Document:

Unassociated Document

    Exhibit 10.2

     

    
      
        	
                EXCLUSIVE AGREEMENT
      FOR LICENSE AND TRANSFER OF
IP

              

      

      

      THIS
AGREEMENT is made and entered into as of the date last entered below and upon
the payment of $250,000 to Guided Therapeutics, Inc. ("GT") (as set forth
below), which payment must be made to GT no later than January 30, 2011 and
$20,000 to GT for previous services provided, which payment must be made to GT
by no later than August 15, 2010 ("the Effective Date"), by and between Mark L.
Faupel, Ph.D., an individual  having an address of 160 Foalgarth Way,
Alpharetta, Georgia 30022 ("DR. FAUPEL") and Biofield Corp., a Delaware
corporation, having an office at 175 Strafford Avenue, Wayne, PA 19087
("BZEC").

      

      WHEREAS
BZEC includes its successors and assigns.

      

      WHEREAS,
DR. FAUPEL owns the exclusive rights in and to technology relating to electrical
methods, apparatuses, and devices for the in vivo and in vitro screening and
diagnosis of disease states, including the technology described in more detail
below,

      

      AND
WHEREAS, BZEC desires to obtain the exclusive rights to utilize the technology
described herein and eventual ownership of same,

      

      NOW
THEREFORE, for and in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto agree as
follows:

      

      1. Definitions

      

      As used herein:

      

      1.1 "Licensed Technology" means any
technology pertaining to the utilization of electrical, electropotential,
electrical or impedance measurements for the noninvasive screening, detection,
or diagnosis of disease states in an organism, including but not limited
to:

      

      (a) The patent application which
describes the invention of utilizing extremely low frequency electromagnetic
fields for the screening and diagnosis of disease states in an organism,
and

      

      (b) All divisionals, continuations,
reissues, extensions, and foreign counterparts of the Licensed Intellectual
Property.

      

      1.2 "Licensed Territory" means the
entire world.

      

      1.3 "Licensed Method" means any method
which is claimed in a patent application.

      

      1.4 "Licensed Product(s)" means any
product, including devices and disposable components of the device system, which
are claimed in a patent application.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      1.5 "Agreement" means this Agreement
including all Exhibits

      attached
to this Agreement together with any written amendments of

      any of
the foregoing.

      

      2.  Grant of
License

      

      2.1  License.  Subject to
the exceptions of paragraph 9.2, DR. FAUPEL hereby grants to BZEC the exclusive
right and license to use and exploit the Licensed Technology to make, have made,
use, market, lease, and sell Licensed Products and to practice Licensed Methods
in the Licensed Territory during the term of this Agreement unless sooner
terminated as provided in this Agreement.

      

      2.2  Developmental
Information.  Upon execution of this Agreement, DR. FAUPEL shall
provide BZEC with the Licensed Technology and all information relating to the
development of the Licensed Technology, including but not limited to blueprints,
working drawings, and data and information relating to manufacture of Licensed
Products.

      

      3.  BZEC ownership of the
Technology

      

      3.1  Upon the complete
payment by BZEC of monies agreed to be paid to DR. FAUPEL under this Agreement,
DR. FAUPEL shall forthwith take all steps necessary to transfer and assign title
of the Licensed Technology and all information relating to the development of
the Licensed Technology, including but not limited to blueprints, working
drawings, and data and information relating to
manufacture of Licensed Products to BZEC.

      

      4.  Payment

      

      4.1  Timing of
Payments.  Within one (1) year of the Effective Date of this
Agreement, viz., July 30, 2011, BZEC shall pay to DR. FAUPEL the sum of
$180,000.  On or before July 30, 2012, BZEC shall pay to DR. FAUPEL
the sum of $180,000.  On or before July 30, 2013, BZEC shall pay to
DR. FAUPEL the sum of $240,000.  On or before July 30, 2014, BZEC
shall pay to DR. FAUPEL the sum of 2,000,000.  On or before July 30,
2015, BZEC shall pay to DR. FAUPEL the sum of $2,400,000.  The
foregoing totals $5,000,000 and is the full amount to be paid to DR. FAUPEL
under this Agreement.  These monies may be paid in advance of the
aforesaid schedule.  All sums are in U.S. Dollars.  At the
conclusion of these payments, DR. FAUPEL shall immediately comply with paragraph
3.1, above.

      

      4.2  Manufacture of Devices
by Guided Therapeutics, Inc.  The parties  hereto agree that
Guided Therapeutics, Inc. shall re-engineer and  manufacture 100 BDS
devices (a product which may be used for the non-invasive  detection
of breast cancer).  That Agreement will be separate from this
Agreement, and will be incorporated
herein as Exhibit "A."

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.3  Violations of
Agreement.  For the purpose of clarification, the following
contingencies represent a material breach in payment by BZEC to DR. FAUPEL or
GT, in the event of which, all rights to the Licensed Technology, as defined
above in Section 1, both exclusive and nonexclusive, remain the exclusive
property of DR. FAUPEL.

      

      a)  Failure by BZEC to pay GT
$20,000 by July 30, 2010 for GT's past services to BZEC;

      

      b)  Failure by BZEC to pay GT
$250,000 by January 30, 2011 for GT's planned work in developing the Licensed
Technology as described in the Agreement betweeen BZEC and GT, of even date
herewith and attached hereto as Exhibit "A;"

      

      c)  Failure by BZEC to pay GT
monies due for completion of GT's planned work in developing the Licensed
Technology as described
in the Agreement betweeen BZEC and GT, of even date herewith and attached hereto
as Exhibit "A;" and

      

      d)  Failure by BZEC to pay
DR. FAUPEL according to the schedule
set forth in Section 4.1 of this Agreement.

      

      5.  Improvements in Licensed
Technology 

      

      5.1  Notification of
Improvements.  DR. FAUPEL shall promptly inform BZEC of any
improvements to the Licensed Technology developed or acquired by DR. FAUPEL
during the term of this Agreement.

      

      6.  Patent
Maintenance

      

      6.1  Responsibility.  BZEC
shall be responsible for the payment of all fees, costs and expenses paid or
incurred connected with filing patent applications, research of prior art, legal
opinions, maintenance fees or annuities to maintain the Licensed Intellectual
Property licensed to BZEC during the term of this Agreement.  DR.
FAUPEL shall cooperate as reasonably requested by BZEC in any such filings and
prosecutions; such cooperation to include executing or supplying without
additional compensation all papers and other instruments, information, or
testimony deemed appropriate by BZEC for such filings and
prosecutions.

      

      6.2  Notification.  BZEC
shall, within fourteen (14) days of the event, advise DR. FAUPEL of the filing
of any patent application under paragraph 6.1 and, as appropriate, advise DR.
FAUPEL of
the prosecution of such application and maintenance of any patent issuing
thereon.

      

      6.3  Inventions Made by
BZEC.  Inventions made by BZEC relating to the subject matter of the
Licensed Technology, and any patents based thereon, shall belong to
BZEC.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

                            7.  Patent
Infringement

      

      7.1  Notice of
Infringement.  BZEC and DR. FAUPEL shall take all reasonable steps to
protect the Licensed Patents in all parts of the
Licensed Territory, and each of them shall give prompt notice to
the other of any infringement or threatened or suspected infringement thereof
that shall at any time come to his or its knowledge together with such detailed
information as shall from time to time be available to him or it relating to
such infringement or threatened or suspected infringement.

      

      7.2  Defense.  In
the event that a declaratory judgment action, cancellation, opposition or
similar proceeding alleging invalidity, unenforceability, or infringement of any
of the Licensed Patents shall be brought by a third party against DR. FAUPEL
involving the Licensed Patents, BZEC shall assume the responsibility of
defending or settling such action or proceeding.

      

      7.3  Infringement
Suits.  BZEC shall be responsible for Patents,
if it is of the opinion that such infringement will instituting
legal action against infringers of the Licensed seriously
affect its business.  The decision to institute or settle legal action
will be solely that of BZEC.  If DR. FAUPEL disagrees with BZEC's
decision not to institute legal action against infringers, DR. FAUPEL shall have
the option to institute legal action for patent infringement at his own expense
and the right to retain
all damages (including attorneys' fees) obtained as a result of such legal
action.  If BZEC chooses to institute legal action against infringers,
it shall be entitled to deduct its costs relating to each such legal action from
any damages (including attorneys' fees) obtained as a result of the
action.  Should any moneys then remain of the damages, BZEC shall
retain seventy-five (75) percent of such remaining monies and shall pay to DR.
FAUPEL the other twenty-five (25) percent of such remaining moneys.

      

      7.4  Cooperation.  In any
suit either party may commence or defend against a third party pursuant to its
rights under this Agreement in order to enforce or defend the validity or
enforceability
of the Licensed Patents, the other party shall, at the request and expense of
the party initiating or defending such suit, cooperate in all respects and, to
the extent possible, have its or his employees testify when requested and make
available relevant records, papers, information, samples, specimens ,and
the

      like.

      

      8.  Confidentiality

      

      8.1  Agreement
Terms.

      

      (a) During the term of this Agreement
and for five (5) years thereafter, BZEC shall not divulge to any third party
(excluding its
employees, counsel, affiliates, and sublicensees) any written information
provided by DR. FAUPEL pursuant to paragraph 2.2 and prominently
marked "CONFIDENTIAL" when so provided; provided, however,
that BZEC shall not be obligated to maintain as confidential any information now
or hereafter in the public domain through no fault of BZEC, any information
ordered to be divulged by a court of competent jurisdiction.  However,
in the event that BZEC completes its monetary obligations under this Agreement
to DR. FAUPEL, then this paragraph shall be of no effect.

      

      (b) During the term or this Agreement
and for five (5) years thereafter, DR. FAUPEL shall not divulge to any third
party any written information provided by BZEC and prominently marked
"CONFIDENTIAL" when so provided; provided, however, that DR. FAUPEL shall not be
obligated to maintain as confidential any information now or hereafter in the
public domain through no fault of DR. FAUPEL or any information ordered to be
divulged by a court of competent jurisdiction, except that if BZEC shall default
on this Agreement, then this paragraph shall be of no effect.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      9.  Term and
Termination

      

      9.1  Duration.  This
Agreement shall commence upon the Effective Date.  The term of this
Agreement is five (5) years, unless BZEC accelerates all payments to be paid to
DR. FAUPEL as provided in  paragraph 4, at which time DR. FAUPEL shall
transfer
and assign title of the Licensed Technology and all information relating to the
development of the Licensed Technology, including but not limited to blueprints,
working drawings, and data and information relating to manufacture of Licensed
Products to BZEC as per paragraph 3.1.  However, this Agreement may be
terminated sooner by DR. FAUPEL as otherwise provided immediately
below.

      

      9.2  Termination of
Exclusivity or Agreement.  If BZEC defaults in any payment to
DR.FAUPEL required by this Agreement and remains in default for ten (10)
business days after notice of default from DR. FAUPEL, DR. FAUPEL may void this
Agreement by sending written Notice in accordance with paragraph
11.4.

      

      9.3  Termination by
BZEC.  BZEC may terminate this Agreement at any time by giving DR.
FAUPEL thirty (30) days prior written notice of BZEC's election to
terminate.

      

      9.4  Events Following
Termination.  If this Agreement is terminated
by DR. FAUPEL under paragraph 9.2 or by BZEC under paragraph 9.3,
then,

      

      (a)  All rights and
obligations in relation to the Licensed Technology and improvements thereto
shall remain with DR. FAUPEL and may be exploited by him as his unencumbered
beneficially owned property and BZEC shall have no rights whatsoever to the
Licensed Technology.

      

      (b)  If BZEC terminates this
Agreement, then BZEC shall have no rights whatsoever to the Licensed
Technology.  BZEC will be under no further obligation to make any
payments to DR. FAUPEL

      in
accordance with Section 4, but DR. FAUPEL may retain any monies paid to him
under that Section.

      

      (c)  The termination of this
Agreement shall not affect any right of action which may have accrued to either
party in respect of any breach prior to the date of such
termination.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      10.0  Warranties

      

      10.1  DR. FAUPEL's
Warranties.  DR. FAUPEL hereby makes the following
representations and warranties to BZEC, which representations and warranties are
true and correct on the Effective Date:

      

      (a)  Except as expressly set
forth to the contrary in paragraph 10.2 of this Agreement, DR. FAUPEL is the
sole inventor of the Intellectual Property covered by this
Agreement;

      

      (b)  DR. FAUPEL has the right
to grant and license and to sell the Intellectual Property covered by this
Agreement and he has executed no agreement in conflict herewith; 

       

      (c)  DR. FAUPEL has not
filed, caused to be filed, or participated in filing any applications for
patent, nor has he obtained in his name, or caused to be obtained in the name of
another, any patent based on or covering the Licensed Technology;

      

      (d)  There are no claims
(relating to patent infringement or any other matters), actions, suits,
agreements, proceedings, arbitrations, or investigations existing or pending or,
to the best of DR. FAUPEL's knowledge, threatened against DR. FAUPEL or others
which if adversely determined would adversely affect the Licensed Technology (or
the patentability thereof) or DR. FAUPEL's ability
to enter into or carry out this Agreement or license the Licensed
Technology.

