Document:

Exhibit 4.5

                          REGISTRATION RIGHTS AGREEMENT

         This  Registration  Rights  Agreement  (this  "Agreement")  is made and
entered into as of March 15, 2005, among Knobias,  Inc., a Delaware  corporation
(the "Company"),  and the purchasers  signatory hereto (each such purchaser is a
"Purchaser" and all such purchasers are, collectively, the "Purchasers").

         This Agreement is made pursuant to the Securities  Purchase  Agreement,
dated as of the date hereof among the Company and the Purchasers  (the "Purchase
Agreement").

         The Company and the Purchasers hereby agree as follows:

         1. Definitions

         Capitalized  terms  used  and not  otherwise  defined  herein  that are
defined in the Purchase  Agreement  shall have the meanings  given such terms in
the Purchase  Agreement.  As used in this  Agreement,  the following terms shall
have the following meanings:

         "Advice" shall have the meaning set forth in Section 6(d).

         "Effectiveness  Date" means,  with respect to the initial  Registration
         Statement  required  to be filed  hereunder,  the  240th  calendar  day
         following  the  date  hereof  and,  with  respect  to  any   additional
         Registration Statements which may be required pursuant to Section 3(c),
         the 240th  calendar day  following  the date on which the Company first
         knows,   or  reasonably   should  have  known,   that  such  additional
         Registration Statement is required hereunder; provided, however, in the
         event the Company is notified by the  Commission  that one of the above
         Registration Statements will not be reviewed or is no longer subject to
         further  review  and  comments,  the  Effectiveness  Date  as  to  such
         Registration  Statement  shall be the fifth  Trading Day  following the
         date on which the  Company is so  notified  if such date  precedes  the
         dates required above.

         "Effectiveness  Period"  shall  have the  meaning  set forth in Section
         2(a).

         "Event" shall have the meaning set forth in Section 2(b).

         "Event Date" shall have the meaning set forth in Section 2(b).

         "Filing Date" means, with respect to the initial Registration Statement
         required  hereunder,  the 180th  calendar day following the date hereof
         and, with respect to any additional  Registration  Statements which may
         be required  pursuant to Section 3(c), the 180th day following the date
         on which the Company first knows, or reasonably  should have known that
         such additional Registration Statement is required hereunder.

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         "Holder" or "Holders" means the holder or holders,  as the case may be,
         from time to time of Registrable Securities.

         "Indemnified Party" shall have the meaning set forth in Section 5(c).

         "Indemnifying Party" shall have the meaning set forth in Section 5(c).

         "Losses" shall have the meaning set forth in Section 5(a).

         "Proceeding" means an action, claim, suit,  investigation or proceeding
         (including, without limitation, an investigation or partial proceeding,
         such as a deposition), whether commenced or threatened.

         "Prospectus" means the prospectus included in a 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 a 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.

         "Registrable Securities" means (i) all Warrant Shares, (ii) all Shares,
         (iii) any securities issued or issuable upon any stock split,  dividend
         or other distribution recapitalization or similar event with respect to
         the foregoing  and (iv) any  additional  shares  issuable in connection
         with any anti-dilution provisions in the Warrants.

          "Registration Statement" means the registration statements required to
         be  filed   hereunder  and  any  additional   registration   statements
         contemplated by Section 3(c),  including (in each case) 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.

          "Rule 415" means Rule 415  promulgated by the  Commission  pursuant to
         the  Securities  Act, as such Rule may be amended from time to time, or
         any similar  rule or  regulation  hereafter  adopted by the  Commission
         having substantially the same purpose and effect as such Rule.

         "Rule 424" means Rule 424 promulgated by the Commission pursuant to the
         Securities  Act, as such Rule may be amended from time to time,  or any
         similar rule or regulation  hereafter  adopted by the Commission having
         substantially the same purpose and effect as such Rule.

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         2. Shelf Registration

                  (a) On or prior to each Filing Date, the Company shall prepare
         and file with the Commission a "Shelf" Registration  Statement covering
         the resale of 125% of the  Registrable  Securities  on such Filing Date
         for an offering to be made on a continuous  basis pursuant to Rule 415.
         The Registration Statement shall be on Form SB-2 (except if the Company
         is not then eligible to register for resale the Registrable  Securities
         on Form  SB-2,  in which  case such  registration  shall be on  another
         appropriate  form in accordance  herewith)  and shall  contain  (unless
         otherwise   directed  by  the  Holders)   substantially  the  "Plan  of
         Distribution"  attached hereto as Annex A. Subject to the terms of this
         Agreement,  the  Company  shall  use its  best  efforts  to  cause  the
         Registration  Statement to be declared  effective  under the Securities
         Act as promptly as possible after the filing thereof,  but in any event
         prior to the  applicable  Effectiveness  Date,  and  shall use its best
         efforts  to keep such  Registration  Statement  continuously  effective
         under the Securities Act until all  Registrable  Securities  covered by
         such  Registration  Statement  have  been  sold or may be sold  without
         volume  restrictions  pursuant  to Rule  144(k)  as  determined  by the
         counsel to the  Company  pursuant to a written  opinion  letter to such
         effect,  addressed and  acceptable to the Company's  transfer agent and
         the affected Holders (the  "Effectiveness  Period").  The Company shall
         immediately  notify the Holders via facsimile of the  effectiveness  of
         the  Registration  Statement on the same day that the Company  receives
         notification of the  effectiveness  from the Commission.  Failure to so
         notify the Holder  within 1 Trading Day of such  notification  shall be
         deemed an Event under Section 2(b).

                  (b) If: (i) a Registration  Statement is not filed on or prior
         to its  Filing  Date (if the  Company  files a  Registration  Statement
         without  affording the Holders the opportunity to review and comment on
         the same as required by Section  3(a),  the Company shall not be deemed
         to have  satisfied  this clause (i)), or (ii) the Company fails to file
         with the Commission a request for  acceleration in accordance with Rule
         461  promulgated  under the Securities Act, within five Trading Days of
         the date that the Company is notified (orally or in writing,  whichever
         is earlier) by the Commission that a Registration Statement will not be
         "reviewed,"  or not  subject to further  review,  or (iii) prior to its
         Effectiveness Date, the Company fails to file a pre-effective amendment
         and otherwise  respond in writing to comments made by the Commission in
         respect of such  Registration  Statement  within 10 calendar days after
         the  receipt of comments  by or notice  from the  Commission  that such
         amendment  is  required  in order for a  Registration  Statement  to be
         declared effective,  or (iv) a Registration Statement filed or required
         to be filed  hereunder is not declared  effective by the  Commission by
         its  Effectiveness  Date,  or  (v)  after  the  Effectiveness  Date,  a
         Registration  Statement  ceases for any  reason to remain  continuously
         effective as to all Registrable  Securities for which it is required to
         be  effective,  or  the  Holders  are  not  permitted  to  utilize  the
         Prospectus  therein  to  resell  such  Registrable  Securities  for  10
         consecutive  calendar days but no more than an aggregate of 15 calendar
         days during any 12-month period (which need not be consecutive  Trading

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         Days) (any such failure or breach being referred to as an "Event",  and
         for purposes of clause (i) or (iv) the date on which such Event occurs,
         or for  purposes of clause (ii) the date on which such five Trading Day
         period is exceeded, or for purposes of clause (iii) the date which such
         10 calendar day period is  exceeded,  or for purposes of clause (v) the
         date on which such 10 or 15 calendar  day  period,  as  applicable,  is
         exceeded being  referred to as "Event  Date"),  then in addition to any
         other rights the Holders may have hereunder or under applicable law, on
         each such Event Date and on each monthly anniversary of each such Event
         Date (if the  applicable  Event shall not have been cured by such date)
         until the  applicable  Event is cured,  the  Company  shall pay to each
         Holder an amount in cash,  as partial  liquidated  damages and not as a
         penalty,  equal to 1.0% of the  aggregate  purchase  price paid by such
         Holder   pursuant  to  the  Purchase   Agreement  for  any  Registrable
         Securities  then held by such Holder.  If the Company  fails to pay any
         partial  liquidated  damages  pursuant  to this  Section in full within
         seven  days  after the date  payable,  the  Company  will pay  interest
         thereon at a rate of 18% per annum (or such lesser  maximum amount that
         is  permitted  to be paid by  applicable  law) to the Holder,  accruing
         daily from the date such partial  liquidated damages are due until such
         amounts,  plus all such interest thereon, are paid in full. The partial
         liquidated  damages pursuant to the terms hereof shall apply on a daily
         pro-rata  basis  for any  portion  of a month  prior  to the cure of an
         Event.

