Exhibit
      10.1

    EXECUTION
      COPY

    


    COMMON
      STOCK PURCHASE AGREEMENT

    


    COMMON
      STOCK PURCHASE AGREEMENT
      (the
“Agreement”), dated as of October 21, 2005 by and between GLYCOGENESYS,
      INC.,
      a
      Nevada corporation (the “Company”), and FUSION
      CAPITAL FUND II, LLC,
      an
      Illinois limited liability company (the “Buyer”). Capitalized terms used herein
      and not otherwise defined herein are defined in Section 10 hereof. 

    


    WHEREAS:

    


    Subject
      to the terms and conditions set forth in this Agreement, the Company wishes
      to
      sell to the Buyer, and the Buyer wishes to buy from the Company, up to Twenty
      Million Dollars ($20,000,000) of the Company's common stock, par value $0.01
      per
      share (the “Common Stock”). The shares of Common Stock to be purchased hereunder
      are referred to herein as the "Purchase Shares." 

    


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

    


    1.
       PURCHASE
      OF COMMON STOCK. 

    


    Subject
      to the terms and conditions set forth in Sections 6, 7 and 9 below, the Company
      hereby agrees to sell to the Buyer, and the Buyer hereby agrees to purchase
      from
      the Company, Purchase Shares as follows:

    


    (a) Commencement
      of Purchases of Common Stock.
      The
      purchase and sale of Purchase Shares hereunder shall commence (the
      "Commencement") within five (5) Trading Days following the date of satisfaction
      of the conditions to the Commencement set forth in Sections 6 and 7 below (the
      date of such Commencement, the "Commencement Date"). 

    


    (b) Buyer's
      Purchase Rights and Obligations.
      Subject
      to the Company’s right to suspend purchases under Section 1(d)(ii) hereof, the
      Buyer shall buy Purchase Shares (“Daily Purchases”) on each Trading Day during
      each Monthly Period equal to the Daily Purchase Amount (as defined in Section
      1(c)(i)) at the Purchase Price. From time to time, the Company shall also have
      the right but not the obligation, by its delivery to the Buyer of a Block
      Purchase Notice (as defined in Section 1(c)(iv)), to require the Buyer to buy
      Purchase Shares (a “Block Purchase”) equal to the Block Purchase Amount (as
      defined in Section 1(c)(iv)) at the Block Purchase Price (as defined in Section
      1(c)(iv)). The
      Buyer
      shall promptly pay to the Company an amount equal to the Purchase Amount with
      respect to such Purchase Shares as full payment for the purchase of the Purchase
      Shares so received. The Company shall not issue any fraction of a share of
      Common Stock upon any purchase. If the issuance would result in the issuance
      of
      a fraction of a share of Common Stock, the Company shall round such fraction
      of
      a share of Common Stock up or down to the nearest whole share. All payments
      made
      under this Agreement shall be made in lawful money of the United States of
      America by check or wire transfer of immediately available funds to such account
      as the Company may from time to time designate by written notice in accordance
      with the provisions of this Agreement. Whenever any amount expressed to be
      due
      by the terms of this Agreement is due on any day that is not a Trading Day,
      the
      same shall instead be due on the next succeeding day which is a Trading
      Day.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c) The
      Daily Purchase Amount; Company's Right to Decrease or Increase the Daily
      Purchase Amount; the Block Purchase Amount.

    


    (i) The
      Daily Purchase Amount.
      As used
      herein the term “Original Daily Purchase Amount” shall mean Forty Thousand
      Dollars ($40,000) per Trading Day. As used herein, the term “Daily Purchase
      Amount” shall mean initially Forty Thousand Dollars ($40,000) per Trading Day,
      which amount may be increased or decreased from time to time pursuant to this
      Section 1(c).

    


    (ii) Company’s
      Right to Decrease the Daily Purchase Amount.
      The
      Company shall always have the right at any time to decrease the amount of the
      Daily Purchase Amount by delivering written notice (a “Daily Purchase Amount
      Decrease Notice”) to the Buyer which notice shall specify the new Daily Purchase
      Amount. The decrease in the Daily Purchase Amount shall become effective one
      Trading Day after receipt by the Buyer of the Daily Purchase Amount Decrease
      Notice. Any purchases by the Buyer which have a Purchase Date on or prior to
      the
      first (1st) Trading Day after receipt by the Buyer of a Daily Purchase Amount
      Decrease Notice must be honored by the Company as otherwise provided herein.
      The
      decrease in the Daily Purchase Amount shall remain in effect until the Company
      delivers to the Buyer a Daily Purchase Amount Increase Notice (as defined
      below).

    


    (iii) Company’s
      Right to Increase the Daily Purchase Amount.
      The
      Company shall have the right (but not the obligation) to increase the amount
      of
      the Daily Purchase Amount in accordance with the terms and conditions set forth
      in this Section 1(c)(iii) by delivering written notice to the Buyer stating
      the
      new amount of the Daily Purchase Amount (a “Daily Purchase Amount Increase
      Notice”). A Daily Purchase Amount Increase Notice shall be effective five (5)
      Trading Days after receipt by the Buyer. The Company shall always have the
      right
      at any time to increase the amount of the Daily Purchase Amount up to the
      Original Daily Purchase Amount. With respect to increases in the Daily Purchase
      Amount above the Original Daily Purchase Amount, as the market price for the
      Common Stock increases the Company shall have the right from time to time to
      increase the Daily Purchase Amount as follows. For every $0.10 increase in
      Threshold Price above $1.25 (subject to equitable adjustment for any
      reorganization, recapitalization, non-cash dividend, stock split or other
      similar transaction), the Company shall have the right to increase the Daily
      Purchase Amount by up to an additional $4,000 in excess of the Original Daily
      Purchase Amount. “Threshold Price” for purposes hereof means the lowest Sale
      Price of the Common Stock during the five (5) consecutive Trading Days
      immediately prior to the submission to the Buyer of a Daily Purchase Amount
      Increase Notice (subject to equitable adjustment for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar transaction).
      For example, if the Threshold Price is $1.35, the Company shall have the right
      to increase the Daily Purchase Amount to up to $44,000 in the aggregate. If
      the
      Threshold Price is $1.75, the Company shall have the right to increase the
      Daily
      Purchase Amount to up to $60,000 in the aggregate. Any increase in the amount
      of
      the Daily Purchase Amount shall continue in effect until the delivery to the
      Buyer of a Daily Purchase Amount Decrease Notice. However, if at any time during
      any Trading Day the Sale Price of the Common Stock is below the applicable
      Threshold Price, such increase in the Daily Purchase Amount shall be void and
      the Buyer’s obligations to buy Purchase Shares hereunder in excess of the
      applicable maximum Daily Purchase Amount shall be terminated (e.g., if the
      Company has issued a Daily Purchase Amount Increase Notice to purchase $60,000
      but the Sale Price of the Common Stock subsequently is $1.65, the Daily Purchase
      Amount shall be reduced to $56,000). Thereafter, the Company shall again have
      the right to increase the amount of the Daily Purchase Amount as set forth
      herein by delivery of a new Daily Purchase Amount Increase Notice only if the
      Sale Price of the Common Stock is above the applicable Threshold Price on each
      of five (5) consecutive Trading Days immediately prior to such new Daily
      Purchase Amount Increase Notice.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (iv) The
      Block Purchase Amount.
      As used
      herein the term “Block Purchase Amount” shall mean such Purchase Amount as
      specified by the Company in a Block Purchase Notice. As used herein the term
      “Block Purchase Notice” shall mean an irrevocable written notice from the
      Company to the Buyer directing the Buyer to buy the Purchase Amount in Purchase
      Shares as specified by the Company therein at the Block Purchase Price. For
      a
      Block Purchase Notice to be valid the following conditions must be met: (1)
      the
      Block Purchase Amount shall not exceed Two Hundred Fifty Thousand Dollars
      ($250,000) per Block Purchase Notice, (2) the Company must deliver the Purchase
      Shares (based on a reasonable good faith estimate with any actual difference
      in
      the number of Purchase Shares to be settled within two Trading Days) on the
      same
      day as the Block Purchase Notice is delivered and (3) the Sale Price of the
      Common Stock must have been above $1.75 (subject to equitable adjustment for
      any
      reorganization, recapitalization, non-cash dividend, stock split or other
      similar transaction) during the ten (10) Trading Days prior to the delivery
      of
      the Block Purchase Notice. The Block Purchase Amount may be increased to up
      to
      $500,000 if the Sale Price of the Common Stock is above $2.75 (subject to
      equitable adjustment for any reorganization, recapitalization, non-cash
      dividend, stock split or other similar transaction) during the ten (10) Trading
      Days prior to the delivery of the Block Purchase Notice. The Block Purchase
      Amount may be increased to up to $750,000 if the Sale Price of the Common Stock
      is above $3.75 (subject to equitable adjustment for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar transaction)
      during the ten (10) Trading Days prior to the delivery of the Block Purchase
      Notice. The Block Purchase Amount may be increased to up to $1,000,000 if the
      Sale Price of the Common Stock is above $4.75 (subject to equitable adjustment
      for any reorganization, recapitalization, non-cash dividend, stock split or
      other similar transaction) during the ten (10) Trading Days prior to the
      delivery of the Block Purchase Notice. The Company may deliver multiple Block
      Purchase Notices as it shall determine; provided however, at least ten (10)
      Trading Days must have passed since the most recent Block Purchase was
      completed. As used herein, the term “Block Purchase Price” shall mean the lesser
      of (i) the lowest Sale Price of the Common Stock on the Trading Day that a
      valid
      Block Purchase Notice was received by the Buyer or (ii) the lowest Purchase
      Price during the previous fifteen (15) Trading Days prior to the date that
      the
      valid Block Purchase Notice was received by the Buyer.  

