Document:

Exhibit 10 (c)

Exhibit
10(c)

2002-2004
Long-Term Incentive Award Measures

On March
14, 2002, the Compensation Committee of our Board of Directors approved the
performance measures for the three-year, long-term performance award cycle of
2002-2004 under the Lincoln National Corporation Incentive Compensation Plan, as
amended and restated on March 8, 2001. The performance measures are based on
Lincoln National Corporation’s:

	·  	
      shareholder
      return,

	·  	
      growth
      in income from operations per share and

	·  	
      return
      on equity.

Each of
the performance measures are based on Lincoln National’s performance relative to
the performance of a peer group of companies. 

 

As used
above, income from operations is defined as net income determined in accordance
with generally accepted accounting principles (“GAAP”) excluding, as applicable,
the after-tax effects of realized gain or losses on investments and derivatives,
restructuring charges, gains (losses) related to reinsurance embedded
derivatives/trading account assets, cumulative effect of accounting changes,
reserve changes on business sold through reinsurance net of related deferred
gain amortization, gains (losses) on the sale of subsidiaries and blocks of
business and loss on early retirement of debt, including subordinated debt. This
is the measure that the Compensation Committee uses to evaluate the performance
of our businesses. Return on equity as used above is calculated based on income
from operations.Exhibit 10 (d)

Exhibit
10(d)

2003-2005
Long-Term Incentive Award Measures

On
January 9, 2003, the Compensation Committee of our Board of Directors approved
the performance measures for the three-year, long-term performance award cycle
of 2003-2005 under the Lincoln National Corporation Incentive Compensation Plan,
as amended and restated on March 8, 2001. The performance measures are based on
Lincoln National Corporation’s:

  

	·  	
      shareholder
      return,

	·  	
      growth
      in income from operations per share and

	·  	
      return
      on equity.

 

Each of
the performance measures are based on Lincoln National’s performance relative to
the performance of a peer group of companies. 

 

As used
above, income from operations is defined as net income determined in accordance
with generally accepted accounting principles (“GAAP”) excluding, as applicable,
the after-tax effects of realized gain or losses on investments and derivatives,
restructuring charges, gains (losses) related to reinsurance embedded
derivatives/trading account assets, cumulative effect of accounting changes,
reserve changes on business sold through reinsurance net of related deferred
gain amortization, gains (losses) on the sale of subsidiaries and blocks of
business and loss on early retirement of debt, including subordinated debt. This
is the measure that the Compensation Committee uses to evaluate the performance
of our businesses. Return on equity as used above is calculated based on income
from operations.Exhibit 10 (e)

Exhibit
10(e)

2004-2006
Long-Term Incentive Award Measures

On March
11, 2004, the Compensation Committee of our Board of Directors approved the
performance measures for the three-year, long-term performance award cycle of
2004-2006 under the Lincoln National Corporation Incentive Compensation Plan, as
amended and restated on March 8, 2001. The performance measures are based on
Lincoln National Corporation’s: 

 

	·  	
      total
      shareholder return compared to a modified S&P 500
      Index,

	·  	
      growth
      in income from operations per share and

	·  	
      return
      on equity.

  

As used
above, income from operations is defined as net income determined in accordance
with generally accepted accounting principles (“GAAP”) excluding, as applicable,
the after-tax effects of realized gain or losses on investments and derivatives,
restructuring charges, gains (losses) related to reinsurance embedded
derivatives/trading account assets, cumulative effect of accounting changes,
reserve changes on business sold through reinsurance net of related deferred
gain amortization, gains (losses) on the sale of subsidiaries and blocks of
business and loss on early retirement of debt, including subordinated debt. This
is the measure that the Compensation Committee uses to evaluate the performance
of our businesses. Return on equity as used above is calculated based on income
from operations.SECURITIES PURCHASE AGREEMENT

       This  Securities  Purchase  Agreement  (this  "AGREEMENT") is dated as of
February 14, 2005,  among  Vision-Sciences,  Inc., a Delaware  corporation  (the
"COMPANY"),  and each purchaser  identified on the signature pages hereto (each,
including  its  successors  and assigns,  a  "PURCHASER"  and  collectively  the
"PURCHASERS"); and

       WHEREAS,  subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act (as defined below),  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 in the  aggregate,  up to $10,000,000 of shares of Common Stock
and Warrants on the Closing Date.

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

                                   ARTICLE I.
                                   DEFINITIONS

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

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

            "AFFILIATE"  means any Person that,  directly or indirectly  through
       one or more  intermediaries,  controls  or is  controlled  by or is under
       common  control  with a Person as such  terms  are used in and  construed
       under Rule 144.  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.

            "CLOSING"  means the closing of the  purchase and sale of the Common
       Stock and the Warrants pursuant to Section 2.1.

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

            "CLOSING  PRICE" means on any particular  date (a) the last reported
       closing  bid price per share of Common  Stock on such date on the Trading
       Market (as reported by Bloomberg L.P. at 4:15 PM (New York time),  or (b)
       if there is no such price on such date, then the closing bid price on the
       Trading  Market on the date nearest  preceding  such date (as reported by
       Bloomberg  L.P.  at 4:15 PM (New York time) for the closing bid price for
       regular  session  trading on such day), or (c) if the Common Stock is not
       then listed or quoted on the Trading  Market and if prices for the Common
       Stock  are then  reported  in the  "pink  sheets"  published  by the Pink
       Sheets, LLC (or a similar

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<PAGE>

       organization or agency succeeding to its functions of reporting  prices),
       the most recent bid price per share of the Common Stock so  reported,  or
       (d) if the shares of Common Stock are not then  publicly  traded the fair
       market  value of a share of Common  Stock as  determined  by a  qualified
       independent  appraiser  selected  in good  faith by the  Purchasers  of a
       majority  in  interest  of  the  principal   amount  of  Securities  then
       outstanding.

            "COMMISSION" means the Securities and Exchange Commission.

            "COMMON  STOCK"  means the common  stock of the  Company,  par value
       $0.01 per share,  and any  securities  into which such  common  stock may
       hereafter be reclassified.

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

            "COMPANY COUNSEL" means Proskauer Rose LLP.

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

            "EFFECTIVE  DATE"  means  the  date  that the  initial  registration
       statement  filed by the Company for the  Registrable  Securities is first
       declared effective by the Commission.

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

            "EXCHANGE  ACT"  means  the  Securities  Exchange  Act of  1934,  as
       amended.

