Document:

IPIX Corporation 8-K 06/15/06 Exhibit 10.1

    Exhibit
      10.1

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement is entered into and dated as of June 23, 2006
      (this “Agreement”),
      by
      and among IPIX Corporation, a Delaware corporation (the “Company”),
      and
      each of the purchasers identified on the signature pages hereto (each, 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 (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, certain securities of the Company pursuant to the terms set
      forth herein.

     

    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, severally and not
      jointly, agree as follows:

     

    ARTICLE
      I.  

     

    DEFINITIONS

     

    1.1  Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, the following terms
      shall have the meanings set forth in this Section 1.1:

     

    “Additional
      Warrants”
      means,
      collectively, the Common Stock warrants issued upon exercise of the Warrant
      B,
      in the form of Exhibit
      B-3.

     

    “AdMission
      Transaction”
      means
      the transaction or series transaction(s) more specifically described on
Schedule
      1.1
      hereto,
      pursuant to which the Company will sell all of its equity ownership in AdMission
      Corporation.

     

    “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.

     

    “Bankruptcy
      Event”
      means
      any of the following events: (a) the Company or any Subsidiary commences a
      case
      or other proceeding under any bankruptcy, reorganization, arrangement,
      adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
      or
      similar law of any jurisdiction relating to the Company or any Subsidiary
      thereof; (b) there is commenced against the Company or any Subsidiary any such
      case or proceeding that is not dismissed within 60 days after commencement;
      (c)
      the Company or any Subsidiary is adjudicated insolvent or bankrupt or any order
      of relief or other order approving any such case or proceeding is entered;
      (d)
      the Company or any Subsidiary suffers any appointment of any custodian or the
      like for it or any substantial part of its property that is not discharged
      or
      stayed within 60 days; (e) the Company or any Subsidiary makes a general
      assignment for the benefit of creditors; (f) the Company or any Subsidiary
      fails
      to pay, or states that it is unable to pay or is unable to pay, its debts
      generally as they become due; (g) the Company or any Subsidiary calls a meeting
      of its creditors with a view to arranging a composition, adjustment or
      restructuring of its debts; or (h) the Company or any Subsidiary, by any act
      or
      failure to act, expressly indicates its consent to, approval of or acquiescence
      in any of the foregoing or takes any corporate or other action for the purpose
      of effecting any of the foregoing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    “Change
      of Control”
      means
      the occurrence of any of the following in one or a series of related
      transactions: (i) an acquisition after the date hereof by an individual or
      legal
      entity or “group” (as described in Rule 13d-5(b)(1) under the Exchange Act) of
      more than one-third of the voting rights or equity interests in the Company;
      (ii) a replacement of more than one-half of the members of the Company’s board
      of directors that is not approved by a majority of those individuals who remain
      members of the board of directors; (iii) a merger or consolidation of the
      Company or any Subsidiary or a sale of more than one-third of the assets of
      the
      Company in one or a series of related transactions, unless following such
      transaction or series of transactions, the holders of the Company’s securities
      prior to the first such transaction continue to hold at least two-thirds of
      the
      voting rights and equity interests in of the surviving entity or acquirer of
      such assets; (iv) a recapitalization, reorganization or other transaction
      involving the Company or any Subsidiary that constitutes or results in a
      transfer of more than one-half of the voting rights or equity interests in
      the
      Company; (v) consummation of a “Rule 13e-3 transaction” as defined in Rule 13e-3
      under the Exchange Act with respect to the Company, or (vi) the execution by
      the
      Company or its controlling shareholders of an agreement providing for or
      reasonably likely to result in any of the foregoing events.

     

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

     

    “Closing
      Date”
      means
      the date of the Closing.

     

    “Closing
      Price”
      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 an Eligible Market
      or any other national securities exchange, the closing bid price per share
      of
      the Common Stock for such date (or the nearest preceding date) on the primary
      Eligible Market or exchange on which the Common Stock is then listed or quoted;
      (b) if prices for the Common Stock are then quoted on the OTC Bulletin Board,
      the closing bid price per share of the Common Stock for such date (or the
      nearest preceding date) so quoted; (c) if prices for the Common Stock are then
      reported in the “Pink Sheets” published by the National Quotation Bureau
      Incorporated (or a similar organization or agency succeeding to its functions
      of
      reporting prices), the most recent closing 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 a majority in interest of the Purchasers.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Commission”
      means
      the
      Securities and Exchange Commission.

     

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

     

    “Common
      Stock Equivalents”
      means,
      collectively, Options and Convertible Securities.

     

    “Company
      Counsel”
      means
      Winston & Strawn LLP, counsel to the Company.

     

    “Conversion
      Price” has
      the
      meaning set forth in the Note.

     

    “Convertible
      Securities”
      means
      any stock or securities (other than Options) convertible into or exercisable
      or
      exchangeable for Common Stock.

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      Commission.

     

    “Eligible
      Market”
      means
      any of the New York Stock Exchange, the American Stock Exchange, the Nasdaq
      National Market or the Nasdaq SmallCap Market.

     

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

     

    “Excluded
      Stock”
means
      the issuance of Common Stock (A) upon exercise or conversion of any options
      or
      other securities described in Schedule
      3.1(g)
      (provided that such exercise or conversion occurs in accordance with the terms
      thereof, without amendment or modification, and that the applicable exercise
      or
      conversion price or ratio is described in such schedule); (B) in connection
      with
      any issuance of shares or grant of options to employees, officers, directors
      or
      consultants of the Company pursuant to any stock option plan or employee benefit
      plan described in Schedule
      3.1(g)
      or
      hereafter adopted by the Company and approved by its shareholders or in respect
      of the issuance of Common Stock upon exercise of any such options; (C) pursuant
      to a bona fide firm commitment underwritten public offering with a nationally
      recognized underwriter (excluding any equity lines) in an aggregate offering
      amount greater than $15,000,000, or (D) in connection with a bona fide joint
      venture, strategic partnership, or strategic alliance the primary purpose of
      which is not to raise cash.

     

    “Filing
      Date”
      means
      the 30th day following the Closing Date with respect to the initial Registration
      Statement required to be filed hereunder, and, with respect to any additional
      Registration Statements that may be required pursuant to Section
      6.1(g),
      the
      15th day following the date on which the Company first knows, or reasonably
      should have known, that such additional Registration Statement is required
      under
      such Section.

     

    “Losses”
      means
      any and all losses, claims, damages, liabilities, settlement costs and expenses,
      including without limitation costs of preparation of legal action and reasonable
      attorneys’ fees.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Notes”
      means
      the Senior Secured Convertible Notes due June 26, 2011 with an aggregate
      principal face amount of $5,000,000 issued by the Company to the Purchasers
      hereunder in the form of Exhibit
      A
      hereto.

     

    “Options”
      means
      any rights, warrants or options to subscribe, directly or indirectly for or
      purchase Common Stock or Convertible Securities (including all Additional
      Warrants that can be issued under the Transaction Documents).

     

    “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.

     

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

     

    “Prospectus”
      means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A promulgated under the Securities Act), as amended or supplemented
      by
      any prospectus supplement, with respect to the terms of the offering of any
      portion of the Registrable Securities covered by the Registration Statement,
      and
      all other amendments and supplements to the Prospectus including post effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

     

    “Purchaser
      Counsel”
      means
      Malhotra & Associates LLP, counsel to Iroquois Master Fund, Ltd.

     

    “Registrable
      Securities”
      means
      any Common Stock (including Underlying Shares) issued or issuable pursuant
      to
      the Transaction Documents, together with any securities issued or issuable
      upon
      any stock split, dividend or other distribution, recapitalization or similar
      event with respect to the foregoing.

     

    “Registration
      Statement”
      means
      the initial registration statement required to be filed under Article VI and
      any
      additional registration statements contemplated by Section 6.1(f), including
      (in
      each case) the Prospectus, amendments and supplements to such registration
      statement or Prospectus, including pre- and post-effective amendments, all
      exhibits thereto, and all material incorporated by reference or deemed to be
      incorporated by reference in such registration statement.

     

    “Required
      Effectiveness Date”
      means
      (i) with respect to the initial Registration Statement required to be filed
      hereunder, the 90th day following the Closing Date, and (ii) with respect to
      any
      additional Registration Statements that may be required pursuant to Section
      6.1(f),
      the
      60th day following the date on which the Company first knows, or reasonably
      should have known, that such additional Registration Statement is required
      under
      such Section.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Rule
      144,” “Rule
      415,”
      and
“Rule
      424”
      means
      Rule 144, Rule 415 and Rule 424, respectively, promulgated by the Commission
      pursuant to the Securities Act, as such Rules may be amended from time to time,
      or any similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

     

    “Securities”
      means
      the Notes, the Warrant A, the Warrant B, the Additional Warrant and the
      Underlying Shares issued or issuable (as applicable) to the applicable Purchaser
      pursuant to the Transaction Documents. 

     

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

     

    “Security
      Agreement”
      means
      the Security Agreement dated as of the Closing Date, among the Company, Iroquois
      Master Fund, Ltd., as agent, and the Purchasers substantially in the form of
      Exhibit
      E.

     

    “Subsidiary”
      means
      any subsidiary of the Company that is required to be listed on Schedule
      3.1(a).
      For the
      avoidance of doubt, AdMission Corporation shall not be considered a “Subsidiary”
of the Company hereunder.

     

    “Trading
      Day”
      means
      (a) any day on which the Common Stock is listed or quoted and traded on its
      primary Trading Market, or (b) if the Common Stock is not then listed or quoted
      and traded on any Trading Market, then any Business Day. 

     

    “Trading
      Market”
      means
      Nasdaq SmallCap Market or any other Eligible Market or any national securities
      exchange, market or trading or quotation facility on which the Common Stock
      is
      then listed or quoted.

     

    “Transaction
      Documents”
      means
      this Agreement, the Notes, the Warrant A, the Warrant B, the Additional Warrant,
      the Transfer Agent Instructions and any other documents or agreements executed
      or delivered in connection with the transactions contemplated
      hereby.

     

    “Transfer
      Agent Instructions”
      means
      the Company’s transfer agent instructions in the form of Exhibit
      C.

     

    “Underlying
      Shares”
      means
      the shares of Common Stock issuable (i) upon conversion of the Notes, (ii)
      upon
      exercise of the Warrants, (iii) upon exercise of the Additional Warrants issued
      upon exercise of the Warrant B, and (v) in satisfaction of any other obligation
      of the Company to issue shares of Common Stock pursuant to the Transaction
      Documents, and in each case, any securities issued or issuable in exchange
      for
      or in respect of such securities. 

     

    “VWAP”
      means on
      any particular Trading Day or for any particular period the volume weighted
      average trading price per share of Common Stock on such date or for such period
      on an Eligible Market as reported by Bloomberg L.P., or any successor performing
      similar functions; provided,
      however,
      that
      during any period the VWAP is being determined, the VWAP shall be subject to
      adjustment from time to time for stock splits, stock dividends, combinations
      and
      similar events as applicable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Warrant
      A”
      means,
      collectively, the Common Stock warrants issued and sold under this Agreement,
      in
      the form of Exhibit
      B-1.

     

    “Warrant
      B”
      means,
      collectively, the Common Stock warrants issued and sold under this Agreement,
      in
      the form of Exhibit
      B-2.

     

    “Warrants”
      means,
      collectively, each of the Warrant A and Warrant B issued and sold under this
      Agreement

     

    ARTICLE
      II 

    PURCHASE
      AND SALE

     

    2.1  Closing.
      Subject
      to the terms and conditions set forth in this Agreement, at the Closing, the
      Company shall issue and sell to each Purchaser, and each Purchaser shall,
      severally and not jointly, purchase from the Company, the Notes, the Warrant
      A
      and the Warrant B for the purchase price set forth on Schedule
      A
      hereto
      under the heading “Purchase Price”. The Closing shall take place at the offices
      of Purchaser Counsel or at such other location or time as the parties may
      agree.

     

    2.2  Closing
      Deliveries.

     

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

     

    (i)  a
      Note,
      registered in the name of such Purchaser, in the principal amount indicated
      on
Schedule
      A
      hereto
      under the heading “Note Principal Amount”;

     

    (ii)  a
      Warrant
      A, registered in the name of such Purchaser, pursuant to which such Purchaser
      shall have the right to acquire such number of Underlying Shares indicated
      on
Schedule
      A
      hereto
      under the heading “Warrant Shares”.

     

    (iii)  a
      Warrant
      B, registered in the name of such Purchaser, pursuant to which such Purchaser
      shall have the right to acquire (i) such number of Underlying Shares indicated
      on Schedule
      A
      hereto
      under the heading “Warrant B Shares”, and (ii) an Additional Warrant, pursuant
      to which such Purchaser shall have the right to acquire such number of
      Underlying Shares indicated on Schedule
      A
      hereto
      under the heading “Additional Warrant Shares”, each on the terms set forth
      therein;

     

    (iv)  the
      legal
      opinion of Company Counsel, in the form of Exhibit
      D,
      executed by such counsel and delivered to the Purchasers; 

     

    (v)  the
      Security Agreement executed by the parties thereto;

     

    (vi)  duly
      executed Transfer Agent Instructions acknowledged by the Company’s transfer
      agent; and

     

    (vii)  any
      other
      document reasonably requested by the Purchasers or Purchaser
      Counsel.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)
        At
      the
      Closing, each Purchaser shall deliver or cause to be delivered to the Company
      the purchase price indicated below such Purchaser’s name on the signature page
      of this Agreement under the heading “Purchase Price”, in United States dollars
      and in immediately available funds, by wire transfer to an account designated
      in
      writing by the Company for such purpose.

     

    ARTICLE
      III

    REPRESENTATIONS
      AND WARRANTIES

     

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

     

    (a)
        Subsidiaries.
      The
      Company does not directly or indirectly control or own more than a five percent
      (5%) interest in any other corporation, partnership, joint venture or other
      business association or entity (a “Subsidiary”),
      other
      than those listed in Schedule
      3.1(a).
      Except
      as disclosed in Schedule
      3.1(a),
      the
      Company owns, directly or indirectly, all of the capital stock or comparable
      equity interests of each Subsidiary free and clear of any lien, charge, claim,
      security interest, encumbrance, right of first refusal or other restriction
      (collectively, “Liens”),
      and
      all the issued and outstanding shares of capital stock or comparable equity
      interests of each Subsidiary are validly issued and are fully paid,
      non-assessable and free of preemptive and similar rights. 

     

    (b)
        Organization
      and Qualification.
      Each of
      the Company and 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 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,
      individually or in the aggregate, (i) adversely affect the legality, validity
      or
      enforceability of any Transaction Document, (ii) have or result in a material
      adverse effect on the results of operations, assets, prospects, business or
      condition (financial or otherwise) of the Company and the Subsidiaries, taken
      as
      a whole, or (iii) adversely impair the Company’s ability to perform fully on a
      timely basis its obligations under any Transaction Document (any of (i), (ii)
      or
      (iii), a “Material
      Adverse Effect”).

     

    (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 hereunder and thereunder
      have been duly authorized by all necessary action on the part of the Company
      and
      no further consent or action is required by the Company, its Board of Directors
      or its stockholders. Each Transaction Document has been (or upon delivery will
      be) duly executed by the Company is, or when delivered in accordance with the
      terms hereof, will constitute, the valid and binding obligation of the Company
      enforceable against the Company in accordance with its terms. Neither the
      Company nor any Subsidiary is in violation of any of the provisions of its
      certificate or articles of incorporation, by laws or other organizational or
      charter documents. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)
        No
      Conflicts.
      Except
      as disclosed on Schedule
      3.1(d),
      the
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby do not and will not (i) conflict with or violate any provision of the
      Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws
      or other organizational or charter documents, or (ii) conflict with, or
      constitute a default (or an event that with notice or lapse of time or both
      would become a default) under, 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) 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 and the rules and regulations of any self-regulatory organization
      to
      which the Company or its securities are subject), or by which any property
      or
      asset of the Company or a Subsidiary is bound or affected; except in each case
      as, individually or in the aggregate, do not have or are not reasonably expected
      to result in a Material Adverse Effect.

     

    (e)
        Filings,
      Consents and Approvals.
      The
      Company is not required to obtain any consent, waiver, authorization or order
      of, give any notice to, or make any filing or registration with, any court
      or
      other federal, state, local or other governmental authority or other Person
      in
      connection with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) the filing with the Commission of a Form
      8-K Current Report, (ii) the filing with the Commission of the Registration
      Statement(s), (iii) the application(s) to each Trading Market for the listing
      of
      the Underlying Shares for trading thereon, (iv) the notification to the Trading
      Market of the change in the number of shares outstanding and (v) applicable
      Blue
      Sky filings (collectively, the “Required
      Approvals”).

     

    (f)
        Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens (other than restrictions under
      applicable securities laws), and shall not be subject to preemptive rights
      or
      similar rights of shareholders. The Securities are issued
      in
      compliance with applicable securities laws, rules and regulations. The
      Company has reserved from its duly authorized capital stock the maximum number
      of shares of Common Stock issuable under the Transaction Documents (without
      giving effect to any anti-dilution provisions contained therein).
      

