Document:

Exhibit 10.1

CONSULTING AGREEMENT

This Consulting Agreement (the “Agreement”) is
entered into by and between Platinum Research Organization, Inc., a company
existing under the laws of Delaware (“PRO, Inc.” or the “Company”), The
Fairmount Company, a District of Columbia corporation (the “Consultant”), and
for certain limited purposes, John T. (Corky) Jaeger, Jr. (“Jaeger”)

RECITALS:

The Company desires to employ Consultant as an
independent contractor, and Consultant desires to accept such employment, on the
terms and conditions set forth in this Agreement.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the premises and
the mutual covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company, Jaeger and Consultant agree as follows:

1.             Employment. The Company agrees to
retain and does hereby retain Consultant, and Consultant agrees to be retained
by the Company on the terms and conditions set forth in this Agreement.

2.             Duties and Responsibilities. Consultant
shall have those responsibilities, duties and authorities assigned to it (the “Duties”)
by the board of directors of the Company (the “Directors”).  Consultant shall faithfully, industriously
and to the best of its ability perform to the satisfaction of the Directors all
of the Duties.  Jaeger shall be
responsible for the performance of the Duties required of the Consultant as the
President, Chief Executive Officer, and Director of the Company, and, except as
permitted below, shall devote substantially all of his business time, skill and
attention to the business of the Company. 
Jaeger shall not, except as provided below, during the term of this
Agreement, be actively engaged in any managerial or employment capacity in any
other business activity for profit which detracts from his performance of the
Consultant’s Duties.  Consultant shall
use its best efforts and skills to preserve the business of the Company and the
goodwill of its employees and persons having business relations with the
Company.  Notwithstanding the foregoing,
the Company acknowledges that Jaeger is currently employed on a part time basis
by the Consultant to perform services for others.  Jaeger may continue to perform the services
he is currently performing for the Consultant, but may not expand the scope of
such duties or the time dedicated to the performance of those duties without
the written consent of the Company.

3.             Term. The term of this Agreement shall
commence as of the effective date of this Agreement, and shall continue for
three (3) years from such date, or for such term as extended by mutual
agreement of the parties, or until it is otherwise terminated in accordance
with this Agreement.

4.             Compensation and Other Benefits.

(a)           Compensation. For the 12 month period commencing
upon the effective date of this Agreement and continuing for each of the 12
calendar month thereafter, the Company shall pay Jaeger a salary of $6,250 per
month ($75,000 per year) and Consultant 
$11,250 per month ($135,000 per year), prorated for lesser periods.  Company will provide a cash bonus plan
whereby Jaeger and

consultant could earn up to one hundred percent
(100%) of their total yearly compensation of $210,000 (i.e. $75,000 plus
$135,000) shared 50% to Jaeger and 50% to Consultant based on specific
milestones established and agreed to by the Company’s Board of Directors.  The cash compensation paid to Jaeger and
Consultant shall be reviewed annually and may be modified by the mutual
agreement of Jaeger, Consultant and the Company.  This plan would be established and confirmed
by the Board of Directors.

(b)           Business
Expenses.  Upon the submission of
properly documented expense account reports in accordance with Company policy,
the Company shall reimburse Consultant and Jaeger for legitimate business
expenses incurred on behalf of the Company in the performance of its Duties,
including but not limited to the applicable dues and fees of the Consultant’s
corporate membership of the Sports Club and the legal cost to prepare the Stock
Option Plan of the Company and this Consulting Agreement.

(c)           The Company shall pay the reasonable expense for Health
and Disability insurance for Jaeger.

(d)           Vacation. 
Jaeger shall be entitled to take two weeks paid vacation during each
calendar year in the term of this Agreement.

(e)           Stock Options. 
On or about the effective date of this Agreement, the Company will grant
to Consultant an option to acquire a ten percent (10%) percent common stock
interest in the Company on a fully diluted basis on the date of grant (the “Substituted
Options”).  The Substituted Options will
be granted on terms comparable to the terms of the option granted to Consultant
on September 26, 2006 to acquire a total option equity interest of ten percent
(10%) in Platinum Research Organization, L.P. (the “PRO LP Equity Options”).  The PRO, LP Equity Options will be cancelled
upon issuance and grant of the Substituted Options to Consultant.  The Stock options granted to Consultant shall
be vested as follows: 1/6 of the stock options shall be vested on the first
anniversary of this Agreement; 1/6 of the stock options shall be vested on the
second anniversary of this Agreement; 1/6 of the stock options shall be vested
on the third anniversary of this Agreement; and 1⁄2 of the stock options shall be
vested in accordance with performance-based milestones as established and
agreed to by the Company’s Board of Directors. The Substituted Options shall be
granted under the terms of that certain 
Stock Incentive Plan previously adopted by the Company.

5.             Termination.

(a)           Death
or Disability. This Agreement shall terminate upon the death or Disability
of Jaeger. The phrase “Disability” shall mean Jaeger is unable to perform the
Duties properly with the Company, even if reasonable accommodations are made by
the Company, on a full-time basis for 60 consecutive days or for 80 days out of
100 consecutive days due to Jaeger’s physical or mental illness as determined
(after expiration of either such periods) by a qualified physician.

(b)           Cause.
The Company may terminate this Agreement at any time for Cause. The Company
shall have “Cause” to terminate this Agreement if during the term of this
Agreement Consultant or Jaeger (a) engages in a course of conduct that
constitutes gross dereliction of duties and

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such behavior continues 30 days after the Company has given Consultant
or Jaeger the opportunity to cure it, (b) engages in fraudulent activities or
engages in gross misconduct which injures, or is reasonably anticipated to injure,
the Company or its affiliates, (c) is convicted of, or pleas nolo contendere to, a felony criminal
offense punishable by more than one year in prison or an offense involving
moral turpitude, in a court of competent jurisdiction, (d) violates any statutory
or common law duty of loyalty which results, or is reasonably anticipated to
result, in an injury to the Company or any of its subsidiaries or affiliates,
or (e) violates a material provision of this Agreement.

(c)           Notice
of Termination.  Any termination of
employment, other than as a result of Jaeger’s death, shall be communicated by “Notice
of Termination” to the other party to this Agreement. For purposes of this
Agreement, a “Notice of Termination” shall mean a notice in writing which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Consultant’s employment under the provision
so indicated.

(d)           Date
of Termination. The Date of Termination (herein so called) shall mean (a)
if Jaeger’s employment is terminated under this Agreement as a result of Jaeger’s
death, the date of Jaeger’s death, (b) if Jaeger’s employment is terminated as
a result of Jaeger’s Disability, the date Notice of Termination is delivered to
Consultant and Jaeger, (c) if Consultant terminates this Agreement, the earlier
of sixty (60) days following the date on which a Notice of Termination is
delivered pursuant to Paragraph 11 or the date Consultant and Jaeger cease
actively working for the Company, and (d) if Jaeger’s employment is terminated
for any other reason, then ten (10) days following the date on which a Notice
of Termination is delivered pursuant to Paragraph 11.

