subagreement.htm


    SUBSCRIPTION
      AGREEMENT

     

    SUBSCRIPTION
      AGREEMENT (this “Agreement”) made as of the date set forth on the
      signature page hereof between BioSante Pharmaceuticals, Inc., a Delaware
      corporation (the “Company”) and the undersigned (the
“Subscriber”).

     

    WITNESSETH:

     

    WHEREAS,
      the Company is offering in a private placement to accredited investors (the
      “Offering”) up to a maximum of 4,702,669 shares of common stock, par
      value $0.0001 per share (the “Common Stock”) at a price equal to $6.00
      per share (the “Offering Price”) and warrants to purchase shares of
      Common Stock equal to twenty-five percent (25%) of the total number of shares
      sold to Subscribers in the Offering at an exercise price per share equal to
      $8.00 (the “Warrants”).  The Warrants are exercisable beginning
      on the date that is six months and one day after the Closing Date and continuing
      for three years thereafter.  The shares of Common Stock and Warrants
      offered hereby are sometimes referred to as the “Securities;”
and

     

    WHEREAS,
      the Subscriber desires to purchase that number of Securities set forth on the
      signature page hereof on the terms and conditions hereinafter set forth;
      and

     

    WHEREAS,
      the Company has engaged Rodman & Renshaw, LLC and, indirectly, Oppenheimer
& Co. Inc. (collectively, the “Placement Agents”) as co-placement
      agents for the Offering on a “best-efforts” basis.

     

    NOW,
      THEREFORE, in consideration of the premises and the mutual representations
      and
      covenants hereinafter set forth, the parties hereto agree as
      follows:

     

    


    I.  SUBSCRIPTION
      FOR SECURITIES AND REPRESENTATIONS BY SUBSCRIBER

     

    1.1  Subject
      to the terms and conditions hereinafter set forth, the Subscriber hereby
      irrevocably subscribes for and agrees to purchase from the Company such
      Securities as is set forth upon the signature page hereof and the Company agrees
      to sell such Securities to the Subscriber for said purchase price. The purchase
      price is payable by wire transfer of immediately available funds
      contemporaneously with the execution and delivery of this Agreement by the
      Subscriber.  All wires should be sent to:

     

    LaSalle
      Bank NA

    ABA#

    Acct.#

    Account
      name BioSante Pharmaceuticals

    Bank
      contact = Kimberly Hall 847-990-3916

    


    Certificates
      for the shares of Common Stock and the Warrants will be delivered by the Company
      to the Subscriber promptly following the Closing (as herein
      defined).  Notwithstanding the foregoing, the Subscriber acknowledges
      that, although the Company intends to file on the next business day hereafter
      or
      as soon as practicable hereafter a listing application with the American Stock
      Exchange (“AMEX”) containing all information required by the rules and
      regulations of AMEX, final approval by AMEX is required in connection with
      the
      listing of the Common Stock to be eligible for trading on AMEX.  The
      Company shall use its reasonable best efforts to cause AMEX to approve the
      listing application for the Securities as soon as practicable.

     

    1.2  The
      Subscriber recognizes that the purchase of Securities involves a high degree
      of
      risk in that (i) the Company remains an early stage business with a limited
      operating history and will require funds in addition to the proceeds of the
      Offering; (ii) an investment in the Company is highly speculative and only
      investors who can afford the loss of their entire investment should consider
      investing in the Company; (iii) the Subscriber may not be able to liquidate
      the
      Subscriber’s investment in the Company; (iv) transferability of the Securities
      is extremely limited; and (v) in the event of a disposition, the Subscriber
      could sustain the loss of its entire investment.

     

    1.3  The
      Subscriber represents that the Subscriber is an “accredited investor” as such
      term is defined in Rule 501 of Regulation D promulgated under the Securities
      Act
      of 1933, as amended, (the “Act”), as indicated by the responses to the
      questions contained in Section VII hereof, and that the Subscriber is able
      to
      bear the economic risk and illiquidity of an investment in the
      Securities.

     

    1.4  The
      Subscriber hereby acknowledges and represents that (i) the Subscriber has prior
      investment experience, including investment in non-listed and unregistered
      securities, or that the Subscriber has employed the services of an investment
      advisor, attorney and/or accountant to read all of the documents furnished
      or
      made available by the Company both to the Subscriber and to all other
      prospective investors to evaluate the merits and risks of such an investment
      on
      the Subscriber’s behalf; (ii) the Subscriber recognizes the highly speculative
      nature of an investment in the Securities; and (iii) the Subscriber is able
      to
      bear the economic risk and illiquidity which the Subscriber assumes by investing
      in the Securities.

     

    1.5  The
      Subscriber (i) hereby represents that the Subscriber has been furnished by
      the
      Company during the course of this transaction with and has carefully read the
      Company’s SEC Filings (as hereafter defined), including without limitation the
      Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
      2006, the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended
      March 31, 2007, the additional risk factors specific to the Common Stock and
      the
      Offering contained in Schedule 1.5 (together with the SEC Filings, the
“Offering Documents”), and all other information regarding the Company
      which the Subscriber has requested or desired to know; (ii) has been afforded
      the opportunity to ask questions of and receive answers from duly authorized
      officers or other representatives of the Company concerning the terms and
      conditions of the Offering; and (iii) has received any additional information
      which the Subscriber has requested.

     

    1.6  To
      the
      extent necessary, the Subscriber has retained, at its own expense, and relied
      upon the advice of appropriate professionals regarding the investment, tax
      and
      legal merits and consequences of this Agreement and its purchase of the
      Securities hereunder.

     

    1.7  The
      Subscriber hereby acknowledges that the Offering has not been reviewed by the
      United States Securities and Exchange Commission (the “SEC”) because of
      the Company’s representations that this Offering is intended to be exempt from
      the registration requirements of Section 5 of the Act pursuant to Sections
      3(b),
      4(2) and/or 4(6) thereof and Regulation D promulgated under the Act. The
      Subscriber agrees that the Subscriber will not, directly or indirectly, offer,
      sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
      purchase or otherwise acquire or take a pledge of) any of the Securities, except
      in compliance with the Act and the rules and regulations promulgated
      thereunder.

     

    1.8  The
      Subscriber understands that none of the Securities have been registered under
      the Act by reason of a claimed exemption under the provisions of the Act which
      depends, in part, upon the Subscriber’s investment intention. In this
      connection, the Subscriber hereby represents that the Subscriber is purchasing
      the Securities for the Subscriber’s own account for investment and not with a
      view toward the resale or distribution thereof to others.  The
      Subscriber, if an entity, was not formed for the purpose of purchasing the
      Securities.  The Subscriber understands that Rule 144 promulgated
      under the Act requires, among other conditions, a one-year holding period prior
      to the resale (in limited amounts) of securities acquired in a non-public
      offering without having to satisfy the registration requirements under the
      Act.

     

    1.9  The
      Subscriber understands and hereby acknowledges that the Company is under no
      obligation to register the Securities under the Act or any applicable state
      securities or “blue sky” laws  (collectively, “Securities
      Laws”) other than as set forth in Section V.  Prior to the Legend
      Removal Date (as hereafter defined), the Subscriber consents that the Company
      may, if it desires, permit the transfer of the Securities out of the
      Subscriber’s name only when the Subscriber’s request for transfer is accompanied
      by an opinion of counsel reasonably satisfactory to the Company that neither
      the
      sale nor the proposed transfer results in a violation of the Act or any
      applicable state “blue sky” laws.

     

    1.10  So
      long
      as required by Section 5.13, the Subscriber consents to the placement of a
      legend on any certificate or other document evidencing the Securities indicating
      that such Securities have not been registered under the Act or any state
      securities or “blue sky” laws and setting forth or referring to the restrictions
      on transferability and sale thereof contained in this Agreement. The Subscriber
      is aware that the Company will make a notation in its appropriate records and
      issue “stop transfer” instructions to its transfer agent with respect to the
      restrictions on the transferability of such Securities.

     

    1.11  The
      Subscriber understands that the Company will review this Agreement and, if
      such
      Subscriber is an individual, hereby gives authority to the Company to call
      Subscriber’s bank or place of employment (in a call in which the Placement
      Agents participate) or otherwise review the financial standing of the
      Subscriber; and it is further agreed that upon their mutual agreement the
      Placement Agents and the Company reserve the unrestricted right, without further
      documentation or agreement on the part of the Subscriber, to reject or limit
      any
      subscription, to accept subscriptions for Securities and to close the Offering
      to the Subscriber at any time.

     

    1.12  The
      Subscriber hereby represents that the address of the Subscriber furnished by
      the
      Subscriber on the signature page hereof is the Subscriber’s principal residence
      if the Subscriber is an individual or its principal business address if it
      is a
      corporation or other entity.

     

    1.13  The
      Subscriber represents that the Subscriber has full power and authority
      (corporate, statutory and other­wise) to execute and deliver this Agreement
      and to purchase the Securities subscribed for hereby.  This Agreement
      constitutes the legal, valid and binding obligation of the Subscriber,
      enforceable against the Subscriber in accordance with its terms.

     

    1.14  If
      the
      Subscriber is a corporation, partnership, limited liability company, trust,
      employee benefit plan, individual retire­ment account, Keogh Plan, or other
      entity, then (a) it is authorized and qualified to become an investor in the
      Company and the person signing this Agreement on behalf of such entity has
      been
      duly authorized by such entity to do so, and (b) it is duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization.

     

    1.15  The
      Subscriber represents and warrants that it has not engaged, consented to nor
      authorized any broker, finder or intermediary to act on its behalf, directly
      or
      indirectly, as a broker, finder or intermediary in connection with the
      transactions contemplated by this Agreement.  The Subscriber shall
      indemnify and hold harmless the Company from and against all fees, commissions
      or other payments owing to any such person or firm acting on behalf of such
      Subscriber hereunder.

     

    1.16  The
      Subscriber acknowledges that (a) the Company has engaged, consented to and
      authorized the Placement Agents in connection with the transactions contemplated
      by this Agreement, (b) the Company shall pay the Placement Agents a commission
      and reimburse the Placement Agents’ expenses and the Company shall indemnify and
      hold harmless the Subscriber from and against all fees, commissions or other
      payments owing by the Company to the Placement Agents or any other person or
      firm acting on behalf of the Company hereunder, (c) registered representatives
      of the Placement Agents and/or its designees (including, without limitation,
      registered representatives of the Placement Agents and/or its designees who
      participate in the Offering and sale of the securities sold in the Offering)
      will be paid a portion of the commissions paid to the Placement Agents and
      (d)
      the Placement Agents have not independently verified any information (financial,
      legal or otherwise) and makes no representation or warranty, express or implied,
      as to, and assumes no responsibility for, the accuracy or completeness of the
      information contained in the Offering Documents.

