Document:

Subscription
      Agreement

    

    As
      of
      November 9, 2007

    

    To
      the
      Board of Directors of 

    CS
      China
      Acquisition Corp.:

    

    Gentlemen:

    

    The
      undersigned hereby subscribes for and agrees to purchase 1,500,000 warrants
      (“Insider Warrants”), each to purchase one Ordinary Share, at $1.00 per Insider
      Warrant, of CS China Acquisition Corp. (the “Corporation”) for an aggregate
      purchase price of $1,500,000 (“Purchase Price”). The purchase and issuance of
      the Insider Warrants shall occur simultaneously with the consummation of the
      Corporation’s initial public offering of Units, consisting of one Ordinary Share
      and one Public Warrant (“IPO”), which is being underwritten by EarlyBirdCapital,
      Inc. (“EBC”). The Insider Warrants will be sold to the undersigned on a private
      placement basis and not part of the IPO. Except as herein provided, the Insider
      Warrants shall have the same terms as the Public Warrants.

    

    At
      least
      24 hours prior to the effective date of the registration statement filed in
      connection with the IPO (“Registration Statement”), the undersigned shall
      deliver the Purchase Price to Graubard Miller, as escrow agent (“Escrow Agent”),
      to hold in a non-interest bearing account until the Corporation consummates
      the
      IPO. Simultaneously with the consummation of the IPO, the Escrow Agent shall
      deposit the Purchase Price, without interest or deduction, into the trust fund
      (“Trust Fund”) established by the Corporation for the benefit of the
      Corporation’s public shareholders as described in the Corporation’s Registration
      Statement, pursuant to the terms of an Investment Management Trust Agreement
      to
      be entered into between the Corporation and Continental Stock Transfer &
Trust Company. In the event that the IPO is not consummated within 14 days
      of
      the date the Purchase Price is delivered to the Escrow Agent, the Escrow Agent
      shall return the Purchase Price to the undersigned, without interest or
      deduction.

    

    The
      undersigned represents and warrants that he has been advised that the Insider
      Warrants have not been registered under the Securities Act; that he is acquiring
      the Insider Warrants for its account for investment purposes only; that he
      has
      no present intention of selling or otherwise disposing of the Insider Warrants
      in violation of the securities laws of the United States; that he is an
“accredited investor” as defined by Rule 501 of Regulation D promulgated under
      the Securities Act of 1933, as amended (the “Securities Act”); and that he is
      familiar with the proposed business, management, financial condition and affairs
      of the Corporation.

    

    Moreover,
      the undersigned agrees that he shall not sell or transfer the Insider Warrants
      or any underlying securities until after the Corporation consummates a merger,
      capital stock exchange, asset acquisition or other similar business combination
      with an operating business (“Business Combination”) and acknowledges that the
      certificates for such Insider Warrants shall contain a legend indicating such
      restriction on transferability. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    The
      Corporation hereby acknowledges and agrees that, in the event the Corporation
      calls the Warrants for redemption pursuant to that certain Warrant Agreement
      to
      be entered into by the Corporation and Continental Stock Transfer & Trust
      Company in connection with the Corporation’s IPO, the Insider Warrants may be
      exercised by surrendering such Warrants for that number of Ordinary Shares
      equal
      to the quotient obtained by dividing (x) the product of the number of Ordinary
      Shares underlying the Warrant, multiplied by the difference between the Warrant
      exercise price and the “Fair Market Value” (defined below) by (y) the Fair
      Market Value, so long as the Insider Warrants are still held by the undersigned
      or its affiliates. The “Fair Market Value” shall mean the average reported last
      sale price of the Ordinary Shares for the 10 trading days ending on the third
      trading day prior to the date on which the notice of redemption is sent to
      holders of Warrants.

    

    The
      terms
      of this agreement and the restriction on transfers with respect to the Insider
      Warrants may not be amended without the prior written consent of
      EBC.

     

    
      	 	 	 
	 	Very truly yours,
	 	
            
	 	
              CS
                Capital USA, LLC

            
	 
 	 
 	 
 
	
            	By:  	
            
	 	
              
Name:
	 	
              Title:

            

    

     

    Agreed
      to:

    

    CS
      China
      Acquisition Corp.

    

    
      	 	 	 	 
	By:
	 	 	
            
	
              
                

              

            	 	 	
            
	
              Name:
                

              Title:
                

            	 	 	
            

    

     

    EarlyBirdCapital,
      Inc.

    

    
      	 	 	 	 
	By:
	 	 	
            
	
              
                

              

            	 	 	
            
	
              Name:
                

              Title:
                

            	 	 	
            

    

    

    Graubard
      Miller

    

    
      	 	 	 	 
	By:
	 	 	
            
	
              
                

              

            	 	 	
            
	
              Name:
                

              Title:EXHIBIT
      10.1

     

    SECURITIES
      EXCHANGE AND AMENDMENT AGREEMENT

     

    This
      Securities Exchange and Amendment Agreement (this “Agreement”)
      is
      dated as of December 31, 2007, among GigaBeam Corporation, a Delaware
      corporation (the “Company”)
      and
      each holder identified on the signature pages hereto (each, including its
      successors and assigns, a “Holder”
and
      collectively the “Holders”).

     

    WHEREAS,
      each Holder is party to that certain Securities Purchase Agreement, dated
      November 7, 2005 (the “Series
      B Agreement”)
      pursuant to which the Company issued Series B Convertible Preferred Stock (the
      “Series
      B Preferred Stock”)
      and
      common stock purchase warrants (the “Series
      B Warrants”)
      and/or
      that certain Securities Purchase Agreement, dated August 21, 2006 (the
“Series
      C Agreement”
and
      together with the Series B Agreement, the “Purchase
      Agreements”)
      pursuant to which the Company issued Series C Convertible Preferred Stock (the
      “Series
      C Preferred Stock”
and
      together with the Series B Preferred Stock, the “Outstanding
      Preferred Stock”)
      and
      common stock purchase warrants (the “Series
      C Warrants”
      together with the Series B Warrants, the “Outstanding
      Warrants”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Sections 3(a)(9) and 4(2) of the Securities Act of 1933, as amended (the
“Securities
      Act”),
      the
      Company desires to issue and exchange with each Holder, and each Holder,
      severally and not jointly, desires to exchange with the Company, all Outstanding
      Preferred Stock for Preferred Stock as more fully described in this
      Agreement.

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement, the Company
      and
      the Holders have agreed to amend certain terms of the Purchase
      Agreements;

     

    WHEREAS,
      certain triggering events have occurred and are continuing pursuant to the
      Certificate of Designation to the Outstanding Preferred Stock and certain
      defaults of the Purchase Agreements have occurred as of the date
      hereof.

     

    WHEREAS,
      the Company has accrued liquidated damages to the Holders pursuant to the
      Registration Rights Agreements entered into in connection with the registration
      rights entered into in connection with the Purchase Agreements.

     

    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 Holder agree 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 Certificate of Designation (as defined herein), and (b) the
      following terms have the meanings set forth in this Section 1.1:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Acquiring
      Person”
shall
      have the meaning ascribed to such term in Section 4.7.

     

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

     

    “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 Holder, any investment fund or managed account that is managed
      on a
      discretionary basis by the same investment manager as such Holder will be deemed
      to be an Affiliate of such Holder.

