Document:

EXHIBIT
      10.9

    

    AGREEMENT

    

    WHEREAS,
      Oil For America (OFA) has obtained the right to drill a twin to the Evaline
      1-18
      Well from the present lease holder and operator Helis Oil & Gas, LLC
      (Helis), at such location as OFA has determined to be the best location to
      produce oil from the Lodgepole Reef, and

     

    WHEREAS,
      OFA has obtained the right under an Operating Agreement to drill two additional
      Lodgepole Reefs identified by OFA on the leases owned by Helis (the “Leases”),
      which rights are documented in the attached Agreement between OFA and Helis;
      and

     

    WHEREAS,
      OFA has obtained the agreement of Coastal Petroleum Company (Coastal) to act
      as
      operator of the project until the twin to the Evaline 1-18 well is producing;
      and

     

    WHEREAS,
      each of the undersigned persons (“Participants”) desire to participate in the
      costs of drilling this twin well and the operations thereof, and to have their
      pro-rata share of the opportunity to participate in the wells to test the two
      additional Lodgepole Reefs on the Leases;

     

    NOW
      THEREFORE, the undersigned parties agree upon the following terms which shall
      govern their rights and responsibilities:

     

    1.
 
      The expected cost of the twin well to the Evaline 1-18 is $600,000 to drill,
      complete and connect the production to the existing surface facilities at the
      well (the “Anticipated Cost(s)”). The Anticipated Cost is divided into six parts
      (the “Participating Interests”) and each Participant shall pay to Coastal their
      pro-rata share of this cost at the time of signing this Agreement. Coastal
      shall
      act as operator of the program. (Coastal itself is purchasing a 1/6
      Participant’s Interest.)

     

    2.
 
      In the event actual costs exceed the Anticipated Costs (“Additional Costs”),
      each Participant shall be obligated to pay their pro-rata share of the
      Additional Costs within ten (10) days of the notice from Coastal requesting
      such
      payment. The Participating Interest of any person who fails to pay such cost
      when due shall be divided equally amongst the remaining Participants who agree
      to pay such pro-rata share not paid timely by a Participant. Any funds remaining
      after completion of the well will be returned pro rata to the Participants.
      A
      person may purchase more than one Participant Interest.

     

    3.
 
      Coastal shall drill, complete and tie the production into the current facilities
      as soon as reasonably possible pursuant to the Operating Agreement with Helis
      and this Agreement. At the time satisfactory production is achieved, Coastal
      shall assign its responsibilities as operator of the well to Helis.

     

    
      
        
        

      

      
        Page
          1

        
          

        

      

      
        
        

      

    

    
       

      4.
 
        At the time the required production is established (more than 100 barrels
        per
        day), Helis shall assign a 60% working interest in the lease to Oil For America.
        Oil For America shall assign the 60% interest to Coastal, which shall act
        as
        operator of the 60% interest for the benefit of the Participating Interests,
        Bill Cullen, OFA and itself as operator. Coastal shall forward the shares
        of
        revenues less costs in the following manner:

       

    

    Before
      Payout of the Well:

     

    
      	
               

            	
              (i)

            	
              A
                9% working interest (out of the 60% working interest owned by OFA)
                to each
                Participant

            

    

     

    
      	
               

            	
              (ii)

            	
              A
                5% working interest (out of the 60% working interest) to Coastal
                as
                operator.

            

    

     

    
      	
               

            	
              (iii)

            	
              A
                1% working interest (out of the 60% working interest) to Bill
                Cullen

            

    

     

    After
      Payout of the Well:

     

    
      	
               

            	
              (i)

            	
              A
                6.75% working interest (out of the 60% working interest) to each
                Participant

            

    

     

    
      	
               

            	
              (ii)

            	
              A
                13.5% working interest (out of the 60% working interest) to
                OFA

            

    

     

    
      	
               

            	
              (iii)

            	
              A
                5% working interest (out of the 60%) to Coastal as
                operator

            

    

     

    
      	
               

            	
              (iv)

            	
              A
                1% working interest (out of the 60% working interest) to Bill
                Cullen

            

    

     

    5.
 
      Bill Cullen may reassign his interest at any time after proper notice to
      Coastal; such interest to be assigned pro-rata to the benefit of the parties
      pursuant to the above ratios of working interests, excluding his
      interest.

     

    6.
 
      OFA may assign its interest to its individual partners and/or their
      assigns.

     

    7.
 
      OFA shall confidentially identify to Coastal and the Participants each of the
      other two Lodgepole Prospects on the leases. Coastal shall prepare a drilling
      and completion plan along with an Authorization For Expenditure (“AFE”) and give
      at least 30 days notice to each Participant of its intention to commence
      operations. Coastal, along with OFA, shall endeavor to obtain the agreement
      of
      Helis to reduce its working interest for the new wells prior to the preparation
      of the AFE. Any reduction shall be apportioned among the parties pro rata.
      Each
      Participant shall have 21 days to pay their share of the AFE to Coastal in
      order
      to participate in the program. In the event one or more Participants decline
      to
      participate in the new program such share will be offered on a
      first-come-first-served basis to the remaining participants. In the event none
      of the Participants acquires the declined share it will be offered to other
      persons who have indicated an interest in acquiring a Participating Interest,
      including OFA or its individual partners. Neither Coastal nor any of the
      Participants shall be entitled under this Agreement to any further prospects
      from OFA in this area, unless acquired under the terms of another agreement
      with
      OFA.

    

    
      
        
        

      

      
        Page
          2

        
          

        

      

      
        
        

      

    

     

    8.
 
      Neither Coastal nor any Participant shall have any right to OFA's proprietary
      AI, AII, AIII or AIV Technology, any of OFA’s maps, photos or data, which are
      the exclusive property of OFA. Neither Coastal nor any of the Participants
      will
      disclose any of such information revealed to them by OFA.

     

    9.
 
      All notices and other communications given or made pursuant to this Agreement
      shall be in writing and shall be deemed effectively given: (a) upon personal
      delivery to the party to be notified, (b) when sent by confirmed electronic
      mail
      or facsimile if sent during normal business hours of the recipient, and if
      not
      so confirmed, then on the next business day, (c) five (5) days after having
      been
      sent by registered or certified mail, return receipt requested, postage prepaid,
      or (d) one (1) day after deposit with a nationally recognized overnight courier,
      specifying next day delivery, with written verification of receipt. All
      communications shall be sent to the respective parties at their address as
      set
      forth on the signature page, or to such e-mail address, facsimile number or
      address as subsequently modified by written notice given in accordance with
      this
      Section.

