Document:

[FORM
      OF SERIES C WARRANT]

     

    NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
      IN A
      GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      OR
      (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.
      NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH
      A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
      THE
      SECURITIES. ANY TRANSFEREE OF THIS WARRANT SHOULD CAREFULLY REVIEW THE TERMS
      OF
      THIS WARRANT. THE SECURITIES REPRESENTED BY THIS WARRANT MAY BE LESS THAN THE
      NUMBER SET FORTH ON THE FACE HEREOF.

    

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE EXERCISED UNTIL THE
      STOCKHOLDER APPROVAL DATE (AS DEFINED IN THE SECURITIES PURCHASE AGREEMENT,
      DATED MARCH 16, 2007, BY AND AMONG THE COMPANY AND THE BUYERS PARTY
      THERETO).

    

    CLEVELAND
      BIOLABS, INC.

    

    SERIES
      C Warrant To Purchase Common Stock

    

    Warrant
      No.: C-_____

    Number
      of
      Shares of Common Stock:_____________

    Date
      of
      Issuance: March 16, 2007 ("Issuance
      Date")

    

    Cleveland
      BioLabs, Inc., a Delaware corporation (the "Company"),
      hereby certifies that, for good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, [BUYER] the registered holder
      hereof or its permitted assigns (the "Holder"),
      is
      entitled, subject to the terms set forth below, to purchase from the Company,
      at
      the Exercise Price (as defined below) then in effect, upon surrender of this
      Warrant to Purchase Common Stock (including any Warrants to Purchase Common
      Stock issued in exchange, transfer or replacement hereof, the "Warrant"),
      at
      any time or times on or after September 16, 2007 (the "Initial
      Exercise Date"),
      but
      not after 11:59 p.m., New York Time, on the Expiration Date (as defined below
      ___________________(______________) fully
      paid nonassessable shares of Common Stock (as defined below) (the
      "Warrant
      Shares").
      Except as otherwise defined herein, capitalized terms in this Warrant shall
      have
      the meanings set forth in Section 15. This Warrant is one of the Warrants (as
      defined in the Securities Purchase Agreement) to purchase Common Stock (the
      "SPA
      Warrants"
      issued
      pursuant to Section 1 of that certain Securities Purchase Agreement, dated
      as of
      March 14, 2007 (the "Subscription
      Date"),
      by
      and among the Company and the investors (the "Buyers")
      referred to therein (the "Securities
      Purchase Agreement").

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    1.  EXERCISE
      OF WARRANT.

     

    (a)  Mechanics
      of Exercise.
      Subject
      to the terms and conditions hereof (including, without limitation, the
      limitations set forth in Section 1(f)), this Warrant may be exercised by the
      Holder on any day on or after the Initial Exercise Date, in whole or in part
      by
      (i) delivery of a written notice, in the form attached hereto as Exhibit B
      (the
      "Exercise
      Notice"),
      of
      the Holder's election to exercise this Warrant, (ii) (A) payment to the
      Company of an amount equal to the applicable Exercise Price multiplied by the
      number of Warrant Shares as to which this Warrant is being exercised (the
      "Aggregate
      Exercise Price")
      in
      cash or wire transfer of immediately available funds, or (B) to the extent
      permitted by Section 1(d), by notifying the Company that this Warrant is being
      exercised pursuant to a Cashless Exercise (as defined in Section 1(d)), and
      (iii) if required by Section 2(h) or unless the Holder has previously delivered
      this Warrant to the Company and it or a new replacement Warrant has not yet
      been
      delivered to the Holder, the surrender of this Warrant to a common carrier
      for
      overnight delivery to the Company; provided, that if such Warrant Shares are
      to
      be issued in any name other than that of the registered holder of this Warrant,
      such issuance shall be deemed a transfer and the provisions of Section 7(a)
      shall be applicable. On or before the first (1st) Business Day following the
      date on which the Company has received each of the Exercise Notice, the
      Aggregate Exercise Price (or notice of a Cashless Exercise) and, if required,
      this Warrant (collectively, the "Exercise
      Delivery Documents"),
      the
      Company shall transmit by facsimile an acknowledgment of confirmation of receipt
      of the Exercise Delivery Documents to the Holder and the Company's transfer
      agent (the "Transfer
      Agent").
      On or
      before the third (3rd) Business Day following the date on which the Company
      has
      received all of the Exercise Delivery Documents (the "Share
      Delivery Date"),
      the
      Company shall (X) provided that the Transfer Agent is participating in The
      Depository Trust Company ("DTC")
      Fast
      Automated Securities Transfer Program, upon the request of the Holder, credit
      such aggregate number of shares of Common Stock to which the Holder is entitled
      pursuant to such exercise to the Holder's or its designee's balance account
      with
      DTC through its Deposit Withdrawal Agent Commission system, or (Y) if the
      Transfer Agent is not participating in the DTC Fast Automated Securities
      Transfer Program, issue and dispatch by overnight courier to the address as
      specified in the Exercise Notice, a certificate, registered in the Company's
      share register in the name of the Holder or its designee, for the number of
      shares of Common Stock to which the Holder is entitled pursuant to such
      exercise. Upon delivery to the Company of the Exercise Delivery Documents,
      the
      Holder shall be deemed for all corporate purposes to have become the holder
      of
      record of the Warrant Shares with respect to which this Warrant has been
      exercised, irrespective of the date such Warrant Shares are credited to the
      Holder's DTC account or the date of delivery of the certificates evidencing
      such
      Warrant Shares, as the case may be. If this Warrant is submitted in connection
      with any exercise pursuant to this Section 1(a) and the number of Warrant Shares
      represented by this Warrant submitted for exercise is greater than the number
      of
      Warrant Shares being acquired upon an exercise, then the Company shall as soon
      as practicable and in no event later than three (3) Business Days after any
      exercise and at its own expense, issue a new Warrant (in accordance with Section
      7(d)) representing the right to purchase the number of Warrant Shares
      purchasable immediately prior to such exercise under this Warrant, less the
      number of Warrant Shares with respect to which this Warrant is exercised. No
      fractional shares of Common Stock are to be issued upon the exercise of this
      Warrant, but rather the number of shares of Common Stock to be issued shall
      be
      rounded up to the nearest whole number. The Company shall pay any and all taxes
      which may be payable with respect to the issuance and delivery of Warrant Shares
      upon exercise of this Warrant, other than income, franchise, profits or similar
      taxes of the Holder or taxes resulting from issuance of Warrant Shares to a
      Person other than the Holder. 

     

    
      
        
        

      

      
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    (b)  Exercise
      Price.
      For
      purposes of this Warrant, "Exercise
      Price"
      means
      $11 per share of Common Stock, subject to adjustment as provided herein.