     

    (g)
        Capitalization.
      The
      number of shares and type of all authorized, issued and outstanding capital
      stock, options and other securities of the Company (whether or not presently
      convertible into or exercisable or exchangeable for shares of capital stock
      of
      the Company) is set forth in Schedule
      3.1(g).
      All
      outstanding shares of capital stock are duly authorized, validly issued, fully
      paid and nonassessable and have been issued in compliance with all applicable
      securities laws. No securities of the Company are entitled to preemptive or
      similar rights, and no Person has any right of first refusal, preemptive right,
      right of participation, or any similar right to participate in the transactions
      contemplated by the Transaction Documents. Except as a result of the purchase
      and sale of the Securities and except as disclosed in Schedule
      3.1(g),
      there
      are no outstanding options, warrants, script rights to subscribe to, calls
      or
      commitments of any character whatsoever relating to, or securities, rights
      or
      obligations convertible into or exchangeable for, or giving any Person any
      right
      to subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common Stock,
      or
      securities or rights convertible or exchangeable into shares of Common Stock.
      Except as disclosed on Schedule
      3.1(g),
      the
      issue and sale of the Securities will not obligate the Company to issue shares
      of Common Stock or other securities to any Person (other than the Purchasers)
      and will not result in a right of any holder of Company securities to adjust
      the
      exercise, conversion, exchange or reset price under such securities. To the
      knowledge of the Company, except as specifically disclosed in Schedule
      3.1(g),
      no
      Person or group of related Persons beneficially owns (as determined pursuant
      to
      Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement
      with or by obligation binding upon the Company, beneficial ownership of in
      excess of 5% of the outstanding Common Stock, ignoring for such purposes any
      limitation on the number of shares of Common Stock that may be owned at any
      single time. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (h)
        SEC
      Reports; Financial Statements.
      The
      Company has filed all reports required to be filed by it under the Securities
      Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
      for the two years preceding the date hereof (or such shorter period as the
      Company was required by law to file such material) (the foregoing materials
      being collectively referred to herein as the “SEC
      Reports”
and,
      together with the Schedules to this Agreement, the “Disclosure
      Materials”)
      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. The
      Company has delivered to the Purchasers a copy of all SEC Reports filed within
      the 10 days preceding the date hereof. As of their respective dates, the SEC
      Reports complied in all material respects with the requirements of the
      Securities Act and the Exchange Act and the rules and regulations of the
      Commission promulgated thereunder, and none of the SEC Reports, when filed,
      contained any untrue statement of a material fact or omitted to state a material
      fact required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading. The financial statements of the Company included in the SEC Reports
      comply in all material respects with applicable accounting requirements and
      the
      rules and regulations of the Commission with respect thereto as in effect at
      the
      time of filing. Such financial statements have been prepared in accordance
      with
      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 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. All material agreements to which the Company or any
      Subsidiary is a party or to which the property or assets of the Company or
      any
      Subsidiary are subject are included as part of or specifically identified in
      the
      SEC Reports.

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (i)
        Material
      Changes.
      Since
      the date of the latest audited financial statements included within the SEC
      Reports, except as specifically disclosed in the SEC Reports or in Schedule
      3.1(i),
      (i)
      there has been no event, occurrence or development that, individually or in
      the
      aggregate, has had or that could result in a Material Adverse Effect, (ii)
      the
      Company has not incurred any liabilities (contingent or otherwise) other than
      (A) trade payables and accrued expenses incurred in the ordinary course of
      business consistent with past practice and (B) liabilities not required to
      be
      reflected in the Company’s financial statements pursuant to GAAP or required to
      be disclosed in filings made with the Commission, (iii) the Company has not
      altered its method of accounting or the identity of its auditors, (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.

     

    (j)
        Absence
      of Litigation.
      Other
      than as described in the SEC Reports, 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, individually or in the aggregate, have or result in
      a
      Material Adverse Effect. Neither the Company nor any Subsidiary, nor any
      director or officer thereof, is or has been the subject of any Action involving
      a claim of violation of or liability under federal or state securities laws
      or a
      claim of breach of fiduciary duty. There has not been, and to the knowledge
      of
      the Company, there is not pending or contemplated, any formal 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.

     

    (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.

     

    (l)
        Compliance.
      Except
      as disclosed in the SEC Reports or on 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 relating to taxes,
      environmental protection, occupational health and safety, product quality and
      safety and employment and labor matters, except in each case (a) as,
      individually or in the aggregate, do not have or are not reasonably expected
      to
      result in a Material Adverse Effect, or (b) for which appropriate accruals
      have
      been made in the Company’s financial statements in the SEC Reports.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (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,
      individually or in the aggregate, have or result in a Material Adverse Effect
      (“Material
      Permits”),
      and
      neither the Company nor any Subsidiary has received any notice of proceedings
      relating to the revocation or modification of any Material Permit.

     

    (n)
        Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries. Any real property and facilities held under lease by the Company
      and the Subsidiaries are held by them under valid, subsisting and enforceable
      leases of which the Company and the Subsidiaries are in compliance in all
      material respects.

     

    (o)
        Patents
      and Trademarks.
      Other
      than as described in the SEC Reports, the Company and the Subsidiaries have,
      or
      have rights to use, all patents, patent applications, trademarks, trademark
      applications, service marks, trade names, copyrights, licenses and other similar
      rights that are 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”).
      Other
      than as described in the SEC Reports, neither the Company nor any Subsidiary
      has
      received a written notice that the Intellectual Property Rights used by the
      Company or any Subsidiary violates or infringes upon the rights of any Person.
      Other than as described in the SEC Reports, 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.

     

    (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. 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 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (r)
        Internal
      Accounting Controls.
      The
      Company and the Subsidiaries maintain a system of internal accounting controls
      sufficient to provide reasonable assurance regarding the reliability of
      financial reporting and the preparation of financial statements for external
      purposes in accordance with GAAP and includes those policies and procedures
      that
      (i) pertain to the maintenance of records that in reasonable detail accurately
      and fairly reflect the transactions and dispositions of the assets of the
      Company; (ii) provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      GAAP,
      and that receipts and expenditures of the Company are being made only in
      accordance with authorizations of management and directors of the Company;
      and
      (iii) provide reasonable assurance regarding prevention or timely detection
      of
      unauthorized acquisition, use or disposition of the Company’s assets that could
      have a material effect on the financial statements.

     

    (s)
        Solvency.
      Based
      on the financial condition of the Company as of the Closing Date and subject
      to
      the Company meeting its projected revenue targets for the third and fourth
      quarters of the current fiscal year: (i) the Company’s fair saleable value of
      its 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 during the current fiscal year; (ii)
      the
      Company’s assets do not constitute unreasonably small capital to carry on its
      business for the current fiscal year 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) assuming (A) the
      liquidation of assets includes receipts of material payment for intellectual
      property which is not currently reflected on the Company’s balance sheet and (B)
      that forced liquidation of inventory assets would not adversely affect the
      realizable value of that inventory when compared to its carrying value and
      the
      sale of inventory in the normal course of business, 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 debt
      when such amounts are required to be paid. While 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 paid on or in respect of its debt,
      the Company does believe that an additional working capital financing will
      be
      required in the next fiscal year. 

     

    (t)
        Certain
      Fees.
      Except
      as described in Schedule
      3.1(t),
      no
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by this Agreement. The Purchasers shall have no obligation with
      respect to any fees or with respect to any claims made by or on behalf of other
      Persons for fees of a type contemplated in this Section that may be due in
      connection with the transactions contemplated by this Agreement. The Company
      shall indemnify and hold harmless the Purchasers, their employees, officers,
      directors, agents, and partners, and their respective Affiliates, from and
      against all claims, losses, damages, costs (including the costs of preparation
      and attorney’s fees) and expenses suffered in respect of any such claimed or
      existing fees, as such fees and expenses are incurred.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (u)
        Private
      Placement.
      Neither
      the Company nor any Person acting on the Company’s behalf has sold or offered to
      sell or solicited any offer to buy the Securities by means of any form of
      general solicitation or advertising. Neither the Company nor any of its
      Affiliates nor any Person acting on the Company's behalf has, directly or
      indirectly, at any time within the past six months, made any offer or sale
      of
      any security or solicitation of any offer to buy any security under
      circumstances that would (i) eliminate the availability of the exemption from
      registration under Regulation D under the Securities Act in connection with
      the
      offer and sale of the Securities as contemplated hereby or (ii) cause the
      offering of the Securities pursuant to the Transaction Documents to be
      integrated with prior offerings by the Company for purposes of any stockholder
      approval provisions under the rules and regulations of any Trading Market.
      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 and no shareholder
      approval is required for the Company to fulfill its obligations under the
      Transaction Documents. The Company is not a United States real property holding
      corporation within the meaning of the Foreign Investment in Real Property Tax
      Act of 1980.

     

    (v)
        Form
      S-3 Eligibility.
      The
      Company is eligible to register the resale of its Common Stock for resale by
      the
      Purchasers under Form S-3 promulgated under the Securities Act.

     

    (w)
        Listing
      and Maintenance Requirements.
      Other
      than as disclosed in the SEC Reports, the Company has not, in the two years
      preceding the date hereof, received notice (written or oral) from any Eligible
      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 Eligible 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)
        Registration
      Rights.
      Except
      as described in Schedule
      3.1(x),
      the
      Company has not granted or agreed to grant to any Person any rights (including
      “piggy back” registration rights) to have any securities of the Company
      registered with the Commission or any other governmental authority that have
      not
      been satisfied.

     

    (y)
        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
      the
      Company’s issuance of the Securities and the Purchasers’ ownership of the
      Securities.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (z)
        Disclosure.
      The
      Company confirms that neither it nor any other Person acting on its behalf
      has
      provided any of the Purchasers or their agents or counsel with any information
      that constitutes or might constitute material, non-public information. The
      Company understands and confirms that the Purchasers will rely on the foregoing
      representations in effecting transactions in securities of the Company. All
      disclosure provided to the Purchasers regarding the Company, its business and
      the transactions contemplated hereby, including the Schedules to this Agreement,
      furnished by or on behalf of the Company are true and correct and do not contain
      any untrue statement of a material fact or omit to state any material fact
      necessary in order to make the statements made therein, in light of the
      circumstances under which they were made, not misleading. No event or
      circumstance has occurred or information exists with respect to the Company
      or
      any of its Subsidiaries or its or their business, properties, prospects,
      operations or financial conditions, which, under applicable law, rule or
      regulation, requires public disclosure or announcement by the Company but which
      has not been so publicly announced or disclosed. 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.

     

    (aa)
        No
      Violation.
      The
      issuance and sale of the Securities contemplated hereby does not conflict with
      or violate any rules or regulations of the Trading Market.

     

    (bb)
        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 this Agreement and the
      transactions contemplated hereby. The Company further acknowledges that no
      Purchaser is acting as a financial advisor or fiduciary of the Company or any
      other Purchaser (or in any similar capacity) with respect to this Agreement
      and
      the transactions contemplated hereby and any advice given by any Purchaser
      or
      any of their respective representatives or agents in connection with this
      Agreement and the transactions contemplated hereby is merely incidental to
      such
      Purchaser’s purchase of the Securities. The Company further represents to each
      Purchaser that the Company’s decision to enter into this Agreement has been
      based solely on the independent evaluation of the Company and its
      representatives. The Company further acknowledges that no Purchaser has made
      any
      promises or commitments other than as set forth in this Agreement, including
      any
      promises or commitments for any additional investment by any such Purchaser
      in
      the Company.

     

    (cc)
        Investment
      Company.
      The
      Company is not, and is not an Affiliate of, an investment company within the
      meaning of the Investment Company Act of 1940, as amended.

     

    (dd)
        Ranking.
      Except
      as set forth on Schedule
      3.1(dd),
      as of
      the date of this Agreement, no indebtedness of the Company is senior to, or
      pari
      passu with, the Notes in right of payment, whether with respect to interest
      or
      upon liquidation or dissolution, or otherwise. 

     

    (ee)
        Indebtedness.
      Except
      as set forth on Schedule
      3.1(ee)
      and
      trade payables arising in the ordinary course of business not more than sixty
      (60) days past due, the Company does not have any indebtedness.

     

    (ff)
        Sarbanes-Oxley
      Act.
      The
      Company is in compliance with applicable requirements of the Sarbanes-Oxley
      Act
      of 2002 and applicable rules and regulations promulgated by the Commission
      thereunder in effect as of the date of this Agreement, except where such
      noncompliance could not be reasonably expected to have, individually or in
      the
      aggregate, a Material Adverse Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.2  Representations
      and Warranties of the Purchasers.
      Each
      Purchaser hereby, as to itself only and for no other Purchaser, represents
      and
      warrants 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 the requisite
      corporate, limited liability company 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 this Agreement
      have
      been duly authorized by all necessary corporate or limited liability company
      action on the part of such Purchaser. This Agreement has been duly executed
      by
      such Purchaser and, when delivered by such Purchaser in accordance with terms
      hereof, will constitutes the valid and legally binding obligation of such
      Purchaser, enforceable against it in accordance with its terms.

     

    (b)
        Investment
      Intent.Such
      Purchaser is acquiring the Securities for investment purposes only and not
      with
      a view to or for distributing or reselling such Securities or any part thereof,
      without prejudice, however, to such Purchaser’s right, subject to the provisions
      of this Agreement, at all times to sell or otherwise dispose of all or any
      part
      of such Securities pursuant to an effective registration statement under the
      Securities Act or under an exemption from such registration and in compliance
      with applicable federal and state securities laws. Nothing contained herein
      shall be deemed a representation or warranty by such Purchaser to hold
      Securities for any period of time. 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, an “accredited investor” as defined in Rule 501(a) under the Securities
      Act. Such Purchaser is not a registered broker-dealer under Section 15 of the
      Exchange Act.

     

    (d)
        Group
      Status.Such
      Purchaser is not acting with any other Purchaser as a "group" as that term
      is
      used in Section 13(d) of the Exchange Act.

     

    (e)
        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.

     

    (f)
        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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g)
        Access
      to Information.
      Such
      Purchaser has had the opportunity to ask questions or, and receive answers
      from,
      representatives of the Company concerning the Company and the terms and
      conditions of this transaction, as well as obtain any information requested
      by
      such Purchaser. Such Purchaser’s decision to enter into the transactions
      contemplated hereby is based on such Purchaser’s own evaluation of the risks and
      merits of the Company.

     

    ARTICLE
      IV

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
      Restrictions.

     

    (a)
        The
      Securities may only be disposed of pursuant to an effective registration
      statement under the Securities Act or pursuant to an available exemption from
      the registration requirements of the Securities Act, and in compliance with
      any
      applicable state securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or to the Company
      or
      pursuant to Rule 144(k), except as otherwise set forth herein, the Company
      may
      require the transferor to provide to the Company an opinion of counsel selected
      by the transferor, the form and substance of which opinion shall be reasonably
      satisfactory to the Company, to the effect that such transfer does not require
      registration under the Securities Act. Notwithstanding the foregoing, the
      Company hereby consents to and agrees to register on the books of the Company
      and with its transfer agent, without any such legal opinion, any transfer of
      Securities by a Purchaser to an Affiliate of such Purchaser, provided that
      the
      transferee certifies to the Company that it is an “accredited investor” as
      defined in Rule 501(a) under the Securities Act.

     

    (b)
        The
      Purchasers agree to the imprinting, except as otherwise permitted by Section
      4.1(c), the following legend on any certificate evidencing Securities:

     

    [NEITHER]
      THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
      [EXERCISABLE] [CONVERTIBLE]] HAVE [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 COMPLIANCE WITH
      APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE
      FOREGOING, THESE SECURITIES AND THE SECURITIES ISSUABLE UPON [EXERCISE]
      [CONVERSION] OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
      MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH
      SECURITIES.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)
        Certificates
      evidencing Securities shall not be required to contain the legend set forth
      in
      Section 4.1(b) or any other legend (i) while a Registration Statement covering
      the resale of such Securities is effective under the Securities Act, or (ii)
      following any sale of such Securities pursuant to Rule 144, or (iii) if such
      Securities 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 the legal opinion
      included in the Transfer Agent Instructions to the Company’s transfer agent on
      the Effective Date. Following the Effective Date or at such earlier time as
      a
      legend is no longer required for certain Securities, the Company will no later
      than three Trading Days following the delivery by a Purchaser to the Company
      or
      the Company’s transfer agent of a legended certificate representing such
      Securities, deliver or cause to be delivered to such Purchaser a certificate
      representing such Securities 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 Section 4.1(b). For so long as any Purchaser owns
      Securities, the Company will not effect or publicly announce its intention
      to
      effect any exchange, recapitalization or other transaction that effectively
      requires or rewards physical delivery of certificates evidencing the Common
      Stock.

     

    (d)
        The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      or
      grant a security interest in some or all of the Securities in connection with
      a
      bona fide margin agreement or other loan or financing arrangement secured by
      the
      Securities and, if required under the terms of such agreement, loan or
      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 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 the preparation and filing of any required
      prospectus supplement under Rule 424(b)(3) of the Securities Act or other
      applicable provision of the Securities Act to appropriately amend the list
      of
      selling stockholders thereunder.

