Document:

Exhibit 10.5

EXHIBIT 10.5

Schedule Prepared in Accordance with Instruction 2 to Item 601 of Regulation S-K

The Warrants dated February 29, 2008 are substantially identical in all material respects except as to the warrantholder, the number of shares for which warrant can be exercised, the exercise price and whether the warrant may be exercised on a “net exercise (cashless)” basis.

				
	Holder

	Number of Shares

	Exercise Price

	Net Exercise Option

	MapleRidge Insurance Services, Inc.

	9,037,506

	$.11065

	No

	MapleRidge Insurance Services, Inc.

	9,037,506

	$.16598

	No

	Heartland Services, Inc.

	4,518,753

	$.11065

	Yes

	GP Group, LLC

	1,265,251

	$.11065

	Yes

	 
	 
	 
	 

.

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS, BUT HAVE BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR PURPOSES OF INVESTMENT AND IN RELIANCE ON STATUTORY EXEMPTIONS UNDER THE ACT, AND UNDER ANY APPLICABLE STATE SECURITIES LAWS.  THESE SECURITIES AND THE SECURITIES ISSUED UPON EXERCISE HEREOF MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED, NOR MAY THIS WARRANT BE EXERCISED, EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT.

COMMON STOCK PURCHASE WARRANT

Date of Issuance: February 29, 2008

For value received, Voyant International Corporation a Nevada  (the “Company”), hereby grants to MapleRidge Insurance Services, Inc., a California S corporation (“Lender”), or its permitted transferees and assigns, the right to purchase from the Company a total of _________(“X”, as defined below) shares of the Company’s common stock (“Common Stock”), at a price per share equal to $ ______ (the “Initial Exercise Price”).  

This Warrant is being issued in connection with the Loan Agreement between Voyant International Corporation and MapleRidge Insurance Services, Inc., dated February 29, 2008 (the “Loan Agreement”).  Certain capitalized terms used herein are defined in Section 4 hereof. 

This Warrant is subject to the following provisions: 

SECTION 1.  Exercise of Warrant. 

(a)

Terms of Warrants; Exercise Period.  Subject to the terms of this Warrant, the Registered Holder shall have the right, commencing on the date hereof and expiring on the five-year anniversary hereof (the “Expiration Date”), to exercise this Warrant, from time to time and in whole or in part, and receive from the Company the number of Warrant Shares which the Registered Holder may at the time be entitled to receive on exercise of this Warrant and payment of the Exercise Price then in effect for the Warrant Shares.  To the extent not exercised prior to the Expiration Date, this Warrant shall become void and all rights thereunder and all rights in respect thereof under this Agreement shall cease as of such time.

(b)

Exercise Procedure.

(i)

This Warrant shall be deemed to have been exercised on the date specified in a written notice from the Registered Holder to the Company (the “Exercise Time”) and within three 

business days following the Exercise Time, the Registered Holder shall deliver the following to the Company: 

(A)

a completed Exercise Agreement, as described in Section 1(c) below;

(B)

this Warrant; and

(C)

a check payable to the Company in an amount equal to the product of the Exercise Price (as such term is defined in Section 2) multiplied by the number of Warrant Shares being purchased upon such exercise (the “Aggregate Exercise Price”)

(ii)

Certificates for Warrant Shares purchased upon exercise of this Warrant shall be delivered by the Company to the Registered Holder within five business days after the date of the Exercise Time.  Unless this Warrant has expired or all of the purchase rights represented hereby have been exercised, the Company shall prepare a new Warrant, substantially identical hereto, representing the rights formerly represented by this Warrant that have not expired or been exercised and shall, within such five-day period, deliver such new Warrant to the Person designated for delivery in the Exercise Agreement. 

(iii)

The Warrant Shares issuable upon the exercise of this Warrant shall be deemed to have been issued to the Registered Holder at the Exercise Time, and the Registered Holder shall be deemed for all purposes to have become the record holder of such Warrant Shares at the Exercise Time. 

(iv)

The Company shall not close its books against the transfer of this Warrant or of any Warrant Shares issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.  

(v)

The Company shall make any governmental filings or obtain any governmental approvals necessary in connection with the exercise of this Warrant by the Registered Holder.

(vi)

The Company shall at all times reserve and keep available out of its authorized but unissued capital stock, solely for the purpose of issuance upon the exercise of this Warrant, the maximum number of Warrant Shares issuable upon the exercise of this Warrant.  All Warrant Shares that are so issuable shall, when issued and upon the payment of the Exercise Price therefor, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges.  The Company shall take all such actions as may be necessary to assure that all such Warrant Shares may be so issued without violation by the Company of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which securities of the Company may be listed (except for official notice of issuance which shall be immediately delivered by the Company upon each such issuance). 

(c)

Exercise Agreement.  Upon any exercise of this Warrant, the Registered Holder shall deliver an Exercise Agreement in the form set forth in Exhibit I hereto, except that if the Warrant Shares are not to be issued in the name of the Person in whose name this Warrant is registered, the Exercise Agreement shall also state the name of the Person to whom the certificates for the Warrant Shares are to be issued, and if the number of Warrant Shares to be issued does not include all the 

Warrant Shares purchasable hereunder, it shall also state the name of the Person to whom a new Warrant for the unexercised portion of the rights hereunder is to be issued.

SECTION 2.  Adjustment of Exercise Price and Number of Shares.  In order to prevent dilution of the rights granted under this Warrant, the Initial Exercise Price shall be subject to adjustment from time to time as provided in this Section 2 (such price or such price as last adjusted pursuant to the terms hereof, as the case may be, is herein called the “Exercise Price”), and the number of Warrant Shares obtainable upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this Section 2. 

(a)

Reorganization, Reclassification, Consolidation, Merger or Sale.  In case of any reclassification, capital reorganization, consolidation, merger, sale of all or substantially all of the Company’s assets to another Person or any other change in the Common Stock of the Company, other than as a result of a subdivision, combination, or stock dividend provided for in Section 2(b) below (any of which, a “Change Event”), then, as a condition of such Change Event, lawful provision shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Registered Holder, so that the Registered Holder shall have the right at any time prior to the expiration of this Warrant to purchase, at a total price equal to that payable upon the exercise of this Warrant (subject to adjustment of the Exercise Price as provided in Section 2), the kind and amount of shares of stock and other securities and property receivable in connection with such Change Event by a holder of the same number of shares of Common Stock as were purchasable by the Registered Holder immediately prior to such Change Event.  In any such case appropriate provisions shall be made with respect to the rights and interest of the Registered Holder so that the provisions hereof shall thereafter be applicable with respect to any shares of stock or other securities and property deliverable upon exercise hereof, and appropriate adjustments shall be made to the purchase price per share payable hereunder, provided the aggregate purchase price shall remain the same.

(b)

Subdivisions, Combinations and Other Issuances.  If the Company shall at any time prior to the expiration of this Warrant (i) subdivide its Common Stock, by split up or otherwise, or combine its Common Stock, or (ii) issue additional shares of its Common Stock or other equity securities as a dividend with respect to any shares of its Common Stock, the number of shares of Common Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision of stock, or proportionately decreased in the case of a combination. Appropriate adjustments shall also be made to the purchase price payable per share, but the aggregate purchase price payable for the total number of Warrant Shares purchasable under this Warrant (as adjusted) shall remain the same.  Any adjustment under this Section 2(b) shall become effective at the close of business on the date the subdivision or combination becomes effective, or as of the record date of such dividend, or in the event that no record date is fixed, upon the making of such dividend.

(c)

Issuance of New Warrant.  Upon the occurrence of any of the events listed in this Section 2 that results in an adjustment of the type, number or exercise price of the securities underlying this Warrant, the Registered Holder shall have the right to receive a new warrant reflecting such adjustment upon the Registered Holder tendering this Warrant in exchange.  The new warrant shall otherwise have terms identical to this Warrant.

(d)

Notices. 

(i)

The Company shall give written notice to the Registered Holder of this Warrant at least 10 days prior to the date on which the Company closes its books or takes a record for determining rights to vote with respect to any event described in this Section 2 or any dissolution or liquidation. 

(ii)

The Company shall also give written notice to the Registered Holder of this Warrant at least 10 days prior to the date on which any event described in this Section 2 or any dissolution or liquidation shall take place. 

SECTION 3.  Registration Rights.  

(a)

Demand Registration.  

(i)

As soon as practicable, but in no event later than the Filing Deadline, the Company shall file with the SEC a Registration Statement on Form SB-2 covering the resale of all the Registrable Securities.  If Form SB-2 is unavailable for such a Registration, the Company shall register the resale of the Registrable Securities on another appropriate form reasonably acceptable to the Holders of at least a majority of the Registrable Securities and undertake to register the Registrable Securities on Form SB-2 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form SB-2 covering the Registrable Securities has been declared effective by the SEC.  The Company shall use its reasonable best efforts to have such Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Effectiveness Deadline.

(ii)

The Company shall prepare and file with the SEC such amendments and supplements to the Registration Statement filed under this Section 3(a)(i) as may be reasonably necessary to keep such Registration Statement effective until all Registrable Securities have been sold pursuant to such Registration Statement or pursuant to Rule 144, or may be sold without restriction pursuant to Rule 144.  The Company shall comply with the provisions of the Act with respect to the disposition of all Registrable Securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the Holders as set forth in such Registration Statement  

(iii)

In the event the Registration Statement required to be filed with the SEC pursuant to Section 3(a)(i) is not filed with the SEC by the Filing Deadline, the Company shall issue to the Registered Holder an additional warrant for each 30-day period (or a portion thereof) during which time such Registration Statement has not been filed with the SEC, which additional warrants shall be issued on the last day of each 30-day period commencing on the Filing Deadline.  In addition, if the Registration Statement required to be filed with the SEC pursuant to Section 3(a)(i) is not declared effective by the SEC by the Effectiveness Deadline, the Company shall issue to the Registered Holder an additional warrant for each 30-day period (or a portion thereof) during which time such Registration Statement has not been declared effective by the SEC, which additional warrants shall be issued on the last day of each 30-day period commencing on the Effectiveness Deadline.   Each additional warrant shall be exercisable for that number of shares equal to 1% of the 

number of shares for which this Warrant is exercisable on the date of issuance of such additional warrant, with an exercise price per share equal to that of this Warrant on such date. If the Company is advised by legal counsel that the filing of the registration statement may preclude the private placement of securities in a PIPE transaction prior to the effectiveness of the registration statement, the Filing Deadline shall be delayed until within ten (10) business days following the earlier of (a) the completion of any larger PIPE financing following the Loan and (b) the day on which the Company no longer is so advised that the filing of the registration statement may preclude the private placement of securities in a PIPE transaction.

(b)

Piggyback Registration.  

(i)

If, at any time commencing on the date hereof and expiring on the Expiration Date, the Company proposes to file a Registration Statement (other than under a Registration Statement pursuant to Form S-8 or Form S-4) to register its securities, and all of the Registrable Securities are not then covered by an effective Registration Statement, the Company shall: (A) give written notice by registered mail, at least 20 days prior to the filing of such Registration Statement to the Holders of its intention to do so; and (B) include all Registrable Securities in such Registration Statement with respect to which the Company has received written requests for inclusion therein within 15 days of actual receipt of the Company’s notice.

(ii)

The Company shall have the right at any time after it shall have given written notice pursuant to this Section 3(a) (irrespective of whether a written request for inclusion of any Registration Securities shall have been made) to elect not to file any such Registration Statement, or to withdraw the same after the filing but prior to the effective date thereof.

(iii)

If the Registration Statement pursuant to this Section 3(a) relates to a firmly underwritten public offering and the managing underwriter(s) advise the Company in writing that in their opinion the number of securities proposed to be included in the Registration Statement (including the Registrable Securities) exceeds the number of securities which can be sold therein without adversely affecting the marketability of the public offering, the Company will include in such Registration Statement the number of securities requested to be included which in the opinion of such underwriter(s) can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders of all securities proposed to be included in the Registration Statement.  

(c)

Covenants of the Company with Respect to Registration.  In connection with each Registration under this Section 3, the Company covenants and agrees as follows:

(i)

The Company shall use its best efforts to have any Registration Statement declared effective at the earliest practicable time.  The Company will promptly notify each Holder of included Registrable Securities and confirm such advice in writing, (A) when such Registration Statement becomes effective, (B) when any post-effective amendment to such Registration Statement becomes effective and (C) of any request by the SEC for any amendment or supplement to such Registration Statement or any prospectus relating thereto or for additional information.

(ii)

The Company shall furnish to each Holder of included Registrable Securities such number of copies of such Registration Statement and of each such amendment and supplement 

thereto (in each case including each preliminary prospectus and summary prospectus) in conformity with the requirements of the Act, and such other documents as such Holders may reasonably request in order to facilitate their disposition of the Registrable Securities.

(iii)

If at any time the SEC should institute or threaten to institute any proceedings for the purpose of issuing a stop order suspending the effectiveness of any Registration Statement, the Company will promptly notify each Registered Holder of Registrable Securities and will use all reasonable efforts to prevent the issuance of any such stop order or to obtain the withdrawal thereof as soon as possible.  

(iv)

The Company will use its good faith reasonable efforts and take all reasonably necessary action which may be required in qualifying or registering the Registrable Securities included in a Registration Statement for offering and sale under the securities or blue sky laws of such states as reasonably are required by the Holders, provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction.

(v)

The Company shall use its good faith reasonable efforts to cause such Registrable Securities covered by a Registration Statement to be registered with or approved by such other governmental agencies or authorities of the United States or any State thereof as may be reasonably necessary to enable the Holder(s) thereof to consummate the disposition of such Registrable Securities.

(vi)

The Company shall deliver promptly to each Holder that has included Registrable Securities in a Registration Statement and to the managing underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and all non-privileged memoranda relating to discussions with the SEC or its staff with respect to the Registration Statement and permit each such Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the Registration Statement as it deems reasonably necessary to comply with applicable securities laws or rules of the NASD.  Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times and as often as any such Holder shall reasonably request.

(vii)

All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation all registration and filing fees, legal opinions for shareholder certificates, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions) and other Persons retained by the Company will be borne by the Company.  In no event shall the Company be obligated to pay any discounts or commissions with respect to the Registrable Shares sold by any Holder.  In connection with each Registration Statement, the Company will reimburse the Holders of included Registrable Securities for the reasonable fees and disbursements of one counsel chosen by the Holders of a majority of the included Registrable Securities.   

(d)

Indemnification and Contribution

(i)

The Company shall indemnify each Holder of the Registrable Securities included in any Registration Statement, each of its officers, directors and agents (including brokers and underwriters selling Registrable Securities on behalf of the Holder), and each Person, if any, who controls such Holder within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act against all losses, claims, damages, expenses and/or liabilities (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act, any state securities laws or otherwise, arising from such Registration Statement, including, without limitation, any and all losses, claims, damages, expenses and liabilities caused by (I) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, or (II) any omission or alleged omission to state in the Registration Statement a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to Company by the Holder expressly for use therein.

(ii)

If requested by the Company prior to the filing of any Registration Statement covering the Registrable Securities, each Holder of the Registrable Securities to be included in such Registration Statement shall severally, and not jointly, indemnify the Company, its officers and directors and each Person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all losses, claims, damages, expenses and/or liabilities (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from written information furnished by such Holder, or their successors or assigns, for specific inclusion in such Registration Statement, except that the maximum amount which may be recovered from each Holder pursuant to this Section 3(c)(ii) or otherwise shall be limited to the amount of net proceeds received by the Holder from the sale of the Registrable Securities under such Registration Statement.

(iii)

In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to this Section 3(c), such Person (an “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent (and only to the extent that) that the Indemnifying Party is materially prejudiced by such failure to notify.  In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (A) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (B) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them.  It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to 

any local counsel) at any time for all such Indemnified Parties (including in the case of Holder, all of its officers, directors and controlling persons) and that all such fees and expenses shall be reimbursed as they are incurred.  In the case of any such separate firm for the Indemnified Parties, the Indemnified Parties shall designate such firm in writing to the Indemnifying Party.  The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.  No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

(iv)

To the extent any indemnification by an Indemnifying Party is prohibited or limited by law, the Indemnifying Party agrees to make the maximum contribution with respect to any amounts for which, he, she or it would otherwise be liable under this Section 3(c) to the fullest extent permitted by law; provided, however, that (A) no contribution shall be made under circumstances where a party would not have been liable for indemnification under this Section 3(c) and (B) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning used in the Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation.

(e)

Nothing contained in this Agreement shall be construed as requiring the Holders to exercise their Warrants prior to the filing of any Registration Statement or the effectiveness thereof.

(f)

The Company shall not, directly or indirectly, enter into any merger, business combination or consolidation in which (i) the Company shall not be the surviving corporation and (ii) the shareholders of the Company are to receive, in whole or in part, capital stock or other securities of the surviving corporation, unless the surviving corporation shall, prior to such merger, business combination or consolidation, agree in writing to assume the obligations of the Company under this Agreement, and for that purpose references hereunder to “Registrable Securities” shall be deemed to include the securities which the Holders would be entitled to receive in exchange for Registrable Securities under any such merger, business combination or consolidation, provided that to the extent such securities to be received are convertible into shares of Common Stock of the issuer thereof, then any such shares of Common Stock as are issued or issuable upon conversion of said convertible securities shall also be included within the definition of “Registrable Securities.”

