Exhibit
10.1

     

    SUBSCRIPTION
AGREEMENT

     

    THIS SUBSCRIPTION AGREEMENT
(this “Agreement”), is
dated as of March 4, 2009, by and between Collexis Holdings, Inc., a Nevada
corporation (the “Company”), and Alpha Capital
Anstalt (“Subscriber”).

    


    WHEREAS, the Company and the
Subscriber are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”).

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscriber, as provided herein, and the
Subscriber shall purchase (i) for $650,000 (the “Purchase Price”) of
$764,705.88 principal amount (“Principal Amount”) of
secured  promissory notes of the Company (“Note” or “Notes”), a form of which is
annexed hereto as Exhibit
A, convertible into shares of the Company’s Common Stock, $0.001 par
value (the “Common
Stock”) at a per share conversion price set forth in the Note (“Conversion Price”); (ii)
2,050,128 shares of the Company’s Common Stock (“Incentive Shares”), and (iii)
share purchase warrants (the “Warrants”) in the form
attached hereto as Exhibit B,
to purchase shares of the Company’s Common Stock (the “Warrant Shares”) (the “Offering”).  The
Notes, shares of Common Stock issuable upon conversion of the Notes (the “Shares” or “Conversion Shares”), the
Incentive Shares, the Warrants and the Warrant Shares are collectively referred
to herein as the “Securities.”; and

     

    WHEREAS, the aggregate
proceeds of the sale of the Notes and the Warrants contemplated hereby shall be
held in escrow pursuant to the terms of a Funds Escrow Agreement to be executed
by the parties substantially in the form attached hereto as Exhibit C (the “Escrow
Agreement”).

     

    NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscriber hereby agree as follows:

     

    1.           Closing
Date.   The “Closing Date” shall be the
date that the Purchase Price is transmitted by wire transfer or otherwise
credited to or for the benefit of the Company. The consummation of the
transactions contemplated herein shall take place at the offices of Grushko
& Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176,
upon the satisfaction or waiver of all conditions to closing set forth in this
Agreement.   Subject to the satisfaction or waiver of the terms
and conditions of this Agreement, on the Closing Date, Subscriber shall purchase
and the Company shall sell to Subscriber a Note in the Principal Amount of
$764,705.88 and Warrants as described in Section 2 of this
Agreement.

    


    2.           Note, Shares and
Warrants.

    


    (a)           Notes.   Subject
to the satisfaction or waiver of the terms and conditions of this Agreement, on
the Closing Date, each Subscriber shall purchase and the Company shall sell to
the Subscriber a Note in the Principal Amount designated on the signature page
hereto for such Subscriber’s Purchase Price indicated thereon.  The
Principal Amount of the Subscriber’s Note will be determined by dividing such
Subscriber’s Purchase Price by .85.

    


    (b)           Class A
Warrants.  On the Closing Date, the Company will issue and
deliver Class A Warrants to the Subscriber.  One Class A Warrant will
be issued for each Share which would be issued on the Closing Date assuming the
complete conversion of the Note on the Closing Date at the Conversion
Price.  The exercise price to acquire a Warrant Share upon exercise of
a Class A Warrant shall be equal to shall be 110% of the closing bid price of
the Company’s Common Stock as reported by Bloomberg L.P. for the trading day
preceding the Closing Date, subject to reduction as described in the Class A
Warrant.  The Class A Warrants shall be exercisable until five years
after the issue date of the Class A Warrants.

    


    
      
        
           


        

        
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    (c)           Incentive
Shares.  On the Closing Date, the Company will issue to the
Subscriber an aggregate of 2,050,128 Incentive Shares The Incentive Shares will
be fully paid and non-assessable..

    


    (d)           Allocation of Purchase
Price.   The Purchase Price will be allocated among the
components of the Securities so that each component of the Securities will be
fully paid and non-assessable.

    


    3.           Security
Interest.   The Subscriber will be granted a security
interest in the assets of the Company and Subsidiaries (as defined in
Section 5(a) of this Agreement), including ownership of the Subsidiaries
and in the assets of the Subsidiaries, which security interest will be
memorialized in a “Security
Agreement,” a form of which is annexed hereto as Exhibit
D.   The Subsidiaries will guaranty the Company’s
obligations under the Transaction Documents as defined in Section
5(c).   Such guaranties will be memorialized in a “Subsidiary Guaranty”, the form
of which is annexed hereto as Exhibit E.  The
Company will execute such other agreements, documents and financing statements
reasonably requested by the Subscribers, which will be filed at the Company’s
expense with the jurisdictions, states and counties designated by the
Subscribers.  As additional security for the obligations of the
Company and Subsidiaries under the Transaction Documents, Margie Chassman, a
shareholder of the Company, will execute and deliver to the Subscriber on the
Closing Date, a guaranty (the “Personal Guaranty”) in the
form annexed hereto as Exhibit
F.

    


    4.           Subscriber Representations
and Warranties.  Subscriber hereby represents and warrants to
and agrees with the Company that:

    


    (a)           Organization and Standing of
the Subscriber.  Subscriber is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation.

    


    (b)           Authorization and
Power.  Subscriber has the
requisite power and authority to enter into and perform this Agreement and the
other Transaction Documents and to purchase the Note being sold to it
hereunder.  The execution, delivery and performance of this Agreement
and the other Transaction Documents by Subscriber and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action, and no further consent or authorization of
Subscriber or its Board of Directors or
stockholders is
required.  This Agreement and the other Transaction Documents have
been duly authorized, executed and when
delivered by Subscriber and constitute, or
shall constitute when executed and delivered, a valid and binding obligation of
Subscriber enforceable against Subscriber in accordance with the terms
thereof.

    


    (c)           No Conflicts.  The execution, delivery and performance of
this Agreement and the other Transaction Documents and the consummation by
Subscriber of the transactions contemplated hereby and thereby or relating
hereto do not and will not (i) result in a violation of Subscriber’s charter
documents, bylaws or other organizational documents, (ii) conflict
with nor constitute a default (or an event which with notice
or lapse of time or both would become a default) under, nor (iii) result in
a violation of any law, rule, or regulation, or any order, judgment or decree of
any court or governmental agency applicable to Subscriber or its
properties (except for such conflicts, defaults and violations as would not,
individually or in the aggregate, have a material adverse effect on
Subscriber).  Subscriber is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement and the other Transaction
Documents  nor to purchase the Securities in accordance with the
terms hereof, provided that for purposes of the representation made in this
sentence, Subscriber is assuming and relying upon the accuracy of the relevant
representations and agreements of the Company herein.

    


    
      
        
           


        

        
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    (d)           Information on
Company.   Subscriber has been furnished with or has had
access at the EDGAR Website of the Commission to the Company's Form 10-K filed
on October 14, 2008 for the fiscal year ended June 30, 2008, and the financial
statements included therein for the year ended June 30, 2008, together with all
subsequent filings made with the Commission available at the EDGAR website until
five days before the Closing Date (hereinafter referred to collectively as the
"Reports").  In
addition, Subscriber may have received in writing from the Company such other
information concerning its operations, financial condition and other matters as
Subscriber has requested in writing, identified thereon as OTHER WRITTEN
INFORMATION (such other information is collectively, the "Other Written Information"),
and considered all factors Subscriber deems
material in deciding on the advisability of investing in the
Securities.

    


    (e)           Information on
Subscriber.   Subscriber is, and will be at the time of
the conversion of the Notes and exercise of the Warrants, an "accredited investor", as such
term is defined in Regulation D promulgated by the Commission under the 1933
Act, is experienced in investments and business matters, has made investments of
a speculative nature and has purchased securities of United States
publicly-owned companies in private placements in the past and, with its
representatives, has such knowledge and experience in financial, tax and other
business matters as to enable Subscriber to
utilize the information made available by the Company to evaluate the merits and
risks of and to make an informed investment decision with respect to the
proposed purchase, which represents a speculative
investment.  Subscriber has the authority and is duly and legally
qualified to purchase and own the Securities.  Subscriber is able to
bear the risk of such investment for an indefinite period and to afford a
complete loss thereof.  The information set forth on the signature
page hereto regarding Subscriber is
accurate.

    


    (f)           Purchase of Note, Incentive
Shares and Warrants.  On the Closing Date, Subscriber will purchase the Note, Incentive
Shares and Warrant as principal for its own account for investment only and not
with a view toward, or for resale in connection with, the public sale or any
distribution thereof.

    


    (g)           Compliance with Securities
Act.   Subscriber understands and agrees that the
Securities have not been registered under the 1933 Act or any applicable state
securities laws, by reason of their issuance in a transaction that does not
require registration under the 1933 Act (based in part on the accuracy of the
representations and warranties of the Subscriber contained herein), and that such
Securities must be held indefinitely unless a subsequent disposition is
registered under the 1933 Act or any applicable state securities laws or is
exempt from such registration. In any event, and subject to compliance with
applicable securities laws, the Subscriber may enter into lawful hedging
transactions in the course of hedging the position they assume and the
Subscriber may also enter into lawful short positions or other derivative
transactions relating to the Securities, or interests in the Securities, and
deliver the Securities, or interests in the Securities, to close out their short
or other positions or otherwise settle other transactions, or loan or pledge the
Securities, or interests in the Securities, to third parties who in turn may
dispose of these Securities.

    


    (h)           Conversion Shares, Incentive
Shares and Warrant Shares Legend.  The Conversion Shares,
Incentive Shares and Warrant Shares shall bear the following or similar
legend:

    


    
      
        
           


        

        
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    "THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."

    


    (i)           Note and Warrant
Legend.  The Note and Warrant shall bear the following
legend:

     

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

     

    (j)           Communication of
Offer.  The offer to sell the Securities was directly
communicated to Subscriber by the Company.  At no time was Subscriber
presented with or solicited by any leaflet, newspaper or magazine article, radio
or television advertisement, or any other form of general advertising or
solicited or invited to attend a promotional meeting otherwise than in
connection and concurrently with such communicated offer.

    


    (k)           Restricted
Securities.   Subscriber understands that the Securities
have not been registered under the 1933 Act and Subscriber will not sell, offer
to sell, assign, pledge, hypothecate or otherwise transfer any of the Securities
unless pursuant to an effective registration statement under the 1933 Act, or
unless an exemption from registration is available.  Notwithstanding
anything to the contrary contained in this Agreement, Subscriber may transfer
(without restriction and without the need for an opinion of counsel) the
Securities to its Affiliates (as defined below) provided that each such
Affiliate is an “accredited investor” under Regulation D and such Affiliate
agrees to be bound by the terms and conditions of this Agreement. For the
purposes of this Agreement, an “Affiliate” of any person or
entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  Affiliate includes each Subsidiary of the
Company.  For purposes of this definition, “control” means the power to
direct the management and policies of such person or firm, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise.

    


    
      
        
           


        

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

    


    (m)                      Correctness of
Representations.  Subscriber represents that the foregoing
representations and warranties are true and correct as of the date hereof and,
unless Subscriber otherwise notifies the Company prior to the Closing Date shall
be true and correct as of the Closing Date.

