EXHIBIT
10.12

    


    SIGNPATH
PHARMA, INC.

     

    Private
Placement of Units

     

    PLACEMENT
AGENCY AGREEMENT

     

    Dated as
of May 28,
2008                            


     

    Meyers
Associates L.P.

    45
Broadway, 2nd
Floor

    New York,
New York 10006

    Attn:
President

     

    Ladies
and Gentlemen:

    


    SignPath
Pharma, Inc., a Delaware corporation (the “Company”) proposes to offer for sale
(the “Offering”) in a private offering pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the “Act”), and/or Regulation D promulgated
thereunder, an aggregate of up to $4,000,000 of units of its securities
(“Units”) (plus $2,000,000 of additional Units to cover
oversubscriptions).  Each Unit consists of one share of Series A
Preferred Stock (the “Preferred Shares”) and one Common Stock Purchase Warrant
(the “Warrants”). Each Warrant will entitle the holder thereof to purchase 1,177
shares of the Company’s Common Stock. The Units, Preferred Shares and Warrants
are sometimes referred to herein as the “Securities.” The Offering is being
conducted on a “best efforts all or none” basis with respect to minimum gross
proceeds of $1,500,000 (the “Minimum Offering”), and on a “best efforts” basis
as to the remaining $2,500,000 of the maximum $4,000,000 gross proceeds (or
$6,000,000 in the event the Offering is increased by the parties; in either
event, the “Maximum Offering”). Offers and sales of the Securities shall be
solely to Accredited Investors (as defined in Regulation D). This agreement
shall confirm our agreement concerning Meyers Associates L.P. acting as our
exclusive placement agent (the “Placement Agent” or “Meyers”) in connection with
the offer and sale of the Securities.

     

    
      	
              1.

            	
              Appointment
      of Placement Agent.

            


    

     

    On the
basis of the representations and warranties contained herein, and subject to the
terms and conditions set forth herein, the Company hereby appoints Meyers
Associates L.P. as its Placement Agent and grants to it the exclusive right to
offer, as its agent, the Securities pursuant to the terms of this Agreement. The
Company expressly acknowledges and agrees that Meyers’ obligations hereunder are
not on a firm commitment basis and that the execution of this Agreement does not
constitute a commitment by Meyers to purchase the Securities and does not ensure
the successful placement of the Securities or any portion thereof. Further,
Meyers’ obligation to use its best efforts to assist the Company in the Offering
is subject to the completion of a due diligence review of the Company, the
industry and the market for such securities generally, as well as general market
conditions. On the basis of such representations and warranties, and subject to
such conditions, Meyers hereby accepts such an appointment and agrees to use its
reasonable best efforts to secure subscriptions to purchase at least the Minimum
Offering and up to the Maximum Offering.

     

    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    
      	
              2.

            	
              Terms of the
      Offering.

            


    

     

    (a)           The
Company shall prepare and deliver to the Placement Agent copies of a
Confidential Private Placement Memorandum (the “Memorandum”), relating to, among
other things, the Company, the Securities and the terms of the sale of the
Securities. The Memorandum, including all exhibits and appendices thereto and
documents delivered therewith, are referred to herein as the “Offering
Documents” and shall include any supplements or amendments in accordance with
this Agreement. The Company shall utilize the services of securities counsel
with experience in private placement offerings and the rules and regulations of
the Securities and Exchange Commission (“SEC”) in drafting the Offering
Documents.

     

    (b)           The
Offering shall consist of up to $4,000,000 of Units (plus $2,000,000 of
additional Units to cover over-subscriptions) at a purchase price equal to
$1,000 per Unit. The terms of the Offering and Securities are further described
in the Offering Documents delivered by the Company to Placement Agent prior to
execution hereof and which are incorporated herein. The Offering is being made
on a “best efforts all or none” basis up to the Minimum Offering of $1,500,000
of Units and on a “best efforts” basis as to an additional $2,500,000 of Units;
provided however, the Offering may be
increased by agreement of the parties to gross proceeds for an additional
$2,000,000 of Units to allow for over subscriptions. The actual composition of
the Units and terms of the Preferred Shares and Warrants, and the price of the
Units are subject to further review and negotiation, market conditions and the
market for the Company’s Common Stock and the completion of due diligence. In
the event a subscription is not accepted, such rejected subscription funds will
be returned to the subscriber without interest or deductions. The investors
shall be entitled to such “registration rights”, anti-dilution protection and
other rights as may be mutually acceptable to the Company and the Placement
Agent and described in the Offering Documents.

     

    (c)           The
Offering shall commence on the date that the Company delivers to the Placement
Agent the Offering Documents that have been completed to the reasonable
satisfaction of the Placement Agent and its counsel, and shall expire at 5:00
p.m., New York time, on the day that is 90 days from date hereof and may be
extended for up to an additional 90-day period at the discretion of the
Placement Agent, provided that the Minimum Offering amount has been subscribed
for and accepted by the Company prior to August 29, 2008. In addition, the
Offering Period may be extended for the additional 90 day period without regard
to the foregoing condition at the discretion of the Company and Placement Agent.
Such period, as same may be so extended, shall hereinafter be referred to as the
“Offering Period.”

     

    (d)           Each
prospective investor (“Prospective Investor”) who desires to purchase the
Securities shall deliver to the Placement Agent a fully executed subscription
agreement and questionnaire (“Subscription Agreement”), in the form annexed to
the Offering Documents and immediately available funds in the amount necessary
to purchase the number of Securities such Prospective Investor desires to
purchase. The Placement Agent shall not have any obligation to independently
verify the accuracy or completeness of any information contained in any
Subscription Agreement or the authenticity, sufficiency, or validity of any
check delivered by any Prospective Investor in payment for
Securities.

     

    
      
         


      

      
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    (e)           The
Placement Agent shall deliver each subscription funds received from a
Prospective Investor to the Company for deposit in a segregated,
non-interest-bearing escrow account at an independent banking institution and
shall deliver the executed copies of the Subscription Agreement received from
such Prospective Investor to the Company. All funds shall be held in the
segregated account pending acceptance of the subscription. The Company shall
notify the Placement Agent promptly of the acceptance or rejection or any
subscription.

     

    (f)           Meyers
may engage other persons selected by Meyers to assist Meyers in the Offering
(each such broker/dealers being hereinafter referred to as a “Selling Group
Member”) and Meyers may allow such Selling Group Member such part of the
compensation and payment of expenses payable to Meyers under Section 5 hereof as
Meyers shall determine. Any such Selling Group Member shall be a member firm in
good standing as a broker-dealer under the rules of FINRA.  Each
Selling Group Member shall be required to agree in writing to comply with the
provisions of this Section 2. The Company hereby agrees to make such
representations and warranties to, and covenants and agreements with, any
Selling Group Member (including an agreement to indemnify such Selling Group
Member on terms substantially similar to Section 12 hereof) as provided
herein.

     

    
      	
              3.

            	
              Closings:  Release
      of Funds.

            


    

     

    (a)           The
date that the initial subscriptions in the amount of the Minimum Offering are
accepted by the Company and funds are released from the escrow account shall be
deemed the “Initial Closing.” At least one (1) day prior to the release of
funds, the Company and the Placement Agent shall send written notice to each
other, which notice shall state the amount of funds to be released, the name and
address of each subscriber whose subscription has been accepted, and the amount
of each subscription.

     

    (b)           At
any time prior to the expiration of the Offering Period following the Initial
Closing and after acceptance by the Company of subscriptions for the sale of
additional Units up to the Maximum Offering, one or more closings (each an
“Interim Closing”) shall take place in the manner herein set forth with respect
to the Initial Closing. The final Interim Closing to be held in accordance
herewith shall be deemed the “Final Closing” and the date thereof shall be the
“Final Closing Date.” References herein to a Closing shall mean the Closing, any
Interim Closing or the Final Closing, as the context requires, and the date
thereof shall be referred to as a “Closing Date.”

     

    
      	
              4.

            	
              Representations
      and Warranties of the Placement
Agent.

            


    

     

    The
Placement Agent represents and warrants to the Company as follows:

     

    (a)           The
Placement Agent is duly incorporated and validly existing and in good standing
under the laws of its State of incorporation.

