Document:

EXHIBIT
10.36

EMPLOYMENT
AGREEMENT

          THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this 21st day
of August, 1997, by and between OMNICARE MANAGEMENT COMPANY, a Delaware
corporation (the “Company”) and LEO P. FINN III (the “Employee”).

          WHEREAS,
the Company desires to employ Employee under the terms and conditions of this
Agreement for the purpose of providing services as an executive in furtherance
of the institutional pharmacy business of the Company and Omnicare Holding
Company (collectively referred to as “Omnicare”) and such other businesses in
which Omnicare may be engaged during the term of this Agreement (referred to
collectively as the “Business”) and Employee desires to be employed by the
Company for that purpose; and

          WHEREAS,
Employee, in the course of performing such services, will have access to
confidential financial information, trade secrets, and other confidential and
proprietary information of Omnicare;

          THEREFORE,
in consideration of these recitals and the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

SECTION
1. EMPLOYMENT

          1.1 Duties.  The Company will employ
Employee as an operating executive of the Company for the term of this Agreement.  Employee will be assigned such duties with
regard to the Business as are generally performed by such an employee of the
Company, and such other duties as may from time to time be assigned to Employee
by the President of the Company or its designee.

          1.2 Performance.  Employee will
devote his exclusive and full professional time and attention to his duties as
an employee of the Company (except as hereinafter permitted) and to perform
such duties in an efficient, trustworthy and businesslike manner.  In addition, Employee will not render to
others any service of any kind for compensation or engage in any

other business activity (including without limitation
any involvement in any business in which the Employee has any administrative or
operating responsibility) except as to any other activities which are approved
in writing by the President of the Company. 

SECTION
2. TERM OF EMPLOYMENT

          2.1
Term.  The initial term of
employment of Employee pursuant to this Agreement shall be a period of three
years from the commencement date of this Agreement, such date being the 1st day
of June, 1997, (the “Commencement Date”) through May 31, 2000.  This Agreement shall be automatically
renewed at the end of this term for an additional three-year term, and shall
continue to automatically renew at the end of each three-year term for like
three-year terms, unless at least 120 days prior to the end of the initial
three-year term or any subsequent three-year term, either party notifies the
other party that this Agreement shall not renew for the next three year
term.  Notwithstanding the foregoing,
Employee’s employment may be sooner terminated as described in Sections 2.2
through 2.5 hereof.

          2.2 Termination for Cause.  The
Company shall have the right to terminate this Agreement by written notice for
the following causes (a “Termination for Cause”):

	
 

	
 

	
 

	
 

	
(a)

	
Conduct which is detrimental to Omnicare’s
  reputation, goodwill or business operations;

	
 

	
 

	
 

	
 

	
(b)

	
Gross neglect of Employee’s duties or breach of
  Employee’s duties or any material failure to perform satisfactorily such
  duties, or misconduct in discharging such duties;

	
 

	
 

	
 

	
 

	
(c)

	
Employee’s repeated absence from his duties without
  the consent of the President of the Company;

	
 

	
 

	
 

	
 

	
(d)

	
Employee’s failure or refusal to comply with the
  directions of the President of the Company, or with the policies, standards
  and regulations of the Company;

	
 

	
 

	
 

	
 

	
(e)

	
Commission by Employee of any act of fraud or
  dishonesty;

	
 

	
 

	
 

	
 

	
(f)

	
Conviction of Employee for, or entry of a plea of
  guilty or nolo contendere by Employee with respect to, any criminal act;

	
 

	
 

	
 

	
 

	
(g)

	
Breach or threatened breach of the restrictive
  covenants set forth in Section 5 of this Agreement.

	
 

	
 

	
 

                    Upon
any Termination for Cause, payment of all compensation to Employee under
Section 3 of this Agreement shall cease immediately.  Accrued, but unpaid base salary and incurred but unreimbursed
business expenses as defined in Section 3.3 hereunder shall remain the
obligation of the Company.

          2.3
Termination by the Company Due to Disability or Death.  Employee acknowledges that his duties
pursuant to this Agreement, including without limitation Section 1.1,
constitute the essential functions of his job.
If Employee is unable to perform his duties under this Agreement by
reason of illness or other physical or mental disability, the Company may
notify him that an event of disability (“Event of Disability”) exists
whereupon, provided he remains disabled, Employee shall continue to receive the
compensation described in Section 3 hereof for a period of three (3) months
after the date of the Event of Disability.
Such payments shall be reduced by any disability payment to which
Employee may be entitled in lieu of such compensation but not by any disability
payment for which Employee has privately contracted without the Company’s
involvement.  At the expiration of the
three month period, payment of such compensation pursuant to Section 3 shall
cease and this Agreement may be terminated by the Company at its sole
discretion.  The term “disability” as
used herein shall mean a condition which prohibits Employee from performing his
duties hereunder with reasonable accommodation which he may request.  If Employee should die before the
termination of this Agreement, Employee’s compensation under Section 3 hereof
shall terminate upon the date of his death. 

          2.4
Termination for Reasons Other Than With Cause.  The Company shall have the right to terminate this Agreement and
Employee’s employment without cause.
Should Employee be terminated by the Company for any reason other than
those included in Sections 2.2 or 2.3 herein, full payment of Employee’s
remaining base salary for the remainder of the current three-year term, or
twelve months, whichever is greater, shall be paid to Employee in such
installments as the Company

determines for such payment.  Notwithstanding the foregoing, payments to Employee under this
Section, in the aggregate, shall be limited to an amount that does not constitute
an excess parachute payment under Section 280G of the Internal Revenue Code of
1986 and regulations thereunder.  In the
event of termination without cause, Employee acknowledges that the Company
shall have no obligations or liability to him whatsoever other than the
obligations set forth in this Section.

          2.5
Voluntary Termination.  In the
event Employee voluntarily terminates his employment for any reason prior to
May 31, 2000, or the date of termination of any subsequent three-year term,
payment of all compensation under Section 3 shall immediately cease.

SECTION
3. COMPENSATION

          3.1
Annual Salary.  The Company shall
pay to Employee an initial salary (“Base Salary”) effective March 1, 1997, of
$125,000 payable in equal monthly installments, or more frequently if the Board
of Directors determines that such salary shall be paid in more frequent
installments.

          3.2
Incentive Compensation.  Employee
will be entitled to participate in all bonus and incentive compensation plans
as may be maintained by the Company for its senior management generally.

          3.3
Reimbursement of Business Expenses.
During the term of this Agreement, the Company will reimburse the
Employee for all authorized, ordinary and necessary business expenses incurred
by him in connection with the Business.
Reimbursement of such expenses shall be paid monthly, upon submission by
Employee to the Company of vouchers itemizing such expenses in a form
satisfactory to the Company, properly identifying the nature and business
purpose of any expenditures.  

          3.4
Benefits.  During the term of
this Agreement, Employee will be entitled to such insurance, medical, savings,
and investment plans, vacation, sick leave, holiday, education and continuing
education assistance and other benefits as may be given from time to time to
other employees of the Company as set forth from time to time by the Board of
Directors.  Employee may request
non-paid leave benefits at any time, which benefits may be granted at the sole
discretion of the President of the Company. 

SECTION 4. ALL BUSINESS TO BE THE
PROPERTY OF OMNICARE

          4.1
Business to be Property of Omnicare.
Employee agrees that any and all business and “confidential information”
(as defined in Section 5.1 hereof) which are part of or relate to the Business
and which are or have been developed by him or by any employee of Omnicare or
its respective successors, including, without limitation, contracts, fees,
commissions, customer lists and any other incident of any business developed by
Omnicare, or carried on by Employee for Omnicare, are and shall be the
exclusive property of Omnicare for its sole use.

SECTION
5. COVENANTS OF NONDISCLOSURE, NONSOLICITATION AND NONCOMPETITION

          5.1
Nondisclosure.  Employee shall
not at any time during or after termination of Employee’s employment with the
Company, directly or indirectly, use any proprietary, “confidential
information” of Omnicare, for any purpose not associated with Omnicare
activities, or disseminate or disclose any such information to any person or
entity not affiliated with Omnicare.
Such proprietary, “confidential information” includes, without
limitation, customer lists, computer technology, programs and data, whether
online or off-loaded on disk format, sales, marketing and prospecting
methodologies, plans and materials, and any other such plans, programs,
methodologies and materials used in managing, marketing or furthering the
Business.  Upon termination of Employee’s
employment with the Company, Employee will return all documents, records,
notebooks, manuals, plans and materials, computer disks and similar
repositories of or containing Omnicare proprietary, “confidential information”,
including all copies thereof, then in Employee’s possession or control, whether
prepared by Employee or otherwise.
Employee will undertake all reasonably necessary and appropriate steps
to ensure that the confidentiality of Omnicare proprietary, “confidential
information” shall be maintained.