    


    (n)           Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    5.           Company Representations and
Warranties.  The Company represents and warrants to and agrees
with each Subscriber that:

     

    (a)           Due
Incorporation.  The Company is a corporation or other entity
duly incorporated or organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has the
requisite corporate power to own its properties and to carry on its business as
presently conducted.  The Company is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction where
the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a Material Adverse Effect.  For purposes of
this Agreement, a “Material
Adverse Effect” shall mean a material adverse effect on the financial
condition, results of operations, prospects, properties or business of the
Company and its Subsidiaries taken as a whole.  For purposes of this
Agreement, “Subsidiary”
means, with respect to any entity at any date, any corporation, limited or
general partnership, limited liability company, trust, estate, association,
joint venture or other business entity of which more than 30% of
(i) the outstanding capital stock having (in the absence of contingencies)
ordinary voting power to elect a majority of the board of directors or other
managing body of such entity, (ii) in the case of a partnership or limited
liability company, the interest in the capital or profits of such partnership or
limited liability company or (iii) in the case of a trust, estate,
association, joint venture or other entity, the beneficial interest in such
trust, estate, association or other entity business is, at the time of
determination, owned or controlled directly or indirectly through one or more
intermediaries, by such entity.  As of the Closing Date, all of the
Company’s Subsidiaries and the Company’s ownership interest therein is set forth
on Schedule
5(a).

     

    (b)           Outstanding
Stock.  All issued and outstanding shares of capital stock and
equity interests in the Company have been duly authorized and validly issued and
are fully paid and non-assessable.

     

    (c)           Authority;
Enforceability.  This Agreement, the Note, Shares, Incentive
Shares,  Warrants, the Security Agreement, Subsidiary Guaranty, the
Escrow Agreement, and any other agreements delivered together with this
Agreement or in connection herewith (collectively “Transaction Documents”) have
been duly authorized, executed and delivered by the Company and/or Subsidiaries
and are valid and binding agreements of the Company enforceable in accordance
with their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights generally and to general principles of
equity.  The Company has full corporate power and authority necessary
to enter into and deliver the Transaction Documents and to perform its
obligations thereunder.

    


    
      
        
           


        

        
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    (d)           Capitalization and
Additional
Issuances.   The authorized and outstanding capital stock
of the Company and Subsidiaries on a fully diluted basis as of the date of
this Agreement and the Closing Date (not including the Securities) are set forth
on Schedule
5(d).  Except as set forth on Schedule 5(d), there are no
options, warrants, or rights to subscribe to, securities, rights, understandings
or obligations convertible into or exchangeable for or giving any right to
subscribe for any shares of capital stock or other equity interest of the
Company or any of the Subsidiaries.  The only officer, director,
employee and consultant stock option or stock incentive plan or similar plan
currently in effect or contemplated by the Company is described on Schedule
5(d).  There are no outstanding agreements or preemptive or
similar rights affecting the Company's Common Stock.

     

    (e)           Consents.  No
consent, approval, authorization or order of any court, governmental agency or
body or arbitrator having jurisdiction over the Company, or any of its
Affiliates, the OTC Bulletin Board (the “Bulletin Board”) or the
Company's shareholders is required for the execution by the Company of the
Transaction Documents and compliance and performance by the Company of its
obligations under the Transaction Documents, including, without limitation, the
issuance and sale of the Securities.  The Transaction Documents and
the Company’s performance of its obligations thereunder has been unanimously
approved by the Company’s Board of Directors.  No consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any governmental authority in the world, including
without limitation, the United States, or elsewhere is required by the Company
or any Affiliate of the Company in connection with the consummation of the
transactions contemplated by this Agreement, except as would not otherwise have
a Material Adverse Effect or the consummation of any of the other agreements,
covenants or commitments of the Company or any Subsidiary contemplated by the
other Transaction Documents. Any such qualifications and filings will, in the
case of qualifications, be effective on the Closing and will, in the case of
filings, be made within the time prescribed by law.

     

    (f)           No Violation or
Conflict.  Assuming the representations and warranties of the
Subscriber in Section 4 are true and correct, neither the issuance and sale of
the Securities nor the performance of the Company’s obligations under this
Agreement and all other agreements entered into by the Company relating thereto
by the Company will:

     

    (i)           violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect;
or

     

    (ii)           result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
in favor of Subscriber as described herein; or

     

    (iii)           except
as described on Schedule
5(f)(iii), result in the activation of any anti-dilution rights or a
reset or repricing of any debt, equity or security instrument of any creditor or
equity holder of the Company, or the holder of the right to receive any debt,
equity or security instrument of the Company nor result in the acceleration of
the due date of any obligation of the Company; or

    


    
      
        
           


        

        
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    (iv)           result
in the triggering of any piggy-back or other registration rights of any person
or entity holding securities of the Company or having the right to receive
securities of the Company.

     

    (g)           The
Securities.  The Securities upon issuance:

     

    (i)           are,
or will be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;

    


    (ii)           have
been, or will be, duly and validly authorized and on the dates of issuance of
the Incentive Shares, Conversion Shares upon conversion of the Note, and
the Warrant Shares upon exercise of the Warrants, such Shares and Warrant Shares
will be duly and validly issued, fully paid and non-assessable and if registered
pursuant to the 1933 Act and resold pursuant to an effective registration
statement or exempt from registration will be free trading, unrestricted and
unlegended;

     

    (iii)           will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company;

     

    (iv)           will
not subject the holders thereof to personal liability by reason of being such
holders; and

     

    (v)           assuming
the representations warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.

     

    (h)           Litigation.  There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates that
would affect the execution by the Company or the complete and timely performance
by the Company of its obligations under the Transaction
Documents.  Except as disclosed in the Reports, there is no pending
or, to the best knowledge of the Company, basis for or threatened action, suit,
proceeding or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company, or any of its Affiliates which
litigation if adversely determined would have a Material Adverse
Effect.

     

    (i)           No Market
Manipulation.  The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Securities
or affect the price at which the Securities may be issued or
resold.

     

    (j)           Information Concerning
Company.  The Reports and Other Written Information contain all
material information relating to the Company and its operations and financial
condition as of their respective dates which information is required to be
disclosed therein.   Since June 30, 2008 and except as modified
in the Reports and Other Written Information or in the Schedules hereto, there
has been no Material Adverse Event relating to the Company's business, financial
condition or affairs. The Reports and Other Written Information including the
financial statements included therein do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, taken as a whole, not misleading in
light of the circumstances and when made.

    


    
      
        
           


        

        
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    (k)           Solvency.  Based
on the financial condition of the Company as of the Closing Date, (i) the
Company’s fair saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature; (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by the Company, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of the Company, together with the proceeds the Company would receive, were it to
liquidate all of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect of its debt
when such amounts are required to be paid.  The Company does not
intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt).

     

    (l)           Defaults.  The
Company is not in violation of its articles of incorporation or
bylaws.   Except as set forth in Schedule 5(l), the Company is
(i) not in default under or in violation of any other material agreement or
instrument to which it is a party or by which it or any of its properties are
bound or affected, which default or violation would have a Material Adverse
Effect, (ii) not in default with respect to any order of any court, arbitrator
or governmental body or subject to or party to any order of any court or
governmental authority arising out of any action, suit or proceeding under any
statute or other law respecting antitrust, monopoly, restraint of trade, unfair
competition or similar matters, or (iii) not in violation of any statute, rule
or regulation of any governmental authority which violation would have a
Material Adverse Effect.

     

    (m)           No Integrated
Offering. Neither the Company, nor any of its Affiliates, nor any
person acting on its or their behalf, has directly or indirectly made any offers
or sales of any security of the Company nor solicited any offers to buy any
security of the Company under circumstances that would cause the offer of the
Securities pursuant to this Agreement to be integrated with prior offerings by
the Company for purposes of the 1933 Act or any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
the Bulletin Board.  No prior offering will impair the exemptions
relied upon in this Offering or the Company’s ability to timely comply with its
obligations hereunder.  Neither the Company nor any of its Affiliates
will take any action or steps that would cause the offer or issuance of the
Securities to be integrated with other offerings which would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.  The Company will not conduct
any offering other than the transactions contemplated hereby that may be
integrated with the offer or issuance of the Securities that would impair the
exemptions relied upon in this Offering or the Company’s ability to timely
comply with its obligations hereunder.

     

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

     

    (o)           No Undisclosed
Liabilities.  The Company has no liabilities or obligations
which are material, individually or in the aggregate, other than those incurred
in the ordinary course of the Company businesses since June 30, 2008 and which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, except as disclosed in the Reports or on Schedule 5(o).

     

    (p)           No Undisclosed Events or
Circumstances.  Since June 30, 2008, except as disclosed in the
Reports, no event or circumstance has occurred or exists with respect to the
Company or its businesses, properties, operations or financial condition, that,
under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed in the Reports.

     

    (q)           Banking.   Schedule 5(q) contains a list of all
financial institutions at which the Company and Subsidiaries maintains deposit,
checking and other accounts.  The list includes the accurate addresses
of such financial institution and account numbers of such accounts.

    


    
      
        
           


        

        
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    (r)           Dilution.   The
Company's executive officers and directors understand the nature of the
Securities being sold hereby and recognize that the issuance of the Securities
will have a potential dilutive effect on the equity holdings of other holders of
the Company’s equity or rights to receive equity of the Company.  The
board of directors of the Company has concluded, in its good faith business
judgment that the issuance of the Securities is in the best interests of the
Company.  The Company specifically acknowledges that its obligation to
issue the Incentive Shares, Conversion Shares upon conversion of the Note
and the Warrant Shares upon exercise of the Warrants is binding upon the Company
and enforceable regardless of the dilution such issuance may have on the
ownership interests of other shareholders of the Company or parties entitled to
receive equity of the Company.

     

    (s)           No Disagreements with
Accountants and Lawyers.  There are no material disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise between the Company and the accountants and lawyers previously and
presently employed by the Company, including but not limited to disputes or
conflicts over payment owed to such accountants and lawyers, nor have there been
any such disagreements during the two years prior to the Closing
Date.

    


    (t)           Investment
Company.   Neither the Company nor any Affiliate of the
Company is an “investment company” within the meaning of the Investment Company
Act of 1940, as amended.

    


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

    


    (v)           Reporting Company/Shell
Company.  The Company is a publicly-held company subject to
reporting obligations pursuant to Section 13 of the Securities Exchange Act of
1934, as amended (the "1934
Act") and has a class of Common Stock registered pursuant to Section
12(g) of the 1934 Act.  Pursuant to the provisions of the 1934 Act,
the Company has timely filed all reports and other materials required to be
filed thereunder with the Commission during the preceding twelve
months.  As of the Closing Date, the Company is not a “shell company”;
it is a “former shell company” as those terms are employed in Rule 144 under the
1933 Act.  However, more than twelve months have elapsed since the
filing of the “Form 10” information as such terms are employed in Rule 144 under
the 1933 Act.

    


    (w)           Listing.  The
Company's Common Stock is quoted on the Bulletin Board under the symbol
CLXS.  The Company has not received any oral or written notice that
its Common Stock is not eligible nor will become ineligible for quotation on the
Bulletin Board nor that its Common Stock does not meet all requirements for the
continuation of such quotation.  The Company satisfies all the
requirements for the continued quotation of its Common Stock on the Bulletin
Board.

    


    (x)           DTC
Status.   The Company’s transfer agent is a participant
in, and the Common Stock is eligible for transfer pursuant to, the Depository
Trust Company Automated Securities Transfer Program. The name, address,
telephone number, fax number, contact person and email address of the Company
transfer agent is set forth on Schedule 5(x)
hereto.