      

      10.2  Licensed Patents
Subject to Other Agreement.  Inventions which are subject to DR.
FAUPEL's previous employment agreement with BZEC are not the property of DR.
FAUPEL and are not included in the Licensed Technology.  BZEC
represents that the "new" Licensed Technology to be developed under this
Agreement by DR. Faupel is not subject in any way to DR. Faupel's previous
employment Agreement with BZEC.

      

      10.3  Cooperation.

      

      DR. FAUPEL agrees to extend reasonable
efforts to answer inquiries from any funder of BZEC or its representatives,
counsel or consultant regarding the provisional and final patent applications
which DR. FAUPEL shall prepare for BZEC in accordance with this
Agreement.

      

      DR. FAUPEL agrees to extend reasonable
efforts to answer inquiries from any major customer of BZEC or its
representatives, counsel or consultant regarding the operation of the BDS
device.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      11.  Miscellaneous and
General

      

      11.1  Patent
Marking,  BZEC agrees to mark the Licensed Products sold in the United
States with all applicable United States patent numbers.  All Licensed
Products shipped to or sold in other countries shall be to the extent practical
marked in such manner as to conform with the patent laws and practice of the
country of sale.

      

      11.2  Interpretation.  The
parties are equally responsible for the preparation of this Agreement, and in
any legal proceeding the terms hereof shall not be more strictly construed
against one party than the other.

      

      11.3  Resolution of
Disputes.  In the event the parties have a dispute or claim of any
kind arising under this Agreement that they are unable to resolve through direct
communications, such dispute
shall be resolved through arbitration pursuant to the rules of the American
Arbitration Association; provided, however, that (1) the Federal Rules of
Evidence shall apply during any such arbitration, (2) any discovery permitted
during such arbitration shall be completed within ninety (90) days of
commencement of such arbitration, and (3) such arbitration shall be held in
Atlanta, GA if either party asserts a claim against the other.

      

      11.4  Notices.  All
notices, statements and reports required or contemplated herein by one party to
the other shall be in writing and shall be deemed to have been given upon
delivery in person or upon the expiration of seven (7) days after deposit in a
lawful mail depository, registered or certified mail postage prepaid, and
addressed as follows:

      

      If to BZEC:

      

      Biofield Corp.

      Suite One

      175 Strafford Avenue

      Wayne, PA 19087

      ATTN: Mark S. Pearlstein,
Esquire

      Facsimile: 610-687-7757

      E-mail: mspearls@att.net

      

      If to DR. FAUPEL:

      

      Mark I. Faupel, Ph.D.

      160 Foalgartli Way

      Alpharetta, GA 30022

      Facsimile: 770-141-1917

      Email: mfaupel@comcast.net

      

      Either
party hereto may change the address to which notices to such party are to be
sent by giving notice to the other party at the address and in the manner
provided above.  Any notice herein required or permitted to be given
may be given, in addition to the manner set forth above, by telex, facsimile or
cable, provided that the party giving such notice obtains acknowledgement by
telex, facsimile
or cable that such notice has been received by the party to he
notified.  Notice made in this manner shall be deemed to have been
given when such acknowledgement has been transmitted.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      11.6  Assignments and
Inurement.  Except to the extent otherwise herein provided, neither
party shall grant, transfer, convey, sublicense or otherwise assign any of its
rights or delegate any of its obligations under this Agreement without the prior
written consent of the other, which consent shall not be unreasonably
withheld, except in connection with the reorganization or sale of substantially
all of the assets of the party's business or as otherwise explicitly permitted
in this Agreement, and any attempt to do so shall be of no
effect.  This Agreement shall be binding upon and inure to the benefit
of the successors and

      permitted
assigns of the parties hereto.

      

      11.7  Filing of Contract
Rights.  BZEC may file any and all appropriate documents, with the
United States Patent and Trademark Office, and any other country's patent
office, as relevant, at its sole expense, to give notice of its exclusive right
to purchase the IP under this Agreement.  Copies of all such filings
shall be timely provided to DR. FAUPEL.  However, no such filing may
be made until after GT has received the $250,000 and $20,000 payments and DR.
FAUPEL has received his initial $180,000 payment.  Further, in the
event that this Agreement or the GT Agreement are breached by BZEC, DR. FAUPEL
has the right, without more, to withdraw/nullify the aforesaid
filings.

      

      11.8  Entire
agreement.  This Agreement constitutes the entire Agreement between
DR. FAUPEL and BZEC with respect to the subject matter hereof and shall not be
modified, amended or terminated except as herein provided or except by another
agreement in writing executed by the parties hereto.

      

      11.9  Headings.  The
section and paragraph headings are for convenience and are not a part of this
Agreement.

      

      11.10  Severability.  All
rights and restrictions contained herein
may be exercised and shall be applicable and binding only to the
extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary so that they will not
render this Agreement illegal, invalid or unenforceable. If any provision or
portion of any provision of this Agreement not
essential to the commercial purpose of this Agreement shall be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the parties that the remaining provisions or portions thereof
shall constitute their agreement with respect to the subject matter hereof, and
all such remaining
provisions or portions thereof shall remain in full force and
effect.  To the extent legally permissible, any illegal, invalid or
unenforceable provision of this Agreement shall be replaced by a valid provision
which will implement the commercial purpose
of this illegal, invalid or unenforceable provision.  In the event
that any provision essential to the commercial purpose

      of this
Agreement is held to be illegal, invalid or unenforceable and cannot be replaced
by a valid provision which will implement the commercial purpose of this
Agreement, this Agreement and rights granted herein shall
terminate.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      11.11  Choice of
Law.  This Agreement is acknowledged to have been made in and shall be
construed in accordance with the laws of the State of Georgia, United States of
America; provided that all questions concerning the construction or effect of
Licensed Patents shall be decided in accordance with the laws of the country
in  which the particular patent application concerned has been
filed or
granted, as the case may be.

      

      11.12  Indemnification.  BZEC
shall indemnify, hold harmless and defend (including paying reasonable
attorneys' fees) DR. FAUPEL from and against any and all losses, including but
not limited to, injury to persons, property, and the environment, caused by the
Licensed Products or arising out of the manufacture, use, sale, promotion, or
possession of the Licensed Products or any intermediate
activity thereof or by the performance of any activities by BZEC as a result of
this Agreement, except where caused by the fraudulent actions or omissions of
DR. FAUPEL.

      

      11.13  Use of
Names.  BZEC shall not use DR. FAUPEL's name, or the name of any
entity affiliated with DR. FAUPEL, in any advertisement or sales material unless
it obtains the prior written
consent of such person or entity proposed to be named.

      

      IN WITNESS WHEREOF, DR. FAUPEL has
executed this Agreement and BZEC has caused this Agreement to be executed by its
duly authorized representative as of the day and year written
below.

       

      
        
          
            	 	 	 	 
	
                    Date:
      July 27,
      2010  

                  	
                    By:
      

                  	/s/ Mark
      L. Faupel       	 
	 	 	MARK
      L. FAUPEL, PH.D 	 
	 	 	 	 
	 	 	 	 

          

        

      

       

       

      
        
          	 	BIOFIELD
      CORP.	 
	 	 	 	 
	
                  Date:
      July 16,
      2010    

                	
                  By:
      

                	/s/ David
      Bruce Hong 	 
	 	 	David
      Bruce Hong 	 
	 	 	President	 
	 	 	 	 

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
EXHIBIT
"A"

      

      AGREEMENT FOR RE-ENGINEERING
AND MANUFACTURE OF NEW BDS DEVICE

      

      THIS
AGREEMENT is made and entered into as of the date last entered below and upon
the payment of $20,000 to GT for previous services provided, which payments must
be made to GT by no later than August 15, 2010 ("the Effective Date"), by and
between Guided Therapeutics, Inc. ("GT"), a corporation having an address of
5835 Peachtree Corners East, Suite D, Norcross, GA 30092 and Biofield Corp.
("BZEC"), a Delaware corporation, having an office at 175 Strafford Avenue,
Wayne, PA 19087.  In addition, prior to commencing work on the subject
project, GT shall receive a further payment from BZEC of $250,000 towards the
re-engineering and development of that certain BDS technology, which payment
must be made to GT no later than January 30, 2011.

      

      WHEREAS,
MARK FAUPEL, PhD ("DR. FAUPEL") owns the exclusive rights in and to technology
relating to electrical and ionic methods, apparatus, and devices for the in vivo
and in vitro screening and diagnosis of disease states, including the technology
described in more detail below,

      

      AND
WHEREAS, BZEC has entered into an agreement with DR. FAUPEL of even date
herewith, to obtain the exclusive rights to utilize the technology described
herein and eventual ownership of same,

      

      NOW
THEREFORE, for and in consideration of the foregoing and the mutual covenants
and agreements contained herein, the parties hereto agree as
follows:

      

      1. Definitions

      

      As used herein:

      

      1.1 "Licensed Technology" means any
technology pertaining to the utilization of electrical, electropotential, or
electrical impedance, for the noninvasive screening, detection, or diagnosis of
disease states in an organism, including but not limited to:

      

      (a) The patent application which
describes the invention of utilizing extremely low frequency electromagnetic
fields for the screening and diagnosis of disease states in an organism,
and

      

      1.2 "Licensed Method" means any method
which is claimed in a patent application.

      

      1.3 "Licensed Product(s)" means any
product, including devices and disposable components of the device system, which
are claimed in a patent application.

      

      1.4 "Agreement" means this Agreement
including all Exhibits attached to this Agreement together with any written
amendments of any of the foregoing.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      2.  License

      

      2.1  License.  Pursuant
to that certain Agreement between BZEC and
DR. FAUPEL, DR. FAUPEL has granted to BZEC the exclusive right and license to
use and exploit the Licensed Technology to make, have made, use, market, lease,
and sell Licensed Products and, if that agreement is fulfilled BZEC will own the
IP rights to the Licensed Technology.

      

      2.2  Developmental
Information.  Upon execution of this Agreement and the
Agreement with DR. FAUPEL, DR. FAUPEL shall provide GT with the Licensed
Technology and all information relating to the development of the Licensed
Technology, including but not limited to blueprints, working drawings, and data
and information relating to manufacture of Licensed Products. 

       

      2.3  Ownership of
Technology.  Upon the payment by BZEC of all monies agreed to
be paid to DR. FAUPEL under the Agreement between DR. FAUPEL and BZEC, the
latter will then own the Licensed Technology and all information relating to the
development of the Licensed Technology, including but not limited to blueprints,
working drawings, and data and information relating to manufacture of Licensed
Products.  If the Agreement between DR. FAUPEL and BZEC fails, then
exclusive title to the Licensed Technology and all information relating to the
development of the Licensed Technology, including but not limited to blueprints,
working drawings, and data and information relating to manufacture of Licensed
Products shall remain with DR. FAUPEL.

      

      3.  Development and
Re-engineering

      

      3.1  GT agrees to use all
reasonable efforts to develop the new Biofield BDS Device ("Work"), as
follows:

      

      (a)  Plan.  The method
and approximate timing of the development and re-engineering of the new Biofield
Device is set forth in Exhibit "A," hereto;

      

      (b)  Cost.  Approximately
$400,000 to $500,0000 (see Exhibit "A");

      

      (c)  Timing.  Payment of
the initial $250,000 must be made to GT no later than January 30,
2011.  Completion of the re-engineering and development phase is
expected to occur within six (6) months of payment of the $250,000 to GT and
agreement by both BZEC and GT on product specifications, not including CE
inspection.

      

      (d)  Interim
Payments.  Within sixty (60) of the initial payment and GT's
commencement of Work, BZEC will pay $125,000 to GT.  Should GT not
receive this payment, GT reserves the right, at its sole discretion, to cease
further work until it receives the said payment or the Agreement terminates in
accordance with paragraph 7.1, below.

      

      (e)  Final
Payment.  Within thirty (30) days before the scheduled CE
inspection, BZEC will pay to GT the balance due.  Should GT not
receive this payment, GT reserves the right, at its sole discretion, to cease
further work until it receives the said payment or the Agreement terminates in
accordance with paragraph 7.1, below.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.  Manufacture of
Units

      

      4.1  Number of Units.  GT
shall manufacture a minimum of 100 Biofield Prototypes at cost (including parts,
labor, warranty and overhead) plus a profit margin of thirty-five (35%)
percent.

      

      4.2  Additional
work.  Any other work requested of GT by BZEC beyond the scope
of the development, re-engineering and manufacturing described in sections 3 and
4.1 above,  will be quoted
in advance and then accepted (by Purchase Order) or rejected by
BZEC.

