and to
      exercise all other rights granted by law. Furthermore, the Company recognizes
      that in the event that it fails to perform, observe, or discharge any or all
      of
      its obligations under the Transaction Documents, any remedy at law may prove
      to
      be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
      shall be entitled to seek temporary and permanent injunctive relief in any
      such
      case without the necessity of proving actual damages and without posting a
      bond
      or other security.

     

    (n) Rescission
      and
      Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Buyer exercises
      a
      right, election, demand or option under a Transaction Document and the Company
      does not timely perform its related obligations within the periods therein
      provided, then such Buyer 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.


    
      
        
        

      

      
        -
          36
          -

        
          

        

      

      
        
        

      

    


    (o) Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to the Buyers hereunder
      or
      pursuant to any of the other Transaction Documents or the Buyers enforce or
      exercise their rights hereunder or 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, foreign, 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.

     

    (p) Independent
      Nature of Buyers' Obligations and Rights.
      The
      obligations of each Buyer under any Transaction Document are several and not
      joint with the obligations of any other Buyer, and no Buyer shall be responsible
      in any way for the performance of the obligations of any other Buyer under
      any
      Transaction Document. Nothing contained herein or in any other Transaction
      Document, and no action taken by any Buyer pursuant hereto or thereto, shall
      be
      deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
      do not so constitute, a partnership, an association, a joint venture or any
      other kind of entity, or create a presumption that the Buyers are in any way
      acting in concert or as a group, and the Company will not assert any such claim
      with respect to such obligations or the transactions contemplated by the
      Transaction Documents and the Company acknowledges that, to the Company's
      knowledge, the Buyers are not acting in concert or as a group with respect
      to
      such obligations or the transactions contemplated by the Transaction Documents.
      The Company acknowledges and each Buyer confirms that it has independently
      participated in the negotiation of the transaction contemplated hereby with
      the
      advice of its own counsel and advisors. Each Buyer shall be entitled to
      independently protect and enforce its rights, including, without limitation,
      the
      rights arising out of this Agreement or out of any other Transaction Documents,
      and it shall not be necessary for any other Buyer to be joined as an additional
      party in any proceeding for such purpose.

     

    [Signature
      Page Follows]


    
      
        
        

      

      
        -
          37
          -

        
          

        

      

      
        
        

      

    

     

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

     

    
      	
              COMPANY:

            
	 
	
              RxELITE,
                INC.

            
	 
	 
	 	 
	
              By:

            	/s/
              Jonathan Houssian
	 	
              Name:
                Jonathan Houssian

            
	 	
              Title:  
                President and Chief Executive Officer

            
	 	 


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


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

     

    
      	
              BUYERS:

            
	 
	
              CASTLERIGG
                MASTER INVESTMENTS LTD.

            
	 
	By: 	SANDELL
              ASSET MANAGEMENT CORP.
	 	 
	
              By:

            	/s/
              Serge Adam
	 	
              Name:
                Serge Adam

            
	 	
              Title:  
                Senior Managing Director

            
	 	 


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    SCHEDULE
      OF BUYERS

     

    


    
      	
              (1)

               

            	
              (2)

               

            	
              (3)

               

            	
              (4)

               

            	
              (5)

               

            	
              (6)

               

            	
              (7)

               

            	
              (8)

               

            
	
              Buyer

            	
              Address
                and

              Facsimile
                Number

            	
              Aggregate

              Principal

              Amount
                of

              Notes

            	
              Number of
                

              Common
                Shares

            	
              Number of
                

              Series
                A Warrant Shares

            	
              Number of
                

              Series
                B Warrant Shares

            	
              Purchase
                Price

            	
              Legal Representative's
                Address and Facsimile 

              Number

            
	 	 	 	 	 	 	 	 
	
               

              Castlerigg
                Master Investments Ltd.

            	
              c/o
                Sandell Asset Management

              40
                West 57th St

              26th
                Floor

              New
                York, NY 10019

              Attention:
                Cem Hacioglu/Matthew Pliskin

              Fax:
                212-603-5710

              Telephone:
                212-603-5700

              Residence:
                British Virgin Islands

            	
              $10,500,000

               

            	
              5,594,033

               

            	
              13,985,083

               

            	
              4,661,694

               

            	
              $10,500,000

               

            	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, New York 10022

              Attention:
                Eleazer Klein, Esq.

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2376

               

            


    

    



    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    EXHIBITS

     

    
      	
              Exhibit
                A

            	
              Form
                of Notes

            
	
              Exhibit
                B-1

            	
              Form
                of Series A Warrants

            
	
              Exhibit
                B-2

            	
              Form
                of Series B Warrants

            
	
              Exhibit
                C

            	
              Form
                of Registration Rights Agreement

            
	
              Exhibit
                D

            	
              Form
                of Pledge Agreement

            
	
              Exhibit
                E

            	
              Form
                of Security Agreement

            
	
              Exhibit
                F

            	
              Form
                of Guaranty

            
	
              Exhibit
                G

            	
              Form
                of Irrevocable Transfer Agent Instructions

            
	
              Exhibit
                H

            	
              Form
                of Opinion of Company's Counsel

            
	
              Exhibit
                I

            	
              Form
                of Secretary's Certificate

            
	
              Exhibit
                J

            	
              Form
                of Officer's Certificate

            
	
              Exhibit
                K

            	
              Form
                of Put Option Agreement

            
	
              Exhibit
                L

               

            	
              Form
                of Tiburon Pledge Agreement

               

            


    

    


    SCHEDULES

     

    
      	
              Schedule
                3(a)

            	
              Subsidiaries

            
	
              Schedule
                3(k)

            	
              SEC
                Documents

            
	
              Schedule
                3(l)

            	
              Absence
                of Certain Changes

            
	
              Schedule
                3(q)

            	
              Transactions
                with Affiliates

            
	
              Schedule
                3(r)

            	
              Equity
                Capitalization

            
	
              Schedule
                3(s)

            	
              Indebtedness
                and Other Contracts

            
	
              Schedule
                3(t)

            	
              Absence
                of Litigation

            
	
              Schedule
                3(x) 

            	
              Intellectual
                Property Rights

            
	
              Schedule
                3(z)

            	
              Subsidiary
                Rights

            
	
              Schedule
                3(ee)

            	
              Ranking
                of Notes

            
	
              Schedule
                4(d)

            	
              Use
                of Proceeds

            
	
              Schedule
                4(i)

            	
              Disclosure
                of Transactions and Other Material
                Information