Document:

EXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

         This Securities  Purchase  Agreement (this  "AGREEMENT") is dated as of
July 17, 2007, among Elite  Pharmaceuticals,  Inc., a Delaware  corporation (the
"COMPANY"),  and each purchaser  identified on the signature pages hereto (each,
including  its  successors  and assigns,  a  "PURCHASER"  and  collectively  the
"PURCHASERS").

         WHEREAS,  the Company has previously entered into an agreement to issue
and sell up to 20,000 shares of Series C Preferred Stock, together with warrants
to purchase  shares of Common Stock and on April 24, 2007, the Company closed on
the issuance and sale of 15,000 shares of Series C Preferred  Stock and warrants
to purchase Common Stock (the "April Closing"); and

         WHEREAS,  subject  to the  terms  and  conditions  set  forth  in  this
Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "SECURITIES ACT") and Rule 506 promulgated thereunder,  the Company desires
to issue  and sell to each  Purchaser,  and each  Purchaser,  severally  and not
jointly,  desires to purchase from the Company,  the remaining 5,000  authorized
shares of the Series C  Preferred  Stock,  together  with  warrants  to purchase
Common Stock as more fully described in this Agreement.

         NOW,  THEREFORE,  IN CONSIDERATION of the mutual covenants contained in
this Agreement,  and for other good and valuable  consideration  the receipt and
adequacy of which are hereby acknowledged,  the Company and each Purchaser agree
as follows:

                                    ARTICLE I
                                   DEFINITIONS

         1.1  DEFINITIONS.  In addition to the terms  defined  elsewhere in this
Agreement:  (a) capitalized terms that are not otherwise defined herein have the
meanings  given to such terms in the  Certificate  of  Designation  (as  defined
herein), and (b) the following terms have the meanings indicated in this Section
1.1:

              "ACTION"  shall have the meaning  ascribed to such term in Section
         3.1(j).

              "ACTUAL  MINIMUM"  means,  as of any date,  the maximum  aggregate
         number of shares of Common Stock then issued or potentially issuable in
         the  future  pursuant  to  the  Transaction  Documents,  including  any
         Underlying  Shares  issuable upon exercise or conversion in full of all
         Warrants  and  shares  of  Series  C  Preferred  Stock,   ignoring  any
         conversion or exercise limits set forth therein,  and assuming that any
         previously  unconverted  shares  of Series C  Preferred  Stock are held
         until the fifth  anniversary  of the Closing Date and all dividends are
         paid in shares of Common Stock until such fifth anniversary.

              "AFFILIATE" means any Person that,  directly or indirectly through
         one or more  intermediaries,  controls or is  controlled by or is under
         common control with a Person, as

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         such  terms  are  used  in and  construed  under  Rule  144  under  the
         Securities  Act. With respect to a Purchaser,  any  investment  fund or
         managed  account that is managed on a  discretionary  basis by the same
         investment  manager as such Purchaser will be deemed to be an Affiliate
         of such Purchaser.

              "BUSINESS  DAY" means any day  except  Saturday,  Sunday,  any day
         which shall be a federal  legal holiday in the United States or any day
         on which banking  institutions  in the State of New York are authorized
         or required by law or other governmental action to close.

              "CERTIFICATE OF DESIGNATION"  means the Certificate of Designation
         of the Series C Preferred Stock filed by the Company with the Secretary
         of State of Delaware on April 24, 2007, as corrected by the Certificate
         of  Correction  filed with the  Secretary of State of Delaware on April
         25,  2007,  a  certified  copy of each of which is  attached  hereto as
         EXHIBIT A.

              "CLOSING"  means the closing or closings of the  purchase and sale
         of the Securities pursuant to Section 2.1.

              "CLOSING  DATE" means the Trading Day when all of the  Transaction
         Documents  have been executed and delivered by the  applicable  parties
         thereto,   and  all  conditions   precedent  to  (i)  the   Purchasers'
         obligations  to pay the  Subscription  Amount  and (ii)  the  Company's
         obligations to deliver the Securities have been satisfied or waived.

              "COMMISSION" means the Securities and Exchange Commission.

              "COMMON  STOCK" means the common  stock of the Company,  par value
         US$.01 per share,  and any other  class of  securities  into which such
         securities may hereafter be reclassified or changed into.

              "COMMON STOCK  EQUIVALENTS" means any securities of the Company or
         the  Subsidiaries  which would entitle the holder thereof to acquire at
         any  time  Common  Stock,  including,  without  limitation,  any  debt,
         preferred stock, rights, options,  warrants or other instrument that is
         at any time  convertible  into or exercisable or  exchangeable  for, or
         otherwise entitles the holder thereof to receive, Common Stock.

              "COMPANY  COUNSEL"  means  Reitler,  Brown,  & Rosenblatt LLC with
         offices  located at 800 Third  Avenue,  New York,  NY  10022.

              "CONVERSION PRICE" shall have the meaning ascribed to such term in
         the Certificate of Designation.

              "DISCLOSURE  SCHEDULES"  shall have the  meaning  ascribed to such
         term in Section 3.1.

              "DISCUSSION  TIME" shall have the meaning ascribed to such term in
         Section 3.2 (f).

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              "EFFECTIVE  DATE"  means  the date that the  initial  Registration
         Statement  filed by the  Company  pursuant to the  Registration  Rights
         Agreement is first declared effective by the Commission.

              "EXCHANGE  ACT"  means the  Securities  Exchange  Act of 1934,  as
         amended, and the rules and regulations promulgated thereunder.

              "EXEMPT ISSUANCE" means the issuance of (a) shares of Common Stock
         or options to  employees,  consultants,  officers or  directors  of the
         Company pursuant to any stock or option plan duly adopted by a majority
         of the non-employee members of the Board of Directors of the Company or
         a majority  of the  members of a committee  of  non-employee  directors
         established  for such  purpose,  (b)  securities  upon the  exercise or
         exchange of or conversion of any  Securities  issued  hereunder  and/or
         other  securities  exercisable or exchangeable  for or convertible into
         shares of  Common  Stock  issued  and  outstanding  on the date of this
         Agreement,  provided that such  securities  have not been amended since
         the date of this Agreement to increase the number of such securities or
         to decrease  the  exercise,  exchange or  conversion  price of any such
         securities, (c) securities issued pursuant to acquisitions or strategic
         transactions  approved  by a majority of the  disinterested  directors,
         provided any such  issuance  shall only be to a Person which is, itself
         or through its subsidiaries,  an operating company in, or an individual
         that operates,  a business synergistic with the business of the Company
         and  in  which  the  Company  receives  benefits  in  addition  to  the
         investment of funds,  but shall not include a transaction  in which the
         Company  is issuing  securities  primarily  for the  purpose of raising
         capital  or to  an  entity  whose  primary  business  is  investing  in
         securities,  (d) up to a maximum of 1,500,000 shares of Common Stock or
         Common  Stock  Equivalents  in any  rolling 12 month  period  issued to
         consultants,  vendors,  financial institutions or lessors in connection
         with services  (including the provision of Permitted  Indebtedness  (as
         defined in the Certificate of  Designations))  provided by such Persons
         referred to in this clause (d), but shall not include a transaction  in
         which the Company is issuing  securities  primarily  for the purpose of
         raising capital or to an entity whose primary  business is investing in
         securities, and provided that none of such shares may be registered for
         sale or  resale  by any of such  holders;  (e)  securities  issued as a
         dividend or distribution any of the Securities pursuant to the terms of
         the Transaction  Documents and (f) securities issued in connection with
         any stock  split,  stock  dividend  or  recapitalization  of the Common
         Stock.

              "GAAP"  shall have the  meaning  ascribed  to such term in Section
         3.1(h).

              "INDEBTEDNESS"  shall have the  meaning  ascribed  to such term in
         Section 3.1(aa).

              "INITIAL CONVERSION PRICE" means US$2.32.

              "INTELLECTUAL  PROPERTY RIGHTS" shall have the meaning ascribed to
         such term in Section 3.1(o).

              "LIENS"  means a lien,  charge,  security  interest,  encumbrance,
         right of first refusal, preemptive right or other restriction.

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              "MATERIAL  ADVERSE EFFECT" shall have the meaning assigned to such
         term in Section 3.1(b).

              "MATERIAL PERMITS" shall have the meaning ascribed to such term in
         Section 3.1(m).

              "PERSON" means an individual or corporation,  partnership,  trust,
         incorporated  or  unincorporated  association,  joint venture,  limited
         liability  company,  joint stock  company,  government (or an agency or
         subdivision thereof) or other entity of any kind.

              "SERIES C  PREFERRED  STOCK"  means the up to 5,000  shares of the
         Company's 8% Series C  Convertible  Preferred  Stock  issued  hereunder
         having  the  rights,  preferences  and  privileges  set  forth  in  the
         Certificate of Designation.

              "PRE-NOTICE"  shall  have the  meaning  ascribed  to such  term in
         Section 4.8(b).

              "PROCEEDING"  means  an  action,  claim,  suit,  investigation  or
         proceeding (including,  without limitation, an investigation or partial
         proceeding, such as a deposition), whether commenced or threatened.

              "REGISTRATION  RIGHTS  AGREEMENT"  means the  Registration  Rights
         Agreement, dated the date hereof, among the Company and the Purchasers,
         in the form of EXHIBIT B attached hereto.

              "REGISTRATION  STATEMENT" means a registration  statement  meeting
         the  requirements  set forth in the  Registration  Rights Agreement and
         covering  the  resale of the  Underlying  Shares by each  Purchaser  as
         provided for in the Registration Rights Agreement.

              "REQUIRED  APPROVALS" shall have the meaning ascribed to such term
         in Section 3.1(e).

              "RULE 144" means Rule 144  promulgated by the Commission  pursuant
         to the  Securities  Act, as such Rule may be amended from time to time,
         or any similar rule or regulation  hereafter  adopted by the Commission
         having substantially the same effect as such Rule.

              "SEC  REPORTS"  shall have the  meaning  ascribed  to such term in
         Section 3.1(h).

              "SECURITIES" means the Series C Preferred Stock, the Warrants, the
         Warrant Shares and the Underlying Shares.

              "SECURITIES ACT" means the Securities Act of 1933, as amended, and
         the rules and regulations promulgated thereunder.

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              "SHORT  SALES" shall  include all "short sales" as defined in Rule
         200 of Regulation SHO under the Exchange Act.

              "STATED  VALUE"  means  US$1,000  per share of Series C  Preferred
         Stock.

              "SUBSCRIPTION  AMOUNT"  shall  mean,  as to  each  Purchaser,  the
         aggregate  amount to be paid for the Series C Preferred Stock purchased
         hereunder as specified  below such  Purchaser's  name on the  signature
         page of this Agreement and next to the heading  "Subscription  Amount",
         in United States Dollars and in immediately available funds.

              "SUBSEQUENT  FINANCING"  shall have the  meaning  ascribed to such
         term in Section 4.8(a).

              "SUBSEQUENT  FINANCING  NOTICE" shall have the meaning ascribed to
         such term in Section 4.8(b).

              "SUBSIDIARY"  means any entity in which the Company  holds greater
         than 50% of voting  securities,  each of which is set forth on SCHEDULE
         3.1(A).

              "TRADING DAY" means a day on which the Common Stock is traded on a
         Trading Market.

              "TRADING MARKET" means the following markets or exchanges on which
         the  Common  Stock is  listed  or  quoted  for  trading  on the date in
         question:  the Nasdaq Capital Market, the American Stock Exchange,  the
         New York Stock Exchange or the Nasdaq National Market.

              "TRANSACTION  DOCUMENTS" means this Agreement,  the Certificate of
         Designation, the Warrants and the Registration Rights Agreement.

              "UNDERLYING  SHARES"  means the shares of Common  Stock issued and
         issuable upon conversion of the Series C Preferred Stock, upon exercise
         of the  Warrants and issued and issuable in lieu of the cash payment of
         dividends on the Series C Preferred  Stock in accordance with the terms
         of the Certificate of Designation.

              "VWAP" means,  for any date, the price  determined by the first of
         the  following  clauses that  applies:  (a) if the Common Stock is then
         listed or quoted on a Trading Market, the daily volume weighted average
         price of the Common Stock for such date (or the nearest preceding date)
         on the  Trading  Market on which  the  Common  Stock is then  listed or
         quoted for trading as reported by Bloomberg  Financial L.P. (based on a
         Trading Day from 9:30 a.m.  (New York City time) to 4:02 p.m. (New York
         City time); (b) if the OTC Bulletin Board is not a Trading Market,  the
         volume weighted average price of the Common Stock for such date (or the
         nearest  preceding date) on the OTC Bulletin  Board;  (c) if the Common
         Stock is not then quoted for trading on the OTC  Bulletin  Board and if

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         prices  for the Common  Stock are then  reported  in the "Pink  Sheets"
         published  by Pink  Sheets,  LLC (or a similar  organization  or agency
         succeeding to its functions of reporting  prices),  the most recent bid
         price per share of the Common  Stock so  reported;  or (d) in all other
         cases,  the fair market value of a share of Common Stock as  determined
         by an  independent  appraiser  selected in good faith by the Holder and
         reasonably acceptable to the Company.

              "WARRANTS" means  collectively the Common Stock purchase warrants,
         in the form of EXHIBIT C delivered to the  Purchasers at the Closing in
         accordance  with Section  2.2(a)(iii)  hereof,  which Warrants shall be
         exercisable immediately and have a term of exercise equal to 5 years.

              "WARRANT  SHARES"  means the shares of Common Stock  issuable upon
         exercise of the Warrants.

                                   ARTICLE II
                                PURCHASE AND SALE

         2.1  CLOSING.  On the Closing  Date,  upon the terms and subject to the
conditions  set forth herein,  substantially  concurrent  with the execution and
delivery of this  Agreement by the parties  hereto,  the Company agrees to sell,
and each  Purchaser  agrees to  purchase  in the  aggregate,  severally  and not
jointly,  up to  US$5,000,000  of  shares of Series C  Preferred  Stock  with an
aggregated  Stated  Value  equal to such  Purchaser's  Subscription  Amount  and
Warrants as determined by pursuant to Section  2.2(a).  The aggregate  number of
shares of Series C Preferred  Stock sold  hereunder  shall be up to 5,000.  Each
Purchaser shall deliver to Reitler Brown & Rosenblatt LLC (the "Escrow  Agent"),
as escrow agent, via wire transfer or a certified check of immediately available
funds equal to their  Subscription  Amount and the Company shall deliver to each
Purchaser  their  respective  shares of Series C Preferred Stock and Warrants as
determined  pursuant to Section  2.2(a) and the other items set forth in Section
2.2 issuable at the Closing.  Upon  satisfaction  of the conditions set forth in
Sections  2.2 and 2.3,  the  Closing  shall  occur at the offices of the Company
Counsel, or such other location as the parties shall mutually agree.

         2.2 DELIVERIES.

              (a) On the Closing Date,  the Company shall deliver or cause to be
         delivered to each Purchaser the following:

                  (i) this Agreement duly executed by the Company;

                  (ii) a  certificate  evidencing a number of shares of Series C
              Preferred  Stock  equal to such  Purchaser's  Subscription  Amount
              divided  by the  Stated  Value,  registered  in the  name  of such
              Purchaser;

                  (iii) a Warrant  registered  in the name of such  Purchaser to
              purchase up to a number of shares of Common  Stock equal to 30% of
              such  Purchaser's

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              Subscription  Amount divided by the Initial Conversion Price, with
              an  exercise  price  equal  to  US$3.00  per  share,   subject  to
              adjustment therein;

                  (iv) the  Registration  Rights  Agreement duly executed by the
              Company;

                  (v) a  certificate,  duly  executed  by  its  Chief  Executive
              Officer,  certifying as to the  satisfaction of the conditions set
              forth in Section 2.3(b);

                  (vi) a certificate  executed by its Secretary  having attached
              thereto (i) the Company's Certificate of Incorporation,  certified
              by the  Secretary of State of the State of Delaware,  as in effect
              at the Closing Date,  (ii) the  Company's  By-Laws as in effect at
              the  Closing  Date,  (iii)  resolutions  approved  by the Board of
              Directors of the Company authorizing the transactions contemplated
              hereby,  and (iv) good standing  certificates  with respect to the
              Company from the Secretary of State of the State of Delaware.

              (b) On the Closing Date,  each Purchaser shall deliver or cause to
         be delivered to the Company the following:

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's  Subscription Amount by wire transfer to
              the Escrow  Agent  escrow  account as  specified in writing by the
              Escrow Agent; and

                  (iii) the Registration  Rights Agreement duly executed by such
              Purchaser.

         2.3 CLOSING CONDITIONS.

              (a) The  obligations of the Company  hereunder in connection  with
         the Closing are subject to the following conditions being met:

                  (i) the accuracy in all material respects when made and on the
              Closing  Date  of  the   representations  and  warranties  of  the
              Purchasers   contained  herein,   other  than  representation  and
              warranties  that are  qualified  by "Material  Adverse  Affect" or
              "materiality" which shall be true and correct in all respects;

                  (ii)  all   obligations,   covenants  and  agreements  of  the
              Purchasers  required  to be  performed  at or prior to the Closing
              Date shall have been performed; and

                  (iii) the delivery by the Purchasers of the items set forth in
              Section 2.2(b) of this Agreement.