6.             Effects on Compensation upon Disability or Termination
of Employment.

(a)           Disability.
During any period that Jaeger fails to perform the Consultant’s Duties under
this Agreement as a result of a Disability, the Company shall nonetheless
continue to pay the Consultant and Jaeger under Section 4 until the Date of
Termination.

(b)             Termination.  If Jaeger’s employment terminates for any
other reason, except for termination of Jaeger by the Company without Cause
then the Company shall pay Consultant and Jaeger its compensation under Section
through the Date of Termination.  If
Jaeger is terminated by the Company without Cause, the Company shall pay
compensation and other benefits to Jaeger and Consultant for a period of six
(6) months after the Date of Termination under Section 4 hereunder.

7.             Nondisclosure Covenants. During the
term of this Agreement, Consultant and its officers, directors, managers,
members, employees and owners, including, without limitation Jaeger
(collectively, a “Consultant Party”), shall have access to and become familiar
with various trade secrets and other sensitive information of the Company or
its affiliates consisting of, but not limited to, processes, computer programs,
compilations of information, records, sales procedures, customer requirements,
customers, pricing techniques, customer lists, technical data, know-how, market
reports, consumer investigations, methods of doing business and other
confidential information (collectively, the “Confidential Information”), which
are owned by the Company or its affiliates and regularly used in the operation
of its business.  Each Consultant Party
acknowledges and agrees that all Confidential

 3
 

Information is and shall remain the property of the Company or its
affiliates, as the case may be.  Each
Consultant Party further agrees that he shall not use in any way or disclose
any of the Confidential Information, directly or indirectly, either during the
term of this Agreement or at any time thereafter, except as required in the
performance of the Duties or to the extent such Confidential Information is
publicly known (except as a result of either’s own actions).  All files, records, documents, information,
data, and similar items relating to the business of the Company or its
affiliates, whether prepared by a Consultant Party or otherwise coming into its
possession, shall remain the exclusive property of the Company or its
affiliates, as the case may be, and shall not be removed from the premises of
the Company or its affiliates under any circumstances without the prior written
consent of the Managers of the Company (except in the ordinary course of
business during Consultant’s period of active employment under this Agreement),
and in any event shall be promptly delivered to the Company (without a
Consultant Party retaining any copies) upon termination of this Agreement.

8.             Noncompetition Covenant.  Without the prior written consent of the
Company, no Consultant Party, during the term of this Agreement and for two (2)
years thereafter, directly or indirectly, as a director, officer, agent,
employee, consultant, or independent contractor, or in any other individual or
representative capacity, may (i) invest in (other than investments in
publicly-owned companies which constitute not more than one percent (1%) of the
outstanding securities of any such company) or engage in any business or
activity that is competitive with the business of the Company or its
affiliates, (ii) accept employment with or render services to a competitor of
the Company or its affiliates, or (iii) take any action inconsistent with the
fiduciary relationship of an employee to his employer.  As used in this Agreement, (i) “affiliates”
shall mean persons or entities that, directly or indirectly through one or more
intermediaries, control or are controlled by, or are under common control with,
the Company or its affiliates, and shall specifically include all subsidiaries
of the Company, (ii) “competitive” shall mean the subject action or activity is
the same or similar action, duty, function, product, service or activity
provided by the Company or an affiliate, and it involves a client, customer or
identified potential customer of the Company or an affiliate of either as of
the date this Agreement terminates, and (iii) “competitor” shall mean the
subject person or entity engages in activity which is the same or similar to
the services or activities provided by the Company or an affiliate, to its
customers, and such activity is directed at, or involves a client, customer or
identified potential customer of the Company or an affiliate of either as of
the date this Agreement terminates.

9.             Covenant Not to Hire.  During the term of this Agreement and for a
period of two (2) years after its termination for any reason whatsoever, no
Consultant Party shall, on his own behalf or on behalf of any other person,
partnership, association, limited liability company, corporation, or other
entity, hire, or solicit any employee of the Company or its affiliates, or in
any manner attempt to influence or induce any employee of the Company or its
affiliates, to leave the employment of the Company or its affiliates, nor shall
any Consultant party use or disclose to any person, partnership, association,
limited liability company, corporation, or other entity any information obtained
while an employee of the Company concerning the names and addresses of the
employees of the Company or its affiliate.

10.           Severability.  If any provision of this Agreement is held to
be illegal, invalid, or unenforceable under present or future laws effective
during the term hereof, such provision shall be fully severable and this
Agreement shall be construed and enforced as if such illegal, invalid, or

 4
 

unenforceable provision never comprised a part of this Agreement; and
the remaining provisions of this Agreement shall remain in full force and
effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of such
illegal, invalid, or unenforceable provision, there shall be added
automatically as part of this Agreement a provision as similar in its terms to
such illegal, invalid, or unenforceable provision as may be possible and be
legal, valid, and enforceable.

11.           Notice. 
All notices, demands, requests or other communications that may be or
are required to be given, served or sent by either party to the other party
pursuant to this Agreement shall be in writing and shall be mailed by
first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, telegram or facsimile transmission
addressed as set forth on the signature pages hereof. Each party may designate
by notice in writing a new address to which any notice, demand, request or
communication may thereafter be so given, served or sent. Each notice, demand,
request or communication that is mailed, delivered or transmitted in the manner
described above shall be deemed sufficiently given, served, sent and received
for all purposes at such time as it is delivered to the addressee with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a facsimile transmission) the answer back being deemed conclusive
evidence of such delivery or at such time as delivery is refused by the
addressee upon presentation.

12.           Amendment; Waiver.  No provisions of this Agreement may be
modified, waived or amended unless such waiver, modification or amendment is
agreed to in writing and signed by Consultant and such officer as may be
specifically designated by the Board, and such provisions shall be modified,
waived or amended only to the extent set forth in such writing.

13.           Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not effect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.

14.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

15.           Arbitration.  Any dispute arising from this Agreement shall
be settled by arbitration in accordance with the commercial rules then in
effect of the American Arbitration Association, except as modified in this
Paragraph 15 and, except that the arbitrator(s) shall be selected in accordance
with the following procedure: such dispute shall be referred to and decided by
a single arbitrator if the parties can agree upon one within thirty (30) days
after either of the parties shall notify the other that it wishes to avail
itself of the provisions of this Paragraph 15; otherwise, such dispute shall be
referred to and decided by three arbitrators, one to be appointed by the
Company and one to be appointed by Consultant, each such appointment to be made
within twenty (20) days after the expiration of the thirty (30) day period
referred to above, and the third arbitrator to be appointed by the first two
arbitrators within thirty (30) days after the expiration of such twenty (20)
day period. If the first two arbitrators cannot reach agreement on the third
arbitrator within said thirty (30) day period, the third arbitrator shall be an
impartial arbitrator appointed by the President of the American Arbitration
Association within twenty (20) days after the expiration of said thirty (30)
day period.  Hearings of the
arbitrator(s)

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shall be held in Dallas, Texas, unless the parties agree
otherwise.  The presentations of the
parties in the arbitration proceeding shall be commenced and completed within
sixty (60) days after selection of the arbitration panel, and the arbitration
panel shall render its decision in writing within thirty (30) days after
completion of such presentations. Any decision concurred in by any two (2) of
the arbitrators shall constitute the decision of the arbitration panel, and
unanimity shall not be required. Judgment upon an award rendered by the
arbitrator(s) may be entered in any court of competent jurisdiction, including
courts in the State of Texas. Any award so rendered shall be final and binding
upon the parties hereto. All costs and expenses of the arbitrator(s) shall be
paid as determined by such arbitrator(s), and all costs and expenses of
experts, witnesses and other persons retained by the parties shall be borne by
them respectively.