    


    (d) Limitations
      on Purchases.

    


    (i) Limitation
      on Beneficial Ownership.
      The
      Buyer shall not have the right or the obligation to purchase shares of Common
      Stock under this Agreement to the extent that after giving effect to such
      purchase the Buyer together with its affiliates would beneficially own in excess
      of 9.9% of the outstanding shares of the Common Stock following such purchase.
      For purposes hereof, the number of shares of Common Stock beneficially owned
      by
      the Buyer and its affiliates or acquired by the Buyer and its affiliates, as
      the
      case may be, shall include the number of shares of Common Stock issuable in
      connection with a purchase under this Agreement with respect to which the
      determination is being made, but shall exclude the number of shares of Common
      Stock which would be issuable upon (1) a purchase of the remaining Available
      Amount which has not been submitted for purchase, and (2) exercise or conversion
      of the unexercised or unconverted portion of any other securities of the Company
      (including, without limitation, any notes or warrants) subject to a limitation
      on conversion or exercise analogous to the limitation contained herein
      beneficially owned by the Buyer and its affiliates. 
      For
      purposes of this Section, in determining the number of outstanding shares of
      Common Stock the Buyer may rely on the number of outstanding shares of Common
      Stock as reflected in (1) the Company's most recent Form 10-Q or Form 10-K,
      as
      the case may be, (2) a more recent public announcement by the Company or (3)
      any
      other written communication by the Company or its Transfer Agent setting forth
      the number of shares of Common Stock outstanding. Upon the reasonable written
      or
      oral request of the Buyer, the Company shall promptly confirm orally and in
      writing to the Buyer the number of shares of Common Stock then outstanding.
      In
      any case, the number of outstanding shares of Common Stock shall be determined
      after giving effect to any purchases under this Agreement by the Buyer since
      the
      date as of which such number of outstanding shares of Common Stock was reported.
      Except as otherwise set forth herein, for purposes of this Section 1(d)(i),
      beneficial ownership shall be determined in accordance with Section 13(d) of
      the
      Securities Exchange Act of 1934, as amended.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (ii) Company's
      Right to Suspend Purchases.
      The
      Company may, at any time, give written notice (a " Daily Purchase Suspension
      Notice") to the Buyer suspending Daily Purchases of Purchase Shares by the
      Buyer
      under this Agreement. The Daily Purchase Suspension Notice shall be effective
      only for Daily Purchases that have a Purchase Date later than one (1) Trading
      Day after receipt of the Daily Purchase Suspension Notice by the Buyer. Any
      Daily Purchase by the Buyer that has a Purchase Date on or prior to the first
      (1st) Trading Day after receipt by the Buyer of a Daily Purchase Suspension
      Notice from the Company must be honored by the Company as otherwise provided
      herein. Such Daily Purchase suspension shall continue in effect until a
      revocation in writing by the Company, at its sole discretion. 

    


    (iii) Purchase
      Price Floor.
      The
      Company shall not affect any sales under this Agreement and the Buyer shall
      not
      have the right nor the obligation to purchase any Purchase Shares under this
      Agreement on any Trading Day where the Purchase Price for any purchases of
      Purchase Shares would be less than the Floor Price. “Floor Price” means $0.25,
      which shall
      be
      appropriately adjusted for any reorganization, recapitalization, non-cash
      dividend, stock split or other similar transaction.

    


    (e) Records
      of Purchases.
      The
      Buyer and the Company shall each maintain records showing the remaining
      Available Amount at any give time and the dates and Purchase Amounts for each
      purchase or shall use such other method, reasonably satisfactory to the Buyer
      and the Company.

    


    (f) Taxes.
      The
      Company shall pay any and all transfer, stamp or similar taxes that may be
      payable with respect to the issuance and delivery of any shares of Common Stock
      to the Buyer made under this Agreement.

    


    (g) Compliance
      with Principal Market Rules.
      The
      Company shall not effect any sale under this Agreement and the Buyer shall
      not
      have the right or the obligation to purchase shares of Common Stock under this
      Agreement to the extent that after giving effect to such purchase the "Exchange
      Cap" shall be deemed to be reached. The "Exchange Cap" shall be deemed to have
      been reached if, at any time prior to the shareholders of the Company approving
      the transaction contemplated by this Agreement, upon a purchase under this
      Agreement, the Purchase Shares issuable pursuant to such purchase would,
      together with all Purchase Shares previously issued under this Agreement, exceed
      2,716,159 shares of Common Stock (19.99% of the 13,587,590 outstanding shares
      of
      Common Stock as of the date of this Agreement). The Company may, but shall
      be
      under no obligation to, request its shareholders to approve the transaction
      contemplated by this Agreement. The Company shall not be required to issue
      any
      shares of Common Stock under this Agreement if such issuance would breach the
      Company's obligations under the rules or regulations of the Principal
      Market. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    2. BUYER'S
      REPRESENTATIONS AND WARRANTIES.

    


    The
      Buyer
      represents and warrants to the Company that as of the date hereof and as of
      the
      Commencement Date: 

    


    (a) Investment
      Purpose.
      The
      Buyer is entering into this Agreement and acquiring the Commitment Shares,
      (as
      defined in Section 4(f) hereof) (this Agreement and the Commitment Shares
 are
      collectively referred to herein as the "Securities"), for its own account for
      investment only and not with a view towards, or for resale in connection with,
      the public sale or distribution thereof; provided however, by making the
      representations herein, the Buyer does not agree to hold any of the Securities
      for any minimum or other specific term.

     

    (b) Accredited
      Investor Status.
      The
      Buyer is an "accredited investor" as that term is defined in Rule 501(a)(3)
      of
      Regulation D.

    


    (c) Reliance
      on Exemptions.
      The
      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 the Buyer's compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      the Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of the Buyer to acquire the
      Securities.

    


    (d) Information.
      The
      Buyer has 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 that have been reasonably requested by the Buyer, including,
      without limitation, the SEC Documents (as defined in Section 3(f) hereof).
      The
      Buyer understands that its investment in the Securities involves a high degree
      of risk. The Buyer (i) is able to bear the economic risk of an investment in
      the
      Securities including a total loss, (ii) has such knowledge and experience in
      financial and business matters that it is capable of evaluating the merits
      and
      risks of the proposed investment in the Securities and (iii) has had an
      opportunity to ask questions of and receive answers from the officers of the
      Company concerning the financial condition and business of the Company and
      others matters related to an investment in the Securities. Neither such
      inquiries nor any other due diligence investigations conducted by the Buyer
      or
      its representatives shall modify, amend or affect the Buyer's right to rely
      on
      the Company's representations and warranties contained in Section 3 below.
      The
      Buyer has sought such accounting, legal and tax advice as it has considered
      necessary to make an informed investment decision with respect to its
      acquisition of the Securities.

    


    (e) No
      Governmental Review.
      The
      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.
      The
      Buyer understands that except as provided in the Registration Rights Agreement
      (as defined in Section 4(a) hereof): (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 or (B) an exemption exists permitting such Securities
      to
      be sold, assigned or transferred without such registration; (ii) any sale of
      the
      Securities made in reliance on Rule 144 may be made only in accordance with
      the
      terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
      the
      Securities under circumstances in which the seller (or the person through whom
      the sale is made) may be deemed to be an underwriter (as that term is defined
      in
      the 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.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g) Validity;
      Enforcement.
      This
      Agreement has been duly and validly authorized, executed and delivered on behalf
      of the Buyer and is a valid and binding agreement of the Buyer enforceable
      against the Buyer in accordance with its terms, subject as to enforceability
      to
      general principles of equity and to applicable bankruptcy, insolvency,
      reorganization, moratorium, liquidation and other similar laws relating to,
      or
      affecting generally, the enforcement of applicable creditors' rights and
      remedies. 

    


    (h) Residency.
      The
      Buyer is a resident of the State of Illinois.

    


    (i) No
      Prior Short Selling.
      The
      Buyer represents and warrants to the Company that at no time prior to the date
      of this Agreement has any of the Buyer, its agents, representatives or
      affiliates engaged in or effected, in any manner whatsoever, directly or
      indirectly, any (i) "short sale" (as such term is defined in Rule 3b-3 of the
      Securities Exchange Act of 1934, as amended (the "1934 Act")) of the Common
      Stock or (ii) hedging transaction, which establishes a net short position with
      respect to the Common Stock.