     

    (c)  Company's
      Failure to Timely Deliver Securities.
      If the
      Company shall fail for any reason or for no reason to issue to the Holder within
      three (3) Trading Days of receipt of the Exercise Delivery Documents, a
      certificate for the number of shares of Common Stock to which the Holder is
      entitled and register such shares of Common Stock on the Company's share
      register or to credit the Holder's balance account with DTC for such number
      of
      shares of Common Stock to which the Holder is entitled upon the Holder's
      exercise of this Warrant, then, in addition to all other remedies available
      to
      the Holder, the Company shall pay in cash to the Holder on each day after such
      third Business Day that the issuance of such shares of Common Stock is not
      timely effected an amount equal to 1.0% of the product of (A) the sum of the
      number of shares of Common Stock not issued to the Holder on a timely basis
      and
      to which the Holder is entitled and (B) the Closing Sale Price of the shares
      of
      Common Stock on the Trading Day immediately preceding the last possible date
      which the Company could have issued such shares of Common Stock to the Holder
      without violating Section 1(a). In addition to the foregoing, if within three
      (3) Trading Days after the Company's receipt of the Exercise Delivery Documents,
      the Company shall fail to issue and deliver a certificate to the Holder and
      register such shares of Common Stock on the Company's share register or credit
      the Holder's balance account with DTC for the number of shares of Common Stock
      to which the Holder is entitled upon such holder's exercise hereunder or if
      the
      Company fails to deliver to the Holder the certificate or certificates
      representing the applicable Warrant Shares (or credit the Holder's balance
      account at DTC with the applicable Warrant Shares) within three (3) Trading
      Days
      after its obligation to do so under clause (ii) below and if on or after such
      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 of
      shares of Common Stock issuable upon such exercise that the Holder anticipated
      receiving from the Company (a "Buy-In"),
      then
      the Company shall, within three (3) Business 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 or credit
      such
      Holder's balance account with DTC (and to issue such shares of Common Stock)
      shall terminate, or (ii) promptly honor its obligation to deliver to the Holder
      a certificate or certificates representing such shares of Common Stock or credit
      such Holder's balance account with DTC 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 Bid Price on the date
      of
      exercise. By complying with either of clauses (i) or (ii) in the preceding
      sentence in accordance with the Holder's request, the Company shall have been
      deemed to have cured the failure to timely deliver such shares of Common
      Stock.

     

    
      
        
        

      

      
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    (d)  Cashless
      Exercise.
       Notwithstanding
      anything contained herein to the contrary, the Holder may, in its sole
      discretion, exercise this Warrant in whole or in part and, in lieu of making
      the
      cash payment otherwise contemplated to be made to the Company upon such exercise
      in payment of the Aggregate Exercise Price, elect instead to receive upon such
      exercise the "Net Number" of shares of Common Stock determined according to
      the
      following formula (a "Cashless
      Exercise"):

     

    Net
      Number = (A
      x
      B) - (A x C)

     

    B

     

    For
      purposes of the foregoing formula:

     

    A
      = the
      total number of shares with respect to which this Warrant is then being
      exercised.

     

    B=
      the
      arithmetic average of the Weighted Average Price of the shares of Common Stock
      (as reported by Bloomberg) over the five (5) consecutive Trading Days ending
      on
      the date immediately preceding the date of the Exercise Notice.

     

    C=
      the
      Exercise Price then in effect for the applicable Warrant Shares at the time
      of
      such exercise.

    

    (e)  Disputes.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall promptly issue
      to the Holder the number of Warrant Shares that are not disputed and resolve
      such dispute in accordance with Section 12.

     

    (f)  Limitations
      on Exercises.
      

     

    Beneficial
      Ownership.
      The
      Company shall not effect the exercise of this Warrant, and the Holder shall
      not
      have the right to exercise this Warrant, to the extent that after giving effect
      to such exercise, such Person (together with such Person's affiliates) would
      beneficially own in excess of 9.99% (the "Maximum
      Percentage")
      of the
      shares of Common Stock outstanding immediately after giving effect to such
      exercise. For purposes of the foregoing sentence, the aggregate number of shares
      of Common Stock beneficially owned by such Person and its affiliates shall
      include the number of shares of Common Stock issuable upon exercise of this
      Warrant with respect to which the determination of such sentence is being made,
      but shall exclude shares of Common Stock which would be issuable upon (i)
      exercise of the remaining, unexercised portion of this Warrant beneficially
      owned by such Person and its affiliates and (ii) exercise or conversion of
      the
      unexercised or unconverted portion of any other securities of the Company
      beneficially owned by such Person and its affiliates (including, without
      limitation, any convertible notes or convertible preferred stock or warrants)
      subject to a limitation on conversion or exercise analogous to the limitation
      contained herein. Except as set forth in the preceding sentence, for purposes
      of
      this paragraph, beneficial ownership shall be calculated in accordance with
      Section 13(d) of the Securities Exchange Act of 1934, as amended (the
      "Exchange
      Act").
      For
      purposes of this Warrant, in determining the number of outstanding shares of
      Common Stock, the Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (1) the Company's most recent Form 10-K, Form 10-KSB,
      Form
      10-Q, Form 10-QSB, Current Report on Form 8-K or other public filing with the
      Securities and Exchange Commission, as the case may be, (2) a more recent public
      announcement by the Company or (3) any other notice by the Company or the
      Transfer Agent setting forth the number of shares of Common Stock outstanding.
      For any reason at any time, upon the written or oral request of the Holder,
      the
      Company shall within one Business Day 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
      the
      SPA Securities and the SPA Warrants, by the Holder and its affiliates since
      the
      date as of which such number of outstanding shares of Common Stock was reported.
      

     

    
      
        
        

      

      
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    (g)  Insufficient
      Authorized Shares.
      If at
      any time while this Warrant remain outstanding the Company does not have a
      sufficient number of authorized and unreserved shares of Common Stock to satisfy
      its obligation to reserve for issuance upon exercise of this Warrant at least
      a
      number of shares of Common Stock equal to 130% (the "Required
      Reserve Amount")
      of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of all of this Warrant then outstanding (an "Authorized
      Share Failure"),
      then
      the Company shall immediately take all action necessary to increase the
      Company's authorized shares of Common Stock to an amount sufficient to allow
      the
      Company to reserve the Required Reserve Amount for this Warrant then
      outstanding. Without limiting the generality of the foregoing sentence, as
      soon
      as reasonably practicable after the date of the occurrence of an Authorized
      Share Failure, but in no event later than ninety (90) days after the occurrence
      of such Authorized Share Failure, the Company shall hold a meeting of its
      stockholders for the approval of an increase in the number of authorized shares
      of Common Stock. In connection with such meeting, the Company shall provide
      each
      stockholder with a proxy statement and shall use its reasonable best efforts
      to
      solicit its stockholders' approval of such increase in authorized shares of
      Common Stock and to cause its board of directors to recommend to the
      stockholders that they approve such proposal.