     

    “Authorized
      Shares Deficiency”
shall
      have the meaning ascribed to such term in Section 4.10(b).

     

    “Authorized
      Share Action”
shall
      have the meaning ascribed to such term in Section 4.10(b).

     

    “Benefited
      Parties”
shall
      have the meaning ascribed to such term in Section 4.16.

     

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

     

    “Certificate
      of Designation”
means
      the Certificate of Designation to be filed prior to the Closing by the Company
      with the Secretary of State of Delaware in the form of Exhibit
      A.

     

    “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, subject to Section 5.1, all
      conditions precedent set forth in Section 2.3 below have been satisfied or
      waived.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any other
      class
      of securities into which such securities may hereafter be reclassified or
      changed into.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    “Company
      Counsel”
means
      Trombly Business Law, with offices located at 1320 Centre Street, Suite 202,
      Newton, MA 02459.

     

    “Conversion
      Price”
shall
      have the meaning ascribed to such term in the Certificate of
      Designation.

     

    “Discussion
      Time”
shall
      have the meaning ascribed to such term in Section 3.2(f).

     

     “Effective
      Date”
means
      the date that the Registration Statement of the applicable Underlying Shares
      is
      filed by the Company pursuant to this Agreement is first declared effective
      by
      the Commission.

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    

    “Exchange
      Amount”
shall
      mean, as to each Holder as applicable, as of the Closing, the aggregate
      outstanding amount of (i) all indebtedness (principal and interest and all
      other
      amounts due under each respective underlying obligation, including but not
      limited to dividends); (ii) all amounts due in the nature of liquidated damages
      or any similar remedy or recovery; (iii) preferred stock; and (iv) warrants,
      each as beneficially owned by such Holder and to be exchanged for the Preferred
      Stock purchased hereunder, in each case to the extent specified below such
      Holder’s name on the signature page of this Agreement and next to the heading
“Exchange Amount”.

    

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

    

    “FWS”
means
      Feldman Weinstein & Smith LLP with offices located at 420 Lexington Avenue,
      Suite 2620, New York, New York 10170-0002.

    

    “Holder
      Party”
shall
      have the meaning ascribed to such term in Section 4.9.

    

    “Indebtedness”
means
      (a) any liabilities for borrowed money or amounts owed in excess of $25,000
      (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 $25,000 due under leases required to be capitalized in accordance
      with GAAP.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Legend
      Removal Date”
shall
      have the meaning ascribed to such term in Section 4.1(c). 

    

    “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).

    

     “Maximum
      Rate”
shall
      have the meaning ascribed to such term in Section 4.16.

    

    “NASD”
shall
      have the meaning ascribed to such term in Section 4.15(x).

    

    “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.

    

    “Preferred
      Stock”
means
      the 28,000 shares of the Company’s Series D Convertible Preferred Stock issued
      hereunder, in addition to such shares issued as dividends on such preferred
      stock, having the rights, preferences and privileges set forth in the
      Certificate of Designation, in the form of Exhibit
      A
      attached
      hereto.

    

    “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).

    

    “Required
      Minimum”
means,
      as of any date, the maximum aggregate number of shares of Common Stock then
      issued or potentially issuable in the future pursuant to the Transaction
      Documents, including any Underlying Shares issuable upon conversion in full
      of
      all shares of Preferred Stock, ignoring any conversion limits set forth
      therein.

     

    “Registration
      Statement”
shall
      mean a registration statement registering for resale the Underlying Shares
      as
      provided for under this Agreement.

     

    “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 Preferred Stock, the Warrants and the Underlying Shares.

    

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, and the rules and regulations
      promulgated thereunder. 

    

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

    

    “Subsidiary”
means
      any subsidiary of the Company as identified in Section 3.1(a).

    

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market; provided that
      if
      the Company is not listed or quoted for trading on a Trading Market, “Trading
      Day” shall mean “Business Day” unless the context otherwise
      requires.

    

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

    

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

    

    “Underlying
      Shares”
means
      the shares of Common Stock issued and issuable upon conversion of the Preferred
      Stock,
      the
      exercise of the Warrants
      and the
      issuance of Common Stock pursuant to this Agreement.

    

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Warrants”
means,
      collectively, the Common Stock purchase warrants delivered to the Purchasers
      at
      the Closing in accordance with Section 2.1(b) hereof, which Warrants shall
      be
      exercisable immediately and have a term of exercise until December 31, 2012,
      in
      the form of Exhibit
      C
      attached
      hereto and an exercise price of $1 per Warrant Share.

     

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

     

    ARTICLE
      II

    EXCHANGE,
      RESETS AND AMENDMENTS

     

    2.1 Agreements.
      

     

    (a) Exchange
      of All Outstanding Preferred Stock.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      substantially concurrent with the execution and delivery of this Agreement
      by
      the parties hereto, the Company agrees to issue to each Holder shares of
      Preferred Stock, and each Holder agrees, severally and not jointly, to accept
      the shares of Preferred Stock in exchange for such Holder’s Outstanding
      Preferred Stock and all accrued dividends and other amounts thereunder, as
      summarized on Schedule
      A
      attached
      hereto and incorporated herein by reference. Upon the consummation of the
      exchange hereunder, all obligations of the Company under the Outstanding
      Preferred Stock shall be deemed satisfied in full and the Company shall have
      no
      other obligations thereunder.

     

    (b) Exchange
      of All Outstanding Warrants.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      substantially concurrent with the execution and delivery of this Agreement
      by
      the parties hereto, the Company agrees to exchange each outstanding common
      stock
      purchase warrant issued in connection with the Series B and Series C Preferred
      Stock of the Company (“Outstanding
      Warrants”)
      with
      each Holder a Warrant to purchase the number of shares of Common Stock as
      summarized on Schedule
      A
      attached
      hereto and incorporated herein by reference, and each Holder agrees, severally
      and not jointly, to accept such Warrants in exchange for such Holder’s
      Outstanding Warrants, as summarized on Schedule
      A
      attached
      hereto and incorporated herein by reference. Upon the consummation of the
      exchange hereunder, all obligations of the Company under the Outstanding
      Warrants shall be deemed satisfied in full and the Company shall have no other
      obligations thereunder.
      Additionally, each Holder that exercised Outstanding Warrants for cash pursuant
      to that certain notice from the Company dated on or about October 1, 2007 shall
      receive, for each share underlying such Outstanding Warrants exercised
      pursuant thereto, 2 additional shares of Common Stock in connection with such
      exercise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) Waiver
      of Existing Defaults.
      Each
      Holder hereby agrees, solely in connection with the existence of any
      current
      Triggering Events, to waive, forever more in respect of the Outstanding
      Preferred Stock its right to enforce its rights in connection therewith.
      Additionally, the Holder hereby agrees to waive any breach of any of the
outstanding
      Transaction Documents that relate, directly or indirectly, to an existing
      default. Notwithstanding anything herein to the contrary, this waiver is limited
      only to the existing defaults and any other future
      Triggering Events, including a breach of this Agreement, shall not be deemed
      waived hereunder.

     

    (d) Waiver
      of Liquidated Damages.
      The
      payment of all accrued and unpaid liquidated damages payable pursuant to Section
      2(b) of the Registration Rights Agreements entered into in connection with
      the
      Purchase Agreements (the “Registration
      Rights Agreements”).

