Document:

Unassociated Document

    GUARANTY

     

    GUARANTY,
      dated as of November 30, 2007 made by each of the undersigned (each a
      "Guarantor",
      and
      collectively, the "Guarantors"),
      in
      favor of PORTSIDE
      GROWTH AND OPPORTUNITY FUND,
      a
      company organized under the laws of the Cayman Islands, in
      its
      capacity as collateral agent (in such capacity, the "Collateral
      Agent")
      for
      the "Buyers" (as defined below) party to the Securities Purchase Agreement,
      dated as of November 29, 2007 (as amended, restated or otherwise modified from
      time to time, the "Securities
      Purchase Agreement").

     

    WITNESSETH
      :

     

    WHEREAS,
      DigitalFX International, Inc., a Florida corporation (the "Company"),
      and
      each party listed as a "Buyer" on the Schedule of Buyers attached to the
      Securities Purchase Agreement (each a "Buyer",
      and
      collectively, the "Buyers")
      are
      parties to the Securities Purchase Agreement;

     

    WHEREAS,
      the Securities Purchase Agreement requires that the Guarantors execute and
      deliver to the Collateral Agent, (i) a guaranty guaranteeing all of the
      obligations of the Company under the Securities Purchase Agreement, the Notes
      (as defined below and the "Transaction Documents" (as defined in the Securities
      Purchase Agreement, the "Transaction
      Documents");
      and
      (ii) a Security Agreement dated the date hereof granting the Collateral Agent
      a
      lien in all of their personal property (the "Security
      Agreement");
      and

     

    WHEREAS,
      each Guarantor has determined that the execution, delivery and performance
      of
      this Guaranty directly benefits, and is in the best interest of, such
      Guarantor;

     

    NOW,
      THEREFORE, in consideration of the premises and the agreements herein and in
      order to induce the Buyers to perform under the Securities Purchase Agreement,
      each Guarantor hereby agrees with each Buyer as follows:

     

    SECTION
      1. Definitions.
      Reference is hereby made to the Securities Purchase Agreement and the "Notes"
      (as defined) in and issued pursuant to the Securities Purchase Agreement and
      (as
      such Notes may be amended, restated, replaced or otherwise modified from time
      to
      time in accordance with the terms thereof, collectively, the "Notes")
      for a
      statement of the terms thereof. All terms used in this Guaranty, which are
      defined in the Securities Purchase Agreement or the Notes and not otherwise
      defined herein, shall have the same meanings herein as set forth therein.

     

    SECTION
      2. Guaranty.
      The
      Guarantors, jointly and severally, hereby unconditionally and irrevocably,
      guaranty the punctual payment, as and when due and payable, by stated maturity
      or otherwise, of all Obligations (as defined in the Security Agreement) of
      the
      Company from time to time owing by it in respect of the Securities Purchase
      Agreement, the Notes and the other Transaction Documents, including, without
      limitation, all interest that accrues after the commencement of any Insolvency
      Proceeding (as defined in the Security Agreement) of the Company or any
      Guarantor, whether or not the payment of such interest is unenforceable or
      is
      not allowable due to the existence of such Insolvency Proceeding, and all fees,
      commissions, expense reimbursements, indemnifications and all other amounts
      due
      or to become due under any of the Transaction Documents (such obligations,
      to
      the extent not paid by the Company, being the "Guaranteed
      Obligations"),
      and
      agrees to pay any and all expenses (including reasonable counsel fees and
      expenses) reasonably incurred by the Collateral Agent in enforcing any rights
      under this Guaranty. Without limiting the generality of the foregoing, each
      Guarantor's liability hereunder shall extend to all amounts that constitute
      part
      of the Guaranteed Obligations and would be owed by the Company to the Collateral
      Agent under the Securities Purchase Agreement and the Notes but for the fact
      that they are unenforceable or not allowable due to the existence of an
      Insolvency Proceeding involving any Guarantor or the Company (each, a
      "Transaction
      Party").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SECTION
      3. Guaranty
      Absolute; Continuing Guaranty; Assignments.

     

    (a)
       The
      Guarantors, jointly and severally, guaranty that the Guaranteed Obligations
      will
      be paid strictly in accordance with the terms of the Transaction Documents,
      regardless of any law, regulation or order now or hereafter in effect in any
      jurisdiction affecting any of such terms or the rights of the Collateral Agent
      with respect thereto. The obligations of each Guarantor under this Guaranty
      are
      independent of the Guaranteed Obligations, and a separate action or actions
      may
      be brought and prosecuted against any Guarantor to enforce such obligations,
      irrespective of whether any action is brought against any Transaction Party
      or
      whether any Transaction Party is joined in any such action or actions. The
      liability of any Guarantor under this Guaranty shall be irrevocable, absolute
      and unconditional irrespective of, and each Guarantor hereby irrevocably waives,
      to the extent permitted by law, any defenses it may now or hereafter have in
      any
      way relating to, any or all of the following:

     

    (i) any
      lack
      of validity or enforceability of any Transaction Document or any agreement
      or
      instrument relating thereto;

     

    (ii) any
      change in the time, manner or place of payment of, or in any other term of,
      all
      or any of the Guaranteed Obligations, or any other amendment or waiver of or
      any
      consent to departure from any Transaction Document, including, without
      limitation, any increase in the Guaranteed Obligations resulting from the
      extension of additional credit to any Transaction
      Party
      or
      otherwise;

     

    (iii) any
      taking, exchange, release or non-perfection of any Collateral (as defined in
      the
      Security Agreement), or any taking, release or amendment or waiver of or consent
      to departure from any other guaranty, for all or any of the Guaranteed
      Obligations;

     

    (iv) any
      change, restructuring or termination of the corporate, limited liability company
      or partnership structure or existence of any Transaction
      Party;
      or

     

    (v) any
      other
      circumstance (including any statute of limitations) or any existence of or
      reliance on any representation by the Collateral Agent that might otherwise
      constitute a defense available to, or a discharge of, any Transaction Party
      or
      any other guarantor or surety.

     

    This
      Guaranty shall continue to be effective or be reinstated, as the case may be,
      if
      at any time any payment of any of the Guaranteed Obligations is rescinded or
      must otherwise be returned by the Collateral
      Agent
      or any
      other Person upon the insolvency, bankruptcy or reorganization of any
      Transaction Party or otherwise, all as though such payment had not been
      made.

     

    
      
        
        

      

      
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    (b)
       This
      Guaranty is a continuing guaranty and shall (i) remain in full force and effect
      until the indefeasible cash payment in full of the Guaranteed Obligations (other
      than inchoate indemnity obligations) and/or complete conversion of all of the
      Company's obligations under the Notes to equity securities of the Company and
      payment of all other amounts payable under this Guaranty (other than inchoate
      indemnity obligations) and shall not terminate for any reason prior to the
      Maturity Date of the Notes (other than payment in full of the Notes and/or
      complete conversion of all of the Company's obligations under the Notes to
      equity securities of the Company) and (ii) be binding upon each Guarantor and
      its respective successors and assigns. This Guaranty shall inure to the benefit
      of and be enforceable by the Collateral
      Agent
      and its
      successors, and permitted pledgees, transferees and assigns. Without limiting
      the generality of the foregoing sentence, the Collateral Agent or any Buyer
      may
      pledge, assign or otherwise transfer all or any portion of its rights and
      obligations under and subject to the terms of any Transaction Document to any
      other Person, and such other Person shall thereupon become vested with all
      the
      benefits in respect thereof granted to such Collateral Agent or Buyer herein
      or
      otherwise, in each case as provided in the Securities Purchase Agreement or
      such
      Transaction Document. Notwithstanding the foregoing and for the avoidance of
      doubt, this Guaranty will expire and each Guarantor will be released from its
      obligation hereunder upon the earlier of payment in full and/or complete
      conversion of the Obligations to equity securities of the Company.

     

    SECTION
      4. Waivers.
      To the
      extent permitted by applicable law, each Guarantor hereby
      waives promptness, diligence, notice of acceptance and any other notice with
      respect to any of the Guaranteed Obligations and this Guaranty and any
      requirement that the Collateral Agent exhaust any right or take any action
      against any Transaction Party or any other Person or any Collateral. Each
      Guarantor acknowledges that it will receive direct and indirect benefits from
      the financing arrangements contemplated herein and that the waiver set forth
      in
      this Section 4
      is knowingly made in contemplation of such benefits. The Guarantors hereby
      waive
      any right to revoke this Guaranty, and acknowledge that this Guaranty is
      continuing in nature and applies to all Guaranteed Obligations, whether existing
      now or in the future.

     

    SECTION
      5. Subrogation.
      No
      Guarantor may exercise any rights that it may now or hereafter acquire against
      any Transaction Party or any other guarantor that arise from the existence,
      payment, performance or enforcement of any Guarantor's obligations under this
      Guaranty, including, without limitation, any right of subrogation,
      reimbursement, exoneration, contribution or indemnification and any right to
      participate in any claim or remedy of the Collateral Agent against any
      Transaction Party or any other guarantor or any Collateral, whether or not
      such
      claim, remedy or right arises in equity or under contract, statute or common
      law, including, without limitation, the right to take or receive from any
      Transaction Party or any other guarantor, directly or indirectly, in cash or
      other property or by set-off or in any other manner, payment or security solely
      on account of such claim, remedy or right, unless and until all of the
      Guaranteed Obligations (other than inchoate indemnity obligations) and all
      other
      amounts payable under this Guaranty (other than inchoate indemnity obligations)
      shall have indefeasibly
      been
      paid in full in cash and/or completely converted to equity securities of the
      Company. If any amount shall be paid to a Guarantor in violation of the
      immediately preceding sentence at any time prior to the later of the payment
      in
      full in cash and/or complete conversion to equity securities of the Company
      of
      the Guaranteed Obligations and all other amounts payable under this Guaranty,
      such amount shall be held in trust for the benefit of the Collateral Agent
      and
      shall forthwith be paid to the Collateral Agent to be credited and applied
      to
      the Guaranteed Obligations and all other amounts payable under this Guaranty,
      whether matured or unmatured, in accordance with the terms of the Transaction
      Document, or to be held as Collateral for any Guaranteed Obligations or other
      amounts payable under this Guaranty thereafter arising. If (a) any
      Guarantor shall make payment to the Collateral Agent of all or any part of
      the
      Guaranteed Obligations, and (b) all of the Guaranteed Obligations (other
      than inchoate indemnity obligations) and all other amounts payable under this
      Guaranty (other than inchoate indemnity obligations) shall indefeasibly
      be
      paid in full in cash and/or completely converted to equity securities of the
      Company, the Collateral Agent will, at such Guarantor's request and expense,
      execute and deliver to such Guarantor appropriate documents, without recourse
      and without representation or warranty, necessary to evidence the transfer
      by
      subrogation to such Guarantor of an interest in the Guaranteed Obligations
      resulting from such payment by such Guarantor.

     

    
      
        
        

      

      
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    SECTION
      6. Representations,
      Warranties and Covenants.
      

     

    (a)
       Each
      Guarantor hereby represents and warrants as of the date first written above
      as
      follows:

     

    (i) The
      Guarantor (A) is a corporation, limited liability company or limited partnership
      duly organized, validly existing and in good standing under the laws of the
      jurisdiction of its organization as set forth on the signature pages hereto,
      (B)
      has all requisite corporate, limited liability company or limited partnership
      power and authority to conduct its business as now conducted and as presently
      contemplated and to execute and deliver this Guaranty and each other Transaction
      Document to which the
      Guarantor
      is a
      party, and to consummate the transactions contemplated hereby and thereby and
      (C) is duly qualified to do business and is in good standing in each
      jurisdiction in which the character of the properties owned or leased by it
      or
      in which the transaction of its business makes such qualification necessary
      except where the failure to be so qualified would not result in a Material
      Adverse Effect.