     

    1.17  The
      Subscriber, whose name appears on the signature line below, shall be the
      beneficial owner of the Securities for which such Subscriber
      subscribes.

     

    1.18  The
      Subscriber understands, acknowledges and agrees with the Company as
      follows:

     

    (a)  The
      Company may terminate the Offering or reject any subscription at any time in
      its
      sole discretion.  The execution of this Agreement by the Subscriber or
      solicitation of the investment contemplated hereby shall create no obligation
      on
      the part of the Company or the Placement Agents to accept any subscription
      or
      complete the Offering.

     

    (b)  The
      Subscriber hereby acknowledges and agrees that the subscription hereunder is
      irrevocable by the Subscriber, and that, except as required by law, the
      Subscriber is not entitled to cancel, terminate or revoke this Agreement or
      any
      agreements of the Subscriber hereunder and that if the Subscriber is an
      individual this Agreement shall survive the death or disability of the
      Subscriber and shall be binding upon and inure to the benefit of the parties
      and
      their heirs, executors, administrators, successors, legal representatives and
      permitted assigns.

     

    (c)  No
      federal or state agency or authority has made any finding or determination
      as to
      the accuracy or adequacy of the Offering Documents or as to the fairness of
      the
      terms of the Offering nor any recommendation or endorsement of the
      Securities.  Any representation to the contrary is a criminal
      offense.  In making an investment decision, the Subscriber must rely
      on its own examination of the Company and the terms of the Offering, including
      the merits and risks involved.

     

    1.19  Other
      than the transaction contemplated hereunder, the Subscriber has not directly
      or
      indirectly, nor has any Person acting on behalf of or pursuant to any
      understanding with the Subscriber, executed any disposition, including “short
      sales” as defined in Rule 200 of Regulation SHO under the Exchange Act, in
      the securities of the Company during the period commencing from the time that
      the Subscriber first received a term sheet (written or oral) from the Company
      or
      any other Person setting forth the material terms of the transactions
      contemplated hereunder until the date hereof (the “Discussion Time”).
      Notwithstanding the foregoing, in the case of a Subscriber that is a
      multi-managed investment vehicle whereby separate portfolio managers manage
      separate portions of such Subscriber’s assets and the portfolio managers have no
      direct knowledge of the investment decisions made by the portfolio managers
      managing other portions of the Subscriber’s assets, the representation set forth
      above shall only apply with respect to the portion of assets managed by the
      portfolio manager that made the investment decision to purchase the Securities
      covered by this Agreement.  Other than to other Persons party to this
      Agreement, the Subscriber has maintained the confidentiality of all disclosures
      made to it in connection with this transaction (including the existence and
      terms of this transaction).

     

    1.20  The
      Subscriber represents that the Subscriber is not a broker-dealer or if the
      Subscriber is a broker-dealer, the Subscriber represents that the Subscriber
      is
      purchasing the Securities in the ordinary course of business, and has no
      agreements or understandings, directly or indirectly, with any person to
      distribute the Securities.

     

    1.21  The
      Subscriber represents that the Subscriber did not purchase any shares of Common
      Stock of the Company in the open market on May 4, 2007 or May 7,
      2007.

     

    II.  REPRESENTATIONS
      BY THE COMPANY

     

    The
      Company hereby represents and warrants to the Subscriber and the Placement
      Agents that:

     

    2.1  Organization
      and Qualification.  The Company is a corporation duly organized,
      validly existing and in good standing under the laws of the State of Delaware
      and has full corporate power and lawful authority to conduct its business as
      presently conducted.  Except as set forth in Schedule 2.1, the
      Company is duly qualified to do business as a foreign corporation and is in
      good
      standing in each jurisdiction in which the nature of the business presently
      conducted by it or the properties owned, leased or operated by it, makes such
      qualification or licensing necessary and where the failure to be so qualified
      or
      licensed would have a material adverse effect upon the business, prospects
      or
      financial condition of the Company (a “Material Adverse
      Effect”).

     

    2.2  Capitalization
      and Voting Rights.  The authorized capital stock of the Company is
      as set forth in its most recent SEC Filing (as hereafter defined), 23,513,350
      shares of common stock and 391,286 shares of class C special stock of which
      are
      issued and outstanding as of May 24, 2007.  All issued and outstanding
      shares of capital stock of the Company are validly issued, fully paid and
      nonassessable.  Except as set forth in this Agreement or in the SEC
      Filings, there are no outstanding options, warrants, agreements, commitments,
      convertible securities, preemptive rights or other rights to subscribe for
      or to
      purchase any shares of capital stock of the Company nor are there any
      agreements, promises or commitments to issue any of the
      foregoing.  Except as set forth in the SEC Filings, in this Agreement
      and as otherwise required by law, there are no restrictions upon the voting
      or
      transfer of the Securities pursuant to the Company's Amended and Restated
      Certificate of Incorporation, as amended, (the “Certificate of
      Incorporation”), By-laws or other governing documents or any agreement or
      other instruments to which the Company is a party or by which the Company is
      bound; provided, however, that the Securities will be subject to restrictions
      on
      transfer and Securities Laws (as hereafter defined) as provided
      herein.  No securityholder has the right to include any securities in
      the Registration Statement (as hereinafter defined) or otherwise cause the
      Company to effect registration of any of the Company’s securities under the Act,
      except for investors in the Company’s prior private placements, which rights the
      Company has to date satisfied.

     

    2.3  Authorization;
      Enforceability. The Company has all corporate right, power and authority to
      enter into this Agreement and to consummate the transactions contemplated
      hereby.  All corporate action on the part of the Company, its
      directors and stockholders necessary for the authorization, execution, delivery
      and performance of this Agreement by the Company, the authorization, sale,
      issuance and delivery of the Securities and the performance of the Company's
      obligations hereunder has been taken.  This Agreement has been duly
      executed and delivered by the Company and constitutes a legal, valid and binding
      obligation of the Company, enforceable against the Company in accordance with
      its terms, subject to laws of general application relating to bankruptcy,
      insolvency and the relief of debtors and rules of law governing specific
      performance, injunctive relief or other equitable remedies, and to limitations
      of public policy.  The Securities and the issuance of shares of Common
      Stock upon issuance of the Warrants (the “Warrant Shares”) have been duly
      and validly authorized and, upon the issuance and delivery thereof and payment
      therefor as contemplated by this Agreement and the terms of the Warrants, will
      be free and clear of liens (other than any liens created by or imposed on the
      holders thereof through no action of the Company), duly and validly authorized
      and issued, fully paid and nonassessable.  The Company has reserved a
      sufficient number of shares of Common Stock for its authorized but unissued
      shares for issuance upon exercise of the Warrants.  The issuance and
      sale of the Securities contemplated hereby will not give rise to any preemptive
      rights or rights of first refusal on behalf of any person.

     

    2.4  No
      Conflict; Governmental Consents.

     

    (a)  The
      execution and delivery by the Company of this Agreement, the consumma­tion
      of the transactions contemplated hereby and the offer and sale of the Securities
      will not result in the violation of any law, statute, rule, regulation, order,
      writ, injunction, judgment or decree of any court or governmental authority
      to
      or by which the Company is bound that would have a material adverse effect
      upon
      the business or financial condition of the Company, or of any provision of
      the
      Certificate of Incorporation or By-laws of the Company, and will not conflict
      with, or result in a breach or violation of, any of the terms or provisions
      of,
      or constitute (with due notice or lapse of time or both) a default under, any
      lease, loan agreement, mortgage, security agreement, trust indenture or other
      agreement or instrument to which the Company is a party or by which it is bound
      or to which any of its properties or assets is subject, nor result in the
      creation or imposition of any lien upon any of the properties or assets of
      the
      Company that would have a material adverse effect upon the business or financial
      condition of the Company.

     

    (b)  Except
      as
      set forth in Schedule 2.4(b), no consent, waiver, approval, authorization
      or other order of any governmental authority or other third-party is required
      to
      be obtained by the Company in connection with the authorization, execution
      and
      delivery of this Agreement or with the authorization, issuance and sale of
      the
      Securities, except for such consents, waivers, approvals, authorizations, orders
      or filings as may be required to be obtained or made, and which shall have
      been
      obtained or made at or prior to the required time and except for such consents,
      waivers, approvals, authorizations, orders or filings that would not have a
      Material Adverse Affect.

     

    2.5  Licenses.  The
      Company has all licenses, permits and other governmental authorizations
      currently required for the conduct of its business or ownership of properties
      and is in all material respects complying therewith, except for any licenses,
      permits or other governmental authorizations which would not materially
      adversely affect the business, property, financial condition, or results of
      operations of the Company.

     

    2.6  Litigation.  Except
      as set forth in the SEC Reports, there is no action, suit, inquiry, notice
      of
      violation, proceeding or investigation pending or, to the knowledge of the
      Company, threatened against or affecting the Company or any of its properties
      before or by any court, arbitrator, governmental or administrative agency or
      regulatory authority (federal, state, county, local or foreign) (collectively,
      an “Action”) which (i) adversely affects or challenges the legality,
      validity or enforceability of this Agreement or the Securities or (ii) could,
      if
      there were an unfavorable decision, have or reasonably be expected to result
      in
      a Material Adverse Effect.  Except as set forth in the SEC Reports,
      neither the Company, nor any director or officer thereof, is or has been the
      subject of any action involving a claim of violation of or liability under
      federal or state securities laws or a claim of breach of fiduciary
      duty.  Except as set forth in the SEC Reports, there has not been, and
      the Company has not received any notice or indication from the SEC that there
      is
      pending or contemplated any investigation by the SEC involving the Company
      or
      any current or former director or officer of the Company.  The SEC has
      not issued any stop order or other order suspending the effectiveness of any
      registration statement filed by the Company under the Securities Exchange Act
      of
      1934, as amended (the “Exchange Act”) or the Act.

     

    2.7  Accuracy
      of Report.  The Company has filed all reports, schedules, forms,
      statements and other documents required to be filed by it under the Act and
      the
      Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
      two
      years preceding the date hereof (the foregoing materials, including the exhibits
      thereto and documents incorporated by reference therein, being collectively
      referred to herein as the “SEC Reports”) on a timely basis or has
      received a valid extension of such time of filing and has filed any such SEC
      Reports prior to the expiration of any such extension.  As of their
      respective dates, the SEC Reports complied in all material respects with the
      requirements of the Act and the Exchange Act, as applicable, and the rules
      and
      regulations of the Commission promulgated thereunder, as applicable, and none
      of
      the SEC Reports, when filed, contained any untrue statement of a material fact
      or omitted to state a material fact required to be stated therein or necessary
      in order to make the statements therein, in the light of the circumstances
      under
      which they were made, not misleading.