     

    10.
        If any action at law or in equity (including arbitration) is necessary to
      enforce or interpret the terms of any of this Agreement, the prevailing party
      shall be entitled to reasonable attorney’s fees, costs and necessary
      disbursements in addition to any other relief to which such party may be
      entitled.

     

    11.
        Amendments
      and Waivers
      . Any
      term of this Agreement may be amended, terminated or waived only with the
      written consent of each of the Parties hereto.

     

    12.
        Severability
      . The
      invalidity or unenforceability of any provision hereof shall in no way affect
      the validity or enforceability of any other provision. No delay or omission
      to
      exercise any right, power or remedy accruing to any party under this Agreement,
      upon any breach or default of any other party under this Agreement, shall impair
      any such right, power or remedy of such non-breaching or non-defaulting party
      nor shall it be construed to be a waiver of any such breach or default, or
      an
      acquiescence therein, or of or in any similar breach or default thereafter
      occurring; nor shall any waiver of any single breach or default be deemed a
      waiver of any other breach or default theretofore or thereafter occurring.
      Any
      waiver, permit, consent or approval of any kind or character on the part of
      any
      party of any breach or default under this Agreement, or any waiver on the part
      of any party of any provisions or conditions of this Agreement, must be in
      writing and shall be effective only to the extent specifically set forth in
      such
      writing. All remedies, either under this Agreement or by law or otherwise
      afforded to any party, shall be cumulative and not alternative.

     

    13.
        This Agreement (including the Exhibits hereto), constitute the full and
      entire understanding and agreement between the parties with respect to the
      subject matter hereof, and any other written or oral agreement relating to
      the
      subject matter hereof existing between the parties are expressly
      canceled.

    

    
      
        
        

      

      
        Page
          3

        
          

        

      

      
        
        

      

    

     

    14.
        The parties agree that any unresolved controversy or claim arising out of
      or relating to this Agreement, except as: (i) otherwise provided in this
      Agreement, or (ii) any such controversies or claims arising out of either
      party’s intellectual property rights for which a provisional remedy or equitable
      relief is sought, shall be submitted to arbitration by one arbitrator mutually
      agreed upon by the parties, and if no agreement can be reached within thirty
      (30) days after names of potential arbitrators have been proposed by the
      American Arbitration Association (the “ AAA
      ”),
      then
      by one arbitrator having reasonable experience in oil and gas transactions
      of
      the type provided for in this Agreement and who is chosen by the AAA. The
      arbitration shall take place in Tallahassee, Florida, in accordance with the
      AAA
      rules then in effect, and judgment upon any award rendered in such arbitration
      will be binding and may be entered in any court having jurisdiction thereof.
      There shall be limited discovery prior to the arbitration hearing as follows:
      (a) exchange of witness lists and copies of documentary evidence and documents
      relating to or arising out of the issues to be arbitrated; (b) depositions
      of all party witnesses; and (c) such other depositions as may be allowed by
      the
      arbitrators upon a showing of good cause. Depositions shall be conducted in
      accordance with the Florida Code of Civil Procedure, the arbitrator shall be
      required to provide in writing to the parties the basis for the award or order
      of such arbitrator, and a court reporter shall record all hearings, with such
      record constituting the official transcript of such proceedings. The prevailing
      party shall be entitled to reasonable attorney’s fees, costs, and necessary
      disbursements in addition to any other relief to which such party may be
      entitled. Each of the parties to this Agreement consents to personal
      jurisdiction for any equitable action sought in the U.S. District Court for
      the
      Northern District of Florida or any court of the State of Florida having subject
      matter jurisdiction.

     

    15.
        The date of this contract is August 10, 2006.

     

    16.
        This Agreement may be signed in counterparts.

     

    [REMAINDER
      OF THIS PAGE INTENTIONALLY BLANK]

    

    
      
        
        

      

      
        Page
          4

        
          

        

      

      
        
        

      

    

     

    
      	
              Coastal
                Petroleum Company:

            	
               

            	
              Participant
                1:

            
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              By:

            	
               

            	
               

            	
              By:

            	
               

            
	 	 	 	 	 
	
              Address:

            	 	 	
              Address:

            	 
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Oil
                For America:

            	
               

            	
              Participant
                2:

            
	
               

            	
               

            	
               

            
	
              By:

            	 	
               

            	
              By:

            	 
	 	 	 	 	 
	
              Address:

            	 	 	
              Address:

            	 
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Participant
                3:

            	
               

            	
              Participant
                4:

            
	
               

            	
               

            	
               

            
	
              By:

            	 	
            	
              By:

            	 
	 	 	 	 	 
	
              Address:

            	 	 	
              Address:

            	 
	
               

            	
               

            	
               

            	
               

            	
               

            
	
              Participant
                5:

            	
               

            	
              Participant
                6:

            
	
               

            	
               

            	
               

            
	
              By:

            	 	
               

            	
              By:

            	 
	 	 	 	 	 
	
              Address:

            	 	 	
              Address:

            	 

    

     

    
      
        
        

      

      
        Page
          5EXHIBIT
        10.1

    

     

    SECURITIES
      PURCHASE AGREEMENT

    

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of November 29, 2006, among SpatiaLight, Inc., a New York 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:

    

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

    

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

    

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

    

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

    

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

    

    “Commission”
means
      the Securities and Exchange Commission.

    

    
      
         

      

      
        1

        
          

        

      

      
         

      

       

    

    “Common
      Stock”
means
      the common stock of the Company, par value $.01 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
      Franklin Cardwell & Jones, P.C., with offices located at 1001 McKinney,
      18th
      Floor,
      Houston, Texas 77002. 

    

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

    

    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

    

    “Evaluation
      Date”
shall
      have the meaning ascribed to such term in Section 3.1(r). 

    

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

    

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      for
      such purpose, by a majority of the non-employee members of the Board of
      Directors of the Company or a majority of the members of a committee of
      non-employee directors established, (b) securities upon the exercise or exchange
      of or conversion of any Securities issued hereunder and/or other securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to increase
      the number of such securities or to decrease the exercise, exchange or
      conversion price of such securities, and (c) securities issued pursuant to
      acquisitions or strategic transactions approved by a majority of the
      disinterested directors of the Company, provided that any such issuance shall
      only be to a Person which is, itself or through its subsidiaries, an operating
      company in a business 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.

    

    “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).

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

       

    

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

    

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

    

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

    

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

    

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

    

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

    

    “Participation
      Maximum”
shall
      have the meaning ascribed to such term in Section 4.13. 

    

    “Per
      Share Purchase Price”
equals
      $1.25, 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.

    

    “Pre-Notice”
shall
      have the meaning ascribed to such term in Section 4.13. 