     

    (b)           The
Placement Agent is, and at the time of each Closing will be, a member in good
standing of FINRA.

     

    
      
         


      

      
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    (c)           Sales
of Securities by the Placement Agent will only be made in such jurisdictions in
which the Placement Agent or a Selling Group Member is a registered
broker-dealer or where an applicable exemption from such registration
exists.

     

    (d)           Offers
and sales of Securities by the Placement Agent will be made only in accordance
with this Placement Agreement and in compliance with the provisions of Rule 506
of Regulation D (it being understood and agreed that the Placement Agent shall
be entitled to rely upon the information and statements provided by the
Prospective Investor in the Subscription Agreement and Purchaser Questionnaire),
and the Placement Agent will furnish to each investor a copy of the Offering
Documents prior to accepting any subscription for the Securities.

     

    
      	
              5.

            	
              Compensation.

            


    

     

    (a)           The
Placement Agent shall be entitled, on each Closing Date, as compensation for
Meyers’ services as Placement Agent under this Agreement, to selling commissions
equal to 10 % of the gross proceeds received by the Company from the sale of the
Units effected at each Closing. In addition, the Placement Agent shall be
entitled to 3% of the gross proceeds from the sale of the Units effected at each
Closing in payment for a non-accountable expense allowance. All payments
hereunder shall be effected at each Closing in immediately available
funds.

     

    (b)           Concurrent
with, and as a condition to, each closing of the Offering, the Company shall
sell to the Placement Agent (or its designated affiliates) common stock purchase
warrants (the “Agent Warrants”), at a price of $.0001 per warrant, to purchase a
number of shares of Common Stock equal to 15% of the Units sold in the Offering.
Such Agent Warrants will expire five years after the effective date of the
registration statement contemplated by the Offering and will be exercisable at
the then-current conversion price of the Preferred Stock issued to investors in
the Offering, subject to adjustment to prevent dilution. The Agent Warrants
maybe exercised as to all or a lesser number of shares, will not be redeemable
and will contain provisions for “cashless exercise” and for the piggy-back and
demand registration of the resale of the underlying shares at the Company’s
expense and for adjustment in the number of such shares and the exercise price
to prevent dilution. The Agent Warrants shall otherwise be in a form mutually
acceptable to the Company and the Placement Agent. The Company covenants and
agrees that with respect to registration under the Act of the Securities
underlying the Placement Agent Warrants, the Placement Agent shall be entitled
to the same registration rights as provided to subscribers in the
Offering.

     

    
      	
              6.

            	
              Representations
      and Warranties of the Company.

            


    

     

    (a)           The
Company represents and warrants to, and agrees with, the Placement Agent that as
of the date hereof and as of each Closing Date (except as affected by the
Offering):

     

    (i)           Assuming
the accuracy of the representations and warranties of the Prospective Investors
set forth in the Subscription Agreement and Purchaser Questionnaire and the
representations and warranties of the Placement Agent set forth herein, the
Offering Documents (a) contain, and at all times during the period from the date
hereof to and including each Closing Date, will contain all information required
to be contained therein, if any, pursuant to Rules 502 and 506 of Regulation D
and all applicable federal and/or state securities and “blue sky” laws, and (b)
do not, and during such period will not, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein in light of the circumstances made
therein not misleading. Each contract, agreement, instrument, lease, license, or
other document required to be described in the Offering Documents shall be, and
have been, accurately described therein.

     

    
      
         


      

      
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    (ii)           No
Offering Documents or information (it being understood that neither the Company
nor any of its officers or directors or employees shall provide any written
information to any Prospective Investor which is not contained in the Offering
Documents) provided by the Company to Prospective Investors pursuant to Section
7(f) hereof shall contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein in light of circumstances made therein not
misleading.

     

    (iii)           The
Company has not, directly or indirectly, solicited any offer to buy or offered
to sell any Securities or any other securities of the Company during the
twelve-month period ending on the date hereof except as may be properly
described in the Offering Documents, and has no present intention to solicit any
offer to buy or to offer to sell any of the Securities, any Common Stock or any
other securities of the Company other than pursuant to this
Agreement.

     

    (iv)           The
Company is, and at all times during the period from the date hereof to and
including each Closing Date will be, a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware, with
full corporate power and authority, and has obtained all necessary consents,
authorizations, approvals, orders, licenses, certificates, and permits and
declarations of and from, and has made filings with, all federal, state and
local authorities, to own, lease, license, and use its properties and assets and
to conduct its business as presently conducted as described in the Offering
Documents and/or in any such case where the failure to have any of the foregoing
would not have a material adverse effect on the Company’s presently conducted
business. As of the date hereof, the Company is, and at all times during the
period from the date hereof to and including each Closing Date, duly qualified
to do business and is in good standing in every jurisdiction in which its
ownership, leasing, licensing, or use of property and assets or the conduct of
its business makes such qualification necessary except where the failure to be
so qualified would not have a material adverse effect on the Company’s
business.

     

    (v)           The
Offering Documents do not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, all in light of the circumstances
under which they were made. Each statute, regulation, legal and governmental
proceeding, contract, agreement, instrument, lease, license, or other document
described in the Offering Documents has been accurately described therein in all
material respects.

     

    
      
         


      

      
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    (vi)           No
document provided by the Company to Prospective Investors pursuant to Section
6(a)(vii) hereof, and_ no oral information provided by the Company to
Prospective Investors, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. Contracts to which the Company or
any of its Controlled Subsidiaries (as defined below) is a party provided by the
Company to Prospective Investors shall not be deemed to contain any untrue
statement of a material fact or to omit to state any material fact if the
contract so provided is a true, correct and complete copy of such contract, as
amended or modified through the date it is so provided.

     

    (vii)           All
prior offerings of the Company’s securities complied in all respects with the
Securities Act, the Exchange Act and rules and regulations promulgated
thereunder, all applicable Blue Sky laws and all applicable securities laws and
regulations of any foreign country in which such securities were offered or
sold.

     

    (viii)          The
Company and its Controlled Subsidiaries, if any, are (A) corporations or other
legal entities duly organized, validly existing and in good standing under the
laws of the state of their incorporation or organization, each have full power
and authority to own or lease all of the assets owned or leased by each of them
and to conduct business as described in the Offering Documents and (B) are duly
qualified to do business and in good standing as a foreign corporation in all
jurisdictions in which the nature of the activities conducted or the character
of the assets owned or leased makes such qualification necessary. Complete and
correct copies of the articles of incorporation, by-laws and/or other
organizational instruments of the Company and its Controlled Subsidiaries as in
effect on the date hereof have been delivered to Meyers, and no changes therein
will be made on or subsequent to the date hereof and prior to the Final Closing
Date except as may be required pursuant to this Agreement. The term “Controlled
Subsidiaries” means any corporation or other organization in which the Company
owns, directly or indirectly, an equity or other ownership interest equal to or
greater than 50 percent.

     

    (ix)        
   Since the dates as of which information is given in the
Offering Documents, other than as set forth therein, (A) there has not been any
material adverse change or any development involving a prospective material
adverse change in the general affairs, business, prospects, properties,
management, condition (financial or otherwise) or results of operations of the
Company or its Controlled Subsidiaries, whether or not arising from transactions
in the ordinary course of business, (B) except in the ordinary course of
business, neither the Company nor its Controlled Subsidiaries has incurred, and
neither the Company nor its Controlled Subsidiaries will have incurred, any
material liabilities or obligations, direct or indirect, or have entered into
any material transaction, (C) the Company has not and will not have paid or
declared any dividends or other distributions on its capital stock and (D) there
has not been any change in the capital stock of the Company or any material
change in the short-term or long-term debt of the Company or its Controlled
Subsidiaries.

     

    (x)            
 The auditing firm that has been engaged by the Company are independent
public accountants with respect to the Company and its Controlled
Subsidiaries.