          5.2
Nonsolicitation.  While Employee
is employed by the Company, and for a period of two (2) years following
Employee’s termination whether such termination was voluntary or involuntary,
with or without cause, and within the States in which Omnicare operates the
Business, Employee agrees to the following:

	
 

	
 

	
 

	
 

	
(a)

	
Not to directly or indirectly contact, solicit,
  serve, cater or provide services to any customer, client, organization or
  person who, or which, has had a business relationship with Omnicare during
  the twelve (12) month period preceding Employee’s termination;

	
 

	
 

	
 

	
 

	
(b)

	
Not to directly or indirectly influence or attempt
  to influence any customer, client, organization or person who, or which, has
  had a business relationship with Omnicare during the twelve (12) month period
  preceding Employee’s termination to direct or transfer away any business or
  patronage from the Company;

	
 

	
 

	
 

	
 

	
(c)

	
Not to directly or indirectly solicit or attempt to
  solicit any employee, officer or director to leave Omnicare, or to contact
  any customer or client in order to influence or attempt to influence the
  directing or transferring of any business or patronage away from Omnicare;

	
 

	
 

	
 

	
 

	
(d)

	
Not to directly or indirectly interfere with or
  disrupt any relationship, contractual or otherwise, between Omnicare and its
  respective customers, clients, employees, independent contractors, agents,
  suppliers, distributors or other similar parties; and

	
 

	
 

	
 

	
 

	
(e)

	
To advise any and all employers or potential
  employers of Employee’s obligations hereunder.

          5.3
Noncompetition.  Employee agrees
that, during his employment with the Company, and for two (2) years immediately
after such employment ceases, he will neither, directly or indirectly, engage
or hold an interest in any business competing with the Business as then
conducted by Omnicare or its respective successors, nor directly or indirectly
have any interest in, own, manage, operate, control, be connected with as a
stockholder (other than as a stockholder of less than five percent (5%) of a
publicly held corporation), joint venturer, officer, director, partner,
employee or consultant, or otherwise engage or invest or participate in, any
business which shall

compete with the Business as then conducted by
Omnicare, or its respective successors, in the United States and such other
defined geographic areas in which Omnicare operates the Business.

          5.4
Applicability.  The provisions of
Sections 5.1, 5.2, and 5.3 immediately preceding shall remain in effect in
accordance with their respective terms notwithstanding any termination of
Employee’s employment with the Company or its successors, regardless of the
cause or circumstances thereof and whether such termination was voluntary or
involuntary.  Further, Employee’s
covenants of nondisclosure, noncompetition and nonsolicitation along with the
Company’s remedies for the breach or threatened breach of those covenants shall
remain in effect in accordance with their respective terms following any
termination of this Agreement. 

          5.5
Remedies.  In view of the
services which Employee will perform hereunder, which are special, unique,
extraordinary and intellectual in character, which place him in a position of
confidence and trust with the customers and employees of Omnicare and which
provide him with access to confidential financial information, trade secrets,
“know-how” and other confidential and proprietary information of Omnicare, in
view of the geographic scope and nature of the business in which Omnicare is
engaged, and recognizing the value of this Agreement to him, Employee expressly
acknowledges that the restrictive covenants set forth in this Agreement,
including, without limitation, the duration, the business scope and the
geographic scope of such covenants, are necessary in order to protect and
maintain the proprietary interests and other legitimate business interests of
Omnicare, and that the enforcement of such restrictive covenants will not
prevent him from earning a livelihood.
Employee further acknowledges that the remedy at law for any breach or
threatened breach of this Agreement will be inadequate and, accordingly, that
the Company shall, in addition to all other available remedies (including,
without limitation, seeking such damages as it can show it has sustained by
reason of such breach), be entitled to injunctive or any other appropriate form
of equitable relief.  In the event
Employee breaches or threatens to breach these restrictive covenants, he shall
not receive any further payments from the Company pursuant to this Agreement,
following the expiration of the thirty (30) day cure period provided for in
Section 6.6 hereof, but only if such breach or threatened breach has not been
cured.  

SECTION
6. MISCELLANEOUS PROVISIONS

          6.1
Indemnification.  Except to the
extent prohibited by law, the Company shall save and hold harmless Employee
from and against any claim of liability or loss (including reasonable
attorney’s fees) arising as a result of Employee’s good faith activities in the
course of his employment hereunder.

          6.2
Assignment and Performance.  The
Company may assign its rights and obligations under this Agreement to any
corporation or other entity with Employee’s consent, which consent shall not be
unreasonably withheld.  This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
the Company.  Employee’s obligation to
provide services hereunder may not be assigned to or assumed by any other
person or entity.

          6.3
Notices.  All notices, requests,
demands or other communications under this Agreement shall be in writing and
shall only be deemed to be duly given if made in writing and sent by first
class mail, overnight courier, or telecopy to the following addresses:

	
 

	
 

	
 

	
Cheryl D. Hodges

	
 

	
Secretary

	
 

	
Omnicare Management Company

	
 

	
2800 Chemed Center

	
 

	
255 East Fifth Street

	
 

	
Cincinnati, OH
  45202

	
 

	
 

	
 

	
and

	
 

	
 

	
 

	
Leo P. Finn III

	
 

	
1000 Hatch Street

	
 

	
Cincinnati, OH
  45202

          6.4
Severability.  Any provision of
this Agreement which is deemed invalid, illegal or unenforceable in any
jurisdiction shall, as to that jurisdiction and subject to this paragraph, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining provisions hereof in such jurisdiction
or rendering that or any other provisions of this Agreement invalid, illegal,
or unenforceable in any other jurisdiction.
If any covenant should be deemed invalid, illegal or unenforceable
because its scope is considered excessive, such covenant shall be modified so
that the scope of the covenant is reduced only to the minimum

extent necessary to render the modified covenant
valid, legal and enforceable.

          6.5 Amendment
and Waiver.  This Agreement
constitutes the entire agreement between the parties hereto as to the matters
addressed herein and may be modified, amended or waived only by a written
instrument signed by all the parties hereto.
No waiver or breach of any provision hereof shall be a waiver of any
future breach, whether similar or dissimilar in nature.

          6.6
Right to Cure.  In the event that
either party in good faith believes that the other has violated (whether by
breach, threatened breach or otherwise) any of the terms of this Agreement,
with the exception of Sections 2.2 (e) or (f) of this Agreement, then that
party shall give notice in writing to the other party as provided in Sections
6.3 of this Agreement of the alleged violation and that party shall have thirty
(30) days following receipt of said notice to cure any such alleged violation.

          6.7
Injunctive Relief.  The parties
hereto agree that money damages would be an inadequate remedy for the Company
in the event of breach or threatened breach of this Agreement and thus, in any
such event, the Company may, either with or without pursuing any potential
damage remedies, immediately obtain and enforce any injunction prohibiting
Employee from violating this Agreement.

          6.8
Applicable Law.  This Agreement
has been made and its validity, performance and effect shall be determined in
accordance with the laws of the State of Ohio.

          6.9
Consent to Jurisdiction.  The
parties hereby (a) agree that any suit, proceeding or action at law or in
equity (hereinafter referred to as an “Action”) arising out of or relating to
this Agreement must be instituted in state or federal court located within
Hamilton County, Ohio, (b) waive any objection which he or it may have now or
hereafter to the laying of the venue of any such Action, (c) irrevocably submit
to the jurisdiction of any such court in any such Action, and (d) hereby waive
any claim or defense of inconvenient forum.
The parties irrevocably agree that service of any and all process which
may be served in any such Action may be served upon him or it by registered
mail to the address referred to in Section 6.3 hereof or to such other address
as the parties shall designate in writing by notice duly given in accordance
with Section 6.3 hereof and that such service shall be deemed 

effective service of process upon the parties in any
such Action.  The parties irrevocably
agree that any such service of process shall have the same force and validity
as if service were made upon him or it according to the law governing such
service in the State of Ohio, and waives all claims of error by reason of any
such service.