    


    


    3. REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

    


    The
      Company represents and warrants to the Buyer that as of the date hereof and
      as
      of the Commencement Date:

    


    (a) Organization
      and Qualification.
      The
      Company and its "Subsidiaries" (which for purposes of this Agreement means
      any
      entity in which the Company, directly or indirectly, owns 50% or more of the
      voting stock or capital stock or other similar equity interests) are
      corporations duly organized and validly existing in good standing under the
      laws
      of the jurisdiction in which they are incorporated, and have the requisite
      corporate power and authority to own their properties and to carry on their
      business as now being conducted. Each of the Company and its Subsidiaries is
      duly qualified as a foreign corporation to do business and is in good standing
      in every jurisdiction in which 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 could not
      reasonably be expected to have a Material Adverse Effect. As used in this
      Agreement, "Material Adverse Effect" means any material adverse effect on any
      of: (i) the business, properties, assets, operations, results of operations
      or
      financial condition of the Company and its Subsidiaries, if any, taken as a
      whole, or (ii) the authority or ability of the Company to perform its
      obligations under the Transaction Documents (as defined in Section 3(b) hereof).
      The Company has no Subsidiaries except as set forth on Schedule
      3(a).

    


    (b) Authorization;
      Enforcement; Validity.
      (i) The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement, the Registration Rights Agreement
      and each of the other agreements entered into by the parties on the Commencement
      Date and attached hereto as exhibits to this Agreement (collectively, the
      "Transaction Documents"), and to issue the Securities in accordance with the
      terms hereof and thereof, (ii) the execution and delivery of the Transaction
      Documents by the Company and the consummation by it of the transactions
      contemplated hereby and thereby, including without limitation, the issuance
      of
      the Commitment Shares and the reservation for issuance and the issuance of
      the
      Purchase Shares issuable under this Agreement, have been duly authorized by
      the
      Company's Board of Directors and no further consent or authorization is required
      by the Company, its Board of Directors or its shareholders, except to comply
      with the Exchange Cap, (iii) this Agreement has been, and each other Transaction
      Document shall be on the Commencement Date, duly executed and delivered by
      the
      Company and (iv) this Agreement constitutes, and each other Transaction Document
      upon its execution on behalf of the Company, shall constitute, the valid and
      binding obligations of the Company enforceable against the Company in accordance
      with their terms, except as such enforceability may be limited by general
      principles of equity or applicable bankruptcy, insolvency, reorganization,
      moratorium, liquidation or similar laws relating to, or affecting generally,
      the
      enforcement of creditors' rights and remedies. The Board of Directors of the
      Company has approved the resolutions (the “Signing Resolutions”) substantially
      in the form as set forth as Exhibit
      C-1
      attached
      hereto to authorize this Agreement and the transactions contemplated hereby.
      The
      Signing Resolutions are valid, in full force and effect and have not been
      modified or supplemented in any respect other than by the resolutions set forth
      in Exhibit
      C-2
      attached
      hereto regarding the registration statement referred to in Section 4 hereof.
      The
      Company has delivered to the Buyer a true and correct copy of the Signing
      Resolutions as approved by the Board of Directors of the Company as certified
      by
      the Secretary of the Company. No other approvals or consents of the Company’s
      Board of Directors and/or shareholders is necessary under applicable laws and
      the Company’s Certificate of Incorporation and/or Bylaws to authorize the
      execution and delivery of this Agreement or any of the transactions contemplated
      hereby, including, but not limited to, the issuance of the Commitment Shares
      and
      the issuance of the Purchase Shares.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c) Capitalization.
      As of
      the date hereof, the authorized capital stock of the Company consists of (i)
      75,000,000 shares of Common Stock, of which as of the date hereof, 13,587,590
      shares are issued and outstanding, no shares are held as treasury shares,
      1,662,500 shares are reserved for issuance pursuant to the Company's stock
      option plans of which only approximately 859,086 shares remain available for
      future grants and 15,154,009 shares are issuable and reserved for issuance
      pursuant to securities (other than stock options issued pursuant to the
      Company's stock option plans) exercisable or exchangeable for, or convertible
      into, shares of Common Stock and (ii) 5,000,000 shares of Preferred Stock,
      $0.01
      par value, of which as of the date hereof 6153.51 shares of Series A preferred
      stock, with a $2,430 per share liquidation preference 3471.15 shares of Series
      B
      preferred stock with a $2,115.13 per share liquidation preference and 3159.31
      shares of Series D preferred stock are issued and outstanding with a $1,000
      per
      share liquidation preference. 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(c), (i) no shares of the Company's capital stock are
      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
      debt securities, (iii) 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, any shares of 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 shares of 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, any shares of capital stock of the Company or any of its
      Subsidiaries, (iv) 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 the Registration Rights Agreement),
      (v) there are no outstanding securities or instruments of the Company or any
      of
      its Subsidiaries which contain any redemption or similar provisions, and there
      are no contracts, commitments, understandings or arrangements by which the
      Company or any of its Subsidiaries is or may become bound to redeem a security
      of the Company or any of its Subsidiaries, (vi) there are no securities or
      instruments containing anti-dilution or similar provisions that will be
      triggered by the issuance of the Securities as described in this Agreement
      and
      (vii) the Company does not have any stock appreciation rights or "phantom stock"
      plans or agreements or any similar plan or agreement. The Company has furnished
      to the Buyer true and correct 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 By-laws, as amended and as in effect
      on
      the date hereof (the "By-laws"), and summaries of the terms of all securities
      convertible into or exercisable for Common Stock, if any, and copies of any
      documents containing the material rights of the holders thereof in respect
      thereto.

    


    (d) Issuance
      of Securities.
      The
      Commitment Shares have been duly authorized and, upon issuance in accordance
      with the terms hereof, the Commitment Shares shall be (i) validly issued, fully
      paid and non-assessable and (ii) free from all taxes, liens and charges with
      respect to the issue thereof. 8,000,000 shares of Common Stock have been duly
      authorized and reserved for issuance upon purchase under this Agreement. 338,819
      shares of Common Stock (subject to equitable adjustment for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar transaction)
      have been duly authorized and reserved for issuance as Additional Commitment
      Shares in accordance with Section 4(f) this Agreement. Upon
      issuance and payment therefor in accordance with the terms and conditions of
      this Agreement, the Purchase Shares shall be validly issued, fully paid and
      nonassessable and free from all 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.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (e) No
      Conflicts.
      Except
      as disclosed in Schedule 3(e), 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
      reservation for issuance and issuance of the Purchase Shares) will not (i)
      result in a violation of the Certificate of Incorporation, any Certificate
      of
      Designations, Preferences and Rights of any outstanding series of preferred
      stock of the Company or the By-laws 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
      the Company or any of its Subsidiaries is a party, or result in a violation
      of
      any law, rule, regulation, order, judgment or decree (including federal and
      state securities laws and regulations and the rules and regulations of 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 case of conflicts, defaults and violations under
      clause (ii), which could not reasonably be expected to result in a Material
      Adverse Effect. Except as disclosed in Schedule 3(e), neither the Company nor
      its Subsidiaries is in violation of any term of or in default under its
      Certificate of Incorporation, any Certificate of Designation, Preferences and
      Rights of any outstanding series of preferred stock of the Company or By-laws
      or
      their organizational charter or by-laws, respectively. Except as disclosed
      in
      Schedule 3(e), neither the Company nor any of its Subsidiaries is in violation
      of any term of or is in default under any material contract, agreement,
      mortgage, indebtedness, indenture, instrument, judgment, decree or order or
      any
      statute, rule or regulation applicable to the Company or its Subsidiaries,
      except for possible conflicts, defaults, terminations or amendments which could
      not reasonably be expected to have a Material Adverse Effect. The business
      of
      the Company and its Subsidiaries is not being conducted, and shall not be
      conducted, in violation of any law, ordinance, regulation of any governmental
      entity, except for possible violations, the sanctions for which either
      individually or in the aggregate could not reasonably be expected to have a
      Material Adverse Effect. Except as specifically contemplated by this Agreement
      and as required under the 1933 Act or applicable state securities laws, the
      Company is not required to obtain any consent, authorization or order of, or
      make any filing or registration with, any court or governmental agency or any
      regulatory or self-regulatory agency in order for it to execute, deliver or
      perform any of its obligations under or contemplated by the Transaction
      Documents in accordance with the terms hereof or thereof. Except as disclosed
      in
      Schedule 3(e), all consents, authorizations, orders, filings and registrations
      which the Company is required to obtain pursuant to the preceding sentence
      shall
      be obtained or effected on or prior to the Commencement Date. Except as listed
      in Schedule 3(e), since October 1, 2004, the Company has not received nor
      delivered any notices or correspondence from or to the Principal Market. The
      Principal Market has not commenced any delisting proceedings against the
      Company.

