Document:

EXHIBIT
10.68

     

    SECURITIES
PURCHASE AGREEMENT

     

    This
Securities Purchase Agreement (this “Agreement”) is dated
as of October 2, 2009 by and between Micro Imaging Technology, Inc., a
California corporation (the “Company”), Ascendiant
Capital Group, LLC (the “Purchaser”).
Capitalized terms used in this Agreement and not otherwise defined shall have
the meanings ascribed to them in Article I.

    

    WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall have the right to issue and sell to Purchaser from time to time as
provided herein, and Purchaser shall be obligated to purchase from the Company
up to $3,000,000 worth of shares of Common Stock on a private placement basis
pursuant to an exemption from registration under Section 4(2) of the Securities
Act of 1933; and

     

    WHEREAS,
the Purchaser shall be entitled to resell shares of Common Stock acquired
hereunder pursuant to a resale registration statement established by the Company
pursuant to the terms of the Registration Rights Agreement between the Company
and the Purchaser which shall be declared effective by the Commission prior to
the delivery of the first Draw Down Notice.

     

    NOW, THEREFORE, in
consideration of the foregoing premises, and the promises and covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged by the
parties hereto, the parties, intending to be legally bound, hereby 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 under the Securities Act.  With
respect to the Purchaser, any investment fund or managed account that is managed
on a discretionary basis by the same investment manager as the Purchaser will be
deemed to be an Affiliate of the Purchaser.

     

    “Agreement” shall have
the meaning ascribed to such term in the preamble.

     

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

     

     “Commission” means the
Securities and Exchange Commission.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Commencement Date”
shall mean the Trading Day immediately following the date on which the
applicable Draw Down Notice is delivered to the Purchaser.

    

    “Commitment Amount”
shall have the meaning assigned to such term in Section 2.1 hereof.

     

    “Commitment Period”
shall mean the period of 36 consecutive months commencing immediately after the
Effective Date.

     

    “Common Stock” means
the common stock of the Company, par value $0.01 per share, and any other class
of securities into which such securities may hereafter be reclassified or
changed into.

     

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

     

    “Company Counsel”
means Christopher H. Dieterich, Esq., Dieterich & Mazarei, with offices
located at 11300 West Olympic Blvd., Suite 800, Los Angeles, CA
90064.

     

    “Consolidation Event”
shall mean a sale of all or substantially all of the Company’s assets or a
merger pursuant to which the holders of the voting securities of the Company
prior to the merger do not own a majority of the voting securities of the
surviving entity.

     

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

     

    “Draw Down” shall have
the meaning assigned to such term in Section 6.1(a) hereof.

     

    “Draw Down Notice”
shall have the meaning assigned to such term in Section 6.1(e)
hereof.

     

    “Draw Down Pricing
Period” shall mean each period of 9 consecutive Trading Days following
the delivery by the Company of a Draw Down Notice, the first of such periods
commencing on the date specified in the Draw Down Notice and subsequent periods,
if any, described in the Draw Down Notice, commencing  on the third Trading
Day following the immediately preceding Draw Down Pricing Period, such
subsequent periods, if any, continuing until such time that the Company delivers
to the Purchaser a subsequent suspension notice, which notice must be delivered
on or before the end of the prior Draw Down Pricing Period; provided, however, the first
Draw Down Pricing Period and any subsequent Draw Down Pricing Period commencing
after a suspension notice is delivered, shall not begin before the day on which
receipt of such notice is delivered to Purchaser pursuant to Section 8.3
herein.

     

    
      
        
        

      

      
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    “Draw Down Shares” or
“Shares” shall
mean the shares of Common Stock issued and issuable pursuant to a Draw Down and
the shares of Common Stock issued and issuable pursuant to Section 2.2(a)(iii)
and Section 4.16 hereof.

     

    “DTC” shall have the
meaning assigned to such term in Section 6.1(f).

     

    “DWAC” shall have the
meaning assigned to such term in Section 6.1(f).

     

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

     

     “Equity Conditions”
shall mean, during the period in question, (i) all liquidated damages and other
amounts owing to the Purchaser pursuant to the Transaction Documents have been
paid, (ii) there is an effective Registration Statement pursuant to which the
Purchaser is permitted to utilize the prospectus thereunder to resell all of the
Draw Down Shares (issued and to be issued pursuant to the applicable Draw Down),
the Shares (and the Company believes, in good faith, that such effectiveness
will continue uninterrupted for the foreseeable future), (iii) the Common Stock
is trading on the Trading Market and all of the shares issuable pursuant to the
Transaction Documents are listed or quoted (if applicable) for trading on a
Trading Market (and the Company believes, in good faith, that trading of the
Common Stock on a Trading Market will continue uninterrupted for the foreseeable
future), (iv) there is a sufficient number of authorized but unissued and
otherwise unreserved shares of Common Stock for the issuance of all of the Draw
Down Shares (issued and to be issued pursuant to the applicable Draw Down), the
Shares, (v) the issuance of the Draw Down Shares subject to the applicable Draw
Down would not violate the limitations set forth in Section 4.12 and (vi) the
Company, directly or indirectly, has not provided the Purchaser with any
material, non-public information that has not been made publicly available in a
widely disseminated release.

     

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

     

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

    

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

     

    “Initial Closing”
shall have the meaning assigned to such term in Section 2.2 hereof.

     

    “Initial Closing Date”
shall have the meaning assigned to such term in Section 2.2 hereof.

     

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

     

    
      
        
        

      

      
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    “Investment Amount”
shall have the meaning assigned to such term in Section 6.1(e)
hereof.

     

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

     

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

     

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

     

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

     

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

     

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

     

     “Purchase Price” shall
mean, with respect to Draw Down Shares purchased during each applicable
Settlement Period, 90% of the VWAP on the date in question.

     

    “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.7.

     

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

     

     “Registration
Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale by the
Purchaser of the Shares and the shares of Common Stock issued and issuable
pursuant to Section 2.2(a)(iii) and Section 4.16 hereof.

     

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

     

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

     

    “Rule 424” means Rule
424 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.

     

    
      
        
        

      

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

     

     “Securities” means the
Shares and the shares of Common Stock issued and issuable pursuant to Section
2.2(a)(iii) and Section 4.16 hereof.

     

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

     

    “Settlement” shall
mean the delivery of the Draw Down Shares into the Purchaser’s DTC account via
DTC’s DWAC system and the Purchaser’s delivery of payment therefor.

     

    “Settlement Date”
shall have the meaning assigned to such term in Section 6.1(b).

     

    “Settlement Period”
shall have the meaning assigned to such term in Section 6.1(b).

     

     “Short Sales” shall
include all “short sales” as defined in Rule 200 of Regulation SHO under the
Exchange Act; provided, however, that in no event shall either
the sale of Draw Down Shares to be received but not yet delivered pursuant to a
pending Draw Down during a Draw Down Pricing Period be deemed a Short Sale or
the sale of any Securities issued under this Agreement after the date hereof be
deemed a Short Sale.

     

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

     

     “Threshold Price”
shall mean the price per Share designated by the Company in a Draw Down Notice
as the lowest VWAP during any Draw Down Pricing Period at which the Company
shall sell its Common Stock in accordance with this Agreement.

     

    “Trading Cushion”
shall mean the mandatory 2 Trading Days between Draw Down Pricing
Periods.

     

     “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 Nasdaq Capital Market, the NYSE Amex,
the New York Stock Exchange, the Nasdaq National Market or the OTC Bulletin
Board.

     

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

     

    
      
        
        

      

      
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    “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the daily
volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed
or quoted for trading as reported by Bloomberg Financial L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time); (b)  if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported; or
(d) in all other cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by the Holder and
reasonably acceptable to the Company.

     

    “WS” means Weinstein
Smith LLP with offices located at 420 Lexington Avenue, Suite 2620, New York,
New York 10170-0002.

     

    ARTICLE
II.

    PURCHASE
AND SALE

     

    2.1           Purchase and
Sale of Draw Down Shares. Upon the terms and subject to the
conditions of this Agreement, the Company may sell and issue to the Purchaser
and the Purchaser shall be obligated to purchase from the Company, up to an
aggregate of $3,000,000 worth of shares of Common Stock (the
“Commitment
Amount”).

     

    2.2           Initial
Closing. The execution and delivery of this
Agreement and the other agreements referred to herein (the “Initial
Closing”) shall take place at the offices
of WS, 420 Lexington Avenue, Suite 2620, New
York, New York 10170 (i) at 10:00 a.m. local time within 5 Trading Days of the
date hereof, or (ii) at such other time and place or on such date as the
Purchaser and the Company may agree upon (the “Initial
Closing Date”).  Each party shall deliver
the following documents, instruments and writings at
or prior to the Initial
Closing:

     

    (a)           the
Company shall deliver or cause to be delivered to the Purchaser the
following:

     

    (i)           this
Agreement duly executed by the Company;

     

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

     

    (iii)           a
certificate evidencing 1,071,429 shares of Common Stock registered in the name
of the Purchaser; and

     

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

     

    
      
        
        

      

      
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    (b)           the
Purchaser shall deliver or cause to be delivered to the Company the
following:

     

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

     

    (ii)           the
Registration Rights Agreement duly executed by the Purchaser.

     

    ARTICLE
III.

    REPRESENTATIONS
AND WARRANTIES

     

    3.1           Representations
and Warranties of the Company.  Except as set forth under the
corresponding section of the Disclosure Schedules which Disclosure Schedules
shall be deemed a part hereof and to qualify any representation or warranty
otherwise made herein to the extent of such disclosure, the Company hereby makes
the representations and warranties set forth below to the
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 all other
references in the Transaction Documents to the Subsidiaries or any of them 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 condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

      
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    (i)           Material Changes;
Undisclosed Events, Liabilities or Developments.  Since the
date of the latest audited financial statements included within the SEC Reports,
except as specifically disclosed in a subsequent SEC Report, (i) there has been
no event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans or compensation
agreements.  The Company does not have pending before the Commission
any request for confidential treatment of information.  Except for the
issuance of the Securities contemplated by this Agreement or as set forth on
Schedule
3.1(i), no event, liability or development has occurred or exists with
respect to the Company or its Subsidiaries or their respective business,
properties, operations or financial condition, that would be required to be
disclosed by the Company under applicable securities laws at the time this
representation is made that has not been publicly disclosed at least 1 Trading
Day prior to the date that this representation is made.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

      
        - 11
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    (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 with which the Company and the Subsidiaries
are in compliance.

     

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

     

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

     

    (q)           Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each case in excess
of $120,000 other than (i) for payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) for other employee benefits, including stock option agreements under any
stock option plan of the Company.

     

    
      
        
        

      

      
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    (r)           Sarbanes-Oxley; Internal
Accounting Controls.  Except as set forth on Schedule 3.1(r), the
Company is in material compliance with all provisions of the Sarbanes-Oxley Act
of 2002 which are applicable to it as of the Closing Date.  Except as
set forth on Schedule
3.1(r), the Company and the
Subsidiaries maintain a system of internal accounting controls sufficient to
provide reasonable assurance that (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as set forth on Schedule 3.1(r),
the Company has established
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms.  Except as set forth on Schedule 3.1(r),
the Company’s certifying officers
have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the Company’s most recently
filed periodic report under the Exchange Act (such date, the “Evaluation
Date”).  Except as set
forth on Schedule
3.1(r), the Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation
Date.  Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.