     

    
      
         


      

      
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    (xi)      
     The Company’s consolidated financial statements,
together with related notes and schedules of the Company and its Controlled
Subsidiaries, included as part of the Offering Documents comply in all respects
with the requirements of the Securities Act and the rules and regulations
thereunder and present fairly the financial position of the Company and its
Controlled Subsidiaries on the respective dates indicated and its statement of
operations for the respective periods covered thereby. Any condensed financial
information appearing in the Offering Documents is fairly stated in all material
respects in relation to the financial statements of the Company and its
Controlled Subsidiaries from which they have been derived. Such financial
statements, and related notes and schedules, have been prepared in conformity
with generally accepted accounting principles in the United States applied on a
consistent basis through the entire period involved. Except as stated in the
Offering Documents, the unaudited statements contained in the Offering Documents
are consistent with, and have been prepared from the books and records kept by
the Company in a manner consistent with past practice.

     

    (xii)           Except
as described in the Offering Documents, there is no action, suit, investigation
or proceeding pending or threatened before or by any Federal or state court,
commission, regulatory body, administrative agency or other governmental body,
domestic or foreign, or arbitrator to which the Company or its Controlled
Subsidiaries is or may become a party or of which any property of the Company or
its Controlled Subsidiaries is subject or affected that (A) might affect the
consummation of the transactions contemplated under this Agreement, including
the issuance or validity of the Units offered hereby, or the Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants, or
(B) might have a material adverse effect on the condition (financial or
otherwise), sales, properties, earnings, net worth, prospects, results of
operations or businesses of the Company and its Controlled Subsidiaries, taken
as a whole (“Material Adverse Effect”), or any of its principal officers. All
pending legal or governmental proceedings to which the Company or its Controlled
Subsidiaries is a party or of which any of their respective properties are
subject or affected which are not described in the Offering Documents, including
ordinary routine litigation incidental to the business, would not have a
Material Adverse Effect. No labor dispute with the employees of the Company
exists or is threatened or imminent that could have a Material Adverse
Effect.

     

    (xiii)           The
Company and its Controlled Subsidiaries have all approvals, licenses,
franchises, authorizations and permits (collectively, “permits”) necessary under
all applicable statutes, codes, rules, regulations, orders and decrees of
governments or governmental bodies (collectively, “laws”), including, but not
limited to, the rules and regulations of the Food and Drug Administration and
the Department of Health and Human Services, which are material to the
ownership, lease or use of their respective properties or the conduct of their
respective businesses as described in the Offering Documents. Neither the
Company nor its Controlled Subsidiaries has received notice of any proceedings
relating to the revocation or modification of any such permits which, singly or
in the aggregate, would have a Material Adverse Effect, and each of the Company
and its Controlled Subsidiaries is in all material respects in compliance with
such permits and laws.

     

    (xiv)          The
Company and its Controlled Subsidiaries own or are licensed to use all patents,
patent applications, inventions, trademarks, trade names, applications for
registration of trademarks, copyrights, know-how, trade secrets, licenses and
rights in any thereof (“Proprietary Rights”) which are material to the
businesses of the Company and its Controlled Subsidiaries as now conducted and
as proposed to be conducted, in each case as described in the Offering
Documents.

     

    Except as
described in the Offering Documents:

     

    
      
         


      

      
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    (a)           the
Company and its Controlled Subsidiaries do not have any knowledge of, and the
Company and its Controlled Subsidiaries have not given or received any notice of
any pending conflict with or infringement of, the rights of others with respect
to any Proprietary Rights or with respect to any license of Proprietary
Rights;

     

    (b)           no
action, suit, arbitration, or legal, administrative or other proceeding, or
domestic or foreign governmental investigation is pending or, to the best of the
Company’s knowledge, threatened, which involves any Proprietary
Rights;

     

    (c)           neither
the Company nor its Controlled Subsidiaries is subject to any judgment, order,
writ, injunction or decree of any court or any Federal, state, local, foreign or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, or any arbitrator, or has entered into or
is a party to any contract which restricts or impairs the use of any such
Proprietary Rights in a manner which would have a material adverse effect on the
use of any of the Proprietary Rights;

     

    (d)           no
Proprietary Rights used by the Company or its Controlled Subsidiaries and no
services or products sold by the Company or its Controlled Subsidiaries,
conflict with or infringe upon, to the knowledge of the Company and its
Controlled Subsidiaries, any Proprietary Rights available to any third
party;

     

    (e)           neither
the Company nor its Controlled Subsidiaries has received written notice of any
pending conflict with or infringement upon such third party Proprietary
Rights;

     

    (f)           neither
the Company nor its Controlled Subsidiaries has entered into any consent,
indemnification, forbearance to sue or settlement agreement with respect to
Proprietary Rights other than in the ordinary course of business;

     

    (g)           to
the best knowledge of the Company, no claims have been asserted by any person
with respect to the validity of or the Company’s or its Controlled Subsidiaries’
ownership of or right to use the Proprietary Rights and, to the best knowledge
of the Company, there is no reasonable basis for any such claim;

     

    (h)           the
Proprietary Rights are valid and enforceable and no registration relating
thereto has lapsed, expired or been abandoned or canceled or is the subject of
cancellation or other adversarial proceedings which would have a Material
Adverse Effect, and all applications therefore are pending and are in good
standing;

     

    (i)       
    the Company and its Controlled Subsidiaries have
complied, in all material respects, with their respective contractual
obligations relating to the protection of the Proprietary Rights used pursuant
to licenses; and

     

    (j)       
    to the best knowledge of the Company, no person is
infringing on or violating the Proprietary Rights owned or used by the Company
or its Controlled Subsidiaries.

     

    
      
         


      

      
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    (xv)           The
Company has an authorized, issued and outstanding capitalization as set forth in
the Offering Documents; all of the issued shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and nonassessable
and conform to the descriptions thereof contained in the Offering Documents; and
none of the issued shares of capital stock of the Company has been issued in
violation of any preemptive or similar right. Except as described in the
Offering Documents, there are no outstanding (A) securities or obligations of
the Company convertible into or exchangeable for any shares of capital stock of
the Company, (B) warrants, rights or options to subscribe for or purchase from
the Company any such capital stock or any such convertible or exchangeable
securities or obligations or (C) obligations for the Company to issue such
shares, any such convertible or exchangeable securities or obligations, or any
such warrants, rights or obligations.

     

    (xvi)          Except
as described in the Offering Documents, there are no contracts, agreements or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities in the securities
being registered pursuant to any registration statement filed by the Company
under the Act.

     

    (xvii)         The
Units to be issued and sold to Prospective Investors as provided in the
Subscription Agreement have been duly authorized and when issued and delivered
against payment therefor, will be validly issued, fully paid and nonassessable
and will conform to the description thereof in the Offering Documents. The
Preferred Shares are convertible into Common Stock and the shares of Common
Stock issuable upon conversion of the Preferred Shares have been duly authorized
and when issued and delivered upon conversion thereof will be validly issued,
fully paid and nonassessable and will conform to the description thereof in the
Offering Documents; and there are no preemptive or other rights to subscribe for
or to purchase, nor any restriction upon the voting or transfer of, any shares
of the Common Stock issuable upon conversion of the Preferred Shares or
otherwise pursuant to the Preferred Shares under the Company’s articles of
incorporation or by-laws or any agreement or other outstanding instrument to
which the Company is a party or is otherwise known to the Company. The Company
has reserved sufficient shares of Common Stock to be issued upon conversion of,
or otherwise pursuant to, the Preferred Shares. The Warrants are exercisable for
Common Stock and the shares of Common Stock issuable upon exercise of the
Warrants have been duly authorized and when issued and delivered upon exercise
and due payment therefor will be validly issued, fully paid and nonassessable
and will conform to the description thereof in the Offering Documents; and there
are no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any shares of the Common Stock
issuable upon exercise of the Warrants pursuant to the Company’s articles of
incorporation or by-laws or any agreement or other outstanding instrument to
which the Company is a party or is otherwise known to the Company. The Company
has reserved sufficient shares of Common Stock to be issued upon exercise of the
Warrants.