              (b) The  respective  obligations  of the  Purchasers  hereunder in
         connection  with the Closing are  subject to the  following  conditions
         being met:

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                  (i) the accuracy in all material  respects on the Closing Date
              of the  representations  and  warranties of the Company  contained
              herein,   other  than   representation  and  warranties  that  are
              qualified  by "Material  Adverse  Affect" or  "materiality"  which
              shall be true and correct in all respects;

                  (ii) all obligations,  covenants and agreements of the Company
              required to be  performed  at or prior to the  Closing  Date shall
              have been performed;

                  (iii) the  delivery  by the  Company of the items set forth in
              Section 2.2(a) of this Agreement;

                  (iv) there  shall have been no  Material  Adverse  Effect with
              respect to the Company since the date hereof;

                  (v) the Company shall have obtained all requisite governmental
              approval,   if  any,   required  to  consummate  the  transactions
              contemplated herein; and

                  (vi) from the date hereof to the Closing Date,  trading in the
              Common Stock shall not have been  suspended by the  Commission  or
              the Company's  principal Trading Market (except for any suspension
              of trading of limited  duration  agreed to by the  Company,  which
              suspension shall be terminated prior to the Closing),  and, at any
              time prior to the Closing Date, trading in securities generally as
              reported  by  Bloomberg  Financial  Markets  shall  not have  been
              suspended  or  limited,  or  minimum  prices  shall  not have been
              established  on  securities  whose  trades  are  reported  by such
              service,  or on any Trading Market, nor shall a banking moratorium
              have been  declared  either by the United States or New York State
              authorities nor shall there have occurred any material outbreak or
              escalation  of  hostilities  or other  national  or  international
              calamity  of such  magnitude  in its  effect  on, or any  material
              adverse  change in, any financial  market which,  in each case, in
              the reasonable judgment of each Purchaser,  makes it impracticable
              or  inadvisable  to purchase  the Series C Preferred  Stock at the
              Closing.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  Except as set forth
in the disclosure  schedules delivered to the Purchasers  concurrently  herewith
(the "DISCLOSURE SCHEDULES"),  which Disclosure Schedules shall be deemed a part
hereof and to qualify any  representation  or warranty  otherwise made herein to
the extent of such disclosure,  the Company hereby makes the representations and
warranties set forth below to each Purchaser:

              (a) SUBSIDIARIES.  All of the direct and indirect  Subsidiaries of
         the  Company  are set  forth on  SCHEDULE  3.1(A).  The  Company  owns,
         directly  or  indirectly,  all of the  capital  stock or  other  equity
         interests of each Subsidiary  free and clear of any Liens,  and all the
         issued and  outstanding  shares of capital stock of each Subsidiary are
         validly  issued

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         and are fully paid,  non-assessable  and free of preemptive and similar
         rights to subscribe for or purchase  securities.  If the Company has no
         subsidiaries, then all other references in the Transaction Documents to
         the Subsidiaries or any of them will be disregarded.

              (b)  ORGANIZATION AND  QUALIFICATION.  The Company and each of the
         Subsidiaries  is an entity duly  incorporated  or otherwise  organized,
         validly   existing  and  in  good  standing   under  the  laws  of  the
         jurisdiction of its incorporation or organization (as applicable), with
         the  requisite  power and authority to own and use its  properties  and
         assets and to carry on its business as currently conducted. Neither the
         Company nor any  Subsidiary  is in  violation  or default of any of the
         provisions of its respective  certificate or articles of incorporation,
         bylaws  or  other  organizational  or  charter  documents.  Each of the
         Company and the  Subsidiaries is duly qualified to conduct business and
         is in good  standing as a foreign  corporation  or other entity in each
         jurisdiction in which the nature of the business  conducted or property
         owned  by it makes  such  qualification  necessary,  except  where  the
         failure to be so  qualified  or in good  standing,  as the case may be,
         could not have or  reasonably  be  expected to result in (i) a material
         adverse  effect on the  legality,  validity  or  enforceability  of any
         Transaction Document,  (ii) a material adverse effect on the results of
         operations,  assets,  business,  prospects or condition  (financial  or
         otherwise) of the Company and the  Subsidiaries,  taken as a whole,  or
         (iii) a material adverse effect on the Company's  ability to perform in
         any  material  respect  on a timely  basis  its  obligations  under any
         Transaction  Document (any of (i), (ii) or (iii),  a "MATERIAL  ADVERSE
         EFFECT") and no Proceeding has been instituted in any such jurisdiction
         revoking, limiting or curtailing or seeking to revoke, limit or curtail
         such power and authority or qualification.

              (c)  AUTHORIZATION;  ENFORCEMENT.  The Company  has the  requisite
         corporate  power and  authority  to enter  into and to  consummate  the
         transactions  contemplated  by each of the  Transaction  Documents  and
         otherwise to carry out its obligations  hereunder and  thereunder.  The
         execution  and  delivery of each of the  Transaction  Documents  by the
         Company and the  consummation  by it of the  transactions  contemplated
         hereby and thereby have been duly authorized by all necessary action on
         the part of the  Company  and no  further  action  is  required  by the
         Company,  its board of  directors  or its  stockholders  in  connection
         therewith  other than in connection with the Required  Approvals.  Each
         Transaction  Document has been (or upon  delivery  will have been) duly
         executed by the Company  and,  when  delivered in  accordance  with the
         terms  hereof  and  thereof,  will  constitute  the valid  and  binding
         obligation of the Company enforceable against the Company in accordance
         with its terms  except (i) as limited by general  equitable  principles
         and applicable bankruptcy, insolvency,  reorganization,  moratorium and
         other laws of general application  affecting  enforcement of creditors'
         rights generally,  (ii) as limited by laws relating to the availability
         of specific performance,  injunctive relief or other equitable remedies
         and (iii) insofar as indemnification and contribution provisions may be
         limited by applicable law.

              (d) NO CONFLICTS.  The execution,  delivery and performance of the
         Transaction  Documents  by the  Company  and  the  consummation  by the
         Company of the other  transactions  contemplated  hereby and thereby do
         not and will not:  (i)  conflict  with or

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         violate any provision of the Company's or any Subsidiary's  certificate
         or articles of incorporation, bylaws or other organizational or charter
         documents,  or (ii) conflict with, or constitute a default (or an event
         that  with  notice  or lapse of time or both  would  become a  default)
         under, result in the creation of any Lien upon any of the properties or
         assets of the Company or any  Subsidiary,  or give to others any rights
         of  termination,  amendment,  acceleration  or  cancellation  (with  or
         without  notice,  lapse  of time or both)  of,  any  agreement,  credit
         facility,  debt or other instrument (evidencing a Company or Subsidiary
         debt or otherwise) or other  understanding  to which the Company or any
         Subsidiary  is a party or by which any property or asset of the Company
         or any  Subsidiary  is  bound or  affected,  or  (iii)  subject  to the
         Required Approvals,  conflict with or result in a violation of any law,
         rule,  regulation,   order,  judgment,   injunction,  decree  or  other
         restriction of any court or governmental authority to which the Company
         or a Subsidiary is subject (including federal and state securities laws
         and regulations), or by which any property or asset of the Company or a
         Subsidiary is bound or affected;  except in the case of each of clauses
         (ii) and (iii),  such as could not have or  reasonably  be  expected to
         result in a Material Adverse Effect.

              (e) FILINGS,  CONSENTS AND APPROVALS.  The Company is not required
         to obtain any  consent,  waiver,  authorization  or order of,  give any
         notice to, or make any filing or registration  with, any court or other
         federal,  state, local or other governmental  authority or other Person
         in  connection  with the  execution,  delivery and  performance  by the
         Company  of the  Transaction  Documents,  other  than  (i) the  filings
         required  pursuant to Section 4.6, (ii) the filing with the  Commission
         of the Registration  Statement,  (iii) the notice and/or application(s)
         to each  applicable  Trading  Market for the  issuance  and sale of the
         Securities and the listing of the Underlying Shares for trading thereon
         in the time and manner required thereby,  and (iv) the filing of Form D
         with the  Commission  and such filings as are required to be made under
         applicable   state   securities  laws   (collectively,   the  "REQUIRED
         APPROVALS").

              (f) ISSUANCE OF THE SECURITIES. The Securities are duly authorized
         and,  when  issued  and paid  for in  accordance  with  the  applicable
         Transaction Documents,  will be duly and validly issued, fully paid and
         nonassessable, free and clear of all Liens imposed by the Company other
         than   restrictions  on  transfer   provided  for  in  the  Transaction
         Documents.  The Underlying  Shares,  when issued in accordance with the
         terms of the Transaction Documents,  will be validly issued, fully paid
         and nonassessable,  free and clear of all Liens imposed by the Company.
         The Company  has  reserved  from its duly  authorized  capital  stock a
         number of shares of Common Stock for issuance of the Underlying  Shares
         at least equal to the Actual Minimum on the date hereof.

              (g)  CAPITALIZATION.  The  capitalization of the Company is as set
         forth on SCHEDULE 3.1(G).  Except as set forth in SCHEDULE 3.1(G),  the
         Company has not issued any capital stock since its most recently  filed
         periodic  report under the  Exchange  Act,  other than  pursuant to the
         exercise of employee  stock options  under the  Company's  stock option
         plans, the issuance of shares of Common Stock to employees  pursuant to
         the  Company's  employee  stock  purchase  plan  and  pursuant  to  the
         conversion or exercise of Common Stock  Equivalents  outstanding  as of
         the date of the most recently filed periodic

                                       10
<PAGE>

         report under the Exchange  Act.  Except as a result of the purchase and
         sale of the Securities or as set forth on SCHEDULE 3.1(G), there are no
         outstanding options,  warrants, script rights to subscribe to, calls or
         commitments  of any character  whatsoever  relating to, or  securities,
         rights or obligations  convertible  into or exercisable or exchangeable
         for, or giving any Person any right to  subscribe  for or acquire,  any
         shares of Common Stock, or contracts,  commitments,  understandings  or
         arrangements  by which the Company or any  Subsidiary  is or may become
         bound to issue  additional  shares  of  Common  Stock or  Common  Stock
         Equivalents.  Except as set forth in SCHEDULE 3.1(G),  the issuance and
         sale of the Securities will not obligate the Company to issue shares of
         Common  Stock  or  other  securities  to any  Person  (other  than  the
         Purchasers)  and will not  result in a right of any  holder of  Company
         securities to adjust the exercise, conversion,  exchange or reset price
         under any of such securities.  All of the outstanding shares of capital
         stock of the Company are validly issued,  fully paid and nonassessable,
         have been issued in  compliance  with all federal and state  securities
         laws,  and none of such  outstanding  shares was issued in violation of
         any  preemptive  rights or similar  rights to subscribe for or purchase
         securities.  No further  approval or  authorization of any stockholder,
         the Board of  Directors  of the Company or others is  required  for the
         issuance  and sale of the  Securities.  Except as set forth in SCHEDULE
         3.1(G),  there are no  stockholders  agreements,  voting  agreements or
         other similar agreements with respect to the Company's capital stock to
         which  the  Company  is a party or, to the  knowledge  of the  Company,
         between or among any of the Company's stockholders.

              (h) SEC REPORTS;  FINANCIAL STATEMENTS.  The Company has filed all
         reports,  schedules,  forms, statements and other documents required to
         be filed by it under the Securities Act and the Exchange Act, including
         pursuant to Section 13(a) or 15(d) thereof, for the two years preceding
         the date hereof (or such shorter  period as the Company was required by
         law or  regulation to file such  material)  (the  foregoing  materials,
         including the exhibits thereto and documents  incorporated by reference
         therein, being collectively referred to herein as the "SEC REPORTS") on
         a timely basis or has received a valid extension of such time of filing
         and has filed any such SEC Reports prior to the  expiration of any such
         extension.  As of their  respective  dates, the SEC Reports complied in
         all material  respects with the  requirements of the Securities Act and
         the  Exchange  Act and the  rules  and  regulations  of the  Commission
         promulgated  thereunder,  as  applicable,  and none of the SEC Reports,
         when  filed,  contained  any untrue  statement  of a  material  fact or
         omitted  to state a  material  fact  required  to be stated  therein or
         necessary in order to make the statements  therein, in the light of the
         circumstances under which they were made, not misleading. The financial
         statements  of the Company  included  in the SEC Reports  comply in all
         material respects with applicable accounting requirements and the rules
         and  regulations of the Commission with respect thereto as in effect at
         the time of filing.  Such  financial  statements  have been prepared in
         accordance with United States generally accepted accounting  principles
         applied on a  consistent  basis during the periods  involved  ("GAAP"),
         except as may be otherwise  specified in such  financial  statements or
         the notes thereto and except that  unaudited  financial  statements may
         not contain all footnotes  required by GAAP,  and fairly present in all
         material  respects  the  financial  position  of the  Company  and  its
         consolidated  subsidiaries  as of and for  the  dates  thereof  and the
         results  of  operations  and cash  flows for the  periods  then

                                       11
<PAGE>

         ended,  subject,  in the  case  of  unaudited  statements,  to  normal,
         immaterial, year-end audit adjustments.

              (i)  MATERIAL   CHANGES;   UNDISCLOSED   EVENTS,   LIABILITIES  OR
         DEVELOPMENTS. Since the date of the latest audited financial statements
         included within the SEC Reports,  except as specifically disclosed in a
         subsequent SEC Report or as set forth in SCHEDULE 3.1(I) there has been
         no  event,  occurrence  or  development  that  has  had or  that  could
         reasonably be expected to result in a Material Adverse Effect, (ii) the
         Company has not  incurred any  liabilities  (contingent  or  otherwise)
         other than (A) trade  payables  and  accrued  expenses  incurred in the
         ordinary  course of  business  consistent  with past  practice  and (B)
         liabilities  not required to be reflected  in the  Company's  financial
         statements  pursuant  to GAAP or  disclosed  in  filings  made with the
         Commission, (iii) the Company has not altered its method of accounting,
         (iv) the Company has not declared or made any dividend or  distribution
         of cash or other property to its stockholders or purchased, redeemed or
         made any  agreements  to  purchase  or redeem any shares of its capital
         stock and (v) the Company has not issued any equity  securities  to any
         officer,  director or Affiliate,  except  pursuant to existing  Company
         stock option plans.

              (j)  LITIGATION.  There is no  action,  suit,  inquiry,  notice of
         violation,  proceeding or investigation pending or, to the knowledge of
         the  Company,   threatened  against  or  affecting  the  Company,   any
         Subsidiary  or any of  their  respective  properties  before  or by any
         court, arbitrator,  governmental or administrative agency or regulatory
         authority (federal, state, county, local or foreign) (collectively,  an
         "ACTION")  which (i)  adversely  affects or  challenges  the  legality,
         validity or enforceability  of any of the Transaction  Documents or the
         Securities or (ii) could, if there were an unfavorable  decision,  have
         or  reasonably  be  expected  to result in a Material  Adverse  Effect.
         Neither  the Company nor any  Subsidiary,  nor any  director or officer
         thereof,  is or has been the subject of any Action involving a claim of
         violation of or liability  under federal or state  securities laws or a
         claim of  breach of  fiduciary  duty.  There  has not been,  and to the
         knowledge of the  Company,  there is not pending or  contemplated,  any
         investigation by the Commission involving the Company or any current or
         former  director  or officer of the  Company.  The  Commission  has not
         issued any stop order or other order  suspending the  effectiveness  of
         any registration statement filed by the Company or any Subsidiary under
         the Exchange Act or the Securities Act.

              (k) LABOR RELATIONS.  No labor dispute exists or, to the knowledge
         of the Company, is imminent with respect to any of the employees of the
         Company  which  could  reasonably  be  expected to result in a Material
         Adverse Effect. None of the Company's or its Subsidiaries' employees is
         a member of a union that relates to such employee's  relationship  with
         the Company,  and neither the Company or any of its  Subsidiaries  is a
         party to a  collective  bargaining  agreement,  and the Company and its
         Subsidiaries  believe that their relationships with their employees are
         good. No executive officer, to the knowledge of the Company,  is, or is
         now expected to be, in violation of any material term of any employment
         contract,   confidentiality,   disclosure  or  proprietary  information
         agreement  or  non-competition  agreement,  or any  other  contract  or
         agreement or any restrictive covenant,  and the continued employment of
         each such executive  officer does

                                       12
<PAGE>

         not  subject the Company or any of its  Subsidiaries  to any  liability
         with  respect to any of the  foregoing  matters.  The  Company  and its
         Subsidiaries are in compliance with all U.S. federal,  state, local and
         foreign laws and  regulations  relating to  employment  and  employment
         practices,  terms and  conditions  of  employment  and wages and hours,
         except where the failure to be in compliance could not, individually or
         in the  aggregate,  reasonably  be expected to have a Material  Adverse
         Effect.

              (l)  COMPLIANCE.  Neither the Company nor any Subsidiary (i) is in
         default  under or in violation  of (and no event has occurred  that has
         not been  waived  that,  with  notice  or lapse of time or both,  would
         result in a default by the Company or any  Subsidiary  under),  nor has
         the Company or any Subsidiary  received notice of a claim that it is in
         default  under or that it is in violation  of, any  indenture,  loan or
         credit  agreement or any other agreement or instrument to which it is a
         party or by which it or any of its  properties is bound (whether or not
         such default or violation has been waived), (ii) is in violation of any
         order of any court, arbitrator or governmental body, or (iii) is or has
         been  in  violation  of  any  statute,   rule  or   regulation  of  any
         governmental  authority,  including  without  limitation  all  foreign,
         federal,  state and local laws  applicable to its business and all such
         laws that affect the environment, except in each case as could not have
         or reasonably be expected to result in a Material Adverse Effect.