     

    (s)           Certain
Fees.  No brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents.  The
Purchaser shall have no obligation with respect to any fees or with respect to
any claims made by or on behalf of other Persons for fees of a type contemplated
in this Section that may be due in connection with the transactions contemplated
by the Transaction Documents.

     

    (t)           Private Placement.
Assuming the accuracy of the Purchaser 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 Purchaser as contemplated
hereby. The issuance and sale of the Securities hereunder does not contravene
the rules and regulations of the Trading Market.

     

    
      
        
        

      

      
        - 13
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    (u)           Investment Company.
The Company is not, and is not an Affiliate of, and immediately after receipt of
payment for the Securities, will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as
amended.  The Company shall conduct its business in a manner so that
it will not become subject to the Investment Company Act.

     

    (v)           Registration
Rights.  Other than each of the Purchaser, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company.

     

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

     

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

     

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

     

    
      
        
        

      

      
        - 14
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    (z)           No Integrated
Offering. Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Section 3.2, neither the Company, nor any of its
affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of
the Securities Act or any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or
designated.

     

    (aa)           Solvency.  Based
on the financial condition of the Company, as of the Closing Date after giving
effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder, (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be
paid.  The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of
cash to be payable on or in respect of its debt).  The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date.  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.

     

    (bb)           Tax
Status.  Except for matters that would not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and each Subsidiary has filed all necessary federal, state
and foreign income and franchise tax returns and , except for as set forth on
Schedule
3.1(bb), 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.

     

    
      
        
        

      

      
        - 15
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    (cc)           No General
Solicitation.  Neither the Company nor any person acting on
behalf of the Company has offered or sold any of the Securities by any form of
general solicitation or general advertising.  The Company has offered
the Securities for sale only to the Purchaser and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

     

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

     

    (ee)           Accountants.  The
Company’s accountants are set forth on Schedule 3.1(ee) of
the Disclosure Schedule.  To the knowledge of the Company, 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 October 31, 2009, are a registered public accounting
firm as required by the Exchange Act.

     

    (ff)           Acknowledgment Regarding
Purchaser’s Purchase of Securities.  The Company acknowledges
and agrees that the Purchaser is acting solely in the capacity of an arm’s
length purchaser with respect to the Transaction Documents and the transactions
contemplated thereby.  The Company further acknowledges that Purchaser
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by the Purchaser or any of the
Purchaser’s respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated thereby is merely
incidental to the Purchaser’s purchase of the Securities.  The Company
further represents to the Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

     

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

     

    
      
        
        

      

      
        - 16
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    3.2           Representations
and Warranties of the Purchaser.  Purchaser hereby represents
and warrants as of the date hereof and as of each Closing Date to the Company as
follows:

     

    (a)           Organization;
Authority.  Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with full right, corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution, delivery and performance by the Purchaser of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate or similar action on the part of the Purchaser.  Each
Transaction Document to which it is a party has been duly executed by the
Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the
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.  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 at the
Initial Closing as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities (this representation and warranty not
limiting the Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable federal and
state securities laws) in violation of the Securities Act or any applicable
state securities law.  Purchaser is acquiring the Securities hereunder
in the ordinary course of its business.

     

    (c)           Purchaser
Status.  At the time the Purchaser was offered the Securities,
it was, and at the date hereof it is, 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.

     

    (d)           Experience of
Purchaser.  Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  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.

     

    
      
        
        

      

      
        - 17
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    (e)           General
Solicitation.  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.

     

    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 the 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 the Purchaser under this Agreement and the Registration Rights
Agreement, as to issued Securities only.

     

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

     

    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 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 OR OTHER LOAN SECURED BY SUCH SECURITIES.

     

    
      
        
        

      

      
        - 18
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    The
Company acknowledges and agrees that the Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, the 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 Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
Securities, including, if the Securities are subject to registration pursuant to
the Registration Rights Agreement, the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) under the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder.

     

    (c)           Certificates
evidencing the Shares shall not contain any legend (including the legend set
forth in Section 4.1(b)), (i) while a registration statement (including the
Registration Statement) covering the resale of such security is effective under
the Securities Act, or (ii) following any sale of such Shares pursuant to Rule
144, or (iii) if such Shares are eligible for sale under Rule 144, or (iv) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission).  The Company shall cause its counsel to issue a legal
opinion to the 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.   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 the
Purchaser to the Company or the Company’s transfer agent of a certificate
representing Shares as the case may be, issued with a restrictive legend (such
third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered
to the Purchaser a certificate representing such shares that is free from all
restrictive and other legends. All Draw Down Shares shall be delivered without
any restrictive 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 Purchaser by crediting the account of the
Purchaser’s prime broker with the Depository Trust Company System.

     

    (d)           In
addition to the Purchaser’s other available remedies, the Company shall pay to
the Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Shares (based on the VWAP of the Common Stock on the date such
Securities are submitted to the Company’s transfer agent) delivered for removal
of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day
(increasing to $20 per Trading Day five (5) Trading Days after such damages have
begun to accrue) for each Trading Day after the Legend Removal Date until such
certificate is delivered without a legend. Nothing herein shall limit the
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 the 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.

     

    
      
        
        

      

      
        - 19
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    (e)           Purchaser
agrees that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance that the Purchaser will sell any Securities pursuant to either the
registration requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, and that if
Securities are sold pursuant to a Registration Statement, they will be sold in
compliance with the plan of distribution set forth therein.

     

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

     

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

     

    4.4           Securities
Laws Disclosure; Publicity.  The Company shall, by 8:30 a.m. Eastern
time on the Trading Day immediately following the date hereof, issue a Current
Report on Form 8-K, disclosing the material terms of the transactions
contemplated hereby, and shall attach the Transaction Documents
thereto.  The Company and the Purchaser shall consult with each other
in issuing any other press releases with respect to the transactions
contemplated hereby, and neither the Company nor the 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 the Purchaser, or
without the prior consent of the Purchaser, with respect to any press release of
the Company, which consent shall not unreasonably be withheld or delayed, except
if such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication.

     

    
      
        
        

      

      
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    4.5           Shareholder
Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or similar anti-takeover plan or arrangement in effect or hereafter
adopted by the Company, or that the 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 Purchaser.

     

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

     

    4.7           Indemnification
of Purchaser.   Subject to the
provisions of this Section 4.7, the Company will indemnify and hold the
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a
lack of such title or any other title), each Person who controls the
Purchaser (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, shareholders, agents, members, partners or employees
(and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding a lack of such title or any other title) of such
controlling persons (each,
a “Purchaser
Party”) harmless from any
and all losses, liabilities, obligations, claims, contingencies, damages, costs
and expenses, including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and costs of investigation that any 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 the Purchaser, or any of its Affiliates, by any stockholder
of the Company who is not an Affiliate of the Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of the Purchaser’s representations, warranties or
covenants under the Transaction Documents or any agreements or understandings
the Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by the 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,
the Purchaser Party shall promptly notify the Company in writing, and the
Company shall have the right to assume the defense thereof with counsel of its
own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the 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 the Purchaser
Party, in which case the Company shall be responsible for the reasonable fees
and expenses of no more than one such separate counsel.  The Company
will not be liable to any Purchaser Party under this Agreement (i) for any
settlement by the 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 Purchaser Party in this
Agreement or in the other Transaction Documents.

     

    
      
        
        

      

      
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    4.8           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.

     

    4.9           Listing of
Common Stock.  The Company hereby agrees to
use best efforts to maintain the listing or quotation of the Common Stock on a
Trading Market, and as soon as reasonably practicable following the Initial
Closing (but not later than
the Effective Date of the initial Registration Statement) to list or quote all of the 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 will take such other action as is necessary
to cause all of the Shares to be listed or quoted on such other Trading Market
as promptly as possible.  The Company will take all action reasonably
necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company’s reporting, filing and
other obligations under the bylaws or rules of the Trading
Market.

     

    4.10           Confidentiality After the
Date Hereof.  Purchaser covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.4, the Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this
transaction.  

     

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

     

    4.12           The
Shares.  Anything
in this Agreement to the contrary notwithstanding, (i) in no event shall the
number of shares issuable to Purchaser cause the Purchaser to own in excess of
9.99% of the then outstanding Common Stock and (ii) at no time will the Company
request a Draw Down which would result in the issuance of an aggregate number of
shares of Common Stock pursuant to this Agreement which exceeds 19.9% of the
number of shares of Common Stock issued and outstanding on the date hereof
without first obtaining stockholder approval of such excess issuance, or such
other amount as would require stockholder approval under rules of the principal
Trading Market or otherwise without first obtaining stockholder approval of such
excess issuance, if any such is required.

     

    
      
        
        

      

      
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    4.13           Accuracy of
Registration Statement.  On each Settlement Date, the
Registration Statement and the prospectus therein (including any prospectus
supplement) shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which they were made;
and on such Settlement Date the Registration Statement and the prospectus
therein will not include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided,
however, the Company makes no representations or warranties as to the
information contained in or omitted from the Registration Statement and the
prospectus therein in reliance upon and in conformity with the information
furnished in writing to the Company by the Purchaser specifically for inclusion
in the Registration Statement and the prospectus therein.

     

    4.14           Notice of
Certain Events Affecting Registration; Suspension of Right to Request a Draw
Down. The Company will promptly notify the
Purchaser in writing upon the occurrence of any of the events set forth in
Section 3(d) of the Registration Rights Agreement. The Company shall not deliver
to the Purchaser any Draw Down Notice during the continuation of any of the
foregoing events.  The Company shall promptly make available to the
Purchaser any such supplements or amendments to the related prospectus, at which
time, provided that the registration statement and any supplements and
amendments thereto are then effective, the Company may recommence the delivery
of Draw Down Notices.

     

    4.15           Short
Sales.  After the
date hereof and prior to the termination of this Agreement, the Purchaser hereby
agrees not to execute any Short Sales of the Common Stock.

     

    4.16           Commitment
Shares.                                                      In consideration for agreeing to the
terms of this Agreement and no additional consideration at such time of
issuance, the Company shall deliver to the Purchaser, a number of shares of
Common Stock equal to:

     

    (a)           on
45th
calendar day immediately following the Effective Date of the initial
Registration Statement (such date, the “Second Issuance
Date”) (i) $30,000 divided by the lesser of (y) closing bid price of the
Common Stock on the Trading Day immediately preceding the Second Issuance Date
(such price, the “Second Issuance
Price”) and (z) the closing bid price of the Common Stock on the Trading
Day immediately preceding the date of this Agreement (such price, the “First Issuance
Price”), and (ii) if the Second Issuance Price is less than the First
Issuance Price, additional shares of Common Stock equal to the difference
between (A) $75,000 divided by the Second Issuance Price and (B) the number of
shares of Common Stock issued to the Purchaser pursuant to Section 2.2(a)(iii)
on the date of this Agreement;

     

    (b)           on
the 90th
calendar day immediately following the Effective Date of the initial
Registration Statement (such date, the “Third Issuance
Date”), $15,000 divided by the closing bid price of the Common Stock on
the Trading Day immediately preceding the Third Issuance Date;

     

    
      
        
        

      

      
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    (c)           on
the 120th
calendar day immediately following the Effective Date of the initial
Registration Statement (such date, the “Fourth Issuance
Date”), $15,000 divided by the closing bid price of the Common Stock on
the Trading Day immediately preceding the Fourth Issuance Date; and

     

    (d)           on
the 150th
calendar day immediately following the Effective Date of the initial
Registration Statement (such date, the “Fifth Issuance Date”
and together with the First Issuance Price, the Second Issuance Price, the Third
Issuance Price and the Fourth Issuance Price, the “Issuance Price”),
$15,000 divided by the closing bid price of the Common Stock on the Trading Day
immediately preceding the Fifth Issuance Date.