     

    (ii) The
      execution, delivery and performance by the
      Guarantor
      of this
      Guaranty and each other Transaction Document to which the
      Guarantor
      is a
      party (A) have been duly authorized by all necessary corporate, limited
      liability company or limited partnership action, (B) do not and will not
      contravene its charter or by-laws, its limited liability company or operating
      agreement or its certificate of partnership or partnership agreement, as
      applicable, or any applicable law or any contractual restriction binding on
      the
      Guarantor
      or its
      properties do not and will not result in or require the creation of any lien
      (other than pursuant to any Transaction Document) upon or with respect to any
      of
      its properties, and (C) do not and will not result in any default,
      noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal
      of
      any material permit, license, authorization or approval applicable to it or
      its
      operations or any of its properties.

     

    
      
        
        

      

      
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    (iii) No
      authorization or approval or other action by, and no notice to or filing with,
      any governmental authority is required in connection with the due execution,
      delivery and performance by the
      Guarantor
      of this
      Guaranty or any of the other Transaction Documents to which the
      Guarantor
      is a
      party (other than expressly provided for in any of the Transaction
      Documents).

     

    (iv) Each
      of
      this Guaranty and the other Transaction Documents to which the
      Guarantor
      is or
      will be a party, when delivered, will be, a legal, valid and binding obligation
      of the
      Guarantor,
      enforceable against the
      Guarantor
      in
      accordance with its terms, except as may be limited by applicable bankruptcy,
      insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or
      other similar laws and equitable principles (regardless of whether enforcement
      is sought in equity or at law). 

     

    (v) There
      is
      no pending or, to the best knowledge of the
      Guarantor,
      threatened action, suit or proceeding against the
      Guarantor
      or to
      which any of the properties of the
      Guarantor
      is
      subject, before any court or other governmental authority or any arbitrator
      that
      (A) if adversely determined, could reasonably be expected to have a
      Material Adverse Effect or (B) relates to this Guaranty or any of the other
      Transaction Documents to which the
      Guarantor
      is a
      party or any transaction contemplated hereby or thereby. 

     

    (vi) The
      Guarantor (A) has read and understands the terms and conditions of the
      Securities Purchase Agreement and the other Transaction Documents, and
      (B) now has and will continue to have independent means of obtaining
      information concerning the affairs, financial condition and business of the
      Company and the other Transaction Parties, and has no need of, or right to
      obtain from any Buyer, any credit or other information concerning the affairs,
      financial condition or business of the Company or the other Transaction Parties
      that may come under the control of any Buyer.

     

    (b)
       The
      Guarantor covenants and agrees that until indefeasible full and final payment
      of
      the Guaranteed Obligations and/or complete conversion of all of the Company's
      obligations under the Notes to equity securities of the Company, it will comply
      with each of the covenants (except to the extent applicable only to a public
      company) which are set forth in Section 4
      of the Securities Purchase Agreement as if the Guarantor were a party
      thereto.

     

    SECTION
      7. Right
      of Set-off.
      Upon
      the occurrence and during the continuance of any Event of Default, any
      Buyer may, and is hereby authorized to, at any time and from time to time,
      without notice to the Guarantors (any such notice being expressly waived by
      each
      Guarantor) and to the fullest extent permitted by law, set-off and apply any
      and
      all deposits (general or special, time or demand, provisional or final) at
      any
      time held and other indebtedness at any time owing by any Buyer to or for the
      credit or the account of any Guarantor against any and all obligations of the
      Guarantors now or hereafter existing under this Guaranty or any other
      Transaction Document, irrespective of whether or not any Buyer shall have made
      any demand under this Guaranty or any other Transaction Document and although
      such obligations may be contingent or unmatured. Each Buyer agrees to notify
      the
      relevant Guarantor promptly after any such set-off and application made by
      such
      Buyer, provided that the failure to give such notice shall not affect the
      validity of such set-off and application. The rights of any Buyer under this
      Section 7
      are in
      addition to other rights and remedies (including, without limitation, other
      rights of set-off) which such Buyer may have under this Guaranty or any other
      Transaction Document in law or otherwise.

     

    
      
        
        

      

      
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    SECTION
      8. Notices,
      Etc.
      All
      notices and other communications provided for hereunder shall be in writing
      and
      shall be mailed, telecopied or delivered, if to any Guarantor that is a Foreign
      Subsidiary (as defined in the Security Agreement), to the address of the Company
      set forth on the signature page hereto, if to any Guarantor that is not a
      Foreign Subsidiary, to it at its address set forth on the signature page hereto,
      or if to the Collateral Agent or any Buyer, to it at its respective address
      set
      forth in the Securities Purchase Agreement; or as to any Person at such other
      address as shall be designated by such Person in a written notice to such other
      Person complying as to delivery with the terms of this Section 8.
      All
      such notices and other communications shall be effective (i) if mailed (by
      certified mail, postage prepaid and return receipt requested), when received
      or
      three Business Days after deposited in the mails, whichever occurs first; (ii)
      if telecopied, when transmitted and confirmation is received, provided same
      is
      on a Business Day and, if not, on the next Business Day; or (iii) if delivered
      by hand, upon delivery, provided same is on a Business Day and, if not, on
      the
      next Business Day. For the avoidance of doubt, the Foreign Subsidiaries, as
      Guarantors, hereby appoint the Company as its agent for receipt of service
      of
      process and all notices and other communications in the United States at the
      address specified below.

     

    SECTION
      9. CONSENT
      TO JURISDICTION; SERVICE OF PROCESS AND VENUE.
      ANY
      LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER
      TRANSACTION DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
      IN
      THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
      DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
      GUARANTOR HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY
      AND
      UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.
      EACH
      GUARANTOR HEREBY IRREVOCABLY APPOINTS THE SECRETARY OF STATE OF THE STATE OF
      NEW
      YORK AS ITS AGENT FOR SERVICE OF PROCESS IN RESPECT OF ANY SUCH ACTION OR
      PROCEEDING AND FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF
      ANY
      OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
      OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT ITS
      ADDRESS FOR NOTICES AS SET FORTH ON THE SIGNATURE PAGE HERETO AND TO THE
      SECRETARY OF STATE OF THE STATE OF NEW YORK, SUCH SERVICE TO BECOME EFFECTIVE
      TEN (10) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF
      THE
      COLLATERAL AGENT TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
      OR
      TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST EACH GUARANTOR IN
      ANY
      OTHER JURISDICTION. ANY GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
      TO
      THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
      HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT
      IN
      ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS
      BEEN
      BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT ANY GUARANTOR HAS OR
      HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY
      LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
      ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
      PROPERTY, EACH GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT
      OF
      ITS OBLIGATIONS UNDER THIS GUARANTY AND THE OTHER TRANSACTION
      DOCUMENTS.

     

    
      
        
        

      

      
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    SECTION
      10. WAIVER
      OF JURY TRIAL, ETC.
      EACH
      GUARANTOR HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
      OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS GUARANTY OR THE OTHER
      TRANSACTION DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT,
      DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED
      IN
      CONNECTION HEREWITH OR THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP
      EXISTING IN CONNECTION WITH THIS GUARANTY OR THE OTHER TRANSACTION DOCUMENTS,
      AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM SHALL BE TRIED
      BEFORE A COURT AND NOT BEFORE A JURY. EACH GUARANTOR CERTIFIES THAT NO OFFICER,
      REPRESENTATIVE, AGENT OR ATTORNEY OF THE COLLATERAL AGENT OR ANY BUYER HAS
      REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY BUYER WOULD NOT, IN THE EVENT
      OF
      ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS.
      EACH GUARANTOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT
      FOR THE COLLATERAL
      AGENT
      ENTERING
      INTO THIS AGREEMENT.

     

    SECTION
      11. Taxes.
      

     

    (a)
       All
      payments made by any Guarantor hereunder or under any other Transaction Document
      shall be made in accordance with the terms of the respective Transaction
      Document and shall be made without set-off, counterclaim, deduction or other
      defense. All such payments shall be made free and clear of and without deduction
      for any present or future taxes, levies, imposts, deductions, charges or
      withholdings, and all liabilities with respect thereto, excluding
      taxes
      imposed on the net income of any Buyer by the jurisdiction in which such Buyer
      is organized or where it has its principal lending office (all such nonexcluded
      taxes, levies, imposts, deductions, charges, withholdings and liabilities,
      collectively or individually, "Taxes").
      If
      any Guarantor shall be required to deduct or to withhold any Taxes from or
      in
      respect of any amount payable hereunder or under any other Transaction
      Document:

     

    (i) the
      amount so payable shall be increased to the extent necessary so that after
      making all required deductions and withholdings (including Taxes on amounts
      payable to any Buyer pursuant to this sentence) each Buyer receives an amount
      equal to the sum it would have received had no such deduction or withholding
      been made, 

     

    (ii) such
      Guarantor shall make such deduction or withholding,

     

    (iii) such
      Guarantor shall pay the full amount deducted or withheld to the relevant
      taxation authority in accordance with applicable law, and 

     

    
      
        
        

      

      
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    (iv) as
      promptly as possible thereafter, such Guarantor shall send the Buyers an
      official receipt (or, if an official receipt is not available, such other
      documentation as shall be satisfactory to the Collateral Agent, as the case
      may
      be) showing payment.  In addition, each Guarantor agrees to pay any present
      or future stamp or documentary taxes or any other excise or property taxes,
      charges or similar levies that arise from any payment made hereunder or from
      the
      execution, delivery, registration or enforcement of, or otherwise with respect
      to, this Agreement or any other Transaction Document (collectively,
      "Other
      Taxes").

     

    (b)
       Each
      Guarantor hereby indemnifies and agrees to hold the Collateral Agent and each
      Buyer (each an "Indemnified
      Party")
      harmless from and against Taxes or Other Taxes (including, without limitation,
      any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
      this Section 11)
      paid by
      any Indemnified Party  as a result of any payment made hereunder or from
      the execution, delivery, registration or enforcement of, or otherwise with
      respect to, this Agreement or any other Transaction Document, and any liability
      (including penalties, interest and expenses for nonpayment, late payment or
      otherwise) arising therefrom or with respect thereto, whether or not such Taxes
      or Other Taxes were correctly or legally asserted.  This indemnification
      shall be paid within 30 days from the date on which the Collateral Agent or
      such
      Buyer makes written demand therefor, which demand shall identify the nature
      and
      amount of such Taxes or Other Taxes.

     

    (c)
       If
      any
      Guarantor fails to perform any of its obligations under this Section 11,
      such
      Guarantor shall indemnify the Collateral Agent and each Buyer for any taxes,
      interest or penalties that may become payable as a result of any such failure.
      The obligations of the Guarantors under this Section 11
      shall
      survive the termination of this Guaranty and the payment of the Obligations
      and
      all other amounts payable hereunder.

     

    SECTION
      12. Miscellaneous.
      

     

    (a)
       Each
      Guarantor will make each payment hereunder in lawful money of the United States
      of America and in immediately available funds to each Buyer, at such address
      specified by such Buyer from time to time by notice to the
      Guarantors.

     

    (b)
       No
      amendment or waiver of any provision of this Guaranty and no consent to any
      departure by any Guarantor therefrom shall in any event be effective unless
      the
      same shall be in writing and signed by each Guarantor and each Buyer, and then
      such waiver or consent shall be effective only in the specific instance and
      for
      the specific purpose for which given.

     

    (c)
       No
      failure on the part of any Buyer to exercise, and no delay in exercising, any
      right hereunder or under any other Transaction Document shall operate as a
      waiver thereof, nor shall any single or partial exercise of any right hereunder
      or under any Transaction Document preclude any other or further exercise thereof
      or the exercise of any other right. The rights and remedies of the Collateral
      Agent and the Buyers provided herein and in the other Transaction Documents
      are
      cumulative and are in addition to, and not exclusive of, any rights or remedies
      provided by law. The rights of the Collateral Agent and the Buyers under any
      Transaction Document against any party thereto are not conditional or contingent
      on any attempt by the Collateral Agent or any Buyer to exercise any of their
      respective rights under any other Transaction Document against such party or
      against any other Person.