            "EXEMPT  ISSUANCE"  means the issuance of (a) shares of Common Stock
       or options to employees, officers or directors of the Company pursuant to
       any stock or option plan duly  adopted by a majority of the  non-employee
       members of the Board of  Directors  of the  Company or a majority  of the
       members of a committee of  non-employee  directors  established  for such
       purpose,  (b)  securities  upon  the  exercise  of or  conversion  of any
       Securities issued hereunder,  convertible securities, options or warrants
       issued and outstanding on the date of this Agreement,  provided that such
       securities  have not been  amended  since the date of this  Agreement  to
       increase  the number of such  securities  or to decrease  the exercise or
       conversion  price  of any  such  securities,  and (c)  securities  issued
       pursuant to  acquisitions  or strategic  transactions,  provided any such
       issuance  shall  only be to a Person  which  is,  itself or  through  its
       subsidiaries,  an operating  company in a business  synergistic  with the
       business of the Company  and in which the  Company  receives  benefits in
       addition to the investment of funds,  but shall not include a transaction
       in which the Company is issuing  securities  primarily for the purpose of
       raising  capital or to an entity whose  primary  business is investing in
       securities.

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

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<PAGE>

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

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

            "LEGEND  REMOVAL DATE" shall have the meaning  ascribed to such term
       in Section 4.1(c).

            "LIENS" means a lien, charge, security interest,  encumbrance, right
       of first refusal, preemptive right or other restriction.

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

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

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

            "PER SHARE PURCHASE  PRICE" equals $2.70,  subject to adjustment for
       reverse and forward stock splits, stock dividends, stock combinations and
       other similar  transactions of the Common Stock that occur after the date
       of this Agreement.

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

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

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

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

            "REGISTRABLE  SECURITIES"  means  all of the  Shares  held  by  such
       Purchasers  and the  Warrant  Shares  issuable  to such  Purchasers  upon
       exercise of the Warrants, together with any shares of Common Stock issued
       or  issuable  upon any  stock  split,  dividend  or  other  distribution,
       recapitalization or similar event with respect to the foregoing.

            "REGISTRATION STATEMENT" means a registration statement covering the
       resale of the Registrable Securities.

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

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<PAGE>

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

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

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

            "SECURITIES ACT" means the Securities Act of 1933, as amended.

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

            "SHORT SALES" shall include,  without limitation,  all "short sales"
       as defined in Rule 3b-3 of the Exchange Act.

            "SUBSCRIPTION  AMOUNT" means, as to each Purchaser,  the amounts set
       forth  below  such  Purchaser's  signature  block on the  signature  page
       hereto, in United States dollars and in immediately available funds.

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

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

            "SUBSIDIARY" shall mean the subsidiaries of the Company, if any, set
       forth on SCHEDULE 3.1(a).

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

            "TRADING  MARKET" means the following  markets or exchanges on which
       the Common Stock is listed or quoted for trading on the date in question:
       the American  Stock  Exchange,  the New York Stock  Exchange,  the Nasdaq
       National Market or the Nasdaq SmallCap Market.

            "TRANSACTION  DOCUMENTS" means this Agreement,  the Warrants and any
       other   documents  or  agreements   executed  in   connection   with  the
       transactions contemplated hereunder.

            "VWAP" means, for any date, the price determined by the first of the
       following clauses that applies: (a) if the Common Stock is then listed or
       quoted on a Trading Market,  the daily volume  weighted  average price of
       the Common  Stock for such date (or the  nearest  preceding  date) on the
       Trading  Market on which  the  Common  Stock is then  listed or quoted as
       reported by Bloomberg  Financial  L.P.  (based on a Trading Day from 9:30
       a.m.  Eastern Time to 4:02 p.m. Eastern Time); (b) if the Common Stock is
       not then

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<PAGE>

       listed or quoted on a Trading  Market and if prices for the Common  Stock
       are then quoted on the OTC Bulletin Board,  the volume  weighted  average
       price of the Common Stock for such date (or the nearest  preceding  date)
       on the OTC Bulletin Board;  (c) if the Common Stock is not then listed or
       quoted on the OTC  Bulletin  Board and if prices for the Common Stock are
       then reported in the "Pink Sheets" published by the Pink Sheets,  LLC (or
       a similar organization or agency succeeding to its functions of reporting
       prices),  the most  recent  bid price per  share of the  Common  Stock so
       reported;  or (c) in all other cases, the fair market value of a share of
       Common Stock as determined by an independent  appraiser  selected in good
       faith by the Purchasers and reasonably acceptable to the Company.

            "WARRANTS" means the Common Stock Purchase Warrants,  in the form of
       EXHIBIT B, delivered to the Purchasers at the Closing in accordance  with
       Section   2.2(a)(iii)   hereof,   which  warrants  shall  be  exercisable
       immediately  upon  issuance for a term of five years and have an exercise
       price equal to $3.75, subject to adjustment as provided therein.

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

                                  ARTICLE II.
                                PURCHASE AND SALE

       2.1 CLOSING.  On the Closing Date, each Purchaser shall purchase from the
Company,  severally and not jointly with the other  Purchasers,  and the Company
shall  issue and sell to each  Purchaser,  (a) a number of Shares  equal to such
Purchaser's  Subscription Amount divided by the Per Share Purchase Price and (b)
the  Warrants as  determined  pursuant  to Section  2.2(a)(iii).  The  aggregate
Subscription  Amounts for the Shares sold  hereunder  shall be up to $10,00,000.
Upon  satisfaction  of the  conditions  set forth in Sections  2.2 and 2.3,  the
Closing  shall occur at the offices of FW or such other  location as the parties
shall mutually agree.

       2.2 DELIVERIES.

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

               (i) this Agreement duly executed by the Company;

               (ii) a copy  of the  irrevocable  instructions  to the  Company's
         transfer  agent  instructing  the  transfer  agent  to  deliver,  on an
         expedited  basis, a certificate  evidencing a number of Shares equal to
         such Purchaser's  Subscription Amount divided by the Per Share Purchase
         Price, registered in the name of such Purchaser;

               (iii)  within 3  Trading  Days of the  date  hereof,  a  Warrant,
         registered  in the  name of such  Purchaser,  pursuant  to  which  such
         Purchaser shall have the right to acquire up to the number of shares of
         Common Stock equal to 25% of the Shares to be issued to such Purchaser;
         and

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<PAGE>

               (iv) a legal opinion of Company Counsel, in the form of EXHIBIT A
         attached hereto.

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

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

               (ii) such Purchaser's Subscription Amount by wire transfer to the
         account as specified in writing by the Company.