     

    (xviii)        The
Agent’s Warrant has been duly authorized and, when issued and delivered against
payment therefor, will be validly issued, fully paid and nonassessable; the
Agent’s Warrant is exercisable for Common Stock in accordance with the terms of
the Agent Warrant Agreement and at the price therein provided; the shares of
Common Stock issuable upon the exercise of the Agent’s Warrant have been duly
authorized and reserved for issuance upon such exercise and such shares, when
issued upon such exercise in accordance with the terms of the Agent Warrant
Agreement, will be duly authorized, validly issued, fully paid and
nonassessable; and there are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer of, any shares of
the Common Stock issuable upon exercise of the Agent’s Warrants pursuant to the
Company’s articles of incorporation or by-laws or any agreement or other
outstanding instrument to which the Company is a party or is otherwise known to
the Company.

     

    
      
         


      

      
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    (xix)           All
offers and sales of securities of the Company issued prior to the date hereof
were at all relevant times duly registered or exempt from the registration
requirements of the Securities Act and the rules and regulations thereunder and
were duly registered or the subject of an available exemption from the
registration requirements of the applicable state securities or Blue Sky laws
and all applicable securities laws and regulations of any foreign country in
which such securities were offered or sold. The Company has not, directly or
indirectly, solicited any offer to buy or offered to sell any Securities or any
other securities of the Company during the twelve-month period ending on the
date hereof which, to the knowledge of the Company, would be integrated with the
Offering.

     

    (xx)           Neither
the Company nor its Controlled Subsidiaries is (A) in violation of its articles
of incorporation or organization or by-laws, (B) in violation of any statute,
law, rule, code, administrative regulation, ordinance, judgment, order or decree
of any government, governmental instrumentality, court, domestic or foreign, or
arbitration panel or other body applicable to it where such violation would have
a Material Adverse Effect or (C) in default (or would be in default but for the
passage of time) in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust,
voting agreement, voting trust agreement, loan agreement, bond, debenture, note
or other evidence of indebtedness, lease, sublease, license agreement, contract
or other agreement or instrument to which it is a party or by which it or any of
its respective properties are bound or affected (“Contracts”), where such
defaults, singly or in the aggregate, would have a Material Adverse Effect. To
the knowledge of the Company, no other party under any Contract is in default in
any material respect thereunder which affects the Company.

     

    (xxi)           The
Company has all requisite power and authority to execute, deliver and perform
its obligations under this Agreement, the Subscription Agreement, the
Registration Rights Agreement, the Preferred Shares, and the Warrant Agreement
and the Agent’s Warrant. This Agreement, the Subscription Agreement, the
Registration Rights Agreement, the Preferred Shares, and the Warrant Agreement
and the Agent’s Warrant have been duly and validly authorized, executed and
delivered by the Company, and each such agreement constitutes a legal, valid and
binding agreement of the Company enforceable against the Company in accordance
with its respective terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by the securities laws of the United
States and except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws or equitable principles affecting the
enforcement of creditors’ rights generally;

     


    
      
         


      

      
        10

        
          

        

      

      
         


      

    


    (xxii)          The
issuance of the Units, including the Preferred Shares, the Warrants, the Agent’s
Warrant, the Common Stock issuable pursuant to the Preferred Shares, Warrants
and Agent’s Warrant, and the execution, delivery and performance of this
Agreement, the Subscription Agreement, the Registration Rights Agreement, the
Preferred Shares, the Warrant Agreement and the Agent’s Warrant, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not conflict with or result in a material breach or violation of any of the
terms or provisions of, or constitute a material default under, or give rise to
rights of termination under, or result in the acceleration of any obligation
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its Controlled
Subsidiaries pursuant to the terms of any indenture, mortgage, deed of trust,
voting agreement, voting trust agreement, loan agreement, bond, debenture, note
or other evidence of indebtedness or result in a material breach or violation of
any of the terms or provisions of, or constitute a material default under any
lease, sublease, contract or other agreement or instrument to which the Company
or any of its Controlled Subsidiaries are, a party or by which the Company, its
Controlled Subsidiaries, or any of the Company’s or its Controlled Subsidiaries’
respective properties or assets are bound or affected, nor will such action
result in any violation of the provisions of the articles of incorporation or
by-laws of the Company or its Controlled Subsidiaries or a material violation of
any applicable statute, law, rule, code, administrative regulation, ordinance,
judgment, order or decree of any government, governmental instrumentality or
court, domestic or foreign, or arbitration panel or other body, having
jurisdiction over the Company, its Controlled Subsidiaries, or any of the
Company’s or its Controlled Subsidiaries’ respective properties or
obligations.

     

    (xxiii)         No
consent, approval, authorization, license or order of or from, or registration,
qualification, declaration or filing with, federal, state, local, foreign or
other governmental authority or any person or court, administrative agency, or
other body is required for the consummation of the transactions contemplated in
this Agreement, or the Offering Documents, except as may have been made or may
be required obtained under FINRA, any state securities or Blue Sky laws or
pursuant to Regulation D.

     

    (xxiv)         The
Company is in compliance in all material respects with all applicable federal,
state and local environmental laws and regulations, including, without
limitation, those applicable to emissions to the environment, waste management
and waste disposal (collectively, the “Environmental Laws”), except for any
noncompliance as may be described in the Offering Documents, and to the best of
the Company’s knowledge, there are no circumstances that would prevent,
interfere with, or materially increase the cost of such compliance in the
future. Except as set forth in the Offering Documents, there is no claim under
any Environmental Law, including common law (“Environmental Claim”), pending or,
to the knowledge of the Company, threatened against or affecting the Company or
its Controlled Subsidiaries and, to the best of the Company’s knowledge, there
are no past or present actions, activities, circumstances, events or incidents,
including, without limitation, releases of any material into the environment,
that could form the basis of any Environmental Claim against or affecting the
Company or its Controlled Subsidiaries.

     

    (xxv)          Each
of the Company and its Controlled Subsidiaries has good and marketable title to
all property owned by it, in each case free and clear of all liens, charges,
encumbrances or restrictions except as described in the Offering Documents 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.
Except as described in the Offering Documents, all material Contracts to which
the Company or its Controlled Subsidiaries is a party or by which the Company or
its Controlled Subsidiaries or any of their respective properties or assets are
bound are valid, subsisting and enforceable and are in full force and
effect.

     

    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

    (xxvi)         The
Company and its Controlled Subsidiaries (A) has paid all federal, state, local
and foreign taxes for which it is liable and has furnished all information
returns it is required to furnish pursuant to the Internal Revenue Code of 1986,
as amended, (B) has established adequate reserves for such taxes which are not
due and payable and (C) does not have any tax deficiency or claims outstanding,
proposed or assessed against it.

     

    (xxvii)        The
Company and its Controlled Subsidiaries maintains insurance of the types and in
amounts which it deems adequate for its business, all of which are in full force
and effect.

     

    (xxviii)       Other
than set forth herein, there are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder’s or origination fee with respect to the sale of the Units.

     

    (xxix)         Neither
the Company nor its Controlled Subsidiaries, nor to the best of the Company’s
knowledge any of the Company’s officers, employees, agents or any other person
acting on behalf of, at the direction of or for the benefit of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency (domestic or
foreign) or instrumentality of any government (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (a) might subject the Company or any other such person to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign), (b) if not given in the past, might have had a
Material Adverse Effect or (c) if not continued in the future, might result in a
Material Adverse Effect. The Company’s internal accounting controls are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.

     

    (xxx)          During
the past five years, none of the current officers or directors of the Company
have been:

     

    (a)           The
subject of a petition under the federal bankruptcy laws or any state insolvency
law filed by or against them, or by a receiver, fiscal agent or similar officer
appointed by a court for their business or property, or any partnership in which
any or them was a general partner at or within two years before the time of such
filing, or any corporation or business association of which any of them was an
executive officer at or within two years before the time of such
filing;

     

    (b)           Convicted
in a criminal proceeding or a named subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);

     

    (c)           The
subject of any order, judgment, or decree not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any of them from, or otherwise limiting, any of the following
activities:

     

    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    (i)         
   acting as a futures commission merchant, introducing broker,
commodity trading advisor, commodity pool operator, floor broker, leverage
transaction merchant, any other person regulated by the Commodity Futures
Trading Commission, or an associated person of any of the foregoing, or as an
investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with any such activity;

     

    (ii)           
 engaging in any type of business practice; or

     

    (iii)          
 engaging in any activity in connection with the purchase or sale of any
security or commodity or in connection with any violation of federal or state
securities law or federal commodities laws.