     

    2.8  Investment
      Company.  The Company is not and, upon completion of the Offering,
      will not be an “investment company” within the meaning of such term under the
      Investment Company Act of 1940, as amended,  and the rules and
      regulations of the SEC thereunder.

     

    2.9  Patents
      and Trademarks.  The Company has, or has rights to use, all
      patents, patent applications, trademarks, trademark applications, service marks,
      trade names, trade secrets, inventions, copyrights, licenses and other
      intellectual property rights and similar rights necessary or material for use
      in
      connection with their respective businesses as described in the SEC Reports
      and
      which the failure to so have could have a Material Adverse Effect (collectively,
      the “Intellectual Property Rights”).  Except as set forth on
      Schedule 2.9, the Company has not received a notice (written or otherwise)
      that
      the Intellectual Property Rights used by the Company or violates or infringes
      upon the rights of any Person (as hereinafter defined).  To the
      knowledge of the Company, all such Intellectual Property Rights are enforceable
      and there is no existing infringement by another Person of any of the
      Intellectual Property Rights that could have a Material Adverse
      Effect.  The Company has taken reasonable security measures to protect
      the secrecy, confidentiality and value of all of their intellectual properties,
      except where failure to do so could not, individually or in the aggregate,
      reasonably be expected to have a Material Adverse Effect.

     

    2.10  No
      Material Adverse Change.  Since the date of the latest audited
      financial statements included within the SEC Reports, except as specifically
      disclosed in a subsequent SEC Report, (i) there has been no event, occurrence
      or
      development that has had or that could reasonably be expected to result in
      a
      Material Adverse Effect, (ii) the Company has not incurred any liabilities
      (contingent or otherwise) other than (A) trade payables and accrued expenses
      incurred in the ordinary course of business consistent with past practice and
      (B) liabilities not required to be reflected in the Company’s financial
      statements pursuant to GAAP or disclosed in filings made with the SEC, (iii)
      the
      Company has not altered its method of accounting, except as otherwise required
      pursuant to GAAP, (iv) the Company has not declared or made any dividend or
      distribution of cash or other property to its stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock and (v) the Company has not issued any equity securities to any officer,
      director or Affiliate, except pursuant to existing Company stock
      plans.  Except as set forth in Schedule 2.12, the Company does
      not have pending before the SEC any request for confidential treatment of
      information.  Except for the issuance of the Securities contemplated
      by this Agreement, no event, liability or development has occurred or exists
      with respect to the Company or its Subsidiaries or their respective business,
      properties, operations or financial condition, that would be required to be
      disclosed by the Company under applicable securities laws at the time this
      representation is made that has not been publicly disclosed as of the date
      of
      this Agreement.

     

    2.11  Financial
      Statements.  The financial statements included in the Company's
      most recent Annual Report on Form 10-K for the fiscal year ended December 31,
      2006 and all other reports filed by the Company with the SEC pursuant to the
      Exchange Act since January 1, 2007 and prior to the date hereof (collectively,
      the “SEC Filings”) present fairly and accurately in all material respects
      the financial position of the Company as of the dates shown and its results
      of
      operations and cash flows for the periods shown, and such financial statements
      have been prepared in conformity with generally accepted accounting principles
      (“GAAP”) applied on a consistent basis (except as may be indicated
      thereon or in the notes thereto and subject, in the case of unaudited financial
      statements, to normal adjustments).  The Company has accounted for all
      option grants and other incentive-based stock awards in, compliance under GAAP,
      as in effect on the respective date of grant or award or as otherwise required
      by GAAP’s effect at the time of the SEC filing.  Except as set forth
      in the financial statements of the Company included in the SEC Filings filed
      prior to the date hereof, to the Company's knowledge, the Company has no
      liabilities, contingent or otherwise, except those which individually or in
      the
      aggregate are not material to the financial condition or operating results
      of
      the Company.

     

    2.12  Compliance
      with Laws.  Neither the Company nor, to the Company's knowledge,
      any Person (as hereafter defined) acting on the Company’s behalf and in
      accordance with the Company’s instructions, has conducted any general
      solicitation or general advertising (as those terms are used in Regulation
      D of
      the Act) in connection with the offer or sale of the
      Securities.  Assuming the accuracy of the Subscribers’ representations
      and warranties set forth in Article III, no registration under the Act is
      required for the offer and sale of the Securities by the Company to the
      Subscribers.  Neither the Company nor any of its Affiliates (as
      hereafter defined), nor, to the Company's knowledge, any Person acting on the
      Company’s or on the behalf of its Affiliates and in accordance with the
      Company’s instructions, has, directly or indirectly, made any offers or sales of
      any security of the Company or solicited any offers to buy any security of
      the
      Company, under circumstances that would adversely affect reliance by the Company
      on Section 4(2) of the Act for the exemption from registration for the
      transactions contemplated hereby or would require registration of the Securities
      under the Act.  The Company is in compliance with the requirements of
      AMEX for continued listing of the Common Stock thereon and has not received
      any
      notification that, and has no knowledge that, the AMEX is contemplating
      terminating such listing nor, to the Company's knowledge, is there any basis
      therefore. The transactions contemplated by this Agreement will not contravene
      the rules and regulations of the AMEX, however, the approval of the AMEX will
      be
      required for the issuance and sale of the Shares and the Warrant Shares and
      the
      Company will use commercially reasonable efforts to obtain such
      approval.    The Company intends to file on the next
      business day after the date of this Agreement or as soon as practicable
      hereafter a subsequent listing application for listing the Securities on and
      hereby represents and warrants to the Placement Agents and the Subscriber that
      it will take any other necessary action in accordance with the rules of the
      AMEX
      to enable the Securities to trade on the AMEX.

     

    2.13  Insurance.  The
      Company is insured by insurers of recognized financial responsibility against
      such losses and risks and in such amounts as are prudent and customary in the
      businesses in which the Company is engaged, including, but not limited to,
      directors and officers insurance coverage in the amount of
      $5,000,000.  The Company has no reason to believe that it will not be
      able to renew its existing insurance coverage as and when such coverage expires
      or to obtain similar coverage from similar insurers as may be necessary to
      continue its business without a significant increase in cost.

     

    2.14  Sarbanes-Oxley;
      Internal Accounting Controls.  The Company has at all times been
      and currently is in material compliance with all provisions of the
      Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing
      Date.  The Company believes that it maintains a system of internal
      accounting controls sufficient to provide reasonable assurance that (i)
      transactions are executed in accordance with management’s general or specific
      authorizations, (ii) transactions are recorded as necessary to permit
      preparation of financial statements in conformity with GAAP and to maintain
      asset accountability, (iii) access to assets is permitted only in accordance
      with management’s general or specific authorization, and (iv) the recorded
      accountability for assets is compared with the existing assets at reasonable
      intervals and appropriate action is taken with respect to any differences.
      The
      Company has established disclosure controls and procedures (as defined in
      Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
      disclosure controls and procedures to ensure that information required to be
      disclosed by the Company in the reports it files or submits under the Exchange
      Act is recorded, processed, summarized and reported, within the time periods
      specified in the Commission’s rules and forms.  The Company’s
      certifying officers have evaluated the effectiveness of the Company’s disclosure
      controls and procedures as of the end of the period covered by the Company’s
      most recently filed periodic report under the Exchange Act (such date, the
      “Evaluation Date”).  The Company presented in its most recently
      filed periodic report under the Exchange Act the conclusions of the certifying
      officers about the effectiveness of the disclosure controls and procedures
      based
      on their evaluations as of the Evaluation Date.  Since the Evaluation
      Date, there have been no changes in the Company’s internal control over
      financial reporting (as such term is defined in the Exchange Act) that has
      materially affected, or is reasonably likely to materially affect, the Company’s
      internal control over financial reporting.

     

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

     

    2.16  Disclosure.  Except
      with respect to the material terms and conditions of the transactions
      contemplated by this Agreement and the Warrants, the Company confirms that,
      neither it nor any other Person acting on its behalf has provided any of the
      Subscribers or their agents or counsel with any information that it believes
      constitutes or might constitute material, non-public
      information.   The Company understands and confirms that the
      Subscribers will rely on the foregoing representation in effecting transactions
      in securities of the Company.  All disclosure furnished by or on
      behalf of the Company to the Subscribers regarding the Company, its business
      and
      the transactions contemplated hereby, including the Offering Documents, with
      respect to the representations and warranties made herein are true and correct
      with respect to such representations and warranties and do not contain any
      untrue statement of a material fact or omit to state any material fact necessary
      in order to make the statements made therein, in light of the circumstances
      under which they were made, not misleading. The Company acknowledges and agrees
      that no Subscriber makes or has made any representations or warranties with
      respect to the transactions contemplated hereby other than those specifically
      set forth in Section III hereof.

     

    2.17  Accountants.  The
      Company’s accountants are set forth on Schedule 2.17.  To the
      knowledge of the Company, such accountants, who the Company expects will express
      their opinion with respect to the financial statements to be included in the
      Company’s Annual Report on Form 10-K for the year ended December 31, 2007, are a
      registered public accounting firm as required by the Act.

     

    2.18  Acknowledgment
      Regarding Subscribers’ Purchase of Securities.  The Company
      acknowledges and agrees that each of the Subscribers is acting solely in the
      capacity of an arm’s length purchaser with respect to the Transaction Documents
      and the transactions contemplated thereby.  The Company further
      acknowledges that no Subscriber is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to this Agreement and
      the
      transactions contemplated thereby and any advice given by any Subscriber or
      any
      of their respective representatives or agents in connection with this Agreement
      and the transactions contemplated hereby is merely incidental to Subscribers’
purchase of the Securities.  The Company further represents to each
      Subscriber that the Company’s decision to enter into this Agreement and the
      other agreements contemplated hereby has been based solely on the independent
      evaluation of the transactions contemplated hereby by the Company and its
      representatives.

     

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

     

    2.20  Form
      S-3 Eligibility.  The Company is eligible to register the resale
      of the Common Stock sold hereunder and issuable upon exercise of the Warrants
      for resale by the Subscriber on Form S-3 promulgated under the Securities
      Act.

     

    III.  TERMS
      OF SUBSCRIPTION

     

    3.1  The
      Offering is for a maximum of up to 4,702,669 shares of Common Stock and Warrants
      to purchase twenty-five percent (25%) of the total number of shares of Common
      Stock sold to Subscribers in the Offering.  The Securities are offered
      on a “best efforts” basis.