     

    
      
        2.2
          Deliveries.

      

    

     

    (a) On
      or
      prior to the Closing Date, the Company shall deliver or cause to be delivered
      to
      each Holder the following:

     

    
      
        (i)
          this
          Agreement duly executed by the Company;

      

    

     

    (ii) a
      legal
      opinion of Company Counsel, in the form of Exhibit
      B
      attached
      hereto;

     

    (iii) one
      or
      more certificates evidencing the shares of Preferred Stock issuable to such
      Holder pursuant to Section 2.1(a); and

     

    (iv) a
      certificate evidencing the Warrant issuable to such Holder pursuant to Section
      2.1(b).

     

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

     

    (i) this
      Agreement duly executed by such Holder; and

     

    (ii) such
      Holder’s certificate(s) representing the securities comprising the Exchange
      Amount.

     

    
      
        2.3
          Closing
          Conditions.

      

    

     

    (a) The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met (or waived by the Company in its sole
      discretion):

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

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

     

    (iii) the
      delivery by the Holders of the items set forth in Section 2.2(b) of this
      Agreement; and

     

    (iv) other
      than the Indebtedness set forth on Schedule 2.3(a)(iv) attached hereto, all
      outstanding Indebtedness of the Company shall have been surrendered and paid
      off
      in full.

     

    (b) The
      obligations of each Holder hereunder in connection with the Closing are subject
      to the following conditions being met (or waived by such Holder in its sole
      discretion):

     

    (i) the
      accuracy in all material respects when made and 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) the
      execution and delivery by 90%
      of
      the Holders in interest
      with an
      entry set forth on Schedule
      A
      attached
      hereto (Exchange Amounts) of this Agreement and all documents and instruments
      contemplated to be delivered hereunder; and

     

    (v) there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1Representations
      and Warranties of the Company.
      The
      Company hereby makes the following representations and warranties to each
      Holder:

     

    (a) Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth in the
      Company’s Annual Report on Form 10-KSB for the year ended December 31, 2006, as
      filed with the Commission. The Company owns, directly or indirectly, all of
      the
      capital stock or other equity interests of each
      Subsidiary free and clear of any Liens, and all of the issued and outstanding
      shares of capital stock of each Subsidiary are validly issued and are fully
      paid, non-assessable and free of preemptive and similar rights to subscribe
      for
      or purchase securities. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, 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 condition (financial or otherwise) of the Company and the
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
      Company’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
      Adverse Effect”)
      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.

     

    (c) 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 hereunder and thereunder. The
      execution and delivery of each of the Transaction Documents by the Company
      and
      the consummation by it of the transactions contemplated hereby and thereby
      have
      been duly authorized by all necessary action on the part of the Company and
      no
      further action is required by the Company, its board of directors or its
      stockholders 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 and thereof, will constitute the valid and binding obligation of the
      Company enforceable against the Company 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    (e) Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      (other than the Holders) in connection with the execution, delivery and
      performance by the Company of the Transaction Documents, other than (i) the
      Authorized Share Action, (ii) filings required pursuant to Section 4.6, (iii)
      the filing of Form D with the Commission and such filings as are required to
      be
      made under applicable state securities laws, (iv) filing of the registration
      statement contemplated hereby and (v) filing of any of the foregoing with the
      appropriate Trading Market(s) (collectively, the “Required
      Approvals”).

     

    (f) Issuance
      of the Securities.
      As of
      the Closing Date, the Securities will be 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 or any other Person other than restrictions on transfer
      provided for in the Transaction Documents and, if applicable, pledges or other
      actions taken by any particular Holder with respect to such Holder’s Securities.
      The Underlying Shares, when issued in accordance with the terms of the
      Transaction Documents, will be validly issued, fully paid and nonassessable,
      free and clear of all Liens imposed by the Company. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (g) Capitalization.
      The
      capitalization of the Company as of the date hereof, immediately prior to the
      Closing, is as set forth on Schedule
      3.1(g)(i),
      and
the
      capitalization of the Company immediately following the Closing, assuming
      consummation of the transactions contemplated by this Agreement and the Purchase
      Agreement, will be as set forth on Schedule
      3.1(g)(ii),
      each of
      which schedule shall include the number of shares of Common Stock and all other
      equity securities or convertible debt securities owned or to be owned
      beneficially, and of record, by each security holder of the Company (other
      than
      security holders who hold less than 1% of the Common Stock as of the date hereof
      and are not Affiliates of any party to the Exchange or the Purchase Agreement,
      which security holders are denominated as a group as Other Common Stockholders),
      together with the outstanding options, warrants, scrip rights to subscribe
      to,
      calls or commitments of any character whatsoever relating to, or securities,
      rights or obligations convertible into or exercisable or exchangeable for,
      or
      giving any Person any right to subscribe for or acquire, any shares of Common
      Stock, or contracts, commitments, understandings or arrangements by which the
      Company or any Subsidiary is or may become bound to issue additional shares
      of
      Common Stock or Common Stock Equivalents. Except for the Authorized Shares
      Increase Action, 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.

     

    (h) Litigation.
      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, any Subsidiary or any of their respective properties before or by
      any
      court, arbitrator, governmental or administrative agency or regulatory authority
      (federal, state, county, local or foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any Subsidiary, 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. The Commission has not issued any stop order or other
      order suspending the effectiveness of any registration statement filed by the
      Company or any Subsidiary under the Exchange Act or the Securities
      Act.

     

    (i) Transactions
      with Affiliates and Employees.
      None of
      the officers or directors of the Company and, to the knowledge of the Company,
      none of the employees of the Company is presently a party to any transaction
      with the Company or any Subsidiary, 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
      $60,000 other than for (i) payment of salary, consulting fees and directors’
fees for services rendered in the ordinary course of business consistent with
      past practices, (ii) reimbursement for expenses incurred on behalf of the
      Company and (iii) other employee benefits granted in the ordinary course of
      business, including stock option agreements under any stock option plan of
      the
      Company disclosed in filings with the Commission.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (j) Certain
      Fees.
      (i)
      Except as otherwise disclosed on Schedule
      3.1(j)
      attached
      hereto and incorporated herein, 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 the Transaction Documents;
      and
      (ii) the Holders 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 the Transaction Documents.

     

    (k) Private
      Placement.
      Assuming the accuracy of the Holders’ 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 Holders as contemplated
      hereby. 

     

    (l) Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock is registered pursuant to Section 12(b) or 12(g) of the
      Exchange Act.

     

    (m) Disclosure.
      All
      disclosure furnished by or on behalf of the Company to the Holders regarding
      the
      Company, its business and the transactions contemplated hereby, including the
      Disclosure Schedules to this Agreement, is true and correct and does 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 press releases
      disseminated by the Company during the twelve months preceding the date of
      this
      Agreement taken as a whole do not contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      in order to make the statements, in light of the circumstances under which
      they
      were made and when made, not misleading. The Company acknowledges and agrees
      that no Holder 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.

     

    (n) No
      Integrated Offering.
      Assuming
      the accuracy of the Holders’ 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 provision of any Trading Market
      on
      which any of the securities of the Company are listed or
      designated.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (o) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      (i) any of the Securities by any form of general solicitation or general
      advertising, or (ii) any other securities of the Company with comparable rights
      and preferences by any form of general solicitation or general advertising
      within two months of the date hereof. The Company has offered such Securities
      for sale only to the Holders and certain other “accredited investors” within the
      meaning of Rule 501 under the Securities Act.