     

    (h)  Book-Entry.
      Upon
      exercise of this Warrant in accordance with the terms hereof, the Holder shall
      not be required to physically surrender this Warrant to the Company unless
      it is
      being exercised for all of the Warrant Shares represented by the Warrant. The
      Holder and the Company shall maintain records showing the number of Warrant
      Shares exercised and issued and the dates of such exercises or shall use such
      other method, reasonably satisfactory to the Holder and the Company, so as
      not
      to require physical surrender of this Warrant upon each such exercise. In the
      event of any dispute or discrepancy, such records of the Company establishing
      the number of Warrant Shares to which the Holder is entitled shall be
      controlling and determinative in the absence of manifest error. Notwithstanding
      the foregoing, if this Warrant is exercised as aforesaid, the Holder may not
      transfer this Warrant unless the Holder first physically surrenders this Warrant
      to the Company in accordance with Section 7(a). The Holder and any assignee,
      by
      acceptance of this Warrant, acknowledge and agree that, by reason of the
      provisions of this paragraph, following exercises of any portion of this
      Warrant, the number of Warrant Shares represented by this Warrant may be less
      than the number stated on the face hereof. 

     

    
      
        
        

      

      
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    (i)  Notwithstanding
      the foregoing, this Warrant shall not be exercisable until after the Stockholder
      Approval Date (as defined in the Securities Purchase Agreement).

     

    2.  ADJUSTMENT
      OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.
      The
      Exercise Price and the number of Warrant Shares shall be adjusted from time
      to
      time as follows:

     

    (a)  Adjustment
      upon Issuance of shares of Common Stock.
      If and
      whenever on or after the Subscription Date, the Company issues or sells, or
      in
      accordance with this Section 2 is deemed to have issued or sold, any shares
      of
      Common Stock (including the issuance or sale of shares of Common Stock owned
      or
      held by or for the account of the Company, but excluding shares of Common Stock
      deemed to have been issued by the Company in connection with any Excluded
      Securities (as defined in the Certificate of Designations) for a consideration
      per share (the "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Exercise Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a "Dilutive
      Issuance"),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the product of (A) the Exercise Price
      in
      effect immediately prior to such Dilutive Issuance and (B) the quotient
      determined by dividing (1) the sum of (I) the product derived by multiplying
      the
      Exercise Price in effect immediately prior to such Dilutive Issuance and the
      number of shares of Common Stock Deemed Outstanding immediately prior to such
      Dilutive Issuance plus (II) the consideration, if any, received by the Company
      upon such Dilutive Issuance, by (2) the product derived by multiplying (I)
      the
      Exercise Price in effect immediately prior to such Dilutive Issuance by (II)
      the
      number of shares of Common Stock Deemed Outstanding immediately after such
      Dilutive Issuance.
      Upon
      each
      such adjustment of the Exercise Price hereunder, the number of Warrant Shares
      shall be adjusted to the number of shares of Common Stock determined by
      multiplying the Exercise Price in effect immediately prior to such adjustment
      by
      the number of Warrant Shares acquirable upon exercise of this Warrant
      immediately prior to such adjustment and dividing the product thereof by the
      Exercise Price resulting from such adjustment. For purposes of determining
      the
      adjusted Exercise Price under this Section 2(a), the following shall be
      applicable:

     

      (i)    
      Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      share of Common Stock shall be deemed to be outstanding and to have been issued
      and sold by the Company at the time of the granting or sale of such Option
      for
      such price per share. For purposes of this Section 2(a)(i), the "lowest price
      per share for which one share of Common Stock is issuable upon exercise of
      such
      Options or upon conversion, exercise or exchange of such Convertible Securities
      issuable upon exercise of any such Option" shall be equal to the sum of the
      lowest amounts of consideration (if any) received or receivable by the Company
      with respect to any one share of Common Stock upon the granting or sale of
      the
      Option, upon exercise of the Option and upon conversion, exercise or exchange
      of
      any Convertible Security issuable upon exercise of such Option. No further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      upon
      the actual issuance of such shares of Common Stock or of such Convertible
      Securities upon the exercise of such Options or upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities. 

     

    
      
        
        

      

      
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      (ii)    
      Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
      Section 2(a)(ii), the "lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange thereof" shall
      be
      equal to the sum of the lowest amounts of consideration (if any) received or
      receivable by the Company with respect to one share of Common Stock upon the
      issuance or sale of the Convertible Security and upon conversion, exercise
      or
      exchange of such Convertible Security. No further adjustment of the Exercise
      Price or number of Warrant Shares shall be made upon the actual issuance of
      such
      shares of Common Stock upon conversion, exercise or exchange of such Convertible
      Securities, and if any such issue or sale of such Convertible Securities is
      made
      upon exercise of any Options for which adjustment of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 2(a), no further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      by
      reason of such issue or sale. 

     

      (iii)    
      Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exercise or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exercisable or exchangeable for shares of Common Stock increases or decreases
      at any time, the Exercise Price and the number of Warrant Shares in effect
      at
      the time of such increase or decrease shall be adjusted to the Exercise Price
      and the number of Warrant Shares which would have been in effect at such time
      had such Options or Convertible Securities provided for such increased or
      decreased purchase price, additional consideration or increased or decreased
      conversion rate, as the case may be, at the time initially granted, issued
      or
      sold. For purposes of this Section 2(a)(iii), if the terms of any Option or
      Convertible Security that was outstanding as of the date of issuance of this
      Warrant are increased or decreased in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the shares
      of
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such increase or decrease.
      No
      adjustment pursuant to this Section 2(a) shall be made if such adjustment would
      result in an increase of the Exercise Price then in effect or a decrease in
      the
      number of Warrant Shares.

     

      (iv)    
      Calculation
      of Consideration Received.
      In case
      any Option is issued in connection with the issue or sale of other securities
      of
      the Company, together comprising one integrated transaction in which no specific
      consideration is allocated to such Options by the parties thereto, the Options
      will be deemed to have been issued for a consideration of $0.01. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold or deemed
      to have been issued or sold for cash, the consideration received therefor will
      be deemed to be the net amount received by the Company therefor. If any shares
      of Common Stock, Options or Convertible Securities are issued or sold for a
      consideration other than cash, the amount of such consideration received by
      the
      Company will be the fair value of such consideration, except where such
      consideration consists of securities, in which case the amount of consideration
      received by the Company will be the Weighted Average Price of such security
      on
      the date of receipt. If any shares of Common Stock, Options or Convertible
      Securities are issued to the owners of the non-surviving entity in connection
      with any merger in which the Company is the surviving entity, the amount of
      consideration therefor will be deemed to be the fair value of such portion
      of
      the net assets and business of the non-surviving entity as is attributable
      to
      such shares of Common Stock, Options or Convertible Securities, as the case
      may
      be. The fair value of any consideration other than cash or securities will
      be
      determined jointly by the Company and the Required Holders. If such parties
      are
      unable to reach agreement within ten (10) days after the occurrence of an event
      requiring valuation (the "Valuation
      Event"),
      the
      fair value of such consideration will be determined within five (5) Business
      Days after the tenth (10th)
      day
      following the Valuation Event by an independent, reputable appraiser jointly
      selected by the Company and the Required Holders. The determination of such
      appraiser shall be final and binding upon all parties absent manifest error
      and
      the fees and expenses of such appraiser shall be borne by the
      Company.

