Document:

EXECUTION COPY

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated June 1, 2005, between DLJ Mortgage Capital, Inc., a Delaware corporation (“Assignor”), and Credit Suisse First Boston Mortgage Securities Corp., a Delaware corporation (“Assignee”):

For and in consideration of the sum of TEN DOLLARS ($10.00) and other valuable consideration the receipt and sufficiency of which hereby are acknowledged, and of the mutual covenants herein contained, the parties hereto hereby agree as follows:

1.          The Assignor hereby grants, transfers and assigns to Assignee all of the right, title and interest of Assignor, as Purchaser, in, to and under (a) those certain Mortgage Loans listed on Exhibit A attached hereto (the “Mortgage Loans”) and (b) those certain agreements listed on Exhibit B attached hereto (the “Agreements”) with respect to the Mortgage Loans.

The Assignor specifically reserves and does not assign to the Assignee hereunder any and all right, title and interest in, to and under and all obligations of the Assignor with respect to any mortgage loans subject to the Agreements which are not the Mortgage Loans set forth on Exhibit A attached hereto and are not the subject of this Assignment and Assumption Agreement.

	
            2.
 	
            The Assignor warrants and represents to, and covenants with, the Assignee that:
 

(a)        The Assignor is the lawful owner of the Mortgage Loans with the full right to transfer the Mortgage Loans free from any and all claims and encumbrances whatsoever;

(b)        The Assignor has not received notice or, and has no knowledge of, any offsets, counterclaims or other defenses with respect to the Agreements or the Mortgage Loans;

(c)        The Assignor has not waived or agreed to any waiver under, or agreed to any amendment or other modification of, the Agreements or the Mortgage Loans, including without limitation the transfer of the servicing obligations under the Agreements.  The Assignor has no knowledge of, and has not received notice of, any waivers under or amendments or other modifications of, or assignments of rights or obligations under or defaults under, the Agreements, or the Mortgage Loans; and

(d)        Neither the Assignor nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security from, or otherwise approached or negotiated with respect to the Mortgage Loans, any interest in the Mortgage Loans or any other similar security with, any person in any manner, or made by general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Mortgage Loans under the Securities Act of 1933 (the “1933 Act”) or which would render the disposition of the Mortgage Loans a
violation of Section 5 of the 1933 Act or require registration pursuant thereto.

 

 

 

 

	
            3.
 	
            The Assignee warrants and represents to, and covenants with, the Assignor that:
 

(a)               The Assignee is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, and has all requisite corporate power and authority to acquire, own and purchase the Mortgage Loans;

(b)               The Assignee has full corporate power and authority to execute, deliver and perform under this Assignment and Assumption Agreement, and to consummate the transactions set forth herein.  The execution, delivery and performance of the Assignee of this Assignment and Assumption Agreement, and the consummation by it of the transactions contemplated hereby, have been duly authorized by all necessary corporate action of the Assignee.  This Assignment and Assumption Agreement has been duly executed and delivered by the Assignee and constitutes the valid and legally binding obligation of the Assignee enforceable against the Assignee in accordance with its respective terms;

(c)               To the best of Assignee’s knowledge, no material consent, approval, order or authorization of, or declaration, filing or registration with, any governmental entity is required to be obtained or made by the Assignee in connection with the execution, delivery or performance by the Assignee of this Assignment and Assumption Agreement, or the consummation by it of the transactions contemplated hereby;

(d)               The Assignee agrees to be bound, as Purchaser, by all of the terms, covenants and conditions of the Agreements and the Mortgage Loans, and from and after the date hereof, the Assignee assumes for the benefit of the Assignor all of the Assignor’s obligations as Purchaser thereunder, with respect to the Mortgage Loans;

(e)               The Assignee understands that the Mortgage Loans have not been registered under the 1933 Act or the securities laws of any state;

(f)                The purchase price being paid by the Assignee for the Mortgage Loans is in excess of $250,000 and will be paid by cash remittance of the full purchase price within sixty (60) days of the sale;

(g)               The Assignee is acquiring the Mortgage Loans for investment for its own account only and not for any other person;

(h)               The Assignee considers itself a substantial, sophisticated institutional investor having such knowledge and financial and business matters that it is capable of evaluating the merits and the risks of investment in the Mortgage Loans;

(i)                The Assignee has been furnished with all information regarding the Mortgage Loans that it has requested from the Assignor;

(j)                Neither the Assignee nor anyone acting on its behalf has offered, transferred, pledged, sold or otherwise disposed of the Mortgage Loans, an interest in the Mortgage Loans or any other similar security to, or solicited any offer to buy or accept a transfer, pledge or other disposition of the Mortgage Loans, any interest in the Mortgage Loans or any other similar security from, or otherwise approached or negotiated with respect to the Mortgage 

 

 

	
            2
 

 

 

Loans, any interest in the Mortgage Loans or any other similar security with, any person in any manner, or made any general solicitation by means of general advertising or in any other manner, or taken any other action which would constitute a distribution of the Mortgage Loans under the 1933 Act or which would render the disposition of the Mortgage Loans a violation of Section 5 of the 1933 Act or require registration pursuant thereto, nor will it act, nor has it authorized or will it authorize any person to act, in such manner with respect to the Mortgage Loans; and

(k)               Either: (1) the Assignee is not an employee benefit plan (“Plan”) within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) or a plan (also “Plan”) within the meaning of Section 4975(e)(1) of the Internal Revenue Code of 1986, as amended (“Code”), and the Assignee is not directly or indirectly purchasing the Mortgage Loans on behalf of, investment manager of, as named fiduciary of, as Trustee of, or with assets of, a Plan; or (2) the Assignee’s purchase of the Mortgage Loans will not result in a prohibited transaction under section 406 of ERISA or Section 4975 of the Code.

 

[SIGNATURES BEGIN ON FOLLOWING PAGE]

 

 

	
            3
 

 

 

 

IN WITNESS WHEREOF, the parties have caused this Assignment and Assumption to be executed by their duly authorized officers as of the date first above written.

	
            DLJ MORTGAGE CAPITAL, INC.,

as Assignor

 

By:                                                                                          
                       

Name: 

Title:  
 	
            CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES CORP.,

as Assignee

By:                                                                                          
                       

Name: 

Title:  
 
	
             
 	
             
 
	
            Taxpayer Identification Number: 13-3460798
 	
            Taxpayer Identification Number: 13-3320910
 

 

 

 

 

EXHIBIT A

Mortgage Loan Schedule

 

[Attached as Schedule I to the Pooling and Servicing Agreement]

 

	
            A-1
 

 

 

 

EXHIBIT B

List of Agreements

 

[On file with Orrick, Herrington & Sutcliffe LLP]

 

 

 

	
            B-1WWW.EXFILE.COM, INC. -- 13681 -- CDKNET.COM, INC. -- EXHIBIT 10.1 TO FORM 8-K

    
      EXHIBIT 10.1

    Memorandum
      No.: ______________

     

    Name
      of Investor: _______________

     

    Number
      of Units: _______________

     

    CDKNET.COM,
      INC.

     

    SECURITIES
      PURCHASE AGREEMENT

     

    SECURITIES
      PURCHASE AGREEMENT dated as of ___________, 2005 (the
“Agreement”), between
      CDKNET.COM, INC., a Delaware corporation (the “Company”), and the person
      or entity whose
      signature appears on the execution page of this Agreement (the
“Investor”).

     

    WHEREAS,
      the Company, with the assistance of
      TRIDENT PARTNERS, LTD. (the “Placement
      Agent”), and selected sub-agents selected by Trident
      (collectively, the “Agents”) is offering
      up to 20 units (and an additional 4 units if all 20 units
      are sold) (the “Units”),
      each consisting of a $100,000 principal amount, 6% convertible, subordinated
      two
      year notes (the “Convertible Notes”) and 14,286
      five year warrants (the “Warrants”) to purchase
      shares of the
      Company’s common stock, $.0001 par value (“Common
      Stock”). The purchase price for each Unit is
      $100,000.00, subject to proportional adjustments for fractional
      Units.

     

    WHEREAS,
      the parties desire that, upon the terms
      and subject to the conditions contained herein, the Company shall issue and
      sell
      to the Investor, and the Investor shall purchase from the Company, the principal
      amount of the Convertible Notes and the number of Warrants corresponding to
      the
      number of Units set forth on the execution page hereof.

     

    WHEREAS,
      such investments will be made in
      reliance upon the provisions of Section 4(2) (“Section 4(2)”)
      and/or Section 4(6) (“Section 4(6)”)
      of the United States Securities Act of 1933
      and/or Regulation D (“Regulation D”)
      and
      the other rules and regulations promulgated thereunder or upon such other
      exemption from the registration requirements of the Securities Act as may be
      available with respect to any or all of the investments in securities to be
      made
      hereunder.

     

    
      	
              NOW,
                THEREFORE, the parties hereto agree as
                follows:

            

    

     

    ARTICLE
      I

     

    Certain
      Definitions

     

    In
      addition to the definitions set forth in the text of this Agreement,
      the following capitalized terms shall have the meanings ascribed to them
      below:

     

    “Affiliate”
      means
      (i) with respect to any Person, any other Person directly or indirectly
      controlling or controlled by or under direct or indirect common control with
      such specified Person or (ii) with respect to any individual, shall also mean
      the spouse, sibling, child, step-child, grandchild, niece, nephew or parent
      of
      such Person, or the spouse thereof.

     

     

    

    
    

     

     

    “Agents”
      shall mean Trident Partners, Ltd., and agents
      appointed by them.

     

    “Capital
      Shares” shall mean the
      Common Stock and any shares of
      any other class of common stock, whether now or hereafter authorized, having
      the
      right to participate in the distribution of earnings and assets of the
      Company.

     

    “Closing”
      shall mean each closing of the purchase and
      sale of the Convertible Notes and Warrants pursuant to Section 2.1.

     

    “Closing
      Date” shall mean each
      date on which (x) all
      conditions to Closing have been satisfied or waived as provided in Section
      2.1(b) hereof and (y) a Closing shall have occurred.

     

    “Common
      Stock” shall mean the
      Company’s common stock, $.0001
      par value per share.

     

    “Conversion
      Shares” shall mean the
      shares of Common Stock issuable
      upon conversion of the Convertible Notes, including any shares of Common Stock
      issued in payment of interest under the Convertible Notes.

     

    “Convertible
      Notes” shall mean the
      Company’s 6% Convertible
      Subordinated Notes, substantially in the form annexed to the Memorandum as
      Exhibit B, to be issued to the Investor hereunder.

     

    “Damages”
      shall mean any loss, claim, damage, judgment,
      penalty, deficiency, liability, costs or expenses (including, without
      limitation, reasonable attorneys’ fees and disbursements and reasonable costs
      and expenses of expert witnesses and investigation).

     

    “Effective
      Date” shall mean the
      date on which the SEC first
      declares effective a Registration Statement registering the resale of the
      Registrable Securities.

     

    “Environmental
      Laws” shall mean foreign,
      Federal, state and local
      laws and regulations relating to the protection of human health and safety,
      the
      environment, hazardous or toxic substances or wastes, pollutants or
      contaminants.

     

    “Escrow
      Agent” means Continental
      Stock Transfer and Trust
      Company.

     

    “Exchange
      Act” shall mean the
      Securities Exchange Act of 1934,
      as amended, or any similar Federal statute, and the rules and regulations of
      the
      SEC thereunder, as the same shall be in effect at the time. Reference to a
      particular section of the Exchange Act shall include a reference to the
      comparable section, if any, of any such similar statue.

     

    “Holder”
      or
“Holders” means the
      Investors and any party who shall hereafter acquire and hold Registrable
      Securities.

     

    “GAAP”
      shall mean United States generally accepted
      accounting principles as shall be in effect from time to time.

     

     

    2

     

    

    
    

     

     

    “Intellectual
      Property” shall mean all
      trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, trade secrets, know-how (including trade secrets
      and other unpatented and/or unpatentable proprietary or confidential
      information, systems or procedures) and other similar proprietary rights,
      information and knowledge.

     

    “Legend”
      shall mean the legend set forth in Section
      10.1.

     

    “Market
      Price” on any given
      date shall mean the average
      closing bid price of the Common Stock on the Principal Market (as reported
      by
      Bloomberg L.P.) for the period of ten consecutive Trading Days ending on the
      Trading Day immediately prior to the date for which the Market Price is to
      be
      determined.

     

    “Material
      Adverse
      Effect” shall mean any
      effect on the business, operations, properties, prospects, stock price or
      financial condition of the Company that is material and adverse to the Company
      and its subsidiaries and affiliates, taken as a whole, or any condition,
      circumstance, or situation that would prohibit or otherwise interfere with
      the
      ability of the Company to enter into and perform any of its obligations under
      any of the Transaction Documents in any material respect.

     

    “Memorandum”shall
      mean the Company’s Confidential Private Placement
      Memorandum, as supplemented and amended up to the Closing Date.

     

    “Outstanding,”
      when used with reference to any Capital
      Shares, shall mean, at any date as of which the number of such Capital Shares
      is
      to be determined, all issued and outstanding Capital Shares, and shall include
      all such Capital Shares issuable in respect of outstanding scrip or any
      certificates representing fractional interests in such Capital Shares;
provided, however,
      that “Outstanding” shall not mean any
      such Capital Shares then directly or indirectly owned or held by or for the
      account of the Company.

     

    “Person”
      shall mean an individual, a corporation, a
      partnership, a limited liability company, an association, a trust or other
      entity or organization, including a government or political subdivision or
      an
      agency or instrumentality thereof.

     

    “Placement
      Agent”shall mean Trident
      Partners, Ltd.

     

    “Principal
      Amount” shall mean,
      at any time, the unpaid principal
      balance of one or more Convertible Notes.

     

    “Principal
      Market” shall mean the
      American Stock Exchange, the New
      York Stock Exchange, the NASDAQ National Market, or the NASDAQ SmallCap Market,
      whichever is at the time the principal trading exchange or market for the Common
      Stock, based upon share volume, or if the Common Stock is not traded on an
      exchange or The Nasdaq Stock Market, the OTC Bulletin Board or any other
      quotation medium in which quotations are regularly published for Common
      Stock.

     

     

    3

     

    

    
    

     

     

    “Purchase
      Price” shall mean $100,000
      for each Unit, subject to
      proportional adjustment for fractional Units.