     

    
      
        
        

      

      
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          8 -

        
          

        

      

      
        
        

      

    

     

    (d)
       Any
      provision of this Guaranty that is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining portions
      hereof or affecting the validity or enforceability of such provision in any
      other jurisdiction.

     

    (e)
       This
      Guaranty shall (i) be binding on each Guarantor and its respective successors
      and assigns, and (ii) inure, together with all rights and remedies of the
      Collateral Agent hereunder, to the benefit of the Collateral Agent, the Buyers
      and their respective successors, transferees and assigns. Without limiting
      the
      generality of clause (ii) of the immediately preceding sentence, the Collateral
      Agent and any Buyer may assign or otherwise transfer its rights and obligations
      under the Securities Purchase Agreement or any other Transaction Document to
      any
      other Person in accordance with the terms thereof, and such other Person shall
      thereupon become vested with all of the benefits in respect thereof granted
      to
      the Collateral Agent or such Buyer, as the case may be, herein or otherwise.
      None of the rights or obligations of any Guarantor hereunder may be assigned
      or
      otherwise transferred without the prior written consent of each
      Buyer.

     

    (f)
       This
      Guaranty reflects the entire understanding of the transaction contemplated
      hereby and shall not be contradicted or qualified by any other agreement, oral
      or written, entered into before the date hereof.

     

    (g)
       Section
      headings herein are included for convenience of reference only and shall not
      constitute a part of this Agreement for any other purpose.

     

    (h)
       THIS
      GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
      STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN
      WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

     

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      OF THIS PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -
          9 -

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by
      its
      respective duly authorized officer, as of the date first above
      written.

     

    
      	 	 	 
	 	DIGITALFX NETWORKS,
              LLC
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:

	 	
              Title:
                

            

    

    
       

      
        	 	 	 
	 	DIGITALFX SOLUTIONS,
                LLC
	 
 	 
 	 
 
	 	By:  	 
	 	
                
Name:

	 	
                Title:
                  

              

      

      
         

        
          	 	 	 
	 	VMDIRECT L.L.C.
	 
 	 
 	 
 
	 	By:  	 
	 	
                  
Name:

	 	
                  Title:
                    

                

        

         

         

         

         

         

        GuarantyUnassociated Document

    

      SECURITIES
        PURCHASE AGREEMENT

       

      SECURITIES
        PURCHASE AGREEMENT (this “Agreement”),
        dated
        as of November 27, 2007, by and among Grant Life Sciences, Inc., a Nevada
        corporation, with headquarters located at 1787 E. Fort Union Blvd., Suite
        202,
        Salt Lake City, UT 84121 (the “Company”),
        and
        each of the purchasers set forth on the signature pages hereto (the
“Buyers”).

       

      WHEREAS:
        

       

      A. The
        Company and the Buyers are executing and delivering this Agreement in reliance
        upon the exemption from securities registration afforded by the rules and
        regulations as promulgated by the United States Securities and Exchange
        Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933
        Act”);

       

      B. Buyers
        desire to purchase and the Company desires to issue and sell, upon the terms
        and
        conditions set forth in this Agreement (i) 8%
        secured convertible notes of the Company, in the form attached hereto as
        Exhibit
        “A”,
        in the
        aggregate principal amount of Four Hundred Thousand Dollars ($400,000) (together
        with any note(s) issued in replacement thereof or as a dividend thereon or
        otherwise with respect thereto in accordance with the terms thereof, the
        “Notes”),
        convertible into shares of common stock, par value $.001 per share, of the
        Company (the “Common
        Stock”),
        upon
        the terms and subject to the limitations and conditions set forth in such
        Notes
        and (ii) warrants,
        in the form attached hereto as Exhibit
        “B”,
        to
        purchase 8,000,000 shares of Common Stock (the “Warrants”).

       

      C. Each
        Buyer wishes to purchase, upon the terms and conditions stated in this
        Agreement, such principal amount of Notes and number of Warrants as is set
        forth
        immediately below its name on the signature pages hereto; and

       

      D. Contemporaneous
        with the execution and delivery of this Agreement, the parties hereto are
        executing and delivering a Registration Rights Agreement, in the form attached
        hereto as Exhibit
        “C”
        (the
“Registration
        Rights Agreement”),
        pursuant to which the Company has agreed to provide certain registration
        rights
        under the 1933 Act and the rules and regulations promulgated thereunder,
        and
        applicable state securities laws.

       

      NOW
        THEREFORE,
        the
        Company and each of the Buyers severally (and not jointly) hereby agree as
        follows:

       

      1. PURCHASE
        AND SALE OF NOTES AND WARRANTS.

       

      a. Purchase
        of Notes and Warrants.
        On the
        Closing Date (as defined below), the Company shall issue and sell to each
        Buyer
        and each Buyer severally agrees to purchase from the Company such principal
        amount of Notes and number of Warrants as is set forth immediately below
        such
        Buyer’s name on the signature pages hereto.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      b. Form
        of Payment.
        On the
        Closing Date (as defined below), (i) each
        Buyer shall pay the purchase price for the Notes and the Warrants to be issued
        and sold to it at the Closing (as defined below) (the “Purchase
        Price”)
        by
        wire transfer of immediately available funds to the Company, in accordance
        with
        the Company’s written wiring instructions, against delivery of the Notes in the
        principal amount equal to the Purchase Price and the number of Warrants as
        is
        set forth immediately below such Buyer’s name on the signature pages hereto, and
(ii) the
        Company shall deliver such Notes and Warrants duly executed on behalf of
        the
        Company, to such Buyer, against delivery of such Purchase Price. 

       

      c. Closing
        Date.
        Subject
        to the satisfaction (or written waiver) of the conditions thereto set forth
        in
        Section 6 and Section 7 below, the date and time of the issuance and sale
        of the
        Notes and the Warrants pursuant to this Agreement (the “Closing
        Date”)
        shall
        be 12:00 noon, Eastern Standard Time on November 27, 2007, or such other
        mutually agreed upon time. The closing of the transactions contemplated by
        this
        Agreement (the “Closing”)
        shall
        occur on the Closing Date at such location as may be agreed to by the
        parties.

       

      2. BUYERS’
        REPRESENTATIONS AND WARRANTIES.
        Each
        Buyer severally (and not jointly) represents and warrants to the Company
        solely
        as to such Buyer that:

       

      a. Investment
        Purpose.
        As of
        the date hereof, the Buyer is purchasing the Notes and the shares of Common
        Stock issuable upon conversion of or otherwise pursuant to the Notes (including,
        without limitation, such additional shares of Common Stock, if any, as are
        issuable (i) on
        account of interest on the Notes, (ii) as
        a result of the events described in Sections 1.3 and 1.4(g) of the Notes
        and
        Section 2(c) of the Registration Rights Agreement or (iii) in
        payment of the Standard Liquidated Damages Amount (as defined in Section
        2(f)
        below) pursuant to this Agreement, such shares of Common Stock being
        collectively referred to herein as the “Conversion
        Shares”)
        and
        the Warrants and the shares of Common Stock issuable upon exercise thereof
        (the
“Warrant
        Shares”
and,
        collectively with the Notes, Warrants and Conversion Shares, the “Securities”)
        for
        its own account and not with a present view towards the public sale or
        distribution thereof, except pursuant to sales registered or exempted from
        registration under the 1933 Act; provided,
        however,
        that by
        making the representations herein, the Buyer 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 1933 Act.

       

      b. Accredited
        Investor Status.
        The
        Buyer is an “accredited investor” as that term is defined in Rule 501(a) of
        Regulation D (an “Accredited
        Investor”).

       

      c. Reliance
        on Exemptions.
        The
        Buyer understands that the Securities are being offered and sold to it in
        reliance upon specific exemptions from the registration requirements of United
        States federal and state securities laws and that the Company is relying
        upon
        the truth and accuracy of, and the Buyer’s compliance with, the representations,
        warranties, agreements, acknowledgments and understandings of the Buyer set
        forth herein in order to determine the availability of such exemptions and
        the
        eligibility of the Buyer to acquire the Securities.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      d. Information.
        The
        Buyer and its advisors, if any, have been, and for so long as the Notes and
        Warrants remain outstanding will continue to be, furnished with all materials
        relating to the business, finances and operations of the Company and materials
        relating to the offer and sale of the Securities which have been requested
        by
        the Buyer or its advisors. The Buyer and its advisors, if any, have been,
        and
        for so long as the Notes and Warrants remain outstanding will continue to
        be,
        afforded the opportunity to ask questions of the Company. Notwithstanding
        the
        foregoing, the Company has not disclosed to the Buyer any material nonpublic
        information and will not disclose such information unless such information
        is
        disclosed to the public prior to or promptly following such disclosure to
        the
        Buyer. Neither such inquiries nor any other due diligence investigation
        conducted by Buyer or any of its advisors or representatives shall modify,
        amend
        or affect Buyer’s right to rely on the Company’s representations and warranties
        contained in Section 3 below. The Buyer understands that its investment in
        the
        Securities involves a significant degree of risk.

       

      e. Governmental
        Review.
        The
        Buyer understands that no United States federal or state agency or any other
        government or governmental agency has passed upon or made any recommendation
        or
        endorsement of the Securities.

       

      f. Transfer
        or Re-sale.
        The
        Buyer understands that (i) except
        as provided in the Registration Rights Agreement, the sale or re-sale of
        the
        Securities has not been and is not being registered under the 1933 Act or
        any
        applicable state securities laws, and the Securities may not be transferred
        unless (a) the
        Securities are sold pursuant to an effective registration statement under
        the
        1933 Act, (b) the
        Buyer shall have delivered to the Company an opinion of counsel reasonably
        acceptable to the Company that shall be in form, substance and scope customary
        for opinions of counsel in comparable transactions to the effect that the
        Securities to be sold or transferred may be sold or transferred pursuant
        to an
        exemption from such registration, which opinion shall be accepted by the
        Company, (c) the
        Securities are sold or transferred to an “affiliate” (as defined in Rule 144
        promulgated under the 1933 Act (or a successor rule) (“Rule
        144”))
        of
        the Buyer who agrees to sell or otherwise transfer the Securities only in
        accordance with this Section 2(f) and who is an Accredited Investor,
(d) the
        Securities are sold pursuant to Rule 144, or (e) the
        Securities are sold pursuant to Regulation S under the 1933 Act (or a successor
        rule) (“Regulation
        S”),
        and
        the Buyer shall have delivered to the Company an opinion of counsel that
        shall
        be in form, substance and scope customary for opinions of counsel in corporate
        transactions, which opinion shall be accepted by the Company; (ii) any sale
        of
        such Securities made in reliance on Rule 144 may be made only in accordance
        with
        the terms of said Rule and further, if said Rule is not applicable, any re-sale
        of such Securities under circumstances in which the seller (or the person
        through whom the sale is made) may be deemed to be an underwriter (as that
        term
        is defined in the 1933 Act) may require compliance with some other exemption
        under the 1933 Act or the rules and regulations of the SEC thereunder; and
        (iii)
        neither the Company nor any other person is under any obligation to register
        such Securities under the 1933 Act or any state securities laws or to comply
        with the terms and conditions of any exemption thereunder (in each case,
        other
        than pursuant to the Registration Rights Agreement). Notwithstanding the
        foregoing or anything else contained herein to the contrary, the Securities
        may
        be pledged as collateral in connection with a bona fide
        margin
        account or other lending arrangement. In the event that the Company does
        not
        accept the opinion of counsel provided by the Buyer with respect to the transfer
        of Securities pursuant to an exemption from registration, such as Rule 144
        or
        Regulation S, within three (3) business days of delivery of the opinion to
        the
        Company, the Company shall pay to the Buyer liquidated damages of three percent
        (3%) of the outstanding amount of the Notes per month plus accrued and unpaid
        interest on the Notes, prorated for partial months, in cash or shares at
        the
        option of the Company (“Standard
        Liquidated Damages Amount”).
        If
        the Company elects to be pay the Standard Liquidated Damages Amount in shares
        of
        Common Stock, such shares shall be issued at the Conversion Price at the
        time of
        payment.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      g. Legends.
        The
        Buyer understands that the Notes and the Warrants and, until such time as
        the
        Conversion Shares and Warrant Shares have been registered under the 1933
        Act as
        contemplated by the Registration Rights Agreement or otherwise may be sold
        pursuant to Rule 144 or Regulation S without any restriction as to the number
        of
        securities as of a particular date that can then be immediately sold, the
        Conversion Shares and Warrant Shares may bear a restrictive legend in
        substantially the following form (and a stop-transfer order may be placed
        against transfer of the certificates for such Securities):

       

      “The
        securities represented by this certificate have not been registered under
        the
        Securities Act of 1933, as amended. The securities may not be sold, transferred
        or assigned in the absence of an effective registration statement for the
        securities under said Act, or an opinion of counsel, in form, substance and
        scope customary for opinions of counsel in comparable transactions, that
        registration is not required under said Act or unless sold pursuant to Rule
        144
        or Regulation S under said Act.”