    

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

    

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

    

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

    

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Shares and
      the
      Warrant Shares. 

    

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

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

       

    

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

    

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

    

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

    

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

    

    “Shareholder
      Approval”
means
      such approval as may be required by the applicable rules and regulations of
      the
      Nasdaq Capital Market (or any successor entity) from the shareholders of the
      Company with respect to the transactions contemplated by the Transaction
      Documents, including the issuance of all of the Shares and Warrant Shares in
      excess of 19.99% of the issued and outstanding Common Stock on the Closing
      Date.

    

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      this
      Agreement.

    

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

    

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

    

    “Subsequent
      Financing”
shall
      have the meaning ascribed to such term in Section 4.13.

    

    “Subsequent
      Financing Notice”
shall
      have the meaning ascribed to such term in Section 4.13. 

    

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

    

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

    

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

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

       

    

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

    

    “Transfer
      Agent”
means
      American Stock Transfer & Trust Company, with a mailing address of 59 Maiden
      Lane, New York, New York 10007 and a facsimile number of (718) 921-8334, and
      any
      successor transfer agent of the Company. 

    

    “VWAP”
means,
      for any date, the price determined by the first of the following clauses that
      applies: (a) if the Common Stock is then listed or quoted on a Trading Market,
      the daily volume weighted average price of the Common Stock for such date (or
      the nearest preceding date) on the Trading Market on which the Common Stock
      is
      then listed or quoted for trading as reported by Bloomberg L.P. (based on a
      Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
      time); (b)  if the 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
      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 holder
      and
      reasonably acceptable to the Company, the fees and expenses of which shall
      be
      paid by the Company. 

    

    “Warrants”
means
      collectively the Common Stock purchase warrants delivered to the Purchasers
      at
      the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
      be
      exercisable 181 days following their issuance and have a term of exercise equal
      to five (5) years and 181 days from the date of issuance, in the form of
Exhibit
      C
      attached
      hereto.

    

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

    

    ARTICLE
      II.

    PURCHASE
      AND SALE

    

    2.1 Closing.
      On the Closing Date, upon the terms and subject to the conditions set forth
      herein, substantially concurrent with the execution and delivery of this
      Agreement by the parties hereto, the Company agrees to sell, and each Purchaser,
      severally and not jointly, agrees to purchase, an aggregate of, up to $3,000,000
      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 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.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

       

    

    2.2 Deliveries.

    

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

    

    (i) this
      Agreement duly executed by the Company;

    

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

    

    (iii) a
      certificate evidencing a number of Shares equal to such Purchaser’s Subscription
      Amount divided by the Per Share Purchase Price, registered in the name of such
      Purchaser;

    

    (iv) a
      lock-up
      agreement, in the form attached hereto as Exhibit
      D,
      duly
      executed by each officer and director of the Company; 

    

    (v) a
      Warrant, in the form attached hereto as Exhibit
      C,
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 200% of the Shares to be purchased by such Purchaser
      hereunder, with an exercise price equal to $1.751 ,
      subject
      to adjustment therein; and

    

    (vi) the
      Registration Rights Agreement, in the form attached hereto as Exhibit
      A,
      duly
      executed by the Company.

    

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

    

    (i) this
      Agreement duly executed by such Purchaser;

    

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

    

    (iii) the
      Registration Rights Agreement, in the form attached hereto as Exhibit
      A,
      duly
      executed by such Purchaser.

    

    2.3 Closing
      Conditions. 

    

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

    

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

     

    
      
        

      

      
        1
          The
          closing price plus $.01 on the Trading Day immediately prior to the date
          hereof.

      

       

      
         

      

      
        6

        
          

        

      

      
         

      

       

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

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

    

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

    

    3.1 Representations
      and Warranties of the Company. Except
      as
      set forth under the corresponding section of the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof and to qualify any
      representation or warranty otherwise made herein to the extent of such
      disclosure, 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.

    

    
      
         

      

      
        7

        
          

        

      

      
         

      

       

    

    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business,
      prospects or condition (financial or otherwise) of the Company and the
      Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
      Company’s ability to perform in any material respect on a timely basis its
      obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

    

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

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

       

    

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

    

    (e) Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.4
      of this Agreement, (ii) the filing with the Commission of the Registration
      Statement, (iii) application(s) to each applicable Trading Market for the
      listing of the Securities for trading thereon in the time and manner required
      thereby, (iv) the filing of Form D with the Commission and such filings as
      are
      required to be made under applicable state securities laws and (v) Shareholder
      Approval (collectively, the “Required
      Approvals”).

    

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

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

       

    

    (g) Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(g).
      The
      Company has not issued any capital stock since its most
      recently filed periodic report under the Exchange Act, other
      than pursuant to the exercise of employee stock options under the Company’s
      stock option plans, the issuance of shares of Common Stock to employees pursuant
      to the Company’s employee stock purchase plan and pursuant to the conversion or
      exercise of Common Stock Equivalents outstanding as of the date of the most
      recently filed periodic report under the Exchange Act. Except as set forth
      on
Schedule
      3.1(g),
      no
      Person has any right of first refusal, preemptive right, right of participation,
      or any similar right to participate in the transactions contemplated by the
      Transaction Documents. Except as set forth on Schedule
      3.1(g)
      and as a
      result of the purchase and sale of the Securities, there are no outstanding
      options, warrants, scrip rights to subscribe to, calls or commitments of any
      character whatsoever relating to, or securities, rights or obligations
      convertible into or exercisable or exchangeable for, or giving any Person any
      right to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock
      or
      Common Stock Equivalents. Except as set forth on Schedule 3.1(g), 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 of the Company or others is required for the issuance
      and
      sale of the Securities. There are no stockholders agreements, voting agreements
      or other similar agreements with respect to the Company’s capital stock to which
      the Company is a party or, to the knowledge of the Company, between or among
      any
      of the Company’s stockholders.