              (m) REGULATORY PERMITS.  The Company and the Subsidiaries  possess
         all certificates,  authorizations and permits issued by the appropriate
         federal,  state, local or foreign regulatory  authorities  necessary to
         conduct  their  respective  businesses as described in the SEC Reports,
         except  where the  failure to possess  such  permits  could not have or
         reasonably  be  expected  to  result  in  a  Material   Adverse  Effect
         ("MATERIAL  PERMITS"),  and neither the Company nor any  Subsidiary has
         received  any  notice of  proceedings  relating  to the  revocation  or
         modification of any Material Permit.

              (n) TITLE TO ASSETS.  Except as set forth on SCHEDULE 3.1(N),  the
         Company  and the  Subsidiaries  have good and  marketable  title in fee
         simple  to all real  property  owned by them  that is  material  to the
         business of the Company and the  Subsidiaries  and good and  marketable
         title in all  personal  property  owned by them that is material to the
         business  of the Company  and the  Subsidiaries,  in each case free and
         clear of all Liens,  except for Liens as do not  materially  affect the
         value of such  property and do not  materially  interfere  with the use
         made and  proposed  to be made of such  property by the Company and the
         Subsidiaries  and  Liens for the  payment  of  federal,  state or other
         taxes,  the  payment  of which is  neither  delinquent  nor  subject to
         penalties.  Any real  property and  facilities  held under lease by the
         Company and the Subsidiaries  are held by them under valid,  subsisting
         and enforceable  leases with which the Company and the Subsidiaries are
         in compliance.

              (o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries have,
         or have rights to use, all patents,  patent  applications,  trademarks,
         trademark  applications,  service  marks,  trade names,  trade secrets,
         inventions, copyrights, licenses and other intellectual property rights
         and similar  rights  necessary or material for use in  connection  with
         their  respective  businesses as described in the SEC Reports and which
         the  failure  to  so  have

                                       13
<PAGE>

         could have a Material Adverse Effect  (collectively,  the "INTELLECTUAL
         PROPERTY  RIGHTS").   To  the  knowledge  of  the  Company,   all  such
         Intellectual  Property  Rights are enforceable and there is no existing
         infringement  by  another  Person of any of the  Intellectual  Property
         Rights. The Company and its Subsidiaries have taken reasonable security
         measures to protect the  secrecy,  confidentiality  and value of all of
         their intellectual properties, except where failure to do so could not,
         individually  or in the  aggregate,  reasonably  be  expected to have a
         Material Adverse Effect. None of the Company's  registered,  or applied
         for,  Intellectual  Property  Rights have expired or terminated or have
         been  abandoned,  or are expected to expire or terminate or expected to
         be abandoned within three years of the date of this Agreement. There is
         no  claim,  action  or  proceeding  being  made or  brought,  or to the
         knowledge of the Company,  being threatened  against the Company or its
         Subsidiaries regarding its Intellectual Property Rights, except for any
         claim,  action or proceeding which, if determined  against the Company,
         would not have a Material Adverse Effect.

              (p)  INSURANCE.  The Company and the  Subsidiaries  are insured by
         insurers of recognized financial responsibility against such losses and
         risks  and  in  such  amounts  as  are  prudent  and  customary  in the
         businesses  in which the  Company  and the  Subsidiaries  are  engaged,
         including,  but  not  limited  to,  directors  and  officers  insurance
         coverage as set forth in SCHEDULE  3.1(P).  Neither the Company nor any
         Subsidiary  has any reason to believe that it will not be able to renew
         its existing insurance coverage as and when such coverage expires or to
         obtain  similar  coverage from similar  insurers as may be necessary to
         continue its business without a significant increase in cost.

              (q)  TRANSACTIONS  WITH  AFFILIATES AND  EMPLOYEES.  Except as set
         forth in the SEC  Reports,  none of the  officers or  directors  of the
         Company and, to the knowledge of the Company,  none of the employees of
         the Company is presently a party to any transaction with the Company or
         any  Subsidiary  (other than for  services as  employees,  officers and
         directors),  including  any  contract,  agreement or other  arrangement
         providing for the furnishing of services to or by, providing for rental
         of real  or  personal  property  to or  from,  or  otherwise  requiring
         payments to or from any officer,  director or such  employee or, to the
         knowledge of the Company, any 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 US$60,000 per
         annum  other  than (i) for  payment  of salary or  consulting  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.

              (r)  CERTAIN  FEES.  Except as set forth on  SCHEDULE  3.1(R),  no
         brokerage or finder's fees or commissions are or will be payable by the
         Company  to  any  broker,  financial  advisor  or  consultant,  finder,
         placement agent,  investment banker,  bank or other Person with respect
         to the  transactions  contemplated  by the Transaction  Documents.  The
         Purchasers  shall have no  obligation  with respect to any fees or with
         respect to any claims made by or on behalf of other Persons for fees of
         a type  contemplated in this Section that may be due in connection with
         the transactions contemplated by the Transaction Documents.

                                       14
<PAGE>

              (s) PRIVATE  PLACEMENT.  Assuming the  accuracy of the  Purchasers
         representations   and   warranties   set  forth  in  Section   3.2,  no
         registration  under the  Securities  Act is required  for the offer and
         sale of the Securities by the Company to the Purchasers as contemplated
         hereby.  The issuance  and sale of the  Securities  hereunder  does not
         contravene the rules and regulations of the Trading Market.

              (t)  INVESTMENT  COMPANY.  The  Company  is  not,  and  is  not an
         Affiliate  of,  and  immediately  after  receipt  of  payment  for  the
         Securities,  will not be or be an Affiliate of, an "investment company"
         within the meaning of the  Investment  Company Act of 1940, as amended.
         The Company  shall conduct its business in a manner so that it will not
         become subject to the Investment Company Act.

              (u) LISTING AND  MAINTENANCE  REQUIREMENTS.  The Company's  Common
         Stock is registered  pursuant to Section 12(b) or 12(g) of the Exchange
         Act,  and the Company has taken no action  designed to, or which to its
         knowledge is likely to have the effect of, terminating the registration
         of the Common Stock under the Exchange Act nor has the Company received
         any notification that the Commission is contemplating  terminating such
         registration.

              (v) NO INTEGRATED OFFERING. Other than the April Closing, assuming
         the accuracy of the  Purchasers'  representations  and  warranties  set
         forth in Section 3.2,  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 or solicited  any
         offers to buy any security,  under  circumstances that would cause this
         offering of the Securities to be integrated with prior offerings by the
         Company  for  purposes  of  the   Securities   Act  or  any  applicable
         shareholder  approval  provisions of any Trading Market on which any of
         the securities of the Company are listed or designated.

              (w) TAX STATUS. Except for matters that would not, individually or
         in the  aggregate,  have or  reasonably  be  expected  to  result  in a
         Material Adverse Effect,  the Company and each Subsidiary has filed all
         necessary  federal,  state and foreign income and franchise tax returns
         and has paid or accrued all taxes shown as due thereon, and the Company
         has no  knowledge  of a tax  deficiency  which  has  been  asserted  or
         threatened against the Company or any Subsidiary.

              (x) NO GENERAL  SOLICITATION.  Neither  the Company nor any person
         acting  on  behalf  of the  Company  has  offered  or  sold  any of the
         Securities by any form of general  solicitation or general advertising.
         The Company has offered the  Securities for sale only to the Purchasers
         and certain other "accredited investors" within the meaning of Rule 501
         under the Securities Act.

              (y) FORM S-3 ELIGIBILITY.  The Company is eligible to register the
         resale of the Underlying Shares for resale by the Purchaser on Form S-3
         promulgated under the Securities Act.

         3.2  REPRESENTATIONS  AND WARRANTIES OF THE PURCHASERS.  Each Purchaser
hereby, for

                                       15
<PAGE>

itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company as follows:

              (a) ORGANIZATION; AUTHORITY. Such Purchaser, if an entity, is duly
         organized,  validly existing and in good standing under the laws of the
         jurisdiction  of  its  organization  with  full  right,   corporate  or
         partnership  power and  authority to enter into and to  consummate  the
         transactions contemplated by the Transaction Documents and otherwise to
         carry out its obligations hereunder and thereunder.  Such Purchaser, if
         an  individual,  has legal  capacity  and  authority  to enter into and
         consummate the transactions  contemplated by the Transaction  Documents
         and  otherwise  to  carry  out  his or her  obligations  hereunder  and
         thereunder.  The execution,  delivery and performance by such Purchaser
         of the  transactions  contemplated  by this  Agreement  have  been duly
         authorized by all necessary  corporate or similar action on the part of
         such Purchaser.  Each  Transaction  Document to which it is a party has
         been  duly  executed  by such  Purchaser,  and when  delivered  by such
         Purchaser in accordance  with the terms  hereof,  will  constitute  the
         valid and legally  binding  obligation of such  Purchaser,  enforceable
         against  it in  accordance  with its  terms,  except  (i) as limited by
         general  equitable  principles and applicable  bankruptcy,  insolvency,
         reorganization,  moratorium  and  other  laws  of  general  application
         affecting  enforcement of creditors' rights generally,  (ii) as limited
         by  laws  relating  to  the   availability  of  specific   performance,
         injunctive  relief or other  equitable  remedies  and (iii)  insofar as
         indemnification   and   contribution   provisions  may  be  limited  by
         applicable law.

              (b) OWN ACCOUNT.  Such Purchaser  understands  that the Securities
         are  "restricted  securities"  and have not been  registered  under the
         Securities Act or any applicable  state securities law and is acquiring
         the  Securities as principal for its own account and not with a view to
         or for distributing or reselling such Securities or any part thereof in
         violation of the Securities Act or any applicable state securities law,
         has no present  intention of  distributing  any of such  Securities  in
         violation of the Securities Act or any applicable  state securities law
         and has no direct or indirect  arrangement or  understandings  with any
         other  persons to  distribute  or regarding  the  distribution  of such
         Securities  (this   representation   and  warranty  not  limiting  such
         Purchaser's  right to sell the Securities  pursuant to the Registration
         Statement or otherwise in compliance with applicable  federal and state
         securities  laws) in violation of the  Securities Act or any applicable
         state  securities  law.  Such  Purchaser  is acquiring  the  Securities
         hereunder in the ordinary course of its business.

              (c) PURCHASER  STATUS.  At the time such Purchaser was offered the
         Securities,  it was,  and at the date hereof it is, and on each date on
         which it converts  any shares of Series C Preferred  Stock or exercises
         any  Warrants,  it will be  either:  (i) an  "accredited  investor"  as
         defined in Rule 501(a)(1),  (a)(2),  (a)(3), (a)(7) or (a)(8) under the
         Securities Act or (ii) a "qualified  institutional buyer" as defined in
         Rule 144A(a) under the  Securities  Act. Such Purchaser is not required
         to be  registered as a  broker-dealer  under Section 15 of the Exchange
         Act.

                                       16
<PAGE>

              (d) EXPERIENCE OF SUCH PURCHASER. Such Purchaser,  either alone or
         together with its representatives,  has such knowledge,  sophistication
         and experience in business and financial matters so as to be capable of
         evaluating  the merits and risks of the  prospective  investment in the
         Securities,  and  has  so  evaluated  the  merits  and  risks  of  such
         investment.  Such  Purchaser  is able to bear the  economic  risk of an
         investment  in the  Securities  and,  at the present  time,  is able to
         afford a complete  loss of such  investment.  Such  Purchaser  has been
         given the  opportunity  to ask questions of, and receive  answers from,
         the Company  concerning  the terms and  conditions  of the offer of the
         Securities and other matters pertaining to such investment.

              (e)  GENERAL  SOLICITATION.  To the  Purchaser's  knowledge,  such
         Purchaser  is  not  purchasing  the  Securities  as  a  result  of  any
         advertisement,  article,  notice or other  communication  regarding the
         Securities  published in any  newspaper,  magazine or similar  media or
         broadcast  over  television or radio or presented at any seminar or any
         other general solicitation or general advertisement.

              (f) SHORT  SALES  AND  CONFIDENTIALITY  PRIOR TO THE DATE  HEREOF.
         Other than the transaction  contemplated hereunder,  such Purchaser has
         not directly or  indirectly,  nor has any Person acting on behalf of or
         pursuant  to  any  understanding  with  such  Purchaser,  executed  any
         disposition,  including  Short Sales,  in the securities of the Company
         during the period  commencing  from the time that such Purchaser  first
         received a term sheet  (written  or oral) from the Company or any other
         Person   setting   forth  the  material   terms  of  the   transactions
         contemplated hereunder until such time as the transactions contemplated
         by this Agreement are publicly disclosed by the Company as described in
         Section 4.6 ("DISCUSSION TIME").  Notwithstanding the foregoing, in the
         case of a Purchaser that is a multi-managed  investment vehicle whereby
         separate   portfolio   managers  manage   separate   portions  of  such
         Purchaser's  assets and the portfolio managers have no direct knowledge
         of the  investment  decisions made by the portfolio  managers  managing
         other portions of such Purchaser's assets, the representation set forth
         above shall only apply with respect to the portion of assets managed by
         the portfolio manager that made the investment decision to purchase the
         Securities covered by this Agreement. Other than to other Persons party
         to this Agreement, such Purchaser has maintained the confidentiality of
         all  disclosures  made  to  it  in  connection  with  this  transaction
         (including the existence and terms of this transaction).

              (g)  MANIPULATION  OF PRICE PRIOR TO CLOSING.  Such  Purchaser has
         not,  and to its  knowledge no one acting on its behalf has, (i) taken,
         directly or  indirectly,  any action  designed to cause or to result in
         the  manipulation  of the price of any  security  of the  Company at or
         prior to the Closing Date, (ii) sold, bid for,  purchased,  or paid any
         compensation for soliciting  purchases of, any security of the Company,
         or (iii)  paid or  agreed to pay to any  Person  any  compensation  for
         soliciting another to purchase any securities of the Company.

                                       17
<PAGE>

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

         4.1 TRANSFER RESTRICTIONS.

              (a) The  Securities  may only be  disposed of in  compliance  with
         state and federal  securities  laws. In connection with any transfer of
         Securities other than pursuant to an effective  registration  statement
         or Rule 144, to the  Company or to an  affiliate  of a Purchaser  or in
         connection with a pledge as contemplated in Section 4.1(b), the Company
         may require the transferor thereof to provide to the Company an opinion
         of counsel selected by the transferor and reasonably  acceptable to the
         Company,  the form and  substance of which  opinion shall be reasonably
         satisfactory to the Company,  to the effect that such transfer does not
         require   registration  of  such   transferred   Securities  under  the
         Securities Act. As a condition of transfer,  any such transferee  shall
         agree in writing to be bound by the terms of this  Agreement  and shall
         have  the  rights  of  a  Purchaser   under  this   Agreement  and  the
         Registration Rights Agreement.

              (b) The Purchasers agree to the imprinting, so long as is required
         by this Section  4.1(b),  of a legend on any of the  Securities  in the
         following form:

              [NEITHER]  THESE  SECURITIES  [NOR THE SECURITIES INTO WHICH THESE
              SECURITIES ARE [EXERCISABLE]  [CONVERTIBLE]]  HAVE BEEN REGISTERED
              WITH THE  SECURITIES  AND EXCHANGE  COMMISSION  OR THE  SECURITIES
              COMMISSION  OF ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
              REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED (THE
              "SECURITIES  ACT"), AND,  ACCORDINGLY,  MAY NOT BE OFFERED OR SOLD
              EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION  STATEMENT UNDER THE
              SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
              TRANSACTION NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS OF THE
              SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE  STATE SECURITIES
              LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE  TRANSFEROR
              TO SUCH  EFFECT,  THE  SUBSTANCE  OF  WHICH  SHALL  BE  REASONABLY
              ACCEPTABLE TO THE COMPANY.  THESE  SECURITIES  AND THE  SECURITIES
              ISSUABLE UPON [EXERCISE]  [CONVERSION] OF THESE  SECURITIES MAY BE
              PLEDGED IN  CONNECTION  WITH A BONA FIDE  MARGIN  ACCOUNT OR OTHER
              LOAN SECURED BY SUCH SECURITIES.

