Document:

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

     

    COMMON
      STOCK PURCHASE WARRANT

    

     GENSPERA,
      INC.

     

    Warrant
      Shares: _______

    Initial
      Exercise Date: March ___, 2008

     

    THIS
      COMMON STOCK PURCHASE WARRANT (the “Warrant”)
      certifies that, for value received, _____________ (the “Holder”)
      is
      entitled, upon the terms and subject to the limitations on exercise and the
      conditions hereinafter set forth, at any time on or after the date hereof (the
      “Initial
      Exercise Date”)
      and on
      or prior to the close of business on the five year anniversary of the Initial
      Exercise Date (the “Termination
      Date”)
      but
      not thereafter, to subscribe for and purchase from GenSpera, Inc., a Delaware
      corporation (the “Company”),
      up to
      ______ shares (the “Warrant
      Shares”)
      of
      Common Stock. The purchase price of one share of Common Stock under this Warrant
      shall be equal to the Exercise Price, as defined in Section 2(b). 

     

    Section
      1. Definitions.
      

     

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

     

    
      
         

      

      
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    “Board
      of Directors”
means
      the board of directors of the Company.

     

    “Business
      Day”
means
      any day except any Saturday, any Sunday, any day which is 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.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

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

     

    “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 members of the Board of
      Directors or a majority of the members of a committee of directors established
      for such purpose, (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, (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
      synergistic 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) securities issued for cash at the prevailing market price
      on
      a Trading Market. 

     

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

     

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

     

    “Trading
      Day”
means
      a
      day on which the New York Stock Exchange is open for trading.

     

    
      
         

      

      
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    “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, and the OTC Bulletin Board.

     

    “Transfer
      Agent”
means
      American Stock Transfer and Trust Company, the current transfer agent of the
      Company with a mailing address of 59 Maiden Lane, New York, New York 10038
      and a
      facsimile number of (718) 921-8336, 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 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
      OTC Bulletin Board is not a Trading Market, the volume weighted average price
      of
      the Common Stock for such date (or the nearest preceding date) on the OTC
      Bulletin Board; (c) if the Common Stock is not then listed or quoted on the
      OTC
      Bulletin Board 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 (d) in all other cases, the fair
      market value of a share of Common Stock as determined by an independent
      appraiser selected in good faith by the Purchasers of a majority in interest
      of
      the Securities then outstanding and reasonably acceptable to the Company, the
      fees and expenses of which shall be paid by the Company.

     

    Section
      2. Exercise.

     

    a) Exercise
      of Warrant.
      Exercise of the purchase rights represented by this Warrant may be made, in
      whole or in part, at any time or times on or after the Initial Exercise Date
      and
      on or before the Termination Date by delivery to the Company (or such other
      office or agency of the Company as it may designate by notice in writing to
      the
      registered Holder at the address of the Holder appearing on the books of the
      Company) of a duly executed facsimile copy of the Notice of Exercise Form
      annexed hereto; and, within 3 Business Days of the date said Notice of Exercise
      is delivered to the Company, the Company shall have received payment of the
      aggregate Exercise Price of the shares thereby purchased by wire transfer or
      cashier’s check drawn on a United States bank. Notwithstanding anything herein
      to the contrary, the Holder shall not be required to physically surrender this
      Warrant to the Company until the Holder has purchased all of the Warrant Shares
      available hereunder and the Warrant has been exercised in full, in which case,
      the Holder shall surrender this Warrant to the Company for cancellation within
      3
      Business Days of the date the final Notice of Exercise is delivered to the
      Company. Partial exercises of this Warrant resulting in purchases of a portion
      of the total number of Warrant Shares available hereunder shall have the effect
      of lowering the outstanding number of Warrant Shares purchasable hereunder
      in an
      amount equal to the applicable number of Warrant Shares purchased. The Holder
      and the Company shall

     

    
      
         

      

      
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    maintain
      records showing the number of Warrant Shares purchased and the date of such
      purchases. The Company shall deliver any objection to any Notice of Exercise
      Form within 1 Business Day of receipt of such notice. In the event of any
      dispute or discrepancy, the records of the Holder shall be controlling and
      determinative in the absence of manifest error. The
      Holder and any assignee, by acceptance of this Warrant, acknowledge and agree
      that, by reason of the provisions of this paragraph, following the purchase
      of a
      portion of the Warrant Shares hereunder, the number of Warrant Shares available
      for purchase hereunder at any given time may be less than the amount stated
      on
      the face hereof.

     

    b) Exercise
      Price.
      The
      exercise price per share of the Common Stock under this Warrant shall be
$1.00,
      subject
      to adjustment hereunder (the “Exercise
      Price”).

     

    c) Cashless
      Exercise.
      If at
      any time after the earlier of (i) the one year anniversary of the date of the
      Initial Exercise Date and (ii) the completion of the then-applicable holding
      period required by Rule 144, or any successor provision then in effect, there
      is
      no effective registration statement registering, or no current prospectus
      available for, the resale of the Warrant Shares by the Holder, then this Warrant
      may also be exercised at such time by means of a “cashless exercise” in which
      the Holder shall be entitled to receive a certificate for the number of Warrant
      Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A),
      where:

     

    (A)
      = the
      VWAP on the Business Day immediately preceding the date of such
      election;

    

    (B)
      = the
      Exercise Price of this Warrant, as adjusted; and 

    

    (X)
      = the
      number of Warrant Shares issuable upon exercise of this Warrant in accordance
      with the terms of this Warrant by means of a cash exercise rather than a
      cashless exercise.

    

    Notwithstanding
      anything herein to the contrary, on the Termination Date, this Warrant shall
      be
      automatically exercised via cashless exercise pursuant to this Section
      2(c).

    

    d) Exercise
      Limitations.
      The
      Company shall not effect any exercise of this Warrant, and a Holder shall not
      have the right to exercise any portion of this Warrant, pursuant to Section
      2 or
      otherwise, to the extent that after giving effect to such issuance after
      exercise as set forth on the applicable Notice of Exercise, the Holder (together
      with the Holder’s Affiliates, and any other person or entity acting as a group
      together with the Holder or any of the Holder’s Affiliates), would beneficially
      own in excess of the Beneficial Ownership Limitation (as defined below). 
For purposes of the foregoing sentence, the number of shares of Common Stock
      beneficially owned by the Holder and its Affiliates shall include the number
      of
      shares of Common Stock issuable upon exercise of this Warrant with respect
      to
      which such determination is being made, but shall exclude the number of shares
      of Common Stock which would be issuable upon (A) exercise of the remaining,
      nonexercised portion of this Warrant beneficially owned by the Holder
      or

     

    
      
         

      

      
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    any
      of
      its Affiliates and (B) exercise or conversion of the unexercised or nonconverted
      portion of any other securities of the Company (including, without limitation,
      any other Common Stock Equivalents) subject to a limitation on conversion or
      exercise analogous to the limitation contained herein beneficially owned by
      the
      Holder or any of its affiliates.  Except as set forth in the preceding
      sentence, for purposes of this Section 2(c), beneficial ownership shall be
      calculated in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder, it being acknowledged by the Holder
      that
      the Company is not representing to the Holder that such calculation is in
      compliance with Section 13(d) of the Exchange Act and the Holder is solely
      responsible for any schedules required to be filed in accordance therewith.
      To
      the extent that the limitation contained in this Section 2(d) applies, the
      determination of whether this Warrant is exercisable (in relation to other
      securities owned by the Holder together with any Affiliates) and of which
      portion of this Warrant is exercisable shall be in the sole discretion of the
      Holder, and the submission of a Notice of Exercise shall be deemed to be the
      Holder’s determination of whether this Warrant is exercisable (in relation to
      other securities owned by the Holder together with any Affiliates) and of which
      portion of this Warrant is exercisable, in each case subject to the Beneficial
      Ownership Limitation, and the Company shall have no obligation to verify or
      confirm the accuracy of such determination. In addition, a determination as
      to
      any group status as contemplated above shall be determined in accordance with
      Section 13(d) of the Exchange Act and the rules and regulations promulgated
      thereunder. For purposes of this Section 2(d), in determining the number of
      outstanding shares of Common Stock, a Holder may rely on the number of
      outstanding shares of Common Stock as reflected in (x) the Company’s most recent
      periodic or annual report, as the case may be, (y) a more recent public
      announcement by the Company or (z) any other notice by the Company or the
      Transfer Agent setting forth the number of shares of Common Stock
      outstanding.  Upon the written or oral request of a Holder, the Company
      shall within two Trading Days confirm orally and in writing to the Holder the
      number of shares of Common Stock then outstanding.  In any case, the number
      of outstanding shares of Common Stock shall be determined after giving effect
      to
      the conversion or exercise of securities of the Company, including this Warrant,
      by the Holder or its Affiliates since the date as of which such number of
      outstanding shares of Common Stock was reported. The “Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice
      to the Company, may increase or decrease the Beneficial Ownership Limitation
      provisions of this Section 2(c), provided that the Beneficial Ownership
      Limitation in no event exceeds 9.99% of the number of shares of the Common
      Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock upon exercise of this Warrant held by the Holder and the provisions of
      this Section 2(d) shall continue to apply. Any such increase or decrease will
      not be effective until the 61st
      day
      after such notice is delivered to the Company. The provisions of this paragraph
      shall be construed and implemented in a manner otherwise than in strict
      conformity with the terms of this Section 2(c) to correct this paragraph (or
      any
      portion hereof) which may be defective or inconsistent with the intended
      Beneficial Ownership Limitation herein contained or to make changes or
      supplements necessary or desirable to properly give effect to such

     

    
      
         

      

      
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    limitation.
      The limitations contained in this paragraph shall apply to a successor holder
      of
      this Warrant.