     

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

     

    4.3  Furnishing
      of Information.
      As long
      as any Purchaser owns Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. Upon the request of any Purchaser, the Company
      shall deliver to such Purchaser a written certification of a duly authorized
      officer as to whether it has complied with the preceding sentence. As long
      as
      any Purchaser owns Securities, if the Company is not required to file reports
      pursuant to such laws, it will prepare and furnish to the Purchasers and make
      publicly available in accordance with paragraph (c) of Rule 144 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 satisfy the provisions of Rule 144
      applicable to the issuer of securities relating to transactions for the sale
      of
      securities pursuant to Rule 144.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.4  Integration.
      The
      Company shall not, and shall use its best efforts to ensure that no Affiliate
      of
      the Company shall, sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchasers or that would be integrated with the offer
      or sale of the Securities for purposes of the rules and regulations of any
      Trading Market.

     

    4.5  Reservation
      and Listing of Securities.

     

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

     

    (b)
        The
      Company shall (i) promptly prepare and file with such Trading Market an
      additional shares listing application covering all of the shares of Common
      Stock
      issued or issuable under the Transaction Documents, (ii) take all steps
      necessary to cause such shares of Common Stock to be approved for listing on
      each Trading Market as soon as possible thereafter, (iii) provide to the
      Purchasers evidence of such listing, and (iv) maintain the listing of such
      Common Stock on each such Trading Market or another Eligible
      Market.

     

    (c)
        In
      the
      case of a breach by the Company of Section 4.5(a), in addition to the other
      remedies available to the Purchasers, the Purchasers shall have the right to
      require the Company to either: (i) use its best efforts to obtain the required
      shareholder approval necessary to permit the issuance of such shares of Common
      Stock as soon as is possible, but in any event not later than the 60th day
      after
      such notice, or (ii) within five Trading Days after delivery of a written
      notice, pay cash to such Purchaser, as liquidated damages and not as a penalty,
      in an amount equal to the number of shares of Common Stock not issuable by
      the
      Company times 115% of the arithmetic average of the VWAP for the five Trading
      Days immediately prior to the date of such notice or, if greater, the five
      Trading Days immediately prior to the date of payment (the “Cash
      Amount”).
      If the
      exercising or converting Purchaser elects the first option under the preceding
      sentence and the Company fails to obtain the required shareholder approval
      on or
      prior to the 60th day after such notice, then within three Trading Days after
      such 60th day, the Company shall pay the Cash Amount to such Purchaser, as
      liquidated damages and not as penalty.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.6  Subsequent
      Placements.

     

    (a)
        From
      the
      date hereof until the Effective Date, the Company will not, directly or
      indirectly, offer, sell, grant any option to purchase, or otherwise dispose
      of
      (or announce any offer, sale, grant or any option to purchase or other
      disposition of) any of its or the Subsidiaries’ equity or equity equivalent
      securities, including without limitation any debt, preferred stock or other
      instrument or security that is, at any time during its life and under any
      circumstances, convertible into or exchangeable or exercisable for Common Stock
      or Common Stock Equivalents (any such offer, sale, grant, disposition or
      announcement being referred to as a “Subsequent
      Placement”).

     

    (b)
        From
      the
      Effective Date and for so long as the Notes are outstanding, the Company will
      not, directly or indirectly, effect any Subsequent Placement unless the Company
      shall have first complied with this Section 4.6(b).

     

    (i)  The
      Company shall deliver to each Purchaser a written notice (the “Offer”)
      of any
      proposed or intended issuance or sale or exchange of the securities being
      offered (the “Offered
      Securities”)
      in a
      Subsequent Placement, which Offer shall (w) identify and describe the
      Offered Securities, (x) describe the price and other terms upon which they
      are
      to be issued, sold or exchanged, and the number or amount of the Offered
      Securities to be issued, sold or exchanged, (y) identify the Persons or entities
      to which or with which the Offered Securities are to be offered, issued, sold
      or
      exchanged and (z) offer to issue and sell to or exchange with each Purchaser
      (A)
      a pro rata portion of 66% of the Offered Securities based on such Purchaser’s
      pro rata portion of the aggregate principal amount of the Notes purchased
      hereunder (the “Basic
      Amount”),
      and
      (B) with respect to each Purchaser that elects to purchase its Basic Amount,
      any
      additional portion of the Offered Securities attributable to the Basic Amounts
      of other Purchasers as such Purchaser shall indicate it will purchase or acquire
      should the other Purchasers subscribe for less than their Basic Amounts (the
      “Undersubscription
      Amount”).

     

    (ii)  To
      accept
      an Offer, in whole or in part, a Purchaser must deliver a written notice to
      the
      Company prior to the end of the five (5) Trading Day period of the Offer,
      setting forth the portion of the Purchaser’s Basic Amount that such Purchaser
      elects to purchase and, if such Purchaser shall elect to purchase all of its
      Basic Amount, the Undersubscription Amount, if any, that such Purchaser elects
      to purchase (in either case, the “Notice
      of Acceptance”).
      If the
      Basic Amounts subscribed for by all Purchasers are less than the total of all
      of
      the Basic Amounts, then each Purchaser who has set forth an Undersubcription
      Amount in its Notice of Acceptance shall be entitled to purchase, in addition
      to
      the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
      for; provided,
      however,
      that if
      the Undersubscription Amounts subscribed for exceed the difference between
      the
      total of all the Basic Amounts and the Basic Amounts subscribed for (the
“Available
      Undersubscription Amount”),
      each
      Purchaser who has subscribed for any Undersubscription Amount shall be entitled
      to purchase on that portion of the Available Undersubscription Amount as the
      Basic Amount of such Purchaser bears to the total Basic Amounts of all
      Purchasers that have subscribed for Undersubscription Amounts, subject to
      rounding by the Board of Directors to the extent its deems reasonably
      necessary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iii)  The
      Company shall have three (3) Trading Days from the expiration of the period
      set
      forth in Section 4.6(b)(ii) above to issue, sell or exchange all or any part
      of
      such Offered Securities as to which a Notice of Acceptance has not been given
      by
      the Purchasers (the “Refused
      Securities”),
      but
      only to the offerees described in the Offer and only upon terms and conditions
      (including, without limitation, unit prices and interest rates) that are not
      more favorable to the acquiring Person or Persons or less favorable to the
      Company than those set forth in the Offer.

     

    (iv)  In
      the
      event the Company shall propose to sell less than all the Refused Securities
      (any such sale to be in the manner and on the terms specified in Section
      4.6(b)(iii) above), then each Purchaser may, at its sole option and in its
      sole
      discretion, reduce the number or amount of the Offered Securities specified
      in
      its Notice of Acceptance to an amount that shall be not less than the number
      or
      amount of the Offered Securities that the Purchaser elected to purchase pursuant
      to Section 4.6(b)(ii) above multiplied by a fraction, (i) the numerator of
      which
      shall be the number or amount of Offered Securities the Company actually
      proposes to issue, sell or exchange (including Offered Securities to be issued
      or sold to Purchasers pursuant to Section 4.6(c)(ii) above prior to such
      reduction) and (ii) the denominator of which shall be the original amount of
      the
      Offered Securities. In the event that any Purchaser so elects to reduce the
      number or amount of Offered Securities specified in its Notice of Acceptance,
      the Company may not issue, sell or exchange more than the reduced number or
      amount of the Offered Securities unless and until such securities have again
      been offered to the Purchasers in accordance with Section 4.6(b)(i)
      above.

     

    (v)  Upon
      the
      closing of the issuance, sale or exchange of all or less than all of the Refused
      Securities, the Purchasers shall acquire from the Company, and the Company
      shall
      issue to the Purchasers, the number or amount of Offered Securities specified
      in
      the Notices of Acceptance, as reduced pursuant to Section 4.6(b)(iv) above
      if
      the Purchasers have so elected, upon the terms and conditions specified in
      the
      Offer. The purchase by the Purchasers of any Offered Securities is subject
      in
      all cases to the preparation, execution and delivery by the Company and the
      Purchasers of a purchase agreement relating to such Offered Securities
      reasonably satisfactory in form and substance to the Purchasers and their
      respective counsel.

     

    (vi)  Any
      Offered Securities not acquired by the Purchasers or other Persons in accordance
      with Section 4.6(b)(iii) above may not be issued, sold or exchanged until they
      are again offered to the Purchasers under the procedures specified in this
      Agreement.

     

    (c)
        The
      restrictions contained in paragraphs (b) of this Section 4.6 shall not apply
      to
      Excluded Stock.

     

    4.7  Conversion
      and Exercise Procedures.
      The
      form of Exercise Notice included in the Warrants and Additional Warrants and
      the
      form of Holder Conversion Notice included in the Notes set forth the totality
      of
      the procedures required by the Purchasers in order to exercise the Warrants
      or
      Additional Warrants or convert the Notes. No additional legal opinion or other
      information or instructions shall be necessary to enable the Purchasers to
      exercise their Warrants or convert their Notes. The Company shall honor
      exercises of the Warrants and Additional Warrants and conversions of the Notes
      and shall deliver Underlying Shares in accordance with the terms, conditions
      and
      time periods set forth in the Transaction Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.8  Securities
      Laws Disclosure; Publicity.
      On or
      before 8:30 a.m., New York time, on June 26, 2006, the Company shall issue
      a
      press release acceptable to the Purchasers disclosing all material terms of
      the
      transactions contemplated hereby. Within two Trading Days of the date of this
      Agreement, the Company shall file a Current Report on Form 8-K with the
      Commission (the “8-K
      Filing”)
      describing the terms of the transactions contemplated by the Transaction
      Documents and including as exhibits to such Current Report on Form 8-K this
      Agreement and the form of Notes and Warrants, in the form required by the
      Exchange Act. Thereafter, the Company shall timely file any filings and notices
      required by the Commission or applicable law with respect to the transactions
      contemplated hereby and provide copies thereof to the Purchasers promptly after
      filing. Except with respect to the 8-K Filing and the press release referenced
      above (a copy of which will be provided to Purchaser Counsel for its review
      as
      early as practicable prior to its filing), the Company shall, at least two
      Trading Days prior to the filing or dissemination of any disclosure required
      by
      this paragraph, provide a copy thereof to the Purchasers for their review.
      The
      Company and the Purchasers shall consult with each other in issuing any press
      releases or otherwise making public statements or filings and other
      communications with the Commission or any regulatory agency or Trading Market
      with respect to the transactions contemplated hereby, and neither party shall
      issue any such press release or otherwise make any such public statement, filing
      or other communication without the prior consent of the other, 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, filing
      or
      other 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 to the
      extent such disclosure (but not any disclosure as to the controlling Persons
      thereof) is required by law or Trading Market regulations, in which case the
      Company shall provide the Purchasers with prior notice of such disclosure.
      The
      Company shall not, and shall cause each of its Subsidiaries and its and each
      of
      their respective officers, directors, employees and agents not to, provide
      any
      Purchaser with any material nonpublic information regarding the Company or
      any
      of its Subsidiaries from and after the filing of the 8-K Filing without the
      express written consent of such Purchaser. In the event of a breach of the
      foregoing covenant by the Company, any of its Subsidiaries, or any of its or
      their respective officers, directors, employees and agents, in addition to
      any
      other remedy provided herein or in the Transaction Documents, a Purchaser shall
      have the right to require the Company to make a public disclosure, in the form
      of a press release, public advertisement or otherwise, of such material
      nonpublic information. No Purchaser shall have any liability to the Company,
      its
      Subsidiaries, or any of its or their respective officers, directors, employees,
      shareholders or agents for any such disclosure. Subject to the foregoing,
      neither the Company nor any Purchaser shall issue any press releases or any
      other public statements with respect to the transactions contemplated hereby;
      provided, however, that the Company shall be entitled, without the prior
      approval of any Purchaser, to make any press release or other public disclosure
      with respect to such transactions (i) in substantial conformity with the 8-K
      Filing and contemporaneously therewith and (ii) as is required by applicable
      law
      and regulations (provided that in the case of clause (i) Purchaser Counsel
      shall
      be consulted by the Company in connection with any such press release or other
      public disclosure prior to its release). Each press release disseminated during
      the 12 months prior to the Closing Date did not at the time of release contain
      any untrue statement of a material fact or omit to state a material fact
      required to be stated therein or necessary in order to make the statements
      therein, in light of the circumstances under which they were made, not
      misleading.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.9  Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Securities hereunder
      for
      working capital purposes and not for the satisfaction of any portion of the
      Company’s debt (other than payment of trade payables and accrued expenses in the
      ordinary course of the Company’s business and prior practices), to redeem any
      Company equity or equity-equivalent securities or to settle any outstanding
      litigation.

     

    4.10  Indebtedness.
      

     

    (a)
        At
      any
      time after the date of this Agreement, neither the Company nor any Subsidiary
      of
      the Company shall incur any indebtedness, liability or obligation that is senior
      to, or pari passu with, the Notes in right of payment, whether with respect
      to
      interest or upon liquidation or dissolution, or otherwise; provided,
      however,
      that
      notwithstanding the foregoing, the Company may, in the ordinary course of
      business, incur indebtedness secured by purchase money security interests (which
      will be senior only as to the underlying assets covered thereby) and
      indebtedness under capital lease obligations (which will be senior only as
      to
      the underlying assets covered thereby).

     

    (b)
        The
      provisions of this Section 4.10 shall terminate and be of no further force
      or
      effect upon the conversion or indefeasible repayment in full of the Notes and
      all accrued interest thereon and any and all expenses or liabilities relating
      thereto.

     

    4.11  Repayment
      of Notes.
      Each of
      the parties hereto agrees that all repayments of the Notes (including any
      accrued interest thereon) by the Company (other than by conversion of the Notes)
      will be paid pro rata to the holders thereof based upon the principal amount
      then outstanding to each of such holders.

     

    4.12  No
      Impairment.
      At all
      times after the date hereof, the Company will not take or permit any action,
      or
      cause or permit any subsidiary to take or permit any action that impairs or
      adversely affects the rights of the Purchasers under the Agreement or the
      Notes.

     

    4.13  Fundamental
      Changes.
      

     

    (a)
        In
      addition to any other rights provided by law or set forth herein, from and
      after
      the date of this Agreement and for so long as any Notes remain outstanding,
      the
      Company shall not without first obtaining the approval (by vote or written
      consent, as provided by law) of the holders of a majority of the outstanding
      principal face amount of the Notes:

     

    (i)purchase,
      redeem (other than pursuant to equity incentive agreements with non-officer
      employees giving the Company the right to repurchase shares upon the termination
      of services) or set aside any sums for the purchase or redemption of, or declare
      or pay any dividend (including a dividend payable in stock of the Company)
      or
      make any other distribution with respect to, any shares of capital stock or
      any
      other securities that are convertible into or exercisable for such
      stock;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (ii)change
      the nature of the Company’s business to any business which is fundamentally
      distinct and separate from the business currently conducted by the Company;
      or

     

    (iii)cause
      or
      permit any subsidiary of the Company directly or indirectly to take any actions
      described in clauses (a) through (b) above, other than issuing securities to
      the
      Company.

     

    (b)
        From
      the
      date of this Agreement until the Effective Date, except in connection with
      the
      AdMission Transaction, the Company shall not without first obtaining the
      approval (by vote or written consent, as provided by law) of the holders of
      a
      majority of the outstanding principal face amount of the Notes, which approval
      shall not be unreasonably withheld or delayed: 

     

    (i)  acquire
      or merge with any other business entity;

     

    (ii)  sell
      a
      substantial portion of assets not in the ordinary course of
      business;

     

    (iii)  enter
      into a transaction that results in or cause a Change of Control; 

     

    (iv)  amend
      the
      company’s charter or by-laws (other than to make changes that are not
      material);

     

    (v)  increase
      the number of shares issuable pursuant to any stock option or other equity
      incentive plan;

     

    (vi)  change
      the nature of the Company’s business to any business which is fundamentally
      distinct and separate from the business currently conducted by the
      Company;

     

    (vii)  create,
      incur, assume or suffer to exist indebtedness (other than trade payables
      incurred in the ordinary course of business) greater than $200,000 in
      aggregate;

     

    (viii)  create
      or
      suffer to exist any Lien (other than Liens arising by operation of law) or
      transfer upon or against any of its property or assets now owned or hereafter
      acquired, except for indebtedness less than $200,000 in aggregate;
      or

     

    (ix)  cause
      or
      permit any Subsidiary of the Company directly or indirectly to take any actions
      described in clauses (a) through (j) above, other than issuing securities to
      the
      Company.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.14  Reimbursement.
      If any
      Purchaser or any of its Affiliates or any officer, director, partner,
      controlling person, employee or agent of a Purchaser or any of its Affiliates
      (a
“Related
      Person”)
      becomes
      involved in any capacity in any Proceeding brought by or against any Person
      in
      connection with or as a result of the transactions contemplated by the
      Transaction Documents, the Company will indemnify and hold harmless such
      Purchaser or Related Person for its reasonable legal and other expenses
      (including the costs of any investigation, preparation and travel) and for
      any
      Losses incurred in connection therewith, as such expenses or Losses are
      incurred, excluding only Losses that result directly from such Purchaser’s or
      Related Person’s gross negligence or willful misconduct. In addition, the
      Company shall indemnify and hold harmless each Purchaser and Related Person
      from
      and against any and all Losses, as incurred, arising out of or relating to
      any
      breach by the Company of any of the representations, warranties or covenants
      made by the Company in this Agreement or any other Transaction Document, or
      any
      allegation by a third party that, if true, would constitute such a breach
      (unless such allegation is based upon a breach of such Purchaser’s
      representation, warranties or covenants under the Transaction Documents or
      any
      agreements or understandings that such Purchaser may have with any other Person
      or any violations by the Purchaser or any Related Person of state or federal
      securities laws or any conduct by such Purchaser or Related Person which
      constitutes gross negligence or willful misconduct). The conduct of any
      Proceedings for which indemnification is available under this paragraph shall
      be
      governed by Section 6.4(c) below. The indemnification obligations of the Company
      under this paragraph shall be in addition to any liability that the Company
      may
      otherwise have and shall be binding upon and inure to the benefit of any
      successors, assigns, heirs and personal representatives of the Purchasers and
      any such Related Persons. If the Company breaches its obligations under any
      Transaction Document, then, in addition to any other liabilities the Company
      may
      have under any Transaction Document or applicable law, the Company shall pay
      or
      reimburse the Purchasers on demand for all costs of collection and enforcement
      (including reasonable attorneys’ fees and expenses). Without limiting the
      generality of the foregoing, the Company specifically agrees to reimburse the
      Purchasers on demand for all costs of enforcing the indemnification obligations
      in this paragraph. 