              (c)  Certificates  evidencing  the  Underlying  Shares  shall  not
         contain any legend  (including  the legend set forth in Section  4.1(b)
         hereof): (i) while a registration statement (including the Registration
         Statement)  covering the resale of such security is effective under the
         Securities  Act, or (ii) following any sale of such  Underlying  Shares
         pursuant to Rule 144, or (iii) if such  Underlying  Shares are eligible
         for sale  under Rule  144(k),  or (iv) if such  legend is not  required
         under applicable requirements of the Securities Act (including judicial
         interpretations   and  pronouncements   issued  by  the  staff  of  the

                                       18
<PAGE>

         Commission).  The  Company  shall  cause its  counsel  to issue a legal
         opinion to the Company's  transfer  agent  promptly after the Effective
         Date if required by the Company's  transfer agent to effect the removal
         of the legend  hereunder.  If all or any  shares of Series C  Preferred
         Stock or any  portion  of a  Warrant  is  converted  or  exercised  (as
         applicable) at a time when there is an effective registration statement
         to cover the resale of the  Underlying  Shares,  or if such  Underlying
         Shares may be sold under Rule 144(k) or if such legend is not otherwise
         required under applicable requirements of the Securities Act (including
         judicial  interpretations and pronouncements issued by the staff of the
         Commission)  then such  Underlying  Shares  shall be issued free of all
         legends.  The Company  agrees that  following the Effective  Date or at
         such time as such  legend  is no longer  required  under  this  Section
         4.1(c),  it will,  following the delivery by a Purchaser to the Company
         or  the  Company's   transfer  agent  of  a  certificate   representing
         Underlying  Shares,  as applicable,  issued with a restrictive  legend,
         deliver  or cause  to be  delivered  to such  Purchaser  a  certificate
         representing  such shares that is free from all  restrictive  and other
         legends.  The Company may not make any  notation on its records or give
         instructions  to any  transfer  agent of the Company  that  enlarge the
         restrictions  on transfer set forth in this Section.  Certificates  for
         Underlying   Shares  subject  to  legend  removal  hereunder  shall  be
         transmitted  by the transfer  agent of the Company to the Purchasers by
         crediting  the  account  of  the  Purchaser's  prime  broker  with  the
         Depository Trust Company System.

              (d) Each  Purchaser,  severally  and not  jointly  with the  other
         Purchasers,  agrees  that the  removal of the  restrictive  legend from
         certificates  representing  Securities as set forth in this Section 4.1
         is predicated upon the Company's  reliance that the Purchaser will sell
         any Securities pursuant to either the registration  requirements of the
         Securities   Act,   including  any   applicable   prospectus   delivery
         requirements,  or an exemption  therefrom,  and that if Securities  are
         sold  pursuant  to a  Registration  Statement,  they  will  be  sold in
         compliance with the plan of distribution set forth therein.

         4.2 FURNISHING OF INFORMATION.

              (a)  As  long  as  any  Purchaser  owns  Securities,  the  Company
         covenants to timely file (or obtain  extensions in respect  thereof and
         file within the  applicable  grace  period) all reports  required to be
         filed by the  Company  after the date hereof  pursuant to the  Exchange
         Act. As long as any Purchaser  owns  Securities,  if the Company is not
         required to file reports  pursuant to the Exchange Act, it will prepare
         and furnish to the Purchasers and make publicly available in accordance
         with Rule 144(c) such  information as is required for the Purchasers to
         sell the Securities under Rule 144. The Company further  covenants that
         it will  take such  further  action as any  holder  of  Securities  may
         reasonably  request, to the extent required from time to time to enable
         such  Person to sell such  Securities  without  registration  under the
         Securities  Act within the  requirements  of the exemption  provided by
         Rule 144.

              (b) The Company  agrees to send the  following  to each  Purchaser
         during the  Reporting  Period (as  defined in the  Registration  Rights
         Agreement),  unless the  following  are filed with the SEC  through the
         EDGAR system and are  available to the public

                                       19
<PAGE>

              through the EGDAR  system  within one (1)  Business  Day after the
              filing  thereof  with  the  SEC,  (i) a  copy  of its  Annual  and
              Quarterly  Reports  on Form  10-K,  10-KSB,  10-Q or  10-QSB,  any
              interim  report  or  any  consolidated   balance  sheets,   income
              statements,  stockholders'  equity  statements  and/or  cash  flow
              statements for any period other than annual,  any Current  Reports
              on Form 8-K and any registration  statements (other than Form S-8)
              or  amendments  filed  pursuant  to the 1933  Act,  (ii) all press
              releases  issued by the  Company or any of its  Subsidiaries,  and
              (iii) copies of any notices and other  information  made available
              or given to the stockholders of the Company generally.

         4.3  INTEGRATION.  Other  than as  related  to the April  Closing,  the
Company  shall not sell,  offer for sale or solicit  offers to buy or  otherwise
negotiate in respect of any security (as defined in Section 2 of the  Securities
Act) that  would be  integrated  with the offer or sale of the  Securities  in a
manner that would require the registration  under the Securities Act of the sale
of the Securities to the  Purchasers or that would be integrated  with the offer
or sale of the  Securities  for  purposes  of the rules and  regulations  of any
Trading Market.

         4.4 CONVERSION AND EXERCISE PROCEDURES.  The form of Notice of Exercise
included in the  Warrants and the form of Notice of  Conversion  included in the
Certificate of Designation set forth the totality of the procedures  required of
the  Purchasers  in order to  exercise  the  Warrants  or  convert  the Series C
Preferred   Stock.  No  additional   legal  opinion  or  other   information  or
instructions  shall be required of the  Purchasers to exercise their Warrants or
convert their Series C Preferred Stock. The Company shall honor exercises of the
Warrants  and  conversions  of the Series C  Preferred  Stock and shall  deliver
Underlying Shares in accordance with the terms,  conditions and time periods set
forth in the Transaction Documents.

         4.5 SECURITIES LAWS  DISCLOSURE;  PUBLICITY.  The Company shall issue a
press release  describing  the material terms of the  transactions  contemplated
hereby,  and a Current  Report on Form 8-K  disclosing the material terms of the
transactions  contemplated  hereby,  and shall attach the Transaction  Documents
thereto.  The Company  shall provide the  Purchasers  with a draft of such press
release prior to filing and provide an opportunity for comments.  Each Purchaser
shall consult with the Company prior to issuing any press  releases with respect
to the transactions  contemplated  hereby, and no Purchaser shall issue any such
press  release or  otherwise  make any such public  statement  without the prior
consent of the Company,  which  consent  shall not  unreasonably  be withheld or
delayed,  except  if such  disclosure  is  required  by law,  in which  case the
disclosing  party shall  promptly  provide the other party with prior  notice of
such public  statement or  communication.  Notwithstanding  the  foregoing,  the
Company shall not publicly  disclose the name of any  Purchaser,  or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market,  without the prior written consent of such Purchaser,  except
(i)  as  required  by  federal   securities  law  in  connection  with  (A)  any
registration statement contemplated by the Registration Rights Agreement and (B)
the filing of final Transaction  Documents  (including  signature pages thereto)
with the Commission and (ii) to the extent such disclosure is required by law or
Trading  Market  regulations,  in  which  case the  Company  shall  provide  the
Purchasers with prior notice of such  disclosure  permitted under this subclause
(ii).

                                       20
<PAGE>

         4.6 USE OF PROCEEDS.  The Company  shall use the net proceeds  from the
sale of the Securities  hereunder for working  capital  purposes and not for the
satisfaction  of any portion of the Company's  debt (other than payment of trade
payables in the ordinary course of the Company's  business and prior practices),
to redeem Common Stock or Common Stock  Equivalents or to settle any outstanding
litigation.

         4.7 RESERVATION AND LISTING OF SECURITIES.

              (a) The Company shall maintain a reserve from its duly  authorized
         shares  of  Common  Stock  for  issuance  pursuant  to the  Transaction
         Documents in such amount as may be required to fulfill its  obligations
         in full under the Transaction Documents.

              (b) If, on any date,  the number of  authorized  but unissued (and
         otherwise  unreserved)  shares of Common Stock is less than 110% of (i)
         the Actual  Minimum  on such  date,  minus (ii) the number of shares of
         Common Stock previously  issued pursuant to the Transaction  Documents,
         then the Board of  Directors  of the  Company  shall  use  commercially
         reasonable  efforts to amend the Company's  certificate  or articles of
         incorporation  to increase the number of authorized but unissued shares
         of Common Stock to at least the Actual  Minimum at such time (minus the
         number of shares of Common  Stock  previously  issued  pursuant  to the
         Transaction Documents),  as soon as possible and in any event not later
         than the 75th day after such date;  provided  that the Company will not
         be required at any time to authorize a number of shares of Common Stock
         greater  than the maximum  remaining  number of shares of Common  Stock
         that  could  possibly  be  issued  after  such  time  pursuant  to  the
         Transaction Documents.

         4.8 PARTICIPATION IN FUTURE FINANCING.

              (a)  From the  date  hereof  until  the  date  that  the  Series C
         Preferred  Stock is no longer  outstanding,  upon any  issuance  by the
         Company  or any of its  Subsidiaries  of Common  Stock or Common  Stock
         Equivalents (a "SUBSEQUENT  FINANCING"),  each Purchaser shall have the
         right to  purchase  its PRO RATA  share of the  Common  Stock or Common
         Stock Equivalents on the same terms,  conditions and price provided for
         in the Subsequent  Financing.  Each Purchaser's PRO RATA share is equal
         to the ratio of (a) the number of shares of the Company's  Common Stock
         (including   all  shares  of  Common  Stock  issued  or  issuable  upon
         conversion  of the Series C Preferred  Stock)  which such  Purchaser is
         deemed to hold  immediately  prior to the issuance of such Common Stock
         or Common  Stock  Equivalents  to (b) the total number of shares of the
         Company's  outstanding  Common  Stock  (including  all shares of Common
         Stock  issued or  issuable  upon  conversion  of the Series C Preferred
         Stock)  immediately prior to the issuance of the Common Stock or Common
         Stock Equivalents.

              (b) At least 5 Trading Days prior to the closing of the Subsequent
         Financing, the Company shall deliver to each Purchaser a written notice
         of its intention to effect a Subsequent Financing ("PRE-NOTICE"), which
         Pre-Notice  shall ask such  Purchaser if it wants to review the details
         of such financing  (such  additional  notice,  a "SUBSEQUENT  FINANCING
         NOTICE").  Upon the request of a Purchaser,  and only upon a request by
         such

                                       21
<PAGE>

         Purchaser,  for  a  Subsequent  Financing  Notice,  the  Company  shall
         promptly, but no later than 2 Trading Days after such request,  deliver
         a  Subsequent  Financing  Notice  to  such  Purchaser.  The  Subsequent
         Financing Notice shall describe in reasonable detail the proposed terms
         of such  Subsequent  Financing,  the amount of proceeds  intended to be
         raised  thereunder,  the  Person or  Persons  through or with whom such
         Subsequent Financing is proposed to be effected,  and attached to which
         shall  be a  term  sheet  or  similar  document  relating  thereto.  If
         requested by a Purchaser,  the Company shall provide a copy of the then
         current drafts of the documents relating to such Subsequent  Financing.
         This  Section  4.8(b)  shall not  restrict  or limit the ability of the
         Company to provide information regarding a Subsequent Financing if such
         delivery is in connection with the  solicitation of consents or waivers
         relating to such Subsequent Financing.

              (c) Any  Purchaser  desiring  to  participate  in such  Subsequent
         Financing must provide  written notice to the Company by not later than
         5:30 p.m.  (New York City time) on the 5th Trading Day after all of the
         Purchasers  have received the Pre-Notice  that the Purchaser is willing
         to  purchase  its PRO RATA  share of the Common  Stock or Common  Stock
         Equivalents  for the price and upon the terms and conditions  specified
         in the Subsequent  Financing  Notice and stating the quantity of Common
         Stock  or  Common  Stock  Equivalents  to be  purchased,  and  that the
         Purchaser has such funds ready,  willing, and available for investment.
         Such written  notice to the Company  shall be a binding  obligation  of
         such Purchaser to participate in such  Subsequent  Financing upon terms
         substantially  similar to those set forth in the  Subsequent  Financing
         Notice.  If the Company  receives no notice from a Purchaser as of such
         5th Trading Day,  such  Purchaser  shall be deemed to have notified the
         Company that it does not elect to participate.

              (d)  The  Company  may  effect  the  remaining   portion  of  such
         Subsequent Financing on the terms and with the Persons set forth in the
         Subsequent Financing Notice.

              (e)  The  Company  must  provide  the  Purchasers  with  a  second
         Subsequent  Financing  Notice,  and the Purchasers  will again have the
         right of  participation  set forth  above in this  Section  4.8, if the
         Subsequent Financing subject to the initial Subsequent Financing Notice
         is not  consummated  for any  reason  on the  terms  set  forth in such
         Subsequent  Financing  Notice  within 60 Trading Days after the date of
         the initial Subsequent Financing Notice.

              (f)  Notwithstanding  the  foregoing,  this  Section 4.8 shall not
         apply in respect of an Exempt Issuance.

         4.9 EQUAL TREATMENT OF PURCHASERS. No consideration shall be offered or
paid to any  Person  to amend or  consent  to a waiver  or  modification  of any
provision of any of the Transaction  Documents unless the same  consideration is
also  offered  to  all  of  the  parties  to  the  Transaction  Documents.   For
clarification  purposes,  this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated  separately by each Purchaser,  and
is intended for the Company to treat the  Purchasers as a class and shall not in
any way be  construed

                                       22
<PAGE>

as the Purchasers  acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise.

         4.10  SHORT  SALES  AND  CONFIDENTIALITY  AFTER THE DATE  HEREOF.  Each
Purchaser  severally and not jointly with the other  Purchasers  covenants  that
neither  it  nor  any  Affiliate  acting  on  its  behalf  or  pursuant  to  any
understanding  with it will execute any Short Sales during the period commencing
at the Discussion Time and ending on the public announcement of the transactions
contemplated  hereby in accordance with Section 4.6. Each  Purchaser,  severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions  contemplated  by this  Agreement  are  publicly  disclosed  by the
Company  as  described  in  Section  4.6,  such   Purchaser  will  maintain  the
confidentiality   of  all  disclosures  made  to  it  in  connection  with  this
transaction  (including  the  existence  and  terms of this  transaction).  Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser,  that the  Commission  currently  takes the position that coverage of
short  sales of  shares  of the  Common  Stock  "against  the box"  prior to the
Effective Date of the Registration  Statement with the Securities is a violation
of Section 5 of the  Securities  Act, as set forth in Item 65, Section A, of the
Manual  of  Publicly  Available  Telephone  Interpretations,  dated  July  1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.

         4.11 FORM D; BLUE SKY FILINGS. The Company agrees to timely file a Form
D with respect to the Securities as required under Regulation D and to provide a
copy  thereof,  promptly upon request of any  Purchaser.  The Company shall take
such action as the Company shall  reasonably  determine is necessary in order to
obtain  an  exemption  for,  or to  qualify  the  Securities  for,  sale  to the
Purchasers at the Closing under applicable  securities or "Blue Sky" laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser.

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

         4.13  VARIABLE RATE  SECURITIES.  For so long as any Series C Preferred
Stock or Warrants  remain  outstanding,  the  Company  shall not, in any manner,
issue or sell any  rights,  warrants  or options to  subscribe  for or  purchase
Common  Stock or directly or  indirectly  convertible  into or  exchangeable  or
exercisable for Common Stock at a price which varies or may vary with the market
price of the Common Stock, including by way of one or more reset(s) to any fixed
price unless the  conversion,  exchange or exercise  price of any such  security
cannot be less than the then  applicable  Conversion  Price (as  defined  in the
Certificate  of  Designation)  with  respect to the Common  Stock into which any
Warrant is exercisable.

         4.14 ACKNOWLEDGEMENT OF PURCHASERS.  Each Purchaser hereby acknowledges
and agrees that the dividends  accruing upon the Series C Preferred Stock issued
and sold under this Agreement shall commence  accruing upon the Closing Date and
not  as  of  the  Original  Issue  Date  (as  defined  in  the   Certificate  of
Designations).

                                       23
<PAGE>

         4.15  LIMITED  WAIVER  OF  CERTAIN  SERIES  C  REDEMPTION  RIGHT.  Each
Purchaser  hereby  agrees  that it shall not  exercise  the right,  pursuant  to
Section  9(b) of the  Certificate  of  Designations,  to require  the Company to
redeem  any or all  shares of Series C  Preferred  Stock  purchased  under  this
Agreement  upon the  occurrence  of the  Triggering  Event  (as  defined  in the
Certificate of  Designations)  set forth in clause 9(a)(i) of the Certificate of
Designation  if such  Triggering  Event shall occur prior to the 275th day after
the Closing Date;  provided that if such Triggering  Event remains uncured as of
the 275th day after the  Closing  Date,  each  Purchaser  shall  have the rights
provided under Article 9 of the Certificate of Designations.

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1 TERMINATION.  This Agreement may be terminated by any Purchaser, as
to such Purchaser's obligations hereunder only and without any effect whatsoever
on the  obligations  between the Company  and the other  Purchasers,  by written
notice to the other  parties,  if the  Closing  has not been  consummated  on or
before July 31, 2007;  PROVIDED,  HOWEVER,  that no such termination will affect
the right of any party to sue for any breach by the other party (or parties).

         5.2 FEES AND  EXPENSES.  Each party shall pay the fees and  expenses of
its advisers,  counsel,  accountants  and other  experts,  if any, and all other
expenses  incurred  by such  party  incident  to the  negotiation,  preparation,
execution, delivery and performance of this Agreement. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers.