     

    “Registrable
      Securities” shall mean
      the Conversion Shares and the Warrant Shares until (i) all Conversion Shares
      and
      Warrant Shares have been disposed of pursuant to the Registration Statement,
      (ii) all Conversion Shares and Warrant Shares have been sold under circumstances
      under which all of the applicable conditions of Rule 144, under the Securities
      Act (“Rule 144”) are met, or (iii) all Conversion Shares and Warrant Shares have
      been otherwise transferred to holders who may trade such shares without
      restriction under the Securities Act, and the Company has delivered a new
      certificate or other evidence of ownership for such securities not bearing
      a
      restrictive Legend.

     

    “Requisite
      Percentage of Outstanding
      Holders” means the Holders of Registrable Securities
      who, assuming conversion of all of the then outstanding Notes into Conversion
      Shares and the exercise of all the Warrants, would hold 50.1% or more of the
      total Registrable Securities that would then be outstanding.

     

    “Requisite
      Percentage of Participating
      Holders” means Holders of Registrable Securities
      participating in the registration who, assuming conversion of all then
      outstanding Notes into Conversion Shares and exercise of the Warrants, would
      hold a majority of the total Registrable Securities that would then be held
      by
      all Holders participating in the registration.

     

    “Registration
      Statement” shall mean a
      registration statement on Form SB-2 if use of such form is then available to
      the
      Company pursuant to the rules of the SEC and, if not, on such other form
      promulgated by the SEC for which the Company then qualifies and which counsel
      for the Company shall deem appropriate, and which form shall be available for
      the resale by the Investor of the Registrable Securities to be registered
      thereunder in accordance with the provisions of this Agreement and the
      Registration Rights Agreement and in accordance with the intended method of
      distribution of such securities), for the registration of the resale by the
      Investor of the Registrable Securities under the Securities Act.

     

    “Regulation
      D” shall have the
      meaning set forth in the
      recitals of this Agreement.

     

    “SEC”
      shall mean the Securities and Exchange
      Commission.

     

    “SEC
      Documents” shall mean the
      Company’s Annual Report on Form
      10-KSB for the fiscal year ended May 31, 2004 and each report, proxy statement
      and registration statement filed by the Company with the SEC pursuant to the
      Exchange Act or the Securities Act since the filing of such Annual Report
      through the date hereof.

     

    “Section
      4(2)”and “Section
      4(6)” shall have the meanings set forth in the
      recitals of this Agreement.

     

    “Securities”shall
      mean the Convertible Notes, the Warrants, the
      Conversion Shares and the Warrant Shares, individually and
      collectively.

     

     

    4

     

    

    
    

     

     

    “Securities
      Act” shall mean the
      Securities Act of 1933, as
      amended, or any similar Federal statute, and the rules and regulations of the
      SEC thereunder, as the same shall be in effect at the time. Reference to a
      particular section of the Securities Act shall include a reference to the
      comparable section, if any, of any such similar statue.

     

    “Subsidiary”
      shall mean any entity in which the Company,
      directly or indirectly, owns capital stock or holds an equity or similar
      interest.

     

    “Trading
      Day” shall mean any
      day during which the Principal
      Market shall be open for business.

     

    “Transaction
      Documents” shall mean
      this Agreement, the Convertible Notes, the Warrants, the Memorandum, and each
      of
      the other agreements entered into by the parties hereto in connection with
      the
      transactions contemplated by this Agreement.

     

    “Warrants”
      shall mean the warrants to purchase Common
      Stock, substantially in the form annexed to the Memorandum as Exhibit C, to
      be
      issued to the Investor hereunder.

     

    “Warrant
      Shares” shall mean all
      shares of Common Stock or other
      securities issued or issuable pursuant to exercise of the Warrants.

     

    ARTICLE
      II     

     

    Purchase
      and Sale of Convertible Notes and Warrants

     

    
      	
              Section
                2.1.

            	
              Investment.

            

    

     

    Upon
      the terms and subject to the conditions set forth herein, on the
      Closing Dates set forth below the Company agrees to sell to the Investor, and
      the Investor agrees to purchase from the Company, the Units consisting of the
      principal amount of Convertible Notes and related Warrants set forth beside
      the
      Investor’s signature below, as follows:

     

    (a)        Concurrently
      with the
      execution and delivery of this Agreement, the Investor shall deliver the
      Purchase Price, in immediately available funds, to the Escrow Agent, to deposit
      and hold to the following non-interest bearing account pending Closing or the
      termination of the offering without acceptance of the Investors offer to
      purchase Units:

     

    
      	
              Account
                Name:

            	
              CST&T
                AAF CDKnet.com Subscribers Escrow
                Account

            
	
              Bank:

            	
              JP
                Morgan Chase

            	
               

            
	
               

            	
              4
                Metro Tech Center, 22nd Floor

            	
               

            
	
               

            	
              Brooklyn,
                NY 11245

            	
               

            
	
              Account
                No.:

            	
              530-060124

            	
               

            
	
              ABA
                No.:

            	
              021000021

            	
               

            
	
            	
            	
            	
            	
            	
            	
            

    

    
      	
              Details:

            	
              [Name
                of Investor, facsimile no. or e-mail address of
                investor]

            

    

     

     

    5

     

    

    
    

     

     

    (b)        The
      Escrow Agent will
      release the funds to the Company upon the receipt of notice from the Company
      and
      the Placement Agent that an executed original Convertible Note and Warrant
      registered in the name of the Investor has been delivered to the Placement
      Agent
      on the Investors’ behalf.

     

    Section
      2.2.      Closing. Each Closing shall
      be subject to the
      satisfaction of the conditions to Closing set forth below:

     

    (a)            The
      obligation of the Company hereunder to issue and sell the Convertible
      Note(s) and issue the Warrant(s) to the Investor at a Closing is subject to
      the
      satisfaction, at or before the relevant Closing Date, of each of the following
      conditions, provided that these conditions are for the Company’s sole benefit
      and may be waived by the Company at any time in its sole discretion by providing
      the Investor with prior written notice thereof:

     

    (i)             The
      Investor shall have executed each of the Transaction Documents to be
      executed by it and delivered the same to the Company.

     

    (ii)           The
      Investor shall have delivered to the Escrow Agent the Purchase Price
      for the Convertible Notes and Warrants being purchased by the Investor at the
      Closing by wire transfer of immediately available funds pursuant to the written
      wire instructions provided by the Company or, if the Purchase Price has been
      delivered to the Escrow Agent in the form of a check, such funds are
      available.

     

    (iii)          The
      representations and warranties of the Investor shall be true and
      correct as of the date when made and as of the Closing Date as though made
      at
      that time (except for representations and warranties that speak as of a specific
      date), and the Investor shall have performed, satisfied and complied with the
      covenants, agreements and conditions required by the Transaction Documents
      to be
      performed, satisfied or complied with by it at or prior to the Closing Date,
      and
      the Placement Agent has not directed the Company to reject the Investors
      subscription for any reason, at the Placement Agent’s sole
      discretion.

     

    (b)           The
      obligation of the Investor hereunder to purchase the Convertible
      Note(s) and Warrant(s) at the Closing is subject to the satisfaction, at or
      before the relevant Closing Date, of each of the following conditions, provided
      that these conditions are for the Investor’s sole benefit and may be waived by
      the Placement Agent on the Investor’s behalf at any time in its sole
      discretion:

     

    (i)             The
      Company shall have executed each of the Transaction Documents to be
      executed by it and delivered copies of the same to the Placement
      Agent.

     

     

    6

     

    

    
    

     

     

    (ii)           The
      Common Stock shall be authorized for quotation on a Principal Market,
      trading in the Common Stock shall not have been suspended by such Principal
      Market or the SEC at any time beginning on the date hereof and through and
      including the Closing Date, and, except as set forth on the Disclosure Schedule,
      the Company shall not have been notified of any pending or threatened proceeding
      or other action to delist or suspend the Common Stock.

     

    (iii)          The
      representations and warranties of the Company set forth herein shall
      be true and correct as of the date when made and as of the Closing Date as
      though made at that time (except for representations and warranties that speak
      as of a specific date) and the Company shall have performed, satisfied and
      complied with the covenants, agreements and conditions required by the
      Transaction Documents to be performed, satisfied or complied with by the Company
      at or prior to the Closing Date. The Investor shall have received a certificate,
      executed by the Company’s Chief Executive Officer, dated as of the Closing Date,
      to the foregoing effect and as to such other matters as may be reasonably
      requested by the Investor and the Placement Agent.

     

    (iv)          The
      Company shall have executed and delivered to the Placement Agent the
      Convertible Note(s) (in such denominations as the Investor shall request) being
      purchased by the Investor at the Closing.

     

    (E)           The
      Company shall have executed and delivered to the Placement Agent the
      Warrant(s) (in such denominations as the Investor shall request) being purchased
      by the Investor at such Closing.

     

    (F)           The
      Board of Directors of the Company shall have adopted resolutions
      consistent with Section 4.2 below (the “Resolutions”).

     

    (G)          As
      of the Closing Date, the Company shall have reserved out of its
      authorized and unissued Common Stock, for the purpose of effecting the
      conversion of the Convertible Notes and the exercise of the Warrants, 103,175
      shares of Common Stock for each Unit (and fractions thereof) sold for a maximum
      aggregate of 2,476,200 shares.

     

    (H)          The
      Company shall have delivered to the Investor such other documents and
      instruments as the Placement Agent may reasonably request.

     

    ARTICLE
      III

    Representations
      and Warranties of the Investor

     

    The
      Investor represents and warrants to the Company that:

     

     

    7

     

    

    
    

     

     

    Section
      3.1.      Intent. The Investor is entering
      into this
      Agreement for its own account and not with a view to or for sale in connection
      with any distribution of the Convertible Notes, the Warrants or the Common
      Stock
      (collectively the “Securities”).
      The
      Investor has no present arrangement (whether or not legally binding) at any
      time
      to sell the Securities to or through any person or entity; provided, however,
      that by making the representations herein, the Investor does not agree to hold
      such Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with Federal and state
      securities laws applicable to such disposition.

     

    Section
      3.2.      Sophisticated Investor. The Investor is a
      sophisticated investor (as described in Rule 506(b)(2)(ii) of Regulation D)
      and
      an accredited investor (as defined in Rule 501 of Regulation D and evidenced
      by
      the completed Suitability Questionnaire annexed hereto), and the Investor has
      such experience in business and financial matters that it has the capacity
      to
      protect its own interests in connection with this transaction and is capable
      of
      evaluating the merits and risks of an investment in the Securities. The Investor
      acknowledges that an investment in the Securities is speculative and involves
      a
      high degree of risk.

     

    Section
      3.3.      Authority. This Agreement and
      each of the
      Transaction Documents that are required to be executed by the Investor have
      been
      duly authorized (if the Investor is not a natural person) and validly executed
      and delivered by the Investor and are a valid and binding agreements of the
      Investor enforceable against it in accordance with their terms, subject to
      applicable bankruptcy, insolvency, or similar laws relating to, or affecting
      generally the enforcement of, creditors’ rights and remedies or other equitable
      principles of general application.

     

    Section
      3.4.      Suitability Questionnaire. The information in
      the
      Suitability Questionnaire annexed hereto is accurate and true in all material
      respects.

     

    Section
      3.5.      Absence of Conflicts. The execution, delivery
      and
      performance of this Agreement and each other Transaction Document, and the
      consummation of the transactions contemplated hereby and thereby, and compliance
      with the requirements hereof and thereof by the Investor, will not violate
      any
      law, rule, regulation, order, writ, judgment, injunction, decree or award
      binding on the Investor or (a) violate any provision of any indenture,
      instrument or agreement to which the Investor is a party or is subject, or
      by
      which the Investor or any of its assets is bound; (b) conflict with or
      constitute a material default thereunder; (c) result in the creation or
      imposition of any lien pursuant to the terms of any such indenture, instrument
      or agreement, or constitute a breach of any fiduciary duty owed by the Investor
      to any third party; or (d) require the approval of any third party (which has
      not been obtained) pursuant to any material contract, agreement, instrument,
      relationship or legal obligation to which the Investor is subject or to which
      any of its assets, operations or management may be subject.

     

    Section
      3.6.      Disclosure; Access to Information. The Investor
      has received all documents, records, books and other publicly available
      information pertaining to the Investor’s investment in the Company as the
      Investor has requested. The Investor acknowledges that the Company is subject
      to
      the periodic reporting requirements of the Exchange Act, and the Investor has
      been afforded the opportunity to review copies of all SEC Documents deemed
      relevant by the 

     

    8

     

    

    
    

     

    Investor,
      as well as the Company’s Confidential Placement Memorandum
      dated May 18, 2005, as supplemented and amended up to the Closing Date (the
      “Memorandum”). 

     

    Section
      3.7.      Manner of Sale. At no time was the
      Investor
      presented with or solicited by or through any leaflet, public promotional
      meeting, television advertisement or any other form of general solicitation
      or
      advertising. 

     

    Section
      3.8       Agent Compensation. The Investor acknowledges
      that it is aware and consents to compensation of the Agents in the manner set
      forth in the Memorandum.

     

    ARTICLE
      IV

     

    Representations
      and Warranties of the Company

     

    The
      Company represents and warrants to the Investor that, except as set
      forth on the Disclosure Schedule prepared by the Company and attached
      hereto:

     

    Section
      4.1.      Organization of the Company. The Company is a
      corporation duly organized, validly existing and in good standing under the
      laws
      of the State of Delaware and has all requisite corporate authority to own its
      properties and to carry on its business as now being conducted and as proposed
      to be conducted as described in the Memorandum. The Company’s Subsidiaries are
      corporations duly organized and validly existing in good standing under the
      laws
      of the jurisdiction in which they are incorporated and have the requisite
      corporate power and authority to own their properties and to carry on their
      business as now being conducted. The Company does not have any Subsidiaries
      and
      does not own more than fifty percent (50%) of or control any other business
      entity except as set forth in the SEC Documents. The Company and each of its
      Subsidiaries is duly qualified and is in good standing as a foreign corporation
      to do business in every jurisdiction in which the nature of the business
      conducted or property owned by it makes such qualification necessary, other
      than
      those in which the failure so to qualify would not have a Material Adverse
      Effect.