     

    3.2  Upon
      the
      mutual consent of the Company and the Placement Agents, this Offering may close
      (the “Closing” and the date of such Closing, the “Closing Date”)
      prior to the sale of all 4,702,669 shares of Common Stock.  The
      purchase price is payable by wire transfer of immediately available funds as
      provided in Section 1.1.

     

    3.3  The
      Subscriber hereby authorizes and directs the Company to deliver the Securities
      to be issued to the Subscriber pursuant to this Agreement directly to the
      Subscriber’s account maintained by the Placement Agents or, if no such account
      exists, to the residential or business address indicated on the signature page
      hereto.

     

    3.4  The
      Subscriber hereby authorizes and directs the Company to return any funds related
      to unaccepted subscriptions to the same account from which the funds were drawn,
      including any customer account maintained with the Placement
      Agents.

     

    IV.  CONDITIONS
      TO OBLIGATIONS OF THE SUBSCRIBERS AND THE COMPANY

     

    4.1  The
      Subscribers’ obligation to purchase the Securities at the Closing is subject to
      the fulfillment on or prior to the Closing Date of the following conditions,
      which conditions may be waived at the option of each Subscriber to the extent
      permitted by law:

     

    (a)  Representations
      and Warranties. The representations and warranties made by the Company in
      Section II hereof shall be true and correct in all material respects when made,
      and shall be true and correct in all material respects on the Closing Date
      with
      the same force and effect as if they had been made on and as of said
      date.

     

    (b)  Covenants.
      All covenants, agreements and conditions contained in this Agreement to be
      performed by the Company on or prior to such purchase shall have been performed
      or complied with in all material respects.

     

    (c)  No
      Legal Order Pending. There shall not then be in effect any legal or other
      order enjoining or restraining the transactions contemplated by this
      Agreement.

     

    (d)  No
      Law
      Prohibiting or Restricting Such Sale. There shall not be in effect any law,
      rule or regulation prohibiting or restricting such sale or requiring any consent
      or approval of any person to issue the Securities which consent or approval
      shall not have been obtained (except as may otherwise be provided in this
      Agreement).

     

    (e)  Legal
      Opinion. Upon the Closing, counsel to the Company shall have delivered to
      the Placement Agents for the benefit of the Subscribers a legal opinion with
      respect to such legal matters relating to this Agreement and the Offering as
      the
      Placement Agents may reasonably require.

     

    4.2  The
      Company’s obligation to sell the Securities at the Closing is subject to the
      fulfillment on or prior to the Closing Date of the following conditions, which
      conditions may be waived at the option of the Company to the extent permitted
      by
      law:

     

    (a)  Acknowledgements,
      Representations and Warranties.  The acknowledgements,
      representations and warranties made by the Subscriber in Section I hereof shall
      be true and correct in all respects when made, and shall be true and correct
      in
      all material respects on the Closing Date with the same force and effect as
      if
      they had been made on and as of said date; provided, however, that
      any acknowledgement, representation or warranty made by the Subscriber that
      is
      not true and correct and as a result the Subscriber is not an “accredited
      investor” under Rule 501 under Regulation D of the Act or the Company is not
      able to rely upon a private placement exemption under Rule 506 under Regulation
      D of the Act for the issuance of the Securities will automatically be deemed
      to
      be material.  If any such representations, warranties or
      acknowledgements shall not be true and accurate in any respect prior to the
      Closing, the undersigned shall give immediate written notice of such fact to
      the
      Company, to the Placement Agents, and to his representatives, if any, specifying
      which representations, warranties or acknowledgements are not true and accurate
      and the reason therefor.

     

    (b)  Covenants.  All
      covenants, agreements and conditions contained in this Agreement to be performed
      by the Subscriber on or prior to such purchase shall have been performed or
      complied with in all material respects.

     

    (c)  No
      Legal Order Pending.  There shall not then be in effect any legal
      or other order enjoining or restraining the transactions contemplated by this
      Agreement.

     

    (d)  No
      Law
      Prohibiting or Restricting Such Sale.  There shall not be in
      effect any law, rule or regulation prohibiting or restricting such sale or
      requiring any consent or approval of any person to issue the Securities which
      consent or approval shall not have been obtained (except as may otherwise be
      provided in this Agreement).

     

    V.  REGISTRATION
      RIGHTS.

     

    5.1  As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    (a)  “Affiliate”
      shall mean, with respect to any Person (as defined below), any other Person
      controlling, controlled by, or under direct or indirect common control with,
      such Person (for the purposes of this definition “control,” when used with
      respect to any specified Person, shall mean the power to direct the management
      and policies of such person, directly or indirectly, whether through ownership
      of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” shall have meanings correlative to the foregoing).

     

    (b)  “Business
      Day” shall mean a day, Monday through Friday, on which banks are generally
      open for business in each of New York, New York; and Chicago,
      Illinois.

     

    (c)  “Holders”
      shall mean the Subscriber and any person holding Registrable Securities as
      defined below, or any person to whom the rights under Section V have been
      transferred in accordance with Section 5.10 hereof, and who, if known by
      the Company, shall be specifically named by the Company as selling stockholders
      in the Registration Statement (as defined below).

     

    (d)  “Person”
      shall mean any person, individual, corporation, limited liability company,
      partnership, trust or other nongovernmental entity or any governmental agency,
      court, authority or other body (whether foreign, federal, state, local or
      otherwise).

     

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

     

    (f)  “Prospectus”
      means the prospectus included in a Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by a Registration Statement,
      and
      all other amendments and supplements to the Prospectus, including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    (g)  The
      terms
“register,” “registered” and “registration” refer to the
      registration effected by preparing and filing with the SEC a registration
      statement in compliance with the Act, and the declaration or ordering by the
      SEC
      of the effectiveness of such registration statement.

     

    (h)  “Registrable
      Securities” shall mean (i) the Common Stock, and (ii) the shares of Common
      Stock issuable upon exercise of the Warrants; provided, however, that securities
      shall only be treated as Registrable Securities if and only for so long as
      they
      (A) have not been disposed of pursuant to a registration statement declared
      effective by the SEC, (B) have not been sold in a transaction exempt from the
      registration and prospectus delivery requirements of the Act so that all
      transfer restrictions and restrictive legends with respect thereto are removed
      upon the consummation of such sale, and (C) are held by a Holder or a permitted
      transferee pursuant to Section 5.10; provided that any such securities
      shall cease to be Registrable Securities at such time as the Holder may sell
      all
      such securities of the Company then held by such Holder under Rule 144(k) under
      the Act.

     

    (i)  “Registration
      Expenses” shall mean all expenses incurred by the Company in complying with
      Section 5.2 hereof, including, without limitation, all registration,
      qualification and filing fees, printing expenses, escrow fees, fees and expenses
      of counsel for the Company, blue sky fees and expenses and the expense of any
      special audits incident to, or required by, any such registration (but excluding
      the aggregate fees of legal counsel for all Holders).

     

    (j)  “Registration
      Statement” shall have the meaning ascribed to such term in Section 5.2
      (a).

     

    (k)  “Registration
      Period” shall have the meaning ascribed to such term in Section 5.4
      (a).

     

    (l)  “Selling
      Expenses” shall mean all underwriting discounts and selling commissions
      applicable to the sale of Registrable Securities and the aggregate fees and
      expenses of legal counsel for all Holders.

     

    5.2  (a)           The
      Company shall, as soon as reasonably practicable, but not later than thirty
      (35)
      days after the Closing Date (the “Filing Date”), (i) use its reasonable
      best efforts to file with the SEC a shelf registration statement on Form S-3
      (or
      if not eligible for such form, on such other form on which the Company is
      eligible) (the “Registration Statement”) with respect to the resale of
      the Registrable Securities for an offering to be made on a continuous basis
      pursuant to Rule 415 under the Act and cause such Registration Statement
      declared effective by the SEC within the earlier of (a) 90 days from the Closing
      Date (120 in the event of a review by the Commission) or (b) the tenth (10th)
      business day following the date on which the Company is notified by the SEC
      that
      the SEC will not be reviewing the Registration Statement or that the SEC has
      no
      further comment on the Registration Statement (such earlier date is referred
      to
      as the “Effectiveness Date”) and (ii) cause such Registration Statement
      to remain effective for the Registration Period.  The Registration
      Statement shall contain (unless otherwise directed by at least a majority in
      interest of the Holders) substantially the “Plan of Distribution”
attached hereto as Annex A.  The Company shall telephonically
      request effectiveness of a Registration Statement as of 5:00 pm Eastern Time
      on
      a trading day.   The Company shall immediately notify the Holders
      via facsimile of the effectiveness of a Registration Statement on the same
      trading day that the Company telephonically confirms effectiveness with
      the  SEC, which shall be the date requested for effectiveness of a
      Registration Statement.  The Company shall, by 9:30 am Eastern Time on
      the trading day after the day the Registration Statement is declared effective
      (as defined in the Subscription Agreement), file a final Prospectus with the
      SEC
      if required by Rule 424.

     

    (b)           If:
      (i) a Registration Statement is not filed on or prior to its Filing Date (if
      the
      Company files a Registration Statement without affording the Holders the
      opportunity to review and comment on the same as required by Section 5.4(b)
      or
      (ii) a Registration Statement filed or required to be filed hereunder is not
      declared effective by the Commission by its Effectiveness Date, or (iii) after
      the Effectiveness Date, a Registration Statement ceases for any reason to remain
      continuously effective as to all Registrable Securities for which it is required
      to be effective, or the Holders are otherwise not permitted to utilize the
      Prospectus therein to sell Registrable Securities at any time other than during
      a Permitted Black-Out Period (as defined herein) (any such failure or breach
      being referred to as an “Event”, and for purposes of clause (i) or (ii)
      the date on which such Event occurs, or for purposes of clause (iii) the first
      date on which the Holders are not permitted to utilize the Prospectus, being
      referred to as “Event Date”), then in addition to any other rights the
      Holders may have hereunder or under applicable law, on each such Event Date
      and
      on each monthly anniversary of each such Event Date (if the applicable Event
      shall not have been cured by such date) until the applicable Event is cured,
      the
      Company shall pay to each Holder an amount in cash, as partial liquidated
      damages and not as a penalty, equal to 1% of the aggregate purchase price paid
      for the Securities held by such Holder pursuant to the Subscription Agreement
      for any Registrable Securities then held by such
      Holder.  Notwithstanding the foregoing, the partial liquidated damages
      shall not exceed a maximum of 12% of the aggregate purchase price paid for
      the
      Securities held by such Holder pursuant to the Subscription Agreement for any
      Registrable Securities then held by such Holder.  If the Company fails
      to pay any partial liquidated damages pursuant to this Section in full within
      seven days after the date payable, the Company will pay interest thereon at
      a
      rate of 18% per annum (or such lesser maximum amount that is permitted to be
      paid by applicable law) to the Holder, accruing daily from the date such partial
      liquidated damages are due until such amounts, plus all such interest thereon,
      are paid in full. The partial liquidated damages pursuant to the terms hereof
      shall apply on a daily pro-rata basis for any portion of a month prior to the
      cure of an Event.