         5.3 ENTIRE  AGREEMENT.  The  Transaction  Documents,  together with the
exhibits and schedules thereto,  contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

         5.4 NOTICES.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c) the 2nd Trading  Day  following  the date of mailing,  if sent by U.S.
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

         5.5 AMENDMENTS;  WAIVERS. No provision of this Agreement may be waived,
modified,  supplemented or amended except in a written instrument signed, in the
case of an  amendment,  by the Company and each  Purchaser  or, in the case of a
waiver,  by the party against whom  enforcement of any such waived  provision is
sought.  No waiver of any default  with

                                       24
<PAGE>

respect to any provision,  condition or  requirement of this Agreement  shall be
deemed to be a  continuing  waiver in the  future or a waiver of any  subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right  hereunder in any
manner impair the exercise of any such right.

         5.6  HEADINGS.  The headings  herein are for  convenience  only, do not
constitute a part of this  Agreement  and shall not be deemed to limit or affect
any of the provisions hereof.

         5.7  SUCCESSORS AND ASSIGNS.  This Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger).  Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities in the minimum Stated
Value of  US$500,000,  provided such  transferee  agrees in writing to be bound,
with respect to the transferred Securities, by the provisions of the Transaction
Documents that apply to the "Purchasers"  (provided,  however, a Purchaser shall
not knowingly assign or transfer any of its Series C Preferred Stock or Warrants
to an entity whose primary  business  operations are in direct  competition with
the primary  business  operations  of the  Company,  without  the prior  written
consent of the Company).

         5.8 NO  THIRD-PARTY  BENEFICIARIES.  This Agreement is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person.

         5.9 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and
any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, shareholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein  (including  with respect to the  enforcement  of any of the  Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient  venue for such proceeding.  Each party hereby irrevocably
waives  personal  service of process and consents to process being served in any
such suit,  action or  proceeding  by mailing a copy thereof 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. The parties hereby waive
all  rights to a trial by jury.  If either  party  shall  commence  an action or
proceeding to enforce any  provisions  of the  Transaction

                                       25
<PAGE>

Documents,  then the  prevailing  party in such  action or  proceeding  shall be
reimbursed by the other party for its reasonable attorneys' fees and other costs
and expenses  incurred with the  investigation,  preparation  and prosecution of
such action or proceeding.

         5.10 SURVIVAL.  The  representations,  warranties,  covenants and other
agreements contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Securities,  as applicable for the applicable statue of
limitations.

         5.11  EXECUTION.  This  Agreement  may  be  executed  in  two  or  more
counterparts,  all of which when taken  together shall be considered one and the
same agreement and shall become effective when  counterparts have been signed by
each party and  delivered  to the other  party,  it being  understood  that both
parties need not sign the same  counterpart.  In the event that any signature is
delivered by facsimile  transmission  or by e-mail  delivery of a ".pdf"  format
data file,  such  signature  shall create a valid and binding  obligation of the
party  executing (or on whose behalf such  signature is executed)  with the same
force and effect as if such facsimile or ".pdf"  signature page were an original
thereof.

         5.12 SEVERABILITY.  If any term, provision,  covenant or restriction of
this  Agreement  is held by a court of  competent  jurisdiction  to be  invalid,
illegal,  void  or  unenforceable,  the  remainder  of  the  terms,  provisions,
covenants  and  restrictions  set forth  herein  shall  remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto  shall use their  commercially  reasonable  efforts to find and employ an
alternative  means to achieve the same or substantially  the same result as that
contemplated  by such term,  provision,  covenant or  restriction.  It is hereby
stipulated  and declared to be the intention of the parties that they would have
executed the remaining terms,  provisions,  covenants and  restrictions  without
including any of such that may be hereafter declared invalid,  illegal,  void or
unenforceable.

         5.13 RESCISSION AND WITHDRAWAL RIGHT.  Notwithstanding  anything to the
contrary  contained in (and without  limiting any similar  provisions of) any of
the other  Transaction  Documents,  whenever  any  Purchaser  exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company,  any relevant notice,  demand or election in
whole or in part without  prejudice to its future actions and rights;  PROVIDED,
HOWEVER,  in the case of a rescission  of a conversion of the Series C Preferred
Stock or exercise of a Warrant,  the  Purchaser  shall be required to return any
shares of Common  Stock  subject to any such  rescinded  conversion  or exercise
notice.

         5.14  REPLACEMENT  OF  SECURITIES.  If any  certificate  or  instrument
evidencing any Securities is mutilated,  lost, stolen or destroyed,  the Company
shall  issue or cause to be issued in  exchange  and  substitution  for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor,  a new  certificate or  instrument,  but only upon receipt of evidence
reasonably  satisfactory to the Company of such loss, theft or destruction.  The
applicant for a new  certificate or instrument  under such  circumstances  shall
also  pay any  reasonable  third-party  costs  (including  customary  indemnity)
associated with the issuance of such replacement Securities.

                                       26
<PAGE>

         5.15  REMEDIES.  In addition to being  entitled to exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchasers  and the Company will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations described and hereby agrees to waive and not to assert in any action
for specific performance of any such obligation the defense that a remedy at law
would be adequate.

         5.16 PAYMENT SET ASIDE.  To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such  enforcement  or exercise or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside,  recovered
from, disgorged by or are required to be refunded,  repaid or otherwise restored
to the  Company,  a  trustee,  receiver  or  any  other  person  under  any  law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

         5.17  INDEPENDENT  NATURE OF PURCHASERS'  OBLIGATIONS  AND RIGHTS.  The
obligations of each Purchaser under any Transaction Document are several and not
joint with the  obligations of any other  Purchaser,  and no Purchaser  shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under any Transaction Document.  Nothing contained herein
or in any  other  Transaction  Document,  and no action  taken by any  Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an  association,  a joint  venture  or any  other  kind of  entity,  or create a
presumption  that the  Purchasers are in any way acting in concert or as a group
with  respect  to  such  obligations  or the  transactions  contemplated  by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation,  the rights arising out of
this Agreement or out of the other  Transaction  Documents,  and it shall not be
necessary  for any other  Purchaser to be joined as an  additional  party in any
proceeding  for such purpose.  Each  Purchaser has been  represented  by its own
separate  legal  counsel in their  review  and  negotiation  of the  Transaction
Documents.

         5.18  CONSTRUCTION.  The parties  agree that each of them and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            [SIGNATURE PAGE FOLLOWS]

                                       27
<PAGE>

         IN WITNESS  WHEREOF,  the parties  hereto  have caused this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

ELITE PHARMACEUTICALS, INC.                  ADDRESS FOR NOTICE:
                                             -------------------

By:_______________________________________   Elite Pharmaceuticals, Inc.
     Name: Bernard J. Berk                   165 Ludlow Avenue
     Title: Chief Executive Officer          Northvale, New Jersey 07647
                                             Attention: Chief Executive Officer

With a copy to (which shall not constitute notice):

Reitler Brown & Rosenblatt LLC
800 Third Avenue
21st Floor
New York, New York 10022
Attention: Scott H. Rosenblatt

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       28
<PAGE>

        [PURCHASER SIGNATURE PAGES TO ELI SECURITIES PURCHASE AGREEMENT]

         IN  WITNESS  WHEREOF,  the  undersigned  have  caused  this  Securities
Purchase   Agreement  to  be  duly  executed  by  their  respective   authorized
signatories as of the date first indicated above.

Name of Purchaser: __________________________

SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

Email Address of Purchaser: ________________________________

Fax Number of Purchaser: ______________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount:
Shares of Series C Preferred Stock:
Warrant Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       29
<PAGE>

                               DISCLOSURE SCHEDULE

         This Disclosure  Schedule (this  "DISCLOSURE  SCHEDULE") is arranged in
schedules  corresponding to the numbered and lettered sections and subparagraphs
contained in the Securities Purchase Agreement (the "AGREEMENT").

         No  representation  or warranty  contained  in the  Agreement  shall be
deemed to be inaccurate if the actual  situation is explicitly  disclosed in any
section  in this  Disclosure  Schedule  and would  reasonably  relate to another
section of this  Disclosure  Schedule where the context of such  disclosure in a
section reasonably relates to such other section.

                                       30
<PAGE>

                                 SCHEDULE 3.1(a)

                                  SUBSIDIARIES

Elan Laboratories, Inc., a Delaware corporation

Elan Research, Inc., a Delaware corporation

                                       31
<PAGE>

                                 SCHEDULE 3.1(g)

                                 CAPITALIZATION

21,335,846 shares of Common Stock outstanding.

9,032 shares of Series B Preferred Stock outstanding, currently convertible into
4,014,222 shares of Common Stock.

14,768 shares of Series C Preferred  Stock  outstanding,  currently  convertible
into 6,365,517 shares of Common Stock.

3,776,500 options to purchase shares of Common Stock,  under the Company's stock
option plan.

2,805,000 options to purchase shares of Common Stock outside the Company's stock
option plan.

8,682,445  warrants to purchase shares of Common Stock outstanding with exercise
prices ranging from $1.50 to $4.20, subject to applicable vesting.

Contingent  with  the  closing  of the  transactions  contemplated  hereby,  the
expiration date of the warrants purchased by the holders of the Company's Series
B Preferred  Stock was extended from the fifth  anniversary of the grant date to
the sixth anniversary of the grant date of such warrants.

Commitment to issue options  during the term of a current  employment  agreement
upon the following  milestones  (which  commitments  terminate at the end of the
initial term of such employment agreement):

(a)      50,000  options  upon the  closing of each  product  license or product
         sales  transaction  in which the Company  receives an  aggregate  of at
         least $5,000,000 in net cash;

(b)      10,000 options upon filing with FDA of either an  abbreviated  new drug
         application (an "ANDA") or new drug application (an "NDA"); and

(c)      40,000  options  upon  approval  by the  FDA of any  ANDA  or NDA for a
         product not previously approved by the FDA.

Commitment to issue options  during the term of a current  employment  agreement
upon the following  milestones  (which  commitments  terminate at the end of the
initial term of such employment agreement):

(a)      125,000 options upon commencement of Phase III clinical trials relating
         to the Company first non-generic  opioid drug, to the extent previously
         granted options have

                                       32
<PAGE>

         not vested upon the occurrence of such event;

(b)      125,000 options upon commencement of Phase III clinical trials relating
         to the Company  second first  non-generic  opioid  drug,  to the extent
         previously  granted options have not vested upon the occurrence of such
         event;

(c)      50,000 options upon the closing of each exclusive  product  license for
         the US market or product sales transaction,  excluding certain specific
         non-generic opioid drugs;

(d)      10,000 options upon filing with FDA of either an  abbreviated  new drug
         application (an "ANDA") or new drug application (an "NDA");

(e)      40,000  options  upon  approval  by the  FDA of any  ANDA  or NDA for a
         product not previously approved by the FDA;

(f)      25,000 options upon filing of an application for a new US patent; and

(g)      25,000 upon  granting of a new US patent by the US Patent and Trademark
         Office.

Commitment to issue options  during the term of a current  employment  agreement
upon the following  milestones  (which  commitments  terminate at the end of the
initial term of such employment agreement):

(a)      125,000 options upon commencement of Phase III clinical trials relating
         to the Company first non-generic  opioid drug, to the extent previously
         granted options have not vested upon the occurrence of such event;

(b)      125,000 options upon commencement of Phase III clinical trials relating
         to the Company  second first  non-generic  opioid  drug,  to the extent
         previously  granted options have not vested upon the occurrence of such
         event;

(c)      50,000 options upon the closing of each exclusive  product  license for
         the US market or product sales transaction,  excluding certain specific
         non-generic opioid drugs;

(d)      10,000 options upon filing with FDA of either an  abbreviated  new drug
         application (an "ANDA") or new drug application (an "NDA");

(e)      40,000  options  upon  approval  by the  FDA of any  ANDA  or NDA for a
         product not previously approved by the FDA;

(f)      25,000 options upon filing of an application for a new US patent; and

(g)      25,000 upon  granting of a new US patent by the US Patent and Trademark
         Office.

                                       33
<PAGE>

VOTING AGREEMENTS:

Pursuant  to  Section  3.1 of the  Strategic  Alliance  Agreement,  dated  as of
December 6, 2006, between the Company,  Veerappan S. Subramanian ("VS"), and VGS
Pharma,  LLC, so long as the Company holders at least forty percent (40%) of the
outstanding capital stock of Novel Laboratories, Inc., the Company has agreed to
use its best efforts to include VS in each slate of directors to be presented by
the Company's board of directors to the Company's  stockholders of Elite at each
annual  and  special  stockholder  meeting  for the  election  of the  Company's
directors.

So long as Midsummer Investment,  Ltd.  ("MIDSUMMER") and Bushido Capital Master
Fund, LP ("BUSHIDO" and  collectively  with Midsummer,  the "PRINCIPAL  SERIES B
INVESTORS"),  continue to hold as least 25% of the  Company's  then  outstanding
shares of the Series B Preferred Stock, in the event that the Company intends to
take an  action,  pursuant  to Section 4 or  Section  10 of the  Certificate  of
Designation of the Series B Preferred Stock, as amended, which would require the
affirmative  vote or written  consent of the Holders of at least 70% of the then
outstanding  shares  of the  Series B and  Series C  Preferred  Stock,  then the
Company shall not take such action unless both Principal Series B Investors vote
in favor of, or consent to, such action.

                                       34
<PAGE>

                                 SCHEDULE 3.1(i)

        MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABILITIES OR DEVELOPMENTS

                                       35
<PAGE>

                                 SCHEDULE 3.1(n)

                                 TITLE TO ASSETS

         New Jersey Economic Development  Authority  ("NJEDA"),  and The Bank of
New York, as Indenture  Trustee have security  interests in the following assets
of Elite Pharmaceuticals, Inc. and Elite Laboratories, Inc.:

         o    Elite  Pharmaceuticals,  Inc.: The premises  located at 150 Ludlow
              Avenue, New Jersey and all fixtures and equipment acquired,  or to
              be acquired, with the proceeds of the bond issued by NJEDA; and

         o    Elite Laboratories, Inc.: Certain laboratory equipment acquired by
              Elite Laboratories,  Inc., with the proceeds of the bond issued by
              NJEDA.

                                       36
<PAGE>

                                 SCHEDULE 3.1(p)

                                    INSURANCE

The Company has Director's and Officer's  liability  coverage of $5,000,000 from
The Hartford Insurance.

                                       37
<PAGE>

                                 SCHEDULE 3.1(q)

                   TRANSACTIONS WITH AFFILIATES AND EMPLOYEES

                                       38
<PAGE>

                                 SCHEDULE 3.1(r)

                                  CERTAIN FEES

Oppenheimer & Co., Inc., the placement agent, is entitled to:

         (i)  Cash  commissions  equal to 7.0% of the gross  proceeds  resulting
              from the sale of the Series C Preferred Stock in the offering; and

         (ii) A five year  non-callable  warrant  to  purchase  shares of Common
              Stock  equal to 3.0% of the number of shares of Common  Stock into
              which the Series C  Preferred  Stock sold in the  offering  may be
              converted.

         Additionally,   Oppenheimer  &  Co.,  Inc.,  may  engage  one  or  more
sub-placement agents.

                                       39
<PAGE>

                                                                       EXHIBIT A

                           CERTIFICATE OF DESIGNATIONS
                                 (see attached)

                                       40
<PAGE>

                                                                       EXHIBIT B

                          REGISTRATION RIGHTS AGREEMENT
                                 (see attached)

                                       41
<PAGE>

                                                                       EXHIBIT C

                                 FORM OF WARRANT
                                 (see attached)

                                       42EXHIBIT 10.2

                          REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (this  "AGREEMENT")  is made and
entered into as of July 17, 2007 among Elite  Pharmaceuticals,  Inc., a Delaware
corporation (the "COMPANY"),  and the several purchasers  signatory hereto (each
such purchaser is a "PURCHASER" and collectively, the "PURCHASERS").

               This  Agreement  is  made  pursuant  to the  Securities  Purchase
Agreement,  dated as of the date hereof  between the Company and each  Purchaser
(the "PURCHASE AGREEMENT").

               The Company and each Purchaser hereby agrees as follows:

        1. DEFINITIONS.  Capitalized terms used and not otherwise defined herein
that are defined in the Purchase  Agreement  shall have the meanings  given such
terms in the Purchase Agreement. As used in this Agreement,  the following terms
shall have the following meanings:

                  "ADVICE" shall have the meaning set forth in Section 6(c).

                  "EFFECTIVENESS  DATE"  means,  with  respect  to  the  Initial
         Registration  Statement  required  to be  filed  hereunder,  the  120th
         calendar day following  the date hereof (the 150th  calendar day in the
         case of a "full review" by the  Commission of the Initial  Registration
         Statement),  and with respect to any additional Registration Statements
         which may be required  pursuant to Section 3(c),  the 60th calendar day
         following  the date on which an  additional  Registration  Statement is
         required to be filed  hereunder;  PROVIDED,  HOWEVER,  in the event the
         Company  is  notified  by  the   Commission   that  one  of  the  above
         Registration Statements will not be reviewed or is no longer subject to
         further  review  and  comments,  the  Effectiveness  Date  as  to  such
         Registration  Statement  shall be the tenth  Trading Day  following the
         date on which the  Company is so  notified  if such date  precedes  the
         dates required above.

                  "EFFECTIVENESS  PERIOD"  shall have the  meaning  set forth in
         Section 2(a).

                  "EVENT" shall have the meaning set forth in Section 2(b).

                  "EVENT DATE" shall have the meaning set forth in Section 2(b).