       2.3 CLOSING CONDITIONS.

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

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

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

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

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

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

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

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

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

               (v) From the date  hereof to the  Closing  Date,  trading  in the
         Common Stock shall not have been  suspended by the  Commission  (except
         for any  suspension  of trading of  limited  duration  agreed to by the
         Company,  which  suspension  shall be terminated prior to the Closing),
         and,  at any time prior to the  Closing  Date,  trading  in  securities
         generally as reported by  Bloomberg  Financial  Markets  shall not have
         been  suspended  or  limited,  or  minimum  prices  shall not have been
         established on securities whose trades are reported by such service, or

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<PAGE>

         on any  Trading  Market,  nor  shall a  banking  moratorium  have  been
         declared either by the United States or New York State  authorities nor
         shall  there have  occurred  any  material  outbreak or  escalation  of
         hostilities  or  other  national  or  international  calamity  of  such
         magnitude  in its effect  on, or any  material  adverse  change in, any
         financial  market which,  in each case, in the  reasonable  judgment of
         each Purchaser,  makes it  impracticable or inadvisable to purchase the
         Shares at the Closing.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

         3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall  be  deemed  a  part  hereof,  the  Company  hereby  makes  the
representations and warranties set forth below to each Purchaser:

            (a) SUBSIDIARIES. All of the direct and indirect subsidiaries of the
       Company are set forth on SCHEDULE 3.1(a).  The Company owns,  directly or
       indirectly,  all of the capital  stock or other equity  interests of each
       Subsidiary  free  and  clear  of  any  Liens,  and  all  the  issued  and
       outstanding shares of capital stock of each Subsidiary are validly issued
       and are fully paid,  non-assessable  and free of  preemptive  and similar
       rights to  subscribe  for or purchase  securities.  If the Company has no
       subsidiaries,  then  references  in  the  Transaction  Documents  to  the
       Subsidiaries will be disregarded.

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

            (c)  AUTHORIZATION;  ENFORCEMENT.  The  Company  has  the  requisite
       corporate  power  and  authority  to  enter  into and to  consummate  the
       transactions  contemplated  by  each  of the  Transaction  Documents  and
       otherwise to carry out its obligations thereunder.

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       The  execution and delivery of each of the  Transaction  Documents by the
       Company  and  the  consummation  by it of the  transactions  contemplated
       thereby have been duly authorized by all necessary  action on the part of
       the  Company  and  no  further  action  is  required  by the  Company  in
       connection   therewith   other  than  in  connection  with  the  Required
       Approvals.  Each of the Transaction  Documents has been (or upon delivery
       will have been) duly  executed  by the Company  and,  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  except  (i)  as  limited  by   applicable   bankruptcy,
       insolvency,   reorganization,   moratorium  and  other  laws  of  general
       application affecting enforcement of creditors' rights generally and (ii)
       as limited by laws relating to the availability of specific  performance,
       injunctive relief or other equitable remedies.

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

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

            (f)  ISSUANCE OF THE  SECURITIES.  The Shares and  Warrants 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  imposed by the Company other
       than restrictions on transfer provided for in the Transaction

                                       8
<PAGE>

       Documents.  The Warrant Shares,  when issued in accordance with the terms
       of the  Transaction  Documents,  will be validly  issued,  fully paid and
       nonassessable,  free and clear of all Liens  imposed by the Company.  The
       Company has reserved from its duly  authorized  capital stock the maximum
       number of shares of Common Stock issuable  pursuant to this Agreement and
       the Warrants.

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

            (h) SEC REPORTS;  FINANCIAL STATEMENTS.  The Company  has  filed all
       reports,  schedules, forms, statements and other documents required to be
       filed by 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,  including  the
       exhibits thereto and documents  incorporated by reference therein,  being
       collectively  referred to herein as the "SEC  Reports") on a timely basis
       or has  received a valid  extension  of such time of filing and has filed
       any such SEC Reports prior to the expiration of any such extension. As of
       their respective dates, the SEC Reports complied in all material respects
       with the  requirements of the Securities Act and the Exchange Act 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

                                       9
<PAGE>

       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 United States generally  accepted  accounting
       principles  applied on a  consistent  basis  during the periods  involved
       ("GAAP"),  except  as  may  be  otherwise  specified  in  such  financial
       statements  or the notes  thereto  and except  that  unaudited  financial
       statements  may not contain all  footnotes  required by GAAP,  and fairly
       present in all material  respects the  financial  position of the Company
       and its consolidated subsidiaries as of and for the dates thereof and the
       results of operations and cash flows for the periods then ended, subject,
       in the case of  unaudited  statements,  to normal,  immaterial,  year-end
       audit adjustments.

            (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, (i) there has been no event,  occurrence or
       development  that has had or that could  reasonably be expected to result
       in a Material  Adverse  Effect,  (ii) the  Company has not  incurred  any
       liabilities  (contingent or otherwise)  other than (A) trade payables and
       accrued expenses  incurred in the ordinary course of business  consistent
       with past  practice and (B)  liabilities  not required to be reflected in
       the  Company's  financial  statements  pursuant to GAAP or required to be
       disclosed in filings made with the Commission,  (iii) the Company has not
       altered its method of  accounting,  (iv) the Company has not  declared or
       made  any  dividend  or  distribution  of cash or other  property  to its
       stockholders or purchased, redeemed or made any agreements to purchase or
       redeem any shares of its capital stock and (v) the Company has not issued
       any equity  securities  to any  officer,  director or  Affiliate,  except
       pursuant to existing  Company  stock option  plans.  The Company does not
       have pending before the Commission any request for confidential treatment
       of information.

            (j)  LITIGATION.  There  is no  action,  suit,  inquiry,  notice  of
       violation,  proceeding or  investigation  pending or, to the knowledge of
       the Company,  threatened against or affecting the Company, any Subsidiary
       or any of their respective properties before or by any court, arbitrator,
       governmental or administrative  agency or regulatory  authority (federal,
       state,  county, local or foreign)  (collectively,  an "ACTION") which (i)
       adversely affects or challenges the legality,  validity or enforceability
       of any of the  Transaction  Documents or the Securities or (ii) could, if
       there were an  unfavorable  decision,  have or  reasonably be expected to
       result  in a  Material  Adverse  Effect.  Neither  the  Company  nor  any
       Subsidiary,  nor any  director  or  officer  thereof,  is or has been the
       subject of any Action  involving  a claim of  violation  of or  liability
       under federal or state  securities laws or a claim of breach of fiduciary
       duty.  There has not been, and to the knowledge of the Company,  there is
       not  pending  or  contemplated,   any  investigation  by  the  Commission
       involving the Company or any current or former director or officer of the
       Company.  The  Commission  has not issued  any stop order or other  order
       suspending the  effectiveness of any registration  statement filed by the
       Company or any Subsidiary under the Exchange Act or the Securities Act.