SECTION 4.  Definitions.  The following terms have the meanings set forth below: 

“Act” means the Securities Act of 1933, as amended.

“Equity Securities” means the capital stock of a person or entity and/or any options, warrants, calls, rights, commitments, convertible securities and other securities pursuant to which the holder, directly or indirectly, has the right to acquire (with or without additional consideration) capital stock or equity of such person or entity.

“Effectiveness Deadline” shall mean 180 days after the filing of the Registration Statement.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 “Filing Deadline” shall mean 60 days from the Loan Closing Date.

“Holders” means the Registered Holder, and the registered holders of all other Warrants (including Additional Warrants) originally issued pursuant the Loan Agreement, and the registered holders of the Registrable Securities. 

“Loan Closing Date” means the date upon which the Loan is made to the Company pursuant to the terms of the Loan Agreement. 

“Person” means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof.  

“Registered Holder” means the registered holder of this Warrant. 

“Registrable Securities” means the Warrant Shares and any securities issued with respect to the Warrant Shares by virtue of a stock dividend, stock split, reclassification or reorganization, provided that the Warrant Shares and such other securities shall no longer by Registrable Securities once they have been sold or transferred pursuant to an effective Registration Statement under the Act or pursuant to Rule 144.

“Registration” shall mean a registration of Registrable Securities under the Act pursuant to Section 3 of this Agreement.

“Registration Statement” shall mean the Registration Statement, as amended from time to time, filed with the SEC in connection with a Registration, and each prospectus that is used in connection with such Registration Statement (including any preliminary prospectus).

“Rule 144” means Rule 144 of the SEC under the Act.

“SEC” means the United States Securities and Exchange Commission, or any successor regulatory agency.

“Warrant” means the right to purchase one or more Warrant Shares pursuant to the terms of this Warrant, as the same may be transferred, divided or exchanged pursuant to the terms hereof.

“Warrant Shares” means shares of the Common Stock issuable upon exercise of the Warrant; provided, however, that if there is a change such that the securities issuable upon exercise of the Warrant are issued by a Person other than the Company or there is a change in the class of securities so issuable, then the term “Warrant Shares” shall mean shares of the security issuable upon exercise of the Warrant if such security is issuable in shares, or shall mean the equivalent units in which such security is issuable if such security is not issuable in shares.

SECTION 5.  No Voting Rights; Limitations of Liability.  This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Company.  No provision hereof, in the absence of affirmative action by the Registered Holder to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Registered Holder shall give rise to any liability of such Registrable Holder for the Exercise Price or as a stockholder of the Company.  

SECTION 6.  Warrant Transferable.  Subject to compliance with applicable securities laws and the terms of this Section 6, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Registered Holder upon surrender of this Warrant with a properly executed Assignment (in the form of Exhibit II hereto) at the principal office of the Company, subject to prior written approval by the Company.

SECTION 7.  Warrant Exchangeable for Different Denominations.  This Warrant is exchangeable, upon the surrender hereof by the Registered Holder at the principal office of the Company, for new Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of such new Warrants shall represent such portion of such rights as is designated by the Registered Holder at the time of such surrender.  The date the Company initially issues this Warrant shall be deemed to be the “Date of Issuance” hereof regardless of the number of times new certificates representing the unexpired and unexercised rights formerly represented by this Warrant shall be issued.  All Warrants representing portions of the rights hereunder are referred to herein as the “Warrants.”  

SECTION 8.  Replacement.  Upon receipt of evidence reasonably satisfactory to the Company of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing this Warrant, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company, or, in the case of any such mutilation upon surrender of such certificate, the Company shall (at the expense of the Registered Holder) execute and deliver in lieu of such certificate a new certificate of like kind representing the same rights represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate.  

SECTION 9.  Notices.  All notices, requests, deliveries, consents and other communications provided for herein shall be in writing and shall be effective upon delivery in person, faxed, or mailed by certified or registered mail, return receipt requested, postage pre-paid, addressed as follows:

	
	if to Company, to:

Dana Waldman, CEO

Voyant International Corporation

530 Lytton Ave. 2nd Floor 

Palo Alto, CA 94301

	
	with a copy to:

Richardson & Patel LLP

10900 Wilshire Boulevard, Suite 500

Los Angeles, CA 90024

Attn:  Benjamin M. Alexander, Esq.

Fax:  (310) 208-1154

	

if to the Lender, to:

MapleRidge Insurance Services, Inc.

114 Pacifica, Suite 130 

Irvine, CA 92618

	with a copy to:

or, in any case, at such other address or addresses as shall have been furnished in writing to the Company (in the case of a Registered Holder of Warrants) or to the Registered Holders of Warrants (in the case of the Company) in accordance with the provisions of this paragraph.

SECTION 10.  Amendment and Waiver.  Except as otherwise provided herein, the provisions of the Warrants may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holders representing a majority of the Warrant Shares obtainable upon exercise of the then-outstanding Warrants; provided, however, that no such action may change the Exercise Price of the Warrants or the number of shares or class of capital stock obtainable upon exercise of each Warrant without the written consent of all Holders.

SECTION 11.  Descriptive Headings; Governing Law.  

(a)

The descriptive headings of the several Sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  

(b)

All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the laws of the State of Nevada, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Nevada or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Nevada.

SECTION 12.  Warrant Register.  The Company shall maintain at its principal executive office books for the registration and the registration of transfer of this Warrant.  The Company may deem and treat the Registered Holder as the absolute owner hereof (notwithstanding any notation of ownership or other writing thereon made by anyone) for all purposes and shall not be affected by any notice to the contrary.

SECTION 13.  Fractions of Shares.  The Company may, but shall not be required, to issue a fraction of a Warrant Share upon the exercise of this Warrant in whole or in part.  As to any fraction of a share which the Company elects not to issue, the Company shall make a cash payment in respect of such fraction in an amount equal to the same fraction of the market price of a Warrant Share on the date of such exercise (as determined by the board of directors in its reasonable discretion).

SECTION 14.  Attorneys’ Fees.  If any action, suit, arbitration or other proceeding is instituted to remedy, prevent or obtain relief from a default in the performance by any party to this Warrant of its obligations under this Warrant, the prevailing party shall recover all of such party’s attorneys’ fees incurred in each and every such action, suit, arbitration or other proceeding, including any and all appeals or petitions therefrom.  As used in this Section, attorneys’ fees shall be deemed to mean the full and actual costs of any legal services actually performed in connection with the matters involved calculated on the basis of the usual fee charged by the attorney performing such services and shall not be limited to “reasonable attorneys’ fees” as defined in any statute or rule of court.

* * * * *

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly authorized officers and to be dated as of the Date of Issuance hereof.  

			
	 
	Voyant International Corporation

	 
	 
	 

	 
	By:

	 

	      

	 
	 

	 
	 
	 

	 
	 
	 

EXHIBIT I

EXERCISE AGREEMENT

To:

Dated:  

The undersigned, pursuant to the provisions set forth in the attached Warrant (Certificate No. W-____), hereby subscribes for the purchase of ______ Warrant Shares covered by such Warrant and makes payment herewith in full therefor at the price per share provided by such Warrant.  Please issue the Warrant Shares in the following names and amounts:

		
	Name

	Number of Warrant Shares

		
	 
	Signature

	 
	Address

EXHIBIT II

ASSIGNMENT

FOR VALUE RECEIVED, LENDER_NAME hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant (Certificate No. W-_____) with respect to the number of the Warrant Shares covered thereby set forth below, unto:  

					
	Name of Assignee

	 
	Address

	 
	No. of Shares

	 
	 
	 
	 
	 

	 
	 
	 
	 
	 

			
	 
	Signature

	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	Witness

	 

The Assignee agrees to be bound by the terms of the Warrant.

			
	 
	Signature

	 

	 
	 
	 

	 
	 
	 

	 
	 
	 

	 
	WitnessUnassociated Document

    EXHIBIT
      10.23

    
      

      

    

    
 

    _____________________________________________________________________________

     

    

     

    

     

    PREFERRED
      STOCK AND WARRANT PURCHASE AGREEMENT

     

    by
      and
      among

     

    Access
      Pharmaceuticals, Inc.

     

    and

     

    the
      parties named herein on Schedule 1, as Purchasers

     

    

     

    

     

    

     

    

     

    

     

    November
      7, 2007

     

    

     

    _____________________________________________________________________________

     

    

     

    

     

    

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    This
      PREFERRED
      STOCK AND WARRANT PURCHASE AGREEMENT
      (this
“Agreement”)
      is
      dated as of November 7, 2007, among Access Pharmaceuticals, Inc., a Delaware
      corporation (the “Company”),
      and
      the purchasers identified on Schedule
      1
      hereto
      (each a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated
      thereunder, the Company desires to issue and sell to the Purchasers, and the
      Purchasers, severally and not jointly, desire to purchase from the Company,
      in
      the aggregate, (i) up to 3,227.3617 shares of the Company’s Series A Cumulative
      Convertible Preferred Stock, and (ii) Common Stock Purchase Warrants (the
“Warrants”)
      entitling the holders thereof to purchase up to 3,440,882 shares
      of
      the Company’s Common Stock as more fully set forth herein.

     

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

     

    ARTICLE
      I

     

    DEFINITIONS
      AND TERMS OF PREFERRED STOCK AND WARRANTS

     

    1.1 Certain
      Definitions; Terms of Preferred Stock and Warrants.
      

     

    In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings indicated in this Section
      1.1:

     

    “Action”
shall
      have the meaning ascribed to such term in Section
      3.1(j). 

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person, as such
      terms are used in and construed under Rule 144. With respect to a Purchaser,
      any
      investment fund or managed account that is managed on a discretionary basis
      by
      the same investment manager as such Purchaser will be deemed to be an Affiliate
      of such Purchaser.

     

    “Agreement”
shall
      have the meaning ascribed to such term in the Preamble.

     

    “Business
      Day”
means
      any day except Saturday, Sunday and any day which shall be a federal legal
      holiday or a day on which banking institutions in the State of Texas are
      authorized or required by law or other governmental action to
      close.

     

    “Certificate
      of Designation”
shall
      have the meaning ascribed to such term in Section 1.2.

     

    “Closing”
shall
      have the meaning ascribed to such term in Section 2.1(a). 

     

    “Closing
      Date”
shall
      have the meaning ascribed to such term in Section 2.1(a).

     

    “Closing
      Escrow Agreement”
shall
      have the meaning ascribed to such term in Section 2.1(b).

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    “Commission”
means
      the Securities and Exchange Commission. 

     

    “Common
      Stock”
means
      the common stock of the Company, $0.01 par value per share, and any securities
      into which such common stock may hereafter be reclassified. 

     

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

     

    “Company”
shall
      have the meaning ascribed to such term in the Preamble.

     

    “Conversion
      Shares”
means
      the shares of Common Stock issuable or issued upon conversion of the Preferred
      Stock.

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules concurrently delivered herewith. 

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      Commission. 

     

    “Environmental
      Laws”
shall
      have the meaning ascribed to such term in Section 3.1(y).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “FDC
      Act”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

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

     

    “Governmental
      Authorizations”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Hazardous
      Substances”
shall
      have the meaning ascribed to such term in Section 3.1(y).

     

    “Indemnified
      Party”
shall
      have the meaning ascribed to such term in Section 5.3.

     

    “Indemnifying
      Party”
shall
      have the meaning ascribed to such term in Section 5.3.

     

    “Intellectual
      Property”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    “Investor
      Rights Agreement”
means
      the Investor Rights Agreement, dated as of the date of this Agreement, between
      the Company and each of the Purchasers, in the form of Exhibit
      A
      hereto.

     

    “Lien”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal or other
      restriction, except for a lien for current taxes not yet due and payable and
      a
      minor imperfection of title, if any, not material in nature or amount and not
      materially detracting from the value or impairing the use of the property
      subject thereto or impairing the operations or proposed operations of the
      Company. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    “Material
      Adverse Effect”
shall
      have the meaning ascribed to such term in Section 3.1(b). 

     

    “Per
      Share Purchase Price”
equals
      $10,000.

     

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

     

    “Placement
      Agents”
means
      Rodman & Renshaw, LLC and Dawson James Securities, Inc.

     

    “Placement
      Agent Warrants”
shall
      mean the common stock purchase warrants to be issued to the Placement Agents
      and/or their designees as compensation for services rendered in connection
      with
      the transaction set forth herein as provided on Schedule
      1
      attached
      hereto, which warrants shall be in the form of Exhibit
      D
      hereto.

     

    “Preferred
      Shares”
means
      the shares of Preferred Stock issued to each Purchaser pursuant to this
      Agreement.

     

    “Preferred
      Stock”
means
      the Company’s Series A Cumulative Convertible Preferred Stock, par value $0.01
      per share.

     

    “Premises”
shall
      have the meaning ascribed to such term in Section 3.1(y).

     

    “Promissory
      Notes”
shall
      have shall have the meaning ascribed to such term in Section
      2.1(c).

     

    “Purchase
      Price”
      means
      the aggregate purchase price paid by each Purchaser for the shares of Preferred
      Stock and Warrants purchased by such Purchaser hereunder.

     

    “Purchaser”
shall
      have the meaning ascribed to such term in the Preamble.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Investor Rights
      Agreement and covering the resale by the Purchasers of the Conversion Shares
      and
      the Warrant Shares. 

     

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

     

    “Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

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

     

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.1(h). 

     

    “Securities”
means
      the Preferred Shares, the Conversion Shares, the Warrants and the Warrant
      Shares. 

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Short
      Sales”
means
      all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
      Act (but shall not be deemed to include the location and/or reservation of
      borrowable shares of Common Stock).

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the amount set forth beside such Purchaser's name on
      Schedule
      1
      hereto,
      in United States dollars and in immediately available funds.

     

    “Subsidiary”
means,
      with respect to any entity, any corporation or other organization of which
      securities or other ownership interests having ordinary voting power to elect
      a
      majority of the board of directors or other persons performing similar
      functions, are directly or indirectly owned by such entity or of which such
      entity is a partner or is, directly or indirectly, the beneficial owner of
      50%
      or more of any class of equity securities or equivalent profit participation
      interests.

     

    “Trading
      Day”
means
      (i) a day on which the Common Stock is traded on a Trading Market, or (ii)
      if
      the Common Stock is not listed on a Trading Market, a day on which the Common
      Stock is traded on the over-the-counter market, as reported by the OTC Bulletin
      Board, or (iii) if the Common Stock is not listed on a Trading Market or quoted
      on the OTC Bulletin Board, a day on which the Common Stock is quoted in the
      over-the-counter market as reported by Pink Sheets LLC (or any similar
      organization or agency succeeding to its functions of reporting prices);
      provided, that in the event that the Common Stock is not listed or quoted as
      set
      forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business
      Day.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the American Stock Exchange, the New York
      Stock Exchange, the Nasdaq National Market, the Nasdaq Capital Market or the
      OTC
      Bulletin Board.

     

    “Transaction
      Documents”
means
      this Agreement, the Certificate of Designation, the Investor Rights Agreement,
      the Warrants and any other documents or agreements executed in connection with
      the transactions contemplated hereunder. 

     

    “Underlying
      Shares”
      means
      the shares of Common Stock issued and issuable upon conversion of the Preferred
      Stock, upon exercise of the Warrants and issued and issuable in lieu of the
      cash
      payment of dividends on the Preferred Stock in accordance with the terms of
      the
      Certificate of Designation.

    

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    “VWAP”
      means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day
      from
      9:30 a.m. (New York City time) to 4:02 p.m. (New York City time); (v) if the
      Common Stock is not then quoted for trading on any Trading Market and if prices
      for the Common Stock are then reported in the “Pink Sheets” published by Pink
      Sheets, LLC (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent bid price per share of the Common Stock
      so
      reported; or (d) in all other cases, the fair market value of a share of
      Common Stock as determined by an independent appraiser selected in good faith
      by
      the Purchasers of a majority in interest of the Securities then outstanding
      and
      reasonably acceptable to the Company.

    

    “Warrants”
shall
      have the meaning ascribed to such term in the recitals hereto. The Placement
      Agent Warrants shall also constitute “Warrants” for all purposes hereunder and
      the Placement Agents and/or their designees and such other persons or entities
      shall constitute “Purchasers” for all purposes hereunder.

    

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    1.2 Terms
      of the Preferred Stock and Warrants.
      The
      terms and provisions of the Preferred Stock are set forth in the form of
      Certificate of Designations of Rights and Preferences of Series A Convertible
      Preferred Stock, attached hereto as Exhibit B (the “Certificate
      of Designation”).
      The
      terms and provisions of the Warrants are as set forth in the form of Common
      Stock Purchase Warrant, attached hereto as Exhibit
      C
      (and
Exhibit
      D
      in the
      case of the Placement Agent Warrants).