     

    e) Mechanics
      of Exercise.
      

     

    i. Delivery
      of Certificates Upon Exercise.
      Certificates for shares purchased hereunder shall be transmitted by the transfer
      agent of the Company to the Holder by crediting the account of the Holder’s
      prime broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission (“DWAC”)
      system
      if the Company is then a participant in such system and either (A) there is
      an
      effective registration statement permitting the resale of the Warrant Shares
      by
      the Holder or (B) the shares are eligible for resale without volume or
      manner-of-sale limitations pursuant to Rule 144, and otherwise by physical
      delivery to the address specified by the Holder in the Notice of Exercise within
      3 Business Days from the delivery to the Company of the Notice of Exercise
      Form,
      surrender of this Warrant (if required) and payment of the aggregate Exercise
      Price as set forth above (the “Warrant
      Share Delivery Date”).
      This
      Warrant shall be deemed to have been exercised on the date the Exercise Price
      is
      received by the Company. The Warrant Shares shall be deemed to have been issued,
      and Holder or any other person so designated to be named therein shall be deemed
      to have become a holder of record of such shares for all purposes, as of the
      date the Warrant has been exercised by payment to the Company of the Exercise
      Price (or by cashless exercise, if permitted) and all taxes required to be
      paid
      by the Holder, if any, pursuant to Section 2(e)(v) prior to the issuance of
      such
      shares, have been paid. 

     

    ii. Delivery
      of New Warrants Upon Exercise.
      If this
      Warrant shall have been exercised in part, the Company shall, at the request
      of
      a Holder and upon surrender of this Warrant certificate, at the time of delivery
      of the certificate or certificates representing Warrant Shares, deliver to
      Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased
      Warrant Shares called for by this Warrant, which new Warrant shall in all other
      respects be identical with this Warrant.

     

    iii. Rescission
      Rights.
      If the
      Company fails to cause the transfer agent of the Company to transmit to the
      Holder a certificate or the certificates representing the Warrant Shares
      pursuant to Section 2(e)(i) by the Warrant Share Delivery Date, then, the Holder
      will have the right to rescind such exercise.

     

    iv. No
      Fractional Shares or Scrip.
      No
      fractional shares or scrip representing fractional shares shall be issued upon
      the exercise of this Warrant. As to any fraction of a share which Holder would
      otherwise be entitled to purchase upon such exercise, the Company shall, at
      its
      election,

     

    
      
         

      

      
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    either
      pay a cash adjustment in respect of such final fraction in an amount equal
      to
      such fraction multiplied by the Exercise Price or round up to the next whole
      share.

     

    v. Charges,
      Taxes and Expenses.
      Issuance of certificates for Warrant Shares shall be made without charge to
      the
      Holder for any issue or transfer tax or other incidental expense in respect
      of
      the issuance of such certificate, all of which taxes and expenses shall be
      paid
      by the Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however,
      that in
      the event certificates for Warrant Shares are to be issued in a name other
      than
      the name of the Holder, this Warrant when surrendered for exercise shall be
      accompanied by the Assignment Form attached hereto duly executed by the Holder
      and the Company may require, as a condition thereto, the payment of a sum
      sufficient to reimburse it for any transfer tax incidental thereto.

     

    vi. Closing
      of Books.
      The
      Company will not close its stockholder books or records in any manner which
      prevents the timely exercise of this Warrant, pursuant to the terms
      hereof.

     

    Section
      3. Certain
      Adjustments.

     

    a) Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding: (i) pays a stock
      dividend or otherwise make a distribution or distributions on shares of its
      Common Stock or any other equity or equity equivalent securities payable in
      shares of Common Stock (which, for avoidance of doubt, shall not include any
      shares of Common Stock issued by the Company upon exercise of this Warrant),
      (ii) subdivides outstanding shares of Common Stock into a larger number of
      shares, (iii) combines (including by way of reverse stock split) outstanding
      shares of Common Stock into a smaller number of shares or (iv) issues by
      reclassification of shares of the Common Stock any shares of capital stock
      of
      the Company, then in each case the Exercise Price shall be multiplied by a
      fraction of which the numerator shall be the number of shares of Common Stock
      (excluding treasury shares, if any) outstanding immediately before such event
      and of which the denominator shall be the number of shares of Common Stock
      outstanding immediately after such event and the number of shares issuable
      upon
      exercise of this Warrant shall be proportionately adjusted such that the
      aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment
      made pursuant to this Section 3(a) shall become effective immediately after
      the
      record date for the determination of stockholders entitled to receive such
      dividend or distribution and shall become effective immediately after the
      effective date in the case of a subdivision, combination or
      re-classification.

     

    b) Subsequent
      Equity Sales.
      If the
      Company or any Subsidiary thereof, as applicable, at any time while this Warrant
      is outstanding, shall sell or grant any option to purchase, or sell or grant
      any
      right to reprice, or otherwise dispose of or issue (or announce any offer,
      sale,
      grant or any option to purchase or other disposition) any

     

    
      
         

      

      
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    Common
      Stock or Common Stock Equivalents entitling any Person to acquire shares of
      Common Stock, at an effective price per share less than the then Exercise Price
      (such lower price, the “Base
      Share Price”
and
      such issuances collectively, a “Dilutive
      Issuance”)
      (if
      the holder of the Common Stock or Common Stock Equivalents so issued shall
      at
      any time, whether by operation of purchase price adjustments, reset provisions,
      floating conversion, exercise or exchange prices or otherwise, or due to
      warrants, options or rights per share which are issued in connection with such
      issuance, be entitled to receive shares of Common Stock at an effective price
      per share which is less than the Exercise Price, such issuance shall be deemed
      to have occurred for less than the Exercise Price on such date of the Dilutive
      Issuance), then, the Exercise Price shall be reduced and only reduced to equal
      the Base Share Price and the number of Warrant Shares issuable hereunder shall
      be increased such that the aggregate Exercise Price payable hereunder, after
      taking into account the decrease in the Exercise Price, shall be equal to the
      aggregate Exercise Price prior to such adjustment. Such adjustment shall be
      made
      whenever such Common Stock or Common Stock Equivalents are issued.
      Notwithstanding the foregoing, no adjustments shall be made, paid or issued
      under this Section 3(b) in respect of an Exempt Issuance. The Company shall
      notify the Holder, in writing, no later than the Business Day following the
      issuance of any Common Stock or Common Stock Equivalents subject to this Section
      3(b), indicating therein the applicable issuance price, or applicable reset
      price, exchange price, conversion price and other pricing terms (such notice,
      the “Dilutive
      Issuance Notice”).
      For
      purposes of clarification, whether or not the Company provides a Dilutive
      Issuance Notice pursuant to this Section 3(b), upon the occurrence of any
      Dilutive Issuance, after the date of such Dilutive Issuance the Holder is
      entitled to receive a number of Warrant Shares based upon the Base Share Price
      regardless of whether the Holder accurately refers to the Base Share Price
      in
      the Notice of Exercise.