    

    (h) SEC
      Reports; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by the Company under the Securities Act and the Exchange
      Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was required
      by
      law or regulation to file such material) (the foregoing materials, including
      the
      exhibits thereto and documents incorporated by reference therein, being
      collectively referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, except as set forth on Schedule 3.1(h), the SEC Reports
      complied in all material respects with the requirements of the Securities Act
      and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading. The financial statements of the Company included in the SEC Reports
      comply in all material respects with applicable accounting requirements and
      the
      rules and regulations of the Commission with respect thereto as in effect at
      the
      time of filing. Such financial statements have been prepared in accordance
      with
      United States generally accepted accounting principles applied on a consistent
      basis during the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited 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 included within the SEC
      Reports, except as specifically disclosed in a subsequent SEC Report filed
      prior
      to the date hereof, (i) there has been no event, occurrence or development
      that
      has had or that could reasonably be expected to result in a Material Adverse
      Effect, (ii) the Company has not incurred any liabilities (contingent or
      otherwise) other than (A) trade payables and accrued expenses incurred in the
      ordinary course of business consistent with past practice and (B) liabilities
      not required to be reflected in the Company’s financial statements pursuant to
      GAAP or disclosed in filings made with the Commission, (iii) the Company has
      not
      altered its method of accounting, (iv) the Company has not declared or made
      any
      dividend or distribution of cash or other property to its stockholders or
      purchased, redeemed or made any agreements to purchase or redeem any shares
      of
      its capital stock and (v) the Company has not issued any equity securities
      to
      any officer, director or Affiliate, except pursuant to existing Company stock
      option plans. The Company does not have pending before the Commission any
      request for confidential treatment of information. Except for the issuance
      of
      the Securities contemplated by this Agreement or as set forth on Schedule
      3.1(i),
      no
      event, liability or development has occurred or exists with respect to the
      Company or its Subsidiaries or their respective business, properties, operations
      or financial condition, that would be required to be disclosed by the Company
      under applicable securities laws at the time this representation is made that
      has not been publicly disclosed at least one (1) Trading Day prior to the date
      that this representation is made.

    

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

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

       

    

    (k) Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could reasonably
      be
      expected to result in a Material Adverse Effect. None of the Company’s or its
      Subsidiaries’ employees is a member of a union that relates to such employee’s
      relationship with the Company, and neither the Company 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, 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.

    

    (l) Compliance.
      Except
      as set forth in Schedule 3.1(l), neither the Company nor any Subsidiary (i)
      is
      in default under or in violation of (and no event has occurred that has not
      been
      waived that, with notice or lapse of time or both, would result in a default
      by
      the Company or any Subsidiary under), nor has the Company or any Subsidiary
      received notice of a claim that it is in default under or that it is in
      violation of, any indenture, loan or credit agreement or any other agreement
      or
      instrument to which it is a party or by which it or any of its properties is
      bound (whether or not such default or violation has been waived), (ii) is in
      violation of any order of any court, arbitrator or governmental body, or (iii)
      is or has been in violation of any statute, rule or regulation of any
      governmental authority, including without limitation all foreign, federal,
      state
      and local laws applicable to its business and all such laws that affect the
      environment, except in each case as could not have or reasonably be expected
      to
      result in a Material Adverse Effect.

    

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

    

    (n) Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens set forth on
Schedule
      3.1(n)
      or 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.

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

       

    

    (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 necessary or material for use in connection with
      their
      respective businesses as described in the SEC Reports and which the failure
      to
      so have could have a Material Adverse Effect (collectively, the “Intellectual
      Property Rights”).
      Neither the Company nor any Subsidiary has received a notice (written or
      otherwise) that the Intellectual Property Rights used by the Company or any
      Subsidiary violates or infringes upon the rights of any Person. To the knowledge
      of the Company, all such Intellectual Property Rights are enforceable and there
      is no existing infringement by another Person of any of the Intellectual
      Property Rights. The Company and its Subsidiaries have taken reasonable security
      measures to protect the secrecy, confidentiality and value of all of their
      intellectual properties, except where failure to do so could not, individually
      or in the aggregate, reasonably be expected to have a Material Adverse
      Effect.

    

    (p) Insurance.
      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; provided,
      however, that
      the
      Company does not have any directors’ or officers’ liability insurance. Neither
      the Company nor any Subsidiary has any reason to believe that it will not be
      able to renew its existing insurance coverage as and when such coverage expires
      or to obtain similar coverage from similar insurers as may be necessary to
      continue its business without a significant increase in cost.

    

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

    

    
      
         

      

      
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    (r) Sarbanes-Oxley;
      Internal Accounting Controls.
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 which are applicable to it as of the Closing Date. Except as disclosed
      SEC Reports, the
      Company and the Subsidiaries maintain a system of internal accounting controls
      sufficient to provide reasonable assurance that (i) transactions are executed
      in
      accordance with management’s general or specific authorizations, (ii)
      transactions are recorded as necessary to permit preparation of financial
      statements in conformity with GAAP and to maintain asset accountability, (iii)
      access to assets is permitted only in accordance with management’s general or
      specific authorization, and (iv) the recorded accountability for assets is
      compared with the existing assets at reasonable intervals and appropriate action
      is taken with respect to any differences. The Company has established disclosure
      controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
      15d-15(e)) for the Company and designed such disclosure controls and procedures
      to ensure that information required to be disclosed by the Company in the
      reports it files or submits under the Exchange Act is recorded, processed,
      summarized and reported, within the time periods specified in the Commission’s
      rules and forms. The Company’s certifying officers have evaluated the
      effectiveness of the Company’s disclosure controls and procedures as of the end
      of the period covered by the Company’s most recently filed periodic report under
      the Exchange Act (such date, the “Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no changes in the
      Company’s internal control over financial reporting (as such term is defined in
      the Exchange Act) that has materially affected, or is reasonably likely to
      materially affect, the Company’s internal control over financial
      reporting.

    

    (s) Certain
      Fees.
      Except
      as set forth 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.

    

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

    

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

    

    
      
         

      

      
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    (v) Registration
      Rights.
      Except
      as set forth in Schedule 3.1(v), no Person other than each of the Purchasers
      has
      any right to cause the Company to effect the registration under the Securities
      Act of any securities of the Company.

    

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

    

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

    

    (y) Disclosure.
      Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company confirms that neither
      it
      nor any other Person acting on its behalf has provided any of the Purchasers
      or
      their agents or counsel with any information that it believes constitutes or
      might constitute material, non-public information. The Company understands
      and
      confirms that the Purchasers will rely on the foregoing representation in
      effecting transactions in securities of the Company. All disclosure furnished
      by
      or on behalf of the Company to the Purchasers regarding the Company, its
      business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, is true and correct and does not contain any untrue
      statement of a material fact or omit to state any material fact necessary in
      order to make the statements made therein, in light of the circumstances under
      which they were made, not misleading. The press releases disseminated by the
      Company during the twelve (12) months preceding the date of this Agreement
      taken
      as a whole do not contain any untrue statement of a material fact or omit to
      state a material fact required to be stated therein or necessary in order to
      make the statements, in light of the circumstances under which they were made
      and when made, not misleading. The Company acknowledges and agrees that no
      Purchaser makes or has made any representations or warranties with respect
      to
      the transactions contemplated hereby other than those specifically set forth
      in
      Section 3.2 hereof.