     

    5.3  All
      Registration Expenses incurred in connection with any registration,
      qualification, exemption or compliance pursuant to Section 5.2 shall be borne
      by
      the Company.  All Selling Expenses relating to the sale of securities
      registered by or on behalf of Holders shall be borne by such Holders pro rata
      on
      the basis of the number of securities so registered.

     

    5.4  In
      the
      case of the registration, qualification, exemption or compliance effected by
      the
      Company pursuant to this Agreement, the Company shall, upon reasonable request,
      inform each Holder as to the status of such registration, qualification,
      exemption and compliance.  At its expense the Company
      shall:

     

    (a)  use
      its
      reasonable best efforts to keep such registration, and any qualification,
      exemption or compliance under state securities laws which the Holders reasonably
      request the Company to obtain, continuously effective as to all Registrable
      Securities until the earlier of: (i) the Holders having completed the
      distribution of the Registrable Securities described in the Registration
      Statement relating thereto; or (ii) with respect to any Holder, such time as
      all
      Registrable Securities then held by such Holder may be sold in compliance with
      Rule 144(k) under the Act.  The period of time during which the
      Company is required hereunder to keep the Registration Statement effective
      is
      referred to herein as the “Registration Period”;

     

    (b)  The
      Company shall deliver a draft of the Registration Statement or any amendment
      or
      supplement thereto, which changes as modifies any information regarding a
      Holder, a Holder’s beneficial ownership of the Company’s securities or any
      information under the caption “Plan of Distribution” to the Holders at least
      five (5) business days prior to filing such Registration Statement, amendment
      or
      supplement.  Notify the Holders of Registrable Securities to be sold
      (which notice shall, pursuant to clauses (iii) through (vi) hereof, be
      accompanied by an instruction to suspend the use of the Prospectus until the
      requisite changes have been made) as promptly as reasonably possible (and,
      in
      the case of (i)(A) below, not less than one trading day prior to such filing)
      and (if requested by any such Person) confirm such notice in writing no later
      than one trading day following the day (i)(A) when a Prospectus or any
      Prospectus supplement or post-effective amendment to a Registration Statement
      is
      proposed to be filed; and (B) with respect to a Registration Statement or any
      post-effective amendment, when the same has become effective; (ii) of any
      request by the SEC or any other Federal or state governmental authority for
      amendments or supplements to a Registration Statement or Prospectus; (iii)
      of
      the issuance by the SEC or any other federal or state governmental authority
      of
      any stop order suspending the effectiveness of a Registration Statement covering
      any or all of the Registrable Securities or the initiation of any Proceedings
      for that purpose; (iv) of the receipt by the Company of any notification with
      respect to the suspension of the qualification or exemption from qualification
      of any of the Registrable Securities for sale in any jurisdiction, or the
      initiation or threatening of any Proceeding for such purpose; (v) of the
      occurrence of any event or passage of time that makes the financial statements
      included in a Registration Statement ineligible for inclusion therein or any
      statement made in a Registration Statement or Prospectus or any document
      incorporated or deemed to be incorporated therein by reference untrue in any
      material respect or that requires any revisions to a Registration Statement,
      Prospectus or other documents so that, in the case of a Registration Statement
      or the Prospectus, as the case may be, it 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 under which they were made, not misleading; and (vi) the
      occurrence or existence of any pending corporate development with respect to
      the
      Company that the Company believes may be material and that, in the determination
      of the Company, makes it not in the best interest of the Company to allow
      continued availability of a Registration Statement or Prospectus; provided
      that
      any and all of such information shall remain confidential to each Holder until
      such information otherwise becomes public, unless disclosure by a Holder is
      required by law; provided, further, notwithstanding each Holder’s
      agreement to keep such information confidential, the Holders make no
      acknowledgement that any such information is material, non-public
      information;

     

    (c)  Use
      its
      reasonable best efforts to obtain the withdrawal of (i) any order suspending
      the
      effectiveness of a Registration Statement, or (ii) any suspension of the
      qualification (or exemption from qualification) of any of the Registrable
      Securities for sale in any jurisdiction, at the earliest reasonably practicable
      moment;

     

    (d)  furnish
      to each Holder, without charge, at least one copy of such Registration Statement
      and any post-effective amendment or supplement thereto, including financial
      statements and schedules, and, if the Holder so requests in writing, all
      exhibits (excluding those incorporated by reference) in the form filed with
      the
      SEC;

     

    (e)  during
      the Registration Period, deliver to each Holder, without charge, a reasonable
      number of copies of the prospectus included in such Registration Statement
      and
      any amendment or supplement thereto as such Holder may reasonably request;
      and
      the Company consents to the use, consistent with the provisions hereof, of
      the
      prospectus and any amendment or supplement thereto by each of the selling
      Holders of Registrable Securities in connection with the offering and sale
      of
      the Registrable Securities covered by the prospectus and any amendment or
      supplement thereto;

     

    (f)  during
      the Registration Period, deliver to each Holder, without charge, upon request,
      (i) a copy of the full Registration Statement (excluding exhibits); (ii) all
      exhibits excluded by the parenthetical to the immediately preceding clause
      (i);
      and (iii) such other documents as may be reasonably requested by the
      Holder;

     

    (g)  prior
      to
      any public offering of Registrable Securities pursuant to the Registration
      Statement, register or qualify or obtain an exemption for the offer and sale
      under the securities or blue sky laws of such jurisdictions as any such Holders
      reasonably request in writing, provided that the Company shall not for any
      such
      purpose be required to qualify generally to transact business as a foreign
      corporation in any jurisdiction where it is not so qualified or to consent
      to
      general service of process in any such jurisdiction, and do any and all other
      acts or things reasonably necessary or advisable to enable the offer and sale
      in
      such jurisdictions of the Registrable Securities covered by the Registration
      Statement.

     

    (h)  cooperate
      with the Holders to facilitate the timely preparation and delivery of
      certificates representing Registrable Securities to be sold pursuant to the
      Registration Statement, free of any restrictive legends to the extent not
      required at such time as determined by the Company after consultation with
      legal
      counsel and in such denominations and registered in such names as Holders may
      request;

     

    (i)  upon
      the
      occurrence of any event contemplated by Section 5.4(b)(v) above, the Company
      shall promptly prepare a post-effective amendment to the Registration Statement
      or a supplement to the related prospectus, or file any other required document
      so that, as thereafter delivered to purchasers of the Registrable Securities
      included therein, the prospectus will not include any untrue statement of a
      material fact or omit to state any material fact necessary to make the
      statements therein, in the light of the circumstances under which they were
      made, not misleading;

     

    (j)  use
      its
      reasonable best efforts to comply in all material respects with all applicable
      rules and regulations of the SEC, and make generally available to the Holders
      not later than 45 days (or 90 days if the fiscal quarter is the fourth fiscal
      quarter) after the end of its fiscal quarter in which the first anniversary
      date
      of the effective date of the Registration Statement occurs, an earnings
      statement satisfying the provisions of Section 11(a) of the Act;
      and

     

    (k)  Subject
      to the terms of this Agreement, the Company hereby consents to the use of such
      Prospectus and each amendment or supplement thereto by each of the selling
      Holders in connection with the offering and sale of the Registrable Securities
      covered by such Prospectus and any amendment or supplement thereto, except
      after
      the giving of any notice pursuant to Section 3(d).

     

    5.5  The
      Holders shall have no right to take any action to restrain, enjoin or otherwise
      delay any registration pursuant to Section 5.2 hereof as a result of any
      controversy that may arise with respect to the interpretation or implementation
      of this Agreement.

     

    5.6  (a)           To
      the extent permitted by law, the Company shall indemnify each Holder, each
      underwriter of the Registrable Securities and each person controlling such
      Holder and each such underwriter within the meaning of Section 15 of the Act,
      with respect to which any registration, qualification or compliance has been
      sought pursuant to this Agreement, against all claims, losses, expenses, costs,
      damages and liabilities (or action in respect thereof), including any of the
      foregoing incurred in settlement of any litigation, commenced or threatened
      (subject to Section 5.6(c) below), arising out of or based on (i) any untrue
      statement (or alleged untrue statement) of a material fact contained in any
      registration statement, prospectus or offering circular, or any amendment or
      supplement thereof, incident to any such registration, qualification or
      compliance, or based on any omission (or alleged omission) to state therein
      a
      material fact required to be stated therein or necessary to make the statements
      therein not misleading in light of the circumstances in which they were made,
      or
      (ii) any violation or alleged violation by the Company of the Act, the Exchange
      Act, or any rule or regulation promulgated under the Act or the Exchange Act,
      and shall reimburse each Holder, each underwriter of the Registrable Securities
      and each person controlling such Holder and each such underwriter, for
      reasonable legal and other expenses, in connection with investigating or
      defending any such claim, loss, damage, liability or action as and when
      incurred; provided that the Company shall not be liable in any such case to
      the
      extent that any untrue statement or omission thereof is made in reliance upon
      and in conformity with written information furnished to the Company by or on
      behalf of such Holder or underwriter and stated to be specifically for use
      in
      preparation of such registration statement, prospectus or offering circular;
      provided that the Company shall not be liable in any such case where the claim,
      loss, damage or liability arises out of or is related to the failure of the
      Holder to comply with the covenants and agreements contained in Section 5.7
      hereof, and except that the foregoing indemnity agreement is subject to the
      condition that, insofar as it relates to any such untrue statement or alleged
      untrue statement or omission made in the preliminary prospectus but eliminated
      or remedied in the amended prospectus on file with the SEC at the time the
      registration statement becomes effective or in the amended prospectus filed
      with
      the SEC pursuant to Rule 424(b) of the Act or in the prospectus subject to
      completion under Rule 434 of the Act, which together meet the requirements
      of
      Section 10(a) of the Act (the “Final Prospectus”), such indemnity
      agreement shall not inure to the benefit of any such Holder, any such
      underwriter or any such controlling person, with respect to any Losses relating
      to a sale made after the date of the final Prospectus if, and only if, (x)
      the
      Company complied with Section 5.4(b) and (y) if a copy of the Final Prospectus
      furnished by the Company to the Holder for delivery was not furnished to the
      person or entity asserting the loss, liability, claim or damage at or prior
      to
      the time such furnishing is required by the Act and the Final Prospectus would
      have cured the defect giving rise to such loss, liability, claim or
      damage.  Notwithstanding any provision herein to the contrary, the
      Company shall reimburse each Holder, upon such Holder's demand, for all
      reasonably necessary expenses and costs which are incurred, as and when
      incurred, by such Holder as a result of the indemnification claims described
      in
      this Section 5.6(a).  Such demand may be made from time to time prior
      to resolution of the claim.  In no event shall the Company be liable
      for the expenses and costs of more than one counsel on behalf of the Holders
      unless in the reasonable judgment of  a Holder, based upon written
      advice of its counsel, a conflict of interest exists between the Holders with
      respect to such claims, in which case the Company shall reimburse the Holders
      for additional attorneys.