     

    4.15  Shareholders
      Rights Plan.
      No
      claim will be made or enforced by the Company or any other Person that any
      Purchaser is an “Acquiring Person” under any shareholders rights plan or similar
      plan or arrangement in effect or hereafter adopted by the Company, or that
      any
      Purchaser could be deemed to trigger the provisions of any such plan or
      arrangement, by virtue of receiving Underlying Shares under the Transaction
      Documents or under any other agreement between the Company and the
      Purchasers.

     

    4.16  Seniority.
      For so
      long as the Notes are outstanding, (i)  no indebtedness of the Company is
      or will be senior to, or pari passu with, this Note in right of payment, whether
      with respect of interest, damages or upon liquidation or dissolution or
      otherwise and (ii) the Company will not, and will not permit any Subsidiary
      to, directly or indirectly, enter into, create, incur, assume or suffer to
      exist
      any indebtedness for borrowed money of any kind, on or with respect to any
      of
      its property or assets now owned or hereafter acquired or any interest therein
      or any income or profits therefrom, that is senior or pari passu in any respect
      to the Company’s obligations under the Notes, whether with respect to interest
      or upon liquidation or dissolution, or otherwise; provided, however, that the
      Company may incur any such indebtedness if the proceeds received in respect
      thereof are used for repayment of the Notes in full.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.17  Delivery
      of Certificates.
      In
      addition to any other rights available to a Purchaser, if the Company fails
      to
      deliver to such Purchaser a certificate representing Common Stock on the date
      on
      which delivery of such certificate is required by any Transaction Document,
      and
      if after such date such Purchaser purchases (in an open market transaction
      or
      otherwise) shares of Common Stock to deliver in satisfaction of a sale by such
      Purchaser of the shares that the Purchaser anticipated receiving from the
      Company (a “Buy-In”),
      then
      the Company shall, within three Trading Days after such Purchaser’s request and
      in such Purchaser’s discretion, either (i) pay cash to such Purchaser in an
      amount equal to such Purchaser’s total purchase price (including brokerage
      commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In
      Price”),
      at
      which point the Company’s obligation to deliver such certificate (and to issue
      such Common Stock) shall terminate, or (ii) promptly honor its obligation to
      deliver to such Purchaser a certificate or certificates representing such Common
      Stock and pay cash to such Purchaser in an amount equal to the excess (if any)
      of the Buy-In Price over the product of (A) such number of shares of Common
      Stock, times (B) the VWAP on the date of the event giving rise to the Company’s
      obligation to deliver such certificate.

     

    ARTICLE
      V

    CONDITIONS

     

    5.1  Conditions
      Precedent to the Obligations of the Purchasers.
      The
      obligation of each Purchaser to acquire Securities at the Closing is subject
      to
      the satisfaction or waiver by such Purchaser, at or before the Closing, of
      each
      of the following conditions:

     

    (a)
        Representations
      and Warranties.
      The
      representations and warranties of the Company contained herein shall be true
      and
      correct in all material respects as of the date when made and as of the Closing
      as though made on and as of such date; 

     

    (b)
        Performance.
      The
      Company and each other Purchaser shall have performed, satisfied and complied
      in
      all material respects with all covenants, agreements and conditions required
      by
      the Transaction Documents to be performed, satisfied or complied with by it
      at
      or prior to the Closing;

     

    (c)
        No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits the consummation of any
      of
      the transactions contemplated by the Transaction Documents;

     

    (d)
        Adverse
      Changes.
      Since
      the date of execution of this Agreement, no event or series of events shall
      have
      occurred that reasonably would be expected to have or result in a Material
      Adverse Effect; and

     

    (e)
        No
      Suspensions of Trading in Common Stock; Listing.
      Trading
      in the Common Stock shall not have been suspended by the Commission or any
      Trading Market (except for any suspensions of trading of not more than one
      Trading Day solely to permit dissemination of material information regarding
      the
      Company) at any time since the date of execution of this Agreement, and the
      Common Stock shall have been at all times since such date listed for trading
      on
      an Eligible Market.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.2  Conditions
      Precedent to the Obligations of the Company.
      The
      obligation of the Company to sell Securities at the Closing is subject to the
      satisfaction or waiver by the Company, at or before the Closing, of each of
      the
      following conditions:

     

    (a)
        Representations
      and Warranties.
      The
      representations and warranties of the Purchasers contained herein shall be
      true
      and correct in all material respects as of the date when made and as of the
      Closing Date as though made on and as of such date; 

     

    (b)
        Performance.
      The
      Purchasers shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by the Purchasers at
      or
      prior to the Closing; and

     

    (c)
        No
      Injunction.
      No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction that prohibits the consummation of any
      of
      the transactions contemplated by the Transaction Documents.

     

    ARTICLE
      VI

    REGISTRATION
      RIGHTS 

     

    6.1  Shelf
      Registration.

     

    (a)
        As
      promptly as possible, and in any event on or prior to the Filing Date, the
      Company shall prepare and file with the Commission a “shelf” Registration
      Statement covering the resale of all Registrable Securities for an offering
      to
      be made on a continuous basis pursuant to Rule 415. If for any reason the
      Commission does not permit all of the Registrable Securities to be included
      in
      such Registration Statement, then the Company shall prepare and file with the
      Commission a separate Registration Statement with respect to any such
      Registrable Securities not included with the initial Registration Statements,
      as
      expeditiously as possible, but in no event later than the date which is 30
      days
      after the date on which the Commission shall indicate as being the first date
      such filing may be made. The Registration Statement shall be on Form S-3 and
      shall contain (except if otherwise directed by the Purchasers) the “Plan of
      Distribution”, substantially as attached hereto as Exhibit
      G.
      In the
      event the Form S-3 is not available for the registration of the resale of
      Registrable Securities hereunder, the Company shall (i) register the resale
      of
      the Registrable Securities on another appropriate form in accordance herewith
      as
      the Purchasers may consent and (ii) attempt to register the Registrable
      Securities on Form S-3 as soon as such form is available, provided that the
      Company shall maintain the effectiveness of the Registration Statements then
      in
      effect until such time as a Registration Statement on Form S-3 covering the
      Registrable Securities has been declared effective by the Commission.

     

    (b)
        The
      Company shall use its best efforts to cause the Registration Statement to be
      declared effective by the Commission as promptly as possible after the filing
      thereof, but in any event prior to the Required Effectiveness Date, and shall
      use its best efforts to keep the Registration Statement continuously effective
      under the Securities Act until the earlier of (i) the fifth anniversary of
      the
      Effective Date, (ii) the date when all Registrable Securities covered by such
      Registration Statement have been sold publicly, or (iii) the date on which
      the
      Registrable Securities are eligible for sale without registration pursuant
      to
      subparagraph (k) of Rule 144 (the “Effectiveness
      Period”).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)
        The
      Company shall notify each Purchaser in writing promptly (and in any event within
      one business day) after receiving notification from the Commission that the
      Registration Statement has been declared effective. 

     

    (d)
        If:
      (i)
      any Registration Statement is not filed on or prior to the Filing Date (if
      the
      Company files such Registration Statement without affording the Purchasers
      the
      opportunity to review and comment on the same as required by Section 6.2(a)
      hereof, the Company shall not be deemed to have satisfied this clause (i)),
      or
      (ii) the Company fails to file with the Commission a request for acceleration
      in
      accordance with Rule 461 promulgated under the Securities Act, within five
      Trading Days after the date that the Company is notified (orally or in writing,
      whichever is earlier) by the Commission that a Registration Statement will
      not
      be “reviewed,” or will not be subject to further review, or (iii) the Company
      fails to respond to any comments made by the Commission within 10 Trading Days
      after the receipt of such comments, or (iv) a Registration Statement filed
      hereunder is not declared effective by the Commission by the Required
      Effectiveness Date, or (v) except as provided in Section 6.1(f) hereof, after
      a
      Registration Statement is filed with and declared effective by the Commission,
      such Registration Statement ceases to be effective as to all Registrable
      Securities to which it is required to relate at any time prior to the expiration
      of the Effectiveness Period without being succeeded within 10 Trading Days
      by an
      amendment to such Registration Statement or by a subsequent Registration
      Statement filed with and declared effective by the Commission, or (vi) an
      amendment to a Registration Statement is not filed by the Company with the
      Commission within ten Trading Days after the Commission’s having notified the
      Company that such amendment is required in order for such Registration Statement
      to be declared effective, or (vii) the Common Stock is not listed or quoted,
      or
      is suspended from trading on the Nasdaq National Market for a period of three
      Trading Days (which need not be consecutive Trading Days), or (viii) the
      exercise rights of the Purchasers pursuant to the Warrants are suspended for
      any
      reason (any such failure or breach being referred to as an “Event,”
and
      for purposes of clause (i), (iv) or (viii) the date on which such Event occurs,
      or for purposes of clause (ii) the date on which such five Trading Day period
      is
      exceeded, or for purposes of clauses (iii), (v) or (vi) the date which such
      ten
      Trading Day-period is exceeded, or for purposes of clause (vii) the date on
      which such three Trading Day period is exceeded, being referred to as
“Event
      Date”),
      then:
      (x) on each such Event Date the Company shall pay to each Purchaser an amount
      in
      cash, as partial liquidated damages and not as a penalty, equal to 2% of the
      aggregate purchase price paid by such Purchaser pursuant to this Agreement;
      and
      (y) on each monthly anniversary of each such Event Date thereof (if the
      applicable Event shall not have been cured by such date) until the applicable
      Event is cured, the Company shall pay to each Purchaser an amount in cash,
      as
      partial liquidated damages and not as a penalty, equal to 2% of the aggregate
      purchase price paid by such Purchaser pursuant to the Purchase Agreement. Such
      payments shall be in partial compensation to the Purchasers and shall not
      constitute the Purchaser’s exclusive remedy for such events. If the Company
      fails to pay any liquidated damages pursuant to this Section in full within
      seven days after the date payable, the Company will pay interest thereon at
      a
      rate of 18% per annum (or such lesser maximum amount that is permitted to be
      paid by applicable law) to the Purchaser, accruing daily from the date such
      liquidated damages are due until such amounts, plus all such interest thereon,
      are paid in full.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (e)
        The
      Company shall not, prior to the Effective Date of the Registration Statement,
      prepare and file with the Commission a registration statement relating to an
      offering for its own account or the account of others under the Securities
      Act
      of any of its equity securities.

     

    (f)
        Notwithstanding
      anything in this Agreement to the contrary, after 60 consecutive Trading Days
      of
      continuous effectiveness of the initial Registration Statement filed and
      declared effective pursuant to this Agreement, the Company may, by written
      notice to the Purchasers, suspend sales under a Registration Statement after
      the
      Effective Date thereof and/or require that the Purchasers immediately cease
      the
      sale of shares of Common Stock pursuant thereto and/or defer the filing of
      any
      subsequent Registration Statement if the Company is engaged in a material
      merger, acquisition or sale and the Board of Directors determines in good faith,
      by appropriate resolutions, that, as a result of such activity, (A) it would
      be
      materially detrimental to the Company (other than as relating solely to the
      price of the Common Stock) to file a Registration Statement at such time and
      (B)
      it is in the best interests of the Company to defer proceeding with such
      registration at such time. Upon receipt of such notice, each Purchaser shall
      immediately discontinue any sales of Registrable Securities pursuant to such
      registration until such Purchaser has received copies of a supplemented or
      amended Prospectus or until such Purchaser is advised in writing by the Company
      that the then-current Prospectus may be used and has received copies of any
      additional or supplemental filings that are incorporated or deemed incorporated
      by reference in such Prospectus. In no event, however, shall this right be
      exercised to suspend sales beyond the period during which (in the good faith
      determination of the Company’s Board of Directors) the failure to require such
      suspension would be materially detrimental to the Company. The Company’s rights,
      under this Section 6(f) may be exercised for a period of no more than 15 Trading
      Days in any twelve-month period, of which no more than 5 Trading Days may be
      consecutive. Immediately after the end of any suspension period under this
      Section 6(f), the Company shall take all necessary actions (including filing
      any
      required supplemental prospectus) to restore the effectiveness of the applicable
      Registration Statement and the ability of the Purchasers to publicly resell
      their Registrable Securities pursuant to such effective Registration
      Statement.

     

    (g)
        If
      the
      Company issues to the Purchasers any Common Stock pursuant to the Transaction
      Documents that is not included in the initial Registration Statement, then
      the
      Company shall file an additional Registration Statement covering such number
      of
      shares of Common Stock on or prior to the Filing Date and shall use it best
      efforts, but in no event later than the Required Filing Date, to cause such
      additional Registration Statement to become effective by the
      Commission.

     

    6.2  Registration
      Procedures.
      In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a)
        Not
      less
      than three Trading Days prior to the filing of a Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto (including any
      document that would be incorporated or deemed to be incorporated therein by
      reference), the Company shall (i) furnish to the Purchasers and Purchaser
      Counsel copies of all such documents proposed to be filed, which documents
      (other than those incorporated or deemed to be incorporated by reference) will
      be subject to the review of such Purchasers and Purchaser Counsel (it being
      understood that such review must be completed within three Trading Days of
      receipt of the applicable documents), and (ii) cause its officers and directors,
      counsel and independent certified public accountants to respond to such
      inquiries as shall be necessary, in the reasonable opinion of respective
      counsel, to conduct a reasonable investigation within the meaning of the
      Securities Act. The Company shall not file a Registration Statement or any
      such
      Prospectus or any amendments or supplements thereto to which Purchasers holding
      a majority of the Registrable Securities shall reasonably object.

     

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

     

    (c)
        Notify
      the Purchasers of Registrable Securities to be sold and Purchaser Counsel as
      promptly as reasonably possible, and (if requested by any such Person) confirm
      such notice in writing no later than one Trading Day thereafter, of any of
      the
      following events: (i) the Commission notifies the Company whether there will
      be
      a “review” of any Registration Statement; (ii) the Commission comments in
      writing on any Registration Statement (in which case the Company shall deliver
      to each Purchaser a copy of such comments and of all written responses thereto);
      (iii) any Registration Statement or any post-effective amendment is declared
      effective; (iv) the Commission or any other Federal or state governmental
      authority requests any amendment or supplement to any Registration Statement
      or
      Prospectus or requests additional information related thereto; (v) the
      Commission issues any stop order suspending the effectiveness of any
      Registration Statement or initiates any Proceedings for that purpose; (vi)
      the
      Company receives notice of any suspension of the qualification or exemption
      from
      qualification of any Registrable Securities for sale in any jurisdiction, or
      the
      initiation or threat of any Proceeding for such purpose; or (vii) the financial
      statements included or incorporated by reference in any Registration Statement
      become ineligible for inclusion or incorporation therein or any statement made
      in any Registration Statement or Prospectus or any document incorporated or
      deemed to be incorporated therein by reference is untrue in any material respect
      or any revision to a Registration Statement, Prospectus or other document is
      required so that it will not contain any untrue statement of a material fact
      or
      omit to state any material fact required to be stated therein or necessary
      to
      make the statements therein, in the light of the circumstances under which
      they
      were made, not misleading.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)
        Except
      as
      provided in Section
      6.1(f),
      use its
      best efforts to avoid the issuance of or, if issued, obtain the withdrawal
      of
      (i) any order suspending the effectiveness of any Registration Statement, or
      (ii) any suspension of the qualification (or exemption from qualification)
      of
      any of the Registrable Securities for sale in any jurisdiction, as soon as
      possible.

     

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

     

    (f)
        Promptly
      deliver to each Purchaser and Purchaser Counsel, without charge, as many copies
      of the Prospectus or Prospectuses (including each form of prospectus) and each
      amendment or supplement thereto as such Persons may reasonably request. The
      Company hereby consents to the use of such Prospectus and each amendment or
      supplement thereto by each of the selling Purchasers in connection with the
      offering and sale of the Registrable Securities covered by such Prospectus
      and
      any amendment or supplement thereto.