     

    
      
        
           


        

        
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      (y)           Company Predecessor and
Subsidiaries.  The Company makes each of the representations
contained in Sections 5(a), (b), (c), (d), (e), (f), (h), (j), (l), (o), (p),
(q), (s), (t) and (u) of this Agreement, as same relate or could be applicable
to each Subsidiary.  All representations made by or relating to the
Company of a historical or prospective nature and all undertakings described in
Sections 9(g) through 9(l) shall relate, apply and refer to the Company and its
predecessors and successors.  The Company represents that it owns all
of the equity of the Subsidiaries and rights to receive equity of the
Subsidiaries identified on Schedule 5(a), free and clear
of all liens, encumbrances and claims, except as set forth on Schedule 5(a).  No person or
entity other than the Company has the right to receive any equity interest in
the Subsidiaries.  The Company further represents that the
Subsidiaries have not been known by any other name for the prior five
years.

    

    


    (z)           Correctness of
Representations.  The Company represents that the foregoing
representations and warranties are true and correct as of the date hereof in all
material respects, and, unless the Company otherwise notifies the Subscribers
prior to the Closing Date, shall be true and correct in all material respects as
of the Closing Date; provided, that, if such representation or warranty is made
as of a different date, in which case such representation or warranty shall be
true as of such date.

     

    (AA)       Survival.  The
foregoing representations and warranties shall survive the Closing
Date.

     

    6.           Regulation D Offering/Legal
Opinion.  The offer and issuance of the Securities to the
Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.  On the
Closing Date, the Company will provide an opinion reasonably acceptable to the
Subscribers from the Company's legal counsel opining on the availability of an
exemption from registration under the 1933 Act as it relates to the offer and
issuance of the Securities and other matters reasonably requested by
Subscribers.  A form of the legal opinion is annexed hereto as Exhibit G.  The
Company will provide, at the Company's expense, such other legal opinions, if
any, as are reasonably necessary in each Subscriber’s opinion for the issuance
and resale of the Incentive Shares, Common Stock issuable upon conversion of the
Notes and exercise of the Warrants pursuant to an effective registration
statement, Rule 144 under the 1933 Act or an exemption from
registration.

    


    7.1.           Conversion of
Note.

    


    (a)           Upon
the conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering, an
opinion of counsel to assure that the Company's transfer agent shall issue stock
certificates in the name of Subscriber (or its permitted nominee) or such other
persons as designated by Subscriber and in such denominations to be specified at
conversion representing the number of shares of Common Stock issuable upon such
conversion.  The Company warrants that no instructions other than
these instructions have been or will be given to the transfer agent of the
Company's Common Stock and that the certificates representing such shares shall
contain no legend other than the legend set forth in Section 4(h).  If
and when Subscriber sells the Shares, assuming (i) a registration statement
including such Shares for registration, filed with the Commission is effective
and the prospectus, as supplemented or amended, contained therein is current and
(ii) Subscriber or its agent confirms in writing to the transfer agent that
Subscriber has complied with the prospectus delivery requirements, the Company
will reissue the Shares without restrictive legend and the Shares will be
free-trading, and freely transferable.  In the event that the Shares
are sold in a manner that complies with an exemption from registration, the
Company will promptly instruct its counsel to issue to the transfer agent an
opinion permitting removal of the legend indefinitely, if pursuant to Rule
144(b)(1)(i) of the 1933 Act, or for 90 days if pursuant to the other provisions
of Rule 144 of the 1933 Act, provided that Subscriber delivers all reasonably
requested representations in support of such opinion.

     

    
      
        
           


        

        
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      (b)           Subscriber
will give notice of its decision to exercise its right to convert the Note,
interest, or part thereof by telecopying, or otherwise delivering a completed
Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the
Company via confirmed telecopier transmission or otherwise pursuant to Section
13(a) of this Agreement.  Subscriber will not be required to surrender
the Note until the Note has been fully converted or satisfied.  Each
date on which a Notice of Conversion is telecopied to the Company in accordance
with the provisions hereof by 6 PM Eastern Time (“ET”) (or if received by the
Company after 6 PM ET, then the next business day) shall be deemed a “Conversion
Date.”  The Company will itself or cause the Company’s transfer
agent to transmit the Company's Common Stock certificates representing the
Conversion Shares issuable upon conversion of the Note to Subscriber via express
courier for receipt by Subscriber within three (3) business days after the
Conversion Date (such third day being the "Delivery Date").  In
the event the Conversion Shares are electronically transferable, then delivery
of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber.   A Note representing the balance of the Note
not so converted will be provided by the Company to Subscriber if requested by
Subscriber, provided Subscriber delivers the original Note to the
Company.

    

     

    (c)           The
Company understands that a delay in the delivery of the Conversion Shares in the
form required pursuant to Section 7.1 hereof, or the Mandatory Redemption Amount
described in Section 7.2 hereof, respectively, later than the Delivery Date or
the Mandatory Redemption Payment Date (as hereinafter defined) could result in
economic loss to the Subscriber.  As compensation to Subscriber for
such loss, the Company agrees to pay (as liquidated damages and not as a
penalty) to Subscriber for late issuance of Conversion Shares in the form
required pursuant to Section 7.1 hereof upon Conversion of the Note, the amount
of $100 per business day after the Delivery Date for each $10,000 of Note
principal amount and interest (and proportionately for other amounts) being
converted of the corresponding Conversion Shares which are not timely
delivered.  The Company shall pay any payments incurred under this
Section upon demand.  Furthermore, in addition to any other remedies
which may be available to the Subscriber, in the event that the Company fails
for any reason to effect delivery of the Conversion Shares within seven (7)
business days after the Delivery Date or make payment within seven (7) business
days after the Mandatory Redemption Payment Date (as defined in Section 7.2
below), Subscriber will be entitled to revoke all or part of the relevant Notice
of Conversion or rescind all or part of the notice of Mandatory Redemption by
delivery of a notice to such effect to the Company whereupon the Company and
Subscriber shall each be restored to their respective positions immediately
prior to the delivery of such notice, except that the damages payable in
connection with the Company’s default shall be payable through the date notice
of revocation or rescission is given to the Company.

    


    7.2.           Mandatory Redemption at
Subscriber’s Election.  In the event (i) the Company is
prohibited from issuing Conversion Shares or Warrant Shares, (ii) the Company
redeems any securities junior to the Notes, (iii) upon the occurrence of any
other Event of Default (as defined in the Note or in this Agreement), that
continues for more than ten (10) business days, (iv) a Change in Control (as
defined below), or (v) of the liquidation, dissolution or winding up of the
Company, then at the Subscriber's election, the Company must pay to the
Subscriber ten (10) business days after request by Subscriber (“Calculation Period”), a sum of
money determined by multiplying up to the outstanding principal amount of the
Note designated by Subscriber by 120%, plus accrued but unpaid interest and any
other amounts due under the Transaction Documents ("Mandatory Redemption
Payment"). The Mandatory Redemption Payment must be received by
Subscriber not later than ten (10) business days after request ("Mandatory Redemption Payment
Date"). Upon receipt of the Mandatory Redemption Payment, the
corresponding Note principal, interest and other amounts will be deemed paid and
no longer outstanding.  The Subscriber may rescind the election to
receive a Mandatory Redemption Payment at any time until such payment is
actually received.  Liquidated damages calculated pursuant to Section
7.1(c) hereof, that have been paid or accrued for the ten day period prior to
the actual receipt of the Mandatory Redemption Payment by Subscriber shall be
credited against the Mandatory Redemption Payment.  For purposes of
this Section 7.2, “Change in
Control” shall mean (i) the Company no longer having a class of shares
publicly traded or listed on a Principal Market (as defined in Section 9(b)
hereto), (ii) the Company  becoming a Subsidiary of another entity
(other than a corporation formed by the Company for purposes of reincorporation
in another U.S. jurisdiction), (iii) a majority of the board of directors of the
Company as of the Closing Date no longer serving as directors of the Company
except due to natural causes, and (iv) the sale, lease or transfer of
substantially all the assets of the Company or its Subsidiaries.

    


    
      
        
           


        

        
          11

          
            

          

        

        
           


        

      

    

    


    7.3.           Maximum
Conversion.  Subscriber shall not be entitled to convert on a
Conversion Date that amount of the Note nor may the Company make any payment
including principal, interest, or liquidated or other damages by delivery of
Conversion Shares in connection with that number of Conversion Shares which
would be in excess of the sum of (i) the number of shares of Common Stock
beneficially owned by Subscriber and its Affiliates on a Conversion Date or
payment date, and (ii) the number of Conversion Shares issuable upon the
conversion of the Note with respect to which the determination of this provision
is being made on a calculation date, which would result in beneficial ownership
by Subscriber and its Affiliates of more than 4.99% of the outstanding shares of
Common Stock of the Company on such Conversion Date.  For the purposes
of the immediately preceding sentence, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Rule 13d-3 thereunder.  Subject to the foregoing, the
Subscriber shall not be limited to aggregate conversions of only 4.99% and
aggregate conversions by the Subscriber may exceed 4.99%.  The
Subscriber may increase the permitted beneficial ownership amount up to 9.99%
upon and effective after 61 days prior written notice to the
Company.  Subscriber may allocate which of the equity of the Company
deemed beneficially owned by Subscriber shall be included in the 4.99% amount
described above and which shall be allocated to the excess above
4.99%.

    


    7.4.           Injunction Posting of
Bond.  In the event Subscriber shall elect to convert a Note or
part thereof, the Company may not refuse conversion based on any claim that
Subscriber or any one associated or affiliated with Subscriber has been engaged
in any violation of law, or for any other reason, unless, a final non-appealable
injunction from a court made on notice to Subscriber, restraining and or
enjoining conversion of all or part of such Note shall have been sought and
obtained by the Company or the Company has posted a surety bond for the benefit
of Subscriber in the amount of 120% of the outstanding principal and accrued but
unpaid interest of the Note, or aggregate purchase price of the Shares which are
sought to be subject to the injunction, which bond shall remain in effect until
the completion of arbitration/litigation of the dispute and the proceeds of
which shall be payable to Subscriber to the extent the judgment or decision is
in Subscriber’s favor.

    


    7.5.           Buy-In.   In
addition to any other rights available to Subscriber, if the Company fails to
deliver to Subscriber Conversion Shares by the Delivery Date and if after the
Delivery Date Subscriber or a broker on Subscriber’s behalf purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by Subscriber of the Common Stock which Subscriber was
entitled to receive upon such conversion (a "Buy-In"), then the Company
shall pay to Subscriber (in addition to any remedies available to or elected by
the Subscriber) the amount by which (A) Subscriber's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (B) the aggregate principal and/or interest amount of the Note
for which such conversion request was not timely honored together with interest
thereon at a rate of 15% per annum, accruing until such amount and any accrued
interest thereon is paid in full (which amount shall be paid as liquidated
damages and not as a penalty).  For example, if a Subscriber purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to an attempted conversion of $10,000 of Note principal
and/or interest, the Company shall be required to pay Subscriber $1,000 plus
interest. Subscriber shall provide the Company written notice and evidence
indicating the amounts payable to Subscriber in respect of the
Buy-In.

    


    7.6           Adjustments.   The
Conversion Price, Warrant exercise price and amount of Shares issuable upon
conversion of the Notes and Warrant Shares issuable upon exercise of the
Warrants and Incentive Shares shall be equitably adjusted and as otherwise
described in this Agreement, the Notes and Warrants.

     

    7.7.           Redemption.    The
Note shall not be redeemable or callable by the Company, except as described in
the Note.

    


    
      
        
           


        

        
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    8.           Credit Enhancement Fee/Due
Diligence/Legal Fees.