     

    c) Subsequent
      Rights Offerings.
      If the
      Company, at any time while the Warrant is outstanding, shall issue rights,
      options or warrants to all holders of Common Stock (and not to Holders)
      entitling them to subscribe for or purchase shares of Common Stock at a price
      per share less than the VWAP at the record date mentioned below, then, the
      Exercise Price shall be multiplied by a fraction, of which the denominator
      shall
      be the number of shares of the Common Stock outstanding on the date of issuance
      of such rights or warrants plus the number of additional shares of Common Stock
      offered for subscription or purchase, and of which the numerator shall be the
      number of shares of the Common Stock outstanding on the date of issuance of
      such
      rights or warrants plus the number of shares which the aggregate offering price
      of the total number of shares so offered (assuming receipt by the Company in
      full of all consideration payable upon exercise of such rights, options or
      warrants) would purchase at such VWAP. Such adjustment shall be made whenever
      such rights or warrants are issued, and shall become effective immediately
      after
      the record date for the determination of stockholders entitled to receive such
      rights, options or warrants. 

     

    d) Pro
      Rata Distributions.
      If the
      Company, at any time while this Warrant is outstanding, shall distribute to
      all
      holders of Common Stock (and not to Holders of the Warrants) evidences of its
      indebtedness or assets (including cash and cash dividends) or rights or warrants
      to subscribe for or purchase any security other than the Common
      Stock

     

    
      
         

      

      
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    (which
      shall be subject to Section 3(b)), then in each such case the Exercise Price
      shall be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to receive
      such distribution by a fraction of which the denominator shall be the VWAP
      determined as of the record date mentioned above, and of which the numerator
      shall be such VWAP on such record date less the then per share fair market
      value
      at such record date of the portion of such assets or evidence of indebtedness
      so
      distributed applicable to one outstanding share of the Common Stock as
      determined by the Board of Directors in good faith. In either case the
      adjustments shall be described in a statement provided to the Holder of the
      portion of assets or evidences of indebtedness so distributed or such
      subscription rights applicable to one share of Common Stock. Such adjustment
      shall be made whenever any such distribution is made and shall become effective
      immediately after the record date mentioned above.

     

    e) Fundamental
      Transaction.
      If, at
      any time while this Warrant is outstanding, (i) the Company effects any merger
      or consolidation of the Company with or into another Person, (ii) the Company
      effects any sale of all or substantially all of its assets in one or a series
      of
      related transactions, (iii) any tender offer or exchange offer (whether by
      the
      Company or another Person) is completed pursuant to which holders of Common
      Stock are permitted to tender or exchange their shares for other securities,
      cash or property or (iv) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (each “Fundamental
      Transaction”),
      then,
      upon any subsequent exercise of this Warrant, the Holder shall have the right
      to
      receive, for each Warrant Share that would have been issuable upon such exercise
      immediately prior to the occurrence of such Fundamental Transaction, the number
      of shares of Common Stock of the successor or acquiring corporation or of the
      Company, if it is the surviving corporation, and any additional consideration
      (the “Alternate
      Consideration”)
      receivable as a result of such merger, consolidation or disposition of assets
      by
      a holder of the number of shares of Common Stock for which this Warrant is
      exercisable immediately prior to such event. For purposes of any such exercise,
      the determination of the Exercise Price shall be appropriately adjusted to
      apply
      to such Alternate Consideration based on the amount of Alternate Consideration
      issuable in respect of one share of Common Stock in such Fundamental
      Transaction, and the Company shall apportion the Exercise Price among the
      Alternate Consideration in a reasonable manner reflecting the relative value
      of
      any different components of the Alternate Consideration. If holders of Common
      Stock are given any choice as to the securities, cash or property to be received
      in a Fundamental Transaction, then the Holder shall be given the same choice
      as
      to the Alternate Consideration it receives upon any exercise of this Warrant
      following such Fundamental Transaction. To the extent necessary to effectuate
      the foregoing provisions, any successor to the Company or surviving entity
      in
      such Fundamental Transaction shall issue to the Holder a new warrant consistent
      with the foregoing provisions and evidencing the Holder’s right to exercise such
      warrant into Alternate Consideration. The terms of any agreement pursuant to
      which a Fundamental Transaction is effected shall include terms requiring any
      such successor or surviving entity to comply with the provisions of this Section
      3(e) and insuring that this Warrant (or any such replacement security) will
      be
      similarly adjusted upon any

     

    
      
         

      

      
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    subsequent
      transaction analogous to a Fundamental Transaction. Notwithstanding anything
      to
      the contrary, in the event of a Fundamental Transaction that is (1) an all
      cash
      transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the
      Exchange Act, or (3) a Fundamental Transaction involving a person or entity
      not
      traded on a national securities exchange, the Nasdaq Global Select Market,
      the
      Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor
      entity shall pay at the Holder’s option, exercisable at any time concurrently
      with or within 30 days after the consummation of the Fundamental Transaction,
      an
      amount of cash equal to the value of this Warrant as determined in accordance
      with the Black Scholes Option Pricing Model obtained from the “OV” function on
      Bloomberg L.P. using (A) a price per share of Common Stock equal to the VWAP
      of
      the Common Stock for the Business Day immediately preceding the date of
      consummation of the applicable Fundamental Transaction, (B) a risk-free interest
      rate corresponding to the U.S. Treasury rate for a 30 day period immediately
      prior to the consummation of the applicable Fundamental Transaction, (C) an
      expected volatility equal to the 100 day volatility obtained from the “HVT”
function on Bloomberg L.P. determined as of the Business Day immediately
      following the public announcement of the applicable Fundamental Transaction
      and
      (D) a remaining option time equal to the time between the date of the public
      announcement of such transaction and the Termination Date. 

     

    f) Calculations.
      All
      calculations under this Section 3 shall be made to the nearest cent or the
      nearest 1/100th of a share, as the case may be. For purposes of this Section
      3,
      the number of shares of Common Stock deemed to be issued and outstanding as
      of a
      given date shall be the sum of the number of shares of Common Stock (excluding
      treasury shares, if any) issued and outstanding.

     

    g) Notice
      to Holder.
      

     

    i. Adjustment
      to Exercise Price.
      Whenever the Exercise Price is adjusted pursuant to any provision of this
      Section 3, the Company shall promptly mail to the Holder a notice setting forth
      the Exercise Price after such adjustment and setting forth a brief statement
      of
      the facts requiring such adjustment. 

     

    ii. Notice
      to Allow Exercise by Holder.
      If (A)
      the Company shall declare a dividend (or any other distribution in whatever
      form) on the Common Stock, (B) the Company shall declare a special nonrecurring
      cash dividend on or a redemption of the Common Stock, (C) the Company shall
      authorize the granting to all holders of the Common Stock rights or warrants
      to
      subscribe for or purchase any shares of capital stock of any class or of any
      rights, (D) the approval of any stockholders of the Company shall be required
      in
      connection with any reclassification of the Common Stock, any consolidation
      or
      merger to which the Company is a party, any sale or transfer of all or
      substantially all of the assets of the Company, of any compulsory share exchange
      whereby the Common Stock is converted into other securities, cash or property,
      or (E) the Company shall authorize the voluntary or involuntary dissolution,
      liquidation or

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    winding
      up of the affairs of the Company, then, in each case, the Company shall cause
      to
      be mailed to the Holder at its last address as it shall appear upon the Warrant
      Register of the Company, at least 20 calendar days prior to the applicable
      record or effective date hereinafter specified, a notice stating (x) the date
      on
      which a record is to be taken for the purpose of such dividend, distribution,
      redemption, rights or warrants, or if a record is not to be taken, the date
      as
      of which the holders of the Common Stock of record to be entitled to such
      dividend, distributions, redemption, rights or warrants are to be determined
      or
      (y) the date on which such reclassification, consolidation, merger, sale,
      transfer or share exchange is expected to become effective or close, and the
      date as of which it is expected that holders of the Common Stock of record
      shall
      be entitled to exchange their shares of the Common Stock for securities, cash
      or
      other property deliverable upon such reclassification, consolidation, merger,
      sale, transfer or share exchange; provided that the failure to mail such notice
      or any defect therein or in the mailing thereof shall not affect the validity
      of
      the corporate action required to be specified in such notice. The Holder is
      entitled to exercise this Warrant during the period commencing on the date
      of
      such notice to the effective date of the event triggering such
      notice.

     

    Section
      4. Transfer
      of Warrant.

     

    a) Transferability.
      Subject
      to compliance with any applicable securities laws and the conditions set forth
      in Section 4(d), this Warrant and all rights hereunder (including, without
      limitation, any registration rights) are transferable, in whole or in part,
      upon
      surrender of this Warrant at the principal office of the Company or its
      designated agent, together with a written assignment of this Warrant
      substantially in the form attached hereto duly executed by the Holder or its
      agent or attorney and funds sufficient to pay any transfer taxes payable upon
      the making of such transfer. Upon such surrender and, if required, such payment,
      the Company shall execute and deliver a new Warrant or Warrants in the name
      of
      the assignee or assignees, as applicable, and in the denomination or
      denominations specified in such instrument of assignment, and shall issue to
      the
      assignor a new Warrant evidencing the portion of this Warrant not so assigned,
      and this Warrant shall promptly be cancelled. The Warrant, if properly assigned,
      may be exercised by a new holder for the purchase of Warrant Shares without
      having a new Warrant issued. 