     

    (g)
        (i)
      Promptly prepare and file with each Trading Market an additional shares listing
      application covering all of the Registrable Securities; (ii) take all steps
      necessary to cause such Registrable Securities to be approved for listing on
      each Trading Market as soon as possible thereafter; (iii) provide to the
      Purchasers evidence of such listing; and (iv) maintain the listing of such
      Registrable Securities on each such Trading Market or another Eligible Market
      (it being understood that the Company will seek a waiver of NASDAQ Marketplace
      Rule 4310(c)(17)(D)).

     

    (h)
        Prior
      to
      any public offering of Registrable Securities, use its best efforts to register
      or qualify or cooperate with the selling Purchasers and Purchaser Counsel in
      connection with the registration or qualification (or exemption from such
      registration or qualification) of such Registrable Securities for offer and
      sale
      under the securities or Blue Sky laws of such jurisdictions within the United
      States as any Purchaser requests in writing, to keep each such registration
      or
      qualification (or exemption therefrom) effective during the Effectiveness Period
      and to do any and all other acts or things necessary or advisable to enable
      the
      disposition in such jurisdictions of the Registrable Securities covered by
      a
      Registration Statement.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (j)
        Upon
      the
      occurrence of any event described in Section 6.2(c)(vii), as promptly as
      reasonably possible, prepare a supplement or amendment, including a
      post-effective amendment, to the Registration Statement or a supplement to
      the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither the Registration Statement nor such Prospectus
      will contain an untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading.

     

    (k)
        Cooperate
      with any due diligence investigation undertaken by the Purchasers in connection
      with the sale of Registrable Securities, including, without limitation, by
      making available any documents and information; provided that the Company will
      not deliver or make available to any Purchaser material, nonpublic information
      unless such Purchaser specifically requests in advance to receive material,
      nonpublic information in writing.

     

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

     

    In
      connection with the registration of the Registrable Securities, it shall be
      a
      condition precedent to the obligations of the Company to complete the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of a particular Purchaser (or to make any payments or other damages
      to such Purchaser pursuant to Section 6.1) that such Purchaser shall furnish
      to
      the Company the Selling Stockholder Questionnaire set forth on Exhibit
      G
      hereto
      within ten Trading Days of the Company’s written request.

    

    6.3  Registration
      Expenses.
      The
      Company shall pay (or reimburse the Purchasers for) all fees and expenses
      incident to the performance of or compliance with this Agreement by the Company,
      including without limitation (a) all registration and filing fees and expenses,
      including without limitation those related to filings with the Commission,
      any
      Trading Market and in connection with applicable state securities or Blue Sky
      laws, (b) printing expenses (including without limitation expenses of printing
      certificates for Registrable Securities and of printing prospectuses requested
      by the Purchasers), (c) messenger, telephone and delivery expenses, (d) fees
      and
      disbursements of counsel for the Company and up to $5,000 for the Purchaser
      Counsel, (e) fees and expenses of all other Persons retained by the Company
      in
      connection with the consummation of the transactions contemplated by this
      Agreement, and (f) all listing fees to be paid by the Company to the Trading
      Market. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.4  Indemnification.

     

    (a)
        Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless each Purchaser, the officers, directors, partners, members,
      agents, brokers (including brokers who offer and sell Registrable Securities
      as
      principal as a result of a pledge or any failure to perform under a margin
      call
      of Common Stock), investment advisors and employees of each of them, each Person
      who controls any such Purchaser (within the meaning of Section 15 of the
      Securities Act or Section 20 of the Exchange Act) and the officers, directors,
      partners, members, agents and employees of each such controlling Person, to
      the
      fullest extent permitted by applicable law, from and against any and all Losses,
      as incurred, arising out of or relating to any untrue or alleged untrue
      statement of a material fact contained in the Registration Statement, any
      Prospectus or any form of prospectus or in any amendment or supplement thereto
      or in any preliminary prospectus, or arising out of or relating to any omission
      or alleged omission of a material fact required to be stated therein or
      necessary to make the statements therein (in the case of any Prospectus or
      form
      of prospectus or supplement thereto, in the light of the circumstances under
      which they were made) not misleading, except to the extent, but only to the
      extent, that (i) such untrue statements, alleged untrue statements, omissions
      or
      alleged omissions are based solely upon information regarding such Purchaser
      furnished in writing to the Company by such Purchaser expressly for use therein,
      or to the extent that such information relates to such Purchaser or such
      Purchaser’s proposed method of distribution of Registrable Securities and was
      reviewed and expressly approved in writing by such Purchaser expressly for
      use
      in the Registration Statement, such Prospectus or such form of Prospectus or
      in
      any amendment or supplement thereto or (ii) in the case of an occurrence of
      an
      event of the type specified in Section 6.2(c)(v)-(vii), the use by such
      Purchaser of an outdated or defective Prospectus after the Company has notified
      such Purchaser in writing that the Prospectus is outdated or defective and
      prior
      to the receipt by such Purchaser of the Advice contemplated in Section 6.5.
      In
      no event shall the liability of any selling Purchaser hereunder be greater
      in
      amount than the dollar amount by which the net proceeds received by such
      Purchaser upon the sale of the Registrable Securities giving rise to such
      indemnification obligation exceeds the amount paid, directly or indirectly,
      by
      such Purchaser for such Registrable Securities.

     

    (b)
        Indemnification
      by Purchasers.
      Each
      Purchaser shall, severally and not jointly, indemnify and hold harmless the
      Company, its directors, officers, agents and employees, each Person who controls
      the Company (within the meaning of Section 15 of the Securities Act and Section
      20 of the Exchange Act), and the directors, officers, agents or employees of
      such controlling Persons, to the fullest extent permitted by applicable law,
      from and against all Losses (as determined by a court of competent jurisdiction
      in a final judgment not subject to appeal or review) arising solely out of
      any
      untrue statement of a material fact contained in the Registration Statement,
      any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising solely out of any omission of a material fact required
      to be
      stated therein or necessary to make the statements therein (in the case of
      any
      Prospectus or form of prospectus or supplement thereto, in the light of the
      circumstances under which they were made) not misleading to the extent, but
      only
      to the extent, that such untrue statement or omission is contained in any
      information so furnished in writing by such Purchaser to the Company
      specifically for inclusion in such Registration Statement or such Prospectus
      or
      to the extent that (i) such untrue statements or omissions are based solely
      upon
      information regarding such Purchaser furnished in writing to the Company by
      such
      Purchaser expressly for use therein, or to the extent that such information
      relates to such Purchaser or such Purchaser’s proposed method of distribution of
      Registrable Securities and was reviewed and expressly approved in writing by
      such Purchaser expressly for use in the Registration Statement, such Prospectus
      or such form of Prospectus or in any amendment or supplement thereto or (ii)
      in
      the case of an occurrence of an event of the type specified in Section
      6.2(c)(v)-(vii), the use by such Purchaser of an outdated or defective
      Prospectus after the Company has notified such Purchaser in writing that the
      Prospectus is outdated or defective and prior to the receipt by such Purchaser
      of the Advice contemplated in Section 6.5. In no event shall the liability
      of
      any selling Purchaser hereunder be greater in amount than the dollar amount
      of
      the net proceeds received by such Purchaser upon the sale of the Registrable
      Securities giving rise to such indemnification obligation.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)
        Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted against any Person entitled to indemnity
      hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it shall be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have
      proximately and materially adversely prejudiced the Indemnifying
      Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
      expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
      the defense of such Proceeding and to employ counsel reasonably satisfactory
      to
      such Indemnified Party in any such Proceeding; or (iii) the named parties to
      any
      such Proceeding (including any impleaded parties) include both such Indemnified
      Party and the Indemnifying Party, and such Indemnified Party shall have been
      advised by counsel that a conflict of interest is likely to exist if the same
      counsel were to represent such Indemnified Party and the Indemnifying Party
      (in
      which case, if such Indemnified Party notifies the Indemnifying Party in writing
      that it elects to employ separate counsel at the expense of the Indemnifying
      Party, the Indemnifying Party shall not have the right to assume the defense
      thereof and such counsel shall be at the expense of the Indemnifying Party).
      The
      Indemnifying Party shall not be liable for any settlement of any such Proceeding
      effected without its written consent, which consent shall not be unreasonably
      withheld. No Indemnifying Party shall, without the prior written consent of
      the
      Indemnified Party, effect any settlement of any pending Proceeding in respect
      of
      which any Indemnified Party is a party, unless such settlement includes an
      unconditional release of such Indemnified Party from all liability on claims
      that are the subject matter of such Proceeding.

     

    All
      fees
      and expenses of the Indemnified Party (including reasonable fees and expenses
      to
      the extent incurred in connection with investigating or preparing to defend
      such
      Proceeding in a manner not inconsistent with this Section) shall be paid to
      the
      Indemnified Party, as incurred, within ten Trading Days of written notice
      thereof to the Indemnifying Party (regardless of whether it is ultimately
      determined that an Indemnified Party is not entitled to indemnification
      hereunder; provided, that the Indemnifying Party may require such Indemnified
      Party to undertake to reimburse all such fees and expenses to the extent it
      is
      finally judicially determined that such Indemnified Party is not entitled to
      indemnification hereunder). 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)
        Contribution.
      If a
      claim for indemnification under Section 6.4(a) or (b) is unavailable to an
      Indemnified Party (by reason of public policy or otherwise), then each
      Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
      contribute to the amount paid or payable by such Indemnified Party as a result
      of such Losses, in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party and Indemnified Party in connection with the
      actions, statements or omissions that resulted in such Losses as well as any
      other relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among other
      things, whether any action in question, including any untrue or alleged untrue
      statement of a material fact or omission or alleged omission of a material
      fact,
      has been taken or made by, or relates to information supplied by, such
      Indemnifying Party or Indemnified Party, and the parties’ relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      action, statement or omission. The amount paid or payable by a party as a result
      of any Losses shall be deemed to include, subject to the limitations set forth
      in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or
      expenses incurred by such party in connection with any Proceeding to the extent
      such party would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section was available to such party in
      accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section 6.4(d) were determined by pro rata allocation or by
      any
      other method of allocation that does not take into account the equitable
      considerations referred to in the immediately preceding paragraph.
      Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be
      required to contribute, in the aggregate, any amount in excess of the amount
      by
      which the proceeds actually received by such Purchaser from the sale of the
      Registrable Securities subject to the Proceeding exceeds the amount of any
      damages that such Purchaser has otherwise been required to pay by reason of
      such
      untrue or alleged untrue statement or omission or alleged omission. No Person
      guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
      of
      the Securities Act) shall be entitled to contribution from any Person who was
      not guilty of such fraudulent misrepresentation.

     

    The
      indemnity and contribution agreements contained in this Section are in addition
      to any liability that the Indemnifying Parties may have to the Indemnified
      Parties.

     

    6.5  Dispositions.
      Each
      Purchaser agrees that it will comply with the prospectus delivery requirements
      of the Securities Act as applicable to it in connection with sales of
      Registrable Securities pursuant to the Registration Statement. Each Purchaser
      further agrees that, upon receipt of a notice from the Company of the occurrence
      of any event of the kind described in Sections 6.2(c)(v), (vi) or (vii), such
      Purchaser will discontinue disposition of such Registrable Securities under
      the
      Registration Statement until such Purchaser’s receipt of the copies of the
      supplemented Prospectus and/or amended Registration Statement contemplated
      by
      Section 6.2(j), or until it is advised in writing (the “Advice”) by the Company
      that the use of the applicable Prospectus may be resumed, and, in either case,
      has received copies of any additional or supplemental filings that are
      incorporated or deemed to be incorporated by reference in such Prospectus or
      Registration Statement. The Company may provide appropriate stop orders to
      enforce the provisions of this paragraph.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.6  No
      Piggyback on Registrations.
      Except
      as set forth on Schedule
      3.1(x)
      neither
      the Company nor any of its security holders (other than the Purchasers in such
      capacity pursuant hereto) may include securities of the Company in the
      Registration Statement other than the Registrable Securities, and the Company
      shall not after the date hereof enter into any agreement providing any such
      right to any of its security holders.

     

    6.7  Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period there is not an effective Registration
      Statement covering all of the Registrable Securities and the Company shall
      determine to prepare and file with the Commission a registration statement
      relating to an offering for its own account or the account of others under
      the
      Securities Act of any of its equity securities, other than on Form S-4 or Form
      S-8 (each as promulgated under the Securities Act) or their then equivalents
      relating to equity securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to each Purchaser written notice of such determination and if, within
      fifteen days after receipt of such notice, any such Purchaser shall so request
      in writing, the Company shall include in such registration statement all or
      any
      part of such Registrable Securities such Purchaser requests to be
      registered.

     

    ARTICLE
      VII

    MISCELLANEOUS
      

     

    7.1  Termination.
      This
      Agreement may be terminated by the Company or any Purchaser, by written notice
      to the other parties, if the Closing has not been consummated by the third
      Trading Day following the date of this Agreement; provided that no such
      termination will affect the right of any party to sue for any breach by the
      other party (or parties).

     

    7.2  Fees
      and Expenses.
      At the
      Closing, the Company shall pay to Iroquois Master Fund, Ltd. an aggregate of
      $30,000 for their legal fees and expenses incurred in connection with the
      preparation and negotiation of this Agreement, of which amount $20,000 has
      been
      previously paid by the Company. In lieu of the foregoing remaining payment,
      Iroquois Master Fund, Ltd. may retain such amount at the Closing. Except as
      expressly set forth in the Transaction Documents to the contrary, each party
      shall pay the fees and expenses of its advisers, counsel, accountants and other
      experts, if any, and all other expenses incurred by such party incident to
      the
      negotiation, preparation, execution, delivery and performance of this Agreement.
      The Company shall pay all transfer agent fees, stamp taxes and other taxes
      and
      duties levied in connection with the issuance of any Securities.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.3  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. At or after the Closing, and
      without further consideration, the Company will execute and deliver to the
      Purchasers such further documents as may be reasonably requested in order to
      give practical effect to the intention of the parties under the Transaction
      Documents.

     

    7.4  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 (i) the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified in this Section
      prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the Trading
      Day
      after the date of transmission, if such notice or communication is delivered
      via
      facsimile at the facsimile number specified in this Agreement later than 6:30
      p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
      City
      time) on such date, (iii) the Trading Day following the date of mailing, if
      sent
      by nationally recognized overnight courier service, or (iv) 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 follows:

     

    If
      to the
      Company:

     

    IPIX
      Corporation

    Reston
      Executive Center

    12120
      Sunset Hills Road

    Suite
      410

    Reston,
      VA 20190 

    Phone:
      (703) 674-4100

    Fax:
      (703) 674-4101

    Attn:
      Chief Executive Officer

     

    With
      a
      copy
      to:               
Winston
      & Strawn LLP

    1700
      K
      Street, N.W.

    Washington,
      D.C. 20006

    Phone:
      (202) 282-5000

    Fax:
      (202) 282-5100

    Attn: Gerald
      P.
      Farano

    

    and

    

    Baker,
      Donelson,
      Bearman, Caldwell 

    &
      Berkowitz, P.C.

    165
      Madison Avenue, Suite 2000

    Memphis,
      Tennessee 38103

    Phone:
      (901)
      577.8117

    Fax:
      (901) 577-0737

    Attn: Matthew
      S. Heiter, Esq.

    

            If
      to the Purchasers:                    To
      the address set
      forth under such Purchaser's name on the signature pages attached
      hereto.      

     

     

    or
      such
      other address as may be designated in writing hereafter, in the same manner,
      by
      such Person. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    7.5  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 holders
      collectively holding 51% of the aggregate amount outstanding under the Notes
      or,
      in the case of a waiver, by the party against whom enforcement of any such
      waiver is sought. No waiver of any default with respect to any provision,
      condition or requirement of this Agreement shall be deemed to be a continuing
      waiver in the future or a waiver of any subsequent default or a waiver of any
      other provision, condition or requirement hereof, nor shall any delay or
      omission of either party to exercise any right hereunder in any manner impair
      the exercise of any such right. Notwithstanding the foregoing, a waiver or
      consent to depart from the provisions hereof with respect to a matter that
      relates exclusively to the rights of Purchasers under Article VI and that does
      not directly or indirectly affect the rights of other Purchasers may be given
      by
      Purchasers holding at least a majority of the Registrable Securities to which
      such waiver or consent relates.

     

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

     

    7.7  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 the Purchasers. Any Purchaser may assign its rights under this
      Agreement to any Person to whom such Purchaser assigns or transfers any
      Securities, provided such transferee agrees in writing to be bound, with respect
      to the transferred Securities, by the provisions hereof that apply to the
“Purchasers.” Notwithstanding anything to the contrary herein, Securities may be
      assigned to any Person in connection with a bona fide margin account or other
      loan or financing arrangement secured by such Securities.

     

    7.8  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 that each Related
      Person is an intended third party beneficiary of Section 4.14 and each
      Indemnified Party is an intended third party beneficiary of Section 6.4 and
      (in
      each case) may enforce the provisions of such Sections directly against the
      parties with obligations thereunder.