     

    (b)  Each
      Holder will severally, if Registrable Securities held by such Holder are
      included in the securities as to which such registration, qualification or
      compliance is being effected, indemnify the Company, each of its directors
      and
      officers, each underwriter of the Registrable Securities and each person who
      controls the Company and each underwriter of the Registrable Securities within
      the meaning of Section 15 of the Act, against all claims, losses, expenses,
      costs, damages and liabilities (or actions in respect thereof), including any
      of
      the foregoing incurred in settlement of any litigation, commenced or threatened
      (subject to Section 5.6(c) below), arising out of or based on (i) such Holder’s
      failure to comply with the prospectus delivery requirements of the 1933 Act
      or
      (ii) any untrue statement of a material fact contained in any registration
      statement, prospectus or offering circular, or any amendment or supplement
      thereof, incident to any such registration, qualification or compliance or
      based
      on any omission to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading in light of the
      circumstances in which they were made, and will reimburse the Company, such
      directors and officers, each underwriter of the Registrable Securities and
      each
      person controlling the Company and each underwriter of the Registrable
      Securities for reasonable legal and any other expenses or costs reasonably
      incurred in connection with investigating or defending any such claim, loss,
      damage, liability or action as incurred, in each case to the extent, but only
      to
      the extent, that such untrue statement or omission thereof is made in reliance
      upon, and in conformity with, written information furnished to the Company
      by or
      on behalf of the Holder and stated to be specifically for use in preparation
      of
      such registration statement, prospectus or offering circular; provided that
      the
      indemnity shall not apply to the extent that such claim, loss, damage or
      liability results from the fact that a current copy of the prospectus was not
      made available to the Holder and such current copy of the prospectus would
      have
      cured the defect giving rise to such loss, claim, expense, costs, damage or
      liability.  Notwithstanding the foregoing, in no event shall a Holder
      be liable for any such claims, losses, expenses, costs, damages or liabilities
      in excess of the proceeds received by such Holder in that offering, except
      in
      the event of fraud by such Holder.

     

    (c)  Each
      party entitled to indemnification under this Section 5.6 (the “Indemnified
      Party”) shall give notice to the party required to provide indemnification
      (the “Indemnifying Party”) promptly after such Indemnified Party has
      actual knowledge of any claim as to which indemnity may be sought, and shall
      permit the Indemnifying Party to assume the defense of any such claim or any
      litigation resulting therefrom, provided that counsel for the Indemnifying
      Party, who shall conduct the defense of such claim or litigation, shall be
      approved by the Indemnified Party (whose approval shall not unreasonably be
      withheld), and the Indemnified Party may participate in such defense with its
      own counsel at such Indemnified Party’s expense unless the named parties to any
      proceeding covered hereby (including any impleaded parties) include both the
      Company or any others the Company may designate and one or more Indemnified
      Persons, and representation of the Indemnified Persons and such other parties
      by
      the same counsel would be inappropriate due to actual or potential differing
      interests between them, and provided further that the failure of any Indemnified
      Party to give notice as provided herein shall not relieve the Indemnifying
      Party
      of its obligations under this Agreement, except to the extent such failure
      is
      materially prejudicial to the Indemnifying Party in defending such claim or
      litigation.  An Indemnifying Party shall not be liable for any
      settlement of an action or claim effected without its written consent (which
      consent will not be unreasonably withheld).

     

    (d)  If
      the
      indemnification provided for in this Section 5.6 is held by a court of competent
      jurisdiction to be unavailable to an Indemnified Party with respect to any
      loss,
      liability, claim, damage, cost or expense referred to therein, then the
      Indemnifying Party, in lieu of indemnifying such Indemnified Party thereunder,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such loss, liability, claim, damage, cost or expense in such
      proportion as is appropriate to reflect the relative fault of the Indemnifying
      Party on the one hand and of the Indemnified Party on the other in connection
      with the statements or omissions which resulted in such loss, liability, claim,
      damage, cost or expense as well as any other relevant equitable
      considerations.  The relative fault of the Indemnifying Party and of
      the Indemnified Party shall be determined by reference to, among other things,
      whether the untrue or alleged untrue statement of a material fact or the
      omission to state a material fact relates to information supplied or which
      should have been supplied by the Indemnifying Party or by the Indemnified Party
      and the parties’ relative intent, knowledge, access to information and
      opportunity to correct or prevent such statement or omission.  The
      amount paid or payable by a party as a result of any Losses shall be deemed
      to
      include, subject to the limitations set forth in this Agreement, any reasonable
      attorneys’ or other fees or expenses incurred by such party in connection with
      any Proceeding to the extent such party would have been indemnified for such
      fees or expenses if the indemnification provided for in this Section was
      available to such party in accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 5.6(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding
      paragraph.  Notwithstanding the provisions of this Section 5.6(d), no
      Holder shall be required to contribute, in the aggregate, any amount in excess
      of the amount by which the net proceeds actually received by such Holder from
      the sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that such Holder has otherwise been required to pay by
      reason of such untrue statement or omission, except in the case of fraud or
      willful misconduct by such Holder.

     

    (e)  The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

     

    5.7  (a)           Subject
      to the limitations set forth in Section 5.7(b) below, upon receipt of any notice
      from the Company of the happening of any event requiring the preparation of
      a
      supplement or amendment to a prospectus relating to Registrable Securities
      so
      that, as thereafter delivered to the Holders, such prospectus will not contain
      an 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, each Holder shall forthwith discontinue disposition of Registrable
      Securities pursuant to the registration statement contemplated by Section 5.2
      until its receipt of copies of the supplemented or amended prospectus from
      the
      Company and, if so directed by the Company, each Holder shall deliver to the
      Company all copies, other than permanent file copies then in such Holder’s
      possession, of the prospectus covering such Registrable Securities current
      at
      the time of receipt of such notice.

     

    (b)  Any
      Holder of the Company’s outstanding Common Stock shall suspend, upon request of
      the Company, any disposition of Registrable Securities pursuant to the
      Registration Statement and prospectus contemplated by Section 5.2 during
      any period, not to exceed two 30-day periods within any 12-month period (each,
      a
“Permitted Black-Out Period”), when the Company determines in good faith
      that offers and sales pursuant thereto should not be made by reason of the
      presence of material undisclosed circumstances or developments with respect
      to
      which the disclosure that would be required in such a prospectus is premature
      because it would have an adverse effect on the Company.  The period of
      time in which the disposition of Registrable Securities pursuant to the
      Registration Statement and prospectus is so suspended shall be referred to
      as a
“Black-Out Period.”  The Company agrees to so advise the
      Holders promptly of the commencement and termination of any such Black-Out
      Period, and the Holders agree to keep the fact of such Black-Out Period
      confidential.

     

    (c)  As
      a
      condition to the inclusion of its Registrable Securities, each Holder shall
      furnish to the Company such information regarding the securities of the Company
      owned beneficially or of record by such Holder and the distribution proposed
      by
      such Holder as the Company may request in writing because it is required in
      connection with any registration, qualification or compliance referred to in
      this Section V.  Any sale of any Registrable Securities by any Holder
      shall constitute a representation and warranty by such Holder that the required
      information relating to such Holder’s beneficial ownership of the Company’s
      securities and its plan of distribution is as set forth in the prospectus
      delivered by such Holder in connection with such disposition, that such
      prospectus does not as of the time of such sale contain any untrue statement
      of
      a material fact relating to such Holder or its plan of distribution and that
      such prospectus does not as of the time of such sale omit to state any material
      fact relating to such Holder’s beneficial ownership of the Company’s securities
      or its plan of distribution necessary to make the statements in such prospectus,
      in the light of the circumstances under which they were made, not
      misleading.

     

    (d)  With
      respect to any sale of Registrable Securities pursuant to a Registration
      Statement filed pursuant to this Section V, each Holder hereby covenants with
      the Company not to make any sale of the Registrable Securities without
      effectively causing the prospectus delivery requirements under the Act to be
      satisfied.

     

    (e)  Each
      Holder acknowledges and agrees that the Registrable Securities sold pursuant
      to
      the Registration Statement described in this Section are not transferable on
      the
      books of the Company unless the stock certificate submitted to the transfer
      agent evidencing such Registrable Securities is accompanied by a certificate
      reasonably satisfactory to the Company to the effect that (i) the
      Registrable Securities have been sold in accordance with such Registration
      Statement and (ii) the requirement of delivering a current prospectus has
      been satisfied.

     

    (f)  Each
      Holder shall not take any action with respect to any distribution deemed to
      be
      made pursuant to such registration statement, which would constitute a violation
      of Regulation M under the Exchange Act or any other applicable rule, regulation
      or law.

     

    (g)  At
      the
      end of the Registration Period, the Holders of Registrable Securities included
      in the Registration Statement shall discontinue sales of shares pursuant to
      such
      Registration Statement upon receipt of notice from the Company of its intention
      to remove from registration the shares covered by such Registration Statement
      which remain unsold.

     

    5.8  With
      a
      view to making available to the Holders the benefits of certain rules and
      regulations of the SEC which at any time permit the sale of the Registrable
      Securities to the public without registration, the Company shall use its
      reasonable best efforts:

     

    (a)  to
      make
      and keep public information available, as those terms are understood and defined
      in Rule 144 under the Act, at all times;

     

    (b)  to
      file
      with the SEC in a timely manner all reports and other documents required of
      the
      Company under the Exchange Act; and

     

    (c)  so
      long
      as a Holder owns any Registrable Securities, to furnish to such Holder upon
      any
      reasonable request a written statement by the Company as to its compliance
      with
      Rule 144 under the Act, and of the Exchange Act, and a copy of the most
      recent annual or quarterly report of the Company, and such other reports and
      documents of the Company as such Holder may reasonably request in availing
      itself of any rule or regulation of the SEC allowing a Holder to sell any such
      securities without registration.