16.           General Creditor.  Nothing contained in this Agreement and no
action taken pursuant to the provisions of this Agreement shall create or be
construed to create a trust relationship between the Company and Consultant or
any other person. To the extent that Consultant acquires a right to receive
payments under this Agreement, such rights shall be no greater than the right
of any general unsecured creditor of the Company.

17.           No Assignment.  The right of Consultant or any other person
to the payment of amounts or other benefits under this Agreement shall not be
assigned, alienated, hypothecated, placed in trust, disposed of, transferred,
pledged or encumbered (except by will or by the laws of descent and
distribution), and, to the extent permitted by law, no such amount or payment
shall in any way be subject to any legal process to subject the same to the
payments of any claim against Consultant or any other person.

18.           Taxes. 
The Company will have the right to withhold from any transfer or payment
made to Consultant or to any other person hereunder, whether such payment is to
be made in cash or other property, all applicable federal, state, city or other
taxes or foreign taxes as shall be required, in the determination of the
Company, pursuant to any statute or governmental regulation or ruling.  Notwithstanding the foregoing, Consultant
shall be solely responsible for the payment of all employment taxes of each
Consultant Party.  Consultant hereby
indemnifies and agrees to hold harmless each officer and director of the
Company for any employment taxes of, or attributable to, any Consultant Party.

19.           Injunctive Relief.  Notwithstanding the provisions of Paragraph 15
if there is a breach or threatened breach by Consultant of the provisions of
this Agreement, the Company shall be entitled to an injunction to prevent
irreparable injury to the Company

20.           Integration.  This Agreement represents the entire
understanding and agreement between the parties with respect to the subject
matter of this Agreement, and all other written or oral agreements relating to
the subject matter hereof are hereby superseded.

21.           Governing Law.  The terms and provisions of this Agreement,
including without limitation the provisions for arbitration under Paragraph 15,
shall be construed in accordance with, and governed by, the laws of the State
of Texas.

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22.           Survival.  Notwithstanding the termination of this
Agreement or Consultant’s termination of employment, the provisions of
Paragraphs 7 through 13 and Paragraph 15 through 17 shall survive and continue
in full force and effect in accordance with its terms.

23.           Personal Guarantee.  Jaeger hereby personally guarantees the
complete, professional and satisfactory performance of the Consultant under
this Agreement.

24.           Independent
Contractor.  The
Consultant and the Company agree that the Consultant is serving as an
independent contractor to the Company, and not as its employee.  The Consultant shall not have any authority
to act on behalf of, or to bind the Company without its written consent.

25.           Indemnification.  The Company shall indemnify Consultant and
Jaeger against, and reimburse and advance to Consultant and Jaeger for, all
liabilities, costs and expenses incurred in connection with their performance
as a director, officer or consultant under this Agreement and any actions taken
or omitted in such capacity as a director, officer or consultant under this
Agreement to the greatest extent permitted under the Texas Business Corporation
Act and other applicable laws at the time of such indemnification,
reimbursement or advance payment.

IN WITNESS WHEREOF, the
Company and the Consultant have executed this Agreement as of the 14th day
of April, 2007.

	
  

  	
   

  	
  CONSULTANT:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE FAIRMOUNT COMPANY

  
	
   

  	
   

  	
  a District of Columbia corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John T. Jaeger, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
  John T. Jaeger, Jr.

  
	
   

  	
   

  	
  Its:

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JAEGER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ John T.
  Jaeger, Jr.

  	
   

  
	
   

  	
   

  	
  John T. (Corky)
  Jaeger, Jr.

  	
   

  
							

 

 7
 

 

	
  

  	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PLATINUM RESEARCH ORGANIZATION, INC.

  
	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Thomas G.
  Plaskett

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Thomas G.
  Plaskett

  	
   

  
	
   

  	
   

  	
  Its:

  	
  Chairman

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Acknowledged and Agreed:

  
	
   

  	
   

  	
  PLATINUM RESEARCH ORGANIZATION, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John T.
  Jaeger, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John T. Jaeger,
  Jr.

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President and
  CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PLATINUM IP MANAGEMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John T.
  Jaeger, Jr.

  	
   

  
	
   

  	
   

  	
  Name:

  	
  John T. Jaeger,
  Jr.

  	
   

  
	
   

  	
   

  	
  Title:

  	
  President and
  CEO

  	
   

  
								

 

 8Exhibit 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.  THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT OR ANY APPLICABLE STATE SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ANDOVER MEDICAL, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

2007-C-1

WARRANT TO PURCHASE SHARES

OF THE COMMON STOCK OF

ANDOVER MEDICAL, INC.

(Void after Expiration Date – May 8, 2012)

Issue Date: May 8, 2007

This certifies that Vicis Capital Master Fund or
its successors or assigns (“Holder”) shall be entitled to purchase from Andover Medical, Inc., a Delaware
corporation (“Company”),
having its principal place of business at 510 Turnpike Street, Suite 204, N.
Andover, MA 01845, 4,857,143 fully paid and non-assessable shares (“Warrant Shares”) of the
Company’s common stock, par value $.001 per share (“Common Stock”), at a
price per share equal to the Exercise Price (as defined below).

This Warrant is being issued to the Holder in
connection with the offering of up to 34 units (the “Units”)
at a price of $50,000 per Unit (the “Series B Offering”),
or a maximum offering of $1,700,000 pursuant to offering documents dated the
date hereof.  Each Unit will consist of
(i) fifty shares of Series B Convertible Preferred Stock of the Corporation,
par value $.001 per share (“Series B Preferred Stock”),
with a Face Value of $1,000 per share, with each share initially convertible
into 2,857 shares, or an aggregate of 142,850 shares per Unit, of common stock,
$.001 par value (“Common Stock”)
at $0.35 per share of Common Stock (the “Offering Price”),
(ii) Class C Common Stock Purchase Warrants to purchase 142,850 shares of
Common Stock exercisable for a period of five years at $0.35 per share (this “Warrant”), and (iii) Class D Common
Stock Purchase Warrants to purchase 142,850 shares of Common Stock exercisable
for a period of five years at a price of $0.35 per share (“D Warrant”).
This Warrant is one of several which will be identical except for names and
amounts.  Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Subscription
Agreement.

The initial exercise price (“Exercise Price”) of this Warrant
will be equal to $0.35 per share, subject to adjustment upon the occurrence of
the events described in Section 2 of this Warrant.