     

    7.9  Governing
      Law; Venue; Waiver of Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by and construed and enforced in accordance
      with the internal laws of the State of New York, including Sections 5-1401
      and
      5-1402 of the New York General Obligations Law. Each party agrees that all
      legal
      proceedings concerning the interpretations, enforcement and defense of the
      transactions contemplated by any of the 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, Borough of Manhattan. Each
      party hereto 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 this Agreement), 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. Each party hereto hereby irrevocably waives personal
      service of process and consents to process being served in any such suit, action
      or proceeding by mailing a copy thereof via registered or certified mail or
      overnight delivery (with evidence of delivery) to such party at the address
      in
      effect for notices to it under this Agreement and agrees that such service
      shall
      constitute good and sufficient service of process and notice thereof. Nothing
      contained herein shall be deemed to limit in any way any right to serve process
      in any manner permitted by law. Each party hereto hereby irrevocably waives,
      to
      the fullest extent permitted by applicable law, any and all right to trial
      by
      jury in any legal proceeding arising out of or relating to this Agreement or
      any
      of the Transaction Documents or the transactions contemplated hereby or thereby.
      If either party shall commence an action or proceeding to enforce any provisions
      of this Agreement or any Transaction Document, then the prevailing party in
      such
      action or proceeding shall be reimbursed by the other party for its reasonable
      attorneys’ fees and other reasonable costs and expenses incurred with the
      investigation, preparation and prosecution of such action or
      proceeding.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.10  Survival.
      The
      representations, warranties, agreements and covenants contained herein shall
      survive the Closing and the delivery, exercise and/or conversion of the
      Securities, as applicable.

     

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

     

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

     

    7.13  Rescission
      and Withdrawal Right.
      Notwithstanding anything to the contrary contained in (and without limiting
      any
      similar provisions of) the Transaction Documents, whenever any Purchaser
      exercises a right, election, demand or option under a Transaction Document
      and
      the Company does not timely perform its related obligations within the periods
      therein provided, then such Purchaser may rescind or withdraw, in its sole
      discretion from time to time upon written notice to the Company, any relevant
      notice, demand or election in whole or in part without prejudice to its future
      actions and rights.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

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

     

    7.16  Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to any Purchaser hereunder
      or pursuant to the Notes or Warrants or any Purchaser enforces or exercises
      its
      rights hereunder or 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
      by 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.

     

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

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.18  Independent
      Nature of Purchasers’ Obligations and Rights.
      The
      obligations of each Purchaser under any Transaction Document are several and
      not
      joint with the obligations of any other Purchaser, and no Purchaser shall be
      responsible in any way for the performance of the obligations of any other
      Purchaser under any Transaction Document. The decision of each Purchaser to
      purchase Notes pursuant to this Agreement has been made by such Purchaser
      independently of any other Purchaser and independently of any information,
      materials, statements or opinions as to the business, affairs, operations,
      assets, properties, liabilities, results of operations, condition (financial
      or
      otherwise) or prospects of the Company or of the Subsidiary which may have
      been
      made or given by any other Purchaser or by any agent or employee of any other
      Purchaser, and no Purchaser or any of its agents or employees shall have any
      liability to any other Purchaser (or any other Person) relating to or arising
      from any such information, materials, statements or opinions. Nothing contained
      herein or in any Transaction Document, and no action taken by any Purchaser
      pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
      an association, a joint venture or any other kind of entity, or create a
      presumption that the Purchasers are in any way acting in concert or as a group
      with respect to such obligations or the transactions contemplated by the
      Transaction Document. The Company hereby confirms that it understands and agrees
      that the Purchasers are not acting as a “group” as that term is used in Section
      13(d) of the Exchange Act. Each Purchaser acknowledges that no other Purchaser
      has acted as agent for such Purchaser in connection with making its investment
      hereunder and that no other Purchaser will be acting as agent of such Purchaser
      in connection with monitoring its investment hereunder. 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 represents that it has been represented by its own separate legal
      counsel in its review and negotiations of this Agreement and the Transaction
      Documents and each party represents and confirms that Malhotra & Associates
      LLP represents only Iroquois Master Fund, Ltd. in connection with this Agreement
      and the other Transaction Documents.

     

    7.19  Adjustments
      in Share Numbers and Prices.
      In the
      event of any stock split, subdivision, dividend or distribution payable in
      shares of Common Stock (or other securities or rights convertible into, or
      entitling the holder thereof to receive directly or indirectly shares of Common
      Stock), combination or other similar recapitalization or event occurring after
      the date hereof, each reference in this Agreement to a number of shares or
      a
      price per share shall be amended to appropriately account for such
      event.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES FOLLOW]

     

    
      
         

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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.

     

    
      	 	
              IPIX
                CORPORATION

            
	 	 
	 	 
	 	
              By:
                __________________________________

            
	 	
              Name:

            
	 	
              Title:

            
	 	 
	 	 
	 	 

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGES OF PURCHASERS FOLLOW.]

     

    
      
         

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    

      
        	 	
                Iroquois
                  Master Fund, Ltd.

                 

                 

                By: _________________________

                Name: _________________________

                Title: _________________________

                 

                 

                Note
                  Principal Amount: $__________

                 

              
	 	
                Address
                  for Notice:

                 

                Iroquois
                  Master Fund Ltd.

                641
                  Lexington Avenue, 28th
                  Floor

                New
                  York, NY 10022

                Facsimile
                  No.:212-207-3452

                Telephone
                  No.:212-974-3070

                Attn:
                  Joshua Silverman

                 

              
	 	
                With
                  a copy to:

                 

                Malhotra
                  & Associates LLP

                11
                  Penn Plaza, 5th
                  Floor

                New
                  York, New York 10001

                Facsimile
                  No.: (212) 504-0863

                Telephone
                  No.: (212) 593-2284

                Attn:
                  Gary Malhotra, Esq.

              

      

    

     [Signature
      Page to Securities Purchase Agreement]

     

    
      
         

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      
        	 	
                [Purchaser]

                 

                By: _________________________

                Name: _________________________

                Title: _________________________

                 

                 

                Note
                  Principal Amount: $__________

                 

              
	 	
                Address
                  for Notice:

                 

                ________________________

                ________________________

                ________________________

                Facsimile
                  No.:

                Telephone
                  No.:

                Attn:

                 

              
	 	 

      

     

     

     

    [Signature
      Page to Securities Purchase Agreement]

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibits:

     

    A.         
      Form
      of
      Note

     

    B-1.      
      Form
      of
      Warrant A

     

    B-2.      
      Form
      of
      Warrant B

     

    B-3       
      Form
      of
      Additional Warrant

     

    C.         
      Transfer
      Agent Instructions

     

    D.         
      Form
      of
      Opinion of Company Counsel

     

    E.         
      Form
      of
      Security Agreement

     

    F.         
      Plan
      of
      Distribution

     

    G.        
      Selling
      Stockholder Questionnaire

     

    

     

    

     

    Schedules:

     

    3.1(a)     
      Subsidiaries

     

    3.1(d)    
      No
      Conflicts

     

    3.1(g)    
      Capitalization

     

    3.1(i)     
      Material
      Changes

     

    3.1(l)     
      Compliance

     

    3.1(t)     
      Certain
      Fees

     

    3.1(x)     
      Registration
      Rights

     

    3.1(dd)   Ranking

     

    3.1(ee)   
      Indebtedness

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Schedule
      A

     

    
       

      
        	
                 

                 

                 

                Purchasers

              	
                 

                Note
                  Principal Amount

              	
                 

                 

                Warrant
                  A Shares

              	
                 

                 

                Warrant
                  B Shares

              	
                 

                Additional
                  Warrant Shares

              	
                 

                 

                 

                Purchase
                  Price

              
	
                Iroquois Master Fund, Ltd.

              	
                $1,150,000.00

              	
                419,271

              	
                598,959

              	
                209,636

              	
                $1,150,000.00

              
	
                Rockmore
                  Investment Master Fund Ltd

              	
                $650,000.00

              	
                236,980

              	
                338,542

              	
                118,490

              	
                  
$650,000.00

              
	
                Bonanza
                  Master
                  Fund Ltd.

              	
                $500,000.00

              	
                182,292

              	
                260,417

              	
                91,146

              	
                $500,000.00

              
	
                Crescent
                  International Ltd.

              	
                $300,000.00

              	
                109,375

              	
                156,250

              	
                54,688

              	
                $300,000.00

              
	
                Hudson
                  Bay Fund
                  LP

              	
                $120,000.00

              	
                43,750

              	
                62,500

              	
                21,875

              	
                $120,000.00

              
	
                Hudson
                  Bay
                  Overseas Fund LTD

              	
                $30,000.00

              	
                10,938

              	
                15,625

              	
                5,469

              	
                       
                  $30,000.00

              
	
                Knott Partners, L.P 

              	
                $241,000.00

              	
                87,865

              	
                125,521

              	
                43,933

              	
                      
$241,000.00

              
	
                Matterhorn Offshore Fund, Ltd.

              	
                $358,000.00

              	
                130,521

              	
                186,459

              	
                65,261

              	
                      
$358,000.00

              
	
                Common Fund Hedged Equity Co. 

              	
                $29,000.00

              	
                10,574

              	
                15,105

              	
                5,287

              	
                        
                  $29,000.00

              
	
                Shoshone Partners, L.P. 

              	
                $153,000.00

              	
                55,782

              	
                79,688

              	
                27,891

              	
                       
                  $153,000.00

              
	
                Good Steward Trading Co. SPC 

              	
                $9,000.00

              	
                3,282

              	
                4,688

              	
                1,641

              	
                          
                  $9,000.00

              
	
                Finderne LLC

              	
                $10,000.00

              	
                3,646

              	
                5,209

              	
                1,824

              	
                       
                  $10,000.00

              
	
                Nite
                  Capital
                  LP

              	
                $600,000.00

              	
                218,750

              	
                312,500

              	
                109,375

              	
                        
                  $600,000.00

              
	
                C.E.
                  Unterberg,
                  Towbin Capital Partners I, L.P.

              	
                $650,000.00

              	
                236,980

              	
                338,542

              	
                118,490

              	
                    
$650,000.00

              
	
                Bristol
                  Capital
                  Advisors, LLC

              	
                $200,000.00

              	
                72,917

              	
                104,167

              	
                36,459

              	
                    
                  $200,000.00IPIX Corporation 8-K 06/15/06 Exhibit 10.2

    Exhibit
      10.2

    
 

    SECURITY
      AGREEMENT

     

    This
      SECURITY AGREEMENT, dated as of June 23, 2006 (the “Agreement”)
      is by
      and among IPIX Corporation, a Delaware corporation (the “Company”),
      the
      Purchasers identified on the signature pages hereto (each, a “Purchaser”
and
      collectively, the “Purchasers”)
      and
      Iroquois Master Fund Ltd., as agent for the Purchasers (in such capacity,
      together with its successors in such capacity, the “Agent”).

     

    The
      Company and each of the Purchasers are parties to a Securities Purchase
      Agreement dated as of June 23, 2006 (as modified and supplemented and in effect
      from time to time, the “Purchase
      Agreement”),
      that
      provides, subject to the terms and conditions thereof, for the issuance and
      sale
      by the Company to each of the Purchasers, severally and not jointly, Notes
      and
      Warrants as more fully described in the Purchase Agreement. 

     

    To
      induce
      each of the Purchasers to enter into the Purchase Agreement, and for other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Company has agreed to pledge and grant a security interest
      in
      the Collateral (as hereinafter defined) as security for the Secured Obligations
      (as hereinafter defined). Accordingly, the parties hereto agree as
      follows:

     

    Section
      1.  Definitions.
      Each
      capitalized term used herein and not otherwise defined shall have the meaning
      assigned to such term in the Purchase Agreement. In addition, as used
      herein:

     

    “Accounts”
shall
      have the meaning ascribed thereto in Section 3(d) hereof.

     

    “Business”
shall
      mean the businesses from time to time, now or hereafter, conducted by the
      Company and its Subsidiaries.

     

    “Collateral”
shall
      have the meaning ascribed thereto in Section 3 hereof.

     

    “Copyright
      Collateral”
shall
      mean all Copyrights, whether now owned or hereafter acquired by the Company,
      that are associated with the Business.

     

    “Copyrights”
shall
      mean all copyrights, copyright registrations and applications for copyright
      registrations, including, without limitation, all renewals and extensions
      thereof, the right to recover for all past, present and future infringements
      thereof, and all other rights of any kind whatsoever accruing thereunder or
      pertaining thereto.

     

    “Documents”
shall
      have the meaning ascribed thereto in Section 3(j) hereof.

     

    “Equipment”
shall
      have the meaning ascribed thereto in Section 3(h) hereof.

     

    “Event
      of Default”
shall
      have the meaning ascribed thereto in Section 8 of the Notes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Excluded
      Collateral”
shall
      mean the assets of the Company which secure the Permitted Indebtedness and
      the
      assets listed on Annex
      2
      hereto.

     

    “Instruments”
shall
      have the meaning ascribed thereto in Section 3(e) hereof.

     

    “Intellectual
      Property”
shall
      mean, collectively, all Copyright Collateral, all Patent Collateral and all
      Trademark Collateral, together with (a) all inventions, processes, production
      methods, proprietary information, know-how and trade secrets used or useful
      in
      the Business; (b) all licenses or user or other agreements granted to the
      Company with respect to any of the foregoing, in each case whether now or
      hereafter owned or used including, without limitation, the licenses or other
      agreements with respect to the Copyright Collateral, the Patent Collateral
      or
      the Trademark Collateral; (c) all customer lists, identification of suppliers,
      data, plans, blueprints, specifications, designs, drawings, recorded knowledge,
      surveys, manuals, materials standards, processing standards, catalogs, computer
      and automatic machinery software and programs, and the like pertaining to the
      operation by the Company of the Business; (d) all sales data and other
      information relating to sales now or hereafter collected and/or maintained
      by
      the Company that pertain to the Business; (e) all accounting information which
      pertains to the Business and all media in which or on which any of the
      information or knowledge or data or records which pertain to the Business may
      be
      recorded or stored and all computer programs used for the compilation or
      printout of such information, knowledge, records or data; (f) all licenses,
      consents, permits, variances, certifications and approvals of governmental
      agencies now or hereafter held by the Company pertaining to the operation by
      the
      Company and its Subsidiaries of the Business; and (g) all causes of action,
      claims and warranties now or hereafter owned or acquired by the Company in
      respect of any of the items listed above.

     

    “Inventory”
shall
      have the meaning ascribed thereto in Section 3(f) hereof.

     

    “Issuers”
shall
      mean, collectively, the respective entities identified on Annex
      1
      hereto,
      and all other entities formed by the Company or entities in which the Company
      owns or acquires any capital stock or similar interest. For the avoidance of
      doubt, the term “Issuer” shall not include AdMission Corporation.

     

    “Motor
      Vehicles”
shall
      mean motor vehicles, tractors, trailers and other like property, whether or
      not
      the title thereto is governed by a certificate of title or
      ownership.

     

    “Patent
      Collateral”
shall
      mean all Patents, whether now owned or hereafter acquired by the Company that
      are associated with the Business.

     

    “Patents”
shall
      mean all patents and patent applications, including, without limitation, the
      inventions and improvements described and claimed therein together with the
      reissues, divisions, continuations, renewals, extensions and
      continuations-in-part thereof, all income, royalties, damages and payments
      now
      or hereafter due and/or payable under and with respect thereto, including,
      without limitation, damages and payments for past or future infringements
      thereof, the right to sue for past, present and future infringements thereof,
      and all rights corresponding thereto throughout the world.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Permitted
      Indebtedness”
shall
      mean the Company’s existing indebtedness, liabilities and obligations as
      disclosed on Annex
      5
      hereto
      and any future capitalized leases, purchase money indebtedness and the
      Notes.

     

    “Permitted
      Liens”
shall
      mean (i) the Company’s existing Liens as disclosed in the Current SEC Report or
Annex
      6
      hereto,
      (ii) the security interests created by this Agreement and the Pledge Agreement,
      (iii) Liens of local or state authorities for franchise, real estate or other
      like taxes, (iv) statutory Liens of landlords and liens of carriers,
      warehousemen, bailees, mechanics, materialmen and other like Liens imposed
      by
      law, created in the ordinary course of business and for amounts not yet due,
      (v)
      tax Liens not yet due and payable and (vi) existing Liens which do not
      materially affect the value of the Company’s property and do not materially
      interfere with the use made and proposed to be made of such property by the
      Company and the Subsidiaries.

     

    “Pledged
      Stock”
shall
      have the meaning ascribed thereto in Section 3(a) hereof.

     

    “Real
      Estate”
shall
      have the meaning ascribed thereto in Section 3(l) hereof.

     

    “Secured
      Obligations”
shall
      mean, collectively, the principal of and interest on the Notes issued or
      issuable (as applicable) by the Company and held by the applicable Purchaser
      and
      all other amounts from time to time owing to such Purchasers by the Company
      under the Purchase Agreement and the Notes. 

     

    “Stock
      Collateral”
shall
      mean, collectively, the Collateral described in clauses (a) through (c) of
      Section 3 hereof and the proceeds of and to any such property and, to the extent
      related to any such property or such proceeds, all books, correspondence, credit
      files, records, invoices and other papers.