     

    All such
shares issuable pursuant to this Section 4.16 (the “Commitment Shares”)
shall be delivered to the DTC account specified by the Purchaser in writing to
the Company.

     

    ARTICLE
V.

    CONDITIONS
TO INITIAL CLOSING AND DRAW DOWNS

     

    5.1           Conditions
Precedent to the Obligation of the Company to Sell the Shares.  The obligation hereunder of
the Company to proceed to close this Agreement and to issue and sell the Shares
to the Purchaser is subject to the satisfaction or waiver, at or before the
Initial Closing, and as of each Settlement Date of each of the conditions set
forth below.  These conditions are for the Company’s sole benefit and may be waived by the
Company in writing at any time in its sole discretion.

     

    (a)           Accuracy of the Purchaser’s
Representations and Warranties.  The representations and
warranties of the Purchaser shall be true and correct in all material respects
as of the date when made and as of the Initial Closing and as of each Settlement
Date as though made at that time (except for representations and warranties that
speak as of a particular date, which shall be true and correct in all material
respects as of such dates).

     

    (b)           Performance by the
Purchaser.  The Purchaser shall have performed, satisfied and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Purchaser at or prior to the Initial Closing and as of each Settlement
Date.

     

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

     

    (d)           No Proceedings or
Litigation.  No material Action shall have been commenced
against the Purchaser or the Company or any Subsidiary, or any of the officers,
directors or affiliates of the Company or any Subsidiary, seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.

     

    
      
        
        

      

      
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    (e)           Initial Closing
Deliveries.  The delivery by the Purchaser of the items set
forth in Section 2.2(b) of this Agreement.

     

    (f)           Threshold
Price.  The Purchase Price for the applicable Draw Down shall
be equal to or greater than the Threshold Price.

     

    5.2           Conditions
Precedent to the Obligation of the Purchaser to Close.  The obligation hereunder of
the Purchaser to perform its obligations under this Agreement and to purchase
the Shares is subject to the satisfaction or waiver, at or before the Initial
Closing, of each of the conditions set forth below.  These conditions
are for the Purchaser’s sole benefit and may be waived by the
Purchaser in writing at any time in its sole discretion.

     

    (a)           Accuracy of the Company’s
Representations and Warranties.  Each of the representations
and warranties of the Company shall be true and correct in all material respects
as of the date when made and as of the Initial Closing as though made at that
time (except for representations and warranties that speak as of a particular
date, which shall be true and correct in all material respects as of such
date).

     

    (b)           Performance by the
Company.  The Company shall have performed, satisfied and
complied in all material respects with all material covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Initial Closing.

     

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

     

    (d)           No Proceedings or
Litigation.  No material Action shall have been commenced,
against the Purchaser or the Company or any subsidiary, or any of the officers,
directors or affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or seeking
damages in connection with such transactions.

     

    (e)           Initial Closing
Deliveries.  The delivery by the Company of the items set forth
in Section 2.2(a) of this Agreement.

     

    5.3           Conditions
Precedent to the Obligation of the Purchaser to Accept a Draw Down and Purchase
the Shares.  The obligation hereunder of
the Purchaser to accept a Draw Down request and to acquire and pay for the
Shares is subject to the satisfaction at or before each Settlement Date, of each
of the conditions set forth below.

     

    (a)           Satisfaction of Conditions
to Initial Closing.  The Company shall have satisfied at the
Initial Closing, or the Purchaser shall have waived at the Initial Closing, the
conditions set forth in Section 5.2 hereof.

     

    (b)           No
Suspension.  Trading in the Common Stock shall not have been
suspended by the Commission or the principal Trading Market (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the delivery of each Draw Down Notice),
and, at any time prior to such Draw Down Notice, trading in securities generally
as reported on the principal Trading Market shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported on the principal Trading Market unless the general
suspension or limitation shall have been terminated prior to the delivery of
such Draw Down Notice.

     

    
      
        
        

      

      
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    (c)           Material Adverse
Effect.  No Material Adverse Effect and no Consolidation Event
where the successor entity has not agreed to deliver to the Purchaser such
shares of stock and/or securities as the Purchaser is entitled to receive
pursuant to this Agreement.

     

    (d)           Opinion of
Counsel.  The Purchaser shall have received a legal opinion
from Company Counsel, in the form of Exhibit B
hereto.

     

    (e)           Threshold
Price.  The Purchase Price for the applicable Draw Down shall
be equal to or greater than the Threshold Price.

     

    (f)           
Equity
Conditions.  During the Draw Down Pricing Period through the
Settlement Date, all of the Equity Conditions shall have been met.

     

    

    ARTICLE
VI.

    DRAW DOWN
TERMS

     

    6.1           Draw Down
Terms.  Subject to the satisfaction
of the conditions set forth in this Agreement, the parties agree as
follows:

     

    (a)           The
Company may, in its sole discretion, issue and exercise draw downs against the
Commitment Amount (each a “Draw Down”) during
the Commitment Period, which Draw Downs the Purchaser shall be obligated to
accept, subject to the terms and conditions of this Agreement. Before the
Company shall exercise a Draw Down, the Company shall have caused a sufficient
number of shares of Common Stock to be registered to cover the resale of the
Draw Down Shares to be issued in connection with such Draw Down.

     

    (b)           Only
one Draw Down shall be allowed in each Draw Down Pricing Period and any
subsequent Draw Down Pricing Period shall not commence until the Trading Cushion
has elapsed since the end of the previous Draw Down Pricing Period. The number
of shares of Common Stock purchased by the Purchaser with respect to each Draw
Down shall be determined as set forth in Section 6.1(d) herein. Each Draw Down
Pricing Period shall be comprised of settlement periods which shall each be
comprised of three Trading Days (each such period, a “Settlement Period”)
whereby final Settlement Period shall consist of the first, second and third
Trading Days following the Draw Down Pricing Period, the second Settlement
Period shall consist of the fourth, fifth and sixth Trading Days of the Draw
Down Pricing Period and the third Settlement Period shall consist of the
seventh, eighth and ninth Trading Days of the Draw Down Pricing Period. Each
Draw Down shall be settled on the third Trading Day following the end of the
applicable Settlement Period (each such settlement date shall be referred to as
a “Settlement
Date”).

     

    
      
        
        

      

      
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    (c)           The
maximum Investment Amount as to each Draw Down shall be equal to A multiplied by B, where A equals a number of
shares of Common Stock equal to 20% of the total trading volume during the 9
Trading Days immediately prior to the applicable Draw Down Pricing Period and
B equals the
average of each of the VWAPs during such 9 Trading Day period; provided, however, unless
mutually agreed upon by the Company and the Purchaser, no Draw Down shall exceed
$100,000.

     

    (d)           The
number of shares of Common Stock to be issued on each Settlement Date shall be a
number of shares equal to the sum of the quotients (for each Trading Day within
the Settlement Period) of (x) 10% of the Investment Amount divided by (y) the
Purchase Price on each Trading Day within the Settlement Period, subject to the
following adjustments:

     

    (i)           if
the Purchase Price on a given Trading Day is less than the applicable Threshold
Price, then such Trading Day shall be withdrawn from the Draw Down Pricing
Period; and

     

    (ii)           if
during any Trading Day during the Draw Down Pricing Period trading of the Common
Stock on the Trading Market is suspended for more than 3 hours, in the
aggregate, or if any Trading Day during the Draw Down Pricing Period is
shortened because of a public holiday, then such Trading Day shall be withdrawn
from the Draw Down Pricing Period; and

     

    (iii)           if
during any Trading Day during the Draw Down Pricing Period sales of Draw Down
Shares pursuant to the Registration Statement are suspended by the Company for
more than three (3) hours, in the aggregate, then such Trading Day shall be
withdrawn from the Draw Down Pricing Period.

     

    (e)           The
Company must inform the Purchaser by delivering a draw down notice, in the form
of Exhibit C
hereto (the “Draw Down
Notice”), via facsimile transmission in accordance with Section 8.3, as
to the amount of the Draw Down (the “Investment Amount”)
the Company wishes to exercise. The Draw Down Notice shall also inform the
Purchaser of the first day of the Draw Down Pricing Period, which, shall be the
first Trading Day following the date such Draw Down Notice is received (the
“Commencement
Date”).  At no time shall the Purchaser be required to purchase
more than the maximum Investment Amount for a given Draw Down Pricing
Period.  The Company shall have the right to notify the Purchaser that
Draw Downs shall be continuous pursuant to a Draw Down Notice until such time
that the Company elects to suspend such Draw Down Notice.  In the
event of a continuous Draw Down Notice, the Company must give at least 2 Trading
Days’ written notice of suspension to the Purchaser and in no event shall a
suspension of a Draw Down occur prior to the end of any pending Draw Down
Pricing Periods.  On or before any Trading Day that a Draw Down Notice
is delivered or notice of suspension of Draw Downs is delivered, the Company
shall have filed with the Commission a prospectus supplement pursuant to Rule
424 under the Securities Act setting forth the terms of the Draw Down Notice or
suspension notice.

     

    
      
        
        

      

      
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    (f)           On
the Trading Day immediately following the last day of the Settlement Period, the
Company shall deliver and the Purchaser shall acknowledge a settlement statement
(the “Settlement
Statement”) setting forth the number of Draw Down Shares issuable and the
aggregate Purchase Price as to such Settlement Period.  On the
Settlement Date as to such Draw Down, the Draw Down Shares purchased pursuant to
such Settlement Statement shall be delivered to the Depository Trust Company
(“DTC”) account
of the Purchaser, or its designees, as designated by the Purchaser in the
Settlement Statement, via DTC’s Deposit Withdrawal Agent Commission system
(“DWAC”).  Upon
the Company electronically delivering such Draw Down Shares to the DTC account
of the Purchaser, or its designees, via DWAC by 1:00 p.m. ET, the Purchaser
shall, on the same day (or the next Business Day if such day is not a Business
Day) wire transfer immediately available funds to the Company’s bank account, as
designated by the Company in the Settlement Statement, for the amount of the
aggregate Purchase Price of such Draw Down Shares. Upon the Company
electronically delivering the Draw Down Shares to the Purchaser or its
designee’s DTC account via DWAC after 1:00 p.m. ET, the Purchaser shall wire
transfer next day available funds to the Company’s designated account on such
day.  At the sole election of the Purchaser, the Purchaser may elect
to pay any broker fees disclosed in the schedules attached to this Agreement
directly to the brokers pursuant to written instructions from any such
broker.

     

    (g)           The
Company understands that a delay in the delivery of the Shares to the Purchaser
beyond the Settlement Date could result in economic loss to the
Purchaser.  In addition to the Purchaser’s other available remedies,
the Company shall pay to the Purchaser, in cash, as partial liquidated damages
and not as a penalty, for each $1,000 of Shares (based on the Closing Price of
the Common Stock on the applicable Settlement Date) required to be delivered on
the Settlement Date, $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 Settlement Date until such Shares are delivered pursuant to this
Article VI.  Nothing herein shall limit the Purchaser’s right to
pursue actual damages for the Company’s failure to deliver certificates
representing any Securities as required by the Transaction Documents, including
but not limited to the cost of any buy-in to the Purchaser, and the 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.

     

    ARTICLE
VII.