     

    ARTICLE
      II

     

    PURCHASE
      AND SALE

     

    2.1 Closing.

     

    (a) The
      closing of the transactions contemplated under this Agreement (the “Closing”)
      will
      take place upon the execution of this Agreement by the Company and the
      Purchasers immediately following satisfaction or waiver of the conditions set
      forth in Sections 2.2 and 2.3 (other than those conditions which by their terms
      are not to be satisfied or waived until the Closing), at the offices of Wiggin
      and Dana LLP, 400 Atlantic Street, Stamford, CT 06901 (or remotely via exchange
      of documents and signatures) or at such other place or day as may be mutually
      acceptable to the Purchasers and the Company. The date on which the Closing
      occurs is the “Closing
      Date”.

     

    (b) At
      the
      Closing, the Purchasers shall purchase, severally and not jointly, and the
      Company shall issue and sell, in the aggregate, 3,227.3617 shares of Preferred
      Stock and Warrants to purchase 3,440,882 shares of Common Stock. Each Purchaser
      shall purchase from the Company, and the Company shall issue and sell to each
      Purchaser, a number of Preferred Shares equal to such Purchaser's Subscription
      Amount divided by the Per Share Purchase Price and a Warrant to purchase 50%
      of
      the number of Conversion Shares into which the Preferred Shares purchased by
      such Purchaser are initially convertible. Except to the extent paid in the
      form
      of surrender and cancellation of Promissory Notes (as defined below) pursuant
      to
      Section 2.1(c), the Subscription Amount paid by each Purchaser shall be placed
      in escrow pending the Closing pursuant to a Closing Escrow Agreement among
      the
      Company, SCO Capital Partners LLC and Wiggin and Dana LLP (the “Escrow
      Agent”),
      which
      agreement shall be in the form attached hereto as Exhibit
      E
      (the
“Closing
      Escrow Agreement”).
      

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (c) All
      or a
      portion of the Subscription Amount payable by certain Purchasers for the
      Preferred Stock and Warrants purchased pursuant to this Agreement shall be
      payable by the surrender and cancellation of promissory notes of the Company
      held by such Purchasers, representing an aggregate principal amount of
      $10,015,000 plus accrued and unpaid interest thereon and described next to
      such
      Purchaser’s name in Schedule
      1
      hereto
      (the “Promissory
      Notes”),
      with
      the value of such Promissory Notes toward such Purchaser’s Subscription Amount
      also described in Schedule
      1.
      The
      value of each Promissory Note toward the Subscription Amount shall be determined
      according to whether the Promissory Note is an “A” Promissory Note (a
“Category
      A Note”)
      or a
“B” Promissory Note (a “Category
      B Note”),
      in
      each case, as set forth on Schedule
      1
      under
      the heading “Promissory Note Category”. Category A Notes shall be valued toward
      each applicable Purchaser’s Subscription Amount at a dollar amount equal to (i)
      the number of shares of Common Stock into which such Category A Note is
      convertible immediately prior to the Closing (without giving effect to any
      limitations on beneficial ownership contained therein) multiplied by (ii) the
      Conversion Value (as defined in the Certificate of Designation); provided that,
      notwithstanding any other provision of this Agreement, the Warrants issuable
      to
      the Category A Note holders in respect of Category A Notes exchanged by them
      shall be exercisable for a number of shares of Common Stock determined as if
      the
      principal and interest on such Category A Notes were exchanged on a
      dollar-for-dollar basis and as set forth next to the name of such Category
      A
      Note holder on Schedule
      1.
      Category B Notes shall be valued toward each applicable Purchaser’s Subscription
      Amount at a dollar amount equal to the outstanding principal amount of such
      Category B Note plus all accrued and unpaid interest thereon. Each Purchaser
      surrendering Promissory Notes for cancellation in payment of any portion of
      such
      Purchaser’s Subscription Amount hereby agrees that such Promissory Notes shall
      be cancelled and that all liens held by such Purchaser in connection with such
      Promissory Notes shall be terminated, in each case, as of the
      Closing.

     

    2.2 Conditions
      to Obligations of Purchasers to Effect the Closing.

     

    The
      obligations of each Purchaser to effect the Closing and the transactions
      contemplated by this Agreement shall be subject to the satisfaction at or prior
      to the Closing of each of the following conditions, any of which may be waived,
      in writing, by such Purchaser:

     

    (a) At
      the
      Closing (unless otherwise specified below) the Company shall deliver or cause
      to
      be delivered to each Purchaser the following: 

     

    (i)
      this
      Agreement, duly executed by the Company;

     

    (ii)
      a
      certificate evidencing a number of Preferred Shares equal to such Purchaser's
      Subscription Amount divided by the Per Share Purchase Price as set forth on
      Schedule
      1
      hereto,
      registered in the name of such Purchaser;

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    (iii)
      a
      Warrant, registered in the name of such Purchaser, pursuant to which such
      Purchaser shall have the right to acquire up to the number of shares of Common
      Stock equal to 50% of the shares of Common Stock initially issuable upon
      conversion of the Preferred Shares to be issued to such Purchaser at such
      Closing (except with respect to Warrants issued upon exchange of Category A
      Notes, the number of which shall be determined in accordance with Section
      2.1(c)), as set forth on Schedule
      1
      hereto;

     

    (iv)
      the
      Investor Rights Agreement, duly executed by the Company;

     

    (v)
      a
      legal opinion of Bingham McCutchen LLP, counsel
      to the Company, in the form of Exhibit
      F
      hereto;

     

    (vii)
      a
      certificate of the Secretary of the Company (the “Secretary’s
      Certificate”),
      attaching a true copy of the Certificate of Incorporation and Bylaws of the
      Company, as amended to the Closing Date, and attaching true and complete copies
      of the resolutions of the Board of Directors of the Company authorizing the
      execution, delivery and performance of this Agreement and the other Transaction
      Documents; and

    

    (vii) evidence
      satisfactory to the Purchasers that the Certificate of Designation was duly
      filed with, and accepted by, the Secretary of State of the State of
      Delaware.

     

    (b) The
      Company shall have entered into the Closing Escrow Agreement.

     

    (c) All
      representations and warranties of the Company contained herein shall remain
      true
      and correct as of the Closing Date as though such representations and warranties
      were made on such date (except those representations and warranties that address
      matters only as of a particular date will remain true and correct as of such
      date).

    

    (d) All
      of
      the Promissory Notes shall have been surrendered for cancellation in partial
      payment of the Subscription Amount for the Purchasers holding such
      notes;

     

    (e) As
      of the
      Closing Date, there shall have been no Material Adverse Effect with respect
      to
      the Company since the date hereof.

     

    (f) From
      the
      date hereof to the Closing Date, trading in the Common Stock shall not have
      been
      suspended by the Commission (except for any suspension of trading of limited
      duration agreed to by the Company, which suspension shall be terminated prior
      to
      the Closing), and, at any time prior to the Closing Date, trading in securities
      generally as reported by Bloomberg Financial Markets shall not have been
      suspended or limited, or minimum prices shall not have been established on
      securities whose trades are reported by such service, or on any Trading Market,
      nor shall a banking moratorium have been declared either by the United States
      or
      New York State authorities.

     

    (g)
       All
      Purchasers surrendering Promissory Notes for cancellation in payment of any
      portion of their Subscription Amount shall have executed this
      Agreement.

     

    (i) The
      minimum aggregate cash Subscription Amount hereunder shall be
      $7,500,000.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    2.3. Conditions
      to Obligations of the Company to Effect the Closing.

     

    The
      obligations of the Company to effect the Closing and the transactions
      contemplated by this Agreement shall be subject to the satisfaction at or prior
      to the Closing of each of the following conditions, any of which may be waived,
      in writing, by the Company. 

     

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

     

    (i)
      this
      Agreement, duly executed by such Purchaser;

     

    (ii)
      such
      Purchaser's Subscription Amount, as applicable, (A) by wire transfer of
      immediately available funds as provided in the Closing Escrow Agreement and/or
      (B) in the case of Purchasers paying all or a portion of their Subscription
      Amount by the cancellation of the Promissory Notes held by them, by the
      cancellation of such Promissory Notes pursuant to Section 2.1(c);
      and

     

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

     

    (b) All
      representations and warranties of each of the Purchasers contained herein shall
      remain true and correct as of the Closing Date as though such representations
      and warranties were made on such date.

     

    (c) The
      Certificate of Designation shall have been duly filed with, and accepted by,
      the
      Secretary of State of the State of Delaware.

     

    ARTICLE
      III

     

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company.

     

    Except
      as
      set forth under the corresponding section of the Disclosure Schedules delivered
      concurrently herewith, the Company hereby makes the following representations
      and warranties as of the date hereof and as of the Closing Date to each
      Purchaser:

     

    (a)
       Subsidiaries.
      Except
      as listed in Schedule 3.1(a), the Company has no direct or indirect
      Subsidiaries. 

     

    (b)
       Organization
      and Qualification.
      Each of
      the Company and the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite corporate power and authority to own and use its properties and assets
      and to carry on its business as currently conducted. Neither the Company nor
      any
      Subsidiary is in violation of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, would not
      have or result in (i) a material adverse effect on the legality, validity or
      enforceability of any Transaction Document, (ii) a material adverse effect
      on
      the business or financial condition of the Company and the Subsidiaries, taken
      as a whole, or (iii) a material adverse effect on the Company's ability to
      perform in any material respect on a timely basis its obligations under any
      Transaction Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”).

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    (c)
       Authorization;
      Enforceability.
      The
      Company has the requisite corporate power and authority to enter into and to
      consummate the transactions contemplated by each of the Transaction Documents
      and otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby (including, but
      not
      limited to, the sale and delivery of the Preferred Stock and Warrants) have
      been
      duly authorized by all necessary corporate action on the part of the Company
      and
      no further corporate action is required by the Company in connection therewith.
      The issuance and delivery of the Conversion Shares upon conversion of the
      Preferred Stock and the Warrant Shares upon exercise of the Warrants have been
      duly authorized by all necessary action on the part of the Company and no
      further action is required by the Company in connection therewith. Each
      Transaction Document has been (or upon delivery will have been) duly executed
      by
      the Company and, when delivered in accordance with the terms hereof, will
      constitute the valid and binding obligation of the Company enforceable against
      the Company in accordance with its terms, subject to laws of general application
      relating to bankruptcy, insolvency, reorganization, moratorium or other similar
      laws affecting creditors’ rights generally and rules of law governing specific
      performance, injunctive relief, or other equitable remedies.

     

    (d)
       No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated thereby
      do
      not and will not (i) conflict with or violate any provision of the Company's
      or
      any Subsidiary's certificate or articles of incorporation, bylaws or other
      organizational or charter documents, or (ii) conflict with, or constitute a
      default (or an event that with notice or lapse of time or both would become
      a
      default) under, or give to others any rights of termination, amendment,
      acceleration or cancellation (with or without notice, lapse of time or both)
      of,
      any agreement, credit facility, debt or other instrument (evidencing a Company
      or Subsidiary debt or otherwise) or other understanding to which the Company
      or
      any Subsidiary is a party or by which any property or asset of the Company
      or
      any Subsidiary is bound or affected, or (iii) result in a violation of any
      law,
      rule, regulation, order, judgment, injunction, decree or other restriction
      of
      any court or governmental authority to which the Company or a Subsidiary is
      subject (including federal and state securities laws and regulations), or by
      which any property or asset of the Company or a Subsidiary is bound or affected,
      except, in the cases of clause (ii), where such conflict, default or violation
      would not have or result in a Material Adverse Effect.

     

    (e)
       Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) the filing with the Commission of the
      Registration Statement, the application(s) to each Trading Market for the
      listing of the Conversion Shares and Warrant Shares for trading thereon in
      the
      time and manner required thereby, Form D and applicable Blue Sky filings, (ii)
      such as have already been obtained or such exemptive filings as are required
      to
      be made under applicable securities laws and (iii) the filing of the Certificate
      of Designation with the Secretary of State of the State of
      Delaware.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

       

    

    (f)
       Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens, other than any Liens created by
      or
      imposed on the holders thereof through no action of the Company. The Company
      has
      reserved from its duly authorized capital stock (i) the maximum number of shares
      of Preferred Stock issuable pursuant to this Agreement and (ii) the maximum
      number of shares of Common Stock issuable upon conversion of the Preferred
      Stock
      and exercise of the Warrants.

     

    (g)
       Capitalization.
      

     

    (i) The
      authorized and outstanding capitalization of the Company is set forth on
      Schedule 3.1(g) hereto. All shares of the Company’s issued and outstanding
      capital stock have been duly authorized, are validly issued and outstanding,
      and
      are fully paid and nonassessable. No securities issued by the Company from
      March
      1, 2002 to the date hereof were issued in violation of any statutory or common
      law preemptive rights. There are no dividends which have accrued or been
      declared but are unpaid on the capital stock of the Company. All taxes required
      to be paid by the Company in connection with the issuance and any transfers
      of
      the Company’s capital stock have been paid. The holders of the Company’s Common
      Stock have certain rights under the company’s Rights Agreement dated as of
      October 31, 2001 by and between the Company and American Stock Transfer as
      Rights Agent. All outstanding securities of the Company have been issued in
      all
      material respects in accordance with the provisions of all applicable securities
      and other laws.

     

    (ii) No
      Person
      has any right of first refusal, preemptive right, right of participation, or
      any
      similar right to participate in the transactions contemplated by the Transaction
      Documents. Except as a result of the purchase and sale of the Securities and
      except for employee and director stock options under the Company's equity
      compensation plans and as set forth on Schedule 3.1(h)(ii) hereto, there are
      no
      outstanding options, warrants, rights to subscribe to, calls or commitments
      of
      any character whatsoever relating to, or securities, rights or obligations
      convertible into or exchangeable for, or giving any Person any right to
      subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
      understandings or arrangements by which the Company or any Subsidiary is or
      may
      become bound to issue additional shares of Common Stock, or securities or rights
      convertible or exchangeable into shares of Common Stock. The issue and sale
      of
      the Securities will not obligate the Company to issue shares of Common Stock
      or
      other securities to any Person (other than the Purchasers) and will not result
      in a right of any holder of Company securities other than the Purchasers to
      adjust the exercise, conversion, exchange or reset price under such
      securities.

     

    (h) SEC
      Reports; Financial Statements; Liabilities.
      

     

    (i) The
      Company has filed all reports required to be filed by it under the Securities
      Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the
      Exchange Act, for the 24 months preceding the date hereof (or such shorter
      period as the Company was required by law to file such material) (the foregoing
      materials, including the exhibits thereto, being collectively referred to herein
      as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective filing dates, the SEC Reports complied in all material respects
      with the requirements of the Securities Act and the Exchange Act, as the case
      may be, and the rules and regulations of the Commission promulgated thereunder,
      as applicable, and none of the SEC Reports, as of their respective filing dates,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    (ii) The
      Company’s (A) audited financial statements for the fiscal years ended December
      31, 2006 and 2005 included in the Company’s annual reports on Form 10-KSB and
      Form 10-K, respectively, filed with the Commission and (B) the financial
      statements included in the Company’s quarterly reports on Form 10-QSB filed with
      the Commission for the first two fiscal quarters of 2007 comply with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto as in effect at the time of filing of such reports. Such
      financial statements have been prepared in accordance with generally accepted
      accounting principles in the United States, applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, subject to normal year-end audit adjustments. Such
      financial statements fairly present in all material respects the financial
      position of the Company and its consolidated subsidiaries, if any, as of and
      for
      the dates thereof and the results of operations and cash flows for the periods
      then ended, subject, in the case of unaudited statements, to normal year-end
      audit adjustments.

     

    (iii) Except
      for liabilities and obligations incurred since June 30, 2007 in the ordinary
      course of business, consistent with past practice, as of the date hereof: (i)
      the Company and its Subsidiaries do not have any material liabilities or
      obligations (absolute, accrued, contingent or otherwise) and (ii) there has
      not
      been any aspect of the prior or current conduct of the business of the Company
      or its Subsidiaries which may form the basis for any material claim by any
      third
      party which if asserted could result in a Material Adverse Effect.

     

    (i)
       Material
      Changes.
      Except
      as set forth on Schedule 3.1(i), since June 30, 2007, the Company has conducted
      its business only in the ordinary course, consistent with past practice, and
      since such date there has not occurred:

     

    (i) any
      event, occurrence or development that has had or that could reasonably be
      expected to result in a Material Adverse Effect on the Company or any of its
      Subsidiaries;

     

    (ii) any
      amendments or changes in the charter documents of the Company and its
      Subsidiaries;

     

    (iii) any:

     

    (A)
      incurrence, assumption or guarantee by the Company or its Subsidiaries of any
      debt for borrowed money other than (i) equipment leases made in the ordinary
      course of business, consistent with past practice and (ii) any such incurrence,
      assumption or guarantee with respect to an amount of $25,000 or less that has
      been disclosed in the SEC Reports; 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

    (B)
      other
      than as set forth on Schedule 3.1(i)(iii)(A) hereto, issuance or sale of any
      securities convertible into or exchangeable for securities of the Company other
      than to directors, employees and consultants pursuant to existing equity
      compensation or stock purchase plans of the Company; 

     

    (C)
      issuance or sale of options or other rights to acquire from the Company or
      its
      Subsidiaries, directly or indirectly, securities of the Company or any
      securities convertible into or exchangeable for any such securities, other
      than
      options issued to directors, employees and consultants in the ordinary course
      of
      business, consistent with past practice; 

     

    (D)
      issuance or sale of any stock, bond or other corporate security other than
      to
      directors, employees and consultants pursuant to existing equity compensation
      or
      stock purchase plans of the Company;

     

    (E)
      discharge or satisfaction of any material Lien; 

     

    (F)
      declaration or making any payment or distribution to stockholders or purchase
      or
      redemption of any share of its capital stock or other security other than to
      directors, officers and employees of the Company or its Subsidiaries as
      compensation for services rendered to the Company or its Subsidiary (as
      applicable) or for reimbursement of expenses incurred on behalf of the Company
      or its Subsidiary (as applicable); 

     

    (G)
      sale,
      assignment or transfer of any of its intangible assets except in the ordinary
      course of business, consistent with past practice, or cancellation of any debt
      or claim except in the ordinary course of business, consistent with past
      practice;

     

    (H)
      waiver of any right of substantial value whether or not in the ordinary course
      of business;

     

    (I)
      material change in officer compensation, except in the ordinary course of
      business and consistent with past practice; or 

     

    (J)
      other
      commitment (contingent or otherwise) to do any of the foregoing.