    


    (f) SEC
      Documents; Financial Statements.
      Except
      as disclosed in Schedule 3(f), since January 1, 2004, the Company has timely
      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 and schedules thereto and documents
      incorporated by reference therein being hereinafter referred to as the "SEC
      Documents"). As of their respective dates (except as they have been correctly
      amended), 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 (except as they may have
      been properly amended), contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading. As of their respective dates (except as they
      have been properly amended), 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). Except as listed
      in
      Schedule 3(f), the Company has received no notices or correspondence from the
      SEC since January 1, 2004.
      The SEC
      has not commenced any enforcement proceedings against the Company or any of
      its
      subsidiaries.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g) Absence
      of Certain Changes.
      Except
      as disclosed in Schedule 3(g), since June 30, 2005, there has been no material
      adverse change in the business, properties, operations, financial condition
      or
      results of operations of the Company or its Subsidiaries. The Company has not
      taken any steps, and does not currently expect to take any steps, to seek
      protection pursuant to any Bankruptcy Law nor does the Company or any of its
      Subsidiaries have any knowledge or reason to believe that its creditors intend
      to initiate involuntary bankruptcy or
      insolvency proceedings. As of the date of this Agreement, the Company has
      positive stockholders’ equity and, upon receipt of the funds available through
      the purchase by the Buyer of the Purchase Shares under this Agreement, will
      be
      generally able to pay its debts as they become due.

    


    (h) Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body pending
      or, to the knowledge of the Company or any of its Subsidiaries, threatened
      against or affecting the Company, the Common Stock or any of the Company's
      Subsidiaries or any of the Company's or the Company's Subsidiaries' officers
      or
      directors in their capacities as such, which could reasonably be expected to
      have a Material Adverse Effect. A description of each action, suit, proceeding,
      inquiry or investigation before or by any court, public board, government
      agency, self-regulatory organization or body which, as of the date of this
      Agreement, is pending or threatened in writing against or affecting the Company,
      the Common Stock or any of the Company's Subsidiaries or any of the Company's
      or
      the Company's Subsidiaries' officers or directors in their capacities as such,
      is set forth in Schedule 3(h).

    


    (i) Acknowledgment
      Regarding Buyer's Status.
      The
      Company acknowledges and agrees that the Buyer is acting solely in the capacity
      of arm's length purchaser with respect to the Transaction Documents and the
      transactions contemplated hereby and thereby. The Company further acknowledges
      that the Buyer is not acting as a financial advisor or fiduciary of the Company
      (or in any similar capacity) with respect to the Transaction Documents and
      the
      transactions contemplated hereby and thereby and any advice given by the 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 the Buyer's purchase of the Securities. The Company further
      represents to the 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 and advisors.

    


    (j) No
      General Solicitation.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D under the 1933 Act) in connection with
      the
      offer or sale of the Securities.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (k) Intellectual
      Property Rights.
      The
      Company and its Subsidiaries own or possess adequate rights or licenses to
      use
      all material trademarks, trade names, service marks, service mark registrations,
      service names, patents, patent rights, copyrights, inventions, licenses,
      approvals, governmental authorizations, trade secrets and rights necessary
      to
      conduct their respective businesses as now conducted. Except as set forth on
      Schedule 3(k), none of the Company's material trademarks, trade names, service
      marks, service mark registrations, service names, patents, patent rights,
      copyrights, inventions, licenses, approvals, government authorizations, trade
      secrets or other intellectual property rights have expired or terminated, or,
      by
      the terms and conditions thereof, could expire or terminate within two years
      from the date of this Agreement. The Company and its Subsidiaries do not have
      any knowledge of any infringement by the Company or its Subsidiaries of any
      material trademark, trade name rights, patents, patent rights, copyrights,
      inventions, licenses, service names, service marks, service mark registrations,
      trade secret or other similar rights of others, or of any such development
      of
      similar or identical trade secrets or technical information by others and,
      except as set forth on Schedule 3(k), there is no claim, action or proceeding
      being made or brought against, or to the Company's knowledge, being threatened
      against, the Company or its Subsidiaries regarding trademark, trade name,
      patents, patent rights, invention, copyright, license, service names, service
      marks, service mark registrations, trade secret or other infringement, which
      could reasonably be expected to have a Material Adverse Effect.

    


    (l) Environmental
      Laws.
      The
      Company and its Subsidiaries (i) are in compliance with any and all applicable
      foreign, federal, state and local laws and regulations relating to the
      protection of human health and safety, the environment or hazardous or toxic
      substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii)
      have received all permits, licenses or other approvals required of them under
      applicable Environmental Laws to conduct their respective businesses and (iii)
      are in compliance with all terms and conditions of any such permit, license
      or
      approval, except where, in each of the three foregoing clauses, the failure
      to
      so comply could not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect.

    


    (m) Title.
      The
      Company and its Subsidiaries have good and marketable title in fee simple to
      all
      real property and 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
      are described in Schedule 3(m) or 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.

    


    (n) 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 materially and
      adversely affect the condition, financial or otherwise, or the earnings,
      business or operations of the Company and its Subsidiaries, taken as a
      whole.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (o) Regulatory
      Permits.
      The
      Company and its Subsidiaries possess all material certificates, authorizations
      and permits issued by the appropriate federal, state or foreign regulatory
      authorities necessary to conduct their respective businesses, and neither the
      Company nor any such Subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

    


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

    


    (q) Transactions
      With Affiliates.
      Except
      as set forth on Schedule 3(q) and other than the grant or exercise of stock
      options disclosed on Schedule 3(c), 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 services as employees,
      officers and directors), including any contract, agreement or other arrangement
      providing for the furnishing of services to or by, providing for rental of
      real
      or personal property to or from, or otherwise requiring payments to or from
      any
      officer, director or such employee or, to the knowledge of the Company, any
      corporation, partnership, trust or other entity in which any officer, director,
      or any such employee has an interest or is an officer, director, trustee or
      partner.

    


    (r) Application
      of Takeover Protections.
      The
      Company and its board of directors have taken or will take prior to the
      Commencement Date 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 or the laws of the state of its
      incorporation which is or could become applicable to the Buyer as a result
      of
      the transactions contemplated by this Agreement, including, without limitation,
      the Company's issuance of the Securities and the Buyer's ownership of the
      Securities.

    


    (s) 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, used any corporate funds for any unlawful contribution, gift,
      entertainment or other unlawful expenses relating to political activity; made
      any direct or indirect unlawful payment to any foreign or domestic government
      official or employee from corporate funds; violated or is in violation of any
      provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
      made
      any unlawful bribe, rebate, payoff, influence payment, kickback or other
      unlawful payment to any foreign or domestic government official or
      employee.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    4. COVENANTS.

    


    (a) Filing
      of Form 8-K and Registration Statement.
      The
      Company agrees that it shall, within the time required under the 1934 Act file
      a
      Report on Form 8-K disclosing this Agreement and the transaction contemplated
      hereby. The Company shall also file within twenty (20) Trading Days from the
      date hereof a new registration statement covering only the sale of the
      Commitment Shares and at least 8,000,000 Purchase Shares in accordance with
      the
      terms of the Registration Rights Agreement between the Company and the Buyer,
      dated as of the date hereof (“Registration Rights Agreement”). After such
      registration statement is declared effective by the SEC, the Company agrees
      and
      acknowledges that any sales by the Company to the Buyer pursuant to this
      Agreement are
      sales
      of the Company's equity securities in a transaction that is registered under
      the
      1933 Act.

    


    (b) Blue
      Sky.
      The
      Company shall take such action, if any, as is reasonably necessary in order
      to
      obtain an exemption for or to qualify (i) the initial sale of the Commitment
      Shares and any Purchase Shares to the Buyer under this Agreement and (ii) any
      subsequent resale of the Commitment Shares and any Purchase Shares by the Buyer,
      in each case, under applicable securities or "Blue Sky" laws of the states
      of
      the United States in such states as is reasonably requested by the Buyer from
      time to time, and shall provide evidence of any such action so taken to the
      Buyer.

    


    (c) Notice
      of Variable Priced Financing.
      The
      Company agrees to provide to the Buyer prior written notice (“Equity Financing
      Notice”) of any equity financing (including any debt financing with an equity
      component) that the Company intends to enter into involving the issuance of
      any
      equity securities of the Company or any Subsidiary or securities convertible
      or
      exchangeable into or for equity securities of the Company or any Subsidiary
      (including debt securities with an equity component) which, in any case (i)
      are
      convertible into or exchangeable for an indeterminate number of shares of common
      stock, (ii) are convertible into or exchangeable for Common Stock at a price
      which varies with the market price of the Common Stock, (iii) directly or
      indirectly provide for any "re-set" or adjustment of the purchase price,
      conversion rate or exercise price after the issuance of the security, or (iv)
      contain any "make-whole" provision based upon, directly or indirectly, the
      market price of the Common Stock after the issuance of the security, in each
      case, other than reasonable and customary anti-dilution adjustments for issuance
      of shares of Common Stock at a price which is below the market price of the
      Common Stock. Such Equity Financing Notice shall be delivered to the Buyer
      five
      (5) Trading Days prior to the Company entering into definitive documentation
      with respect to such equity financing, together with copies of all proposed
      definitive documentation relating to such equity financing. 

