Document:

FORM OF SECURITIES
        PURCHASE AGREEMENT

       

       

      This
        Securities Purchase Agreement, dated on and as of the date set forth on the
        signature page hereto (this “Agreement”),
        is
        made among Genelabs Technologies, Inc., a California corporation (the
“Company”),
        the
        undersigned purchaser(s) (each a “Purchaser”
and
        collectively, the “Purchasers”)
        and
        each assignee of a Purchaser who becomes a party hereto.

       

      WHEREAS,
        subject
        to the terms and conditions set forth in this Agreement and pursuant to Section
        4(2) of the Securities Act of 1933, as amended (the “Securities
        Act”)
        and
        Rule 506 of Regulation D promulgated thereunder, the Company desires to offer,
        issue and sell to the Purchasers (the “Offering”),
        and
        the Purchasers, severally and not jointly, desire to purchase from the Company,
        shares (the “Shares”)
        of the
        Company’s common stock, no par value per share (the “Common
        Stock”),
        and
        five-year warrants to purchase shares of Common Stock (the “Warrants”),
        with
        an exercise price per share equal to $1.85. The Shares and the Warrants are
        collectively referred to herein as the “Securities.”

       

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

       

      
        	
                A.

              	
                Subscription

              

      

       

      (1) Subject
        to the conditions to closing set forth herein, each Purchaser hereby irrevocably
        subscribes for and agrees to purchase Securities for the aggregate purchase
        price set forth on the signature page of such Purchaser hereto (the
“Subscription
        Amount”).
        The
        Securities to be issued to a Purchaser hereunder shall consist of (i) Shares
        in
        an amount equal to the quotient of (x) the Subscription Amount, divided by
        (y)
        the Offering Price, rounded down to the nearest whole number, and (ii) a
        Warrant
        to purchase such number of shares of Common Stock to be determined based
        on a
        ratio of one (1) share of Common Stock for every three and one-third
        (3-1/3) (the
        “Warrant Fraction”) Shares
        purchased hereunder, rounded down to the nearest whole number. The
        Company shall allocate the Subscription Amount between the Shares and the
        Warrants prior to the Closing (as defined below) and provide notice to the
        Purchasers of such allocation. 

       

      (2) For
        purposes of this Agreement, the “Offering
        Price”
shall
        be $1.72, which shall be
        the
        sum of (i) the price per Share to be paid by the Purchasers, which shall
        equal
        or exceed the last closing bid price of the Common Stock prior to the entering
        into of this Agreement, plus (ii) the price for the portion of the Warrant
        relating to such Share to be paid by the Purchasers, which shall be $0.125
        multiplied by the Warrant Fraction. The aggregate Offering Price to be paid
        by a
        Purchaser shall be rounded up to the nearest whole cent. 

       

      (3) As
        soon
        as possible, but no later than three (3) business days after the date of
        this
        Agreement, the Company shall hold the closing of the Offering (the “Closing”
and
        the
        date of the Closing, the “Closing
        Date”).
        Prior
        to the Closing, each Purchaser shall deliver the applicable Subscription
        Amount,
        by wire transfer to such escrow account in accordance with the wire transfer
        instructions set forth on Schedule
        A,
        and
        such amount shall be held in the manner described in Paragraph (4) below.
        There
        is a $9 million minimum subscription amount required for the Closing.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      (4) All
        payments for Securities made by the Purchasers will be deposited as soon
        as
        practicable for the undersigned’s benefit in an escrow account. 
        Payments
        for Securities made by the Purchasers will be returned promptly, prior to
        the
        Closing, without interest or deduction, if, or to the extent, the undersigned’s
        subscription is rejected or the Offering is terminated for any reason.

       

      (5) Upon
        receipt by the Company of the requisite payment for all Securities to be
        purchased by the Purchasers whose subscriptions are accepted, the Company
        shall,
        at the Closing and as a condition thereof: (i) issue to each Purchaser a
        Warrant
        to purchase such number of shares of Common Stock calculated in accordance
        with
        Paragraph (1) above; (ii) deliver to the Purchasers and to Oppenheimer & Co.
        Inc., the placement agent for the Offering (the “Placement
        Agent”),
        a
        certificate stating that the representations and warranties made by the Company
        in Section C of this Agreement were true and correct in all respects when
        made
        and are true and correct in all respects on the date of the Closing relating
        to
        the Securities subscribed for pursuant to this Agreement as though made on
        and
        as of the Closing Date (provided, however, that representations and warranties
        that speak as of a specific date shall continue to be true and correct as
        of the
        Closing with respect to such date); and (iii) cause to be delivered to the
        Placement Agent and the Purchasers an opinion of Skadden, Arps, Slate, Meagher
        & Flom LLP substantially
        in the form of Exhibit
        A
        hereto
        and reasonably acceptable to counsel for the Placement Agent. At the closing
        or
        as promptly after the Closing as is practicable, the Company shall issue
        to each
        Purchaser stock certificates representing the shares of Common Stock purchased
        at the Closing under this Agreement.

       

      (6) Each
        Purchaser acknowledges and agrees that this Agreement shall be binding upon
        such
        Purchaser upon the execution and delivery to the Company, in care of the
        Placement Agent, of such Purchaser’s signed counterpart signature page to
        this Agreement unless and until the Company or the Placement Agent shall
        reject
        the subscription being made hereby by such Purchaser.

       

      (7) Each
        Purchaser agrees that each of the Company and the Placement Agent may reduce
        such Purchaser’s subscription with respect to the number of Shares and Warrants
        to be purchased without any prior notice or further consent by such
        Purchaser.  If such a reduction occurs, the part of the Subscription Amount
        attributable to the reduction shall be promptly returned, without interest
        or
        deduction.

       

      (8) Each
        Purchaser acknowledges and agrees that the purchase of Shares and Warrants
        by
        such Purchaser pursuant to the Offering is subject to all the terms and
        conditions set forth in this Agreement.

       

      
        	
                B.

              	
                Representations
                  and Warranties of the
                  Purchasers

              

      

       

      Each
        Purchaser, severally and not jointly, hereby represents and warrants to the
        Company and the Placement Agent, and agrees with the Company as
        follows:

       

      
        
           

        

        
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      (1) The
        Purchaser has read this Agreement and the form of Warrant attached hereto
        as
Exhibit
        B
        (collectively the “Offering
        Documents”),
        and
        is familiar with and understands the terms of the Offering. Specifically,
        and
        without limiting in any way the foregoing representation, the Purchaser has
        read
        and considered the Company’s (a) Annual Report on Form 10-K for the fiscal year
        ended December 31, 2005 (the “2005
        Form 10-K”),
        including, without limitation, the financial statements included therein
        and the
        sections therein entitled “Item 1. Business,” “Item 1A. Risk Factors,” and
“Management’s Discussion and Analysis of Financial Condition and Results of
        Operations,” (b) Quarterly Reports on Form 10-Q for the quarters ended March 31,
        2006, June 30, 2006 and September 30, 2006, respectively, including, without
        limitation, the subsections of each such Form 10-Q entitled “Item 1. Financial
        Statements,” and “Item 2. Management’s Discussion and Analysis of Financial
        Condition and Results of Operations,” and (c) the additional risk factors set
        forth on Schedule
        B.
        The
        Purchaser understands all of the risks related to the purchase of the
        Securities. The Purchaser has considered and has discussed with the Purchaser’s
        professional legal, tax, accounting and financial advisors, to the extent
        the
        Purchaser has deemed necessary, the suitability of an investment in the
        Securities for the Purchaser’s particular tax and financial situation and has
        determined that the Securities being subscribed for by the Purchaser are
        a
        suitable investment for the Purchaser. The Purchaser recognizes that an
        investment in the Securities involves substantial risks, including the possible
        loss of the entire amount of such investment. The Purchaser further recognizes
        that the Company has broad discretion concerning the use and application
        of the
        proceeds from the Offering.

       

      (2) The
        Purchaser acknowledges that (i) the Purchaser has had the opportunity to
        request
        copies of any documents, records, and books pertaining to this investment
        and
        (ii) any such documents, records and books that the Purchaser requested have
        been made available for inspection by the Purchaser, the Purchaser’s attorney,
        accountant or advisor(s).

       

      (3) The
        Purchaser and the Purchaser’s advisor(s) have had a reasonable opportunity to
        ask questions of and receive answers from representatives of the Company
        or
        persons acting on behalf of the Company concerning the Offering and all such
        questions have been answered to the full satisfaction of the
        Purchaser.

       

      (4) The
        Purchaser is not subscribing for Securities as a result of or subsequent
        to any
        advertisement, article, notice or other communication published in any
        newspaper, magazine or similar media or broadcast over television or radio
        or
        presented at any seminar, meeting or conference whose attendees have been
        invited by any general solicitation or general advertising.

       

      (5) 
        If the
        Purchaser is a natural person, the Purchaser has reached the age of majority
        in
        the state in which the Purchaser resides. Each Purchaser has adequate means
        of
        providing for the Purchaser’s current financial needs and contingencies, is able
        to bear the substantial economic risks of an investment in the Securities
        for an
        indefinite period of time, has no need for liquidity in such investment and
        can
        afford a complete loss of such investment. 

       

      (6) The
        Purchaser has sufficient knowledge and experience in financial, tax and business
        matters to enable the Purchaser to utilize the information made available
        to the
        Purchaser in connection with the Offering, to evaluate the merits and risks
        of
        an investment in the Securities and to make an informed investment decision
        with
        respect to an investment in the Securities on the terms described in the
        Offering Documents.

       

      
        
           

        

        
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      (7) The
        Purchaser will not sell or otherwise transfer the Securities without
        registration under the Securities Act and applicable state securities laws
        or an
        applicable exemption therefrom. The Purchaser acknowledges that neither the
        offer nor sale of the Securities has been registered under the Securities
        Act or
        under the securities laws of any state. The Purchaser represents and warrants
        that the Purchaser is acquiring the Securities for the Purchaser’s own account,
        for investment and not with a view toward resale or distribution within the
        meaning of the Securities Act. The Purchaser has not offered or sold the
        Securities being acquired nor does the Purchaser have any present intention
        of
        selling, distributing or otherwise disposing of such Securities either currently
        or after the passage of a fixed or determinable period of time or upon the
        occurrence or non-occurrence of any predetermined event or circumstances
        in
        violation of the Securities Act. The Purchaser is aware that (i) the Securities
        are not currently eligible for sale in reliance upon Rule 144 promulgated
        under
        the Securities Act and (ii) the Company has no obligation to register the
        Securities subscribed for hereunder, except as provided in Section E
        hereof.
        By
        making these representations herein, Purchaser is not making any representation
        or agreement to hold the Securities for any minimum or other specific term
        and
        reserves the right to dispose of the Securities at any time in accordance
        with
        or pursuant to a registration statement or an available exemption to the
        registration requirements of the Securities Act. 

       

      (8) The
        Purchaser acknowledges that the certificates representing the Shares, the
        Warrants and, upon the exercise of the Warrants, the shares of Common Stock
        issuable upon exercise of the Warrants (the “Warrant
        Shares”),
        be
        stamped or otherwise imprinted with a legend substantially in the following
        form: 

       

      The
        securities represented hereby have not been registered under the Securities
        Act
        of 1933, as amended, or any state securities laws and neither the securities
        nor
        any interest therein may be offered, sold, transferred, pledged or otherwise
        disposed of except pursuant to an effective registration under such act or
        an
        exemption from registration, which, in the opinion of counsel reasonably
        satisfactory to this corporation, is available.

      

      Certificates
        evidencing the Shares and the Warrant Shares shall not be required to contain
        such legend or any other legend (i) following any sale of such Shares or
        Warrant
        Shares pursuant to Rule 144, or (ii) if such Shares or Warrant Shares are
        eligible for sale under Rule 144(k) or have been sold pursuant to the
        Registration Statement (as hereafter defined) and in compliance with the
        obligations set forth in Section E(6), below, or (iii) such legend is not
        required under applicable requirements of the Securities Act (including judicial
        interpretations and pronouncements issued by the Staff of the Securities
        and
        Exchange Commission), in each such case (i) through (iii) to the extent
        reasonably determined by the Company’s legal counsel. At such time and to the
        extent a legend is no longer required for the Shares or Warrant Shares, the
        Company will use its best efforts to, no later than five (5) trading days
        following the delivery by a Purchaser to the Company or the Company’s transfer
        agent of a legended certificate representing such Shares or Warrant Shares
        (together with such accompanying documentation or representations as reasonably
        required by counsel to the Company), deliver or cause to be delivered a
        certificate representing such Shares or Warrant Shares that is free from
        the
        foregoing legend. For purposes of this Agreement, the term “best efforts”
means
        the
        efforts that a prudent person desirous of achieving a result would use in
        similar circumstances to ensure that such result is achieved as expeditiously
        as
        practical; provided,
        however,
        that an
        obligation to use “best efforts” under this Agreement does not require the
        Company to dispose of or make any change to its business, expend any material
        funds or incur any other material burden.

      
        
           

        

        
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      (9) If
        this
        Agreement is executed and delivered on behalf of a partnership, corporation,
        trust, estate or other entity: (i) such partnership, corporation, trust,
        estate
        or other entity has the full legal right and power and all authority and
        approval required (a) to execute and deliver this Agreement and all other
        instruments executed and delivered by or on behalf of such partnership,
        corporation, trust, estate or other entity in connection with the purchase
        of
        its Securities, and (b) to purchase and hold such Securities; (ii) the signature
        of the party signing on behalf of such partnership, corporation, trust, estate
        or other entity is binding upon such partnership, corporation, trust, estate
        or
        other entity; and (iii) such partnership, corporation, trust or other entity
        has
        not been formed for the specific purpose of acquiring such Securities, unless
        each beneficial owner of such entity is qualified as an accredited investor
        within the meaning of Rule 501(a) of Regulation D promulgated under the
        Securities Act and has submitted information to the Company substantiating
        such
        individual qualification.

       

      (10) If
        the
        Purchaser is a retirement plan or is investing on behalf of a retirement
        plan,
        the Purchaser acknowledges that an investment in the Securities poses additional
        risks, including the inability to use losses generated by an investment in
        the
        Securities to offset taxable income.

       

      (11) The
        information contained in the purchaser questionnaire in the form of Exhibit
        C
        attached
        hereto (the “Purchaser
        Questionnaire”)
        delivered by the Purchaser in connection with this Agreement is complete
        and
        accurate in all respects, and the Purchaser is an “accredited investor” as
        defined in Rule 501 of Regulation D under the Securities Act on the basis
        indicated therein. The Purchaser shall indemnify and hold harmless the Company,
        the Placement Agent and each officer, director or control person thereof,
        who is
        or may be a party or is or may be threatened to be made a party to any
        threatened, pending or completed action, suit or proceeding, whether civil,
        criminal, administrative or investigative, by reason of or arising from any
        actual or alleged misrepresentation or misstatement of facts or omission
        to
        represent or state facts made or alleged to have been made by the Purchaser
        to
        the Company or omitted or alleged to have been omitted by the Purchaser,
        concerning the Purchaser or the Purchaser’s authority to invest or financial
        position in connection with the Offering, including, without limitation,
        any
        such misrepresentation, misstatement or omission contained in the Agreement
        or
        any other document submitted by the Purchaser, against losses, liabilities
        and
        expenses for which the Company or any officer, director or control person
        has
        not otherwise been reimbursed (including attorney’s fees, judgments, fines and
        amounts paid in settlement) actually and reasonably incurred by the Company
        or
        such officer, director or control person in connection with such action,
        suit or
        proceeding. For the avoidance of doubt, such indemnification shall be the
        several, and not joint, obligation of each Purchaser with respect to its
        own
        action or inaction as provided above.

       

      
        
           

        

        
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      (12) 
        The
        information contained in the selling stockholder questionnaire in the form
        of
Exhibit
        D
        attached
        hereto (the “Selling
        Stockholder Questionnaire”)
        delivered by the Purchaser in connection with this Agreement is complete
        and
        accurate in all respects.

       

      (13) The
        Purchaser acknowledges that the Company will have the authority to issue
        shares
        of Common Stock, in excess of those being issued in connection with the
        Offering, and that the Company may issue additional shares of Common Stock
        from
        time to time. The issuance of additional shares of Common Stock may cause
        dilution of the existing shares of Common Stock and a decrease in the market
        price of such existing shares.

       

      (14) The
        Purchaser acknowledges that the Company has engaged the Placement Agent in
        connection with the Offering and, as consideration for its services, has
        agreed
        to pay the Placement Agent a cash commission equal to seven percent (7%)
        of the
        gross proceeds resulting from the Offering and issue a warrant (the
“Placement
        Agent Warrant”)
        to
        purchase a number of shares of Common Stock equal to three percent (3%) of
        the
        aggregate Shares sold in the Offering. The Placement Agent Warrant will have
        a
        term of five years and be exercisable at a price equal to the exercise price
        of
        the Warrant issued to Purchaser hereunder. 

       

      (15) The
        Purchaser represents that, during the last thirty (30) days prior to the
        date
        hereof, neither such Purchaser nor any affiliate of such Purchaser, foreign
        or
        domestic, has, directly or indirectly, effected or agreed to effect any "short
        sale" (as defined in Rule 200 under Regulation SHO), whether or not against
        the
        box, established any "put equivalent position" (as defined in Rule 16a-1(h)
        under the 1934 Act) with respect to the Common Stock, borrowed or pre-borrowed
        any shares of Common Stock, or granted any other right (including, without
        limitation, any put or call option) with respect to the Common Stock or with
        respect to any security that includes, relates to or derived any significant
        part of its value from the Common Stock or otherwise sought to hedge its
        position in the Securities (each, a "Prohibited
        Transaction").
        Notwithstanding the foregoing, in the case of a Purchaser and/or its affiliates
        that is, individually or collectively, a multi-managed investment bank or
        vehicle whereby separate portfolio managers manage separate portions of such
        Purchaser's or affiliates assets and the portfolio managers have no direct
        knowledge of the investment decisions made by the portfolio managers managing
        other portions of such Purchaser's or affiliates assets, the representation
        set
        forth above shall only apply with respect to the portion of assets managed
        by
        the portfolio managers that have knowledge about the financing transaction
        contemplated by this Agreement. 

       

      (16) The
        Purchaser represents that it has received confidential information about
        the
        existence and terms of this Offering and that it has maintained and will
        continue to maintain such information in confidence until the Company files
        the
        Form 8-K referred to in Section F(4) hereof.

      

      
        	
                C.

              	
                Representations
                  and Warranties of the Company

              

      

       

      The
        Company hereby makes the following representations and warranties to the
        Purchaser and the Placement Agent, which shall survive the Closing and the
        purchase and sale of the Securities.
        