     

    (a)           Credit Enhancement
Fee.   The Company and Subscriber agree to indemnify the
other against and hold the other harmless from any and all liabilities to any
persons other than those listed on Schedule 8(a) claiming
brokerage commissions, finder’s fees, credit enhancement fees or due diligence
fees on account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby or in connection with any investment in the Company at any
time, whether or not such investment was consummated and arising out of such
party’s actions.  The Company represents that there are no parties
entitled to receive fees, commissions, credit enhancement fees, due diligence
fees, lead investor fees, or similar payments in connection with the Offering
except as described on Schedule
8(a).  The Company is solely responsible for payment of the
fees described on Schedule
8(a) and agrees to pay all such fees at the times stated on Schedule 8(a).

     

               (b)           Subscriber’s Legal
Fees.   The Company shall pay to Grushko & Mittman,
P.C., a fee of $25,000 (“Subscriber’s Legal Fees”) as reimbursement
for services rendered to the Subscribers in connection with this Agreement and
the purchase and sale of the Incentive Shares, Notes and Warrants (the “Offering”). The
Subscriber’s Legal Fees and expenses (to the extent known as of the Closing)
will be payable out of funds held pursuant to the Escrow
Agreement.  Grushko & Mittman, P.C. will be reimbursed at Closing
for all lien searches, filing fees, and printing and shipping costs for the
closing statements to be delivered to Subscribers.

     

    9.           Covenants of the
Company.  The Company covenants and agrees with the Subscribers
as follows:

     

    (a)           Stop
Orders.  Subject to the prior notice requirement described in
Section 9(n), the Company will advise the Subscriber, within twenty-four hours
after it receives notice of issuance by the Commission, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of the Company, or of
the suspension of the qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.  The Company will not issue any stop transfer order
or other order impeding the sale, resale or delivery of any of the Securities,
except as may be required by any applicable federal or state securities laws and
unless contemporaneous notice of such instruction is given to the
Subscriber.

     

    (b)           Listing/Quotation.  The
Company shall promptly secure the quotation or listing of the Incentive Shares,
Conversion Shares and Warrant Shares upon each national securities exchange, or
automated quotation system upon the Company’s Common Stock is quoted or listed
and upon which such Incentive Shares, Conversion Shares and Warrant Shares are
or become eligible for quotation or listing (subject to official notice of
issuance) and shall maintain same so long as any Notes and Warrants are
outstanding.  The Company will maintain the quotation or listing of
its Common Stock on the American Stock Exchange, Nasdaq Capital Market, Nasdaq
Global Market, Nasdaq Global Select Market, Bulletin Board, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock (the “Principal Market”), and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide Subscribers with copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common Stock
from any Principal Market.  As of the date of this Agreement and the
Closing Date, the Bulletin Board is and will be the Principal
Market.

     

    (c)           Market
Regulations.  If required, the Company shall notify the
Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, of the transactions contemplated by this Agreement, and
shall take all other necessary action and proceedings as may be required and
permitted by applicable law, rule and regulation, for the legal and valid
issuance of the Securities to the Subscriber and promptly provide copies thereof
to the Subscriber.

    


    
      
        
           


        

        
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    (d)           Filing
Requirements.  From the date of this Agreement and until the
last to occur of (i) two (2) years after the Closing Date, (ii) until all the
Incentive Shares and Shares have been resold or transferred by the Subscriber
pursuant to a registration statement or pursuant to Rule 144(b)(1)(i), or (iii)
the Note and Warrants are no longer outstanding (the date of such latest
occurrence being the “End
Date”), the Company will (A) cause its Common Stock to continue to be
registered under Section 12(b) or 12(g) of the 1934 Act, (B) comply in all
respects with its reporting and filing obligations under the 1934 Act, (C)
voluntarily comply with all reporting requirements that are applicable to an
issuer with a class of shares registered pursuant to Section 12(g) of the 1934
Act, if the Company is not subject to such reporting requirements, and (D)
comply with all requirements related to any registration statement filed
pursuant to this Agreement.  The Company will use its best efforts not
to take any action or file any document (whether or not permitted by the 1933
Act or the 1934 Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said acts until the End Date.  Until the End Date, the Company
will continue the listing or quotation of the Common Stock on a Principal Market
and will comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Principal Market.  The
Company agrees to timely file a Form D with respect to the Securities if
required under Regulation D and to provide a copy thereof to Subscriber promptly
after such filing.

     

    (e)           Use of
Proceeds.   The proceeds of the Offering will be employed
by the Company for expenses of the Offering and general working
capital.  Except as described on Schedule 9(e), the Purchase
Price may not and will not be used for accrued and unpaid officer and director
salaries, payment of financing related debt, redemption of outstanding notes or
equity instruments of the Company nor non-trade obligations outstanding on a
Closing Date.  For so long as any Note is outstanding, the Company
will not prepay any financing related debt obligations, except equipment
payments, nor redeem any equity instruments of the Company without the prior
consent of the Subscriber.

     

    (f)           Reservation.   Prior
to the Closing, the Company undertakes to reserve on behalf of Subscriber
from its authorized but unissued Common Stock, a number of shares of Common
Stock equal to 175% of the amount of Common Stock necessary to allow Subscriber
to be able to convert the entire Note and 100% of the amount of Warrant Shares
issuable upon exercise of the Warrants (“Required
Reservation”).   Failure to have sufficient shares
reserved pursuant to this Section 9(f) at any time shall be a material default
of the Company’s obligations under this Agreement and an Event of Default under
the Note.  If at any time Notes and Warrants are outstanding the
Company has insufficient Common Stock reserved on behalf of the Subscriber in an
amount less than 140% of the amount necessary for full conversion of the
outstanding Note principal and interest at the conversion price that would be in
effect on every such date and 100% of the Warrant Shares (“Minimum Required
Reservation”), the Company will promptly reserve the Minimum Required
Reservation, or if there are insufficient authorized and available shares of
Common Stock to do so, the Company will take all action necessary to increase
its authorized capital to be able to fully satisfy its reservation requirements
hereunder, including the filing of a preliminary proxy with the Commission not
later than fifteen days after the first day the Company has less than the
Minimum Required Reservation.  The Company agrees to provide notice to
the Subscriber not later than three days after the date the Company has less
than the Minimum Required Reservation reserved on behalf of the
Subscriber.

     

    (g)           DTC
Program.  At all times that Notes or Warrants are outstanding,
the Company will employ as the transfer agent for the Common Stock, Incentive
Shares, Shares and Warrant Shares a participant in the Depository Trust Company
Automated Securities Transfer Program.

     

    
      
        
           


        

        
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      (h)           Taxes.  From
the date of this Agreement and until the End Date, the Company will promptly pay
and discharge, or cause to be paid and discharged, when due and payable, all
lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefore.

    

     

    (i)           Insurance.  From
the date of this Agreement and until the End Date, the Company will keep its
assets which are of an insurable character insured by financially sound and
reputable insurers against loss or damage by fire, explosion and other risks
customarily insured against by companies in the Company’s line of business and
location, in amounts and to the extent and in the manner customary for companies
in similar businesses similarly situated and located and to the extent available
on commercially reasonable terms.

     

    (j)           Books and
Records.  From the date of this Agreement and until the End
Date, the Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.

     

    (k)           Governmental
Authorities.   From the date of this Agreement and until
the End Date, the Company shall duly observe and conform in all material
respects to all valid requirements of governmental authorities relating to the
conduct of its business or to its properties or assets.

     

    (l)           Intellectual
Property.  From the date of this Agreement and until the End
Date, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business, unless it is sold for
value. Schedule
9(l) hereto identifies all of the intellectual property owned by the
Company and Subsidiaries.

     

    (m)           Properties.  From
the date of this Agreement and until the End Date, the Company will keep its
properties in good repair, working order and condition, reasonable wear and tear
excepted, and from time to time make all necessary and proper repairs, renewals,
replacements, additions and improvements thereto; and the Company will at all
times comply with each provision of all leases and claims to which it is a party
or under which it occupies or has rights to property if the breach of such
provision could reasonably be expected to have a Material Adverse
Effect.  The Company will not abandon any of its assets except for
those assets which have negligible or marginal value or for which it is prudent
to do so under the circumstances.

     

    (n)           Confidentiality/Public
Announcement.   From the date of this Agreement and until
the End Date, the Company agrees that except in connection with a Form 8-K and
the registration statement or statements regarding the Subscriber’s Securities
or in correspondence with the SEC regarding same, it will not disclose publicly
or privately the identity of the Subscriber unless expressly agreed to in
writing by a Subscriber or only to the extent required by law and then only upon
not less than three days prior notice to Subscriber.  In any event and
subject to the foregoing, the Company undertakes to file a Form 8-K describing
the Offering not later than the fourth (4th)
business day after the Closing Date.  Prior to the filing date of such
Form 8-K, a draft in the final form will be provided to Subscriber for
Subscriber’s review and approval.  In the Form 8-K, the Company will
specifically disclose the amount of Common Stock outstanding immediately after
the Closing.  Upon  delivery by the Company to the
Subscriber after the Closing Date of any notice or information, in writing,
electronically or otherwise, and while a Note, Incentive Shares, Conversion
Shares or Warrants are held by Subscriber, unless the  Company has in
good faith determined that the matters relating to such notice do not
constitute material, nonpublic information relating to
the Company or Subsidiaries, the Company  shall within one
business day after any such delivery publicly disclose such 
material,  nonpublic  information on a
Report on Form 8-K.  In the event that
the Company believes that a notice or communication to
Subscriber contains material, nonpublic information relating to the Company or
Subsidiaries, the Company shall so indicate to Subscriber prior to delivery of
such notice or information.  Subscriber will be granted sufficient
time to notify the Company that Subscriber elects not to receive such
information.   In such case, the Company will not deliver such
information to Subscriber.  In the absence of any such
indication, Subscriber shall be allowed to presume that all matters
relating to such notice and information do not constitute material,
nonpublic information relating to the Company or
Subsidiaries.

    


    
      
        
           


        

        
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    (o)           Non-Public
Information.  The Company covenants
and agrees that except for the Reports, Other Written Information and schedules
and exhibits to this Agreement and the Transaction Documents, which information
the Company undertakes to publicly disclose on the Form 8-K described in Section
9(n) above, neither it nor any other person acting on its behalf will at any
time provide Subscriber or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto Subscriber shall have agreed in writing to accept such
information.  The Company understands and confirms that Subscriber
shall be relying on the foregoing representations in effecting transactions in
securities of the Company.

    


    (p)           Negative
Covenants.   So long as a Note is outstanding, without the
consent of the Subscriber, the Company will not and will not permit any of its
Subsidiaries to directly or indirectly:

    


    (i)           create,
incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for:  (A) the
Excepted Issuances (as defined in Section 12 hereof), and (B) (a) Liens imposed
by law for taxes that are not yet due or are being contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’, warehousemen’s, mechanics’,
material men’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (e) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company’s business up
to the amount of the purchase price of such property; (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property; and (g) liens set forth on Schedule 9(p)(i) (each of (a)
through (g), a “Permitted
Lien”).

    


    (ii)           amend
its certificate of incorporation, bylaws or its charter documents so as to
materially and adversely affect any rights of the Subscriber (an increase in the
amount of authorized shares and an increase in the number of directors will not
be deemed adverse to the rights of the Subscriber);

    


    (iii)           repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents.

    


    
      
        
           


        

        
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    (iv)           engage
in any transactions with any officer, director, employee or any Affiliate of the
Company, including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $100,000
other than (i) for payment of salary, or fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company, and (iii) for
other employee benefits, including stock option agreements under any stock
option plan of the Company; or

    


    (v)           prepay
or redeem any financing related debt or past due obligations or securities
outstanding as of the Closing Date, or past due obligations (except with respect
to vendor obligations, any such obligations which in management’s good faith,
reasonable judgment must be repaid to avoid disruption of the Company’s
businesses.