This Warrant shall be immediately exercisable
into shares of Common Stock at any time, or from time-to-time, up to and
including 5:00 p.m. (Eastern Standard time) on 

the fifth anniversary of the Effective Date of
the registration statement (the “Series B  Registration Statement”) of the Company on Form SB-2, or
another suitable form permitted by the SEC, registering the shares of Common
Stock underlying the Series B Preferred Stock and the C and D Warrants (the “Expiration Date”); provided, however, if such date is not a
Business Day, then on the Business Day immediately following such date). “Business Day” means any day except a Saturday, Sunday or
other day on which commercial banks in the City of New York, New York are
authorized by law to close.

This Warrant is exercisable in whole or in part
upon the surrender to the Company at its principal place of business (or at
such other location as the Company may advise the Holder in writing) of this
Warrant properly endorsed with a form of subscription in substantially the form
attached hereto duly filled in and signed and, if applicable, upon payment in
cash or by check of the aggregate Exercise Price for the number of shares for
which this Warrant is being exercised as determined in accordance with the
provisions hereof.

1.     Exercise;
Issuance of Certificates; Payment for Shares.

1.1                               General.  This Warrant is exercisable in full, or in
part, in increments of 1,000 shares, except for the final exercise which may be
for the remainder, at the option of the Holder of record at any time or from
time to time, up to the Expiration Date for all of the shares of Common Stock
(but not for a fraction of a share) which may be purchased hereunder.  In the case of the exercise of less than all
of the Warrants represented hereby, the Company shall cancel this Warrant
Certificate upon the surrender hereof and shall execute and deliver a new  Warrant Certificate or Warrant Certificates
of like tenor for the balance of such Warrants. The Company agrees that the shares of
Common Stock purchased under this Warrant shall be and are deemed to be issued
to the Holder hereof as the record owner of such shares as of the close of
business on the date on which the exercise notice (attached hereto as Schedule
A or B) is delivered to the Company via facsimile; provided, however, that in
such case this Warrant shall be surrendered to the Company within three (3)
business days.  Certificates for the
shares of Common Stock so purchased, together with any other securities or
property to which the Holder is entitled upon such exercise, shall be delivered
to the Holder by the Company at the Company’s expense within a reasonable time
after the rights represented by this Warrant have been so exercised, and in any
event, within three business days of such exercise and delivery of the Exercise
Price.  The Company shall, no later than
the close of business on the first business day following the date on which the
Company receives the exercise notice by facsimile transmission issue and
deliver to the Company’s Transfer Agent irrevocable instructions to issue and
deliver or cause to be delivered to such Holder the number of Warrant Shares
exercised within two business days thereafter by either express mail or hand
delivery.  Each Common Stock certificate
so delivered shall be in such denominations of 

 2
 

1,000 or more shares of Common Stock, in
increments of 1,000, as may be requested by the Holder hereof and shall be
registered on the Company’s books in the name designated by such Holder,
provided that no Holder of this Warrant shall be permitted to exercise any
warrants to the extent that such exercise would cause any Holder to be the
beneficial owner of 5% or more of the then outstanding Company’s Common Stock,
at that given time.  This limitation
shall not be deemed to prevent any Holder from acquiring more than an aggregate
of 5% of the Common Stock, so long as such Holder does not beneficially own, or
have the right to beneficially own, 5% or more of the Company’s Common Stock at
any given time.

1.2                               Exercise
for Cash

This
Warrant may be exercised, in whole at any time or in part from time to time,
prior to the Expiration Date, by the Holder by the facsimile delivery of the
exercise notice, as attached hereto, on the date of the exercise and by
surrender of this Warrant within three (3) business days from the exercise day
at the address set forth hereof, together with proper payment of the aggregate Exercise Price payable hereunder for
the Warrant Shares (“Aggregate Warrant Price”),
or the proportionate part thereof if this Warrant is exercised in part.  Payment for the Warrant Shares shall be made
by wire, or check payable to the order of the Company.  If this Warrant is exercised in part, this
Warrant must be exercised for a number of whole shares of the Common Stock, and
the Holder is entitled to receive a new Warrant covering the Warrant Shares
which have not been exercised and setting forth the proportionate part of the
Aggregate Warrant Price applicable to such Warrant Shares.  Upon such surrender of this Warrant, the
Company will (a) issue a certificate or certificates in the name of the Holder
for the largest number of whole shares of the Common Stock to which the Holder
shall be entitled and (b) deliver the other securities and properties
receivable upon the exercise of this Warrant, or the proportionate part thereof
if this Warrant is exercised in part, pursuant to the provisions of this
Warrant.

1.3                               Cashless Exercise

If commencing on the date
that is one year following the final closing of the Series B Offering, an
effective Series B Registration Statement is not available for the resale of
all of the Warrant Shares issuable hereunder at the time an exercise notice is
delivered to the Company (either due to the inability of the Company to have
the Securities and Exchange Commission declare such Series B Registration
Statement effective on or prior to such date or to maintain the effectiveness
of such Series B Registration Statement for the duration of the period prescribed
in the Series B Registration Statement), the Holder may pay the Exercise Price
through a cashless exercise (a “Cashless Exercise”),
as hereinafter 

 3
 

provided.  The Holder may effect a Cashless Exercise by
surrendering this Warrant to the Company and noting on the exercise notice that
the Holder wishes to effect a Cashless Exercise, upon which the Company shall
issue to the Holder the number of Warrant Shares determined as follows:

X
= Y x (A-B)/A

where:

X = the number of Warrant
Shares to be issued to the Holder;

Y = the number of Warrant
Shares with respect to which this Warrant is being exercised;

A = the Market Price (as
defined in Section 2.4(ii)(C) below) as of the Exercise Date; and

B = the Exercise Price.

For purposes of Rule 144, it is intended and
acknowledged that the Warrant Shares issued in a Cashless Exercise transaction
shall be deemed to have been acquired by the Holder, and the holding period for
the Warrant Shares required by Rule 144 shall be deemed to have been commenced,
on the date this Warrant was originally issued by the Company.

1.4                               SHARES TO BE FULLY PAID; RESERVATION OF SHARES.   The Company covenants and agrees that all
shares of Common Stock which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable and free from all preemptive rights of any
shareholder and free of all taxes, liens and charges with respect to the issue
thereof.  The Company further covenants
and agrees that, during the period within which the rights represented by this
Warrant may be exercised, the Company will at all times have authorized and
reserved, for the purpose of issue or transfer upon exercise of the
subscription rights evidenced by this Warrant, a sufficient number of shares of
authorized but unissued Common Stock, when and as required to provide for the
exercise of the rights represented by this Warrant.  The Company will take all such action as may
be necessary to assure that such shares of Common Stock may be issued as
provided herein without violation of any applicable law or regulation, or of
any requirements of any domestic securities exchange upon which the Common
Stock or other securities may be listed; provided, however, that the Company
shall not be required to effect a registration under federal or state
securities laws with respect to such exercise other than as required by Section
7.7 herein.  The Company will not take
any 

 4
 

action which would result in any adjustment
of the Exercise Price if the total number of shares of Common Stock issuable
after such action upon exercise of all outstanding warrants, together with all
shares of Common Stock then outstanding and all shares of Common Stock then
issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of
shares of Common Stock or equity securities then authorized by the Company’s Certificate
of Incorporation, as amended (“Company Charter”).