    TERMINATION

     

    

    7.1           Term.  The term of this Agreement
shall begin on the date hereof and shall end 24 months from the Effective Date or as otherwise set forth in Section
7.2.

     

    
      
        
        

      

      
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    7.2           Other
Termination.

     

    (a)           This
Agreement shall terminate if (i) the Common Stock is de-listed from the
principal Trading Market unless such de-listing is in connection with a
subsequent listing on another principal Trading Market, (ii) the Company files
for protection from creditors under any applicable law or (iii) the Registration
Statement is not declared effective by the Commission on the 9-month anniversary
of the date hereof; provided, however, that upon
such date, the Company shall be required to deliver the shares of Common Stock
otherwise deliverable pursuant to Section 4.16 as if the Registration Statement
had gone effective on such date.

     

    (b)           The
Company may terminate this Agreement upon 10 Trading Day’s notice if the
Purchaser shall fail to fund a properly noticed Draw Down within 10 Trading Days
of the end of the applicable Settlement Period.

     

    7.3           Effect of
Termination. In the event of termination of this
Agreement pursuant to Section 7.2 herein, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by this Agreement
shall be terminated without further action by either party.  If this
Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement
shall become void and of no further force and effect, except for Section 4.7 and
Article 8 herein, which shall survive the termination of this
Agreement.  Nothing in this Section 7.3 shall be deemed to release the
Company or the Purchaser from any liability for any breach under this Agreement,
or to impair the rights of the Company or the Purchaser to compel specific
performance by the other party of its obligations under this
Agreement.

     

    ARTICLE
VIII.

    MISCELLANEOUS

     

    8.1           Fees and
Expenses.  At the Closing, the Company has agreed
to reimburse the Purchaser for its legal fees and expenses, $10,000 of which
amount was paid on or about
September 24, 2009.  Except as expressly set
forth in the Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other experts, if
any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this
Agreement.  The Company shall pay all transfer agent fees, stamp taxes
and other taxes and duties levied in connection with the delivery of any
Securities to the Purchaser.

     

    8.2           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.

     

    8.3           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 2nd Trading Day following the date of
transmission if sent by U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be
given.  The address for such notices and communications shall be as
set forth on the signature pages attached hereto.

     

    
      
        
        

      

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

     

    8.5           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.

     

    8.6           Successors
and Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties and their
successors.  Neither party may assign this Agreement or any rights or
obligations hereunder (other than by merger).

     

    8.7           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
4.7.

     

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

     

    
      
        
        

      

      
        - 30
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    8.9           Survival.  The representations and
warranties contained herein shall survive the Closing and the delivery of the
Shares.

     

    8.10           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 or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original
thereof.

     

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

     

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

     

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

     

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

     

    
      
        
        

      

      
        - 31
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    8.15           Construction. The parties agree that each of them
and/or their respective counsel has reviewed and had an opportunity to revise
the Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments hereto. In addition, each and every reference to
share prices and shares of Common Stock in any Transaction Document shall be
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.

     

    (Signature
Pages Follow)

     

    
      
        
        

      

      
        - 32
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    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.

     

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	MICRO
      IMAGING TECHNOLOGY, INC.    	 	
                                  Address for
      Notice:

                                
	 	 	 
	 	 	 
	By:	

                                  /S/ Michael W. Brennan

                                	 	970
      Calle Amanecer, Suite F
	 	
                                  Name:   Michael W. Brennan 

                                    Title:     Chairman
      and CEO

                                  

                                	 	
                                  San
      Clemente, CA 92673

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

                                   

                                  Christopher
      H. Dieterich, Esq.

                                   

                                	 	
                                  Dieterich
      & Associates

                                  11300
      West Olympic Boulevard,

                                  Suite
      800

                                  Los
      Angeles, CA
90064

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    

    

    [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

     

    
      
        
        

      

      
        - 33
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    [PURCHASER
SIGNATURE PAGES TO MMTC 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: ______ASCENDIANT CAPITAL GROUP,
LLC_____________________

     

    Signature of Authorized Signatory of
Purchaser: ___/S/ Bradley J.
Wilhite_________

     

    Name of
Authorized Signatory: _________Bradley J.
Wilhite_________________________

     

    Title of
Authorized Signatory: __________Managing
Member____________________________

     

    Email
Address of
Purchaser:________________________________________________

     

    Fax
Number of Purchaser:
________________________________________________

     

    Address
for Notice of Purchaser:

    

    18881 Von
Karman Avenue, Suite 1600

    Irvine,
CA 92612

    

    

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

    

    

    

    

    Brokerage
Identification Code (if delivered via DWAC)

    

    

    EIN
Number:  [PROVIDE
THIS UNDER SEPARATE COVER]

    

    

    [SIGNATURE
PAGES CONTINUE]

     

    
      
        
        

      

      
        - 34
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    EXHIBIT
C

     

    DRAW
DOWN NOTICE/COMPLIANCE CERTIFICATE

     

    MICRO
IMAGING TECHNOLOGY, INC.

     

    The
undersigned hereby certifies, with respect to shares of Common Stock of Micro
Imaging Technology, Inc. (the “Company”) issuable in
connection with this Draw Down Notice and Compliance Certificate dated
_____________ (the “Notice”), delivered
pursuant to the Securities Purchase Agreement dated as of October 2, 2009 (the
“Agreement”),
as follows:

    

    1.           The
undersigned is the duly appointed Chief Executive Officer or Chief Financial
Officer of the Company.

     

     

    2.           Except
as set forth on the schedules attached hereto or in the SEC Reports (as defined
in the Agreement), the representations and warranties of the Company set forth
in the Agreement are true and correct in all material respects as though made on
and as of the date hereof, except for representations and warranties are
expressly made as of a particular date.

     

    3.           The
Company has performed in all material respects all covenants and agreements and
conditions required under the Agreement to be performed by the Company on or
prior to the date of this Draw Down Notice.

     

    4.           The
Investment Amount is $___________.

     

    5.           The
Threshold Price is $____________.

     

    6.           Draw
Downs shall commence on ____________ and end after [check one]:

     

    a.           ______
the completion of ___ Draw Down Pricing Periods.

     

    b.           ______
until written notice to you that Draw Downs have been suspended provided that no
pending Draw Down may be suspended.

     

    The
undersigned has executed this Certificate this ____ day of ________,
_____.

     

    
      
        
          
            	 	MICRO IMAGING TECHNOLOGY,
      INC.	 
	 	 	 	 
	
                     

                  	
                    By:
      

                  	 	 
	 	Name: 
      	 	 
	 	Title	 	 

          

        

      

    

     

     

    
      
        
        

      

      
        - 35
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    SCHEDULE
3.1

    TO

    SECURITIES
PURCHASE AGREEMENT

    

    3.1           Representations
and Warranties of the Company.

     

    The Company hereby discloses exceptions
to the disclosure contained in the following sections of the Securities Purchase
Agreement:

     

    3.1(p)  Insurance.  The
Company maintains business personal property insurance for its facility located
at 970 Calle Amanecer, Suite F, San Clemente, CA 92673.  The Company
maintains no other forms of insurance coverage, including directors and officers
insurance coverage, at this time.

     

    3.1(r)  Sarbanes-Oxley; Internal
Accounting Controls.  The Company’s management believes that
its disclosure controls and procedures and its internal controls over financial
reporting are adequate and effective to ensure that information required to be
disclosed in its SEC Reports is processed, summarized and reported within the
time periods specified by the SEC rules and forms, and that such information is
accumulated and communicated to its management, including the certifying
officer, to allow timely decisions regarding the required
disclosure.  However, the Company is not currently in full compliance
with Section 404 of the Sarbanes-Oxley Act of 2002.

     

    3.1(bb)  Tax
Status.   The Company and its subsidiary are each subject
to the California minimum state income tax of $800 each year.  The
Company has not paid the minimum taxes. Totaling $3,200, for income years 2008
and 2009.

     

    
      
        
        

      

      
        - 36
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    SCHEDULE
3.1(a)

     

    TO

     

    SECURITIES
PURCHASE AGREEMENT

     

    

     

    3.1(a)      Subsidiaries

     

    Micro Imaging Technology, Inc., a
California corporation, (the “Company”) is the parent company of Micro Imaging
Technology, organized under the laws of the State of Nevada in February
2000.  As of October 1, 2009, there are 14,865,000 and 1,000,000
shares of common stock and preferred stock issued and outstanding,
respectively.  The Company currently owns 80.73% of the outstanding
common stock and 100% of the preferred shares.

     

    The
total number of shares of capital stock which this corporation shall have
authority to issue is One Hundred Three Million (103,000,000) with a par value
of $.001 per share amounting to $103,000.  One Hundred Million
(100,000,000) of those shares are Common Stock and Three Million (3,000,000) of
those shares as Preferred Stock.  Each share of Common Stock shall
entitle the holder thereof to one vote, in person or by proxy, on any matter on
which action of the stockholders of his corporation is sought.  The
holders of share of Preferred Stock shall have no right to vote such shares,
except (i) determined by the Board of Directors of this corporation in
accordance with the provisions of Section (3) of ARTICLE FIFTH of the Articles
of Incorporation, or (ii) as otherwise provided by the Nevada General
Corporation Law, as amended from time to time.

     

    
      
        
        

      

      
        - 37
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    SCHEDULE
3.1(g)

    TO

    SECURITIES
PURCHASE AGREEMENT

    

    3.1(g)      Capitalization

    

    As of October 1, 2009, Schedule, the Company had:

     

    Common Stock, $0.01 par
value;  500,000,000 shares authorized issued; 118,347,758 shares issued and outstanding

     

    Redeemable Convertible Preferred
Stock, $0.01 par value per
share; 2,600,000 shares authorized, issued and
outstanding.

     

    Each share of common stock and
redeemable convertible preferred stock is entitled to one vote in connection
with the Amendment.

     

    As of October 1, 2009, there
are:

     

     6,950,000 shares reserved for
issuance upon conversion of issued and outstanding options, warrants and other
derivative securities;

     

    415,528 shares reserved for issuance to
employees, officers and directors under the Company’s 2008 Employee Incentive
Stock Program; and

     

    1,250,000 shares reserved for issuance
to employees, officers and directors under the Company’s 2009 Employee Benefit
Plan.

     

    
      
        
        

      

      
        - 38
-

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
3.1(i)

    TO

    SECURITIES
PURCHASE AGREEMENT

    

    3.1(i)                                Material
Changes; Undisclosed Events, Liabilities or Developments

    The Company has issued the following
shares of common stock since July 31, 2009:

    

    
      	
              RECORDHOLDER

            	
              DATE
      OF ISSUANCE

            	
              REASON
      FOR ISSUANCE

            	
              NO.
      OF SHARES

               

            
	
              Brennan,
      Michael

            	
              08/31/09

            	
              Consulting
      Fee

            	
              50,000

            
	
              Maroka,
      Inc.

            	
              08/31/09

            	
              Consulting
      Fee

            	
              25,000

            
	
              Divine
      Capital Investors

            	
              09/03/09

            	
              Lawsuit
      Settlement

            	
              5,889,997

            
	
              Brennan,
      Michael

            	
              09/30/09

            	
              Consulting
      Fee

            	
              50,000

            
	
              Maroka,
      Inc.

            	
              09/30/09

            	
              Consulting
      Fee

            	
              25,000

            
	 
      	 
      	 
      	
              6,049,997

            

    

    

    The Company has agreed to convert a
June 10, 2009 $75,000 loan from Anthony M. Frank, plus interest accrued at 6%,
into common stock at the rate of $0.075 per share.