          6.10
Counterparts.  This Agreement may
be executed simultaneously in two or more counterparts, each of which shall be
deemed an original, but all of which shall constitute one and the same instrument.

          6.11
Interpretation.  The headings
contained in this Agreement are for reference purposes only and shall not
affect in any ways the  meaning or
interpretation of this Agreement.  The
language in all parts of this Agreement shall in all cases be construed
according to its fair meaning, and not strictly for or against any party
hereto.  In this Agreement, unless the
context otherwise requires, the masculine, feminine and neuter genders and the
singular and the plural include one another.

          6.12
Non-Waiver of Rights and Breaches.
No failure or delay of any party herein in the exercise of any right
given to such party hereunder shall constitute a waiver thereof unless the time
specified herein for the exercise of such right has expired, nor shall any
single or partial exercise of any right preclude other or further exercise
thereof or of any other right.  The
waiver of a party hereto of any default of any other party shall not be deemed
to be a waiver of any subsequent default or other default by such party.

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

	
 

	
 

	
 

	
 

	
OMNICARE MANAGEMENT COMPANY

	
 

	
 

	
 

	
 

	
By:

	
/s/ Cheryl D. Hodges

	
 

	
 

	

	
 

	
 

	
Cheryl D. Hodges

	
 

	
 

	
 

	
 

	
Its:

	
Secretary

	
 

	
 

	
 

	
 

	
 

	
/s/ Leo P. Finn III

	
 

	
 

	

	
 

	
 

	
Leo P. Finn IIIEXHIBIT 10.1

                          SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "AGREEMENT") is dated as of
February 27, 2007, among GammaCan International, Inc., a Delaware corporation
(the "COMPANY"), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a "PURCHASER" and collectively the
"PURCHASERS").

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

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

                                   ARTICLE I.
                                   DEFINITIONS

      1.1   DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms have the
meanings set forth in this Section 1.1:

            "ACTION" shall have the meaning ascribed to such term in Section
      3.1(j).

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

            "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.

            "CLOSING" means the closing of the purchase and sale of the
      Securities pursuant to Section 2.1.

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

            "COMMISSION" means the United States Securities and Exchange
      Commission.

                                        1

<PAGE>

            "COMMON STOCK" means the common stock of the Company, par value
      $0.0001 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 Reitler Brown & Rosenblatt LLC, with offices
      located at 800 Third Avenue, 21st Floor, New York, New York 10022.

            "DISCLOSURE SCHEDULES" means the Disclosure Schedules of the Company
      delivered concurrently herewith.

            "EFFECTIVE DATE" means the date that the initial Registration
      Statement filed by the Company pursuant to the Registration Rights
      Agreement is first declared effective by the Commission.

            "EVALUATION DATE" shall have the meaning ascribed to such term in
      Section 3.1(r).

            "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
      amended, and the rules and regulations promulgated thereunder.

            "EXEMPT ISSUANCE" means the issuance of (a) shares of Common Stock
      or options to employees, officers, directors or consultants of the Company
      pursuant to any stock or option plan duly adopted for such purpose, by a
      majority of the non-employee members of the Board of Directors of the
      Company or a majority of the members of a committee of non-employee
      directors established, (b) securities upon the exercise or exchange of or
      conversion of any Securities issued hereunder and/or other securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to
      increase the number of such securities or to decrease the exercise,
      exchange or conversion price of such securities, and (c) securities issued
      pursuant to acquisitions or strategic transactions approved by a majority
      of the disinterested directors of the Company, provided that any such
      issuance shall only be to a Person which is, itself or through its
      subsidiaries, an operating company in a business complimentary to, or
      competitive with the business of the Company and in which the Company
      receives benefits in addition to the investment of funds, but shall not
      include a transaction in which the Company is issuing securities primarily
      for the purpose of raising capital or to an entity whose primary business
      is investing in securities and (d) for purposes of Sections 4.13 and 4.14
      only and with the prior written consent of the Placement Agent, up to an
      amount of Common Stock and warrants equal to the difference between
      $6,500,000 and the aggregate Subscription Amounts hereunder, on
      substantially the same terms and conditions as hereunder, with investors
      executing definitive agreements for the purchase of such securities and
      such transactions having

                                        2

<PAGE>

      closed on or before the earlier of (i) the Filing date (as defined in the
      Registration Rights Agreement) or (ii) the date that the initial
      Registration Statement is actually filed with the Commission.

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

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

            "INDEBTEDNESS" shall have the meaning ascribed to such term in
      Section 3.1(aa).

            "INTELLECTUAL PROPERTY RIGHTS" shall have the meaning ascribed to
      such term in Section 3.1(o).

            "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.

            "LOCK-UP AGREEMENT" means the Lock-up Agreement, dated as of the
      date hereof, between the Company and the directors, officers and greater
      than 5% shareholders of the Company, in the form of EXHIBIT D attached
      hereto.

            "MATERIAL ADVERSE EFFECT" shall have the meaning assigned to such
      term in Section 3.1(b).

            "MATERIAL PERMITS" shall have the meaning ascribed to such term in
      Section 3.1(m).

            "PARTICIPATION MAXIMUM" shall have the meaning ascribed to such term
      in Section 4.13.

            "PER SHARE PURCHASE PRICE" equals $0.40, subject to adjustment for
      reverse and forward stock splits, stock dividends, stock combinations and
      other similar transactions of the Common Stock that occur after the date
      of this Agreement.

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

            "PLACEMENT AGENT" means T.R. Winston & Company, LLC, with an address
      of 376 Main Street, Bedminster, New Jersey 07921, and a facsimile number
      of (310) 424-1990.

            "PRE-NOTICE" shall have the meaning ascribed to such term in Section
      4.13.

                                        3

<PAGE>

            "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.

            "PURCHASER PARTY" shall have the meaning ascribed to such term in
      Section 4.9.

            "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
      Agreement, dated the date hereof, among the Company and the Purchasers, in
      the form of EXHIBIT A attached hereto.

            "REGISTRATION STATEMENT" means a registration statement meeting the
      requirements set forth in the Registration Rights Agreement and covering
      the resale by the Purchasers of the Shares and the Warrant Shares.

            "REQUIRED APPROVALS" shall have the meaning ascribed to such term in
      Section 3.1(e).

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

            "SEC REPORTS" shall have the meaning ascribed to such term in
      Section 3.1(h).

            "SECURITIES" means the Shares, the Warrants and the Warrant Shares.

            "SECURITIES ACT" means the Securities Act of 1933, as amended, and
      the rules and regulations promulgated thereunder.

            "SHARES" means the shares of Common Stock issued or issuable to each
      Purchaser pursuant to this Agreement.

            "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).

            "SUBSCRIPTION AMOUNT" means, as to each Purchaser, the aggregate
      amount to be paid for Shares and Warrants purchased hereunder as specified
      below such Purchaser's name on the signature page of this Agreement and
      next to the heading "Subscription Amount," in United States dollars and in
      immediately available funds.

            "SUBSEQUENT FINANCING" shall have the meaning ascribed to such term
      in Section 4.13.

            "SUBSEQUENT FINANCING NOTICE" shall have the meaning ascribed to
      such term in Section 4.13.

                                        4

<PAGE>

            "SUBSIDIARY" means any subsidiary of the Company as set forth on
      SCHEDULE 3.1(a).

            "TRADING DAY" means a day on which the Common Stock is traded on a
      Trading Market.

            "TRADING MARKET" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the 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 Warrants, the
      Registration Rights Agreement and any other documents or agreements
      executed in connection with the transactions contemplated hereunder.

            "TRANSFER AGENT" means PacWest Transfer, LLC, with a mailing address
      of 360 Main Street, P.O. Box 393, Washington, VA 22747 and a facsimile
      number of (540) 675-3281, and any successor transfer agent of the Company.

            "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 for trading 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 in good faith by the Board of
      Directors of the Company, absent manifest error.

            "WARRANTS" means collectively the Common Stock purchase warrants
      delivered to the Purchasers at the Closing in accordance with Section
      2.2(a) hereof, which Warrants shall be exercisable immediately and have a
      term of exercise equal to 5 years, in the form of EXHIBIT C attached
      hereto.