     

    (d)           the
subject of any order, judgment or decree, not subsequently reversed, suspended
or vacated of any federal or state authority barring, suspending or otherwise
limiting for more than sixty (60) days their right to engage in any activity
described in paragraph (xxx)(c) above, or be associated with persons engaged in
any such activity;

     

    (e)           found
by any court of competent jurisdiction in a civil action or by the Securities
and Exchange Commission to have violated any federal or state securities law,
and the judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended or vacated; or

     

    (f)           found
by a court of competent jurisdiction in a civil action or by the Commodity
Futures Trading Commission to have violated any federal commodities law, and the
judgment in such civil action or finding by the Commodity Futures Trading
Commission has not been subsequently reversed, suspended or
vacated.

     

    (g)           found
by a court or an administrative agency to have or is alleged to have violated
any Canadian or foreign securities laws.

     

    (i)      
      Neither the Company nor, to the knowledge of
the Company, any of its affiliates has, directly or through any agent, sold,
offered for sale or solicited offers to buy nor will any of the foregoing
directly buy any security of the Company, as defined in the Securities Act,
which is or will be integrated with the sale of the Units in a manner that would
require the registration, pursuant to the Securities Act, of the
Offering.

     

    (ii)        
    During the period commencing on the date hereof and
ending on the Final Closing Date, the Company shall not, without prior notice to
and consent of the Placement Agent: (A) issue any securities or incur any
liability or obligation, primary or contingent, for borrowed money; (B) enter
into any transaction not in the ordinary course of business; or (C) declare or
pay any dividend on its capital stock,

     

    (iii)        
   Neither the Company nor any of its officers, directors, or
affiliates, has engaged or will engage, directly or indirectly, in any act or
activity that may jeopardize the status of the offering and sale of the
Securities as an exempt transaction under the Act or under all applicable
federal and/or state securities or “blue sky” laws of any jurisdiction in which
the Securities may be offered or sold.

     

    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    
      	
              7.

            	
              Covenants of
      the Company.

            


    

     

    The
Company covenants that it will:

     

    (a)           Notify
Meyers immediately, and confirm such notice in writing, (i) when any event shall
have occurred during the period commencing on the date hereof and ending on the
Final Closing Date, as a result of which the Offering Documents would include
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, and (ii)
of the receipt of any notification with respect to the modification, rescission,
withdrawal, or suspension of the qualification or registration of the
Securities, or of an exemption from such registration or qualification, in any
jurisdiction. The Company will use its best efforts to prevent the issuance of
any such modification, rescission, withdrawal, or suspension and if Meyers so
request, to obtain the lifting thereof as promptly as possible.

     

    (b)           Not
make any supplement or amendment to the Offering Documents unless such
supplement or amendment complies with the requirements of the Act and Regulation
D and the applicable federal and/or state securities and “blue sky” laws and
unless Meyers shall have approved of such supplement or amendment in writing.
If, at any time during the period commencing on the date hereof and ending on
the Final Closing Date, any event shall have occurred as a result of which the
Offering Documents contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, or if, in the opinion of counsel to the
Company or counsel to the Placement Agent, it is necessary at any time to
supplement or amend the Offering Documents to comply with the Act, Regulation D,
or any applicable securities or “blue sky” laws, the Company will promptly
prepare an appropriate supplement or amendment (in form and substance
satisfactory to Meyers) which will correct such statement or omission or which
will effect such compliance.

     

    (c)           Deliver
without charge to the Placement Agent such number of copies of the Offering
Documents and any supplement or amendment thereto as may reasonably be requested
by the Placement Agent.

     

    (d)           Not,
directly or indirectly, solicit any offer to buy from, or offer to sell to any
person any Securities, except through the Placement Agent.

     

    (e)           Use
its best efforts to qualify the Securities for offering and sale under, or
establish an exemption from such qualification or registration under, the
securities or “blue sky” laws of the jurisdictions as may be required by the
Placement Agent; provided, however, that the Company will not be obligated to
qualify to do business as a dealer in securities in any jurisdiction in which it
is not so qualified. The Company will not consummate any sale of Securities in
any jurisdiction or in any manner in which such sale may not be lawfully made;
in this regard the Company shall be entitled to rely on the Placement Agent’s
representations herein, and the representations of Prospective Investors in the
Subscription Agreement and on the Blue Sky qualifications affected by the
Placement Agent’s counsel.

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

    (f)           At
all times during the period commencing on the date hereof and ending on the
Final Closing Date, provide to each Prospective Investor or his Purchaser
Representative (as defined in Regulation D), if any, on request, such
information (in addition to that contained in the Offering Documents) concerning
the Offering, the Company and any other relevant matters, as it possesses or can
acquire without unreasonable effort or expense, and to extend to each
Prospective Investor or his Purchaser Representative, if any, the opportunity to
ask questions of, and receive answers from, the President or other Executive
Officers of the Company concerning the terms and conditions of the Offering and
the business of the Company and to obtain any other additional information, to
the extent it possesses the same or can acquire it without reasonable effort or
expense, as such Prospective Investor or Purchaser Representative may consider
necessary in making an informed investment decision or in order to verify the
accuracy of the information furnished to such Prospective Investor or Purchaser
Representative, as the case may be.

     

    (g)           Provide
to each Prospective Investor or his Purchaser Representative any information
required to be delivered by Rule 502(b) of Regulation D.

     

    (h)           Disclose
to each Prospective Investor, in writing, any material relationship between such
Prospective Investor’s Purchaser Representative, if any, or its affiliates, on
the one hand, and the Company or its affiliates, on the other hand, which, to
the knowledge of the Company, then exists or is understood to be contemplated or
has existed at any time during the previous two years and any compensation
received or to be received as a result of such relationship.

     

    (i)           Before
accepting any subscription to purchase Securities from, or making any sale to,
any Prospective Investor, have reasonable grounds to believe (relying upon the
information provided pursuant to the Subscription Agreements that (A) such
Prospective Investor meets the suitability requirements for investing in the
Securities set forth in the Offering Documents, or (B) such Prospective Investor
is an accredited investor (as defined in Regulation D).

     

    (j)           Notify
Meyers promptly of the acceptance or rejection of any subscription. The Company
shall not (i) accept subscriptions from, or make sales of Securities to, any
Prospective Investors who are not, to the Company’s knowledge, accredited
investors, or (ii) unreasonably reject any subscription for
Securities.

     

    (k)           Cooperate
with Placement Agent’s counsel to file five copies of a Notice of Sales of
Securities on Form D with the Securities and Exchange Commission (the
“Commission”) no later than 15 days after the first sale of the Securities,
and/or such documents or certificates as are required by any particular state
“blue sky” law. In the event that Company counsel effects the filing of a Form D
with the Commission and the “blue sky” filings required by the securities laws
of any state, the Company or its counsel shall promptly deliver a copy of such
filings i
to the Placement Agent and its counsel. The Company shall file promptly
such amendments to such Notice on Form D as shall become necessary and, as
requested by Meyers, shall also comply with any filing requirement imposed by
the laws of any state or jurisdiction in which offers and sales are made. The
Company shall furnish Meyers with copies of all such filings.

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    (l)           Not,
directly or indirectly, engage in any act or activity which may jeopardize the
status of the offering and sale of the Securities as exempt transactions under
the Act or under the securities or “blue sky” laws of any jurisdiction in which
the Offering maybe made. Without limiting the generality of the foregoing, and
notwithstanding anything contained herein to the contrary, the Company shall
not, directly or indirectly, engage in any offering of securities which, if
integrated with the Offering in the manner prescribed by Rule 502(a) of
Regulation D and applicable releases of the Commission, may jeopardize the
status of the offering and sale of the Securities as exempt transactions under
Regulation D.

     

    (m)          Apply
the net proceeds from the sale of the Securities as set forth under “Use of
Proceeds” in the Memorandum.

     

    (n)           Not,
during the period commencing on the date hereof and ending on the Final Closing
Date, issue any press release or other communication, or hold any press
conference with respect to the Company, its financial condition, results of
operations, business, properties, assets, or liabilities, or the Offering,
without Meyers’ prior written consent, except as required by applicable
securities laws and except as may be related to the marketing and sale of its
products in the normal course of business.