     

    The
Company agrees to provide Subscribers not less than ten (10) days notice prior
to becoming obligated to or effectuating a Permitted Lien or Excepted
Issuance.

     

    (q)           Further Registration
Statements.   Except for a registration statement filed
exclusively on behalf of the Subscriber, the Company will not, without the
consent of the Subscribers, file with the Commission or with state regulatory
authorities any registration statements or amend any already filed registration
statement to increase the amount of Common Stock registered therein, or reduce
the price of which such company securities are registered therein, (including
but not limited to Forms S-8), until the expiration of the “Exclusion Period,” which shall
be defined as the sooner of (i) the date all of the Registrable Securities [as
defined in Section 11.1(iv)] have been registered in an effective registration
statement, or (ii) until all the Incentive Shares, Conversion Shares and
Warrant Shares have been resold by the Subscriber pursuant to a
registration statement or Rule 144b(1)(i), without regard to volume
limitations.  The Exclusion Period will be tolled or reinstated, as
the case may be, during the pendency of an Event of Default as defined in the
Note.

     

    (r)           Offering
Restrictions.   For so long as the Notes are outstanding,
the Company will not enter into any Equity Line of Credit or similar agreement,
nor issue nor agree to issue any floating or Variable Priced Equity Linked
Instruments nor any of the foregoing or equity with price reset rights
(collectively, the “Variable
Rate Restrictions”).   For purposes hereof, “Equity Line of Credit” shall
include any transaction involving a written agreement between the Company and an
investor or underwriter whereby the Company has the right to “put” its
securities to the investor or underwriter over an agreed period of time and at
an agreed price or price formula, and “Variable Priced Equity Linked
Instruments” shall include: (A) any debt or equity securities which are
convertible into, exercisable or exchangeable for, or carry the right to receive
additional shares of Common Stock either (1) at any conversion, exercise or
exchange rate or other price that is based upon and/or varies with the trading
prices of or quotations for Common Stock at any time after the initial issuance
of such debt or equity security, or (2) with a fixed conversion, exercise or
exchange price that is subject to being reset at some future date at any time
after the initial issuance of such debt or equity security due to a change in
the market price of the Company’s Common Stock since date of initial issuance,
and (B) any amortizing convertible security which amortizes prior to its
maturity date, where the Company is required or has the option to (or any
investor in such transaction has the option to require the Company to) make such
amortization payments in shares of Common Stock which are valued at a price that
is based upon and/or varies with the trading prices of or quotations for Common
Stock at any time after the initial issuance of such debt or equity security
(whether or not such payments in stock are subject to certain equity
conditions).

     

    (s)           Seniority.   Except
for Permitted Liens, until the Note is fully satisfied or converted, the Company
shall not grant nor allow any security interest to be taken in the assets of the
Company or any Subsidiary or any Subsidiary’s assets; nor issue any debt, equity
or other instrument which would give the holder thereof directly or indirectly,
a right in any assets of the Company or any Subsidiary or any right to payment
equal to or superior to any right of the Subscriber as a holder of the Note in
or to such assets or payment, nor issue or incur any debt not in the ordinary
course of business.

    


    
      
        
           


        

        
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    (t)           Notices.   For
so long as the Subscribers hold any Securities, the Company will maintain a
United States address and United States fax number for notice purposes under the
Transaction Documents.

     

    (u)       Transactions With
Insiders.  So long as the Note is outstanding, the Company
shall not, and shall cause each of its subsidiaries not to, enter into, amend,
modify or supplement, or permit any subsidiary to enter into, amend, modify or
supplement any agreement, transaction, commitment, or arrangement relating to
the sale, transfer or assignment of any of the Company’s tangible or intangible
assets with any of its Insiders (as defined below)(or any persons who were
Insiders at any time during the previous two (2) years), or any Affiliates (as
defined below) thereof, or with any individual related by blood, marriage, or
adoption to any such individual.  Affiliate for purposes of this
Section 9(v) means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity.  “Control” or
“Controls” for purposes hereof means that a person or entity has the power,
direct or indirect, to conduct or govern the policies of another person or
entity.  For purposes hereof, “Insiders” shall mean any officer,
director or manager of the Company, including but not limited to the Company’s
president, chief executive officer, chief financial officer and chief operations
officer, and any of their affiliates or family members.

     

    (v)           Blackout.    The
Company undertakes and covenants that without the consent of the Subscriber,
until the end of the Exclusion Period, the Company will not enter into any
acquisition, merger, exchange or sale or other transaction or fail to take any
action that could have the effect of delaying the effectiveness of any pending
Registration Statement beyond the Effective Date [as defined in Section
11.1(iv)], or causing an already effective registration statement to no longer
be effective or current for a period of forty-five or more days in the aggregate
during any three hundred and sixty-five day period.

     

    10.           Covenants of the Company
Regarding Indemnification.

     

    (a)           The
Company agrees to indemnify, hold harmless, reimburse and defend the Subscriber,
the Subscriber’s officers, directors, agents, Affiliates, members, managers,
control persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Subscriber or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Company or breach of any representation or warranty by Company in this Agreement
or in any Exhibits or Schedules attached hereto in any Transaction Document, or
other agreement delivered pursuant hereto or in connection herewith, now or
after the date hereof; or (ii) after any applicable notice and/or cure periods,
any breach or default in performance by the Company of any covenant or
undertaking to be performed by the Company hereunder, or any other agreement
entered into by the Company and Subscriber relating hereto.

     

    (b)           In
no event shall the liability of the Subscriber or permitted successor hereunder
or under any Transaction Document or other agreement delivered in connection
herewith be greater in amount than the dollar amount of the net proceeds
actually received by such Subscriber or successor upon the sale of Registrable
Securities (as defined herein).

     

    (c)           The
procedures set forth in Section 11.6 shall apply to the indemnification set
forth in Section 10(a).

    


    
      
        
           


        

        
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    11.1.        Registration
Rights.  The Company hereby grants the following registration
rights to holders of the Securities.

     

    (i)           On
one occasion, for a period commencing one hundred and twenty-one days after the
Closing Date, but not later than two years after the Closing Date, upon a
written request therefor from any record holder or holders of more than 50% of
the Conversion Shares issued and issuable upon conversion of the outstanding
Notes and outstanding Warrant Shares, the Company shall prepare and file with
the Commission a registration statement under the 1933 Act registering the
Registrable Securities, as defined in Section 11.1(iv) hereof, which are the
subject of such request for unrestricted public resale by the holder
thereof.  For purposes of Sections 11.1(i) and 11.1(ii), Registrable
Securities shall not include Securities which are (A) registered for resale in
an effective registration statement, (B) included for registration in a pending
registration statement, (C) which have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act or
(D) which may be resold under Rule 144 without volume
limitations.  Upon the receipt of such request, the Company shall
promptly give written notice to all other record holders of the Registrable
Securities that such registration statement is to be filed and shall include in
such registration statement Registrable Securities for which it has received
written requests within ten days after the Company gives such written
notice.  Such other requesting record holders shall be deemed to have
exercised their demand registration right under this Section
11.1(i).

     

    (ii)           If
the Company at any time proposes to register any of its securities under the
1933 Act for sale to the public, whether for its own account or for the account
of other security holders or both, except with respect to registration
statements on Forms S-4, S-8 or another form not available for registering the
Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Subscribers or Holder
pursuant to an effective registration statement, each such time it will give at
least ten (10) days' prior written notice to the record holder of the
Registrable Securities of its intention so to do. Upon the written request of
the holder, received by the Company within ten (10) days after the giving of any
such notice by the Company, to register any of the Registrable Securities not
previously registered, the Company will cause such Registrable Securities as to
which registration shall have been so requested to be included with the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent required to permit the sale or other disposition
of the Registrable Securities so registered by the holder of such Registrable
Securities (the “Seller”
or “Sellers”). In the
event that any registration pursuant to this Section 11.1(ii) shall be, in whole
or in part, an underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 11.1(ii)
without thereby incurring any liability to the Seller.

     

    (iii)           If,
at the time any written request for registration is received by the Company
pursuant to Section 11.1(i), the Company has determined to proceed with the
actual preparation and filing of a registration statement under the 1933 Act in
connection with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given
pursuant to Section 11.1(ii) rather than Section 11.1(i), and the rights of the
holders of Registrable Securities covered by such written request shall be
governed by Section 11.1(ii).

    


    
      
        
           


        

        
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    (iv)           The
Company shall file with the Commission a Form S-1 registration statement (the
“Registration
Statement”) (or such other form that it is eligible to use) in order to
register the Registrable Securities for resale and distribution under the 1933
Act within sixty (60) calendar days after the Closing Date (the “Filing Date”), and cause the
Registration Statement to be declared effective not later than one hundred and
twenty (120) days after the Closing Date or one hundred and fifty days (150)
after the Closing Date if the Registration Statement is the subject of a “full
review” by the Commission (the “Effective
Date”).  The Company will register not less than a number of
shares of common stock in the aforedescribed registration statement that is
equal to 100% of the Shares issued and issuable upon conversion of all of the
Notes, 100% of the Warrant Shares issuable upon exercise of the Warrants and
100% of the Incentive Shares (collectively the “Registrable Securities”). The
Registrable Securities shall be reserved and set aside exclusively for the
benefit of each Subscriber and Warrant holder, pro rata, and not issued,
employed or reserved for anyone other than each Subscriber and Warrant
holder.  The Registration Statement will immediately be amended or
additional registration statements will be immediately filed by the Company as
necessary to register additional shares of Common Stock to allow the public
resale of all Common Stock included in and issuable by virtue of the Registrable
Securities.  Except with the written consent of the Subscriber, no
securities of the Company other than the Registrable Securities will be included
in the Registration Statement.  It shall be deemed a Non-Registration
Event if at any time after the date the Registration Statement is declared
effective by the Commission (“Actual Effective Date”) the
Company has registered for unrestricted resale on behalf of the Subscribers
fewer than 120% of the amount of Common Shares issuable upon full conversion of
all sums due under the Notes and all of the Incentive Shares and Warrant Shares
(the difference between such 120% and the actual amount of shares registered
being the “Shortfall”).  In
such event, the Company shall take all actions necessary to cause at least 120%
of the amount of shares of Common Stock issuable upon full conversion of all
sums due under the Notes and 100% of the Incentive Shares and Warrant Shares to
be registered within sixty (60) days after the first day such Shortfall
exists.  Failure to file the Registration Statement within thirty (30)
days after the first day such Shortfall first exists or failure to cause such
registration to become effective within sixty (60) days after such Shortfall
first exists shall be a Non-Registration Event.