      

      5.  Additional
Services.

      

      5.1  Any other services
requested by BZEC of GT shall be governed by a written request for a quote and
purchase order.

      

      6.  Confidentiality

      

      6.1  Agreement Terms.

      

      (a)  During the term or this
Agreement and for five (5) years thereafter, GT shall not divulge to any third
party any written information provided by BZEC and prominently marked
"CONFIDENTIAL" when so provided; provided, however, that GT shall not be
obligated to maintain as confidential any information now or hereafter in the
public domain through no fault of GT or any information ordered to be divulged
by a Court of competent jurisdiction, except that if BZEC shall default on this
Agreement, then this paragraph shall be of no effect.

      

      7.  Term and
Termination

      

      7.1  Duration.  This
Agreement shall commence upon the Effective Date.  This Agreement
shall terminate upon the completion by GT of the above-stated
tasks.  Should BZEC desire that GT manufacture additional Biofield
Devices, either a new contract may be entered by the parties hereto or the
parties hereto may amend this agreement.  If BZEC defaults in any
payment to GT required by this Agreement and remains in default for ten (10)
business days after notice of default from GT, GT may void this Agreement by
sending written Notice in accordance with paragraph 9.3.  If this
Agreement shall be terminated as immediately aforesaid, GT shall have no
obligation to perform any further work for BZEC or to return any monies paid to
it by BZEC under this Agreement.  GT will provide BZEC with copies of
blueprints, working drawings, and data and information relating to manufacture
of Licensed Products which it has created from the Effective Date to the default
date.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      8.  Cooperation.

      

      8.1  GT agrees to extend
reasonable efforts to answer inquiries from any funder of BZEC or its
representatives, counsel or consultants regarding the development,
re-engineering and/or manufacture of the Biofield Devices in accordance with
this Agreement.

      

      8.2  GT agrees to extend
reasonable efforts to answer inquiries from any major customer of BZEC or its
representatives, counsel or consultant regarding the development, re-engineering
and/or manufacture of the Biofield Devices in accordance with this
Agreement.

      

      9.  Miscellaneous and
General

      

      9.1  Interpretation.  The
parties are equally responsible for the preparation of this Agreement, and in
any legal proceeding the terms hereof shall not be more strictly construed
against one party than the other.

      

      9.2  Resolution of
Disputes.  In the event the parties have a dispute or claim of
any kind arising under this Agreement that they are unable to resolve through
direct communications, such dispute
shall be resolved through arbitration pursuant to the rules of the American
Arbitration Association; provided, however, that (1) the Federal Rules of
Evidence shall apply during any such arbitration, (2) any discovery permitted
during such arbitration shall be completed within ninety (90) days of
commencement of such arbitration, and (3) such arbitration shall be held in
Atlanta, GA if either party asserts a claim against the other.

      

      9.3 Notices.  All
notices, statements and reports required or contemplated herein by one party to
the other shall be in writing and shall be deemed to have been given upon
delivery in person or upon the expiration of seven (7) days after deposit in a
lawful mail depository, registered or certified mail postage prepaid, and
addressed as follows:

      

      If to BZEC:

      

      Biofield Corp.

      Suite One

      175 Strafford Avenue

      Wayne, PA 19087

      ATTN: Mark S. Pearlstein,
Esquire

      Facsimile: 610-687-7757

      E-mail: mspearls@att.net

      

      If to Guided Therapeutics,
Inc.:

      

      Guided Therapeutics, Inc.

      5835 Peachtree Corners East Suite
D

      Norcross, GA 30071

      ATTN: Mark I. Faupel,
Ph.D.

      Facsimile: 770-242-8639

      Email:
mfaupel@guidedinc.com

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Either
party hereto may change the address to which notices to such party are to be
sent by giving notice to the other party at the address and in the manner
provided above.  Any notice herein required or permitted to be given
may be given, in addition to the manner set forth above, by telex, facsimile or
cable, provided
that the party giving such notice obtains acknowledge-ment by telex, facsimile
or cable that such notice has been received by the party to he
notified.  Notice made in this manner shall be deemed to have been
given when such acknowledgement has been transmitted.

      

      9.4  Assignments and
Inurement.  Except to the extent otherwise herein provided,
neither party shall grant, transfer, convey, sublicense or otherwise assign any
of its rights or delegate any of its obligations under this Agreement without
the prior written consent of the other, which consent shall not be unreasonably
withheld, except in connection with the reorganization or sale of substantially
all of the assets of the party's business or as otherwise explicitly permitted
in this Agreement, and any attempt to do so shall be of no
effect.  This Agreement shall be binding upon and inure to the benefit
of the successors and permitted assigns of the parties hereto.

      

      9.5  Prior
Inventory.  BZEC shall pay to GT the sum of $20,000, on or
before July 30, 2010, as full payment for any and all GT charges for storage of
existing BZEC materials stored at GT.  GT herein agrees that upon
receipt of this payment, for itself and for its affiliates, subsidiaries,
directors, officers, employees and any representative of any kind, it does
release and
forever discharge BZEC and its affiliates, subsidiaries, directors, officers,
employees and any representative of any kind from any
and all claims, demands, damages, costs, expenses, loss of services, actions and
causes of action, arising from the storage of the aforesaid BZEC materials at
GT.

      

      9.5 (a)  Prior Inventory --
Removal.

      

      BZEC shall be responsible to retrieve,
within sixty (60) days of the Effective Date of this Agreement, at its sole cost
and expense, all BZEC materials currently at GT, including but not limited to
old devices, schematics, brochures, etc.   If BZEC should fail to
retrieve the aforesaid materials within the specified time, ownership of these
materials shall, without more, revert to GT.

      

      9.6  Entire
agreement.  This Agreement constitutes the entire Agreement
between GT and BZEC with respect to the subject matter hereof and shall not be
modified, amended or terminated except as herein provided or except by another
agreement in writing executed by the parties hereto.

      

      9.7  Headings.  The
section and paragraph headings are for convenience and are not a part of this
Agreement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      9.8  Severability.  All
rights and restrictions contained herein
may be exercised and shall be applicable and binding only to the
extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary so that they will not
render this Agreement illegal, invalid or unenforceable. If any provision or
portion of any provision of this Agreement not
essential to the commercial purpose of this Agreement shall be held to be
illegal, invalid or unenforceable by a court of competent jurisdiction, it is
the intention of the parties that the remaining provisions or portions thereof
shall constitute their agreement with respect to the subject matter hereof, and
all such remaining provisions or portions thereof shall remain in full force and
effect. To the extent legally permissible, any illegal, invalid or unenforceable
provision of this Agreement shall be replaced by a valid provision which will
implement the commercial purpose of this illegal, invalid or unenforceable
provision.  In the event that any provision essential to the
commercial purpose of this Agreement is held to be illegal, invalid
or unenforceable and cannot be replaced by a valid provision which will
implement the commercial purpose of this
Agreement, this Agreement and rights granted herein shall
terminate.

      

      9.9  Choice of Law.  This
Agreement is acknowledged to have been made in and shall be construed in
accordance with the laws of the State of Georgia, United States of America;
provided that all questions concerning the construction or effect of Licensed
Patents shall be decided in accordance with the laws of the country
in  which the particular patent application concerned has been filed
or granted, as the case may be.

      

      9.10  Use of Names.  BZEC
shall not use GT's name, or the name of any entity affiliated with GT, in any
advertisement or sales material unless it obtains the prior written consent of
GT or the entity proposed to be named, which consent will not be unreasonably
withheld or delayed.  The only exception to the foregoing is that BZEC
may use the name of GT and any entity affiliated with GT (if required) for SEC
filings.

      

      IN WITNESS WHEREOF, GT has executed
this Agreement and BZEC has caused this Agreement to be executed by its duly
authorized representative as of the day and year written below.

      

      
        
          	 	GUIDED
      THERAPEUTICS, INC.	 
	 	 	 	 
	
                  Date: July
      27, 2010 

                	
                  By:
      

                	/s/ Mark
      L. Faupel    	 
	 	 	MARK L.
      FAUPEL, PH.D.,	 
	 	 	CEO and PRESIDENT	 
	 	 	 	 

        

      
        
          	 	GUIDED
      THERAPEUTICS, INC	 
	 	 	 	 
	
                  Date:
      July 16, 2010

                	
                  By:
      

                	/s/ David
      Bruce Hong 	 
	 	 	David Bruce
      Hong 	 
	 	 	PRESIDENTRESERVE
EQUITY FINANCING AGREEMENT

     

    THIS AGREEMENT dated as of the
22nd day of June 2010 (the “Agreement”) between
AGS Capital Group, LLC a
New York limited liability company (the “Investor”), and Biofield Corporation a
corporation organized and existing under the laws of the State of Delaware (the
“Company”).

     

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, from time to time as provided herein, and
the Investor shall purchase from the Company up to Two Million Dollars
($2,000,000) of the Company’s fully registered and freely tradable common stock,
par value $.001 per share (the “Common Stock”),;
and

     

     

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

     

    NOW, THEREFORE, the parties hereto
agree as follows:

     

    ARTICLE
I.

    Certain
Definitions

    

    Section
1.1. “Advance”
shall mean the portion of the Commitment Amount requested by the Company in the
Advance Notice.

     

    Section
1.2. “Advance
Date” shall mean the first Trading Day after expiration of the applicable
Pricing Period for each Advance.

     

    Section
1.3. “Advance
Notice” shall mean a written notice in the form of Exhibit A attached
hereto to the Investor executed by an officer of the Company and setting forth
the Advance amount that the Company requests from the Investor.

     

    Section
1.4 “Advance Notice
Date” shall mean each date the Company delivers (in accordance with
Section 2.2(b) of this Agreement) to the Investor an Advance Notice requiring
the Investor to purchase the number of shares of Common Stock specified in the
Advance Notice, subject to the terms of this Agreement. No Advance Notice Date
shall be less than five (5) Trading Days after the prior Advance Notice
Date.

     

    Section
1.5 “Average Daily
Trading Volume” means the average trading volume of the ten (10) Trading
Days prior to the date of delivery of the Advance Notice.

     

    Section
1.6. “Bid
Price” shall mean, on any date, the closing bid price (as reported by
Bloomberg L.P. or other comparable reporting service) of the Common Stock on the
Principal Market or if the Common Stock is not traded on a Principal Market, the
highest reported bid price for the Common Stock, as furnished by the Financial
Industry Regulatory Authority.

     

    Section
1.7. “Closing”
shall mean one of the closings of a purchase and sale of Common Stock pursuant
to Section 2.3.

     

    Section
1.8. “Commitment
Amount” shall mean the aggregate amount of up to Two Million Dollars
($2,000,000) which the Investor has agreed to provide to the Company in order to
purchase the Company’s Common Stock pursuant to the terms and conditions of this
Agreement.

     

    Section
1.9. “Commitment
Period” shall mean the period commencing on the Effective Date, and
expiring upon the termination of this Agreement in accordance with Section
10.2.

     

    Section
1.10. “Common
Stock” shall mean the Company’s common stock, par value $.001 per
share.

     

    Section
1.11. “Condition
Satisfaction Date” shall have the meaning set forth in Section
7.2.

     

    Section
1.12. “Damages”
shall mean any loss, claim, damage, liability, costs and expenses (including,
without limitation, reasonable attorney’s fees and disbursements and costs and
expenses of expert witnesses and investigation).

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
1.13. “Effective
Date” shall mean the date on which the SEC first declares effective a
Registration Statement registering the resale of the Registrable Securities as
set forth in Section 7.2(a).

     

    Section
1.14. Intentionally
Omitted.

     

    Section
1.15. “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

     

    Section
1.16. “Material
Adverse Effect” shall mean any condition, circumstance, or situation that
may result in, or reasonably be expected to result in (i) a material adverse
effect on the legality, validity or enforceability of the Agreement, (ii) a
material adverse effect on the results of operations, assets, business or
condition (financial or otherwise) of the Company, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under the Agreement.

     

    Section
1.17. “Market
Price” shall mean the lowest closing bid price of the Company’s Common
Stock during the Pricing Period.

     

    Section
1.18. “Maximum Advance
Amount” The maximum amount that the Company can request from each of the
Advances, shall at the sole discretion of the Investor be equal to either
$10,000 or 500% of the product of the average of the daily trading volume (U.S.
market only) of the 10 trading days immediately preceding the Advance Date
multiplied by the average of the 10 daily closing prices immediately preceding
the Advance Date.

     

    Section
1.19. “FINRA”
shall mean the Financial Industry Regulatory Authority.

     

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

     

    Section
1.21. “Pricing
Period” shall mean the five (5) consecutive Trading Days after the
Advance Notice Date.

     

    Section
1.22. “Principal
Market” shall mean the Nasdaq Global Select Market, the Nasdaq Global
Market, the Nasdaq Capital Market, the American Stock Exchange, the OTC Bulletin
Board, or the New York Stock Exchange, whichever is at the time the principal
trading exchange or market for the Common Stock.