         3. Registration Procedures

         In connection with the Company's  registration  obligations  hereunder,
the Company shall:

                  (a) Not less than five  Trading  Days  prior to the  filing of
         each Registration  Statement or any related Prospectus or any amendment
         or   supplement   thereto   (including   any  document  that  would  be
         incorporated  or deemed to be incorporated  therein by reference),  the
         Company shall,  (i) furnish to each Holder copies of all such documents
         proposed to be filed, which documents (other than those incorporated or
         deemed to be  incorporated  by reference) will be subject to the review
         of such Holders, and (ii) cause its officers and directors, counsel and
         independent  certified public  accountants to respond to such inquiries
         as shall be necessary,  in the reasonable opinion of respective counsel
         to  conduct  a  reasonable  investigation  within  the  meaning  of the
         Securities Act. The Company shall not file the  Registration  Statement
         or any such  Prospectus  or any  amendments or  supplements  thereto to
         which the Holders of a majority  of the  Registrable  Securities  shall
         reasonably object in good faith, provided that, the Company is notified
         of such  objection  in writing  no later than 5 Trading  Days after the
         Holders have been so furnished  copies of such  documents.  Each Holder
         agrees to furnish to the Company a completed  Questionnaire in the form
         attached   to  this   Agreement   as   Annex  B  (a   "Selling   Holder
         Questionnaire") not less than two Trading Days prior to the Filing Date
         or by the end of the fourth  Trading  Day  following  the date on which
         such Holder receives draft materials in accordance with this Section.

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                  (b) (i) Prepare and file with the Commission such  amendments,
         including  post-effective  amendments,  to a Registration Statement and
         the Prospectus used in connection therewith as may be necessary to keep
         a Registration  Statement  continuously  effective as to the applicable
         Registrable  Securities  for the  Effectiveness  Period and prepare and
         file with the Commission  such  additional  Registration  Statements in
         order to  register  for  resale  under  the  Securities  Act all of the
         Registrable Securities; (ii) cause the related Prospectus to be amended
         or supplemented by any required  Prospectus  supplement (subject to the
         terms of this Agreement), and as so supplemented or amended to be filed
         pursuant to Rule 424; (iii) respond as promptly as reasonably  possible
         to  any  comments  received  from  the  Commission  with  respect  to a
         Registration  Statement  or any  amendment  thereto  and as promptly as
         reasonably possible provide the Holders true and complete copies of all
         correspondence  from and to the  Commission  relating to a Registration
         Statement; and (iv) comply in all material respects with the provisions
         of the  Securities  Act  and  the  Exchange  Act  with  respect  to the
         disposition  of all  Registrable  Securities  covered by a Registration
         Statement  during the applicable  period in accordance  (subject to the
         terms of this  Agreement)  with the intended  methods of disposition by
         the Holders  thereof  set forth in such  Registration  Statement  as so
         amended or in such Prospectus as so supplemented.

         (c)      If during the Effectiveness  Period, the number of Registrable
                  Securities  at any time exceeds 90% of the number of shares of
                  Common Stock then registered in a Registration Statement, then
                  the Company shall file as soon as reasonably  practicable  but
                  in any case prior to the applicable Filing Date, an additional
                  Registration  Statement  covering the resale by the Holders of
                  not  less  than  125%  of  the  number  of  such   Registrable
                  Securities.

                  (d) Notify the Holders of  Registrable  Securities  to be sold
         (which notice shall,  pursuant to clauses (ii) through (vi) hereof,  be
         accompanied  by an  instruction  to suspend  the use of the  Prospectus
         until the  requisite  changes have been made) as promptly as reasonably
         possible (and, in the case of (i)(A) below,  not less than five Trading
         Days  prior to such  filing)  and (if  requested  by any  such  Person)
         confirm such notice in writing no later than one Trading Day  following
         the day  (i)(A)  when a  Prospectus  or any  Prospectus  supplement  or
         post-effective  amendment to a Registration Statement is proposed to be
         filed; (B) when the Commission  notifies the Company whether there will
         be  a  "review"  of  such  Registration   Statement  and  whenever  the
         Commission  comments  in writing on such  Registration  Statement  (the
         Company shall provide true and complete  copies thereof and all written
         responses  thereto to each of the  Holders);  and (C) with respect to a
         Registration Statement or any post-effective  amendment,  when the same
         has become  effective;  (ii) of any  request by the  Commission  or any
         other  Federal  or  state  governmental  authority  for  amendments  or
         supplements to a Registration Statement or Prospectus or for additional
         information;  (iii) of the  issuance  by the  Commission  or any  other
         federal or state  governmental  authority of any stop order  suspending
         the  effectiveness of a Registration  Statement  covering any or all of

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         the  Registrable  Securities or the initiation of any  Proceedings  for
         that  purpose;  (iv) of the receipt by the Company of any  notification
         with respect to the suspension of the  qualification  or exemption from
         qualification  of any of the  Registrable  Securities  for  sale in any
         jurisdiction,  or the  initiation or  threatening of any Proceeding for
         such  purpose;  (v) of the  occurrence  of any event or passage of time
         that  makes  the  financial   statements  included  in  a  Registration
         Statement  ineligible for inclusion  therein or any statement made in a
         Registration  Statement or Prospectus or any document  incorporated  or
         deemed to be incorporated  therein by reference  untrue in any material
         respect or that  requires any  revisions to a  Registration  Statement,
         Prospectus or other  documents so that,  in the case of a  Registration
         Statement  or the  Prospectus,  as the case may be, 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;  and  (vi)  the  occurrence  or  existence  of any  pending
         corporate  development  with  respect to the  Company  that the Company
         believes may be material and that, in the determination of the Company,
         makes it not in the best  interest  of the  Company to allow  continued
         availability of the Registration Statement or Prospectus; provided that
         any and all of  such  information  shall  remain  confidential  to each
         Holder  until  such  information   otherwise  becomes  public,   unless
         disclosure  by  a  Holder  is  required  by  law;  provided,   further,
         notwithstanding  each  Holder's  agreement  to  keep  such  information
         confidential,  the  Holders  make  no  acknowledgement  that  any  such
         information is material, non-public information.

                  (e) Use its best  efforts  to avoid the  issuance  of,  or, if
         issued,   obtain  the  withdrawal  of  (i)  any  order  suspending  the
         effectiveness  of a 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.

                  (f)  Furnish  to each  Holder,  without  charge,  at least one
         conformed copy of each such  Registration  Statement and each amendment
         thereto,  including financial  statements and schedules,  all documents
         incorporated or deemed to be  incorporated  therein by reference to the
         extent  requested  by such  Person,  and  all  exhibits  to the  extent
         requested  by such Person  (including  those  previously  furnished  or
         incorporated by reference)  promptly after the filing of such documents
         with the Commission.