     

    11.2.           Registration
Procedures. If and whenever the Company is required by the provisions of
Sections 11.1(i), 11.1(ii) or 11.1(iv) to effect the registration of any
Registrable Securities under the 1933 Act, the Company will, as expeditiously as
possible:

     

    (a)           subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 11, with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), promptly provide to the holders of the
Registrable Securities copies of all filings and Commission letters of comment
and notify the Sellers (by telecopier and by e-mail addresses provided by the
Subscribers) and Grushko & Mittman, P.C. (by telecopier and by email to
Counslers@aol.com) on
or before the second  business day thereafter that the Company
receives notice that (i) the Commission has no comments or no further comments
on the registration statement, and (ii) the registration statement has been
declared effective [failure to timely provide notice as required by this Section
11.2(a) shall be a material breach of the Company’s obligation and an Event of
Default as defined in the Notes and a Non-Registration Event as defined in
Section 11.4 of this Agreement];

     

    (b)           prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of two (2) years, and comply with the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Sellers’ intended method of disposition set forth in such registration
statement for such period;

     

    (c)           furnish
to the Sellers, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement or make them electronically available;

    


    
      
        
           


        

        
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    (d)           use
its reasonable best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or “blue sky” laws
of New York and such jurisdictions as the Sellers shall request in writing,
provided, however, 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;

     

    (e)           list
the Registrable Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is then
listed;

     

    (f)            notify
the Sellers within twenty-four hours of the Company’s becoming aware that a
prospectus relating thereto is required to be delivered under the 1933 Act, of
the happening of any event of which the Company has knowledge as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing or which
becomes subject to a Commission, state or other governmental order suspending
the effectiveness of the registration statement covering any of the Registrable
Securities;

     

    (g)           provided
same would not be in violation of the provision of Regulation FD under the 1934
Act, make available for inspection by the Sellers during reasonable business
hours,  and any attorney, accountant or other agent retained by the
Sellers or underwriter, all publicly available, non-confidential financial and
other records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all publicly
available, non-confidential information reasonably requested by the Sellers,
attorney, accountant or agent in connection with such registration statement at
such requesting Seller’s expense; and

     

    (h)           provide
to the Sellers copies of the Registration Statement and amendments thereto five
business days prior to the filing thereof with the Commission.  Any
Seller’s failure to comment on any registration statement or other document
provided to a Subscriber or its counsel shall not be construed to constitute
approval thereof nor the accuracy thereof.

     

    11.3.        Provision of
Documents.  In connection with each registration described in
this Section 11, each Seller will furnish to the Company in writing such
information and representation letters with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.

     

    11.4.        Non-Registration
Events.  The Company agrees that the Sellers will suffer
damages if the Registration Statement is not filed by the Filing Date and not
declared effective by the Commission by the Effective Date, and any registration
statement required under Section 11.1(i) or 11.1(ii) is not filed within 60 days
after written request and declared effective by the Commission within 120 days
after such request, and maintained in the manner and within the time periods
contemplated by Section 11 hereof, and it would not be feasible to ascertain the
extent of such damages with precision.  Accordingly, if (A) the
Registration Statement is not filed on or before the Filing Date, (B) the
Registration Statement is not declared effective on or before the required
Effective Date, (C) due to the action or inaction of the Company the
Registration Statement is not declared effective within three (3) business days
after receipt by the Company or its attorneys of a written or oral communication
from the Commission that the Registration Statement will not be reviewed or that
the Commission has no further comments, (D) if the registration statement
described in Sections 11.1(i) or 11.1(ii) is not filed within 60 days after such
written request, or is not declared effective within 120 days after such written
request, or (E) any registration statement described in Sections 11.1(i),
11.1(ii) or 11.1(iv) is filed and declared effective but shall thereafter cease
to be effective without being succeeded within twenty-five (25) business days by
an effective replacement or amended registration statement or for a period of
time which shall exceed forty (45) days in the aggregate per year (defined as
every rolling period of 365 consecutive days commencing on the Actual Effective
Date) (each such event referred to in clauses A through E of this Section 11.4
is referred to herein as a "Non-Registration Event"), then
the Company shall deliver to the holder of Registrable Securities, as Liquidated Damages, an amount
equal to one percent (1%) for each thirty (30) days (or such lesser pro-rata
amount for any period of less than thirty (30) days) of the principal amount of
the outstanding Notes and purchase price of Incentive Shares, Shares and Warrant
Shares issued upon conversion of Notes and exercise (but excluding cashless
exercise) of Warrants held by Subscriber which are subject to such
Non-Registration Event, subject to a cap of nine percent (9%) in the
aggregate.  The Company must pay the Liquidated Damages in
cash.  The Liquidated Damages must be paid within ten (10) days after
the end of each thirty (30) day period or shorter part thereof for which
Liquidated Damages are payable. In the event a Registration Statement is
filed by the Filing Date but is withdrawn prior to being declared effective by
the Commission, then such Registration Statement will be deemed to have not been
filed and Liquidated Damages will be calculated accordingly.  All oral
or written comments received from the Commission relating to a registration
statement must be satisfactorily responded to within ten (10) business days
after receipt of comments from the Commission.  Failure to timely
respond to Commission comments is a Non-Registration Event for which Liquidated
Damages shall accrue and be payable by the Company to the holders of Registrable
Securities at the same rate and amounts set forth above calculated from the date
the response was required to have been made.  Liquidated Damages shall
not be payable pursuant to this Section 11.4 in connection with Registrable
Securities for such times as such Registrable Securities may be sold by the
holder thereof without restriction pursuant to Section 144(b)(1)(i) of the 1933
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    11.5.        Expenses.  All
expenses incurred by the Company in complying with Section 11, including,
without limitation, all registration and filing fees, printing expenses (if
required), fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the NASD, transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses.”
All underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called "Selling
Expenses."  The Company will pay all Registration Expenses in
connection with any registration statement described in Section
11.  Selling Expenses in connection with each such registration
statement shall be borne by the Seller and may be apportioned among the Sellers
in proportion to the number of shares included on behalf of the Seller relative
to the aggregate number of shares included under such registration statement for
all Sellers, or as all Sellers thereunder may agree.

     

    11.6.        Indemnification and
Contribution.

     

    (a)           In
the event of a registration of any Registrable Securities under the 1933 Act
pursuant to Section 11, the Company will, to the extent permitted by law,
indemnify and hold harmless the Seller, each of the officers, directors,
agents, Affiliates, members, managers, control persons, and principal
shareholders of the Seller, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the 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 when made, and will subject to the provisions of
Section 11.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller in
writing specifically for use in such registration statement or
prospectus.


    
      
         


      

      
        22

        
          

        

      

      
         


      

    

     

    (b)           In
the event of a registration of any of the Registrable Securities under the 1933
Act pursuant to Section 11, each Seller severally but not jointly will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
and will reimburse the Company and each such officer, director, underwriter and
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Seller will be liable hereunder
in any such case if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such Seller, as such, furnished in
writing to the Company by such Seller specifically for use in such registration
statement or prospectus, and provided, further, however, that the liability of
the Seller hereunder shall be limited to the net proceeds actually received by
the Seller from the sale of Registrable Securities pursuant to such registration
statement.

     

    (c)           Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 11.6(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 11.6(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 11.6(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnifying party shall
have reasonably concluded that there may be reasonable defenses available to
indemnified party which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified parties, as a group, shall have the right to select one separate
counsel, reasonably satisfactory to the indemnified and indemnifying party, and
to assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.


    
      
         


      

      
        23

        
          

        

      

      
         


      

    

     

    (d)           In
order to provide for just and equitable contribution in the event of joint
liability under the 1933 Act in any case in which either (i) a Seller, or any
controlling person of a Seller, makes a claim for indemnification pursuant to
this Section 11.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 11.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
not provided under this Section 11.6; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation and provided, further, however, that the liability
of the Seller hereunder shall be limited to the net proceeds actually received
by the Seller from the sale of Registrable Securities pursuant to such
registration statement..

     

    11.7.        Delivery of Unlegended
Shares.

     

    (a)           Within
three (3) business days (such third business day being the “Unlegended Shares Delivery
Date”) after the business day on which the Company has received (i) a
notice that Conversion Shares, Incentive Shares, Warrant Shares or any other
Common Stock held by Subscriber has been sold pursuant to the Registration
Statement or Rule 144 under the 1933 Act, (ii) a representation that the
prospectus delivery requirements, or the requirements of Rule 144, as applicable
and if required, have been satisfied, (iii) the original share certificates
representing the shares of Common Stock that have been sold, and (iv) in the
case of sales under Rule 144, customary representation letters of the Subscriber
and, if required, Subscriber’s broker regarding compliance with the requirements
of Rule 144, the Company at its expense, (y) shall deliver, and shall cause
legal counsel selected by the Company to deliver to its transfer agent (with
copies to Subscriber) an appropriate instruction and opinion of such counsel,
directing the delivery of shares of Common Stock without any legends including
the legend set forth in Section 4(i) above (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the submitted
Common Stock certificate, if any, to the Subscriber at the address specified in
the notice of sale, via express courier, by electronic transfer or otherwise on
or before the Unlegended Shares Delivery Date.

     

    (b)           In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of Subscriber, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system.  Such delivery must be made on or before the Unlegended
Shares Delivery Date.

    


    (c)           The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11 hereof later than the Unlegended Shares Delivery Date
could result in economic loss to a Subscriber.  As compensation to a
Subscriber for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the Subscriber for late delivery of
Unlegended Shares in the amount of $100 per business day after the Delivery Date
for each $10,000 of purchase price of the Unlegended Shares subject to the
delivery default.  If during any 360 day period, the Company fails to
deliver Unlegended Shares as required by this Section 11.2 for an aggregate of
thirty days, then each Subscriber or assignee holding Securities subject to such
default may, at its option, require the Company to redeem all or any portion of
the Shares subject to such default at a price per share equal to the greater of
(i) 120%, or (ii) a fraction in which the numerator is the highest closing price
of the Common Stock during the aforedescribed thirty day period and the
denominator of which is the lowest conversion price during such thirty day
period, multiplied by the price paid by Subscriber for such Common Stock (“Unlegended Redemption
Amount”).  The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.

     

    
      
         


      

      
        24

        
          

        

      

      
         


      

    


    (d)           In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 11.7 and the Company is required to deliver such Unlegended Shares
pursuant to Section 11.7, the Company may not refuse to deliver Unlegended
Shares based on any claim that such Subscriber or any one associated or
affiliated with such Subscriber has been engaged in any violation of law, or for
any other reason, unless, an injunction or temporary restraining order from a
court, on notice, restraining and or enjoining delivery of such Unlegended
Shares shall have been sought and obtained by the Company and the Company has
posted a surety bond for the benefit of such Subscriber in the amount of 120% of
the amount of the aggregate purchase price of the Common Stock which are subject
to the injunction or temporary restraining order, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Subscriber to the extent Subscriber
obtains judgment in Subscriber’s favor.

    


    (e)           
In addition to any other rights available to Subscriber, if the Company fails to
deliver to a Subscriber Unlegended Shares as required pursuant to this Agreement
and after the Unlegended Shares Delivery Date, the Subscriber or a broker on the
Subscriber’s behalf, purchases (in an open market transaction or otherwise)
shares of common stock to deliver in satisfaction of a sale by such Subscriber
of the shares of Common Stock which the Subscriber was entitled to receive from
the Company (a "Buy-In"), then the Company
shall pay in cash to the Subscriber (in addition to any remedies available to or
elected by the Subscriber) the amount by which (A) the Subscriber's total
purchase price (including brokerage commissions, if any) for the shares of
common stock so purchased exceeds (B) the aggregate purchase price of the shares
of Common Stock delivered to the Company for reissuance as Unlegended Shares
together with interest thereon at a rate of 15% per annum accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty).  For example, if a
Subscriber purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to $10,000 of purchase price of shares of
Common Stock delivered to the Company for reissuance as Unlegended Shares, the
Company shall be required to pay the Subscriber $1,000, plus interest. The
Subscriber shall provide the Company written notice indicating the amounts
payable to the Subscriber in respect of the Buy-In.