     

    Section
      4.2.      Authority. (i) The Company has
      the requisite
      corporate power and corporate authority to enter into and perform its
      obligations under the Transaction Documents and to issue the Securities pursuant
      to their respective terms; (ii) the execution, issuance and delivery of the
      Transaction Documents, the Convertible Notes and the Warrants by the Company
      and
      the consummation by it of the transactions contemplated hereby have been duly
      authorized by all necessary corporate action and no further consent or
      authorization of the Company or its Board of Directors or stockholders is
      required; and (iii) the Transaction Documents have been duly executed and
      delivered by the Company and constitute valid and binding obligations of the
      Company enforceable against the Company in accordance with their terms, except
      as such enforceability may be limited by applicable bankruptcy, insolvency,
      or
      similar laws relating to, or affecting generally the enforcement of, creditors’
      rights and remedies or other equitable principles of general application. The
      Company has duly and validly authorized and reserved for issuance shares of
      Common Stock sufficient in number for the conversion of the Convertible Notes
      and for the exercise of the Warrants. The Company understands and acknowledges
      the 

     

    9

     

    

    
    

     

    potentially
      dilutive effect on the Common Stock of the issuance of the
      Conversion Shares and the Warrant Shares. The Company further acknowledges
      that
      its obligation to issue Conversion Shares upon conversion of the Convertible
      Notes and Warrant Shares upon exercise of the Warrants in accordance with this
      Agreement, the Convertible Notes and/or the Warrants is absolute and
      unconditional regardless of the dilutive effect that such issuance may have
      on
      the ownership interests of other stockholders of the Company and notwithstanding
      the commencement of any case under 11 U.S.C. § 101 et seq. (the
“Bankruptcy Code”).

     

    Section
      4.3. No Pre-Emptive
      Rights. The Company is not a party to any agreement
      granting preemptive rights to any person with respect to any of its equity
      or
      debt securities. 

     

    Section
      4.4.      Common Stock. The Company has registered
      its
      Common Stock pursuant to Section 12(b) or (g) of the Exchange Act and is in
      full
      compliance with all reporting requirements of the Exchange Act, and the Company
      is in compliance with all requirements for the continued listing or quotation
      of
      its Common Stock, and such Common Stock is currently listed or quoted on, a
      Principal Market. As of the date hereof, the Principal Market is the OTC
      Bulletin Board, and the Company has not received any notice regarding, and
      to
      its knowledge there is no threat of, the termination or discontinuance of the
      eligibility of the Common Stock for such listing.

     

    Section
      4.5.      SEC Documents. The Company has delivered
      to the
      Investor, by reference to the SEC Website and “EDGAR” therender, true and
      complete copies of the SEC Documents. The Company has not provided the Investor
      any information that, according to applicable law, rule or regulation, should
      have been disclosed publicly prior to the date hereof by the Company, but which
      has not been so disclosed. As of their respective dates, the SEC Documents
      complied in all material respects with the requirements of the Securities Act
      or
      the Exchange Act, as the case may be, and rules and regulations of the SEC
      promulgated thereunder, and the SEC Documents did not contain any untrue
      statement of a material fact or omit to state a material fact required to be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances under which they were made, not misleading. The Memorandum
      (including any document incorporated by reference therein) does not and will
      not
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein not misleading. The consolidated financial
      statements of the Company included in the SEC Documents complied in all material
      respects with applicable accounting requirements and the rules and regulations
      of the SEC or other applicable rules and regulations with respect thereto at
      the
      time of such inclusion. Such consolidated financial statements have been
      prepared in accordance with GAAP applied on a consistent basis during the
      periods involved (except (i) as may be otherwise indicated in such consolidated
      financial statements or the notes thereto or (ii) in the case of unaudited
      interim statements, to the extent they exclude footnotes or may be condensed
      or
      summary statements) and fairly present in all material respects the financial
      position of the Company as of the dates thereof and the results of operations
      and cash flows for the periods then ended (subject, in the case of unaudited
      interim statements, to normal year-end audit adjustments). Neither the Company
      nor any of its subsidiaries has any material indebtedness, obligations or
      liabilities of any kind (whether accrued, absolute, contingent or otherwise,
      and
      whether due or to become due) that would have been required to be reflected
      in,
      reserved against or otherwise described in the financial statements or in the
      notes thereto in accordance with GAAP, which was not fully 

     

    10

     

    

    
    

     

    reflected
      in, reserved against or otherwise described in the financial
      statements or the notes thereto included in the SEC Documents or was not
      incurred in the ordinary course of business consistent with the Company’s past
      practices since the last date of such financial statements. No other information
      provided by or on behalf of the Company to the Investor that is not included
      in
      the SEC Documents, including, without limitation, the Memorandum contains any
      untrue statement of a material fact or omits to state any material fact
      necessary in order to make the statements therein, in the light of the
      circumstance under which they are or were made, not misleading. 

     

    Section
      4.6.      Exemption from Registration; Valid Issuances.
      Subject to the accuracy of the Investor’s representations in Article III, the
      Company’s sale of the Convertible Notes and its issuance of the Warrants under
      this Agreement does not, and the Company’s issuance of the Conversion Shares on
      the conversion of the Convertible Notes and the Warrant Shares on the exercise
      or conversion of the Warrants will not, require registration under the
      Securities Act and/or any applicable state securities law. When issued in
      accordance with the terms of the Convertible Notes or issued and paid for in
      accordance with the Warrants, the Conversion Shares and the Warrant Shares,
      as
      the case may be, will be duly and validly authorized and issued, fully-paid,
      and
      nonassessable. Neither the sales of the Securities pursuant to, nor the
      Company’s performance of its obligations under, the Transaction Documents will
      (i) result in the creation or imposition by the Company of any liens, charges,
      claims or other encumbrances upon any of the Securities or any of the assets
      of
      the Company or Securities, or (ii) entitle the holders of Outstanding Capital
      Shares to preemptive or other rights to subscribe for or acquire the Capital
      Shares or other securities of the Company. None of the Securities will subject
      the Investor to personal liability to the Company or its creditors by reason
      of
      the Investor’s possession thereof.

     

    Section
      4.7.      No
      General Solicitation or Advertising in Regard to this
      Transaction. Neither the Company nor any of its
      affiliates nor any person acting on its or their behalf (i) has conducted or
      will conduct any general solicitation (as that term is used in Rule 502(c)
      of
      Regulation D) or general advertising with respect to the sale of the Convertible
      Notes or the Warrants, or (ii) has made any offers or sales of any security
      or
      solicited any offers to buy any security under any circumstances that would
      require registration of the Securities under the Securities Act.

     

    Section
      4.8.      No
      Conflicts. The Company’s execution, delivery and
      performance of the Transaction Documents, the Company’s performance of its
      obligations under the Convertible Notes and Warrants, and the Company’s
      consummation of the transactions contemplated hereby and thereby do not and
      will
      not (i) result in a violation of the Company’s Certificate of Incorporation or
      By-Laws 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, or give to others
      any rights of termination, amendment, acceleration or cancellation of, any
      material agreement, indenture or instrument, or any “lock-up” or similar
      provision of any underwriting or similar agreement to which the Company is
      a
      party, or (iii) result in a violation of any law, rule, regulation, order,
      judgment or decree (including laws regarding usury, Federal and state securities
      laws and regulations and the rules and regulations of the Principal Market)
      applicable to the Company or by which any property or asset of the Company
      is
      bound or affected. The Company is not otherwise in violation of any term of
      or
      in default under its Certificate of Incorporation or By-laws, or any contract,
      agreement, mortgage, indebtedness, indenture, instrument, judgment, 

     

    11

     

    

    
    

     

    decree
      or order or any statute, rule or regulation applicable to the
      Company, except for possible conflicts, defaults, terminations, amendments,
      accelerations, cancellations and violations that would not individually or
      in
      the aggregate have a Material Adverse Effect. The Company’s business is not
      being conducted in violation of any law, ordinance or regulation of any
      governmental entity, except for possible violations that either singly or in
      the
      aggregate would not result in a Material Adverse Effect. Except for the filing
      of the Form D as required by the Securities Act, the Company is not required
      to
      obtain any consent, authorization or order of, or make any filing or
      registration with, any court or governmental agency or any regulatory or
      self-regulatory organization, in order for it to execute, deliver or perform
      any
      of its obligations under or contemplated by the Transaction Documents, in each
      case in accordance with the terms hereof or thereof. All consents,
      authorizations, orders, filings and registrations that the Company is required
      to obtain pursuant to the preceding sentence have been obtained or effected
      on
      or prior to the date hereof. The Company is not in violation of the listing
      requirements of the Principal Market as in effect on the date hereof and is
      not
      aware of any facts which would reasonably lead to delisting of the Common Stock
      by the Principal Market in the foreseeable future.

     

    Section
      4.9.      No
      Material Adverse Change. Since February 28, 2005, except
      as set forth in the Memorandum or an SEC Document filed with the SEC after
      such
      date, the Company has not (i) issued any stock, bonds or other corporate
      securities, (ii) borrowed any amount or incurred any liabilities (absolute
      or
      contingent) that would be required to be disclosed on a balance sheet as of
      the
      date hereof prepared in accordance with generally accepted accounting
      principles, except current liabilities incurred, and liabilities under contracts
      entered into, in the ordinary course of business or liabilities for legal fees
      incurred in connection with the transactions contemplated hereby, (iii) declared
      or made any payment or distribution to stockholders or purchased or redeemed
      any
      shares of its capital stock or other securities, (iv) mortgaged, pledged or
      subjected to lien any of its assets, tangible or intangible, other than liens
      of
      current real property taxes not yet due and payable, (v) sold, assigned or
      transferred any of its tangible assets or canceled any debts or claims, except
      in the ordinary course of business, (vi) sold, assigned or transferred any
      patents, trademarks, trade names, copyrights, trade secrets or other intangible
      assets, (vii) suffered any material losses (except for continuing losses from
      operations) or waived any rights of substantial value, whether or not in the
      ordinary course of business, (viii) received notification of cancellation,
      or
      canceled or waived any rights which, individually or in the aggregate, are
      material with respect to any currently existing agreement, contract, right
      or
      understanding, (ix) made any changes in officer compensation, (x) entered into
      any transaction except in the ordinary course of business, or (xi) been the
      subject of any claims from the holders of any of its securities. Since February
      28, 2005, no Material Adverse Effect has occurred or exists with respect to
      the
      Company, except as disclosed in any SEC Documents filed at least five (5) days
      prior to the date hereof and available on EDGAR or can reasonably be expected
      to
      have occurred as the result of continuing losses. The Company has not taken
      any
      steps, and does not currently expect to take any steps, to seek protection
      pursuant to the Bankruptcy Code or any law generally affecting creditors’ rights
      nor does the Company have any knowledge or reason to believe that its creditors
      intend to initiate involuntary bankruptcy proceedings.

     

    Section
      4.10.    No
      Undisclosed Liabilities. No liability has occurred or
      exists with respect to the Company or its Subsidiaries or their respective
      businesses, properties, operations or financial condition, that has not been
      disclosed in the SEC Documents or the Memorandum, except for 

     

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    liabilities
      which are immaterial in amount or liabilities that have been
      incurred subsequent to February 28, 2005 in the ordinary course of business
      consistent with past practice.

     

    Section
      4.11.    No Integrated
      Offering. The Company has not, directly or indirectly,
      made any offers or sales of any security, or solicited any offers to buy any
      security, under circumstances that would require registration of any of the
      Securities under the Securities Act or cause this offering of Securities to
      be
      integrated with prior offerings of securities by the Company for purposes of
      the
      Securities Act or any applicable stockholder approval provisions, including,
      without limitation, under the rules and regulations of the Principal Market;
      nor
      will the Company or any of its Subsidiaries take any action or steps that would
      require registration of the Securities under the Securities Act or cause the
      offering of the Securities to be integrated with other offerings.

     

    Section
      4.12.    Litigation
      and Other Proceedings. Except as disclosed in the SEC
      Documents and Memorandum, there are no lawsuits or proceedings pending or,
      to
      the knowledge of the Company, threatened, against the Company or any Subsidiary
      or any of their officers or directors in their capacities as such, nor has
      the
      Company received any written or oral notice of any such action, suit, proceeding
      or investigation, which could reasonably be expected to have a Material Adverse
      Effect. Except as set forth in the SEC Documents and Memorandum, no judgment,
      order, writ, injunction or decree or award has been issued by or, to the
      knowledge of the Company, requested of any court, arbitrator or governmental
      agency that could result in a Material Adverse Effect.

     

    Section
      4.14.    Intellectual
      Property. Each of the Company and its Subsidiaries owns
      or possesses adequate and enforceable rights or licenses to use all Intellectual
      Property necessary for the conduct of its business as now being conducted and
      as
      proposed to be conducted. None of the Company’s or any Subsidiary’s Intellectual
      Property necessary to conduct its business as now conducted or as proposed
      to be
      conducted has expired or terminated, or is expected to expire or terminate
      within two years from the date of this Agreement. To the Company’s knowledge,
      except as disclosed in the SEC Documents, neither the Company nor any of its
      subsidiaries is infringing upon or in conflict with any right of any other
      person with respect to any Intellectual Property. Except as disclosed in the
      SEC
      Documents, no adverse claims have been asserted by any person to the ownership
      or use of any Intellectual Property, and the Company has no knowledge of any
      basis for such claim.

     

    Section
      4.14.    Internal
      Controls and Procedures. The Company maintains books and
      records and internal accounting controls that provide reasonable assurance
      that
      (i) all transactions to which the Company or any Subsidiary is a party or by
      which its properties are bound are executed with management’s authorization;
      (ii) the recorded accounting of the Company’s consolidated assets is compared
      with existing assets at regular intervals; (iii) access to the Company’s
      consolidated assets is permitted only in accordance with management’s
      authorization; and (iv) all transactions to which the Company or any Subsidiary
      is a party or by which its properties are bound are recorded as necessary to
      permit preparation of the financial statements of the Company in accordance
      with
      GAAP.

     

     

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    Section
      4.15.     Acknowledgment Regarding Investors’ Purchase of Convertible
      Notes. The Company acknowledges and agrees that each
      of
      the Investors is acting solely independently in the capacity of arm’s-length
      purchaser with respect to the Transaction Documents and the transactions
      contemplated thereby. The Company further acknowledges that no Investor is
      acting as a financial advisor or fiduciary of the Company (or in any similar
      capacity) with respect to the Transaction Documents and the transactions
      contemplated thereby and any advice given by any of the Investor or any of
      their
      respective representatives or agents in connection with the Transaction
      Documents and the transactions contemplated thereby is merely incidental to
      the
      Investor’s purchase of the Securities. The Company further represents to the
      Investor that the Company’s decision to enter into the Transaction Documents has
      been based solely on the independent evaluation by the Company and its
      representatives.