     

    (p) Acknowledgment
      Regarding Holders’ Purchase of Securities.
      The
      Company acknowledges and agrees that, to the best of its knowledge, each of
      the
      Holders is acting solely in the capacity of an arm’s length purchaser with
      respect to the Transaction Documents and the transactions contemplated thereby.
      The Company further acknowledges that no Holder is acting as a financial advisor
      or fiduciary of the Company (or in any similar capacity) with respect to the
      Transaction Documents and the transactions contemplated thereby and any advice
      given by any Holder or any of their respective representatives or agents in
      connection with the Transaction Documents and the transactions contemplated
      thereby is merely incidental to the Holders’ purchase of the Securities. The
      Company further represents to each Holder that the Company’s decision to enter
      into this Agreement and the other Transaction Documents has been based solely
      on
      the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

     

    (q) Acknowledgement
      Regarding Holders’ Trading Activity.
      Anything in this Agreement or elsewhere herein to the contrary notwithstanding
      (except for Sections 3.2(f) and 4.16 hereof), it is understood and acknowledged
      by the Company (i) that none of the Holders have been asked to agree, nor has
      any Holder agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities based on securities issued
      by the Company or to hold the Securities for any specified term; (ii) that
      past
      or future open market or other transactions by any Holder, including Short
      Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
      placement transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) that any Holder, and counter-parties in
“derivative” transactions to which any such Holder is a party, directly or
      indirectly, presently may have a “short” position in the Common Stock; and (iv)
      that each Holder shall not be deemed to have any affiliation with or control
      over any arm’s length counter-party in any “derivative” transaction.
The
      Company further understands and acknowledges that (a) one or more Holders may
      engage in hedging activities at various times during the period that the
      Securities are outstanding, including, without limitation, during the periods
      that the value of the Underlying Shares deliverable with respect to
      Securities are being determined and (b) such hedging activities (if any) could
      reduce the value of the existing stockholders' equity interests in the Company
      at and after the time that the hedging activities are being conducted. The
      Company acknowledges that such aforementioned hedging activities do not
      constitute a breach of any of the Transaction Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    (s) 3(a)(9)
      Exchange.
      The
      exchange of securities comprising the Exchange Amounts and the Warrants is
      being
      consummated pursuant to Sections 3(a)(9) and 18(b)(4)(C) of the Securities
      Act.
      Accordingly, pursuant to Rule 144(d), the holding period of the Underlying
      Shares shall tack back to the original issue date of the securities comprising
      the Exchange Amount and the Warrants, respectively.

     

    (t) $500,000
      Principal Amount 14% Secured Debenture.
      The
      Company represents that Midsummer Investment, Ltd. has indicated its intent
      to
      the Company that it will roll the $500,000 principal
      amount 14% Secured Debenture
      into a
      future debt financing acceptable to Midsummer.

     

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

     

    (a) Organization;
      Authority.
      Such
      Holder 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 hereunder and thereunder (or,
      as
      appropriate, is an individual with full right, power and authority to enter
      into
      and to consummate the transactions contemplated by the Transaction Documents
      and
      otherwise to carry out his obligations hereunder and thereunder).
      The
      execution, delivery and performance by such Holder of the transactions
      contemplated by this Agreement have been duly authorized by all necessary
      corporate or similar action on the part of such Holder. Each Transaction
      Document to which it is a party has been duly executed by such Holder, and
      when
      delivered by such Holder in accordance with the terms hereof, will constitute
      the valid and legally binding obligation of such Holder, 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) Own
      Account.
      Such
      Holder 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
      in
      violation of the Securities Act or any applicable state securities law, has
      no
      present intention of distributing any of such Securities in violation of the
      Securities Act or any applicable state securities law and has no direct or
      indirect arrangement or understandings with any other persons to distribute
      or
      regarding the distribution of such Securities in violation of the Securities
      Act
      or any applicable state securities law (this representation and warranty not
      limiting such Holder’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws). Such Holder is acquiring the Securities hereunder in the
      ordinary course of its business.

     

    (c) Holder
      Status.
      At the
      time such Holder was offered the Securities, it was, and at the date hereof
      it
      is, and on each date on which it converts any shares of Preferred Stock or
      exercises any Warrants, 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 Holder is not required to be registered as a
      broker-dealer under Section 15 of the Exchange Act.

     

    (d) Experience
      of Such Holder.
      Such
      Holder, 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
      Holder 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.

     

    (e) General
      Solicitation.
      Such
      Holder 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (f) Short
      Sales and Confidentiality Prior To The Date Hereof.
      Other
      than the transaction contemplated hereunder, such Holder has not directly or
      indirectly, nor has any Person acting on behalf of or pursuant to any
understanding
      with such Holder, executed any disposition, including Short Sales, in the
      securities of the Company during the period commencing from the time that such
      Holder first received a term sheet (written or oral) from the Company or any
      other Person setting forth the material terms of the transactions contemplated
      hereunder until the date hereof (“Discussion
      Time”).
      Notwithstanding the foregoing, in the case of a Holder that is a multi-managed
      investment vehicle whereby separate portfolio managers manage separate portions
      of such Holder's assets and the portfolio managers have no direct knowledge
      of
      the investment decisions made by the portfolio managers managing other portions
      of such Holder's assets, the representation set forth above shall only apply
      with respect to the portion of assets managed by the portfolio manager that
      made
      the investment decision to purchase the Securities covered by this Agreement.
      Other than to other Persons party to this Agreement, such Holder has maintained
      the confidentiality of all disclosures made to it in connection with this
      transaction (including the existence and terms of this
      transaction).

     

    (g) No
      Commission or Other Recommendation for Solicitation of Exchange.
      The
      Holder has not received any commission or other remuneration for the
      solicitation of any of the participants in, or recommendation with respect
      to,
      the share exchange contemplated by this Agreement.

     

    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 Holder 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 Holder
      under this Agreement. Upon a cashless exercise of the Warrants, the holdings
      period for purpose of Rule 144 shall tack back to the original issue date of
      such Warrants.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

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

     