     

    
      
        
        

      

      
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      (v)    
      Record
      Date.
      If the
      Company takes a record of the holders of shares of Common Stock for the purpose
      of entitling them (A) to receive a dividend or other distribution payable
      in shares of Common Stock, Options or in Convertible Securities or (B) to
      subscribe for or purchase shares of Common Stock, Options or Convertible
      Securities, then such record date will be deemed to be the date of the issue
      or
      sale of the shares of Common Stock deemed to have been issued or sold upon
      the
      declaration of such dividend or the making of such other distribution or the
      date of the granting of such right of subscription or purchase, as the case
      may
      be.

     

      (vi)    
      Floor
      Price.
      Until
      such time as the Company receives the Stockholder Approval, no adjustment
      pursuant to Section 2(a) shall cause the Exercise Price to be less than $10.36,
      as adjusted for any stock dividend, stock split, stock combination,
      reclassification or similar transaction.

     

    (b)  Adjustment
      upon Subdivision or Combination of shares of Common Stock.
      If the
      Company at any time on or after the Subscription Date subdivides (by any stock
      split, stock dividend, recapitalization or otherwise) one or more classes of
      its
      outstanding shares of Common Stock into a greater number of shares, the Exercise
      Price in effect immediately prior to such subdivision will be proportionately
      reduced and the number of Warrant Shares will be proportionately increased.
      If
      the Company at any time on or after the Subscription Date combines (by
      combination, reverse stock split or otherwise) one or more classes of its
      outstanding shares of Common Stock into a smaller number of shares, the Exercise
      Price in effect immediately prior to such combination will be proportionately
      increased and the number of Warrant Shares will be proportionately decreased.
      Any adjustment under this Section 2(b) shall become effective at the close
      of
      business on the date the subdivision or combination becomes
      effective.

     

    
      
        
        

      

      
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    (c)  Other
      Events.
      If any
      event occurs of the type contemplated by the provisions of this Section 2 but
      not expressly provided for by such provisions (including, without limitation,
      the granting of stock appreciation rights, phantom stock rights or other rights
      with equity features), then the Company's Board of Directors will make an
      appropriate adjustment consistent with the provisions of this Section 2 in
      the
      Exercise Price and the number of Warrant Shares so as to protect the rights
      of
      the Holder; provided that no such adjustment pursuant to this Section 2(c)
      will
      increase the Exercise Price or decrease the number of Warrant Shares as
      otherwise determined pursuant to this Section 2.

     

    3.  RIGHTS
      UPON DISTRIBUTION OF ASSETS.
      If the
      Company shall declare or make any dividend or other distribution of its assets
      (or rights to acquire its assets) to holders of shares of Common Stock, by
      way
      of return of capital or otherwise (including, without limitation, any
      distribution of stock or other securities, property or options by way of a
      dividend, spin off, reclassification, corporate rearrangement, scheme of
      arrangement or other similar transaction) (a "Distribution")
      at any
      time after the issuance of this Warrant, then, in each such case, any Exercise
      Price in effect immediately prior to the close of business on the record date
      fixed for the determination of holders of shares of Common Stock entitled to
      receive the Distribution shall be reduced, effective as of the close of business
      on such record date, to a price determined by multiplying such Exercise Price
      by
      a fraction of which (i) the numerator shall be the Weighted Average Price of
      the
      shares of Common Stock on the Trading Day immediately preceding such record
      date
      minus the value of the Distribution (as determined in good faith by the
      Company's Board of Directors) applicable to one share of shares of Common Stock,
      and (ii) the denominator shall be the Weighted Average Price of the shares
      of
      Common Stock on the Trading Day immediately preceding such record date;
      provided, however, that in the event that the Distribution is of shares of
      Common Stock (or common stock) ("Other
      Shares of Common Stock")
      of a
      company whose common shares are traded on a national securities exchange or
      a
      national automated quotation system, then the Holder may elect to receive a
      warrant to purchase Other Shares of Common Stock in lieu of an increase in
      the
      number of Warrant Shares, the terms of which shall be identical to those of
      this
      Warrant, except that such warrant shall be exercisable into the number of shares
      of Other Shares of Common Stock that would have been payable to the Holder
      pursuant to the Distribution had the Holder exercised this Warrant immediately
      prior to such record date and with an aggregate exercise price equal to the
      product of the amount by which the Exercise Price of this Warrant was decreased
      with respect to the Distribution pursuant to the terms of this Section
      3.

     

    4.  PURCHASE
      RIGHTS; FUNDAMENTAL TRANSACTIONS.

     

    (a)  Purchase
      Rights.
      If at
      any time the Company grants, issues or sells any Options, Convertible Securities
      or rights to purchase stock, warrants, securities or other property pro rata
      to
      the record holders of any class of shares of Common Stock (the "Purchase
      Rights"),
      then
      the Holder will be entitled to acquire, upon the terms applicable to such
      Purchase Rights, the aggregate Purchase Rights which the Holder could have
      acquired if the Holder had held the number of shares of Common Stock acquirable
      upon complete exercise of this Warrant (without regard to any limitations on
      the
      exercise of this Warrant) immediately before the date on which a record is
      taken
      for the grant, issuance or sale of such Purchase Rights, or, if no such record
      is taken, the date as of which the record holders of shares of Common Stock
      are
      to be determined for the grant, issue or sale of such Purchase Rights; provided
      that, notwithstanding anything to the contrary contained herein in any such
      case
      the provisions of Section 2 shall not be applicable to such grant, issuance
      or
      sale by the Company.

     

    
      
        
        

      

      
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    (b)  Fundamental
      Transactions.
      The
      Company shall not enter into or be party to a Fundamental Transaction in which
      the Company is not a surviving entity holding all or substantially all of the
      assets that the Company held prior to such Fundamental Transaction, unless
      the
      Successor Entity assumes in writing all of the obligations of the Company under
      this Warrant and the other Transaction Documents in accordance with the
      provisions of this Section (4)(b) pursuant to written agreements in form and
      substance reasonably satisfactory to the Required Holders, including agreements
      to deliver to each holder of Warrants in exchange for such Warrants a security
      of the Successor Entity evidenced by a written instrument substantially similar
      in form and substance to this Warrant, including, without limitation, an
      adjusted exercise price equal to the value for the shares of Common Stock
      reflected by the terms of such Fundamental Transaction, and exercisable for
      a
      corresponding number of shares of capital stock equivalent to the shares of
      Common Stock acquirable and receivable upon exercise of this Warrant (without
      regard to any limitations on the exercise of this Warrant) prior to such
      Fundamental Transaction, and reasonably satisfactory to the Required Holders.
      Prior to the consummation of any Fundamental Transaction pursuant to which
      holders of shares of Common Stock are entitled to receive securities or other
      assets with respect to or in exchange for shares of Common Stock (a
      "Corporate
      Event"),
      the
      Company shall make appropriate provision to insure that the Holder will
      thereafter have the right to receive upon an exercise of this Warrant
at
      any
      time after the consummation of the Fundamental Transaction but
      prior
      to the Expiration Date,
      in lieu
      of the shares of the Common Stock (or
      other
      securities, cash, assets or other property) purchasable
      upon the exercise of the Warrant prior to such Fundamental
      Transaction,
      such
      shares of stock, securities, cash, assets or any other property whatsoever
      (including warrants or other purchase or subscription rights) which the Holder
      would have been entitled to receive upon the happening of such Fundamental
      Transaction had the Warrant been exercised immediately prior to such Fundamental
      Transaction. Provision
      made pursuant to the preceding sentence shall be in a form and substance
      reasonably satisfactory to the Required Holders. The provisions of this Section
      shall apply similarly and equally to successive Fundamental Transactions and
      Corporate Events and shall be applied without regard to any limitations on
      the
      exercise of this Warrant.