     

    b) New
      Warrants.
      This
      Warrant may be divided or combined with other Warrants upon presentation hereof
      at the aforesaid office of the Company, together with a written notice
      specifying the names and denominations in which new Warrants are to be issued,
      signed by the Holder or its agent or attorney. Subject to compliance with
      Section 4(a), as to any transfer which may be involved in such division or
      combination, the Company shall execute and deliver a new Warrant or Warrants
      in
      exchange for the Warrant or Warrants to be divided or combined in accordance
      with such notice. All Warrants issued on transfers or exchanges shall be dated
      the original Issue Date and shall

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    be
      identical with this Warrant except as to the number of Warrant Shares issuable
      pursuant thereto. 

     

    c) Warrant
      Register.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    d) Transfer
      Restrictions.
      If,
      at the
time
      of
      the surrender of this Warrant in connection with any transfer of this Warrant,
      the transfer of this Warrant shall not be either (i) registered pursuant to
      an
      effective registration
      statement under the Securities Act
      and
under
      applicable state securities or blue sky laws or (ii) eligible for resale without
      volume or manner-of-sale restrictions pursuant to Rule 144, the Company may
      require, as a condition of allowing such transfer, that the Holder or transferee
      of this Warrant, as the case may be, comply
      with the provisions of Section 5.7 of the Purchase Agreement.

     

    Section
      5. Miscellaneous.

     

    a) No
      Rights as Stockholder Until Exercise.
      This
      Warrant does not entitle the Holder to any voting rights or other rights as
      a
      stockholder of the Company prior to the exercise hereof as set forth in Section
      2(e)(i). 

     

    b) Loss,
      Theft, Destruction or Mutilation of Warrant.
      The
      Company covenants that upon receipt by the Company of evidence reasonably
      satisfactory to it of the loss, theft, destruction or mutilation of this Warrant
      or any stock certificate relating to the Warrant Shares, and in case of loss,
      theft or destruction, of indemnity or security reasonably satisfactory to it
      (which, in the case of the Warrant, shall not include the posting of any bond),
      and upon surrender and cancellation of such Warrant or stock certificate, if
      mutilated, the Company will make and deliver a new Warrant or stock certificate
      of like tenor and dated as of such cancellation, in lieu of such Warrant or
      stock certificate.

     

    c) Saturdays,
      Sundays, Holidays, etc.
      If the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then, such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

    d) Authorized
      Shares.
      

     

    The
      Company covenants that, during the period the Warrant is outstanding, it will
      reserve from its authorized and unissued Common Stock a sufficient number of
      shares to provide for the issuance of the Warrant Shares upon the exercise
      of
      any purchase rights under this Warrant. The Company further covenants that
      its
      issuance of this Warrant shall constitute full authority to its officers who
      are
      charged with the duty of executing stock certificates to

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    execute
      and issue the necessary certificates for the Warrant Shares upon the exercise
      of
      the purchase rights under this Warrant. The Company will take all such
      reasonable action as may be necessary to assure that such Warrant Shares may
      be
      issued as provided herein without violation of any applicable law or regulation,
      or of any requirements of the Trading Market upon which the Common Stock may
      be
      listed. The Company covenants that all Warrant Shares which may be issued upon
      the exercise of the purchase rights represented by this Warrant will, upon
      exercise of the purchase rights represented by this Warrant, be duly authorized,
      validly issued, fully paid and nonassessable and free from all taxes, liens
      and
      charges created by the Company in respect of the issue thereof (other than
      taxes
      in respect of any transfer occurring contemporaneously with such issue).

     

    Except
      and to the extent as waived or consented to by the Holder, the Company shall
      not
      by any action, including, without limitation, amending its certificate of
      incorporation or through any reorganization, transfer of assets, consolidation,
      merger, dissolution, issue or sale of securities or any other voluntary action,
      avoid or seek to avoid the observance or performance of any of the terms of
      this
      Warrant, but will at all times in good faith assist in the carrying out of
      all
      such terms and in the taking of all such actions as may be necessary or
      appropriate to protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company will
      (i) not increase the par value of any Warrant Shares above the amount payable
      therefor upon such exercise immediately prior to such increase in par value,
      (ii) take all such action as may be necessary or appropriate in order that
      the
      Company may validly and legally issue fully paid and nonassessable Warrant
      Shares upon the exercise of this Warrant and (iii) use commercially reasonable
      efforts to obtain all such authorizations, exemptions or consents from any
      public regulatory body having jurisdiction thereof, as may be, necessary to
      enable the Company to perform its obligations under this Warrant.

     

    Before
      taking any action which would result in an adjustment in the number of Warrant
      Shares for which this Warrant is exercisable or in the Exercise Price, the
      Company shall obtain all such authorizations or exemptions thereof, or consents
      thereto, as may be necessary from any public regulatory body or bodies having
      jurisdiction thereof.

     

    e) Governing
      Law.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Warrant shall be governed by and construed and enforced in accordance
      with the internal laws of the State of Delaware, 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 Warrant (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 Los Angeles. Each party hereby irrevocably submits
      to the exclusive jurisdiction of the state and federal courts sitting in the
      City of Los Angeles for the adjudication of any dispute hereunder or in
      connection

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    herewith
      or with any transaction contemplated hereby or discussed herein, and hereby
      irrevocably waives, and agrees not to assert in any suit, action or proceeding,
      any claim that it is not personally subject to the jurisdiction of any such
      court, that such suit, action or proceeding is improper or is an inconvenient
      venue for such proceeding. Each party hereby irrevocably waives personal service
      of process and consents to process being served in any such suit, action or
      proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices 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. If either party shall commence an action or proceeding to
      enforce any provisions of this Warrant, 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 proceedings or questions
      concerning the construction, validity, enforcement and interpretation of this
      Warrant.

     

    f) Restrictions.
      The
      Holder acknowledges that the Warrant Shares acquired upon the exercise of this
      Warrant, if not registered, will have restrictions upon resale imposed by state
      and federal securities laws.

     

    g) Nonwaiver
      and Expenses.
      No
      course of dealing or any delay or failure to exercise any right hereunder on
      the
      part of Holder shall operate as a waiver of such right or otherwise prejudice
      Holder’s rights, powers or remedies, notwithstanding the fact that all rights
      hereunder terminate on the Termination Date. If the Company willfully and
      knowingly fails to comply with any provision of this Warrant, which results
      in
      any material damages to the Holder, the Company shall pay to Holder such amounts
      as shall be sufficient to cover any costs and expenses including, but not
      limited to, reasonable attorneys’ fees, including those of appellate
      proceedings, incurred by Holder in collecting any amounts due pursuant hereto
      or
      in otherwise enforcing any of its rights, powers or remedies
      hereunder.

     

    h) Notices.
      Any
      notice, request or other document required or permitted to be given or delivered
      to the Holder by the Company shall be delivered in accordance with the notice
      provisions of the Purchase Agreement.

     

    i) Limitation
      of Liability.
      No
      provision hereof, in the absence of any affirmative action by Holder to exercise
      this Warrant to purchase Warrant Shares, and no enumeration herein of the rights
      or privileges of Holder, shall give rise to any liability of Holder for the
      purchase price of any Common Stock or as a stockholder of the Company, whether
      such liability is asserted by the Company or by creditors of the
      Company.

     

    j) Remedies.
      The
      Holder, in addition to being entitled to exercise all rights granted by law,
      including recovery of damages, will be entitled to specific performance of
      its
      rights under this Warrant. The Company agrees that monetary damages would not
      be
      adequate compensation for any loss incurred by reason of a breach by it of
      the

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    provisions
      of this Warrant and hereby agrees to waive and not to assert the defense in
      any
      action for specific performance that a remedy at law would be
      adequate.

     

    k) Successors
      and Assigns.
      Subject
      to applicable securities laws, this Warrant and the rights and obligations
      evidenced hereby shall inure to the benefit of and be binding upon the
      successors of the Company and the successors and permitted assigns of Holder.
      The provisions of this Warrant are intended to be for the benefit of all Holders
      from time to time of this Warrant and shall be enforceable by the Holder or
      holder of Warrant Shares.