     

    Section
1.23. “Purchase
Price” shall mean:

     

    Fifty
percent (50%) of the Market Price on the date in question during such Advance
Pricing Period.

     

    If the
stock price is between .11 and .19 then the Purchase Price shall be Eighty
percent (80%) of the Market Price on the date in question during such Advance
Pricing Period.

     

    If the
stock price is above .20 then the Purchase Price shall be ninety percent (90%)
of the Market Price on the date in question during such Advance Pricing
Period.

     

    Section
1.24. “Registrable
Securities” shall mean the shares of Common Stock to be issued hereunder
(i) in respect of which the Registration Statement has not been declared
effective by the SEC, (ii) which have not been sold under circumstances meeting
all of the applicable conditions of Rule 144 (or any similar provision then in
force) under the Securities Act (“Rule 144”) or (iii)
which have not been otherwise transferred to a holder who may trade such shares
without restriction under the Securities Act, and the Company has delivered a
new certificate or other evidence of ownership for such securities not bearing a
restrictive legend.

     

    Section
1.25. “Registration
Rights Agreement” shall mean the Registration Rights Agreement dated the
date hereof, regarding the filing of the Registration Statement for the resale
of the Registrable Securities, entered into between the Company and the
Investor.

     

    Section
1.26. “Registration
Statement” shall mean a registration statement on Form S-1 or Form S-3
(if use of such form is then available to the Company pursuant to the rules of
the SEC and, if not, on such other form promulgated by the SEC for which the
Company then qualifies and which counsel for the Company shall deem appropriate,
and which form shall be available for the resale of the Registrable Securities
to be registered thereunder in accordance with the provisions of this Agreement
and the Registration Rights Agreement, and in accordance with the intended
method of distribution of such securities), for the registration of the resale
by the Investor of the Registrable Securities under the Securities
Act.

     

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
1.28. “SEC”
shall mean the United States Securities and Exchange Commission.

     

    Section
1.29. “Securities
Act” shall have the meaning set forth in the recitals of this
Agreement.

     

    Section
1.30 “Trading
Cushion” Unless the parties agree in writing otherwise, there shall be a
minimum of three (3) Trading Days between the expiration of any Pricing Period
and the beginning of the next succeeding Pricing Period.

     

    Section
1.31. “Trading
Day” shall mean any day during which the New York Stock Exchange shall be
open for business.

     

    Section
1.32. “VWAP”
means, as of any date, the daily dollar volume-weighted average price for such
security as reported by Bloomberg, LP through its “Historical Price Table Screen
(HP)” with Market: Weighted Ave function selected (or comparable financial news
service (U.S market only), or, if no dollar volume-weighted average price is
reported for such security by Bloomberg, LP (or comparable financial news
service (U.S market only), the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC.

     

    ARTICLE
II.

    Advances

    Section
2.1. “Advances”

     

    Subject
to the terms and conditions of this Agreement (including, without limitation,
the provisions of Article VII hereof), the Company, at its sole and exclusive
option, may issue and sell to the Investor, and the Investor shall purchase from
the Company, shares of the Company’s Common Stock by the delivery, in the
Company’s sole discretion, of Advance Notices. The aggregate maximum amount of
all Advances that the Investor shall be obligated to make under this Agreement
shall not exceed the Commitment Amount. The Company shall send an Advance
Notice to Investor at least once every month equaling the Maximum Advance
Amount.

     

    Section
2.2. Mechanics.

     

    (a) Advance Notice. At
any time during the Commitment Period, the Company may require the Investor to
purchase shares of Common Stock by delivering an Advance Notice to the Investor,
subject to the conditions set forth in Article VII; provided, however, that (i)
the amount for each Advance as designated by the Company in the applicable
Advance Notice shall not be more than the Maximum Advance Amount, (ii) the
aggregate amount of the Advances pursuant to this Agreement shall not exceed the
Commitment Amount, (iii) in no event shall the number of shares of Common Stock
issuable to the Investor pursuant to an Advance cause the aggregate number of
shares of Common Stock beneficially owned (as calculated pursuant to Section
13(d) of the Exchange Act) by the Investor and its affiliates to exceed 9.99% of
the then outstanding Common Stock (the “Ownership
Limitation”) (as of the date of this Agreement, Investor and its
affiliates hold 1,000,000 shares of Common Stock, and (iv) under no
circumstances shall the aggregate offering price or number of Shares, as the
case may be, exceed the aggregate offering price or number of Shares available
for issuance under the Registration Statement (the “Registration
Limitation”). There shall be a minimum of 5 Trading Days between each
Advance Notice Date. Notwithstanding any other provision in this Agreement, the
Company acknowledges and agrees that upon receipt of an Advance Notice, the
Investor may sell shares that it is unconditionally obligated to purchase under
such Advance Notice prior to taking possession of such shares.

     

    (b) Date of Delivery of Advance
Notice. An Advance Notice shall be deemed delivered on (i) the Trading
Day it is received by email (to the address set forth in Section 11.1 herein) by
the Investor if such notice is received prior to 5:00 pm Eastern Time, or (ii)
the immediately succeeding Trading Day if it is received by email after 5:00 pm
Eastern Time on a Trading Day or at any time on a day which is not a Trading
Day. No Advance Notice may be deemed delivered on a day that is not a Trading
Day. The Company acknowledges and agrees that the Investor shall be entitled to
treat any email it receives from officers whose email addresses are identified
by the Company purporting to be an Advance Notice as a duly executed and
authorized Advance Notice from the Company.

     

    Section
2.3. Closings.

     

    (a) On
the day of the Advance Notice, the Company shall deliver to the Investor such
number of shares of the Common Stock registered in the name of the Investor as
shall equal the number of shares specified in the Advance Notice. On the later
of the Advance Date or one Trading Day following receipt of the shares of Common
Stock corresponding to the Advance Notice, the Investor shall deliver to the
Company the amount of the Advance by wire transfer of immediately available
funds. On or prior to the Advance Date, each of the Company and the Investor
shall deliver to the other all documents, instruments and writings required to
be delivered by either of them pursuant to Section 2.3(b) below in order to
implement and effect the transactions contemplated herein. To the extent the
Company has not paid the fees, expenses, and disbursements of the Investor in
accordance with Section 12.4, the amount of such fees, expenses, and
disbursements may be deducted by the Investor (and shall be paid to the relevant
party) directly out of the proceeds of the Advance with no reduction in the
amount of shares of the Company’s Common Stock to be delivered on such Advance
Date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    (b) Obligations Upon
Closing. The Investor agrees to advance the amount corresponding to the
Advance Notice to the Company upon completion of each of the following
conditions:

     

    (i) The
Company shall deliver to the Investor the shares of Common Stock applicable to
the Advance in accordance with Section 2.3(a). The certificates evidencing such
shares shall be free of restrictive legends.

     

    (ii) The
Registration Statement filed pursuant to the Registration Rights Agreement shall
be effective and available for the resale of all applicable shares of Common
Stock to be issued in connection with the Advance and certificates evidencing
such shares shall be free of restrictive legends;

     

    (iii) the
Company shall have obtained all material permits and qualifications required by
any applicable state for the offer and sale of the Registrable Securities, or
shall have the availability of exemptions therefrom. The sale and issuance of
the Registrable Securities shall be legally permitted by all laws and
regulations to which the Company is subject;

     

    (iv) the
Company shall have filed with the SEC in a timely manner all reports, notices
and other documents required of a “reporting company” under the Exchange Act and
applicable Commission regulations;

     

    (v) the
Company shall pay any unpaid fees as set forth in Section 12.4 below or withhold
such amounts as provided in Section 2.3; and

     

    (vi) the
Company’s transfer agent shall be DWAC eligible.

     

    (vii) the
conditions in Section 7.2.3(a)(i) above and provided the Company is in
compliance with its obligations in Section 2.3, the Investor shall deliver to
the Company the amount of the Advance specified in the Advance Notice by wire
transfer of immediately available funds are satisfied.

     

    Section
2.4. Lock Up
Period. On the date hereof, the Company shall obtain from each officer
and director a lock-up agreement, as defined below, in the form annexed hereto
as Schedule 2.4.

     

    Section
2.5. Hardship.
In the event the Investor sells shares of the Company’s Common Stock after
receipt of an Advance Notice and the Company fails to perform its obligations as
mandated in Section 2.3, the Company agrees that in addition to and in no way
limiting the rights and obligations set forth in Article V hereto and in
addition to any other remedy to which the Investor is entitled at law or in
equity, including, without limitation, specific performance, it will hold the
Investor harmless against any loss, claim, damage, or expense (including
reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company and acknowledges that irreparable
damage would occur in the event of any such default. It is accordingly
agreed that the Investor shall be entitled to an injunction or injunctions to
prevent such breaches of this Agreement and to specifically enforce, without the
posting of a bond or other security, the terms and provisions of this
Agreement.

     

    Section
2.6. Delay in
delivering Common Stock. The Company understands that a delay in the
issuance of Common Stock could result in economic damage to the Investor. After
the Effective Date, as compensation to the Investor for such loss, the Company
agrees to make late payments to the Investor for late issuance of Common Stock
in accordance with the following schedule (where "No. of Days Late" is defined
as the number of trading days beyond the Advance Notice Date, with the Amounts
being cumulative.):

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    LATE
PAYMENT FOR EACH

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  NO. OF
      DAYS LATE

                                	 	$10,000
      WORTH OF COMMON STOCK
	 	 	 
	
                                  1

                                	 
      	
                                  $100

                                
	 	 	 
	
                                  2

                                	 
      	
                                  $200

                                
	 	 	 
	
                                  3

                                	 
      	
                                  $300

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  4

                                	 
      	
                                  $400

                                
	 	 	 
	
                                  5

                                	 
      	
                                  $500

                                
	 	 	 
	
                                  6

                                	 
      	
                                  $600

                                
	 	 	 
	
                                  7

                                	 
      	
                                  $700

                                
	 	 	 
	
                                  8

                                	 
      	
                                  $800

                                
	 	 	 
	
                                  9

                                	 
      	
                                  $900

                                
	 	 	 
	
                                  10

                                	 
      	
                                  $1,000

                                
	 	 	 
	
                                  Over
      10

                                	 	$1,000
      + $200 for each Business Day late beyond 10 days

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    The
Company shall make any payments incurred under this Section in immediately
available funds upon demand by the Investor. Nothing herein shall limit the
Investor's right to pursue actual damages for the Company's failure to issue and
deliver the Securities to the Investor, except that such late payments shall
offset any such actual damages incurred by the Investor, and any Open Market
Adjustment Amount, as set forth below.

     

    If, by
the third (3rd) business day after the Closing Date, the Company fails to
deliver any portion of the shares of the Put to the Investor (the "Put Shares
Due") and the Investor purchases, in an open market transaction or otherwise,
shares of Common Stock necessary to make delivery of shares which would have
been delivered if the full amount of the shares to be delivered to the Investor
by the Company (the "Open Market Share Purchase") , then the Company shall pay
to the Investor, in addition to any other amounts due to Investor pursuant to
the Put, and not in lieu thereof, the Open Market Adjustment Amount (as defined
below). The "Open Market Adjustment Amount" is the amount equal to the excess,
if any, of (x) the Investor's total purchase price (including brokerage
commissions, if any) for the Open Market Share Purchase minus (y) the net
proceeds (after brokerage commissions, if any) received by the Investor
from the sale of the Put Shares Due. The Company shall pay the Open Market
Adjustment Amount to the Investor in immediately available funds within two (2)
business days of written demand by the Investor. By way of illustration and not
in limitation of the foregoing, if the Investor purchases shares of Common Stock
having a total purchase price (including brokerage commissions) of $11,000 to
cover an Open Market Purchase with respect to shares of Common Stock it sold for
net proceeds of $10,000, the Open Market Purchase Adjustment Amount which the
Company will be required to pay to the Investor will be $1,000.

     

    Section
2.7  Increase in Commitment
Amount. At any time prior to the one year anniversary of the Effective
Date (the “Commitment
Increase Date”) the Company may notify the Investor in writing that it
wishes to increase the Commitment Amount (provided that the Company has the
ability to register the additional Commitment Amount on the Registration
Statement) effective upon the Commitment Increase Date and the Commitment Amount
shall automatically be deemed increased.

     

    ARTICLE
III.