       

      The
        legend set forth above shall be removed and the Company shall issue a
        certificate without such legend to the holder of any Security upon which
        it is
        stamped, if, unless otherwise required by applicable state securities laws,
        (a)
        such Security is registered for sale under an effective registration statement
        filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or
        Regulation S without any restriction as to the number of securities as of
        a
        particular date that can then be immediately sold, or (b) such holder provides
        the Company with an opinion of counsel, in form, substance and scope customary
        for opinions of counsel in comparable transactions which opinion shall be
        reasonably acceptable to the Company’s counsel, to the effect that a public sale
        or transfer of such Security may be made without registration under the 1933
        Act, which opinion shall be accepted by the Company so that the sale or transfer
        is effected or (c) such holder provides the Company with reasonable assurances
        that such Security can be sold pursuant to Rule 144 or Regulation S. The
        Buyer
        agrees to sell all Securities, including those represented by a certificate(s)
        from which the legend has been removed, in compliance with applicable prospectus
        delivery requirements, if any.

       

      h. Authorization;
        Enforcement.
        This
        Agreement and the Registration Rights Agreement have been duly and validly
        authorized. This Agreement has been duly executed and delivered on behalf
        of the
        Buyer, and this Agreement constitutes, and upon execution and delivery by
        the
        Buyer of the Registration Rights Agreement, such agreement will constitute,
        valid and binding agreements of the Buyer enforceable in accordance with
        their
        terms.

       

      i. Residency.
        The
        Buyer is a resident of the jurisdiction set forth immediately below such
        Buyer’s
        name on the signature pages hereto. 

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      3. REPRESENTATIONS
        AND WARRANTIES OF THE COMPANY.
        The
        Company represents and warrants to each Buyer that:

       

      a. Organization
        and Qualification.
        The
        Company and each of its Subsidiaries (as defined below), if any, is a
        corporation duly organized, validly existing and in good standing under the
        laws
        of the jurisdiction in which it is incorporated, with full power and authority
        (corporate and other) to own, lease, use and operate its properties and to
        carry
        on its business as and where now owned, leased, used, operated and conducted.
        Schedule
        3(a)
        sets
        forth a list of all of the Subsidiaries of the Company and the jurisdiction
        in
        which each is incorporated. The Company and each of its Subsidiaries is duly
        qualified as a foreign corporation to do business and is in good standing
        in
        every jurisdiction in which its ownership or use of property or the nature
        of
        the business conducted by it makes such qualification necessary except where
        the
        failure to be so qualified or in good standing would not have a Material
        Adverse
        Effect. “Material
        Adverse Effect”
means
        any material adverse effect on the business, operations, assets, financial
        condition or prospects of the Company or its Subsidiaries, if any, taken
        as a
        whole, or on the transactions contemplated hereby or by the agreements or
        instruments to be entered into in connection herewith. “Subsidiaries”
means
        any corporation or other organization, whether incorporated or unincorporated,
        in which the Company owns, directly or indirectly, any equity or other ownership
        interest.

       

      b. Authorization;
        Enforcement.
        (i) The
        Company has all requisite corporate power and authority to enter into and
        perform this Agreement, the Registration Rights Agreement, the Notes and
        the
        Warrants and to consummate the transactions contemplated hereby and thereby
        and
        to issue the Securities, in accordance with the terms hereof and thereof,
        (ii)
        the execution and delivery of this Agreement, the Registration Rights Agreement,
        the Notes and the Warrants by the Company and the consummation by it of the
        transactions contemplated hereby and thereby (including without limitation,
        the
        issuance of the Notes and the Warrants and the issuance and reservation for
        issuance of the Conversion Shares and Warrant Shares issuable upon conversion
        or
        exercise thereof) have been duly authorized by the Company’s Board of Directors
        and no further consent or authorization of the Company, its Board of Directors,
        or its shareholders is required, (iii) this Agreement has been duly executed
        and
        delivered by the Company by its authorized representative, and such authorized
        representative is the true and official representative with authority to
        sign
        this Agreement and the other documents executed in connection herewith and
        bind
        the Company accordingly, and (iv) this Agreement constitutes, and upon execution
        and delivery by the Company of the Registration Rights Agreement, the Notes
        and
        the Warrants, each of such instruments will constitute, a legal, valid and
        binding obligation of the Company enforceable against the Company in accordance
        with its terms.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      c. Capitalization.
        As of
        the date hereof, the authorized capital stock of the Company consists of
        (i)
        750,000,000 shares of Common Stock, of which 307,833,746 shares are issued
        and
        outstanding, 38,445,867 shares are reserved for issuance pursuant to the
        Company’s stock option plans, 78,227,889 shares are reserved for issuance
        pursuant to securities (other than the Notes and the Warrants) exercisable
        for,
        or convertible into or exchangeable for shares of Common Stock and 45,037,037
        shares are reserved for issuance upon conversion of the Notes and exercise
        of
        the Warrants (subject to adjustment pursuant to the Company’s covenant set forth
        in Section 4(h) below); and (ii) 20,000,000 shares of preferred stock, of
        which
        0 shares are issued and outstanding. All of such outstanding shares of capital
        stock are, or upon issuance will be, duly authorized, validly issued, fully
        paid
        and nonassessable. No shares of capital stock of the Company are subject
        to
        preemptive rights or any other similar rights of the shareholders of the
        Company
        or any liens or encumbrances imposed through the actions or failure to act
        of
        the Company. Except as disclosed in Schedule
        3(c),
        as of
        the effective date of this Agreement, (i) there are no outstanding options,
        warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal,
        agreements, understandings, claims or other commitments or rights of any
        character whatsoever relating to, or securities or rights convertible into
        or
        exchangeable for any shares of capital stock of the Company or any of its
        Subsidiaries, or arrangements by which the Company or any of its Subsidiaries
        is
        or may become bound to issue additional shares of capital stock of the Company
        or any of its Subsidiaries, (ii) there are no agreements or arrangements
        under
        which the Company or any of its Subsidiaries is obligated to register the
        sale
        of any of its or their securities under the 1933 Act (except the Registration
        Rights Agreement) and (iii) there are no anti-dilution or price adjustment
        provisions contained in any security issued by the Company (or in any agreement
        providing rights to security holders) that will be triggered by the issuance
        of
        the Notes, the Warrants, the Conversion Shares or Warrant Shares. The Company
        has furnished to the Buyer true and correct copies of the Company’s Articles of
        Incorporation as in effect on the date hereof (“Articles
        of Incorporation”),
        the
        Company’s By-laws, as in effect on the date hereof (the “By-laws”),
        and
        the terms of all securities convertible into or exercisable for Common Stock
        of
        the Company and the material rights of the holders thereof in respect thereto.
        The Company shall provide the Buyer with a written update of this representation
        signed by an executive officer of the Company on behalf of the Company as
        of the
        Closing Date.

       

      d. Issuance
        of Shares.
        The
        Conversion Shares and Warrant Shares are duly authorized and reserved for
        issuance and, upon conversion of the Notes and exercise of the Warrants in
        accordance with their respective terms, will be validly issued, fully paid
        and
        non-assessable, and free from all taxes, liens, claims and encumbrances with
        respect to the issue thereof and shall not be subject to preemptive rights
        or
        other similar rights of shareholders of the Company and will not impose personal
        liability upon the holder thereof.

       

      e. Acknowledgment
        of Dilution.
        The
        Company understands and acknowledges the potentially dilutive effect to the
        Common Stock upon the issuance of the Conversion Shares and Warrant Shares
        upon
        conversion of the Note or exercise of the Warrants. The Company further
        acknowledges that its obligation to issue Conversion Shares and Warrant Shares
        upon conversion of the Notes or exercise of the Warrants in accordance with
        this
        Agreement, the Notes and the Warrants is absolute and unconditional regardless
        of the dilutive effect that such issuance may have on the ownership interests
        of
        other shareholders of the Company.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      f. No
        Conflicts.
        The
        execution, delivery and performance of this Agreement, the Registration Rights
        Agreement, the Notes and the Warrants by the Company and the consummation
        by the
        Company of the transactions contemplated hereby and thereby (including, without
        limitation, the issuance and reservation for issuance of the Conversion Shares
        and Warrant Shares) will not (i) conflict with or result in a violation of
        any
        provision of the Articles of Incorporation or By-laws or (ii) violate or
        conflict with, or result in a breach of any provision of, or constitute a
        default (or an event which with notice or lapse of time or both could become
        a
        default) under, or give to others any rights of termination, amendment,
        acceleration or cancellation of, any agreement, indenture, patent, patent
        license or instrument to which the Company or any of its Subsidiaries is
        a
        party, or (iii) result in a violation of any law, rule, regulation, order,
        judgment or decree (including federal and state securities laws and regulations
        and regulations of any self-regulatory organizations to which the Company
        or its
        securities are subject) applicable to the Company or any of its Subsidiaries
        or
        by which any property or asset of the Company or any of its Subsidiaries
        is
        bound or affected (except for such conflicts, defaults, terminations,
        amendments, accelerations, cancellations and violations as would not,
        individually or in the aggregate, have a Material Adverse Effect). Neither
        the
        Company nor any of its Subsidiaries is in violation of its Articles of
        Incorporation, By-laws or other organizational documents and neither the
        Company
        nor any of its Subsidiaries is in default (and no event has occurred which
        with
        notice or lapse of time or both could put the Company or any of its Subsidiaries
        in default) under, and neither the Company nor any of its Subsidiaries has
        taken
        any action or failed to take any action that would give to others any rights
        of
        termination, amendment, acceleration or cancellation of, any agreement,
        indenture or instrument to which the Company or any of its Subsidiaries is
        a
        party or by which any property or assets of the Company or any of its
        Subsidiaries is bound or affected, except for possible defaults as would
        not,
        individually or in the aggregate, have a Material Adverse Effect. The businesses
        of the Company and its Subsidiaries, if any, are not being conducted, and
        shall
        not be conducted so long as a Buyer owns any of the Securities, in violation
        of
        any law, ordinance or regulation of any governmental entity. Except as
        specifically contemplated by this Agreement and as required under the 1933
        Act
        and any applicable state securities laws, the Company is not required to
        obtain
        any consent, authorization or order of, or make any filing or registration
        with,
        any court, governmental agency, regulatory agency, self regulatory organization
        or stock market or any third party in order for it to execute, deliver or
        perform any of its obligations under this Agreement, the Registration Rights
        Agreement, the Notes or the Warrants in accordance with the terms hereof
        or
        thereof or to issue and sell the Notes and Warrants in accordance with the
        terms
        hereof and to issue the Conversion Shares upon conversion of the Notes and
        the
        Warrant Shares upon exercise of the Warrants. Except as disclosed in
Schedule
        3(f),
        all
        consents, authorizations, orders, filings and registrations which the Company
        is
        required to obtain pursuant to the preceding sentence have been obtained
        or
        effected on or prior to the date hereof. The Company is not in violation
        of the
        listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”)
        and
        does not reasonably anticipate that the Common Stock will be delisted by
        the
        OTCBB in the foreseeable future. The Company and its Subsidiaries are unaware
        of
        any facts or circumstances which might give rise to any of the foregoing.
        