     

    Section
      4.16.     Environmental Laws. The Company and its
      Subsidiaries (i) are in compliance with any and all applicable Environmental
      Laws, (ii) have received all permits, licenses or other approvals required
      of
      them under applicable Environmental Laws to conduct their respective businesses
      and (iii) are in compliance with all terms and conditions of any such permit,
      license or approval where, in each of the three foregoing cases, the failure
      to
      so comply would have, individually or in the aggregate, a Material Adverse
      Effect.

     

    Section
      4.17.     Regulatory
      Permits. The Company and its Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate Federal,
      state or foreign regulatory authorities necessary to conduct their respective
      businesses, except where the failure to possess such items would not have,
      individually or in the aggregate, a Material Adverse Effect, and neither the
      Company nor any such Subsidiary has received any notice of proceedings relating
      to the revocation or modification of any such certificate, authorization or
      permit.

     

    Section
      4.18.     No
      Materially Adverse Contracts, Etc. Neither the Company
      nor any of its Subsidiaries is subject to any charter, corporate or other legal
      restriction, or any judgment, decree, order, rule or regulation that has a
      Material Adverse Effect. Neither the Company nor any of its Subsidiaries is
      a
      party to any contract or agreement that has or is expected to have a Material
      Adverse Effect.

     

    Section
      4.19.     No Other
      Agreements. The Company has not, directly or indirectly,
      made any agreements with any Investor relating to the terms or conditions of
      the
      transactions contemplated by the Transaction Documents, except as set forth
      in
      the Transaction Documents.

     

    Section
      4.20     Capitalization. The authorized capital
      of the
      Company consists of 5,000,000 shares of Preferred Stock, par value $ 0.0001
      per
      share (the "Preferred Stock"), none of which has been authorized for issuance
      issued or reserved for issuance and 100,000,000 shares of Common Stock, par
      value $$ 0.0001 per share ("Common Stock"), of which as of the date of the
      Memorandum, (i) 23,566,667 shares of Common Stock are issued and outstanding
      and
      (ii) 6,714,642 (not including securities that are contingently convertible)
      shares of Common Stock are issuable upon conversion of equity or debt
      securities, exercise of outstanding warrants and other rights to acquire Common
      Stock and upon the exercise of options granted pursuant to the Company's stock
      option plans and pursuant to any other agreements, excluding the shares of
      Common Stock issuable upon conversion of the Notes and exercise or conversion
      of
      the 

     

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    Warrants.
      Except as disclosed in this Agreement or the Memorandum, the
      Company is not a party to any agreement to issue, and has not issued, any
      warrants, options or rights or debentures, notes or other evidence of
      indebtedness or other securities, instruments or agreements pursuant to the
      terms of which or upon the exercise or conversion of which additional shares
      of
      capital stock of the Company may become issuable. The holders of Common Stock
      and other securities of the Company have no preemptive rights or other similar
      rights. 

     

    Section
      4.21.     Taxes. Except as set forth
      in the Memorandum or
      the SEC Documents (a) the Company and its Subsidiaries have filed all necessary
      federal, state and foreign income, payroll, excise, sales and use, withholding,
      property and franchise tax returns, reports, estimates and other statements
      or
      returns (collectively, “Returns”) (b) all such Returns are complete and correct
      in all material respects, (c) the Company and its Subsidiaries have not failed
      to pay any taxes which were payable pursuant to said Returns or any assessments
      with respect thereto and (d) the Company has no knowledge of any tax deficiency
      which has been or is likely to be threatened or asserted against the Company
      or
      its Subsidiaries and there is no pending or potential audit, dispute or claim
      concerning any Return or any tax liability.

     

    Section
      4.22.     Indebtedness
      to Affiliates. Except as otherwise disclosed in the
      Memorandum, the Company has no indebtedness to any officers, directors, 5%
      or
      more stockholders (as calculated pursuant to Rule 13d-3 promulgated under the
      Exchange Act), or other affiliate (as such term is defined in the rules and
      regulations of the Securities and Exchange. Commission) of the
      Company.

     

    Section
      4.23.      Employment
      and Consulting Agreement. Neither the Company nor any
      Subsidiary have any employment or consultingcontracts or arrangements
      with any officer, director, 5%
      or more stockholder (as calculated pursuant to Rule 13d-3 promulgated under
      the
      Exchange Act) or other affiliate except as disclosed in the SEC Documents or
      the
      Memorandum.

     

    Section
      4.24.      Encumbrances. Except as disclosed
      in the SEC
      Documents or Memorandum, none of the property or assets of the Company or any
      Subsidiary are subject to any lien, mortgage, pledge, encumbrance or other
      security interest.

     

    Section
      4.25.      Disclosure
      Controls and Procedures. The Company and its
      Subsidiaries maintain “disclosure controls and procedures” (as defined in Rule
      13a-14(i) under the Exchange Act) and the Company and its Subsidiaries are
      in
      compliance with all applicable effective provisions of the Sarbanes-Oxley Act
      of
      2002 and the rules and regulations issued thereunder.

     

    Section
      4.26.     Unlawful
      Contributions. Neither the Company, any Subsidiary, nor
      any of their respective officers, directors, employees or representatives has
      at
      any time during the last five years (a) made any unlawful contribution to any
      candidate for public office (whether foreign, federal, state or local), or
      failed to disclose fully any contribution in violation of laws, or (b) made
      any
      payment to any foreign, federal , state or local governmental officer or
      official or other person charged with similar public duties, other than payments
      required or permitted by the laws of the United States or any jurisdiction
      thereof.

     

     

    15

     

    

    
    

     

     

    Section
      4.27.     Transactions
      in Company Securities. The Company, and its officers,
      directors and affiliates has not taken and may not take, directly or indirectly,
      any action designed to cause or result in, or which has constituted or which
      might reasonably be expected to constitute, the stabilization or manipulation
      of
      the price of the shares of Common Stock to facilitate the sale of the
      Securities.

     

    Section
      4.28.     Holding
      Period. The holding period required by Rule 144(d)
      promulgated with respect to the Securities Act commences with respect to the
      Conversion Shares and the Warrant Shares as and when the corresponding Note
      and
      Warrants are issued by the Company.

     

    Section
      4.29.    No
      Misrepresentation. The representations and warranties of
      the Company contained in this Agreement, any schedule, annex or exhibit hereto
      and any agreement, instrument or certificate furnished by the Company to the
      Investor pursuant to this Agreement, do not contain any untrue statement of
      a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary to make the statements therein, in light of the circumstances under
      which they were made, not misleading.

     

    ARTICLE
      V

     

    Covenants
      of the Investor

     

    [INTENTIONALLY
      OMITTED]

     

    ARTICLE
      VI

     

    Covenants
      of the Company

     

    Section
      6.1.    Best
      Efforts. The Company shall use its best efforts to
      timely satisfy each of the conditions to be satisfied by it as provided in
      Article II of this Agreement.

     

    Section
      6.2.    Reservation of
      Common Stock. As of the date hereof, the Company has
      reserved, for the purpose of enabling the Company to issue the Conversion Shares
      and the Warrant Shares pursuant to any conversion of the Convertible Notes
      or
      exercise of the Warrants, the number of shares of Common Stock needed to provide
      for the issuance of the Conversion Shares and the Warrant Shares. 

     

    Section
      6.3.    Listing of
      Common Stock. The Company shall maintain the listing of
      the Common Stock on a Principal Market and, as soon as required by the rules
      of
      the Principal Market and any other national securities exchange or automated
      quotation system, if any, upon which shares of Common Stock are listed, shall
      list the Conversion Shares and the Warrant Shares on the Principal Market and
      each such other exchange or system. The Company further agrees, if the Company
      applies to have the Common Stock traded on any other Principal Market, that
      it
      will include in such application the Conversion Shares and the Warrant Shares,
      and will take all such other action as is necessary or desirable in the opinion
      of the Investor to cause the Conversion Shares and Warrant Shares to be listed
      on such other Principal Market contemporaneously with the listing of the Common
      Stock on such other Principal Market. The 

     

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    Company
      will take all action necessary to continue the listing and
      trading of its Common Stock on a Principal Market (including, without
      limitation, maintaining sufficient net tangible assets) and will comply in
      all
      respects with the Company’s reporting, filing and other obligations under the
      bylaws or rules of the Principal Market. 

     

    Section
      6.4.    Exchange Act
      Registration. The Company will cause its Common Stock to
      continue to be registered under Section 12(b) or (g) of the Exchange Act, will
      comply in all respects with its reporting and filing obligations under the
      Exchange Act, and will not take any action or file any document (whether or
      not
      permitted by the Exchange Act or the rules thereunder) to terminate or suspend
      such registration or to terminate or suspend its reporting and filing
      obligations under the Exchange Act until the Investor have disposed of all
      of
      their Registrable Securities.

     

    Section
      6.5.    Legends. The certificates evidencing
      the
      Registrable Securities shall be free of legends, except as set forth in Article
      X.

     

    Section
      6.6.    Corporate
      Existence; Conflicting Agreements. The Company will take
      all steps necessary to preserve and continue its corporate existence. The
      Company shall not enter into any agreement, the terms of which agreement would
      restrict or impair the right or ability of the Company to perform any of its
      obligations under this Agreement or any of the other Transaction
      Documents.

     

    Section
      6.7.    Consolidation;
      Merger. The Company shall not, at any time after the
      date hereof, effect any merger or consolidation of the Company with or into,
      or
      a transfer of all or substantially all of the assets of the Company to, another
      entity (a “Consolidation Event”) unless the
      resulting successor or acquiring entity (if not the
      Company) assumes by written instrument or by operation of law the obligation
      to
      deliver to the Investor such shares of stock and/or securities as the Investor
      are entitled to receive pursuant to this Agreement and the Convertible Notes
      and
      the Warrants.

     

    Section
      6.8.    Issuance of
      Convertible Notes and Warrant Shares. The sale of the
      Convertible Notes and the Warrants and the issuance of the Warrant Shares
      pursuant to exercise or conversion of the Warrants and the Conversion Shares
      upon conversion of the Convertible Notes shall be exempt from the registration
      requirements of the Securities Act and applicable state securities laws pursuant
      to Section 4(2), Section 4(6) or Regulation D and applicable state securities
      law. The Company shall file a Form D with respect to the issuance of the
      Securities as required under Regulation D and provide a copy thereof to the
      Investor promptly after such filing. The Company shall take such action as
      reasonably necessary to qualify the Securities for, or obtain exemption for
      the
      Securities for, sale to the Investor at the Closing pursuant to this Agreement
      under applicable securities or “Blue Sky” laws of the states of the United
      States, and shall provide evidence of any such action so taken to the Investor
      on or prior to the Closing Date. The Company shall make all filings and reports
      relating to the offer and sale of the Securities required under the applicable
      securities or “Blue Sky” laws of the states of the United States following the
      Closing Date.

     

     

    17

     

    

    
    

     

     

    Section
      6.9.      Relief in Bankruptcy. The Company shall not
      seek
      judicial relief from its obligations hereunder. In the event the Company is
      a
      debtor under the Bankruptcy Code, the Company hereby waives to the fullest
      extent permitted any rights to relief it may have under 11 U.S.C. § 362 in
      respect of the conversion of the Convertible Notes and the exercise of the
      Warrants. The Company agrees, without cost or expense to the Investor, to take
      or consent to any and all action necessary to effectuate relief under 11 U.S.C.
      § 362.

     

    Section
      6.10. Use of Proceeds. The Company will use
      the proceeds from the sale of the Units in the
      manner set forth in the Memorandum.

     

    ARTICLE
      VII

     

    Registration
      Rights

     

    
      	
              Section
                7.1.

            	
              Registration
                Rights.

            

    

     

    (a)        Piggyback
      Registrations. If, at any time, the
      Company proposes or is required to register any of its equity securities or
      securities convertible or exchangeable for equity securities under the
      Securities Act (other than pursuant to registrations on such form or similar
      form(s) solely for registration of securities in connection with an employee
      benefit plan or dividend reinvestment plan or a merger, consolidation or
      acquisition), whether or not for its own account, the Company shall give prompt
      written notice of its intention to do so to each of the Holders of record of
      Registrable Securities. Upon the written request of any Holder, made within
      15
      days following the receipt of any such written notice (which request shall
      specify the maximum number of Registrable Securities intended to be disposed
      of
      by such Holder and the intended method of distribution thereof), the Company
      shall use its best efforts to cause all such Registrable Securities, the Holders
      of which have so requested the registration thereof, to be registered under
      the
      Securities Act (with the securities which the Company at the time proposes
      to
      register) to permit the sale or other disposition by the Holders (in accordance
      with the intended method of distribution thereof) of the Registrable Securities
      to be so registered. There is no limitation on the number of such piggyback
      registrations pursuant to the preceding sentence which the Company is obligated
      to effect. 

     

    (b)        Abandonment
      or Delay. If, at any time after
      giving written notice of its intention to register any equity securities and
      prior to the effective date of the registration statement filed in connection
      with such registration, the Company shall determine for any reason not to
      register or to delay registration of such equity securities, the Company may,
      at
      its election, give written notice of such determination to all Holders of record
      of Registrable Securities and, in the case of a determination not to register,
      shall be relieved of its obligation to register any Registrable Securities
      in
      connection with such abandoned registration, without prejudice.

     

    (c)        Holder’s
      Right to Withdraw. Any Holder shall have
      the right to withdraw its request for inclusion of its Registrable Securities
      in
      any registration statement pursuant to this Section 7.1 by giving written notice
      to the Company of its request to withdraw; provided, however, that (i) such
      request must be made in writing prior to the earlier of the execution of the
      underwriting agreement or the execution of the custody agreement with respect
      to
      such 

     

    18

     

    

    
    

     

    registration,
      and (ii) such withdrawal shall be irrevocable and, after
      making such withdrawal, a Holder shall no longer have any right to include
      Registrable Securities in the registration as to which such withdrawal was
      made.