    Representations
of Investor

    

    Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof and as of each Advance
Date:

     

    Section
3.1. Organization and
Authorization. The Investor is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all
requisite power and authority to purchase and hold the securities issuable
hereunder. The decision to invest and the execution and delivery of this
Agreement by such Investor, the performance by such Investor of its obligations
hereunder and the consummation by such Investor of the transactions contemplated
hereby have been duly authorized and requires no other proceedings on the part
of the Investor. The undersigned has the right, power and authority to execute
and deliver this Agreement and all other instruments (including, without
limitations, the Registration Rights Agreement), on behalf of the Investor. This
Agreement has been duly executed and delivered by the Investor and, assuming the
execution and delivery hereof and acceptance thereof by the Company, will
constitute the legal, valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
3.2.  Evaluation
of Risks. The Investor has such knowledge and experience in financial,
tax and business matters as to be capable of evaluating the merits and risks of,
and bearing the economic risks entailed by, an investment in the Company and of
protecting its interests in connection with this transaction. It recognizes that
its investment in the Company involves a high degree of risk.

     

    Section
3.3. No Legal Advice
From the Company. The Investor acknowledges that it had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with his or its own legal counsel and investment and tax advisors. The Investor
is relying solely on such counsel and advisors and not on any statements or
representations of the Company or any of its representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.

     

    Section
3.4. Investment
Purpose. The securities are being purchased by the Investor for its own
account, and for investment purposes. The Investor agrees not to assign or in
any way transfer the Investor’s rights to the securities or any interest therein
and acknowledges that the Company will not recognize any purported assignment or
transfer except in accordance with applicable Federal and state securities laws.
No other person has or will have a direct or indirect beneficial interest in the
securities. The Investor agrees not to sell, hypothecate or otherwise transfer
the Investor’s securities unless the securities are registered under Federal and
applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such laws is
available.

     

    Section
3.5. Accredited
Investor. The Investor is an “Accredited Investor”
as that term is defined in Rule 501(a) of Regulation D of the Securities
Act.

     

    Section
3.6. Information. The
Investor and its advisors (and its counsel), if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and information it deemed material to making an informed investment decision.
The Investor and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and its management. Neither such inquiries nor any
other due diligence investigations conducted by such Investor or its advisors,
if any, or its representatives shall modify, amend or affect the Investor’s
right to rely on the Company’s representations and warranties contained in this
Agreement. The Investor understands that its investment involves a high degree
of risk. The Investor is in a position regarding the Company, which, based
upon employment, family relationship or economic bargaining power, enabled and
enables such Investor to obtain information from the Company in order to
evaluate the merits and risks of this investment. The Investor has sought
such accounting, legal and tax advice, as it has considered necessary to make an
informed investment decision with respect to this transaction.

     

    Section
3.7. Receipt of
Documents. The Investor and its counsel have received and read in their
entirety: (i) this Agreement and the Exhibits annexed hereto; (ii) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; (iii) the
Company’s Form 10-Q for the period ended June 30, 2009 and other SEC filings ;
and (iv) answers to all questions the Investor submitted to the Company
regarding an investment in the Company; and the Investor has relied on the
information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.

     

    Section
3.8. No General
Solicitation. Neither the Company, nor any of its affiliates, nor any
person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the shares of Common
Stock offered hereby.

     

    Section
3.9. Not an
Affiliate. The Investor is not an officer, director or a person that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with the Company or any “Affiliate” of
the Company (as that term is defined in Rule 405 of the Securities
Act).

     

    Section
3.10. Trading
Activities. The Investor’s
trading activities with respect to the Company’s Common Stock shall be in
compliance with all applicable federal and state securities laws, rules and
regulations and the rules and regulations of the Principal Market on which the
Company’s Common Stock is listed or traded. Investor makes no representations or
covenants that it will not engage in trading in the securities of the Company,
other than the Investor will not engage in any Short Sales of the Company's
common stock at any time during the Agreement. The Company acknowledges and
agrees that upon receipt of an Advance Notice the Investor has the right to sell
the shares to be purchased by the Investor pursuant to the Advance Notice prior
to taking possession of such Shares.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
IV.

    Representations
and Warranties of the Company

    Except as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents (as defined herein), the Company hereby represents and warrants to,
and covenants with, the Investor that the following are true and correct as of
the date hereof:

     

    Section
4.1. Organization and
Qualification. The Company is duly incorporated or organized and validly
existing in the jurisdiction of its incorporation or organization and has all
requisite corporate power to own its properties and to carry on its business as
now being conducted. Each of the Company and its subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect on the
Company and its subsidiaries taken as a whole.

     

    Section
4.2. Authorization, Enforcement, Compliance
with Other Instruments. (i) The Company has the requisite corporate power
and authority to enter into and perform this Agreement, the Registration Rights
Agreement and any related agreements, in accordance with the terms hereof and
thereof, (ii) the execution and delivery of this Agreement, the Registration
Rights Agreement and any related agreements by the Company and the consummation
by it of the transactions contemplated hereby and thereby, have been duly
authorized by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement, the Registration Rights Agreement and any
related agreements have been duly executed and delivered by the Company, (iv)
this Agreement, the Registration Rights Agreement and assuming the execution and
delivery thereof and acceptance by the Investor and any related agreements
constitute the valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors’ rights and
remedies.

     

    Section
4.3. Capitalization. The
authorized capital stock of the Company consists of 60,000,000 shares of Common
Stock, of which 40,558,699 shares of Common Stock are issued and outstanding,
and 12,300,00 shares of authorized Preferred Stock, of which no shares are
issued and outstanding All of such outstanding shares have been validly issued
and are fully paid and nonassessable. Except as disclosed in the SEC Documents
(as defined in paragraph 4.5), no shares of Common Stock are subject to
preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in the SEC Documents
and on Schedule 4.3, as of the date hereof, (i) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, or contracts,
commitments, understandings 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 or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities (iii) there
are no outstanding registration statements; and (iv) there are no agreements or
arrangements under which the Company or any of its subsidiaries is obligated to
register the sale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement), except pursuant to the
terms of an agreement between the Company and the Investor. There are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by this Agreement or any related agreement or the consummation
of the transactions described herein or therein. The Company has furnished to
the Investor true and correct copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Certificate of
Incorporation”), and 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 and the
material rights of the holders thereof in respect thereto.

     

    Section
4.4. No
Conflict. The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Certificate of Incorporation,
any certificate of designations of any outstanding series of preferred stock of
the Company or By-laws or (ii) conflict with or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of the Principal Market on
which the Common Stock is quoted) applicable to the Company or any of its
subsidiaries or by which any material property or asset of the Company or any of
its subsidiaries is bound or affected and which would cause a Material Adverse
Effect. Except as disclosed in the SEC Documents, neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles of
Incorporation or By-laws or their organizational charter or by-laws,
respectively, or any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its subsidiaries. The business of the
Company and its subsidiaries is not being conducted in violation of any material
law, ordinance, regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities 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 or governmental agency in order for it to execute, deliver or perform any
of its obligations under or contemplated by this Agreement or the Registration
Rights Agreement in accordance with the terms hereof or thereof. 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 and its subsidiaries are unaware of any
fact or circumstance which might give rise to any of the
foregoing.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.5. SEC Documents;
Financial Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
under the Securities Exchange Act for the two years preceding the date hereof
(or such shorter period as the Company was required by law or regulation to file
such material) (all of the foregoing filed prior to the date hereof or amended
after the date hereof and all exhibits include therein and financial statements
and schedules thereto and documents incorporated by reference therein, being
hereinafter referred to as the “SEC Documents”) on
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Document prior to the expiration of any such extension. The
Company has delivered to the Investor or its representatives, or made available
through the SEC’s website at http://www.sec.gov., true and complete copies of
the SEC Documents. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Exchange 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 the light of the circumstances under which they were
made, not misleading. 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 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 exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). Such financial statements have been prepared in accordance with
generally accepted accounting principles. For preparation of the Company’s
financials after the date of this Agreement, they shall use the accounting and
audit services of Friedman LLP to ensure compliance with applicable accounting
requirements and the published rules and regulations of the SEC. No other
information provided by or on behalf of the Company to the Buyers which is not
included in the SEC Documents contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein, in the light of the circumstance under which they are or were made and
not misleading.

     

    Section
4.6. No Misstatement
or Omission. Each part of the Registration Statement, when such part
became or becomes effective, and the Prospectus, on the date of filing thereof
with the SEC and at each Advance Notice Date and Closing Date, conformed or will
conform in all material respects with the requirements of the Securities Act and
the rules and regulations promulgated thereunder; each part of the Registration
Statement, when such part became or becomes effective, did not or will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and the Prospectus, on the date of filing thereof with the SEC and
at each Advance Notice Date and Share Issuance Date, did not or will not include
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; except that the foregoing shall not apply
to statements or omissions in any such document made in reliance on information
furnished in writing to the Company by the Investor expressly stating that such
information is intended for use in the Registration Statement, the Prospectus,
or any amendment or supplement thereto.

     

    Section
4.7. No
Default. Except as disclosed in the SEC Documents, the Company is not in
default in the performance or observance of any material obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of trust or
other material instrument or agreement to which it is a party or by which it is
or its property is bound and neither the execution, nor the delivery by the
Company, nor the performance by the Company of its obligations under this
Agreement or any of the exhibits or attachments hereto will conflict with or
result in the breach or violation of any of the terms or provisions of, or
constitute a default or result in the creation or imposition of any lien or
charge on any assets or properties of the Company under its Certificate of
Incorporation, By-Laws, any material indenture, mortgage, deed of trust or
other material agreement applicable to the Company or instrument to which the
Company is a party or by which it is bound, or any statute, or any decree,
judgment, order, rules or regulation of any court or governmental agency or body
having jurisdiction over the Company or its properties, in each case which
default, lien or charge is likely to cause a Material Adverse Effect on the
Company’s business or financial condition.

     

    Section
4.8. Absence
of Events of
Default. Except for matters described in the SEC Documents and/or this
Agreement, no Event of Default, as defined in the respective agreement to which
the Company is a party, and no event which, with the giving of notice or the
passage of time or both, would become an Event of Default (as so defined), has
occurred and is continuing, which would have a Material Adverse Effect on the
Company’s business, properties, prospects, financial condition or results of
operations.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
4.9. Intellectual
Property
Rights. The Company and its subsidiaries own or possess adequate rights
or licenses to use all material trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now conducted. The
Company and its subsidiaries do not have any knowledge of any infringement by
the Company or its subsidiaries of trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company, there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
mark registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.

     

    Section
4.10. Employee
Relations. Neither the Company nor any of its subsidiaries is involved in
any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s or its
subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.

     

    Section
4.11. Environmental
Laws. Except as set forth in the SEC Documents, the Company and its
subsidiaries are (i) in compliance with any and all applicable material foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval.

     

    Section
4.12. Title.
Except as set forth in the SEC Documents, the Company has good and marketable
title to its properties and material assets owned by it, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest other
than such as are not material to the business of the Company. 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 are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.

     

    Section
4.13. 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 been refused any insurance coverage sought or applied
for and 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 materially
and adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company and its subsidiaries, taken as a
whole.

     

    Section
4.14. Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.

     

    Section
4.15. Internal
Accounting Controls. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient 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 the rules and regulations as promulgated by
the SEC 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.

     

    Section
4.16. No Material
Adverse Breaches, etc. Except as set forth in the SEC Documents, 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 on the business, properties, operations,
financial condition, results of operations or prospects of the Company or its
subsidiaries. Except as set forth in the SEC Documents, neither the Company nor
any of its subsidiaries is in breach of any contract or agreement which breach,
in the judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect on the business, properties, operations, financial condition,
results of operations or prospects of the Company or its
subsidiaries.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
4.17. Absence of
Litigation. Except as set forth in the SEC Documents, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending against or
affecting the Company, the Common Stock or any of the Company’s subsidiaries,
wherein an unfavorable decision, ruling or finding would (i) have a Material
Adverse Effect on the transactions contemplated hereby (ii) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) have a Material Adverse Effect on the business,
operations, properties, financial condition or results of operation of the
Company and its subsidiaries taken as a whole.

     

    Section
4.18. Subsidiaries. Except
as disclosed in the SEC Documents, the Company does not presently own or
control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.

     

    Section
4.19. Tax
Status. Except as disclosed in the SEC Documents, the Company and each of
its subsidiaries has made or filed all federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which it
is subject and (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) 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 provision
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.

     

    Section
4.20. Certain
Transactions. Except as set forth in the SEC Documents none of the
officers, directors, or employees of the Company is presently a party to any
transaction with the Company (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.

     

    Section
4.21. Rights of First
Refusal. The Company is not obligated to offer the securities offered
hereunder on a right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.

     

    Section
4.22. Use of
Proceeds. The Company shall use the net proceeds from this offering for
working capital and other general corporate purposes including paying relevant
fees and commissions incurred from this transaction.

     

    Section
4.23. Maintenance of
Listing or Quotation on Principal Market. For so long as any securities
issuable hereunder held by the Investor remain outstanding, the Company
acknowledges, represents, warrants and agrees that it will /maintain the listing
or quotation, as applicable, of its Common Stock on the Principal
Market.