    

    On September 23, 2009, the Company
borrowed $64,000 from Anthony M. Frank at 6% interest.  The loan
matures on March 10, 2010 or is payable from the proceeds of any investment or
financing received by the Company in an aggregate amount of One Hundred Thousand
($100,000) Dollars.  The lender has the option to convert the
principal and interest into common stock at a per share price equal to the
average closing price of the Company’s common shares during the twenty day
period prior to the conversion date.

     

    
      
        
        

      

      
        - 39
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    SCHEDULE
3.1(ee)

    TO

    SECURITIES
PURCHASE AGREEMENT

    

    3.1(ee)    Accountants

     

    

    Jeffrey
S. Gilbert, CPA

    921 Linda
Flora Drive

    Los
Angeles, CA  90049

    (310)
476-2998

    jsgcpa@pacbell.net

     

    
      
        
        

      

      
        - 40
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    EXHIBIT
A

     

    REGISTRATION
RIGHTS AGREEMENT

     

    This
Registration Rights Agreement (this “Agreement”) is made
and entered into as of October 2, 2009, among Micro Imaging Technology, Inc., a
California corporation (the “Company”) and the
purchaser signatory hereto (“the “Purchaser”).

     

    This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof between the Company and the Purchaser (the “Purchase
Agreement”).

     

    The
Company and Purchaser hereby agree as follows:

     

    ARTICLE IX.Definitions.  Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.  As used in this Agreement, the following terms shall have
the following meanings:

     

    “Advice” shall have
the meaning set forth in Section 6(d).

     

    “Effectiveness Date”
means, with respect to the initial Registration Statement required to be filed
hereunder, the 120th
calendar day following the date hereof.

     

    “Effectiveness Period”
shall have the meaning set forth in Section 2(a).

     

    “Filing Date” means,
with respect to the Registration Statement required hereunder, the 30th
calendar day following the date hereof.

     

    “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

     

    “Indemnified Party”
shall have the meaning set forth in Section 5(c).

     

    “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

     

    “Losses” shall have
the meaning set forth in Section 5(a).

     

    “Plan of Distribution”
shall have the meaning set forth in Section 2(a).

     

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

     

    
      
        
        

      

      
        - 41
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    “Registrable
Securities” means all of (i) the Draw Down Shares, (ii) the shares of
Common Stock issued and issuable pursuant to Section 2.2(a)(iii) and Section
4.16 of the Purchase Agreement and (iii) 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 the registration statement required to be filed
hereunder, including (in each case) the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration
statement.

     

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

     

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

     

    “Selling Stockholder
Questionnaire” shall have the meaning set forth in Section
3(a).

     

    ARTICLE X.Shelf
Registration.

     

    10.1           On or prior
to the
Filing Date,
the Company shall prepare and file with the Commission a “Shelf” Registration
Statement covering the resale of
the Registrable
Securities for an offering to be made by the
Holder(s) on a
continuous basis pursuant to Rule 415.  The Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith) and shall contain
substantially the “Plan of
Distribution” attached hereto as Annex A.  Subject to
the terms of this Agreement, the Company shall use its best efforts to cause
a
Registration
Statement to be declared effective under the Securities Act as promptly as
possible after the filing thereof, but in any event prior to the applicable
Effectiveness Date, and shall use its best efforts to keep such Registration
Statement continuously effective under the Securities Act until all Registrable
Securities covered by such Registration Statement (i) have
been sold, thereunder or pursuant to Rule 144, or (ii) (A) may be sold without
volume or manner-of-sale restrictions pursuant to Rule 144 and (B) (I) may be
sold without the requirement for the Company to be in compliance with the
current public information requirement under Rule 144 or (II) the Company is in
compliance with the current public information requirement under Rule
144, or (iii) the
Commitment Period has expired and no Registrable Securities are then
outstanding, as
determined by the counsel to the Company pursuant to a written opinion letter to
such effect, addressed and acceptable to the Transfer
Agent and the
affected Holders (the
“Effectiveness Period”).  The Company
shall promptly
notify the
Holders via facsimile or by e-mail
of the
effectiveness of a
Registration
Statement on the same Trading Day that the Company telephonically confirms
effectiveness with the Commission.
The Company
shall file a final
Prospectus with the
Commission as required
by Rule 424.

     

    
      
        
        

      

      
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    ARTICLE XI.Registration
Procedures

     

    In
connection with the Company’s registration obligations hereunder, the Company
shall:

     

    11.1           Not less
than five Trading Days prior to the filing of the Registration Statement and not
less than 1 Trading Day prior to the filing of any related Prospectus or any
amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall, (i) furnish to Holder copies of all such documents proposed to be filed,
which documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of Holder, and (ii) cause its officers
and directors, counsel and independent registered
public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel to Holder to conduct a reasonable
investigation within the meaning of the Securities Act. The Company shall not
file a Registration Statement or any such Prospectus or any amendments
or supplements thereto to
which the Holder shall reasonably object in good faith, provided that, the
Company is notified of such objection in writing no later than 5 Trading Days
after the Holder has been so furnished copies of a Registration Statement or 1
Trading Day after the Holder has been so furnished copies of any related
Prospectus or amendments
or supplements thereto. Holder
agrees to furnish to the
Company a completed questionnaire
in the form attached to this Agreement as Annex B (a “Selling
Stockholder
Questionnaire”) on a date
that is not less
than two Trading Days prior to the Filing Date or by the end of the fourth
Trading Day following the date on which the
Holder
receives draft materials in accordance with this Section.

     

    11.2           (i) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as reasonably possible provide the Holder true and
complete copies of all correspondence from and to the Commission relating to the
Registration Statement (provided that the Company may excise any information
contained therein which would constitute material non-public information as to
Holder); and (iv) comply in all material respects with the applicable
provisions
of the Securities Act and the Exchange Act with respect to the disposition of
all Registrable Securities covered by a Registration Statement during the
applicable period in accordance (subject to the terms of this Agreement) with
the intended methods of disposition by the Holder set forth in such Registration
Statement as so amended or in such Prospectus as so
supplemented.

     

    
      
        
        

      

      
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    11.3           If during
the Effectiveness Period, the number of Registrable Securities at any time
exceeds 100% of the number of shares of Common Stock then registered in a
Registration Statement, then the Company shall file as soon as reasonably
practicable but in any case prior to the applicable Filing Date, an additional
Registration Statement covering the resale by the Holder of not less than 100%
of the number of such Registrable Securities.

     

    11.4           Notify the
Holder of Registrable Securities to be sold (which notice shall, pursuant to
clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend
the use of the Prospectus until the requisite changes have been made) as
promptly as reasonably possible (and, in the case of (i)(A) below, not less than
1 Trading Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Trading Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to a Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to a Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the
issuance by the Commission or any other federal or state governmental authority
of any stop
order suspending the effectiveness of a Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; (v) of the occurrence of any
event or passage of time that makes the financial statements included in a
Registration Statement ineligible for inclusion therein or any statement made in
a Registration Statement or Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading; and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus; provided that any and all of such information shall
remain confidential to Holder until such information otherwise becomes public,
unless disclosure by Holder is required by law; provided, further, that
notwithstanding Holder’s agreement to keep such information confidential, the
Holder makes no acknowledgement that any such information is material,
non-public information.

     

    
      
        
        

      

      
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    11.5           Use its best
efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i)
any order stopping or
suspending
the effectiveness of a Registration Statement, or (ii) any suspension of the
qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, at the earliest practicable
moment.

     

    11.6           Furnish to
Holder, without charge, at least one conformed copy of each such Registration
Statement and each amendment thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference to the extent requested by such Person, and all exhibits to the extent
requested by such Person (including those previously furnished or incorporated
by reference) promptly after the filing of such documents with the
Commission; provided,
that any such item which is available on the EDGAR system (or successor thereto)
need not be furnished in physical form.

     

    11.7           Subject to
the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by the Holder in connection
with the offering and sale of the Registrable Securities covered by such
Prospectus and any amendment or supplement thereto, except
after the giving of any notice
pursuant to Section 3(d).

     

    11.8           The Company
shall cooperate with any broker-dealer through which a Holder proposes to resell
its Registrable Securities in effecting a filing with the FINRA Corporate
Financing Department pursuant to FINRA Rule 5110, as requested by the
Holder, and
the Company shall pay the filing fee required by such filing within two (2)
Business Days of request therefor.

     

    11.9           Prior to any
resale of Registrable Securities by Holder, use its commercially reasonable
efforts to register or qualify or cooperate with the Holder in
connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by the
Registration
Statement; provided, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified, subject
the Company to any material tax in any such jurisdiction where it is not then so
subject or file a general consent to service of process in any such
jurisdiction.

     

    11.10                      If requested
by the Holder, cooperate with the Holder to facilitate the timely preparation
and delivery of certificates representing Registrable Securities to be delivered
to a transferee pursuant to the Registration Statement, which certificates shall
be free, to the extent permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities to be in such denominations
and registered in such names as Holder may request.

     

    
      
        
        

      

      
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    11.11                      Upon the
occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company’s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.  If the Company notifies the
Holder in accordance with clauses (iii) through
(vi) of Section 3(d) above to suspend the use of any Prospectus until the
requisite changes to such Prospectus have been made, then the Holder shall
suspend use of such Prospectus.  The Company will use its best efforts
to ensure that the use of the Prospectus may be resumed as promptly as is
practicable.

     

    11.12                      Comply with
all applicable rules and regulations of the Commission.

     

    11.13                      The Company
may require the Holder to furnish to the Company a certified statement as to the
number of shares of Common Stock beneficially owned by the Holder and, if
required by the Commission, the natural persons thereof that have voting and
dispositive control over the Shares. The Holder acknowledges that it will be
named as an “underwriter” of the Registrable Securities in the Prospectus, as
required by Commission policies.

     

    ARTICLE XII.Registration
Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (of the Company’s counsel and
independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading, (C) in compliance
with applicable state securities or Blue Sky laws reasonably agreed to by the
Company in writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions
of the Registrable Securities) and (D) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection
with such sale, (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement.  In addition, the Company shall be responsible for all
of its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of Holder or, except to the
extent provided for in the Transaction Documents, any legal fees or other costs
of the Holder.

     

    
      
        
        

      

      
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    ARTICLE XIII.Indemnification

     

    13.1           Indemnification
by the Company.  The Company shall, notwithstanding any termination of
this Agreement, indemnify and hold harmless Holder, the officers, directors,
members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
(and any other Persons with a functionally equivalent role of a Person holding
such titles, notwithstanding a lack of such title or any other title) of Holder,
each Person who controls Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
members, stockholders, partners, agents and employees (and any other Persons
with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title)of each such controlling
Person, to the fullest extent permitted by applicable law, from and against any
and all losses, claims, damages, liabilities, costs (including, without
limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”),
as incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading, or (2) any violation or alleged violation by the
Company of the Securities Act, Exchange Act or any state securities law, or any
rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding Holder furnished in writing to the Company by Holder expressly for use
therein, or to the extent that such information relates to Holder or Holder’s
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by Holder expressly for use in a Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto (it being understood that the Holder has approved Annex A
hereto for this purpose) or (ii) in the case of an occurrence of an event of the
type specified in Section 3(d)(iii)-(vi), the use by Holder of an outdated,
defective or otherwise
unavailable Prospectus
after the Company has notified Holder in writing that the Prospectus is
outdated, defective or otherwise
unavailable for use by the
Holder
and prior to
the receipt by Holder of the Advice contemplated in Section
6(d).  The Company
shall notify the Holder promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Company is aware.