    


    (d) Listing.
      The
      Company shall promptly secure the listing of all of the Purchase Shares and
      Commitment Shares upon each national securities exchange and automated quotation
      system, if any, upon which shares of Common Stock are then listed (subject
      to
      official notice of issuance) and shall maintain, so long as any other shares
      of
      Common Stock shall be so listed, such listing of all such securities from time
      to time issuable under the terms of the Transaction Documents. The Company
      shall
      maintain the Common Stock's authorization for quotation on the Principal Market.
      Neither the Company nor any of its Subsidiaries shall take any action that
      would
      be reasonably expected to result in the delisting or suspension of the Common
      Stock on the Principal Market. The Company shall promptly, and in no event
      later
      than the following Trading Day, provide to the Buyer copies of any notices
      it
      receives from the Principal Market regarding the continued eligibility of the
      Common Stock for listing on such automated quotation system or securities
      exchange. The Company shall pay all fees and expenses in connection with
      satisfying its obligations under this Section.

    


    (e) Limitation
      on Short Sales and Hedging Transactions.
      The
      Buyer agrees that beginning on the date of this Agreement and ending on the
      date
      of termination of this Agreement as provided in Section 11(k), the Buyer and
      its
      agents, representatives and affiliates shall not in any manner whatsoever enter
      into or effect, directly or indirectly, any (i) "short sale" (as such term
      is
      defined in Rule 3b-3 of the 1934 Act) of the Common Stock or (ii) hedging
      transaction, which establishes a net short position with respect to the Common
      Stock. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f) Issuance
      of Commitment Shares; Limitation on Sales of Commitment Shares.
      Immediately upon the execution of this Agreement, the Company shall issue to
      the
      Buyer 338,819 shares of Common Stock (the "Initial Commitment Shares").
      Immediately at such time as the remaining Available Amount is $9,999,999 (i.e.,
      the Buyer has purchased $10,000,001 of Purchase Shares), the Company shall
      issue
      to the Buyer 338,819 shares of Common Stock (the "Second Initial Commitment
      Shares"). In connection with each purchase of Purchase Shares hereunder, the
      Company agrees to issue to the Buyer a number of shares of Common Stock (the
      “Additional Commitment Shares” and together with the Initial Commitment Shares
      and the Second Initial Commitment Shares, the “Commitment Shares”) equal to the
      product of (x) 677,638 and (y) the Purchase Amount Fraction. The “Purchase
      Amount Fraction” shall mean a fraction, the numerator of which is the Purchase
      Amount purchased by the Buyer with respect to such purchase of Purchase Shares
      and the denominator of which is Twenty Million Dollars ($20,000,000). The
      Additional Commitment Shares shall be equitably adjusted for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar transaction.
      The Initial
      Commitment Shares shall be issued in certificated form and (subject to Section
      5
      hereof) shall bear the following restrictive legend:

    


    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
      SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
      SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
      OR
      APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF HOLDER’S COUNSEL, IN A
      CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
      STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
      ACT.

    


    The
      Buyer
      agrees that the Buyer shall not transfer or sell the Initial Commitment Shares
      and the first 338,819 Additional Commitment Shares issued to the Buyer until
      the
      earlier of 250 Trading Days from the date hereof or the date on which this
      Agreement has been terminated and shall not sell the Second Initial Commitment
      Shares and the last 338,819 Additional Commitment Shares issued to the Buyer
      until the earlier of 500 Trading Days from the date hereof or the date on which
      this Agreement has been terminated, provided, however, that such restrictions
      shall not apply: (i) in connection with any transfers to or among affiliates
      (as
      defined in the 1934 Act), (ii) in connection with any pledge in connection
      with
      a bona fide loan or margin account, (iii) in the event that the Commencement
      does not occur on or before January 31, 2006, due to the failure of the Company
      to satisfy the conditions set forth in Section 7 or (iv) if an Event of Default
      has occurred, or any event which, after notice and/or lapse of time, would
      become an Event of Default, including any failure by the Company to timely
      issue
      Purchase Shares under this Agreement. Notwithstanding the forgoing, the Buyer
      may transfer Commitment Shares to a third party in order to settle a sale made
      by the Buyer where the Buyer reasonably expects the Company to deliver Purchase
      Shares to the Buyer under this Agreement so long as the Buyer maintains
      ownership of the same overall number of shares of Common Stock by "replacing"
      the Commitment Shares so transferred with Purchase Shares when the Purchase
      Shares are actually issued by the Company to the Buyer. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (g) Due
      Diligence.
      The
      Buyer shall have the right, from time to time as the Buyer may reasonably deem
      appropriate, to perform reasonable due diligence on the Company during normal
      business hours. The Company and its officers and employees shall provide
      information and reasonably cooperate with the Buyer in connection with any
      reasonable request by the Buyer related to the Buyer's due diligence of the
      Company, including, but not limited to, any such request made by the Buyer
      in
      connection with (i) the filing of the registration statement described in
      Section 4(a) hereof and (ii) the Commencement. Each party hereto agrees not
      to
      disclose any Confidential Information of the other party to any third party
      and
      shall not use the Confidential Information for any purpose other than in
      connection with, or in furtherance of, the transactions contemplated hereby.
      Each party hereto acknowledges that the Confidential Information shall remain
      the property of the disclosing party and agrees that it shall take all
      reasonable measures to protect the secrecy of any Confidential Information
      disclosed by the other party. Each party agrees to maintain the secrecy of
      any
      Confidential Information in accordance with the terms of the Mutual
      Nondisclosure Agreement between the parties dated October 3, 2005. 

    


    (h) Participation
      Rights.
      For a
      period of 12.5 months from the date of this Agreement, the Company hereby grants
      to the Buyer a right to participate in the purchase of any New Securities (as
      defined below) that the Company may, from time to time, propose to issue and
      sell in connection with any financing transaction, as follows. Not later than
      5
      Trading Days prior to the execution of any definitive documentation relating
      to
      the sale of any New Securities to any person or entity other than the Buyer
      or
      an Affiliate of the Buyer (a “New Person”), the Company shall deliver written
      notice to Buyer of its intent to enter into any such transaction, describing
      the
      New Person and the type of New Securities in reasonable detail, and attaching
      to
      such notice copies of such definitive documentation. The Buyer shall have 10
      Trading Days after receipt of such notice to purchase 12.5% of such New
      Securities or any portion thereof, at the price and on the terms specified
      in
      such notice by giving written notice to the Company specifying the amount of
      New
      Securities to be purchased by the Buyer. In the event the Company has not sold
      such New Securities to the New Person within 10 Trading Days after notice
      thereof to the Buyer, the Company shall not thereafter issue or sell any New
      Securities to any New Person without first again complying with this Section.
      “New Securities” shall mean any shares of Common Stock, preferred stock or any
      other equity securities of the Company or securities convertible or exchangeable
      for equity securities of the Company, provided, however, that New Securities
      shall not include, (i) shares of Common Stock issuable upon conversion,
      redemption, exercise of or as dividends for any securities outstanding as of
      the
      date hereof, (ii) shares, options or warrants for Common Stock granted to
      officers, directors and employees of the Company pursuant to stock option plans
      approved by the Board of Directors of the Company, (iii) shares of Common Stock
      or securities convertible or exchangeable for Common Stock issued pursuant
      to
      the acquisition of another company by consolidation, merger, or purchase of
      all
      or substantially all of the assets of such company or (iv) shares of Common
      Stock or securities convertible or exchangeable into shares of Common Stock
      issued in connection with a strategic transaction involving the Company and
      issued to an entity or an affiliate of such entity that is engaged in the same
      or substantially related business as the Company. The Buyer rights hereunder
      shall not prohibit or limit the Company from selling any New Securities so
      long
      as the Company makes the same offer to the Buyer as provided herein. Otherwise
      the Company shall be prohibited from selling any New Securities to any New
      Person until it fully complies herewith.

    


    


    5. TRANSFER
      AGENT INSTRUCTIONS.

    


    Immediately
      upon the execution of this Agreement, the Company shall deliver to the Transfer
      Agent a letter in the form as set forth as Exhibit
      E
      attached
      hereto with respect to the issuance of the Initial Commitment
      Shares. On
      the
      Commencement Date, the Company shall cause any restrictive legend on the Initial
      Commitment Shares to
      be
      removed and all of the Purchase Shares and Commitment Shares, to be issued
      under
      this Agreement shall be issued without any restrictive legend unless the Buyer
      expressly consents otherwise. The Company shall issue irrevocable instructions
      to the Transfer Agent, and any subsequent transfer agent, to issue Purchase
      Shares in the name of the Buyer for the Purchase Shares (the "Irrevocable
      Transfer Agent Instructions"). The Company warrants to the Buyer that no
      instruction other than the Irrevocable Transfer Agent Instructions referred
      to
      in this Section 5, will be given by the Company to the Transfer Agent with
      respect to the Purchase Shares and that the Commitment Shares and the Purchase
      Shares shall otherwise be freely transferable on the books and records of the
      Company as and to the extent provided in this Agreement and the Registration
      Rights Agreement subject to the provisions of Section 4(f) in the case of the
      Commitment Shares.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    
      
        6.
          CONDITIONS
          TO THE COMPANY'S OBLIGATION TO COMMENCE SALES
          OF SHARES OF COMMON STOCK.

      

    

    


    The
      obligation of the Company hereunder to commence sales of the Purchase Shares
      is
      subject to the satisfaction of each of the following conditions on or before
      the
      Commencement Date (the date that sales begin) and once such conditions have
      been
      initially satisfied, there shall not be any ongoing obligation to satisfy such
      conditions after the Commencement has occurred; 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 the Buyer with prior written notice
      thereof:

    


    (a) The
      Buyer
      shall have executed each of the Transaction Documents and delivered the same
      to
      the Company. 