                  (g) Promptly deliver to each Holder,  without charge,  as many
         copies  of the  Prospectus  or  Prospectuses  (including  each  form of
         prospectus)  and each  amendment or supplement  thereto as such Persons
         may  reasonably  request in  connection  with  resales by the Holder of
         Registrable  Securities.  Subject to the terms of this  Agreement,  the
         Company  hereby  consents  to  the  use of  such  Prospectus  and  each

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         amendment  or  supplement  thereto  by each of the  selling  Holders in
         connection  with the  offering and sale of the  Registrable  Securities
         covered by such  Prospectus  and any amendment or  supplement  thereto,
         except after the giving on any notice pursuant to Section 3(d).

                  (h) Prior to any resale of Registrable Securities by a Holder,
         use its  commercially  reasonable  efforts  to  register  or qualify or
         cooperate with the selling Holders in connection with the  registration
         or qualification  (or exemption from the Registration or qualification)
         of such  Registrable  Securities for the resale by the Holder under the
         securities  or Blue Sky laws of such  jurisdictions  within  the United
         States as any  Holder  reasonably  requests  in  writing,  to keep each
         registration or qualification (or exemption therefrom) effective during
         the  Effectiveness  Period  and to do any and all other  acts or things
         reasonably necessary to enable the disposition in such jurisdictions of
         the  Registrable  Securities  covered by each  Registration  Statement;
         provided,  that the Company shall not be required to qualify  generally
         to do business in any  jurisdiction  where it is not then so qualified,
         subject the Company to any material tax in any such jurisdiction  where
         it is not then so  subject  or file a general  consent  to  service  of
         process in any such jurisdiction.

                  (i) If requested by the Holders, cooperate with the Holders to
         facilitate  the  timely   preparation   and  delivery  of  certificates
         representing  Registrable  Securities  to be  delivered to a transferee
         pursuant to a Registration Statement, which certificates shall be free,
         to the extent permitted by the Purchase  Agreement,  of all restrictive
         legends,  and to  enable  such  Registrable  Securities  to be in  such
         denominations  and  registered  in such names as any such  Holders  may
         request.

                  (j) Upon the  occurrence  of any  event  contemplated  by this
         Section 3, as promptly as reasonably  possible under the  circumstances
         taking into account the Company's good faith  assessment of any adverse
         consequences  to the  Company  and its  stockholders  of the  premature
         disclosure of such event, prepare a supplement or amendment,  including
         a post-effective amendment, to a 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 a 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. If the Company notifies the
         Holders in  accordance  with  clauses  (ii) through (v) of Section 3(d)
         above to suspend the use of any Prospectus until the requisite  changes
         to such  Prospectus  have been made, then the Holders shall suspend use
         of such  Prospectus.  The Company  will use its best  efforts to ensure
         that  the  use of the  Prospectus  may be  resumed  as  promptly  as is
         practicable.  The Company shall be entitled to exercise its right under
         this  Section  3(j)  to  suspend  the  availability  of a  Registration
         Statement and Prospectus,  subject to the payment of partial liquidated
         damages  pursuant to Section  2(b),  for a period not to exceed 60 days
         (which need not be consecutive days) in any 12 month period.

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                  (k) Comply with all  applicable  rules and  regulations of the
         Commission.

                  (l) The Company may require each selling  Holder to furnish to
         the Company a certified  statement as to the number of shares of Common
         Stock  beneficially  owned  by such  Holder  and,  if  required  by the
         Commission,  the person thereof that has voting and dispositive control
         over the Shares.  During any periods that the Company is unable to meet
         its  obligations  hereunder  with  respect to the  registration  of the
         Registrable  Securities solely because any Holder fails to furnish such
         information  within three  Trading Days of the Company's  request,  any
         liquidated  damages  that are  accruing  at such time as to such Holder
         only  shall be tolled  and any Event that may  otherwise  occur  solely
         because of such delay shall be suspended as to such Holder only,  until
         such information is delivered to the Company.

                  4.  Registration  Expenses.  All fees and expenses incident to
         the  performance  of or compliance  with this  Agreement by the Company
         shall be borne by the Company whether or not any Registrable Securities
         are sold pursuant to the Registration Statement.  The fees and expenses
         referred  to  in  the  foregoing   sentence  shall   include,   without
         limitation,  (i) all registration  and filing fees (including,  without
         limitation,  fees and expenses (A) with respect to filings  required to
         be made  with the  Trading  Market on which  the  Common  Stock is then
         listed  for  trading,  and  (B) in  compliance  with  applicable  state
         securities  or Blue Sky laws  reasonably  agreed to by the  Company  in
         writing  (including,  without  limitation,  fees and  disbursements  of
         counsel for the Company in connection with Blue Sky  qualifications  or
         exemptions  of the  Registrable  Securities  and  determination  of the
         eligibility of the Registrable Securities for investment under the laws
         of such  jurisdictions  as requested  by the  Holders),  (ii)  printing
         expenses   (including,   without   limitation,   expenses  of  printing
         certificates for Registrable Securities and of printing prospectuses if
         the printing of prospectuses is reasonably  requested by the holders of
         a majority of the  Registrable  Securities  included in a  Registration
         Statement), (iii) messenger, telephone and delivery expenses, (iv) fees
         and  disbursements  of counsel  for the  Company,  (v)  Securities  Act
         liability insurance, if the Company so desires such insurance, and (vi)
         fees and  expenses  of all other  Persons  retained  by the  Company in
         connection with the  consummation of the  transactions  contemplated by
         this Agreement.  In addition,  the Company shall be responsible for all
         of its internal  expenses  incurred in connection with the consummation
         of the transactions contemplated by this Agreement (including,  without
         limitation,  all salaries  and  expenses of its officers and  employees
         performing legal or accounting duties), the expense of any annual audit
         and the fees and expenses  incurred in  connection  with the listing of
         the  Registrable  Securities  on any  securities  exchange  as required
         hereunder.  In no event shall the Company be responsible for any broker
         or similar  commissions  or,  except to the extent  provided for in the
         Transaction Documents, any legal fees or other costs of the Holders.

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         5. Indemnification

                  (a)  Indemnification  by  the  Company.   The  Company  shall,
         notwithstanding  any termination of this Agreement,  indemnify and hold
         harmless  each  Holder,  the  officers,   directors,   agents,  brokers
         (including  brokers  who  offer  and  sell  Registrable  Securities  as
         principal  as a result of a pledge or any  failure to  perform  under a
         margin call of Common Stock), investment advisors and employees of each
         of them,  each Person who controls any such Holder  (within the meaning
         of Section 15 of the  Securities Act or Section 20 of the Exchange Act)
         and  the  officers,  directors,  agents  and  employees  of  each  such
         controlling  Person, to the fullest extent permitted by applicable law,
         from and  against  any and all losses,  claims,  damages,  liabilities,
         costs (including,  without limitation,  reasonable attorneys' fees) and
         expenses  (collectively,  "Losses"),  as  incurred,  arising  out of or
         relating to any untrue or alleged  untrue  statement of a material fact
         contained in a  Registration  Statement,  any Prospectus or any form of
         prospectus  or in  any  amendment  or  supplement  thereto  or  in  any
         preliminary  prospectus,  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 based  solely  upon  information  regarding  such Holder
         furnished  in writing to the Company by such Holder  expressly  for use
         therein,  or to the extent that such information relates to such Holder
         or  such  Holder's  proposed  method  of  distribution  of  Registrable
         Securities  and was reviewed and expressly  approved in writing by such
         Holder expressly for use in a Registration  Statement,  such Prospectus
         or such form of Prospectus  or in any  amendment or supplement  thereto
         (it being  understood  that the Holder has approved  Annex A hereto for
         this  purpose) or (ii) in the case of an  occurrence of an event of the
         type specified in Section  3(d)(ii)-(vi),  the use by such Holder of an
         outdated or defective  Prospectus  after the Company has notified  such
         Holder in writing  that the  Prospectus  is outdated or  defective  and
         prior to the  receipt  by such  Holder of the  Advice  contemplated  in
         Section  6(d).  The Company  shall  notify the Holders  promptly of the
         institution,  threat or assertion of any Proceeding  arising from or in
         connection  with the  transactions  contemplated  by this  Agreement of
         which the Company is aware.