     

    (c)  Notwithstanding
      the foregoing, in the event of a Fundamental Transaction other than one in
      which
      a Successor Entity that is a publicly traded corporation whose stock is quoted
      or listed for trading on an Eligible Market assumes this Warrant such that
      the
      Warrant shall be exercisable for the publicly traded Common Stock of such
      Successor Entity, at the request of the Holder delivered before the ninetieth
      (90th)
      day
      after such Fundamental Transaction, the Company (or the Successor Entity) shall
      purchase this Warrant from the Holder by paying to the Holder, within five
      (5)
      Business Days after such request (or, if later, on the effective date of the
      Fundamental Transaction), cash in an amount equal to the Black Scholes value
      of
      the remaining unexercised portion of this Warrant on the date of such
      Fundamental Transaction calculated using the Black Scholes Option Pricing
      Model.

     

    5.  NONCIRCUMVENTION.
      The
      Company hereby covenants and agrees that the Company will not, by amendment
      of
      its Certificate of Incorporation, Bylaws or through any reorganization, transfer
      of assets, consolidation, merger, scheme of arrangement, 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, and will at
      all
      times in good faith carry out all the provisions of this Warrant and take all
      action as may be required to protect the rights of the Holder. Without limiting
      the generality of the foregoing, the Company (i) shall not increase the par
      value of any shares of Common Stock receivable upon the exercise of this Warrant
      above the Exercise Price then in effect, (ii) shall take all such actions
      as may be reasonably necessary or appropriate in order that the Company may
      validly and legally issue fully paid and nonassessable shares of Common Stock
      upon the exercise of this Warrant, and (iii) shall, so long as any of the SPA
      Warrants are outstanding, take all action reasonably necessary to reserve and
      keep available out of its authorized and unissued shares of Common Stock, solely
      for the purpose of effecting the exercise of the SPA Warrants, 130% of the
      number of shares of Common Stock as shall from time to time be necessary to
      effect the exercise of the SPA Warrants then outstanding (without regard to
      any
      limitations on exercise).

     

    
      
        
        

      

      
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    6.  WARRANT
      HOLDER NOT DEEMED A STOCKHOLDER.
      Except
      as otherwise specifically provided herein, the Holder, solely in such Person's
      capacity as a holder of this Warrant, shall not be entitled to vote or receive
      dividends or be deemed the holder of share capital of the Company for any
      purpose, nor shall anything contained in this Warrant be construed to confer
      upon the Holder, solely in such Person's capacity as the Holder of this Warrant,
      any of the rights of a stockholder of the Company or any right to vote, give
      or
      withhold consent to any corporate action (whether any reorganization, issue
      of
      stock, reclassification of stock, consolidation, merger, conveyance or
      otherwise), receive notice of meetings, receive dividends or subscription
      rights, or otherwise, prior to the issuance to the Holder of the Warrant Shares
      which such Person is then entitled to receive upon the due exercise of this
      Warrant. In addition, nothing contained in this Warrant shall be construed
      as
      imposing any liabilities on the Holder to purchase any securities (upon exercise
      of this Warrant or otherwise) or as a stockholder of the Company, whether such
      liabilities are asserted by the Company or by creditors of the Company.
      Notwithstanding this Section 6, the Company shall provide the Holder with copies
      of the same notices and other information given to the stockholders of the
      Company generally, contemporaneously with the giving thereof to the
      stockholders.

     

    7.  REISSUANCE
      OF WARRANTS.

     

    (a)  Transfer
      of Warrant.
      If this
      Warrant is to be transferred in accordance herewith and the Purchase Agreement,
      the Holder shall surrender this Warrant to the Company, whereupon the Company
      will forthwith issue and deliver upon the order of the Holder a new Warrant
      (in
      accordance with Section 7(d)), registered as the Holder may request,
      representing the right to purchase the number of Warrant Shares being
      transferred by the Holder and, if less then the total number of Warrant Shares
      then underlying this Warrant is being transferred, a new Warrant (in accordance
      with Section 7(d)) to the Holder representing the right to purchase the number
      of Warrant Shares not being transferred.

     

    (b)  Lost,
      Stolen or Mutilated Warrant.
      Upon
      receipt by the Company of evidence reasonably satisfactory to the Company of
      the
      loss, theft, destruction or mutilation of this Warrant, and, in the case of
      loss, theft or destruction, of any indemnification undertaking by the Holder
      to
      the Company in customary form and, in the case of mutilation, upon surrender
      and
      cancellation of this Warrant, the Company shall execute and deliver to the
      Holder a new Warrant (in accordance with Section 7(d)) representing the right
      to
      purchase the Warrant Shares then underlying this Warrant.

     

    
      
        
        

      

      
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    (c)  Exchangeable
      for Multiple Warrants.
      This
      Warrant is exchangeable, upon the surrender hereof by the Holder at the
      principal office of the Company, for a new Warrant or Warrants (in accordance
      with Section 7(d)) representing in the aggregate the right to purchase the
      number of Warrant Shares then underlying this Warrant, and each such new Warrant
      will represent the right to purchase such portion of such Warrant Shares as
      is
      designated by the Holder at the time of such surrender; provided, however,
      that
      no Warrants for fractional shares of Common Stock shall be given.

     

    (d)  Issuance
      of New Warrants.
      Whenever the Company is required to issue a new Warrant pursuant to the terms
      of
      this Warrant, such new Warrant (i) shall be of like tenor with this Warrant,
      (ii) shall represent, as indicated on the face of such new Warrant, the right
      to
      purchase the Warrant Shares then underlying this Warrant (or in the case of
      a
      new Warrant being issued pursuant to Section 7(a) or Section 7(c), the Warrant
      Shares designated by the Holder which, when added to the number of shares of
      Common Stock underlying the other new Warrants issued in connection with such
      issuance, does not exceed the number of Warrant Shares then underlying this
      Warrant), (iii) shall have an issuance date, as indicated on the face of such
      new Warrant which is the same as the Issuance Date, and (iv) shall have the
      same
      rights and conditions as this Warrant.

     

    8.  REGISTRATION
      RIGHTS.

     

    8.1.    Demand
      Registration.

     

    (a)  Right
      to Demand Registration.
      (i)
      Subject to Sections 8.1(a)(iv) and 8.1(c), at any time or from time to time
      after the date that is fifteen (15) months after the Issuance Date (the
      "Demand
      Date"),
      the
      Required Holders shall have the right to request in writing that the Company
      register all or part of such Required Holders' Registrable Securities (as
      defined in the Registration Rights Agreement) (a "Request")
      by
      filing with the Securities and Exchange Commission (the "SEC")
      a
      Demand Registration Statement (a "Demand
      Registration").
      