       

      
        
           

        

        
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      (1) Organization,
        Good Standing and Qualification.
        The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of California and has full corporate power and
        authority to conduct its business as currently conducted. The Company is
        duly
        qualified to do business as a foreign corporation and is in good standing
        in all
        jurisdictions in which the character of the property owned or leased or the
        nature of the business transacted by it makes qualification necessary, except
        where the failure to be so qualified would not have a material adverse effect
        on
        the business, properties, financial condition or results of operations of
        the
        Company (a “Material
        Adverse Effect”).
        

       

      (2) Capitalization.
        The
        authorized capital stock of the Company consists of 125,000,000 shares of
        Common
        Stock and 4,990,000 shares
        of
        preferred stock, no par value per share. As of February 2,
        2007,
        there were 24,166,244 shares
        of
        Common Stock and no shares of preferred stock issued and outstanding. As
        of
        February 2,
        2007,
        the Company had reserved (i) an aggregate of 2,589,291 shares
        of
        Common Stock reserved for issuance to employees, directors and consultants
        pursuant to the Company’s 1995 Stock Option Plan, as amended, and the Company’s
        2001 Stock Option Plan, as amended, of which 2,123,028 shares
        of
        Common Stock are subject to outstanding, unexercised options as of such date
        under such plans, (ii) 181,588 shares
        of
        Common Stock reserved for issuance to employees pursuant to the Company’s 2001
        Employee Stock Purchase Plan as amended, and (iii) 3,551,807 shares
        of
        Common Stock reserved for issuance pursuant to other outstanding options
        and
        warrants to purchase Common Stock. Other than as set forth above or as
        contemplated in this Agreement, there are no other options, warrants, calls,
        rights, commitments or agreements of any character to which the Company is
        a
        party or by which either the Company is bound or obligating the Company to
        issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
        sold, repurchased or redeemed, any shares of the capital stock of the Company
        or
        obligating the Company to grant, extend or enter into any such option, warrant,
        call, right, commitment or agreement. 

       

      (3) Issuance;
        Reservation of Shares.
        The
        issuance of the Shares has been duly and validly authorized by all necessary
        corporate action, and the Shares, when issued and paid for pursuant to this
        Agreement, will be validly issued, fully paid and non-assessable shares of
        Common Stock of the Company. The issuance of the Warrants has been duly and
        validly authorized by all necessary corporate action, and the Warrant Shares,
        when issued upon the due exercise of the Warrants, will be validly issued,
        fully
        paid and non-assessable shares of Common Stock of the Company. The Company
        has
        reserved, and will reserve, at all times that the Warrants or Placement Agent
        Warrant remain outstanding, such number of shares of Common Stock sufficient
        to
        enable the full exercise of the Warrants and the Placement Agent
        Warrant.

       

      (4) Authorization;
        Enforceability.
        The
        Company has all corporate right, power and authority to enter into this
        Agreement and to consummate the transactions contemplated hereby. All corporate
        action on the part of the Company necessary for the authorization, execution,
        delivery and performance of this Agreement by the Company, the authorization,
        sale, issuance and delivery of the Securities contemplated herein and the
        performance of the Company’s obligations hereunder has been taken. This
        Agreement has been duly executed and delivered by the Company and constitutes
        the legal, valid and binding obligation of the Company, enforceable against
        the
        Company in accordance with its terms, subject to laws of general application
        relating to bankruptcy, insolvency and the relief of debtors and rules of
        law
        governing specific performance, injunctive relief or other equitable remedies,
        and to limitations of public policy. The issuance and sale of the Securities
        contemplated hereby will not give rise to any preemptive rights or rights
        of
        first refusal on behalf of any person. 

       

      
        
           

        

        
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      (5) No
        Conflict; Governmental and Other Consents.

       

      (a) The
        execution and delivery by the Company of this Agreement and the consummation
        of
        the transactions contemplated hereby will not result in the violation of
        any
        law, statute, rule, regulation, order, writ, injunction, judgment or decree
        of
        any court or governmental authority to or by which the Company is bound,
        or of
        any provision of the Articles of Incorporation or Bylaws of the Company,
        and
        will not conflict with, or result in a breach or violation of, any of the
        terms
        or provisions of, or constitute (with due notice or lapse of time or both)
        a
        default under, any lease, loan agreement, mortgage, security agreement, trust
        indenture or other agreement or instrument to which the Company is a party
        or by
        which it is bound or to which any of its properties or assets is subject,
        nor
        result in the creation or imposition of any lien upon any of the properties
        or
        assets of the Company except to the extent that any such violation, conflict
        or
        breach would not be reasonably likely to have a Material Adverse Effect.
        No
        holder
        of any of the securities of the Company or any of its subsidiaries has any
        rights (“demand,” “piggyback” or otherwise) to have such securities registered
        by reason of the intention to file, filing or effectiveness of a Registration
        Statement (as defined in Section E hereof), other than “piggy back” registration
        rights covering an aggregate of not more that 170,000 shares of Common Stock
        and
        other than the registration rights granted under a Securities Purchase
        Agreement, dated June 26, 2006 (the “2006 Securities Purchase
        Agreement”).

       

      (b) No
        consent, approval, authorization or other order of any governmental authority
        or
        other third-party is required to be obtained by the Company in connection
        with
        the authorization, execution and delivery of this Agreement or with the
        authorization, issue and sale of the Securities, except such filings as are
        required to be made with The Nasdaq Stock Market, Inc. (which will be made
        prior
        to Closing), and post-Closing filings as may be required to be made with
        the
        Securities and Exchange Commission (the “SEC”)
        and
        with any state or foreign blue sky or securities regulatory authority.

       

      (6) Litigation.
        There
        are no pending or, to the Company’s knowledge, threatened legal or governmental
        proceedings against the Company, which would be reasonably likely to have
        a
        Material Adverse Effect on the Company. There is no action, suit, proceeding,
        inquiry or investigation before or by any court, public board or body
        (including, without limitation, the SEC) pending or, to the knowledge of
        the
        Company, threatened against or affecting the Company or any of its subsidiaries
        which would be reasonably likely to adversely affect the validity or
        enforceability of, or the authority or ability of the Company to perform
        its
        obligations under the Agreement.

       

      (7) Accuracy
        of Reports.
        All
        reports required to be filed by the Company within the twelve months prior
        to
        the date of this Agreement (the “SEC
        Reports”)
        under
        the Securities Exchange Act of 1934, as amended (the “Exchange
        Act”),
        have
        been filed with the SEC, complied at the time of filing in all material respects
        with the requirements of their respective forms and, except to the extent
        updated or superseded by any subsequently filed report, were complete and
        correct in all material respects as of the dates at which the information
        was
        furnished, and contained (as of such dates) no untrue statements of a material
        fact nor omitted to state any material fact necessary in order to make the
        statements contained therein, in light of the circumstances under which they
        were made, not misleading.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      

       

      (8) Financial
        Information.
        The
        Company’s financial statements that appear in the SEC Reports have been prepared
        in accordance with United States generally accepted accounting principles
        (“GAAP”),
        except in the case of unaudited statements, as permitted by Form 10-Q of
        the SEC
        or as may be indicated therein or in the notes thereto, applied on a consistent
        basis throughout the periods indicated and such financial statements fairly
        present in all material respects the financial condition and results of
        operations of the Company as of the dates and for the periods indicated therein.
        

       

      (9) Accounting
        Controls.
        The
        Company maintains a system of internal accounting controls sufficient to
        provide
        reasonable assurances that (i) transactions are executed in accordance with
        management’s general or specific authorization; (ii) transactions are recorded
        as necessary to permit preparation of financial statements in conformity
        with
        GAAP and to maintain accountability for assets; (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
        existing assets at reasonable intervals and appropriate action is taken with
        respect to any differences. 

       

      (10) Sarbanes-Oxley
        Act of 2002.
        The
        Company is in compliance, in all material respects, with all applicable
        provisions of the Sarbanes-Oxley Act of 2002 and all rules and regulations
        promulgated thereunder or implementing the provisions thereof that are in
        effect, and has taken reasonable steps to ensure that it will be in compliance
        with other applicable provisions of the Sarbanes-Oxley Act of 2002 not currently
        in effect upon the effectiveness of such provisions.

       

      (11) Absence
        of Certain Changes.
        Since
        the date of the Company’s financial statements in the latest of the SEC Reports,
        there has not occurred any undisclosed event that has caused a Material Adverse
        Effect or any occurrence, circumstance or combination thereof that reasonably
        would be likely to result in such Material Adverse Effect.

       

      (12) Investment
        Company.
        The
        Company is not an “investment company” within the meaning of such term under the
        Investment Company Act of 1940, as amended, and the rules and regulations
        of the
        SEC thereunder.

       

      (13) Subsidiaries.
        Exhibit
        21.01 of the 2005 Form 10-K sets forth each of the subsidiaries of the Company
        required to be listed in such exhibit. For the purposes of this Agreement,
        “subsidiary” shall mean any company or other entity of which at least 50% of the
        securities or other ownership interest having ordinary voting power for the
        election of directors or other persons performing similar functions are at
        the
        time owned directly or indirectly by the Company or any of its other
        subsidiaries.

       

      (14) Indebtedness.
        The
        financial statements in the SEC Reports reflect, to the extent required,
        as of
        the date thereof all outstanding secured and unsecured Indebtedness (as defined
        below) of the Company or any subsidiary, or for which the Company or any
        subsidiary has commitments. For purposes of this Agreement, “Indebtedness”
shall
        mean (a) any liabilities for borrowed money or amounts owed in excess of
        $50,000
        (other than trade accounts payable incurred in the ordinary course of business),
        (b) all guaranties, endorsements and other contingent obligations in respect
        of
        Indebtedness of others, whether or not the same are or should be reflected
        in
        the Company’s balance sheet (or the notes thereto), except guaranties by
        endorsement of negotiable instruments for deposit or collection or similar
        transactions in the ordinary course of business; and (c) the present value
        of
        any lease payments in excess of $50,000 due under leases required to be
        capitalized in accordance with GAAP. The Company is not in default with respect
        to any Indebtedness. 

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      

       

      (15) Certain
        Fees.
        Other
        than fees payable to the Placement Agent,
        no
        brokers’, finders’ or financial advisory fees or commissions will be payable by
        the Company with respect to the transactions contemplated by this
        Agreement.

       

      (16) Material
        Agreements.
        Except
        as set forth in the SEC Reports, the Company is not a party to any written
        or
        oral contract, instrument, agreement, commitment, obligation, plan or
        arrangement, a copy of which would be required to be filed with the SEC as
        an
        exhibit to Form 10-K (each, a “Material
        Agreement”).
        The
        Company and each of its subsidiaries has in all material respects performed
        all
        the obligations required to be performed by them to date under the foregoing
        agreements, have received no notice of default by the Company or the subsidiary
        that is a party thereto, as the case may be, and, to the Company’s knowledge,
        are not in default under any Material Agreement now in effect, the result
        of
        which would be reasonably likely to have a Material Adverse Effect.

       

      (17) Transactions
        with Affiliates.
        Except
        as set forth in the SEC Reports, there are no loans, leases, agreements,
        contracts, royalty agreements, management contracts or arrangements or other
        continuing transactions with aggregate obligations exceeding $60,000 between
        (a)
        the Company or any of its customers or suppliers on the one hand, and (b)
        on the
        other hand, any person who would be covered by Item 404(a) of Regulation
        S-K or
        any company or other entity controlled by such person.

       

      (18) Taxes.
        The
        Company has prepared and filed all federal, state, local, foreign and other
        tax
        returns for income, gross receipts, sales, use and other taxes and custom
        duties
        (“Taxes”)
        required by law to be filed by it, except for tax returns, the failure to
        file
        which, individually or in the aggregate, would not reasonably be likely to
        have
        a Material Adverse Effect on the Company, and for tax returns for which the
        Company has validly filed for extensions thereof. Such filed tax returns
        are
        complete and accurate, except for such omissions and inaccuracies which,
        individually or in the aggregate, would not reasonably be likely to have
        a
        Material Adverse Effect on the Company. The Company has paid or made provisions
        for the payment of all Taxes shown to be due on such tax returns and all
        additional assessments, and adequate provisions have been and are reflected
        in
        the consolidated financial statements of the Company for all current Taxes
        to
        which the Company or any subsidiary is subject and which are not currently
        due
        and payable, except for such Taxes which, if unpaid, individually or in the
        aggregate, would not reasonably be likely to have a Material Adverse Effect
        on
        the Company. None of the federal income tax returns of the Company for the
        past
        five years has been audited by the Internal Revenue Service. The Company
        has not
        received written notice of any assessments, adjustments or contingent liability
        (whether federal, state, local or foreign) in respect of any Taxes pending
        or
        threatened against the Company or any subsidiary for any period which, if
        unpaid, would reasonably be likely to have a Material Adverse Effect on the
        Company. 

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      

       

      (19) Insurance.
        The
        Company is insured by insurers of recognized financial responsibility against
        such losses and risks and in such amounts as the Company believes are prudent
        and customary in the businesses in which the Company is engaged. The Company
        has
        no reason to believe that it will not be able to renew or extend its existing
        insurance coverage as and when such coverage expires or will not be able
        to
        obtain similar coverage from similar insurers as may be necessary to continue
        its business without an increase in cost significantly greater than general
        increases in cost experienced for similar companies in similar industries
        with
        respect to similar coverage.

       

      (20) Environmental
        Matters.
        Except
        as disclosed in the SEC Reports, all real property owned, leased or otherwise
        operated by the Company is, to the Company’s knowledge, free of contamination
        from any substance, waste or material currently identified to be toxic or
        hazardous pursuant to, within the definition of a substance which is toxic
        or
        hazardous under, any Environmental Law (as defined below), including, without
        limitation, any asbestos, polychlorinated biphenyls, radioactive substance,
        methane, volatile hydrocarbons, industrial solvents, oil or petroleum or
        chemical liquids or solids, liquid or gaseous products, or any other material
        or
        substance (“Hazardous
        Substance”)
        which
        has caused or would reasonably be expected to cause or constitute a threat
        to
        human health or safety, or an environmental hazard in violation of Environmental
        Law or to result in any environmental liabilities that would be reasonably
        likely to have a Material Adverse Effect. To the Company’s knowledge, the
        Company has not caused or suffered to occur any release, spill, migration,
        leakage, discharge, disposal, uncontrolled loss, seepage, or filtration of
        Hazardous Substances that would reasonably be expected to result in
        environmental liabilities that would be reasonably likely to have a Material
        Adverse Effect. To the Company’s knowledge, the Company has generated, treated,
        stored and disposed of any Hazardous Substances in compliance with applicable
        Environmental Laws, except for such non-compliances that would not be reasonably
        likely to have a Material Adverse Effect. To the Company’s knowledge, the
        Company has obtained, or has applied for, and is in compliance with and in
        good
        standing under all permits required under Environmental Laws (except for
        such
        failures that would not be reasonably likely to have a Material Adverse Effect)
        and the Company has no knowledge of any proceedings to substantially modify
        or
        to revoke any such permit. There are no investigations, proceedings or
        litigation pending or, to the Company's knowledge, threatened against the
        Company or any of the Company’s facilities relating to Environmental Laws or
        Hazardous Substances. “Environmental
        Laws”
shall
        mean all federal, national, state, regional and local laws, statutes, ordinances
        and regulations, in each case as amended or supplemented from time to time,
        and
        any judicial or administrative interpretation thereof, including orders,
        consent
        decrees or judgments relating to the regulation and protection of human health,
        safety, the environment and natural resources. 

       

      (21) Intellectual
        Property Rights and Licenses.
        The
        Company has, or has rights to use, all patents, patent applications, trademarks,
        trademark applications, service marks, trade names, copyrights, licenses
        and
        other similar rights that are necessary or material for use in connection
        with
        its business as described in the SEC Reports and which the failure to so
        have
        would reasonably be expected to result in a Material Adverse Effect
        (collectively, the “Intangible
        Rights”).
        The
        Company has not received any notice expressly stating that the Intangible
        Rights
        used by the Company violates or infringes upon the rights of any person or
        entity. Except as set forth in the SEC Reports, to the knowledge of the Company,
        all such Intellectual Property Rights are enforceable and there is no existing
        infringement by another Person of any of the Intellectual Property Rights.
         

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      

       

      (22) Labor,
        Employment and Benefit Matters.
        

       

      (a) There
        are
        no existing, or to the best of the Company’s knowledge, threatened strikes or
        other labor disputes against the Company that would be reasonably likely
        to have
        a Material Adverse Effect. Except as set forth in the SEC Reports, there
        is no
        organizing activity involving employees of the Company pending or, to the
        Company’s or its subsidiaries’ knowledge, threatened by any labor union or group
        of employees. There are no representation proceedings pending or, to the
        Company’s knowledge, threatened with the National Labor Relations Board, and no
        labor organization or group of employees of the Company or its subsidiaries
        has
        made a pending demand for recognition. 

       

      (b) Except
        as
        set forth in the SEC Reports, the Company is not, or during the five years
        preceding the date of this Agreement was not, a party to any labor or collective
        bargaining agreement and there are no labor or collective bargaining agreements
        which pertain to employees of the Company.

       

      (c) Each
        employee benefit plan is in compliance with all applicable law, except for
        such
        noncompliance that would not be reasonably likely to have a Material Adverse
        Effect.

       

      (d) The
        Company does not have any liabilities, contingent or otherwise, including
        without limitation, liabilities for retiree health, retiree life, severance
        or
        retirement benefits, which are not fully reflected, to the extent required
        by
        GAAP, on the balance sheet included in the 2005 Form 10-K or fully funded.
        The
        term “liabilities” used in the preceding sentence shall be calculated in
        accordance with reasonable actuarial assumptions.

       

      (e) The
        Company has not (i) terminated any “employee pension benefit plan” as defined in
        Section 3(2) of ERISA (as defined below) under circumstances that present
        a
        material risk of the Company or any of its subsidiaries incurring any liability
        or obligation that would be reasonably likely to have a Material Adverse
        Effect,
        or (ii) incurred or expects to incur any outstanding liability under Title
        IV of
        the Employee Retirement Income Security Act of 1974, as amended and all rules
        and regulations promulgated thereunder (“ERISA”).
        