                                       10
<PAGE>

            (k) LABOR  RELATIONS.  No material  labor dispute  exists or, to the
       knowledge  of  the  Company,  is  imminent  with  respect  to  any of the
       employees of the Company which could  reasonably be expected to result in
       a Material Adverse Effect.

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

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

            (n) TITLE TO ASSETS.  The Company and the Subsidiaries have good and
       marketable title in fee simple to all real property owned by them that is
       material to the business of the Company and the Subsidiaries and good and
       marketable title in all personal  property owned by them that is material
       to the  business of the Company and the  Subsidiaries,  in each case free
       and clear of all Liens,  except for Liens as do not materially affect the
       value of such property and do not materially  interfere with the use made
       and  proposed  to be  made  of  such  property  by the  Company  and  the
       Subsidiaries and Liens for the payment of federal,  state or other taxes,
       the payment of which is neither delinquent nor subject to penalties.  Any
       real  property  and  facilities  held under  lease by the Company and the
       Subsidiaries  are held by them under valid,  subsisting  and  enforceable
       leases of which the Company and the Subsidiaries are in compliance in all
       material respects.

            (o) PATENTS AND TRADEMARKS.  The Company and the Subsidiaries  have,
       or have rights to use,  all  patents,  patent  applications,  trademarks,
       trademark applications,  service marks, trade names, copyrights, licenses
       and other similar rights necessary or material for use in connection with
       their respective businesses as described in the SEC Reports and which the
       failure to so have could have a Material  Adverse  Effect  (collectively,
       the  "INTELLECTUAL  PROPERTY  RIGHTS").   Neither  the  Company  nor  any
       Subsidiary has received a written notice that the  Intellectual  Property
       Rights used by the Company or any  Subsidiary  violates or infringes upon
       the rights of any  Person.  To the  knowledge  of the  Company,  all such
       Intellectual  Property  Rights are  enforceable  and there is no existing
       infringement by another Person of any of the Intellectual Property Rights
       of others.

                                       11
<PAGE>

            (p)  INSURANCE.  The  Company  and the  Subsidiaries  are insured by
       insurers of recognized financial  responsibility  against such losses and
       risks and in such amounts as are prudent and customary in the  businesses
       in which the Company and the Subsidiaries are engaged, including, but not
       limited to,  directors and officers  insurance.  To the best of Company's
       knowledge,  such  insurance  contracts  and  policies  are  accurate  and
       complete.  Neither  the  Company  nor any  Subsidiary  has any  reason to
       believe that it will not be able to renew its existing insurance coverage
       as and when such  coverage  expires or to obtain  similar  coverage  from
       similar  insurers as may be necessary to continue its business  without a
       significant increase in cost.

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

            (r) SARBANES-OXLEY;  INTERNAL ACCOUNTING CONTROLS. The Company is in
       material compliance with all provisions of the Sarbanes-Oxley Act of 2002
       which  are  applicable  to it as  of  the  Closing  Date.  The  Company's
       certifying  officers have  evaluated the  effectiveness  of the Company's
       controls  and  procedures  as of the date prior to the filing date of the
       most recently  filed  periodic  report under the Exchange Act (such date,
       the "EVALUATION  DATE"). The Company presented in its most recently filed
       periodic  report under the Exchange Act the conclusions of the certifying
       officers  about  the   effectiveness  of  the  disclosure   controls  and
       procedures  based on their  evaluations as of the Evaluation  Date. Since
       the  Evaluation  Date,  there  have been no  significant  changes  in the
       Company's  internal  controls  (as such term is defined in Item 307(b) of
       Regulation S-K under the Exchange Act) or, to the Company's knowledge, in
       other  factors that could  significantly  affect the  Company's  internal
       controls.

            (s) CERTAIN FEES. Other than the fees payable to Rodman and Renshaw,
       LLC. pursuant to the terms of its engagement letter with the Company,  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.

                                       12
<PAGE>

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

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

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

            (w) 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.

            (x) DISCLOSURE. The Company confirms that all disclosure provided to
       the Purchasers  regarding the Company,  its business and the transactions
       contemplated   hereby,   including  the  Disclosure   Schedules  to  this
       Agreement,  furnished  by or on behalf of the Company with respect to the
       representations  and  warranties  made herein are true and  correct  with
       respect to such  representations  and  warranties  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.  The Company
       acknowledges  and  agrees  that  no  Purchaser  makes  or  has  made  any
       representations   or   warranties   with  respect  to  the   transactions
       contemplated  hereby other than those  specifically  set forth in Section
       3.2 hereof.

            (y) NO INTEGRATED OFFERING. Assuming the accuracy of the Purchasers'
       representations  and  warranties  set forth in Section  3.2,  neither the
       Company, nor to the

                                       13
<PAGE>

       Company's knowledge, any of its affiliates,  nor any Person acting on its
       or their behalf has, directly or indirectly,  made any offers or sales of
       any  security  or  solicited  any  offers  to  buy  any  security,  under
       circumstances  that would  cause this  offering of the  Securities  to be
       integrated  with prior  offerings  by the  Company  for  purposes  of the
       Securities  Act  or  any  applicable   shareholder  approval  provisions,
       including,  without  limitation,  under the rules and  regulations of any
       Trading  Market on which any of the  securities of the Company are listed
       or designated.

            (z) SOLVENCY.  Based on the financial condition of the Company as of
       the Closing Date after giving effect to the receipt by the Company of the
       proceeds  from the sale of the  Securities  hereunder,  (i) the 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;  (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) 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.  The Company does
       not intend to incur  debts  beyond its  ability to pay such debts as they
       mature  (taking into account the timing and amounts of cash to be payable
       on or in respect of its debt).  The Company has no knowledge of any facts
       or  circumstances  which  lead  it to  believe  that  it  will  file  for
       reorganization or liquidation under the bankruptcy or reorganization laws
       of any  jurisdiction  within  one year  from the  Closing  Date.  The SEC
       Reports  set forth as of the dates  thereof all  outstanding  secured and
       unsecured Indebtedness of the Company or any Subsidiary, or for which the
       Company or any  Subsidiary  has  commitments.  For the  purposes  of this
       Agreement,  "INDEBTEDNESS"  shall mean (a) any  liabilities  for borrowed
       money or amounts  owed in excess of $50,000  (other  than trade  accounts
       payable incurred in the ordinary course of business), (b) all guaranties,
       endorsements and other contingent  obligations in respect of Indebtedness
       of  others,  whether  or not the same are or should be  reflected  in the
       Company's  balance  sheet (or the notes  thereto),  except  guaranties by
       endorsement  of  negotiable  instruments  for  deposit or  collection  or
       similar  transactions  in the ordinary  course of  business;  and (c) the
       present value of any lease payments in excess of $50,000 due under leases
       required to be capitalized in accordance  with GAAP.  Neither the Company
       nor any Subsidiary is in default with respect to any Indebtedness.