     

    (o)           Provide
each Prospective Investor with a full executed registration rights agreement
which agreement will provide that the Company shall file a registration
statement (the “Registration Statement”) with the SEC within 60 days of the
Final Closing of the Offering to provide for the resale of the shares of Common
Stock issuable pursuant to the Preferred Shares, Warrants and Agent Warrants.
The Company shall use its best efforts to obtain an order of effectiveness from
the SEC declaring
the registration statement effective as soon as reasonably possible, but in no
event later than 120 days from the filing date and to maintain the effectiveness
of such registration statement until the date which is the earlier of (i) such
time as all of the shares registered thereunder have been publicly sold, or (ii)
at such time as all of such shares may be sold pursuant to Rule 144(b). The
agreement shall also provide that the failure to file the registration statement
as contemplated herein or otherwise comply with its obligations thereunder shall
result in a two (2%) percent per month, pro-rated daily, penalty on the
subscription price payable in cash or through the issuance by the Company to
each investor of additional shares of Common Stock and an additional two (2%)
percent penalty for each 30 days period thereafter up to a maximum of eight such
30-day periods.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

    
      	
              8.

            	
              Payment of
      Expenses.

            


    


    The
Company shall pay all fees, charges, expenses and disbursements relating to the
Offering, including, without limitation, all fees, charges, expenses and
disbursements in connection with (a) the preparation, printing, filing,
distribution and mailing of the Offering Documents and any supplement and
amendment thereto and all other documents relating to the Offering and the
purchase, sale and delivery of the Securities, including the cost of all copies
thereof, (b) the issuance, sale, transfer and delivery of the Securities,
including any transfer or other taxes payable thereon and the fees of any
transfer agent or registrar; (c) the registration or qualification of the
Securities for offer and sale under the securities laws of such states and other
jurisdictions as Meyers may designate (including, without limitation, all filing
and registration fees and the reasonable “blue sky” fees and disbursements of
Meyers’s counsel); (d) placement agent counsel fees of $25,000; and (e)
printing, mailing, travel and lodging expenses and other out-of-pocket expenses
incurred by Meyers in connection with this Offering, including (i) due diligence
expenses and (ii) reasonable costs of advertising the issue, limited to one
“tombstone advertisement” to be placed in Wall Street Journal following
completion of the Offering. Upon Meyers’s request, the Company shall provide
funds to pay all such fees, charges, expenses and disbursements in
advance.

     

    
      	
              9.

            	
              Conditions of
      Placement Agent’s Obligations.

            


    

     

    The
obligations of the Placement Agent pursuant to this Agreement shall be subject,
in its discretion, to the continuing accuracy of the representations and
warranties of the Company contained herein and in each certificate and document
contemplated under this Agreement to be delivered to the Placement Agent, as of
the date hereof and as of each Closing Date, with respect to the performance by
the Company of its obligations hereunder, and to the following
conditions:

     

    (a)           At
each Closing, the Placement Agent shall have received the favorable opinion of
Greenberg Traurig, LLP, counsel for the Company, dated each Closing Date,
addressed to the Placement Agent and the investors, and in form and scope
satisfactory to the Placement Agent and its counsel. In rendering such opinion,
counsel for the Company may rely (A) as to matters of fact, on certificates of
responsible officers of the Company; and (B) to the extent they deem proper,
upon written statements or certificates of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to counsel for the Placement Agent.

     

    (b)           On
or prior to the each Closing Date the Placement Agent shall have been furnished
such information, documents, certificates, and opinions as it may reasonably
require for the purpose of enabling it to review the matters referred to in
Section 6, and in order to evidence the accuracy, completeness, or satisfaction
of any of the representations, warranties, covenants, agreements, or conditions
herein contained, or as it may otherwise reasonably request.

     

    (c)           At
the Initial Closing and each additional Closing, the Placement Agent shall have
received one or more certificates of the chief executive officer and of the
chief financial officer of the Company, dated the applicable Closing Date to the
effect that, as of the date of this Agreement and as of the applicable Closing
Date the representations and warranties of the Company contained herein were and
are accurate, and that as of the Closing Date the obligations to be performed by
the Company hereunder on or prior thereto have been fully performed. In
addition, the parties shall deliver such other certificates or closing documents
as are within the industry norm. Notwithstanding the foregoing, the Company
hereby represents and warrants that at each Closing, the representations and
warranties contained herein shall be true and correct in all
respects.

     

    (d)           All
proceedings taken in connection with the issuance, sale, and delivery of the
Securities shall be satisfactory in form and substance to Meyers and Meyers
counsel.

     

    
      
         


      

      
        17

        
          

        

      

      
         


      

    

     

    (e)           There
shall not have occurred after the date hereof, at any time prior to each
Closing: (A) any domestic or international event, act, or occurrence which has
materially disrupted, or in Meyers opinion will in the immediate future
materially disrupt the securities markets; (B) a general suspension of, or a
general limitation on prices for, trading in securities on the Nasdaq SmallCap
Market, American Stock Exchange or the over-the-counter market; (C) any banking
moratorium declared by a state or federal authority; (D) any material
interruption in the mail service or other means of communication within the
United States; (E) any material adverse change in the business, properties,
assets, results of operations, or financial condition of the Company; or (F) any
change in the market for securities in general or in political, financial, or
economic conditions which, in Meyers judgment, makes it inadvisable to proceed
with the offering, sale, and delivery of the Securities.

     

    (f)           The
Company shall have executed and delivered to Meyers any required Agent Warrants
as provided herein.

     

    (g)           Any
certificate or other document signed by any officer of the Company and delivered
to Meyers or to Meyers’ counsel at a Closing shall be deemed a representation
and warranty by the Company hereunder as to the statements made therein. If any
condition to Meyers obligations hereunder has not been fulfilled as and when
required to be so fulfilled, Meyers may terminate this Agreement or,. if Meyers
so elect, in writing waive any such conditions which have not been fulfilled or
extend the time for their fulfillment. In the event that Meyers elect to
terminate this Agreement, Meyers shall notify the Company of such election in
writing. Upon such termination, neither party shall have any further liability
or obligation to the other except as provided in Section 11 hereof.

     

    
      	
              10.

            	
              Conditions of
      Company’s Obligations.

            


    

     

    The
obligations of the Company pursuant to this Agreement shall be subject, in its
discretion, to the performance by the Placement Agent in all material respects
of its obligations hereunder.

     

    
      	
              11.

            	
              Termination.

            


    

     

    (a)           This
Agreement is effective upon the date hereof and shall remain in effect until (i)
the completion of the Offering, or (ii) the earlier termination as herein
provided. If subscriptions for the Minimum offering are not received into escrow
on or before the date that is 60 days from the date of this Agreement, the
Company may terminate the agency agreement created hereby upon 10 days prior
written notice to the Placement Agent. The Placement Agent may terminate the
agency created hereby for any reason upon written notice to the Company.
Notwithstanding the foregoing, in the event the Company elects to terminate the
agency for any reason at any time within 60 days of the date of the Confidential
Offering Memorandum and/or Offering Documents (90 days upon the mutual agreement
of the Company and Placement Agent), the Company shall pay the Placement Agent,
in addition to the other obligations contained herein, as liquidated damages the
sum of $200,000 with five days of such termination.

     

    
      
         


      

      
        18

        
          

        

      

      
         


      

    


    (b)           Except
as otherwise set forth herein, neither party shall have any liability or
continuing obligation to the other upon termination of this Agreement in
accordance with paragraph 11 except that, regardless of which party elects to
terminate, (i) the Company agrees to reimburse the Placement Agent for, or
otherwise pay and bear, the expenses and fees to be paid and borne by the
Company as provided for in paragraph 8 above and to reimburse the Placement
Agent for the full amount of its actual out-of-pocket expenses (which shall
include, without limitation, the fees and disbursements of the Placement Agent’s
counsel, travel and lodging expenses, mailing, printing and reproduction
expenses, and any expenses reasonably incurred by the Placement Agent in
conducting its due diligence) less amounts previously paid to the Placement
Agent in reimbursement for such expenses and the advance against expenses
delivered upon the execution of this Agreement, and (ii) the provisions of
paragraph 14 and the Indemnification Provisions in paragraph 12 shall remain in
full force and effect; provided further, that in the event the Company
terminates this agreement, except as otherwise provided herein, prior to the
consummation of the Offering, and within 24 months from the date of such
termination, consummates any financing, merger, acquisition or like transaction
introduced to, or considered by, the Company, during the term hereof, the
Placement Agent shall be entitled to receive an amount equal to 10% of the
aggregate amount of such financing or $300,000 in the event of a merger or
acquisition or similar transaction. In the event the Placement Agent arranges
the sale of any securities under this Agreement, paragraphs 4, 5, 6, 7, 8, 12,
13, 14, 15, 16 and 17 shall survive the termination of this
Agreement.