       

      (23) Compliance
        with Law.
        The
        Company is in compliance in all material respects with all applicable laws,
        except for such noncompliance that would not reasonably be likely to have
        a
        Material Adverse Effect. The Company has not received any notice of, nor
        does
        the Company have any knowledge of, any violation (or of any investigation,
        inspection, audit or other proceeding by any governmental entity involving
        allegations of any violation) of any applicable law involving or related
        to the
        Company which has not been dismissed or otherwise disposed of that would
        be
        reasonably likely to have a Material Adverse Effect. The Company has not
        received notice or otherwise has any knowledge that the Company is charged
        with,
        threatened with or under investigation with respect to, any violation of
        any
        applicable law that would reasonably be likely to have a Material Adverse
        Effect.
        To the
        Company’s knowledge, neither the Company nor any of its subsidiaries nor any
        employee or agent of the Company or any subsidiary has made any contribution
        or
        other payment to any official of, or candidate for, any federal, state or
        foreign office in violation of any law. To the Company’s knowledge, the Company
        and its directors, officers, employees and agents have complied in all material
        respects with the Foreign Corrupt Practices Act of 1977, as amended, and
        any
        related rules and regulations.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      

       

      (24) Ownership
        of Property.
        Except
        as set forth in the Company’s financial statements included in the SEC Reports,
        the Company and has (i) good and marketable fee simple title to its owned
        real
        property, if any, free and clear of all liens, except for liens which do
        not
        individually or in the aggregate have a Material Adverse Effect; (ii) a valid
        leasehold interest in all leased real property, and each of such leases is
        valid
        and enforceable in accordance with its terms (subject to laws of general
        application relating to bankruptcy, insolvency and the relief of debtors
        and
        rules of law governing specific performance, injunctive relief or other
        equitable remedies, and to limitations of public policy) and is in full force
        and effect, and (iii) good title to, or valid leasehold interests in, all
        of its
        other properties and assets free and clear of all liens, except for liens
        disclosed in the SEC Reports or which otherwise do not individually or in
        the
        aggregate have a Material Adverse Effect. 

       

      (25) No
        Integrated Offering.
        Assuming the accuracy of each Purchaser’s representations and warranties set
        forth in Section B hereof, neither the Company, nor any of its affiliates
        or
        other person acting on the Company’s behalf has, directly or indirectly, made
        any offers or sales of any security or solicited any offers to buy any security
        under circumstances that would cause the Offering of the Securities to be
        integrated with prior offerings by the Company for purposes of the Securities
        Act, when integration would cause the Offering not to be exempt from the
        requirements of Section 5 of the Securities Act.

       

      (26) General
        Solicitation.
        Neither
        the Company nor, its knowledge, any person acting on behalf of the Company,
        has
        offered or sold any of the Securities by any form of “general solicitation”
within the meaning of Rule 502 under the Securities Act. To the knowledge
        of the
        Company, no person acting on its behalf has offered the Securities for sale
        other than to the Purchasers and certain other “accredited investors” within the
        meaning of Rule 501 under the Securities Act. 

       

      (27) No
        Manipulation of Stock.
        The
        Company has not taken and will not, in violation of applicable law, take,
        any
        action designed to or that might reasonably be expected to cause or result
        in
        stabilization or manipulation of the price of the Common Stock to facilitate
        the
        sale or resale of the Securities.

       

      (28) No
        Registration.
        Assuming the accuracy of the representations and warranties made by, and
        compliance with the covenants of, the Purchasers in Section B hereof, no
        registration of the Securities under the Securities Act is required in
        connection with the offer and sale of the Securities by the Company to the
        Purchasers as contemplated by this Agreement.

       

      (29) Use
        of
        Proceeds.
        The
        Company intends that the net proceeds from the Offering will be used to fund
        the
        continued development of its product candidates (including, without
        limitation, expenses relating to conducting clinical trials and milestones
        payments that may be triggered under the license agreements relating to such
        product candidates), for working capital and for other general corporate
        purposes.

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

      

       

      (30) Disclosure.
        The
        Company understands and confirms that each of the Purchasers will rely on
        the
        foregoing representations in effecting transactions in securities of the
        Company. All disclosure provided by the Company to the Purchasers regarding
        the
        Company, its business and the transactions contemplated hereby furnished
        by or
        on the behalf of the Company, when taken together, are true and correct in
        all
        material respects and do not contain any untrue statement of a material fact
        or
        omit to state any material fact necessary in order to make the statements
        made
        therein, in the light of the circumstances under which they were made, not
        misleading. To the Company’s knowledge, no material event or circumstance has
        occurred or information exists with respect to the Company or its business,
        properties, operations or financial conditions, which, under applicable law,
        rule or regulation, requires public disclosure or announcement by the Company
        but which has not been so publicly announced or disclosed. Each Purchaser
        acknowledges and agrees that the disclosure referred to above constitutes
        only
        the information set forth in this Agreement, together with the disclosure
        set
        forth in the SEC Reports.

       

      Each
        Purchaser acknowledges and agrees that the Company makes no other
        representations or warranties with respect to the transactions contemplated
        hereby other than those specifically set forth in this Section E.

      

      
        	
                D.

              	
                Understandings

              

      

       

      Each
        of
        the Purchasers understands, acknowledges and agrees with the Company as
        follows:

       

      (1) That
        the
        subscription hereunder is irrevocable by the Purchaser, and that, except
        as
        required by law, the Purchaser is not entitled to cancel, terminate or revoke
        this Agreement or any agreements of the Purchaser hereunder. The
        execution of this Agreement by the Purchaser or solicitation of the investment
        contemplated hereby shall create no obligation on the part of the Company
        or the
        Placement Agent to accept any subscription or complete the Offering. The
        Company
        may in its sole discretion terminate this Offering or reject any subscription
        at
        any time prior to the sale of the Securities to any Purchaser.  If
        the
        Company accepts a subscription for Securities made by a Purchaser, it shall
        countersign this Agreement within one business day of its submission by
        Purchaser.

       

      (2) No
        federal or state agency or authority has made any finding or determination
        as to
        the accuracy or adequacy of the Offering Documents or as to the fairness
        of the
        terms of the Offering nor any recommendation or endorsement of the Securities.
        Any representation to the contrary is a criminal offense. In making an
        investment decision, Purchasers must rely on their own examination of the
        Company and the terms of the Offering, including the merits and risks
        involved.

       

      (3) The
        Offering is intended to be exempt from registration under the Securities
        Act by
        virtue of Section 4(2) of the Securities Act and the provisions of Rule 506
        of
        Regulation D thereunder, which is in part dependent upon the truth, completeness
        and accuracy of the statements made by the Purchaser herein and in the Purchaser
        Questionnaire.

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

      

       

      (4) Notwithstanding
        the registration obligations provided herein, there can be no assurance that
        the
        Purchaser will be able to sell or dispose of the Securities. It is understood
        that in order not to jeopardize the Offering’s exempt status under Section 4(2)
        of the Securities Act and Regulation D, any transferee may, at a minimum,
        be
        required to fulfill the investor suitability requirements
        thereunder.

       

      (5) The
        Purchaser acknowledges that the Offering is confidential and non-public and
        agrees that all information about the Offering shall be kept in confidence
        by
        the Purchaser until the public announcement of the Offering by the Company.
        The
        Purchaser acknowledges that the foregoing restrictions on the Purchaser’s use
        and disclosure of any such confidential, non-public information contained
        in the
        above-described documents restricts the Purchaser from trading in the Company’s
        securities to the extent such trading is on the basis of material, non-public
        information of which the Purchaser is aware. Except for the terms of the
        transaction documents and the fact that the Company is considering consummating
        the transactions contemplated therein, the Company confirms that neither
        the
        Company nor, to its knowledge, any other person acting on its behalf, has
        provided any of the Purchasers or their agents or counsel with any information
        that constitutes material, non-public information.

       

      (6) The
        Purchaser agrees that, prior to the earliest to occur of (i) the termination
        of
        this Agreement, (ii) the effective date of the Registration Statement or
        (iii)
        forty five (45) days after the date of the last signature to this Agreement,
        such Purchaser shall not, and shall cause its affiliates not to, engage,
        directly or indirectly, in (a) a Prohibited Transaction nor (b) any sale,
        assignment, pledge, hypothecation, put, call, or other transfer of any of
        the
        shares of Common Stock, warrants or other securities of the issuer acquired
        hereunder. Notwithstanding the foregoing, in the case of a Purchaser that
        is a
        multi-managed investment vehicle whereby separate portfolio managers manage
        separate portions of such Purchaser's assets and the portfolio managers have
        no
        direct knowledge of the investment decisions made by the portfolio managers
        managing other portions of such Purchaser's assets, the covenant set forth
        above
        shall only apply with respect to the portion of assets managed by the portfolio
        managers that have knowledge about the financing transaction contemplated
        by
        this Agreement. 

       

      
        	
                E.

              	
                Registration
                  Rights

              

      

       

      (1) Certain
        Definitions.
        For
        purposes of this Section E, the following terms shall have the meanings ascribed
        to them below.

      

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

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      

       

      (b) “Registrable
        Securities”
shall
        mean any Shares and Warrant Shares issued or issuable pursuant to the Offering
        Documents together with any securities issued or issuable upon any stock
        split,
        dividend or other distribution, adjustment, recapitalization or similar event
        with respect to the foregoing.

       

      (c) “Registration
        Statement”
means
        the registration statement required to be filed under this Section E, including
        the Prospectus, amendments and supplements to such registration statement
        or
        Prospectus, including pre- and post-effective amendments, all exhibits thereto,
        and all material incorporated by reference or deemed to be incorporated by
        reference in such registration statement.

       

      (2) Shelf
        Registration.

       

      (a) The
        Company shall use its best efforts to cause to prepare and file with the
        SEC a
“Shelf” Registration Statement covering the resale of all Registrable Securities
        for an offering to be made on a continuous basis pursuant to Rule 415 under
        the
        Securities Act on or prior to thirty (30) days from the date hereof (such
        date
        of actual filing, the “Filing
        Date”).
        The
        Registration Statement shall be on Form S-3 (or if such form is not available
        to
        the Company, on such other form as is then available to the Company) and
        shall
        contain (except if otherwise directed by the Purchasers) a “Plan of
        Distribution” substantially in the form attached hereto as Exhibit
        E.
        Each
        Purchaser will furnish to the Company, within five days of the Closing, a
        completed questionnaire in the form set forth as Exhibit
        D
        hereto.
        Each Purchaser agrees to promptly update such questionnaire in order to make
        the
        information previously furnished to the Company by such Purchaser not materially
        misleading. The Registration Statement shall register the Registrable Securities
        for resale by the holders thereof. 

       

      (b) The
        Company shall use its best efforts to cause the Registration Statement to
        be
        declared effective by the SEC on or prior to the 90th day following the Closing,
        and shall use its best efforts to keep the Registration Statement continuously
        effective under the Securities Act until the earliest of (i) the second
        anniversary of the Closing, (ii) the date when all Registrable Securities
        covered by such Registration Statement have been sold or (iii) the date upon
        which all of the Shares and the shares of Common Stock issuable upon the
        exercise of the Warrants, assuming net exercise of the Warrants pursuant
        to the
        provisions thereof, may be sold in any three month period in reliance on
        Rule
        144 (such later date, the “Effectiveness
        Period”).

       

      (c) The
        Company shall request effectiveness of the Registration Statement (and any
        post-effective amendments thereto) within five (5) business days following
        the
        Company’s receipt of notice from the SEC that the Registration Statement will
        not be reviewed by the SEC or that the SEC has completed its review of such
        Registration Statement and has no further comments. The Company shall request
        effectiveness of the Registration Statement (and any post-effective amendments
        thereto) at 5:00 p.m., Eastern time, on the effective date and use its
        commercially reasonable efforts to deliver the Prospectus (or any supplements
        thereto), which delivery may be made electronically, by 8:00 a.m. Eastern
        time
        on the first business day after such effective date. The Company shall use
        commercially reasonable efforts to file the Prospectus with the SEC by 8:00
        a.m.
        Eastern time on the first business day after such effective date.

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      

       

      (d) Upon
        the
        occurrence of any Event (as defined below), as partial relief for the damages
        suffered therefrom by the Purchasers (which remedy shall not be exclusive
        of any
        other remedies which are available at law or in equity; and provided further
        that the Purchasers shall be entitled to pursue an action for specific
        performance of the Company’s obligations under Paragraph (2)(b) above and
        any such actions at law, in equity, for specific performance or
        otherwise shall not require the Purchaser to post a bond), the Company
        shall pay to each Purchaser, as liquidated damages and not as a penalty (it
        being agreed that it would not be feasible to ascertain the extent of such
        damages with precision), such amounts and at such times as shall be determined
        pursuant to this Paragraph (2)(d).  For such purposes, each of the
        following shall constitute an “Event”:

       

      (i) the
        Filing Date does not occur on the date 30 days after the Closing Date (such
        date
        is defined herein as the “Filing
        Default Date”),
        in
        which case the Company shall pay to each Purchaser an amount in cash equal
        to:
        (A) one percent (1.0%) of the aggregate purchase price paid by such Purchaser
        for the first 30-day period following such Filing Default, on a pro-rata
        basis
        for any portion of such 30-day period; and (B) for each successive 30-day
        period
        thereafter or any portion thereof until the Filing Date, one percent (1.0%)
        of
        the aggregate purchase price paid by such Purchaser, on a pro-rata basis
        for any
        portion of such 30-day period, to be paid at the end of each 30-day period;
        or

       

      (ii) the
        Registration Statement is not declared effective on or prior to the date
        that is
        90 days after the Closing Date (the “Required
        Effectiveness Date”),
        in
        which case the Company shall pay to each Purchaser an amount in cash equal
        to:
        (A) for the first 30 days after such 90th day, one percent (1.0%) of the
        aggregate purchase price paid by such Purchaser, on a pro-rata basis for
        any
        portion of such 30-day period; and (B) for each successive 30-day period
        thereafter until the Registration Statement is deemed effective, one percent
        (1.0%) of the aggregate purchase price paid by such Purchaser, on a pro rata
        basis for any portion of such 30-day period, at the end of each 30-day period.
        

       

      The
        payment obligations of the Company under this Section E(2)(d) (i) shall be
        cumulative, and (ii) notwithstanding any of the above or any other provision
        set
        forth in this Agreement, shall not exceed, in the aggregate (including pursuant
        to the last sentence of Section E(3)(g)), 10% of the aggregate purchase price
        paid by such Purchaser. 

       

      (3) Registration
        Procedures.
        In
        connection with the Company’s registration obligations hereunder, the Company
        shall:

       

      (a) Use
        its
        best efforts to (i) prepare and file with the SEC such amendments, including
        post-effective amendments, to the Registration Statement as may be necessary
        to
        keep the Registration Statement continuously effective as to the Registrable
        Securities for the Effectiveness Period; (ii) cause the related Prospectus
        to be
        amended or supplemented by any required Prospectus supplement, and as so
        supplemented or amended to be filed pursuant to Rule 424; and (iii) respond
        as
        promptly as reasonably possible, and in any event within ten (10) trading
        days,
        to any comments received from the SEC with respect to the Registration Statement
        or any amendment thereto and as promptly as reasonably possible provide the
        Placement Agent true
        and
        complete copies of all correspondence from and to the SEC relating to the
        Registration Statement.

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      

       

      (b) Notify
        the Placement Agent and the Purchasers as promptly as reasonably possible,
        and
        (if requested by the Placement Agent) confirm such notice in writing no later
        than one (1) trading day thereafter, of any of the following events: (i)
        the SEC
        notifies the Company whether there will be a “review” of the Registration
        Statement; (ii) the SEC comments in writing on the Registration Statement
        (in
        which case the Company shall deliver to the Placement Agent a copy of such
        comments and of all written responses thereto); (iii) the SEC or any other
        Federal or state governmental authority in writing requests any amendment
        or
        supplement to the Registration Statement or Prospectus or requests additional
        information related thereto; (iv) if the SEC issues any stop order suspending
        the effectiveness of the Registration Statement or initiates any action,
        claim,
        suit, investigation or proceeding (a “Proceeding”)
        for
        that purpose; (v) the Company receives notice in writing of any suspension
        of
        the qualification or exemption from qualification of any Registrable Securities
        for sale in any jurisdiction, or the initiation or threat of any Proceeding
        for
        such purpose; or (vi) the financial statements included in the Registration
        Statement become ineligible for inclusion therein or any statement made in
        the
        Registration Statement or Prospectus or any document incorporated or deemed
        to
        be incorporated therein by reference is untrue in any material respect or
        any
        revision to the Registration Statement, Prospectus or other document is required
        so that it will not contain any untrue statement of a material fact or omit
        to
        state any material fact required to be stated therein or necessary to make
        the
        statements therein, in light of the circumstances under which they were made,
        not misleading. 

       

      (c) Use
        its
        best efforts to avoid the issuance of or, if issued, obtain the withdrawal
        of
        (i) any order suspending the effectiveness of the Registration Statement
        or (ii)
        any suspension of the qualification (or exemption from qualification) of
        any of
        the Registrable Securities for sale in any jurisdiction, at the earliest
        practicable moment.

       

      (d) Deliver
        to each Purchaser, which delivery may be made electronically by 8:00 a.m.
        Eastern time on the first business day after the date first available, without
        charge, such reasonable number of copies of the Prospectus or Prospectuses
        (including each form of prospectus) and each amendment or supplement thereto
        as
        such Purchasers may reasonably request. The Company hereby consents to the
        use
        of such Prospectus and each amendment or supplement thereto by each of the
        selling Purchasers in connection with the offering and sale of the Registrable
        Securities covered by such Prospectus and any amendment or supplement
        thereto.

       

      (e) [INTENTIONALLY
        LEFT BLANK]

       

      (f) To
        the
        extent required by law, prior to any public offering of Registrable Securities,
        use its best efforts to register or qualify or cooperate with the selling
        Purchasers in connection with the registration or qualification (or exemption
        from such registration or qualification) of such Registrable Securities for
        offer and sale under the securities or “blue sky” laws of such jurisdictions
        within the United States as any Purchaser requests in writing, to keep each
        such
        registration or qualification (or exemption therefrom) effective during the
        Effectiveness Period and to do any and all other acts or things necessary
        or
        advisable to enable the disposition in such jurisdictions of the Registrable
        Securities covered by a Registration Statement; provided,
        however,
        that
        the Company shall not be required for any such purpose (i) to consent to
        service
        of process or to qualify generally to do business as a foreign corporation
        in
        any jurisdiction wherein it would not be otherwise required to consent or
        qualify but for the requirements of this Paragraph (3)(f), or (ii) to subject
        itself to taxation.