       

      g. SEC
        Documents; Financial Statements.
        Except
        as disclosed in Schedule
        3(g),
        the
        Company has timely filed all reports, schedules, forms, statements and other
        documents required to be filed by it with the SEC pursuant to the reporting
        requirements of the Securities Exchange Act of 1934, as amended (the
“1934
        Act”)
        (all
        of the foregoing filed prior to the date hereof and all exhibits included
        therein and financial statements and schedules thereto and documents (other
        than
        exhibits to such documents) incorporated by reference therein, being hereinafter
        referred to herein as the “SEC
        Documents”).
        The
        Company has delivered to each Buyer true and complete copies of the SEC
        Documents, except for such exhibits and incorporated documents. As of their
        respective dates, the SEC Documents complied in all material respects with
        the
        requirements of the 1934 Act and the rules and regulations of the SEC
        promulgated thereunder applicable to the SEC Documents, and none of the SEC
        Documents, at the time they were filed with the SEC, 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. None of the
        statements made in any such SEC Documents is, or has been, required to be
        amended or updated under applicable law (except for such statements as have
        been
        amended or updated in subsequent filings prior the date hereof). As of their
        respective dates, the financial statements of the Company included in the
        SEC
        Documents complied as to form in all material respects with applicable
        accounting requirements and the published rules and regulations of the SEC
        with
        respect thereto. Such financial statements have been prepared in accordance
        with
        United States generally accepted accounting principles, consistently applied,
        during the periods involved (except (i) as may be otherwise indicated in
        such
        financial statements or the notes thereto, or (ii) in the case of unaudited
        interim statements, to the extent they may not include footnotes or may be
        condensed or summary statements) and fairly present in all material respects
        the
        consolidated financial position of the Company and its consolidated Subsidiaries
        as of the dates thereof and the consolidated results of their operations
        and
        cash flows for the periods then ended (subject, in the case of unaudited
        statements, to normal year-end audit adjustments). Except as set forth in
        the
        financial statements of the Company included in the SEC Documents, the Company
        has no liabilities, contingent or otherwise, other than (i) liabilities incurred
        in the ordinary course of business subsequent to September 30, 2007 and (ii)
        obligations under contracts and commitments incurred in the ordinary course
        of
        business and not required under generally accepted accounting principles
        to be
        reflected in such financial statements, which, individually or in the aggregate,
        are not material to the financial condition or operating results of the
        Company.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

      h. Absence
        of Certain Changes.
        Since
        September 30, 2007, there has been no material adverse change and no material
        adverse development in the assets, liabilities, business, properties,
        operations, financial condition, results of operations or prospects of the
        Company or any of its Subsidiaries.

       

      i. Absence
        of Litigation.
        There
        is no action, suit, claim, proceeding, inquiry or investigation before or
        by any
        court, public board, government agency, self-regulatory organization or body
        pending or, to the knowledge of the Company or any of its Subsidiaries,
        threatened against or affecting the Company or any of its Subsidiaries, or
        their
        officers or directors in their capacity as such, that could have a Material
        Adverse Effect. Schedule
        3(i)
        contains
        a complete list and summary description of any pending or, to the knowledge
        of
        the Company, threatened proceeding against or affecting the Company or any
        of
        its Subsidiaries, without regard to whether it would have a Material Adverse
        Effect. The Company and its Subsidiaries are unaware of any facts or
        circumstances which might give rise to any of the foregoing.

       

      j. Patents,
        Copyrights, etc.
        The
        Company and each of its Subsidiaries owns or possesses the requisite licenses
        or
        rights to use all patents, patent applications, patent rights, inventions,
        know-how, trade secrets, trademarks, trademark applications, service marks,
        service names, trade names and copyrights (“Intellectual
        Property”)
        necessary to enable it to conduct its business as now operated (and, except
        as
        set forth in Schedule
        3(j)
        hereof,
        to the best of the Company’s knowledge, as presently contemplated to be operated
        in the future); there is no claim or action by any person pertaining to,
        or
        proceeding pending, or to the Company’s knowledge threatened, which challenges
        the right of the Company or of a Subsidiary with respect to any Intellectual
        Property necessary to enable it to conduct its business as now operated (and,
        except as set forth in Schedule
        3(j)
        hereof,
        to the best of the Company’s knowledge, as presently contemplated to be operated
        in the future); to the best of the Company’s knowledge, the Company’s or its
        Subsidiaries’ current and intended products, services and processes do not
        infringe on any Intellectual Property or other rights held by any person;
        and
        the Company is unaware of any facts or circumstances which might give rise
        to
        any of the foregoing. The Company and each of its Subsidiaries have taken
        reasonable security measures to protect the secrecy, confidentiality and
        value
        of their Intellectual Property.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

      k. No
        Materially Adverse Contracts, Etc.
        Neither
        the Company nor any of its Subsidiaries is subject to any charter, corporate
        or
        other legal restriction, or any judgment, decree, order, rule or regulation
        which in the judgment of the Company’s officers has or is expected in the future
        to have a Material Adverse Effect. Neither the Company nor any of its
        Subsidiaries is a party to any contract or agreement which in the judgment
        of
        the Company’s officers has or is expected to have a Material Adverse
        Effect.

       

      l. Tax
        Status.
        Except
        as set forth on Schedule
        3(l),
        the
        Company and each of its Subsidiaries has made or filed all federal, state
        and
        foreign income and all other tax returns, reports and declarations required
        by
        any jurisdiction to which it is subject (unless and only to the extent that
        the
        Company and each of its Subsidiaries has set aside on its books provisions
        reasonably adequate for the payment of all unpaid and unreported taxes) and
        has
        paid all taxes and other governmental assessments and charges that are material
        in amount, shown or determined to be due on such returns, reports and
        declarations, except those being contested in good faith and has set aside
        on
        its books provisions reasonably adequate for the payment of all taxes for
        periods subsequent to the periods to which such returns, reports or declarations
        apply. There are no unpaid taxes in any material amount claimed to be due
        by the
        taxing authority of any jurisdiction, and the officers of the Company know
        of no
        basis for any such claim. The Company has not executed a waiver with respect
        to
        the statute of limitations relating to the assessment or collection of any
        foreign, federal, state or local tax. Except as set forth on Schedule
        3(l),
        none of
        the Company’s tax returns is presently being audited by any taxing
        authority.

       

      m. Certain
        Transactions.
        Except
        as set forth on Schedule
        3(m)
        and
        except for arm’s length transactions pursuant to which the Company or any of its
        Subsidiaries makes payments in the ordinary course of business upon terms
        no
        less favorable than the Company or any of its Subsidiaries could obtain from
        third parties and other than the grant of stock options disclosed on
Schedule
        3(c),
        none of
        the officers, directors, or employees of the Company is presently a party
        to any
        transaction with the Company or any of its Subsidiaries (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 corporation, partnership, trust or other entity in which
        any
        officer, director, or any such employee has a substantial interest or is
        an
        officer, director, trustee or partner.

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

      n. Disclosure.
        All
        information relating to or concerning the Company or any of its Subsidiaries
        set
        forth in this Agreement and provided to the Buyers pursuant to Section 2(d)
        hereof and otherwise in connection with the transactions contemplated hereby
        is
        true and correct in all material respects and the Company has not omitted
        to
        state any material fact necessary in order to make the statements made herein
        or
        therein, in light of the circumstances under which they were made, not
        misleading. No event or circumstance has occurred or exists with respect
        to the
        Company or any of its Subsidiaries or its or their business, properties,
        prospects, operations or financial conditions, which, under applicable law,
        rule
        or regulation, requires public disclosure or announcement by the Company
        but
        which has not been so publicly announced or disclosed (assuming for this
        purpose
        that the Company’s reports filed under the 1934 Act are being incorporated into
        an effective registration statement filed by the Company under the 1933
        Act).

       

      o. Acknowledgment
        Regarding Buyers’ Purchase of Securities.
        The
        Company acknowledges and agrees that the Buyers are acting solely in the
        capacity of arm’s length purchasers with respect to this Agreement and the
        transactions contemplated hereby. The Company further acknowledges that no
        Buyer
        is acting as a financial advisor or fiduciary of the Company (or in any similar
        capacity) with respect to this Agreement and the transactions contemplated
        hereby and any statement made by any Buyer or any of their respective
        representatives or agents in connection with this Agreement and the transactions
        contemplated hereby is not advice or a recommendation and is merely incidental
        to the Buyers’ purchase of the Securities. The Company further represents to
        each Buyer that the Company’s decision to enter into this Agreement has been
        based solely on the independent evaluation of the Company and its
        representatives.

       

      p. No
        Integrated Offering.
        Neither
        the Company, nor any of its affiliates, nor any person acting on its or their
        behalf, has directly or indirectly made any offers or sales in any security
        or
        solicited any offers to buy any security under circumstances that would require
        registration under the 1933 Act of the issuance of the Securities to the
        Buyers.
        The issuance of the Securities to the Buyers will not be integrated with
        any
        other issuance of the Company’s securities (past, current or future) for
        purposes of any shareholder approval provisions applicable to the Company
        or its
        securities.

       

      q. No
        Brokers.
        The
        Company has taken no action which would give rise to any claim by any person
        for
        brokerage commissions, transaction fees or similar payments relating to this
        Agreement or the transactions contemplated hereby. 

       

      r. Permits;
        Compliance.
        The
        Company and each of its Subsidiaries is in possession of all franchises,
        grants,
        authorizations, licenses, permits, easements, variances, exemptions, consents,
        certificates, approvals and orders necessary to own, lease and operate its
        properties and to carry on its business as it is now being conducted
        (collectively, the “Company
        Permits”),
        and
        there is no action pending or, to the knowledge of the Company, threatened
        regarding suspension or cancellation of any of the Company Permits. Neither
        the
        Company nor any of its Subsidiaries is in conflict with, or in default or
        violation of, any of the Company Permits, except for any such conflicts,
        defaults or violations which, individually or in the aggregate, would not
        reasonably be expected to have a Material Adverse Effect. Since September
        30,
        2007, neither the Company nor any of its Subsidiaries has received any
        notification with respect to possible conflicts, defaults or violations of
        applicable laws, except for notices relating to possible conflicts, defaults
        or
        violations, which conflicts, defaults or violations would not have a Material
        Adverse Effect.

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      s. Environmental
        Matters.