    The
      Company acknowledges and agrees that a Holder 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, if required under the terms of such arrangement, such Holder 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 Holder’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, 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 Underlying Shares shall not contain any legend (including the
      legend set forth in Section 4.1(b) hereof): (i) while a registration statement
      covering the resale of such security is effective under the Securities Act,
      or
      (ii) following any sale of such Underlying Shares pursuant to Rule 144, or
      (iii)
      if such Underlying Shares are eligible for sale under Rule 144(k), or (iv)
      if
      such legend is not required under applicable requirements of the Securities
      Act
      (including judicial interpretations and pronouncements issued by the staff
      of
      the Commission). Upon a sale pursuant to a Registration Statement or pursuant
      to
      Rule 144, the Company shall cause its counsel to issue a legal opinion to the
      Company’s transfer agent promptly upon any such request, so long as the Holder
      provides the Company’s counsel with all such information counsel reasonably and
      customarily requests to provide such opinion. If all or any shares of
      Preferred Stock is converted or the Warrants are exercised at a time when there
      is an effective registration statement to cover the resale of the Underlying
      Shares, or if such Underlying Shares may be sold (as to the Warrants, via
      cashless exercise only) under Rule 144 without volume or manner restrictions
      or
      if such legend is not otherwise required under applicable requirements of the
      Securities Act (including judicial interpretations and pronouncements issued
      by
      the staff of the Commission) then such Underlying Shares shall be issued free
      of
      all legends. The Company agrees that following the Effective Date or at such
      time as such legend is no longer required under this Section 4.1(c), it will,
      no
      later than five Trading Days following the delivery by a Holder to the Company
      or the Company’s transfer agent of a certificate representing Underlying Shares,
      as applicable, issued with a restrictive legend (such fifth Trading Day, the
      “Legend
      Removal Date”),
      deliver or cause to be delivered to such Holder a certificate representing
      such
      shares that is free from all restrictive and other legends; provided however
      that the Company has been provided with such information as is reasonably and
      customarily required to make the determination that the legend should be
      removed. 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. Certificates for Underlying Shares
      subject to legend removal hereunder shall be transmitted by the transfer agent
      of the Company to the Holders by crediting the account of the Holder’s prime
      broker with the Depository Trust Company System.

    

    (d) In
      addition to such Holder’s other available remedies, the Company shall pay to a
      Holder, in cash, as partial liquidated damages and not as a penalty, for each
      $5,000 of Underlying Shares (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 Section 4.1(c), $10 per Trading
      Day for each Trading Day after the fourth Trading Day following the Legend
      Removal Date until such certificate is delivered without a legend; provided
      however that if the Company is not listed or quoted on a Trading Market, no
      such
      payment shall be required. Nothing herein shall limit such Holder’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
      Holder 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
      Holder, severally and not jointly with the other Holders, 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
      Holder will sell any Securities pursuant to either the registration requirements
      of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom, and that if Securities are sold
      pursuant to a Registration Statement, they will be sold in compliance with
      the
      plan of distribution set forth therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.2 Acknowledgment
      of Dilution.
      The
      Company acknowledges that the issuance of the Securities will result in
      substantial dilution of the outstanding shares of Common Stock. The Company
      further acknowledges that its obligations under the Transaction Documents,
      including without limitation its obligation to issue the Underlying Shares
      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
      Holder 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.
      From
      and after the date hereof and as long as any Holder 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
      Holder owns Securities, if the Company is not required to file reports pursuant
      to the Exchange Act, it will prepare and furnish to the Holders and make
      publicly available in accordance with Rule 144(c) such information as is
      required for the Holders 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, to the extent required from time to time
      to
      enable such Person to sell such Securities without registration under the
      Securities Act within the requirements of the exemption provided by Rule 144,
      including providing a legal opinion of counsel if required by the Transfer
      Agent
      to effect such transfer.

     

    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 Holders 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
      Conversion
      and Exercise Procedures.
      The
      form of Notice of Conversion included in the Certificate of Designation and
      the
      form of Notice of Exercise set forth in the Warrants sets forth the totality
      of
      the procedures required of the Holders in order to convert the Preferred Stock
      or exercise the Warrants. No additional legal opinion or other information
      or
      instructions shall be required of the Holders to convert their Preferred Stock
      or exercise their Warrants. The Company shall honor conversions of the Preferred
      Stock, exercises of the Warrants and shall deliver Underlying Shares in
      accordance with the terms, conditions and time periods set forth in the
      Transaction Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.6
      Securities
      Laws Disclosure;
      Publicity.
      The
      Company shall, by the fourth Business Day following the date hereof, issue
      a
      Current Report on Form 8-K, disclosing the material terms of the transactions
      contemplated hereby and including the Transaction Documents as exhibits thereto.
      The Company and each Holder shall consult with each other in issuing any other
      press releases with respect to the transactions contemplated hereby, and neither
      the Company nor any Holder 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 Holder, or without the prior consent of each Holder,
      with respect to any press release of the Company, which consent shall not
      unreasonably be withheld or delayed, 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 Holder, or include
      the
      name of any Holder in any filing with the Commission or any regulatory agency
      or
      Trading Market, without the prior written consent of such Holder, except (i)
      as
      required by federal securities law in connection with (A) any registration
      statement contemplated by this Agreement and (B) the filing of final Transaction
      Documents (including signature pages thereto) with the Commission and (ii)
      to
      the extent such disclosure is required by law or Trading Market regulations,
      in
      which case the Company shall provide the Holders with prior notice of such
      disclosure permitted under this subclause (ii).

     

    4.7 Shareholder
      Rights Plan.
      No
      claim will be made or enforced by the Company or, with the consent of the
      Company, any other Person, that any Holder is an “Acquiring Person” under any
      control share acquisition, business combination, poison pill (including any
      distribution under a rights agreement) or similar anti-takeover plan or
      arrangement in effect or hereafter adopted by the Company, or that any Holder
      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 Holders.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.9 Indemnification
      of Holders.
      Subject
      to the provisions of this Section 4.9, the Company will indemnify and hold
      each
      Holder and its directors, officers, shareholders, members, partners, employees
      and agents (and any other Persons with a functionally equivalent role of a
      Person holding such titles notwithstanding a lack of such title or any other
      title), each Person who controls such Holder (within the meaning of Section
      15
      of the Securities Act and Section 20 of the Exchange Act), and the directors,
      officers, shareholders, agents, members, partners or employees (and any other
      Persons with a functionally equivalent role of a Person holding such titles
      notwithstanding a lack of such title or any other title) of such controlling
      person (each, a “Holder
      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 Holder Party may suffer or incur as a result of
      or
      relating to (a) any material breach of any of the material 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 Holder,
      or any of them or their respective Affiliates, by any stockholder of the Company
      who is not an Affiliate of such Holder, with respect to any of the transactions
      contemplated by the Transaction Documents (unless such action is based upon
      a
      breach of
      such
      Holder’s representations, warranties or covenants under the Transaction
      Documents or any agreements or understandings such Holder may have with any
      such
      stockholder or any violations by the Holder of state or federal securities
      laws
      or any conduct by such Holder which constitutes fraud, gross negligence, willful
      misconduct or malfeasance). If any action shall be brought against any Holder
      Party in respect of which indemnity may be sought pursuant to this Agreement,
      such Holder 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 reasonably acceptable to the Holder Party. Any Holder 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 Holder 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 Holder Party, in which case
      the
      Company shall be responsible for the reasonable fees and expenses of no more
      than one such separate counsel for each class of Holder Parties with
      substantially identical interests in all pending issues. The Company will not
      be
      liable to any Holder Party under this Agreement (i) for any settlement by a
      Holder 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 Holder
      Party’s breach of any of the representations, warranties, covenants or
      agreements made by such Holder Party in this Agreement or in the other
      Transaction Documents.