       

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      

       

      (g) Upon
        the
        occurrence of any event described in Paragraph (3)(b)(vi) above, as promptly
        as
        reasonably practicable, prepare a supplement or amendment, including a
        post-effective amendment, to the Registration Statement or a supplement to
        the
        related Prospectus or any document incorporated or deemed to be incorporated
        therein by reference, and file any other required document so that, as
        thereafter delivered, neither the Registration Statement nor such Prospectus
        will contain an untrue statement of a material fact or omit to state a material
        fact required to be stated therein or necessary to make the statements therein,
        in light of the circumstances under which they were made, not misleading;
        provided,
        however,
        that
        the Company may suspend sales pursuant to the Registration Statement for
        a
        period of up to thirty (30) days (unless the holders of at least a 66-2/3%
        of
        the then-eligible Registrable Securities consisting of outstanding shares
        of
        Common Stock consent in writing to a longer delay of up to an additional
        thirty
        (30) days) no more than twice in any twelve-month period if the Company
        furnishes to the holders of the Registrable Securities a certificate signed
        by
        the Company’s Chief Executive Officer stating that in the good faith judgment of
        the Company’s Board of Directors, (i) the offering could reasonably be expected
        to interfere in any material respect with any acquisition, corporate
        reorganization or other material transaction under consideration by the Company
        or (ii) there is some other material development relating to the operations
        or
        condition (financial or other) of the Company that has not been disclosed
        to the
        general public and as to which it is in the Company’s best interests not to
        disclose such development; provided further, however, that the Company may
        not
        so suspend sales more than once in any calendar year without the written
        consent
        of the holders of at least a 66-2/3% of the then-eligible Registrable Securities
        consisting of outstanding shares of Common Stock. Each violation of the
        Company’s obligation not to suspend sales pursuant to the Registration Statement
        longer than permitted pursuant to the proviso
        of this
        Paragraph 3(g) shall be deemed an “Event” and for each such default, Purchaser
        shall be entitled to the payment provisions set forth in Paragraph 2(d)(i),
        but
        treating the aggregate purchase price referred to in such Paragraph 2(d)(i)
        as
        the aggregate purchase price of only the Affected Securities. For the purposes
        hereof, the “Affected Securities” shall mean only those Shares and portion of
        the Warrants (treating such portion of the Warrants as the shares of Common
        Stock issuable upon the net exercise of the Warrants pursuant to the provisions
        thereof) held by Purchaser at such time that may not be sold in any three
        month
        period in reliance on Rule 144. 

       

      (h) Comply
        with all applicable rules and regulations of the SEC in all material
        respects.

       

      (4) Registration
        Expenses.
        The
        Company shall pay (or reimburse the Purchasers for) all fees and expenses
        incident to the performance of or compliance with this Agreement by the Company,
        including without limitation (a) all registration and filing fees and expenses,
        including without limitation those related to filings with the SEC, Nasdaq
        and
        in connection with applicable state securities or “Blue Sky” laws, (b) printing
        expenses (including, without limitation, expenses of printing certificates
        for
        Registrable Securities and of printing copies of Prospectuses reasonably
        requested by the Purchasers), (c) messenger, telephone and delivery expenses,
        (d) fees and disbursements of counsel for the Company, and (e) fees and expenses
        of all other Persons retained by the Company in connection with the consummation
        of the transactions contemplated by this Agreement. Notwithstanding the
        foregoing, each Purchaser shall pay any and all costs, fees, discounts or
        commissions attributable to the sale of its respective Registrable
        Securities.

       

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      

       

      (5) Indemnification.

       

      (a) Indemnification
        by the Company.
        The
        Company shall, notwithstanding any termination of this Agreement, indemnify
        and
        hold harmless each Purchaser, and each of their officers and directors,
        partners, members, agents, brokers and employees of each of them, each Person
        who controls any such Purchaser (within the meaning of Section 15 of the
        Securities Act or Section 20 of the Exchange Act) and the officers, directors,
        partners, members, agents and employees of each such controlling Person,
        and
        each underwriter of Registrable Securities, to the fullest extent permitted
        by
        applicable law, from and against any and all losses, claims, damages,
        liabilities, settlement costs and expenses, including without limitation
        costs
        of preparation and reasonable attorneys’ fees (collectively, “Losses”),
        as
        incurred, arising out of or relating to any untrue or alleged untrue statement
        of a material fact contained in the Registration Statement, any Prospectus
        or
        form of prospectus or in any amendment or supplement thereto, or arising
        out of
        or relating to any omission or alleged omission of a material fact required
        to
        be stated therein or necessary to make the statements therein (in the case
        of
        any Prospectus or form of prospectus or supplement thereto, in light of the
        circumstances under which they were made) not misleading, except to the extent,
        but only to the extent, that (i) such untrue statements or omissions are
        in
        reliance upon and in conformity with information regarding such Purchaser
        furnished in writing to the Company by such Purchaser expressly for use therein,
        or to the extent that such information related to such Purchaser or such
        Purchaser’s proposed method of distribution of Registrable Securities and was
        reviewed and expressly approved in writing by such Purchaser expressly for
        use
        in the Registration Statement, such Prospectus or such form of Prospectus
        or in
        any amendment or supplement thereto (which shall, however, be deemed to include
        disclosure substantially in accordance with the “Plan of Distribution” attached
        hereto), or (ii) in the case of an occurrence of an event of the type specified
        in Paragraph (3)(b) above, the use by such Purchaser of an outdated or defective
        Prospectus after the Company has notified such Purchaser in writing that
        the
        Prospectus is outdated or defective and prior to the receipt by such Purchaser
        of the Advice contemplated in Paragraph (6) below. The Company shall notify
        the
        Placement Agent and the Purchasers promptly of the institution, threat or
        assertion of any Proceeding of which the Company is aware in connection with
        the
        transactions contemplated by this Agreement.

       

      (b) Indemnification
        by Purchasers.
        Each
        Purchaser shall, severally and not jointly, indemnify and hold harmless the
        Company, its directors, officers, agents and employees, and each Person who
        controls the Company (within the meaning of Section 15 of the Securities
        Act and
        Section 20 of the Exchange Act), and the directors, officers, agents or
        employees of such controlling Persons, to the fullest extent permitted by
        applicable law, from and against all Losses arising out of or based upon
        any
        untrue statement or alleged untrue statement of a material fact contained
        in any
        Registration Statement, any Prospectus, or any form of prospectus or in any
        amendment or supplement thereto, or arising out of or based upon any omission
        of
        a material fact required to be stated therein or necessary to make the
        statements therein not misleading to the extent, but only to the extent,
        that
        such untrue statement or omission is contained in any information furnished
        in
        writing by such Purchaser to the Company specifically for inclusion in such
        Registration Statement or Prospectus or to the extent that (i) such untrue
        statements or omissions are in reliance upon and in conformity with information
        regarding such Purchaser furnished in writing to the Company by such Purchaser
        expressly for use therein, or to the extent that such information related
        to
        such Purchaser or such Purchaser’s proposed method of distribution of
        Registrable Securities and was reviewed and expressly approved in writing
        by
        such Purchaser expressly for use in the Registration Statement, such Prospectus
        or such form of Prospectus or in any amendment or supplement thereto (which
        shall, however, be deemed to include disclosure substantially in accordance
        with
        the “Plan of Distribution” attached hereto), or (ii) in the case of an
        occurrence of an event of the type specified in Paragraph (3)(b) above, the
        use
        by such Purchaser of an outdated or defective Prospectus after the Company
        has
        notified such Purchaser in writing that the Prospectus is outdated or defective
        and prior to the receipt by such Purchaser of the Advice contemplated in
        Paragraph (6) below. In no event shall the liability of any selling Purchaser
        hereunder be greater in amount than the dollar amount of the net proceeds
        received by such Purchaser upon the sale of the Registrable Securities giving
        rise to such indemnification obligation.

       

      
        
           

        

        
          20

          
            

          

        

        
           

        

      

      

       

      (c) Conduct
        of Indemnification Proceedings.
        If any
        Proceeding shall be brought or asserted against any Person entitled to indemnity
        hereunder (an “Indemnified
        Party”),
        such
        Indemnified Party shall promptly notify the Person from whom indemnity is
        sought
        (the “Indemnifying
        Party”)
        in
        writing, and the Indemnifying Party shall assume the defense thereof, including
        the employment of counsel reasonably satisfactory to the Indemnified Party
        and
        the payment of all fees and expenses incurred in connection with defense
        thereof, provided, that the failure of any Indemnified Party to give such
        notice
        shall not relieve the Indemnifying Party of its obligations or liabilities
        pursuant to this Agreement, except (and only) to the extent that such failure
        shall have prejudiced the Indemnifying Party. An Indemnified Party shall
        have
        the right to employ separate counsel in any such Proceeding and to participate
        in the defense thereof, but the fees and expenses of such counsel shall be
        at
        the expense of such Indemnified Party or Parties unless: (i) the Indemnifying
        Party has agreed in writing to pay such fees and expenses; or (ii) the
        Indemnifying Party shall have failed promptly to assume the defense of such
        Proceeding and to employ counsel reasonably satisfactory to such Indemnified
        Party in any such Proceeding; or (iii) the named parties to any such Proceeding
        (including any impleaded parties) include both such Indemnified Party and
        the
        Indemnifying Party, and such Indemnified Party shall have been advised by
        counsel that a conflict of interest is likely to exist if the same counsel
        were
        to represent such Indemnified Party and the Indemnifying Party (in which
        case,
        if such Indemnified Party notifies the Indemnifying Party in writing that
        it
        elects to employ separate counsel at the expense of the Indemnifying Party,
        the
        Indemnifying Party shall not have the right to assume the defense thereof
        and
        such counsel shall be at the expense of the Indemnifying Party; provided,
        however, that in the event that the Indemnifying Party shall be required
        to pay
        the fees and expenses of separate counsel, the Indemnifying Party shall only
        be
        required to pay the fees and expenses of one separate counsel for such
        Indemnified Party or Parties. The Indemnifying Party shall not be liable
        for any
        settlement of any such Proceeding affected without its written consent, which
        consent shall not be unreasonably withheld. No Indemnifying Party shall,
        without
        the prior written consent of the Indemnified Party, effect any settlement
        of any
        pending Proceeding in respect of which any Indemnified Party is a party,
        unless
        such settlement includes an unconditional release of such Indemnified Party
        from
        all liability on claims that are the subject matter of such Proceeding. All
        fees
        and expenses of the Indemnified Party (including reasonable fees and expenses
        to
        the extent incurred in connection with investigating or preparing to defend
        such
        Proceeding in a manner not inconsistent with this Section) shall be paid
        to the
        Indemnified Party, but no more frequently than on a monthly basis, within
        ten
        trading days of written notice thereof to the Indemnifying Party (regardless
        of
        whether it is ultimately determined that an Indemnified Party is not entitled
        to
        indemnification hereunder; provided, that the Indemnifying Party may require
        such Indemnified Party to undertake to reimburse all such fees and expenses
        to
        the extent it is finally judicially determined that such Indemnified Party
        is
        not entitled to indemnification hereunder).

       

      
        
           

        

        
          21

          
            

          

        

        
           

        

      

      

       

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

       

      The
        parties hereto agree that it would not be just and equitable if contribution
        pursuant to this Paragraph (5)(d) were determined by pro rata allocation
        or by
        any other method of allocation that does not take into account the equitable
        considerations referred to in the immediately preceding paragraph.
        Notwithstanding the provision of this Paragraph (5)(d), no Purchaser shall
        be
        required to contribute, in the aggregate, any amount in excess of the amount
        by
        which the proceeds actually received by such Purchaser from the sale of the
        Registrable Securities subject to the Proceeding exceeds the amount of any
        damages that such Purchaser 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.

      

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

      

      (6) Dispositions.
        Each
        Purchaser agrees that it will comply with the prospectus delivery requirements
        of the Securities Act as applicable to it in connection with sales of
        Registrable Securities pursuant to the Registration Statement. Each Purchaser
        further agrees that, upon receipt of a notice from the Company of the occurrence
        of any event of the kind described in Paragraphs (3)(b), such Purchaser will
        discontinue disposition of such Registrable Securities under the Registration
        Statement until such Purchaser’s receipt of the copies of the supplemented
        Prospectus and/or amended Registration Statement contemplated by Paragraph
        (3)(g), or until it is advised in writing (the “Advice”)
        by the
        Company that the use of the applicable Prospectus may be resumed, and, in
        either
        case, has received copies of any additional or supplemental filings that
        are
        incorporated or deemed to be incorporated by reference in such Prospectus
        or
        Registration Statement. The Company may provide appropriate stop orders to
        enforce the provisions of this paragraph.

       

      
        
           

        

        
          22

          
            

          

        

        
           

        

      

      

       

      (7) No
        Piggy-Back on Registrations.
        Neither
        the Company nor any of its security holders (other than the Purchasers and
        the
        Placement Agent, with respect to the shares of Common Stock issuable upon
        the
        exercise of the Placement Agent Warrant, in such capacities pursuant hereto)
        may
        include securities of the Company in the Registration Statement other than
        the
        Registrable Securities, the Registrable Securities as defined in the 2006
        Securities Purchase Agreement and an
        aggregate of not more that 170,000 shares of Common Stock,
        and the
        Company shall not after the date hereof enter into any agreement providing
        any
        such right with respect to the Registration Statement to any of its security
        holders.

       

      (8) Piggy-Back
        Registrations.
        If at
        any time during the Effectiveness Period, other than any suspension period
        referred to in Paragraph (3)(g), there is not an effective Registration
        Statement covering all of the Registrable Securities and the Company shall
        determine to prepare and file with the SEC a registration statement relating
        to
        an offering for its own account or the account of others under the Securities
        Act of any of its equity securities, other than, subject to its obligations
        in
        Section 3(a), (i) any registration statement filed by the Company pursuant
        to
        their obligations under the 2006 Securities Purchase Agreement or (ii) on
        Form
        S-4 or Form S-8 (each as promulgated under the Securities Act) or their then
        equivalents relating to equity securities to be issued solely in connection
        with
        any acquisition of any entity or business or equity securities issuable in
        connection with stock option or other employee benefit plans, then the Company
        shall send to each Purchaser written notice of such determination and if,
        within
        fifteen (15) days after receipt of such notice, any such Purchaser shall
        so
        request in writing, the Company shall include in such registration statement
        all
        or any part of such Registrable Securities not already covered by an effective
        Registration Statement such Purchaser requests to be registered.

       

      (9) Rule
        144.
        For a
        period of two years following the date hereof, the Company agrees with each
        holder of Registrable Securities to:

       

      (a) use
        its
        best efforts
        to
        comply
        with the requirements of Rule 144(c) under the Securities Act with respect
        to
        current public information about the Company;

       

      (b) use
        its
        best efforts to file with the SEC in a timely manner all reports and other
        documents required of the Company under the Securities Act and the Exchange
        Act
        (at any time it is subject to such reporting requirements); and

       

      (c) furnish
        to any holder of Registrable Securities upon request (i) a written statement
        by
        the Company as to its compliance with the requirements of said Rule 144(c)
        and
        the reporting requirements of the Securities Act and the Exchange Act (at
        any
        time it is subject to such reporting requirements), (ii) a copy of the most
        recent annual or quarterly report of the Company, and (iii) such other reports
        and documents of the Company as such holder may reasonably request to avail
        itself of any similar rule or regulation of the SEC allowing it to sell any
        such
        securities without registration.

       

      
        
           

        

        
          23

          
            

          

        

        
           

        

      

      

       

      (10) Early
        Termination.
        The
        obligations of the Company pursuant to this Section E shall not apply at
        any
        time during which the Company’s Common Stock is not registered under the
        Exchange Act.

       

      
        	
                F.

              	
                Covenants
                  of the Company

              

      

       

      (1) The
        Company hereby agrees that, for a period of sixty (60) days after effectiveness
        of the Registration Statement, it shall not issue or sell any Common Stock
        of
        the Company, or any warrants or other rights to acquire Common Stock or any
        other securities that are convertible into Common Stock, with the exception
        of
        issuances or sales (i) related to a strategic transaction, (ii) pursuant
        to the
        exercise of an option, warrant or other right to acquire Common Stock
        outstanding as of the date of this Agreement, or (iii) to an employee, director,
        consultant, supplier, lender or lessor, or any option grant or
        issuance.

       

      (2) Until
        the
        later of (i) one hundred eighty (180) days following the Closing or
        (ii)
        forty-five (45) days following effectiveness of the Registration Statement,
        the
        Company shall not cause any registration statement to become effective, other
        than the Registration Statement contemplated hereby, any registration statement
        related to securities issued or to be issued pursuant to any option or other
        plan for the benefit of the Company’s employees, officers, directors or
        consultants, or any registration statement filed on Form S-4 relating to
        securities issued in connection with a merger or other acquisition; provided,
        however,
        that
        nothing herein shall prohibit the Company from maintaining the effectiveness
        of
        any currently outstanding registration statement filed by the Company under
        the
        Securities Act, including, without limitation, the filing of post-effective
        amendments to such registration statements.

       

      (3) Not
        later
        than 8:30 a.m. Eastern time on the business day following the date this
        Agreement is entered into, the Company shall make a public announcement of
        the
        execution of this Agreement by filing with the SEC a Current Report on Form
        8-K
        and issuing a press release which shall disclose the material terms of the
        Offering.

       

      (4) Not
        later
        than 8:30 a.m. Eastern time on the business day following the Closing, the
        Company shall make a public announcement of the Closing of the Offering by
        filing with the SEC a Current Report on Form 8-K and issuing a press
        release.

       

      (5) Form
        D.
        The
        Company agrees to file one or more Forms D with respect to the Securities
        on a
        timely basis as required under Regulation D under the Securities Act to claim
        the exemption provided by Rule 506 of Regulation D.

       

      (6) Certain
        Future Financings and Related Actions.
        The
        Company will not sell, offer to sell, solicit offers to buy or otherwise
        negotiate in respect of any “security” (as defined in the Securities Act) that
        is or could be integrated with the sale of the Securities in a manner that
        would
        require the sale of Securities to the Purchasers to be registered under the
        Securities Act.

       

      
        
           

        

        
          24

          
            

          

        

        
           

        

      

      

       

      (7) No
        Manipulation of Stock.
        The
        Company has not taken and will not, in violation of applicable law, take,
        any
        action designed to or that might reasonably be expected to cause or result
        in
        stabilization or manipulation of the price of the Common Stock to facilitate
        the
        sale or resale of the Securities.

       

      

      
        	
                G.

              	
                Miscellaneous

              

      

       

      (1) All
        pronouns and any variations thereof used herein shall be deemed to refer
        to the
        masculine, feminine, singular or plural, as identity of the person or persons
        may require. 

       

      (2) Any
        notice or other document required or permitted to be given or delivered to
        the
        Purchasers shall be in writing and sent (a) by fax if the sender on the same
        day
        sends a confirming copy of such notice by an internationally recognized
        overnight delivery service (charges prepaid) or (b) by an internationally
        recognized overnight delivery service (with charges prepaid):

       

      (i) if
        to the
        Company, at 

       

      Genelabs
        Technologies, Inc.