     

    (1) Each
      Request shall specify the amount of Registrable Securities (as defined in the
      Registration Rights Agreement) intended to be disposed of by such Holders and
      the intended method of disposition thereof.

     

    (2) As
      promptly as practicable, but no later than ten (10) days after receipt of a
      Request, the Company shall give written notice of such requested registration
      to
      all other holders of Registrable Securities. 

     

    (3) Subject
      to Section 8.1(b), the Company shall include in a Demand Registration (i) the
      Registrable Securities intended to be disposed of by the Initiating Holders
      and
      (ii) the Registrable Securities intended to be disposed of by any other Holder
      which shall have made a written request (which request shall specify the amount
      of Registrable Securities to be registered and the intended method of
      disposition thereof) to the Company for inclusion thereof in such registration
      within ten (10) days after the receipt of such written notice from the
      Company.

     

    
      
        
        

      

      
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    (4) The
      Company, as expeditiously as possible following a Request, shall use its
      reasonable best efforts to cause to be filed with the SEC a Demand Registration
      Statement providing for the registration under the Securities Act of 1933,
      as
      amended (the "1933
      Act")
      of the
      Registrable Securities which the Company has been so requested to register
      by
      all such Holders, to the extent necessary to permit the disposition of such
      Registrable Securities so to be registered in accordance with the intended
      methods of disposition thereof specified in such Request or further
      requests.

     

    (4) The
      Company shall use its reasonable best efforts to have such Demand Registration
      Statement declared effective by the SEC as soon as practicable thereafter and
      to
      keep such Demand Registration Statement continuously effective until such time
      as all of such Registrable Securities have been disposed of in accordance with
      the intended methods of disposition by the seller(s) thereof set forth in such
      Demand Registration Statement; provided,
      such
      period need not extend beyond nine (9) months after the effective date of the
      Demand Registration Statement; and provided, further,
      that
      with respect to any Demand Registration Statement, such period, in any event,
      shall terminate when all Registrable Securities covered by such Demand
      Registration Statement have been sold (but not before the expiration of the
      90
      day period referred to in Section 4(3) of the 1933 Act and Rule 174 thereunder,
      if applicable) (the "Demand
      Registration Period").

     

    (ii) A
      Request
      may be withdrawn prior to the filing of the Demand Registration Statement by
      holders of a majority of the Registrable Securities included in such
      registration (the "Required
      Holders of the Registration")
      (a
      "Withdrawn
      Request")
      and a
      Demand Registration Statement may be withdrawn prior to the effectiveness
      thereof by the Required Holders of the Registration (a "Withdrawn
      Demand Registration")
      and
      such withdrawals shall be treated as a Demand Registration which shall have
      been
      effected pursuant to this Section 8.1, unless the Required Holders of
      Registrable Securities to be included in such Registration Statement reimburse
      the Company for its reasonable out-of-pocket Registration Expenses relating
      to
      the preparation and filing of such Demand Registration Statement (to the extent
      actually incurred); provided;
      however,
      that if
      a Withdrawn Request or Withdrawn Demand Registration is made because of a
      material adverse change in the business or financial condition of the Company,
      then such withdrawal shall not be treated as a Demand Registration effected
      pursuant to this Section 8.1 (and shall not be counted toward the number of
      Demand Registrations to which such Holders are entitled), and the Company shall
      pay all Registration Expenses in connection therewith. Any Holder requesting
      inclusion in a Demand Registration may, at any time prior to the effective
      date
      of the Demand Registration Statement (and for any reason), revoke such request
      by delivering written notice to the Company revoking such requested
      inclusion.

     

    
      
        
        

      

      
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    (iii) The
      registration rights granted pursuant to the provisions of this Section 8.1
      shall
      be in addition to the registration rights granted pursuant to the other
      provisions of Section 8 hereof.

     

    (iv) Notwithstanding
      anything to the contrary herein, the registration rights pursuant to the
      provisions of this Section 8.1 shall be available on any given day only to
      the
      extent (i) all of the Warrant Shares are not previously registered for resale
      on
      a registration statement on Form S-3 or such registration statement is not
      available for the resale of all such Warrant Shares and (ii) the average daily
      trading volume as reported by Bloomberg of the Company's Common Stock on the
      Principal Market (as defined in the Securities Purchase Agreement) during
      the 30 calendar day period preceding such given date is less
      than 100,000 shares; provided, that the registration rights pursuant to
      this Section 8.1 shall terminate in their entirety, and be of no further force
      or effect on the Demand Date if during the ninety (90) day period immediately
      preceding the Demand Date, the average daily trading volume as reported by
      Bloomberg of the Common Stock on the Principal Market (or such other market
      or
      service on which the Common Stock is traded or quoted) is at least 100,000
      shares.

     

    (b)  Priority
      in Demand Registrations.
      If a
      Demand Registration involves an Underwritten Offering, and the sole or lead
      managing Underwriter, as the case may be, of such Underwritten Offering shall
      advise the Company in writing (with a copy to each Holder requesting
      registration) on or before the date five (5) days prior to the date then
      scheduled for such offering that, in its opinion, the amount of Registrable
      Securities, if any, requested to be included in such Demand Registration exceeds
      the number which can be sold in such offering within a price range acceptable
      to
      the Required Holders of the Registration (such writing to state the basis of
      such opinion and the approximate number of Registrable Securities which may
      be
      included in such offering), the Company shall include in such Demand
      Registration, to the extent of the number which the Company is so advised may
      be
      included in such offering without such effect, the Registrable Securities
      requested to be included in the Demand Registration by the Holders allocated
      pro rata
      (on an
      as converted, fully-diluted basis and without giving effect to any exercise
      limitations contained in this Warrant) In the event the Company shall not,
      by
      virtue of this Section 8.1(b), include in any Demand Registration all of the
      Registrable Securities of any Holder requesting to be included in such Demand
      Registration, such Holder, upon written notice to the Company given within
      five
      (5) days of the time such Holder first is notified of such matter, may reduce
      the amount of Registrable Securities it desires to have included in such Demand
      Registration, whereupon only the Registrable Securities, if any, it desires
      to
      have included will be so included and the Holders not so reducing shall be
      entitled to a corresponding increase in the amount of Registrable Securities
      to
      be included in such Demand Registration.

     

    (c)  Limitations
      on Registrations.
      The
      rights of Holders of Registrable Securities to request Demand Registrations
      pursuant to Section 8.1(a) are subject to the following limitations:

     

    (i)  in
      no
      event shall the Company be required to effect a Demand Registration unless
      the
      reasonably anticipated aggregate offering price to the public of all Registrable
      Securities for which registration has been requested by Holders, together with
      any shares sold by the Company for its own account, will be at least $5,000,000
      (or a lesser amount if all remaining Registrable Securities are requested to
      be
      registered);

     

    
      
        
        

      

      
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    (ii)  in
      no
      event shall the Company be required to effect a Demand Registration prior to
      91
      calendar days after a prior Demand Registration Statement is declared effective
      by the SEC; and

     

    (iii)  in
      no
      event shall the Company be required to effect a Demand Registration at any
      time
      during the period commencing with the filing of the Initial Registration
      Statement or the Additional Registration Statement (as such terms are defined
      in
      the Registration Rights Agreement) with the SEC and ending with the earlier
      of
      (x) the effectiveness of the Initial Registration Statement or the Additional
      Registration Statement, as applicable, and (y) the applicable Effectiveness
      Deadline (as defined in the Registration Rights Agreement).