     

    l) Amendment.
      This
      Warrant may be modified or amended or the provisions hereof waived with the
      written consent of the Company and Holder.

     

    m) Severability.
      Wherever possible, each provision of this Warrant shall be interpreted in such
      manner as to be effective and valid under applicable law, but if any provision
      of this Warrant shall be prohibited by or invalid under applicable law, such
      provision shall be ineffective to the extent of such prohibition or invalidity,
      without invalidating the remainder of such provisions or the remaining
      provisions of this Warrant.

     

    n) Headings.
      The
      headings used in this Warrant are for the convenience of reference only and
      shall not, for any purpose, be deemed a part of this Warrant.

     

    

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

    

    

    (Signature
      Pages Follow)

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
      officer thereunto duly authorized as of the date first above
      indicated.

     

    

     

    
      	
              GENSPERA,
                INC.

            
	 
	 
	
              By: 
                __________________________________________

              Name:

              Title:

            

    

     

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

     

     

    NOTICE
      OF EXERCISE

    

    TO: GENSPERA,
      INC.

    

    (1) The
      undersigned hereby elects to purchase ________ Warrant Shares of the Company
      pursuant to the terms of the attached Warrant (only if exercised in full),
      and
      tenders herewith payment of the exercise price in full, together with all
      applicable transfer taxes, if any.

     

    (2) Payment
      shall take the form of (check applicable box):

     

    [
      ] in
      lawful money of the United States; or

     

    [
      ] [if
      permitted] the cancellation of such number of Warrant Shares as is necessary,
      in
      accordance with the formula set forth in subsection 2(c), to exercise this
      Warrant with respect to the maximum number of Warrant Shares purchasable
      pursuant to the cashless exercise procedure set forth in subsection
      2(c).

     

    (3) Please
      issue a certificate or certificates representing said Warrant Shares in the
      name
      of the undersigned or in such other name as is specified below:

     

    _______________________________

     

    

    The
      Warrant Shares shall be delivered to the following DWAC Account Number or by
      physical delivery of a certificate to:

    

    _______________________________

     

    _______________________________

     

    _______________________________

    

    (4)
      Accredited
      Investor.
      The
      undersigned is an “accredited investor” as defined in Regulation D promulgated
      under the Securities Act of 1933, as amended.

    

    [SIGNATURE
      OF HOLDER]

     

    Name
      of
      Investing Entity:
      ________________________________________________________________________

    Signature
      of Authorized Signatory of Investing Entity:
      _________________________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________________________

    Date:
      ________________________________________________________________________________________

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ASSIGNMENT
      FORM

     

    (To
      assign the foregoing warrant, execute

    this
      form
      and supply required information. 

    Do
      not
      use this form to exercise the warrant.)

    

    

    

    FOR
      VALUE
      RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all
      rights evidenced thereby are hereby assigned to

     

    

    _______________________________________________
      whose address is

    

    _______________________________________________________________.

    

    

    

    _______________________________________________________________

    

    Dated:
      ______________, _______

    

    

    Holder’s
      Signature:  _____________________________

    

    Holder’s
      Address:   _____________________________

     

    _____________________________

    

    

    

    Signature
      Guaranteed: ___________________________________________

    

    

    NOTE:
      The
      signature to this Assignment Form must correspond with the name as it appears
      on
      the face of the Warrant, without alteration or enlargement or any change
      whatsoever, and must be guaranteed by a bank or trust company. Officers of
      corporations and those acting in a fiduciary or other representative capacity
      should file proper evidence of authority to assign the foregoing
      Warrant.SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of July ____, 2008, between GenSpera, 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 of 1933, as amended (the “Securities
      Act”),
      and
      Rule 506 promulgated thereunder, the Company desires to issue and sell to each
      Purchaser, and each Purchaser, severally and not jointly, desires to purchase
      from the Company, securities of the Company as more fully described in this
      Agreement.

     

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

     

    “Accounts
      Receivable” shall have the meaning ascribed to such term in Section 3.1(hh).

     

    “Acquiring
      Person” shall have the meaning ascribed to such term in Section
      4.5.

     

    “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 405 under the Securities Act.

     

    “Board
      of Directors”
means
      the board of directors of the Company.

     

    “Business
      Day”
means
      any day except Saturday, Sunday, any day which is 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 and,
      upon the Company becoming listed or quoted on a Trading Market, except any
      day
      that the Common Stock is not trading on the Trading Market.

     

    “Business
      Plan”
means
      the business plan attached hereto as Exhibit
      E.
      

     

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

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    “Closing
      Date”
means
      the Business 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.

     

    “Closing
      Statement”
means
      the Closing Statement in the form Annex
      A
      attached
      hereto.

     

    “Commission”
means
      the United States Securities and Exchange Commission.

     

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

     

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

     

    “Company
      Counsel”
means
      Raul Silvestre, Esq. with offices located at 31200 Via Colinas, Suite 200,
      Westlake Village, CA 91362. 

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered concurrently herewith.

     

    “Discounted
      Purchase Price”
shall
      have the meaning ascribed to such term in Section 4.16. 

     

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

     

    “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.

     

    “Escrow
      Agent”
means
      Signature Bank, a New York State chartered bank and having an office at, 261
      Madison Avenue, New York, New York 10016.

     

    “Escrow
      Agreement”
means
      the escrow agreement entered into prior to the date hereof, by and among the
      Company, T.R. Winston & Company and the Escrow Agent pursuant to which the
      Purchasers, shall deposit Subscription Amounts with the Escrow Agent to be
      applied to the transactions contemplated hereunder. 

     

    “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.

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    “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 members of the Board of
      Directors or a majority of the members of a committee of directors established
      for such purpose (provided, however, any such issuances to consultants shall
      not
      exceed an aggregate of 100,000 shares, subject to adjustment for forward and
      reverse stock splits, stock dividends and similar transactions of the Common
      Stock that occur after the Closing Date, in any 12-month period), (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, or (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 synergistic 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. 

     

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

     

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

     

    “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(w).

     

    “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
      Agreements”
means
      the lock-up agreements, in the form of Exhibit
      D
      attached
      hereto, duly executed by each officer, director and 5% stockholder of the
      Company and each Subsidiary.

     

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

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

     

    “Per
      Share Purchase Price”
equals
      $1.00, 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, joint stock company,
      government (or an agency or subdivision thereof) or other entity of any
      kind.

     

    “Pharmaceutical
      Product”
shall
      have the meaning ascribed to such term in Section 3.1(mm). 

     

    “Pre-Notice”
shall
      have the meaning ascribed to such term in Section 4.16(b). 

     

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

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.8.

     

    “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).

     

    “Risk
      Factors”
means
      the Risk Factors attached hereto as Exhibit
      F.
      

     

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

     

    “Securities”
means
      the 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.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    “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”
means
      any issuance by the Company or any of its Subsidiaries of Common Stock, Common
      Stock Equivalents for cash consideration, Indebtedness (or a combination of
      units hereof).

     

    “Subsequent
      Financing Notice”
shall
      have the meaning ascribed to such term in Section 4.16(b). 

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a),
      and
      shall, where applicable, also include any direct or indirect subsidiary of
      the
      Company formed or acquired after the date hereof.

     

    “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 Lock-Up Agreements, the Escrow Agreement,
      the
      Business Plan, the Risk Factors, the Registration Rights Agreement and any
      other
      documents or agreements executed in connection with the transactions
      contemplated hereunder.

     

    “Variable
      Rate Transaction”
shall
      have the meaning ascribed to such term in Section 4.12(b). 

     

    “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
      Business Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
      time); (b)  if the OTC Bulletin Board is not a Trading Market, the volume
      weighted average price of the Common Stock for such date (or the nearest
      preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
      listed or quoted for trading on the OTC Bulletin Board 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 (d) in all other cases, the fair market value of a share of
      Common Stock as determined by an independent appraiser selected in good faith
      by
      the Purchasers of a majority
      in interest of the Shares then outstanding and reasonably acceptable to the
      Company, the fees and expenses of which shall be paid by the Company.

    

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

     

    “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 five 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 the Purchasers,
      severally and not jointly, agree to purchase, up to an aggregate of Six Million
      Dollars ($6,000,000) of Shares and Warrants. Each Purchaser shall deliver to
      the
      Company via wire transfer or a certified check immediately available funds
      equal
      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 covenants
      and
      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 and
      T.R. Winston shall deliver to the Escrow Agent the Form of Escrow Release Notice
      (as defined in the Escrow Agreement), duly executed.