      505
        Penobscot Drive

      Redwood
        City, CA 94063

      Fax
        No.:
        650-368-0709

      Attention:
        James A.D. Smith, President and Chief Executive Officer

      

      or
        such
        other address as it shall have specified to the Purchaser in writing, with
        a
        copy (which shall not constitute notice) to: 

      

      Skadden,
        Arps, Slate, Meagher & Flom LLP

      525
        University Avenue, Suite 1100

      Palo
        Alto, CA 94301

      Fax
        No.:
        650-470-4570

      Attention:
        Thomas J. Ivey,
        Esq.

      

      (ii) if
        to the
        Purchaser, at its address set forth on the signature page to this Agreement,
        or
        such other address as it shall have specified to the Company in
        writing.

       

      (3) Failure
        of the Company to exercise any right or remedy under this Agreement or any
        other
        agreement between the Company and the Purchaser, or otherwise, or delay by
        the
        Company in exercising such right or remedy, will not operate as a waiver
        thereof. No waiver by the Company will be effective unless and until it is
        in
        writing and signed by the Company.

       

      (4) This
        Agreement shall be enforced, governed and construed in all respects in
        accordance with the laws of the State of New York, as such laws are applied
        by
        the New York courts to agreements entered into and to be performed in New
        York
        by and between residents of New York, and shall be binding upon the Purchaser,
        the Purchaser’s heirs, estate, legal representatives, successors and assigns and
        shall inure to the benefit of the Company, its successors and
        assigns.
        

       

      
        
           

        

        
          25

          
            

          

        

        
           

        

      

      

       

      (5) If
        any
        provision of this Agreement is held to be invalid or unenforceable under
        any
        applicable statute or rule of law, then such provision shall be deemed modified
        to conform with such statute or rule of law. Any provision hereof that may
        prove
        invalid or unenforceable under any law shall not affect the validity or
        enforceability of any other provisions hereof.

       

      (6) The
        parties understand and agree that, unless provided otherwise herein, money
        damages would not be a sufficient remedy for any breach of the Agreement
        by the
        Company or the Purchaser and that the party against which such breach is
        committed shall be entitled to equitable relief, including injunction and
        specific performance, as a remedy for any such breach. Such remedies shall
        not,
        unless provided otherwise herein, be deemed to be the exclusive remedies
        for a
        breach by either party of the Agreement but shall be in addition to all other
        remedies available at law or equity to the party against which such breach
        is
        committed.

       

      (7) The
        obligations of each Purchaser under this Agreement are several and not joint
        with the obligations of any other Purchaser, and no Purchaser shall be
        responsible in any way for the performance of the obligations of any other
        Purchaser hereunder, except as may result from the actions of any such Purchaser
        other than through the execution hereof. Nothing contained herein solely
        by
        virtue of being contained herein shall be deemed to constitute the Purchasers
        as
        a partnership, an association, a joint venture or any similar entity, or
        create
        a presumption that the Purchasers are in any way acting in concert or as
        a group
        with respect to such obligations or the transactions contemplated
        hereby.

       

      (8) This
        Agreement, together with the agreements and documents executed and delivered
        in
        connection with this Agreement, constitutes the entire agreement between
        the
        parties hereto with respect to the subject matter hereof. Nothing in this
        Agreement shall create or be deemed to create any rights in any person or
        entity
        not a party to this Agreement, except for the Placement Agent and the holders
        of
        Registrable Securities.

       

      
        	
                H.

              	
                Signature

              

      

       

      The
        signature page of this Agreement is contained as part of the applicable
        subscription package, entitled “Signature Page.”

      

       

      *
        * * * *
        * *

      

      
        
           

        

        
          26

          
            

          

        

        
           

        

      

      SIGNATURE
        PAGE

       

      The
        Purchaser hereby subscribes for such number of Shares as shall equal the
        Subscription Amount as set forth below, divided by the Offering Price, and
        shall
        also receive a Warrant to purchase such number of shares of Common Stock
        calculated as set forth in this Agreement, and agrees to be bound by the
        terms
        and conditions of this Agreement.

       

      PURCHASER

       

      1. Dated:                         , 2007

       

      2. Total
        Subscription Amount: $__________

       

      

      
        	 
	 	 	 
                
	
                Signature
                  of Subscriber (and
                  title, if applicable)

              	 	 	
                Signature
                  of Joint Purchaser

                (if
                  any)

              
	  	 	 	 	 
	 	 	 	 
                
	
                Taxpayer
                  Identification or Social Security
                  Number

              	 	 	Taxpayer Identification
                or Social
                Security
                Number of Joint Purchaser (if any)
	  	 	 	 	 
	 	 	 	 
	
                Name (please print as name will appear on
                  stock certificate)

              	 	 	 
	 	 	 	 	 
	  
                	 	 	 
	Number and
                Street	 	 	 
	  
                	 	 	 	 
	 	 	 	 
	 City, State  	
                 Zip
                  Code

              	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

      

      

      

       

      ACCEPTED
        BY:

       

      GENELABS
        TECHNOLOGIES, INC.

       

      

       

      By: 

      
        
          

        

      

      Name:

      Title:

       

      

       

      Dated:
             

      
        
          

        

      

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Schedule
        A

      

      Escrow
        Instructions

       

      PLEASE
        SEND WIRE TRANSFERS TO THE ESCROW ACCOUNT AS FOLLOWS:

       

      Wire
        Transfer Instructions:

       

      

      J.P.
        Morgan Chase 

       

      55
        Water
        Street

       

      New
        York,
        NY 

      

      A/C
        # 323
        053696

      

      ABA
        # 021
        000 021

      

      American
        Stock Transfer & Trust Company

      As
        Escrow
        Agent for

      Oppenheimer/
        Genelabs Technologies, Inc.

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Schedule
        B

       

      Additional
        Risk Factors for the Offering

       

      The
        Offering involves a high degree of risk. You should carefully consider the
        following information about some of these risks, as well as the other
        information contained or incorporated by reference into our SEC Reports,
        before
        you decide to invest in Securities. The following risks and uncertainties
        are
        not the only ones facing the Company. Additional risks and uncertainties
        of
        which the Company is unaware or which it currently believes are immaterial
        could
        also materially adversely affect its business, financial condition or results
        of
        operations. In any case, the value of the Securities could decline, and you
        could lose all or part of your investment. 

       

      Our
        stock price may be volatile and your investment in our common stock could
        suffer
        a decline in value.

       

      The
        market price of our common stock may fluctuate significantly in response
        to a
        number of factors, some of which are beyond our control. These factors
        include:

      

      
        	 	
                §

              	
                progress
                  of our products through the regulatory process;

              

      

       

      
        	 	
                §

              	
                results
                  of preclinical studies and clinical
                  trials;

              

      

       

      
        	 	
                §

              	
                announcements
                  of technological innovations or new products by us or our
                  competitors;

              

      

       

      
        	 	
                §

              	
                government
                  regulatory action affecting our products or our competitors’ products in
                  both the United States and foreign
                  countries;

              

      

       

      
        	 	
                §

              	
                developments
                  or disputes concerning patent or proprietary
                  rights;

              

      

       

      
        	 	
                §

              	
                actual
                  or anticipated fluctuations in our operating
                  results;

              

      

       

      
        	 	
                §

              	
                changes
                  in our financial estimates by securities
                  analysts;

              

      

       

      
        	 	
                §

              	
                general
                  market conditions for emerging growth and pharmaceutical
                  companies;

              

      

       

      
        	 	
                §

              	
                broad
                  market fluctuations; and

              

      

       

      
        	 	
                §

              	
                economic
                  conditions in the United States or
                  abroad.

              

      

       

      The
        Securities to be issued in the Offering are restricted
        securities.

       

      The
        offer
        and sale of the Securities has not been registered under the Securities Act
        or
        the securities laws of any state. Accordingly, the Securities may not be
        sold or
        otherwise transferred unless such sale or transfer is subsequently registered
        under the Securities Act and applicable state securities laws or unless
        exemptions from such registration are available. Notwithstanding the Company’s
        registration obligations regarding the Securities, investors may be required
        to
        hold the Securities for an indefinite period of time. All investors who purchase
        the Securities are required to make representations that it will not sell,
        transfer, pledge or otherwise dispose of any of the Securities in the absence
        of
        an effective registration statement covering such transaction under the
        Securities Act and applicable state securities laws, or the receipt by the
        Company of an opinion of counsel to the effect that registration is not
        required.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      Because
        the average daily trading volume of our common stock is low, your ability
        to
        sell your shares in the secondary trading market may be
        limited.

       

      Because
        the average daily trading volume of our Common Stock is low, the liquidity
        of
        our common stock may be impaired. As a result, prices for shares of our common
        stock may be lower than might otherwise prevail if the average daily trading
        volume of our common stock was higher. The average daily trading volume of
        our
        Common Stock may be low relative to the stocks of exchange-listed companies,
        which could limit your ability to sell your shares in the secondary trading
        market.

       

      Sales
        of a substantial number of shares of our Common Stock in the public market,
        including the shares offered under the Registration Statement and under other
        registration statements, could lower our stock price and impair our ability
        to
        raise funds in new stock offerings.

       

      Future
        sales of a substantial number of shares of our common stock in the public
        market, including the shares to be offered under the Registration Statement,
        other registration statements and shares available for resale under Rule
        144(k)
        under the Act, or the perception that such sales could occur, could adversely
        affect the prevailing market price of our Common Stock and could make it
        more
        difficult for us to raise additional capital through the sale of equity
        securities. 

       

      We
        may incur significant costs from class action litigation due to our expected
        stock volatility.

       

      In
        the
        past, following periods of large price declines in the public market price
        of a
        company’s stock, holders of that stock occasionally have instituted securities
        class action litigation against the company that issued the stock. If any
        of our
        stockholders were to bring this type of lawsuit against us, even if the lawsuit
        is without merit, we could incur substantial costs defending the lawsuit.
        The
        lawsuit also could divert the time and attention of our management, which
        would
        hurt our business. Any adverse determination in litigation could also subject
        us
        to significant liabilities.

       

      Exercise
        of outstanding options and warrants will dilute stockholders and could decrease
        the market price of our Common Stock.

       

      As
        of
        February 2, 2007, we had issued and outstanding 24,166,244 shares of Common
        Stock and outstanding options and warrants to purchase 5,674,835 additional
        shares of Common Stock. The existence of the outstanding options and warrants
        may adversely affect the market price of our Common Stock and the terms under
        which we could obtain additional equity capital. 

       

      We
        do not intend to pay any cash dividends in the foreseeable future and,
        therefore, any return on your investment in our common stock must come from
        increases in the fair market value and trading price of our Common
        Stock.

       

      We
        do not
        intend to pay any cash dividends in the foreseeable future and, therefore,
        any
        return on your investment in our Common Stock must come from increases in
        the
        fair market value and trading price of our Common Stock.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      We
        likely will issue additional equity securities, which will dilute your share
        ownership.

       

      We
        likely
        will issue additional equity securities to raise capital and through the
        exercise of options and warrants that are outstanding or may be outstanding.
        These additional issuances will dilute your share ownership.

       

      The
        Company will have broad discretion as to the use of the proceeds from the
        Offering and may use the proceeds in a manner with which you
        disagree.

       

      The
        Company’s board of directors and management will have broad discretion over the
        use of the net proceeds of the Offering. Shareholders may disagree with the
        judgment of the board of directors and management regarding the application
        of
        the proceeds of the Offering. The Company cannot predict that investments
        of the
        proceeds will yield a favorable, or any, return.

       

      Although
        we met the standards for continued listing on the Nasdaq quotation system
        as of
        September 30, 2006, the date of our most recent Quarterly Report on Form
        10-Q,
        there is no guarantee that we will continue to meet these standards in the
        future and if we are delisted the value of our Common Stock may substantially
        decrease.

      

      To
        remain
        listed on the Nasdaq Capital Market we must have a market value of at least
        $35
        million or at least $2.5 million in shareholders’ equity. Between January 1,
        2006 and September 30, 2006, our market value has fluctuated between
        approximately $13 million and approximately $41 million. In our Quarterly
        Report
        on Form 10-Q, filed for the period ended March 31, 2006, our
        shareholders’ equity was a deficit of $0.8 million. Based on these factors, the
        Nasdaq Stock Market sent us a delisting notice, which we appealed to a listing
        qualifications panel. We
        subsequently received notification from Nasdaq that the Panel granted our
        request for continued listing on the Nasdaq Capital Market. The notification
        further stated that under Nasdaq Marketplace Rule 4806(d)(2), the Panel will
        continue to monitor our compliance with the continued listing standards of
        the
        Nasdaq Capital Market for a period of one year. During this one year period,
        which expires August 3, 2007, if the Company fails to comply with the continued
        listing standards an additional hearing regarding the listing would be promptly
        scheduled pursuant to Marketplace Rule 4806(a).
        Even
        though the listing qualifications panel granted our request for continued
        listing on the Nasdaq Capital Market there is no guarantee that we will continue
        to meet the standards for listing in the future. Delisting from the Nasdaq
        Capital Market would adversely affect the trading price of our common stock,
        significantly limit the liquidity of our common stock and impair our ability
        to
        raise additional funds.

       

       

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Exhibit
        A

       

      Legal
        Matters

       

      Skadden,
        Arps, Slate, Meagher & Flom LLP shall
        deliver an opinion to the Purchasers covering the following matters. The
        opinion
        shall be subject to and include customary assumptions, limitations and
        qualifications.

       

      1. The
        Company is validly existing in good standing under the laws of the State
        of
        California, with requisite corporate power to own or lease, as the case may
        be,
        and to operate its properties and conduct its business as described
        in
        Company’s Form 10-Q for the quarter ended September 30, 2006 and the
        2005
        Form 10-K. The Company has the corporate power and authority to execute and
        deliver the Securities Purchase Agreement and to consummate the transactions
        contemplated thereby.

       

      2. The
        authorized capital stock of the Company consists of 125,000,000 shares of
        common
        stock, no par value per share, and 4,990,000 shares of preferred stock, no
        par
        value per share.

       

      3. The Shares
        have been duly authorized and, when issued and paid for by the Purchasers
        pursuant to the Agreement, will be validly issued, fully paid and
        nonassessable.

       

      4. The Warrants
        have been duly authorized and executed by the Company.

       

      5. 
        The
        shares of Common Stock initially issuable upon conversion of the Warrant
        pursuant to the Warrant (the “Warrant Shares”) have been duly authorized by all
        necessary corporate action and, when issued and delivered against payment
        therefor upon the due exercise of the Warrants, in accordance with the
        provisions thereof, will be validly issued, fully paid and nonassessable.
        The
        resolutions of the Board of Directors of the Company approving the issuance
        of
        the Warrants state that they have reserved the Warrant Shares for
        issuance.

       

      6. The
        Agreement has been duly authorized, executed and delivered by the Company
        and
constitutes
        a valid and binding agreement of the Company, enforceable against the Company
        in
        accordance with its terms, except as rights to indemnification and contribution
        thereunder may be limited by applicable law and except as the enforcement
        thereof may be limited by bankruptcy, insolvency, reorganization, arrangement,
        moratorium or other similar laws relating to or affecting creditors’ rights
        generally or by public policy or general equitable principles and to limitations
        on the availability of equitable relief, including specific
        performance.

       

      7. The
        execution and delivery by the Company of the Securities Purchase Agreement,
        and
        the consummation by the Company of the transactions contemplated thereby,
        including the issuance and sale of the Shares, will not (i) conflict with
        the
        Article of Incorporation or Bylaws, (ii) constitute a violation of, or a
        breach
        or default under, the terms of those agreements or instruments identified
        on a
        schedule to the opinion and that have been identified to Skadden as all the
        agreements and instruments that are material to the business or financial
        condition of the Company, (iii)violate or conflict with, or result in any
        contravention of, those laws, rules and regulations of the State of California
        corporation law and the State of New York and those federal laws, rules and
        regulations of the United States of America, in each case that, in our
        experience, are normally applicable to transactions of the type contemplated
        by
        the Securities Purchase Agreement or those judgments, orders or decrees
        identified on a schedule to the certificate from the Company.
        We do
        not express any opinion, however, as to whether the execution, delivery or
        performance by the Company of the Securities Purchase Agreement will constitute
        a violation of, or a default under, any covenant, restriction or provision
        with
        respect to financial ratios or tests or any aspect of the financial condition
        or
        results of operation of the Company or any of its subsidiaries.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      8. Assuming
        (a) the accuracy of the representations made by each Purchaser in the Securities
        Purchase Agreement;(b) the accuracy of the representations made by the Company
        in the Securities Purchase Agreement, (c) that neither the Company, the
        Placement Agent nor any person acting on behalf of either the Company or
        the
        Placement Agent has offered or sold the Securities by any form of general
        solicitation or general advertising within the meaning of Rule 502(c) of
        Regulation D promulgated under the Securities Act (“Regulation
        D”);
        (d)
        that no offerings or sales of securities of the Company after the date hereof
        in
        a transaction can be “integrated” with any sales of the Securities; and (e) that
        each person or entity that purchased securities of the Company directly from
        the
        Company or its agents and without registration between the date six months
        prior
        to the Closing of the Offering and the date of the Agreement was, as of the
        date
        of such purchase, an “accredited investor” as defined in Rule 501 of Regulation
        D, the sale of the Securities to the Purchasers at the Closing under the
        circumstances contemplated by this Agreement are exempt from the registration
        and prospectus delivery requirements of Section 5 of the Securities Act,
        subject
        to the timely filing of a Form D pursuant to the Regulation D, it being
        understood that we do not express any opinion as to the Common Stock issuable
        upon exercise of any Warrant or any subsequent offer or resale of any
        Security.

       

      9. To
        our
        knowledge, there are no legal or governmental proceedings pending to which
        the
        Company is a party or to which any property of the Company is subject that
        are
        required to be described in the Company’s Form 10-Q for each of the quarters
        ended September 30, 2006, June 30, 2006 and March 31, 2006, and the Company’s
        Form 10-K for the fiscal year ended December 31, 2005, which is not otherwise
        disclosed therein. 

       

      Skadden,
        Arps, Slate, Meagher & Flom LLP shall
        deliver an opinion to the Placement Agent covering the following matters.
        The
        opinion shall be subject to and include customary assumptions, limitations
        and
        qualifications.

      

      1. The
        Company is validly existing in good standing under the laws of the State
        of
        California, with requisite corporate power to own or lease, as the case may
        be,
        and to operate its properties and conduct its business as described
        in
        Company’s Form 10-Q for the quarter ended September 30, 2006 and the
        2005
        Form 10-K.