     

    (d)        Cutbacks.
      If the managing underwriter of any
      underwritten offering shall inform the Company by letter of its belief that
      the
      number of Registrable Securities requested to be included in a registration
      under this Section 7.1 would materially adversely affect such offering, then
      the
      Company will include in such registration, first the securities proposed by
      the
      Company to be sold for its own account and, second the Registrable Securities
      and all other securities of the Company to be included in such registration
      to
      the extent of the number and type, if any, which the Company is so advised
      can
      be sold in (or during the time of) such offering, pro rata among the Holders
      participating in such offering in accordance with the number of Registrable
      Securities requested to be registered by each such Holder, but in no event
      shall
      the number of Registrable Securities in the offering represent less than 20%
      of
      all securities being offered in the offering.

     

    Section
      7.2.      Registration Procedures. If and whenever the
      Company is required by the provisions of this Agreement to use its best efforts
      to effect or cause the registration of any Registrable Securities under the
      Securities Act as provided in this Agreement, the Company shall, as
      expeditiously as possible:

     

    (a)        prepare
      and file with
      the SEC a registration statement on an appropriate registration form of the
      SEC
      for the disposition of such Registrable Securities in accordance with the
      intended method of disposition thereof, which form (i) shall be selected by
      the
      Company and (ii) shall, in the case of a shelf registration, be available for
      the sale of the Registrable Securities by the selling Holders thereof and such
      registration statement shall comply as to form in all material respects with
      the
      requirements of the applicable form and include all financial statements
      required by the SEC to be filed therewith, and the Company shall use its best
      efforts to cause such registration statement to become effective (provided,
      however, that before filing a registration statement or prospectus or any
      amendments or supplements thereto, or comparable statements under securities
      or
      blue sky laws of any jurisdiction, the Company will furnish to one counsel
      for
      the Holders participating in the planned offering (selected by the Requisite
      Percentage of Participating Holders) and the underwriters, if any, copies of
      all
      such documents proposed to be filed (including all exhibits thereto), which
      documents will be subject to the reasonable review and, reasonable comment
      of
      such counsel relating to disclosure concerning the Holders and their planned
      distribution;

     

    (b)        prepare
      and file with
      the SEC such amendments and supplements to such registration statement and
      the
      prospectus used in connection therewith as may be necessary to keep such
      registration statement effective for such period (which shall not be required
      to
      exceed 120 days) as any seller of Registrable Securities pursuant to such
      registration statement shall request and to comply with the provisions of the
      Securities Act with respect to the sale or other disposition of all Registrable
      Securities covered by such registration statement in accordance with the
      intended methods of disposition by the seller or sellers thereof set forth
      in
      such registration statement;

     

     

    19

     

    

    
    

     

     

    (c)        furnish,
      without
      charge, to each seller of such Registrable Securities and each underwriter,
      if
      any, of the securities covered by such registration statement such number of
      copies of such registration statement, each amendment and supplement thereto
      (in
      each case including all exhibits), and the prospectus included in such
      registration statement (including each preliminary prospectus) in conformity
      with the requirements of the Securities Act, and other documents, as such seller
      and underwriter may reasonably request in order to facilitate the public sale
      or
      other disposition of the Registrable Securities owned by such seller (the
      Company hereby consenting to the use in accordance with applicable law of each
      such registration statement (or amendment or post-effective amendment thereto)
      and each such prospectus (or preliminary prospectus or supplement thereto)
      by
      each such seller of Registrable Securities and the underwriters, if any, in
      connection with the offering and sale of the Registrable Securities covered
      by
      such registration statement or prospectus);

     

    (d)        use
      its best efforts
      to register or qualify the Registrable Securities covered by such registration
      statement under such other securities or “blue sky” laws of such jurisdictions
      as any sellers of Registrable Securities or any managing underwriter, if any,
      shall reasonably request in writing, and do any and all other acts and things
      which may be reasonably necessary or advisable to enable such sellers or
      underwriter, if any, to consummate the disposition of the Registrable Securities
      in such jurisdictions, except that in no event shall the Company be required
      to
      qualify to do business as a foreign corporation in any jurisdiction where it
      would not but for the requirements of this paragraph (d), be required to be
      so
      qualified, to subject itself to taxation in any such jurisdiction or to consent
      to general service of process in any such jurisdiction;

     

    (e)        promptly
      notify each
      Holder selling Registrable Securities covered by such registration statement
      and
      each managing underwriter, if any: (i) when the registration statement, any
      pre-effective amendment, the prospectus or any prospectus supplement related
      thereto or post-effective amendment to the registration statement has been
      filed
      and, with respect to the registration statement or any post-effective amendment,
      when the same has become effective; (ii) of any request by the SEC or state
      securities authority for amendments or supplements to the registration statement
      or the prospectus related thereto or for additional information; (ii) of the
      issuance by the SEC of any stop order suspending the effectiveness of the
      registration statement 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 of any Registrable Securities for sale under
      the
      securities or blue sky laws of any jurisdiction or the initiation of any
      proceeding for such purpose; and (v) of the existence of any fact of which
      the
      Company becomes aware which results in the registration statement, the
      prospectus related thereto or any document incorporated therein by reference
      containing an untrue statement of a material fact or omitting to state a
      material fact required to be stated therein or necessary to make any statement
      therein not misleading; and, if the notification relates to an event described
      in clause (v), the Company shall promptly prepare and furnish to each such
      seller and each underwriter, if any, a reasonable number of copies of a
      prospectus supplemented or amended so that, as thereafter delivered to the
      purchasers of such Registrable Securities, such prospectus shall not include
      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 the light
      of
      the circumstances under which they were made not misleading;

     

     

    20

     

    

    
    

     

     

    (f)         comply
      with all
      applicable rules and regulations of the SEC, and make generally available to
      its
      security holders, as soon as reasonably practicable after the effective date
      of
      the registration statement (and in any event within 16 months thereafter),
      an
      earnings statement (which need not be audited) covering the period of at least
      twelve consecutive months beginning with the first day of the Company’s first
      calendar quarter after the effective date of the registration statement, which
      earnings statement shall satisfy the provisions of Section 11(a) of the
      Securities Act and Rule 158 thereunder;

     

    (g)        provide
      and cause to
      be maintained a transfer agent and registrar for all such Registrable Securities
      covered by such registration statement not later than the effective date of
      such
      registration statement;

     

    (h)        obtain
      an opinion from
      the Company’s counsel and a “cold comfort” letter from the Company’s independent
      public accountants in customary form and covering such matters as are
      customarily covered by such opinions and “cold comfort” letters delivered to
      underwriters in underwritten public offerings, which opinion and letter shall
      be
      reasonably satisfactory to the underwriters, if any, participating in such
      offering, and furnish to each Holder participating in the offering and to each
      underwriter, if any, a copy of such opinion and letter addressed to such Holder
      (in the case of the opinion) and underwriter (in the case of the opinion and
      the
“cold comfort” letter); 

     

    (i)         deliver
      promptly
      to counsel for the selling Holders participating in the offering and each
      underwriter, if any, copies of all correspondence between the Commission and
      the
      Company, its counsel or auditors and any memoranda relating to discussions
      with
      the Commission or its staff with respect to the registration statement, other
      than those portions of any such memoranda which contain information subject
      to
      attorney-client privilege with respect to the Company, and, upon receipt of
      such
      confidentiality agreements as the Company may reasonably request, make
      reasonably available for inspection by any seller of such Registrable Securities
      covered by such registration statement, by any underwriter, if any,
      participating in any disposition to be effected pursuant to such registration
      statement and by any attorney, accountant or other agent retained by any such
      seller or any such underwriter, all pertinent financial and other records,
      pertinent corporate documents and properties of the Company, and cause all
      of
      the Company’s officers, directors and employees to supply all information
      reasonably requested by any such seller, underwriter, attorney, accountant
      or
      agent in connection with such registration statement;

     

    (j)         use
      its best
      efforts to promptly obtain the withdrawal of any order suspending the
      effectiveness of the registration statement;

     

    (k)        provide
      a CUSIP number
      for all Registrable Securities, not later than the effective date of the
      registration statement;

     

    (l)         promptly
      prior
      to the filing of any document which is to be incorporated by reference into
      the
      registration statement or the prospectus (after the initial filing of such
      registration statement) provide copies of such document to counsel for the
      selling holders of Registrable Securities and to each managing underwriter,
      if
      any, and make the Company’s 

     

    21

     

    

    
    

     

    representatives
      reasonably available for discussion of such document and
      make such changes in such document concerning the selling holders prior to
      the
      filing thereof as counsel for such selling holders or underwriters may
      reasonably request; 

     

    (m)       furnish
      to each Holder
      participating in the offering and the managing underwriter, without charge,
      at
      least one signed copy of the registration statement and any amendments thereto,
      including financial statements and schedules, all documents incorporated therein
      by reference and all exhibits (including those incorporated by
      reference);

     

    (n)        cooperate
      with the
      selling Holders of Registrable Securities and the managing underwriter, if
      any,
      to facilitate the timely preparation and delivery of certificates not bearing
      any restrictive legends representing the Registrable Securities to be sold,
      and
      cause such Registrable Securities to be issued in such denominations and
      registered in such names in accordance with the underwriting agreement prior
      to
      any sale of Registrable Securities to the underwriters or, if not an
      underwritten offering, in accordance with the instructions of the selling
      holders of Registrable Securities at least three business days prior to any
      sale
      of Registrable Securities;

     

    (o)        take
      all such other
      commercially reasonable actions as are necessary or advisable in order to
      expedite or facilitate the disposition of such Registrable
      Securities.

     

    The
      Company may require as a condition precedent to the Company’s
      obligations under this Section 7.2 that each seller of Registrable Securities
      as
      to which any registration is being effected furnish the Company such information
      regarding such seller and the distribution of such securities as the Company
      may
      from time to time reasonably request provided that such information shall be
      used only in connection with such registration.

     

    Each
      Holder of Registrable Securities agrees that upon receipt of any
      notice from the Company of the happening of any event of the kind described
      in
      clause (v) of paragraph (e) of this Section 7.2, such Holder will discontinue
      such Holder’s disposition of Registrable Securities pursuant to the registration
      statement covering such Registrable Securities until such Holder’s receipt of
      the copies of the supplemented or amended prospectus contemplated by paragraph
      (e) of this Section 7.2 and, if so directed by the Company, will deliver to
      the
      Company (at the Company’s expense) all copies, other than permanent file copies,
      then in such Holder’s possession of the prospectus covering such Registrable
      Securities that was in effect at the time of receipt of such notice. In the
      event the Company shall give any such notice, the applicable period mentioned
      in
      paragraph (b) of this Section 7.2 shall be extended by the number of days during
      such period from and including the date of the giving of such notice to and
      including the date when each seller of any Registrable Securities covered by
      such registration statement shall have received the copies of the supplemented
      or amended prospectus contemplated by paragraph (e) of this Section
      7.2.

     

    
      	
              Section
                7.3.

            	
              Registration
                Expenses.

            

    

     

    (a)        “Expenses”
      shall mean
      any and all fees and expenses incident to the Company’s performance of or
      compliance with this Article VII, including, without limitation: (i) SEC, stock
      exchange or NASD registration, listing and filing fees and all listing fees
      and
      fees with respect to 

     

    22

     

    

    
    

     

    the
      inclusion of securities in NASDAQ, (ii) fees and expenses of
      compliance with state securities or “blue sky” laws and in connection with the
      preparation of a “blue sky” survey, including without limitation, reasonable
      fees and expenses of blue sky counsel, (iii) printing and copying expenses,
      (iv)
      messenger and delivery expenses, (v) expenses incurred in connection with any
      road show, (vi) fees and disbursements of counsel for the Company, (vii) fees
      and disbursements of all independent public accountants (including the expenses
      of any audit and/or “cold comfort” letter) and fees and expenses of other
      persons, including special experts, retained by the Company, and (vii) any
      other
      fees and disbursements of underwriters, if any, customarily paid by issuers
      or
      sellers of securities (collectively, “Expenses”).

     

    (b)        The
      Company shall pay
      all Expenses with respect to any Registration whether or not it becomes
      effective or remains effective. 

     

    (c)        Notwithstanding
      the
      foregoing, in connection with any registration hereunder, each Holder of
      Registrable Securities being registered shall pay all underwriting discounts
      and
      commissions, pro rata in accordance with the number of shares sold in the
      offering by such Holder, and the Company shall, in the case of all registrations
      under this Article VII, be responsible for all its internal expenses (including,
      without limitation, all salaries and expenses of its officers and employees
      performing legal or accounting duties).

     

    Section
      7.4.      Certain Limitations on Registration Rights. In
      the case of any Registration is pursuant to an underwritten offering, or if
      the
      Company has determined to enter into an underwriting agreement in connection
      therewith, all securities to be included in such registration shall be subject
      to an underwriting agreement and no Person may participate in such registration
      unless such Person agrees to sell such Person’s securities on the basis provided
      therein and completes and executes all reasonable questionnaires and other
      documents (including custody agreements and powers of attorney) which must
      be
      executed in connection therewith, and provides such other information to the
      Company or the underwriter as may be necessary to register such Person’s
      securities.

     

    Section
      7.5.      Limitations on Sale or Distribution of Other Securities. To the extent requested
      in writing by a managing underwriter, if any,
      of any registration effected pursuant to Section 7.1 and only if the number
      of
      Registrable Securities to be registered is not limited pursuant to Section
      7.1(d), each Holder of Registrable Securities agrees during the one year
      commencing the date hereof not to sell, transfer or otherwise dispose of (other
      than in a private transaction), including any sale pursuant to Rule 144 under
      the Securities Act, any Common Stock, or any other equity security of the
      Company or any security convertible into or exchangeable or exercisable for
      any
      equity security of the Company (other than as part of such underwritten public
      offering) during the time period reasonably requested by the managing
      underwriter, not to exceed 90 days (and the Company hereby also so agrees
      (except that the Company may effect any sale or distribution of any such
      securities pursuant to a registration on Form S-4 (if reasonably acceptable
      to
      such managing underwriter) or Form S-8, or any successor or similar form which
      is then in effect or upon the conversion, exchange or exercise of any then
      outstanding options, warrants or securities convertible into Common Stock)
      to
      use its reasonable best efforts to cause each holder of any equity security
      or
      any security convertible into or exchangeable or exercisable for any equity
      security of the Company purchased from the 

     

    23

     

    

    
    

     

    Company
      at any time other than in a public offering so to agree). Each
      managing underwriter shall be entitled to rely on the agreements of each Holder
      of Registrable Securities set forth in this Section 7.5 and shall be a third
      party beneficiary of the provisions of this Section 7.5.