    


    11.8.        In
the event commencing six months after the Closing Date and ending
thirty-six  months thereafter, the Subscriber is not permitted to
resell any of the Incentive Shares, Conversion Shares or Warrant Shares without
any restrictive legend or if such sales are permitted but subject to volume
limitations or further restrictions on resale as a result of the unavailability
to Subscriber of Rule 144(b)(1)(i) under the 1933 Act or any successor rule
(a “144 Default”), for
any reason including but not limited to failure by the Company to file
quarterly, annual or any other filings by the required filing dates, except for
Subscriber’s status as an Affiliate or “control person” of the Company, or as a
result of a change in current applicable securities laws, then the Company shall
pay such Subscriber as liquidated damages and not as a penalty an amount equal
to one percent (1%) for each thirty days (or such lesser pro-rata amount for any
period less than thirty days) not to exceed nine percent (9%) in the aggregate,
thereafter of the purchase price of the Conversion Shares, Warrant Shares and
Shares subject to such 144 Default.  Liquidated Damages shall not be
payable pursuant to this Section 11.8 in connection with Shares for such times
as such Shares may be sold by the holder thereof without volume or other
restrictions  pursuant to Section 144(b)(1)(i) of the 1933 Act or
pursuant to an effective registration statement.

     

    
      
         


      

      
        25

        
          

        

      

      
         


      

    


    12.           (a)           Reset of Purchase
Price.   As a result of the anti-dilution rights granted
to Subscriber in connection with Subscriber’s purchase of common stock and
warrants of the Company as further described on Schedule 5(f)(iii) (“Prior Purchase Shares” and “Prior Purchase Warrants” and “Prior Purchase Warrant Shares”), the exercise price
of the Prior Purchase Warrants is reduced to $0.125 and the Company will issue
to Subscriber a number of Incentive Shares equal to 2,050,128 so that the
average purchase price of each of the Prior Purchase Shares and Incentive Shares
equals $0.125.  Subscriber is granted all of the rights, resets and
protections contained in Section 12(b) below in connection with the Incentive
Shares, Prior Purchase Shares, Prior Purchase Warrants and Prior Purchase
Warrant Shares.

     

    (b)           Favored Nations
Provision.   Other than in connection with (i) full or
partial consideration in connection with a strategic merger, acquisition,
consolidation or purchase of substantially all of the securities or assets of
corporation or other entity which holders of such securities or debt are not at
any time granted registration rights, (ii) the Company’s issuance of securities
in connection with strategic license agreements and other partnering
arrangements so long as such issuances are not for the purpose of raising
capital and which holders of such securities or debt are not at any time granted
registration rights, (iii) the Company’s issuance of Common Stock or the
issuances or grants of options to purchase Common Stock to employees, directors,
and consultants, pursuant to plans described on Schedule 5(d) as such plans
are constituted on the Closing Date, (iv) securities upon the exercise or
exchange of or conversion of any securities exercisable or exchangeable for or
convertible into shares of Common Stock issued and outstanding on the date of
this Agreement and described on Schedule 5(d), and (v) as a
result of the exercise of Warrants or conversion of Notes which are granted or
issued pursuant to this Agreement (collectively, the foregoing (i) through (v)
are “Excepted
Issuances”), if at any time the Notes or Warrants are outstanding, the
Company shall agree to or issue (the “Lower Price Issuance”) any
Common Stock or securities convertible into or exercisable for shares of Common
Stock (or modify any of the foregoing which may be outstanding) to any person or
entity at a price per share or conversion or exercise price per share which
shall be less than the Conversion Price in effect at such time, or if less than
the Warrant exercise price in effect at such time, without the consent of the
Subscriber, then the Company shall issue, for each such occasion, additional
shares of Common Stock to the Subscriber respecting those Conversion Shares,
Incentive Shares and Warrants Shares that are then still owned by the Subscriber
at the time of the Lower Price Issuance so that the average per share purchase
price of the Incentive Shares, Prior Purchase Shares, Prior Purchase Warrants,
Prior Purchase Warrant Shares, Shares or Warrant Shares purchased and owned by
the Subscriber on the date of the Lower Price Issuance is equal to such other
lower price per share and the Conversion Price and Warrant exercise price shall
automatically be reduced to such other lower price.  The average
Purchase Price of the Conversion Shares and average exercise price in relation
to the Warrant Shares shall be calculated separately for the Incentive Shares,
Prior Purchase Shares, Prior Purchase Warrant Shares, Shares and Warrant
Shares.  The delivery to Subscriber of the additional shares of Common
Stock shall be not later than the closing date of the transaction giving rise to
the requirement to issue additional shares of Common
Stock.  Subscriber is granted the registration rights described in
Section 11 hereof in connection with such additional shares of Common
Stock.  For purposes of the issuance and adjustment described in this
paragraph, the issuance of any security of the Company carrying the right to
convert such security into shares of Common Stock or of any warrant, right or
option to purchase Common Stock shall result in the issuance of the additional
shares of Common Stock upon the sooner of the agreement to or actual issuance of
such convertible security, warrant, right or option and again at any time upon
any subsequent issuances of shares of Common Stock upon exercise of such
conversion or purchase rights if such issuance is at a price lower than the
Conversion Price or Warrant exercise price in effect upon such
issuance.  Common Stock issued or issuable by the Company for no
consideration or for consideration that cannot be determined at the time of
issue will be deemed issuable or to have been issued for $0.001 per share of
Common Stock.  The rights of Subscriber set forth in this Section 12
are in addition to any other rights the Subscriber has pursuant to this
Agreement, the Note, any Transaction Document, and any other agreement referred
to or entered into in connection herewith or to which Subscriber and Company are
parties.


    
      
         


      

      
        26

        
          

        

      

      
         


      

    

     

    (c)           Maximum Exercise of
Rights.   In the event the exercise of the rights
described in Sections 12(a) and 12(b) would or could result in the issuance of
an amount of Common Stock of the Company that would exceed the maximum amount
that may be issued to Subscriber calculated in the manner described in Section
7.3 of this Agreement, then the issuance of such additional shares of Common
Stock of the Company to Subscriber will be deferred in whole or in part until
such time as Subscriber is able to beneficially own such Common Stock without
exceeding the applicable maximum amount set forth calculated in the manner
described in Section 7.3 of this Agreement and notifies the Company
accordingly.

     

    13.           Miscellaneous.

     

    (a)           Notices.  All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, 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 the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Collexis Holdings,
Inc., 1201 Main Street, Suite 980, Columbia, SC 29201, Attn: William D.
Kirkland, CEO, facsimile: (803) 727-1118, with a copy by fax only
to:  Andrew J. Levinson, Esq., 1350 Broadway, 11th Floor,
New York, NY 10018, facsimile: (646) 390-6307, and (ii) if to the Subscriber,
to: the address and fax number indicated on the signature page hereto, with an
additional copy by fax only to: Grushko & Mittman, P.C., 551 Fifth Avenue,
Suite 1601, New York, New York 10176, facsimile: (212) 697-3575.

     

    (b)           Entire Agreement;
Assignment.  This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties.  Neither the Company nor the Subscriber has
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith.   No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscriber.

     

    (c)           Counterparts/Execution.  This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument.  This Agreement may be executed by facsimile
signature and delivered by electronic transmission.

     

    (d)           Law Governing this
Agreement.  This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of New York.  The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens.  The parties executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby irrevocably waive trial by jury.  The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs.  In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law.  Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement.  Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.


    
      
         


      

      
        27

        
          

        

      

      
         


      

    

     

    (e)           Specific Enforcement,
Consent to Jurisdiction.  The Company and Subscriber
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity.  Subject to Section 13(d) hereof, the Company hereby
irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper.  Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.

     

    (f)       
    Damages.   In
the event the Subscriber is entitled to receive any liquidated damages pursuant
to the Transactions Documents, the Subscriber may elect to receive the greater
of actual damages or such liquidated damages.

     

    (g)           Maximum
Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscriber and thus
refunded to the Company.

     

    (h)           Calendar
Days.   All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated.  The terms
“business days” and “trading days” shall mean days that the New York Stock
Exchange is open for trading for three or more hours.  Time periods
shall be determined as if the relevant action, calculation or time period were
occurring in New York City.  Any deadline that falls on a non-business
day in any of the Transaction Documents shall be automatically extended to the
next business day and interest, if any, shall be calculated and payable through
such extended period.

     

    (i)            Captions: Certain
Definitions.  The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement.  As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.


    
      
         


      

      
        28

        
          

        

      

      
         


      

    

     

    (j)            Severability.  In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the unenforceable
term or provision were deleted, or (ii) by or before any other authority of any
of the terms and provisions of this Agreement.

     

    (k)           Successor
Laws.  References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms.  A
successor rule to Rule 144(b)(1)(i) shall include any rule that would be
available to a non-Affiliate of the Company for the sale of Common Stock not
subject to volume restrictions and after a six month holding
period.


    
      
         


      

      
        29

        
          

        

      

      
         


      

    

     

    SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT

    


    Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.

    


    
      
        
          
            
              
                	 
      	
                        COLLEXIS
      HOLDINGS, INC.

                      
	 
      	
                        a
      Nevada corporation

                      
	 
      	 
      
	 
      	 
      
	 
      	      
                        By:/s/
      William D. Kirkland

                      	 
	 
      	
                        Name:
      William D. Kirkland

                      
	 
      	
                        Title:
      CEO

                      
	 
      	 
      
	 
      	
                        Dated:
      March 4,
2009

                      


              

            

          

        

      

    

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  SUBSCRIBER

                                	 	
                                  PURCHASE

                                  PRICE

                                	 	 	
                                  NOTE

                                  PRINCIPAL

                                	 	 	
                                  INCENTIVE

                                  SHARES

                                	 	 	
                                  WARRANTS

                                	 
	
                                  ALPHA
      CAPITAL ANSTALT

                                	 	$	650,000.00	 	 	$	764,705.88	 	 	 	2,050,128	 	 	 	6,117,647	 
	
                                  Pradafant
      7

                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                  9490
      Furstentums

                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                  Vaduz,
      Lichtenstein

                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                                  Fax:
      011-42-32323196

                                	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 


                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    
      
        
          	
                    /s/Konrad
    Ackermann

                	 
      	 
	
                  By:
      Konrad Ackermann

                	 
      	 
	
                         Director

                	 
      	 


        

      

    

     

    
      
         


      

      
        30

        
          

        

      

      
         


      

    


    LIST OF EXHIBITS AND
SCHEDULES

    


    
      
        
          	
                  Exhibit
      A

                	
                  Form
      of Note

                
	 
      	 
      
	
                  Exhibit
      B

                	
                  Form
      of Class A Warrant

                
	 
      	 
      
	
                  Exhibit
      C

                	
                  Escrow
      Agreement

                
	 
      	 
      
	
                  Exhibit
      D

                	
                  Form
      of Security Agreement

                
	 
      	 
      
	
                  Exhibit
      E

                	
                  Form
      of Subsidiary Guaranty

                
	 
      	 
      
	
                  Exhibit
      F

                	
                  Form
      of Personal Guaranty

                
	 
      	 
      
	
                  Exhibit
      G

                	
                  Form
      of Legal Opinion

                
	 
      	 
      
	
                  Schedule
      5(a)

                	
                  Subsidiaries

                
	 
      	 
      
	
                  Schedule
      5(d)

                	
                  Additional
      Issuances / Capitalization

                
	 
      	 
      
	
                  Schedule
      5(l)

                	
                  Defaults

                
	 
      	 
      
	
                  Schedule
      5(o)

                	
                  Undisclosed
      Liabilities

                
	 
      	 
      
	
                  Schedule
      5(q)

                	
                  Financial
      Institutions

                
	 
      	 
      
	
                  Schedule
      5(x)

                	
                  Transfer
      Agent

                
	 
      	 
      
	
                  Schedule
      8(a)

                	
                  Credit
      Enhancement Fees

                
	 
      	 
      
	
                  Schedule
      9(e)

                	
                  Use
      of Proceeds

                
	 
      	 
      
	
                  Schedule
      9(l)

                	
                  Intellectual
      Property

                
	 
      	 
      
	
                  Schedule
      9(p)(i)

                	
                  Liens

                


        

      

    

     

    
      
         


      

      
        31

        
          

        

      

      
         


      

    


    SCHEDULE
5(a)

    


    Subsidiaries


    


    Collexis
Holdings, Inc.