     

    
      
         

      

      
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    (z) No
      Integrated Offering.
      Assuming
      the accuracy of the Purchasers’ representations and warranties set forth in
      Section 3.2, except as set forth on Schedule 3.1(z), neither the Company, nor
      any of its Affiliates, nor any Person acting on its or their behalf has,
      directly or indirectly, made any offers or sales of any security or solicited
      any offers to buy any security, under circumstances that would cause this
      offering of the Securities to be integrated with prior offerings by the Company
      for purposes of the Securities Act or any applicable shareholder approval
      provisions of any Trading Market on which any of the securities of the Company
      are listed or designated. 

    

    (aa) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date, after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the fair saleable value of the Company’s assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business as now conducted and as
      proposed to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company, and
      projected capital requirements and capital availability thereof; and (iii)
      the
      current cash flow of the Company, together with the proceeds the Company would
      receive, were it to liquidate all of its assets, after taking into account
      all
      anticipated uses of the cash, would be sufficient to pay all amounts on or
      in
      respect of its liabilities when such amounts are required to be paid. The
      Company does not intend to incur debts beyond its ability to pay such debts
      as
      they mature (taking into account the timing and amounts of cash to be payable
      on
      or in respect of its debt). Except as discussed in the SEC Reports, the Company
      has no knowledge of any facts or circumstances which lead it to believe that
      it
      will file for reorganization or liquidation under the bankruptcy or
      reorganization laws of any jurisdiction within one year from the Closing Date.
      Schedule 3.1(aa) sets forth as of the dates thereof all outstanding secured
      and
      unsecured Indebtedness of the Company or any Subsidiary, or for which the
      Company or any Subsidiary has commitments. For the purposes of this Agreement,
      “Indebtedness”
means
      (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      Indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments
      in excess of $50,000 due under leases required to be capitalized in accordance
      with GAAP. Except
      as
      set forth on Schedule
      3.1(aa),
      neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    (bb) Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company 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.

    

    
      
         

      

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

    

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

    

    (ee) Accountants.
      The
      Company’s accounting firm is set forth on Schedule
      3.1(ee)
      of the
      Disclosure Schedule. To the knowledge and belief of the Company, such accounting
      firm (i) is a registered public accounting firm as required by the Exchange
      Act
      and (ii) shall express its opinion with respect to the financial statements
      to
      be included in the Company’s Annual Report on Form 10-K for the year ending
      December 31, 2006.

    

    (ff) No
      Disagreements with Accountants and Lawyers.
      There
      are no disagreements of any kind presently existing, or reasonably anticipated
      by the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company and, except as set forth on
Schedule
      3.1(ff),
      the
      Company is current with respect to any fees owed to its accountants and lawyers.
       

    

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

    

    (hh) Acknowledgement
      Regarding Purchaser’s Trading Activity.
      Anything
      in this Agreement or elsewhere herein to the contrary notwithstanding (except
      for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by
      the
      Company (i) that none of the Purchasers have been asked to agree, nor has any
      Purchaser agreed, to desist from purchasing or selling, long and/or short,
      securities of the Company, or “derivative” securities based on securities issued
      by the Company or to hold the Securities for any specified term; (ii) that
      past
      or future open market or other transactions by any Purchaser, including Short
      Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the Closing of this or future private
      placement transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) that any Purchaser, and counter-parties in
      “derivative” transactions to which any such Purchaser is a party, directly or
      indirectly, presently may have a “short” position in the Common Stock, and (iv)
      that each Purchaser shall not be deemed to have any affiliation with or control
      over any arm’s length counter-party in any “derivative” transaction.
The
      Company further understands and acknowledges that (a) one or more Purchasers
      may
      engage in hedging activities at various times during the period that the
      Securities are outstanding, including, without limitation, during the periods
      that the value of the Warrant Shares deliverable with respect to Securities
      are
      being determined and (b) such hedging activities (if any) could reduce the
      value
      of the existing stockholders' equity interests in the Company at and after
      the
      time that the hedging activities are being conducted.  The Company
      acknowledges that such aforementioned hedging activities do not constitute
      a
      breach of any of the Transaction Documents.

    

    
      
         

      

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

    

    (jj) Form
      S-3 Eligibility.
      The
      Company is eligible to register the Securities for resale by the Purchaser
      on
      Form S-3 promulgated under the Securities Act.

    

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

    

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

    

    
      
         

      

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

    

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

    

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

     

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

    

    
      
         

      

      
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    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

    

    4.1 Transfer
      Restrictions. 

    

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

    

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

    

    THIS
      SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR
      THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD 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.

    

    
      
         

      

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

    

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

    

    
      
         

      

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

    

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

    

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

    

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

    

    4.4 Securities
      Laws Disclosure; Publicity. The Company shall, by 8:30 a.m. New York City
      time on the Trading Day immediately following the date hereof, issue a Current
      Report on Form 8-K, disclosing the material terms of the transactions
      contemplated hereby, and filing the Transaction Documents as exhibits thereto.
      The Company and each Purchaser shall consult with each other in issuing any
      other press releases with respect to the transactions contemplated hereby,
      and
      neither the Company nor any Purchaser shall issue any such press release or
      otherwise make any such public statement without the prior consent of the
      Company, with respect to any press release of any Purchaser, or without the
      prior consent of each Purchaser, with respect to any press release of the
      Company, which consent shall not unreasonably be withheld 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 (i) as required by federal
      securities law in connection with (A) any registration statement contemplated
      by
      the Registration Rights Agreement and (B) the filing of final Transaction
      Documents (including signature pages thereto) with the Commission and (ii)
      to
      the extent such disclosure is required by law or Trading Market regulations,
      in
      which case the Company shall provide the Purchasers with prior notice of such
      disclosure permitted under this subclause (ii).

    

    
      
         

      

      
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    4.5 Shareholder
      Rights Plan. No claim will be made or enforced by the Company or, with the
      consent of the Company, any other Person, that any Purchaser is an “Acquiring
      Person” under any control share acquisition, business combination, poison pill
      (including any distribution under a rights agreement) or similar anti-takeover
      plan or arrangement in effect or hereafter adopted by the Company, or that
      any
      Purchaser could be deemed to trigger the provisions of any such plan or
      arrangement, by virtue of receiving Securities under the Transaction Documents
      or under any other agreement between the Company and the
      Purchasers.

    

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

    

    4.7 Use
      of
      Proceeds. 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 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), or to redeem any
      Common Stock or Common Stock Equivalents or to settle any outstanding
      litigation.