     

    
      	
              Section
                7.6.

            	
              Indemnification.

            

    

     

    (a)        In
      the event of any
      registration of any securities of the Company under the Securities Act pursuant
      to this Article VII, the Company will, and hereby does, indemnify and hold
      harmless, to the fullest extent permitted by law, each Holder of Registrable
      Securities, its directors, officers, affiliates, employees, stockholders,
      members and partners (and the directors, officers, affiliates, employees,
      stockholders, members and partners thereof), each other Person who participates
      as an underwriter, if any, in the offering or sale of such securities, each
      officer, director, employee, stockholder, member or partner of such underwriter,
      and each other Person, if any, who controls such seller or any such underwriter
      within the meaning of the Securities Act or Exchange Act, against any and all
      losses, claims, damages or liabilities, joint or several, actions or proceedings
      (whether commenced or threatened) in respect thereof (“Claims”) and expenses
      (including reasonable fees of counsel and any amounts paid in any settlement
      effected with the Company’s consent, which consent shall not be unreasonably
      withheld or delayed) to which each such indemnified party may become subject
      under the Securities Act or otherwise, insofar as such Claims or expenses arise
      out of or are based upon (i) any untrue statement or alleged untrue statement
      of
      a material fact contained in any registration statement under which such
      securities were registered under the Securities Act, together with the documents
      incorporated by therein or the omission or alleged omission to state therein
      a
      material fact required to be stated the rein or necessary to make the statements
      therein not misleading, or (ii) any untrue statement or alleged untrue statement
      of a material fact contained in any preliminary, final or summary prospectus
      or
      any amendment or supplement thereto, together with the documents incorporated
      by
      reference therein, or the omission or alleged omission to state therein 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; provided, however, that the Company shall not be liable
      to
      any such indemnified party in any such case to the extent such Claim or expense
      arises out of or is based upon any untrue statement or alleged untrue statement
      of a material fact or omission or alleged omission of a material fact made
      in
      such registration statement or amendment thereof or supplement thereto or in
      any
      such prospectus or any preliminary, final or summary prospectus in reliance
      upon
      and in conformity with written information furnished to the Company by or on
      behalf of such indemnified party specifically for use therein. Such indemnity
      and reimbursement of expenses shall remain in full force and effect regardless
      of any investigation made by as on behalf of such indemnified party and shall
      survive the transfer of such securities by such seller.

     

    (b)        Each
      Holder of
      Registrable Securities that are included in the securities as to which any
      registration under Section 7.1 being effected (and, if the Company requires
      as a
      condition to including any Registrable Securities in any registration statement
      filed in accordance with Section 7.1, any underwriter, if any) shall, severally
      and not jointly, indemnify and hold harmless (in the same manner and to the
      same
      extent as set forth in paragraph (a) of this Section 7.6) to the extent
      permitted by law the Company, its officers and directors, each Person
      controlling the Company within the meaning of the Securities Act and all other
      prospective 

     

    24

     

    

    
    

     

    sellers
      and their directors, officers, general and limited partners and
      respective controlling Persons with respect to any untrue statement or alleged
      untrue statement of any material fact in, or omission or alleged omission of
      any
      material fact from, such registration statement, any preliminary, final or
      summary prospectus contained therein, or any amendment or supplement thereto,
      if
      such statement or alleged statement or omission or alleged omission was made
      in
      reliance upon and in conformity with written information furnished to the
      Company or its representatives by or on behalf of such Holder or underwriter,
      if
      any, specifically for use therein and reimburse such indemnified party for
      any
      legal or other expenses reasonably incurred in connection with investigating
      or
      defending any such Claim as such expenses are incurred; provided, however,
      that
      the aggregate amount which any such Holder shall be required to pay pursuant
      to
      this Section 7.6(b) and Sections 7.6(c) and (e) shall in no case be greater
      than
      the amount of the net proceeds received by such person upon the sale of the
      Registrable Securities pursuant to the registration statement giving rise to
      such claim. Such indemnity and reimbursement of expenses shall remain in full
      force and effect regardless of any investigation made by or on behalf of such
      indemnified party and shall survive the transfer of such securities by such
      Holder.

     

    (c)        Indemnification
      similar to that specified in the preceding paragraphs (a) and (b) of this
      Section 7.6 (with appropriate modifications) shall be given by the Company
      and
      each seller of Registrable Securities with respect to any required registration
      or other qualification of securities under any state securities and “blue sky”
      laws.

     

    (d)        Any
      Person entitled to
      indemnification under this Agreement shall notify promptly the indemnifying
      party in writing of the commencement of any action or proceeding with respect
      to
      which a claim for indemnification may be made pursuant to this Section 7.6,
      but
      the failure of any indemnified party to provide such notice shall not relieve
      the indemnifying party of its obligations under the preceding paragraphs of
      this
      Section 7.6, except to the extent the indemnifying party is materially
      prejudiced thereby and shall not relieve the indemnifying party from any
      liability which it may have to any indemnified party otherwise than under this
      Article VII. In case any action or proceeding is brought against an indemnified
      party and it shall notify the indemnifying party of the commencement thereof,
      the indemnifying party shall be entitled to participate therein and, unless
      in
      the reasonable opinion of outside counsel to the indemnified party a conflict
      of
      interest between such indemnified and indemnifying parties may exist in respect
      of such claim, to assume the defense thereof jointly with any other indemnifying
      party similarly notified, to the extent that it chooses, with counsel reasonably
      satisfactory to such indemnified party, and after notice from the indemnifying
      party to such indemnified party that it so chooses, the indemnifying party
      shall
      not be liable to such indemnified party for any legal or other expenses
      subsequently incurred by such indemnified party in connection with the defense
      thereof other than reasonable costs of investigation; provided, however, that
      (i) if the indemnifying party fails to take reasonable steps necessary to defend
      diligently the action or proceeding within 20 days after receiving notice from
      such indemnified party that the indemnified party believes it has failed to
      do
      so; or (ii) if such indemnified party who is a defendant in any action or
      proceeding which is also brought against the indemnifying party reasonably
      shall
      have concluded that there may be one or more legal defenses available to such
      indemnified party which are not available to the indemnifying party; or (iii)
      if
      representation of both parties by the same counsel is otherwise inappropriate
      under applicable standards of 

     

    25

     

    

    
    

     

    professional
      conduct, then, in any such case, the indemnified party shall
      have the right to assume or continue its own defense as set forth above (but
      with no more than one firm of counsel for all indemnified parties in each
      jurisdiction who shall be approved by the Requisite Percentage of Participating
      Holders in such registration in respect of which such indemnification is
      sought), and the indemnifying party shall be liable for any expenses therefor.
      No indemnifying party shall, without the written consent of the indemnified
      party, effect the settlement or compromise of, or consent to the entry of any
      judgment with respect to, any pending or threatened action or claim in respect
      of which indemnification or contribution may be sought hereunder (whether or
      not
      the indemnified party is an actual or potential party to such action or claim)
      unless such settlement, compromise or judgment (A) includes an unconditional
      release of the indemnified party from all liability arising out of such action
      or claim and (B) does not include a statement as to or an admission of fault,
      culpability or a failure to act, by or on behalf of any indemnified
      party.

     

    (e)        If
      for any reason the
      foregoing indemnity is unavailable or is insufficient to hold harmless an
      indemnified party under Sections 7.6(a), (b) or (c), then each indemnifying
      party shall contribute to the amount paid or payable by such indemnified party
      as a result of any Claim in such proportion as is appropriate to reflect the
      relative fault of the indemnifying party, on the one hand, and the indemnified
      party, on the other hand, with respect to such offering of securities. The
      relative fault shall be determined by reference to, among other things, whether
      the untrue or alleged untrue statement of a material fact or the omission or
      alleged omission to state a material fact relates to information supplied by
      the
      indemnifying party or the indemnified party and the parties relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      untrue statement or omission If, however, the allocation provided in the second
      preceding sentence is not permitted by applicable law, then each indemnifying
      party shall contribute to the amount paid or payable by such indemnified party
      in such proportion as is appropriate to reflect not only such relative faults
      but also the relative benefits of the indemnifying party and the indemnified
      party as well as any other relevant equitable considerations. The parties hereto
      agree that it would not be just and equitable if contributions pursuant to
      this
      Section 7.6(e) were to be determined by pro rata allocation or by any other
      method of allocation which does not take account of the equitable considerations
      referred to in the preceding sentences of this Section 7.6(e). The amount paid
      or payable in respect of any Claim shall be deemed to include any legal or
      other
      expenses reasonably incurred by such indemnified party in connection with
      investigating or defending any such Claim. No person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      shall be entitled to contribution from any person who was not guilty of such
      fraudulent misrepresentation. Notwithstanding anything in this Section 7.6(e)
      to
      the contrary, no indemnifying party (other than the Company) shall be required
      pursuant to this Section 7.6(e) to contribute any amount in excess of the net
      proceeds received by such indemnifying party from the sale of Registrable
      Securities in the offering to which the losses, claims, damages or liabilities
      of the indemnified parties relate, less the amount of any indemnification
      payment made by such indemnifying party pursuant to Sections 7.6(b) and
      (c).

     

    (f)         The
      indemnity
      agreements contained herein shall be in addition to any other rights to
      indemnification or contribution which any indemnified party may have pursuant
      to
      law or contract and shall remain operative and in full force and effect
      regardless of any investigation 

     

    26

     

    

    
    

     

    made
      or omitted by or on behalf of any indemnified party and shall
      survive the transfer of the Registrable Securities by any such party.

     

    (g)        The
      indemnification
      and contribution required by this Section 7.6 shall be made by periodic payments
      of the amount thereof during the course of the investigation or defense, as
      and
      when bills are received or expense, loss, damage or liability is
      incurred.

     

    ARTICLE
      VIII

     

    Survival;
      Indemnification

     

    Section
      8.1.      Survival. The representations,
      warranties and
      covenants made by each of the Company and the Investor in this Agreement, the
      Memorandum, the annexes, schedules and exhibits hereto and in each instrument,
      agreement and certificate entered into and delivered by them pursuant to this
      Agreement, shall survive the Closing and the consummation of the transactions
      contemplated hereby. In the event of a breach or violation of any of such
      representations, warranties or covenants, the party to whom such
      representations, warranties or covenants have been made shall have all rights
      and remedies for such breach or violation available to it under the provisions
      of this Agreement, irrespective of any investigation made by or on behalf of
      such party on or prior to the Closing Date.

     

    Section
      8.2.      Indemnity by Company. The Company shall indemnify
      and hold harmless the Investor, their respective Affiliates and their respective
      officers, directors, partners, members and each other person, if any, who
      controls, within the meaning of the Securities Act or the Exchange Act, any
      one
      or more of the foregoing (each an “Indemnified Party”), from and against any and
      all Damages, and shall reimburse the Indemnified Parties for all reasonable
      out-of-pocket expenses (including the reasonable fees and expenses of legal
      counsel), in each case promptly as incurred by such Indemnified Party and to
      the
      extent arising out of or in connection with:

     

    
      	
              (i)

            	
              any
                misrepresentation, omission of fact or breach of any of the
                Company’s representations or warranties contained in any of the
                Transaction Documents, the annexes, schedules or exhibits thereto
                or any
                instrument, agreement or certificate entered into or delivered by
                the
                Company pursuant hereto or thereto;
                or

            

    

     

    
      	
              (ii)

            	
              any
                failure by the Company to perform in any respect any of its
                covenants, agreements, undertakings or obligations set forth in any
                of the
                Transaction Documents, the annexes, schedules or exhibits thereto
                or any
                instrument, agreement or certificate entered into or delivered by
                the
                Company pursuant hereto or thereto;
                or

            

    

     

    
      	
              (iii)

            	
              any
                action instituted against the Investor, or any of them, by any
                stockholder of the Company who is not an Affiliate of the Investor,
                with
                respect to any of the transactions contemplated by the Transaction
                Documents.

            

    

     

     

    27

     

    

    
    

     

     

    provided,
      however, that the indemnity agreement contained in this Section
      8.2 shall not apply to amounts paid in settlement of any such loss, claim,
      damage, liability, or action if such settlement is effected without the consent
      of the Company (which consent shall not be unreasonably withheld), and that
      the
      Company shall not be liable to an Investor in any such case for any Damages
      to
      the extent, but only to the extent, that it arises out of or is based upon
      a
      statement, omission, or violation which occurs in reliance upon and in
      conformity with written information furnished in a certificate expressly for
      use
      in connection with this Agreement and the transactions contemplated hereby
      by
      such Investor.

     

    Section
      8.3       Indemnity by Investor. To the extent permitted
      by
      law, each Investor (including its directors, officers and any person who
      controls the Investor within the meaning of the Securities Act or the Exchange
      Act) selling securities in such registration statement, severally and not
      jointly, will indemnify and hold harmless the Company, each of its directors
      and
      officers, any underwriters (as defined in the Securities Act) for the Company,
      each person, if any, who controls the Company or any such underwriter within
      the
      meaning of the Securities Act or the Exchange Act (each an “Indemnified Party”)
      against any losses, claims, damages, or liabilities (or actions in respect
      thereto) which arise out of or are based upon any of the following statements,
      omissions or violations (“Violation”), in each case to the extent (and only to
      the extent) that such Violation occurs in reliance upon and in conformity with
      written information furnished by such Investor in a certificate expressly for
      use in connection with this Agreement and the transactions contemplated hereby;
      and each such Investor will reimburse any legal or other expenses reasonably
      incurred by the Company or any such director, officer, any person who controls
      the Company, any underwriter or controlling person of any such underwriter,
      any
      other such Investor, officer, director, or controlling person in connection
      with
      investigating or defending any such loss, claim, damage, liability, or action;
      provided however, that the indemnity agreement contained in this Section 8.3
      shall not apply to amounts paid in settlement of any such loss, claim, damage,
      liability or action if such settlement is effected without the consent of the
      Investor (which consent shall not be unreasonably withheld), and provided
      further that the obligations of each such Investor shall not exceed the amount
      it paid for the securities acquired pursuant to this Agreement, net of any
      commissions. 