     

    (iv) other
      than as set forth on Schedule 3(i)(iv) hereto, any creation, sufferance or
      assumption by the Company or any of its Subsidiaries of any Lien on any asset
      or
      any making of any loan, advance or capital contribution to or investment in
      any
      Person, in an aggregate amount which exceeds $25,000 outstanding at any
      time;

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

       

    

    (v) any
      entry
      into, amendment of, relinquishment, termination or non-renewal by the Company
      or
      its Subsidiaries of any material contract, license, lease, transaction,
      commitment or other right or obligation, other than in the ordinary course
      of
      business, consistent with past practice; or

     

    (vi)
      other than as set forth on Schedule 3(i)(vi) hereto, any transfer or grant
      of a
      right with respect to the patents, trademarks, trade names, service marks,
      trade
      secrets, copyrights or other intellectual property rights owned or licensed
      by
      the Company or its Subsidiaries, except as among the Company and its
      Subsidiaries.

     

    (j)
       Litigation.
      There
      is no action, suit, inquiry, notice of violation, proceeding or, to the
      knowledge of the Company, investigation pending nor, to the knowledge of the
      Company, is any of the above threatened against the Company, any Subsidiary
      or
      any of their respective properties before or by any court, arbitrator,
      governmental or administrative agency or regulatory authority (federal, state,
      county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or result in a Material Adverse Effect. Neither
      the Company nor any Subsidiary, nor, to the knowledge of the Company, any
      director or officer thereof, is or has been the subject of any Action involving
      a claim of violation of or liability under federal or state securities laws
      or a
      claim of breach of fiduciary duty within the past five (5) years. To the
      knowledge of the Company, there has not been and there is not pending or
      contemplated, any investigation by the Commission involving the Company or
      any
      current or former director or officer of the Company. The Commission has not
      issued any stop order or other order suspending the effectiveness of any
      registration statement filed by the Company or any Subsidiary under the Exchange
      Act or the Securities Act within the past eight (8) years.

     

    (k)
       Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could have or result
      in a Material Adverse Effect.

     

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

     

    (m)
       Licenses;
      Compliance With FDA and Other Regulatory Requirements.

     

    (i)
       The
      Company holds all material authorizations, consents, approvals, franchises,
      licenses and permits required under applicable law or regulation for the
      operation of the business of the Company and its Subsidiaries as presently
      operated (the “Governmental
      Authorizations”).
      All
      the Governmental Authorizations have been duly issued or obtained and are in
      full force and effect, and the Company and its Subsidiaries are in material
      compliance with the terms of all the Governmental Authorizations. The Company
      and its Subsidiaries have not engaged in any activity that, to their knowledge,
      would cause revocation or suspension of any such Governmental Authorizations.
      Neither the execution, delivery nor performance of this Agreement shall
      adversely affect the status of any of the Governmental
      Authorizations.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

       

    

    (ii) Without
      limiting the generality of the representations and warranties made in
      sub-paragraph (i) above, the Company represents and warrants that (i) the
      Company and each of its Subsidiaries is in material compliance with all
      applicable provisions of the United States Federal Food, Drug, and Cosmetic
      Act
      and the rules and regulations promulgated thereunder (the “FDC
      Act”)
      and
      equivalent laws, rules and regulations in jurisdictions outside the United
      States in which the Company or its Subsidiaries do business, (ii) its products
      and those of each of its Subsidiaries that are in the Company’s control are not
      adulterated or misbranded and are in lawful distribution, (iii) all of the
      products marketed by and within the control of the Company comply in all
      material respects with any conditions of approval and the terms of the
      application by the Company to the appropriate Regulatory Authorities, (iv)
      no
      Regulatory Authority has initiated legal action with respect to the
      manufacturing of the Company’s products, such as seizures or required recalls,
      and the Company is in compliance with applicable good manufacturing practice
      regulations, (v) its products are labeled and promoted by the Company and its
      representatives in substantial compliance with the applicable terms of the
      marketing applications submitted by the Company to the Regulatory Authorities
      and the provisions of the FDC Act and foreign equivalents, (vi) all adverse
      events that were known to and required to be reported by Company to the
      Regulatory Authorities have been reported to the Regulatory Authorities in
      a
      timely manner, (vii) neither the Company nor any of its Subsidiaries is, to
      their knowledge, employing or utilizing the services of any individual who
      has
      been debarred under the FDC Act or foreign equivalents, (viii) all stability
      studies required to be performed for products distributed by the Company or
      any
      of its Subsidiaries have been completed or are ongoing in material compliance
      with the applicable Regulatory Authority requirements, (ix) any products
      exported by the Company or any of its Subsidiaries have been exported in
      compliance with the FDC Act and (x) the Company and its Subsidiaries are in
      compliance in all material respects with all applicable provisions of the
      Controlled Substances Act. For purposes of this Section 3.1(m), “Regulatory
      Authority”
means
      any governmental authority in a country or region that regulates the manufacture
      or sale of Company’s products, including, but not limited to, the United States
      Food and Drug Administration.

     

    (n)
       Title
      to Assets.
      The
      Company and the Subsidiaries do not own any real property, and have good and
      marketable title to all personal property owned by them that is material to
      the
      business of the Company and the Subsidiaries, taken as a whole, in each case
      free and clear of all Liens, except those, if any, reflected in the Company’s
      financial statements or incurred in the ordinary course of business consistent
      with past practice or which would not cause a Material Adverse Effect. Any
      real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases (subject to laws
      of
      general application relating to bankruptcy, insolvency, reorganization,
      moratorium or other similar laws affecting creditors’ rights generally and rules
      of law governing specific performance, injunctive relief, or other equitable
      remedies) with which the Company and the Subsidiaries are in material
      compliance.

     

    (o) Intellectual
      Property. 

     

    (i) The
      Company or a Subsidiary thereof has the right to use or is the sole and
      exclusive owner of all right, title and interest in and to all material foreign
      and domestic patents, patent rights, trademarks, service marks, trade names,
      brands and copyrights (whether or not registered and, if applicable, including
      pending applications for registration) owned, used or controlled by the Company
      and its Subsidiaries (collectively, the “Rights”)
      and in
      and to each material invention, software, trade secret, technology, product,
      composition, formula and method of process used by the Company or its
      Subsidiaries (the Rights and such other items, the “Intellectual
      Property”),
      and,
      to the Company’s knowledge, has the right to use the same, free and clear of any
      claim or conflict with the rights of others (subject to the provisions of any
      applicable license agreement) except as would not cause a Material Adverse
      Effect; 

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    (ii) other
      than in the ordinary course of business, no royalties or fees (license or
      otherwise) are payable by the Company or its Subsidiaries to any Person by
      reason of the ownership or use of any of the Intellectual Property;

     

    (iii) there
      have been no written claims made against the Company or its Subsidiaries
      asserting the invalidity, abuse, misuse, or unenforceability of any of the
      Intellectual Property, and, to the best of the Company’s knowledge, there are no
      reasonable grounds for any such claims which would cause a Material Adverse
      Effect; 

     

    (iv) neither
      the Company nor its Subsidiaries have made any claim of any violation or
      infringement by others of its rights in the Intellectual Property, and to the
      best of the Company’s knowledge, no reasonable grounds for such claims exist;
      and 

     

    (v) neither
      the Company nor its Subsidiaries have received written notice that it is in
      conflict with or infringing upon the asserted rights of others in connection
      with the Intellectual Property which would cause a Material Adverse
      Effect.

     

    (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage in the amount set forth on Schedule
      3.1(p)
      attached
      hereto. All of the insurance policies of the Company and its Subsidiaries are
      in
      full force and effect and are valid and enforceable in accordance with their
      terms, and the Company and its Subsidiaries have complied with all material
      terms and conditions thereof. Neither the Company nor any Subsidiary has any
      reason to believe that it will not be able to renew its existing insurance
      coverage as and when such coverage expires or to obtain similar coverage from
      similar insurers as may be necessary to continue its business without a
      significant increase in cost.

     

    (q) Transactions
      With Affiliates and Employees.
      Except
      as provided in the SEC Reports, none of the officers or directors of the Company
      and, to the knowledge of the Company, none of the employees of the Company
      is
      presently a party to any transaction with the Company or any Subsidiary (other
      than for services as employees, officers and directors), including any contract,
      agreement or other arrangement providing for the furnishing of services to
      or
      by, providing for rental of real or personal property to or from, or otherwise
      requiring payments to or from any officer, director or such employee or, to
      the
      knowledge of the Company, any entity in which any officer, director, or any
      such
      employee has a substantial interest or is an officer, director, trustee or
      partner, other than (a) for payment of salary or consulting fees for services
      rendered, (b) reimbursement for expenses incurred on behalf of the Company
      and
      (c) for other employee benefits, including stock option agreements and other
      stock awards under any equity compensation plan of the Company.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

       

    

    (r)
       Internal
      Accounting Controls.
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 which are applicable to it as of the Closing Date. The Company and
      each
      of the Subsidiaries maintains a system of internal accounting controls
      sufficient in the judgment of the Company’s management to provide reasonable
      assurance that (i) transactions are executed in accordance with management's
      general or specific authorizations, (ii) transactions are recorded as necessary
      to permit preparation of financial statements in conformity with GAAP and to
      maintain asset accountability, (iii) access to assets is permitted only in
      accordance with management's general or specific authorization, and (iv) the
      recorded accountability for assets is compared with the existing assets at
      reasonable intervals and appropriate action is taken with respect to any
      differences. The Company has established disclosure controls and procedures
      (as
      defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
      designed such disclosure controls and procedures to ensure that the Company
      is
      able to collect the information that it is required to disclose in the reports
      it files with the Commission and to process, summarize and disclose this
      information in the time periods specified in the Commission’s rules. The
      Company's certifying officers have evaluated the effectiveness of the Company's
      controls and procedures as of June 30, 2007 (such date, the “Evaluation
      Date”).
      The
      Company presented in its Form 10-QSB for the quarter ended June 30, 2007, the
      conclusions of the certifying officers about the effectiveness of the disclosure
      controls and procedures based on their evaluations as of the Evaluation Date.
      Since the Evaluation Date, there have been no significant changes in the
      Company's internal control over financial reporting (as such term is defined
      in
      Exchange Act Rule 13a-15) or, to the Company's knowledge, in other factors
      that
      could significantly affect the Company's internal controls.

     

    (s)
       Certain
      Fees.
      Except
      for fees payable to the Placement Agents, no brokerage or finder's fees or
      commissions are or will be payable by the Company to any broker, financial
      advisor or consultant, finder, placement agent, investment banker, bank or
      other
      Person with respect to the transactions contemplated by this Agreement. The
      Purchasers shall have no obligation with respect to any fees or with respect
      to
      any claims made by or on behalf of other Persons for fees of a type contemplated
      in this Section that may be due in connection with the transactions contemplated
      by this Agreement.

     

    (t)
       Private
      Placement; Integrated Offering.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market. Neither the Company,
      nor any of its Affiliates, nor any Person acting on its or their behalf has,
      directly or indirectly, made any offers or sales of any security or solicited
      any offers to buy any security, under circumstances that would cause this
      offering of the Securities to be integrated with prior offerings by the Company
      for purposes of the Securities Act and would as a result require registration
      under the Securities Act or trigger any applicable shareholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any exchange or automated quotation system on which any of the securities of
      the
      Company are listed or designated.

     

    (u)
       Charter,
      Bylaws and Corporate Records.
      The
      minute books of the Company and its Subsidiaries contain in all material
      respects complete and accurate records of all meetings and other corporate
      actions of the board of directors, committees of the board of directors,
      incorporators and stockholders of the Company and its Subsidiaries from the
      date
      of incorporation of each such entity to the date hereof. All material corporate
      decisions and actions have been validly made or taken. All corporate books,
      including without limitation the share transfer register, comply in all material
      respects with applicable laws and regulations and have been regularly
      updated.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

       

    

    (v)
       Registration
      Rights.
      Except
      as set forth in Schedule 3.1(v), no Person has any right to cause the Company
      to
      effect the registration under the Securities Act of any securities of the
      Company.

     

    (w)
       Listing
      and Maintenance Requirements.
      Except
      as set forth on Schedule 3(w), the Company has not, in the 12 months preceding
      the date hereof, received notice from any Trading Market on which the Common
      Stock is or has been listed or quoted to the effect that the Company is not
      in
      compliance with the listing or maintenance requirements of such Trading Market.
      The Company is, and has no reason to believe that it will not in the foreseeable
      future continue to be, in compliance with all such listing and maintenance
      requirements.

     

    (x) Taxes.
      All
      tax
      returns and tax reports required to be filed with respect to the income,
      operations, business or assets of the Company and its Subsidiaries have been
      timely filed (or appropriate extensions have been obtained) with the appropriate
      governmental agencies in all jurisdictions in which such returns and reports
      are
      required to be filed, and all of the foregoing as filed are, in all material
      respects, correct and complete and, in all material respects, reflect accurately
      all liability for taxes of the Company and its Subsidiaries for the periods
      to
      which such returns relate, and all amounts shown as owing thereon have been
      paid. All income, profits, franchise, sales, use, value added, occupancy,
      property, excise, payroll, withholding, FICA, FUTA and other taxes (including
      interest and penalties), if any, collectible or payable by the Company and
      its
      Subsidiaries or relating to or chargeable against any of its material assets,
      revenues or income or relating to any employee, independent contractor,
      creditor, stockholder or other third party through the Closing Date, were fully
      collected and paid by such date if due by such date or provided for by adequate
      reserves in the financial statements contained in the SEC Reports as of and
      for
      the periods ended September 30, 2005 (other than taxes accruing after such
      date)
      and all similar items due through the Closing Date will have been fully paid
      by
      that date or provided for by adequate reserves, whether or not any such taxes
      were reported or reflected in any tax returns or filings. No taxation authority
      has sought to audit the records of the Company or any of its Subsidiaries for
      the purpose of verifying or disputing any tax returns, reports or related
      information and disclosures provided to such taxation authority, or for the
      Company’s or any of its Subsidiaries’ alleged failure to provide any such tax
      returns, reports or related information and disclosure. No material claims
      or
      deficiencies have been asserted against or inquiries raised with the Company
      or
      any of its Subsidiaries with respect to any taxes or other governmental charges
      or levies which have not been paid or otherwise satisfied, including claims
      that, or inquiries whether, the Company or any of its Subsidiaries has not
      filed
      a tax return that it was required to file, and, to the best of the Company’s
      knowledge, there exists no reasonable basis for the making of any such claims
      or
      inquiries. Neither the Company nor any of its Subsidiaries has waived any
      restrictions on assessment or collection of taxes or consented to the extension
      of any statute of limitations relating to taxation.

     

    
      
        
        

      

      
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    (y) Environmental
      Matters. None
      of
      the premises or any properties owned, occupied or leased by the Company or
      its
      Subsidiaries (the “Premises”)
      has
      been used by the Company or the Subsidiaries or, to the Company’s knowledge, by
      any other Person, to manufacture, treat, store, or dispose of any substance
      that
      has been designated to be a “hazardous substance” under applicable Environmental
      Laws (hereinafter defined) (“Hazardous
      Substances”)
      in
      violation of any applicable Environmental Laws. To its knowledge, the Company
      has not disposed of, discharged, emitted or released any Hazardous Substances
      which would require, under applicable Environmental Laws, remediation,
      investigation or similar response activity. No Hazardous Substances are present
      as a result of the actions of the Company or, to the Company’s knowledge, any
      other Person, in, on or under the Premises which would give rise to any
      liability or clean-up obligations of the Company under applicable Environmental
      Laws. The Company and, to the Company’s knowledge, any other Person for whose
      conduct it may be responsible pursuant to an agreement or by operation of law,
      are in compliance with all laws, regulations and other federal, state or local
      governmental requirements, and all applicable judgments, orders, writs, notices,
      decrees, permits, licenses, approvals, consents or injunctions in effect on
      the
      date of this Agreement relating to the generation, management, handling,
      transportation, treatment, disposal, storage, delivery, discharge, release
      or
      emission of any Hazardous Substance (the “Environmental
      Laws”).
      Neither the Company nor, to the Company’s knowledge, any other Person for whose
      conduct it may be responsible pursuant to an agreement or by operation of law
      has received any written complaint, notice, order, or citation of any actual,
      threatened or alleged noncompliance with any of the Environmental Laws, and
      there is no proceeding, suit or investigation pending or, to the Company’s
      knowledge, threatened against the Company or, to the Company’s knowledge, any
      such Person with respect to any violation or alleged violation of the
      Environmental Laws, and, to the knowledge of the Company, there is no basis
      for
      the institution of any such proceeding, suit or investigation. 