    


    (b) Subject
      to the Company's compliance with Section 4(a), a registration statement covering
      the sale of all of the Commitment Shares and at least 8,000,000 Purchase Shares
      shall have been declared effective under the 1933 Act by the SEC and no stop
      order with respect to the Registration Statement shall be pending or threatened
      by the SEC. 

    


    (c) The
      representations and warranties of the Buyer shall be true and correct in all
      material respects as of the date when made and as of the Commencement Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date), and the 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 the
      Buyer at or prior to the Commencement Date.

    


    


    
      
        7.
          CONDITIONS
          TO THE BUYER'S OBLIGATION TO COMMENCE PURCHASES
          OF SHARES OF COMMON STOCK.

      

    

    


    The
      obligation of the Buyer to commence purchases of Purchase Shares under this
      Agreement is subject to the satisfaction of each of the following conditions
      on
      or before the Commencement Date (the date that sales begin) and once such
      conditions have been initially satisfied, there shall not be any ongoing
      obligation to satisfy such conditions after the Commencement has
      occurred:

    


    (a) The
      Company shall have executed each of the Transaction Documents and delivered
      the
      same to the Buyer.

    


    (b) The
      Company shall have issued to the Buyer the Initial Commitment Shares and shall
      have removed the restrictive transfer legend from the certificate representing
      the Initial Commitment Shares. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (c) The
      Common Stock shall be authorized for quotation on the Principal Market, trading
      in the Common Stock shall not have been within the last 365 days suspended
      by
      the SEC or the Principal Market and the Purchase Shares and the Commitment
      Shares shall be approved for listing upon the Principal Market.

    


    (d) The
      Buyer
      shall have received the opinions of the Company's legal counsel dated as of
      the
      Commencement Date substantially in the form of Exhibit
      A
      attached
      hereto.

    


    (e) The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except to the extent that any of such representations and
      warranties is already qualified as to materiality in Section 3 above, in which
      case, such representations and warranties shall be true and correct without
      further qualification) as of the date when made and as of the Commencement
      Date
      as though made at that time (except for representations and warranties that
      speak as of a specific date) and the Company shall have performed, satisfied
      and
      complied 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 Commencement Date. The Buyer shall have received a
      certificate, executed by the CEO, President or CFO of the Company, dated as
      of
      the Commencement Date, to the foregoing effect in the form attached hereto
      as
Exhibit
      B.

    


    (f) The
      Board
      of Directors of the Company shall have adopted resolutions in substantially
      the
      form attached hereto as Exhibit
      C
      which
      shall be in full force and effect without any amendment or supplement thereto
      as
      of the Commencement Date. 

    


    (g) As
      of the
      Commencement Date, the Company shall have reserved out of its authorized and
      unissued Common Stock, (A) solely for the purpose of effecting purchases of
      Purchase Shares hereunder, at least 8,000,000 shares of Common Stock and (B)
      as
      Additional Commitment Shares in accordance with Section 4(f) hereof, 338,819
      shares of Common Stock.

    


    (h) The
      Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer shall
      have been delivered to and acknowledged in writing by the Company and the
      Company's Transfer Agent.

    


    (i) The
      Company shall have delivered to the Buyer a certificate evidencing the
      incorporation and good standing of the Company in the State of Nevada issued
      by
      the Secretary of State of the State of Nevada as of a date within ten (10)
      Trading Days of the Commencement Date.

    


    (j) The
      Company shall have delivered to the Buyer a certified copy of the Certificate
      of
      Incorporation as certified by the Secretary of State of the State of Nevada
      within ten (10) Trading Days of the Commencement Date.

    


    (k) The
      Company shall have delivered to the Buyer a secretary's certificate executed
      by
      the Secretary of the Company, dated as of the Commencement Date, in the form
      attached hereto as Exhibit
      D.

    


    (l) A
      registration statement covering the sale of all of the Commitment Shares and
      at
      least 8,000,000 Purchase Shares shall have been declared effective under the
      1933 Act by the SEC and no stop order with respect to the registration statement
      shall be pending or threatened by the SEC. The Company shall have prepared
      and
      delivered to the Buyer a final form of prospectus to be used by the Buyer in
      connection with any sales of any Commitment Shares or any Purchase Shares.
      The
      Company shall have made all filings under all applicable federal and state
      securities laws necessary to consummate the issuance of the Commitment Shares
      and the Purchase Shares pursuant to this Agreement in compliance with such
      laws.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (m) No
      Event
      of Default has occurred, or any event which, after notice and/or lapse of time,
      would become an Event of Default has occurred.

    


    (n) On
      or
      prior to the Commencement Date, the Company shall take all necessary action,
      if
      any, and such actions as reasonably requested by the Buyer, in order to render
      inapplicable any control share acquisition, business combination, shareholder
      rights plan or poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Certificate of Incorporation
      or the laws of the state of its incorporation which is or could become
      applicable to the Buyer as a result of the transactions contemplated by this
      Agreement, including, without limitation, the Company's issuance of the
      Securities and the Buyer's ownership of the Securities.

    


    (o) The
      Company shall have provided the Buyer with the information requested by the
      Buyer in connection with its due diligence requests made prior to, or in
      connection with, the Commencement, in accordance with the terms of Section
      4(g)
      hereof.

    


    


    
      
        8.
          INDEMNIFICATION.
          

      

    

    


    In
      consideration of the Buyer's execution and delivery of the Transaction Documents
      and acquiring the Securities hereunder and in addition to all of the Company's
      other obligations under the Transaction Documents, the Company shall defend,
      protect, indemnify and hold harmless the Buyer and all of its affiliates,
      shareholders, officers, directors, employees and direct or indirect investors
      and any of the foregoing person's 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 and arising out
      of
      or resulting from the execution, delivery, performance or enforcement of the
      Transaction Documents or any other certificate, instrument or document
      contemplated hereby or thereby, other than with respect to Indemnified
      Liabilities which directly and primarily result from the gross negligence or
      willful misconduct of the Indemnitee. To the extent that the foregoing
      undertaking by the Company may be unenforceable for any reason, the Company
      shall make the maximum contribution to the payment and satisfaction of each
      of
      the Indemnified Liabilities which is permissible under applicable
      law.

    


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    9. EVENTS
      OF DEFAULT. 

    


    An
      "Event
      of Default" shall be deemed to have occurred at any time as any of the following
      events occurs:

    


    (a) while
      any
      registration statement is required to be maintained effective pursuant to the
      terms of the Registration Rights Agreement, the effectiveness of such
      registration statement lapses for any reason (including, without limitation,
      the
      issuance of a stop order) or is unavailable to the Buyer for sale of all of
      the
      Registrable Securities (as defined in the Registration Rights Agreement) in
      accordance with the terms of the Registration Rights Agreement, and such lapse
      or unavailability continues for a period of ten (10) consecutive Trading Days
      or
      for more than an aggregate of thirty (30) Trading Days in any 365-day
      period;

    


    (b) the
      suspension from trading or failure of the Common Stock to be listed on the
      Principal Market for a period of three (3) consecutive Trading
      Days;

    


    (c) the
      delisting of the Company’s Common Stock from the Principal Market, provided,
      however, that the Common Stock is not within 2 Trading Days thereafter trading
      on the New York Stock Exchange, the Nasdaq National Market, the American Stock
      Exchange or the Nasdaq OTC Bulletin Board;

    


    (d) the
      failure for any reason by the Transfer Agent to issue Purchase Shares to the
      Buyer within five (5) Trading Days after the applicable Purchase Date which
      the
      Buyer is entitled to receive;

    


    (e) the
      Company breaches any representation, warranty, covenant or other term or
      condition under any Transaction Document if such breach could have a Material
      Adverse Effect and except, in the case of a breach of a covenant which is
      reasonably curable, only if such breach continues for a period of at least
      five
      (5) Trading Days;

    


    (f) if
      any
      Person commences a proceeding against the Company pursuant to or within the
      meaning of any Bankruptcy Law ; 

    


    (g) if
      the
      Company pursuant to or within the meaning of any Bankruptcy Law; (A) commences
      a
      voluntary case, (B) consents to the entry of an order for relief against it
      in
      an involuntary case, (C) consents to the appointment of a Custodian of it or
      for
      all or substantially all of its property, (D) makes a general assignment for
      the
      benefit of its creditors, (E) becomes insolvent, or (F) is generally unable
      to
      pay its debts as the same become due;

    


    (h) a
      court
      of competent jurisdiction enters an order or decree under any Bankruptcy Law
      that (A) is for relief against the Company in an involuntary case, (B) appoints
      a Custodian of the Company or for all or substantially all of its property,
      or
      (C) orders the liquidation of the Company or any Subsidiary; 

    


    (i) a
      material adverse change in the business, properties, operations, financial
      condition or results of operations of the Company or its Subsidiaries;
      or

    


    (j) if
      at any
      time after the Commencement Date, the "Exchange Cap" is reached. (The "Exchange
      Cap" shall be deemed to be reached at such time if, upon submission of a
      Purchase Notice under this Agreement, the issuance of such shares of Common
      Stock would exceed that number of shares of Common Stock which the Company
      may
      issue under this Agreement without breaching the Company's obligations under
      the
      rules or regulations of the Principal Market). 