                  (b) Indemnification by Holders.  Each Holder shall,  severally
         and  not  jointly,   indemnify  and  hold  harmless  the  Company,  its
         directors, officers, agents and employees, 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,  as incurred,  to the
         extent arising out of or based solely upon:  (x) such Holder's  failure
         to comply with the prospectus  delivery  requirements of the Securities
         Act or (y) any untrue 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 in  any

                                       9
<PAGE>

         preliminary  prospectus,  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 not  misleading  (i) to the
         extent, but only to the extent,  that such untrue statement or omission
         is contained in any  information so furnished in writing by such Holder
         to  the  Company   specifically  for  inclusion  in  such  Registration
         Statement or such Prospectus or (ii) to the extent that (1) such untrue
         statements  or omissions  are based solely upon  information  regarding
         such  Holder  furnished  in  writing  to the  Company  by  such  Holder
         expressly  for use  therein,  or to the  extent  that such  information
         relates to such Holder or such Holder's proposed method of distribution
         of Registrable  Securities  and was reviewed and expressly  approved in
         writing by such Holder expressly for use in the Registration  Statement
         (it being  understood  that the Holder has approved  Annex A hereto for
         this  purpose),  such  Prospectus  or such form of Prospectus or in any
         amendment or supplement  thereto or (2) in the case of an occurrence of
         an event of the type  specified  in Section  3(d)(ii)-(vi),  the use by
         such Holder of an outdated or  defective  Prospectus  after the Company
         has notified such Holder in writing that the  Prospectus is outdated or
         defective  and  prior  to the  receipt  by such  Holder  of the  Advice
         contemplated  in Section  6(d).  In no event shall the liability of any
         selling Holder hereunder be greater in amount than the dollar amount of
         the  net  proceeds  received  by  such  Holder  upon  the  sale  of the
         Registrable Securities giving rise to such indemnification obligation.

                  (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 have
         the right to 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 it shall be  finally  determined  by a court of  competent
         jurisdiction  (which  determination is not subject to appeal or further
         review) 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:  (1) the  Indemnifying  Party has
         agreed in writing to pay such fees and expenses;  (2) 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 (3) 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 reasonably  believe that a material conflict of interest is
         likely to exist if the same counsel were to represent such  Indemnified

                                       10
<PAGE>

         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 the  reasonable  fees and expenses of one separate  counsel
         shall be at the expense of the  Indemnifying  Party).  The Indemnifying
         Party  shall not be liable for any  settlement  of any such  Proceeding
         effected  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.

                  Subject to the terms of this  Agreement,  all reasonable  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, as incurred, within ten Trading Days of
                  written notice thereof to the  Indemnifying  Party;  provided,
                  that  the  Indemnified  Party  shall  promptly  reimburse  the
                  Indemnifying  Party for that portion of such fees and expenses
                  applicable to such actions for which such Indemnified Party is
                  not entitled to  indemnification  hereunder,  determined based
                  upon the relative faults of the parties.

                  (d) Contribution. If a claim for indemnification under Section
         5(a) or 5(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 relates 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 this Agreement,  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 Section 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 Section 5(d) were determined by pro rata
         allocation or by any other method of allocation that does not take into

                                       11
<PAGE>

         account the  equitable  considerations  referred to in the  immediately
         preceding  paragraph.  Notwithstanding  the  provisions of this Section
         5(d), no Holder shall be required to contribute,  in the aggregate, any
         amount in excess of the amount by which the proceeds  actually received
         by such Holder from the sale of the Registrable  Securities  subject to
         the  Proceeding  exceeds the amount of any damages that such Holder has
         otherwise  been  required  to pay by reason of such  untrue or  alleged
         untrue statement or omission or alleged omission, except in the case of
         fraud by such Holder.

                  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. Miscellaneous

                  (a) Remedies.  In the event of a breach by the Company or by a
         Holder, of any of their  obligations under this Agreement,  each Holder
         or the  Company,  as the case may be, in addition to being  entitled to
         exercise all rights granted by law and under this Agreement,  including
         recovery of damages,  will be entitled to specific  performance  of its
         rights  under this  Agreement.  The Company and each Holder  agree that
         monetary damages would not provide adequate compensation for any losses
         incurred by reason of a breach by it of any of the  provisions  of this
         Agreement  and hereby  further  agrees that, in the event of any action
         for specific  performance in respect of such breach, it shall waive the
         defense that a remedy at law would be adequate.

                  (b) Reserved.

                  (c) Compliance.  Each Holder covenants and 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.

                  (d)  Discontinued  Disposition.  Each  Holder  agrees  by  its
         acquisition  of such  Registrable  Securities  that,  upon receipt of a
         notice  from the  Company  of the  occurrence  of any event of the kind
         described  in Section  3(d),  such  Holder will  forthwith  discontinue
         disposition  of  such  Registrable   Securities  under  a  Registration
         Statement until such Holder's receipt of the copies of the supplemented
         Prospectus  and/or  amended  Registration  Statement,  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 will use its best efforts to ensure
         that  the  use of the  Prospectus  may be  resumed  as  promptly  as it
         practicable.  The  Company  agrees and  acknowledges  that any  periods

                                       12
<PAGE>

         during which the Holder is required to discontinue  the  disposition of
         the Registrable Securities hereunder shall be subject to the provisions
         of Section 2(b).

                  (e)  Piggy-Back  Registrations.  If at  any  time  during  the
         Effectiveness Period there is not an effective  Registration  Statement
         covering  all of the  Registrable  Securities  and  the  Company  shall
         determine  to  prepare  and file  with the  Commission  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 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 the stock
         option or other employee benefit plans,  then the Company shall send to
         each  Holder a written  notice  of such  determination  and,  if within
         fifteen  days after the date of such  notice,  any such Holder shall so
         request in writing,  the  Company  shall  include in such  registration
         statement all or any part of such  Registrable  Securities  such holder
         requests to be  registered;  provided,  that,  the Company shall not be
         required  to  register  any  Registrable  Securities  pursuant  to this
         Section  6(e) that are  eligible  for resale  pursuant  to Rule  144(k)
         promulgated  under the Securities Act or that are the subject of a then
         effective Registration Statement.

                  (f) Amendments and Waivers.  The provisions of this Agreement,
         including the provisions of this sentence, may not be amended, modified
         or  supplemented,  and  waivers  or  consents  to  departures  from the
         provisions hereof may not be given, unless the same shall be in writing
         and  signed by the  Company  and each  Holder  of the then  outstanding
         Registrable  Securities.  Notwithstanding  the  foregoing,  a waiver or
         consent to depart from the  provisions  hereof with respect to a matter
         that  relates  exclusively  to the rights of Holders  and that does not
         directly or indirectly  affect the rights of other Holders may be given
         by Holders of all of the Registrable Securities to which such waiver or
         consent  relates;  provided,  however,  that  the  provisions  of  this
         sentence  may not be  amended,  modified,  or  supplemented  except  in
         accordance with the provisions of the immediately preceding sentence.

                  (g) Notices.  Any and all notices or other  communications  or
         deliveries  required or  permitted  to be provided  hereunder  shall be
         delivered as set forth in the Purchase Agreement.