     

    (z)
       Disclosure.
      The
      Company confirms that neither the Company nor any other Person acting on its
      behalf and at the direction of the Company, has provided any Purchaser or its
      agents or counsel with any information that in the Company’s reasonable
      judgment, at the time such information was furnished, constitutes or might
      constitute material, non-public information, other than information relating
      to
      the fact that the Company was considering and engaged in the transactions
      contemplated by the Transaction Documents and unless prior thereto such
      Purchaser shall have consented in writing to the receipt of such information.
      The Company understands and confirms that the Purchasers will rely on the
      foregoing representations and covenants in effecting transactions in securities
      of the Company. All disclosure provided to the Purchasers regarding the Company,
      its business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, furnished by or on behalf of the Company are true
      and correct in all material respects and do not contain any untrue statement
      of
      a material fact or omit to state any material fact necessary in order to make
      the statements made therein, in light of the circumstances under which they
      were
      made, not misleading.

     

    (aa) No
      Additional Representations.
      Each
      Purchaser acknowledges and agrees that the Company does not make and has not
      made any representations or warranties with respect to the transactions
      contemplated hereby other than those specifically set forth in this Section
      3.1
      or in any Transaction Document.

     

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

    

    
      
        
        

      

      
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    (cc) Solvency.
      Based on
      the consolidated financial condition of the Company as of the Closing Date
      after
      giving effect to the receipt by the Company of the proceeds from the sale of
      the
      Securities hereunder, (i) the fair saleable value of the Company’s assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature, (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business as now conducted and as
      proposed to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company, and
      projected capital requirements and capital availability thereof, and (iii)
      the
      current cash flow of the Company, together with the proceeds the Company would
      receive, were it to liquidate all of its assets, after taking into account
      all
      anticipated uses of the cash, would be sufficient to pay all amounts on or
      in
      respect of its liabilities when such amounts are required to be paid. The
      Company does not intend to incur debts beyond its ability to pay such debts
      as
      they mature (taking into account the timing and amounts of cash to be payable
      on
      or in respect of its debt). The Company has no knowledge of any facts or
      circumstances which lead it to believe that it will file for reorganization
      or
      liquidation under the bankruptcy or reorganization laws of any jurisdiction
      within one year from the Closing Date. Schedule
      3.1(cc)
      sets
      forth as of the date hereof all outstanding secured and unsecured Indebtedness
      of the Company or any Subsidiary, or for which the Company or any Subsidiary
      has
      commitments. For the purposes of this Agreement, “Indebtedness”
means
      (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments
      in excess of $50,000 due under leases required to be capitalized in accordance
      with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

    

    (dd) Accountants.
      The
      Company’s accounting firm is set forth on Schedule
      3.1(dd)
      of the
      Disclosure Schedule. To the knowledge and belief of the Company, such accounting
      firm (i) is a registered public accounting firm as required by the Exchange
      Act
      and (ii) shall express its opinion with respect to the financial statements
      to
      be included in the Company’s Annual Report for the year ending December 31,
      2007.

    

    (ee) Seniority.
      As of
      the Closing Date, no Indebtedness or other claim against the Company is senior
      to the Preferred Stock in right of payment, whether with respect to interest
      or
      upon liquidation or dissolution, or otherwise, other than indebtedness secured
      by purchase money security interests (which is senior only as to underlying
      assets covered thereby) and capital lease obligations (which is senior only
      as
      to the property covered thereby).

    

    (ff) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company and the Company is current with
      respect to any fees owed to its accountants and lawyers which could affect
      the
      Company’s ability to perform any of its obligations under any of the Transaction
      Documents.

    

    
      
        
        

      

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

    

    (hh) Acknowledgement
      Regarding Purchasers’ Trading Activity.
      Notwithstanding anything in this Agreement or elsewhere herein to the contrary,
      it is understood and acknowledged by the Company that (i) none of the Purchasers
      has been asked to agree by the Company, nor has any Purchaser agreed, to desist
      from purchasing or selling, long and/or short, securities of the Company, or
      “derivative” securities based on securities issued by the Company or to hold the
      Securities for any specified term, (ii) past or future open market or other
      transactions by any Purchaser, specifically including, without limitation,
      Short
      Sales or “derivative” transactions, before or after the closing of this or
      future private placement transactions, may negatively impact the market price
      of
      the Company’s publicly-traded securities, (iii) any Purchaser, and
      counter-parties in “derivative” transactions to which any such Purchaser is a
      party, directly or indirectly, may presently have a “short” position in the
      Common Stock; and (iv) each Purchaser shall not be deemed to have any
      affiliation with or control over any arm’s length counter-party in any
“derivative” transaction. The Company further understands and acknowledges that
      (a) one or more Purchasers may engage in hedging activities at various times
      during the period that the Securities are outstanding, including, without
      limitation, during the periods that the value of the Underlying Shares
      deliverable with respect to Securities are being determined, and (b) such
      hedging activities (if any) could reduce the value of the existing stockholders'
      equity interests in the Company at and after the time that the hedging
      activities are being conducted.  The Company acknowledges that such
      aforementioned hedging activities do not constitute a breach of any of the
      Transaction Documents.

    

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

    

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

       

    

    (jj) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Securities for sale only to the
      Purchasers and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act.

    

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

    

    3.2
       Representations
      and Warranties of the Purchasers.
      

     

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

     

    (a)
       Organization;
      Authority; Enforceability.
      Such
      Purchaser (other than individuals) is an entity duly organized, validly existing
      and in good standing under the laws of the jurisdiction of its organization
      with
      full power and authority to enter into and to consummate the transactions
      contemplated by the Transaction Documents and otherwise to carry out its
      obligations thereunder. The execution, delivery and performance by such
      Purchaser of the transactions contemplated by this Agreement has been duly
      authorized by all necessary corporate or similar action on the part of such
      Purchaser. Each Transaction Document to which it is a party has been duly
      executed by such Purchaser, and when delivered by such Purchaser in accordance
      with the terms hereof, will constitute the valid and legally binding obligation
      of such Purchaser, enforceable against it in accordance with its terms, subject
      to laws of general application relating to bankruptcy, insolvency,
      reorganization, moratorium or other similar laws affecting creditors’ rights
      generally and rules of law governing specific performance, injunctive relief,
      or
      other equitable remedies.

     

    (b)
       General
      Solicitation.
      Such
      Purchaser is not purchasing the Securities as a result of any advertisement,
      article, notice or other communication regarding the Securities published in
      any
      newspaper, magazine or similar media or broadcast over television or radio
      or
      presented at any seminar or any other general solicitation or general
      advertisement.

     

    (c)
       No
      Public Sale or Distribution.
      Such
      Purchaser is (i) acquiring the Preferred Shares and Warrants and (ii) upon
      conversion of the Preferred Stock will acquire the Conversion Shares and upon
      exercise of the Warrants will acquire the Warrant Shares, as applicable, for
      its
      own account and not with a view towards, or for resale in connection with,
      the
      public sale or distribution thereof; provided,
      however,
      that by
      making the representations herein, such Purchaser does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the Securities Act. Such Purchaser
      is acquiring the Securities hereunder in the ordinary course of its business.
      Such Purchaser does not have any agreement or understanding, directly or
      indirectly, with any Person to distribute any of the Securities.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

       

    

    (d)
       Accredited
      Investor Status.
      Such
      Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of
      Regulation D.

     

    (e)
       Residency. Such
      Purchaser is a resident of the jurisdiction set forth below such Purchaser’s
      name on Schedule
      1
      attached
      hereto.

     

    (f)
       Reliance
      on Exemptions.
      Such
      Purchaser understands that the Preferred Shares and Warrants are being offered
      and sold to it in reliance on specific exemptions from the registration
      requirements of United States federal and state securities laws and that the
      Company is relying in part upon the truth and accuracy of, and such Purchaser's
      compliance with, the representations, warranties, agreements, acknowledgments
      and understandings of such Purchaser set forth herein in order to determine
      the
      availability of such exemptions and the eligibility of such Purchaser to acquire
      the Preferred Shares and Warrants.

     

    (g)
       Information.
      Such
      Purchaser and its advisors, if any, have been furnished with all publicly
      available materials (or such materials have been made available to such
      Purchaser) relating to the business, finances and operations of the Company
      and
      such other publicly available materials relating to the offer and sale of the
      Preferred Shares and Warrants as have been requested by such Purchaser,
      including without limitation the Company’s Form 10-KSB for the period ended
      December 31, 2006, Forms 10-QSB for the periods ended March 31, 2007 and June
      30, 2007 and Forms 8-K filed by the Company since January 1, 2007. Each
      Purchaser acknowledges that it has read and understands the risk factors set
      forth in such Form 10-KSB, Forms 10-QSB and Forms 8-K. Neither such review
      nor
      any other due diligence investigations conducted by such Purchaser or its
      advisors, if any, or its representatives shall modify, amend or affect such
      Purchaser's right to rely on the Company's representations and warranties
      contained herein. Such Purchaser understands that its investment in the
      Preferred Shares and Warrants involves a high degree of risk.

     

    (h)
       No
      Governmental Review.
      Such
      Purchaser understands that no United States federal or state agency or any
      other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Preferred Shares and Warrants or the fairness or suitability
      of the investment in the Preferred Shares and Warrants, nor have such
      authorities passed upon or endorsed the merits of the offering of the Preferred
      Shares and Warrants.

     

    (i)
       Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters,
      including investing in companies engaged in the business in which the Company
      is
      engaged, so as to be capable of evaluating the merits and risks of the
      prospective investment in the Preferred Shares and Warrants, and has so
      evaluated the merits and risks of such investment. Such Purchaser is able to
      bear the economic risk of an investment in the Preferred Shares and Warrants
      and, at the present time, is able to afford a complete loss of such
      investment.

     

    The
      Company acknowledges and agrees that each Purchaser does not make
      or has not made any representations or warranties with respect to the
      transactions contemplated hereby other than those specifically set forth in
      this
      Section 3.2.

     

     

    
      
        
        

      

      
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    ARTICLE
      IV

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions.

     

    (a) The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement, to the Company, to an Affiliate
      of a Purchaser (who is an accredited investor and executes a customary
      representation letter) or in connection with a pledge as contemplated in Section
      4.1(b), the Company may require the transferor thereof to provide to the Company
      an opinion of counsel selected by the transferor and reasonably satisfactory
      to
      the Company (it being understood that Wiggin and Dana LLP is reasonably
      satisfactory), the form and substance of which opinion shall be reasonably
      satisfactory to the Company, to the effect that such transfer does not require
      registration of such transferred Securities under the Securities
      Act,
      provided, however,
      that in
      the case of a transfer pursuant to Rule 144, no opinion shall be required if
      the
      transferor provides the Company with a customary seller’s representation letter,
      and if such sale is not pursuant to subsection (k) of Rule 144, a customary
      broker’s representation letter and a Form 144. 
      Any such
      transferee that agrees in writing to be bound by the terms of this Agreement
      and
      the Investor Rights Agreement shall have the rights of a Purchaser under this
      Agreement and the Investor Rights Agreement. Except as required by federal
      securities laws and the securities law of any state or other jurisdiction within
      the United States, the Securities may be transferred, in whole or in part,
      by
      any of the Purchasers at any time. The Company shall reissue certificates
      evidencing the Securities upon surrender of certificates evidencing the
      Securities being transferred in accordance with this Section
      4.1(a).

     

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

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      AND,
      ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
      REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
      EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
      TO
      SUCH EFFECT, SUCH COUNSEL AND THE SUBSTANCE OF SUCH OPINION SHALL BE REASONABLY
      ACCEPTABLE TO THE COMPANY. UNLESS PROHIBITED BY APPLICABLE LAW, RULE OR
      REGULATION, THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
      MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
      INSTITUTION THAT IS AN “ACCREDITED
      INVESTOR”
AS
      DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

       

    

    The
      Company acknowledges and agrees that, unless prohibited by applicable law,
      rule
      or regulation, a Purchaser may from time to time pledge pursuant to a bona
      fide
      margin agreement with a registered broker-dealer or grant a security interest
      in
      some or all of the Securities to a financial institution that is an “accredited
      investor” as defined in Rule 501(a) under the Securities Act and, if required
      under the terms of such arrangement, such Purchaser may transfer pledged or
      secured Securities to the pledgees or secured parties. Such a pledge or transfer
      would not be subject to approval of the Company and no legal opinion of legal
      counsel of the pledgee, secured party or pledgor shall be required in connection
      therewith; provided, however, that such Purchaser shall provide the Company
      with
      such documentation as is reasonably requested by the Company to ensure that
      the
      pledge is pursuant to a bona fide margin agreement with a registered
      broker-dealer or a security interest in some or all of the Securities to a
      financial institution that is an “accredited investor” as defined in Rule 501(a)
      under the Securities Act. The Company will execute and deliver such
      documentation as a pledgee or secured party of Securities may reasonably request
      in connection with a pledge or transfer of the Securities, including the
      preparation and filing of any required prospectus supplement under Rule
      424(b)(3) under the Securities Act or other applicable provision of the
      Securities Act to appropriately amend the list of selling stockholders
      thereunder.

     

    (c) Certificates
      evidencing the Conversion Shares and the Warrant Shares shall not contain any
      legend (including the legend set forth in Section 4.1(b) hereof): (i) while
      a
      registration statement (including the Registration Statement) covering the
      resale of such security is effective under the Securities Act, or (ii) following
      any sale of such Underlying Shares pursuant to Rule 144, or (iii) if such
      Underlying Shares are eligible for sale under Rule 144(k), or (iv) if such
      legend is not required under applicable requirements of the Securities Act
      (including judicial interpretations and pronouncements issued by the staff
      of
      the Commission). The Company shall cause its counsel to issue a legal opinion
      to
      the Transfer Agent promptly after the Effective Date if required by the Transfer
      Agent to effect the removal of the legend hereunder. If all or any shares of
      Preferred Stock or any portion of a Warrant is converted or exercised (as
      applicable) at a time when there is an effective registration statement to
      cover
      the resale of the Underlying Shares, or if such Underlying Shares may be sold
      under Rule 144(k) or if such legend is not otherwise required under applicable
      requirements of the Securities Act (including judicial interpretations and
      pronouncements issued by the staff of the Commission) then such Underlying
      Shares shall be issued free of all legends. The Company agrees that following
      the Effective Date or at such time as such legend is no longer required under
      this Section 4.1(c), it will, no later than three Trading Days following the
      delivery by a Purchaser to the Company or the Transfer Agent of a certificate
      representing Underlying Shares, as applicable, issued with a restrictive legend
      (such third Trading Day, the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Purchaser a certificate representing
      such shares that is free from all restrictive and other legends. The Company
      may
      not make any notation on its records or give instructions to the Transfer Agent
      that enlarge the restrictions on transfer set forth in this Section.
      Certificates for Underlying Shares subject to legend removal hereunder shall
      be
      transmitted by the Transfer Agent to the Purchaser by crediting the account
      of
      the Purchaser’s prime broker with the Depository Trust Company System as
      directed by such Purchaser.

    

    (d) In
      addition to such Purchaser’s other available remedies, the Company shall pay to
      a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
      each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on
      the
      date such Securities are submitted to the Transfer Agent) delivered for removal
      of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day
      (increasing to $20 per Trading Day 5 Trading Days after such damages have begun
      to accrue) for each Trading Day after the Legend Removal Date until such
      certificate is delivered without a legend. Nothing herein shall limit such
      Purchaser’s right to pursue actual damages for the Company’s failure to deliver
      certificates representing any Securities as required by the Transaction
      Documents, and such Purchaser shall have the right to pursue all remedies
      available to it at law or in equity including, without limitation, a decree
      of
      specific performance and/or injunctive relief.

    

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

       

    

    (e) Each
      Purchaser, severally and not jointly, agrees that the removal of the restrictive
      legend from certificates representing Securities as set forth in this Section
      4.1 is predicated upon the Company's reliance on, and the Purchaser's agreement
      that, and each Purchaser hereby agrees that, the Purchaser will not sell any
      Securities except pursuant to either the registration requirements of the
      Securities Act, including any applicable prospectus delivery requirements,
      or an
      exemption therefrom.