     

    4.10 Reservation
      and Listing of Securities.
      

     

    (a) Subject
      to Sections 4.10(b) and (c), 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) Subject
      to Section 4.10(c), if, on any date, the number of authorized but unissued
      (and
      otherwise unreserved) shares of Common Stock is less than 100% of (i) the
      Required Minimum on such date, minus (ii) the number of shares of Common Stock
      previously issued pursuant to the Transaction Documents (an “Authorized
      Share Deficiency”)
      then
      the Company shall immediately take commercially reasonable efforts to provide
      the Company with authorized shares of Common Stock in an amount sufficient
      to
      allow the Company to reserve the Required Minimum. Without limiting the
      generality of the forgoing sentence, as soon as practicable after the date
      of
      the occurrence of an Authorized Share Deficiency, but in no event later than
      forty-five (45) days after the occurrence of such Authorized Share Deficiency,
      the Company shall use its best efforts to obtain stockholder approval of an
      increase in the number of authorized shares of Common Stock (such action, an
      “Authorized
      Share Action”);
      provided that the Company will not be required at any time to authorize a number
      of shares of Common Stock greater than the maximum remaining number
      of
      shares of Common Stock that could possibly be issued after such time pursuant
      to
      the Transaction Documents and any other agreements binding on the Company,
      including any Underlying Shares issuable upon conversion in full of all
      Preferred Stock, ignoring any conversion limits set forth therein.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c) The
      Holders acknowledge that the Company does not have sufficient Common Stock
      authorized as of the Closing Date to reserve the Required Minimum and meet
      its
      other reserve requirements. Notwithstanding Section 4.10(a) and 4.10(b) to
      the
      contrary, the parties agree that: (i) such failure shall not be considered
      an
      Authorized Share Deficiency until August 1, 2008; (ii) prior to such date,
      the
      Company shall use its best efforts to take an Authorized Share Action; (iii)
      the
      Holders, to the extent each owns any Common Stock or Preferred Stock, will
      vote
      in favor of the Authorized Share Action; and (iv) pending such Authorized Share
      Action, the Company will reserve all unreserved Common Stock with respect to
      the
      Securities.

    

    (d) The
      Company shall, if applicable: (i) in the time and manner required by the
      principal 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 such Trading Market as soon as possible thereafter,
      (iii) provide to the Holders 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. 

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.12 Short
      Sales and Confidentiality After The Date Hereof.
      Each
      Holder severally and not jointly with the other Holders covenants that neither
      it nor any Affiliate acting on its behalf or pursuant to any understanding
      with
      it will execute any Short Sales during the period commencing at the Discussion
      Time and ending at the time that the transactions contemplated by this Agreement
      are first publicly announced as described in Section 4.6. Each
      Holder, severally and not jointly with the other Holders, covenants that until
      such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.6, such Holder will maintain
      the confidentiality of all disclosures made to it in connection with this
      transaction (including the existence and terms of this transaction). Each Holder
      understands and acknowledges, severally and not jointly with any other Holder,
      that the Commission currently takes the position
      that coverage of short sales of shares of the Common Stock “against the box”
prior to the Effective Date of the Registration Statement with the Securities
      is
      a violation of Section 5 of the Securities Act, as set forth in Item 65, Section
      A, of the Manual of Publicly Available Telephone Interpretations, dated July
      1997, compiled by the Office of Chief Counsel, Division of Corporation Finance.
      Notwithstanding
      the foregoing, no Holder makes any representation, warranty or covenant hereby
      that it will not engage in Short Sales in the securities of the Company after
      the time that the transactions contemplated by this Agreement are first publicly
      announced as described in Section 4.6. Notwithstanding
      the foregoing, in the case of a Holder that is a multi-managed investment
      vehicle whereby separate portfolio managers manage separate portions of such
      Holder’s assets and the portfolio managers have no direct knowledge of the
      investment decisions made by the portfolio managers managing other portions
      of
      such Holder’s assets, the covenant set forth above shall only apply with respect
      to the portion of assets managed by the portfolio manager that made the
      investment decision to purchase the Securities covered by this
      Agreement.

     

    4.13 Form
      D; Blue Sky Filings.
      The
      Company agrees to timely file, if necessary, a Form D with respect to the
      Securities as required under Regulation D and to provide a copy thereof,
      promptly upon request of any Holder. The Company shall take such action as
      the
      Company shall reasonably determine is necessary in order to obtain an exemption
      for, or to qualify the Securities for, sale to the Holders at the Closing under
      applicable securities or “Blue Sky” laws of the states of the United States, and
      shall provide evidence of such actions promptly upon request of any
      Holder.

     

    4.14 Director
      Compensation.
      Any
      compensation paid to members of the Board of Directors shall be reasonable
      and
      commensurate with what is customary in the industry.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.15 Registration
      Rights.
      

     

    (a) Piggy-Back
      Registration Rights.
      If, at
      any time, the Company shall determine to proceed with the preparation and filing
      of a registration statement, in connection with the proposed offer and sale
      of
      any of its securities by it or any of its security holders (other than a
      registration statement on Form S-4, S-8 or other similar limited purpose form),
      the Company will give written notice of its determination to the Holders. Upon
      receipt of a written request from the Holders within 5 calendar days after
      receipt of any such notice from the Company, the Company will, except as herein
      provided, cause all Underlying Shares, to the extent requested by the Holders,
      to be included in such Registration Statement, all to the extent required to
      permit the resale or other disposition by the Holders of such Underlying Shares.
      If any registration pursuant to this Section 4.15(a) shall be underwritten
      in
      whole or in part, the Company may require that the shares of Common Stock,
      including the Underlying Shares, requested for inclusion pursuant to this
      Section 4.15(a) (to the extent issued) be included in the underwriting on the
      same terms and conditions as the securities otherwise being sold through the
      underwriters. In the event that the Underlying Shares requested for inclusion
      pursuant to this Section 4.15(a) together with any other shares would,
      in
      the good faith judgment of the managing underwriter of such public offering,
      reduce the number of Underlying Shares to be offered by the Company or interfere
      with the successful marketing of the securities offered by the Company, the
      Company will include in such registration the number of the Holders’ Underlying
      Shares which is pro rata, based on the number of securities which in the opinion
      of such underwriters can be sold and on the number of securities which all
      holders request be included in the registration, provided that any shares of
      Common Stock proposed to be included in such Registration Statement that are
      owned by directors or officers of the Company or their Affiliates shall be
      excluded prior to exclusion of any Underlying Shares requested to be included
      by
      the Holders. The obligation of the Company under this Section 4.15(a) shall
      be
      unlimited as to the number of Registration Statements to which it applies.
      The
      Company shall not be obligated to register any Underlying Shares that the Holder
      can sell pursuant to Rule 144 without volume or manner
      restrictions.