     

    5.9  With
      the
      written consent of the Company and the Holders holding a majority of the
      Registrable Securities that are then outstanding, any provision of this Section
      V may be waived (either generally or in a particular instance, either
      retroactively or prospectively and either for a specified period of time or
      indefinitely) or amended.  Upon the effectuation of each such waiver
      or amendment, the Company shall promptly give written notice thereof to the
      Holders, if any, who have not previously received notice thereof or consented
      thereto in writing.

     

    5.10  The
      rights and obligations of the Holders under this Section V may not be assigned
      or transferred to or assumed by any transferee or assignee except (i) to a
      transferee that acquires at least 20% of such Holder's Registrable Securities
      or
      (ii) to an Affiliate or limited or general partner of a Holder; provided that
      such transfer was not in violation of this Agreement or the Securities Laws;
      and
      provided, further, that any person to whom the rights under this Section V
      have
      been transferred in accordance with this Section 5.10 has assumed the
      obligations of a Holder hereunder and a copy of such written assignment and
      assumption is provided to the Company.

     

    5.11  No
      Piggyback on Registrations.  Neither the Company nor any of its
      security holders (other than the Holders in such capacity pursuant hereto)
      may
      include securities of the Company in the Registration Statement other than
      the
      Registrable Securities.  The Company shall not file any other
      registration statements until the Registration Statement is filed by the Company
      with the SEC or permit any other registration statement filed by the Company
      to
      be declared effective until the Registration Statement is declared effective
      by
      the SEC, provided that this Section 5.11 shall not prohibit the Company from
      filing amendments to registration statements already filed or registration
      statements on Form S-8 or S-4 (or their then equivalent).

     

    5.12  Piggy-Back
      Registrations.  If at any time during the Registration Period
      there is not an effective Registration Statement covering all of the Registrable
      Securities and the Company shall determine to prepare and file with the SEC
      a
      registration statement relating to an offering for its own account or the
      account of others under the Act of any of its equity securities, other than
      on
      Form S-4 or Form S-8 (each as promulgated under the Act) or their then
      equivalents relating to equity securities to be issued solely in connection
      with
      any acquisition of any entity or business or equity securities issuable in
      connection with the stock option or other employee benefit plans, then the
      Company shall send to each Holder a written notice of such determination and,
      if
      within fifteen (15) days after the date of such notice, any such Holder shall
      so
      request in writing, the Company shall include in such registration statement
      all
      or any part of such Registrable Securities such Holder requests to be
      registered.

     

    5.13  Legend
      Removal.

     

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

     

    (b)  Certificates
      evidencing the Shares and Warrant Shares shall not contain any legend (including
      the legends referred to in Section 1.16), (i) while a Registration Statement
      (as
      defined below) covering the resale of the Shares and the Warrant Shares is
      effective under the 1933 Act, (ii) following any sale of such Shares or Warrant
      Shares pursuant to Rule 144 or pursuant to an effective Registration Statement,
      or (iii) if such Shares or Warrant Shares are eligible for sale under Rule
      144(k), or (iv) if such legend is not required under applicable requirements
      of
      the Act (including judicial interpretations and pronouncements issued by the
      staff of the Commission.  The Company shall cause its counsel to issue
      a legal opinion to the Company’s transfer agent promptly after such time as the
      legend is no longer required pursuant to this Section if required by the
      Company’s transfer agent to effect the removal of the legend
      hereunder.  The Company agrees that following such time as such legend
      is no longer required under this Section 4.1(b), it will, no later than three
      trading days following the delivery by a Subscriber to the Company or the
      Company’s transfer agent of a certificate representing Shares or Warrant Shares,
      as the case may be, issued with a restrictive legend (such third trading day,
      the “Legend Removal Date”), deliver or cause to be delivered to such
      Subscriber a certificate representing such shares that is free from all
      restrictive and other legends.  The Company may not make any notation
      on its records or give instructions to any transfer agent of the Company that
      enlarge the restrictions on transfer set forth in this
      Section.  Certificates for Securities subject to legend removal
      hereunder shall be transmitted by the transfer agent of the Company to the
      Subscribers by crediting the account of the Subscriber’s prime broker with the
      Depository Trust Company System.

     

    (c)  The
      Subscriber, severally and not jointly with the other Subscribers, agrees that
      such Subscriber will sell any Shares and Warrant Shares pursuant to either
      the
      registration requirements of the 1933 Act, including any applicable prospectus
      delivery requirements, or an exemption therefrom, and that if Shares and Warrant
      Shares are sold pursuant to a Registration Statement, they will be sold in
      compliance with the plan of distribution set forth therein, and acknowledges
      that the removal of the restrictive legend from certificates representing
      Securities as set forth in this Section 5.13 is predicated upon the Company’s
      reliance upon this understanding.

     

    5.14           Securities
      Laws Disclosure; Publicity.  The Company shall, by 9:15 a.m. (New
      York City time) on the trading day immediately following the date hereof, issue
      a press release disclosing the material terms of the transactions contemplated
      hereby and within 1 Trading Day following the date hereof file a Current Report
      on Form 8-K, disclosing the material terms of the transactions contemplated
      hereby, and filing this Agreement and the form of Warrant as exhibits
      thereto.  The Company and Rodman & Renshaw, LLC shall consult with
      each other in issuing any other press releases with respect to the transactions
      contemplated hereby, and neither the Company nor any Subscriber shall issue
      any
      such press release or otherwise make any such public statement without the
      prior
      consent of the Company, with respect to any press release of any Subscriber,
      or
      without the prior consent of Rodman & Renshaw, LLC, with respect to any
      press release of the Company, which consent shall not unreasonably be withheld
      or delayed, except if such disclosure is required by law, in which case the
      disclosing party shall promptly provide the other party with prior notice of
      such public statement or communication.  Notwithstanding the
      foregoing, the Company shall not publicly disclose the name of any Subscriber,
      or include the name of any Subscriber in any filing with the SEC or any
      regulatory agency or trading market, without the prior written consent of such
      Subscriber, except (i) as required by federal securities law in connection
      with
      (A) any registration statement contemplated by this agreement and (B) the filing
      of final documents entered hereunder (including signature pages thereto) with
      the SEC and (ii) to the extent such disclosure is required by law or trading
      market regulations, in which case the Company shall provide the Subscribers
      with
      prior notice of such disclosure permitted under this clause (ii).

     

    5.15  Non-Public
      Information.  Except with respect to the material terms and
      conditions of the transactions contemplated by this Agreement, the Company
      covenants and agrees that neither it nor any other person acting on its behalf
      will provide any Subscriber or its agents or counsel with any information that
      the Company believes constitutes material non-public information, unless prior
      thereto such Subscriber shall have executed a written agreement regarding the
      confidentiality and use of such information.  The Company understands
      and confirms that each Subscriber shall be relying on the foregoing covenant
      in
      effecting transactions in securities of the Company.

     

    5.16  Reservation
      of Common Stock. As of the date hereof, the Company has reserved and the
      Company shall continue to reserve and keep available at all times a sufficient
      number of shares of Common Stock for the purpose of enabling the Company to
      issue shares pursuant to any exercise of the Warrants.

     

    


     

    VI.  MISCELLANEOUS

     

    6.1  From
      the
      date hereof until 120 days after the date the Registration Statement is declared
      effective, except as otherwise provided below, the Company shall not issue
      shares of Common Stock or any options, warrants, rights or other securities
      convertible into or exchangeable for Common Stock.  The restriction on
      issuance by the Company of securities under this Section 6.1 shall not apply
      to:  (i) the issuance of any shares of Common Stock upon the exercise
      of any options or warrants outstanding as of the Closing Date; (ii) the issuance
      of any shares of Common Stock upon the conversion of any shares
      of  class C special stock of the Company; (iii) the grant of any
      options with an exercise price no less than the mean between the reported high
      and low sale prices of the Common Stock on the date of grant pursuant to the
      Company’s Amended and Restated 1998 Stock Plan; (iv) any rights offering of
      securities, including rights to purchase Common Stock, by the Company to all
      of
      its stockholders; (v) the issuance of any shares of Common Stock or other equity
      securities to Paladin Labs as described in Schedule 2.2 to this Agreement;
      (vi)
      the issuance of any shares of Common Stock or any options, warrants, rights
      or
      other securities convertible into or exchangeable for Common Stock by way of
      stock split or stock dividend or similar capital modification; (vii) the
      issuance of any shares of Common Stock or any options, warrants, rights or
      other
      securities convertible into or exchangeable for Common Stock in connection
      with
      any merger, acquisition or other reorganization; or (viii) the issuance of
      any
      shares of Common Stock or any options, warrants, rights or other securities
      convertible into or exchangeable for Common Stock upon authorization of the
      Board of Directors of the Company in connection with strategic alliances or
      business conducted by the Company with vendors, lessors or financial
      institutions.

     

    6.2  From
      the
      date hereof until the one year anniversary of the Closing Date, the Company
      shall be prohibited from effecting or entering into an agreement to effect
      any
      subsequent financing involving a “Variable Rate Transaction”.  The
      term “Variable Rate Transaction” shall mean a transaction in which the
      Company issues or sells (i) any debt or equity securities that are convertible
      into, exchangeable or exercisable for, or include the right to receive
      additional shares of Common Stock either (A) at a conversion, exercise or
      exchange rate or other price that is based upon and/or varies with the trading
      prices of or quotations for the shares of Common Stock at any time after the
      initial issuance of such debt or equity securities, or (B) with a conversion,
      exercise or exchange price that is subject to being reset at some future date
      after the initial issuance of such debt or equity security or upon the
      occurrence of specified or contingent events directly or indirectly related
      to
      the business of the Company or the market for the Common Stock or (ii) enters
      into any agreement, including, but not limited to, an equity line of credit,
      whereby the Company may sell securities at a future determined
      price.  Any Subscriber shall be entitled to obtain injunctive relief
      against the Company to preclude any such issuance, which remedy shall be in
      addition to any right to collect damages.

     

    6.3  Any
      notice or other communication given hereunder shall be deemed sufficient in
      writing and sent by (a) telecopy or facsimile at the address or number
      designated below (if delivered on a business day during normal business hours
      where such notice is to be received); or (b) registered or certified mail,
      return receipt requested, or delivered by hand against written receipt therefor,
      addressed to BioSante Pharmaceuticals, Inc., 111 Barclay Boulevard,
      Lincolnshire, Illinois 60069, Facsimile: (847) 478-9260, Attention: Stephen
      M.
      Simes, President and Chief Executive Officer.  Notices shall be deemed
      to have been given or delivered on the date of mailing, except notices of change
      of address, which shall be deemed to have been given or delivered when
      received.