     

    “Trademark
      Collateral”
shall
      mean all Trademarks, whether now owned or hereafter acquired by the Company,
      that are associated with the Business. Notwithstanding the foregoing, the
      Trademark Collateral does not and shall not include any Trademark which would
      be
      rendered invalid, abandoned, void or unenforceable by reason of its being
      included as part of the Trademark Collateral.

     

    “Trademarks”
shall
      mean all trade names, trademarks and service marks, logos, trademark and service
      mark registrations, and applications for trademark and service mark
      registrations, including, without limitation, all renewals of trademark and
      service mark registrations, all rights corresponding thereto throughout the
      world, the right to recover for all past, present and future infringements
      thereof, all other rights of any kind whatsoever accruing thereunder or
      pertaining thereto, together, in each case, with the product lines and goodwill
      of the business connected with the use of, and symbolized by, each such trade
      name, trademark and service mark.

     

    “Uniform
      Commercial Code”
shall
      mean the Uniform Commercial Code as in effect in the State of New York from
      time
      to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      2.  Representations
      and Warranties.
      The
      Company represents and warrants to each of the Purchasers that:

     

    
      	a.  	
              the
                Company is the sole beneficial owner of the Collateral and no Lien
                exists
                or will exist upon any Collateral at any time (and, with respect
                to the
                Stock Collateral, no right or option to acquire the same exists in
                favor
                of any other Person), except for Permitted Liens and the pledge and
                security interest in favor of each of the Purchasers created or provided
                for herein which pledge and security interest constitutes a first
                priority
                perfected pledge and security interest in and to all of the Collateral
                (other than Intellectual Property registered or otherwise located
                outside
                of the United States of America);

            

    

     

    
      	b.  	
              the
                Pledged Stock directly or indirectly owned by the Company in the
                entities
                identified in Annex
                1
                hereto is, and all other Pledged Stock, whether issued now or in
                the
                future, will be, duly authorized, validly issued, fully paid and
                nonassessable, free and clear of all Liens other than Permitted Liens
                and
                none of such Pledged Stock is or will be subject to any contractual
                restriction, preemptive and similar rights, or any restriction under
                the
                charter or by-laws of the respective Issuers of such Pledged Stock,
                upon
                the transfer of such Pledged Stock (except for any such restriction
                contained herein);

            

    

     

    
      	c.  	
              the
                Pledged Stock directly or indirectly owned by the Company in the
                entities
                identified in Annex
                1
                hereto constitutes all of the issued and outstanding shares of capital
                stock of any class of such Issuers beneficially owned by the Company
                on
                the date hereof (whether or not registered in the name of the Company)
                and
                said Annex
                1
                correctly identifies, as at the date hereof, the respective Issuers
                of
                such Pledged Stock;

            

    

     

    
      	d.  	
              the
                Company owns and possesses the right to use, and has done nothing
                to
                authorize or enable any other Person to use, all of its Copyrights,
                Patents and Trademarks, and all registrations of its material Copyrights,
                Patents and Trademarks are valid and in full force and effect. Except
                as
                may be set forth in said Annex
                3,
                the Company owns and possesses the right to use all material Copyrights,
                Patents and Trademarks, necessary for the operation of the
                Business;

            

    

     

    
      	e.  	
              to
                the Company’s knowledge, (i) except as set forth in Annex
                3
                hereto, there is no violation by others of any right of the Company
                with
                respect to any material Copyrights, Patents or Trademarks, respectively,
                and (ii) the Company is not, in connection with the Business, infringing
                in any respect upon any Copyrights, Patents or Trademarks of any
                other
                Person; and no proceedings have been instituted or are pending against
                the
                Company or, to the Company’s knowledge, threatened, and no claim against
                the Company has been received by the Company, alleging any such violation,
                except as may be set forth in said Annex
                3;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	f.  	
              the
                Company does not own any material Trademarks registered in the United
                States of America to which the last sentence of the definition of
                Trademark Collateral applies; and

            

    

     

    Section
      3.  Collateral.
      As
      collateral security for the prompt payment in full when due (whether at stated
      maturity, by acceleration or otherwise) of the Secured Obligations, the Company
      hereby pledges, grants, assigns, hypothecates and transfers to the Agent on
      behalf of the Purchasers as hereinafter provided, a security interest in and
      Lien upon all of the Company’s right, title and interest in, to and under all
      personal property and other assets of the Company, whether now owned or
      hereafter acquired by or arising in favor of the Company, whether now existing
      or hereafter coming into existence, whether owned or consigned by or to, or
      leased from or to the Company and regardless of where located, except for the
      Excluded Collateral, (all being collectively referred to herein as “Collateral”)
      including:

     

    
      	a.  	
              the
                Company’s direct or indirect ownership interest in the respective shares
                of capital stock of the Issuers and all other shares of capital stock
                of
                whatever class of the Issuers, now or hereafter owned by the Company,
                together with in each case the certificates evidencing the same
                (collectively, the “Pledged
                Stock”);

            

    

     

    
      	b.  	
              all
                shares, securities, moneys or property representing a dividend on
                any of
                the Pledged Stock, or representing a distribution or return of capital
                upon or in respect of the Pledged Stock, or resulting from a split-up,
                revision, reclassification or other like change of the Pledged Stock
                or
                otherwise received in exchange therefor, and any subscription warrants,
                rights or options issued to the holders of, or otherwise in respect
                of,
                the Pledged Stock;

            

    

     

    
      	c.  	
              without
                affecting the obligations of the Company under any provision prohibiting
                such action hereunder or under the Purchase Agreement or the Notes,
                in the
                event of any consolidation or merger in which any Issuer is not the
                surviving corporation, all shares of each class of the capital stock
                of
                the successor corporation (unless such successor corporation is the
                Company itself) formed by or resulting from such consolidation or
                merger
                (the Pledged Stock, together with all other certificates, shares,
                securities, properties or moneys as may from time to time be pledged
                hereunder pursuant to clause (a) or (b) above and this clause (c)
                being
                herein collectively called the “Stock
                Collateral”);

            

    

     

    
      	d.  	
              all
                accounts and general intangibles (each as defined in the Uniform
                Commercial Code) of the Company constituting any right to the payment
                of
                money, including (but not limited to) all moneys due and to become
                due to
                the Company in respect of any loans or advances for the purchase
                price of
                Inventory or Equipment or other goods sold or leased or for services
                rendered, all moneys due and to become due to the Company under any
                guarantee (including a letter of credit) of the purchase price of
                Inventory or Equipment sold by the Company and all tax refunds (such
                accounts, general intangibles and moneys due and to become due being
                herein called collectively “Accounts”);

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	e.  	
              all
                instruments, chattel paper or letters of credit (each as defined
                in the
                Uniform Commercial Code) of the Company evidencing, representing,
                arising
                from or existing in respect of, relating to, securing or otherwise
                supporting the payment of, any of the Accounts, including (but not
                limited
                to) promissory notes, drafts, bills of exchange and trade acceptances
                (herein collectively called “Instruments”);

            

    

     

    
      	f.  	
              all
                inventory (as defined in the Uniform Commercial Code) of the Company
                and
                all goods obtained by the Company in exchange for such inventory
                (herein
                collectively called “Inventory”);

            

    

     

    
      	g.  	
              all
                Intellectual Property and all other accounts or general intangibles
                of the
                Company not constituting Intellectual Property or
                Accounts;

            

    

     

    
      	h.  	
              all
                equipment (as defined in the Uniform Commercial Code) of the Company
                (herein collectively called “Equipment”);

            

    

     

    
      	i.  	
              each
                contract and other agreement of the Company relating to the sale
                or other
                disposition of Inventory or
                Equipment;

            

    

     

    
      	j.  	
              all
                documents of title (as defined in the Uniform Commercial Code) or
                other
                receipts of the Company covering, evidencing or representing Inventory
                or
                Equipment (herein collectively called “Documents”);

            

    

     

    
      	k.  	
              all
                rights, claims and benefits of the Company against any Person arising
                out
                of, relating to or in connection with Inventory or Equipment purchased
                by
                the Company, including, without limitation, any such rights, claims
                or
                benefits against any Person storing or transporting such Inventory
                or
                Equipment;

            

    

     

    
      	l.  	
              all
                estates in land together with all improvements and other structures
                now or
                hereafter situated thereon, together with all rights, privileges,
                tenements, hereditaments, appurtenances, easements, including, but
                not
                limited to, rights and easements for access and egress and utility
                connections, and other rights now or hereafter appurtenant thereto
                ("Real
                Estate");

            

    

     

    
      	m.  	
              all
                other tangible or intangible property of the Company, including,
                without
                limitation, all proceeds, products and accessions of and to any of
                the
                property of the Company described in clauses (a) through (l) above
                in this
                Section 3 (including, without limitation, any proceeds of insurance
                thereon), and, to the extent related to any property described in
                said
                clauses or such proceeds, products and accessions, all books,
                correspondence, credit files, records, invoices and other papers,
                including without limitation all tapes, cards, computer runs and
                other
                papers and documents in the possession or under the control of the
                Company
                or any computer bureau or service company from time to time acting
                for the
                Company.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      4.  Further
      Assurances; Remedies.
      In
      furtherance of the grant of the pledge and security interest pursuant to Section
      3 hereof, the Company hereby agrees with the Agent and each of the Purchasers
      as
      follows:

     

    4.01  Delivery
      and Other Perfection.
      The
      Company shall:

     

    
      	a.  	
              if
                any of the above-described shares, securities, monies or property
                required
                to be pledged by the Company under clauses (a), (b) and (c) of Section
                3
                hereof are received by the Company, forthwith either (x) transfer
                and
                deliver to the Agent such shares or securities so received by the
                Company
                (together with the certificates for any such shares and securities
                duly
                endorsed in blank or accompanied by undated stock powers duly executed
                in
                blank) all of which thereafter shall be held by the Agent, pursuant
                to the
                terms of this Agreement, as part of the Collateral or (y) take such
                other
                action as the Agent shall reasonably deem necessary or appropriate
                to duly
                record the Lien created hereunder in such shares, securities, monies
                or
                property referred to in said clauses (a), (b) and (c) of Section
                3;

            

    

     

    
      	b.  	
              deliver
                and pledge to the Agent, at the Agent's request, any and all Instruments,
                endorsed and/or accompanied by such instruments of assignment and
                transfer
                in such form and substance as the Agent may request; provided, that
                so
                long as no Event of Default shall have occurred and be continuing,
                the
                Company may retain for collection in the ordinary course any Instruments
                received by it in the ordinary course of business and the Agent shall,
                promptly upon request of the Company, make appropriate arrangements
                for
                making any other Instrument pledged by the Company available to it
                for
                purposes of presentation, collection or renewal (any such arrangement
                to
                be effected, to the extent deemed appropriate by the Agent, against
                trust
                receipt or like document);

            

    

     

    
      	c.  	
              give,
                execute, deliver, file and/or record any financing statement, notice,
                instrument, document, agreement or other papers that may be necessary
                (in
                the reasonable judgment of the Agent) to create, preserve, perfect
                or
                validate any security interest granted pursuant hereto or to enable
                the
                Agent to exercise and enforce their rights hereunder with respect
                to such
                security interest, including, without limitation, causing any or
                all of
                the Stock Collateral to be transferred of record into the name of
                the
                Agent or its nominee (and the Agent agrees that if any Stock Collateral
                is
                transferred into its name or the name of its nominee, the Agent will
                thereafter promptly give to the Company copies of any notices and
                communications received by it with respect to the Stock Collateral),
                provided that notices to account debtors in respect of any Accounts
                or
                Instruments shall be subject to the provisions of Section 4.09
                below;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	d.  	
              upon
                the acquisition after the date hereof by the Company of any Equipment
                covered by a certificate of title or ownership cause the Agent to
                be
                listed as the lienholder on such certificate of title and within
                120 days
                of the acquisition thereof deliver evidence of the same to the
                Agent;

            

    

     

    
      	e.  	
              keep
                accurate books and records relating to the Collateral, and stamp
                or
                otherwise mark such books and records in such manner as the Agent
                may
                reasonably require in order to reflect the security interests granted
                by
                this Agreement;

            

    

     

    
      	f.  	
              furnish
                to the Agent from time to time (but, unless an Event of Default shall
                have
                occurred and be continuing, no more frequently than quarterly) statements
                and schedules further identifying and describing the Copyright Collateral,
                the Patent Collateral and the Trademark Collateral, respectively,
                and such
                other reports in connection with the Copyright Collateral, the Patent
                Collateral and the Trademark Collateral, as the Agent may reasonably
                request, all in reasonable detail;

            

    

     

    
      	g.  	
              permit
                representatives of the Agent, upon reasonable notice, at any time
                during
                normal business hours to inspect and make abstracts from its books
                and
                records pertaining to the Collateral, and permit representatives
                of the
                Agent to be present at the Company’s place of business to receive copies
                of all communications and remittances relating to the Collateral,
                and
                forward copies of any notices or communications by the Company with
                respect to the Collateral, all in such manner as the Agent may reasonably
                require; and

            

    

     

    
      	h.  	
              upon
                the occurrence and during the continuance of any Event of Default,
                upon
                request of the Agent, promptly notify each account debtor in respect
                of
                any Accounts or Instruments that such Collateral has been assigned
                to the
                Agent hereunder, and that any payments due or to become due in respect
                of
                such Collateral are to be made directly to the
                Agent.

            

    

     

    4.02  Other
      Financing Statements and Liens.
      Except
      with respect to Permitted Indebtedness or as otherwise permitted under Schedule
      3.1(a) of the Purchase Agreement, without the prior written consent of the
      Agent, the Company shall not file or suffer to be on file, or authorize or
      permit to be filed or to be on file, in any jurisdiction, any financing
      statement or like instrument with respect to the Collateral in which the Agent
      is not named as the sole secured party for the benefit of each of the
      Purchasers.

     

    4.03  Preservation
      of Rights.
      The
      Agent shall not be required to take steps necessary to preserve any rights
      against prior parties to any of the Collateral.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.04  Special
      Provisions Relating to Certain Collateral.

     

    
      	a.  	
              Stock
                Collateral.

            

    

     

    
      	(1)  	
              The
                Company will cause the Stock Collateral to constitute at all times
                100% of
                the total number of shares of each class of capital stock of each
                Issuer
                then outstanding that is owned directly or indirectly by the Company.
                

            

    

     

    
      	(2)  	
              So
                long as no Event of Default shall have occurred and be continuing,
                the
                Company shall have the right to exercise all voting, consensual and
                other
                powers of ownership pertaining to the Stock Collateral for all purposes
                not inconsistent with the terms of this Agreement, the Purchase Agreement,
                the Notes or any other instrument or agreement referred to herein
                or
                therein, provided that the Company agrees that it will not vote the
                Stock
                Collateral in any manner that is inconsistent with the terms of this
                Agreement, the Purchase Agreement, the Notes or any such other instrument
                or agreement; and the Agent shall execute and deliver to the Company
                or
                cause to be executed and delivered to the Company all such proxies,
                powers
                of attorney, dividend and other orders, and all such instruments,
                without
                recourse, as the Company may reasonably request for the purpose of
                enabling the Company to exercise the rights and powers which it is
                entitled to exercise pursuant to this Section
                4.04(a)(2).

            

    

     

    
      	(3)  	
              Unless
                and until an Event of Default has occurred and is continuing, the
                Company
                shall be entitled to receive and retain any dividends on the Stock
                Collateral paid in cash out of earned
                surplus.

            

    

     

    
      	(4)  	
              If
                any Event of Default shall have occurred, then so long as such Event
                of
                Default shall continue, and whether or not the Agent exercises any
                available right to declare any Secured Obligations due and payable
                or
                seeks or pursues any other relief or remedy available to it under
                applicable law or under this Agreement, the Purchase Agreement, the
                Notes
                or any other agreement relating to such Secured Obligations, all
                dividends
                and other distributions on the Stock Collateral shall be paid directly
                to
                the Agent and retained by it as part of the Stock Collateral, subject
                to
                the terms of this Agreement, and, if the Agent shall so request in
                writing, the Company agrees to execute and deliver to the Agent
                appropriate additional dividend, distribution and other orders and
                documents to that end, provided that if such Event of Default is
                cured,
                any such dividend or distribution theretofore paid to the Agent shall,
                upon request of the Company (except to the extent theretofore applied
                to
                the Secured Obligations) be returned by the Agent to the
                Company.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	b.  	
              Intellectual
                Property.

            

    

     

    
      	(1)  	
              For
                the purpose of enabling the Agent to exercise rights and remedies
                under
                Section 4.05 hereof at such time as the Agent shall be lawfully entitled
                to exercise such rights and remedies, and for no other purpose, the
                Company hereby grants to the Agent, to the extent assignable, an
                irrevocable, non-exclusive license (exercisable without payment of
                royalty
                or other compensation to the Company) to use, assign, license or
                sublicense any of the Intellectual Property (other than the Trademark
                Collateral or goodwill associated therewith) now owned or hereafter
                acquired by the Company, wherever the same may be located, including
                in
                such license reasonable access to all media in which any of the licensed
                items may be recorded or stored and to all computer programs used
                for the
                compilation or printout thereof.