                  "FILING DATE" means, with respect to the Initial  Registration
         Statement required hereunder,  the 30th calendar day following the date
         hereof and,  with  respect to any  additional  Registration  Statements
         which may be required  pursuant to Section 3(c), the 30th day following
         the date on which the Company is  permitted by the SEC Guidance to file
         such  additional  Registration  Statement  related  to the  Registrable
         Securities.

                  "HOLDER" or "HOLDERS" means the holder or holders, as the case
         may be, from time to time of Registrable Securities.

<PAGE>

                  "INDEMNIFIED  PARTY"  shall  have  the  meaning  set  forth in
         Section 5(c).

                  "INDEMNIFYING  PARTY"  shall  have the  meaning  set  forth in
         Section 5(c).

                  "INITIAL    REGISTRATION    STATEMENT"   means   the   initial
         Registration Statement filed pursuant to this Agreement.

                  "LOSSES" shall have the meaning set forth in Section 5(a).

                  "PLAN OF  DISTRIBUTION"  shall have the  meaning  set forth in
         Section 2(a).

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

                   "REGISTRABLE  SECURITIES"  means, as of the date in question,
         (i) all of the shares of Common Stock issuable upon  conversion in full
         of the  shares of  Preferred  Stock,  (ii) all  shares of Common  Stock
         issuable as  dividends  on the  Preferred  Stock  assuming all dividend
         payments are made in shares of Common Stock and the Preferred  Stock is
         held for at least 5 years,  (iii) all shares of Common  Stock  issuable
         upon the occurrence of a Non-Cash Redemption Triggering Event, (iv) all
         Warrant Shares,  (v) any additional  shares issuable in connection with
         any  anti-dilution  provisions  associated with the Preferred Stock and
         Warrants (in each case,  without  giving effect to any  limitations  on
         conversion  set forth in the  Certificate of Designation or limitations
         on exercise set forth in the Warrant) and (vi) any securities issued or
         issuable  upon  any  stock  split,   dividend  or  other  distribution,
         recapitalization  or  similar  event  with  respect  to the  foregoing.
         Notwithstanding the foregoing, Registrable Securities shall not include
         any  securities  (i)  eligible to be sold into the public  market under
         Rule 144(k)  promulgated  under the  Securities  Act (or any  successor
         rule),  (ii) sold by a person to the public  pursuant to Rule 144 under
         the Securities Act (or any successor  rule),  (iii) sold by a person to
         the  public  pursuant  to  a  registration   statement   including  the
         registration  statement filed pursuant to the Agreement or (iv) sold in
         a transaction  in which the  registration  rights of this Agreement are
         not transferred.

                   "REGISTRATION  STATEMENT" means the  registration  statements
         required  to  be  filed  hereunder  and  any  additional   registration
         statements  contemplated by Section 3(c),  including (in each case) the
         Prospectus,  amendments and supplements to such registration  statement
         or  Prospectus,  including  pre-  and  post-effective  amendments,  all
         exhibits thereto, and all material  incorporated by reference or deemed
         to be incorporated by reference in such registration statement.

                                       2
<PAGE>

                  "RULE  415"  means  Rule  415  promulgated  by the  Commission
         pursuant to the  Securities  Act, as such Rule may be amended from time
         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission  having  substantially  the same  purpose and effect as such
         Rule.

                  "RULE  424"  means  Rule  424  promulgated  by the  Commission
         pursuant to the  Securities  Act, as such Rule may be amended from time
         to time,  or any similar rule or  regulation  hereafter  adopted by the
         Commission  having  substantially  the same  purpose and effect as such
         Rule.

                  "SELLING SHAREHOLDER QUESTIONNAIRE" shall have the meaning set
         forth in Section 3(a).

                  "SEC  GUIDANCE"  means (i) any  publicly-available  written or
         oral  guidance,  comments,  requirements  or requests of the Commission
         staff and (ii) the Securities Act.

         2.       SHELF REGISTRATION.

                  (a) On or prior to each Filing Date, the Company shall prepare
         and file with the Commission a "Shelf" Registration  Statement covering
         the  resale  of  all or  such  portion  as  permitted  by SEC  Guidance
         (provided that, the Company shall use commercially  reasonable  efforts
         to advocate  with the  Commission  for the  registration  of all of the
         Registrable  Securities) of the  Registrable  Securities on such Filing
         Date  that  are  not  then  registered  on  an  effective  Registration
         Statement for an offering to be made on a continuous  basis pursuant to
         Rule 415. The  Registration  Statement  shall be on Form S-3 (except if
         the Company is not then eligible to register for resale the Registrable
         Securities  on Form S-3,  in which case such  registration  shall be on
         another  appropriate  form in  accordance  herewith)  and shall contain
         (unless  otherwise  directed  by at least a majority in interest of the
         Holders)  substantially  the "PLAN OF DISTRIBUTION"  attached hereto as
         ANNEX A (as  modified by the Company and  acceptable  to the Holders as
         necessary to the respond to comments from the  Commission).  Subject to
         the terms of this  Agreement,  the Company  shall use its  commercially
         reasonable  efforts to cause a  Registration  Statement  to be declared
         effective  under the  Securities  Act as promptly as possible after the
         filing thereof, but in any event prior to the applicable  Effectiveness
         Date, and shall use its  commercially  reasonable  efforts to keep such
         Registration  Statement continuously effective under the Securities Act
         until all Registrable Securities covered by such Registration Statement
         have been sold, or may be sold without volume restrictions  pursuant to
         Rule 144(k),  as determined by the counsel to the Company pursuant to a
         written opinion letter to such effect,  addressed and acceptable to the
         Company's  transfer agent and the affected Holders (the  "EFFECTIVENESS
         PERIOD").  The Company shall notify the Holders via facsimile or e-mail
         of the effectiveness of a Registration Statement within one Trading Day
         of  the  time  that  the  Company  confirms   effectiveness   with  the
         Commission,  which shall be the date requested for  effectiveness  of a
         Registration Statement.  The Company shall file a final Prospectus with
         the Commission as required by Rule 424.

                                       3
<PAGE>

                  (b) Notwithstanding any other provision of this Agreement,  if
         any SEC Guidance sets forth a limitation  of the number of  Registrable
         Securities to be registered on a particular Registration Statement (and
         notwithstanding that that Company used commercially  reasonable efforts
         to  advocate  with  the  Commission  for the  registration  of all or a
         greater number of Registrable Securities), unless otherwise directed in
         writing  by a Holder as to its  Registrable  Securities,  the number of
         Registrable  Securities to be registered on such Registration Statement
         will first be reduced by Registrable  Securities represented by Warrant
         Shares  (applied,   in  the  case  that  some  Warrant  Shares  may  be
         registered,  to the  Holders  on a pro rata  basis  based on the  total
         number of  unregistered  Warrant Shares held by such Holders on a fully
         diluted  basis),  and second by Registrable  Securities  represented by
         shares of Common  Stock  into  which  Series C  Preferred  Stock may be
         converted  ("SHARES")  (applied,   in  the  case  that  Shares  may  be
         registered,  to the  Holders  on a pro rata  basis  based on the  total
         number of unregistered Shares held by such Holders).

                  (c) If: (i) the Initial Registration Statement is not filed on
         or prior to its Filing Date, or (ii) as to, in the aggregate  among all
         Holders on a pro-rata  basis  based on their  purchase of the shares of
         Series C Preferred Stock pursuant to the Purchase Agreement,  7,000,000
         of the  Registrable  Securities,  subject to adjustment  for reverse or
         forward  stock  splits  and   reclassifications  of  the  Common  Stock
         (collectively,   the  "INITIAL  SHARES"),   a  Registration   Statement
         registering  for  resale  all of the  Initial  Shares  is not  declared
         effective by the  Commission by the  Effectiveness  Date of the Initial
         Registration  Statement,  or (iii) all of the  Registrable  Securities,
         other than the Initial Shares are not registered for resale pursuant to
         one or more effective Registration Statements on or before February 28,
         2008, (any such failure or breach being referred to as an "EVENT",  and
         the date on which  such  Event  occurs,  the "EVENT  DATE"),  then,  in
         addition to any other  rights the Holders may have  hereunder  or under
         applicable law, on each such Event Date and on each monthly anniversary
         of each such Event Date (if the  applicable  Event  shall not have been
         cured by such date) until the  applicable  Event is cured,  the Company
         shall  pay to each  Holder an amount  in cash,  as  partial  liquidated
         damages and not as a penalty,  equal to 1.5% of the aggregate  purchase
         price paid by such Holder  pursuant to the Purchase  Agreement  for any
         unregistered   Registrable   Securities   then  held  by  such   Holder
         (calculated as if all convertible securities had been fully converted).
         The  parties  agree  that  (1) the  Company  shall  not be  liable  for
         liquidated damages under this Agreement with respect to any Warrants or
         Warrant  Shares,  (2) in no event  shall  the  Company  be  liable  for
         liquidated  damages  under  this  Agreement  in  excess  of 1.5% of the
         aggregate  Subscription  Amount of the Holders in any 30-day period and
         (3) the maximum aggregate  liquidated damages payable to a Holder under
         this Agreement shall be 15% of the aggregate  Subscription  Amount paid
         by such Holder pursuant to the Purchase Agreement.

         3. REGISTRATION PROCEDURES.

               In  connection  with  the  Company's   registration   obligations
hereunder, the Company shall:

                                       4
<PAGE>

                  (a) Not less than five  Trading  Days  prior to the  filing of
         each Registration  Statement and not less than one Trading Day prior to
         the filing of any related  Prospectus  or any  amendment or  supplement
         thereto (including any document that would be incorporated or deemed to
         be incorporated  therein by reference),  the Company shall, (i) furnish
         to each Holder that has requested,  in writing, such documents prior to
         the Filing  Date,  copies of all such  documents  proposed to be filed,
         which  documents  (other  than  those  incorporated  or  deemed  to  be
         incorporated  by  reference)  will be  subject  to the  review  of such
         Holders,  and (ii)  cause  its  officers  and  directors,  counsel  and
         independent  certified public  accountants to respond to such inquiries
         as shall be necessary,  in the reasonable opinion of respective counsel
         to each Holder to conduct a reasonable investigation within the meaning
         of the  Securities  Act.  The  Company  shall  not file a  Registration
         Statement  or any such  Prospectus  or any  amendments  or  supplements
         thereto which the Holders of a majority of the  Registrable  Securities
         shall  reasonably  object in good faith,  provided  that the Company is
         notified of such  objection in writing no later than three Trading Days
         after the  Holders  have  been so  furnished  copies of a  Registration
         Statement  or one Trading Day after the Holders  have been so furnished
         copies of any related Prospectus or amendments or supplements  thereto.
         Each Holder agrees to furnish to the Company a completed  Questionnaire
         in  the  form  attached  to  this  Agreement  as  Annex  B (a  "SELLING
         SHAREHOLDER  QUESTIONNAIRE")  not less than three Trading Days prior to
         the Filing Date or by the end of the third  Trading Day  following  the
         date on which such Holder  receives draft  materials in accordance with
         this Section.

                  (b) (i) Prepare and file with the Commission such  amendments,
         including  post-effective  amendments,  to a Registration Statement and
         the Prospectus used in connection therewith as may be necessary to keep
         a Registration  Statement  continuously  effective as to the applicable
         Registrable  Securities  for the  Effectiveness  Period and prepare and
         file with the Commission  such  additional  Registration  Statements in
         order to  register  for  resale  under  the  Securities  Act all of the
         Registrable  Securities  (subject to the permitted blackout periods set
         forth in Section 2(b)); (ii) cause the related Prospectus to be amended
         or supplemented by any required  Prospectus  supplement (subject to the
         terms of this Agreement), and as so supplemented or amended to be filed
         pursuant to Rule 424; (iii) respond as promptly as reasonably  possible
         to  any  comments  received  from  the  Commission  with  respect  to a
         Registration  Statement  or any  amendment  thereto  and as promptly as
         reasonably   possible   provide  true  and   complete   copies  of  all
         correspondence  from and to the  Commission  relating to a Registration
         Statement  to all  Holders  who  request  such  information  in writing
         (provided that the Company may excise any information contained therein
         which would constitute material non-public information as to any Holder
         which has not executed a  confidentiality  agreement with the Company);
         and (iv) comply in all material  respects  with the  provisions  of the
         Securities Act and the Exchange Act with respect to the  disposition of
         all Registrable  Securities covered by a Registration  Statement during
         the  applicable  period  in  accordance  (subject  to the terms of this
         Agreement)  with the  intended  methods of  disposition  by the Holders
         thereof set forth in such  Registration  Statement  as so amended or in
         such Prospectus as so supplemented.

                                       5
<PAGE>

                  (c)  If  during  the  Effectiveness   Period,  the  number  of
         Registrable Securities at any time exceeds 100% of the number of shares
         of Common Stock then registered in a Registration  Statement,  then the
         Company shall file as soon as reasonably  practicable,  but in any case
         prior  to  the  applicable  Filing  Date,  an  additional  Registration
         Statement  covering  the  resale  by the  Holders  of not less than the
         number of such Registrable Securities.

                  (d) Notify the Holders of  Registrable  Securities  to be sold
         (which notice shall,  pursuant to clauses (iii) through (vi) hereof, be
         accompanied  by an  instruction  to suspend  the use of the  Prospectus
         until the  requisite  changes have been made) as promptly as reasonably
         possible  (and, in the case of (i)(A) below,  not less than one Trading
         Day prior to such filing) and (if requested by any such Person) confirm
         such notice in writing no later than one Trading Day  following the day
         (i)(A) when a Prospectus or any Prospectus supplement or post-effective
         amendment to a Registration Statement is proposed to be filed; (B) when
         the Commission notifies the Company whether there will be a "review" of
         such  Registration  Statement and whenever the  Commission  comments in
         writing  on such  Registration  Statement;  and (C) with  respect  to a
         Registration Statement or any post-effective  amendment,  when the same
         has become  effective;  (ii) of any  request by the  Commission  or any
         other  Federal  or  state  governmental  authority  for  amendments  or
         supplements to a Registration Statement or Prospectus or for additional
         information;  (iii) of the  issuance  by the  Commission  or any  other
         federal or state  governmental  authority of any stop order  suspending
         the  effectiveness of a Registration  Statement  covering any or all of
         the  Registrable  Securities or the initiation of any  Proceedings  for
         that  purpose;  (iv) of the receipt by the Company of any  notification
         with respect to the suspension of the  qualification  or exemption from
         qualification  of any of the  Registrable  Securities  for  sale in any
         jurisdiction,  or the  initiation or  threatening of any Proceeding for
         such  purpose;  (v) of the  occurrence  of any event or passage of time
         that  makes  the  financial   statements  included  in  a  Registration
         Statement  ineligible for inclusion  therein or any statement made in a
         Registration  Statement or Prospectus or any document  incorporated  or
         deemed to be incorporated  therein by reference  untrue in any material
         respect or that  requires any  revisions to a  Registration  Statement,
         Prospectus or other  documents so that,  in the case of a  Registration
         Statement  or the  Prospectus,  as the case may be, it will not contain
         any untrue  statement of a material  fact or omit to state any material
         fact required to be stated  therein or necessary to make the statements
         therein,  in light of the circumstances under which they were made, not
         misleading;  and  (vi)  the  occurrence  or  existence  of any  pending
         corporate  development  with  respect to the  Company  that the Company
         believes may be material and that, in the determination of the Company,
         makes it not in the best  interest  of the  Company to allow  continued
         availability of a Registration  Statement or Prospectus;  provided that
         any and all of  such  information  shall  remain  confidential  to each
         Holder  until  such  information   otherwise  becomes  public,   unless
         disclosure  by  a  Holder  is  required  by  law;  PROVIDED,   FURTHER,
         notwithstanding  each  Holder's  agreement  to  keep  such  information
         confidential,  the  Holders  make  no  acknowledgement  that  any  such
         information is material, non-public information.

                  (e) Use its  commercially  reasonable  efforts  to  avoid  the
         issuance  of, or, if issued,  obtain  the  withdrawal  of (i) any order
         suspending the effectiveness of a

                                       6
<PAGE>

         Registration Statement, or (ii) any suspension of the qualification (or
         exemption from qualification) of any of the Registrable  Securities for
         sale in any jurisdiction, at the earliest practicable moment.

                  (f) Furnish to each Holder upon its written  request,  without
         charge, at least one conformed copy of each such Registration Statement
         and  each  amendment  thereto,   including  financial   statements  and
         schedules,  all  documents  incorporated  or deemed to be  incorporated
         therein by  reference to the extent  requested by such Person,  and all
         exhibits  to the  extent  requested  by such  Person  (including  those
         previously  furnished or incorporated by reference)  promptly after the
         filing of such documents with the Commission.

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

                  (h) If NASDR Rule 2710  requires any  broker-dealer  to make a
         filing  prior to  executing a sale by a Holder,  the Company  shall (i)
         make  an  Issuer  Filing  with  the  NASDR,  Inc.  Corporate  Financing
         Department  pursuant to  proposed  NASDR Rule  2710(b)(10)(A)(i),  (ii)
         respond within five Trading Days to any comments received from NASDR in
         connection therewith,  unless compliance would require a longer period,
         then the end of such  period,  and (iii) pay the filing fee required in
         connection therewith.