                  (h) Successors and Assigns.  This Agreement shall inure to the
         benefit of and be binding upon the successors and permitted  assigns of
         each of the parties and shall inure to the benefit of each Holder.  The
         Company may not assign its rights or obligations  hereunder without the
         prior  written  consent of all of the  Holders of the  then-outstanding
         Registrable Securities.  Each Holder may assign their respective rights
         hereunder  in the manner  and to the  Persons  as  permitted  under the
         Purchase Agreement.

                                       13
<PAGE>

                  (i) No Inconsistent Agreements. Neither the Company nor any of
         its  subsidiaries  has entered,  as of the date  hereof,  nor shall the
         Company  or any of its  subsidiaries,  on or  after  the  date  of this
         Agreement,  enter into any  agreement  with respect to its  securities,
         that  would  have the effect of  impairing  the  rights  granted to the
         Holders in this  Agreement or otherwise  conflicts  with the provisions
         hereof.  Except as set forth on Schedule 6(i),  neither the Company nor
         any of its  subsidiaries  has  previously  entered  into any  agreement
         granting any registration  rights with respect to any of its securities
         to any Person that have not been satisfied in full.

                  (j) Execution and Counterparts. This Agreement may be executed
         in any number of counterparts,  each of which when so executed shall be
         deemed  to be an  original  and,  all of  which  taken  together  shall
         constitute one and the same Agreement.  In the event that any signature
         is delivered by facsimile  transmission,  such signature shall create a
         valid  binding  obligation  of the party  executing (or on whose behalf
         such  signature is executed) the same with the same force and effect as
         if such facsimile signature were the original thereof.

                  (k) Governing Law. All questions  concerning the construction,
         validity,  enforcement  and  interpretation  of this Agreement shall be
         determined with the provisions of the Purchase Agreement.

                  (l)  Cumulative  Remedies.  The remedies  provided  herein are
         cumulative and not exclusive of any remedies provided by law.

                  (m)  Severability.   If  any  term,  provision,   covenant  or
         restriction  of  this  Agreement  is  held  by  a  court  of  competent
         jurisdiction  to  be  invalid,  illegal,  void  or  unenforceable,  the
         remainder of the terms,  provisions,  covenants  and  restrictions  set
         forth  herein shall remain in full force and effect and shall in no way
         be affected, impaired or invalidated,  and the parties hereto shall use
         their commercially reasonable efforts to find and employ an alternative
         means to  achieve  the same or  substantially  the same  result as that
         contemplated by such term,  provision,  covenant or restriction.  It is
         hereby  stipulated and declared to be the intention of the parties that
         they would have executed the remaining terms, provisions, covenants and
         restrictions  without  including  any of  such  that  may be  hereafter
         declared invalid, illegal, void or unenforceable.

                  (n)  Headings.   The  headings  in  this   Agreement  are  for
         convenience of reference  only and shall not limit or otherwise  affect
         the meaning hereof.

                  (o) Independent Nature of Holders' Obligations and Rights. The
         obligations of each Holder hereunder are several and not joint with the
         obligations  of any other  Holder  hereunder,  and no  Holder  shall be
         responsible in any way for the  performance  of the  obligations of any
         other  Holder  hereunder.  Nothing  contained  herein  or in any  other
         agreement or document delivered at any closing,  and no action taken by
         any Holder  pursuant  hereto or thereto,  shall be deemed to constitute
         the Holders as a partnership,  an  association,  a joint venture or any

                                       14
<PAGE>

         other kind of entity,  or create a presumption  that the Holders are in
         any way  acting in concert  with  respect  to such  obligations  or the
         transactions  contemplated  by this  Agreement.  Each  Holder  shall be
         entitled  to  protect  and  enforce  its  rights,   including   without
         limitation the rights arising out of this  Agreement,  and it shall not
         be necessary for any other Holder to be joined as an  additional  party
         in any proceeding for such purpose.

                              ********************

                                       15
<PAGE>

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

                                        KNOBIAS, INC.

                                        /s/ E. KEY RAMSEY
                                        -----------------------
                                        Name: E. Key Ramsey
                                        Title: President

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       16
<PAGE>

                   [SIGNATURE PAGE OF HOLDERS TO KNOBIAS RRA]

Name of Investing Entity: DCOFI Master LDC
                          ------------------------------------------------------
Signature of Authorized Signatory of Investing entity: /s/ JEFFREY M. HAAS
                                                       -------------------------
Name of Authorized Signatory: Jeffrey M. Haas
                              --------------------------------------------------
Title of Authorized Signatory: Senior Vice-President
                               -------------------------------------------------

                                       17Exhibit
10.1

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is
dated as of March 15, 2005 among Grant Life Sciences, Inc., a Nevada corporation
(the “Company”), and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

 

WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”) and
Rule 506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this
Agreement.

 

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

 

 

ARTICLE
I.  

DEFINITIONS

 

1.1  Definitions. In
addition to the terms defined elsewhere in this Agreement: (a) capitalized terms
that are not otherwise defined herein have the meanings given to such terms in
the Notes (as defined herein), and (b) the following terms have the meanings
indicated in this Section 1.1:

 

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

 

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

 

“Closing” means
the closing of the purchase and sale of the Securities pursuant to Section
2.1.

 

“Closing
Date” means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to (i)
the Purchasers’ obligations to pay the Subscription Amount and (ii) the
Company’s obligations to deliver the Securities have been satisfied or
waived.

 

“Commission” means
the Securities and Exchange Commission.

 

“Common
Stock” means
the common stock of the Company, par value $.001, and any securities into which
such common stock shall hereinafter have been reclassified into.

 

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

 

“Company
Counsel” means
Sichenzia Ross Friedman Ference LLP.

 

“Disclosure
Schedules” shall
have the meaning ascribed to such term in Section 3.1 hereof.

 

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

 

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

 

“KW” means
Keith Wellner, attorney for DCOFI Master LDC, with offices at 830 Third Avenue,
14th Floor,
New York, New York 10022.

 

“Liens” means a
lien, charge, security interest, encumbrance, right of first refusal, preemptive
right or other restriction. 

 

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

 

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

 

“Notes” means,
the 8% Senior Secured Notes due, subject to the terms therein, June 15, 2005,
issued by the Company to the Purchasers hereunder, in the form of Exhibit
A.

 

“Penalty
Warrants” means
warrants to purchase shares of Common Stock issuable to the Purchasers in the
event that the Notes are not repaid in accordance with their terms.

 

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

 

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

 

1

“Proceeding” means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

 

“Required
Approvals” shall
have the meaning ascribed to such term in Section 3.1(e).

 

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

 

“Securities” means
the Notes, the Warrants, the Warrant Shares, the Penalty Warrants, and the
Penalty Warrant Shares.

 

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

 

“Security
Agreement” means
the Security Agreement, dated the date hereof, among the Company and the
Purchasers, in the form of Exhibit
D attached
hereto.

 

“Security
Documents” means
the Security Agreement and any other documents and filings required thereunder
in order to grant the Purchasers a perfected security interest in all of the
assets of the Company, including all UCC-1 filing receipts.

 

“Subscription
Amount”
means, as
to each Purchaser, the aggregate amount to be
paid for Notes purchased hereunder as specified below such Purchaser’s name on
the signature page of this Agreement and next to the heading “Subscription
Amount”, in United States Dollars and in immediately available
funds.

 

“Trading
Day” means a
day on which (i) the New York Stock Exchange is open for business, if the Common
Stock is not publicly traded or (ii) if the Company’s Common Stock is publicly
traded, the Common Stock is traded on a Trading Market.

 

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

 

“Transaction
Documents” means
this Agreement, the Notes, the Registration Rights Agreement in the form of
Exhibit B attached hereto, the Warrants, the Security Agreement , and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.