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

            (bb) GENERAL SOLICITATION. Neither the Company nor any person acting
       on behalf of the  Company  has  offered  or sold any of the Shares by any
       form of general

                                       14
<PAGE>

       solicitation or general  advertising.  The Company has offered the Shares
       for sale only to the Purchasers and certain other "accredited  investors"
       within the meaning of Rule 501 under the Securities Act.

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

            (dd)  ACCOUNTANTS.  The  Company's  accountants  are  set  forth  on
       SCHEDULE 3.1(dd) of the Disclosure Schedule.  To the Company's knowledge,
       such accountants, who the Company expects will express their opinion with
       respect to the  financial  statements  to be  included  in the  Company's
       Annual  Report on Form 10-K for the year  ending  March 31,  2005,  are a
       registered public accounting firm as required by the Securities Act.

            (ee) ACKNOWLEDGMENT  REGARDING  PURCHASERS'  PURCHASE OF SHARES. The
       Company  acknowledges  and agrees that each of the  Purchasers  is acting
       solely in the capacity of an arm's length  purchaser  with respect to the
       Transaction  Documents  and the  transactions  contemplated  hereby.  The
       Company further  acknowledges  that no Purchaser is acting as a financial
       advisor or  fiduciary  of the Company (or in any similar  capacity)  with
       respect to 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 the Purchasers'
       purchase of the Shares.  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  transactions  contemplated
       hereby by the Company and its representatives.

            (ff)   ACKNOWLEDGEMENT   REGARDING   PURCHASERS'  TRADING  ACTIVITY.
       Anything  in  this   Agreement  or  elsewhere   herein  to  the  contrary
       notwithstanding  (except for Section 4.15 hereof),  it is understood  and
       agreed by the Company (i) that none of the Purchasers  have been asked to
       agree,  nor has any  Purchaser  agreed,  to  desist  from  purchasing  or
       selling,  long and/or short,  securities of the Company,  or "derivative"
       securities  based on  securities  issued  by the  Company  or to hold the
       Securities for any specified  term;  (ii) that past or future open market
       or other  transactions  by any  Purchaser,  including  Short  Sales,  and
       specifically including,  without limitation,  Short Sales or "derivative"
       transactions,  before or after  the  closing  of this or  future  private
       placement  transactions,  may  negatively  impact the market price of the
       Company's  publicly-traded  securities;  (iii)  that any  Purchaser,  and
       counter parties in "derivative"  transactions to which any such Purchaser
       is a party, directly or indirectly, presently may have a "short" position
       in the Common

                                       15
<PAGE>

       Stock,  and (iv)  that  each  Purchaser  shall  not be deemed to have any
       affiliation  with or control over any arm's length  counter-party  in any
       "derivative" transaction.

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

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

            (b) OWN ACCOUNT.  Such Purchaser understands that the Securities are
       "restricted securities" and have not been registered under the Securities
       Act  or  any  applicable  state  securities  law  and  is  acquiring  the
       Securities as principal for its own account and not with a view to or for
       distributing  or reselling  such  Securities or any part thereof,  has no
       present  intention  of  distributing  any of such  Securities  and has no
       arrangement  or  understanding  with  any  other  persons  regarding  the
       distribution of such  Securities  (this  representation  and warranty not
       limiting  such  Purchaser's  right to sell the  Securities  pursuant to a
       Registration Statement or otherwise in compliance with applicable federal
       and state  securities  laws).  Such Purchaser is acquiring the Securities
       hereunder in the ordinary course of its business. Such Purchaser does not
       have any agreement or  understanding,  directly or  indirectly,  with any
       Person to distribute any of the Securities.

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

            (d) EXPERIENCE OF SUCH PURCHASER.  Such  Purchaser,  either alone or
       together with its representatives, has such knowledge, sophistication and
       experience  in  business  and  financial  matters  so as to be capable of
       evaluating the merits and risks of the

                                       16
<PAGE>

       prospective investment in the Securities, and has so evaluated the merits
       and risks of such investment. Such Purchaser is able to bear the economic
       risk of an investment in the Securities and, at the present time, is able
       to afford a complete loss of such investment.

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

            (f) SHORT SALES. Such Purchaser has not directly or indirectly,  nor
       has any Person acting on behalf of or pursuant to any understanding  with
       such Purchaser, executed any Short Sales in the securities of the Company
       (including,  without limitations, any Short Sales involving the Company's
       securities)  since 9 P.M.  (New York Time) on January  __, 2005 which was
       the time that such Purchaser was first contacted  regarding an investment
       in the Company ("DISCUSSION TIME").

       The Company  acknowledges and agrees that each Purchaser does not make or
has not made any  representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

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

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

            THESE  SECURITIES  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

                                       17
<PAGE>

            TRANSACTION  NOT SUBJECT TO, THE  REGISTRATION  REQUIREMENTS  OF THE
            SECURITIES ACT AND IN ACCORDANCE  WITH APPLICABLE  STATE  SECURITIES
            LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
            SUCH EFFECT,  THE SUBSTANCE OF WHICH SHALL BE REASONABLY  ACCEPTABLE
            TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
            BONA FIDE MARGIN  ACCOUNT WITH A REGISTERED  BROKER-DEALER  OR OTHER
            LOAN WITH A FINANCIAL  INSTITUTION THAT IS AN "ACCREDITED  INVESTOR"
            AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