                  (i) Prior to any resale of Registrable Securities by a Holder,
         use its  commercially  reasonable  efforts  to  register  or qualify or
         cooperate with the selling Holders in connection with the  registration
         or qualification  (or exemption from the Registration or qualification)
         of such  Registrable  Securities for the resale by the Holder under the
         securities  or Blue Sky laws of such  jurisdictions  within  the United
         States as any  Holder  reasonably  requests  in  writing,  to keep each
         registration or qualification (or exemption therefrom) effective during
         the  Effectiveness  Period  and to do any and all other  acts or things
         reasonably necessary to enable the disposition in such jurisdictions of
         the  Registrable  Securities  covered by each  Registration  Statement;
         provided,  that the Company shall not be required to qualify  generally
         to do business in any  jurisdiction  where it is not then so qualified,
         subject the Company to any material tax in any such jurisdiction  where
         it is not then so  subject  or file a general  consent  to  service  of
         process in any such jurisdiction.

                  (j) If requested by the Holders, cooperate with the Holders to
         facilitate  the  timely   preparation   and  delivery  of  certificates
         representing  Registrable  Securities  to be  delivered to a transferee
         pursuant to a Registration Statement, which certificates shall be free,
         to the extent permitted by the Purchase  Agreement,  of all restrictive
         legends,  and to  enable  such  Registrable  Securities  to be in  such
         denominations  and  registered  in such names as any such  Holders  may
         request.

                                       7
<PAGE>

                  (k) Upon the  occurrence  of any  event  contemplated  by this
         Section 3, as promptly as reasonably  possible under the  circumstances
         taking into account the Company's good faith  assessment of any adverse
         consequences  to the  Company  and its  stockholders  of the  premature
         disclosure of such event, prepare a supplement or amendment,  including
         a post-effective amendment, to a Registration Statement or a supplement
         to the related Prospectus or any document  incorporated or deemed to be
         incorporated therein by reference, and file any other required document
         so that, as thereafter delivered,  neither a Registration Statement nor
         such Prospectus will contain an 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, in light of the circumstances
         under which they were made, not  misleading.  Upon the  Notification by
         the Company to the Holders in  accordance  with clauses  (iii)  through
         (vi) of Section 3(d) above to suspend the use of any  Prospectus  until
         the requisite  changes to such  Prospectus  have been made, the Holders
         shall  suspend  use of  such  Prospectus.  The  Company  will  use  its
         commercially   reasonable  efforts  to  ensure  that  the  use  of  the
         Prospectus  may be resumed as promptly as is  practicable.  The Company
         shall be  entitled to exercise  its right  under this  Section  3(k) to
         suspend the availability of a Registration Statement and Prospectus for
         a period not to exceed 90 calendar days (which need not be  consecutive
         days) in any 12 month period.

                  (l) Comply with all  applicable  rules and  regulations of the
         Commission.

                  (m) The Company may require each selling  Holder to furnish to
         the Company a certified  statement as to the number of shares of Common
         Stock  beneficially  owned  by such  Holder  and,  if  required  by the
         Commission,   the  natural   persons   thereof  that  have  voting  and
         dispositive  control  over the  Shares.  During  any  periods  that the
         Company is unable to meet its obligations hereunder with respect to the
         registration  of the Registrable  Securities  solely because any Holder
         fails to furnish  such  information  within  three  Trading Days of the
         Company's  request,  any  liquidated  damages that are accruing at such
         time as to such  Holder  only  shall be tolled  and any Event  that may
         otherwise  occur solely  because of such delay shall be suspended as to
         such Holder only,  until such  information is delivered to the Company.
         The Company may file or refile any Registration  Statement or amendment
         thereto  without  including the  Registrable  Securities of such Holder
         until and unless the Holder provides the required information.

                  (n) If requested by a Holder, the Company shall (i) as soon as
         practicable  incorporate in a prospectus  supplement or  post-effective
         amendment  such  information as an Investor  reasonably  requests to be
         included  therein  relating to the sale and distribution of Registrable
         Securities, including, without limitation,  information with respect to
         the  number  of  Registrable  Securities  being  offered  or sold,  the
         purchase  price being paid therefor and any other terms of the offering
         of the Registrable Securities to be sold in such offering; (ii) as soon
         as practicable make all required filings of such prospectus  supplement
         or  post-effective  amendment after being notified of the matters to be
         incorporated in such prospectus supplement or post-effective amendment;
         and (iii) as soon as practicable,  supplement or make amendments to any
         Registration  Statement if reasonably requested by a Holder holding any
         Registrable Securities.

                                       8
<PAGE>

                  4.  REGISTRATION  EXPENSES.  All fees and expenses incident to
         the  performance  of or compliance  with this  Agreement by the Company
         shall be borne by the Company whether or not any Registrable Securities
         are sold pursuant to a  Registration  Statement.  The fees and expenses
         referred  to  in  the  foregoing   sentence  shall   include,   without
         limitation,  (i) all registration  and filing fees (including,  without
         limitation,  fees and expenses (A) with respect to filings  required to
         be made  with any  Trading  Market on which  the  Common  Stock is then
         listed for trading,  (B) in compliance with applicable state securities
         or Blue  Sky  laws  reasonably  agreed  to by the  Company  in  writing
         (including,  without limitation,  fees and disbursements of counsel for
         the Company in connection with Blue Sky qualifications or exemptions of
         the  Registrable  Securities)  and  (C) if not  previously  paid by the
         Company in connection with an Issuer Filing, with respect to any filing
         that may be  required to be made by any broker  through  which a Holder
         intends to make sales of Registrable  Securities with NASD  Regulation,
         Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving
         no more than a customary  brokerage  commission in connection with such
         sale, (ii) printing expenses (including,  without limitation,  expenses
         of printing  certificates  for  Registrable  Securities and of printing
         prospectuses if the printing of prospectuses is reasonably requested by
         the holders of a majority of the Registrable  Securities  included in a
         Registration  Statement),  (iii)  messenger,   telephone  and  delivery
         expenses,  (iv) fees and disbursements of counsel for the Company,  (v)
         Securities  Act  liability  insurance,  if the Company so desires  such
         insurance,  and (vi) fees and expenses of all other Persons retained by
         the Company in connection  with the  consummation  of the  transactions
         contemplated  by this  Agreement.  In  addition,  the Company  shall be
         responsible  for all of its internal  expenses  incurred in  connection
         with  the  consummation  of  the  transactions   contemplated  by  this
         Agreement (including,  without limitation, all salaries and expenses of
         its officers and employees  performing legal or accounting duties), the
         expense  of any  annual  audit and the fees and  expenses  incurred  in
         connection  with  the  listing  of the  Registrable  Securities  on any
         securities  exchange  as  required  hereunder.  In no event  shall  the
         Company be  responsible  for any broker or similar  commissions  of any
         Holder  or,  except  to the  extent  provided  for  in the  Transaction
         Documents, any legal fees or other costs of the Holders.

         5.       INDEMNIFICATION

                  (a)  INDEMNIFICATION  BY  THE  COMPANY.   The  Company  shall,
         notwithstanding  any termination of this Agreement,  indemnify and hold
         harmless  each Holder,  the  officers,  directors,  members,  partners,
         agents, investment advisors and employees (and any other Persons with a
         functionally   equivalent   role  of  a  Person  holding  such  titles,
         notwithstanding  a lack of such  title or any  other  title) of each of
         them,  each Person who controls any such Holder  (within the meaning of
         Section 15 of the Securities Act or Section 20 of the Exchange Act) and
         the officers,  directors, members,  shareholders,  partners, agents and
         employees (and any other Persons with a functionally equivalent role of
         a Person holding such titles,  notwithstanding  a lack of such title or
         any other title) of each such controlling Person, to the fullest extent
         permitted  by  applicable  law,  from and  against  any and all losses,
         claims,  damages,  liabilities,  costs (including,  without limitation,
         reasonable attorneys' fees) and expenses  (collectively,  "LOSSES"), as
         incurred,  arising  out of or  relating  to (1) any  untrue or  alleged
         untrue  statement  of a  material  fact  contained  in  a  Registration
         Statement, any Prospectus or any form of prospectus or in any amendment
         or supplement thereto or in any preliminary prospectus,  or arising out
         of or

                                       9
<PAGE>

         relating  to any  omission  or  alleged  omission  of a  material  fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein  (in the  case of any  Prospectus  or  form  of  prospectus  or
         supplement thereto, in light of the circumstances under which they were
         made) not misleading,  or (2) any violation or alleged violation by the
         Company of the  Securities  Act,  Exchange Act or any state  securities
         law,  or any rule or  regulation  thereunder,  in  connection  with the
         performance  of its  obligations  under this  Agreement,  except to the
         extent,  but only to the  extent,  that (i) such untrue  statements  or
         omissions  are based  solely  upon  information  regarding  such Holder
         furnished  in writing to the Company by such Holder  expressly  for use
         therein,  or to the extent that such information relates to such Holder
         or  such  Holder's  proposed  method  of  distribution  of  Registrable
         Securities  and was reviewed and expressly  approved in writing by such
         Holder expressly for use in a Registration  Statement,  such Prospectus
         or such form of Prospectus  or in any  amendment or supplement  thereto
         (it being  understood  that the Holder has approved  Annex A hereto for
         this  purpose) or (ii) in the case of an  occurrence of an event of the
         type specified in Section 3(d)(iii)-(vi),  the use by such Holder of an
         outdated or defective  Prospectus  after the Company has notified  such
         Holder in writing  that the  Prospectus  is outdated or  defective  and
         prior to the  receipt  by such  Holder of the  Advice  contemplated  in
         Section  6(c).  The Company  shall  notify the Holders  promptly of the
         institution,  threat or assertion of any Proceeding  arising from or in
         connection  with the  transactions  contemplated  by this  Agreement of
         which the Company is aware.

                  (b) INDEMNIFICATION BY HOLDERS.  Each Holder shall,  severally
         and  not  jointly,   indemnify  and  hold  harmless  the  Company,  its
         directors, officers, agents and employees, each Person who controls the
         Company  (within  the meaning of Section 15 of the  Securities  Act and
         Section 20 of the Exchange Act), and the directors, officers, agents or
         employees of such controlling  Persons, to the fullest extent permitted
         by  applicable  law, from and against all Losses,  as incurred,  to the
         extent arising out of or based solely upon:  (x) such Holder's  failure
         to comply with the prospectus  delivery  requirements of the Securities
         Act or (y) any untrue or alleged  untrue  statement of a material  fact
         contained in any Registration Statement, any Prospectus, or any form of
         prospectus,  or in  any  amendment  or  supplement  thereto  or in  any
         preliminary  prospectus,  or arising out of or relating to any omission
         or alleged omission of a material fact required to be stated therein or
         necessary  to make the  statements  therein not  misleading  (i) to the
         extent, but only to the extent,  that such untrue statement or omission
         is contained in any  information so furnished in writing by such Holder
         to  the  Company   specifically  for  inclusion  in  such  Registration
         Statement  or  such   Prospectus  or  (ii)  to  the  extent  that  such
         information relates to such Holder's proposed method of distribution of
         Registrable  Securities  and was  reviewed  and  expressly  approved in
         writing by such Holder  expressly for use in a  Registration  Statement
         (it being  understood  that the Holder has approved  Annex A hereto for
         this  purpose),  such  Prospectus  or such form of Prospectus or in any
         amendment or supplement thereto or (ii) in the case of an occurrence of
         an event of the type  specified in Section  3(d)(iii)-(vi),  the use by
         such Holder of an outdated or  defective  Prospectus  after the Company
         has notified such Holder in writing that the  Prospectus is outdated or
         defective  and  prior  to the  receipt  by such  Holder  of the  Advice
         contemplated  in Section  6(c).  In no event shall the liability of any
         selling Holder hereunder be greater in amount

                                       10
<PAGE>

         than the dollar amount of the net proceeds received by such Holder upon
         the  sale  of  the   Registrable   Securities   giving   rise  to  such
         indemnification obligation.

                  (c) CONDUCT OF INDEMNIFICATION  PROCEEDINGS. If any Proceeding
         shall be brought or asserted  against any Person  entitled to indemnity
         hereunder  (an  "INDEMNIFIED  PARTY"),  such  Indemnified  Party  shall
         promptly   notify  the  Person  from  whom  indemnity  is  sought  (the
         "INDEMNIFYING PARTY") in writing, and the Indemnifying Party shall have
         the right to assume the defense  thereof,  including the  employment of
         counsel  reasonably  satisfactory  to the  Indemnified  Party  and  the
         payment of all fees and expenses  incurred in  connection  with defense
         thereof;  provided,  that the failure of any Indemnified  Party to give
         such notice shall not relieve the Indemnifying Party of its obligations
         or  liabilities  pursuant to this  Agreement,  except (and only) to the
         extent  that it shall be  finally  determined  by a court of  competent
         jurisdiction  (which  determination is not subject to appeal or further
         review) that such failure shall have prejudiced the Indemnifying Party.

                  An Indemnified  Party shall have the right to employ  separate
         counsel  in any  such  Proceeding  and to  participate  in the  defense
         thereof,  but the fees and  expenses  of such  counsel  shall be at the
         expense  of  such  Indemnified   Party  or  Parties  unless:   (1)  the
         Indemnifying Party has agreed in writing to pay such fees and expenses;
         (2) the  Indemnifying  Party shall have  failed  promptly to assume the
         defense  of  such   Proceeding   and  to  employ   counsel   reasonably
         satisfactory to such Indemnified  Party in any such Proceeding;  or (3)
         the named  parties  to any such  Proceeding  (including  any  impleaded
         parties)  include  both such  Indemnified  Party  and the  Indemnifying
         Party,  and the opinion of counsel to the  Indemnified  Party is that a
         material  conflict of  interest is likely to exist if the same  counsel
         were to represent such Indemnified Party and the Indemnifying Party (in
         which case, if such Indemnified  Party notifies the Indemnifying  Party
         in writing that it elects to employ separate  counsel at the expense of
         the Indemnifying Party, the Indemnifying Party shall not have the right
         to assume the defense  thereof and the reasonable  fees and expenses of
         no more  than  one  separate  counsel  shall be at the  expense  of the
         Indemnifying Party). The Indemnifying Party shall not be liable for any
         settlement of any such Proceeding effected without its written consent,
         which  consent  shall  not be  unreasonably  withheld  or  delayed.  No
         Indemnifying  Party  shall,  without the prior  written  consent of the
         Indemnified  Party,  effect any settlement of any pending Proceeding in
         respect  of  which  any  Indemnified  Party  is a  party,  unless  such
         settlement includes an unconditional  release of such Indemnified Party
         from all  liability  on  claims  that are the  subject  matter  of such
         Proceeding.

                  Subject to the terms of this  Agreement,  all reasonable  fees
         and expenses of the Indemnified  Party  (including  reasonable fees and
         expenses to the extent  incurred in connection  with  investigating  or
         preparing to defend such Proceeding in a manner not  inconsistent  with
         this  Section)  shall be paid to the  Indemnified  Party,  as incurred,
         within ten Trading Days of written notice  thereof to the  Indemnifying
         Party;  provided,  that the Indemnified Party shall promptly  reimburse
         the  Indemnifying  Party for that  portion  of such  fees and  expenses
         applicable  to  such  actions  for  which  such  Indemnified  Party  is
         judicially determined to be not entitled to indemnification hereunder.

                                       11
<PAGE>

                  (d) CONTRIBUTION. If the indemnification under Section 5(a) or
         5(b) is unavailable to an Indemnified  Party or insufficient to hold an
         Indemnified Party harmless for any Losses, then each Indemnifying Party
         shall  contribute  to the amount  paid or  payable by such  Indemnified
         Party,  in such  proportion as is  appropriate  to reflect the relative
         fault of the  Indemnifying  Party and  Indemnified  Party in connection
         with the actions,  statements or omissions that resulted in such Losses
         as well as any other relevant  equitable  considerations.  The relative
         fault  of such  Indemnifying  Party  and  Indemnified  Party  shall  be
         determined by reference  to, among other things,  whether any action in
         question,  including  any  untrue  or  alleged  untrue  statement  of a
         material fact or omission or alleged  omission of a material  fact, has
         been taken or made by, or  relates to  information  supplied  by,  such
         Indemnifying  Party or  Indemnified  Party,  and the parties'  relative
         intent, knowledge,  access to information and opportunity to correct or
         prevent such action,  statement or omission. The amount paid or payable
         by a party as a  result  of any  Losses  shall be  deemed  to  include,
         subject to the limitations set forth in this Agreement,  any reasonable
         attorneys'  or  other  fees  or  expenses  incurred  by such  party  in
         connection with any Proceeding to the extent such party would have been
         indemnified for such fees or expenses if the  indemnification  provided
         for in this Section was available to such party in accordance  with its
         terms.

                    The  parties  hereto  agree  that it  would  not be just and
         equitable if contribution pursuant to this Section 5(d) were determined
         by pro rata  allocation or by any other method of allocation  that does
         not take into account the equitable  considerations  referred to in the
         immediately preceding paragraph. Notwithstanding the provisions of this
         Section  5(d),  no  Holder  shall be  required  to  contribute,  in the
         aggregate,  any  amount in excess of the  amount by which the  proceeds
         actually  received  by such  Holder  from the  sale of the  Registrable
         Securities  subject to the Proceeding exceeds the amount of any damages
         that such Holder has  otherwise  been required to pay by reason of such
         untrue or alleged  untrue  statement  or omission or alleged  omission,
         except in the case of fraud by such Holder.