 

“Warrants” means
collectively the Common Stock purchase warrants, in the form of Exhibit
C
delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
hereof, which Warrants shall be exercisable immediately and have a term of
exercise equal to five years.

 

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

 

 

2

ARTICLE
II.  

PURCHASE
AND SALE

 

2.1  Closing. On the
Closing Date, upon the terms and subject to the conditions set forth herein,
concurrent with the execution and delivery of this Agreement by the parties
hereto, the Company agrees to sell, and each Purchaser agrees to purchase,
$200,000 principal amount of the Notes. Each Purchaser shall deliver to the
Company via wire transfer or a certified check immediately available funds equal
to their Subscription Amount and the Company shall deliver to each Purchaser
their respective Note as determined pursuant to Section 2.2(a) and the other
items set forth in Section 2.2 issuable at the Closing. Upon satisfaction of the
conditions set forth in Section 2.2, the Closing shall occur at the offices of
the Company, or such other location as the parties shall mutually
agree.

 

2.2  Deliveries

 

.

 

	a)  	
      On
      the Closing Date, the Company shall deliver to the counsel for such
      Purchasers with respect to each Purchaser the
following:

 

	(i)  	
      this
      Agreement duly executed by the Company;

 

	(ii)  	
      a
      Note with a principal amount equal to such Purchaser’s Subscription
      Amount, in the name of such Purchaser;

 

	(iii)  	
      the
      Security Agreement duly executed by the Company, along with all the
      Security Documents;

 

	(iv)  	
      the
      Registration Rights Agreement duly executed by the
  Company;

 

	(v)  	
      the
      Warrants duly executed by the Company; and

 

	(vi)  	
      a
      legal opinion of Company Counsel.

 

	b)  	
      On
      the Closing Date, each Purchaser shall deliver or cause to be delivered to
      Company Counsel the following: 

 

	(i)  	
      this
      Agreement duly executed by such Purchaser;

 

	(ii)  	
      such
      Purchaser’s Subscription Amount by wire transfer to the account of the
      Company; and 

 

	(iii)  	
      the
      Security Agreement and the Registration Rights Agreement duly executed by
      such Purchaser.

 

2.3  Closing
Conditions. 

 

3

 

	a)  	
      The
      obligations of the Company hereunder in connection with the Closing are
      subject to the following conditions being met:

 

	(i)  	
      the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchasers contained
      herein;

 

	(ii)  	
      all
      obligations, covenants and agreements of the Purchasers required to be
      performed at or prior to the Closing Date shall have been performed;
      and

 

	(iii)  	
      the
      delivery by the Purchasers of the items set forth in Section 2.2(b) of
      this Agreement.

 

	b)  	
      The
      respective obligations of the Purchasers hereunder in connection with the
      Closing are subject to the following conditions being
  met:

 

	(i)  	
      the
      accuracy in all material respects on the Closing Date of the
      representations and warranties of the Company contained
      herein;

 

	(ii)  	
      all
      obligations, covenants and agreements of the Company required to be
      performed at or prior to the Closing Date shall have been performed;
      

 

	(iii)  	
      the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement; 

 

	(iv)  	
      there
      shall have been no Material Adverse Effect with respect to the Company
      since the date hereof; and

 

	(v)  	
      from
      the date hereof to the Closing Date, a banking moratorium shall not have
      been declared either by the United States or New York State authorities
      nor shall there have occurred any material outbreak or escalation of
      hostilities or other national or international calamity of such magnitude
      in its effect on, or any material adverse change in, any financial market
      which, in each case, in the reasonable judgment of each Purchaser, makes
      it impracticable or inadvisable to purchase the Notes at the
      Closing.

 

4

 

ARTICLE
III.  

REPRESENTATIONS
AND WARRANTIES

 

3.1  Representations
and Warranties of the Company. The
Company hereby makes the representations and warranties set forth below to each
Purchaser.

 

(a)  Organization
and Qualification. The
Company is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. The Company is not in violation or default of any of the provisions
of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company is duly qualified to conduct
business and is in good standing as a foreign corporation or other entity in
each jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not have or
reasonably be expected to result in (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or financial condition of the Company, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document (any of
(i), (ii) or (iii), a “Material
Adverse Effect”) and no
Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

 

(b)  Authorization;
Enforcement. The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company in connection therewith other than in
connection with the Required Approvals. Each Transaction Document has been (or
upon delivery will have been) duly executed by the Company and, when delivered
in accordance with the terms hereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies.

 

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

 

5

(d)  Filings,
Consents and Approvals. The
Company is not required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) filings required pursuant to Section 4.6,
(ii) the filing with the Commission of the Registration Statement, (iii) the
notice and/or application(s) to each applicable Trading Market for the issuance
and sale of the Warrant Shares and the Penalty Warrant Shares for trading
thereon in the time and manner required thereby and (iv) the filing of Form D
with the Commission and such filings as are required to be made under applicable
state securities laws (collectively, the “Required
Approvals”).

 

(e)  Issuance
of the Securities. The
Securities are duly authorized and, when issued and paid for in accordance with
the applicable Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The
Company has reserved from its duly authorized capital stock a number of shares
of Common Stock for issuance of the Warrant Shares and the Penalty Warrant
Shares. The Company has not, and to the knowledge of the Company, no Affiliate
of the Company has sold, offered for sale or solicited offers to buy or
otherwise negotiated in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers, or that would be integrated
with the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.

 

(f)  Capitalization. The
capitalization of the Company is as set forth Schedule 3.1(f) of the Disclosure
Schedule. The Company has not issued any capital stock since December 31, 2004
other than pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of Common Stock to
employees pursuant to the Company’s employee stock purchase plan and pursuant to
the conversion or exercise of outstanding Common Stock Equivalents. No Person
has any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents. Except as set forth in Schedule 3.1(f) of the Disclosure Schedule, as
a result of the purchase and sale of the Securities, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations
convertible into or exchangeable for, or giving any Person any right to
subscribe for or acquire, any shares of Common Stock, or contracts, commitments,
understandings or arrangements by which the Company is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder,
the Board of Directors of the Company or others is required for the issuance and
sale of the Securities. There are no stockholders agreements, voting agreements
or other similar agreements with respect to the Company’s capital stock to which
the Company is a party or, to the knowledge of the Company, between or among any
of the Company’s stockholders.

 

6

(g)  SEC
Reports; Financial Statements. The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials,
including the exhibits thereto, being collectively referred to herein as the
“SEC
Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved
(“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments.

 

7

(h)  Material
Changes. Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, (i) there has been
no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company's
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans.
The Company does not have pending before the Commission any request for
confidential treatment of information.

 

(i)  Litigation. Other
than as set forth in the Disclosure Schedule under the caption “Legal
Proceedings,” there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which
(i) adversely affects or challenges the legality, validity or enforceability of
any of the Transaction Documents or the Securities or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company, nor any director or officer thereof, is or
has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company. The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act.

 

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

 

(k)  Compliance. The
Company is (i) not in default under or in violation of (and no event has
occurred that has not been waived that, with notice or lapse of time or both,
would result in a default by the Company), nor has the Company received notice
of a claim that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or
not such default or violation has been waived), (ii) not in violation of any
order of any court, arbitrator or governmental body, (iii) nor has it been in
violation of any statute, rule or regulation of any governmental authority,
including without limitation all foreign, federal, state and local laws
applicable to its business except in each case as could not have a Material
Adverse Effect.

 

8

(l)  Regulatory
Permits. The
Company possesses all certificates, authorizations and permits issued by the
appropriate federal, state, local or foreign regulatory authorities necessary to
conduct its respective businesses as described in the SEC Reports, except where
the failure to possess such permits could not have or reasonably be expected to
result in a Material Adverse Effect (“Material
Permits”), and
the Company has not received any notice of proceedings relating to the
revocation or modification of any Material Permit.