     

    4.2
       Furnishing
      of Information.
      

     

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

     

    4.3 Integration.

     

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

     

    4.4 Publicity.
      

     

    The
      Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately
      following the date hereof, issue a press release disclosing the material terms
      of the transactions contemplated hereby, and within two Business Days following
      the Closing Date, file a Current Report on Form 8-K, disclosing the transactions
      contemplated hereby and make such other filings and notices in the manner and
      time required by the Commission. The Company and the Placement Agents shall
      consult with each other in issuing any press releases with respect to the
      transactions contemplated hereby, and neither the Company nor any Purchaser
      nor
      any of the Placement Agents shall issue any such press release or otherwise
      make
      any such public statement without the prior consent of the Company, with respect
      to any press release of any Purchaser or any of the Placement Agents, or without
      the prior consent of the Placement Agents, with respect to any press release
      of
      the Company, except if such disclosure is required by applicable law, rule
      or
      regulation, in which case the disclosing party shall promptly provide the other
      party with prior notice of such public statement or communication.

     

    
      
        
        

      

      
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    4.5 Non-Public
      Information.

     

    The
      Company covenants and agrees that neither it nor any other Person acting on
      its
      behalf will provide any Purchaser or its agents or counsel with any information
      that the Company believes constitutes material non-public information, unless
      prior thereto such Purchaser shall have executed a written agreement regarding
      the confidentiality and use of such information. The Company understands and
      confirms that each Purchaser shall be relying on the foregoing covenant in
      effecting transactions in securities of the Company.

     

    4.6 Use
      of Proceeds.

     

    The
      Company covenants and agrees that the proceeds from the sale of the Preferred
      Stock and Warrants shall be used by the Company for working capital and general
      corporate purposes; under no circumstances shall any portion of the proceeds
      be
      applied to:

     

    (i) accelerated
      repayment of debt existing on the date hereof (other than payment of trade
      payables in the ordinary course of the Company’s business and consistent with
      prior practices); 

     

    (ii) the
      payment of dividends or other distributions on any capital stock of the Company;
      

     

    (iii) the
      purchase of debt or equity securities of any Person for cash, including the
      Company and its Subsidiaries, except in connection with investment of excess
      cash in high quality (A1/P1 or better) money market instruments having
      maturities of one year or less; 

     

    (iv) any
      expenditure not directly related to the business of the Company; or

     

    (v) the
      redemption of any Company equity or equity-equivalent securities.

     

    4.7 Reservation
      of Preferred Stock and Common Stock.

     

    As
      of the
      date hereof, the Company has reserved and the Company shall continue to reserve
      and keep available at all times, free of preemptive rights, a sufficient number
      of shares of (a) Preferred Stock for the purpose of enabling the Company to
      issue Preferred Shares pursuant to this Agreement and (b) Common Stock for
      the
      purpose of enabling the Company to issue Conversion Shares issuable upon
      conversion of the Preferred Stock and Warrant Shares issuable upon exercise
      of
      the Warrants. If, on any date, the number of authorized but unissued (and
      otherwise unreserved) shares of Common Stock plus the number of shares of
      authorized but unissued Common Stock reserved for issuance upon conversion
      of
      the Preferred Stock and exercise of the Warrants is less than 130% of
      (i) the Required Minimum on such date, minus (ii) the number of shares of
      Common Stock previously issued pursuant to the Transaction Documents, then
      the
      Board of Directors shall use commercially reasonable efforts to amend the
      Company’s certificate or articles of incorporation to increase the number of
      authorized but unissued shares of Common Stock to at least the Required Minimum
      at such time (minus the number of shares of Common Stock previously issued
      pursuant to the Transaction Documents), as soon as possible and in any event
      not
      later than the 75th day after such date; provided that the Company will not
      be
      required at any time to authorize a number of shares of Common Stock greater
      than the maximum remaining number of shares of Common Stock that could possibly
      be issued after such time pursuant to the Transaction Documents.

     

    
      
        
        

      

      
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    4.8 Listing
      of Common Stock.

     

    The
      Company hereby agrees that, from time to time, if the Company applies to have
      the Common Stock traded on any Trading Market, it will include in such
      application the Conversion Shares and the Warrant Shares, and will take such
      other action as is necessary to cause the Conversion Shares and Warrant Shares
      to be listed on such Trading Market as promptly as possible.

     

    4.9 Business
      Operations.
      Until
      the earlier of: (i) the third anniversary of the Closing Date and (ii) the
      date
      that the Purchasers own less than 10% of the Preferred Shares originally issued
      pursuant to this Agreement or Conversion Shares issuable upon conversion
      thereof, the Company shall comply with the following covenants:

     

    (a) Insurance.
      The
      Company and its Subsidiaries shall maintain insurance policies such that the
      representations contained in the first sentence of Section 3.1(p) hereof
      continue to be true and correct and shall, from time to time upon the written
      request of the Purchasers, promptly furnish or cause to be furnished to the
      Purchasers evidence, in form and substance reasonably satisfactory to the
      Purchasers, of the maintenance of all insurance maintained by it. 

     

    (b) Corporate
      Existence; Licenses.
      The
      Company shall preserve and maintain and cause its Subsidiaries to preserve
      and
      maintain their corporate existence and good standing in the jurisdiction of
      their incorporation and the rights, privileges and franchises of the Company
      and
      its Subsidiaries (except, in each case, in the event of a merger or
      consolidation in which the Company or its Subsidiaries, as applicable, is not
      the surviving entity) in each case where the failure to so preserve or maintain
      could have a Material Adverse Effect on the financial condition, business or
      operations of the Company and its Subsidiaries taken as a whole. The Company
      shall, and shall cause its Subsidiaries to, maintain at all times all material
      licenses or permits necessary to the conduct of its business and as required
      by
      any governmental agency or instrumentality thereof, including without limitation
      all Food and Drug Administration clearances and approvals.

     

    (c) Taxes
      and Claims.
      The
      Company and its Subsidiaries shall duly pay and discharge (a) all taxes,
      assessments and governmental charges upon or against the Company or its
      properties or assets prior to the date on which penalties attach thereto, unless
      and to the extent that such taxes are being diligently contested in good faith
      and by appropriate proceedings, and appropriate reserves therefor have been
      established, and (b) all lawful claims, whether for labor, materials, supplies,
      services or anything else which might or could, if unpaid, become a lien or
      charge upon the properties or assets of the Company or its Subsidiaries, unless
      and to the extent only that the same are being contested in good faith and
      by
      appropriate proceedings and appropriate reserves therefor have been
      established.

     

    
      
        
        

      

      
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    (d) Affiliate
      Transactions.
      Except
      for transactions approved by the Company’s Audit Committee or a majority of the
      disinterested members of the board of directors of the Company, neither the
      Company nor any of its Subsidiaries shall enter into any transaction with any
      (i) director, officer, employee or holder of more than 5% of the outstanding
      capital stock of any class or series of capital stock of the Company or any
      of
      its Subsidiaries, (ii) member of the immediate family of any such person, or
      (iii) corporation, partnership, trust or other entity in which any such person,
      or member of the immediate family of any such person, is a director, officer,
      trustee, partner or holder of more than 5% of the outstanding capital stock
      thereof.

     

    4.10 Securities
      Law Compliance.

     

    (a) Securities
      Act.
      The
      Company shall timely prepare and file with the Securities and Exchange
      Commission the form of notice of the sale of securities pursuant to the
      requirements of Regulation D regarding the sale of the Preferred Stock and
      Warrants under this Agreement.

     

    (b) State
      Securities Law Compliance -- Sale.
      The
      Company shall timely prepare and file such applications, consents to service
      of
      process (but not including a general consent to service of process) and similar
      documents and take such other steps and perform such further acts as shall
      be
      required by the state securities law requirements of each jurisdiction where
      a
      Purchaser resides, as indicated on Schedule
      1,
      with
      respect to the sale of the Preferred Stock and Warrants under this Agreement.
      

     

    (c) State
      Securities Law Compliance --Resale.
      Beginning no later than 30 days following any date, from time to time, on which
      the Common Stock is no longer a “covered security” under Section 18(b)(1)(A) of
      the Securities Act and continuing until either (i) the Purchasers have sold
      all
      of their Conversion Shares and Warrant Shares under a registration statement
      pursuant to the Investor Rights Agreement or (ii) the Common Stock becomes
      a
“covered security” under Section 18(b)(1)(A) of the Securities Act, the Company
      shall maintain within either Moody’s Industrial Manual or Standard and Poor’s
      Standard Corporation Descriptions (or any successors to these manuals which
      are
      similarly qualified as “recognized securities manuals” under state Blue Sky
      laws) an updated listing containing (i) the names of the officers and directors
      of the Company, (ii) a balance sheet of the Company as of a date that is at
      no
      time older than eighteen months and (iii) a profit and loss statement of the
      Company for either the preceding fiscal year or the most recent year of
      operations.

     

    4.11
      Poison
      Pill.
      From
      time to time, for as long as any Purchaser holds any Securities, the Company
      and
      its Board of Directors shall take all necessary action, if any, in order to
      render inapplicable any control share acquisition, business combination, poison
      pill (including any distribution under a rights agreement) or other similar
      anti-takeover provision under the Company’s Certificate of Incorporation (or
      similar charter documents) or the laws of its state of incorporation that is
      or
      could become applicable to the Purchasers as a result of the Purchasers and
      the
      Company fulfilling their obligations or exercising their rights under this
      Agreement and the Transaction Documents, including without limitation the
      Company's issuance of the Securities and the Purchasers’ ownership of the
      Securities.

     

    4.12
      Surrender
      of Promissory Notes.
      Each
      Purchaser surrendering Promissory Notes for cancellation in payment of any
      portion of such Purchaser’s Subscription Amount that does not deliver such
      original Promissory Notes to the Company prior to the Closing, hereby covenants
      to deliver such original Promissory Notes to the Company as soon as practicable
      following the Closing Date.

     

    
      
        
        

      

      
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    4.13 Subsequent
      Equity Sales.
      

    

    (a)  From
      the
      date hereof until 45 days after the Effective Date, neither the Company nor
      any
      Subsidiary shall issue shares of Common Stock or Common Stock Equivalents;
      provided, however, the 45 day period set forth in this Section 4.13 shall be
      extended for the number of Trading Days during such period in which (i) trading
      in the Common Stock is suspended by any Trading Market, or (ii) following the
      Effective Date, the Registration Statement is not effective or the prospectus
      included in the Registration Statement may not be used by the Purchasers for
      the
      resale of the Underlying Shares; provided,
      however
      that the
      Company may issue shares of Common Stock or Common Stock Equivalents, with
      an
      aggregate purchase price not to exceed $15,000,000 (including the purchase
      price
      of the Securities sold pursuant to this Agreement) and on terms that are no
      less
      favorable to the Company than the terms of the transactions contemplated by
      this
      Agreement, at any time from the date hereof until the date that the Initial
      Registration Statement (as defined in the Investor Rights Agreement) is filed.
      

    

    (b)  From
      the
      date hereof until such time as no Purchaser holds any of the Securities, the
      Company shall be prohibited from effecting or entering into an agreement to
      effect any Subsequent Financing involving a Variable Rate Transaction.
“Variable
      Rate Transaction”
means
      a
      transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock or
      (ii) enters into any agreement, including, but not limited to, an equity line
      of
      credit, whereby the Company may sell securities at a future determined price.
      

    

    4.14  Equal
      Treatment of Purchasers.
      No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. For clarification purposes, this provision constitutes
      a
      separate right granted to each Purchaser by the Company and negotiated
      separately by each Purchaser, and is intended for the Company to treat the
      Purchasers as a class and shall not in any way be construed as the Purchasers
      acting in concert or as a group with respect to the purchase, disposition or
      voting of Securities or otherwise.

     

    

    
      
        
        

      

      
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    ARTICLE
      V

     

    INDEMNIFICATION,
      TERMINATION AND DAMAGES

     

    5.1 Survival
      of Representations. 

     

    Except
      as
      otherwise provided herein, the representations and warranties of the Company
      and
      the Purchasers contained in or made pursuant to this Agreement shall survive
      the
      execution and delivery of this Agreement and the Closing Date and shall continue
      in full force and effect for a period of three (3) years from the Closing Date.
      The Company’s and the Purchasers’ warranties and representations shall in no way
      be affected or diminished in any way by any investigation of (or failure to
      investigate) the subject matter thereof made by or on behalf of the Company
      or
      the Purchasers.

     

    5.2 Indemnification.
      

     

    The
      Company agrees to indemnify and hold harmless the Purchasers, their Affiliates,
      each of their officers, directors, employees and agents and their respective
      successors and assigns, from and against any losses, damages, or expenses which
      are caused by or arise out of (i) any breach or default in the performance
      by
      the Company of any covenant or agreement made by the Company in this Agreement
      or in any of the Transaction Documents; (ii) any breach of warranty or
      representation made by the Company in this Agreement or in any of the
      Transaction Documents; (iii) any and all third party actions, suits,
      proceedings, claims, demands, judgments, costs and expenses (including
      reasonable legal fees and expenses) incident to any of the foregoing; and/or(iv)
      any action instituted against a Purchaser in any capacity, or any of them or
      their respective Affiliates, by any stockholder of the Company who is not an
      Affiliate of such Purchaser, with respect to any of the transactions
      contemplated by the Transaction Documents (unless such action is based upon
      a
      breach of such Purchaser’s representations, warranties or covenants under the
      Transaction Documents or any agreements or understandings such Purchaser may
      have with any such stockholder or any violations by the Purchaser of state
      or
      federal securities laws or any conduct by such Purchaser which constitutes
      fraud, gross negligence, willful misconduct or malfeasance).

     

    5.3 Indemnity
      Procedure. 

     

    A
      party
      or parties hereto agreeing to be responsible for or to indemnify against any
      matter pursuant to this Agreement is referred to herein as the “Indemnifying
      Party”
and
      the
      other party or parties claiming indemnity is referred to as the “Indemnified
      Party”.
      An
      Indemnified Party under this Agreement shall, with respect to claims asserted
      against such party by any third party, give written notice to the Indemnifying
      Party of any liability which might give rise to a claim for indemnity under
      this
      Agreement within sixty (60) Business Days of the receipt of any written claim
      from any such third party, but not later than twenty (20) days prior to the
      date
      any answer or responsive pleading is due, and with respect to other matters
      for
      which the Indemnified Party may seek indemnification, give prompt written notice
      to the Indemnifying Party of any liability which might give rise to a claim
      for
      indemnity; provided,
      however,
      that
      any failure to give such notice will not waive any rights of the Indemnified
      Party except to the extent the rights of the Indemnifying Party are materially
      prejudiced.

     

    
      
        
        

      

      
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    The
      Indemnifying Party shall have the right, at its election, to take over the
      defense or settlement of such claim by giving written notice to the Indemnified
      Party at least fifteen (15) days prior to the time when an answer or other
      responsive pleading or notice with respect thereto is required. If the
      Indemnifying Party makes such election, it may conduct the defense of such
      claim
      through counsel of its choosing (subject to the Indemnified Party’s approval of
      such counsel, which approval shall not be unreasonably withheld or delayed),
      shall be solely responsible for the expenses of such defense and shall be bound
      by the results of its defense or settlement of the claim. The Indemnifying
      Party
      shall not settle any such claim without prior notice to and consultation with
      the Indemnified Party, and no such settlement involving any equitable relief
      or
      which might have an adverse effect on the Indemnified Party may be agreed to
      without the written consent of the Indemnified Party (which consent shall not
      be
      unreasonably withheld or delayed). So long as the Indemnifying Party is
      diligently contesting any such claim in good faith, the Indemnified Party may
      pay or settle such claim only at its own expense and the Indemnifying Party
      will
      not be responsible for the fees of separate legal counsel to the Indemnified
      Party, unless the named parties to any proceeding include both parties or
      representation of both parties by the same counsel would be inappropriate in
      the
      reasonable opinion of counsel to the Indemnified Party, due to conflicts of
      interest or otherwise. If the Indemnifying Party does not make such election,
      or
      having made such election does not, in the reasonable opinion of the Indemnified
      Party proceed diligently to defend such claim, then the Indemnified Party may
      (after written notice to the Indemnifying Party), at the expense of the
      Indemnifying Party, elect to take over the defense of and proceed to handle
      such
      claim in its discretion and the Indemnifying Party shall be bound by any defense
      or settlement that the Indemnified Party may make in good faith with respect
      to
      such claim. In connection therewith, the Indemnifying Party will fully cooperate
      with the Indemnified Party should the Indemnified Party elect to take over
      the
      defense of any such claim. The parties agree to cooperate in defending such
      third party claims and the Indemnified Party shall provide such cooperation
      and
      such access to its books, records and properties (subject to the execution
      of
      appropriate non-disclosure agreements) as the Indemnifying Party shall
      reasonably request with respect to any matter for which indemnification is
      sought hereunder; and the parties hereto agree to cooperate with each other
      in
      order to ensure the proper and adequate defense thereof.

     

    With
      regard to claims of third parties for which indemnification is payable
      hereunder, such indemnification shall be paid by the Indemnifying Party upon
      the
      earlier to occur of: (i) the entry of a judgment against the Indemnified Party
      and the expiration of any applicable appeal period, or if earlier, five (5)
      days
      prior to the date that the judgment creditor has the right to execute the
      judgment; (ii) the entry of an unappealable judgment or final appellate decision
      against the Indemnified Party; or (iii) a settlement of the claim.
      Notwithstanding the foregoing, the reasonable expenses of counsel to the
      Indemnified Party shall be reimbursed on a current basis by the Indemnifying
      Party. With regard to other claims for which indemnification is payable
      hereunder, such indemnification shall be paid promptly by the Indemnifying
      Party
      upon demand by the Indemnified Party.