     

    
      
        
        

      

      
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    13.2           Indemnification
by Holder. Holder shall, severally and not jointly, indemnify and hold harmless
the Company, its directors, officers, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all Losses, as incurred, to the extent arising
out of or based solely upon: (x) Holder’s failure to comply with the prospectus
delivery requirements of the Securities Act or (y) any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent, but
only to the extent, that such untrue statement or omission is contained in any
information so furnished in writing by Holder to the Company specifically for
inclusion in such Registration Statement or such Prospectus or (ii) to the
extent that such information relates to Holder’s proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in writing by
Holder expressly for use in a Registration Statement (it being understood that
the Holder has approved Annex A hereto for this purpose), such Prospectus or
such form of Prospectus or in any amendment or supplement thereto or (iii) in
the case of an occurrence of an event of the type specified in Section
3(d)(iii)-(vi), the use by Holder of an outdated, defective or otherwise
unavailable for use by the
Holder
Prospectus
after the Company has notified Holder in writing that the Prospectus is
outdated, defective or otherwise
unavailable for use by the
Holder
and prior to
the receipt by Holder of the Advice contemplated in Section 6(d).  In
no event shall the liability of Holder hereunder be greater in amount than the
dollar amount of the net proceeds received by Holder upon the sale of the
Registrable Securities giving rise to such indemnification
obligation.

     

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

     

    An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses; (2) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and counsel to the
Indemnified Party shall reasonably believe that a material conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of no
more than one separate counsel shall be at the expense of the Indemnifying
Party).  The Indemnifying Party shall not be liable for any settlement
of any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld or delayed.  No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.

     

    
      
        
        

      

      
        - 48
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    Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is judicially determined not to be entitled to indemnification
hereunder.

     

    13.4           Contribution.  If
the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party
as a result of any Losses shall be deemed to include, subject to the limitations
set forth in this Agreement, any reasonable attorneys’ or other fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.

     

    The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding
paragraph.  Notwithstanding the provisions of this Section 5(d), the
Holder shall not be required to contribute pursuant to this Section 5(d), in the
aggregate, any amount in excess of the amount by which the net proceeds actually
received by Holder from the sale of the Registrable Securities subject to the
Proceeding exceeds the amount of any damages that Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission, except in the case of fraud by Holder.

     

    
      
        
        

      

      
        - 49
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    The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties.

     

    ARTICLE XIV.Miscellaneous

     

    14.1           Remedies.  In
the event of a breach by the Company or by the Holder, of any of their
respective obligations under this Agreement, Holder or the Company, as the case
may be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement.  The Company
and Holder agree that monetary damages would not provide adequate compensation
for any losses incurred by reason of a breach by it of any of the provisions of
this Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall not assert or shall
waive the defense that a remedy at law would be adequate.

     

    14.2           No Piggyback
on Registrations.  Neither the Company nor any of its security holders
(other than the Holder in such capacity pursuant hereto) may include securities
of the Company in the Registration Statement other than the Registrable
Securities.

     

    14.3           Compliance.  Holder
covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration
Statement.

     

    14.4           Discontinued
Disposition.  Holder agrees by its acquisition of Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(d), Holder will forthwith
discontinue disposition of such Registrable Securities under a Registration
Statement until it is advised in writing (the “Advice”) by the Company that the
use of the applicable Prospectus (as it may have been supplemented or amended)
may be resumed.  The Company will use its best efforts to ensure that
the use of the Prospectus may be resumed as promptly as it
practicable.

     

    14.5           Amendments
and Waivers. The
provisions of this Agreement, including the provisions of this sentence, may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and each Holder of the then outstanding Registrable
Securities.  Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of all of the
Registrable Securities to which such waiver or consent relates; provided,
however, that the provisions of this sentence may not be amended, modified, or
supplemented except in accordance with the provisions of the immediately
preceding sentence.

     

    
      
        
        

      

      
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    14.6           Notices. Any and
all notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.

     

    14.7           Successors
and Assigns. This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors.  Neither
party may assign this
Agreement or any rights or obligations hereunder (other than
by merger).

     

    14.8           No
Inconsistent Agreements. Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor
shall the Company or any of its Subsidiaries, on or after the date of this
Agreement, enter into any agreement with respect to its securities, that would
have the effect of impairing the rights granted to the Holder in this Agreement
or otherwise conflicts with the provisions hereof.  Except as set
forth on Schedule 6(h), neither
the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.

     

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

     

    14.10                      Governing
Law.  All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be determined in accordance with the
provisions of the Purchase Agreement.

     

    14.11                      Cumulative
Remedies.  The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law.

     

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

     

    14.13                      Headings.  The
headings in this Agreement 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.

     

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

     

    
      
        
        

      

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

     

    
      
        
          	 	MICRO
      IMAGING TECHNOLOGY, INC.	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Michael
      W. Brennan	 
	 	 	Name:  Michael
      W. Brennan	 
	 	 	Title:    Chairman
      and CEO	 

        

      

    

    

    

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

     

    
      
        
        

      

      
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    [SIGNATURE
PAGE OF HOLDERS TO MMTC RRA]

     

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  Name
      of Holder:

                                	
                                  ASCENDIANT CAPITAL GROUP,
    LLC

                                	 
	
                                  Signature of Authorized
      Signatory of Holder:

                                	
                                  /S/  Bradley J.
      Wilhite

                                	 
	
                                  Name
      of Authorized Signatory:

                                	
                                   Bradley J. Wilhite

                                	 
	
                                  Title
      of Authorized Signatory:

                                	
                                  Managing Member

                                	 

                        

                      

                    

                  

                

              

            

          

        

      

    

    

    [SIGNATURE
PAGES CONTINUE]

     

    
      
        
        

      

      
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    ANNEX
A

     

    Plan of
Distribution

     

    The
Selling Stockholder (the “Selling Stockholder”)
of the common stock and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on the principal Trading Market or any other stock exchange,
market or trading facility on which the shares are traded or in private
transactions.  These sales may be at fixed or negotiated
prices.  The Selling Stockholder may use any one or more of the
following methods when selling shares:

     

    
      	
               
      

            	
              ·

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

     

    
      	
               
      

            	
              ·

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

     

    
      	
               
      

            	
              ·

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

     

    
      	
               
      

            	
              ·

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

     

    
      	
               
      

            	
              ·

            	
              privately
      negotiated transactions;

            

    

     

    
      	
               
      

            	
              ·

            	
              settlement
      of short sales entered into after the effective date of the registration
      statement of which this prospectus is a
part;

            

    

     

    
      	
               
      

            	
              ·

            	
              broker-dealers
      may agree with the Selling Stockholder to sell a specified number of such
      shares at a stipulated price per
share;

            

    

     

    
      	
               
      

            	
              ·

            	
              through
      the writing or settlement of options or other hedging transactions,
      whether through an options exchange or
  otherwise;

            

    

     

    
      	
               
      

            	
              ·

            	
              a
      combination of any such methods of sale;
or

            

    

     

    
      	
               
      

            	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
Selling Stockholder may also sell shares under Rule 144 under the Securities Act
of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.

     

    Broker-dealers
engaged by the Selling Stockholder may arrange for other brokers-dealers to
participate in sales.  Broker-dealers may receive commissions or
discounts from the Selling Stockholder (or, if any broker-dealer acts as agent
for the purchaser of shares, from the purchaser) in amounts to be negotiated,
but, except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.

     

    
      
        
        

      

      
        - 54
-

        
          

        

      

      
        
        

      

    

     

    In
connection with the sale of the common stock or interests therein, the Selling
Stockholder may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume.  The Selling
Stockholder may also sell shares of the common stock short and deliver these
securities to close out its short position, or loan or pledge the common stock
to broker-dealers that in turn may sell these securities.  The Selling
Stockholder may also enter into option or other transactions with broker-dealers
or other financial institutions or create one or more derivative securities
which require the delivery to such broker-dealer or other financial institution
of shares offered by this prospectus, which shares such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).

     

    The
Selling Stockholder is an underwriter within the meaning of the Securities Act
and any broker-dealers or agents that are involved in selling the shares may be
deemed to be “underwriters” within the meaning of the Securities Act in
connection with such sales.  In such event, any commissions received
by such broker-dealers or agents and any profit on the resale of the shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.  The Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).

     

    The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares.  The Company has agreed to
indemnify the Selling Stockholder against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     

    Because
the Selling Stockholder is an “underwriter” within the meaning of the Securities
Act, it will be subject to the prospectus delivery requirements of the
Securities Act including Rule 172 thereunder.  In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 under the Securities Act may be sold under Rule 144 rather than under this
prospectus.  There is no underwriter or coordinating broker acting in
connection with the proposed sale of the resale shares by the Selling
Stockholder.

     

    We agreed
to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholder without registration and without
regard to any volume or manner-of-sale limitations by reason of Rule 144,
without the requirement for the Company to be in compliance with the current
public information under Rule 144 under the Securities Act or any other rule of
similar effect or (ii) all of the shares have been sold pursuant to this
prospectus or Rule 144 under the Securities Act or any other rule of similar
effect.  The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the resale shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.

     

    Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution.  In addition, the Selling Stockholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholder or any other
person.  We will make copies of this prospectus available to the
Selling Stockholder and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale.

     

    
      
        
        

      

      
        - 55
-

        
          

        

      

      
        
        

      

    

     

    Annex
B

     

    MICRO
IMAGING TECHNOLOGY, INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of common stock, par value $0.01 per share (the
“Common
Stock”), of Micro Imaging Technology, Inc., a California corporation (the
“Company”),
(the “Registrable
Securities”) understands that the Company has filed or intends to file
with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement, dated as of October 2, 2009 (the “Registration Rights
Agreement”), among the Company and the Purchasers named
therein.  A copy of the Registration Rights Agreement is available
from the Company upon request at the address set forth below.  All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

     

    Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus.  Accordingly,
holders and beneficial owners of Registrable Securities are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Registration Statement and
the related prospectus.

     

    NOTICE

     

    The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it and listed below in Item 3 (unless otherwise
specified under such Item 3) in the Registration Statement.

     

    
      
        
        

      

      
        - 56
-

        
          

        

      

      
        
        

      

    

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    
      	
              

                1.

              

            	
              

                Name.

              

            	
               

            

    

     

    
      
        	
                 
      

              	
                (a)

              	
                Full
      Legal Name of Selling Securityholder

              
	 	 	 
	 	 	 

      

    

     

    
      
        	
                 
      

              	
                (b)

              	
                Full
      Legal Name of Registered Holder (if not the same as (a) above) through
      which Registrable Securities Listed in Item 3 below are
    held:

              
	 	 	 
	 	 	 

      

    

     

    
      
        	
                 
      

              	
                (c)

              	
                Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by the questionnaire):

              
	 	 	 
	 	 	 

      

    

     

    
      	
              2.  

            	
              Address
      for Notices to Selling
Securityholder:

            

    

     

    
      
        
          
            	 
      
	 
      
	 
      

          

        

      

    

    
      
        
          
            
              
                
                  	

                          Telephone:

                        	 
	

                          Fax:

                        	 
	

                          Contact
      Person:

                        	 

                

              

            

          

        

      

    

     

    
      
        	
                

                  3.