       

      (i) Except
        as
        set forth in Schedule
        3(s),
        there
        are, to the Company’s knowledge, with respect to the Company or any of its
        Subsidiaries or any predecessor of the Company, no past or present violations
        of
        Environmental Laws (as defined below), releases of any material into the
        environment, actions, activities, circumstances, conditions, events, incidents,
        or contractual obligations which may give rise to any common law environmental
        liability or any liability under the Comprehensive Environmental Response,
        Compensation and Liability Act of 1980 or similar federal, state, local or
        foreign laws and neither the Company nor any of its Subsidiaries has received
        any notice with respect to any of the foregoing, nor is any action pending
        or,
        to the Company’s knowledge, threatened in connection with any of the foregoing.
        The term “Environmental
        Laws”
means
        all federal, state, local or foreign laws relating to pollution or protection
        of
        human health or the environment (including, without limitation, ambient air,
        surface water, groundwater, land surface or subsurface strata), including,
        without limitation, laws relating to emissions, discharges, releases or
        threatened releases of chemicals, pollutants contaminants, or toxic or hazardous
        substances or wastes (collectively, “Hazardous
        Materials”)
        into
        the environment, or otherwise relating to the manufacture, processing,
        distribution, use, treatment, storage, disposal, transport or handling of
        Hazardous Materials, as well as all authorizations, codes, decrees, demands
        or
        demand letters, injunctions, judgments, licenses, notices or notice letters,
        orders, permits, plans or regulations issued, entered, promulgated or approved
        thereunder.

       

      (ii) Other
        than those that are or were stored, used or disposed of in compliance with
        applicable law, no Hazardous Materials are contained on or about any real
        property currently owned, leased or used by the Company or any of its
        Subsidiaries, and no Hazardous Materials were released on or about any real
        property previously owned, leased or used by the Company or any of its
        Subsidiaries during the period the property was owned, leased or used by
        the
        Company or any of its Subsidiaries, except in the normal course of the Company’s
        or any of its Subsidiaries’ business.

       

      (iii) Except
        as
        set forth in Schedule
        3(s),
        there
        are no underground storage tanks on or under any real property owned, leased
        or
        used by the Company or any of its Subsidiaries that are not in compliance
        with
        applicable law. 

       

      t. Title
        to Property.
        The
        Company and its Subsidiaries have good and marketable title in fee simple
        to all
        real property and good and marketable title to all personal property owned
        by
        them which is material to the business of the Company and its Subsidiaries,
        in
        each case free and clear of all liens, encumbrances and defects except such
        as
        are described in Schedule
        3(t)
        or such
        as would not have a Material Adverse Effect. Any real property and facilities
        held under lease by the Company and its Subsidiaries are held by them under
        valid, subsisting and enforceable leases with such exceptions as would not
        have
        a Material Adverse Effect.

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

      u. Insurance.
        The
        Company and each of its Subsidiaries are insured by insurers of recognized
        financial responsibility against such losses and risks and in such amounts
        as
        management of the Company believes to be prudent and customary in the businesses
        in which the Company and its Subsidiaries are engaged. Neither the Company
        nor
        any such 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 at a cost that would not have a Material Adverse Effect. The Company
        has provided to Buyer true and correct copies of all policies relating to
        directors’ and officers’ liability coverage, errors and omissions coverage, and
        commercial general liability coverage.

       

      v. Internal
        Accounting Controls.
        The
        Company and each of its Subsidiaries maintain a system of internal accounting
        controls sufficient, in the judgment of the Company’s board of directors, 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 generally accepted accounting principles 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.

       

      w. Foreign
        Corrupt Practices.
        Neither
        the Company, nor any of its Subsidiaries, nor any director, officer, agent,
        employee or other person acting on behalf of the Company or any Subsidiary
        has,
        in the course of his actions for, or on behalf of, the Company, used any
        corporate funds for any unlawful contribution, gift, entertainment or other
        unlawful expenses relating to political activity; made any direct or indirect
        unlawful payment to any foreign or domestic government official or employee
        from
        corporate funds; violated or is in violation of any provision of the U.S.
        Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate,
        payoff, influence payment, kickback or other unlawful payment to any foreign
        or
        domestic government official or employee.

       

      x. Solvency.
        The
        Company (after giving effect to the transactions contemplated by this Agreement)
        is solvent (i.e.,
        its
        assets have a fair market value in excess of the amount required to pay its
        probable liabilities on its existing debts as they become absolute and matured)
        and currently the Company has no information that would lead it to reasonably
        conclude that the Company would not, after giving effect to the transaction
        contemplated by this Agreement, have the ability to, nor does it intend to
        take
        any action that would impair its ability to, pay its debts from time to time
        incurred in connection therewith as such debts mature. 

       

      y. No
        Investment Company.
        The
        Company is not, and upon the issuance and sale of the Securities as contemplated
        by this Agreement will not be an “investment company” required to be registered
        under the Investment Company Act of 1940 (an “Investment
        Company”).
        The
        Company is not controlled by an Investment Company.

       

      z. Breach
        of Representations and Warranties by the Company.
        If the
        Company materially breaches any of the representations or warranties set
        forth
        in this Section 3, and in addition to any other remedies available to the
        Buyers
        pursuant to this Agreement, the Company shall pay to the Buyer the Standard
        Liquidated Damages Amount in cash or in shares of Common Stock at the option
        of
        the Company, until such breach is cured. If the Company elects to pay the
        Standard Liquidated Damages Amounts in shares of Common Stock, such shares
        shall
        be issued at the Conversion Price at the time of payment.

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      4. COVENANTS.

       

      a. Best
        Efforts.
        The
        parties shall use their best efforts to satisfy timely each of the conditions
        described in Section 6 and 7 of this Agreement. 

       

      b. Form
        D; Blue Sky Laws.
        The
        Company agrees to file a Form D with respect to the Securities as required
        under
        Regulation D and to provide a copy thereof to each Buyer promptly after such
        filing. The Company shall, on or before the Closing Date, take such action
        as
        the Company shall reasonably determine is necessary to qualify the Securities
        for sale to the Buyers at the applicable closing pursuant to this Agreement
        under applicable securities or “blue sky” laws of the states of the United
        States (or to obtain an exemption from such qualification), and shall provide
        evidence of any such action so taken to each Buyer on or prior to the Closing
        Date.

       

      c. Reporting
        Status; Eligibility to Use Form S-3, SB-2 or Form S-1. The
        Company’s Common Stock is registered under Section 12(g) of the 1934 Act. The
        Company represents and warrants that it meets the requirements for the use
        of
        Form S-3 (or if the Company is not eligible for the use of Form S-3 as of
        the
        Filing Date (as defined in the Registration Rights Agreement), the Company
        may
        use the form of registration for which it is eligible at that time) for
        registration of the sale by the Buyer of the Registrable Securities (as defined
        in the Registration Rights Agreement). So long as the Buyer beneficially
        owns
        any of the Securities, the Company shall timely file all reports required
        to be
        filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate
        its status as an issuer required to file reports under the 1934 Act even
        if the
        1934 Act or the rules and regulations thereunder would permit such termination.
        The Company further agrees to file all reports required to be filed by the
        Company with the SEC in a timely manner so as to become eligible, and thereafter
        to maintain its eligibility, for the use of Form S-3. The Company agrees
        that
        such press release shall not disclose the name of the Buyers unless expressly
        consented to in writing by the Buyers or unless required by applicable law
        or
        regulation, and then only to the extent of such requirement.

       

      d. Use
        of Proceeds.
        The
        Company shall use the proceeds from the sale of the Notes and the Warrants
        in
        the manner set forth in Schedule
        4(d)
        attached
        hereto and made a part hereof and shall not, directly or indirectly, use
        such
        proceeds for any loan to or investment in any other corporation, partnership,
        enterprise or other person (except in connection with its currently existing
        direct or indirect Subsidiaries)

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      e. Future
        Offerings.
        Subject
        to the exceptions described below, the Company will not, without the prior
        written consent of a majority-in-interest of the Buyers, not to be unreasonably
        withheld, negotiate or contract with any party to obtain additional equity
        financing (including debt financing with an equity component) that involves
        (A)
        the issuance of Common Stock at a discount to the market price of the Common
        Stock on the date of issuance (taking into account the value of any warrants
        or
        options to acquire Common Stock issued in connection therewith) or (B) the
        issuance of convertible securities that are convertible into an indeterminate
        number of shares of Common Stock or (C) the issuance of warrants during the
        period (the “Lock-up
        Period”)
        beginning on the Closing Date and ending on the later of (i) two hundred
        seventy
        (270) days from the Closing Date and (ii) one hundred eighty (180) days from
        the
        date the Registration Statement (as defined in the Registration Rights
        Agreement) is declared effective (plus any days in which sales cannot be
        made
        thereunder). In addition, subject to the exceptions described below, the
        Company
        will not conduct any equity financing (including debt with an equity component)
        (“Future
        Offerings”)
        during
        the period beginning on the Closing Date and ending two (2) years after the
        end
        of the Lock-up Period unless it shall have first delivered to each Buyer,
        at
        least twenty (20) business days prior to the closing of such Future Offering,
        written notice describing the proposed Future Offering, including the terms
        and
        conditions thereof and proposed definitive documentation to be entered into
        in
        connection therewith, and providing each Buyer an option during the fifteen
        (15)
        day period following delivery of such notice to purchase its pro rata share
        (based on the ratio that the aggregate principal amount of Notes purchased
        by it
        hereunder bears to the aggregate principal amount of Notes purchased hereunder)
        of the securities being offered in the Future Offering on the same terms
        as
        contemplated by such Future Offering (the limitations referred to in this
        sentence and the preceding sentence are collectively referred to as the
“Capital
        Raising Limitations”). 
        In the
        event the terms and conditions of a proposed Future Offering are amended
        in any
        respect after delivery of the notice to the Buyers concerning the proposed
        Future Offering, the Company shall deliver a new notice to each Buyer describing
        the amended terms and conditions of the proposed Future Offering and each
        Buyer
        thereafter shall have an option during the fifteen (15) day period following
        delivery of such new notice to purchase its pro rata share of the securities
        being offered on the same terms as contemplated by such proposed Future
        Offering, as amended. The foregoing sentence shall apply to successive
        amendments to the terms and conditions of any proposed Future Offering. The
        Capital Raising Limitations shall not apply to any transaction involving
        (i)
        issuances of securities in a firm commitment underwritten public offering
        (excluding a continuous offering pursuant to Rule 415 under the 1933 Act)
        or
        (ii) issuances of securities as consideration for a merger, consolidation
        or
        purchase of assets, or in connection with any strategic partnership or joint
        venture (the primary purpose of which is not to raise equity capital), or
        in
        connection with the disposition or acquisition of a business, product or
        license
        by the Company. The Capital Raising Limitations also shall not apply to the
        issuance of securities upon exercise or conversion of the Company’s options,
        warrants or other convertible securities outstanding as of the date hereof
        or to
        the grant of additional options or warrants, or the issuance of additional
        securities, under any Company stock option or restricted stock plan approved
        by
        the shareholders of the Company. 

       

      f. Expenses.
        At the
        Closing, the Company shall reimburse Buyers for expenses incurred by them
        in
        connection with the negotiation, preparation, execution, delivery and
        performance of this Agreement and the other agreements to be executed in
        connection herewith (“Documents”), including, without limitation, attorneys’ and
        consultants’ fees and expenses, transfer agent fees, fees for stock quotation
        services, fees relating to any amendments or modifications of the Documents
        or
        any consents or waivers of provisions in the Documents, fees for the preparation
        of opinions of counsel, escrow fees, and costs of restructuring the transactions
        contemplated by the Documents. When possible, the Company must pay these
        fees
        directly, otherwise the Company must make immediate payment for reimbursement
        to
        the Buyers for all fees and expenses immediately upon written notice by the
        Buyer or the submission of an invoice by the Buyer If the Company fails to
        reimburse the Buyer in full within three (3) business days of the written
        notice
        or submission of invoice by the Buyer, the Company shall pay interest on
        the
        total amount of fees to be reimbursed at a rate of 15% per annum.