     

    Section
4.24. Opinion of
Counsel. Investor shall receive an opinion letter from counsel to the
Company on the date hereof in the form attached hereto as Exhibit
C.

     

    Section
4.25. Opinion of
Counsel. The Company will obtain for the Investor, at the Company’s
expense, any and all opinions of counsel which may be reasonably required in
order to sell the securities issuable hereunder without
restriction.

     

    Section
4.26. Dilutive
Effect. The Company understands and acknowledges that the number of
shares of Common Stock issuable upon purchases pursuant to this Agreement will
increase in certain circumstances including, but not necessarily limited to, the
circumstance wherein the trading price of the Common Stock declines during the
period between the Effective Date and the end of the Open Period. The Company's
executive officers and directors have studied and fully understand the nature of
the transactions contemplated by this Agreement and recognize that they
have a potential dilutive effect on the shareholders of the Company. The Board
of Directors of the Company has concluded, in its good faith business judgment,
and with full understanding of the implications, that such issuance is in the
best interests of the Company. The Company specifically acknowledges that,
subject to such limitations as are expressly set forth in the Agreement, its
obligation to issue shares of Common Stock upon purchases pursuant to this
Agreement is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.

    

    Section
4.27. Acknowledgment
Regarding Investor’s Purchase of Shares.
The Company acknowledges and agrees that the Investor is acting solely in the
capacity of an arm’s length investor with respect to this Agreement and the
transactions contemplated hereunder. The Company further acknowledges that the
Investor is not acting as a financial advisor or fiduciary of the Company
(or in any similar capacity) with respect to this Agreement and the transactions
contemplated hereunder and any advice given by the Investor or any of its
representatives or agents in connection with this Agreement and the transactions
contemplated hereunder is merely incidental to the Investor’s purchase of the
Common Stock hereunder. The Company is aware and acknowledges that it may not be
able to request Advances under this Agreement if it cannot obtain an effective
Registration Statement or if any issuances of Common Stock pursuant to any
Advances would violate any rules of the Principal Market. The Company further is
aware and acknowledges that any fees paid pursuant to Section 12.4 hereunder or
shares issued pursuant to Section 12.4(b) hereunder shall be earned on the date
hereof and not refundable or returnable under any
circumstances.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
4.28. No Legal Advice
From the Investor. The Company acknowledges that it had the opportunity
to review this Agreement and the transactions contemplated by this Agreement
with his or its own legal counsel and investment and tax advisors. The Company
is relying solely on such counsel and advisors and not on any statements or
representations of the Investor or any of its representatives or agents for
legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction. The Company is not relying on any representation except for the
representations of the Investor contained in this Agreement.

     

    Section
4.29. No Similar
Transactions. The Company has not entered into any transaction similar in
nature to the one described in this Agreement.

    

    Section
4.30 Sarbanes-Oxley;
Internal Accounting Controls. The Company is in material compliance with
all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as
of the Closing Date. The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the Company’s most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in
the Company’s internal control over financial reporting (as such term is defined
in the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.

     

    Section
4.32 Other
Transactions. During the Term of the Reserve Equity Financing, the
Company will be prohibited from effecting or entering into (i) an agreement to
effect any financing involving the sale of debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock at a price that is based upon and/or
varies with the trading prices of Company’s Common Stock at any time after the
initial issuance of such securities or is subject to reset upon the
occurrence of specified or contingent events and (ii) any agreement, including
but not limited to an Equity Line of Credit, whereby the Issuer may sell
securities at a future determined price.

    

    Section
4.33 Internal
Accounting Controls. The Company
maintains a system of internal accounting controls sufficient 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.

     

    Section
4.34 The
Shares. The Shares have been duly authorized and, when issued, delivered
and paid for pursuant to this Agreement, will be validly issued and fully paid
and non-assessable, free and clear of all encumbrances and will be issued in
compliance with all applicable United States federal and state securities laws;
the capital stock of the Company, including the Common Stock, conforms in all
material respects to the description thereof contained in the Registration
Statement and the Common Stock, including the Shares, will conform to the
description thereof contained in the Prospectus as amended or supplemented.
Neither the stockholders of the Company, nor any other Person have any
preemptive rights or rights of first refusal with respect to the Shares or other
rights to purchase or receive any of the Shares or any other securities or
assets of the Company, and no Person has the right, contractual or otherwise, to
cause the Company to issue to it, or register pursuant to the Securities Act,
any shares of capital stock or other securities or assets of the Company upon
the issuance or sale of the Shares. The Company is not obligated to offer the
Shares on a right of first refusal basis or otherwise to any third parties
including, but not limited to, current or former shareholders of the Company,
underwriters, brokers, agents or other third parties.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE
V.

    Indemnification

    

    The
Investor and the Company represent to the other the following with respect to
itself:

     

    Section
5.1. Indemnification.

     

    (a) In
consideration of the Investor’s execution and delivery of this Agreement, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Investor, and all
of its officers, directors, partners, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Investor
Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”), incurred by the Investor Indemnitees or any of them as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement or the
Registration Rights Agreement or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, or (c) any cause of action, suit or claim brought or made against
such Investor Indemnitee not arising out of any action or inaction of an
Investor Indemnitee, and arising out of or resulting from the execution,
delivery, performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto by any of the Investor
Indemnitees. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities, which is
permissible under applicable law.

     

    (b) Contribution. In the
event that the indemnity provided in Section 5.1 is unavailable to or
insufficient to hold harmless an indemnified party for any reason, the Company
severally agrees to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending the same) (collectively “Losses”) to which the
Company may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand from transactions
contemplated by this Agreement. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Investor
severally shall contribute in such proportion as is appropriate to reflect not
only such relative benefits but also the relative fault of the Company on the
one hand and of the Investor on the other in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to be equal to
the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by it, and benefits received
by the Investor shall be deemed to be equal to the total discounts received by
the Investor. Relative fault shall be determined by reference to, among other
things, whether any untrue or any alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to information
provided by the Company on the one hand or the Investor on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Investor agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this section shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this secton the Investor shall not be required to contribute any amount in
excess of the amount by which the Purchase Price for Shares actually purchased
pursuant to this Agreement exceeds the amount of any damages which the Investor
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Article V, each person who
controls the Investor within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act and each director, officer, employee and agent of
the Investor shall have the same rights to contribution as the Investor, and
each person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this
section.

     

    (c) The
remedies provided for in this Article V are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any indemnified
person at law or in equity. The obligations of the parties to indemnify or make
contribution under this Article V shall survive termination.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
5.2 Notification of
Claims for Indemnification. Each party entitled to indemnification under
this Article V (an “Indemnified Party”)
shall, promptly after the receipt of notice of the commencement of any claim
against such Indemnified Party in respect of which indemnity may be sought from
the party obligated to indemnify such Indemnified Party under this Article V
(the “Indemnifying
Party”), notify the Indemnifying Party in writing of the commencement
thereof. Any such notice shall describe the claim in reasonable detail. The
failure of any Indemnified Party to so notify the Indemnifying Party of any such
action shall not relieve the Indemnifying Party from any liability which it may
have to such Indemnified Party (a) other than pursuant to this Article V or (b)
under this Article V unless, and only to the extent that, such failure results
in the Indemnifying Party’s forfeiture of substantive rights or defenses or the
Indemnifying Party is prejudiced by such delay. The procedures listed below
shall govern the procedures for the handling of indemnification
claims.

     

    (a) Any
claim for indemnification for Indemnified Liabilities that do not result from a
Third Party Claim as defined in the following paragraph, shall be asserted by
written notice given by the Indemnified Party to the Indemnifying Party. Such
Indemnifying Party shall have a period of thirty (30) days after the receipt of
such notice within which to respond thereto. If such Indemnifying Party does not
respond within such thirty (30) day period, such Indemnifying Party shall be
deemed to have refused to accept responsibility to make payment as set forth in
Section 5.1. If such Indemnifying Party does not respond within such thirty (30)
day period or rejects such claim in whole or in part, the Indemnified Party
shall be free to pursue such remedies as specified in this
Agreement.

     

    (b) If an
Indemnified Party shall receive notice or otherwise learn of the assertion by a
person or entity not a party to this Agreement of any threatened legal action or
claim (collectively a “Third Party Claim”),
with respect to which an Indemnifying Party may be obligated to provide
indemnification, the Indemnified Party shall give such Indemnifying Party
written notice thereof within twenty (20) days after becoming aware of such
Third Party Claim.

     

    (c) An
Indemnifying Party may elect to defend (and, unless the Indemnifying Party has
specified any reservations or exceptions, to seek to settle or compromise) at
such Indemnifying Party’s own expense and by such Indemnifying Party’s own
counsel, any Third Party Claim. Within thirty (30) days after the receipt of
notice from an Indemnified Party (or sooner if the nature of such Third Party
Claim so requires), the Indemnifying Party shall notify the Indemnified Party
whether the Indemnifying Party will assume responsibility for
defending such Third Party Claim, which election shall specify any
reservations or exceptions. If such Indemnifying Party does not respond within
such thirty (30) day period or rejects such claim in whole or in part, the
Indemnified Party shall be free to pursue such remedies as specified in this
Agreement. In case any such Third Party Claim shall be brought against any
Indemnified Party, and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to assume the
defense thereof at its own expense, with counsel satisfactory to such
Indemnified Party in its reasonable judgment; provided, however, that any
Indemnified Party may, at its own expense, retain separate counsel to
participate in such defense at its own expense. Notwithstanding the foregoing,
in any Third Party Claim in which both the Indemnifying Party, on the one hand,
and an Indemnified Party, on the other hand, are, or are reasonably likely to
become, a party, such Indemnified Party shall have the right to employ
separate counsel and to control its own defense of such claim if, in the
reasonable opinion of counsel to such Indemnified Party, either (x) one or more
significant defenses are available to the Indemnified Party that are not
available to the Indemnifying Party or (y) a conflict or potential conflict
exists between the Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate representation
advisable; provided, however, that in such circumstances the Indemnifying Party
(i) shall not be liable for the fees and expenses of more than one counsel to
all Indemnified Parties and (ii) shall reimburse the Indemnified Parties for
such reasonable fees and expenses of such counsel incurred in any such Third
Party Claim, as such expenses are incurred, provided that the Indemnified
Parties agree to repay such amounts if it is ultimately determined that the
Indemnifying Party was not obligated to provide indemnification under this
Article IX. The Indemnifying Party agrees that it shall not, without the prior
written consent of the Indemnified Party, settle, compromise or consent to the
entry of any judgment in any pending or threatened claim relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of such Indemnified
Party from all liability arising or that may arise out of such claim. The
Indemnifying Party shall not be liable for any settlement of any claim effected
against an Indemnified Party without the Indemnifying Party’s written consent,
which consent shall not be unreasonably withheld, conditioned or delayed. The
rights accorded to an Indemnified Party hereunder shall be in addition to any
rights that any Indemnified Party may have at common law, by separate agreement
or otherwise; provided, however, that notwithstanding the foregoing or anything
to the contrary contained in this Agreement, nothing in this Article V shall
restrict or limit any rights that any Indemnified Party may have to seek
equitable relief.

     

    ARTICLE
VI.

    Covenants
of the Company

    

    Section
6.1. Registration
Rights. The Company shall cause the Registration Rights Agreement to
remain in full force and effect and the Company shall comply in all material
respects with the terms thereof. During the Commitment Period, the Company shall
notify the Investor promptly if (i) the Registration Statement shall cease to be
effective under the Securities Act, (ii) the Common Stock shall cease to be
authorized for listing on the Principal Market, (iii) the Common Stock ceases to
be registered under Section 12(g) of the Exchange Act or (iv) the Company fails
to file in a timely manner all reports and other documents required of it as a
reporting company under the Exchange Act.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
6.2. Quotation of
Common Stock. The Company shall maintain the Common Stock’s authorization
for quotation on the Principal Market.

     

    Section
6.3. Exchange
Act
Registration. The Company will cause its Common Stock to continue to be
registered under Section 12(g) of the Exchange Act, will file in a timely manner
all reports and other documents required of it as a reporting company under the
Exchange Act and will not take any action or file any document (whether or not
permitted by Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Exchange Act.

     

    Section
6.4. Transfer Agent
Instructions. On the Advance Notice Date, the Company shall deliver
instructions to its transfer agent to issue shares of Common Stock to the
Investor free of restrictive legends on the Advance Notice Date .

     

    Section
6.5. Corporate
Existence. The Company will take all steps necessary to preserve and
continue the corporate existence of the Company.

     

    Section
6.6. Notice of Certain
Events Affecting Registration; Suspension of Right to Make an Advance.
The Company will immediately notify the Investor upon its becoming aware of the
occurrence of any of the following events in respect of a registration statement
or related prospectus relating to an offering of Registrable Securities: (i)
receipt of any request for additional information by the SEC or any other
Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the registration
statement or related prospectus; (ii) the issuance by the SEC or any other
Federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose; (iii) receipt of any notification with respect to the
suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the happening of any event
that makes any statement made in the Registration Statement or related
prospectus of any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (v) the Company’s
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate; and the Company will promptly make available to
the Investor any such supplement or amendment to the related prospectus. The
Company shall not deliver to the Investor any Advance Notice during the
continuation of any of the foregoing events.