       

      2. The
        authorized capital stock of the Company consists of 125,000,000 shares of
        common
        stock, no par value per share, and 4,990,000 shares of preferred stock, no
        par
        value per share.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      3. The Placement
        Agent Warrants have been duly authorized and executed by the
        Company.

       

      4. 
        The
        shares of Common Stock initially issuable upon conversion of the Placement
        Agent
        Warrant pursuant to the Placement Agent Warrant (the “Placement Agent Warrant
        Shares”) have been duly authorized by all necessary corporate action and, when
        issued and delivered against payment therefor upon the due exercise of the
        Placement Agent Warrants, in accordance with the provisions thereof, will
        be
        validly issued, fully paid and nonassessable. The resolutions of the Board
        of
        Directors of the Company approving the issuance of the Warrants state that
        they
        have reserved the Placement Agent Warrant Shares for issuance.

       

      5. To
        our
        knowledge, there are no legal or governmental proceedings pending to which
        the
        Company is a party or to which any property of the Company is subject that
        are
        required to be described in the Company’s Form 10-Q for each of the quarters
        ended September 30, 2006, June 30, 2006 and March 31, 2006, and the Company’s
        Form 10-K for the fiscal year ended December 31, 2005, which is not otherwise
        disclosed therein.

       

      

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      Exhibit
        B

       

      Form
        of Warrant

       

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      THIS
        WARRANT AND THE SHARES OF COMMON STOCK ISSUED UPON ITS

      EXERCISE
        ARE SUBJECT TO THE RESTRICTIONS ON

      TRANSFER
        SET FORTH IN SECTION 5 OF THIS WARRANT 

      
        

      

       

      
        	
                Warrant
                  No. [   ]

              	
                Number
                  of Shares: [           ]

                (subject
                  to adjustment)

              
	
                Date
                  of Issuance: February [           ],
                  2007

                Original
                  Issue Date (as defined in subsection 2(a)): [           ],
                  2007

              	 

      

      Genelabs
        Technologies, Inc.

       

      Common
        Stock Purchase Warrant

       

      (Void
        after [           ],
        2012)

       

      Genelabs
        Technologies, Inc., a California corporation (the “Company”), for value
        received, hereby certifies that [                ],
        or its
        registered assigns (the “Registered Holder”), is entitled, subject to the terms
        and conditions set forth below, to purchase from the Company, at any time
        or
        from time to time on or after and on or before the earlier to occur of (i)
        5:00
        p.m. (Eastern time) on [           ],
        2012
        and (ii) an Acquisition Event (the “Exercise Period”), [           ]
        shares
        of Common Stock, no par value per share, of the Company (“Common Stock”), at a
        purchase price of $1.85 per share. The shares purchasable upon exercise of
        this
        Warrant, and the purchase price per share, each as adjusted from time to
        time
        pursuant to the provisions of this Warrant, are hereinafter referred to as
        the
“Warrant Shares” and the “Purchase Price,” respectively. This Warrant is one of
        a series of Warrants issued by the Company in connection with a private
        placement of Common Stock and of like tenor, except as to the number of shares
        of Common Stock subject thereto (collectively, the “Company Warrants”). An
“Acquisition Event” shall mean the occurrence, in a single transaction or in a
        series of related transactions, of any one or more of the following events:
        (i)
        a sale or
        other
        disposition of all or substantially all, of the consolidated assets of the
        Company; (ii) a sale or other disposition of at least ninety percent (90%)
        of
        the outstanding securities of the Company; (iii) the consummation of a merger,
        consolidation or similar transaction (with an unaffiliated entity) following
        which the Company is not the surviving corporation; or (iv) the consummation
        of
        a merger, consolidation or similar transaction (with an unaffiliated entity)
        following which the Company is the surviving corporation but the shares of
        Common Stock outstanding immediately preceding the merger, consolidation
        or
        similar transaction are converted or exchanged by virtue of the merger,
        consolidation or similar transaction into other property, whether in the
        form of
        securities, cash or otherwise.

       

      1. Exercise.

       

      (a) Exercise
        for Cash.
        The
        Registered Holder may, at its option, elect to exercise this Warrant, in
        whole
        or in part and at any time or from time to time during the Exercise Period,
        by
        surrendering this Warrant, with the purchase form appended hereto as
Exhibit I
        duly
        executed by or on behalf of the Registered Holder, at the principal office
        of
        the Company, or at such other office or agency as the Company may designate,
        accompanied by payment in full, in lawful money of the United States, of
        the
        Purchase Price payable in respect of the number of Warrant Shares purchased
        upon
        such exercise. A facsimile signature of the Registered Holder on the purchase
        form shall be sufficient for purposes of exercising this Warrant, provided
        that
        the Company receives the Registered Holder’s original signature with three (3)
        business days thereafter.

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

       

      (b)  Cashless
        Exercise.
        

       

      (i) At
        any
        time during the Exercise Period, the Registered Holder may, at its option,
        elect
        to exercise this Warrant, in whole or in part, on a cashless basis, by
        surrendering this Warrant, with the purchase form appended hereto as
Exhibit
        I
        duly
        executed by or on behalf of the Registered Holder, at the principal office
        of
        the Company, or at such other office or agency as the Company may designate,
        by
        canceling a portion of this Warrant in payment of the Purchase Price payable
        in
        respect of the number of Warrant Shares purchased upon such exercise. In
        the
        event of an exercise pursuant to this subsection 1(b), the number of Warrant
        Shares issued to the Registered Holder shall be determined according to the
        following formula: 

       

      
        	
                X
                  = Y(A-B)   

              
	
                    A

              
	 	 	 
	
                Where:
                  

              	
                X
                  =
                  

              	
                the
                  number of Warrant Shares that shall be issued to the Registered
                  Holder;
                  

              
	 	 	 
	 	
                Y
                  =

              	
                the
                  number of Warrant Shares for which this Warrant is being exercised
                  (which
                  shall include both the number of Warrant Shares issued to the Registered
                  Holder and the number of Warrant Shares subject to the portion
                  of the
                  Warrant being cancelled in payment of the Purchase Price);
                  

              
	 	 	 
	 	
                A
                  =

              	
                the
                  Fair Market Value (as defined below) of one share of Common Stock;
                  and

              
	 	 	 
	 	
                B
                  =

              	
                the
                  Purchase Price then in effect.

              

      

       

      (ii) The
        Fair
        Market Value per share of Common Stock shall be determined as
        follows:

       

      (1) If
        the
        Common Stock is listed on a national securities exchange, the Nasdaq National
        Market, the Nasdaq Capital Market or another nationally recognized trading
        system as of the Exercise Date, the Fair Market Value per share of Common
        Stock
        shall be deemed to be the average of the high and low reported sale prices
        per
        share of Common Stock thereon on the trading day immediately preceding the
        Exercise Date (provided
        that if
        no such price is reported on such day, the Fair Market Value per share of
        Common
        Stock shall be determined pursuant to clause (2) below).

       

      (2) If
        the
        Common Stock is not listed on a national securities exchange, the Nasdaq
        National Market, the Nasdaq Capital Market or another nationally recognized
        trading system as of the Exercise Date, the Fair Market Value per share of
        Common Stock shall be deemed to be the amount most recently determined in
        good
        faith by the Board of Directors of the Company (the “Board”) to represent the
        fair market value per share of the Common Stock (including without limitation
        a
        determination for purposes of granting Common Stock options or issuing Common
        Stock under any plan, agreement or arrangement with employees of the Company);
        and, upon request of the Registered Holder, the Board (or a representative
        thereof) shall, as promptly as reasonably practicable but in any event not
        later
        than 10 days after such request, notify the Registered Holder of the Fair
        Market
        Value per share of Common Stock and furnish the Registered Holder with
        reasonable documentation of the Board’s determination of such Fair Market Value.
        Notwithstanding the foregoing, if the Board has not made such a determination
        within the three-month period prior to the Exercise Date, then (A) the
        Board shall make, and shall provide or cause to be provided to the Registered
        Holder notice of, a determination of the Fair Market Value per share of the
        Common Stock within 15 days of a request by the Registered Holder that it
        do so,
        and (B) the exercise of this Warrant pursuant to this subsection 1(b) shall
        be delayed until such determination is made and notice thereof is provided
        to
        the Registered Holder.  

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      

       

      (c) Exercise
        Date.
        Each
        exercise of this Warrant shall be deemed to have been effected immediately
        prior
        to the close of business on the day on which this Warrant shall have been
        surrendered to the Company together with the duly executed purchase form
        as
        provided in subsection 1(a) or 1(b) above (the “Exercise Date”). At such time,
        the person or persons in whose name or names any certificates for Warrant
        Shares
        shall be issuable upon such exercise as provided in subsection 1(d) below
        shall
        be deemed to have become the holder or holders of record of the Warrant Shares
        represented by such certificates.

       

      (d) Issuance
        of Certificates.
        As soon
        as practicable after the exercise of this Warrant in whole or in part, and
        in
        any event within 3 trading days thereafter, the Company, at its expense,
        will
        cause to be issued in the name of, and sent for delivery to, the Registered
        Holder, or as the Registered Holder (upon payment by the Registered Holder
        of
        any applicable transfer taxes) may direct:

       

      (i) a
        certificate or certificates for the number of full Warrant Shares to which
        the
        Registered Holder shall be entitled upon such exercise plus, in lieu of any
        fractional share to which the Registered Holder would otherwise be entitled,
        cash in an amount determined pursuant to Section 3 hereof; and

       

      (ii) in
        case
        such exercise is in part only, a new warrant or warrants (dated the date
        hereof)
        of like tenor, calling in the aggregate on the face or faces thereof for
        the
        number of Warrant Shares equal (without giving effect to any adjustment therein)
        to the number of such shares called for on the face of this Warrant minus
        the
        number of Warrant Shares for which this Warrant was so exercised (which,
        in the
        case of an exercise pursuant to subsection 1(b), shall include both the number
        of Warrant Shares issued to the Registered Holder pursuant to such partial
        exercise and the number of Warrant Shares subject to the portion of the Warrant
        being cancelled in payment of the Purchase Price).

       

      (e) Limitation
        on Exercise.
        Notwithstanding anything to the contrary set forth in this Warrant, at no
        time
        may a Registered Holder of this Warrant exercise any portion of this Warrant
        if
        the number of shares of Common Stock to be issued pursuant to such exercise
        would exceed, when aggregated with all other shares of Common Stock beneficially
        owned by such Registered Holder at such time, the number of shares of Common
        Stock which would result in such Registered Holder beneficially owning (as
        determined in accordance with Section 13(d) of the Exchange Act and the rules
        thereunder) in excess of 4.99% of the then issued and outstanding shares
        of
        Common Stock; provided, however, that upon a Registered Holder of this Warrant
        providing the Company with sixty-one (61) days notice (pursuant to Section
        10
        hereof) (the "Waiver Notice") that such Registered Holder would like to waive
        this Section 1(e) with regard to any or all shares of Common Stock issuable
        upon
        exercise of this Warrant, this Section 1(e) will be of no force or effect
        with
        regard to all or a portion of the Warrant referenced in the Waiver Notice;
        provided, further, that this provision shall be of no further force or effect
        during the sixty-one (61) days immediately preceding the expiration of the
        term
        of this Warrant.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      

       

      [Notwithstanding
        anything to the contrary set forth in this Warrant, at no time may a Registered
        Holder of this Warrant exercise any portion of this Warrant if the number
        of
        shares of Common Stock to be issued pursuant to such exercise would exceed,
        when
        aggregated with all other shares of Common Stock beneficially owned by such
        Registered Holder at such time, the number of shares of Common Stock which
        would
        result in such Registered Holder beneficially owning (as determined in
        accordance with Section 13(d) of the Exchange Act and the rules thereunder)
        in
        excess of 9.99% of the then issued and outstanding shares of Common
        Stock.]1 

      

      2. Adjustments.

       

      (a) Adjustment
        for Stock Splits and Combinations.
        If the
        Company shall at any time or from time to time after the date on which this
        Warrant was first issued (or, if this Warrant was issued upon partial exercise
        of, or in replacement of, another warrant of like tenor, then the date on
        which
        such original warrant was first issued) (the “Original Issue Date”) effect a
        subdivision of the outstanding Common Stock, the Purchase Price then in effect
        immediately before that subdivision shall be proportionately decreased and
        the
        number of Warrant Shares shall be proportionately adjusted. If the Company
        shall
        at any time or from time to time after the Original Issue Date combine the
        outstanding shares of Common Stock, the Purchase Price then in effect
        immediately before the combination shall be proportionately increased and
        the
        number of Warrant Shares shall be proportionately adjusted. Any adjustment
        under
        this paragraph shall become effective at the close of business on the date
        the
        subdivision or combination becomes effective.

       

      (b) Adjustment
        for Certain Dividends and Distributions.
        In the
        event the Company at any time, or from time to time after the Original Issue
        Date shall make or issue, or fix a record date for the determination of holders
        of Common Stock entitled to receive, a dividend or other distribution payable
        in
        additional shares of Common Stock, then and in each such event the Purchase
        Price then in effect immediately before such event shall be decreased (and
        the
        number of Warrant Shares shall be proportionately adjusted) as of the time
        of
        such issuance or, in the event such a record date shall have been fixed,
        as of
        the close of business on such record date, by multiplying the Purchase Price
        then in effect by a fraction:

       

      
        
          

        

      

      1
        Bracketed language to be included in Warrant of SF
        Capital.

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      

       

      (1) the
        numerator of which shall be the total number of shares of Common Stock issued
        and outstanding immediately prior to the time of such issuance or the close
        of
        business on such record date, and

       

      (2) the
        denominator of which shall be the total number of shares of Common Stock
        issued
        and outstanding immediately prior to the time of such issuance or the close
        of
        business on such record date plus the number of shares of Common Stock issuable
        in payment of such dividend or distribution; provided,
        however,
        that if
        such record date shall have been fixed and such dividend is not fully paid
        or if
        such distribution is not fully made on the date fixed therefor, the Purchase
        Price shall be recomputed accordingly as of the close of business on such
        record
        date and thereafter the Purchase Price shall be adjusted pursuant to this
        paragraph as of the time of actual payment of such dividends or
        distributions.

       

      (c) Adjustments
        for Other Dividends and Distributions.
        In the
        event the Company at any time or from time to time after the Original Issue
        Date
        shall make or issue, or fix a record date for the determination of holders
        of
        Common Stock entitled to receive, a dividend or other distribution payable
        in
        securities of the Company (other than shares of Common Stock) or in cash
        or
        other property (other than regular cash dividends paid out of earnings or
        earned
        surplus, determined in accordance with generally accepted accounting
        principles), then and in each such event provision shall be made so that
        the
        Registered Holder shall receive upon exercise hereof, in addition to the
        number
        of shares of Common Stock issuable hereunder, the kind and amount of securities
        of the Company, cash or other property which the Registered Holder would
        have
        been entitled to receive had this Warrant been exercised on the date of such
        event and had the Registered Holder thereafter, during the period from the
        date
        of such event to and including the Exercise Date, retained any such securities
        receivable during such period, giving application to all adjustments called
        for
        during such period under this Section 2 with respect to the rights of the
        Registered Holder.

       

      (d) Adjustment
        for Reorganization.
        If
        there shall occur any reorganization, recapitalization, reclassification,
        consolidation or merger involving the Company in which the Common Stock is
        converted into or exchanged for securities, cash or other property
        (collectively, a “Reorganization”),
        then,
        following such Reorganization, the Registered Holder shall receive upon exercise
        hereof the kind and amount of securities, cash or other property which the
        Registered Holder would have been entitled to receive pursuant to such
        Reorganization if such exercise had taken place immediately prior to such
        Reorganization. Notwithstanding the foregoing sentence, if (x) there shall
        occur any Reorganization in which the Common Stock is converted into or
        exchanged for anything other than solely equity securities, and (y) the
        common stock of the acquiring or surviving company is publicly traded, then,
        as
        part of such Reorganization, (i) the Registered Holder shall have the right
        thereafter to receive upon the exercise hereof such number of shares of common
        stock of the acquiring or surviving company as is determined by multiplying
        (A) the number of shares of Common Stock subject to this Warrant
        immediately prior to such Reorganization by (B) a fraction, the numerator
        of which is the Fair Market Value (as defined in subsection 1(b)(ii) above)
        per
        share of Common Stock as of the effective date of such Reorganization, and
        the
        denominator of which is the fair market value per share of common stock of
        the
        acquiring or surviving company as of the effective date of such transaction,
        as
        determined in good faith by the Board (using the principles set forth in
        subsections 2(d)(i) and 2(d)(ii) to the extent applicable), and
        (ii) the exercise price per share of common stock of the acquiring or
        surviving company shall be the Purchase Price divided by the fraction referred
        to in clause (B) above. In any such case, appropriate adjustment (as
        determined in good faith by the Board) shall be made in the application of
        the
        provisions set forth herein with respect to the rights and interests thereafter
        of the Registered Holder, to the end that the provisions set forth in this
        Section 2 (including provisions with respect to changes in and other adjustments
        of the Purchase Price) shall thereafter be applicable, as nearly as reasonably
        may be, in relation to any securities, cash or other property thereafter
        deliverable upon the exercise of this Warrant. 

       

      
        
           

        

        
          -5-

          
            

          

        

        
           

        

      

      

       

      (e) Certificate
        as to Adjustments.
        Upon
        the occurrence of each adjustment or readjustment of the Purchase Price pursuant
        to this Section 2, the Company at its expense shall, as promptly as reasonably
        practicable but in any event not later than 10 days thereafter, compute such
        adjustment or readjustment in accordance with the terms hereof and furnish
        to
        the Registered Holder a certificate setting forth such adjustment or
        readjustment (including the kind and amount of securities, cash or other
        property for which this Warrant shall be exercisable and the Purchase Price)
        and
        showing in detail the facts upon which such adjustment or readjustment is
        based.
        The Company shall, as promptly as reasonably practicable after the written
        request at any time of the Registered Holder (but in any event not later
        than 10
        days thereafter), furnish or cause to be furnished to the Registered Holder
        a
        certificate setting forth (i) the Purchase Price then in effect and
        (ii) the number of shares of Common Stock and the amount, if any, of other
        securities, cash or property which then would be received upon the exercise
        of
        this Warrant. 

       

      3. Fractional
        Shares.
        The
        Company shall not be required upon the exercise of this Warrant to issue
        any
        fractional shares, but shall pay the value thereof to the Registered Holder
        in
        cash on the basis of the Fair Market Value per share of Common Stock, as
        determined pursuant to subsection 2(d) above. 