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

            (c) Certificates  evidencing the Shares and Warrant Shares shall not
       contain any legend  (including  the legend set forth in Section  4.1(b)),
       (i) while a registration  statement  covering the resale of such security
       is effective under the Securities Act, or (ii) following any sale of such
       Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or
       Warrant  Shares are eligible for sale under Rule 144(k),  or (iv) if such
       legend is not required under  applicable  requirements  of the Securities
       Act (including judicial  interpretations and pronouncements issued by the
       Staff of the  Commission)  and such lack of requirement is confirmed by a
       legal  opinion  satisfactory  to  the  Company;  PROVIDED,   HOWEVER,  in
       connection  with the  issuance of the  Warrant  Shares,  each  Purchaser,
       severally  and not jointly with the other  Purchasers,  hereby  agrees to
       adhere to and abide by all  prospectus  delivery  requirements  under the
       Securities Act and rules and regulations of the  Commission.  The Company
       shall  cause  its  counsel  to  issue a legal  opinion  to the  Company's
       transfer  agent  promptly  after the  Effective  Date if  required by the
       Company's  transfer agent to effect the removal of the legend  hereunder.
       If all or any portion of a Warrant is  exercised  at a time when there is
       an  effective  registration  statement to cover the resale of the Warrant
       Shares,  or if such  Warrant  Shares may be sold under Rule  144(k) or if
       such legend is not otherwise  required under  applicable  requirements of
       the Securities Act (including judicial interpretations thereof) then such
       Warrant  Shares shall be issued free of all legends.  The Company  agrees
       that  following the  Effective  Date or at such time as such legend is no
       longer required under this Section  4.1(c),  it will, no later than three
       Trading Days  following the delivery by a Purchaser to the Company or the
       Company's transfer agent of a certificate  representing Shares or Warrant
       Shares, as the case may be, issued with a restrictive  legend (such date,
       the "LEGEND REMOVAL DATE"),

                                       18
<PAGE>

       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 this  Section.  Certificates  for
       Securities  subject to legend removal  hereunder  shall be transmitted by
       the transfer  agent of the Company to the  Purchasers  by  crediting  the
       account of the Purchaser's prime broker with the Depository Trust Company
       System.

            (d) In addition to such Purchaser's  other available  remedies,  the
       Company shall pay to a Purchaser,  in cash, as partial liquidated damages
       and not as a penalty,  for each $1,000 of Shares or Warrant Shares (based
       on the Closing Price of the Common Stock on the date such  Securities are
       submitted to the Company's transfer agent) subject to Section 4.1(c), $10
       per Trading Day  (increasing to $20 per Trading Day five (5) Trading Days
       after such  damages  have begun to accrue) for each Trading Day after the
       2nd Trading Day after the Legend  Removal Date until such  certificate is
       delivered.  Nothing herein shall limit such  Purchaser's  right to pursue
       actual  damages  for  the  Company's  failure  to  deliver   certificates
       representing any Securities as required by the Transaction Documents, and
       such Purchaser  shall have the right to pursue all remedies  available to
       it at law  or in  equity  including,  without  limitation,  a  decree  of
       specific performance and/or injunctive relief.

            (e)  Each  Purchaser,  severally  and not  jointly  with  the  other
       Purchasers,  agrees  that the  removal  of the  restrictive  legend  from
       certificates  representing Securities as set forth in this Section 4.1 is
       predicated  upon the Company's  reliance that the Purchaser will sell any
       Securities  pursuant  to  either  the  registration  requirements  of the
       Securities   Act,   including   any   applicable    prospectus   delivery
       requirements, or an exemption therefrom.

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

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

                                       19
<PAGE>

       4.4 SECURITIES  LAWS  DISCLOSURE;  PUBLICITY.  The Company shall, by 8:30
a.m. Eastern time on the Trading Day following the date hereof,  issue a Current
Report on Form 8-K,  reasonably  acceptable  to each  Purchaser  disclosing  the
material terms of the  transactions  contemplated  hereby,  and shall attach the
Transaction Documents thereto. The Company and each Purchaser shall consult with
each other in issuing any other press releases with respect to the  transactions
contemplated  hereby,  and neither the Company nor any Purchaser shall issue any
such press release or otherwise make any such public statement without the prior
consent of the Company,  with respect to any press release of any Purchaser,  or
without the prior consent of each  Purchaser,  with respect to any press release
of the Company, which consent shall not unreasonably be withheld, except if such
disclosure is required by law, in which case the disclosing party shall promptly
provide  the  other  party  with  prior  notice  of  such  public  statement  or
communication.  Notwithstanding  the  foregoing,  the Company shall not publicly
disclose the name of any Purchaser,  or include the name of any Purchaser in any
filing with the Commission or any regulatory  agency or Trading Market,  without
the prior written consent of such  Purchaser,  except (i) as required by federal
securities  law in  connection  with a  Registration  Statement  and (ii) to the
extent such  disclosure  is required by law or Trading  Market  regulations,  in
which case the Company  shall provide the  Purchasers  with prior notice of such
disclosure permitted under subclause (i) or (ii).

       4.5  SHAREHOLDER  RIGHTS  PLAN.  No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring  Person" under any  shareholder  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  Securities  under the  Transaction  Documents or under any
other  agreement  between  the  Company and the  Purchasers.  The Company  shall
conduct  its  business  in a manner so that it will not  become  subject  to the
Investment Company Act.

       4.6 NON-PUBLIC INFORMATION. The Company covenants and agrees that neither
it nor any other Person  acting on its behalf will provide any  Purchaser or its
agents or counsel,  with any information that the Company  believes  constitutes
material non-public information,  unless prior thereto such Purchaser shall have
executed  a written  agreement  regarding  the  confidentiality  and use of such
information.  The Company  understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.  The foregoing  shall not apply to Purchasers who are directors,
employees  or  current  shareholders  of the  Company  holding 5% or more of its
capital stock.

       4.7 USE OF PROCEEDS. Except as set forth on SCHEDULE 4.7 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital  purposes,  to purchase fixed assets used in the development
or production of the Company's  products or for  investment in new  technologies
related to the Company's business and not for the satisfaction of any portion of
the Company's debt (other than payment of trade payables in the ordinary  course
of the Company's  business and prior  practices),  to redeem any Common Stock or
Common Stock Equivalents or to settle any outstanding litigation.

       4.8 INTENTIONALLY OMITTED.

                                       20
<PAGE>

       4.9  INDEMNIFICATION  OF  PURCHASERS.  Subject to the  provisions of this
Section  4.9,  the Company  will  indemnify  and hold the  Purchasers  and their
directors,  officers,  shareholders,  partners,  employees and agents  (each,  a
"PURCHASER PARTY") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any such Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or  (b)  any  action  instituted  against  a
Purchaser, or any of them or their respective Affiliates,  by any stockholder of
the Company who is not an  Affiliate of such  Purchaser,  with respect to any of
the transactions  contemplated by the Transaction  Documents (unless such action
is based  upon a  breach  of such  Purchaser's  representations,  warranties  or
covenants  under the Transaction  Documents or any agreements or  understandings
such  Purchaser  may have with any such  stockholder  or any  violations  by the
Purchaser of state or federal  securities  laws or any conduct by such Purchaser
which constitutes fraud,  gross negligence,  willful misconduct or malfeasance).
If any action shall be brought  against any Purchaser  Party in respect of which
indemnity may be sought pursuant to this  Agreement,  such Purchaser Party shall
promptly notify the Company in writing,  and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall  have  the  right to  employ  separate  counsel  in any  such  action  and
participate  in the defense  thereof,  but the fees and expenses of such counsel
shall be at the expense of such  Purchaser  Party  except to the extent that (i)
the  employment  thereof  has been  specifically  authorized  by the  Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the Company and the  position of such  Purchaser
Party.  The  Company  will not be  liable  to any  Purchaser  Party  under  this
Agreement  (i) for any  settlement  by a Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,
damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.