    

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

    

    
      
         

      

      
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    4.9 Indemnification
      of Purchasers. Subject to the provisions of this Section 4.9, the Company
      will indemnify and hold each Purchaser and its directors, officers,
      shareholders, members, partners, employees and agents (and any other Persons
      with a functionally equivalent role of a Person holding such titles
      notwithstanding a lack of such title or any other title), each Person who
      controls such Purchaser (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, shareholders,
      agents, members, partners or employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles notwithstanding
      a
      lack of such title or any other title) of such controlling persons (each, a
      “Purchaser Party”) harmless from any and all losses, liabilities, obligations,
      claims, contingencies, damages, costs and expenses, including all judgments,
      amounts paid in settlements, court costs and reasonable attorneys’ fees and
      costs of investigation that any such Purchaser Party may suffer or incur as
      a
      result of or relating to (a) any breach of any of the representations,
      warranties, covenants or agreements made by the Company in this Agreement or
      in
      the other Transaction Documents or (b) any action instituted against a
      Purchaser, or any of them or their respective Affiliates, by any stockholder
      of
      the Company who is not an Affiliate of such Purchaser, with respect to any
      of
      the transactions contemplated by the Transaction Documents (unless such action
      is based upon a breach of such Purchaser’s representations, warranties or
      covenants under the Transaction Documents or any agreements or understandings
      such Purchaser may have with any such stockholder or any violations by the
      Purchaser of state or federal securities laws or any conduct by such Purchaser
      which constitutes fraud, gross negligence, willful misconduct or malfeasance).
      If any action shall be brought against any Purchaser Party in respect of which
      indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
      promptly notify the Company in writing, and the Company shall have the right
      to
      assume the defense thereof with counsel of its own choosing reasonably
      acceptable to the Purchaser Party. Any Purchaser Party shall have the right
      to
      employ separate counsel in any such action and participate in the defense
      thereof, but the fees and expenses of such counsel shall be at the expense
      of
      such Purchaser Party except to the extent that (i) the employment thereof has
      been specifically authorized by the Company in writing, (ii) the Company has
      failed after a reasonable period of time to assume such defense and to employ
      counsel or (iii) in such action there is, in the reasonable opinion of such
      separate counsel, a material conflict on any material issue between the position
      of the Company and the position of such Purchaser Party, in which case the
      Company shall be responsible for the reasonable fees and expenses of no more
      than one such separate counsel. The Company will not be liable to any Purchaser
      Party under this Agreement (i) for any settlement by a Purchaser Party effected
      without the Company’s prior written consent, which shall not be unreasonably
      withheld or delayed; or (ii) to the extent, but 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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    4.10 Reservation
      of Common Stock.
      As of
      the date hereof, the Company has reserved and the Company shall continue to
      reserve and keep available at all times, free of preemptive rights, a sufficient
      number of shares of Common Stock for the purpose of enabling the Company to
      issue Shares pursuant to this Agreement and Warrant Shares pursuant to any
      exercise of the Warrants. 

    

    4.11 Listing
      of Common Stock. The
      Company hereby agrees to use best efforts to maintain the listing of the Common
      Stock on a Trading Market, and as soon as reasonably practicable following
      the
      Closing (but not later than the earlier of the Effective Date and the first
      anniversary of the Closing Date) to list all of the Shares and Warrant Shares
      on
      such Trading Market. The Company further agrees, if the Company applies to
      have
      the Common Stock traded on any other Trading Market, it will include in such
      application all of the Shares and Warrant Shares, and will take such other
      action as is necessary to cause all of the Shares and Warrant Shares to be
      listed on such other Trading Market as promptly as possible. The Company will
      take all action reasonably necessary to continue the listing and trading of
      its
      Common Stock on a Trading Market and will comply in all respects with the
      Company’s reporting, filing and other obligations under the bylaws or rules of
      the Trading Market. In addition, the Company shall hold a special meeting of
      shareholders (which may also be at the annual meeting of shareholders) at the
      earliest practical date after the date the number of shares of Common Stock
      issuable pursuant to this Agreement on a fully exercised basis (ignoring for
      such purposes any conversion or exercise limitations therein) exceeds 15% of
      the
      issued and outstanding shares of Common Stock on the Closing Date for the
      purpose of obtaining Shareholder Approval, with the recommendation of the
      Company’s Board of Directors that such proposal be approved, and the Company
      shall solicit proxies from its shareholders in connection therewith in the
      same
      manner as all other management proposals in such proxy statement and all
      management-appointed proxyholders shall vote their proxies in favor of such
      proposal. If the Company does not obtain Shareholder Approval at the first
      meeting, the Company shall call a meeting every four months thereafter to seek
      Shareholder Approval until the earlier of the date Shareholder Approval is
      obtained or the Warrants are no longer outstanding.

    

    4.12 Equal
      Treatment of Purchasers. No consideration shall be offered or paid to any
      Person to amend or consent to a waiver or modification of any provision of
      any
      of the Transaction Documents unless the same consideration is also offered
      to
      all of the parties to the Transaction Documents. For clarification purposes,
      this provision constitutes a separate right granted to each Purchaser by the
      Company and negotiated separately by each Purchaser, and is intended to treat
      for the Company 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.

    

    
      
         

      

      
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    4.13 Participation
      in Future Financing. 

    

    (a) From
      the
      date hereof until the date that is the 12 month anniversary of the Effective
      Date, upon any issuance by the Company or any of its Subsidiaries of Common
      Stock or Common Stock Equivalents for cash consideration (a “Subsequent
      Financing”),
      subject to the existing participation rights set forth on Schedule
      3.1(g)(i),
      each
      Purchaser shall have the right to participate in up to an amount of the
      Subsequent Financing equal to a maximum of 100% of the Subsequent Financing
      (the
“Participation
      Maximum”)
      on the
      same terms, conditions and price provided for in the Subsequent
      Financing. 

    

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

    

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

    

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

    

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

    

    
      
         

      

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

    

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

    

    4.14 Subsequent
      Equity Sales. 

    

    (a) From
      the
      date hereof until 90 days after the Effective Date, except as noted in
Schedule
      4.14(a),
      neither
      the Company nor any Subsidiary shall issue shares of Common Stock or Common
      Stock Equivalents; provided,
      however,
      the 90
      day period set forth in this Section 4.14 shall be extended for the number
      of
      Trading Days during such period in which (i) trading in the Common Stock is
      suspended by any Trading Market, or (ii) following the Effective Date, the
      Registration Statement is not effective or the prospectus included in the
      Registration Statement may not be used by the Purchasers for the resale of
      the
      Shares and Warrant Shares. 