            

    

     

    
      	(2)  	
              Notwithstanding
                anything contained herein to the contrary, so long as no Event of
                Default
                shall have occurred and be continuing, the Company will be permitted
                to
                exploit, use, enjoy, protect, license, sublicense, assign, sell,
                dispose
                of or take other actions with respect to the Intellectual Property
                in the
                ordinary course of the business of the Company. In furtherance of
                the
                foregoing, unless an Event of Default shall have occurred and is
                continuing, the Agent shall from time to time, upon the request of
                the
                Company, execute and deliver any instruments, certificates or other
                documents, in the form so requested, which the Company shall have
                certified are appropriate (in its judgment) to allow it to take any
                action
                permitted above (including relinquishment of the license provided
                pursuant
                to clause (1) immediately above as to any specific Intellectual Property).
                Further, upon the payment in full of all of the Secured Obligations
                or
                earlier expiration of this Agreement or release of the Collateral,
                the
                Agent shall grant back to the Company the license granted pursuant
                to
                clause (1) immediately above. The exercise of rights and remedies
                under
                Section 4.05 hereof by the Agent shall not terminate the rights of
                the
                holders of any licenses or sublicenses theretofore granted by the
                Company
                in accordance with the first sentence of this clause
                (2).

            

    

     

    4.05  Events
      of Default, etc.
      During
      the period during which an Event of Default shall have occurred and be
      continuing:

     

    
      	a.  	
              the
                Company shall, at the request of the Agent, assemble the Collateral
                owned
                by it at such place or places, reasonably convenient to both the
                Agent and
                the Company, designated in its
                request;

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	b.  	
              the
                Agent may make any reasonable compromise or settlement deemed desirable
                with respect to any of the Collateral and may extend the time of
                payment,
                arrange for payment in installments, or otherwise modify the terms
                of, any
                of the Collateral;

            

    

     

    
      	c.  	
              the
                Agent shall have all of the rights and remedies with respect to the
                Collateral of a secured party under the Uniform Commercial Code (whether
                or not said Code is in effect in the jurisdiction where the rights
                and
                remedies are asserted) and such additional rights and remedies to
                which a
                secured party is entitled under the laws in effect in any jurisdiction
                where any rights and remedies hereunder may be asserted, including,
                without limitation, the right, to the maximum extent permitted by
                law, to
                exercise all voting, consensual and other powers of ownership pertaining
                to the Collateral as if the Agent were the sole and absolute owner
                thereof
                (and the Company agrees to take all such action as may be appropriate
                to
                give effect to such right);

            

    

     

    
      	d.  	
              the
                Agent in its discretion may, in its name or in the name of the Company
                or
                otherwise, demand, sue for, collect or receive any money or property
                at
                any time payable or receivable on account of or in exchange for any
                of the
                Collateral, but shall be under no obligation to do so;
                and

            

    

     

    
      	e.  	
              the
                Agent may, upon 10 Business Days, prior written notice to the Company
                of
                the time and place, with respect to the Collateral or any part thereof
                which shall then be or shall thereafter come into the possession,
                custody
                or control of the Agent, or any of its respective agents, sell, lease,
                assign or otherwise dispose of all or any of such Collateral, at
                such
                place or places as the Agent deems best, and for cash or on credit
                or for
                future delivery (without thereby assuming any credit risk), at public
                or
                private sale, without demand of performance or notice of intention
                to
                effect any such disposition or of time or place thereof (except such
                notice as is required above or by applicable statute and cannot be
                waived)
                and the Agent or anyone else may be the purchaser, lessee, assignee
                or
                recipient of any or all of the Collateral so disposed of at any public
                sale (or, to the extent permitted by law, at any private sale), and
                thereafter hold the same absolutely, free from any claim or right
                of
                whatsoever kind, including any right or equity of redemption (statutory
                or
                otherwise), of the Company, any such demand, notice or right and
                equity
                being hereby expressly waived and released. In the event of any sale,
                assignment, or other disposition of any of the Trademark Collateral,
                the
                goodwill of the Business connected with and symbolized by the Trademark
                Collateral subject to such disposition shall be included, and the
                Company
                shall supply to the Agent or its designee, for inclusion in such
                sale,
                assignment or other disposition, all Intellectual Property relating
                to
                such Trademark Collateral. The Agent may, without notice or publication,
                adjourn any public or private sale or cause the same to be adjourned
                from
                time to time by announcement at the time and place fixed for the
                sale, and
                such sale may be made at any time or place to which the same may
                be so
                adjourned.

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      proceeds of each collection, sale or other disposition under this Section 4.05,
      including by virtue of the exercise of the license granted to the Agent in
      Section 4.04(b)(1) hereof, shall be applied in accordance with Section 4.09
      hereof. 

     

    The
      Company recognizes that, by reason of certain prohibitions contained in the
      Securities Act of 1933, as amended, and applicable state securities laws, the
      Agent may be compelled, with respect to any sale of all or any part of the
      Collateral, to limit purchasers to those who will agree, among other things,
      to
      acquire the Collateral for their own account, for investment and not with a
      view
      to the distribution or resale thereof. The Company acknowledges that any such
      private sales to an unrelated third party in an arm’s length transaction may be
      at prices and on terms less favorable to the Agent than those obtainable through
      a public sale without such restrictions, and, notwithstanding such
      circumstances, agrees that any such private sale shall be deemed to have been
      made in a commercially reasonable manner and that the Agent shall have no
      obligation to engage in public sales and no obligation to delay the sale of
      any
      Collateral for the period of time necessary to permit the respective Issuer
      thereof to register it for public sale.

     

    4.06  Deficiency.
      If the
      proceeds of sale, collection or other realization of or upon the Collateral
      pursuant to Section 4.05 hereof are insufficient to cover the costs and expenses
      of such realization and the payment in full of the Secured Obligations, the
      Company shall remain liable for any deficiency.

     

    4.07  Removals,
      etc.
      Without
      at least 30 days’ prior written notice to the Agent or unless otherwise required
      by law, the Company shall not (i) maintain any of its books or records with
      respect to the Collateral at any office or maintain its chief executive office
      or its principal place of business at any place, or permit any Inventory or
      Equipment to be located anywhere other than at the address indicated for the
      Company in Section 7.4 of the Purchase Agreement or at one of the locations
      identified in Annex
      4
      hereto
      or in transit from one of such locations to another or (ii) change its corporate
      name, or the name under which it does business, from the name shown on the
      signature page hereto.

     

    4.08  Private
      Sale.
      The
      Agent shall incur no liability as a result of the sale of the Collateral, or
      any
      part thereof, at any private sale to an unrelated third party in an arm’s length
      transaction pursuant to Section 4.05 hereof conducted in a commercially
      reasonable manner. The Company hereby waives any claims against the Agent
      arising by reason of the fact that the price at which the Collateral may have
      been sold at such a private sale was less than the price which might have been
      obtained at a public sale or was less than the aggregate amount of the Secured
      Obligations, even if the Agent accepts the first offer received and does not
      offer the Collateral to more than one offeree.

     

    4.09  Application
      of Proceeds.
      Except
      as otherwise herein expressly provided, the proceeds of any collection, sale
      or
      other realization of all or any part of the Collateral pursuant hereto, and
      any
      other cash at the time held by the Agent under this Section 4, shall be applied
      by the Agent:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    First,
      to the
      payment of the costs and expenses of such collection, sale or other realization,
      including reasonable out-of-pocket costs and expenses of the Agent and the
      fees
      and expenses of its agents and counsel, and all expenses, and advances made
      or
      incurred by the Agent in connection therewith;

     

    Next,
      to the
      payment in full of the Secured Obligations in each case equally and ratably
      in
      accordance with the respective amounts thereof then due and owing to each of
      the
      Purchasers; and

     

    Finally,
      to the
      payment to the Company, or its successors or assigns, or as a court of competent
      jurisdiction may direct, of any surplus then remaining.

     

    As
      used
      in this Section 4, “proceeds”
of
      Collateral shall mean cash, securities and other property realized in respect
      of, and distributions in kind of, Collateral, including any thereof received
      under any reorganization, liquidation or adjustment of debt of the Company
      or
      any issuer of or obligor on any of the Collateral.

     

    4.10  Attorney-in-Fact.
      Without
      limiting any rights or powers granted by this Agreement to the Agent while
      no
      Event of Default has occurred and is continuing, upon the occurrence and during
      the continuance of any Event of Default, the Agent is hereby appointed the
      attorney-in-fact of the Company for the purpose of carrying out the provisions
      of this Section 4 and taking any action and executing any instruments which
      the
      Agent may deem necessary or advisable to accomplish the purposes hereof, which
      appointment as attorney-in-fact is irrevocable and coupled with an interest.
      Without limiting the generality of the foregoing, so long as the Purchasers
      shall be entitled under this Section 4 to make collections in respect of the
      Collateral, the Agent shall have the right and power to receive, endorse and
      collect all checks made payable to the order of the Company representing any
      dividend, payment, or other distribution in respect of the Collateral or any
      part thereof and to give full discharge for the same.

     

    4.11  Perfection.
      (i)
      Prior to or concurrently with the execution and delivery of this Agreement,
      the
      Company shall file such financing statements and other documents in such offices
      as the Agent may request to perfect the security interests granted by Section
      3
      of this Agreement, and (ii) at any time requested by the Agent, the Company
      shall deliver to the Agent all share certificates of capital stock directly
      or
      indirectly owned by the Company in the entities identified in Annex
      1
      hereto,
      accompanied by undated stock powers duly executed in blank. 

     

    4.12  Termination.
      When
      all Secured Obligations shall have been paid in full under the Purchase
      Agreement, this Agreement shall terminate, and the Agent shall forthwith cause
      to be assigned, transferred and delivered, against receipt but without any
      recourse, warranty or representation whatsoever, any remaining Collateral and
      money received in respect thereof, to or on the order of the Company and to
      be
      released and cancelled all licenses and rights referred to in Section 4.04(b)(1)
      hereof. The Agent shall also execute and deliver to the Company upon such
      termination such Uniform Commercial Code termination statements, certificates
      for terminating the Liens on the Motor Vehicles and such other documentation
      as
      shall be reasonably requested by the Company to effect the termination and
      release of the Liens on the Collateral.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.13  Expenses.
      The
      Company agrees to pay to the Agent all out-of-pocket expenses (including
      reasonable expenses for legal services of every kind) of, or incident to, the
      enforcement of any of the provisions of this Section 4, or performance by the
      Agent of any obligations of the Company in respect of the Collateral which
      the
      Company has failed or refused to perform upon reasonable notice, or any actual
      or attempted sale, or any exchange, enforcement, collection, compromise or
      settlement in respect of any of the Collateral, and for the care of the
      Collateral and defending or asserting rights and claims of the Agent in respect
      thereof, by litigation or otherwise, including expenses of insurance, and all
      such expenses shall be Secured Obligations to the Agent secured under Section
      3
      hereof.

     

    4.14  Further
      Assurances.
      The
      Company agrees that, from time to time upon the written request of the Agent,
      the Company will execute and deliver such further documents and do such other
      acts and things as the Agent may reasonably request in order fully to effect
      the
      purposes of this Agreement.

     

    4.15  Indemnity.
      Each of
      the Purchasers hereby jointly and severally covenants and agrees to reimburse,
      indemnify and hold the Agent harmless from and against any and all claims,
      actions, judgments, damages, losses, liabilities, costs, transfer or other
      taxes, and expenses (including, without limitation, reasonable attorneys’ fees
      and expenses) incurred or suffered without any bad faith or willful misconduct
      by the Agent, arising out of or incident to this Agreement or the administration
      of the Agent’s duties hereunder, or resulting from its actions or inactions as
      Agent.

     

    Section
      5.  Miscellaneous.

     

    5.01  No
      Waiver.
      No
      failure on the part of the Agent or any of its agents to exercise, and no course
      of dealing with respect to, and no delay in exercising, any right, power or
      remedy hereunder shall operate as a waiver thereof; nor shall any single or
      partial exercise by the Agent or any of its agents of any right, power or remedy
      hereunder preclude any other or further exercise thereof or the exercise of
      any
      other right, power or remedy. The remedies herein are cumulative and are not
      exclusive of any remedies provided by law.

     

    5.02  Governing
      Law.
      This
      Agreement shall be governed by, and construed in accordance with, the law of
      the
      State of New York, including Sections 5-1401 and 5-1402 of the New York General
      Obligations Law.

     

    5.03  Notices.
      All
      notices, requests, consents and demands hereunder shall be in writing and
      facsimile (facsimile confirmation required) or delivered to the intended
      recipient at its address or telex number specified pursuant to Section 7.4
      of
      the Purchase Agreement and shall be deemed to have been given at the times
      specified in said Section 7.4.

     

    5.04  Waivers,
      etc.
      The
      terms of this Agreement may be waived, altered or amended only by an instrument
      in writing duly executed by the Company and the Agent. Any such amendment or
      waiver shall be binding upon each of the Purchasers and the
      Company.

     

    5.05  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the respective
      successors and assigns of the Company and each of the Purchasers (provided,
      however, that the Company shall not assign or transfer its rights hereunder
      without the prior written consent of the Agent).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.06  Counterparts.
      This
      Agreement may be executed in any number of counterparts, all of which together
      shall constitute one and the same instrument and any of the parties hereto
      may
      execute this Agreement by signing any such counterpart.

     

    5.07  Agent.
      Each
      Purchaser agrees to appoint Iroquois Master Fund Ltd. as its Agent for purposes
      of this Agreement. The Agent may employ agents and attorneys-in-fact in
      connection herewith and shall not be responsible for the negligence or
      misconduct of any such agents or attorneys-in-fact selected by it in good
      faith.

     

    5.08  Severability.
      If any
      provision hereof is invalid and unenforceable in any jurisdiction, then, to
      the
      fullest extent permitted by law, (i) the other provisions hereof shall remain
      in
      full force and effect in such jurisdiction and shall be liberally construed
      in
      favor of the Purchasers in order to carry out the intentions of the parties
      hereto as nearly as may be possible and (ii) the invalidity or unenforceability
      of any provision hereof in any jurisdiction shall not affect the validity or
      enforceability of such provision in any other jurisdiction.

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
      be
      duly executed as of the day and year first above written.

     

    

     

    COMPANY:                                                                         
      IPIX
      CORPORATION 

    

    

    By:
      ______________________________

    Name:

    Title:

    

    

    

    AGENT:                       
IROQUOIS
      MASTER FUND LTD.

    

    

    By:
      ______________________________

    Name:

    Title:

    

    
      
         

        Signature
          Page to Security Agreement

        

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    PURCHASERS:                     IROQUOIS
      MASTER FUND LTD. 

    

    

    By:
      ______________________________

    Name:

    Title:

     

     

     

     

     

     

     

     

     

     

    
 

    

    
      
         

        Signature
          Page to Security Agreement

        

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    OTHER
      PURCHASERS

    

    

    By:
      ______________________________

    Name:

    Title:

    

    

     

     

     

     

     

     

     

     

    
 

     

    
      
        
          

          Signature
            Page to Security Agreement

          

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    ANNEX
      1

     

    ENTITIES
      IN WHICH THE COMPANY IS PLEDGING ITS CAPITAL STOCK

     

                          
      Approximate

    Entity                                       Percentage
      Interest

    

    Interactive
      Pictures Corporation UK
      Limited                United
      Kingdom                     
                   100%

    PW
      Technology,
      Inc.                                                Delaware                                               
      100%

    Internet
      Pictures (Canada),
      Inc.                              
      Canada                                   100%                    

    

     

     

     

     

     

     

     

     

     

    

     

    
      
        
          

          

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    ANNEX
      2

     

    EXCLUDED
      COLLATERAL

     

    

    
      	§  	
              1,035,000
                shares of AdMission Corporation Series A Convertible Preferred
                Stock;

            

    

     

    
      	§  	
              All
                of the Company’s rights and interests in that certain Investors Rights
                Agreement between the Company and AdMission dated February 17, 2005;
                and

            

    

     

    
      	§  	
              A
                warrant to purchase 200,000 shares of AdMission common stock dated
                February 11, 2005.

            

    

     

     

    

    

    

    

    

    

    

    
      
        
          

          

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    ANNEX
      3

     

    EXCEPTIONS
      FOR COPYRIGHTS, PATENTS AND TRADEMARKS

     

     

    None.

     

    

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
      
        
          

          

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    ANNEX
      4

     

    LIST
      OF
      LOCATIONS

     

    Corporate
      Offices

     

    IPIX
      Corporation

    12120
      Sunset Hills Road

    Suite
      410

    Reston,
      VA  20190

     

    Inventory
&
Distribution
      Centers

     

    AigisMechtronics

    1124
      Louise Road

    Winston-Salem,
      NC  27107

     

    AigisMechtronics

    2390
      Farrington Point

    Winston-Salem,
      NC  27107

     

    Lumenera

    7
      Capella Court

    Ottawa
      ON K2E 8A7

    Canada

     

    Tuss
      Vision, Inc.

    2-15-13
      Miyamachi

    Fuchu,
      Tokyo

    183-0023

    Japan

     

    

     

    

     

     

     

     

     

     

     

     

    
 

    
      
         

        

         

         

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      5

     

    

    EXISTING
      INDEBTEDNESS

    

    None.

     

     

     

     

     

     

     

     

     

     

     

     

    
       

       

      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      6

     

    

    EXISTING
      LIENS

     

    None.

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