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

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

                                       21
<PAGE>

Trading  Market and will comply in all respects  with the  Company's  reporting,
filing and other obligations under the bylaws or rules of the Trading Market.

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

       4.13 PARTICIPATION IN FUTURE FINANCING.

            (a) From the date hereof  until 12 months  after the  Closing  Date,
       upon any  financing  by the Company of its Common  Stock or Common  Stock
       Equivalents (a  "SUBSEQUENT  FINANCING"),  each Purchaser  shall have the
       right  to  participate  in up to 50% of such  Subsequent  Financing  (the
       "PARTICIPATION MAXIMUM").

            (b) At least 5 Trading  Days prior to the closing of the  Subsequent
       Financing,  the Company shall deliver to each  Purchaser a written notice
       of its intention to effect a Subsequent Financing  ("PRE-NOTICE"),  which
       Pre-Notice  shall ask such Purchaser if it wants to review the details of
       such financing (such additional notice, a "SUBSEQUENT FINANCING NOTICE").
       Upon  the  request  of a  Purchaser,  and  only  upon a  request  by such
       Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
       but no later than 1 Trading Day after such request,  deliver a Subsequent
       Financing Notice to such Purchaser. The Subsequent Financing Notice shall
       describe  in  reasonable  detail the  proposed  terms of such  Subsequent
       Financing,  the amount of proceeds intended to be raised thereunder,  the
       Person with whom such  Subsequent  Financing  is proposed to be effected,
       and attached to which shall be a term sheet or similar document  relating
       thereto.

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

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

                                       22
<PAGE>

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

            (f) The Company must provide the Purchasers with a second Subsequent
       Financing  Notice,  and the  Purchasers  will  again  have  the  right of
       participation  set forth above in this Section  4.13,  if the  Subsequent
       Financing  subject  to the  initial  Subsequent  Financing  Notice is not
       consummated  for any  reason on the  terms  set forth in such  Subsequent
       Financing  Notice  within 90 Trading  Days after the date of the  initial
       Subsequent Financing Notice.

            (g) Notwithstanding the foregoing, this Section 4.13 shall not apply
       in respect of an Exempt Issuance.

            (h) The  participation  rights pursuant to this Section 4.13 may not
       be transferred or assigned by any Purchaser.

       4.14 PROHIBITION ON VARIABLE RATE TRANSACTION AND MFN TRANSACTIONS.  From
the date hereof until the later of (i) the  Effective  Date or (ii) the 12 month
anniversary of the Closing Date, the Company shall be prohibited  from effecting
or entering  into an agreement to effect any  Subsequent  Financing  involving a
"VARIABLE RATE TRANSACTION" or an "MFN TRANSACTION" (each as defined below). The
term "VARIABLE RATE  Transaction"  shall mean a transaction in which the Company
issues or sells (i) any debt or equity  securities  that are  convertible  into,
exchangeable  or  exercisable  for, or include  the right to receive  additional
shares of Common Stock either (A) at a conversion,  exercise or exchange rate or
other  price that is based upon  and/or  varies  with the  trading  prices of or
quotations for the shares of Common Stock at any time after the initial issuance
of such  debt or  equity  securities,  or (B)  with a  conversion,  exercise  or
exchange  price  that is subject to being  reset at some  future  date after the
initial  issuance  of such debt or equity  security  or upon the  occurrence  of
specified or contingent events directly or indirectly related to the business of
the  Company  or the  market  for the  Common  Stock  or (ii)  enters  into  any
agreement,  including, but not limited to, an equity line of credit, whereby the
Company  may  sell  securities  at a future  determined  price.  The  term  "MFN
TRANSACTION"  shall mean a transaction  in which the Company issues or sells any
securities in a capital  raising  transaction or series of related  transactions
which  grants to an investor the right to receive  additional  shares based upon
future transactions of the Company on terms more favorable than those granted to
such  investor  in such  offering.  Any  Purchaser  shall be  entitled to obtain
injunctive  relief  against  the Company to preclude  any such  issuance,  which
remedy shall be in addition to any right to collect damages.

       4.15  SHORT  SALES.  Each  Purchaser  covenants  that  neither it nor any
affiliates  acting on its behalf or pursuant to any  understanding  with it will
execute any Short Sales during the period  commencing  from the Discussion  Time
and for as long as the Warrants are outstanding.

                                       23
<PAGE>

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

       4.17 PIGGY-BACK REGISTRATIONS.  If 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),  then the  Company  shall send to each  Purchaser a
written  notice of such  determination  and, if within 15 days after the date 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 V.
                                  MISCELLANEOUS

       5.1 TERMINATION. This Agreement may be terminated by any Purchaser, as to
such Purchaser's obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Purchasers,  by written notice
to the other  parties,  if the  Closing  has not been  consummated  on or before
February 28, 2005; PROVIDED,  HOWEVER,  that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

       5.2 FEES AND EXPENSES. The Company shall deliver, prior to the Closing, a
completed and executed copy of the Closing  Statement,  attached hereto as ANNEX
A. Except as  otherwise  set forth in this  Agreement,  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 stamp and other  taxes and duties  levied in  connection  with the
delivery of the Securities.

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

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

                                       24
<PAGE>

date  of  mailing,  if  sent by U.S.  nationally  recognized  overnight  courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given.  The address for such  notices and  communications  shall be as set
forth on the signature pages attached hereto.

       5.5 AMENDMENTS;  WAIVERS. No provision of this Agreement may be waived or
amended except in a written instrument  signed, in the case of an amendment,  by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom  enforcement  of any such 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.

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

       5.6  SUCCESSORS  AND ASSIGNS.  This  Agreement  shall be binding upon and
inure to the benefit of the parties and their successors and permitted  assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written  consent of each  Purchaser.  Any Purchaser may assign
any or  all of its  rights  under  this  Agreement,  other  than  the  right  to
participate  in future  financings  pursuant to Section  4.13,  which may not be
transferred  or  assigned,  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".

       5.7 NO  THIRD-PARTY  BENEFICIARIES.  This  Agreement  is intended for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.