     

    
      	
              12.

            	
              Indemnification
      and Contribution.

            


    

     

    (a)           The
Company agrees to indemnify and hold harmless the Placement Agent, its officers,
directors, partners, employees, agents, and counsel, and each person, if any,
who controls the Placement Agent within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), against any and all loss, liability, claim, damage, and expense
whatsoever (which shall include, for all purposes of this Section 12, but not be
limited to, attorneys’ fees and any and all expense whatsoever incurred in
investigating, preparing, or defending against any litigation, commenced or
threatened, or any claim whatsoever and any and all amounts paid in settlement
of any claim or litigation) as and when incurred arising out of, based upon, or
in connection with (i) any untrue statement or alleged untrue statement of a
material fact contained in the Offering Documents or in any document delivered
or written statement made pursuant to Section 7(f), or (B) in any application or
other document or communication (it being understood that neither the Company
nor any officer, director or employee shall provide any information to any
Prospective Investor which is not contained in the Offering Documents) (in this
Section 12 collectively called an “application”) executed by or on behalf of the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to register or qualify the Securities
under the “blue sky” or securities laws thereof or in order to secure an
exemption from such registration or qualification or filed with the Commission;
or any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company as stated in Section 12(b)
with respect to the Placement Agent expressly for inclusion in the Offering
Documents or in any application, as the case may be; or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company contained in
this Agreement. The foregoing agreement to indemnify shall be in addition to any
liability the Company may otherwise have, including liabilities arising under
this Agreement.

     

    
      
         


      

      
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    If any
action is brought against the Placement Agent or any of its officers, directors,
partners, employees, agent, or counsel, or any controlling persons of the
Placement Agent (an “indemnified party”), in respect of which indemnify may be
sought against the Company pursuant to the foregoing paragraph, such indemnified
party or parties shall promptly notify the Company (the “indemnifying party”) in
writing of the institution of such action (but the failure so to notify shall
not relieve the indemnifying party from any liability it may have other than
pursuant to this Section 12(a)) and the indemnifying party shall promptly assume
the defense of such action, including the employment of counsel (reasonably
satisfactory to such indemnified party or parties) and payment of expenses. Such
indemnified party shall have the right to employ its own counsel in any such
case, but the fees and expense of such counsel shall be at the expense of such
indemnified party unless the employment of such counsel shall have been
authorized in writing by the indemnifying party in connection with the defense
of such action or the indemnifying party shall not have promptly employed
counsel satisfactory to such indemnified party or parties to have charge of the
defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
it or them or to other indemnified parties which are different from or
additional to those available to one or more of the indemnifying parties, in any
of which events such fees and expenses of one such counsel shall be borne by the
indemnifying party and the indemnifying party shall not have the right to direct
the defense of such action on behalf of the indemnified party or parties.
Anything in this paragraph to the contrary notwithstanding, the indemnifying
party shall not be liable for any settlement of any such claim or action
effected without its written consent. The Company agrees promptly to notify the
Placement Agent of the commencement of any litigation or proceedings against the
Company or any of its officers or directors in connection with the sale of the
Securities, the Offering Documents, or any application.

     

    (b)           The
Placement Agent agrees to indemnify and hold harmless the Company, its officers,
directors, employees, agents, and counsel, and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, to the same extent as the foregoing indemnity from
the Company to the Placement Agent in Section 12(a), with respect to any and all
loss, liability, claim, damage, and expense whatsoever (which shall include, for
all purposes of this Section 12, but not be limited to, attorneys’ fees and any
and all expense whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever and any
and all amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) statements or
omissions, if any, made in the Offering Documents in reliance upon and in
conformity with written information furnished to the Company as stated in this
Section 12 with respect to the Placement Agent expressly for inclusion in the
Offering Documents, and (ii) the failure of the Placement Agent to comply with
the provisions of Section 4(c) hereof or with the “blue sky” or securities laws
of the jurisdictions in which the Placement Agent solicits offers to buy or
offers to sell any Securities or any breach of any representation, warranty,
covenant or agreement of the Placement Agent contained in this Agreement. The
foregoing agreement to indemnify shall be in addition to any liability the
Placement Agent may otherwise have, including liabilities arising under this
Agreement. If any action shall be brought against the Company or any other
person so indemnified based on the Offering Documents and in respect of which
indemnity may be sought against the Placement Agent pursuant to this Section 12,
the Placement Agent shall have the rights and duties given to the indemnifying
party, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
12(a) hereof.

     

    
      
         


      

      
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    (c)           To
provide for just and equitable contribution, if (i) an indemnified party makes a
claim for indemnification pursuant to Section 12(a) or 12(b) hereof but it is
found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the Exchange
Act, or otherwise, then the Company (including for this purpose any contribution
made by or on behalf of any officer, director, employee, agent, or counsel of
the Company, or any controlling person of the Company), on the one hand, and the
Placement Agent (including for this purpose any contribution by or on behalf of
an indemnified party), on the other hand, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them may
be subject, in such proportions as are appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Placement Agent, on
the other hand; provided, however, that if applicable law does not permit such
allocation, then other relevant equitable considerations such as the relative
fault of the Company and the Placement Agent in connection with the facts which
resulted in such losses, liabilities, claims, damages, and expenses shall also
be considered. The relative benefits received by the Company, on the one hand,
and the Placement Agent, on the other hand, shall be deemed to be in the same
proportion as (x) the total proceeds from the Offering (net of compensation
payable to the Placement Agent pursuant to Section 5(a) hereof but before
deducting expenses) received by the Company, and (y) the compensation received
by the Placement Agent pursuant to Section 5(a) hereof.

     

    The
relative fault, in the case of an untrue statement, alleged untrue statement,
omission, or alleged omission, shall be determined by, among other things,
whether such statement, alleged statement, omission, or alleged omission relates
to information supplied by the Company or by the Placement Agent, and the
parties’ relative intent, knowledge, access to information, and opportunity to
correct or prevent such statement, alleged statement, omission, or alleged
omission. The Company and the Placement Agent agree that it would be unjust and
inequitable if the respective obligations of the Company and the Placement Agent
for contribution were determined by pro rata or per capita allocation of the
aggregate losses, liabilities, claims, damages, and expenses or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 12(c). In no case shall the Placement Agent by responsible
for a portion of the contribution obligation in excess of the compensation
received by it pursuant to Section 5(a) hereof. No person guilty of a fraudulent
misrepresentation shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section 12(c),
each person, if any, who controls the Placement Agent within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act and each officer,
director, partners, employee, agent, and counsel of the Placement Agent, shall
have the same rights to contribution as the Placement Agent, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, employee, agent,
and counsel of the Company, shall have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 12(c). Anything
in this Section 12(c) to the contrary notwithstanding, no party shall be liable
for contribution with respect to the settlement of any claim or action effected
without its written consent. This Section 12(c) is intended to supersede any
right to contribution under the Act, the Exchange Act, or
otherwise.

     

    
      
         


      

      
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              13.

            	
              Right of
      First Refusal.