1.5                               BUY-IN.  In addition to any other rights available to a
Holder, if the Company fails to deliver to the Holder a certificate
representing Warrant Shares by the
third Trading Day after the date on which delivery of such certificate is
required by this Warrant, and if after such third Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder on or after the Exercise Date
of the Warrant Shares that the
Holder anticipated receiving from the Company (a “Buy-In”),
then the Company shall, within three Trading Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Common Stock) shall terminate, or (ii) promptly
honor its obligation to deliver to the Holder a certificate or certificates
representing such Common Stock and pay cash to the Holder in an amount equal to
the excess (if any) of the Buy-In Price over the product of (A) such number of
shares of Common Stock, times (B) the Closing Price on the date of the event
giving rise to the Company’s obligation to deliver such certificate.  Notwithstanding the foregoing, the Company
shall have no liability under this subsection for the Buy-In Price if it has
compiled with the requirements of subsection 1.1 above and, notwithstanding it
using its best efforts to have its transfer agent deliver the Warrant Shares to
the Holders within three trading days of the Holder’s request, such Warrant
Shares are not delivered on a timely basis.

1.6                               TRUSTEE FOR WARRANT HOLDERS. In the event
that a bank or trust company shall have been appointed as trustee for the
Holder of the Warrants pursuant to Subsection 2.3.3, such bank or trust
company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.

2.     DETERMINATION OR ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.  The Exercise Price and the number of shares
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the occurrence of certain events 

 5
 

described in this Section 2. 
Upon each adjustment of the Exercise Price, the Holder of this Warrant
shall thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of shares obtained by multiplying the Exercise
Price in effect immediately prior to such adjustment by the number of shares
purchasable pursuant hereto immediately prior to such adjustment, and dividing
the product thereof by the Exercise Price resulting from such adjustment.

2.1                               Subdivision
or Combination of Common Stock.  In
case the Company shall at any time subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, the Exercise Price in
effect immediately prior to such subdivision shall be proportionately reduced,
and conversely, in case the outstanding shares of Common Stock of the Company
shall be combined or reclassified into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.  Notwithstanding the preceding
sentence, for a 12-month period commencing on the Effective Date the Exercise
Price and the number of shares of Common Stock issuable upon the exercise of
this Warrant shall not be adjusted in the event of a reverse stock split or any
similar recapitalization of the Company.

2.2                               Dividends
in Common Stock, Other Stock, Property, Reclassification.  If at any time or from time to time the
holders of Common Stock (or any shares of stock or other securities at the time
receivable upon the exercise of this Warrant) shall have received or become
entitled to receive, without payment therefore:

2.2.1                                 Stock,
Common Stock or any shares of capital stock or other securities which are at
any time directly or indirectly convertible into or exchangeable for Common
Stock, or any rights or options to subscribe for, purchase or otherwise acquire
any of the foregoing by way of dividend or other distribution,

2.2.2                                 Any
cash paid or payable otherwise than as a cash dividend, or

2.2.3                                 Common
Stock or additional capital stock or other securities or property (including
cash) by way of spinoff, split-up, reclassification, combination of shares or
similar corporate rearrangement, (other than shares of Common Stock issued as a
stock split or adjustments in respect of which shall be covered by the terms of
Section 2.1 above), then and in each such case, the Holder hereof shall, upon
the exercise of this Warrant, be entitled to receive, in addition to the number
of shares of Common Stock or other capital stock receivable thereupon, and
without payment of any additional consideration therefor, the amount of stock
and other securities and property (including cash in the cases referred to in
clause (2.2.2) above and this clause (2.2.3)) which such 

 6
 

Holder would hold on the date of such
exercise had he been the holder of record of such Common Stock as of the date
on which holders of Common Stock received or became entitled to receive such
shares or all other additional stock and other securities and property.

2.3                               Reorganization,
Reclassification, Consolidation, Merger, Sale or Dissolution.

2.3.1                                                                     If
any recapitalization, reclassification or reorganization of the capital stock
of the Company, or any consolidation or merger of the Company with another
corporation, or the sale of all or substantially all of its assets or other
transaction shall be effected in such a way that holders of Common Stock shall
be entitled to receive stock, securities, or other assets or property (an “Organic Change”),
then, as a condition of such Organic Change, lawful and adequate provisions
shall be made by the Company whereby the Holder hereof shall thereafter have
the right, upon exercise of this Warrant, to purchase and receive (in lieu of
the shares of the Common Stock of the Company immediately theretofore
purchasable and receivable upon the exercise of the rights represented by this
Warrant) such shares of stock, securities or other assets or property as may be
issued or payable with respect to or in exchange for a number of outstanding
shares of such Common Stock equal to the number of shares of such stock
immediately theretofore purchasable and receivable upon the exercise of the
rights represented by this Warrant.  In
the event of any Organic Change, appropriate provision shall be made by the
Company with respect to the rights and interests of the Holder of this Warrant
to the end that the provisions hereof (including, without limitation,
provisions for adjustments of the Exercise Price and of the number of shares
purchasable and receivable upon the exercise of this Warrant) shall thereafter
be applicable, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof. The Company will not effect
any such consolidation, merger or sale unless, prior to the consummation
thereof, the successor corporation (if other than the Company) resulting from
such consolidation or the corporation purchasing such assets shall assume by
written instrument executed and mailed or delivered to the Holder hereof at the
last address of such Holder appearing on the books of the Company, the
obligation to deliver to such Holder, upon Holder’s exercise of this Warrant
and payment of the 

 7
 

purchase price in accordance with the terms
hereof, such shares of stock, securities or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to purchase.

2.3.2                                                                     No
adjustment of the Exercise Price, however, shall be made in an amount less than
$.02 per Share, but any such lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to $.02 per Share
or more.

2.3.3                                                                     In
the event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where applicable) receivable
by the Holder of the Warrants after the effective date of such dissolution
pursuant to this Subsection 2.3.3 to a bank or trust company (a “Trustee”) having its principal office in
New York, NY, as trustee for the Holder of the Warrants.

2.4          Dilutive Issuances.

(i)            Adjustment
Upon Dilutive Issuance.  If, at any time prior to the Expiration Date,
the Company issues or sells any shares of Common Stock or any equity or equity
equivalent securities (including any equity, debt or other instrument that is
at any time over the life thereof convertible into or exchangeable for Common
Stock or other securities which are so convertible or exchangeable)
(collectively, “Common Stock Equivalents”) for per
share consideration less than the Exercise Price on the date of such issuance
or sale, (a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalent so issued shall
at any time, whether by operation of purchase price adjustments, reset
provisions, floating conversion, exercise or exchange prices or otherwise, or
due to warrants, options or rights per share which is issued in connection with
such issuance, be entitled to receive shares of Common Stock at a price per
share which is less than the Offering Price, such issuance shall be deemed to
have occurred for less than the Offering Price) then the Exercise Price shall
be adjusted to 128% of the adjusted Offering Price equal to the price paid for
the shares of Common Stock (or Common Stock Equivalents) so as to equal the
consideration received or receivable by the Company (on a per share basis) for
the additional shares of Common Stock or Common Stock Equivalents so issued,
sold or deemed issued or sold in such Dilutive Issuance (which, in the case of
a deemed issuance or sale, shall be calculated in accordance with subparagraph
(ii) below).  Such adjustment shall be
made whenever such Common Stock or Common Stock Equivalents are issued.