     

    Section
6.7. Prohibited
Transactions. During the term of this Agreement, the Company shall not
enter into any Prohibited Transaction without the prior written consent of the
Investor, which consent may be withheld at the sole discretion of the Investor.
For the purposes of this Agreement, the term “Prohibited Transaction” shall
refer to the issuance by the Company of any “future priced securities,” which
shall mean the issuance of shares of Common Stock or securities of any type
whatsoever that are, or may become, convertible or exchangeable into shares of
Common Stock where the purchase, conversion or exchange price for such Common
Stock is determined using any floating discount or other post-issuance
adjustable discount to the market price of Common Stock, including, without
limitation, pursuant to any equity line financing that is substantially similar
to the financing provided for under this Agreement, provided that any future
issuance by the Company of (i) a convertible security (“Convertible
Security”) that (A) contains provisions that adjust the conversion price
of such Convertible Security in the event of stock splits, dividends,
distributions, reclassifications or similar events or pursuant to anti-dilution
provisions or (B) is issued in connection with the Company obtaining debt
financing for research and development purposes where the issuance of
Convertible Securities is conditioned upon the Company meeting certain defined
clinical milestones, (ii) securities in a registered direct public offering or
an unregistered private placement where the price per share of such securities
is fixed concurrently with the execution of definitive documentation relating to
the offering or placement, as applicable and (iii) securities issued in
connection with a secured debt financing, shall not be a Prohibited
Transaction.

     

    Section
6.8. Consolidation;
Merger. The Company shall not, at any time after the delivery of
anAdvance Notice and before the Advance Date applicable to such Advance Notice,
effect any merger or consolidation of the Company with or into, or a transfer of
all or substantially all the assets of the Company to another entity (a “Consolidation Event”) unless the
resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Investor such shares of stock and/or
securities as the Investor is entitled to receive pursuant to this
Agreement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Section
6.9. Issuance of the
Company’s Common Stock. The
sale of the shares of Common Stock shall be made in accordance with the
provisions and requirements of Regulation D and any applicable state securities
law.

     

    Section
6.10. Review of Public
Disclosures. All SEC filings
(including, without limitation, all filings required under the Exchange Act,
which include Forms 10-Q, 10-K, 8-K, etc) and other public disclosures made by
the Company, including, without limitation, all press releases, investor
relations materials, and scripts of analysts meetings and calls, shall be
reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public
accountants.

     

    Section
6.11. Market
Activities The Company will
not, directly or indirectly take any action designed to cause or result in, or
that constitutes or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Common Stock or (ii) sell, bid for or
purchase the Common Stock, or pay anyone any compensation for soliciting
purchases of the Common Stock.

     

    Section
6.12 Listing of
Shares. The Company will use commercially reasonable efforts to cause the
Shares to be listed on the Principal Market and to qualify the Shares for sale
under the securities laws of such jurisdictions as the Investor designates;
provided that the Company shall not be required in connection therewith to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction.

     

    Section
6.13 Comfort
Letters. At the reasonable request of the Investor the Company will
request that its independent accountants furnish to the Investor a letter, in
form and substance reasonably satisfactory to the Investor, containing
statements and information of the type ordinarily included in accountants’
“comfort letters” to underwriters with respect to the financial statements of
the Company dated the date of and provided within a reasonable period of time
after (i) the date hereof, (ii) the date the Registration Statement or the
Prospectus shall be amended (other than (1) in connection with the filing of a
prospectus supplement that contains solely the information required (2) in
connection with the filing of any report or other document under Section 13, 14
or 15(d) of the Exchange Act by the Company or (3) by a prospectus supplement
relating to the offering of other securities (including, without limitation,
other shares of Common Stock)) and (iii) the date of filing or amending each
Annual Report on Form 10-K and Quarterly Report on Form 10-Q for a period in
which an Advance was delivered pursuant to this Agreement and which are
incorporated by reference in the Registration Statement.

    

    ARTICLE
VII.

    Conditions
for Advance and Conditions to Closing

    

    Section
7.1. Conditions
Precedent to the Obligations of the Company. The obligation hereunder of
the Company to issue and sell the shares of Common Stock to the Investor
incident to each Closing is subject to the satisfaction, or waiver by the
Investor in writing, at or before each such Closing, of each of the conditions
set forth below.

     

    (a) Accuracy of the
Investor’s Representations and
Warranties. The representations and warranties of the Investor shall be
true and correct in all material respects.

     

    (b) Performance by the
Investor. The Investor shall have performed, satisfied and complied in
all respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Investor at or prior to such Closing.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Section
7.2. Conditions
Precedent to the Right of the Company to Deliver an Advance Notice. The
right of the Company to deliver an Advance Notice is subject to the fulfillment
by the Company, on such Advance Notice Date (a “Condition Satisfaction Date”),
of each of the following conditions, any of which may be waived in writing by
the Investor:

     

    (a) Registration of
the Common
Stock with the SEC. The Company shall have filed with the SEC a
Registration Statement with respect to the resale of the Registrable Securities
in accordance with and subject to the terms of the Registration Rights
Agreement. As set forth in the Registration Rights Agreement, the Registration
Statement shall have previously become effective and shall remain effective on
each Condition Satisfaction Date and (i) neither the Company nor the Investor
shall have received notice that the SEC has issued or intends to issue a
stop order with respect to the Registration Statement or that the SEC otherwise
has suspended or withdrawn the effectiveness of the Registration Statement,
either temporarily or permanently, or intends or has threatened to do so (unless
the SEC’s concerns have been addressed and the Investor is reasonably satisfied
that the SEC no longer is considering or intends to take such action), and (ii)
no other suspension of the use or withdrawal of the effectiveness of the
Registration Statement or related prospectus shall exist. The Registration
Statement must have been declared effective by the SEC prior to the first
Advance Notice Date.

     

    (b) Authority. The
Company shall have obtained all permits and qualifications required by any
applicable state in accordance with the Registration Rights Agreement for the
offer and sale of the shares of Common Stock, or shall have the availability of
exemptions therefrom. The sale and issuance of the shares of Common Stock shall
be legally permitted by all laws and regulations to which the Company is
subject.

     

    (c) Fundamental Changes.
There shall not exist any fundamental changes to the information set forth in
the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.

     

    (d) Performance by the
Company. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by this
Agreement and the Registration Rights Agreement to be performed, satisfied or
complied with by the Company at or prior to each Condition Satisfaction
Date.

     

    (e) No Injunction. No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits or directly and adversely
affects any of the transactions contemplated by this Agreement, and no
proceeding shall have been commenced that may have the effect of
prohibiting or adversely affecting any of the transactions contemplated by
this Agreement.

     

    (f) No Suspension of Trading in
or Delisting of Common Stock. The Common Stock is trading on a Principal
Market. The trading of the Common Stock is not suspended by the SEC or the
Principal Market. The issuance of shares of Common Stock with respect to the
applicable Closing will not violate the shareholder approval requirements of the
Principal Market. The Company shall not have received any notice threatening the
continued quotation of the Common Stock on the Principal Market and the Company
shall have no knowledge of any event which would be more likely than not to have
the effect of causing the Common Stock to not be trading or quoted on a
Principal Market.

    

    (g) Maximum Advance Amount. The
amount of an Advance corresponding to the Advance Notice shall not exceed the
Maximum Advance Amount. The Floor Price shall be 95% of the average closing
price of the Common Stock for the ten (10) Trading Days prior to the Advance
Notice Date (“Floating Floor Price”). If on any day during the Pricing Period,
the closing price of the Common Stock falls below the Floor Price, the Maximum
Advance Amount will be reduced to one tenth of the initial Advance Amount
specified in the Advance Notice. If trading in the Company’s Common Stock
is suspended for any reason during trading hours on the Principal Market on any
Trading Day during a Pricing Period or for each day there is public holiday
during the Pricing Period, the Advance Amount in respect of such Pricing Period
shall be reduced by one fifth of the initial Advance Amount specified in the
Advance Notice. In addition, in no event shall the number of shares issuable to
the Investor pursuant to an Advance cause the aggregate number of shares of
Common Stock beneficially owned by the Investor and its affiliates to exceed
9.99% of the then outstanding shares of Common Stock of the Company (“Ownership
Limitation”). If any of the Company’s representations in this Agreement
are false or if the Common Stock is less than twelve cents, then no Advances
shall be permitted. Any portion of an Advance that would cause the Investor to
exceed the Ownership Limitation shall automatically be withdrawn. For the
purposes of this section, beneficial ownership shall be calculated in accordance
with Section 13(d) of the Exchange Act.

     

    (h) No Knowledge. The
Company has no knowledge of any event which would be more likely than not to
have the effect of causing such Registration Statement to be suspended or
otherwise ineffective at Closing.

     

    (i) Executed Advance
Notice. The Investor shall have received the Advance Notice executed by an
officer of the Company and the representations contained in such Advance Notice
shall be true and correct as of each Condition Satisfaction
Date.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (j) Intentionally
Omitted.

     

    (k) Fees Paid. The
Company has paid to investor all fees, expenses and shares due under this
Agreement.

     

    (l) No Material Notices.
None of the following events shall have occurred and be continuing: (i) receipt
by the Company of any request for additional information from the SEC or any
other federal or state governmental, administrative or self regulatory authority
during the period of effectiveness of the Registration Statement, the response
to which would require any amendments or supplements to the Registration
Statement or Prospectus; (ii) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of
the Registration Statement or the initiation of any proceedings for that
purpose; (iii) receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the occurrence of any event that makes any
statement made in the Registration Statement or the Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires the making of any changes in the Registration
Statement, Prospectus or documents so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; and (v) the Company’s reasonable determination that a
post-effective amendment to the Registration Statement would be required. There
shall not exist any fundamental changes to the information set forth in the
Registration Statement which would require the Company to file a post-effective
amendment to the Registration Statement.

     

    ARTICLE
VIII.

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

    

    Section
8.1. Non-Disclosure of
Non-Public Information.

     

    (a)
Subject to Section 6.6 and except as otherwise provided in this Agreement or the
Registration Rights Agreement, the Company covenants and agrees that it has not
in the past and will refrain in the future from disclosing, and shall cause its
officers, directors, employees and agents to refrain from disclosing, any
material non-public information to the Investor without also disseminating such
information to the public.

     

    (b)
Nothing herein shall require the Company to disclose material, non-public
information to the Investor or its advisors or representatives, and the Company
represents that it does not disseminate material, non-public information to any
investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts in violation of Regulation FD of the Exchange
Act, provided, however, that notwithstanding anything herein to the contrary,
the Company will, as hereinabove provided and subject to compliance with
Regulation FD, immediately notify the advisors and representatives of the
Investor and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting material, non-public
information (whether or not requested of the Company specifically or generally
during the course of due diligence by such persons or entities), which, if not
disclosed in the prospectus included in the Registration Statement would cause
such prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Section 8.1 shall be construed to mean that such persons or entities
other than the Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain material, non-public information
in the course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue
statement of material fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not misleading.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
IX.

    Choice
of Law/Jurisdiction

    Section
9.1. Governing
Law. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York without regard to the principles of
conflict of laws.

     

    Section
9.2. Arbitration. Any dispute
arising out of or in connection with this Agreement or otherwise relating to the
parties relationship that cannot be settled by the Company and the Investor
after discussion shall be settled solely by arbitration. Any such arbitration
shall be fully and finally resolved in binding arbitration in a proceeding in
the State of New York, City of New York, in accordance with the rules of the
American Arbitration Association before a single arbitrator who is a securities
lawyer. The arbitrator shall not have the authority to modify or change any
of the terms of this Agreement. The arbitrator may award interim relief and
grant specific performance in addition to monetary damages. The Company and the
Investor further agree that no demand for punitive or exemplary damages shall be
made in any arbitration proceeding. Any monetary award shall be in U.S. dollars.
The arbitrator's award shall be final and binding upon the parties, and judgment
upon the award may be entered in any court of competent jurisdiction in any
state of the United States or country or application may be made to such court
for a judicial acceptance of the award and an enforcement as the law of such
jurisdiction may require or allow. No party to this agreement will challenge the
jurisdiction or venue provisions as provided in this section. No party to this
agreement will challenge the jurisdiction or venue provisions as provided in
this section.

     

    ARTICLE
X.

    Assignment;
Termination

    

    Section
10.1. Assignment. Neither
this Agreement nor any rights or obligations of the Company or the Investor
hereunder may be assigned to any other Person.

     

    Section
10.2. Termination.