     

    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, substantially 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 50% of such Purchaser’s Subscription Amount divided by the
      Per Share Purchase Price, with an exercise price equal to $2.00,
      subject
      to adjustment therein; 

     

    (v) the
      Lock-Up Agreements; 

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (vi) the
      Business Plan;

     

    (vii) the
      Risk
      Factors; and

     

    (viii) 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 Escrow Agent;
      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 on the Closing Date of the representations
      and
      warranties of the Purchasers contained herein; 

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

    

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

     

    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 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).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all of the issued
      and outstanding shares of capital stock of each Subsidiary are validly issued
      and are fully paid, non-assessable and free of preemptive and similar rights
      to
      subscribe for or purchase securities. 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, 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
      nor 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.

    

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

     

    (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, the Board of Directors or the
      Company’s stockholders in connection therewith other than in connection with the
      Required Approvals. Each Transaction Document to which it is a party has been
      (or upon delivery will have been) duly executed by the Company and, when
      delivered in accordance with the terms hereof and thereof, will constitute
      the
      valid and binding obligation of the Company enforceable against the Company
      in
      accordance with its terms, except: (i) as limited by general equitable
      principles and applicable bankruptcy, insolvency, reorganization, moratorium
      and
      other laws of general application affecting enforcement of creditors’ rights
      generally, (ii) as limited by laws relating to the availability of specific
      performance, injunctive relief or other equitable remedies and (iii) insofar
      as
      indemnification and contribution provisions may be limited by applicable
      law.

     

    (d) No
      Conflicts.
      The
      execution, delivery and performance by the Company of the Transaction Documents,
      the issuance and sale of the Securities and the consummation by it to which
      it
      is a party 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, (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) the filings required pursuant to Section
      4.4 of this Agreement, (ii) application(s) to each applicable Trading Market
      for
      the listing of the Securities for trading thereon in the time and manner
      required thereby and (iii) the filing of Form D with the Commission and such
      filings as are required to be made under applicable state securities laws
      (collectively, the “Required
      Approvals”).

    

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

     

    (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 other than
      restrictions on transfer provided for in the Transaction Documents. 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).
      Immediately prior to the Closing, the number of shares of Common Stock
      outstanding on a fully-diluted basis shall be 11,826,718. 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, and
      as
      otherwise set forth on Schedule
      3.1(g),
      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 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 or others is required
      for the issuance and sale of the Securities. Except as set forth on Schedule
      3.1(g),
      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) Financial
      Statements.
      The
      audited financial statements for fiscal 2007 are attached hereto on Schedule
      3.1(h).
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company 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.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (i) Material
      Changes; Undisclosed Events, Liabilities or Developments.
      Since
      the date of the latest audited financial statements attached hereto as
Schedule
      3.1(h),
      except
      as specifically disclosed on Schedule
      3.1(i):
      (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.
      

     

    (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. 

     

    (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 or such Subsidiary, and neither the Company nor
      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 in favor of any third party, 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. The Company and its
      Subsidiaries are in compliance 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.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (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, except where
      the
      failure to possess such permits could not 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 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 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 necessary or material for use in connection with
      their respective businesses and which the 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 any of 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.

    
      
        
        

      

      
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    (p) Insurance.
      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 $5,000,000. 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 disclosed on Schedule
      3.1(q),
      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 $120,000 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) Internal
      Accounting Controls.
      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. 

     

    (s) Certain
      Fees.
      Except
      as disclosed on Schedule
      3.1(s),
      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 which have been incurred by the Company.

     

    (t) Registration
      Rights.
      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.

    
      
        
        

      

      
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    (u) 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 therein, 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.

     

    (v) 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 (i) the Securities Act
      which
      would require the registration of any such securities under the Securities
      Act,
      or (ii) any applicable shareholder approval provisions of any Trading Market
      on
      which any of the securities of the Company are listed or
      designated.

     

    (w) Solvency.
      Based
      on the consolidated 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(ww)
      sets
      forth as of the date 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
      (x) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (y) 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 (z) the present value
      of
      any lease payments
      in excess of $50,000 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.

    

      
        
          
          

        

        
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    (x) Tax
      Status.
      Except
      as set forth on Schedule
      3.1(x)
      and
      except for matters that would not, individually or in the aggregate, have or
      reasonably be expected to result in a Material Adverse Effect, the Company
      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 a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

    (y) 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.

     

    (z) 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.

     

    (aa) Accountants.
      The
      Company’s accounting firm is set forth on Schedule
      3.1(aa)
      of the
      Disclosure Schedules. 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 Registration Statement.

     

    (bb) 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 which could affect the Company’s
      ability to perform any of its
      obligations under any of the Transaction Documents, and the Company is current
      with respect to any fees owed to its accountants and lawyers.  

    
      

        
          
            
            

          

          
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    (cc)  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.

     

    (dd) Marketing
      Rights.
      Neither
      the Company nor any of its Subsidiaries have granted rights to license, market,
      or sell its products or services to any other Person and is not bound by any
      agreement that affects the Company’s (or any Subsidiary’s) exclusive right to
      develop, distribute, market or sell its products or services.

     

    (ee) Employees.
      Neither
      the Company nor any of its Subsidiaries has any collective bargaining agreements
      with any of its employees. There is no labor union organizing activity pending
      or, to the Company’s knowledge, threatened with respect to the Company or its
      Subsidiaries. Neither the Company nor any of its Subsidiaries is a party to
      or
      bound by any currently effective employment contract, deferred compensation
      arrangement, bonus plan, incentive plan, profit sharing plan, retirement
      agreement or other employee compensation plan or agreement. To the Company’s
      knowledge, no employee of the Company or any Subsidiary, nor any consultant
      with
      whom the Company or any Subsidiary has contracted, is in violation of any term
      of any employment contract, proprietary information agreement or any other
      agreement relating to the right of any such individual to be employed by, or
      to
      contract with, the Company (or any Subsidiary) because of the nature of the
      business to be conducted by the Company (or any Subsidiary); and to the
      Company’s knowledge the continued employment by the Company (and its
      Subsidiaries) of their respective present employees, and the performance of
      the
      Company’s (and Subsidiaries’) contracts with its independent contractors, will
      not result in any such violation. The Company has not received any notice
      alleging that any such violation has occurred. No employee of the Company or
      any
      Subsidiary has been granted the right to continued employment by the Company
      (or
      any Subsidiary) or to any material compensation following termination of
      employment with the Company (or any Subsidiary). The Company is not aware that
      any officer, key employee or group of employees intends to terminate his, her
      or
      their employment with the Company (or any Subsidiary) nor does the Company
      have
      a present intention to terminate the employment of any officer, key employee
      or
      group of employees. The Company and its Subsidiaries are in compliance 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.

    

      
        
          
          

        

        
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    (ff) Obligations
      of Management.
      Each
      officer and key employee of the Company and its Subsidiaries is currently
      devoting substantially all of his or her business time to the conduct of
      business of the Company and its Subsidiaries. Neither the Company nor any of
      its
      Subsidiaries is aware that any officer or key employee of the Company or any
      Subsidiary is planning to work less than full time at the Company or any
      Subsidiary, as applicable, in the future. No officer or key employee is the
      currently working or, to the Company’s knowledge, plans to work for a
      competitive enterprise, whether or not such officer of key employee is or will
      be compensated by such enterprise.

     

    (gg) Minute
      Books.
      The
      minute books of the Company and its Subsidiaries made available to the
      Purchasers contain a complete summary of all meetings of directors and
      stockholders since the time of incorporation.

     

    (hh) Accounts
      Receivable.
      All
      accounts receivable of the Company and its Subsidiaries that are reflected
      on
      the Company’s and its Subsidiaries’ balance sheets or interim balance sheets or
      on the accounting records of the Company and its Subsidiaries as of the Closing
      Date (collectively, the “Accounts
      Receivable”)
      represent or will represent valid obligations arising from sales actually made
      or services actually performed in the ordinary course of business. Unless paid
      prior to the Closing Date, the Accounts Receivable are or will be as of the
      Closing Date current and collectible net of the respective reserves shown on
      the
      balance sheet or interim balance sheet or on the accounting records of the
      Company and its Subsidiaries as of the Closing Date (which reserves are adequate
      and calculated consistent with past practice and, in the case of the reserve
      as
      of the Closing Date, will not represent a greater percentage of the Accounts
      Receivable as of the Closing Date than the reserve reflected in the interim
      balance sheet represented of the Accounts Receivable reflected therein and
      will
      not represent a material adverse change in the composition of such Accounts
      Receivable in terms of aging). Subject to such reserves, each of the Accounts
      Receivable either has been or will be collected in full without any set-off,
      within ninety days after the day on which it must becomes due and payable.
      There
      is no contest, claim, or right of set-off, other than returns in the ordinary
      course of business, under any agreement and/or contract with any obligor of
      an
      Accounts Receivable relating to the amount or validity of such Accounts
      Receivable. Schedule
      3.1(hh)
      contains
      a complete and accurate list of all Accounts Receivable as of the date of the
      interim balance sheet, which list sets forth the aging of such Accounts
      Receivable.