 8
 

(ii)           Effect On Exercise Price Of Certain Events.  For
purposes of determining the adjusted Exercise Price under subparagraph (i) of
this paragraph 2.4, the following will be applicable:

(A)         Issuance of Common Stock Equivalents.  If
the Company issues or sells any Common Stock Equivalents, whether or not
immediately convertible, exercisable or exchangeable, and the price per share
for which Common Stock is issuable upon such conversion, exercise or exchange
is less than the Offering Price in effect on the date of issuance or sale of
such Common Stock Equivalents, then the maximum total number of shares of
Common Stock issuable upon the conversion, exercise or exchange of all such
Common Stock Equivalents shall, as of the date of the issuance or sale of such
Common Stock Equivalents, be deemed to be outstanding and to have been issued
and sold by the Company for such price per share. 

(B)          Change in Conversion Rate.  If,
following an adjustment to the Exercise Price upon the issuance of Common Stock
Equivalents pursuant to a Dilutive Issuance, there is a change at any time in
(y) the amount of additional consideration, if any, payable to the Company upon
the conversion, exercise or exchange of any Common Stock Equivalents; or (z)
the rate at which any Common Stock Equivalents are convertible into or
exercisable or exchangeable for Common Stock (in each such case, other than
under or by reason of provisions designed to protect against dilution), then in
any such case, the Exercise Price in effect at the time of such change shall be
readjusted to the Exercise Price which would have been in effect at such time
had such Common Stock Equivalents still outstanding provided for such changed
additional consideration or changed conversion, exercise or exchange rate, as
the case may be, at the time initially issued or sold.

(C)          Calculation of Consideration Received.  If
any Common Stock or Common Stock Equivalents are issued or sold for cash, the
consideration received therefor will be the amount received by the Company
therefor.  In case any Common Stock or
Common Stock Equivalents are issued or sold for a consideration part or all of
which shall be other than cash, including in the case of a strategic or similar
arrangement in which the other entity will provide services to the Company,
purchase services from the Company or otherwise provide intangible
consideration to the Company, the amount of the consideration other than cash
received by the Company (including the net present value of the consideration
other than cash expected by the Company for the provided or purchased services)
shall be the fair market value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount
of consideration received by the Company will be the Market Price thereof on
the date of receipt. The term “Market Price”
means, as of a particular date, the average of the high and low price of the
Common Stock for the ten (10) consecutive Trading Days occurring immediately
prior to (but not including) any given date, as reported in the principal market
where the Company’s securities are traded. 
In case any Common Stock or 

 9
 

Common
Stock Equivalents are issued in connection with any merger or consolidation in
which the Company is the surviving corporation, the amount of consideration
therefor will be deemed to be the fair market value of such portion of the net
assets and business of the non-surviving corporation as is attributable to such
Common Stock or Common Stock Equivalents. The independent members of the
Company’s Board of Directors shall calculate reasonably and in good faith,
using standard commercial valuation methods appropriate for valuing such
assets, the fair market value of any consideration other than cash or
securities.

(D)          Issuances Without Consideration Pursuant to
Existing Securities.  If the Company issues (or becomes obligated
to issue) shares of Common Stock pursuant to any anti-dilution or similar
adjustments (other than as a result of stock splits, stock dividends and the
like) contained in any Common Stock Equivalents outstanding as of the date
hereof, then all shares of Common Stock so issued shall be deemed to have been
issued for no consideration.

(iii)          Exceptions To Adjustment Of Exercise Price. 
Notwithstanding the foregoing, no adjustment to the Exercise Price shall
be made pursuant to this paragraph (c) upon the issuance of any Excluded
Securities.  For purposes hereof, “Excluded Securities” means (i) the issuance of shares of
Common Stock upon the conversion of Series A Preferred Stock and the A and B
Warrants; (ii) the issuance of shares of Common Stock upon the conversion of
Series B Preferred Stock and the C and D Warrants issued in the Series B
Offering; (iii) the issuance of shares of Common Stock, Convertible Securities
or Rights to the Corporation’s management team as compensation, or the issuance
of shares of Common Stock upon exercise of Convertible Securities or Rights, or
issuance of Convertible Securities or Rights to the officers, employees,
directors, consultants or advisors to the Corporation pursuant to any stock
option plan, stock purchase plan, or other arrangement approved by the Board;  (iv) the issuance of shares of Common Stock, convertible
securities or rights in a merger or acquisition by the Corporation approved by
the Board; (v) the issuance of shares of Common Stock, convertible securities
or rights to financial institutions or lessors, pursuant to a commercial credit
arrangement, equipment financing transaction, or a similar transaction, or in
connection with a strategic partnership approved by the Board; (vi) the
issuance of securities in a registered public offering; (vii) the issuance of
securities pursuant to the exercise of currently outstanding options, warrants,
notes or other rights to acquire Common Stock of the Corporation; or (viii) the
issuance of shares of Common Stock, convertible securities or rights approved
by the Corporation’s shareholders.

(iv)          Adjustments; Additional Shares, Securities or
Assets.  In the event that at any time, as a result of
an adjustment made pursuant to this Section 2.4, each Holder shall, upon
conversion of such Holder’s Warrants, become entitled to receive securities or
assets (other than Common Stock) then, wherever appropriate, all references
herein to shares of Common Stock shall be deemed to refer to and include such
shares and/or other securities or assets; and thereafter the number of such shares
and/or other securities or assets shall be subject to adjustment from time to
time in a 

 10
 

manner and upon terms as nearly equivalent as
practicable to the provisions of this Section  2.4.

2.5          Certain Events.  If any change in the outstanding Common Stock
of the Company or any other event occurs as to which the other provisions of
this Section 2 are not strictly applicable or if strictly applicable would not
fairly protect the purchase rights of the Holder of the Warrant in accordance
with such provisions, then the Board of Directors of the Company shall make an
adjustment in the number and class of shares available under the Warrant, the
Exercise Price or the application of such provisions, so as to protect such
purchase rights as aforesaid.  The
adjustment shall be such as will give the Holder of the  Warrant upon exercise for the same aggregate
Exercise Price the total number, and kind of shares as he would have owned had
the  Warrant been exercised prior to the
event and had he continued to hold such shares until after the event requiring
adjustment.

2.6          Notices
of Change.

2.6.1                        Upon any
determination or adjustment in the number or class of shares subject to this
Warrant and of the Exercise Price, the Company shall give written notice
thereof to the Holder, setting forth in reasonable detail and certifying the
calculation of such determination or adjustment.

2.6.2                        The Company shall give written
notice to the Holder at least 20 business days prior to the date on which the
Company closes its books or takes a record for determining rights to receive
any dividends or distributions.

2.6.3                          The Company shall also give
written notice to the Holder at least 20 days prior to the date on which an
Organic Change shall take place.