    

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

    

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

    

    
      
         

      

      
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    4.15 Short
      Sales and Confidentiality After The Date Hereof. Each
      Purchaser severally and not jointly with the other Purchasers covenants that
      neither it nor any Affiliate acting on its behalf or pursuant to any
      understanding with it will execute any Short Sales during the period commencing
      at the Discussion Time and ending at the time that the transactions contemplated
      by this Agreement are first publicly announced as described
      in
      Section 4.4. Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.4, such Purchaser will
      maintain the confidentiality of all disclosures made to it in connection with
      this transaction (including the existence and terms of this transaction). Each
      Purchaser understands and acknowledges, severally and not jointly with any
      other
      Purchaser, that the Commission currently takes the position that coverage of
      short sales of shares of the Common Stock “against the box” prior to the
      Effective Date of the Registration Statement with the Securities is a violation
      of Section 5 of the Securities Act, as set forth in Item 65, Section A, of
      the
      Manual of Publicly Available Telephone Interpretations, dated July 1997,
      compiled by the Office of Chief Counsel, Division of Corporation Finance.
Notwithstanding
      the foregoing, no Purchaser makes any representation, warranty or covenant
      hereby that it will not engage in Short Sales in the securities of the Company
      after the time that the transactions contemplated by this Agreement are first
      publicly announced as described in Section 4.4. Notwithstanding
      the foregoing, in the case of a Purchaser that is a multi-managed investment
      vehicle whereby separate portfolio managers manage separate portions of such
      Purchaser's assets and the portfolio managers have no direct knowledge of the
      investment decisions made by the portfolio managers managing other portions
      of
      such Purchaser's assets, the covenant set forth above shall only apply with
      respect to the portion of assets managed by the portfolio manager that made
      the
      investment decision to purchase the Securities covered by this
      Agreement.

    

    4.16 Delivery
      of Securities After Closing. The Company shall deliver, or cause to be
      delivered, the respective Securities purchased by each Purchaser to such
      Purchaser within three (3) Trading Days of the Closing Date.

    

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

    

    4.18 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.

    

    4.19 Negative
      Covenants. Without the prior written consent of the Purchasers holding a
      majority in interest of Securities then outstanding, the Company shall not,
      and
      shall not permit any of its Subsidiaries to, directly or
      indirectly:

    

    
      
         

      

      
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    a) repay,
      repurchase or offer to repay, repurchase or otherwise acquire more than a
de minimis
      number
      of shares of its Common Stock or Common Stock Equivalents other than as to
      the
      Warrants as permitted or required under the Transaction Documents;

    

    b) until
      ninety (90) days after the Effective Date or the 12-month anniversary of the
      Closing Date, whichever comes first, effect any issuance whatsoever of Common
      Stock or Common Stock Equivalents at an effective per share purchase price
      less
      than $1.30 (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); or

    

    c) enter
      into any agreement with respect to any of the foregoing.

    

    Any
      Purchaser shall be entitled to obtain injunctive relief against the Company
      for
      any violation of this Section, which remedy shall be in addition to any right
      to
      collect damages.

    

    Notwithstanding
      the above, the Company has the right to issue Common Stock or Common Stock
      Equivalents at any time at an effective per share price above $1.30 (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) without consent of the Purchasers.

    

    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 November 30,
      2006;
      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 Enable
      Capital Management LLC (“Enable”) the non-accountable sum of $30,000 for its
      legal fees and due diligence expenses, $20,000 of which has 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.

    

    
      
         

      

      
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    5.4 Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 5:30 p.m. (New York City time)
      on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second
      (2nd)
      Trading
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

    

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

    

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

    

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

    

    5.8 No
      Third-Party Beneficiaries. This Agreement is intended for the benefit of the
      parties hereto and their respective successors and permitted assigns and is
      not
      for the benefit of, nor may any provision hereof be enforced by, any other
      Person, except as otherwise set forth in Section 4.9.

    

    
      
         

      

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

    

    5.10 Survival.
      The representations and warranties contained herein shall survive the Closing
      and the delivery of the Shares and Warrant Shares.

    

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

    

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

    

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

    

    
      
         

      

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

    

    5.15 Remedies.
      In addition to being entitled to exercise all rights provided herein or granted
      by law, including recovery of damages, each of the 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 Enable. 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.

    

    
      
         

      

      
        32

        
          

        

      

      
         

      

       

    

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

    

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

    

    (Signature
      Pages Follow)

    

    
      
         

      

      
        33

        
          

        

      

      
         

      

    

    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.

    

    

    
      	
              SPATIALIGHT,
                INC.

            	
              Address
                for Notice:

            
	 	 
	 	 
	
              By:  
                /s/
                David F. Hakala

              
                

              

              Name:
                David F. Hakala

              Title:
                Chief Operating Officer, Principal Financial and Accounting
                Officer

            	
              5
                Hamilton Landing, Suite 100

              Novato,
                California 94949

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

            	 

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

    
       

      
         

      

      
        34

        
          

        

      

      
         

      

    

    
      

      [PURCHASER
        SIGNATURE PAGES TO HDTV 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:

              	
                Pierce
                  Diversified Strategy Master Fund LLC, Ena

              
	
                Signature
                  of Authorized Signatory of Purchaser:

              	
                /s/
                  Brendan O’Neil

              
	
                Name
                  of Authorized Signatory:

              	
                Brendan
                  O’Neil

              
	
                Title
                  of Authorized Signatory:

              	
                Principal
                  and Portfolio Manager

              
	
                Email
                  Address of Purchaser:

              	
                boneil@enablecapital.com

              
	
                Fax
                  Number of Purchaser:

              	
                (415)
                  677-1580

              
	
                Address
                  for Notice of Purchaser:

              	
                One
                  Ferry Building, Suite 255

              
	 	
                San
                  Francisco, CA 94111

              
	 	 
	 	 

      

      

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

      

      
        	
                Subscription
                  Amount:

              	
                $50,000

              
	
                Warrant
                  Shares:

              	
                80,000

              

      

      

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      

      [SIGNATURE
        PAGES CONTINUE]

      
        
           

        

        
          35

          
            

          

        

        
           

        

      

      

      [PURCHASER
        SIGNATURE PAGES TO HDTV 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:

              	
                Enable
                  Opportunity Partners LP

              
	
                Signature
                  of Authorized Signatory of Purchaser:

              	
                /s/
                  Brendan O’Neil

              
	
                Name
                  of Authorized Signatory:

              	
                Brendan
                  O’Neil

              
	
                Title
                  of Authorized Signatory:

              	
                Principal
                  and Portfolio Manager

              
	
                Email
                  Address of Purchaser:

              	
                boneil@enablecapital.com

              
	
                Fax
                  Number of Purchaser:

              	
                (415)
                  677-1580

              
	
                Address
                  for Notice of Purchaser:

              	
                One
                  Ferry Building, Suite 255

              
	 	