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      g. Financial
        Information.
        The
        Company agrees to send the following reports to each Buyer until such Buyer
        transfers, assigns, or sells all of the Securities: (i) within
        ten (10) days after the filing with the SEC, a copy of its Annual Report
        on Form
        10-KSB its Quarterly Reports on Form 10-QSB and any Current Reports on Form
        8-K;
(ii) within
        one (1) day after release, copies of all press releases issued by the Company
        or
        any of its Subsidiaries; and (iii) contemporaneously
        with the making available or giving to the shareholders of the Company, copies
        of any notices or other information the Company makes available or gives
        to such
        shareholders.

       

      h. Authorization
        and Reservation of Shares.
        The
        Company shall at all times have authorized, and reserved for the purpose
        of
        issuance, a sufficient number of shares of Common Stock to provide for the
        full
        conversion or exercise of the outstanding Notes and Warrants and issuance
        of the
        Conversion Shares and Warrant Shares in connection therewith (based on the
        Conversion Price of the Notes or Exercise Price (as defined in the Warrants)
        of
        the Warrants in effect from time to time) and as otherwise required by the
        Notes. The Company shall not reduce the number of shares of Common Stock
        reserved for issuance upon conversion of Notes and exercise of the Warrants
        without the consent of each Buyer. The Company shall at all times maintain
        the
        number of shares of Common Stock so reserved for issuance at an amount
        (“Reserved
        Amount”)
        equal
        to no less than two (2) times the number that is then actually issuable upon
        full conversion of the Notes and Additional Notes and upon exercise of the
        Warrants and the Additional Warrants (based on the Conversion Price of the
        Notes
        or the Exercise Price of the Warrants in effect from time to time). If at
        any
        time the number of shares of Common Stock authorized and reserved for issuance
        (“Authorized
        and Reserved Shares”)
        is
        below the Reserved Amount, the Company will promptly take all corporate action
        necessary to authorize and reserve a sufficient number of shares, including,
        without limitation, calling a special meeting of shareholders to authorize
        additional shares to meet the Company’s obligations under this Section 4(h), in
        the case of an insufficient number of authorized shares, obtain shareholder
        approval of an increase in such authorized number of shares, and voting the
        management shares of the Company in favor of an increase in the authorized
        shares of the Company to ensure that the number of authorized shares is
        sufficient to meet the Reserved Amount. If the Company fails to obtain such
        shareholder approval within thirty (30) days following the date on which
        the
        number of Reserved Amount exceeds the Authorized and Reserved Shares, the
        Company shall pay to the Borrower the Standard Liquidated Damages Amount,
        in
        cash or in shares of Common Stock at the option of the Buyer. If the Buyer
        elects to be paid the Standard Liquidated Damages Amount in shares of Common
        Stock, such shares shall be issued at the Conversion Price at the time of
        payment. In order to ensure that the Company has authorized a sufficient
        amount
        of shares to meet the Reserved Amount at all times, the Company must deliver
        to
        the Buyer at the end of every month a list detailing (1) the current amount
        of
        shares authorized by the Company and reserved for the Buyer; and (2) amount
        of
        shares issuable upon conversion of the Notes and upon exercise of the Warrants
        and as payment of interest accrued on the Notes for one year. If the Company
        fails to provide such list within five (5) business days of the end of each
        month, the Company shall pay the Standard Liquidated Damages Amount, in cash
        or
        in shares of Common Stock at the option of the Buyer, until the list is
        delivered. If the Buyer elects to be paid the Standard Liquidated Damages
        Amount
        in shares of Common Stock, such shares shall be issued at the Conversion
        Price
        at the time of payment.

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      i. Listing.
        The
        Company shall promptly secure the listing of the Conversion Shares and Warrant
        Shares upon each national securities exchange or automated quotation system,
        if
        any, upon which shares of Common Stock are then listed (subject to official
        notice of issuance) and, so long as any Buyer owns any of the Securities,
        shall
        maintain, so long as any other shares of Common Stock shall be so listed,
        such
        listing of all Conversion Shares and Warrant Shares from time to time issuable
        upon conversion of the Notes or exercise of the Warrants. The Company will
        obtain and, so long as any Buyer owns any of the Securities, maintain the
        listing and trading of its Common Stock on the OTCBB or any equivalent
        replacement exchange, the Nasdaq National Market (“Nasdaq”),
        the
        Nasdaq SmallCap Market (“Nasdaq
        SmallCap”),
        the
        New York Stock Exchange (“NYSE”),
        or
        the American Stock Exchange (“AMEX”)
        and
        will comply in all respects with the Company’s reporting, filing and other
        obligations under the bylaws or rules of the National Association of Securities
        Dealers (“NASD”)
        and
        such exchanges, as applicable. The Company shall promptly provide to each
        Buyer
        copies of any notices it receives from the OTCBB and any other exchanges
        or
        quotation systems on which the Common Stock is then listed regarding the
        continued eligibility of the Common Stock for listing on such exchanges and
        quotation systems.

       

      j. Corporate
        Existence.
        So long
        as a Buyer beneficially owns any Notes or Warrants, the Company shall maintain
        its corporate existence and shall not sell all or substantially all of the
        Company’s assets, except in the event of a merger or consolidation or sale of
        all or substantially all of the Company’s assets, where the surviving or
        successor entity in such transaction (i) assumes the Company’s obligations
        hereunder and under the agreements and instruments entered into in connection
        herewith and (ii) is a publicly traded corporation whose Common Stock is
        listed
        for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

       

      k. No
        Integration.
        The
        Company shall not make any offers or sales of any security (other than the
        Securities) under circumstances that would require registration of the
        Securities being offered or sold hereunder under the 1933 Act or cause the
        offering of the Securities to be integrated with any other offering of
        securities by the Company for the purpose of any stockholder approval provision
        applicable to the Company or its securities.

       

      l. Restriction
        on Short Sales.
        Neither
        the Buyers nor their affiliates has an open short position in the common
        stock
        of the Company and the Buyers agree that, so long as any of the Notes remain
        outstanding, but in no event less than two (2) years from the date hereof,
        the
        Buyers will not enter into or effect any “short sales” (as such term is defined
        in Rule 3b-3 of the 1934 Act) of the Common Stock or hedging transaction
        which
        establishes a net short position with respect to the Common Stock.

       

      m. Breach
        of Covenants.
        If the
        Company breaches any of the covenants set forth in this Section 4, and in
        addition to any other remedies available to the Buyers pursuant to this
        Agreement, the Company shall pay to the Buyers the Standard Liquidated Damages
        Amount, in cash or in shares of Common Stock at the option of the Company,
        until
        such breach is cured. If the Company elects to pay the Standard Liquidated
        Damages Amount in shares, such shares shall be issued at the Conversion Price
        at
        the time of payment.

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

      5. TRANSFER
        AGENT INSTRUCTIONS.
        The
        Company shall issue irrevocable instructions to its transfer agent to issue
        certificates, registered in the name of each Buyer or its nominee, for the
        Conversion Shares and Warrant Shares in such amounts as specified from time
        to
        time by each Buyer to the Company upon conversion of the Notes or exercise
        of
        the Warrants in accordance with the terms thereof (the “Irrevocable
        Transfer Agent Instructions”).
        Prior
        to registration of the Conversion Shares and Warrant Shares under the 1933
        Act
        or the date on which the Conversion Shares and Warrant Shares may be sold
        pursuant to Rule 144 without any restriction as to the number of Securities
        as
        of a particular date that can then be immediately sold, all such certificates
        shall bear the restrictive legend specified in Section 2(g) of this Agreement.
        The Company warrants that no instruction other than the Irrevocable Transfer
        Agent Instructions referred to in this Section 5, and stop transfer instructions
        to give effect to Section 2(f) hereof (in the case of the Conversion Shares
        and
        Warrant Shares, prior to registration of the Conversion Shares and Warrant
        Shares under the 1933 Act or the date on which the Conversion Shares and
        Warrant
        Shares may be sold pursuant to Rule 144 without any restriction as to the
        number
        of Securities as of a particular date that can then be immediately sold),
        will
        be given by the Company to its transfer agent and that the Securities shall
        otherwise be freely transferable on the books and records of the Company
        as and
        to the extent provided in this Agreement and the Registration Rights Agreement.
        Nothing in this Section shall affect in any way the Buyer’s obligations and
        agreement set forth in Section 2(g) hereof to comply with all applicable
        prospectus delivery requirements, if any, upon re-sale of the Securities.
        If a
        Buyer provides the Company with (i) an opinion of counsel in form, substance
        and
        scope customary for opinions in comparable transactions, to the effect that
        a
        public sale or transfer of such Securities may be made without registration
        under the 1933 Act and such sale or transfer is effected or (ii) the Buyer
        provides reasonable assurances that the Securities can be sold pursuant to
        Rule
        144, the Company shall permit the transfer, and, in the case of the Conversion
        Shares and Warrant Shares, promptly instruct its transfer agent to issue
        one or
        more certificates, free from restrictive legend, in such name and in such
        denominations as specified by such Buyer. The Company acknowledges that a
        breach
        by it of its obligations hereunder will cause irreparable harm to the Buyers,
        by
        vitiating the intent and purpose of the transactions contemplated hereby.
        Accordingly, the Company acknowledges that the remedy at law for a breach
        of its
        obligations under this Section 5 may be inadequate and agrees, in the event
        of a
        breach or threatened breach by the Company of the provisions of this Section,
        that the Buyers shall be entitled, in addition to all other available remedies,
        to an injunction restraining any breach and requiring immediate transfer,
        without the necessity of showing economic loss and without any bond or other
        security being required.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      6. CONDITIONS
        TO THE COMPANY’S OBLIGATION TO SELL.
        The
        obligation of the Company hereunder to issue and sell the Notes and Warrants
        to
        a Buyer at the Closing is subject to the satisfaction, at or before the Closing
        Date of each of the following conditions thereto, provided that these conditions
        are for the Company’s sole benefit and may be waived by the Company at any time
        in its sole discretion:

       

      a. The
        applicable Buyer shall have executed this Agreement and the Registration
        Rights
        Agreement, and delivered the same to the Company.

       

      b. The
        applicable Buyer shall have delivered the Purchase Price in accordance with
        Section 1(b) above.

       

      c. The
        representations and warranties of the applicable Buyer shall be true and
        correct
        in all material respects as of the date when made and as of the Closing Date
        as
        though made at that time (except for representations and warranties that
        speak
        as of a specific date), and the applicable Buyer shall have performed, satisfied
        and complied in all material respects with the covenants, agreements and
        conditions required by this Agreement to be performed, satisfied or complied
        with by the applicable Buyer at or prior to the Closing Date. 

       

      d. No
        litigation, statute, rule, regulation, executive order, decree, ruling or
        injunction shall have been enacted, entered, promulgated or endorsed by or
        in
        any court or governmental authority of competent jurisdiction or any
        self-regulatory organization having authority over the matters contemplated
        hereby which prohibits the consummation of any of the transactions contemplated
        by this Agreement.

       

      7. CONDITIONS
        TO EACH BUYER’S OBLIGATION TO PURCHASE.
        The
        obligation of each Buyer hereunder to purchase the Notes and Warrants at
        the
        Closing is subject to the satisfaction, at or before the Closing Date of
        each of
        the following conditions, provided that these conditions are for such Buyer’s
        sole benefit and may be waived by such Buyer at any time in its sole
        discretion:

       

      a. The
        Company shall have executed this Agreement and the Registration Rights
        Agreement, and delivered the same to the Buyer.

       

      b. The
        Company shall have delivered to such Buyer duly executed Notes (in such
        denominations as the Buyer shall request) and Warrants in accordance with
        Section 1(b) above.

       

      c. The
        Irrevocable Transfer Agent Instructions, in form and substance satisfactory
        to a
        majority-in-interest of the Buyers, shall have been delivered to and
        acknowledged in writing by the Company’s Transfer Agent.