                

              	
                

                  Beneficial
      Ownership of Registrable
Securities:

                

              

      

    

     

    
      
        	
                 
      

              	
                (a)

              	
                Type
      and Number of Registrable Securities beneficially owned (not including the
      Registrable Securities that are issuable pursuant to the Purchase
      Agreement):

              
	 	 	 
	 	 	 
	 	 	 
	 	 	 

      

    

    

    
      
        
        

      

      
        - 57
-

        
          

        

      

      
        
        

      

    

    
       

      
        
          	
                  

                    

                      4. 

                    

                  

                	
                  

                    Broker-Dealer
      Status:

                  

                

        

      

    

     

    
      	
               
      

            	
              (a)

            	
              Are
      you a broker-dealer?

            

    

     

    Yes   o                      No   o

     

    
      	
               
      

            	
              (b)

            	
              If
      “yes” to Section 4(a), did you receive your Registrable Securities as
      compensation for investment banking services to the
    Company.

            

    

     

    Yes   o                      No   o

     

    
      
        	 	

                Note:

              	

                If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration Statement.

              
	 	 	 
	
                 
      

              	
                (c)

              	
                Are
      you an affiliate of a
broker-dealer?

              

      

    

     

    Yes   o                      No   o

     

    
      	
               
      

            	
              (d)

            	
              If
      you are an affiliate of a broker-dealer, do you certify that you bought
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

            

    

     

    Yes   o                      No   o

    
       

      
        	
                 
      

              	
                

                  Note:

                

              	
                

                  If
      no, the Commission’s staff has indicated that you should be identified as
      an underwriter in the Registration
  Statement.

                

              

      

       

    

    
      
         

        
          
            	
                    

                      

                        5.  

                      

                    

                  	
                    

                      

                        Beneficial
      Ownership of Other Securities of the Company Owned by the Selling
      Securityholder.

                      

                    

                  

          

        

      

    

     

    Except
as set forth below in this Item 5, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the Registrable
Securities listed above in Item 3.

     

    
      
        	
                 
      

              	
                (a)

              	
                Type
      and Amount of Other Securities beneficially owned by the Selling
      Securityholder:

              
	 	 	 
	 	 	 
	 	 	 

      

    

    

    
      
        
        

      

      
        - 58
-

        
          

        

      

      
        
        

      

    

    
      
        
           

          
            
              	
                      

                        

                          6. 

                        

                      

                    	
                      

                        

                          Relationships
      with the
Company:

                        

                      

                    

            

          

        

      

    

     

    
      
        	 	Except as set forth below,
      neither the undersigned nor any of its affiliates, officers, directors or
      principal equity holders (owners of 5% of more of the equity securities of
      the undersigned) has held any position or office or has had any other
      material relationship with the Company (or its predecessors or affiliates)
      during the past three years.
	 	 
	
                 
      

              	
                State
      any exceptions here:

              
	 	 
	 	 
	 	 

      

    

     

     

    The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 6 and the inclusion of such
information in the Registration Statement and the related prospectus and any amendments or supplements
thereto.  The undersigned understands that such information
will be relied upon by the Company in connection with the preparation or
amendment of the Registration Statement and the related prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

     

    
      
        
          
            
              
                
                  
                    
                      	Dated: 	 	 	Beneficial
      Owner:	 	 
	 	 	 	 	 	 
	 	
                               

                            	 	By:	
                               

                            	 
	 	
                               

                            	 	 	
                              Name:

                            	 
	 	
                               

                            	 	 	
                              Title:

                            	 

                    

                  

                

              

            

          

        

      

    

    

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:

     

    
      
        
        

      

      
        - 59
-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
6(h)

    TO

    REGISTRATION
RIGHTS AGREEMENT

    

    6(h)          No Inconsistent
Agreements.

     

    None

     

     

    
      
        
        

      

      
        - 60
-

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
B

     

    

     

    FORM
OF LEGAL OPINION

     

     

    The
Company is a corporation duly organized, validly existing and in good standing
under the laws of California.  The Company has all requisite power and
authority, and all material governmental licenses, authorizations, consents and
approvals that are required to own and operate its properties and assets and to
carry on its business as now conducted and as proposed to be conducted (all as
described in the Company's SEC Reports filed in the last 12 months). The Company
is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to qualify could have a Material Adverse
Effect on the Company.

     

    Each of
the following subsidiaries of the Company (the “Subsidiaries”) is a
corporation, duly organized and in good standing under the laws of its state of
organization, as noted: Micro Imaging Technology, a Nevada
corporation.

     

    The
Company has all requisite power and authority to (i) execute, deliver and
perform the Transaction Documents, (ii) to issue, sell and deliver the Securities pursuant to the
Transaction Documents and (iii) to carry out and perform its obligations under,
and to consummate the transactions contemplated by, the Transaction
Documents.

     

    All
action on the part of the Company, its directors and its stockholders necessary
for the authorization, execution and delivery by the Company of the Transaction
Documents, the authorization, issuance, sale and delivery of the Securities pursuant to the
Agreement, and
the consummation by the Company of the transactions contemplated by the
Transaction Documents has been duly taken.  The Transaction Documents
have been duly and validly executed and delivered by the Company and constitute
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with their terms, except that (a) such enforceability may
be limited by bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and (b) the remedies of specific
performance and injunctive and other forms of injunctive relief may be subject
to equitable defenses.

     

    After
giving effect to the transactions contemplated by the Agreement, and immediately
after the Closing, the authorized capital stock of the Company will consist of:
an aggregate of 121,084,715 shares of Common Stock, of which 119,419,187 shares
will be issued and outstanding and 6,950,000 shares will be reserved for
issuance upon conversion of issued and outstanding options, warrants and other
derivative securities, 415,528 shares will be reserved for issuance to
employees, officers and directors under the Company's 2008 Employee Incentive
Stock Program and 1,250,000 shares will be reserved for issuance to employees,
officers and directors under the Company’s 2009 Employee Benefit
Plan.  All presently issued and outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and free of any preemptive or similar rights, and have been issued
in compliance with applicable securities laws and regulations.  The
shares of Common Stock which are being issued on the date hereof pursuant to the
Agreement have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive or similar rights, and have been issued in
compliance with applicable securities laws, rules and regulations.  To
our knowledge, except for rights described in Schedules 3.1(g) and
(i) of the Agreement, there are no other options, warrants, conversion
privileges or other rights presently outstanding to purchase or otherwise
acquire from the Company any capital stock or other securities of the Company,
or any other agreements to issue any such securities or rights.  The
rights, privileges and preferences of the Common Stock are as stated in the
Company’s Articles of Incorporation, as amended.

     

    
      
        
        

      

      
        - 61
-

        
          

        

      

      
        
        

      

    

     

    Based in
part upon the representations of the Purchasers contained in the Agreement, the
Shares may be issued to the Purchasers without registration under the Securities
Act of 1933, as amended.

     

    To our
knowledge, the Company has filed all reports (the "SEC Reports")
required to be filed by it under Sections 13(a) and 15(d) of the Exchange Act of
1934, as amended (the "Exchange
Act").  As of their respective filing dates, the SEC Reports
complied in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder.

     

    The
execution, delivery and performance by the Company of, and the compliance by the
Company with the terms of, the Transaction Documents and the issuance, sale and
delivery of the Securities pursuant to the Agreement
do not (a) conflict with or result in a violation of any provision of law, rule
or regulation or any rule or regulation of any Trading Market applicable to the
Company or its Subsidiaries or of the certificate of incorporation or by-laws or
other similar organizational documents of the Company or its Subsidiaries, (b)
conflict with, result in a breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, or result in
or permit the termination or modification of, any agreement, instrument, order,
writ, judgment or decree known to us to which the Company of its Subsidiaries is
a party or is subject or (c) result in the creation or imposition of any lien,
claim or encumbrance on any of the assets or properties of the Company or its
Subsidiaries.

     

    To our
knowledge, there is no claim, action, suit, proceeding, arbitration,
investigation or inquiry, pending or threatened, before any court or
governmental or administrative body or agency, or any private arbitration
tribunal, against the Company or its Subsidiaries, or any of its officers,
directors or employees (in connection with the discharge of their duties as
officers, directors and employees), of the Company or its Subsidiaries, or
affecting any of its properties or assets.

     

    In
connection with the valid execution, delivery and performance by the Company of
the Transaction Documents, or the offer, sale, issuance or delivery of the Securities or the consummation of
the transactions contemplated thereby, no consent, license, permit, waiver,
approval or authorization of, or designation, declaration, registration or
filing with, any court, governmental or regulatory authority, or self-regulatory
organization, is required.

     

    
      
        
        

      

      
        - 62
-

        
          

        

      

      
        
        

      

    

     

    The
Company is not, and after the consummation of the transactions contemplated by
the Transaction Documents shall not be, an Investment Company within the meaning
of the Investment Company Act of 1940, as amended.

     

     

    [Items
12 and 13 to be included in Opinion pursuant to Section 5.3 at each Draw
Down.]

     

     

    The
Registration Statement is effective by the Commission and no stop order is in
effect with respect to the Registration Statement. Assuming compliance by the
Purchaser with the “Plan of Distribution” caption of the Registration Statement
and timely compliance by the Purchaser with all prospectus delivery
requirements, the Shares shall be freely transferable by Purchaser.

     

    Nothing
has come to our attention that has caused us to believe that the Registration
Statement and the prospectus at the time the Registration Statement became
effective and as of the date of this opinion contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading; however,
we express no opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data derived
therefrom included or incorporated by reference in the Registration Statement or
the prospectus.

    
 

    
      
        
        

      

      
        - 63
-8-K

Exhibit 4.1  

COMMON STOCK PURCHASE
WARRANT 

PLURISTEM THERAPEUTICS
INC. 

		
		
		
		
		
	Warrant Shares: _______	Initial Exercise Date: April [__], 2010
	 	Issue Date: October [__], 2009

        THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, _____________ (the “Holder”) is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth, at any
time on or after April [__], 2010 (the “Initial Exercise Date”)
and on or prior to the close of business on the five year anniversary of the Initial
Exercise Date (the “Termination Date”) but not thereafter, to subscribe
for and purchase from Pluristem Therapeutics Inc., a Nevada corporation (the
“Company”), up to ______ shares (the “Warrant Shares”)
of Common Stock. The purchase price of one share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).  

    Section 1.       
Definitions. Capitalized terms used and not otherwise defined herein shall have the
meanings set forth in that certain Securities Purchase Agreement (the “Purchase
Agreement”), dated October [__], 2009, among the Company and the
purchasers signatory thereto.  

     Section 2.       
Exercise.  

          		    a)       
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant
may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company
(or such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of the Holder appearing on the
books of the Company) of: (i) a completed and duly executed copy of the Notice
of Exercise Form annexed hereto; and (ii) payment of the aggregate Exercise
Price of the shares thereby purchased by wire transfer or bank or certified
check drawn on a United States bank. The date such items are delivered to the
Company (as determined in accordance with the notice provisions hereof) is an
“Exercise Date.” The Holder shall not be required to deliver the
original Warrant in order to effect an exercise hereunder, but if it is not so
delivered then such exercise shall constitute an agreement by the Holder to
deliver the original Warrant to the Company as soon as practicable thereafter
and in any event, within three (3) Trading Days of the Exercise Date. Execution
and delivery of the Exercise Notice shall have the same effect as cancellation
of the original Warrant and issuance of a new Warrant evidencing the right to
purchase the remaining number of Warrant Shares, if any, and the Company shall
issue such new Warrant as soon as possible after receipt and cancellation of the
original Warrant. The Company shall maintain records showing the number of
Warrant Shares purchased and the date of such purchases. The Company shall
deliver any objection to any Notice of Exercise Form within three (3) Trading
Days of receipt of such notice.  