                San
                  Francisco, CA 94111

              
	 	 
	 	 

      

      

      

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

      

      

      
        	
                Subscription
                  Amount:

              	
                $100,000

              
	
                Warrant
                  Shares:

              	
                160,000

              

      

      

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      

      [SIGNATURE
        PAGES CONTINUE]

      
         

        
           

        

        
          36

          
            

          

        

        
           

        

      

       

      [PURCHASER
        SIGNATURE PAGES TO HDTV 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:

              	
                Enable
                  Growth Partners LP

              
	
                Signature
                  of Authorized Signatory of Purchaser:

              	
                /s/
                  Brendan O’Neil

              
	
                Name
                  of Authorized Signatory:

              	
                Brendan
                  O’Neil

              
	
                Title
                  of Authorized Signatory:

              	
                Principal
                  and Portfolio Manager

              
	
                Email
                  Address of Purchaser:

              	
                boneil@enablecapital.com

              
	
                Fax
                  Number of Purchaser:

              	
                (415)
                  677-158

              
	
                Address
                  for Notice of Purchaser:

              	
                One
                  Ferry Building, Suite 255

              
	 	
                San
                  Francisco, CA 94111

              
	 	 
	 	 

      

      

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

      

      

      
        	
                Subscription
                  Amount:

              	
                $850,000

              
	
                Warrant
                  Shares:

              	
                1,360,000

              

      

      

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
          37

          
            

          

        

        
           

        

      

      

      [PURCHASER
        SIGNATURE PAGES TO HDTV 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:

              	
                /s/
                  Iroquois Master Fund Ltd.

              
	
                Signature
                  of Authorized Signatory of Purchaser:

              	
                /s/
                  Joshua Silverman

              
	
                Name
                  of Authorized Signatory:

              	
                Joshua
                  Silverman

              
	
                Title
                  of Authorized Signatory:

              	
                Authorized
                  Signator

              
	
                Email
                  Address of Purchaser:

              	
                jsilverman@icfund.com

              
	
                Fax
                  Number of Purchaser:

              	
                (212)
                  207-3452

              
	
                Address
                  for Notice of Purchaser:

              	
                641
                  Lexington Ave., 26th Floor

              
	 	
                New
                  York, NY 10022

              
	 	 
	 	 

      

      

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

      

      

      
        	
                Subscription
                  Amount:

              	
                $1,000,000

              
	
                Warrant
                  Shares:

              	
                1,600,000

              

      

      

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      

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        PAGES CONTINUE]

      

      
        
           

        

        
          38

          
            

          

        

        
           

        

      

      

      [PURCHASER
        SIGNATURE PAGES TO HDTV 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:

              	
                Southridge
                  Partners LP

              
	
                Signature
                  of Authorized Signatory of Purchaser:

              	
                /s/
                  Stephen Hicks

              
	
                Name
                  of Authorized Signatory:

              	
                Stephen
                  Hicks

              
	
                Title
                  of Authorized Signatory:

              	 
	
                Email
                  Address of Purchaser:

              	
                shicks@southridgecapital.com

              
	
                Fax
                  Number of Purchaser:

              	
                (203)
                  431-8301

              
	
                Address
                  for Notice of Purchaser:

              	
                90
                  Grove Street, Suite 204

              
	 	
                Ridgefield,
                  CT 06877

              
	 	 
	 	 

      

      

      

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

      

      Same
        as
        above

      

      
        	
                Subscription
                  Amount:

              	
                $850,000

              
	
                Warrant
                  Shares:

              	
                1,360,000

              

      

      

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      

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        PAGES CONTINUE]

      

      
        
           

        

        
          39

          
            

          

        

        
           

        

      

      

      [PURCHASER
        SIGNATURE PAGES TO HDTV 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:

              	
                Southshore
                  Capital Fund Ltd.

              
	
                Signature
                  of Authorized Signatory of Purchaser:

              	
                /s/
                  Arlene Decastro

              
	
                Name
                  of Authorized Signatory:

              	
                Arlene
                  Decastro

              
	
                Title
                  of Authorized Signatory:

              	
                Navigator
                  Management Ltd. - Director

              
	
                Email
                  Address of Purchaser:

              	 
	
                Fax
                  Number of Purchaser:

              	
                (284)
                  494-4771

              
	
                Address
                  for Notice of Purchaser:

              	
                Cayside,
                  2nd Floor, Georgetown,

              
	 	
                Grand
                  Cayman, Cayman Islands British West Indies

              
	 	 
	 	 

      

      

      

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

      

      90
        Grove
        Street, Suite 204

      Ridgefield,
        Ct. 06877

      

      

      
        	
                Subscription
                  Amount:

              	
                $
                  150,000

              
	
                Warrant
                  Shares:

              	
                240,000

              

      

      

      EIN
        Number: [PROVIDE
        THIS UNDER SEPARATE COVER]

      

      

      [SIGNATURE
        PAGES CONTINUE]

      

      
        
           

        

        
          40

          
            

          

        

        
           

        

      

      

      Annex
        A 

      

      CLOSING
        STATEMENT

      

      Pursuant
        to the attached Securities Purchase Agreement, dated as of the date hereto,
        the
        purchasers shall purchase up to $3,000,000 of Common Stock and Warrants from
        SpatiaLight, Inc. (the “Company”).
        All
        funds will be wired into a trust account maintained by Franklin, Cardwell
&
Jones, P.C., counsel to the Company. All funds will be disbursed in accordance
        with this Closing Statement. 

      

      Disbursement
        Date: November
        29, 2006

      
        	 	 
	 	 
	
                I.
                  PURCHASE
                  PRICE

              	 
	
                Gross
                  Proceeds to be Received in Trust

              	
                $

              
	 	 
	
                II. DISBURSEMENTS

              	 
	
                 

              	 
	
                Enable
                  Capital Management

              	
                $10,000.00

              
	
                Outstanding
                  Legal Fees to Franklin, Cardwell & Jones, P.C.

              	
                $51,666.23

              
	
                Capstone

              	
                $

              
	
                SpatiaLight,
                  Inc.

              	
                $

              
	 	 
	
                Total
                  Amount Disbursed:

              	
                $

              
	 	 
	 	 
	 	 
	
                WIRE
                  INSTRUCTIONS:

                BANK
                  OF AMERICA

                NEW
                  YORK, NY

                CUSTOMER
                  NAME: Franklin, Cardwell & Jones

                ROUTING
                  NUMBER: 026009593

                CUSTOMER
                  ACCOUNT: 005860079807

                SWIFT
                  CODE: BOFAUS3N

              	 

      

      

      
        
           

        

        
          41

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