       

      4. [Intentionally
        deleted]

       

      5. Transfers,
        etc.

       

      (a) Notwithstanding
        anything to the contrary contained herein, this Warrant and the Warrant Shares
        shall not be sold or transferred unless either (i) they first shall have
        been registered under the Securities Act of 1933, as amended (the “Act”) and
        sold or transferred in accordance with the requirements of the prospectus
        delivery requirements thereof, or (ii) such sale or transfer shall be
        exempt from the registration requirements of the Act and the Company shall
        have
        been furnished with an opinion of legal counsel, reasonably satisfactory
        to the
        Company, to the effect that such sale or transfer is exempt from the
        registration requirements of the Act. Notwithstanding the foregoing, no
        registration or opinion of counsel of such Purchaser shall be required for
        a
        transfer made in accordance with Rule 144 under the Act although the
        transfer agent of the Company may require an opinion of counsel to the
        Company.

       

      (b) Each
        certificate representing Warrant Shares shall bear a legend substantially
        in the
        following form:

       

      “The
        securities represented hereby have not been registered under the Securities
        Act
        of 1933, as amended, or any state securities laws and neither the securities
        nor
        any interest therein may not be offered, sold, transferred, pledged or otherwise
        disposed of except pursuant to an effective registration under such act or
        an
        exemption from registration, which, in the opinion of counsel reasonably
        satisfactory to counsel for this corporation, is available.”

      
        
           

        

        
          -6-

          
            

          

        

        
           

        

      

      

      The
        foregoing legend shall be removed from the certificates representing any
        Warrant
        Shares, at the request of the holder thereof, at such time as they become
        eligible for resale pursuant to Rule 144(k) under the Act or at such time
        as the Warrant Shares are sold or transferred in accordance with the
        requirements of a registration statement of the Company on Form S-3, or such
        other form as may then be in effect or sold in compliance with Rule 144 provided
        appropriate documentation of such sale is provided to counsel for the
        Company.

       

      (c) The
        Company will maintain a register containing the name and address of the
        Registered Holder of this Warrant. The Registered Holder may change its address
        as shown on the warrant register by written notice to the Company requesting
        such change.

       

      (d) Subject
        to the provisions of Section 5 hereof, this Warrant and all rights hereunder
        are
        transferable, in whole or in part, upon surrender of this Warrant with a
        properly executed assignment (in the form of Exhibit II
        hereto)
        at the principal office of the Company (or, if another office or agency has
        been
        designated by the Company for such purpose, then at such other office or
        agency).

       

      6. No
        Impairment.
        The
        Company will not, by amendment of its charter or through any reorganization,
        transfer of assets, consolidation, merger, dissolution, issue or sale of
        securities or any other voluntary action, avoid or seek to avoid the observance
        or performance of any of the terms of this Warrant, but will at all times
        in
        good faith assist in the carrying out of all such terms and in the taking
        of all
        such action as may be necessary or appropriate in order to protect the rights
        of
        the Registered Holder against impairment.

       

      7. Notices
        of Record Date, etc.
        In the
        event:

       

      (a) the
        Company shall take a record of the holders of its Common Stock (or other
        stock
        or securities at the time deliverable upon the exercise of this Warrant)
        for the
        purpose of entitling or enabling them to receive any dividend or other
        distribution, or to receive any right to subscribe for or purchase any shares
        of
        stock of any class or any other securities, or to receive any other right;
        or

       

      (b) of
        any
        capital reorganization of the Company, any reclassification of the Common
        Stock
        of the Company, any consolidation or merger of the Company with or into another
        corporation, including an Acquisition Event, or any transfer of all or
        substantially all of the assets of the Company; or

       

      (c) of
        the
        voluntary or involuntary dissolution, liquidation or winding-up of the Company,
        then, and in each such case, the Company will send or cause to be sent to
        the
        Registered Holder a notice specifying, as the case may be, (i) the record
        date
        for such dividend, distribution or right, and the amount and character of
        such
        dividend, distribution or right, or (ii) the effective date on which such
        reorganization, reclassification, consolidation, merger, Acquisition Event,
        transfer, dissolution, liquidation or winding-up is to take place, and the
        time,
        if any is to be fixed, as of which the holders of record of Common Stock
        (or
        such other stock or securities at the time deliverable upon the exercise
        of this
        Warrant) shall be entitled to exchange their shares of Common Stock (or such
        other stock or securities) for securities or other property deliverable upon
        such reorganization, reclassification, consolidation, merger, transfer,
        dissolution, liquidation or winding-up. Such notice shall be sent at least
        10
        days prior to the record date or effective date for the event specified in
        such
        notice.

       

      
        
           

        

        
          -7-

          
            

          

        

        
           

        

      

      

       

      8. Reservation
        of Stock.
        The
        Company will at all times reserve and keep available, solely for issuance
        and
        delivery upon the exercise of this Warrant, such number of Warrant Shares
        and
        other securities, cash and/or property, as from time to time shall be issuable
        upon the exercise of this Warrant.

       

      9. Exchange
        or Replacement of Warrants. 

       

      (a) Upon
        the
        surrender by the Registered Holder, properly endorsed, to the Company at
        the
        principal office of the Company, the Company will, subject to the provisions
        of
        Section 5 hereof, issue and deliver to or upon the order of the Registered
        Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in
        the name of the Registered Holder or as the Registered Holder (upon payment
        by
        the Registered Holder of any applicable transfer taxes) may direct, calling
        in
        the aggregate on the face or faces thereof for the number of shares of Common
        Stock (or other securities, cash and/or property) then issuable upon exercise
        of
        this Warrant.

       

      (b) Upon
        receipt of evidence reasonably satisfactory to the Company of the loss, theft,
        destruction or mutilation of this Warrant and (in the case of loss, theft
        or
        destruction) upon delivery of an indemnity agreement (with surety if reasonably
        required) in an amount reasonably satisfactory to the Company, or (in the
        case
        of mutilation) upon surrender and cancellation of this Warrant, the Company
        will
        issue, in lieu thereof, a new Warrant of like tenor.

       

      10. Notices.
        All
        notices and other communications from the Company to the Registered Holder
        in
        connection herewith shall be mailed by certified or registered mail, postage
        prepaid, or sent via a reputable nationwide overnight courier service
        guaranteeing next business day delivery, to the address last furnished to
        the
        Company in writing by the Registered Holder. All notices and other
        communications from the Registered Holder to the Company in connection herewith
        shall be mailed by certified or registered mail, postage prepaid, or sent
        via a
        reputable nationwide overnight courier service guaranteeing next business
        day
        delivery, to the Company at its principal office set forth below. If the
        Company
        should at any time change the location of its principal office to a place
        other
        than as set forth below, it shall give prompt written notice to the Registered
        Holder and thereafter all references in this Warrant to the location of its
        principal office at the particular time shall be as so specified in such
        notice.
        All such notices and communications shall be deemed delivered one business
        day
        after being sent via a reputable international overnight courier service
        guaranteeing next business day delivery. 

       

      11. No
        Rights as Stockholder.
        Until
        the exercise of this Warrant, the Registered Holder shall not have or exercise
        any rights by virtue hereof as a stockholder of the Company. Notwithstanding
        the
        foregoing, in the event (i) the Company effects a split of the Common Stock
        by means of a stock dividend and the Purchase Price of and the number of
        Warrant
        Shares are adjusted as of the date of the distribution of the dividend (rather
        than as of the record date for such dividend), and (ii) the Registered
        Holder exercises this Warrant between the record date and the distribution
        date
        for such stock dividend, the Registered Holder shall be entitled to receive,
        on
        the distribution date, the stock dividend with respect to the shares of Common
        Stock acquired upon such exercise, notwithstanding the fact that such shares
        were not outstanding as of the close of business on the record date for such
        stock dividend.

       

      
        
           

        

        
          -8-

          
            

          

        

        
           

        

      

      

       

      12. Amendment
        or Waiver.
        Any
        term of this Warrant may be amended or waived (either generally or in a
        particular instance and either retroactively or prospectively) with the written
        consent of the Company and the holders of Company Warrants representing at
        least
        two-thirds of the number of shares of Common Stock then subject to outstanding
        Company Warrants. Notwithstanding the foregoing, (a) this Warrant may be
        amended
        and the observance of any term hereunder may be waived without the written
        consent of the Registered Holder only in a manner which applies to all Company
        Warrants in the same fashion and (b) the number of Warrant Shares subject
        to
        this Warrant and the Purchase Price of this Warrant may not be amended, and
        the
        right to exercise this Warrant may not be waived, without the written consent
        of
        the Registered Holder (it being agreed that an amendment to or waiver under
        any
        of the provisions of Section 2 of this Warrant shall not be considered an
        amendment of the number of Warrant Shares or the Purchase Price). The Company
        shall give prompt written notice to the Registered Holder of any amendment
        hereof or waiver hereunder that was effected without the Registered Holder’s
        written consent. No waivers of any term, condition or provision of this Warrant,
        in any one or more instances, shall be deemed to be, or construed as, a further
        or continuing waiver of any such term, condition or provision.

       

      13. Section
        Headings.
        The
        section headings in this Warrant are for the convenience of the parties and
        in
        no way alter, modify, amend, limit or restrict the contractual obligations
        of
        the parties.

       

      14. Governing
        Law.
        This
        Warrant will be governed by and construed in accordance with the internal
        laws
        of the State of New York (without reference to the conflicts of law provisions
        thereof).

       

      15. Facsimile
        Signatures.
        This
        Warrant may be executed by facsimile signature.

       

      

       

      *
        * * * *
        * *

       

      
        
           

        

        
          -9-

          
            

          

        

        
           

        

      

      EXECUTED
        as of the Date of Issuance indicated above.

      
        	 	 	 
	 	GENELABS
                TECHNOLOGIES, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
                

                Name:

                Title:

              
	 	 

      

       

      

      ATTEST:

       

       

        
          

        

      

      
        
           

        

        
          -10-

          
            

          

        

        
           

        

      

      EXHIBIT
        I

       

      PURCHASE
        FORM

       

      To:
        Genelabs Technologies, Inc.Dated:____________

       

      

       

      The
        undersigned, pursuant to the provisions set forth in the attached Warrant
        (No. ___), hereby elects to purchase (check
        applicable box):

       

      ·
         ____
        shares of the Common Stock of Genelabs Technologies, Inc. covered by such
        Warrant; or 

       

      ·
         ____
        the
        maximum number of shares of Common Stock covered by such Warrant pursuant
        to the
        cashless exercise procedure set forth in subsection 1(b).

       

      The
        undersigned herewith makes payment of the full purchase price for such shares
        at
        the price per share provided for in such Warrant. Such payment takes the
        form of
(check
        applicable box or boxes):

      

        
          	 	
                  ·
                    

                	
                  $______
                    in lawful money of the United States;
                    and/or

                

        

         

        
          	 	
                  ·
                    

                	
                  the
                    cancellation of such portion of the attached Warrant as is exercisable
                    for
                    a total of _____ Warrant Shares (using a Fair Market Value of
                    $_____ per
                    share for purposes of this calculation) ;
                    and/or

                

        

         

        
          	 	
                  ·
                    

                	
                  the
                    cancellation of such number of Warrant Shares as is necessary,
                    in
                    accordance with the formula set forth in subsection 1(b), to exercise
                    this Warrant with respect to the maximum number of Warrant Shares
                    purchasable pursuant to the cashless exercise procedure set forth
                    in
                    subsection 1(b). 

                

        

         

      

      The
        undersigned has reviewed that certain Securities Purchase Agreement pursuant
        to
        which the above-referenced Warrant (or predecessor warrant) was originally
        issued, and herewith makes the same representations and warranties as are
        made
        in Section B of such Securities Purchase Agreement on the date
        hereof.

       

      Signature: ______________________

       

      Address: ________________________

       

      _______________________

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      EXHIBIT
        II

       

      ASSIGNMENT
        FORM

       

      FOR
        VALUE
        RECEIVED, ______________________________________ hereby sells, assigns and
        transfers all of the rights of the undersigned under the attached Warrant
        (No.
        ____) with respect to the number of shares of Common Stock of Genelabs
        Technologies, Inc. covered thereby set forth below, unto:

       

      
        	
                Name
                  of Assignee

              	 	
                Address

              	 	
                No.
                  of Shares

              
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

      

      Dated:_____________________                   
        Signature:________________________________

       

      Signature
        Guaranteed:

       

      By:
        _______________________

       

      The
        signature should be guaranteed by an eligible guarantor institution (banks,
        stockbrokers, savings and loan associations and credit unions with membership
        in
        an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
        under the Securities Exchange Act of 1934, as amended.

       

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      Exhibit
        C

       

      Genelabs
        Technologies, Inc.

      Confidential
        Purchaser Questionnaire

      

      

      Before
        any sale of Shares or Warrants by Genelabs Technologies, Inc. can be made
        to
        you, this Questionnaire must be completed and returned to Oppenheimer & Co.
        Inc. Attn: Investment Banking Department, 125 Broad St., New York, NY
        10004

      1.____Name ________________________________________

             
        (Exact name as it will appear on stock certificate)

      Address
        of Principal

       
        Place of Business ________________________________

      State
        (or
        Country) of Formation

       
or
        Incorporation ________________________________

      Contact
        Person ________________________________

      Telephone
        Number ( )____________________________

      Type
        of
        Entity

       
        (corporation, partnership, 

       
        trust, etc.) ____________________________________

      Was
        entity formed for the purpose of this investment?

      Yes
         __     No
 __    

      

      2. DESCRIPTION
        OF INVESTOR

      

      The
        following information is required to ascertain whether you would be deemed
        an
“accredited investor” as defined in Rule 501 of Regulation D under the
        Securities Act. Please check whether you are any of the following:

      

      
        	 	
                 ̈

              	
                a
                  corporation or partnership with total assets in excess of $5,000,000,
                  not
                  organized for the purpose of this particular
                  investment

              

      

      
        	 	
                 ̈

              	
                private
                  business development company as defined in Section 202(a)(22) of
                  the
                  Investment Advisers Act of 1940, a U.S. venture capital fund which
                  invests
                  primarily through private placements in non-publicly traded securities
                  and
                  makes available (either directly or through co-investors) to the
                  portfolio
                  companies significant guidance concerning management, operations
                  or
                  business objectives

              

      

      
        	 	
                 ̈

              	
                a
                  Small Business Investment Company licensed by the U.S. Small Business
                  Administration under Section 301(c) or (d) of the Small Business
                  Investment Act of 1958

              

      

      
        	 	
                 ̈

              	
                an
                  investment company registered under the Investment Company Act
                  of 1940 or
                  a business development company as defined in Section 2(a)(48) of
                  that
                  Act

              

      

      
        	 	
                 ̈

              	
                a
                  trust not organized to make this particular investment, with total
                  assets
                  in excess of $5,000,000 whose purchase is directed by a sophisticated
                  person as described in Rule 506(b)(2)(ii) of the Securities Act of
                  1933 and who completed item 4 below of this
                  questionnaire

              

      

      
        	 	
                 ̈

              	
                a
                  bank as defined in Section 3(a)(2) or a savings and loan association
                  or other institution defined in Section 3(a)(5)(A) of the Securities
                  Act of 1933 acting in either an individual or fiduciary
                  capacity

              

      

      
        	 	
                 ̈

              	
                an
                  insurance company as defined in Section 2(13) of the Securities Act
                  of 1933

              

      

      
        	 	
                 ̈

              	
                an
                  employee benefit plan within the meaning of Title I of the Employee
                  Retirement Income Security Act of 1974 (i) whose investment decision
                  is made by a fiduciary which is either a bank, savings and loan
                  association, insurance company, or registered investment advisor,
                  or
                  (ii) whose total assets exceed $5,000,000, or (iii) if a
                  self-directed plan, whose investment decisions are made solely
                  by a person
                  who is an accredited investor and who completed Part I of this
                  questionnaire;

              

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      
        	 	
                 ̈

              	
                a
                  charitable, religious, educational or other organization described
                  in
                  Section 501(c)(3) of the Internal Revenue Code, not formed for the
                  purpose of this investment, with total assets in excess of
                  $5,000,000

              

      

      
        	 	
                 ̈

              	
                an
                  entity not located in the U.S. none of whose equity owners are
                  U.S.
                  citizens or U.S. residents

              

      

      
        	 	
                 ̈

              	
                a
                  broker or dealer registered under Section 15 of the Securities
                  Exchange Act of 1934

              

      

      
        	 	
                 ̈

              	
                a
                  plan having assets exceeding $5,000,000 established and maintained
                  by a
                  government agency for its employees

              

      

      
        	 	
                 ̈

              	
                an
                  individual who had individual income from all sources during each
                  of the
                  last two years in excess of $200,000 or
                  the joint income of you and your spouse (if married) from all sources
                  during each of such years in excess of $300,000 and who reasonably
                  excepts
                  that either
                  your own income from all sources during the current year will exceed
                  $200,000 or
                  the joint income of you and your spouse (if married) from all sources
                  during the current year will exceed
                  $300,000

              

      

      
        	 	
                 ̈

              	
                an
                  individual whose net worth as of the date you purchase the securities
                  offered, together with the net worth of your spouse, be in excess
                  of
                  $1,000,000

              

      

      
        	 	
                 ̈

              	
                an
                  entity in which all of the equity owners are accredited
                  investors

              

      

      

       

      4. SIGNATURE

      

      The
        above
        information is true and correct. The undersigned recognizes that the Company
        and
        its counsel are relying on the truth and accuracy of such information in
        reliance on the exemption contained in Subsection 4(2) of the Securities
        Act of 1933, as amended, and Regulation D promulgated thereunder. The
        undersigned agrees to notify the Company promptly of any changes in the
        foregoing information which may occur prior to the investment.

      

      Executed  at ___________________, on                
        , 2007

      

      

      

       

      
        
          

        

      

      (Signature)

      

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      Exhibit
        D

      

      Selling
        Stockholder Questionnaire

      

      To: Genelabs
        Technologies, Inc.

      c/o
        Skadden, Arps, Slate, Meagher & Flom LLP

      525
        University Avenue, Suite 1100

      Palo
        Alto, California 94501

      Attention:
        Thomas Ivey,
        Esq.

      

      Reference
        is made to the Securities Purchase Agreement (the “Agreement”), made between
        Genelabs Technologies, Inc., a Delaware corporation (the “Company”), and the
        Purchasers noted therein. 

       

      Pursuant
        to Section B(11) of the Agreement, the undersigned hereby furnishes to the
        Company the following information for use by the Company in connection with
        the
        preparation of the Registration Statement contemplated by Section E of the
        Agreement.