               

          		    b)       
Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $1.60, subject to adjustment hereunder (the “Exercise
Price”).  

               

          		    c)       
Cashless Exercise. If at any time during the term of this Warrant there is no
effective Registration Statement registering, or no current prospectus available
for, the issuance or resale of the Warrant Shares by the Holder, then this
Warrant may also be exercised at such time by means of a “cashless
exercise” in which the Holder shall be entitled to receive a certificate
for the number of Warrant Shares equal to the quotient obtained by dividing
[(A-B) (X)] by (A), where:  

               

	 	      (A) 	=
the VWAP (as defined below) on the Trading Day immediately preceding the date of such
election;

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

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

	 	
The
term “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 (as defined below), the daily volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time), (b) if the OTC
Bulletin Board is not a Trading Market, the volume weighted average price of the Common
Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the
Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if
prices for the Common Stock are then reported in the “Pink Sheets” published by
Pink Sheets, LLC (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so reported, or
(d) in all other cases, the fair market value of a share of Common Stock as determined by
an independent appraiser selected in good faith by the Purchasers of a majority in
interest of the Shares then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company. 

The term “Trading
Market” means any of the following markets or exchanges on which the Common Stock
is listed or quoted for trading on the date in question: the NYSE Alternext, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York
Stock Exchange (or any successors to any of the foregoing).  

          		    d)       
Holder’s Restrictions. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this
Warrant, pursuant to Section 2 or otherwise, to the extent that after giving
effect to such issuance after exercise as set forth on the applicable Notice of
Exercise, the Holder (together with the Holder’s Affiliates, and any other
person or entity acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the Beneficial
Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (A) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (B) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its affiliates.
Except as set forth in the preceding sentence, for purposes of this Section
2(d)(i), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder,
it being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this
Section 2(d) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the
sole discretion of the Holder, and the submission of a Notice of Exercise shall
be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is exercisable, in each
case subject the Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. In addition,
a determination as to any group status as contemplated above shall be determined
in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 2(d), in
determining the number of outstanding shares of Common Stock, a Holder may rely
on the number of outstanding shares of Common Stock as reflected in (A) the
Company’s most recent periodic annual report as the case may be, (B) a more
recent public announcement by the Company or (C) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of a Holder, the Company shall
within three (3) Trading Days confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this Warrant,
by the Holder or its Affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon
not less than sixty one (61) days’ prior notice to the Company, may
increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(d), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section
2(d) shall continue to apply. Any such increase or decrease will not be
effective until the 61st day after such notice is delivered to the Company. The
provisions of this paragraph shall be construed and implemented in a manner
otherwise than in strict conformity with the terms of this Section 2(d) to
correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant.  

               

- 2 -

          		    e)       
Mechanics of Exercise.  

               

		    i.        Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder
shall be transmitted by the Transfer Agent to the Holder by crediting the
account of the Holder’s prime broker with the Depository Trust Company
through its Deposit Withdrawal Agent Commission (“DWAC”) system
if the Company is then a participant in such system and either (A) there
is an effective Registration Statement permitting the resale of the
Warrant Shares by the Holder or this Warrant is being exercised via
cashless exercise, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise within three (3) Trading
Days from the delivery to the Company of the Notice of Exercise Form,
surrender of this Warrant (if required) and payment of the aggregate
Exercise Price as set forth above (the “Warrant Share Delivery Date”).
This Warrant shall be deemed to have been exercised on the date the
Exercise Price is received by the Company. The Warrant Shares shall be
deemed to have been issued, and Holder or any other person so designated
to be named therein shall be deemed to have become a holder of record of
such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder,
if any, pursuant to Section 2(e)(vi) prior to the issuance of such shares,
have been paid.  

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

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

- 3 -

		    iv.        Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In
addition to any other rights available to the Holder, if the Company fails to
cause the Transfer Agent to transmit to the Holder a certificate or the
certificates representing the Warrant Shares pursuant to an exercise on or
before the Warrant Share Delivery Date, and if after such date the Holder
is required by its broker to purchase (in an open market transaction or
otherwise) or the Holder’s brokerage firm otherwise purchases, shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares which the Holder anticipated receiving upon such exercise
(a “Buy-In”), then the Company shall (A) pay in cash to
the Holder the amount by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (y) the amount obtained by multiplying (1) the number
of Warrant Shares that the Company was required to deliver to the Holder
in connection with the exercise at issue times (2) the price at which the
sell order giving rise to such purchase obligation was executed, and (B)
at the option of the Holder, either reinstate the portion of the Warrant
and equivalent number of Warrant Shares for which such exercise was not
honored or deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. For example, if the Holder purchases
Common Stock having a total purchase price of $11,000 to cover a Buy-In
with respect to an attempted exercise of shares of Common Stock with an
aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (1) of the immediately preceding sentence the Company shall
be required to pay the Holder $1,000. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of
the Buy-In and, upon request of the Company, evidence of the amount of
such loss. Nothing herein shall limit a Holder’s right to pursue any
other remedies available to it hereunder, at law or in equity including,
without limitation, a decree of specific performance and/or injunctive
relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the
Warrant as required pursuant to the terms hereof.  

		    v.        No
Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to
any fraction of a share which Holder would otherwise be entitled to
purchase upon such exercise, the Company shall, at its election, either
pay a cash adjustment in respect of such final fraction in an amount equal
to such fraction multiplied by the Exercise Price or round up to the next
whole share.  

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

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

     Section 3.       
Certain Adjustments.  

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

               

- 4 -

          		    b)       
               Intentionally Omitted. 

               

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

               

          		    d)       
Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to Holders
of the Warrants) evidences of its indebtedness or assets (including cash and
cash dividends) or rights or warrants to subscribe for or purchase any security
other than the Common Stock (which shall be subject to Section 3(b)), then in
each such case the Exercise Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to the record date fixed for determination of
stockholders entitled to receive such distribution by a fraction of which the
denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then
per share fair market value at such record date of the portion of such assets or
evidence of indebtedness so distributed applicable to one outstanding share of
the Common Stock as determined by the Board of Directors in good faith. In
either case the adjustments shall be described in a statement provided to the
Holder of the portion of assets or evidences of indebtedness so distributed or
such subscription rights applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective immediately after the record date mentioned above.  

               

          		    e)       
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i)
the Company effects any merger or consolidation of the Company with or into
another Person, (ii) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (iii) any tender offer or
exchange offer (whether by the Company or another Person) is completed pursuant
to which holders of Common Stock are permitted to tender or exchange their
shares for other securities, cash or property or (iv) the Company effects any
reclassification of the Common Stock or any compulsory share exchange pursuant
to which the Common Stock is effectively converted into or exchanged for other
securities, cash or property (each “Fundamental Transaction”),
then, upon any subsequent exercise of this Warrant, the Holder shall have the
right to receive, for each Warrant Share that would have been issuable upon such
exercise immediately prior to the occurrence of such Fundamental Transaction,
the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a
result of such merger, consolidation or disposition of assets by a holder of the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted to apply to
such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Company or surviving entity in
such Fundamental Transaction shall issue to the Holder a new warrant consistent
with the foregoing provisions and evidencing the Holder’s right to exercise
such warrant into Alternate Consideration. The terms of any agreement pursuant
to which a Fundamental Transaction is effected shall include terms requiring any
such successor or surviving entity to comply with the provisions of this Section
3(e) and insuring that this Warrant (or any such replacement security) will be
similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. Notwithstanding anything to the contrary, in the event of a
Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule
13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3)
a Fundamental Transaction involving a person or entity not traded on a national
securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market,
or the Nasdaq Capital Market, the Company or any successor entity shall pay at
the Holder’s option, exercisable at any time concurrently with or within 30
days after the consummation of the Fundamental Transaction, an amount of cash
equal to the value of this Warrant as determined in accordance with the Black
Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg L.P. using (A) a price per share of Common Stock equal to the VWAP of
the Common Stock for the Trading Day immediately preceding the date of
consummation of the applicable Fundamental Transaction, (B) a risk-free interest
rate corresponding to the U.S. Treasury rate for 30 day period immediately prior
to the consummation of the applicable Fundamental Transaction, (C) an expected
volatility equal to the 100 day volatility obtained from the “HVT”
function on Bloomberg L.P. determined as of the Trading Day immediately
following the public announcement of the applicable Fundamental Transaction, and
(D) a remaining option time equal to the time between the date of the public
announcement of such transaction and the Termination Date.  

               

- 5 -

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

               

          		    g)       
Notice to Holder.  

               

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

		    ii.        Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend
(or any other distribution in whatever form) on the Common Stock, (B) the
Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock of any class or of
any rights, (D) the approval of any stockholders of the Company shall be
required in connection with any reclassification of the Common Stock, any
consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the
voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the
Warrant Register of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a
record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer or
share exchange is expected to become effective or close, and the date as
of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities,
cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the corporate action required to
be specified in such notice. The Holder is entitled to exercise this
Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice.  

- 6 -

     Section 4.       
Transfer of Warrant.  

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

               

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

               

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

               

     Section 5.       
Miscellaneous.  

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

               

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

               

- 7 -

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

               

          		    d)       
Authorized Shares.  

               

	 	        The
Company covenants that, during the period the Warrant is outstanding, it will reserve
from its authorized and unissued Common Stock a sufficient number of shares to provide
for the issuance of the Warrant Shares upon the exercise of any purchase rights under
this Warrant. The Company further covenants that its issuance of this Warrant shall
constitute full authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for the Warrant Shares
upon the exercise of the purchase rights under this Warrant. The Company will take all
such reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or regulation, or of
any requirements of the Trading Market upon which the Common Stock may be listed. The
Company covenants that all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of the purchase rights
represented by this Warrant, be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes, liens and charges created by the Company in
respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).  

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

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

          		    e)       
Jurisdiction. All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.  

               

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

               

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

               

- 8 -

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

               

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

               

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

               

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

               

          		    l)       
Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and Holders holding Warrants at
least equal to 67% of the Warrant Shares issuable upon exercise of all then
outstanding Warrants.  

               

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

               

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

               

(Signature Pages
Follow) 

- 9 -

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

			PLURISTEM THERAPEUTICS INC.

By:
——————————————

Name:
Title:

- 10 -

NOTICE OF EXERCISE 

TO:   PLURISTEM THERAPEUTICS INC.

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

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

	 	
o
in lawful money of the United States; or  

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

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

	 	
____________________________ 

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

	 	
____________________________ 

	 	
____________________________ 

	 	
____________________________ 

[SIGNATURE OF HOLDER] 

Name of Investing Entity: ________________________________________________________________________

Signature of Authorized Signatory of Investing Entity: __________________________________________________

Name of Authorized Signatory: ____________________________________________________________________

Title of Authorized Signatory: _____________________________________________________________________

Date: _________________________________________________________________________________________ 

- 11 -

ASSIGNMENT FORM 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

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

_______________________________________________ whose address is

_______________________________________________________________________________.

_______________________________________________________________________________

	 	
Dated:
______________, _______

	 		
	 		
	 		
	 		
	 		
	 	Holder's Signature:	_____________________________
	 	 
	 	Holder's Address:	_____________________________
	 	 
	 	 	_____________________________

Signature Guaranteed: ___________________________________________

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

- 12 -

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