    1201 Main
St., Suite 980

    Columbia,
SC 29201

    


    Collexis,
Inc.

    1201 Main
St., Suite 980

    Columbia,
SC 29201

    


    SyynX
Solutions

    BioCampus
Cologne

    Nattermannallee
1

    Cologne,
Germany 50829

    


    Collexis
US, Inc

    1201 Main
St., Suite 980

    Columbia,
SC 29201

    


    Lawriter
LLC

    119 W
Central Parkway, 1st Floor

    Cincinnati,
OH  45202

    


    BiomedExperts.com,
Inc

    BioCampus
Cologne

    Nattermannallee
1

    Cologne,
Germany 50829

    


    Biomed
Experts US, Inc

    1201 Main
St., Suite 980

    Columbia,
SC 29201

    


    Collexis
BV

    c/o    Arthur's
Legal B.V.

    Prins
Hendriklaan 26

     1075
BD  AMSTERDAM

    The
Netherlands

     

    
      
         


      

      
        32

        
          

        

      

      
         


      

    


    SCHEDULE
5(d)

    


    Additional Issuances/
Capitalization

     

    
      
        
          
            
              	
                      Collexis
      Capitalization 3/3/09

                    	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Common
      Stock par value $0.001 authorized

                    	 	 	277,713,000	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Shares
      outstanding 1/31/09

                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	120,965,418	 
	 
      	 	 	 	 	 	
                      Exercise Price

                    	 	 	 	 	 
	 
      	 	
                      Total

                    	 	 	$	0.10	 	 	$	.30-$.3875	 	 	$	0.75	 	 	 	 	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Options
      outstanding (in the money)

                    	 	 	16,775,280	 	 	 	7,849,160	 	 	 	541,120	 	 	 	8,385,000	 	 	 	16,775,280	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Current
      Warrants outstanding (unvested
      approx. 4yrs. remaining)

                    	 	 	 	 	 	$	0.75	 	 	 	 	 	 	 	 	 	 	 	597,996	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Current
      Warrants outstanding (vested)

                    	 	 	 	 	 	$	0.145	 	 	 	 	 	 	 	 	 	 	 	12,500,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Current
      Warrants outstanding (vested)

                    	 	 	 	 	 	$	0.07	 	 	 	 	 	 	 	 	 	 	 	10,000,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Restricted
      stock (unvested approx. 2 yrs. Remaining)

                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	400,000	 
	 
      	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
                      Total

                    	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	161,238,694	 


            

          

        

      

    

    
      

        
          
             


          

          
            33

            
              

            

          

          
             


          

        

      

    

    SCHEDULE
5(l)

    


    Defaults

    


    
      
        
          	
                	
                  (1)

                	
                  As
      of the date of this agreement we are in technical default with the second
      installment of the SyynX acquisition.  We do not have a written
      agreement with them but they have verbally agreed to work with us, the
      current payments outstanding and there due dates were/are: € 400,000 due
      2/3/09, €100,000 due 2/17/09, and €714,851 due on
  3/31/09.

                


        

         

        
          	
                	
                  (2)

                	
                  As
      of the date of this agreement, we have received an extension on the
      $313,750 OSBA payment due under the Lawriter acquisition on March 2, 2009
      until April 1,
2009. 

                


        

      

    

     

    
      
         


      

      
        34

        
          

        

      

      
         


      

    


    SCHEDULE
5(o)

    


    Undisclosed
Liabilities


    


    
      	
               
      

            	
              (1)

            	
              As
      of the date of this agreement we are in technical default with the second
      installment of the SyynX acquisition.  We do not have a written
      agreement with them but they have verbally agreed to work with us, the
      current payments outstanding and there due dates were/are: € 400,000 due
      2/3/09, €100,000 due 2/17/09, and €714,851 due on
  3/31/09.

            


    

    


    
      	
               
      

            	
              (2)

            	
              As
      of the date of this agreement, we have received an extension on the
      $313,750 OSBA payment due under the Lawriter acquisition on March 2, 2009
      until April 1, 2009.

            


    

    


    
      	
               
      

            	
              (3)

            	
              As
      of March 3, 2009, we filed for bankruptcy protection in the Netherlands
      for the Company’s subsidiary Collexis B.V. The subsidiary has no employees
      and minimal assets. The largest individual creditor of Collexis B.V. is
      the Parent Company, Collexis Holdings,
Inc.

            


    


    
      
         


      

      
        35

        
          

        

      

      
         


      

    


    SCHEDULE
5(q)

    


    Financial
Institutions


    


    Bank
Name: Nation Bank of South Carolina

    Address:
1241 Main St, Columbia, SC 29202

    Account
name: Collexis Inc

    Account
number: 0445 3968 3801

    Account
type: Operating

    


    Bank
Name: Nation Bank of South Carolina

    Address:
1241 Main St, Columbia, SC 29202

    Account
name: Collexis Holdings Inc

    Account
number: 3235 9134 5904

    Account
type: Money Market

    


    Bank
Name: U.S. Bank, N.A.

    Address:

    Account
name: Lawriter Corporation

    Account
number: 1301 1132 7727

    Account
type: Checking

    


    Bank
Name: Dresdner Bank

    Address:
Cologne, Germany

    Account
name: Syynx Solutions

    Account
number: 0475543100

    IBAN:
DE23370800400475543100

    SWIFT-BIC:
DRESDEFF370

    Account
type: Checking

    


    Bank
Name: RABO Bank Geldermalsen, POB 22, Geldermalsen, The Netherlands

    Address:
Geldermalsen, The Netherlands

    Account
name: COLLEXIS BV

    Account
number: 3212.96.478

    IBAN:
NL04 RABO 0321 2964 78

    SWIFT-BIC:
RABONL2U

    Account
type: Checking


    
      
         


      

      
        36

        
          

        

      

      
         


      

    


    SCHEDULE
5(x)

    


    Transfer
Agent


    


    Holly H.
Drummond

    Vice
President & Senior Account Administrator

    American
Stock Transfer & Trust Company

    10150
Mallard Creek Road, Suite 307

    Charlotte,
NC 28262

    (718)
921-8520

    hdrummond@amstock.com


    
      
         


      

      
        37

        
          

        

      

      
         


      

    


    SCHEDULE
8(a)

    


    CREDIT ENHANCEMENT
FEE


    


    CREDIT ENHANCEMENT FEE
RECIPIENT:

    


    MARGIE
CHASSMAN

    c/o
Andrew J. Levinson, Esq.

    1350
Broadway, 11th
Floor

    New York,
NY 10018

    Fax:
(646) 390-6307

    


    Cash
Fee.   The Company agrees that it will pay the Credit
Enhancement Fee Recipient, on the Closing Date, a fee of $65,000 (“Credit Enhancement
Fee”).  The Company represents that there are no other parties
entitled to receive fees, commissions, or similar payments in connection with
the Offering except the Credit Enhancement Fee Recipient.


    
      
         


      

      
        38

        
          

        

      

      
         


      

    


    SCHEDULE
9(e)

    


    Use of
Proceeds

    


    
      
        
          
            	
                    Acquisition
      payment to SyynX Web solutions:

                  	 	$	195,000	 	 	€	(150,000	)
	
                    General
      working capital

                  	 	$	365,000	 	 	 	 	 


          

        

      

    


    
      
         


      

      
        39

        
          

        

      

      
         


      

    


    Schedule
9(l)

    Intellectual
Property

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      
	
                                                                                      Intellectual
      Property - Encumbered in this Agreement

                                                                                    
	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      
	 
      	
                                                                                      Trademarks Names and
Numbers

                                                                                    	 	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                                      Serial Number

                                                                                    	 	
                                                                                      Trademark

                                                                                    	 	
                                                                                      Issue Date

                                                                                    	 
      	 
      	 
      
	 
      	 
      	
                                                                                      77342940

                                                                                    	 	
                                                                                      Fingerprint

                                                                                    	 	
                                                                                      3/13/2008

                                                                                    	 
      	 
      	 
      
	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      
	 
      	
                                                                                      Patent Filings - Names and
      Numbers

                                                                                    	 	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                                      Filing
      #

                                                                                    	 	
                                                                                      Filing
      Name

                                                                                    	 	
                                                                                      Date

                                                                                      Received

                                                                                    	 
      	 
      	 
      
	 
      	 
      	
                                                                                      PCT/US07/81410

                                                                                    	 	
                                                                                      Methods
      and

                                                                                      Systems
      for

                                                                                      Knowledge

                                                                                      Discovery

                                                                                    	 	
                                                                                      10/15/2007

                                                                                    	 
      	 
      	 
      
	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      
	
                                                                                      Intellectual
      Property - Not Available for this Agreement

                                                                                    
	 
      	
                                                                                      NOTE
      - This Material is owned by SyynX Solutions GmBH.  As a part of
      their acquisition agreement

                                                                                    
	 
      	
                                                                                      with
      Collexis Holdings, Inc, their assets cannot be encumbered or their
      purchase agreement is in default.

                                                                                    
	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      
	 
      	
                                                                                      Trademarks Names and
Numbers

                                                                                    	 	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                                      Serial Number

                                                                                    	 	
                                                                                      Trademark

                                                                                    	 	
                                                                                      Issue Date

                                                                                    	 
      	 
      	 
      
	 
      	 
      	
                                                                                      77327467

                                                                                    	 	
                                                                                      BiomedNetworks

                                                                                    	 	
                                                                                      2/27/2008

                                                                                    	 
      	 
      	 
      
	 
      	 
      	
                                                                                      77327487

                                                                                    	 	
                                                                                      BiomedExperts

                                                                                    	 	
                                                                                      2/27/2008

                                                                                    	 
      	 
      	 
      
	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      
	 
      	
                                                                                      Patent Filings - Names and
      Numbers

                                                                                    	 	 
      	 
      	 
      	 
      
	 
      	 
      	
                                                                                      Filing
      #

                                                                                    	 	
                                                                                      Filing
      Name

                                                                                    	 	
                                                                                      Date

                                                                                      Received

                                                                                    	 
      	 
      	 
      
	 
      	 
      	
                                                                                      US61/075,492

                                                                                    	 	
                                                                                      Methods
      and

                                                                                      Systems
      for

                                                                                      Social

                                                                                      Networking

                                                                                    	 	
                                                                                      6/25/2008

                                                                                    	 
      	 
      	 
      
	 
      	 
      	 
      	 	 
      	 	 
      	 
      	 
      	 
      


                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         


      

      
        40

        
          

        

      

      
         


      

    


    SCHEDULE
9(p)(i)

    


    Liens

    


    
      	
               
      

            	
              (1)

            	
              All
      of the Lawriter equipment and all of the Lawriter accounts receivable
      arising from the Consortium
Licenses.

            


    

     

    
      	
               
      

            	
              (2)

            	
              The
      Common Stock of SyynX Solutions GmbH and the assets
    thereof.

            


    

     

    
      
         


      

      
        41