 

(m)  Title
to Assets. The
Company has good and marketable title in fee simple to all real property owned
by it that is material to the business of the Company and good and marketable
title in all personal property owned by it that is material to the business of
the Company, in each case free and clear of all Liens, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
Liens for the payment of federal, state or other taxes, the payment of which is
neither delinquent nor subject to penalties. Any real property and facilities
held under lease by the Company are held by it under valid, subsisting and
enforceable leases of which the Company is in compliance.

 

(n)  Patents
and Trademarks. 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 necessary or material for use in connection with its
respective businesses as described in the SEC Reports and which the failure to
so have could have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). The
Company has not received a written notice that the Intellectual Property Rights
used by the Company violates or infringes upon the rights of any Person. 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 of others.

 

(o)  Insurance. The
Company is insured by insurers of recognized financial responsibility against
such losses and risks and in such amounts as are prudent and customary in the
businesses in which the Company is engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the aggregate
Subscription Amount. To the best of Company’s knowledge, such insurance
contracts and policies are accurate and complete. The Company has no reason to
believe that it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business without a significant increase in
cost.

 

(p)  Transactions
With Affiliates and Employees. Except
as set forth in the SEC Reports, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the
knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner, in each case in excess of $50,000 other than (i) for payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) for other employee benefits,
including stock option agreements under any stock option plan of the
Company.

 

9

(q)  Sarbanes-Oxley;
Internal Accounting Controls. The
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 which are applicable to it as of the Closing Date. The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company is made known to the certifying officers by
others within those entities, particularly during the period in which the
Company's most recently filed periodic report under the Exchange Act, as the
case may be, is being prepared. The Company's certifying officers have evaluated
the effectiveness of the Company's controls and procedures as of the date prior
to the filing date of the most recently filed periodic report under the Exchange
Act (such date, the “Evaluation
Date”). Since
the Evaluation Date, there have been no significant changes in the Company's
internal controls (as such term is defined in Item 307(b) of Regulation S-K
under the Exchange Act) or, to the Company's knowledge, in other factors that
could significantly affect the Company's internal controls.

 

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

 

(s)  Private
Placement.
Assuming the accuracy of the Purchasers representations and warranties set forth
in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Trading Market.

 

10

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

 

(u)  Registration
Rights. With
the exception of the holders of the Notes, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of
the Company.

 

(v)  Listing
and Maintenance Requirements. The
Company’s Common Stock is registered pursuant to Section 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

 

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

 

(x)  Disclosure. The
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Purchasers or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information. The
Company understands and confirms that the Purchasers will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, furnished by or on behalf of the Company with
respect to the representations and warranties made herein are true and correct
with respect to such representations and warranties and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.

 

11

(y)  No
Integrated Offering.
Assuming the accuracy of the Purchasers’ representations and warranties set
forth in Section 3.2, neither the Company, nor any of its affiliates, nor any
Person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would cause this offering of the Securities to be
integrated with prior offerings by the Company for purposes of the Securities
Act or any applicable shareholder approval provisions, including, without
limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or
designated.

 

(z)  Solvency. The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the Closing Date.
The SEC Reports set forth as of the dates thereof all outstanding secured and
unsecured Indebtedness of the Company, or for which the Company has commitments.
For the 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.

 

(aa)  Tax
Status.
Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company has filed all
necessary federal, state and foreign income and franchise tax returns and has
paid or accrued all taxes shown as due thereon, and the Company has no knowledge
of a tax deficiency which has been asserted or threatened against the Company
..

 

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

 

(cc)  Foreign
Corrupt Practices. Neither
the Company, nor to the knowledge of the Company, any agent or other person
acting on behalf of the Company, has (i) directly or indirectly, used any
corrupt funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company (or made by
any person acting on its behalf of which the Company is aware) which is in
violation of law, or (iv) violated in any material respect any provision of the
Foreign Corrupt Practices Act of 1977, as amended

 

12

(dd)  Accountants. The
Company’s accountants are Russell Bedford Stefanou Mirchandani LLP. To the
Company’s knowledge, such accountants, who the Company expects will express
their opinion with respect to the financial statements to be included in the
Company's Annual Report on Form 10-KSB for the year ending December 31, 2004,
are a registered public accounting firm as required by the Securities
Act.

 

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

 

(ff)  No
Disagreements with Accountants and Lawyers. There
are no disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the accountants and lawyers formerly or
presently employed by the Company and the Company is current with respect to any
fees owed to its accountants and lawyers. By making this representation the
Company does not, in any manner, waive the attorney/client privilege or the
confidentiality of the communications between the Company and its
lawyers.

 

(gg)  Acknowledgment
Regarding Purchasers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Purchasers is acting solely in
the capacity of an arm's length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement and the
transactions contemplated hereby and any advice given by any Purchaser or any of
their respective representatives or agents in connection with this Agreement and
the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
that the Company’s decision to enter into this Agreement has been based solely
on the independent evaluation of the transactions contemplated hereby by the
Company and its representatives. The Company further acknowledges that in
addition to purchasing Securities, the Purchasers or their affiliates may
directly or indirectly own debt, Common Stock and Preferred Stock in the Company
and that such parties, exercising their rights hereunder may adversely impact
their other holdings as well as the other equity holders in the Company.

 

13

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

 

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

 

(b)  Purchaser
Representation. Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof, has no present intention of distributing any of such Securities and has
no arrangement or understanding with any other persons regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Penalty Warrant Shares pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws). Such Purchaser is acquiring the Securities hereunder in
the ordinary course of its business. Such Purchaser does not have any agreement
or understanding, directly or indirectly, with any Person to distribute any of
the Securities.

 

(c)  Purchaser
Status. At the
time such Purchaser was offered the Securities, it was, and at the date hereof
it is, and on the date on which it purchases the Notes, it will be either: (i)
an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or
(a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act. Such Purchaser is not required
to be registered as a broker-dealer under Section 15 of the Exchange
Act.

 

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

 

14

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

 

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

 

ARTICLE
IV.  

OTHER
AGREEMENTS OF THE PARTIES

 

4.1  Transfer
Restrictions.

 

(a)  The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company or
to an affiliate of a Purchaser or in connection with a pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement.

 

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

 

NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

 

15

The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.

 

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

 

16

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

 

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

 

4.2  Acknowledgment
of Dilution. The
Company acknowledges that the issuance of the Securities may result in dilution
of the outstanding shares of Common Stock, which dilution may be substantial
under certain market conditions. The Company further acknowledges that its
obligations under the Transaction Documents, including without limitation its
obligation to issue the Penalty Warrants pursuant to the Transaction Documents,
are unconditional and absolute and not subject to any right of set off,
counterclaim, delay or reduction, regardless of the effect of any such dilution
or any claim the Company may have against any Purchaser and regardless of the
dilutive effect that such issuance may have on the ownership of the other
stockholders of the Company.

 

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

 

17

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

 

4.5  Intentionally
Omitted.

 

4.6  Securities
Laws Disclosure; Publicity. The
Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release or otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with a
registration statement and (ii) to the extent such disclosure is required by law
or Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure permitted under subclause (i) or
(ii).

 

4.7  Shareholder
Rights Plan. No
claim will be made or enforced by the Company or, to the knowledge of the
Company, any other Person that any Purchaser is an “Acquiring Person” under any
shareholder rights plan or similar plan or arrangement in effect or hereafter
adopted by the Company, or that any Purchaser could be deemed to trigger the
provisions of any such plan or arrangement, by virtue of receiving Securities
under the Transaction Documents or under any other agreement between the Company
and the Purchasers. The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.