     

    (b) Registration
      Procedures.
      In the
      case of each registration effected by the Company pursuant to Section 4.15
      hereof, the Company will keep the Holder advised, in writing, as to the
      initiation of each registration and as to the completion thereof. At its
      expense, the Company will:

     

    i. Use
      its
      best efforts to keep such registration effective until the earlier of (i) 24
      months from its filing date and (ii) the date all Registrable Securities covered
      by such Registration Statement have been sold or may be sold without volume
      restrictions pursuant to Rule 144 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”);
      provided,
      however,
      that
      (i) such Effectiveness Period shall be extended for a period of time equal
      to
      the period Holder refrains from selling any Underlying Shares included in such
      registration at the request of an underwriter of securities of the Company
      or at
      the request of the Company or a Trading Market, and (ii) in the case of any
      registration of securities on Form S-3 or comparable successor form which are
      intended to be offered on a continuous or delayed basis, such Effectiveness
      Period shall be extended, if necessary, to keep the Registration Statement
      effective until all securities are sold, provided that applicable rules and
      regulations under the Securities Act governing the obligation to file a
      post-effective amendment permit, in lieu of filing a post-effective amendment
      which (x) includes any prospectus required by Section 10(a)(3) of the Securities
      Act or (y) reflects facts or events representing a material or fundamental
      change in the information set forth in the Registration Statement, the
      incorporation by reference of information required to be included in (x) and
      (y)
      hereof to be contained in periodic reports filed pursuant to Section 13 or
      15(d)
      of the Exchange Act in the Registration Statement;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ii. Prepare
      and file with the Commission such amendments and supplements to such
      Registration Statement and the prospectus used in connection
      with such Registration Statement as may be necessary to comply with the
      provisions of the Securities Act with respect to a disposition of all securities
      covered by such Registration Statement;

     

    iii. Make
      available to each Holder and its designated legal counsel (i) promptly after
      the
      same is prepared and filed with the Commission, one copy of the Registration
      Statement and any amendment thereto, each preliminary prospectus and prospectus
      and each amendment or supplement thereto, and (ii) such number of copies of
      a
      prospectus, including a preliminary prospectus, and all amendments and
      supplements thereto, and such other documents as each Holder may reasonably
      request in order to facilitate the resale of the Underlying Shares owned by
      such
      Holder;

     

    iv. Notify
      each Holder at any time when a prospectus relating thereto is required to be
      delivered under the Securities Act, of the happening of any event as a result
      of
      which the prospectus included in such Registration Statement, as then in effect,
      includes an untrue statement of a material fact or omits to state a material
      fact required to be stated therein or necessary to make the statements therein
      not misleading or incomplete in light of the circumstances then existing, and
      at
      the request of such Holder, prepare and furnish to it a reasonable number of
      copies of a supplement to or an amendment of such prospectus as may be necessary
      so that, as thereafter delivered to such Holder, such prospectus shall not
      include an untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary to make the statements therein not
      misleading or incomplete in light of the circumstances then
      existing;

     

    v. Use
      its
      best efforts to prevent the issuance of any stop order or other suspension
      of
      effectiveness of a Registration Statement, and, if such an order is issued,
      to
      obtain the withdrawal of such order at the earliest possible moment and to
      notify each Holder (or, in the event of an underwritten offering, the managing
      underwriters) of the issuance of such order and the resolution thereof;

     

    vi. Use
      best
      efforts to cause all the Underlying Shares to be listed or included for
      quotation on a Trading Market on which the Common Stock is then listed, traded
      or included for quotation;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    vii. Provide
      a
      transfer agent and registrar for all such Underlying Shares and CUSIP number
      for
      all such Underlying Shares, in each case not later than the effective date
      of
      such registration;

     

    viii. Furnish
      to each Holder or its counsel a copy of all correspondence from or to the
      Commission in connection with any such registration;

    ix. Hold
      in
      confidence and not make any disclosure of information concerning each Holder
      provided to the Company unless (i) disclosure of such information is necessary
      to comply with federal or state securities laws or the rules and regulations
      of
      any applicable Trading Market, (ii) the disclosure of such information is
      necessary to avoid or correct a misstatement or omission in any Registration
      Statement, (iii) the release of such information is ordered pursuant to a
      subpoena or other order from a court or governmental body of competent
      jurisdiction or (iv) such information has been made generally available to
      the
      public other than by disclosure in violation of this or any other agreement;
      and, upon learning that disclosure of such information concerning the Holder
      is
      sought in or by a court or governmental body of competent jurisdiction or
      through other means, give prompt notice to Holder and, at its expense, undertake
      appropriate action to prevent disclosure of, or to obtain a protective order
      for, such information; 

     

    x. If
      requested by a Holder, effect a filing with respect to the public offering
      contemplated by each Registration Statement (an “Issuer
      Filing”)
      with
      the National Association of Securities Dealers, Inc. (“NASD”)
      Corporate Financing Department pursuant to NASD Rule 2710(b)(10)(A)(i) within
      one Trading Day of the date that the Registration Statement is first filed
      with
      the Commission and pay the filing fee required by such Issuer Filing. The
      Company shall use commercially reasonable efforts to pursue the Issuer Filing
      until the NASD issues a letter confirming that it does not object to the terms
      of the offering contemplated by the Registration Statement as described in
      the
      plan of distribution included in the Registration Statement (which plan of
      distribution shall be in a customary form that is reasonably acceptable to
      the
      Holders); and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.16 RELEASE.
      THE COMPANY (FOR ITSELF AND ITS AFFILIATES) HEREBY UNCONDITIONALLY RELEASES
      AND
      FOREVER DISCHARGES EACH HOLDER AND ITS RESPECTIVE SUCCESSORS, ASSIGNS, AGENTS,
      DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES, ACCOUNTANTS, CONSULTANTS,
      CONTRACTORS, ADVISORS AND ATTORNEYS (COLLECTIVELY, THE “BENEFITED
      PARTIES”)
      FROM ALL CLAIMS (AS DEFINED BELOW) FROM THE BEGINNING OF TIME THROUGH THE DATE
      HEREOF. AS USED IN THIS AGREEMENT, THE TERM “CLAIMS” MEANS ANY AND ALL POSSIBLE
      CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTIONS, COSTS, EXPENSES AND LIABILITIES
      WHATSOEVER, KNOWN OR UNKNOWN, AT LAW OR IN EQUITY, WHICH THE COMPANY, OR ANY
      OF
      ITS AGENTS, EMPLOYEES OR AFFILIATES, MAY HAVE AS OF THE DATE HEREOF,
      IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION
      OF LAW OR OTHERWISE IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS,
      INCLUDING ANY CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
      RECEIVING INTEREST IN EXCESS OF THE MAXIMUM RATE ON INTEREST
CHARGEABLE
      UNDER APPLICABLE LAW AND ANY LOSS, COST OR DAMAGE, OF ANY KIND OR CHARACTER,
      ARISING OUT OF OR IN ANY WAY CONNECTED WITH OR IN ANY WAY RESULTING FROM THE
      ACTIONS OR OMISSIONS OF THE BENEFITED PARTIES, INCLUDING ANY BREACH OF FIDUCIARY
      DUTY, BREACH OF ANY DUTY OF GOOD FAITH OR FAIR DEALING, UNDUE INFLUENCE, DURESS,
      ECONOMIC COERCION, CONFLICT OF INTEREST, NEGLIGENCE, BAD FAITH, MALPRACTICE,
      VIOLATIONS OF THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT,
      INTENTIONAL OR NEGLIGENT INFLICTION OF MENTAL DISTRESS, TORTIOUS INTERFERENCE
      WITH CONTRACTUAL RELATIONS, TORTIOUS INTERFERENCE WITH CORPORATE GOVERNANCE
      OR
      PROSPECTIVE BUSINESS ADVANTAGE, BREACH OF CONTRACT, DECEPTIVE TRADE PRACTICES,
      LIBEL, SLANDER, CONSPIRACY OR ANY CLAIM FOR WRONGFULLY ACCELERATING ANY
      OBLIGATIONS OR WRONGFULLY ATTEMPTING TO FORECLOSE ON ANY COLLATERAL. THE COMPANY
      (FOR ITSELF AND ITS AFFILIATES) AGREES THAT NONE OF THE BENEFITED PARTIES HAS
      FIDUCIARY OR SIMILAR OBLIGATIONS TO THE COMPANY OR ANY AGENTS, EMPLOYEES OR
      AFFILIATES OF THE COMPANY AND THAT THEIR RELATIONSHIPS ARE STRICTLY THAT OF
      CREDITOR AND DEBTOR. THIS RELEASE IS ACCEPTED BY HOLDERS PURSUANT TO THIS
      AGREEMENT AND SHALL NOT BE CONSTRUED AS AN ADMISSION OF LIABILITY BY HOLDERS
      OR
      ANY OTHER BENEFITED PARTY.