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    MISCELLANEOUS

     

    6.1 Fees
      and Expenses.

     

    The
      Company shall be responsible for the payment of the Purchasers’ reasonable and
      documented legal fees and other third-party expenses relating to the
      preparation, negotiation and execution of this Agreement and the Transaction
      Documents and the consummation of the transactions contemplated
      herein.

     

    6.2 Entire
      Agreement.

     

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

     

    6.3 Notices.

     

    Any
      and
      all notices or other communications or deliveries required or permitted to
      be
      provided hereunder shall be in writing and shall be deemed given and effective
      on the earliest of (a) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified on the signature
      pages attached hereto prior to 5:00 p.m. (New York City time) on a Trading
      Day,
      (b) the next Trading Day after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number on the
      signature pages attached hereto on a day that is not a Trading Day or later
      than
      5:00 p.m. (New York City time) on any Trading Day, (c) the Trading Day following
      the date of mailing, if sent by U.S. nationally recognized overnight courier
      service, or (d) upon actual receipt by the party to whom such notice is required
      to be given. The address for such notices and communications shall be as
      follows:

     

    If
      to the
      Purchasers, at each Purchaser’s address set forth under its name on Schedule
      1
      attached
      hereto, or with respect to the Company, addressed to: 

     

    Access
      Pharmaceuticals, Inc.

    2600
      Stemmons Freeway, Suite 176

    Dallas,
      Texas 75207

    Attention:
      President 

    Facsimile
      No.: (214) 905-5101 

     

    or
      to
      such other address or addresses or facsimile number or numbers as any such
      party
      may most recently have designated in writing to the other parties hereto by
      such
      notice. Copies of notices to the Company shall be sent to:

     

    Bingham
      McCutchen LLP

    150
      Federal Street

    Boston,
      Massachusetts 02110 

    Attention:
      John J. Concannon, III

    Facsimile
      No.: (617) 951-8736

    

    Copies
      of
      notices to any Purchaser shall be sent to the addresses, if any, listed on
      Schedule
      1
      attached
      hereto.

     

    
      
        
        

      

      
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    6.4 Amendments;
      Waivers.
      

     

    No
      provision of this Agreement may be waived or amended except in a written
      instrument signed, in the case of an amendment, by the Company and the
      Purchasers holding 66% in interest of the Securities then outstanding or, in
      the
      case of a waiver, by the party against whom enforcement of any such waiver
      is
      sought; provided, however that any such amendment or waiver that has a
      disproportionately adverse effect on any Purchaser shall require the consent
      of
      such Purchaser. No waiver of any default with respect to any provision,
      condition or requirement of this Agreement shall be deemed to be a continuing
      waiver in the future or a waiver of any subsequent default or a waiver of any
      other provision, condition or requirement hereof, nor shall any delay or
      omission of either party to exercise any right hereunder in any manner impair
      the exercise of any such right.

     

    6.5 Construction.

     

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

     

    6.6 Successors
      and Assigns.

     

    This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and permitted assigns. The Company may not assign this
      Agreement or any rights or obligations hereunder without the prior written
      consent of each Purchaser. Any Purchaser may assign any or all of its rights
      under this Agreement to any Person, provided such transferee agrees in writing
      to be bound, with respect to the transferred Securities, by the provisions
      hereof that apply to the Purchasers. 

     

    6.7 No
      Third-Party Beneficiaries.

     

    This
      Agreement is intended for the benefit of the parties hereto and their respective
      successors and permitted assigns and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person, except as otherwise set
      forth
      in Article V. 

     

    6.8 Governing
      Law.

     

    All
      questions concerning the construction, validity, enforcement and interpretation
      of the Transaction Documents shall be governed by and construed and enforced
      in
      accordance with the internal laws of the State of New York, without regard
      to
      the principles of conflicts of law thereof. 

     

    
      
        
        

      

      
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    6.9
       Jurisdiction;
      Venue; Service of Process.

     

    This
      Agreement shall be subject to the exclusive jurisdiction of the Federal District
      Court, Southern District of New York and if such court does not have proper
      jurisdiction, the State Courts of New York County, New York. The parties to
      this
      Agreement agree that any breach of any term or condition of this Agreement
      shall
      be deemed to be a breach occurring in the State of New York by virtue of a
      failure to perform an act required to be performed in the State of New York
      and
      irrevocably and expressly agree to submit to the jurisdiction of the Federal
      District Court, Southern District of New York and if such court does not have
      proper jurisdiction, the State Courts of New York County, New York for the
      purpose of resolving any disputes among the parties relating to this Agreement
      or the transactions contemplated hereby. The parties irrevocably waive, to
      the
      fullest extent permitted by law, any objection which they may now or hereafter
      have to the laying of venue of any suit, action or proceeding arising out of
      or
      relating to this Agreement, or any judgment entered by any court in respect
      hereof brought in New York County, New York, and further irrevocably waive
      any
      claim that any suit, action or proceeding brought in Federal District Court,
      Southern District of New York and if such court does not have proper
      jurisdiction, the State Courts of New York County, New York has been brought
      in
      an inconvenient forum. Each of the parties hereto consents to process being
      served in any such suit, action or proceeding, by mailing a copy thereof to
      such
      party at the address in effect for notices to it under this Agreement and agrees
      that such service shall constitute good and sufficient service of process and
      notice thereof. Nothing in this Section 6.9 shall affect or limit any right
      to
      serve process in any other manner permitted by law.

     

    6.10
       Execution.

     

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

     

    6.11
       Severability.

     

    If
      any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

    6.12 Replacement
      of Securities.

     

    If
      any
      certificate or instrument evidencing any of the Securities is mutilated, lost,
      stolen or destroyed, the Company shall issue or cause to be issued in exchange
      and substitution for and upon cancellation thereof, or in lieu of and
      substitution therefor, a new certificate or instrument, but only upon receipt
      of
      evidence reasonably satisfactory to the Company of such loss, theft or
      destruction and customary and reasonable indemnity (but no bond shall be
      required), if requested by the Company.

     

    
      
        
        

      

      
        35

        
          

        

      

      
        
        

      

       

    

    6.13
       Remedies.

     

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

     

    6.14 Payment
      Set Aside.

     

    To
      the
      extent that the Company makes a payment or payments to any Purchaser pursuant
      to
      any Transaction Document or a Purchaser enforces or exercises its rights
      thereunder, and such payment or payments or the proceeds of such enforcement
      or
      exercise or any part thereof are subsequently invalidated, declared to be
      fraudulent or preferential, set aside, recovered from, disgorged by or are
      required to be refunded, repaid or otherwise restored to the Company, a trustee,
      receiver or any other person under any law (including, without limitation,
      any
      bankruptcy law, state or federal law, common law or equitable cause of action),
      then to the extent of any such restoration the obligation or part thereof
      originally intended to be satisfied shall, to the extent permissible under
      applicable law, 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.

     

    6.15 Independent
      Nature of Purchasers' Obligations and Rights.
      

     

    The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      Transaction Document, and no action taken by any Purchaser pursuant thereto,
      shall be deemed to constitute the Purchasers as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Purchasers are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated by the Transaction Document. Each
      Purchaser shall be entitled to independently protect and enforce its rights,
      including without limitation, the rights arising out of this Agreement or out
      of
      the other Transaction Documents, and it shall not be necessary for any other
      Purchaser to be joined as an additional party in any proceeding for such
      purpose. Each Purchaser has been represented by its own separate legal counsel
      in their review and negotiation of the Transaction Documents. For reasons of
      administrative convenience only, Purchasers and their respective counsel have
      chosen to communicate with the Company through Wiggin and Dana LLP, but such
      counsel does not represent any of the Purchasers in this transaction other
      than
      SCO Capital Partners LLC. The Company has elected to provide all Purchasers
      with
      the same terms and Transaction Documents for the convenience of the Company
      and
      not because it was required or requested to do so by the
      Purchasers.

     

    
      
        
        

      

      
        36

        
          

        

      

      
        
        

      

       

    

    6.16 Waiver
      of Trial by Jury. 

     

    THE
      PARTIES HERETO IRREVOCABLY WAIVE TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING
      RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     

    6.17 Further
      Assurances. 

     

    Each
      party agrees to cooperate fully with the other parties and to execute such
      further instruments, documents and agreements and to give such further written
      assurances as may be reasonably requested by any other party to better evidence
      and reflect the transactions described herein and contemplated hereby and to
      carry into effect the intents and purposes of this Agreement, and further agrees
      to take promptly, or cause to be taken, all actions, and to do promptly, or
      cause to be done, all things necessary, proper or advisable under applicable
      law
      to consummate and make effective the transactions contemplated hereby, to obtain
      all necessary waivers, consents and approvals, to effect all necessary
      registrations and filings, and to remove any injunctions or other impediments
      or
      delays, legal or otherwise, in order to consummate and make effective the
      transactions contemplated by this Agreement for the purpose of securing to
      the
      parties hereto the benefits contemplated by this Agreement.

     

    6.18 Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the Closing has not been consummated on or before the fifth business
      day following the date hereof; provided, however, that such termination will
      not
      affect the right of any party to sue for any breach by the other party (or
      parties).

     

    

     

    

     

    [Signature
      pages follow.]

     

    
      
         

        

        
        

      

      
        37

        
          

        

      

      
        
        

      

    

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

     

    COMPANY:

     

    ACCESS
      PHARMACEUTICALS, INC.

    

    

    By:
      /S/ Stephen R. Seiler

    Name:
      Stephen R. Seiler

    Title:
      President and CEO

    

    
      
         

        

        
        

      

      
        38

        
          

        

      

      
        
        

      

    

     

     

    
      	 PURCHASERS:	 
	 	 
	 Print Exact
              Name :	 Beach Capital
              LLC
	 	 

    

     

     

    
      	 By: 	 /s/
              Steven H. Rouhandeh 
	 Name:	 Steven H. Rouhandeh
	 Title: 	 Managing Member 
	 	 
	 Address:	 1285
              Avenue of the Americas 
	 	 35th
              Floor 
	 	 New
              York, NY 10019
	 Telephone:	 212-554-4158
	 Facsimile:     	 212-554-4058
	 Email:	 srouhandeh@scogroup.com

	 SSN/EIN:	
            
	 	 

    

     

    
      	 Amount of
              Investment:	 7.5 % secured
              promissary note
	 # PN-2006-2 for $500,000.00 + accrued
              interest 

    

     

    
       

    

    [Omnibus
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        39

        
          

        

      

      
        
        

        
        

      

    

     

     

    
      	 PURCHASERS:	 
	 	 
	 Print Exact
              Name :	Brio Capital
              L.P.
	 	 

    

     

     

    
      	 By: 	/s/
              Shaye
              Hirsch
	 Name:	 Shaye Hirsch
	 Title: 	 Manager of the General Partner 
	 	 
	 Address:	 401
              E 34th St.
	 	 Suite
              South 33C
	 	 New
              York, NY 10016
	 Telephone:	 212-842-0733
	 Facsimile:     	 646-390-2158
	 Email:	 shaye@briocapital.com
	 SSN/EIN:	
            
	 	 

    

     

    
      	 Amount of
              Investment:	 $
              150,000.00
	 

    

     

    
       

    

    [Omnibus
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        40

        
          

        

      

      
        
        

      

    

     

    
      
        	 PURCHASERS:	 
	 	 
	 Print Exact
                Name :	Catalytix Life
                Sciences Hedge AC
	 	 

      

       

       

      
        	 By: 	/s/
                Ken
                Sorensen 
	 Name:	 Ken Sorensen 
	 Title: 	 PM, DIR
	 	 
	 Address:	 c/o
                Array Capital Management 
	 	 425
                Fifth Ave Ste 28D
	 	 NY,
                NY 10016
	 Telephone:	 212-481-1394
	 Facsimile:     	 212-481-1396
	 Email:	 ksorensen@arraycap.com
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 50,000.00
                US
	 

      

       

      
         

      

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        41

        
          

        

      

      
        
        

      

       

       

    

    
      
        	 PURCHASERS:	 
	 	 
	 Print Exact
                Name :	Cobblestone
                Asset
                Management LLC
	 	
              

      

       

       

      
        	 By: 	/s/
                Michael J. Palazzi 
	 Name:	 Michael J. Palazzi 
	 Title: 	 Managing Member 
	 	 
	 Address:	 11
                Lakeview Ave 
	 	 Sleepy
                Hollow, NY 10591
	 	 
	 Telephone:	 914-631-8087
	 Facsimile:     	 212-259-2093
	 Email:	 mpalazzi@palicapital.com
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 $
                250,000
	 

      

       

      
         

      

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        42

        
          

        

      

      
        
        

      

       

    

     

    
      
        	 PURCHASERS:	 
	 	 
	 Print Exact
                Name :	Cranshire Capita,
                L.P.
	 	 

      

       

       

      
        	 By: 	/s/
                Lawrence A. Prosser     
	 Name:	 Lawrence A. Prosser 
	 Title: 	 CFO-Downsview Capital, Inc. 
	 	 The General Partner
	 Address:	 3100
                Dundee Road, Suite 703
	 	 Northbrook,
                IL 60062
	 	 
	 Telephone:	 847-562-9030
	 Facsimile:     	 847-562-9031
	 Email:	 mkopin@cranshirecapital.com
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 $
                500,001.00
	 

      

       

      
         

      

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        43

        
          

        

      

      
        
        

      

       

      
        
          	 PURCHASERS:	 
	 	 
	 Print Exact
                  Name :	Credit Suisse
                  Securities (USA) LLC
	 	 

        

         

         

        
          	 By: 	/s/
                  Jeffrey B. Andreski 
	 Name:	 Jeffrey B. Andreski 
	 Title: 	 Managing Director 
	 	 
	 Address:	 c/o
                  Greg Grimaldi 
	 	 11
                  Madison Ave 3rd Floor 
	 	 New
                  York, NY 10010
	 Telephone:	 212-325-7408
	 Facsimile:     	 646-935-7716
	 Email:	 gregory.grimaldi@credit-suisse.com
	 SSN/EIN:	
                
	 	 

        

         

        
          	 Amount of
                  Investment:	 $
                  1,000,000.00
	 

        

         

        
           

        

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          44

          
            

          

        

        
          
          

        

         

        
          
            	 PURCHASERS:	 
	 	 
	 Print Exact
                    Name :	Enable
                    Growth
                    Partners LP
	 	 

          

           

           

          
            	 By: 	/s/
                    Brendan O'Neil 
	 Name:	 Brendan O'Neil 
	 Title: 	 Prinicipal and Portfolio Manager 
	 	 
	 Address:	 One
                    Ferry Building, Suite 255
	 	 San
                    Francisco, CA 94111
	 	 
	 Telephone:	 415-677-1578
	 Facsimile:     	 415-677-1580
	 Email:	 boneil@enablecapital.com    
	 SSN/EIN:	
                  
	 	 

          

           

          
            	 Amount of
                    Investment:	 $
                    500,000
	 Common Shares:166,666
	 Warrants: 83,333
	 

          

           

          
             

          

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            45

            
              

            

          

          
            
            

          

           

          
            
              	 PURCHASERS:	 
	 	 
	 Print Exact
                      Name :	Lake
                      End Capital
                      LLC
	 	 

            

             

             

            
              	 By: 	/s/
                      Jeffrey B. Davis 
	 Name:	 Jeffrey B. Davis 
	 Title: 	 Managing Member 
	 	 
	 Address:	33
                      Tall
                      Oaks Dr. 
	 	 Summitt,
                      NJ 07901
	 	 
	 Telephone:	 212-554-4158
	 Facsimile:     	 
	 Email:	 jdavis@scogroup.com
	 SSN/EIN:	
                    
	 	 

            

             

            
              	 Amount
                      of
                      Investment:	 $ 700,000.00
                      +
	 
	 * Conversion of Outstanding notes
                      into
                      convertible preferred stock_________________
	 
	 + To include Acumulated Interest
                      ___________
	 
	 
	 

            

             

            
               

            

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              46

              
                

              

            

            
              
              

            

             

             

            
              
                	 PURCHASERS:	 
	 	 
	 Print
                        Exact
                        Name :	Dennis
                        LaValle
                        
	 	 

              

               

               

              
                	 By: 	/s/
                        Dennis LaValle 
	 Name:	 
	 Title: 	 
	 	 
	 Address:	 1201
                        Yale Place #1409
	 	 Minneapolis,
                        MN 55403
	 	 
	 Telephone:	 612-455-5776
	 Facsimile:     	 612-455-5600
	 Email:	 dlavalle@________
	 SSN/EIN:	
                      
	 	 

              

               

              
                	 Amount
                        of
                        Investment:	 $
                        90,000.00
	 

              

               

              
                 

              

              [Omnibus
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                47

                
                  

                

              

              
                
                

              

            

             

            
              
                	 PURCHASERS: 	 
	 	 
	 Print
                        Exact
                        Name :	Midsummer
                        Investment, Ltd. 
	 	 