       5.8 GOVERNING LAW. All questions  concerning the construction,  validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance  with the internal laws of the State of
New York,  without  regard to the  principles of conflicts of law thereof.  Each
party  agrees  that  all  legal  proceedings   concerning  the  interpretations,
enforcement and defense of the  transactions  contemplated by this Agreement and
any other Transaction  Documents  (whether brought against a party hereto or its
respective affiliates,  directors, officers, shareholders,  employees or agents)
shall be commenced  exclusively  in the state and federal  courts sitting in the
City of New  York.  Each  party  hereby  irrevocably  submits  to the  exclusive
jurisdiction  of the state and federal  courts  sitting in the City of New York,
borough  of  Manhattan  for the  adjudication  of any  dispute  hereunder  or in
connection  herewith or with any  transaction  contemplated  hereby or discussed
herein  (including  with respect to the  enforcement  of any of the  Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action  or  proceeding,  any  claim  that it is not  personally  subject  to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding.  Each party hereby irrevocably waives
personal  service

                                       25
<PAGE>

of process and  consents  to process  being  served in any such suit,  action or
proceeding  by  mailing a copy  thereof  via  registered  or  certified  mail or
overnight  delivery  (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient  service of process and notice  thereof.  Nothing
contained  herein shall be deemed to limit in any way any right to serve process
in any manner  permitted by law. The parties  hereby waive all rights to a trial
by jury.  If either party shall  commence an action or proceeding to enforce any
provisions  of the  Transaction  Documents,  then the  prevailing  party in such
action or proceeding  shall be reimbursed by the other party for its  attorneys'
fees and other costs and expenses incurred with the  investigation,  preparation
and prosecution of such action or proceeding.

       5.9 SURVIVAL. The representations and warranties herein shall survive the
Closing and delivery of the Shares and Warrant Shares.

       5.10   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)  with the same force and effect as if such  facsimile  signature  page
were an original thereof.

       5.11  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.

       5.12  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 the Transaction Documents 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.

       5.13  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.

       5.14  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

                                       26
<PAGE>

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.

       5.15 PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to any Purchaser  pursuant to any  Transaction  Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such  enforcement  or exercise or any part thereof are  subsequently
invalidated,  declared to be fraudulent or  preferential,  set aside,  recovered
from, disgorged by or are required to be refunded,  repaid or otherwise restored
to the  Company,  a  trustee,  receiver  or  any  other  person  under  any  law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable  cause of action),  then to the extent of any such  restoration
the  obligation  or part thereof  originally  intended to be satisfied  shall be
revived and  continued  in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

       5.16  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.  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 Documents. Each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose.  Each Purchaser has been  represented by its own separate legal counsel
in their review and  negotiation of the  Transaction  Documents.  For reasons of
administrative  convenience only,  Purchasers and their respective  counsel have
chosen to communicate  with the Company through FW. FW does not represent all of
the  Purchasers  but only Rodman & Renshaw,  Inc.,  the  placement  agent in the
transaction.  The Company has  elected to provide all  Purchasers  with the same
terms and  Transaction  Documents  for the  convenience  of the  Company and not
because it was required or requested to do so by the Purchasers.

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

       5.18  CONSTRUCTION.  The  parties  agree that each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the

                                       27
<PAGE>

drafting party shall not be employed in the  interpretation  of the  Transaction
Documents or any amendments hereto.

                            (SIGNATURE PAGE FOLLOWS)

                                       28
<PAGE>

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

VISION-SCIENCES, INC.                             ADDRESS FOR NOTICE:

                                                  Vision-Sciences, Inc.
                                                  40 Ramland Rd. South, Suite 1
                                                  Orangeburg, NY 10962
By:/s/ RON HADANI
   Name:Ron Hadani
   Title:President and CEO

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

                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                     SIGNATURE PAGES FOR PURCHASERS FOLLOW]

                                       29
<PAGE>

        [PURCHASER SIGNATURE PAGES TO VSCI SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser:  Lewis C. Pell
SIGNATURE: /S/ LEWIS C. PELL

Email Address of Purchaser:LewisC.Pell@jessco.org

Address for Notice of Purchaser:

Lewis C. Pell
40 Ramland Road South, Suite 10
Orangeburg, New York 10962
Fax:  (845) 359-2251

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

Subscription Amount: $1,000,000
Shares: 370,370
Warrant Shares: 92,593

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       30
<PAGE>

        [PURCHASER SIGNATURE PAGES TO VSCI SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser:  Katsumi Oneda
SIGNATURE: /S/KATSUMI ONEDA

Email Address of Purchaser: KBwine55@aol.com

Address for Notice of Purchaser:

Katsumi Oneda
PO Box 423
33 Stone Tower Drive
Alpine, NJ  07620

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

Subscription Amount: $1,000,000
Shares: 370,370
Warrant Shares: 92,593
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       31
<PAGE>

           [PURCHASER SIGNATURE PAGES TO VSCI SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser:  Perceptive Life Sciences Master Fund, Ltd.
                      /s/ANDREW C. SANKIN

                      By: Perceptive Advisors
                      Title: Investment Manager

                      By: Andrew C. Sankin
                      Chief Operating Officer

Email Address of Purchaser:sankin@hedgesource.org

Address for Notice of Purchaser:
                  Perceptive Life Sciences Master Fund, Ltd.
                  c/o Perceptive Advisors, LLC
                  7284 W. Palmetto Park Rd., Ste. 306
                  Boca Raton, FL 33433

Address for Delivery of Securities for Purchaser (if not same as above):
                  Perceptive Life Sciences Master Fund, Ltd.
                  c/o Perceptive Advisors, LLC
                  850 3rd Avenue, 17th Floor
                  New York, NY 10022
                  Attn: K. Kountouras

Subscription Amount:  $5,999,999.40
Shares:  2,222,222
Warrant Shares:  555,555
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                                       32
<PAGE>

        [PURCHASER SIGNATURE PAGES TO VSCI SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser:  Joseph E. Edelman
Signature of Authorized Signatory of Purchaser: /s/JOSEPH E. EDELMAN

Email Address of Purchaser:sankin@hedgesource.org

Address for Notice of Purchaser:
                  Perceptive Advisors, LLC
                  7284 W. Palmetto Park Rd., Ste. 306
                  Boca Raton, FL 33433

Address for Delivery of Securities for Purchaser (if not same as above):
                  Wachovia Securities
                  150 Radnor-Chester Rd., Ste. A-100
                  Radnor, PA 19087
                  Attn:  Betty Baker

Subscription Amount:  $1,999,998
Shares:  740,740
Warrant Shares:  185,185

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                                       33

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