     

    (ii) Inventory.
      All
      inventory of the Company and the Subsidiaries, whether or not reflected in
      the
      balance sheet or interim balance sheet, consists of a quality and quantity
      usable and salable in the ordinary course of business, except for obsolete
      items
      and items of below standard quality, all of which have been written off or
      written down to net realizable value in the balance sheet or interim balance
      sheet or on the accounting records of the Company and the Subsidiaries as of
      the
      Closing Date, as the case may be. All inventories not written off have been
      priced at the lower of cost or market on the last in, first
      out
      basis. The quantities of each item of inventory (whether raw materials,
      work-in-process, or finished goods) are not excessive, but are reasonable in
      the
      present circumstances of the Company and the Subsidiaries.

    

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

    

     

    (jj) Returns
      and Complaints.
      Neither
      the Company nor any Subsidiary has received any customer complaints concerning
      its respective products and/or services, nor has it had any of its products
      returned by a purchaser thereof, other than minor, nonrecurring warranty
      problems. 

     

    (kk) Employee
      Benefits.
      Except
      as set forth on Schedule
      3.1(kk),
      neither
      the Company nor any Subsidiary has (nor for the two years preceding the date
      hereof has had) any plans which are subject to ERISA. “ERISA”
means
      the Employee Retirement Income Security Act of 1974 or any successor law and
      the
      regulations and rules issued pursuant to that act or any successor
      law.

     

    (ll) Elections.
      To the
      Company’s knowledge, all elections and notices permitted by Section 83(b) of the
      Internal Revenue Code and any analogous provisions of applicable state tax
      laws
      have been timely filed by all employees who have purchased shares of the Common
      Stock under agreements that provide for the vesting of such shares of Common
      Stock.

     

    (mm) FDA.
      As to
      each product subject to the jurisdiction of the U.S. Food and Drug
      Administration (“FDA”)
      under
      the Federal Food, Drug and Cosmetic Act, as amended, and the regulations
      thereunder (“FDCA”)
      that
      is manufactured, packaged, labeled, tested, distributed, sold, and/or marketed
      by the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
      Product”),
      such
      Pharmaceutical Product is being manufactured, packaged, labeled, tested,
      distributed, sold and/or marketed by the Company in compliance with all
      applicable requirements under FDCA and similar laws, rules and regulations
      relating to registration, investigational use, premarket clearance, licensure,
      or application approval, good manufacturing practices, good laboratory
      practices, good clinical practices, product listing, quotas, labeling,
      advertising, record keeping and filing of reports, except where the failure
      to
      be in compliance would not have a Material Adverse Effect. There is no pending,
      completed or, to the Company's knowledge, 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 FDA or any other
      governmental entity, which (i) contests the premarket 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, 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.

    

      
        
          
          

        

        
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    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 and delivery of
      the
      Transaction Documents and performance by such Purchaser of the transactions
      contemplated by the Transaction Documents 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” 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 as of 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), (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.

    

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

    

     

    (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) Confidentiality
      Prior To The Date Hereof.
      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).

     

    (g) Due
      Diligence Review.
      Each
      Purchaser has reviewed the Business Plan and the Risk Factors and had an
      opportunity to obtain all of the information such Purchaser deems necessary
      in
      order to make the decision to purchase the Securities. 

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions. 

     

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

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    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 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.

     

    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.

    

      
        
          
          

        

        
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    (c) Certificates
      evidencing the Shares and Warrant Shares shall not contain any legend (including
      the legend set forth in Section 4.1(b) hereof), (i) while a registration
      statement (including the Registration Statement) covering the resale of such
      security is effective under the Securities Act, (ii) following any sale of
      such
      Shares or Warrant Shares pursuant to Rule 144, (iii) if such Shares or Warrant
      Shares are eligible for sale under Rule 144, without the requirement for the
      Company to be in compliance with the current public information required under
      Rule 144 as to such Underlying Shares and without volume or manner-of-sale
      restrictions, 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 of the Company
      promptly after the Effective Date if required by the transfer agent of the
      Company 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, or if such Warrant Shares may be sold under Rule 144, without the
      requirement for the Company to be in compliance with the current public
      information required under Rule 144 as to such Underlying Shares and without
      volume or manner-of-sale restrictions or if such legend is not otherwise
      required under applicable requirements of the Securities Act (including judicial
      interpretations and pronouncements issued by the staff of the Commission) then
      such 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 Business Days
      following the delivery by a Purchaser to the Company or the transfer agent
      of
      the Company of a certificate representing Shares or Warrant Shares, as the
      case
      may be, issued with a restrictive legend (such third Business 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
      of the Company that enlarge the restrictions on transfer set forth in this
      Section 4. Certificates for Securities subject to legend removal hereunder
      shall
      be transmitted by the transfer agent of the Company to the Purchaser by
      crediting the account of the Purchaser’s prime broker with the Depository Trust
      Company System as directed by such Purchaser.

    

    (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 of the Company)
      delivered for removal of the restrictive legend and subject to Section 4.1(c),
      $10 per Business Day (increasing to $20 per Business Day five (5) Business
      Days
      after such damages have begun to accrue) for each Business Day after the Legend
      Removal Date until such certificate is delivered without a legend. Nothing
      herein shall limit such Purchaser’s right to pursue actual damages for the
      Company’s failure to deliver certificates representing any Securities as
      required by the Transaction Documents, and such Purchaser shall have the right
      to pursue all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive
      relief.

     

    (e) Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      such
      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, and acknowledges 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 upon this
      understanding.

    

      
        
          
          

        

        
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    4.2 Furnishing
      of Information. If after the date hereof the Company becomes subject to the
      rules and regulations of the Exchange Act and as long as any Purchaser owns
      Securities, the Company covenants to timely file (or obtain extensions in
      respect thereof and file within the applicable grace period) all reports
      required to be filed by the Company after the date hereof pursuant
      to the Exchange Act. As long as any Purchaser owns Securities, if the Company
      is
      not required to file reports pursuant to the Exchange Act, it will prepare
      and
      furnish to the Purchasers and make publicly available in accordance with Rule
      144(c) such information as is required for the Purchasers to sell the Securities
      under Rule 144. The Company further covenants that it will take such further
      action as any holder of Securities may reasonably request, 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 to the Purchasers 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 Publicity.
      The Company and each Purchaser shall consult with each other in issuing any
      other press releases with respect to the transactions contemplated hereby,
      and
      neither the Company nor any Purchaser shall issue any such press release nor
      otherwise make any such public statement without the prior consent of the
      Company, with respect to any press release of any Purchaser, or without the
      prior consent of each Purchaser, with respect to any press release of the
      Company, which consent shall not unreasonably be withheld or delayed, except
      if
      such disclosure is required by law, in which case the disclosing party shall
      promptly provide the other party with prior notice of such public statement
      or
      communication. Notwithstanding the foregoing, the Company shall not publicly
      disclose the name of any 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 (a) as required by federal
      securities law in connection with any registration statement contemplated by
      the
      Registration Rights Agreement and (b) to the extent such disclosure is required
      by law or Trading Market regulations, in which case the Company shall provide
      the Purchasers with prior notice of such disclosure permitted under this clause
      (b).

     

    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.

    

      
        
          
          

        

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

     

    4.7 Use
      of
      Proceeds. Except as set forth on Schedule 4.7 attached hereto, 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: (a) 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), (b) the
      redemption of any Common Stock or Common Stock Equivalents or (c) the settlement
      of any outstanding litigation.

     

    4.8 Indemnification
      of Purchasers. Subject to the provisions of this Section 4.8, 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
      in any capacity, 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 (y) for any settlement by a Purchaser Party effected
      without the Company’s prior written consent, which shall not be unreasonably
      withheld or delayed; or (z) to the extent, but only to the extent that a loss,
      claim, damage or liability is attributable to any Purchaser Party’s breach of
      any of the representations, warranties, covenants or agreements made by such
      Purchaser Party in this Agreement or in the other Transaction
      Documents.

    

      
        
          
          

        

        
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    4.9 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. 