     

    Section
      8.4       Contribution. If a court of competent
      jurisdiction holds that the foregoing indemnity is unavailable, then the
      indemnifying party shall contribute to the amount paid or payable by the
      indemnified party as a result of such losses, claims, damages, liabilities
      or
      expenses (i) in such proportion as is appropriate to reflect the relative
      benefits received by the indemnifying party on the one hand and the indemnified
      party on the other (taking into consideration, among other things, the fact
      that
      the provision of the registration rights and indemnification hereunder is a
      material inducement to the Investors to purchase Registrable Securities) or
      (ii)
      if the allocation provided by clause (i) above is not permitted by applicable
      law or provides a lesser sum to the indemnified party than the amount
      hereinafter calculated, in such proportion as is appropriate to reflect not
      only
      the relative benefits received by the indemnifying party on the one hand and
      the
      indemnified party on the other but also the relative fault of the indemnifying
      party and the indemnified party as well as any other relevant equitable
      considerations. The relative fault shall be determined by reference to, among
      other things, whether the untrue or alleged untrue statement of a material
      fact
      or the omission or alleged omission to state a material fact relates to
      information supplied by or on behalf of the 

     

    28

     

    

    
    

     

    indemnifying
      party or the indemnified party and the parties’ relative
      intent, knowledge, access to information and opportunity to correct or prevent
      such untrue statement or omission. No Person guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the Securities Act)
      shall be entitled to contribution from any Person who was not guilty of such
      fraudulent misrepresentation. Notwithstanding anything to the contrary in this
      Section VIII, no Investor shall be required, pursuant to this Section VIII,
      to
      contribute any amount in excess of the purchase price paid by such Investor
      for
      the securities acquired pursuant to this Agreement, net of any
      commissions.

     

    Section
      8.5.      Notice. Promptly after receipt
      by an Indemnified
      Party seeking indemnification pursuant to Section 8.2 or Section 8.4 of written
      notice of any investigation, claim, proceeding or other action in respect of
      which indemnification is being sought (each, a “Claim”), the Indemnified
      Party promptly shall
      notify the other party of the commencement thereof; but the omission so to
      notify the other party shall not relieve it from any liability that it otherwise
      may have to the Indemnified Party, except to the extent that the other party
      is
      actually prejudiced by such omission or delay. In connection with any Claim
      as
      to which both the Indemnified Party and the other party are parties, the other
      party shall be entitled to assume the defense thereof. Notwithstanding the
      assumption of the defense of any Claim by the other party, the Indemnified
      Party
      shall have the right to employ separate legal counsel and to participate in
      the
      defense of such Claim, and the other party shall bear the reasonable fees,
      out-of-pocket costs and expenses of such separate legal counsel to the
      Indemnified Party if (and only if): (x) the other party shall have agreed to
      pay
      such fees, out-of-pocket costs and expenses, (y) the Indemnified Party
      reasonably shall have concluded that representation of the Indemnified Party
      and
      the other party by the same legal counsel would not be appropriate due to actual
      or, as reasonably determined by legal counsel to the Indemnified Party,
      potentially differing interests between such parties in the conduct of the
      defense of such Claim, or if there may be legal defenses available to the
      Indemnified Party that are in addition to or disparate from those available
      to
      the other party, or (z) the other party shall have failed to employ legal
      counsel reasonably satisfactory to the Indemnified Party within a reasonable
      period of time after notice of the commencement of such Claim. If the
      Indemnified Party employs separate legal counsel in circumstances other than
      as
      described in clauses (x), (y) or (z) above, the fees, costs and expenses of
      such
      legal counsel shall be borne exclusively by the Indemnified Party. Except as
      provided above, the other party shall not, in connection with any Claim in
      the
      same jurisdiction, be liable for the fees and expenses of more than one firm
      of
      legal counsel for the Indemnified Party (together with appropriate local
      counsel). The other party shall not, without the prior written consent of the
      Indemnified Party (which consent shall not unreasonably be withheld), settle
      or
      compromise any Claim or consent to the entry of any judgment that does not
      include an unconditional release of the Indemnified Party from all liabilities
      with respect to such Claim or judgment.

     

    Section
      8.6.      Direct Claims. In the event an Indemnified
      Party
      should have a claim for indemnification that does not involve a claim or demand
      being asserted by a third party, the Indemnified Party promptly shall deliver
      notice of such claim to the other party.

     

     

     

    29

     

    

    
    

     

     

    ARTICLE
      IX

     

    Due
      Diligence Review; Non-Disclosure of Non-Public
      Information.

     

    Section
      9.1.      Due Diligence Review. Subject to Section
      9.2, the
      Company shall make available for inspection and review by the Investor, advisors
      to and representatives of the Investor (who may or may not be affiliated with
      the Investor and who are reasonably acceptable to the Company), any underwriter
      participating in any disposition of the Registrable Securities on behalf of
      the
      Investor pursuant to the Registration Statement, any such registration statement
      or amendment or supplement thereto or any blue sky, Nasdaq or other filing,
      all
      SEC Documents and other filings with the SEC, and all other publicly available
      corporate documents and properties of the Company as may be reasonably necessary
      for the purpose of such review, and cause the Company’s officers, directors and
      employees to supply all such publicly available information reasonably requested
      by the Investor or any such representative, advisor or underwriter in connection
      with such Registration Statement (including, without limitation, in response
      to
      all questions and other inquiries reasonably made or submitted by any of them),
      prior to and from time to time after the filing and effectiveness of the
      Registration Statement for the sole purpose of enabling the Investor and such
      representatives, advisors and underwriters and their respective accountants
      and
      attorneys to conduct initial and ongoing due diligence with respect to the
      Company and the accuracy of the Registration Statement. 

     

    
      	
              Section
                9.2.

            	
              Non-Disclosure
                of Non-Public Information.

            

    

     

    (a)       The
      Company shall not
      further disclose material non-public information to the Investor, advisors
      to or
      representatives of the Investor unless prior to disclosure of such information
      the Company identifies such information as being non-public information and
      provides the Investor, such advisors and representatives with the opportunity
      to
      accept or refuse to accept such non-public information for review. Other than
      disclosure of any comment letters received from the SEC staff with respect
      to
      any SEC Document, the Company may, as a condition to disclosing any material
      non-public information hereunder, require the Investor’ advisors and
      representatives to enter into a confidentiality agreement in form and content
      reasonably satisfactory to the Company and the Investor. 

     

    (b)       The
      Company represents that,
      outside of disclosures made pursuant to written confidentiality agreements,
      it
      does not disseminate material non-public information to any investors who
      purchase stock in the Company in a public offering, to money managers or to
      securities analysts; provided, however, that notwithstanding anything herein
      to
      the contrary, the Company will, as hereinabove provided, promptly notify the
      advisors and representatives of the Investor and, if any, underwriters, of
      any
      event or the existence of any circumstance (without any obligation to disclose
      the specific event or circumstance) of which it becomes aware, constituting
      material non-public information (whether or not requested of the Company
      specifically or generally during the course of due diligence by such persons
      or
      entities), which, if not disclosed in the Memorandum would cause such Memorandum
      to include a material misstatement or to omit a material fact required to be
      stated therein in order to make the statements therein, in light of the
      circumstances in which they were made, not misleading. Nothing contained in
      this
      Section 8.2 shall be construed to mean that such persons or entities other
      than
      the Investor (without the 

     

    30

     

    

    
    

     

    written
      consent of the Investor prior to disclosure of such information
      as set forth in Section 8.2(a)) may not obtain non-public information in the
      course of conducting due diligence in accordance with the terms of this
      Agreement and nothing herein shall prevent any such persons or entities from
      notifying the Company of their opinion that based on such due diligence by
      such
      persons or entities, that the Memorandum contains an untrue statement of a
      material fact or omits a material fact required to be stated in the Memorandum
      or necessary to make the statements contained therein, in light of the
      circumstances in which they were made, not misleading.

     

    ARTICLE
      X

     

    Legends;
      Transfer Agent Instructions

     

    Section
      10.1.    Legends. Unless otherwise provided
      below, each
      certificate representing Registrable Securities will bear the following legend
      or equivalent (the “Legend”):

     

    THE
      SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
      UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
      OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE UPON AN
      EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
      OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
      HEREIN MAY BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE
      DISPOSED OF, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT OR PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM SUCH
      REGISTRATION.

     

    Section
      10.2.    No Other
      Legend or Stock Transfer Restrictions. No legend other
      than the one specified in Section 10.1 has been or shall be placed on the share
      certificates representing the Registrable Securities and no instructions or
      “stop transfer orders,”“stock transfer restrictions,” or other restrictions
      have been or shall be given to the Company’s transfer agent with respect thereto
      other than as expressly set forth in this Article X.

     

    Section
      10.3.    Investor’
      Compliance. Nothing in this Article shall affect in any
      way the Investor’s obligations to comply with all applicable securities laws
      upon resale of the Common Stock including delivery of the resale prospectus
      to
      the purchaser of such securities. 

     

    Section
      10.4.     Transfers
      without Registration. If the Investor provides the
      Company with an opinion of counsel (at the Company’s expense), reasonably
      acceptable to the Company in form and substance, that registration of a resale
      by the Investor of any Securities is not required under the Securities Act,
      the
      Company shall permit the transfer and, in the case of the Conversion Shares
      and
      Warrant Shares, promptly instruct its transfer agent to issue one or more
      certificates in such name and in such denominations as specified by the Investor
      and, if such opinion provides that such legends can be removed, without any
      restrictive legends. The Company shall assume the cost of the preparation of
      such opinion if the Investor requests that the Company prepare or arrange for
      the preparation of same.

     

     

    31

     

    

    
    

     

     

    Section
      10.5.     Injunctive
      Relief. The Company acknowledges that a breach by it of
      its obligations hereunder will cause irreparable harm to the Investor by
      vitiating the intent and purpose of the transaction contemplated hereby.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Article X will be inadequate and agrees, in the event
      of
      a breach or threatened breach by the Company of the provisions of this Article
      X
      that the Investor shall be entitled, in addition to all other available
      remedies, to an injunction restraining any breach and requiring immediate
      issuance and transfer, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    ARTICLE
      XI

     

    Choice
      of Law; Jurisdiction

     

    Section
      11.1.    Governing
      Law. This Agreement shall be governed by and construed
      in accordance with the laws of the State of New York applicable to contracts
      made in the State of New York without regard to its principles of conflicts
      of
      laws. 

     

    Section
      11.2.    Jurisdiction. Each of the parties
      consents to the
      jurisdiction of the United States District Court for the Southern District
      of
      New York or the state courts of the State of New York located in New York City,
      New York in connection with any dispute arising under this Agreement and hereby
      waives, to the maximum extent permitted by law, any objection, including any
      objection based on forum non conveniens, to the bringing of any such proceeding
      in such jurisdictions.

     

    ARTICLE
      XII

     

    Assignment

     

    Neither
      this Agreement nor any rights of the Investor or the Company
      hereunder may be assigned by any party to any other person. Notwithstanding
      the
      foregoing, (a) the provisions of this Agreement shall inure to the benefit
      of,
      and be enforceable by, any permitted transferee of any Securities, and (b)
      upon
      the prior written consent of the Company, which consent shall not unreasonably
      be withheld or delayed, the Investor’s interest in this Agreement may be
      assigned at any time, in whole or in part, to any other Person (including any
      affiliate of the Investor) who agrees to make the representations and warranties
      contained in Article III and who agrees to be bound by the terms of this
      Agreement.

     

    The
      registration rights granted to Investor pursuant to Article VII,
      hereof may not be transferred unless the Investor is transferring at least
      50.1%
      of the Registrable Securities acquired by such Investor pursuant to this
      Agreement or such transfer, in addition to complying with the first paragraph
      of
      this Article XII and Section 10.4, or if such transferee is an Affiliate of
      the
      Investor or a member of an Investors immediate family.

     

    32

     

    

    
    

     

     

    ARTICLE
      XIII

     

    Notices

     

    All
      notices, demands, requests, consents, approvals, and other
      communications required or permitted hereunder shall be in writing and, unless
      otherwise specified herein, shall be (i) hand delivered, (ii) deposited in
      the
      mail, registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by facsimile, addressed as set forth below or to such other address
      as such party shall have specified most recently by written notice. Any notice
      or other communication required or permitted to be given hereunder shall be
      deemed effective (a) upon hand delivery or delivery by facsimile, with accurate
      confirmation generated by the transmitting facsimile machine, at the address
      or
      number designated below (if delivered on a business day during normal business
      hours where such notice is to be received), or the first business day following
      such delivery (if delivered other than on a business day during normal business
      hours where such notice is to be received) or (b) on the first business
      day
      following the date of sending by reputable courier service, fully prepaid,
      addressed to such address, or (c) upon actual receipt of such mailing, if
      mailed. The addresses for such communications shall be:

     

    
      	
              If
                to the Company:

            	
              CDKnet.Com,
                Inc.

            

    

    948
      US Highway 22

    North
      Plainfield, NJ 07060

    
      	
              Attn:
                Oleg Logvinov

            	
               

            
	
              Tel:

            	
              (908)
                769-3232

            	
               

            
	
              Fax:

            	
              (908)
                769-0206

            
	
            	
            	
            	
            

    

     

    
      	
              with
                a copy to:

            	
              Sommer
&
                Schneider LLP

            	
               

            
	
              (which
                shall not constitute notice)

            	
              595
                Stewart Avenue, Suite 710

            	
               

            
	
               

            	
              Garden
                City, NY 11530

            	
               

            
	
               

            	
              Attention:
                Herbert H. Sommer, Esq.

            
	
               

            	
              Telephone:
                (516) 228-8181

            	
               

            
	
               

            	
              Facsimile:

            	
              (516)
                228-8211

            	
               

            
	
            	
            	
            	
            	
            	
            	
            	
            

    

     

    
      	
              If
                to the Investor:

            	
              As
                set forth on the signature page
                hereto

            

    

     

    Either
      party hereto may from time to time change its address or facsimile
      number for notices under this Article XIII by giving written notice of such
      changed address or facsimile number to the other party hereto as provided in
      this Article XIII.