    


    In
      addition to any other rights and remedies under applicable law and this
      Agreement, including the Buyer termination rights under Section 11(k) hereof,
      so
      long as an Event of Default has occurred and is continuing, or if any event
      which, after notice and/or lapse of time, would become an Event of Default,
      has
      occurred and is continuing, or so long as the Purchase Price is below the
      Purchase Price Floor, the Buyer shall not be obligated to purchase any shares
      of
      Common Stock under this Agreement. If pursuant to or within the meaning of
      any
      Bankruptcy Law, the Company commences a voluntary case or any Person commences
      a
      proceeding against the Company, a Custodian is appointed for the Company or
      for
      all or substantially all of its property, or the Company makes a general
      assignment for the benefit of its creditors, (any of which would be an Event
      of
      Default as described in Sections 9(f), 9(g) and 9(h) hereof)
      this Agreement shall automatically terminate without any liability or payment
      to
      the Company without further action or notice by any Person. No such termination
      of this Agreement under Section 11(k)(i) shall affect the Company's or the
      Buyer's obligations under this Agreement with respect to pending purchases
      and
      the Company and the Buyer shall complete their respective obligations with
      respect to any pending purchases under this Agreement.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    10. CERTAIN
      DEFINED TERMS. 

    


    For
      purposes of this Agreement, the following terms shall have the following
      meanings:

    


    (a) “1933
      Act” means the Securities Act of 1933, as amended.

    


    (b) “Available
      Amount” means initially Twenty Million Dollars ($20,000,000) in the aggregate
      which amount shall be reduced by the Purchase Amount each time the Buyer
      purchases shares of Common Stock pursuant to Section 1 hereof.

    


    (c) “Bankruptcy
      Law” means Title 11, U.S. Code, or any similar federal or state law for the
      relief of debtors. 

    


    (d) “Closing
      Sale Price” means, for any security as of any date, the last closing trade price
      for such security on the Principal Market as reported by the Principal Market,
      or, if the Principal Market is not the principal securities exchange or trading
      market for such security, the last closing trade price of such security on
      the
      principal securities exchange or trading market where such security is listed
      or
      traded as reported by the Principal Market. 

    


    (e) “Confidential
      Information” means any information disclosed by either party to the other party,
      either directly or indirectly, in writing, orally or by inspection of tangible
      or electronic objects (including, without limitation, documents, prototypes,
      samples, plant and equipment), which is designated as "Confidential,"
      "Proprietary" or some similar designation. Information communicated orally
      shall
      be considered Confidential Information if such information is confirmed in
      writing as being Confidential Information within fifteen (15) business days
      after the initial disclosure. Confidential Information may also include
      information disclosed to a disclosing party by third parties. Confidential
      Information shall not, however, include any information which (i) was publicly
      known and made generally available in the public domain prior to the time of
      disclosure by the disclosing party; (ii) becomes publicly known and made
      generally available after disclosure by the disclosing party to the receiving
      party through no action or inaction of the receiving party; (iii) is already
      in
      the possession of the receiving party at the time of disclosure by the
      disclosing party as shown by the receiving party’s files and records immediately
      prior to the time of disclosure; (iv) is obtained by the receiving party from
      a
      third party without a breach of such third party’s obligations of
      confidentiality; (v) is independently developed by the receiving party without
      use of or reference to the disclosing party’s Confidential Information, as shown
      by documents and other competent evidence in the receiving party’s possession;
      or (vi) is required by law to be disclosed by the receiving party, provided
      that
      the receiving party gives the disclosing party prompt written notice of such
      requirement prior to such disclosure and assistance in obtaining an order
      protecting the information from public disclosure.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (f) “Custodian”
      means any receiver, trustee, assignee, liquidator or similar official under
      any
      Bankruptcy Law.

    


    (g) “Maturity
      Date” means the date that is 500 Trading Days (25 Monthly Periods) from the
      Commencement Date.

    


    (h) “Monthly
      Period” means each successive 20 Trading Day period.

    (i) “Person”
      means an individual or entity including any limited liability company, a
      partnership, a joint venture, a corporation, a trust, an unincorporated
      organization and a government or any department or agency thereof.

    


    (j) “Principal
      Market” means the Nasdaq Capital Market; provided however, that in the event the
      Company’s Common Stock is ever listed or traded on the Nasdaq National Market,
      the Nasdaq OTC Bulletin Board, the New York Stock Exchange or the American
      Stock
      Exchange, then the “Principal Market” shall mean such other market or exchange
      on which the Company’s Common Stock is then listed or traded.

    


    (k) “Purchase
      Amount” means the portion of the Available Amount to be purchased by the Buyer
      pursuant to Section 1 hereof.

    


    (l) “Purchase
      Date” means the actual date that the Buyer is to buy Purchase Shares pursuant to
      Section 1 hereof. 

    


    (m) “Purchase
      Price” means, as of any Trading Day the lower of the (A) the lowest Sale Price
      of the Common Stock on such Trading Day and (B) the arithmetic average of the
      three (3) lowest Closing Sale Prices for the Common Stock during the twelve
      (12)
      consecutive Trading Days ending on the Trading Day immediately preceding such
      date of determination (to be appropriately adjusted for any reorganization,
      recapitalization, non-cash dividend, stock split or other similar
      transaction).

    


    (n) “Sale
      Price” means, for any security as of any date, any trade price for such security
      on the Principal Market as reported by the Principal Market, or, if the
      Principal Market is not the principal securities exchange or trading market
      for
      such security, the trade price of such security on the principal securities
      exchange or trading market where such security is listed or traded as reported
      by the Principal Market.

    


    (o) “SEC”
      means the United States Securities and Exchange Commission.

    


    (q) “Transfer
      Agent” means the transfer agent of the Company as set forth in Section
      11(f) hereof or such other person who is then serving as the transfer agent
      for
      the Company in respect of the Common Stock.

    


    (r) “Trading
      Day” means any day on which the Principal Market is open for trading including
      any day on which the Principal Market is open for trading for a period of time
      less than the customary time.

    


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11. MISCELLANEOUS.

    


    (a) Governing
      Law; Jurisdiction; Jury Trial.
      The
      corporate laws of the State of Nevada shall govern all issues concerning the
      relative rights of the Company and its shareholders. All other questions
      concerning the construction, validity, enforcement and interpretation of this
      Agreement and the other Transaction Documents shall be governed by the internal
      laws of the State of Illinois, without giving effect to any choice of law or
      conflict of law provision or rule (whether of the State of Illinois or any
      other
      jurisdictions) that would cause the application of the laws of any jurisdictions
      other than the State of Illinois. Each party hereby irrevocably submits to
      the
      exclusive jurisdiction of the state and federal courts sitting in the City
      of
      Chicago, for the adjudication of any dispute hereunder or under the other
      Transaction Documents or in connection herewith or therewith, 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 HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
      CONTEMPLATED HEREBY.

    


    (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 shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

    


    (e) Entire
      Agreement; Amendments.
      With
      the exception of the Mutual Nondisclosure Agreement between the parties dated
      as
      of October 3, 2005, this Agreement supersedes all other prior oral or written
      agreements between the Buyer, 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
      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 the Buyer makes any representation, warranty,
      covenant or undertaking with respect to such matters. Any provision of this
      Agreement may be amended or modified by mutual agreement of the Company and
      the
      Buyer, and any provision hereof may be waived only by the party against whom
      enforcement is sought. The Company acknowledges and agrees that is has not
      relied on, in any manner whatsoever, any representations or statements, written
      or oral, other than as expressly set forth in this Agreement.

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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 Trading Day after deposit with a nationally recognized overnight
      delivery service, in each case properly addressed to the party to receive the
      same. The addresses and facsimile numbers for such communications shall
      be:

    


    If
      to the
      Company:

    GlycoGenesys,
      Inc.