            "WARRANT SHARES" means the shares of Common Stock issuable upon
      exercise of the Warrants.

                                   ARTICLE II.
                                PURCHASE AND SALE

      2.1   CLOSING. 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 sell,
and each Purchaser, severally and not jointly, agrees to purchase, an aggregate
of, up to $6,500,000 of Shares and Warrants. Each Purchaser shall deliver to the
Company, via wire transfer or a certified check, immediately available funds
equal

                                        5

<PAGE>

to its Subscription Amount and the Company shall deliver to each Purchaser
its respective Shares and a Warrant as determined pursuant to Section 2.2(a),
and the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the conditions set
forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of FWS, or
such other location as the parties shall mutually agree.

      2.2   DELIVERIES.

            (a) On or prior to the Closing Date, the Company shall deliver or
      cause to be delivered to each Purchaser 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) a certificate evidencing a number of Shares equal to
            such Purchaser's Subscription Amount divided by the Per Share
            Purchase Price, registered in the name of such Purchaser;

                  (iv) a Warrant registered in the name of such Purchaser to
            purchase up to a number of shares of Common Stock equal to 100% of
            the Shares issuable to such Purchaser hereunder, with an exercise
            price per share equal to $0.48, subject to adjustment therein;

                  (v) the Lock-up Agreement duly executed by the Company and
            each director, officer and greater than 5% shareholder of the
            Company; and

                  (vi) the Registration Rights Agreement duly executed by the
            Company.

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

                  (i) this Agreement duly executed by such Purchaser;

                  (ii) such Purchaser's Subscription Amount by wire transfer to
            the account as specified in writing by the Company or by certified
            check; and

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

      2.3   CLOSING CONDITIONS.

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

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

                                        6

<PAGE>

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

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

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

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

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

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

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

                  (v) from the date hereof to the Closing Date, trading in the
            Common Stock shall not have been suspended by the Commission or the
            Company's principal Trading Market (except for any suspension of
            trading of limited duration agreed to by the Company, which
            suspension shall be terminated prior to the Closing), and, at any
            time prior to the Closing Date, trading in securities generally as
            reported by Bloomberg L.P. shall not have been suspended or limited,
            or minimum prices shall not have been established on securities
            whose trades are reported by such service, or on any Trading Market,
            nor shall a banking moratorium have been declared either by the
            United States or New York State authorities nor shall there have
            occurred any material outbreak or escalation of hostilities or other
            national or international calamity of such magnitude in its effect
            on, or any material adverse change in, any financial market which,
            in each case, in the reasonable judgment of each Purchaser, makes it
            impracticable or inadvisable to purchase the Shares at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

      3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in
the Disclosure Schedules which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation and warranty or otherwise made
herein to the extent of the disclosure contained in the corresponding section of
the Disclosure Schedules, the Company hereby makes the following representations
and warranties to each Purchaser:

            (a) SUBSIDIARIES. All of the direct and indirect subsidiaries of the
      Company are set forth on SCHEDULE 3.1(a). Except as set forth on SCHEDULE
      3.1(a), the Company

                                        7

<PAGE>

      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. If the Company
      has no subsidiaries, then all other references to the Subsidiaries or any
      of them in the Transaction Documents shall be disregarded.

            (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.

                                        8

<PAGE>

            (d) NO CONFLICTS. The execution, delivery and performance of the
      Transaction Documents by the Company, the issuance and sale of the Shares
      and the consummation by the Company of the other 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 in connection
      with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4 of this Agreement, (ii) the filing with the Commission of the
      Registration Statement, (iii) application(s) to each applicable Trading
      Market for the listing of the Securities for trading thereon in the time
      and manner required thereby and (iv) the filing of Form D with the
      Commission and such filings as are required to be made under applicable
      federal and state securities laws (collectively, the "REQUIRED
      APPROVALS").

            (f) ISSUANCE OF THE SECURITIES. The Securities are duly authorized
      and, when issued and paid for in accordance with the applicable
      Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other
      than restrictions on transfer provided for in the Transaction Documents.
      The Warrant 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. The
      Company has reserved from its duly authorized capital stock the maximum
      number of shares of Common Stock issuable pursuant to this Agreement and
      the Warrants.

            (g) CAPITALIZATION. The capitalization of the Company is as set
      forth on SCHEDULE 3.1(g), which SCHEDULE 3.1(g) shall also include the
      number of shares of Common Stock owned beneficially, and of record, by
      Affiliates of the Company as of the date hereof. Except as set forth on
      SCHEDULE 3.1(g), the Company has not issued any capital stock since its
      most recently filed periodic report under the Exchange Act, other than
      pursuant to the exercise of employee stock options under the Company's
      stock

                                        9

<PAGE>

      option plans, the issuance of shares of Common Stock to employees pursuant
      to the Company's employee stock purchase plan and pursuant to the
      conversion or exercise of Common Stock Equivalents outstanding as of the
      date of the most recently filed periodic report under the Exchange Act.
      Except as set forth on SCHEDULE 3.1(g), no Person has any right of first
      refusal, preemptive right, right of participation, or any similar right to
      participate in the transactions contemplated by the Transaction Documents.
      Except as a result of the purchase and sale of the Securities, there are
      no 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. The
      issuance and sale of the Securities will not obligate the Company to issue
      shares of Common Stock or other securities to any Person (other than the
      Purchasers) and will not result in a right of any holder of Company
      securities to adjust the exercise, conversion, exchange or reset price
      under any of such securities. All of the outstanding shares of capital
      stock of the Company are validly issued, fully paid and nonassessable,
      have been issued in compliance in all material respects with all federal
      and state securities laws, and none of such outstanding shares was issued
      in violation of any preemptive rights or similar rights to subscribe for
      or purchase securities. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required
      for the issuance and sale of the Securities. There are no stockholders
      agreements, voting agreements or other similar agreements with respect to
      the Company's capital stock to which the Company is a party or, to the
      knowledge of the Company, between or among any of the Company's
      stockholders.

            (h) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all
      reports, schedules, forms, statements and other documents required to be
      filed by the Company under the Securities Act and the Exchange Act,
      including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was
      required by law or regulation to file such material) (the foregoing
      materials, including the exhibits thereto and documents incorporated by
      reference therein, being collectively referred to herein as the "SEC
      REPORTS") on a timely basis or has received a valid extension of such time
      of filing and has filed any such SEC Reports prior to the expiration of
      any such extension. As of their respective dates, the SEC Reports complied
      in all material respects with the requirements of the Securities Act and
      the Exchange Act, as applicable, and none of the SEC Reports, when filed,
      contained any untrue statement of a material fact or omitted to state a
      material fact required to be stated therein or necessary in order to make
      the statements therein, in the light of the circumstances under which they
      were made, not misleading. The financial statements of the Company
      included in the SEC Reports comply in all material respects with
      applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis
      during the periods involved ("GAAP"), except as may be otherwise specified
      in such financial statements or the notes thereto and except that
      unaudited

                                       10

<PAGE>

      financial statements may not contain all footnotes required by GAAP, and
      fairly present in all material respects the financial position of the
      Company and its consolidated subsidiaries as of and for the dates thereof
      and the results of operations and cash flows for the periods then ended,
      subject, in the case of unaudited statements, to normal, immaterial,
      year-end audit adjustments.

            (i) MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABILITIES OR
      DEVELOPMENTS. Since the date of the latest audited financial statements
      included within the SEC Reports, except as specifically disclosed in a
      subsequent SEC Report filed prior to the date hereof, (i) there has been
      no event, occurrence or development that has had or that could reasonably
      be expected to result in a Material Adverse Effect, (ii) the Company has
      not incurred any liabilities (contingent or otherwise) other than (A)
      trade payables and accrued expenses incurred in the ordinary course of
      business consistent with past practice and (B) liabilities not required to
      be reflected in the Company's financial statements pursuant to GAAP or
      disclosed in filings made with the Commission, (iii) the Company has not
      altered its method of accounting, (iv) the Company has not declared or
      made any dividend or distribution of cash or other property to its
      stockholders or purchased, redeemed or made any agreements to purchase or
      redeem any shares of its capital stock and (v) the Company has not issued
      any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option plans. The Company does not have
      pending before the Commission any request for confidential treatment of
      information. Except for the issuance of the Securities contemplated by
      this Agreement or as set forth on SCHEDULE 3.1(i), no event, liability or
      development has occurred or exists with respect to the Company or its
      Subsidiaries or their respective business, properties, operations or
      financial condition, that would be required to be disclosed by the Company
      under applicable securities laws at the time this representation is made
      that has not been publicly disclosed at least one Trading Day prior to the
      date that this representation is made.