       

      (1) Name
        and Contact Information:

       

      
        	
                Full
                  legal name of record holder:

              	 
	 	 
	
                Address
                  of record holder:

              	 
	 	 
	 	 
	 	 
	
                Social
                  Security Number or Taxpayer identification number of record
                  holder:

              	 
	 	 
	
                Identity
                  of beneficial owner (if different
                  than record holder):

              	 
	 	 
	
                Name
                  of contact person:

              	 
	 	 
	
                Telephone
                  number of contact person:

              	 
	 	 
	
                Fax
                  number of contact person:

              	 
	 	 
	
                E-mail
                  address of contact person:

              	 

      

       

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

      (2) Beneficial
        Ownership of Registrable Securities:

      

        
          	
                  (a) Number
                    of Registrable Securities owned by Selling Stockholder:

                
	 
	
                             

                
	 
	
                  (b) Number
                    of Registrable Securities requested to be registered:

                
	 
	
                             

                

        

         

        
          
            (3)
              Beneficial
              Ownership of Other Securities of the Company Owned by the Selling
              Stockholder:

          

        

         

        
          	
                  Except
                    as set forth below in this Item (3), the undersigned is not the
                    beneficial
                    or registered owner of any securities of the Company other than
                    the
                    Registrable Securities listed above in Item (2)(a).

                
	 
	
                  Type
                    and amount of other securities beneficially owned by the Selling
                    Stockholder:

                
	 
	
                             

                
	 
	
                             

                

        

         

        (4) Relationships
          with the Company:

         

        
          	
                  Except
                    as set forth below, neither the undersigned nor any of its affiliates,
                    officers, directors or principal equity holders (5% or more)
                    has held any
                    position or office or has had any other material relationship
                    with the
                    Company (or its predecessors or affiliates) during the past three
                    years.

                
	 
	
                  State
                    any exceptions here:

                
	 
	
                             

                
	 
	
                             

                

        

        

         

         

        (5) Plan
          of Distribution:

         

        
          	
                  Except
                    as set forth below, the undersigned intends to distribute pursuant
                    to the
                    Registration Statement the Registrable Securities listed above
                    in Item (2)
                    in accordance with the “Plan of Distribution” section set forth
                    therein:

                
	 
	
                  State
                    any exceptions here:

                
	 
	
                             

                
	 
	
                             

                

        

        

         

        
          
             

          

          
            -2-

            
              

            

          

          
             

          

        

         

        (6) Selling
          Stockholder Affiliations:

         

        
          	
                  (a) Is
                    the Selling Stockholder a registered broker-dealer?

                
	 
	
                             

                
	 
	 
	
                  (b) Is
                    the Selling Stockholder an affiliate of a registered broker-dealer(s)?
                    (For purposes of this response, an “affiliate” of, or person “affiliated”
                    with, a specified person, is a person that directly, or indirectly
                    through
                    one or more intermediaries, controls or is controlled by, or
                    is under
                    common control with, the person specified.)

                
	 
	
                             

                
	 
	
                  (c) If
                    the answer to Item (6)(b) is yes, identify the registered broker-dealer(s)
                    and describe the nature of the affiliation(s):

                
	 
	
                             

                
	 
	
                  (d) If
                    the answer to Item (6)(b) is yes, did the Selling Stockholder
                    acquire the
                    Registrable Securities in the ordinary course of business (if
                    not, please
                    explain)?

                
	 
	
                             

                
	 
	
                  (e) If
                    the answer to Item (6)(b) is yes, did the Selling Stockholder,
                    at the time
                    of purchase of the Registrable Securities, have any agreements,
                    plans or
                    understandings, directly or indirectly, with any person to distribute
                    the
                    Registrable Securities (if yes, please explain)?

                
	 
	
                             

                

        

        

         

        
          
            (7)
              Voting
              or Investment Control over the Registrable
              Securities:

          

        

         

        
          	
                  If
                    the Selling Stockholder is not a natural person, please identify
                    the
                    natural person or persons who have voting or investment control
                    over the
                    Registrable Securities listed in Item (2) above:

                
	 
	 
	
                             

                

        

      

       

      Pursuant
        to Section E(3) of the Agreement, the undersigned acknowledges that the Company
        may, by notice to the Placement Agent and to each Purchaser at its last known
        address, suspend or withdraw the Registration Statement and require that
        the
        undersigned immediately cease sales of Registrable Securities pursuant to
        the
        Registration Statement under certain circumstances described in the Agreement.
        At any time that such notice has been given, the undersigned may not sell
        Registrable Securities pursuant to the Registration Statement.

       

      
        
           

        

        
          -3-

          
            

          

        

        
           

        

      

      

       

      The
        undersigned hereby further acknowledges that pursuant to Section E(5)(b)
        of the
        Agreement, the undersigned shall indemnify the Company and each of its directors
        and officers against, and hold the Company and each of its directors and
        officers harmless from, any losses, claims, damages, expenses or liabilities
        (including reasonable attorneys fees) to which the Company or its directors
        and
        officers may become subject by reason of any statement or omission in the
        Registration Statement made in reliance upon, or in conformity with, a written
        statement by the undersigned, including the information furnished in this
        Questionnaire by the undersigned.

       

      By
        signing below, the undersigned consents to the disclosure of the information
        contained herein in its answers to Items (1) through (7) above and the inclusion
        of such information in the Registration Statement, any amendments thereto
        and
        the related prospectus. The undersigned understands that such information
        will
        be relied upon by the Company in connection with the preparation or amendment
        of
        the Registration Statement and the related prospectus.

       

      The
        undersigned has reviewed the answers to the above questions and affirms that
        the
        same are true, complete and accurate. THE UNDERSIGNED AGREES TO NOTIFY THE
        COMPANY IMMEDIATELY OF ANY CHANGES IN THE FOREGOING INFORMATION PRIOR TO
        THE
        INCLUSION OF THE UNDERSIGNED IN THE REGISTRATION STATEMENT OR UPON THE COMPANY’S
        REQUEST.

       

      
        	
                Dated:
                  _____________, 2007

              	
                 

                
                  

                

                Signature
                  of Record Holder

                (Please
                  sign your name in exactly the same manner as the certificate(s)
                  for the
                  shares being registered)

              

      

      

      

      

      
        
           

        

        
          -4-

          
            

          

        

        
           

        

      

      Exhibit
        E

      

      Plan
        of Distribution

      

      The
        selling stockholders may sell the shares offered by this prospectus. The
        selling
        stockholders, including their donees, pledgees, transferees or other
        successors-in-interest selling shares of common stock received after the
        date of
        this prospectus from a selling stockholder as a gift, pledge, partnership
        distribution or other transfer, may, from time to time, sell, transfer or
        otherwise dispose of any or all of their shares of common stock or interests
        in
        shares of common stock on any stock exchange, market or trading facility
        on
        which the shares are traded or in private transactions. These dispositions
        may
        be at fixed prices, at prevailing market prices at the time of sale, at prices
        related to the prevailing market price, at varying prices determined at the
        time
        of sale, or at negotiated prices. To the extent any of the selling stockholders
        gift, pledge or otherwise transfer the shares offered hereby, such transferees
        may offer and sell the shares from time to time under this prospectus, provided
        that this prospectus has been amended under Rule 424(b)(3) or other applicable
        provision of the Securities Act to include the name of such transferee in
        the
        list of selling stockholders under this prospectus.

      

      The
        selling stockholders may use any one or more of the following methods when
        disposing of shares or interests therein:

      

        
          	
                  ·

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

                

        

        

        
          	
                  ·

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

                

        

        

        
          	
                  ·

                	
                  purchases
                    by a broker-dealer as principal and resale by the broker-dealer
                    for its
                    account under this prospectus;

                

        

        

        
          	
                  ·

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

                

        

        

        
          	
                  ·

                	
                  privately
                    negotiated transactions;

                

        

        

        
          	
                  ·

                	
                  “at
                    the market” or through market makers or into an existing market for the
                    shares;

                

        

        

        
          	
                  ·

                	
                  short
                    sales entered into after the effective date of the registration
                    statement
                    of which this prospectus is a part;

                

        

        

        
          	
                  ·

                	
                  through
                    the writing or settlement of options or other hedging transactions,
                    whether through an options exchange or otherwise, after the effective
                    date
                    of the registration statement of which this prospectus is a
                    part;

                

        

        

        
          	
                  ·

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

                

        

        

        
          
             

          

          
             

            
              

            

          

          
             

          

        

        

        
          	
                  ·

                	
                  a
                    combination of any such methods of sale;
                    and

                

        

        

        
          	
                  ·

                	
                  any
                    other method permitted pursuant to applicable
                    law.

                

        

         

      

      The
        selling stockholders may, from time to time, pledge or grant a security interest
        in some or all of the shares of common stock owned by them and, if they default
        in the performance of their secured obligations, the pledgees or secured
        parties
        may offer and sell the shares of common stock, from time to time, under this
        prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
        or
        other applicable provision of the Securities Act amending the list of selling
        stockholders to include the pledgee, transferee or other successors in interest
        as selling stockholders under this prospectus. 

      

      In
        connection with the sale of the shares, the selling stockholders may enter
        into
        hedging transactions with broker-dealers or other financial institutions,
        which
        may in turn engage in short sales of the common stock in the course of hedging
        the positions they assume. The selling stockholders may also sell shares
        of our
        common stock short and deliver these securities to close out their short
        positions, or loan or pledge the common stock to broker-dealers that in turn
        may
        sell these securities. The selling stockholders may also enter into option
        or
        other transactions with broker-dealers or other financial institutions or
        the
        creation of one or more derivative securities which require the delivery
        to such
        broker-dealer or other financial institution of shares offered by this
        prospectus, which shares such broker-dealer or other financial institution
        may
        resell pursuant to this prospectus (as supplemented or amended to reflect
        such
        transaction).

      

      The
        aggregate proceeds to the selling stockholders from the shares offered by
        them
        will be the purchase price of the common stock less discounts or commissions,
        if
        any. Each of the selling stockholders reserves the right to accept and, together
        with their agents from time to time, to reject, in whole or in part, any
        proposed purchase of common stock to be made directly or through agents.
        We will
        not receive any of the proceeds from this offering. Upon any exercise of
        the
        warrants by payment of cash, however, we will receive the exercise price
        of the
        warrants.

      

      The
        selling stockholders also may resell all or a portion of the shares in open
        market transactions in reliance upon Rule 144 under the Securities Act of
        1933,
        provided that they meet the criteria and conform to the requirements of that
        rule.

      

      The selling
        shareholders and any broker-dealers that act in connection with the sale
        of
        securities may be deemed to be “underwriters” within the meaning of Section
        2(11) of the Securities Act in connection with such sales, and any commissions
        received by such broker-dealers and any profit on the resale of the securities
        sold by them while acting as principals may be deemed to be underwriting
        discounts or commissions under the Securities Act. 

      

      To
        the
        extent required, the shares of our common stock to be sold, the names of
        the
        selling stockholders, the respective purchase prices and public offering
        prices,
        the names of any agents, dealer or underwriter, any applicable commissions
        or
        discounts with respect to a particular offer will be set forth in an
        accompanying prospectus supplement or, if appropriate, a post-effective
        amendment to the registration statement that includes this
        prospectus.

      
        
           

        

        
          -2-

          
            

          

        

        
           

        

      

      

      

      To
        comply
        with the securities laws of some states, if applicable, the shares may be
        sold
        in these jurisdictions only through registered or licensed brokers or dealers.
        In addition, in some states the shares may not be sold unless it has been
        registered or qualified for sale or an exemption from registration or
        qualification requirements is available and is complied with.

      

      We
        have
        advised the selling stockholders that the anti-manipulation rules of Regulation
        M under the Exchange Act may apply to sales of shares in the market and to
        the
        activities of the selling stockholders and their affiliates. In addition,
        we
        will make copies of this prospectus (as it may be supplemented or amended
        from
        time to time) available to the selling stockholders for the purpose of
        satisfying the prospectus delivery requirements of the Securities Act. The
        selling stockholders may indemnify any broker-dealer that participates in
        transactions involving the sale of the shares against certain liabilities,
        including liabilities arising under the Securities Act.

      

      We
        have
        agreed to indemnify the selling stockholders against liabilities, including
        liabilities under the Securities Act and state securities laws, relating
        to the
        registration of the shares offered by this prospectus.

      

      We
        have
        agreed with the selling stockholders to keep the registration statement that
        includes this prospectus effective until the earliest of (1) insert the second
        anniversary of the Closing, (2) such time as all of the shares covered by
        this
        prospectus have been disposed of pursuant to and in accordance with the
        registration statement, and (3) the date upon which all of the shares and
        the
        shares of common stock issuable upon the exercise of the warrants, assuming
        net
        exercise of the warrants pursuant to the provisions thereof, may be sold
        in any
        three month period in reliance on Rule 144.

      

      
        
           

        

        
          -3-FIRST
      AMENDMENT TO REVOLVING LINE OF CREDIT AGREEMENT

    

    dated
      as
      of December 22, 2006

    

    Reference
      is made to that revolving line of credit agreement and revolving promissory
      note
      attached as Exhibit A (the “Note”) dated July 1, 2006 (collectively the
“Agreement”) between CenterStaging Corp., a Delaware corporation, (the
“Borrower”) and Johnny Caswell (the “Lender”). All terms defined in the
      Agreement shall have the same meaning in this First Amendment, except as
      otherwise provided herein.

    

    NOW,
      THEREFORE, Borrower and Lender hereby agree to amend the Agreement as
      follows:

    

    1. Section
      1.1 of the Agreement and the Note is hereby revised such that the aggregate
      of
      all advances outstanding shall not at any time exceed Five Hundred Thousand
      Dollars ($500,000).

    

    2. The
      fixed
      annual interest rate of the Note is hereby revised and shall be a variable
      annual interest rate equal to the “prime rate, plus four percent (4%),
      retroactive to the date of the first advance.

    

    3. Except
      as
      expressly modified herein, the Agreement is hereby ratified and shall remain
      in
      full force and effect.

    

    If
      Lender
      agrees with the foregoing, please execute this First Amendment in the space
      below.

    

    BORROWER

    

    /s/
      Howard Livington

    Howard
      Livingston

    CFO,
      CenterStaging Corp.

    

    LENDER

    

    /s/
      Johnny Caswell

    Johnny
      Caswell

    Chairman
      of the Board of Directors

    CenterStaging
      Corp.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    

      FIRST
        AMENDMENT TO REVOLVING LINE OF CREDIT AGREEMENT

      

      dated
        as
        of December 22, 2006

      

      Reference
        is made to that revolving line of credit agreement and revolving promissory
        note
        attached as Exhibit A (the “Note”) dated July 1, 2006 (collectively the
“Agreement”) between CenterStaging Corp., a Delaware corporation, (the
“Borrower”) and Howard Livingston (the “Lender”). All terms defined in the
        Agreement shall have the same meaning in this First Amendment, except as
        otherwise provided herein.

      

      NOW,
        THEREFORE, Borrower and Lender hereby agree to amend the Agreement as
        follows:

      

      1. Section
        1.1 of the Agreement and the Note is hereby revised such that the aggregate
        of
        all advances outstanding shall not at any time exceed Five Hundred Thousand
        Dollars ($500,000).

      

      2. The
        fixed
        annual interest rate of the Note is hereby revised and shall be a variable
        annual interest rate equal to the “prime rate” plus four percent (4%),
        retroactive to the date of the first advance.

      

      3. Except
        as
        expressly modified herein, the Agreement is hereby ratified and shall remain
        in
        full force and effect.

      

      If
        Lender
        agrees with the foregoing, please execute this First Amendment in the space
        below.

      

      BORROWER

      

      /s/
        Roger Paglia

      Roger
        Paglia

      CEO,
        CenterStaging Corp.

      

      LENDER

      

      /s/
        Howard Livingston

      Howard
        Livingston

      CFO,
        CenterStaging Corp.

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

     

    

      FIRST
        AMENDMENT TO REVOLVING LINE OF CREDIT AGREEMENT

      

      dated
        as
        of December 22, 2006

      

      Reference
        is made to that revolving line of credit agreement and revolving promissory
        note
        attached as Exhibit A (the “Note”) dated July 1, 2006 (collectively the
“Agreement”) between CenterStaging Corp., a Delaware corporation, (the
“Borrower”) and Roger Paglia (the “Lender”). All terms defined in the Agreement
        shall have the same meaning in this First Amendment, except as otherwise
        provided herein.

      

      NOW,
        THEREFORE, Borrower and Lender hereby agree to amend the Agreement as
        follows:

      

      1. Section
        1.1 of the Agreement and the Note is hereby revised such that the aggregate
        of
        all advances outstanding shall not at any time exceed Five Hundred Thousand
        Dollars ($500,000).

      

      2. The
        fixed
        annual interest rate of the Note is hereby revised and shall be a variable
        annual interest rate equal to the “prime rate” plus four percent (4%),
        retroactive to the date of the first advance.

      

      3. Except
        as
        expressly modified herein, the Agreement is hereby ratified and shall remain
        in
        full force and effect.

      

      If
        Lender
        agrees with the foregoing, please execute this First Amendment in the space
        below.

      

      BORROWER

      

      
        /s/
          Howard Livingston

      

      Howard
        Livingston

      CFO,
        CenterStaging Corp.

      

      LENDER

      

      
        /s/
          Roger Paglia

      

      Roger
        Paglia

      CEO,
        CenterStaging Corp.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

    

     

    

      FIRST
        AMENDMENT TO REVOLVING LINE OF CREDIT AGREEMENT

      

      dated
        as
        of December 22, 2006

      

      Reference
        is made to that revolving line of credit agreement and revolving promissory
        note
        attached as Exhibit A (the “Note”) dated July 1, 2006 (collectively the
“Agreement”) between CenterStaging Corp., a Delaware corporation, (the
“Borrower”) and Jan Parent (the “Lender”). All terms defined in the Agreement
        shall have the same meaning in this First Amendment, except as otherwise
        provided herein.

      

      NOW,
        THEREFORE, Borrower and Lender hereby agree to amend the Agreement as
        follows:

      

      1. Section
        1.1 of the Agreement and the Note is hereby revised such that the aggregate
        of
        all advances outstanding shall not at any time exceed Five Hundred Thousand
        Dollars ($500,000).

      

      2. The
        fixed
        annual interest rate of the Note is hereby revised and shall be a variable
        annual interest rate equal to the “prime rate” plus four percent (4%),
        retroactive to the date of the first advance.

      

      3. Except
        as
        expressly modified herein, the Agreement is hereby ratified and shall remain
        in
        full force and effect.

      

      If
        Lender
        agrees with the foregoing, please execute this First Amendment in the space
        below.

      

      BORROWER

      

      /s/
        Howard Livingston

      Howard
        Livingston

      CFO,
        CenterStaging Corp.

      

      LENDER

      

      /s/
        Jan Parent

      Jan
        Parent

      Senior
        EVP, CenterStaging Corp.

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