     

    4.10 Listing
      of Common Stock.
      The
      Company hereby agrees to use best efforts to obtain the listing of the Common
      Stock on a Trading Market as soon as reasonably practicable following the
      Effective Date. The Company further agrees, if the Company applies to have
      the
      Common Stock traded on any other Trading Market, it will then 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
      then 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. 

     

    4.11 Equal
      Treatment of Purchasers. No consideration (including any modification of any
      Transaction Document) 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.

     

    4.12 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,
      that
      the 90 day period set forth in this Section 4.12 shall be extended for the
      number of Business 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. 

    

      
        
          
          

        

        
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    (b) From
      the
      date hereof until the 12 month anniversary of the later of (i) the Effective
      Date and (ii) the date that the Common Stock is listed on a Trading Market
      and
      as long as the Purchaser hold 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 price, exercise price 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) Notwithstanding
      the foregoing, this Section 4.12 shall not apply in respect of an Exempt
      Issuance, except that no Variable Rate Transaction shall be an Exempt
      Issuance.

     

    4.13 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.

     

    4.14 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.

     

    4.15 Per
      Share Purchase Price Protection. From the date hereof until the date that
      the 18 month anniversary of the date hereof, if in connection with a Subsequent
      Financing, the Company or any Subsidiary 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
      (subject to reverse and forward stock splits and the like) (the “Discounted
      Purchase Price,” as further defined below), the Company shall issue to such
      Purchaser that number of additional shares of Common Stock equal to (a) the
      Subscription Amount paid by such Purchaser at the Closing divided by the
      Discounted Purchase Price, less (b) the Shares issued to such Purchaser at
      the
      Closing pursuant to this Agreement and pursuant to this Section 4.15. The term
      “Discounted Purchase Price” shall mean the amount actually paid in new cash
      consideration by third parties for each 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. The Company shall not refuse to issue
      a
      Purchaser additional Shares hereunder based on any claim that such Purchaser
      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 and the Company posts a surety bond for the benefit
      of
      such Purchaser in the amount of 150% of the market value of such Shares (based
      on the VWAP of the Common Stock on the date of the event giving rise to the
      Company’s obligation hereunder), which is subject to the injunction, which bond
      shall remain in effect until the completion of litigation of the dispute and
      the
      proceeds of which shall be payable to the Purchaser to the extent it obtains
      judgment. 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 4.15 shall not apply to an Exempt Issuance.

    

      
        
          
          

        

        
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    4.16 Most
      Favored Nation Provision.  

     

    (a) From
      the
      date hereof until the date that is the 18 month anniversary of the date hereof,
      if the Company effects a upon any Subsequent Financing, each Purchaser may
      elect, in its sole discretion, to (a) exchange all or some of the Shares (but
      not the Warrants) then held by such Purchaser for any securities or units issued
      in a Subsequent Financing on a $1.00 for $1.00 basis based on the outstanding
      Shares, along with any liquidated damages and other amounts owing thereon,
      and
      the effective price at which such securities are to be sold in such Subsequent
      Financing, or (b) to have any particular provisions of the Subsequent Financing
      legal documents apply to the Transaction Documents ex post facto; provided,
      however,
      that
      this Section 4.16 shall not apply with respect to (i) an Exempt Issuance or
      (ii)
      an underwritten public offering of Common Stock. 

     

    (b) At
      least
      5 Business 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
      Business Day after such request, deliver a Subsequent Financing Notice to such
      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.   Any
      Purchaser desiring to exercise its rights under Section 4.16(a) in connection
      with such Subsequent Financing must provide written notice to the Company by
      not
      later than 5:30 p.m. (New York City time) on the fifth (5th) Business Day after
      all of the Purchasers have received the Pre-Notice that the Purchaser desires
      to
      exercise its rights under Section 4.16(a) in the Subsequent Financing. If the
      Company receives no notice from a Purchaser as of such fifth (5th) Business
      Day,
      such Purchaser shall be deemed to have notified the Company that it does not
      desire to exercise its rights under Section 4.16(a).  The Company must
      provide the Purchasers with a second Subsequent Financing Notice, and the
      Purchasers will again have the right to exercise their rights under Section
      4.16(a), 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 30 Business Days after the date of the
      initial Subsequent Financing Notice.

    
      

        
          
            
            

          

          
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    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 July 31, 2008;
      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 (“T.R. Winston”) the non-accountable sum of $20,000 for
      its legal fees and expenses, $10,000 of which shall have been paid prior to
      the
      Closing. The Company shall deliver, prior to the Closing, a completed and
      executed copy of the Closing Statement, attached hereto as Annex A. 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
      Business Day, (b) the next Business 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 Business
      Day
      or later than 5:30 p.m. (New York City time) on any Business Day, (c) the
      2nd
      Business
      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.

    

      
        
          
          

        

        
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    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
      the
      Purchasers holding at least 67% of the Shares then outstanding or, in the case
      of a waiver, by the party against whom enforcement of any such waived provision
      is sought. No waiver of any default with respect to any provision, condition
      or
      requirement of this Agreement shall be deemed to be a continuing waiver in
      the
      future or a waiver of any subsequent default or a waiver of any other provision,
      condition or requirement hereof, nor shall any delay or omission of any party
      to
      exercise any right hereunder in any manner impair the exercise of any such
      right.

     

    5.6 Headings.
      The headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    5.7 Successors
      and Assigns. This Agreement shall be binding upon and inure to the benefit
      of the parties and their successors and permitted assigns. The Company may
      not
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of each 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 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 4.8.

     

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

    

      
        
          
          

        

        
          29

          
            

          

        

        
          
          

        

      

    

     

    5.10 Survival.
      The representations and warranties contained herein shall survive the Closing
      and the delivery of the Securities for the applicable statute of
      limitations.

     

    5.11 Execution.
      This Agreement may be executed in two or more counterparts, all of which when
      taken together shall be considered one and the same agreement and shall become
      effective when counterparts have been signed by each party and delivered 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, that in the
      case
      of a rescission of an exercise of a Warrant, the Purchaser shall be required
      to
      return any shares of Common Stock subject to 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 reasonably satisfactory to
      the
      Company of such loss, theft or destruction. The applicant for a new certificate
      or instrument under such circumstances shall also pay any reasonable third-party
      costs (including customary indemnity) associated with the issuance of such
      replacement Securities.

    

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

      

    

     

    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 all of the Purchasers but only T.R. Winston. 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 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.

    

      
        
          
          

        

        
          31

          
            

          

        

        
          
          

        

      

    

     

    5.19 Saturdays,
      Sundays, Holidays, etc. If
      the
      last or appointed day for the taking of any action or the expiration of any
      right required or granted herein shall not be a Business Day, then such action
      may be taken or such right may be exercised on the next succeeding Business
      Day.

     

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

     

    5.21 WAIVER
      OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT
      BY
      ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY,
      TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY,
      UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY
      JURY.

     

    (Signature
      Pages Follow)

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

    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.

    

    
      	
              GENSPERA,
                INC.

            	 	
              Address for Notice:

            
	 	 	 	 
	
              By:

            	 	 	
              Fax:

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

            	 	 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    [PURCHASER
      SIGNATURE PAGES TO GENSPERA 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 Authorized Signatory:
      _____________________________________________

     

    Fax
      Number of Authorized Signatory:
      ________________________________________________

     

    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]

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    Annex
      A 

    

    CLOSING
      STATEMENT

    

    Pursuant
      to the attached Securities Purchase Agreement, dated as of the date hereto,
      the
      purchasers shall purchase up to $5,000,000 of Common Stock and Warrants from
      GenSpera, Inc., a Delaware corporation (the “Company”).
      All
      funds will be wired into an account maintained by the Company. All funds will
      be
      disbursed in accordance with this Closing Statement. 

    

    Disbursement
      Date: June
      ___,
      2008

    
      
        

      

    

     

    
      	
              I.
                PURCHASE
                PRICE

            	 
	 	
              Gross
                Proceeds to be Received

            	
              $

            
	 	 	 
	
              II. DISBURSEMENTS

            	 
	 	
              Feldman
                Weinstein & Smith LLP 

            	
              $20,000

            
	 	
               

            	
              $

            
	 	 	
              $

            
	 	 	
              $

            
	 	 	
              $

            
	 	 	 
	
              Total Amount Disbursed:

            	 	
              $

            

    

    

    WIRE
      INSTRUCTIONS:
      

    

    
      	
              To:

            	 
	 	 
	 	 
	
              To:

            	 

    

     

    
      
        
        

      

      
        35

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