     

    (a)
Unless earlier terminated as provided hereunder, this Agreement shall terminate
automatically on the earliest of (i) the first day of the month next following
the 24-month anniversary of the Effective Date, or (ii) the date on which the
Investor shall have made payment of Advances pursuant to this Agreement in the
aggregate amount of the Commitment Amount.

     

    (b) The
Company may terminate this Agreement effective upon fifteen Trading Days’ prior
written notice to the Investor; provided that (i) there are no Advances
outstanding, and (ii) the Company has paid all amounts owed to the Investor
pursuant to this Agreement. This Agreement may be terminated at any time by the
mutual written consent of the parties, effective as of the date of such mutual
written consent unless otherwise provided in such written consent. In the event
of any termination of this Agreement by the Company hereunder, so long as the
Investor owns any shares of Common Stock issued hereunder, unless all of such
shares of Common Stock may be resold by the Investor without registration and
without any time, volume or manner of sale limitations pursuant to Rule 144, the
Company shall not (i) cancel the common stock issued to Investor or suspend
(except as provided for in the Registration Rights Agreement) or withdraw the
Registration Statement or otherwise cause the Registration Statement to become
ineffective, or voluntarily delist the Common Stock from, the Principal
Market without listing the Common Stock on another Principal
Market.

     

    (c) The
obligation of the Investor to make an Advance to the Company pursuant to this
Agreement shall terminate permanently (including with respect to an Advance Date
that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for an
aggregate of fifty (50) Trading Days, during the Commitment Period, or (ii) the
Company shall at any time fail materially to comply with the requirements of
Article VI and such failure is not cured within thirty (30) days after receipt
of written notice from the Investor, provided, however, that this paragraph (c)
shall not apply to any period commencing upon the filing of a post-effective
amendment to such Registration Statement and ending upon the date on which such
post effective amendment is declared effective by the SEC.

     

    (d)
Nothing in this Section 10.2 shall be deemed to release the Company or the
Investor from any liability for any breach under this Agreement, or to impair
the rights of the Company and the Investor to compel specific performance by the
other party of its obligations under this Agreement. The indemnification
provisions contained in Sections 5.1 and 5.2 shall survive termination
hereunder.

     

    ARTICLE
XI.

    Notices

    

    Section
11.1. Notices.
Any notices, consents, waivers, or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) three
(3) days after being sent by U.S. certified mail, return receipt requested,
(iii) one (1) day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same or
(iv) or upon confirmation of receipt of email by the recipient emailing back the
sender that they are in receipt of the email. The addresses and emails for
such communications shall be:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        	
                If
      to the Company, to:

              	
                Attn:
      David Bruce Hong

                Unit
      511, 5/F., Block A, Ming Pao Industrial Centre

                18
      Ka Yip Street, Chai Wan, Hong Kong

                Telephone
      +852 2537-3230

                Email:
      dbh@biofield.com

              
	 
      
	
                If
      to the Investor(s):

              	
                AGS
      Capital Group, LLC

                2
      Water Street, Ste. 17G

                New
      York, New York

                Attention:
      Allen Silberstein

                Telephone:
      212-217-9139

                Email:
      asilberstein@agscapitalgroup.com

              

      

    

     

    Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or email.

     

    ARTICLE
XII.

    Miscellaneous

    

    Section
12.1. Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other
party.

     

    Section
12.2 Entire Agreement;
Amendments. This Agreement and the Registration Rights Agreement
supersedes all other prior oral or written agreements between the Investor, the
Company, their affiliates and persons acting on their behalf with respect to the
matters discussed herein, and this Agreement, the Registration Rights Agreement
and the instruments referenced herein and therein 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 Investor 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. The provisions of this agreement shall be construed
in favor of the Investor.

     

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

     

    Section
12.4. Fees and
Expenses. Each of the parties shall pay its own fees and expenses
(including the fees of any attorneys, accountants, appraisers or others engaged
by such party). Company shall issue to Investor $120,000 worth of restricted
common stock which shall be included in the next registration agreement filed by
the Company. 3,000,000 shares of Common Stock will be issued upon signing this
Agreement. Additional shares constituting the balance of the $120,000 shall be
issued to Investor upon the Company increasing their share count to 300,000,000.
The pricing for the shares referenced in this section will be based on the
average closing price for the 10 trading days preceding the date of this
Agreement.

     

    Section
12.5. Confidentiality. If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any information
obtained from any other party (except information publicly available or in such
party’s domain prior to the date hereof, and except as required by court order)
and shall promptly return to the other parties all schedules, documents,
instruments, work papers or other written information without retaining
copies thereof, previously furnished by it as a result of this Agreement or in
connection herein.

     

    Section
12.6 Publicity.
The Company and the Investor shall consult with each other in issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated hereby and no party shall issue any such press release or otherwise
make any such public statement without the prior consent of the other party,
which consent shall not be unreasonably withheld or delayed, except that no
prior consent shall be required if such disclosure is required by law, in which
such case the disclosing party shall provide the other party with prior notice
of such public statement. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Investor without the prior consent of the
Investor, except to the extent required by law. The Investor acknowledges that
this Agreement and all or part of the Reserve Equity Financing Documents may be
deemed to be "material contracts" as that term is defined by

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Item
601(b)(10) of Regulation S-B, and that the Company may therefore be required to
file such documents as exhibits to reports or registration statements filed
under the 1933 Act or the 1934 Act. The Investor further agrees that the status
of such documents and materials as material contracts shall be determined solely
by the Company, in consultation with its counsel.

     

    Section
12.7 Placement
Agent. If so required by the SEC, the Company agrees to pay a registered
broker dealer, to act as placement agent, a percentage of the Put Amount on each
draw toward the fee. The Investor shall have no obligation with respect to any
fees or with respect to any claims made by or on behalf of other persons or
entities for fees of a type contemplated in this Section that may be due in
connection with the transactions contemplated by the Reserve Equity Financing
Documents. The Company shall indemnify and hold harmless the Investor, their
employees, officers, directors, agents, and partners, and their respective
affiliates, from and against all claims, losses, damages, costs (including the
costs of preparation and attorney's fees) and expenses incurred in respect of
any such claimed or existing fees, as such fees and expenses are
incurred.

     

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

     

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

     

    
      	
              COMPANY:

            
	
              Biofield
      Corp.

            
	 
      
	
              By:
      /s/ David Bruce Hong

            
	 
      
	
              Name:
      David Bruce Hong

            
	
              Title:
      Chief Executive Officer

            
	 
      
	
              INVESTOR:

            
	
              AGS
      Capital Group, LLC

            
	 
      
	
              By:
      /s/ Allen Silberstein

            
	 
      
	
              Name:
      Allen Silberstein

            
	
              Title:
      Chief Executive Officer

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

    ADVANCE
NOTICE

    Biofield
Corp.

     

    The
undersigned, __________hereby certifies, with respect to the sale of shares of
Common Stock of Biofield Corp. (the “Company”) issuable in
connection with this Advance Notice, delivered pursuant to the Reserve Equity
Financing Agreement (the “Agreement”), as
follows:

     

    1. The
undersigned is the duly elected Officer of the Company, its Chief Executive,
President or Chief Financial Officer.

     

    2. There
are no fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post effective amendment to
the Registration Statement.

     

    3. The
Company has performed in all material respects all covenants and agreements to
be performed by the Company and has complied in all material respects with all
obligations and conditions contained in the Agreement on or prior to the Advance
Notice Date, and shall continue to perform in all material respects all
covenants and agreements to be performed by the Company through the applicable
Advance Date. All conditions to the delivery of this Advance Notice are
satisfied as of the date hereof.

     

    4. The
undersigned hereby represents, warrants and covenants that it has made all
filings (“SEC
Filings”) required to be made by it pursuant to applicable securities
laws (including, without limitation, all filings required under the Securities
Exchange Act of 1934, which include Forms 10-Q or, 10-K or, 8-K, etc.). All SEC
Filings and other public disclosures made by the Company, including, without
limitation, all press releases, analysts meetings and calls, etc. (collectively,
the “Public
Disclosures”), have been reviewed and approved for release by the
Company’s attorneys and, if containing financial information, the Company’s
independent certified public accountants. None of the Company’s Public
Disclosures contain, as of their respective dates, any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

     

    5. The
Advance requested is _____shares.

     

    The
undersigned has executed this Certificate this _____ day of _____.

     

    
      
        
          
            
              
                
                  
                    
                      
                        	 	 	 
	 	 
	
                                By:

                              	 
      
	 
      	
                                Name:

                              
	 
      	
                                Title:

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    If
Returning This Advance Notice via email Please Send To:
asilberstein@agscapitalgroup.com

     

    If by
Mail, via Federal Express
To:                AGS
Capital Group, LLC, Attention Allen Silberstein

    2 Water Street, Ste. 17G, New York,
New York, 10004

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    SCHEDULE
2.4

     

    Biofield
Corp.

     

    The
undersigned hereby agrees that for a period commencing on June 15, 2010 and
expiring upon the termination of the Reserve Equity Financing Agreement dated
June 15, 2010 between the Company and the Investor (the “Lock-up Period”), he,
she or it will not, directly or indirectly, without the prior written consent of
the Investor, issue, offer, agree or offer to sell, sell, grant an option for
the purchase or sale of, transfer, pledge, assign, hypothecate, distribute or
otherwise encumber or dispose of any securities of the Company, including common
stock or options, rights, warrants or other securities underlying, convertible
into, exchangeable or exercisable for or evidencing any right to purchase or
subscribe for any common stock (whether or not beneficially owned by the
undersigned), or any beneficial interest therein (collectively, the “Securities”) except
in accordance with the volume limitations set forth in Rule 144(e) of the
General Rules and Regulations under the Securities Act of 1933, as amended.
Notwithstanding the forgoing, nothing herein shall prevent the undersigned from
disposing of Securities (i) if the recipient of the Securities agrees to be
bound by the terms of this Lock-up, or (ii) in connection with a merger where
the Company is not the surviving entity.

     

    In order
to enable the aforesaid covenants to be enforced, the undersigned hereby
consents to the placing of legends and/or stop-transfer orders with the transfer
agent of the Company’s securities with respect to any of the Securities
registered in the name of the undersigned or beneficially owned by the
undersigned, and the undersigned hereby confirms the undersigned’s investment in
the Company.

     

    Dated:
___________________, 2010

     

    
      
        
          
            
              
                
                  	 
      	
                          Signature

                        	 
      
	 
      	 
      	 
      
	 
      	
                          Name:

                        	 
      
	 
      	 
      	 
      
	 
      	
                          Address:

                        	 
      
	 
      	 
      	 
      
	 
      	
                          City,
      State, Zip Code:

                        	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                          Print Social Security Number

                        	 
      
	 
      	
                          Or
      Taxpayer I.D. Number

                        	 
      

                

              

            

          

        

      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    EXHIBIT
C

    

    FORM
OF OPINION

    

    

    1. The
Company is a corporation validly existing and in good standing under the laws of
the State of Delaware, with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the Company’s
latest Form 10-K or 10-Q filed by the Company under the Securities Exchange Act
of 1934, as amended, (the “Exchange Act”) and
the rules and regulations of the Commission thereunder (the “Public Filings”)
and to enter into and perform its obligations under the Standby Equity
Distribution Agreement.

     

    2. The
Company has the requisite corporate power and authority to enter into and
perform its obligations under the Reserve Equity Financing Agreement and to
issue the Common Shares in accordance with their terms. The execution and
delivery of the Reserve Equity Financing Agreement by the Company and the
consummation by it of the transactions contemplated thereby have been
duly authorized by all necessary corporate action, and no further consent
or authorization of the Company or its Board of Directors or stockholders is
required. Each of the Reserve Equity Financing Agreement has been duly executed
and delivered, and each of the Reserve Equity Financing Agreement constitute
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, except as my be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors’ rights and remedies.

     

    3. The
Common Shares are duly authorized and, upon issuance in accordance with the
terms of the Reserve Equity Financing Agreement, will be duly and validly
issued, fully paid and nonassessable, free of any liens, encumbrances and
preemptive or similar rights contained, to our knowledge, in any agreement filed
by the Company as an exhibit to the Company’s Public Filings.

     

    4. The
execution, delivery and performance of the Reserve Equity Financing Agreement by
the Company (other than performance by the Company of its obligations under the
indemnification sections of such agreements, as to which no opinion need be
rendered) will not (i) result in a violation of the Company’s Articles of
Incorporation or By-Laws; (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement or, indenture filed by the Company as an exhibit
to the Company’s Public Filings; or (iii) to our knowledge, result in a
violation of any federal or Virginia law, rule or regulation, order, judgment or
decree applicable to the Company.

     

    5. To our
knowledge without independent investigation and other then as set forth in the
Public Filings, there are no legal or governmental proceedings pending to which
the Company is a party or of which any property or assets of the Company is
subject which is required to be disclosed in any Public
Filings.

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