3.     ISSUE TAX.  The
issuance of certificates for shares of Common Stock upon the exercise of the Warrant
shall be made without charge to the Holder of the Warrant for any issue tax
(other than any applicable income taxes) in respect thereof; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the then Holder of the Warrant being
exercised.

4.     CLOSING OF BOOKS. 
The Company will at no time close its transfer books against the
transfer of any warrant or of any shares of stock issued or issuable upon the
exercise of any warrant in any manner which interferes with the timely exercise
of this Warrant.

5.     NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY.  Nothing contained in this Warrant shall be
construed as conferring upon the Holder hereof the right to vote as a
shareholder of the Company.  No dividends
or interest shall be payable or accrued in respect of this Warrant, the
interest represented hereby, or the shares purchasable 

 11
 

hereunder until, and only to the extent that, this Warrant shall have
been exercised, subject to the Holder’s rights under Section 2 of this Warrant.  The Holder of this Warrant shall receive all
notices as if a shareholder of the Company. 
No provisions hereof, in the absence of affirmative action by the Holder
to purchase shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder hereof, shall give rise to any liability of
such Holder for the Exercise Price or as a shareholder of the Company, whether
such liability is asserted by the Company or by its creditors.

6.     RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT.  The rights and obligations of the Company, of
the Holder of this Warrant and of the holder of shares of Common Stock issued
upon exercise of this Warrant, shall survive the exercise of this Warrant.

7.     Further Representations,
Warranties and Covenants of the Company.

7.1                               Articles
and Bylaws.  The Company has made
available to the Holder true, complete and correct copies of the Company’s
Charter and Bylaws, as amended, through the date hereof.

7.2                               Due
Authority.  The execution and
delivery by the Company of this Warrant and the performance of all obligations
of the Company hereunder, including the issuance to Holder of the right to
acquire the shares of Common Stock, have been duly authorized by all necessary
corporate action on the part of the Company, and the Warrant is not
inconsistent with the Company Charter or Bylaws and constitutes a legal, valid
and binding agreement of the Company, enforceable in accordance with its terms.

7.3                               Consents
and Approvals.  No consent or
approval of, giving of notice to, registration with, or taking of any other
action in respect of any state, federal or other governmental authority or
agency is required with respect to the execution, delivery and performance by
the Company of its obligations under this Warrant, except for any filing
required by applicable federal and state securities laws, which filing will be
effective by the time required thereby.

7.4                               Issued
Securities.  All issued and
outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable.  All outstanding shares of capital stock were
issued in full compliance with all federal and state securities laws.

7.5                               Exempt
Transaction.  Subject to the accuracy
of the Holders’ representations in Section 8 hereof, the issuance of the Common
Stock upon exercise of this Warrant will constitute a transaction exempt from
(i) the registration requirements of Section 5 of the 1933 Act, in reliance upon Section 4(2) thereof, or upon the
applicable exemption under Regulation 

 12
 

D, and (ii) the qualification requirements of
the applicable state securities laws.

7.6                               Compliance
with Rule 144.  At the written
request of the Holder, who proposes to sell Common Stock issuable upon the
exercise of the Warrant in compliance with Rule 144 promulgated by the SEC, the
Company shall furnish to the Holder, within five (5) days after receipt of such
request, a written statement confirming the Company’s compliance with the
filing requirements of the SEC as set forth in such Rule, as such Rule may be
amended from time to time.

7.7                               Registration.  Within 30 days following the final closing of
this Series B Offering (the “Scheduled Filing
Date”), the Company shall file with the Securities and Exchange
Commission the Series B Registration Statement under the Securities Act,
covering, inter alia, the resale of the shares of Common Stock underlying the
Warrants.  In the event the Series B
Registration Statement is not filed on or before the Scheduled Filing Date or
declared effective within six (6) months from the effective date of the Company’s
registration statement concerning the offering of Series A Preferred Stock (the
“Series A Registration Statement”), the number of shares of Common Stock
issuable upon exercise of this Warrant shall be increased to twice the original
amount.  The Company agrees to keep the
Series B Registration Statement effective until expiration of the Warrants.

7.8                               Maximum Exercise. The Holder shall not be
entitled to exercise this Warrant on an exercise date in connection with that
number of shares of Common Stock which would be in excess of the sum of
(i) the number of shares of Common Stock beneficially owned by the Holder
and its affiliates on an exercise date, and (ii) the number of shares of
Common Stock issuable upon the exercise of this Warrant with respect to which
the determination of this limitation is being made on an exercise date, which
would result in beneficial ownership by the Holder and its affiliates of more
than 9.99% of the outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13d-3 promulgated thereunder. 
Subject to the foregoing, the Holder shall not be limited to aggregate
exercises which would result in the issuance of more than 9.99%.  The restriction described in this
paragraph may be revoked upon seventy-five (75) days prior notice from the
Holder to the Company.  The Holder may
allocate which of the equity of the Company deemed beneficially owned by the
Subscriber shall be included in the 9.99% amount described above and which
shall be allocated to the excess above 9.99%.

 13
 

8.             Representations and
Covenants of the Holder.

8.1                               This
Warrant has been entered into by the Company in reliance upon the following
representations and covenants of the Holder:

8.1.1                                      Investment
Purpose.  The Warrant or the Common
Stock issuable upon exercise of the Warrant will be acquired for investment and
not with a view to the sale or distribution of any part thereof, and the Holder
has no present intention of selling or engaging in any public distribution of
the same except pursuant to a registration or exemption.

8.1.2                                      Private
Issue.  The Holder understands (i)
that the Warrant and the Common Stock issuable upon exercise of this Warrant
are not registered under the 1933 Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be
exempt from the registration and qualifications requirements thereof, and (ii)
that the Company’s reliance on such exemption is predicated on the
representations set forth in this Section 8.

8.1.3                                      Disposition
of Holders Rights.  In no event will
the Holder make a disposition of the Warrant or the Common Stock issuable upon
exercise of the Warrant unless and until (i) it shall have notified the Company
of the proposed disposition, and (ii) if requested by the Company, it shall
have furnished the Company with an opinion of counsel (which counsel may either
be inside or outside counsel to the Holder) satisfactory to the Company and its
counsel to the effect that (A) appropriate action necessary for compliance with
the 1933 Act has been taken, or (B) an exemption from the registration
requirements of the 1933 Act is available. 
Notwithstanding the foregoing, the restrictions imposed upon the
transferability of any of its rights to acquire Common Stock issuable on the
exercise of such rights do not apply to transfers from the beneficial owner of
any of the aforementioned securities to its nominee or from such nominee to its
beneficial owner, and shall terminate as to any particular share of stock when
(1) such security shall have been effectively registered under the 1933 Act and
sold by the Holder thereof in accordance with such registration or (2) such
security shall have been sold without registration in compliance with Rule 144
under the 1933 Act, or (3) a letter shall have been issued to the Holder at its
request by the staff of the SEC or a ruling shall have been issued to the
Holder at its request by the SEC stating that no action shall be recommended by
such staff or taken by the SEC, as the case may be, if such security is
transferred without registration under the 1933 Act in accordance with the
conditions 

 14
 

set forth in such letter or ruling and such
letter or ruling specifies that no subsequent restrictions on transfer are
required.  Whenever the restrictions
imposed hereunder shall terminate, as hereinabove provided, the Holder or
holder of a share of stock then outstanding as to which such restrictions have
terminated shall be entitled to receive from the Company, without expense to
such Holder, one or more new certificates for the  Warrant or for such shares of stock not
bearing any restrictive legend.