     

    (iv)  in
      no
      event shall the Company be required to effect, in the aggregate, more than
      two
      (2) Demand Registrations; provided,
      however,
      that
      such number shall be increased to the extent the Company does not include in
      what would otherwise be the final registration the number of Registrable
      Securities requested to be registered by the Holders by reason of Section
      8.1(b);
      provided,
      further,
      that
      the Registration Expenses with respect of one Demand Registration Statement
      will
      be borne by the Company and the Registration Expenses of one Demand Registration
      Statement will be borne by the Initiating Holders and by such other Holder
      which
      shall have made a written request to include his Registrable Securities..

     

    (d)  Underwriting.
      

     

    (i)  Selection
      of Underwriters.
      Notwithstanding anything to the contrary contained in Section 8.1(a), if the
      Initiating Holders holding a majority of the Registrable Securities for which
      registration was requested in the Request so elect, the offering of such
      Registrable Securities pursuant to such Demand Registration shall be in the
      form
      of a firm commitment Underwritten Offering; and such Initiating Holders may
      require that all Persons (including other Holders) participating in such
      registration sell their Registrable Securities to the Underwriters at the same
      price and on the same terms of underwriting applicable to the Initiating
      Holders. If any Demand Registration involves an Underwritten Offering, the
      sole
      or managing Underwriters and any additional investment bankers and managers
      to
      be used in connection with such registration shall be selected by the Initiating
      Holders holding a majority of the Registrable Securities (so long as such
      Underwriter is not affiliated with any such majority holders) for which
      registration was requested in the Request, subject to the approval of the
      Company (such approval not to be unreasonably withheld or delayed).

     

    (ii)  Underwriting
      Agreements.
      If
      requested by the sole or lead managing Underwriter for any Underwritten Offering
      effected pursuant to a Demand Registration the Company shall enter into a
      customary underwriting agreement with the Underwriters for such offering, such
      agreement to be reasonably satisfactory in substance and form to the Required
      Holders of the Registration.

     

    (iii)  Holders
      of Registrable Securities to be Parties to Underwriting
      Agreement.
      The
      Holders of Registrable Securities to be distributed by Underwriters in an
      Underwritten Offering contemplated by Section 8.1(a) shall be parties to the
      underwriting agreement between the Company and such Underwriters and may, at
      such Holders' option, require that any or all of the conditions precedent to
      the
      obligations of such Underwriters under such underwriting agreement be conditions
      precedent to the obligations of such Holders of Registrable Securities. No
      Holder shall be required to make any representations or warranties to, or
      agreements with, the Company or the Underwriters other than representations,
      warranties or agreements regarding such Holder, such Holder's Registrable
      Securities and such Holder's intended method of disposition.

     

    
      
        
        

      

      
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    (iv)  Participation
      in Underwritten Registration.
      Notwithstanding anything herein to the contrary, no Person may participate
      in
      any Underwritten Offering hereunder unless such Person (i) agrees to sell its
      securities on the same terms and conditions provided in any underwritten
      arrangements approved by the Persons entitled hereunder to approve such
      arrangement and (ii) accurately completes and executes in a timely manner all
      questionnaires, powers of attorney, indemnities, custody agreements,
      underwriting agreements and other documents customary for such an offering
      and
      reasonably required under the terms of such underwriting
      arrangements.

     

    (v)  In
      no
      event shall the Company be required to effect more than two (2) Underwritten
      Offerings. 

     

    (e)  Registration
      of Other Securities.
      Whenever the Company shall effect a Demand Registration, no securities other
      than the Registrable Securities shall be covered by such registration unless
      (a)
      the Required Holders of the Registration shall have consented in writing to
      the
      inclusion of such other securities and (b) no holder of Registrable Securities
      is unable to include any of its Registrable Securities requested for inclusion
      in such registration by reason of Section
      8.1(b).

     

    (f)  Effective
      Registration Statement; Suspension.
      A
      Demand Registration Statement shall not be deemed to have become effective
      (and
      the related registration will not be deemed to have been effected) (i) unless
      it
      has been declared effective by the SEC and remains effective in compliance
      with
      the provisions of the 1933 Act with respect to the disposition of all
      Registrable Securities covered by such Demand Registration Statement for the
      Demand Registration Period, (ii) if the offering of any Registrable Securities
      pursuant to such Demand Registration Statement is interfered with by any stop
      order, injunction or other order or requirement of the SEC or any other
      governmental agency or court, or (iii) if, in the case of an Underwritten
      Offering, the conditions to closing specified in an underwriting agreement
      to
      which the Company is a party are not satisfied other than by the sole reason
      of
      any breach or failure by the Holders of Registrable Securities or are not
      otherwise waived.

     

    (g)  Other
      Registrations.
      During
      the period (i) beginning on the date of a Request and (ii) ending on the date
      that is ninety (90) days after the date that a Demand Registration Statement
      filed pursuant to such Request has been declared effective by the SEC or, if
      the
      Required Holders of the Registration shall withdraw such Request or such Demand
      Registration Statement, on the date of such Withdrawn Request or such Withdrawn
      Registration Statement, the Company shall not, without the consent of the
      Required Holders of the Registration, file a registration statement pertaining
      to any other securities of the Company (other than a registration relating
      solely to the sale of securities to participants in a Company employee stock
      or
      similar plan on Form S-8).

     

    
      
        
        

      

      
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    (h)  Registration
      Statement Form.
      Registrations under this Section 8.1 shall be on such appropriate registration
      form of the SEC (i) as shall be selected by the Initiating Holders holding
      a
      majority of the Registrable Securities for which registration was requested
      in
      the Request, and (ii) which shall be available for the sale of Registrable
      Securities in accordance with the intended method or methods of disposition
      specified in the requests for registration. The Company agrees to include in
      any
      such Registration Statement all information which any selling Investor Holder,
      upon advice of counsel, shall reasonably request.