     

    THE
      COMPANY (FOR ITSELF AND ITS AFFILIATES) ACKNOWLEDGES THAT THE FOREGOING
      PROVISIONS ARE INTENDED TO, AND THE TRANSACTION DOCUMENTS CONTAIN PROVISIONS
      WHICH, RELEASE HOLDERS FROM LIABILITY AND/OR INDEMNIFY AND HOLD HARMLESS HOLDERS
      FOR, AMONG OTHER THINGS, THE ORDINARY NEGLIGENCE OF HOLDERS. THE COMPANY (FOR
      ITSELF AND ITS AFFILIATES) AGREES THAT THE RELEASE AND/OR INDEMNITY PROVISIONS
      CONTAINED IN THESE DOCUMENTS ARE CAPTIONED TO CLEARLY IDENTIFY THE RELEASE
      AND/OR INDEMNITY PROVISIONS AND, THEREFORE, ARE SO CONSPICUOUS THAT THE COMPANY
      AND ITS AFFILIATES HAVE FAIR NOTICE OF THE EXISTENCE AND CONTENTS OF SUCH
      PROVISIONS.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V

    MISCELLANEOUS

     

    5.1
      Termination.
      This
      Agreement may be terminated by any Holder, as to such Holder’s obligations
      hereunder only and without any effect whatsoever on the obligations between
      the
      Company and the other Holders, by written notice to the other parties, if the
      Closing has not been consummated on or before December 31, 2007; provided,
      however,
      that
      such termination will not affect the right of any party to sue for any breach
      by
      the other party (or parties).

    5.2
      Fees
      and Expenses.
      At the
      Closing, the Company has agreed to reimburse Midsummer Capital, LLC
      (“Midsummer”)
      for
      its reasonable legal fees and expenses incurred in connection with the
      transactions contemplated herein. 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 delivery of any Securities to the Holders.

     

    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
      or via “.pdf” data file via e-mail at the e-mail address provided to the Company
      by a Holder, (b) the next Trading Day after the date of such transmission,
      if
      such notice or communication is delivered 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
      2nd
      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, modified, supplemented or amended
      except in a written instrument signed, in the case of an amendment prior to
      the
      Automatic Conversion Date (as defined in the Certificate of Designation), by
      the
      Company and all holders of Preferred Stock then outstanding, in the case of
      an
      amendment after the Automatic Conversion Date, by the Company and Holders
      holding at least 51% in interest of the shares of Preferred Stock and Warrants
      then outstanding or, in the case of a waiver, by the party against whom
      enforcement of any such waived provision 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 any party to exercise any right hereunder in
      any
      manner impair the exercise of any such right.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.6 Headings.
      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.

    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 Holder (provided that nothing herein shall prevent the Company
      from assigning the remaining obligations after the Closing Date through merger
      or comparable corporate transactions consummated in accordance with applicable
      law). Any Holder may assign any or all of its rights under this Agreement to
      any
      Person to whom such Holder assigns or transfers any Securities, provided such
      transferee agrees in writing to be bound, with respect to the transferred
      Securities, by the provisions of the Transaction Documents that apply to the
      “Holders”.

     

    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 4.9.

     

    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 is an 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 other
      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 reasonable 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 shall survive the Closing and the delivery of
      Securities for the applicable statue of limitations. 

     

    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
hereunder,
      it being understood that both parties need not sign the same counterpart. In
      the
      event that any signature is delivered by facsimile transmission or by e-mail
      delivery of a “.pdf” format data file, 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 or “.pdf”
signature page were an original thereof.

     

    5.12 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.

     

    5.13 Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) any of the other Transaction Documents, whenever any
      Holder 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 Holder 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.

     

    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 (in the case of mutilation),
      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. The applicant for a new certificate or instrument under
      such circumstances shall also pay any reasonable third-party costs (including
      customary indemnity) 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 Holders 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 contained in the Transaction
      Documents and hereby agrees to waive and not to assert 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 Holder pursuant
      to
      any Transaction Document or a Holder 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.

     

    5.17 Independent
      Nature of Holders’ Obligations and Rights.
      The
      obligations of each Holder under any Transaction Document are several and not
      joint with the obligations of any other Holder, and no Holder shall be
      responsible in any way for the performance or non-performance of the obligations
      of any other Holder under any Transaction Document. Nothing contained herein
      or
      in any other Transaction Document, and no action taken by any Holder pursuant
      thereto, shall be deemed to constitute the Holders as a partnership, an
      association, a joint venture or any other kind of entity, or create a
      presumption that the Holders are in any way acting in concert or as a group
      with
      respect to such obligations or the transactions contemplated by the Transaction
      Documents. Each Holder 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 Holder to be joined as an additional party in any
      proceeding for such purpose. Each Holder has been represented by its own
      separate legal counsel in their review and negotiation of the Transaction
      Documents. For reasons of administrative convenience only, Holders and their
      respective counsel have chosen to communicate with the Company through FWS.
      FWS
      does not represent all of the Holders but only Midsummer. The Company has
      elected to provide all Holders 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 Holders.

     

    5.18 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.

     

    5.19 Construction.
      The
      parties agree that each of them and/or their respective counsel has reviewed
      and
      had an opportunity to revise the Transaction Documents and, therefore, the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    5.20 Effectiveness
      of Agreement.
      This
      Agreement shall not be effective unless and until all Holders shall have agreed
      to the terms and conditions hereunder. Other than the indemnification provisions
      included therein, the rights and obligations of the Company to the Holders
      under
      this Agreement shall supersede and replace the rights and obligations of the
      Company to the Holders under the Purchase Agreements and the other agreements
      entered into in connection therewith.

    [Signature
      Page Follows]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

    

      
        	
                GIGABEAM
                  CORPORATION

              	 	
                Address/Facsimile
                  Number/E-mail

                Address
                  for Notice:

              
	
                By:

              	
                /s/
                  S. Jay Lawrence

              	 	
                GigaBeam
                  Corporation

              
	 	
                Name:
                  S. Jay Lawrence

              	 	
                Attention:
                  S. Jay Lawrence

              
	 	
                Title:
                  Chief Executive Officer

              	 	
                4021
                  Stirrup Creek Drive, Suite 400

              
	 	 	 	
                Durham,
                  NC 27703

              
	 	 	 	
                Facsimile:
                  (919) 544-8470

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

              	
                Trombly
                  Business Law

              
	
                Amy
                  Trombly, Esq.

              	
                Attention:
                  Amy Trombly, Esq.

              
	 	 	
                1320
                  Centre Street, Suite 202

              
	 	 	
                Newton,
                  MA 02459

              
	 	 	
                Facsimile:
                  (617) 243-0066

              

      

    

    
 

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      PAGE FOR HOLDER FOLLOWS]

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