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

         6.       MISCELLANEOUS

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

                                       12
<PAGE>

                  (b) COMPLIANCE.  Each Holder covenants and agrees that it will
         comply with the prospectus delivery  requirements of the Securities Act
         as applicable to it in connection with sales of Registrable  Securities
         pursuant to a Registration Statement.

                  (c)  DISCONTINUED  DISPOSITION.  Each  Holder  agrees  by  its
         acquisition of Registrable  Securities  that,  upon receipt of a notice
         from the Company of the  occurrence of any event of the kind  described
         in  Section   3(d)(iii)   through  (vi),  such  Holder  will  forthwith
         discontinue   disposition  of  such  Registrable   Securities  under  a
         Registration Statement until it is advised in writing (the "ADVICE") by
         the Company that the use of the  applicable  Prospectus (as it may have
         been supplemented or amended) may be resumed.  The Company will use its
         commercially   reasonable  efforts  to  ensure  that  the  use  of  the
         Prospectus  may be resumed as promptly as it  practicable.  The Company
         agrees and  acknowledges  that any periods  during  which the Holder is
         required to discontinue the  disposition of the Registrable  Securities
         hereunder shall be subject to the provisions of Section 2(c).

                  (d) ADDITIONAL REGISTRATION STATEMENTS.Until 30 days after the
         Effective  Date,  the Company shall not file a  registration  statement
         under  the  Securities  Act  relating  to  securities  that are not the
         Securities,   other  than   amendments  or   supplements   to  existing
         registration statements or pursuant to Section 6(f) hereof.

                  (e)  PIGGY-BACK  REGISTRATIONS.  If at  any  time  during  the
         Effectiveness Period there is not an effective  Registration  Statement
         covering  all of the  Registrable  Securities  and  the  Company  shall
         determine  to  prepare  and file  with the  Commission  a  registration
         statement relating to an offering for its own account or the account of
         others under the Securities Act of any of its equity securities,  other
         than on Form S-4 or Form S-8 (each as promulgated  under the Securities
         Act) or their then  equivalents  relating  to equity  securities  to be
         issued  solely in  connection  with any  acquisition  of any  entity or
         business or equity  securities  issuable in  connection  with the stock
         option or other employee benefit plans,  then the Company shall send to
         each  Holder a written  notice  of such  determination  and,  if within
         fifteen  days after the date of such  notice,  any such Holder shall so
         request in writing,  the  Company  shall  include in such  registration
         statement all or any part of such  Registrable  Securities  such Holder
         requests to be registered;  PROVIDED,  HOWEVER, that, the Company shall
         not be required to register any Registrable Securities pursuant to this
         Section  6(d) that are  eligible  for resale  pursuant  to Rule  144(k)
         promulgated  under the Securities Act or that are the subject of a then
         effective Registration Statement.

                  (f) NO PIGGYBACK ON REGISTRATIONS. Neither the Company nor any
         of its  security  holders  (other  than the  Holders  in such  capacity
         pursuant  hereto) may include  securities of the Company in the Initial
         Registration  Statement  other  than the  Registrable  Securities.  The
         Company  shall not file any  other  registration  statements  until the
         Initial Registration Statement required hereunder is declared effective
         by the  Commission,  provided that this Section 6(f) shall not prohibit
         the Company from filing amendments to registration  statements  already
         filed.

                                       13
<PAGE>

                  (g) AMENDMENTS AND WAIVERS.  The provisions of this Agreement,
         including the provisions of this sentence, may not be amended, modified
         or  supplemented,  and  waivers  or  consents  to  departures  from the
         provisions hereof may not be given, unless the same shall be in writing
         and signed by the  Company  and the  Holders of 70% in  interest of the
         then outstanding Registrable Securities. Notwithstanding the foregoing,
         a waiver or consent to depart from the  provisions  hereof with respect
         to a matter that relates  exclusively to the rights of Holders and that
         does not directly or indirectly  affect the rights of other Holders may
         be given by Holders of all of the Registrable  Securities to which such
         waiver or consent relates;  PROVIDED,  HOWEVER,  that the provisions of
         this sentence may not be amended,  modified,  or supplemented except in
         accordance with the provisions of the immediately preceding sentence.

                  (h) NOTICES.  Any and all notices or other  communications  or
         deliveries  required or  permitted  to be provided  hereunder  shall be
         delivered as set forth in the Purchase Agreement.

                  (i) SUCCESSORS AND ASSIGNS.  This Agreement shall inure to the
         benefit of and be binding upon the successors and permitted  assigns of
         each of the parties and shall inure to the benefit of each Holder.  The
         Company  may not assign  (except by merger)  its rights or  obligations
         hereunder  without the prior  written  consent of all of the Holders of
         the  then-outstanding  Registrable  Securities.  Each Holder may assign
         their  respective  rights hereunder in the manner and to the Persons as
         permitted under the Purchase Agreement.

                  (j) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of
         its  Subsidiaries  has entered,  as of the date  hereof,  nor shall the
         Company  or any of its  Subsidiaries,  on or  after  the  date  of this
         Agreement,  enter into any  agreement  with respect to its  securities,
         that  would  have the effect of  impairing  the  rights  granted to the
         Holders in this  Agreement or otherwise  conflicts  with the provisions
         hereof.

                  (k) EXECUTION AND COUNTERPARTS. This Agreement may be executed
         in two or more counterparts,  all of which when taken together shall be
         considered one and the same  agreement and shall become  effective when
         counterparts  have been signed by each party and delivered to the other
         party,  it being  understood  that both  parties need not sign the same
         counterpart.  In the event that any signature is delivered by facsimile
         transmission  or by e-mail  delivery of a ".pdf" format data file, such
         signature  shall  create a valid and  binding  obligation  of the party
         executing (or on whose behalf such signature is executed) with the same
         force and effect as if such facsimile or ".pdf"  signature page were an
         original thereof.

                  (l) GOVERNING LAW. All questions  concerning the construction,
         validity,  enforcement  and  interpretation  of this Agreement shall be
         determined in accordance with the provisions of the Purchase Agreement.

                  (m)  CUMULATIVE  REMEDIES.  The remedies  provided  herein are
         cumulative and not exclusive of any other remedies provided by law.

                                       14
<PAGE>

                  (n)  SEVERABILITY.   If  any  term,  provision,   covenant  or
         restriction  of  this  Agreement  is  held  by  a  court  of  competent
         jurisdiction  to  be  invalid,  illegal,  void  or  unenforceable,  the
         remainder of the terms,  provisions,  covenants  and  restrictions  set
         forth  herein shall remain in full force and effect and shall in no way
         be affected, impaired or invalidated,  and the parties hereto shall use
         their commercially reasonable efforts to find and employ an alternative
         means to  achieve  the same or  substantially  the same  result as that
         contemplated by such term,  provision,  covenant or restriction.  It is
         hereby  stipulated and declared to be the intention of the parties that
         they would have executed the remaining terms, provisions, covenants and
         restrictions  without  including  any of  such  that  may be  hereafter
         declared invalid, illegal, void or unenforceable.

                  (o)  HEADINGS.   The  headings  in  this   Agreement  are  for
         convenience  only, do not constitute a part of this Agreement and shall
         not be deemed to limit or affect any of the provisions hereof.

                  (p) INDEPENDENT NATURE OF HOLDERS' OBLIGATIONS AND RIGHTS. The
         obligations of each Holder hereunder are several and not joint with the
         obligations  of any other  Holder  hereunder,  and no  Holder  shall be
         responsible in any way for the  performance  of the  obligations of any
         other  Holder  hereunder.  Nothing  contained  herein  or in any  other
         agreement or document delivered at any closing,  and no action taken by
         any Holder  pursuant  hereto or thereto,  shall be deemed to constitute
         the Holders as a partnership,  an  association,  a joint venture or any
         other kind of entity,  or create a presumption  that the Holders are in
         any way  acting in concert  with  respect  to such  obligations  or the
         transactions  contemplated  by this  Agreement.  Each  Holder  shall be
         entitled  to  protect  and  enforce  its  rights,   including   without
         limitation the rights arising out of this  Agreement,  and it shall not
         be necessary for any other Holder to be joined as an  additional  party
         in any proceeding for such purpose.

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

                                       15
<PAGE>

         IN WITNESS WHEREOF,  the parties have executed this Registration Rights
Agreement as of the date first written above.

                                                ELITE PHARMACEUTICALS, INC.

                                                By:____________________________
                                                Name: Bernard Berk
                                                Title: Chief Executive Officer

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       16
<PAGE>

                     [SIGNATURE PAGE OF HOLDERS TO ELI RRA]

Name of Holder: __________________________
SIGNATURE OF AUTHORIZED SIGNATORY OF HOLDER: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       17
<PAGE>

                                     ANNEX A

                              PLAN OF DISTRIBUTION

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

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

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

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

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

            o  privately negotiated transactions;

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

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

            o  a combination of any such methods of sale; or

            o  any other method permitted pursuant to applicable law.

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

         In  connection  with sales of the shares of common stock or  otherwise,
the   Selling   Stockholders   may  enter   into   hedging   transactions   with
broker-dealers,  which may in turn engage in short sales of the shares of common
stock  in  the  course  of  hedging  in  positions  they  assume.   The  selling
stockholders  may also sell shares of common  stock short and deliver  shares of
common stock  covered by this  prospectus  to close out short  positions  and to
return  borrowed  shares  in  connection  with such  short  sales.  The  Selling
Stockholders  may also loan or pledge  shares of common stock to  broker-dealers
that in turn may sell such shares.

                                       18
<PAGE>

         The  Selling  Stockholders  may pledge or grant a security  interest in
some or all of the warrants or shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time pursuant
to this prospectus or any amendment to this  prospectus  under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933, as amended,  amending,
if  necessary,  the  list  of  selling  stockholders  to  include  the  pledgee,
transferee or other  successors in interest as selling  stockholders  under this
prospectus.  The selling stockholders also may transfer and donate the shares of
common  stock in other  circumstances  in which  case the  transferees,  donees,
pledgees or other successors in interest will be the selling beneficial owners.

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

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

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

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

         We agreed to keep this  prospectus  effective  until the earlier of (i)
the date on which the shares may be resold by the Selling  Stockholders  without
registration  and  without  regard to any volume  limitations  by reason of Rule
144(k) under the  Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold  pursuant to this  prospectus or Rule 144 under the
Securities  Act or any other rule of similar  effect.  The resale shares will be
sold only through  registered or licensed  brokers or dealers if required  under
applicable  state securities  laws. In

                                       19
<PAGE>

addition,  in certain states, the resale shares may not be sold unless they have
been  registered or qualified for sale in the  applicable  state or an exemption
from the registration or qualification  requirement is available and is complied
with.

         Under  applicable  rules and  regulations  under the Exchange  Act, any
person engaged in the  distribution of the resale shares may not  simultaneously
engage in market  making  activities  with  respect to the common  stock for the
applicable  restricted  period,  as  defined  in  Regulation  M,  prior  to  the
commencement of the distribution.  In addition, the Selling Stockholders will be
subject  to  applicable  provisions  of the  Exchange  Act  and  the  rules  and
regulations  thereunder,  including  Regulation M, which may limit the timing of
purchases and sales of shares of the common stock by the Selling Stockholders or
any other  person.  We will  make  copies of this  prospectus  available  to the
Selling  Stockholders  and have  informed  them of the need to deliver a copy of
this prospectus to each purchaser at or prior to the time of the sale (including
by compliance with Rule 172 under the Securities Act).

                                       20
<PAGE>

                                     ANNEX B

                           ELITE PHARMACEUTICALS, INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

         The undersigned  beneficial  owner of common stock,  par value $.01 per
share  (the  "COMMON  STOCK"),  of  Elite  Pharmaceuticals,   Inc.,  a  Delaware
corporation (the "COMPANY"), (the "REGISTRABLE SECURITIES") understands that the
Company has filed or intends to file with the Securities and Exchange Commission
(the  "COMMISSION")  a  registration  statement  on Form S-3 (the  "REGISTRATION
STATEMENT") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "SECURITIES  ACT"), of the Registrable  Securities,  in
accordance with the terms of the Registration Rights Agreement, dated as of July
17,  2007 (the  "REGISTRATION  RIGHTS  AGREEMENT"),  among the  Company  and the
Purchasers  named  therein.  A copy  of the  Registration  Rights  Agreement  is
available  from the Company  upon  request at the address set forth  below.  All
capitalized  terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

         Certain  legal  consequences  arise  from  being  named  as  a  selling
securityholder  in  the  Registration  Statement  and  the  related  prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel  regarding the consequences of being
named  or not  being  named  as a  selling  securityholder  in the  Registration
Statement and the related prospectus.

                                     NOTICE

         The  undersigned  beneficial  owner (the "SELLING  SECURITYHOLDER")  of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise  specified under such Item 3)
in the Registration Statement.

                                       21
<PAGE>

The  undersigned  hereby  provides the following  information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.       NAME.

         (a)      Full Legal Name of Selling Securityholder

                  ______________________________________________________________

         (b)      Full Legal Name of  Registered  Holder (if not the same as (a)
                  above) through which  Registrable  Securities Listed in Item 3
                  below are held:

                  ______________________________________________________________

         (c)      Full Legal  Name of  Natural  Control  Person  (which  means a
                  natural person who directly or indirectly alone or with others
                  has power to vote or dispose of the securities  covered by the
                  questionnaire):

                  ______________________________________________________________

2.  ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

________________________________________________________________________________

________________________________________________________________________________

________________________________________________________________________________

Telephone: _____________________________________________________________________

Fax: ___________________________________________________________________________

Contact Person: ________________________________________________________________

3.  BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

         (a)      Type and Number of Registrable  Securities  beneficially owned
                  (not including the  Registrable  Securities  that are issuable
                  pursuant to the Purchase Agreement):

                  ______________________________________________________________

                  ______________________________________________________________

                  ______________________________________________________________

                                       22
<PAGE>

4. BROKER-DEALER STATUS:

         (a)       Are you a broker-dealer?

                                            Yes |_|     No |_|

         (b)      If "yes" to Section  4(a),  did you receive  your  Registrable
                  Securities as compensation for investment  banking services to
                  the Company.

                                            Yes |_|     No |_|

         Note:    If no, the  Commission's  staff has indicated  that you should
                  be identified as an underwriter in the Registration Statement.

         (c)      Are you an affiliate of a broker-dealer?

                                            Yes |_|     No |_|

         (d)      If you are an  affiliate  of a  broker-dealer,  do you certify
                  that you bought the  Registrable  Securities  in the  ordinary
                  course of  business,  and at the time of the  purchase  of the
                  Registrable  Securities to be resold, you had no agreements or
                  understandings,  directly  or  indirectly,  with any person to
                  distribute the Registrable Securities?

                                            Yes |_|     No |_|

         Note:    If no, the  Commission's  staff has indicated  that you should
                  be identified as an underwriter in the Registration Statement.

5. BENEFICIAL  OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING
   SECURITYHOLDER.

         EXCEPT AS SET FORTH  BELOW IN THIS ITEM 5, THE  UNDERSIGNED  IS NOT THE
         BENEFICIAL OR REGISTERED  OWNER OF ANY  SECURITIES OF THE COMPANY OTHER
         THAN THE REGISTRABLE SECURITIES LISTED ABOVE IN ITEM 3.

         (a)      Type and Amount of Other Securities  beneficially owned by the
                  Selling Securityholder:

                  ______________________________________________________________

                  ______________________________________________________________

                                       23
<PAGE>

6. RELATIONSHIPS WITH THE COMPANY:

         EXCEPT AS SET  FORTH  BELOW,  NEITHER  THE  UNDERSIGNED  NOR ANY OF ITS
         AFFILIATES,  OFFICERS, DIRECTORS OR PRINCIPAL EQUITY HOLDERS (OWNERS OF
         5% OF MORE OF THE EQUITY  SECURITIES OF THE  UNDERSIGNED)  HAS HELD ANY
         POSITION OR OFFICE OR HAS HAD ANY OTHER MATERIAL  RELATIONSHIP WITH THE
         COMPANY  (OR ITS  PREDECESSORS  OR  AFFILIATES)  DURING  THE PAST THREE
         YEARS.

         State any exceptions here:

         _______________________________________________________________________

         _______________________________________________________________________

         The   undersigned   agrees  to  promptly  notify  the  Company  of  any
inaccuracies  or  changes  in the  information  provided  herein  that may occur
subsequent  to the date  hereof  at any time  while the  Registration  Statement
remains effective.

         By signing  below,  the  undersigned  consents to the disclosure of the
information  contained  herein  in its  answers  to  Items 1  through  6 and the
inclusion of such  information  in the  Registration  Statement  and the related
prospectus  and  any  amendments  or  supplements   thereto.   The   undersigned
understands  that  such  information  will  be  relied  upon by the  Company  in
connection with the preparation or amendment of the  Registration  Statement and
the related prospectus.

         IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and  Questionnaire  to be executed and delivered either in person or
by its duly authorized agent.

Dated: ___________________    Beneficial Owner: ________________________________

                              By: ______________________________________________
                                  Name:
                                  Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED  NOTICE AND  QUESTIONNAIRE,  AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       24

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