              

               

               

              
                	 By: 	/s/
                        Michel Amsalem 
	 Name:	 Michel Amsalem
	 Title: 	 Director 
	 	 
	 Address:	 295
                        Madison Avenue, 38th Floor 
	 	 New
                        York, NY 10017
	 	 
	 Telephone:	 212-624-5030
	 Facsimile:     	 212-624-5040
	 Email:	 MA@midsummercapital.com
	 SSN/EIN:	
                      
	 	 

              

               

              
                	 Amount
                        of
                        Investment:	 $
                        1,500,000
	 

              

               

              
                 

              

              [Omnibus
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                48

                
                  

                

              

              
                
                

              

               

               

            

            
              
                	 PURCHASERS:	 
	 	 
	 Print
                        Exact
                        Name :	Oracle
                        Institutional Partners L.P.
	 	 

              

               

               

              
                	 By: 	/s/
                        Joel
                        Liffmann 
	 Name:	 Joel Liffmann 
	 Title: 	 Authorized Agent 
	 	 
	 Address:	 200
                        Greenwich Ave 
	 	 Greenwich,
                        CT 06830
	 	 
	 Telephone:	 203-862-7900
	 Facsimile:     	 
	 Email:	 
	 SSN/EIN:	
                      
	 	 

              

               

              
                	 Amount
                        of
                        Investment:	 $
                        698,500.00
	 

              

               

              
                 

              

              [Omnibus
                Access Pharmaceuticals, Inc.

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                49

                
                  

                

              

              
                
                

              

            

          

        

      

    

     

    
      
        	 PURCHASERS: 	 
	 	 
	 Print Exact
                Name :	Oracle Offshore
                LTD
	 	 

      

       

       

      
        	 By: 	/s/
                Joel
                Liffmann 
	 Name:	 Joel Liffmann 
	 Title: 	 Authorized Agent 
	 	 
	 Address:	 200
                Greenwich Ave 
	 	 Greenwich,
                CT 06830
	 	 
	 Telephone:	 203-862-7900
	 Facsimile:     	 
	 Email:	 
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 $
                132,000
	 

      

       

      
         

      

      [Omnibus
        Access Pharmaceuticals, Inc.

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        50

        
          

        

      

      
        
        

      

    

     

     

    
      
        	PURCHASERS: 	 
	 	 
	 Print Exact
                Name :	Oracle Partners,
                LP
	 	 

      

       

       

      
        	 By: 	/s/
                Joel
                Liffmann 
	 Name:	 Joel Liffmann
	 Title: 	 Authoriced Agent 
	 	 
	 Address:	 200
                Greenwich Ave
	 	 Greenwich,
                CT 06830
	 	 
	 Telephone:	 203-286-7900
	 Facsimile:     	 
	 Email:	 
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 $2,524,500
	 

      

       

      
         

      

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        51

        
          

        

      

      
        
        

      

       

       

    

    
      
        	 PURCHASERS: 	 
	 	 
	 Print Exact
                Name :	Perceptive
                Life
                Sciences Master Fund LTD
	 	 

      

       

       

      
        	 By: 	/s/
                __________________________
	 Name:	 
	 Title: 	 
	 	 
	 Address:	 499
                Park Ave, 25th Fl
	 	 New
                York, NY 10022
	 	 
	 Telephone:	 646-205-5342
	 Facsimile:     	 646-205-5301
	 Email:	 BERGER@perceptivelife.com
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 2,000,000
	 

      

       

      
         

      

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        52

        
          

        

      

      
        
        

      

       

       

      
        
          	 PURCHASERS: 	
                
	 	 
	 Print Exact
                  Name :	Rockmore
                  Investment
                  Master Fund Ltd. 
	 	 

        

         

         

        
          	 By: 	/s/
                  Michael Clateman 
	 Name:	 Michael Clateman
	 Title: 	 Managing Director 
	 	 
	 Address:	 c/o
                  Rockmore Capital LLC 
	 	 150
                  E 58th St. 
	 	 New
                  York, NY 10155
	 Telephone:	 212-258-2300
	 Facsimile:     	 212-258-2315
	 Email:	 as@rockmorecapital.com
	 SSN/EIN:	
                
	 	 

        

         

        
          	 Amount of
                  Investment:	 500,000.00
	 

        

         

        
           

        

        [Omnibus
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          53

          
            

          

        

        
          
          

        

         

      

       

      
        
          	 PURCHASERS:	 
	 	 
	 Print Exact
                  Name :	SCO Capital
                  Partners LLC
	 	 

        

         

         

        
          	 By: 	/s/
                  Steve
                  H. Rouhandeh 
	 Name:	
                
	 Title: 	 
	 	 
	 Address:	 1285
                  Avenue of the Americas 
	 	 35th
                  Floor 
	 	 New
                  York, NY 10019
	 Telephone:	 212-554-4158
	 Facsimile:     	 212-554-4058
	 Email:	 srouhandeh@scogroup.com
	 SSN/EIN:	
                
	 	 

        

         

        
          	 Amount of
                  Investment:	 $
                  1,000,000.00
	 

        

         

        
           

        

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          54

          
            

          

        

        
          
          

        

         

      

    

     

    
      
        	 PURCHASERS:	 
	 	 
	 Print Exact
                Name :	SCO Capital
                Partners, L.P.
	 	 

      

       

       

      
        	 By: 	Steven
                H.
                Rouhandeh     
	 Name:	 
	 Title: 	 
	 	 
	 Address:	 1285
                Avenue of the Americas 
	 	 35th
                Floor 
	 	 New
                York, NY 10019
	 Telephone:	 212-554-4158
	 Facsimile:     	 212-554-4058
	 Email:	 srouhandeh@scogroup.com
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 $2,000,000.00
	 

      

       

      
         

      

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        55

        
          

        

      

      
        
        

      

       

    

     

    
      
        	 PURCHASERS: 	 
	 	 
	 Print Exact
                Name :	SAM Oracle
                Investments, Inc. 
	 	 

      

       

       

      
        	 By: 	/s/
                Joel
                Liffmann 
	 Name:	 Joel Liffmann 
	 Title: 	 Authorized Agent 
	 	 
	 Address:	 200
                Greenwich Ave 
	 	 Greenwich,
                CT 06830
	 	 
	 Telephone:	 203-862-7900
	 Facsimile:     	 
	 Email:	 
	 SSN/EIN:	
              
	 	 

      

       

      
        	 Amount of
                Investment:	 $
                660,000.00
	 

      

       

      
         

      

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        56

        
          

        

      

      
        
        

      

       

    

    Schedule
      1

     

    

    to
      Preferred Stock and Warrant Purchase Agreement

     

    

     

    Purchasers,
      Shares of Preferred Stock and Warrants

     

    
      	
              Name,
                Address and Fax Number of Purchaser

               

            	
              Shares
                of Preferred Stock Purchased

               

            	
              Common
                Stock Underlying Warrants

               

            	
              Description
                of Promissory Notes to be Cancelled including Actual Principal
                Amount

               

            	
              Promissory
                Note Category [Deemed Value of Notes for Purposes of Exchange for
                Preferred Stock

               

            	
              Purchase
                Price and Value of Promissory Notes Cancelled as
                Applicable

               

            
	
              Beach
                Capital LLC

              1285
                Avenue of the Americas, 35th
                Fl.

              New
                York, NY 10019

              Fax:
                212-554-4058

            	
              154.2898

            	
              94,288

            	
              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-2-1AR) (Original Principal
                Amt:
                $500.000.00) (Interest Amt: $65,729.17)

               

            	
               

               

               

              A

              [$1,542,897.73]

            	
               

               

               

              $565,729.17

            
	
              Brio
                Capital L.P.

              401
                E. 34th
                St.

              Suite
                South 33C

              New
                York, NY 10016

              Fax:
                646-390-2158

            	
              15

               

            	
              25,000

               

            	
              n/a

               

            	
               

               

              n/a

               

            	
               

               

              $150,000.00

               

            
	
              Catalytix
                LDC Life Science Hedge AC

              CIBC
                Bank and Trust Company (Cayman) Ltd.

              CIBC
                Financial Centre

              11
                Roy’s Drive

              P.O.
                Box 694 GT

              Grand
                Cayman

              Cayman
                Islands

              B.W.I.

              Attn:
                Martin Laidlaw

               

              With
                a copy to:

              Theodore
                E. Kalem

              Array
                Capital Management LLC

              425
                5th
                Ave, Ste. 28D

              New
                York, NY 10016

            	
              5

               

            	
              8,333

               

            	
              n/a

               

            	
               

               

               

               

               

               

               

               

              n/a

               

            	
               

               

               

               

               

               

               

               

              $50,000.00

               

            

    

     

    
      
        
        

      

      
        57

        
          

        

      

      
        
        

      

       

    

    
      	
              Cobblestone
                Asset Management LLC

              11
                Lakeview Ave.

              Sleepy
                Hollow, NY 10591

              Fax:
                212-259-2093

            	
              25

               

            	
              41,667

               

            	
              n/a

               

            	
               

               

              n/a

               

            	
               

               

              $250,000.00

               

            
	
              Cranshire
                Capital, L.P.

              3100
                Dundee Rd., #703

              Northbrook,
                IL 60062

              Fax:
                847-562-9031

            	
              50.0001

               

            	
              83,333

               

            	
              n/a

               

            	
               

              n/a

            	
               

              $500,001.00

            
	
              Credit
                Suisse Securities (USA) LLC

              c/o
                Greg Grimaldi

              11
                Madison Ave., 3d Fl.

              New
                York, NY 100100

              Fax:
                212-935-7716

            	
              100

               

            	
              166,667

               

            	
              n/a

               

            	
               

               

              n/a

            	
               

               

              $1,000,000.00

               

            
	
              Enable
                Growth Partners LP

              One
                Ferry Building, Suite 255

              San
                Francisco, CA 94111

              Fax:
                415-677-1580

            	
              50

               

            	
              83,333

               

            	
              n/a

               

            	
               

               

              n/a

            	
               

               

              $500,000.00

               

            

    

     

    
      
        
        

      

      
        58

        
          

        

      

      
        
        

      

       

    

    
      	
              Lake
                End Capital LLC

              33
                Tall Oaks Dr.

              Summit,
                NJ 07901

              Fax:

            	
              154.2898

               

               

               

               

               

               

               

               

              29.4375

               

               

               

               

               

              29.1932

               

               

               

            	
              94,288

               

               

               

               

               

               

               

               

              17,990

               

               

               

               

               

              17,840

               

               

               

            	
              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-3-1AR) (Original Principal
                Amt.:
                $500,000.00) (Interest Amt: $ 65,729.17)

               

              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-FO2-1AR) (Original Principal
                Amt:
                $100,000.00) (Interest Amt: $7937.50)

               

              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-DEC-2-1AR) (Original Principal
                Amt.: $100,000.00) (Interest Amt: $7,041.67)

               

            	
               

               

              A

               

              [$1,542,897.73]

               

               

               

               

               

              A

               

              [$294,375.00]

               

               

               

              A

               

              [$291,931.83]

               

            	
               

               

              $565,729.17

               

               

               

               

               

               

               

              107,937.50

               

               

               

               

               

              107,041.67

               

               

               

            
	
              Dennis
                Lavalle

              1201
                Yale Place #1409

              Minneapolis,
                MN 55403

              Fax:
                612-455-5600

            	
              9

               

            	
              15,000

               

            	
              n/a

               

            	
               

              n/a

            	
               

              $90,000.00

            
	
              Midsummer
                Investment, Ltd.

              295
                Madison Ave., 38th
                Fl.

              New
                York, NY 10017

              Fax:
                212-624-5040

            	
              150

               

            	
              250,000

               

            	
              n/a

               

            	
               

              n/a

            	
               

              $1,500,000.00

            
	
              Oracle
                Institutional Partners LP

              Oracle
                Partners, LP

              200
                Greenwich Ave.

              Greenwich,
                CT 06830

              Fax:

            	
              76.0800

               

            	
              126,800

               

            	
              7.0%
                (Subject to Adjustment) Convertible Promissory Note Due November
                16, 2007
                (Original Principal Amt.: $698,500.00) (Interest Amt:
                $62,300.38)

               

            	
               

               

              B

               

            	
               

               

              $760,800.38

               

            
	
              Oracle
                Offshore Ltd.

              Oracle
                Partners, LP

              200
                Greenwich Ave.

              Greenwich,
                CT 06830

              Fax:

            	
              14.3773

               

            	
              23,962

               

            	
              7.0%
                (Subject to Adjustment) Convertible Promissory Note Due November
                16, 2007
                (Original Principal Amt: $132,000.00) (Interest Amt.:
                $11,773.50)

               

            	
               

               

              B

               

            	
               

               

              $143,773.30

               

            
	
              Oracle
                Partners, LP

              200
                Greenwich Ave.

              Greenwich,
                CT 06830

              Fax:

            	
              274.9664

               

            	
              458,277

               

            	
              7.0%
                (Subject to Adjustment) Convertible Promissory Note Due November
                16, 2007
                (Original Principal Amt.: $2,524,500.00) (Interest Amt.:
                $225,164.36)

               

            	
               

               

              B

               

            	
               

               

              $2,749,664.36

               

            
	
              Perceptive
                Life Sciences Master Fund Ltd.

              499
                Park Ave., 25th
                Fl.

              New
                York, NY 10022

              Fax:
                646-205-5301

            	
              200

               

            	
              333,333

               

            	
              n/a

               

            	
               

              n/a

            	
               

               

              $2,000,000.00

               

            

    

     

    
      
        
        

      

      
        59

        
          

        

      

      
        
        

      

       

    

    
      	
              Rockmore
                Investment Master Fund Ltd.

              c/o
                Rockmore Capital LLC 150 E. 58th
                St.

              New
                York, NY 10155

              Fax:
                212-258-2315

            	
              50

               

            	
              83,333

               

            	
              n/a

               

            	
               

              n/a

            	
               

               

              $500,000.00

               

            
	
              SAM
                Oracle Investments, Inc.

              Oracle
                Partners, LP

              200
                Greenwich Ave.

              Greenwich,
                CT 06830

              Fax:

            	
              71.8867

               

            	
              119,811

               

            	
              7.0%
                (Subject to Adjustment) Covertible Promissory Note Due November 16,
                2007
                (Original Principal Amt.: $660,000.00) (Interest Amt.:
                $58,866.50)

               

            	
               

               

              B

            	
               

               

              $718,866.50

               

            

    

    
      	
              SCO
                Capital Partners LLC

              1285
                Avenue of the Americas

              35th
                Fl.

              New
                York, NY 10019

              Fax:
                212-554-4058

               

              With
                a copy to:

              Michael
                Grundei, Esq.

              400
                Atlantic St.

              P.O.
                Box 110325

              Stamford,
                CT 06911-0325

            	
               

              1,234.3182

               

               

               

               

               

               

               

              117.7500

               

               

               

               

               

               

              116.7727

               

               

               

               

               

               

               

               

               

              100

            	
              754,306

               

               

               

               

               

               

               

              71,958

               

               

               

               

               

               

              71,361

               

               

               

               

               

               

               

               

               

              166,667

            	
              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-1-1AR) (Original Principal
                Amt.:
                $4,000,000.00) (Interest Amt.: $525,833.33)

               

               

              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-FO1-1AR) (Original Principal
                Amt.:
                $400,000.00) (Interest Amt.: $31,750.00)

               

              Amended
                and Restated 7.5% Secured Convertible Promissory Note Due November
                15,
                2007, Dated March 30, 2007 (No. PN-2006-DEC -1-1AR) (Original Principal
                Amt.: $400,000.00) (Interest Amt.: $28,166.67)

               

               

               

               

              n/a

            	
               

               

               

              A

              [$12,343,181.81]

               

               

               

               

              A

              [$1,177,500.00]

               

               

               

               

               

               

              A

              [$1,167,727.28]

               

               

               

               

               

               

               

              n/a

            	
               

               

               

              $4,525,833.33

               

               

               

               

               

              $431,750.00

               

               

               

               

               

               

               

               

              428,166.67

               

               

               

               

               

               

               

              $1,000,000.00

            
	
              SCO
                Capital Partners, L.P.

              1285
                Avenue of the Americas

              35th
                Fl.

              New
                York, NY 10019

              Fax:
                212-554-4058

               

              With
                a copy to:

              Michael
                Grundei, Esq.

              400
                Atlantic St.

              P.O.
                Box 110325

              Stamford,
                CT 06911-0325

            	
              200

               

            	
              333,333

               

            	
              n/a

               

            	
               

               

               

               

               

              n/a

            	
               

               

               

               

               

              $2,000,000.00

            
	
               

              Totals:

            	
              3,227.3617

               

            	
              3,440,880

               

            	 	 	
              $20,645,293.05

               

            

    

    
      
         

        

        
        

      

      
        60

        
          

        

      

      
        
        

      

    

    

    
      	
               

              Placement
                Agent Warrants

            	 	 	 	 
	
               

              Name,
                Address and Fax Number

            	
              Copies
                of Notice to

            	 	
              Common
                Stock Underlying Placement Agent Warrants

               

            	 
	 	 	 	 	 
	
               

              Totals:

            	 	 	 	 

    

    

     

    
      
        
        

      

      
        61

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]