8.1.4                                      Financial
Risk.  The Holder has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the
economic risks of its investment.

8.1.5                                      Risk
of No Registration.  The Holder
understands that if the Company does not file reports pursuant to Section 15(d)
and/or Section 12(g), of the Securities Exchange Act of 1934 (“1934 Act”), or if
a registration statement covering the securities under the 1933 Act is not in
effect when it desires to sell (i) the 
Warrant, or (ii) the Common Stock issuable upon exercise of the  Warrant, it may be required to hold such
securities for an indefinite period.  The
Holder also understands that any sale of the Warrant or the Common Stock
issuable upon exercise of the  Warrant
which might be made by it in reliance upon Rule 144 under the 1933 Act may be
made only in accordance with the terms and conditions of that Rule.

8.1.6                                      Accredited
Investor.   The Holder is an “accredited investor” within
the meaning of Regulation D promulgated under the 1933 Act.

9.             MODIFICATION AND WAIVER.  This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by (a) the party against which enforcement of the same is sought or (b)
the Company and the holders of at least a majority of the number of shares into
which the  Warrants are exercisable
(without regard to any limitation contained herein on such exercise), it being
understood that upon the satisfaction of the conditions described in (a) and
(b) above, each Warrant (including any Warrant held by the Holder who did not
execute the agreement specified in (b) above) shall be deemed to incorporate
any amendment, modification, change or waiver effected thereby as of the
effective date thereof.  Notwithstanding
the foregoing, no modification to this Section 9 will be effective against any
Holder without his consent.

10.          Transfer of this Warrant.  The
Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant,
in whole or in part, as long as such sale or other disposition is made pursuant
to an effective registration statement or an exemption from the registration
requirements of the 1933 Act.  Upon such
transfer or other disposition 

 15
 

(other than a pledge), the
Holder shall deliver this Warrant to the Company together with a written notice
to the Company, substantially in the form of the Transfer Notice attached
hereto as Exhibit B (the “Transfer Notice”),
indicating the person or persons to whom this Warrant shall be transferred and,
if less than all of this Warrant is transferred, the number of Warrant Shares
to be covered by the part of this Warrant to be transferred to each such
person. Within three (3) Business Days of receiving a Transfer Notice and the
original of this Warrant, the Company shall deliver to the each transferee
designated by the Holder another Warrant(s) of like tenor and terms for the
appropriate number of Warrant Shares and, if less than all this Warrant is
transferred, shall deliver to the Holder another Warrant for the remaining
number of Warrant Shares.

11.          NOTICES.   Any
notice required or permitted hereunder shall be given in writing (unless
otherwise specified herein) and shall be deemed effectively given upon (i)
personal delivery, against written receipt thereof, (ii) delivery via facsimile
or e-mail as set forth below (iii) two business days after deposit with Federal
Express or another nationally recognized overnight courier service, or (iv)
five business days after being forwarded, postage paid, via certified or
registered mail, return receipt requested, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice.

12.          BINDING EFFECT ON SUCCESSORS; BENEFIT.  As provided in Section 2.3 above, this Warrant
shall be binding upon any corporation succeeding the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets.  All of the obligations of the
Company relating to the Common Stock issuable upon the exercise of this Warrant
shall survive the exercise and termination of this Warrant.  All of the covenants and agreements of the
Company shall inure to the benefit of the successors and assigns of the Holder
hereof.  This Warrant shall be for the
sole and exclusive benefit of the Holder and nothing in this Warrant shall be
construed to confer upon any person other than the Holder any legal or equitable
right, remedy or claim hereunder.

13.          DESCRIPTIVE HEADINGS AND GOVERNING LAW.  The description headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and
do not constitute a part of this Warrant. 
This Warrant shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by the laws of the State of Delaware.

14.          LOST WARRANTS.  The Company represents and warrants to the
Holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon receipt of an indemnity
reasonably satisfactory to the Company, or in the case of any such mutilation
upon surrender and cancellation of such Warrant, the Company, at its expense,
will make and deliver a new Warrant, of like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant.

15.          FRACTIONAL SHARES. 
No fractional shares shall be issued upon exercise of this Warrant.  The Company shall, in lieu of issuing any
fractional share, pay the Holder 

 16
 

entitled to such
fraction a sum in cash equal to such fraction multiplied by the then effective
Exercise Price.

IN
WITNESS WHEREOF, the
Company has caused this Warrant to be duly executed by its officers, thereunto
duly authorized this 8th day of May, 2007.

	
  

  	
  Andover Medical, Inc.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Edwin A. Reilly

  
	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
  Andover Medical,
  Inc.

  
	
   

  	
   

  	
  510 Turnpike
  Street, Suite 204

  
	
   

  	
   

  	
  N. Andover, MA
  01845

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Phone: 

  	
  (978) 557-1001

  
	
   

  	
   

  	
  Fax:

  	
  (978) 557-1004

  
	
   

  	
   

  	
  E-mail: ereilly@andovermedical.com

  

 

 17

SCHEDULE  A

SUBSCRIPTION
FORM

Date:                                          ,
                    

Andover Medical, Inc. - Attn:  President

Ladies and Gentlemen:

The
undersigned hereby elects to exercise the Class C Warrant issued to it by Andover
Medical, Inc.  (“Company”) and dated May
8, 2007. (“Warrant”)
and to purchase thereunder                                                              shares of the Common Stock of the
Company (“Shares”)
at a purchase price of                      ($.35) per Share or an aggregate
purchase price of                                            Dollars ($                    ) (“Exercise Price”).

Pursuant
to the terms of the Warrant, the undersigned has delivered the Exercise Price
herewith in full in cash or by certified check or wire transfer.

The
undersigned is an accredited investor as such term is defined in Regulation D
under the Securities Act of 1933, as amended (the “1933 Act”).
 The undersigned represents and warrants
that all offers and sales by the undersigned of the securities issuable upon
exercise of the Warrant shall be made pursuant to registration of the Common
Stock under the 1933 Act or pursuant to an exemption from registration under
the 1933 Act.

Very
truly yours,

ASSIGNMENT

To
Be Executed by the Holder

in Order to Assign Class C Warrants

FOR
VALUE RECEIVED,                                                                                                      hereby sells, assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER

                                                                                

                                                                                

                                                                                

[please print or type name and address]

                                        of the Class C Warrants represented by this
Warrant Certificate, and hereby irrevocably constitutes and appoints                                                                                  Attorney to transfer this Warrant
Certificate on the books of the Company, with full power of substitution in the
premises.

	
  Dated:

  	
  x

  	
   

  
	
   

  	
   

  	
  Signature
  Guaranteed

  

 

THE
SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]