            (j) 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.
      There has not been, and to the knowledge of the Company, there is not
      pending or contemplated, any investigation by the Commission involving the
      Company or any current or former director or officer of the Company. The
      Commission has not issued any stop order or other order suspending the
      effectiveness of any registration statement filed by the Company or any
      Subsidiary under the Exchange Act or the Securities Act.

                                       11

<PAGE>

            (k) LABOR RELATIONS. No material labor dispute exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company which could reasonably be expected to result in a Material
      Adverse Effect. None of the Company's or its Subsidiaries' employees is a
      member of a union that relates to such employee's relationship with the
      Company, and neither the Company or any of its Subsidiaries is a party to
      a collective bargaining agreement, and the Company and its Subsidiaries
      believe that their relationships with their employees are good. No
      executive officer, to the knowledge of the Company, is, or is now expected
      to be, in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement or
      non-competition agreement, or any other contract or agreement or any
      restrictive covenant, and the continued employment of each such executive
      officer does not subject the Company or any of its Subsidiaries to any
      liability with respect to any of the foregoing matters. To the extent
      applicable thereto, the Company and its Subsidiaries are in compliance in
      all material respects with all U.S. federal, state, local and foreign laws
      and regulations relating to employment and employment practices, terms and
      conditions of employment and wages and hours, except where the failure to
      be in compliance could not, individually or in the aggregate, reasonably
      be expected to have a Material Adverse Effect.

            (l) COMPLIANCE. Neither the Company nor any Subsidiary (i) is in
      default under or in violation of (and no event has occurred that has not
      been waived that, with notice or lapse of time or both, would result in a
      default by the Company or any Subsidiary under), nor has the Company or
      any Subsidiary received notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its properties is bound (whether or not such default or violation has
      been waived), (ii) is in violation of any order of any court, arbitrator
      or governmental body, or (iii) is or has been in violation of any statute,
      rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its
      business and all such laws that affect the environment, except in each
      case as could not have or reasonably be expected to result in a Material
      Adverse Effect.

            (m) REGULATORY PERMITS. The Company and the Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate
      federal, state, local or foreign regulatory authorities necessary to
      conduct their respective businesses as described in the SEC Reports,
      except where the failure to possess such permits could not have or
      reasonably be expected to result in a Material Adverse Effect ("MATERIAL
      PERMITS"), and neither the Company nor any Subsidiary has received any
      notice of proceedings relating to the revocation or modification of any
      Material Permit.

            (n) TITLE TO ASSETS. The Company and the Subsidiaries have good and
      marketable title in fee simple to all real property owned by them that is
      material to the business of the Company and the Subsidiaries and good and
      marketable title in all personal property owned by them that is material
      to the business of the Company and the Subsidiaries, in each case free and
      clear of all Liens, except for Liens as do not materially affect the value
      of such property and do not materially interfere with the use made and
      proposed to be made of such property by the Company and the Subsidiaries
      and Liens for

                                       12

<PAGE>

      the payment of federal, state or other taxes, the payment of which is
      neither delinquent nor subject to penalties. Any real property and
      facilities held under lease by the Company and the Subsidiaries are held
      by them under valid, subsisting and enforceable leases with which the
      Company and the Subsidiaries are in compliance.

            (o) PATENTS AND TRADEMARKS. The Company and the Subsidiaries have,
      or have rights to use, all patents, patent applications, trademarks,
      trademark applications, service marks, trade names, trade secrets,
      inventions, copyrights, licenses and other intellectual property rights
      and similar rights as set forth on SCHEDULE 3.1(o) necessary or material
      for use in connection with their respective businesses as described in the
      SEC Reports and which failure to so have could have a Material Adverse
      Effect, (collectively, the "INTELLECTUAL PROPERTY RIGHTS"). Neither the
      Company nor any Subsidiary has received a notice (written or otherwise)
      that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the
      knowledge of the Company, all such Intellectual Property Rights are
      enforceable and there is no existing infringement by another Person of any
      of the Intellectual Property Rights. The Company and its Subsidiaries have
      taken reasonable security measures to protect the secrecy, confidentiality
      and value of all of their intellectual properties, except where failure to
      do so could not, individually or in the aggregate, reasonably be expected
      to have a Material Adverse Effect.

            (p) INSURANCE. Except as set forth on SCHEDULE 3.1(p), the Company
      and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are
      prudent and customary in the businesses in which the Company and the
      Subsidiaries are engaged, including, but not limited to, directors and
      officers insurance coverage at least equal to the aggregate Subscription
      Amount. Neither the Company nor any Subsidiary has any reason to believe
      that it will not be able to renew its existing insurance coverage as and
      when such coverage expires or to obtain similar coverage from similar
      insurers as may be necessary to continue its business without a
      significant increase in cost.

            (q) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set forth
      in the SEC Reports, none of the officers or directors of the Company and,
      to the knowledge of the Company, none of the employees of the Company is
      presently a party to any transaction with the Company or any Subsidiary
      (other than for services as employees, officers and directors), including
      any contract, agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer, director
      or such employee or, to the knowledge of the Company, any entity in which
      any officer, director, or any such employee has a substantial interest or
      is an officer, director, trustee or partner, in each case in excess of
      $60,000 other than for (i) payment of salary or consulting fees for
      services rendered, (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) other employee benefits, including stock option
      agreements under any stock option plan of the Company.

            (r) SARBANES-OXLEY; INTERNAL ACCOUNTING CONTROLS. The Company is in
      material compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are

                                       13

<PAGE>

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

            (s) CERTAIN FEES. Other than to the Placement Agent pursuant to the
      Transaction Fee Agreement, dated as of January 19, 2007, between the
      Company and the Placement Agent, 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. The Purchasers shall have no obligation with
      respect to any fees or with respect to any claims made by or on behalf of
      other Persons for fees of a type contemplated in this Section that may be
      due in connection with the transactions contemplated by the Transaction
      Documents.

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

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

                                       14

<PAGE>

            (v) REGISTRATION RIGHTS. Except as set forth on SCHEDULE 3.1(v) and
      other than each of the Purchasers, no Person has any right to cause the
      Company to effect the registration under the Securities Act of any
      securities of the Company.

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

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

            (y) DISCLOSURE. Except with respect to the material terms and
      conditions of the transactions contemplated by the Transaction Documents,
      the Company confirms that neither it nor any other Person acting on its
      behalf has provided any of the Purchasers or their agents or counsel with
      any information that it believes constitutes or might constitute material,
      non-public information. The Company understands and confirms that the
      Purchasers will rely on the foregoing representation in effecting
      transactions in securities of the Company. All disclosure furnished by or
      on behalf of the Company to the Purchasers 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
      Purchaser makes or has made any representations or warranties with respect
      to the transactions contemplated hereby other than those specifically set
      forth in Section 3.2 hereof.

                                       15

<PAGE>

            (z) NO INTEGRATED OFFERING. Assuming the accuracy of the Purchasers'
      representations and warranties set forth in Section 3.2, neither the
      Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances
      that would cause this offering of the Securities to be integrated with
      prior offerings by the Company for purposes of the Securities Act or any
      applicable shareholder approval provisions of any Trading Market on which
      any of the securities of the Company are listed or designated.