     

     

    33

     

    

    
    

     

     

    ARTICLE
      XIV

     

    Miscellaneous

     

    Section
      14.1.    Counterparts/
      Facsimile/ Amendments. This Agreement may be executed in
      multiple counterparts, each of which may be executed by fewer than all of the
      parties, and shall be deemed to be an original instrument that shall be
      enforceable against the parties actually executing such counterparts and all
      of
      which together shall constitute one and the same instrument. Except as otherwise
      stated herein, in lieu of the original documents, a facsimile transmission
      or
      copy of the original documents shall be as effective and enforceable as the
      original. This Agreement may be amended only by a writing executed by all
      parties.

     

    Section
      14.2.    Entire
      Agreement. This Agreement, the other Transaction
      Documents, which include, but are not limited to, the Convertible Notes, and
      the
      Warrants, set forth the entire agreement and understanding of the parties
      relating to the subject matter hereof and supersede all prior and
      contemporaneous agreements, negotiations and understandings between and among
      the parties, both oral and written, relating to the subject matter hereof.
      The
      terms and conditions of all Exhibits to this Agreement are incorporated herein
      by this reference and shall constitute part of this Agreement as is fully set
      forth herein.

     

    Section
      14.3.    Severability. In the event that any
      provision of
      this Agreement becomes or is declared by a court of competent jurisdiction
      to be
      illegal, unenforceable or void, this Agreement shall continue in full force
      and
      effect without such provision; provided that such severability shall be
      ineffective if it materially changes the economic benefit of this Agreement
      to
      any party.

     

    Section
      14.4.    Headings. The headings used in
      this Agreement are
      used for convenience only and are not to be considered in construing or
      interpreting this Agreement. 

     

    Section
      14.5.    Number and
      Gender. One or more Investor may be parties to this
      Agreement, which Investor may be natural persons or entities. All references
      to
      plural Investor shall apply equally to a single Investor if there is only one
      Investor, and all references to the Investor as “it” shall apply equally to a
      natural person.

     

    Section
      14.6.    Reporting
      Entity for the Common Stock. The reporting entity relied
      upon for the determination of the trading price or trading volume of the Common
      Stock on any given Trading Day for the purposes of this Agreement shall be
      Bloomberg, L.P. or any successor thereto. The written agreement of the Investor
      and the Company shall be required to employ any other reporting
      entity.

     

    Section
      14.7.    Replacement
      of Certificates. Upon (i) receipt of evidence reasonably
      satisfactory to the Company of the loss, theft, destruction or mutilation of
      a
      certificate representing any Securities and (ii) in the case of any such loss,
      theft or destruction of such certificate, upon delivery of an indemnity
      agreement or security reasonably satisfactory in form to the Company (which
      shall not include the posting of any bond) or (iii) in the case of any such
      mutilation, on surrender and cancellation of such certificate, the Company
      at
      its expense will execute and deliver, in lieu thereof, a new certificate of
      like
      tenor.

     

    34

     

    

    
    

     

     

    Section
      14.8.    Fees and
      Expenses. Each of the Company and the Investor agrees to
      pay its own expenses incident to the performance of its obligations
      hereunder.

     

    Section
      14.9.    Brokerage. Each of the parties
      hereto represents
      that it has had no dealings in connection with this transaction with any finder
      or broker who will demand payment of any fee or commission from the other party
      except for the Agents, whose fee shall be paid by the Company. The Company
      on
      the one hand, and the Investor, on the other hand, each agree to indemnify
      the
      other against and hold the other harmless from any and all liabilities to any
      person claiming brokerage commissions or finder’s fees on account of services
      purported to have been rendered on behalf of the indemnifying party in
      connection with this Agreement or the transactions contemplated
      hereby.

     

    Section
      14.10.    Publicity. The Company agrees
      that it will not
      issue any press release or other public announcement of the transactions
      contemplated by this Agreement without the prior consent of the Investor, which
      shall not be unreasonably withheld nor delayed by more than two (2) Trading
      Days
      from their receipt of such proposed release. No release shall name the Investor
      without their express written consent. The issuance of any such release will
      not
      violate or cause the breach of any of the Company’s covenants or representations
      or warranties set forth herein, including, without limitation, Sections 4.6
      or
      4.7 hereof.

     

    Section
      14.11.     Further
      Assurances. Each party shall do and perform, or cause to
      be done and performed, all such further acts and things, and shall execute
      and
      deliver all such other agreements, certificates, instruments and documents,
      as
      the other party may reasonably request in order to carry out the intent and
      accomplish the purposes of this Agreement and the consummation of the
      transactions contemplated hereby.

     

    Section
      14.12.     Termination. If the initial Closing
      shall not
      have occurred in the time periods, as may be extended, set forth in the
      Memorandum, due to the Company’s or the Investor’s failure to satisfy the
      conditions set forth in Article II above (and the nonbreaching party’s failure
      to waive such unsatisfied condition(s)), the nonbreaching party shall have
      the
      option to terminate this Agreement with respect to such breaching party at
      the
      close of business on such date without liability of any party to any other
      party. Notwithstanding anything to the contrary herein the Placement Agent
      shall
      be entitled to terminate this Agreement at any time and for any reason
      whatsoever, to the extent that an applicable closing with respect to the
      securities to be acquired hereby has not taken place.

     

    Section
      14.13.     No Strict
      Construction. The language used in this Agreement will
      be deemed to be the language chosen by the parties to express their mutual
      intent, and no rules of strict construction will be applied against any
      party.

     

    Section
      14.14.      Remedies. The Investor and each
      Holder of
      Securities shall have all rights and remedies set forth in this Agreement and
      the Convertible Notes and all rights and remedies that such Holders have been
      granted at any time under any other agreement or contract and all of the rights
      that such Holders have under any law. Any person or entity having any rights
      under any provision of this Agreement shall be entitled to enforce such rights
      specifically (without posting 

     

    35

     

    

    
    

     

    a
      bond or other security), to recover damages by reason of any breach of any
      provision of this Agreement and to exercise all other rights granted by
      law.

     

    Section
      14.15.     Payment Set
      Aside. To the extent that the Company makes a payment
      or
      payments to the Investor hereunder or pursuant to the Convertible Notes or
      the
      Investor enforce or exercise their rights hereunder or 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, by a trustee, receiver or any other person
      or entity 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.

     

    Section
      14.16.      List of
      Security Holders. The Company shall provide the
      Placement Agent, promptly upon its request, a list of the holders (including
      any
      transferee) of Securities. Such list shall identify the holder, indicate such
      holder’s address, and indicate the number and nature of the Securities held by
      such holder.

     

    [SIGNATURE
      PAGE FOLLOWS]

    
    

     

    36

     

    

    
    

     

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be
      executed by the undersigned, thereunto duly authorized, as of the date first
      set
      forth above.

     

    CDKNET.COM,
      INC.

     

     

    By:
      ____________________________________

    
      	
              Name:

            
	
              Title:

            	
               

            

    

     

    Closing
      Date: ____________________________

     

    Investor:
      ________________________________

     

     

    By:____________________________________

    
      	
              Name:

            

    

    Authorized
      Signatory

     

     

    
      	
              Jurisdiction
                of Incorporation (if an entity): 

              ________________________________________

               

              Number
                of Units Purchased: _______________

               

              Purchase
                Price (number of Units Purchased

              Multiplied
                by $100,000): $_________________ 

               

               

            	
              Address
                of Investor:

              ________________________________

              _________________________________

              _________________________________

               

              Telephone:
                ________________________

              Facsimile:
                ________________________

              E-Mail
                Address:____________________

            
	
               

            	
              Tax
                ID No.:
                _______________________

            

    

     

     

     

     

    [SUBSCRIPTION
      FUNDS CANNOT BE DEPOSITED WITHOUT ALL OF THE ABOVE
      INFORMATION]

     

    37

     

    

    
    

    
      	
              Name
                of INVESTOR: _______________________

            

    

     

    NUMBER
      OF UNITS: _________________________

     

     

    SUITABILITY
      QUESTIONNAIRE

     

    (ALL
      INFORMATION WILL BE TREATED CONFIDENTIALLY)

     

    
      	
              To:

            	
              CDKnet.com,
                Inc.

            

    

     

    This
      Suitability Questionnaire (“Questionnaire”) must be completed by
      each potential investor in connection with the offer and sale of Units. The
      Units are being offered and sold by CDKnet.com, Inc. (the "Company") without
      registration under the Securities Act of 1933, as amended (the "Act"), and
      the
      securities laws of certain states, in reliance on the exemptions contained
      in
      Section 4(2) of the Act and on Regulation D promulgated thereunder and in
      reliance on similar exemptions under applicable state laws. The Company must
      determine that a potential investor meets certain suitability requirements
      before offering or selling Units to such investor. The purpose of this
      Questionnaire is to assure the Company and the Placement Agent that each
      investor will meet the applicable suitability requirements. The information
      supplied by you will be used in determining whether you meet such criteria,
      and
      reliance upon the private offering exemptions from registration is based in
      part
      on the information herein supplied.

     

    This
      Questionnaire does not constitute an offer to sell or a solicitation
      of an offer to buy any security. Your answers will be kept strictly
      confidential. However, by signing this Questionnaire, you will be authorizing
      the Company to provide a completed copy of this Questionnaire to such parties
      as
      the Company and the Placement Agent deem appropriate in order to ensure that
      the
      offer and sale of the Units will not result in a violation of the Act or the
      securities laws of any state and that you otherwise satisfy the suitability
      standards applicable to purchasers of the Units. All potential investors must
      answer all applicable questions and complete, date and sign this Questionnaire.
      Please print or type your responses and attach additional sheets of paper if
      necessary to complete your answers to any item.

     

    
      	
              A.

            	
              BACKGROUND
                INFORMATION

            

    

     

    
      	
              Name:

            

    

     

     

    
      	
              Business
                Address:

            	
               

            
	
               

            	
              (Number
                and Street)

            
	
            	
            	
            

    

     

     

    
      	
              (City)

            	
              (State)

            	
              (Zip
                Code)

            

    

     

    Telephone
      Number: _____________________________

     

    If
      an individual:

    
      	
              Age:­­­­­­­­­__________

            	
              Citizenship:
                ____________

            

    

     

    If
      a corporation, partnership, limited liability company, trust or other
      entity:

    
      	
              Type
                of entity:

            	
               

            
	
              State
                of formation:______________________

            	
              Date
                of formation: ____________________

            
	
            	
            	
            

    

     

    
      
         

      

      
        38

        
          

        

      

      
         

      

    

     

    
      	
              Social
                Security or Taxpayer Identification
                No.

            

    

     

    
      	
              B.

            	
              STATUS
                AS ACCREDITED
                INVESTOR

            

    

     

    The
      undersigned is an "accredited investor" as such term is defined in
      Regulation D under the Act, as at the time of the sale of the Units the
      undersigned falls within one or more of the following categories
      (Please initial one or more, as
      applicable): 1

     

    ____
      (1)          a
      bank as defined in Section
      3(a)(2) of the Act, or a savings and loan association or other institution
      as
      defined in Section 3(a)(5)(A) of the Act whether acting in its individual or
      fiduciary capacity; a broker or dealer registered pursuant
      to Section 15 of the Securities Exchange Act of
      1934; an insurance company as
      defined in Section 2(13) of the Act; an investment
      company registered under the Investment Company Act of
      1940 or a business development company as defined in Section
      2(a)(48) of that Act; a Small Business Investment Company licensed by the
      U.S. Small Business Administration under Section 301(c) or (d) of the Small
      Business Investment Act of 1958; a plan established and maintained
      by a state, its political subdivisions, or
      any agency or instrumentality of a state or its political subdivisions for
      the
      benefit of its employees, if such plan has total assets in excess of $5,000,000;
      an employee benefit plan within
      the meaning of the Employee Retirement Income Security Act of 1974, if the
      investment decision is made by a plan fiduciary, as defined in Section 3(21)
      of
      such Act, which is either a bank, savings and loan association, insurance
      company, or registered investment adviser, or if the employee benefit plan
      has
      total assets in excess of $5,000,000 or, if a self-directed plan, with the
      investment decisions made solely by persons that are accredited
      investors;

     

    ____
      (2)          a
      private business development company as defined in Section
      202(a)(22) of the Investment Advisers Act of
      1940;

     

    ____
      (3)          an
      organization described in Section
      501(c)(3) of the Internal Revenue Code of 1986, as
      amended, corporation,
      Massachusetts or similar business trust, or partnership,
      not
      formed for the specific purpose of acquiring the Units offered, with total
      assets in excess of $5,000,000;

     

    ____
      (4)          a
      natural person whose individual
      net worth, or joint net worth with that person's spouse, at the time of such
      person's purchase of the Units exceeds $1,000,000;

     

    ____
      (5)          a
      natural person who had an
      individual income in excess of $200,000 in each of the two most recent years
      or
      joint income with that person's spouse in excess of $300,000 in each of those
      years and has a reasonable expectation of reaching the same income level in
      the
      current year;

     

    ____
      (6)          a
      trust, with total assets in
      excess of $5,000,000, not formed for the specific purpose of acquiring the
      Units
      offered, whose purchase is directed by a sophisticated person as described
      in
      Rule 506(b)(2)(ii) of Regulation D; and

     

    _________________________

    1As
      used in this Questionnaire, the term “net worth” means the
      excess of total assets over total liabilities. In computing net worth for the
      purpose of subsection (4), the principal residence of the investor must be
      valued at cost, including cost of improvements, or at recently appraised value
      by an institutional lender making a secured loan, net of encumbrances. In
      determining income, the investor should add to the investor’s adjusted gross
      income any amounts attributable to tax exempt income received, losses claimed
      as
      a limited partner in any limited partnership, contributions to an IRA or KEOGH
      retirement plan, alimony payments, and any amount by which income from long-term
      capital gains has been reduced in arriving at adjusted gross income.

     

    
      
         

      

      
        39

        
          

        

      

      
         

      

    

     

    
      	
              ____
                (7)

            	
              an
                entity in which all of the equity owners are accredited
                investors (as defined above).

            

    

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Questionnaire this
      ____ day of __________, 2005, and declares under oath that it is truthful and
      correct.

     

     

    
    

    	 	 	 
	 	 
	 
 	 
 	 
            
            

            Print Name 
	 	 	 
	 	
            
              By:

              
                

              
Signature

          
	 	 
	 	
            Title: 

            
              

            
(required for any purchaser that is a corporation,
            partnership, trust or other entity) 

     

     

     

     

     

    
      
         

      

      
        40

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