     

    6.4  Except
      as
      set forth in Section 5.9 and except with respect to Sections 6.1 and 6.2 (which
      Sections may be amended with the written consent of the Company and the Holders
      holding at least a majority of the Registrable Securities that are then
      outstanding), this Agreement shall not be changed, modified or amended except
      by
      a writing signed by the parties to be charged, and this Agreement may not be
      discharged except by performance in accordance with its terms or by a writing
      signed by the party to be charged.

     

    6.5  Upon
      the
      execution and delivery of this Agreement by the Subscriber, this Agreement
      shall
      become a binding obligation of the Subscriber with respect to the purchase
      of
      Securities as herein provided, subject to acceptance by the Company and the
      Placement Agents; subject, however, to the right hereby reserved to the Company
      to enter into the same agreements with other subscribers and to add and/or
      delete other persons as subscribers.

     

    6.6  In
      the
      event of a breach by the Company or by a Holder, of any of their respective
      obligations under this Agreement, each Holder or the Company, as the case may
      be, in addition to being entitled to exercise all rights granted by law and
      under this Agreement, including recovery of damages, will be entitled to
      specific performance of its rights under this Agreement.  The Company
      and each Holder agree that monetary damages would not provide adequate
      compensation for any losses incurred by reason of a breach by it of any of
      the
      provisions of this Agreement and hereby further agrees that, in the event of
      any
      action for specific performance in respect of such breach, it shall not assert
      or shall waive the defense that a remedy at law would be adequate.

     

    6.7  Notwithstanding
      the place where this Agreement may be executed by any of the parties hereto,
      the
      parties expressly agree that all the terms and provisions hereof shall be
      construed in accordance with and governed by the laws of the State of Delaware
      without regard to principles of conflicts of law.

     

    6.8  The
      holding of any provision of this Agreement to be invalid or unenforceable by
      a
      court of competent jurisdiction shall not affect any other provision of this
      Agreement, which shall remain in full force and effect. If any provision of
      this
      Agreement shall be declared by a court of competent jurisdiction to be invalid,
      illegal or incapable of being enforced in whole or in part, such provision
      shall
      be interpreted so as to remain enforceable to the maximum extent permissible
      consistent with applicable law and the remaining conditions and provisions
      or
      portions thereof shall nevertheless remain in full force and effect and
      enforceable to the extent they are valid, legal and enforceable, and no
      provisions shall be deemed dependent upon any other covenant or provision unless
      so expressed herein.

     

    6.9  It
      is
      agreed that a waiver by either party of a breach of any provision of this
      Agreement shall not operate, or be construed, as a waiver of any subsequent
      breach by that same party.

     

    6.10  The
      parties agree to execute and deliver all such further documents, agreements
      and
      instruments and take such other and further action as may be necessary or
      appropriate to carry out the purposes and intent of this Agreement.

     

    6.11  This
      Agreement may be executed in two or more counterparts each of which shall be
      deemed an original, but all of which shall together constitute one and the
      same
      instrument.

     

    6.12  The
      Subscriber agrees not to issue any public statement with respect to the
      Subscriber’s investment or proposed investment in the Company or the terms of
      any agreement or covenant between them and the Company without the Company’s
      prior written consent, except such disclosures as may be required under
      applicable law or under any applicable order, rule or regulation.

     

    6.13  Nothing
      in this Agreement shall create or be deemed to create any rights in any person
      or entity not a party to this Agreement, except for the Placement Agents and
      the
      holders of Registrable Securities.

     

    6.14  Any
      pronoun herein shall include all genders and/or the plural or singular as
      appropriate from the context.

     

    **************

     

    
      	
              SIGNATURE
                PAGE

            	 	
              Date
                Signed: May __ , 2007

            
	
              Number
                of shares:

            	 	 
	
              Multiplied
                by Offering Price per share:

            	
              x

            	
              $____

            
	
              Equals
                subscription amount:

            	
              =

            	 


    

    


    
      Warrants
        (multiply the number of shares
        by
        25%):                                                                                                _______________

    

     

    


    “INVESTOR”
      (Name in which securities should be issued)

     

    By:                                                                

     

    


     

    Print
      Name:                                                                           

     

    


     

    Title:                                                                           

    


    


    Address

    


    


    City,
      State and Zip Code

    


    


    Telephone-Business

    


    


    Facsimile-Business

    


    __                      

    Tax
      ID #
      or Social Security
      #                                                                           

    


    


    *The
      attached Certificate of Signatory must also be
      completed.                                                                                                                                          

    
      


    

    


    This
      Subscription Agreement is agreed to and accepted as of ____________,
      2007.

    


    BIOSANTE
      PHARMACEUTICALS, INC.

    By:

    ____________________________________

    Name:

    Title:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    CERTIFICATE
      OF SIGNATORY

    


    (To
      be
      completed if Securities are being subscribed for by an entity)

    


    


    I,______________________________,
      am the____________________________

     

    


    of
      _____________________________________________ (the
“Entity”).

    


    I
      certify
      that I am empowered and duly authorized by the Entity to execute and carry
      out
      the terms of the Subscription Agreement and to purchase and hold the Securities,
      and certify further that the Subscription Agreement has been duly and validly
      executed on behalf of the Entity and constitutes a legal and binding obligation
      of the Entity.

     

    IN
      WITNESS WHEREOF, I have set my hand this___ day of ____, 2007.

    


    


    _______________________________________

          (Signature)

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    ANNEX
      A

    


    Plan
      of Distribution

     

    Each
      Selling Stockholder (the “Selling Stockholders”) of the common stock and
      any of their pledgees, assignees and successors-in-interest may, from time
      to
      time, sell any or all of their shares of common stock on the American Stock
      Exchange or any other stock exchange, market or trading facility on which the
      shares are traded or in private transactions.  These sales may be at
      fixed or negotiated prices.  A Selling Stockholder may use any one or
      more of the following methods when selling shares:

     

    
      	
              ·  

            	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            


    

     

    
      	
              ·  

            	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

     

    
      	
              ·  

            	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

     

    
      	
              ·  

            	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

     

    
      	
              ·  

            	
              privately
                negotiated transactions;

            


    

     

    
      	
              ·  

            	
              settlement
                of short sales entered into after the effective date of the registration
                statement of which this prospectus is a
                part;

            


    

     

    
      	
              ·  

            	
              broker-dealers
                may agree with the Selling Stockholders to sell a specified number
                of such
                shares at a stipulated price per
                share;

            


    

     

    
      	
              ·  

            	
              through
                the writing or settlement of options or other hedging transactions,
                whether through an options exchange or
                otherwise;

            


    

     

    
      	
              ·  

            	
              a
                combination of any such methods of sale;
                or

            


    

     

    
      	
              ·  

            	
              any
                other method permitted pursuant to applicable
                law.

            


    

     

    The
      Selling Stockholders may also sell shares under Rule 144 under the Securities
      Act of 1933, as amended (the “Securities Act”), if available, rather than
      under this prospectus.

     

    Broker-dealers
      engaged by the Selling Stockholders may arrange for other brokers-dealers to
      participate in sales.  Broker-dealers may receive commissions or
      discounts from the Selling Stockholders (or, if any broker-dealer acts as agent
      for the purchaser of shares, from the purchaser) in amounts to be negotiated,
      but, except as set forth in a supplement to this Prospectus, in the case of
      an
      agency transaction not in excess of a customary brokerage commission in
      compliance with NASDR Rule 2440; and in the case of a principal transaction
      a
      markup or markdown in compliance with NASDR IM-2440.

     

    In
      connection with the sale of the common stock or interests therein, the Selling
      Stockholders may enter into hedging transactions with broker-dealers or other
      financial institutions, which may in turn engage in short sales of the Common
      Stock in the course of hedging the positions they assume.  The Selling
      Stockholders may also sell shares of the common stock short and deliver these
      securities to close out their short positions, or loan or pledge the common
      stock to broker-dealers that in turn may sell these securities.  The
      Selling Stockholders may also enter into option or other transactions with
      broker-dealers or other financial institutions or the creation of one or more
      derivative securities which require the delivery to such broker-dealer or other
      financial institution of shares offered by this prospectus, which shares such
      broker-dealer or other financial institution may resell pursuant to this
      prospectus (as supplemented or amended to reflect such
      transaction).

     

    The
      Selling Stockholders and any broker-dealers or agents that are involved in
      selling the shares may be deemed to be “underwriters” within the meaning of the
      Securities Act in connection with such sales.  In such event, any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares purchased by them may be deemed to be underwriting
      commissions or discounts under the Securities Act.  Each Selling
      Stockholder has informed the Company that it does not have any written or oral
      agreement or understanding, directly or indirectly, with any person to
      distribute the Common Stock. In no event shall any broker-dealer receive fees,
      commissions and markups which, in the aggregate, would exceed eight percent
      (8%).

     

    The
      Company is required to pay certain fees and expenses incurred by the Company
      incident to the registration of the shares.  The Company has agreed to
      indemnify the Selling Stockholders against certain losses, claims, damages
      and
      liabilities, including liabilities under the Securities Act.

     

    Because
      Selling Stockholders may be deemed to be “underwriters” within the meaning of
      the Securities Act, they will be subject to the prospectus delivery requirements
      of the Securities Act including Rule 172 thereunder.  In addition, any
      securities covered by this prospectus which qualify for sale pursuant to Rule
      144 under the Securities Act may be sold under Rule 144 rather than under this
      prospectus.  There is no underwriter or coordinating broker acting in
      connection with the proposed sale of the resale shares by the Selling
      Stockholders.

     

    We
      agreed
      to keep this prospectus effective until the earlier of (i) the date on which
      the
      shares may be resold by the Selling Stockholders without registration and
      without regard to any volume limitations by reason of Rule 144(k) under the
      Securities Act or any other rule of similar effect or (ii) all of the shares
      have been sold pursuant to this prospectus or Rule 144 under the Securities
      Act
      or any other rule of similar effect.  The resale shares will be sold
      only through registered or licensed brokers or dealers if required under
      applicable state securities laws. In addition, in certain states, the resale
      shares may not be sold unless they have been registered or qualified for sale
      in
      the applicable state or an exemption from the registration or qualification
      requirement is available and is complied with.

     

    Under
      applicable rules and regulations under the Exchange Act, any person engaged
      in
      the distribution of the resale shares may not simultaneously engage in market
      making activities with respect to the common stock for the applicable restricted
      period, as defined in Regulation M, prior to the commencement of the
      distribution.  In addition, the Selling Stockholders will be subject
      to applicable provisions of the Exchange Act and the rules and regulations
      thereunder, including Regulation M, which may limit the timing of purchases
      and
      sales of shares of the common stock by the Selling Stockholders or any other
      person.  We will make copies of this prospectus available to the
      Selling Stockholders and have informed them of the need to deliver a copy of
      this prospectus to each purchaser at or prior to the time of the
      sale.