            (aa) SOLVENCY. Based on the financial condition of the Company as of
      the Closing Date, after giving effect to the receipt by the Company of the
      proceeds from the sale of the Securities hereunder, (i) the fair saleable
      value of the Company's assets exceeds the amount that will be required to
      be paid on or in respect of the Company's existing debts and other
      liabilities (including known contingent liabilities) as they mature; (ii)
      the Company's assets do not constitute unreasonably small capital to carry
      on its business as now conducted and as proposed to be conducted including
      its capital needs taking into account the particular capital requirements
      of the business conducted by the Company, and projected capital
      requirements and capital availability thereof; and (iii) the current cash
      flow of the Company, together with the proceeds the Company would receive,
      were it to liquidate all of its assets, after taking into account all
      anticipated uses of the cash, would be sufficient to pay all amounts on or
      in respect of its liabilities when such amounts are required to be paid.
      The Company does not intend to incur debts beyond its ability to pay such
      debts as they mature (taking into account the timing and amounts of cash
      to be payable on or in respect of its debt). The Company has no knowledge
      of any facts or circumstances which lead it to believe that it will file
      for reorganization or liquidation under the bankruptcy or reorganization
      laws of any jurisdiction within one year from the Closing Date. SCHEDULE
      3.1(aa) sets forth as of the dates thereof all outstanding secured and
      unsecured Indebtedness of the Company or any Subsidiary, or for which the
      Company or any Subsidiary has commitments. For the purposes of this
      Agreement, "INDEBTEDNESS" means (a) any liabilities for borrowed money or
      amounts owed in excess of $100,000 (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 $100,000 due under leases required to
      be capitalized in accordance with GAAP. Neither the Company nor any
      Subsidiary is in default with respect to any Indebtedness.

            (bb) TAX STATUS. Except as set forth on SCHEDULE 3.1(bb) and for
      matters that would not, individually or in the aggregate, have or
      reasonably be expected to result in a Material Adverse Effect, the Company
      and each Subsidiary has filed all necessary federal, state and foreign
      income and franchise tax returns and has paid or accrued all taxes shown
      as due thereon, and the Company has no knowledge of any tax deficiency
      which has been asserted or threatened against the Company or any
      Subsidiary.

                                       16

<PAGE>

            (cc) NO GENERAL SOLICITATION. Neither the Company nor any person
      acting on behalf of the Company has offered or sold any of the Securities
      by any form of general solicitation or general advertising. The Company
      has offered the Securities for sale only to the Purchasers and certain
      other "accredited investors" within the meaning of Rule 501 under the
      Securities Act.

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

            (ee) ACCOUNTANTS. The Company's accounting firm is set forth on
      SCHEDULE 3.1(ee) of the Disclosure Schedule. To the knowledge and belief
      of the Company, such accounting firm (i) is a registered public accounting
      firm as required by the Exchange Act and (ii) shall express its opinion
      with respect to the financial statements to be included in the Company's
      Annual Report on Form 10-KSB for the year ending September 30, 2007.

            (ff) NO DISAGREEMENTS WITH ACCOUNTANTS AND LAWYERS. There are no
      disagreements of any kind presently existing, or reasonably anticipated by
      the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company and the Company is current
      with respect to any fees owed to its accountants and lawyers.

            (gg) ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF SECURITIES.
      The Company acknowledges and agrees that each of the Purchasers is acting
      solely in the capacity of an arm's length purchaser with respect to the
      Transaction Documents and the transactions contemplated thereby. The
      Company further acknowledges that no Purchaser is acting as a financial
      advisor or fiduciary of the Company (or in any similar capacity) with
      respect to the Transaction Documents and the transactions contemplated
      thereby and any advice given by any Purchaser or any of their respective
      representatives or agents in connection with the Transaction Documents and
      the transactions contemplated thereby is merely incidental to the
      Purchasers' purchase of the Securities. The Company further represents to
      each Purchaser that the Company's decision to enter into this Agreement
      and the other Transaction Documents has been based solely on the
      independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

            (hh) ACKNOWLEDGEMENT REGARDING PURCHASER'S TRADING ACTIVITY.
      Anything in this Agreement or elsewhere herein to the contrary
      notwithstanding (except for Sections 3.2(f) and 4.15 hereof), it is
      understood and acknowledged by the Company (i) that none of the Purchasers
      have been asked to agree, nor has any Purchaser agreed, to desist from
      purchasing or selling, long and/or short, securities of the Company, or
      "derivative"

                                       17

<PAGE>

      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 Purchaser, 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 Purchaser, and
      counter-parties in "derivative" transactions to which any such Purchaser
      is a party, directly or indirectly, presently may have a "short" position
      in the Common Stock, and (iv) that each Purchaser 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 Purchasers 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 Warrant 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.

            (ii) 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, 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 and the securities that may be issued pursuant
      to clause (d) in the definition of Exempt Issuance.

            (jj) FDA. To the best of the Company's knowledge, it is in
      compliance in all material respects with the Federal Food, Drug and
      Cosmetic Act, as amended, and the regulations thereunder ("FDCA"). To the
      Company's knowledge, there is no pending, completed or threatened, action
      (including any lawsuit, arbitration, or legal or administrative or
      regulatory proceeding, charge, complaint, or investigation) against the
      Company or any of its Subsidiaries, and none of the Company or any of its
      Subsidiaries has received any notice, warning letter or other
      communication from the United States Food and Drug Administration (the
      "FDA") or any other governmental entity, which (i) contests the pre-market
      clearance, licensure, registration, or approval of, the uses of, the
      distribution of, the manufacturing or packaging of, the testing of, the
      sale of, or the labeling and promotion of any pharmaceutical product, (ii)
      withdraws its approval of, requests the recall, suspension, or seizure of,
      or withdraws or orders the withdrawal of advertising or sales promotional
      materials relating to, any pharmaceutical product, (iii) imposes a
      clinical hold on any clinical investigation by the Company or any of its
      Subsidiaries, (iv) enjoins production at any facility of the Company or
      any of its Subsidiaries, (v) enters or proposes to enter into a consent
      decree of permanent injunction with the Company or any of its
      Subsidiaries, or (vi) otherwise alleges any violation of any laws, rules
      or regulations by the Company or any of its Subsidiaries, and which,

                                       18

<PAGE>

      either individually or in the aggregate, would have a Material Adverse
      Effect. The properties, business and operations of the Company have been
      and are being conducted in all material respects in accordance with all
      applicable laws, rules and regulations of the FDA. The Company has not
      been informed by the FDA that the FDA will prohibit the marketing, sale,
      license or use in the United States of any product proposed to be
      developed, produced or marketed by the Company nor has the FDA expressed
      any concern as to approving or clearing for marketing any product being
      developed or proposed to be developed by the Company.

      3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows:

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

            (b) OWN ACCOUNT. Such Purchaser understands that the Securities are
      "restricted securities" as defined in Rule 144 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 (this representation and warranty not limiting such Purchaser's
      right to sell the Securities pursuant to the Registration Statement or
      otherwise in compliance with applicable federal and state securities laws)
      in violation of the Securities Act or any applicable state securities law.
      Such Purchaser is acquiring the Securities hereunder in the ordinary
      course of its business.

            (c) PURCHASER STATUS. At the time such Purchaser was offered the
      Securities, it was, and at the date hereof it is, and on each date on
      which it exercises any Warrants, it will be either: (i) an "accredited
      investor" as defined in Rule 501(a)(1), (a)(2), (a)(3),

                                       19

<PAGE>

      (a)(7) or (a)(8) under the Securities Act or (ii) a "qualified
      institutional buyer" as defined in Rule 144A(a) under the Securities Act.
      Such Purchaser is not required to be registered as a broker-dealer under
      Section 15 of the Exchange Act.

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

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

            (f) SHORT SALES AND CONFIDENTIALITY PRIOR TO THE DATE HEREOF. Other
      than the transaction contemplated hereunder, such Purchaser has not, nor
      has any Person acting on behalf of or pursuant to any understanding with
      such Purchaser, directly or indirectly executed any transaction, including
      Short Sales, in the securities of the Company during the period commencing
      from the time that such Purchaser 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
      Purchaser that is a multi-managed investment vehicle whereby separate
      portfolio managers manage separate portions of such Purchaser's assets and
      the portfolio managers have no direct knowledge of the investment
      decisions made by the portfolio managers managing other portions of such
      Purchaser's assets, the 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
      Purchaser has maintained the confidentiality of all disclosures made to it
      in connection with this transaction (including the existence and terms of
      this transaction).

                                   ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 TRANSFER RESTRICTIONS.

            (a) The Securities may only be disposed of in compliance with state
      and federal securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or Rule 144, to
      the Company or to an Affiliate of a Purchaser or in connection with a
      pledge as contemplated in Section 4.1(b), the Company may require the
      transferor thereof to provide to the Company an opinion of counsel
      selected by the transferor and reasonably acceptable to the Company, the
      form and substance of which opinion shall be reasonably satisfactory to
      the Company, to the effect

                                       20

<PAGE>

      that such transfer does not require registration of such transferred
      Securities under the Securities Act. As a condition of transfer, any such
      transferee shall agree in writing to be bound by the terms of this
      Agreement and shall have the rights of a Purchaser under this Agreement
      and the Registration Rights Agreement.