 

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

 

4.9  Use of
Proceeds. The
Company shall use the net proceeds from the sale of the Securities hereunder for
working capital and general corporate purposes.

 

4.10  Reimbursement. If any
Purchaser becomes involved in any capacity in any Proceeding by or against any
Person who is a stockholder of the Company (except as a result of sales,
pledges, margin sales and similar transactions by such Purchaser to or with any
current stockholder), solely as a result of such Purchaser’s acquisition of the
Securities under this Agreement, the Company will reimburse such Purchaser for
its reasonable legal and other expenses (including the cost of any investigation
preparation and travel in connection therewith) incurred in connection
therewith, as such expenses are incurred. The reimbursement obligations of the
Company under this paragraph shall be in addition to any liability which the
Company may otherwise have, shall extend upon the same terms and conditions to
any Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement.

 

18

4.11  Indemnification
of Purchasers. Subject
to the provisions of this Section 4.11, the Company will indemnify and hold the
Purchasers and their directors, officers, shareholders, partners, employees and
agents (each, a “Purchaser
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any such Purchaser Party may suffer or incur as a result of
or relating to (a) any breach of any of the representations, warranties,
covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents or (b) any action instituted against a Purchaser, or any
of them or their respective Affiliates, by any stockholder of the Company who is
not an Affiliate of such Purchaser, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser’s representation, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state or
federal securities laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing. Any Purchaser Party shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (i) the employment
thereof has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable opinion of
such separate counsel, a material conflict on any material issue between the
position of the Company and the position of such Purchaser Party. The Company
will not be liable to any Purchaser Party under this Agreement (i) for any
settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (ii) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by the Purchasers in this Agreement or
in the other Transaction Documents.

 

19

4.12  Reservation
and Listing of Securities.

 

(a)  The
Company shall maintain a reserve from its duly authorized shares of Common Stock
for issuance pursuant to the Transaction Documents in such amount as may be
required to fulfill its obligations in full under the Transaction
Documents.

 

(b)  If, on
any date, the number of authorized but unissued (and otherwise unreserved)
shares of Common Stock is less than the Warrant Shares and Penalty Warrant
Shares to be issued, then the Board of Directors of the Company shall use
commercially reasonable efforts to amend the Company's certificate or articles
of incorporation to increase the number of authorized but unissued shares of
Common Stock to at least the Warrant Shares and Penalty Warrant Shares to be
issued at such time, as soon as possible and in any event not later than the
75th day after such date.

 

(c)  The
Company shall, if applicable: (i) in the time and manner required by the Trading
Market, prepare and file with such Trading Market an additional shares listing
application covering a number of shares of Common Stock at least equal to the
Required Minimum on the date of such application, (ii) take all steps necessary
to cause such shares of Common Stock to be approved for listing on the Trading
Market as soon as possible thereafter, (iii) provide to the Purchasers evidence
of such listing, and (iv) maintain the listing of such Common Stock on any date
at least equal to the Required Minimum on such date on such Trading Market or
another Trading Market. 

 

4.13  Equal
Treatment of Purchasers. No
consideration shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration is also offered to all of the parties to the
Transaction Documents. Further, the Company shall not make any payment of
principal or interest on the Notes in amounts which are disproportionate to the
respective principal amounts outstanding on the Notes at any applicable time.
For clarification purposes, this provision constitutes a separate right granted
to each Purchaser by the Company and negotiated separately by each Purchaser,
and is intended to treat for the Company the Note holders as a class and shall
not in any way be construed as the Purchasers acting in concert or as a group
with respect to the purchase, disposition or voting of Securities or
otherwise.

 

 

ARTICLE
V.  

MISCELLANEOUS

 

5.1  Termination. This
Agreement may be terminated by any Purchaser, by written notice to the other
parties, if the Closing has not been consummated on or before March 31, 2005;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

 

5.2  Fees. At the
Closing, the Company has agreed to (i) reimburse DC Asset Management LLC
(“DCAM”)
reasonable legal fees and expenses not to exceed $15,000 and (ii) pay DCAM
$10,000 as a structuring fee. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of any Securities.

 

20

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

 

5.4  Notices. Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day,
(b) the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.

 

5.5  Amendments;
Waivers. No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and each
Purchaser or, in the case of a waiver, by the party against whom enforcement of
any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

5.6  Construction. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.

 

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

 

21

5.8  No
Third-Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set forth
in Section 4.11.

 

5.9  Governing
Law. All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or
proceeding shall be reimbursed by the other party for its attorneys’ fees and
other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding.

 

5.10  Survival. The
representations and warranties contained herein shall survive the Closing and
the delivery, exercise and/or conversion of the Securities, as applicable for a
period of 2 years.

 

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

 

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

 

22

5.13  Rescission
and Withdrawal Right.
Notwithstanding anything to the contrary contained in (and without limiting any
similar provisions of) the Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods
therein provided, then such Purchaser may rescind or withdraw, in its sole
discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future
actions and rights; provided,
however, in the
case of a rescission of a conversion of a Note, the Purchaser shall be required
to return any shares of Common Stock subject to any such rescinded conversion or
exercise notice.

 

5.14  Replacement
of Securities. If any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement
Securities.

 

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

 

5.16  Payment
Set Aside. To the
extent that the Company makes a payment or payments to any Purchaser pursuant to
any Transaction Document or a Purchaser enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.

 

23

5.17  Usury. To the
extent it may lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and all efforts to
be compelled to take the benefit or advantage of, usury laws wherever enacted,
now or at any time hereafter in force, in connection with any claim, action or
proceeding that may be brought by any Purchaser in order to enforce any right or
remedy under any Transaction Document. Notwithstanding any provision to the
contrary contained in any Transaction Document, it is expressly agreed and
provided that the total liability of the Company under the Transaction Documents
for payments in the nature of interest shall not exceed the maximum lawful rate
authorized under applicable law (the “Maximum
Rate”), and,
without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the Transaction Documents, such excess shall be
applied by such Purchaser to the unpaid principal balance of any such
indebtedness or be refunded to the Company, the manner of handling such excess
to be at such Purchaser's election.

 

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

 

5.19  Liquidated
Damages. The
Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of the Company
and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due and
payable shall have been canceled.

 

24

(Signature
Pages Follow)

 

 

25

IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

	GRANT
      LIFE SCIENCES, INC.
	
      Address
      for Notice:

	
       

      /s/
      Stan Yakatan

      Name:
      Stan Yakatan

      Title:
      Chief Executive Officer
	
      Grant
      Life Sciences, Inc.

      5511
      Capital Center Drive

      Suite
      224

      Raleigh,
      NC 27606

      Telephone:
      (919) 852-4482

      Facsimile:
      

	
      With
      a copy to (which shall not constitute notice):

       

      Sichenzia
      Ross Friedman Ference LLP

      1065
      Avenue of the Americas

      New
      York, NY 10018 
	 
	 	 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

26

[PURCHASER
SIGNATURE PAGES TO GRANT LIFE SCIENCES SECURITIES PURCHASE
AGREEMENT]

IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

 

Name of
Investing Entity: DCOFI
Master LDC

Signature
of Authorized Signatory of Investing Entity:
/s/
Richard Smithline

Name of
Authorized Signatory: Richard
Smithline

Title of
Authorized Signatory: Director

Email
Address of Authorized
Entity:________________________________________________

Address
for Notice of Investing Entity:

Address
for Delivery of Securities for Investing Entity (if not same as
above):

Subscription
Amount: 

EIN
Number: [PROVIDE
THIS UNDER SEPARATE COVER]

[SIGNATURE
PAGES CONTINUE]

27

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