       

      d. The
        representations and warranties of the Company shall be true and correct in
        all
        material respects as of the date when made and as of the Closing Date as
        though
        made at such time (except for representations and warranties that speak as
        of a
        specific date) and the Company shall have performed, satisfied and complied
        in
        all material respects with the covenants, agreements and conditions required
        by
        this Agreement to be performed, satisfied or complied with by the Company
        at or
        prior to the Closing Date. The Buyer shall have received a certificate or
        certificates, executed by an executive officer of the Company, dated as of
        the
        Closing Date, to the foregoing effect and as to such other matters as may
        be
        reasonably requested by such Buyer including, but not limited to certificates
        with respect to the Company’s Articles of Incorporation, By-laws and Board of
        Directors’ resolutions relating to the transactions contemplated
        hereby.

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      e. No
        litigation, statute, rule, regulation, executive order, decree, ruling or
        injunction shall have been enacted, entered, promulgated or endorsed by or
        in
        any court or governmental authority of competent jurisdiction or any
        self-regulatory organization having authority over the matters contemplated
        hereby which prohibits the consummation of any of the transactions contemplated
        by this Agreement.

       

      f. No
        event
        shall have occurred which could reasonably be expected to have a Material
        Adverse Effect on the Company.

       

      g. The
        Conversion Shares and Warrant Shares shall have been authorized for quotation
        on
        the OTCBB and trading in the Common Stock on the OTCBB shall not have been
        suspended by the SEC or the OTCBB.

       

      h. The
        Buyer
        shall have received an opinion of the Company’s counsel, dated as of the Closing
        Date, in form, scope and substance reasonably satisfactory to the Buyer and
        in
        substantially the same form as Exhibit
        “D”
        attached
        hereto.

       

      i. The
        Buyer
        shall have received an officer’s certificate described in Section 3(c) above,
        dated as of the Closing Date.

       

      8. GOVERNING
        LAW; MISCELLANEOUS.
        

       

      a. Governing
        Law.
        THIS
        AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
        THE
        LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
        ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT
        OF
        LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
        UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO
        ANY
        DISPUTE ARISING UNDER THIS AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION
        HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES
        IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
        OF
        SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS
        UPON
        A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE
        SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING
        HEREIN
        SHALL AFFECT EITHER PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
        BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH
        SUIT
        OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS
        BY
        SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES
        NOT
        PREVAIL IN ANY DISPUTE ARISING UNDER THIS AGREEMENT SHALL BE RESPONSIBLE
        FOR ALL
        FEES AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY
        IN CONNECTION WITH SUCH DISPUTE.

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      b. Counterparts;
        Signatures by Facsimile.
        This
        Agreement may be executed in one or more counterparts, each of which shall
        be
        deemed an original but all of which shall constitute one and the same agreement
        and shall become effective when counterparts have been signed by each party
        and
        delivered to the other party. This Agreement, once executed by a party, may
        be
        delivered to the other party hereto by facsimile transmission of a copy of
        this
        Agreement bearing the signature of the party so delivering this
        Agreement.

       

      c. Headings.
        The
        headings of this Agreement are for convenience of reference only and shall
        not
        form part of, or affect the interpretation of, this Agreement. 

       

      d. Severability.
        In the
        event that any provision of this Agreement is invalid or unenforceable under
        any
        applicable statute or rule of law, then such provision shall be deemed
        inoperative to the extent that it may conflict therewith and shall be deemed
        modified to conform with such statute or rule of law. Any provision hereof
        which
        may prove invalid or unenforceable under any law shall not affect the validity
        or enforceability of any other provision hereof.

       

      e. Entire
        Agreement; Amendments.
        This
        Agreement and the instruments referenced herein contain the entire understanding
        of the parties with respect to the matters covered herein and therein and,
        except as specifically set forth herein or therein, neither the Company nor
        the
        Buyer makes any representation, warranty, covenant or undertaking with respect
        to such matters. No provision of this Agreement may be waived or amended
        other
        than by an instrument in writing signed by the party to be charged with
        enforcement. 

       

      f. Notices.
        Any
        notices required or permitted to be given under the terms of this Agreement
        shall be sent by certified or registered mail (return receipt requested)
        or
        delivered personally or by courier (including a recognized overnight delivery
        service) or by facsimile and shall be effective five days after being placed
        in
        the mail, if mailed by regular United States mail, or upon receipt, if delivered
        personally or by courier (including a recognized overnight delivery service)
        or
        by facsimile, in each case addressed to a party. The addresses for such
        communications shall be:

       

      If
        to the
        Company:

      

      Grant
        Life Sciences, Inc.

      1787
        E.
        Fort Union Blvd., Suite 202

      Salt
        Lake
        City, UT 84121

      Attention:
        Chief Executive Officer

      Telephone:     (801)
        733-0878

      Facsimile:      
        (801)
        733-0842

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

      With
        a
        copy to:

       

      Sichenzia
        Ross Friedman & Ference LLP

      1065
        Avenue of the Americas

      New
        York,
        NY 10018

      Attention:
        Gregory Sichenzia, Esq.

      Telephone:     (212)
        930-9700

      Facsimile:      (212)
        930-9725

       

      If
        to a
        Buyer: To the address set forth immediately below such Buyer’s name on the
        signature pages hereto.

       

      With
        copy
        to:

      

      Ballard
        Spahr Andrews & Ingersoll, LLP

      1735
        Market Street

      51st
        Floor

      Philadelphia,
        Pennsylvania 19103

      Attention:
        Gerald J. Guarcini, Esq.

      Telephone:
        215-864-8625

      Facsimile:
        215-864-8999

       

      Each
        party shall provide notice to the other party of any change in
        address.

       

      g. Successors
        and Assigns.
        This
        Agreement shall be binding upon and inure to the benefit of the parties and
        their successors and assigns. Neither the Company nor any Buyer shall assign
        this Agreement or any rights or obligations hereunder without the prior written
        consent of the other. Notwithstanding the foregoing, subject to
        Section 2(f), any Buyer may assign its rights hereunder to any person that
        purchases Securities in a private transaction from a Buyer or to any of its
        “affiliates,” as that term is defined under the 1934 Act, without the consent of
        the Company.

       

      h. Third
        Party Beneficiaries.
        This
        Agreement is intended for the benefit of the parties hereto and their respective
        permitted successors and assigns, and is not for the benefit of, nor may
        any
        provision hereof be enforced by, any other person.

       

      i. Survival.
        The
        representations and warranties of the Company and the agreements and covenants
        set forth in Sections 3, 4, 5 and 8 shall survive the closing hereunder
        notwithstanding any due diligence investigation conducted by or on behalf
        of the
        Buyers. The Company agrees to indemnify and hold harmless each of the Buyers
        and
        all their officers, directors, employees and agents for loss or damage arising
        as a result of or related to any breach or alleged breach by the Company
        of any
        of its representations, warranties and covenants set forth in Sections 3
        and 4
        hereof or any of its covenants and obligations under this Agreement or the
        Registration Rights Agreement, including advancement of expenses as they
        are
        incurred.

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      j. Publicity.
        The
        Company and each of the Buyers shall have the right to review a reasonable
        period of time before issuance of any press releases, SEC, OTCBB or NASD
        filings, or any other public statements with respect to the transactions
        contemplated hereby; provided,
        however,
        that
        the Company shall be entitled, without the prior approval of each of the
        Buyers,
        to make any press release or SEC, OTCBB (or other applicable trading market)
        or
        NASD filings with respect to such transactions as is required by applicable
        law
        and regulations (although each of the Buyers shall be consulted by the Company
        in connection with any such press release prior to its release and shall
        be
        provided with a copy thereof and be given an opportunity to comment
        thereon).

       

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

       

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

       

      m. Remedies.
        The
        Company acknowledges that a breach by it of its obligations hereunder will
        cause
        irreparable harm to the Buyers by vitiating the intent and purpose of the
        transaction contemplated hereby. Accordingly, the Company acknowledges that
        the
        remedy at law for a breach of its obligations under this Agreement will be
        inadequate and agrees, in the event of a breach or threatened breach by the
        Company of the provisions of this Agreement, that the Buyers shall be entitled,
        in addition to all other available remedies at law or in equity, and in addition
        to the penalties assessable herein, to an injunction or injunctions restraining,
        preventing or curing any breach of this Agreement and to enforce specifically
        the terms and provisions hereof, without the necessity of showing economic
        loss
        and without any bond or other security being required.

      
        
          
          

        

        
          22

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF,
        the
        undersigned Buyers and the Company have caused this Agreement to be duly
        executed as of the date first above written.

      

      
        	
                GRANT
                  LIFE SCIENCES, INC.

              
	 
	
                /s/
                  Doyle R. Judd

              
	
                Doyle
                  R. Judd

              
	
                Chief
                  Financial Officer

              
	 
	
                AJW
                  PARTNERS, LLC

              
	
                By:
                  SMS Group, LLC

              
	 
	
                /s/
                  Corey S. Ribotsky

              
	
                Corey
                  S. Ribotsky

              
	
                Manager

              

      

       

      
        	RESIDENCE:	Delaware
	 	 
	
                ADDRESS:

              	
                1044
                  Northern Boulevard

              
	 	
                Suite
                  302

              
	 	
                Roslyn,
                  New York 11576

              
	 	
                Facsimile:  
                  (516) 739-7115

              
	 	
                Telephone: 
                  (516) 739-7110

              

      

      

      AGGREGATE
        SUBSCRIPTION AMOUNT:

      

      
        	
                Aggregate
                  Principal Amount of Notes:

              	 	
                $

              	
                _______

              	 
	
                Number
                  of Warrants:

              	 	 	
                _______

              	 
	
                Aggregate
                  Purchase Price:

              	 	
                $

              	
                _______

              	 

      

      

      
        
          
            
            

          

          
            23

            
              

            

          

          
            
            

          

        

      

       

      
        	
                AJW
                  MASTER FUND, LTD.

              
	
                By:
                  First Street Manager II, LLC

              
	 
	
                /s/
                  Corey S. Ribotsky

              
	
                Corey
                  S. Ribotsky

              
	
                Manager

              

      

       

      
        	
                RESIDENCE:

              	
                Cayman
                  Islands

              
	 	 
	
                ADDRESS:

              	
                AJW
                  Offshore, Ltd.

              
	 	
                P.O.
                  Box 32021 SMB

              
	 	
                Grand
                  Cayman, Cayman Island, B.W.I.

              

      

      

      AGGREGATE
        SUBSCRIPTION AMOUNT:

      

      
        	
                Aggregate
                  Principal Amount of Notes:

              	 	
                $

              	
                _______

              	 
	
                Number
                  of Warrants:

              	 	 	
                _______

              	 
	
                Aggregate
                  Purchase Price:

              	 	
                $

              	
                _______

              	 

      

      
        
          
          

        

        
          24

          
            

          

        

        
          
          

        

      

       

      
        	
                NEW
                  MILLENNIUM CAPITAL PARTNERS II, LLC 

              
	
                By:
                  First Street Manager II, LLP

              
	 
	
                /s/
                  Corey S. Ribotsky

              
	
                Corey
                  S. Ribotsky 

              
	
                Manager

              

      

       

      
        
          	
                  RESIDENCE:

                	
                  New
                    York

                
	 	 
	
                  ADDRESS:

                	
                  1044
                    Northern Boulevard

                
	 	
                  Suite
                    302

                
	 	
                  Roslyn,
                    New York 11576

                
	 	
                  Facsimile:      (516)
                    739-7115

                
	 	
                  Telephone:    
                     (516) 739-7110

                

        

      

       

      AGGREGATE
        SUBSCRIPTION AMOUNT:

      

      
        	
                Aggregate
                  Principal Amount of Notes:

              	 	
                $

              	
                ______

              	 
	
                Number
                  of Warrants:

              	 	 	
                ______

              	 
	
                Aggregate
                  Purchase Price:

              	 	
                $

              	
                ______

              	 

      

       

      
        
          
          

        

        
          25

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