            (b) The Purchasers 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:

            THIS SECURITY 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, OR OTHERWISE DISPOSED OF 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 MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
            ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
            FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
            RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
            SECURITIES WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED
            INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

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

                                       21

<PAGE>

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

            (d) In addition to such Purchaser's other available remedies, the
      Company shall pay to a Purchaser, in cash, as partial liquidated damages
      and not as a penalty, for each $1,000 of Shares or Warrant Shares (based
      on the VWAP of the Common Stock on the date such Securities are submitted
      to the 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 second Trading Day following the Legend Removal Date until such
      certificate is delivered without a legend. Nothing herein shall limit such
      Purchaser's right to pursue actual damages for the Company's failure to
      deliver certificates representing any Securities as required by the
      Transaction Documents, and such Purchaser shall have the right to pursue
      all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive relief.

            (e) Each Purchaser, severally and not jointly with the other
      Purchasers, agrees that the removal of the restrictive legend from
      certificates representing Securities as set forth in this Section 4.1 is
      predicated upon the Company's reliance that the Purchaser will sell any
      Securities pursuant to either the registration requirements of the
      Securities Act, including any applicable prospectus delivery requirements,
      or an exemption therefrom, 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 FURNISHING OF INFORMATION. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof

                                       22

<PAGE>

pursuant to the Exchange Act. As long as any Purchaser owns Securities, if the
Company is not required to file reports pursuant to the Exchange Act, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell the
Securities under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, 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.

      4.3 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

      4.4 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, on the
second Trading Day immediately following the date hereof, issue a Current Report
on Form 8-K, disclosing the material terms of the transactions contemplated
hereby, and filing the Transaction Documents as exhibits thereto. The Company
and the Placement Agent shall consult with each other in issuing any press
releases with respect to the transactions contemplated hereby, and neither the
Company nor any Purchaser shall issue any such press release or otherwise make
any such public statement without the prior consent of the Placement Agent.
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser, or include the name of any Purchaser in any filing with the
Commission or any regulatory agency or Trading Market, without the prior written
consent of such Purchaser, except (i) as required by federal securities law in
connection with (A) any registration statement contemplated by the Registration
Rights 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 Placement Agent with prior notice of such disclosure
permitted under this clause (ii).

      4.5 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
Purchaser 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 Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Purchasers.

      4.6 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 Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have executed a written agreement

                                       23

<PAGE>

regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the Company.

      4.7 USE OF PROCEEDS. The Company shall use the net proceeds from the sale
of the Securities hereunder for working capital purposes and shall not use such
proceeds for the satisfaction of any portion of the Company's debt (other than
payment of trade payables in the ordinary course of the Company's business and
prior practices), the redemption of any Common Stock or Common Stock Equivalents
or the settlement of any outstanding litigation.

      4.8 [RESERVED].

      4.9 INDEMNIFICATION OF PURCHASERS. Subject to the provisions of this
Section 4.9, the Company will indemnify and hold each Purchaser 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 Purchaser (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 persons (each, a
"PURCHASER PARTY") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a
Purchaser, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser's representations, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Purchaser Party. Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof has
been specifically authorized by the Company in writing, (ii) the Company has
failed after a reasonable period of time to assume such defense and to employ
counsel or (iii) in such action there is, in the reasonable opinion of such
separate counsel, a material conflict on any material issue between the position
of the Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Purchaser
Party under this Agreement (i) for any settlement by a Purchaser Party effected
without the Company's prior written consent, which shall not be unreasonably
withheld or delayed; or (ii) to the extent, but

                                       24

<PAGE>

only to the extent that a loss, claim, damage or liability is attributable to
any Purchaser Party's breach of any of the representations, warranties,
covenants or agreements made by such Purchaser Party in this Agreement or in the
other Transaction Documents.

      4.10 RESERVATION OF COMMON STOCK. As of the date hereof, the Company has
reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

      4.11 LISTING OF COMMON STOCK.(a) The Company hereby agrees to use best
efforts to maintain the listing of the Common Stock on a Trading Market, and as
soon as reasonably practicable following the Closing (but not later than the
earlier of the Effective Date and the first anniversary of the Closing Date) to
list all of the Shares and Warrant Shares on such Trading Market. The Company
further agrees, if the Company applies to have the Common Stock traded on any
other Trading Market, it will include in such application all of the Shares and
Warrant Shares, and will take such other action as is necessary to cause all of
the Shares and Warrant Shares to be listed on such other Trading Market as
promptly as possible. The Company will take all action reasonably necessary to
continue the listing and trading of its Common Stock on a Trading Market and
will comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Trading Market.

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

      4.13 PARTICIPATION IN FUTURE FINANCING.

            (a) From the date hereof until the date that is the 12 month
      anniversary of the Effective Date, upon any issuance by the Company or any
      of its Subsidiaries of Common Stock or Common Stock Equivalents for cash
      consideration (a "SUBSEQUENT FINANCING"), each Purchaser shall have the
      right to participate in up to an amount of the Subsequent Financing equal
      to 100% of the Subsequent Financing (the "PARTICIPATION MAXIMUM") on the
      same terms, conditions and price provided for in the Subsequent Financing.

            (b) At least 5 Trading Days prior to the closing of the Subsequent
      Financing, the Company shall deliver to each Purchaser a written notice of
      its intention to effect a Subsequent Financing ("PRE-NOTICE"), which
      Pre-Notice shall ask such Purchaser if it wants to review the details of
      such financing (such additional notice, a "SUBSEQUENT FINANCING NOTICE").
      Upon the request of a Purchaser, and only upon a request by such
      Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
      but no later than 1 Trading Day after such request, deliver a Subsequent
      Financing Notice to such

                                       25

<PAGE>

      Purchaser. The Subsequent Financing Notice shall describe in reasonable
      detail the proposed terms of such Subsequent Financing, the amount of
      proceeds intended to be raised thereunder and the Person or Persons
      through or with whom such Subsequent Financing is proposed to be effected
      and shall include a term sheet or similar document relating thereto as an
      attachment.

            (c) Any Purchaser desiring to participate in such Subsequent
      Financing must provide written notice to the Company by not later than
      5:30 p.m. (New York City time) on the 5th Trading Day after all of the
      Purchasers have received the Pre-Notice that the Purchaser is willing to
      participate in the Subsequent Financing, the amount of the Purchaser's
      participation, and that the Purchaser has such funds ready, willing, and
      available for investment on the terms set forth in the Subsequent
      Financing Notice. If the Company receives no notice from a Purchaser as of
      such 5th Trading Day, such Purchaser shall be deemed to have notified the
      Company that it does not elect to participate.

            (d) If by 5:30 p.m. (New York City time) on the 5th Trading Day
      after all of the Purchasers have received the Pre-Notice, notifications by
      the Purchasers of their willingness to participate in the Subsequent
      Financing (or to cause their designees to participate) is, in the
      aggregate, less than the total amount of the Subsequent Financing, then
      the Company may effect the remaining portion of such Subsequent Financing
      on the terms and with the Persons set forth in the Subsequent Financing
      Notice.

            (e) If by 5:30 p.m. (New York City time) on the 5th Trading Day
      after all of the Purchasers have received the Pre-Notice, the Company
      receives responses to a Subsequent Financing Notice from Purchasers
      seeking to purchase more than the aggregate amount of the Participation
      Maximum, each such Purchaser shall have the right to purchase its Pro Rata
      Portion (as defined below) of the Participation Maximum. "PRO RATA
      PORTION" means the ratio of (x) the Subscription Amount of Securities
      purchased on the Closing Date by a Purchaser participating under this
      Section 4.13 and (y) the sum of the aggregate Subscription Amounts of
      Securities purchased on the Closing Date by all Purchasers participating
      under this Section 4.13.

            (f) The Company must provide the Purchasers with a second Subsequent
      Financing Notice, and the Purchasers will again have the right of
      participation set forth above in this Section 4.13, if the Subsequent
      Financing subject to the initial Subsequent Financing Notice is not
      consummated for any reason on the terms set forth in such Subsequent
      Financing Notice within 60 Trading Days after the date of the initial
      Subsequent Financing Notice.