            


    

     

    Commencing
at the Closing, the Placement Agent will be granted an irrevocable right of
first refusal for a period ending 60 months from the effective date of the
Registration Statement filed by the Company with respect to this Offering for
all future public offerings or private financings (whether debt and/or equity)
to purchase for its account or to sell for the account of the Company, or any
subsidiary of or successor to the Company, any securities of the Company or any
such subsidiary or successor of the Company that the Company or any such
subsidiary or successor may seek to sell through an underwriter, placement agent
or broker dealer whether pursuant to registration under the Securities Act or
otherwise. This right of first refusal does not include commercial bank
financing arrangements entered into by the Company. If the Placement Agent fails
to accept such offer within 20 business days after the mailing of a notice
containing such offer by registered mail addressed to the Placement Agent (5
business days in the event the offer covers a sale under Rule 144), then the
Placement Agent shall have no further claim or right with respect to the
financing proposal contained in such notice. If, however, the terms of such
proposal are subsequently modified in any material respect, the preferential
right referred to herein shall apply to such modified proposal as if the
original proposal had not been made. The Placement Agent’s failure to exercise
its preferential right with respect to any particular proposal shall not affect
its preferential rights relative to future proposals. The Company represents and
warrants that there are presently no other rights of first refusal for future
financing now outstanding.

     

    
      	
              14.

            	
              Non-Solicitation.

            


    

     

    Commencing
on the initial Closing Date, the Company agrees that it shall not solicit any
offer to buy from or offer to sell any person introduced to the Company by the
Placement Agent in connection with the Offering, directly or indirectly, any
securities of the Company or of any other entity, or provide the name of any
such person to any other securities broker or dealer or selling agent. In the
event that the Company or any of its affiliates, directly or indirectly,
solicits, offers to buy from or offers to sell to any such person any such
securities, or provides the name of any such person to any other securities
broker or dealer or selling agent, and such person purchases such securities or
purchases securities from any other securities broker or dealer or selling
agent, the Company shall pay to the Placement Agent an amount equal to 10% of
the aggregate purchase price of the securities so purchased by such
person.

     

    
      
         

      

      
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              15.

            	
              Additional
      Agreements

            


    

     

    (a)           Warrant Solicitation
Fee.


    Effective
upon each Closing, the Company shall be deemed to have engaged the Placement
Agent as its agent to solicit the investors to exercise the warrants issued in
the Offering (the “Warrants”). The Company shall pay the Placement Agent a fee
consisting of a cash payment equal to ten percent (10%) of the total cash
proceeds received from the exercise of those Warrants for whom the Placement
Agent was properly designated as the soliciting broker (the “Warrant Exercise
Fee”). The Company shall only be obligated to pay the Warrant Exercise Fee if
all of the following conditions are met: (i) the exercise of the Warrants is for
cash and otherwise in accordance with the Warrant Agreement issued to investors,
as same shall be amended from time to time, (ii) the actions of the Placement
Agent in soliciting the exercise of the Warrants have been consistent with
applicable federal and state securities laws, the guidelines of FINRA and
applicable SEC rules and regulations; and (iii) disclosure of the Company’s
compensation arrangement with the Placement Agent is made. Within fifteen (15)
days after the end of each month in which Warrants are solicited by the
Placement Agent, the Company will deliver a notice to the Placement Agent
setting forth the number of Warrant certificates which have been properly
completed for exercise by holders of the Warrants for which Placement Agent has
solicited in accordance with this Agreement, together with payment of the
Warrant Exercise Fee with respect to the Warrants so exercised and any
documentation requested by Placement Agent. The Company shall be responsible for
compliance with applicable state securities and “blue sky laws in connection
with the solicitation of the Warrants. Placement Agent shall notify the Company
of the states of residence of holders of the Warrants in which Placement Agent
intends to solicit the exercise of the Warrants.

     

    (b)           Consulting
Arrangement

     

    Upon the
closing of any financing arranged by the Placement Agent in excess of the
Minimum Offering, the Company will deemed to have engaged, and will enter into a
separate agreement (the “Advisory and Consulting Agreement”) with the Placement
Agent, pursuant to which the Company shall employ the Placement Agent as its
Investment Banker and Financial Consultant for a period of 24 months at a
monthly retainer of $5,000.

     

    
      	
              16.

            	
              Representations
      and Agreements to Survive Delivery.

            


    

     

    All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date and, such representations, warranties, covenants,
and agreements, including the indemnification and contribution agreements
contained in Section 12, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Placement Agent or
any indemnified person, or by or on behalf of the Company or any person or
entity which is entitled to be indemnified under Section 12(b), and shall
survive termination of this Agreement or the issuance, sale, and delivery of the
Securities. In addition, notwithstanding any election hereunder or any
termination of this Agreement, and whether or not the terms of this Agreement
are otherwise carried out, the provisions of Sections 6, 7(a), 7(c), 11 and 12
through 15 shall survive termination of this Agreement and shall not be affected
in any way by such election or termination or failure to carry out the terms of
this Agreement or any part thereof.

     

    
      	
              17.

            	
              Notices.

            


    

     

    All
communications hereunder, except as may be otherwise specifically provided
herein, shall be in writing and, if sent to the Placement Agent, shall be mailed
by certified mail, hand delivered, or sent by overnight courier service, to
Meyers Associates L.P. 45 Broadway, New York, New York 10006, Attention: Bruce
Meyers, with a copy to Becker & Poliakoff, LLP, 45 Broadway, 11”‘ Floor, New
York, New York 10006, Attention: Michael A. Goldstein, Esq.; or if sent to the
Company, SignPath Pharma, Inc., 1375 California Road, Quakertown, PA 18951,
Attention: Robert LeBoyer, with a copy to Greenberg Traurig, LLP, 200 Park
Avenue, New York, New York 10166, Attention: Robert H. Cohen, Esq. All notices
hereunder shall be effective upon receipt by the party to which it is
addressed.

     

    
      
         


      

      
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              18.

            	
              Parties.

            


    

     

    This
Agreement shall inure solely to the benefit of, and shall be binding upon, the
Placement Agent and the Company and the persons and entities referred to in
Section 12 who are entitled to indemnification or contribution, and their
respective successors, legal representatives, and assigns (which shall not
include any purchaser, as such, of Securities), and no other person shall have
or be construed to have any legal or. equitable right remedy, or claim under or
in respect of or by virtue of this Agreement or any provision herein
contained.

     

    
      	
              19.

            	
              Governing
      Law; Jurisdiction.

            


    

     

    This
Agreement shall be construed in accordance with the laws of the State of New
York, without giving effect to conflict of laws. Each of the Placement Agent and
the Company (a) agrees that any legal suit, action or proceeding arising out of
or relating to this Agreement shall be instituted exclusively in New York State
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (b) waives any objection which the Company
may have now or hereafter to the venue of any such suit, action or proceeding,
and (c) irrevocably consents to the jurisdiction of the foregoing named courts
in any such suit, action or procedure. Each of the Company and First Montauk
further agrees to accept and acknowledge service of any and all process which
may be served in any suit, action or proceeding in the foregoing courts, and
agrees that service of process upon the Company or First Montauk mailed by
certified mail to the address set forth in Section 16 hereof shall be deemed in
every respect effective service of process upon the Company in any such suit,
action or proceeding. In the event of litigation between the parties arising
hereunder, the prevailing party shall be entitled to costs and reasonable
attorney’s fees.

     

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              20.

            	
              Counterparts.

            


    

     

    This
Agreement may be executed in counterparts, each of which shall constitute an
original and 319 of which, when taken together, shall constitute one
agreement.

     

    If the
foregoing correctly sets forth the understanding between us, please so indicate
in the space provided below for that purpose, whereupon this letter shall
constitute a binding agreement among us.

     

    
      	 
      	
              Very
      truly yours,

            
	 
      	 
      
	 
      	
              SIGNPATH
      PHARMA, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	
              By:

            	
              /s/ Lawrence Helson

            
	 
      	
              Name:

            	
              Lawrence
      Helson

            
	 
      	
              Title:

            	
              Chief
      Executive’ Officer

            
	
              Accepted
      as of the date

            	 
      	 
      
	
              first
      above written:

            	 
      	 
      
	 
      	 
      	 
      
	
              MEYERS
      ASSOCIATES L.P.

            	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
              By:

            	
                 /s/ Bruce
      Meyers

            	 
      	 
      	 
      
	 
      	
                Name:  Bruce
      Meyers

            	 
      	 
      	 
      
	 
      	
                Title:  President

            	 
      	 
      	 
      


    

     

    
      
         


      

      
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