    31
      St.
      James Avenue, 8th
      Floor

    Boston,
      Massachusetts 02116

    Telephone: 617-422-0674

    Facsimile: 617-422-0675

    Attention:
       William
      O. Fabbri

    


    With
      a
      copy to:

    Torys
      LLP

    Suite
      3000

    79
      Wellington Street West

    Box
      270,
      TD Centre

    Toronto
      Ontario M5K 1N2 Canada

    Telephone: (416)
      865-7373

    Facsimile: 
      (416)
      865-7380

    Attention: 
      Cheryl
      Reicin, Esq,

    


    If
      to the
      Buyer:

    Fusion
      Capital Fund II, LLC

    222
      Merchandise Mart Plaza, Suite 9-112

    Chicago,
      IL 60654

    Telephone: 312-644-6644

    Facsimile: 312-644-6244

    Attention: Steven
      G.
      Martin

    


    If
      to the
      Transfer Agent:

    Computershare
      Investor Services

    350
      Indiana St., Suite 800

    Golden,
      CO 80401

    Telephone:
       (303)
      262-0714

    Facsimile: (303)
      262-0700

    Attention:
       Kathy
      Kinard

    


    or
      at
      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 three (3) Trading 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, and
      recipient facsimile number or (C) provided by a nationally recognized overnight
      delivery service, shall be rebuttable evidence of personal service, receipt
      by
      facsimile or receipt from a nationally recognized overnight delivery 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. The Company shall not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of the Buyer, including by merger or consolidation. The Buyer may not
      assign its rights or obligations under this Agreement.

    


    (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) Publicity.
      The
      Buyer shall have the right to approve before issuance any press release, SEC
      filing or any other public disclosure made by or on behalf of the Company
      whatsoever with respect to, in any manner, the Buyer, its purchases hereunder
      or
      any aspect of this Agreement or the transactions contemplated hereby. The Buyer
      shall approve such public disclosure or raise objections within 2 Trading Days
      of receipt from the Company. The Company agrees and acknowledges that its
      failure to fully comply with this provision constitutes a material adverse
      effect on its ability to perform its obligations under this Agreement.


    


    (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 the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    


    (k) Termination.
      This
      Agreement may be terminated only as follows: 

    


    (i) By
      the
      Buyer any time an Event of Default exists without any liability or payment
      to
      the Company. However, if pursuant to or within the meaning of any Bankruptcy
      Law, the Company commences a voluntary case or any Person commences a proceeding
      against the Company, a Custodian is appointed for the Company or for all or
      substantially all of its property, or the Company makes a general assignment
      for
      the benefit of its creditors, (any of which would be an Event of Default as
      described in Sections 9(f), 9(g) and 9(h) hereof) this Agreement shall
      automatically terminate without any liability or payment to the Company without
      further action or notice by any Person. No such termination of this Agreement
      under this Section 11(k)(i) shall affect the Company's or the Buyer's
      obligations under this Agreement with respect to pending purchases and the
      Company and the Buyer shall complete their respective obligations with respect
      to any pending purchases under this Agreement. 

    


    (ii) In
      the
      event that the Commencement shall not have occurred, the Company shall have
      the
      option to terminate this Agreement for any reason or for no reason without
      liability of any party to any other party.

    


    (iii) In
      the
      event that the Commencement shall not have occurred on or before January 31,
      2006, due to the failure to satisfy the conditions set forth in Sections 6
      and 7
      above with respect to the Commencement (and the nonbreaching party's failure
      to
      waive such unsatisfied condition(s)), the nonbreaching party shall have the
      option to terminate this Agreement at the close of business on such date or
      thereafter without liability of any party to any other party. 

    


    (iv) If
      by the
      Maturity Date (including any extension thereof by the Company pursuant to
      Section 10(g) hereof), for any reason or for no reason the full Available Amount
      under this Agreement has not been purchased as provided for in Section 1 of
      this
      Agreement, by the Buyer without any liability or payment to the Company.


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (v) 
      At any
      time after the Commencement Date, the Company shall have the option to terminate
      this Agreement for any reason or for no reason by delivering notice (a “Company
      Termination Notice”) to the Buyer electing to terminate this Agreement without
      any liability or payment to the Buyer. The Company Termination Notice shall
      not
      be effective until one (1) Trading Day after it has been received by the Buyer.
      

    


    (vi) This
      Agreement shall automatically terminate on the date that the Company sells
      and
      the Buyer purchases the full Available Amount as provided herein, without any
      action or notice on the part of any party. 

    


    Except
      as
      set forth in Sections 11(k)(i) (in respect of an Event of Default under Sections
      9(f), 9(g) and 9(h)) and 11(k)(vi), any termination of this Agreement pursuant
      to this Section 11(k) shall be effected by written notice from the Company
      to
      the Buyer, or the Buyer to the Company, as the case may be, setting forth the
      basis for the termination hereof. The representations and warranties of the
      Company and the Buyer contained in Sections 2 and 3 hereof, the indemnification
      provisions set forth in Section 8 hereof and the agreements and covenants set
      forth in Section 11,
      shall
      survive the Commencement and any termination of this Agreement. No termination
      of this Agreement shall affect the Company's or the Buyer's rights or
      obligations (i) under the Registration Rights Agreement which shall survive
      any
      such termination or (ii) under this Agreement with respect to pending purchases
      and the Company and the Buyer shall complete their respective obligations with
      respect to any pending purchases under this Agreement.

    


    (l) No
      Financial Advisor, Placement Agent, Broker or Finder.
      The
      Buyer represents and warrants to the Company that it has not engaged any
      financial advisor, placement agent, broker or finder in connection with the
      transactions contemplated hereby. The Company shall be responsible for the
      payment of any fees or commissions, if any, of any financial advisor, placement
      agent, broker or finder relating to or arising out of the transactions
      contemplated hereby. The Company shall pay, and hold the Buyer harmless against,
      any liability, loss or expense (including, without limitation, attorneys' fees
      and out of pocket expenses) arising in connection with any such
      claim.

    


    (m) 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.

    


    (n) Remedies,
      Other Obligations, Breaches and Injunctive Relief.
      The
      Buyer’s remedies provided in this Agreement shall be cumulative and in addition
      to all other remedies available to the Buyer under this Agreement, at law or
      in
      equity (including a decree of specific performance and/or other injunctive
      relief), no remedy of the Buyer contained herein shall be deemed a waiver of
      compliance with the provisions giving rise to such remedy and nothing herein
      shall limit the Buyer's right to pursue actual damages for any failure by the
      Company to comply with the terms of this Agreement. The Company acknowledges
      that a breach by it of its obligations hereunder will cause irreparable harm
      to
      the Buyer and that the remedy at law for any such breach may be inadequate.
      The
      Company therefore agrees that, in the event of any such breach or threatened
      breach, the Buyer shall be entitled, in addition to all other available
      remedies, to an injunction restraining any breach, without the necessity of
      showing economic loss and without any bond or other security being
      required.

    


    (o) Changes
      to the Terms of this Agreement.
      This
      Agreement and any provision hereof may only be amended by an instrument in
      writing signed by the Company and the Buyer. The term "Agreement" and all
      reference thereto, as used throughout this instrument, shall mean this
      instrument as originally executed, or if later amended or supplemented, then
      as
      so amended or supplemented.

    


    (p) Enforcement
      Costs.
      If: (i)
      this Agreement is placed by the Buyer in the hands of an attorney for
      enforcement or is enforced by the Buyer through any legal proceeding; or (ii)
      an
      attorney is retained to represent the Buyer in any bankruptcy, reorganization,
      receivership or other proceedings affecting creditors' rights and involving
      a
      claim under this Agreement; or (iii) an attorney is retained to represent the
      Buyer in any other proceedings whatsoever in connection with this Agreement,
      then the Company shall pay to the Buyer, as incurred by the Buyer, all
      reasonable costs and expenses including attorneys' fees incurred in connection
      therewith, in addition to all other amounts due hereunder; provided, however,
      in
      the case of clause (i) or (iii) that if the Buyer is unsuccessful in the pursuit
      of the claims or issues raised by the Buyer, the Buyer shall repay to the
      Company all amounts paid to the Buyer pursuant to this Section
      11(p).

    


    (q) Failure
      or Indulgence Not Waiver.
      No
      failure or delay in the exercise of any power, right or privilege hereunder
      shall operate as a waiver thereof, nor shall any single or partial exercise
      of
      any such power, right or privilege preclude other or further exercise thereof
      or
      of any other right, power or privilege.

    


    


    


    *
      * * * *


    
      
         

      

      
         

        
          

        

      

      
         

      

    


    IN
      WITNESS WHEREOF,
      the
      Buyer and the Company have caused this Common Stock Purchase Agreement to be
      duly executed as of the date first written above.

    


    


    


    THE
      COMPANY:

    


    GLYCOGENESYS,
      INC.

    


    By:/s/
      John W. Burns__________

    Name:
      John W. Burns

    Title:
      Senior Vice President and Chief Financial Officer  

    


    


    BUYER:

    


    FUSION
      CAPITAL FUND II, LLC

    BY:
      FUSION CAPITAL PARTNERS, LLC

    BY:
      SGM HOLDINGS CORP.

    


    By:/s/
      Steven G. Martin_________

    Name:
      Steven G. Martin

    Title:
      President