            (g) Notwithstanding the foregoing, this Section 4.13 shall not apply
      in respect of (i) an Exempt Issuance or (ii) an underwritten public
      offering of Common Stock.

      4.14 SUBSEQUENT EQUITY SALES.

            (a) From the date hereof until 90 days after the Effective Date,
      neither the Company nor any Subsidiary shall issue shares of Common Stock
      or Common Stock Equivalents; PROVIDED, HOWEVER, the 90 day period set
      forth in this Section 4.14 shall be

                                       26
<PAGE>

      extended for the number of Trading Days during such period in which (i)
      trading in the Common Stock is suspended by any Trading Market, or (ii)
      following the Effective Date, the Registration Statement is not effective
      or the prospectus included in the Registration Statement may not be used
      by the Purchasers for the resale of the Shares and Warrant Shares.

            (b) From the date hereof until such time as no Purchaser holds any
      of the Securities, the Company shall be prohibited from effecting or
      entering into an agreement to effect any Subsequent Financing involving a
      Variable Rate Transaction. "VARIABLE RATE TRANSACTION" means a transaction
      in which the Company issues or sells (i) any debt or equity securities
      that are convertible into, exchangeable or exercisable for, or include the
      right to receive additional shares of Common Stock either (A) at a
      conversion, exercise or exchange rate or other price that is based upon
      and/or varies with the trading prices of or quotations for the shares of
      Common Stock at any time after the initial issuance of such debt or equity
      securities, or (B) with a conversion, exercise or exchange price that is
      subject to being reset at some future date after the initial issuance of
      such debt or equity security or upon the occurrence of specified or
      contingent events directly or indirectly related to the business of the
      Company or the market for the Common Stock or (ii) enters into any
      agreement, including, but not limited to, an equity line of credit,
      whereby the Company may sell securities at a future determined price. Any
      Purchaser shall be entitled to obtain injunctive relief against the
      Company to preclude any such issuance, which remedy shall be in addition
      to any right to collect damages.

            (c) From the date hereof until the two year anniversary of the
      Closing Date, in the event the Company issues or sells any shares of
      Common Stock or Common Stock Equivalents, if a Purchaser reasonably
      believes that any of the terms and conditions thereunder are more
      favorable to such investors as the terms and conditions granted hereunder,
      upon notice to the Company by such Purchaser the Company shall amend the
      terms of this transaction as to such Purchaser only so as to give such
      Purchaser the benefit of such more favorable terms or conditions.

            (d) Notwithstanding the foregoing, this Section 4.14 shall not apply
      in respect of an Exempt Issuance, except that no Variable Rate Transaction
      shall be an Exempt Issuance.

      4.15 SHORT SALES AND CONFIDENTIALITY AFTER THE DATE HEREOF. Each Purchaser
severally and not jointly with the other Purchasers 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 4.4. Each Purchaser, severally
and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.4, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction). Each
Purchaser understands and acknowledges, severally and not jointly with any other
Purchaser, 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

                                       27

<PAGE>

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 Purchaser
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 4.4. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser's assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.

      4.16 DELIVERY OF SECURITIES AFTER CLOSING. The Company shall deliver, or
cause to be delivered, the respective Securities purchased by each Purchaser to
such Purchaser within 3 Trading Days of the Closing Date.

      4.17 FORM D; BLUE SKY FILINGS. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of any Purchaser. 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
Purchasers 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 Purchaser.

      4.18 PER SHARE PURCHASE PRICE PROTECTION. As to each Purchaser, from the
date hereof until the date such Purchaser no longer owns any of the Shares
issued to such Purchaser hereunder, if the Company or any Subsidiary thereof
shall issue any Common Stock or Common Stock Equivalents entitling any person or
entity to acquire shares of Common Stock at an effective price per share less
than the Per Share Purchase Price (the "Discounted Purchase Price", as further
defined below), within 5 Trading Days of the date thereof the Company shall
issue to such Purchaser that number of additional shares of Common Stock equal
to the difference between (a) the quotient obtained by dividing (i) the product
of (A) the Shares then held by such Purchaser immediately prior to such issuance
multiplied by (B) the Per Share Purchase Price (or if Shares were previously
issued pursuant to this Section 4.18, the lowest Discounted Purchase Price used
hereunder prior to such issuance) divided by (ii) the Discounted Purchase Price,
less (b) the Shares then held by such Purchaser immediately prior to such
issuance. The term "DISCOUNTED PURCHASE PRICE" shall mean the amount actually
paid by third parties for a share of Common Stock. The sale of Common Stock
Equivalents shall be deemed to have occurred at the time of the issuance of the
Common Stock Equivalents and the Discounted Purchase Price covered thereby shall
also include the actual exercise or conversion price thereof at the time of the
conversion or exercise (in addition to the consideration per share of Common
Stock underlying the Common Stock Equivalents received by the Company upon such
sale or issuance of the Common Stock Equivalents). If shares are issued for a
consideration other than cash, the per share selling price shall be the fair
value of such consideration as determined in good faith by the Board of
Directors of the Company. The Company may not refuse to issue a Purchaser
additional Shares hereunder based on any claim that such Purchaser

                                       28

<PAGE>

or any one associated or affiliated with such Purchaser has been engaged in any
violation of law, agreement or for any other reason, unless, an injunction from
a court, on notice, restraining and or enjoining an issuance hereunder shall
have been sought and obtained. Nothing herein shall limit a Purchaser's right to
pursue actual damages for the Company's failure to deliver Shares hereunder and
such Purchaser shall have the right to pursue all remedies available to it at
law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. On the date of closing of any transaction pursuant to
which securities are issued for a Discounted Purchase Price, the Company shall
give the Purchasers written notice thereof. Notwithstanding anything to the
contrary herein, this Section 4.18 shall not apply to an Exempt Issuance.

      4.19 CAPITAL CHANGES. Until the one year anniversary of the Effective
Date, the Company shall not undertake a reverse or forward stock split or
reclassification of the Common Stock without the prior written consent of the
Purchasers holding a majority in interest of the Shares.

                                   ARTICLE V.
                                  MISCELLANEOUS

      5.1 TERMINATION. This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers, by written notice
to the other parties, if the Closing has not been consummated on or before
February 28, 2007; PROVIDED, HOWEVER, that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

      5.2 FEES AND EXPENSES. At the Closing, the Company has agreed to reimburse
T.R. Winston & Company, LLC ("TR WINSTON") the non-accountable sum of $20,000
for its legal fees and expenses, $10,000 of which has been paid prior to the
Closing. 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 Purchasers.

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

      5.4 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than

                                       29

<PAGE>

5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service, or (d) upon actual receipt by the party to whom such notice is
required to be given. The address for such notices and communications shall be
as set forth on the signature pages attached hereto. In the case of notices or
other communications to the Company, a copy shall be simultaneously sent in the
same manner to Company Counsel, Attn: Robert Steven Brown.

      5.5 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such 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 Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that 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
"Purchasers."

      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

                                       30

<PAGE>

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 contained herein shall
survive the Closing and the delivery of the Shares and Warrant Shares.

      5.11 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission 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. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

      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 Purchaser exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Purchaser may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in
whole or in part without prejudice to its future actions and rights; PROVIDED,
HOWEVER, in the case of a rescission of an exercise of a Warrant, the Purchaser
shall be required to return any shares of Common Stock delivered in connection
with any such rescinded exercise notice.

      5.14 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence

                                       31

<PAGE>

reasonably satisfactory to the Company of such loss, theft or destruction as
well as the execution and delivery of an indemnity agreement in form and
substance reasonably satisfactory to the Company. 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
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations 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 Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

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

      5.18 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

                                       32

<PAGE>

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.

                            (SIGNATURE PAGES FOLLOW)

                                       33

<PAGE>

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

GAMMACAN INTERNATIONAL, INC.                            ADDRESS FOR NOTICE:

By: _______________________________
    Name:
    Title:

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                      SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       34

<PAGE>

        [PURCHASER SIGNATURE PAGES TO GCAN SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: ___________________________________________________________

SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: ______________________________

Name of Authorized Signatory: ________________________________________________

Title of Authorized Signatory: _______________________________________________

Email Address of Purchaser:___________________________________________________

Fax Number of Purchaser: _____________________________________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as address for
notice):

Subscription Amount: $____________________

Shares: ___________________

Warrant Shares: _________________

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       35

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