     

    8.2.    Piggyback
      Registration. 

     

    (a)  Piggyback
      Rights.
      If
      any
      time prior to the date that is five (5) years from the Issuance Date, the
      Company proposes to file a registration statement with the SEC with respect
      to
      an offering of equity securities, or securities or other obligations exercisable
      or exchangeable for, on convertible into, equity securities, for its own account
      or for the account of any stockholder of the Company (other than a registration
      statement on Form S-4 or Form S-8 or their successors or any other form for
      a
      limited similar purpose or any registration statement covering only securities
      proposed to be issued in exchange for securities or assets of another Person),
      the Company shall, at least thirty (30) days prior to such filing, give written
      notice to all Holders of its intention to do so and, upon the written request
      of
      any Holder or Holders given within twenty (20) days of the receipt of such
      notice (which request shall state the intended method of disposition of such
      Registrable Securities), the Company shall use its reasonable best efforts
      to
      cause the Registrable Securities that such Holder or Holders request the Company
      to register to be included in such registration and shall use its reasonable
      best efforts to cause the managing Underwriter or Underwriters (if any) of
      a
      proposed Underwritten Offering to permit such Registrable Securities to be
      included in such registration on the same terms and conditions as any similar
      securities of the Company, in each case to the extent necessary to permit their
      sale or other disposition in accordance with the intended methods of
      distribution specified in the request of the Holder or Holders; provided
      that the
      Company shall have the right to postpone or withdraw any registration effected
      pursuant to this Section 8.2 without obligation to the Holders (any such
      registration statement which includes Registrable Securities, a "Piggy-Back
      Registration Statement").

     

    (b)  Underwritten
      Offerings.
      In
      connection with any Underwritten Offering under this Section 8.2 (but not
      including Underwritten Offerings under Section 8.1), the notice to the Holders
      shall state whether such offering is an Underwritten Offering and the Company
      shall not be required to include any Registrable Securities in such Underwriting
      Offering unless the Holders requesting inclusion of such Registrable Securities
      accept the terms of the underwriting as reasonably agreed upon between the
      Company and the managing Underwriter or Underwriters, selected by the Company.
      Each Holder that has requested that Registrable Securities held by it be
      included in such Registration Statement shall (together with the Company and
      the
      other Holders distributing the securities through such underwriting) enter
      into
      such underwriting agreement as reasonably agreed upon between the Company and
      the managing Underwriter or Underwriters. In connection with any Underwritten
      Offering under this Section 8.2 (but not including Underwritten Offerings under
      Section 8.1), if in the reasonable and good faith opinion of the managing
      Underwriter or Underwriters, the registration of all, or part of, the
      Registrable Securities requested to be included in such registration and any
      other securities to be included in such registration jeopardize the success
      of
      the offering by the Company or the holders of securities initiating such
      registration (the “Demanding
      Holders”),
      then:
      (i) in the case of an Underwritten Offering by the Company, (A) the Company
      shall not be cutback and (B) the Registrable Securities requested for inclusion
      and any other securities requested for inclusion pursuant to similar piggyback
      rights shall be reduced first pro rata
      (on an
      as-converted, fully-diluted basis and without giving effect to any exercise
      limitations contained in this Warrant) in accordance with the number of
      securities that each such Person has requested be included in the registration,
      regardless of the number of securities held by each such Person, and (ii) in
      the
      case of an Underwritten Offering by a Demanding Holder, (A) the Demanding Holder
      (and other parties that are subject to the same registration rights agreement
      with such Demanding Holder) shall not be cutback and (B) the Registrable
      Securities requested for inclusion and any other securities requested for
      inclusion pursuant to similar piggyback rights shall be reduced first
pro rata
      (on an
      as-converted, fully-diluted basis and without giving effect to any exercise
      limitations contained in this warrant) in accordance with the number of
      securities that each such Person has requested be included in the registration,
      regardless of the number of securities held by each such Person. If any Holder
      disapproves of the terms of any such underwriting, it may elect to withdraw
      therefrom by written notice to the Company and the managing
      Underwriter.

     

    
      
        
        

      

      
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          17
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    9.  NOTICES.
      Whenever notice is required to be given under this Warrant, unless otherwise
      provided herein, such notice shall be given in accordance with Section 9(f)
      of
      the Securities Purchase Agreement. The Company shall provide the Holder with
      prompt written notice of all actions taken pursuant to this Warrant, including
      in reasonable detail a description of such action and the reason therefore.
      Without limiting the generality of the foregoing, the Company will give written
      notice to the Holder (i) promptly upon any adjustment of the Exercise Price,
      setting forth in reasonable detail, and certifying, the calculation of such
      adjustment and (ii) at least fifteen (15) days prior to the date on which the
      Company closes its books or takes a record (A) with respect to any dividend
      or
      distribution upon the shares of Common Stock, (B) with respect to any grants,
      issuances or sales of any Options, Convertible Securities or rights to purchase
      stock, warrants, securities or other property, other than Excluded Securities,
      to holders of shares of Common Stock or (C) for determining rights to vote
      with
      respect to any Fundamental Transaction, dissolution or liquidation, provided
      in
      each case that such information shall be made known to the public prior to
      or in
      conjunction with such notice being provided to the Holder.

     

    10.  AMENDMENT
      AND WAIVER.
      Except
      as otherwise provided herein, the provisions of this Warrant may be amended
      and
      the Company may take any action herein prohibited, or omit to perform any act
      herein required to be performed by it, only if the Company has obtained the
      written consent of the Required Holders; provided that no such action may
      increase the exercise price of any SPA Warrant or decrease the number of shares
      or change the class of stock obtainable upon exercise of any SPA Warrant without
      the written consent of the Holder. No such amendment shall be effective to
      the
      extent that it applies to less than all of the holders of the SPA Warrants
      then
      outstanding.

     

    11.  GOVERNING
      LAW.
      This
      Warrant shall be governed by and construed and enforced in accor-dance with,
      and
      all questions concerning the construction, validity, interpretation and
      performance of this Warrant shall be governed by, the internal laws of the
      State
      of New York, without giving effect to any choice of law or conflict of law
      provision or rule (whether of the State of New York or any other jurisdictions)
      that would cause the application of the laws of any jurisdictions other than
      the
      State of New York.

     

    
      
        
        

      

      
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    12.  CONSTRUCTION;
      HEADINGS.
      This
      Warrant shall be deemed to be jointly drafted by the Company and all the Buyers
      and shall not be construed against any person as the drafter hereof. The
      headings of this Warrant are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Warrant.

     

    13.  DISPUTE
      RESOLUTION.
      In the
      case of a dispute as to the determination of the Exercise Price or the
      arithmetic calculation of the Warrant Shares, the Company shall submit the
      disputed determinations or arithmetic calculations via facsimile within two
      (2)
      Business Days of receipt of the Exercise Notice giving rise to such dispute,
      as
      the case may be, to the Holder. If the Holder and the Company are unable to
      agree upon such determination or calculation of the Exercise Price or the
      Warrant Shares within three Business Days of such disputed determination or
      arithmetic calculation being submitted to the Holder, then the Company shall,
      within two (2) Business Days submit via facsimile (a) the disputed determination
      of the Exercise Price to an independent, reputable investment bank selected
      by
      the Company and approved by the Holder or (b) the disputed arithmetic
      calculation of the Warrant Shares to the Company's independent, outside
      accountant. The Company shall cause at its expense the investment bank or the
      accountant, as the case may be, to perform the determinations or calculations
      and notify the Company and the Holder of the results no later than ten Business
      Days from the time it receives the disputed determinations or calculations.
      Such
      investment bank's or accountant's determination or calculation, as the case
      may
      be, shall be binding upon all parties absent demonstrable error.

     

    14.  REMEDIES,
      OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.
      The
      remedies provided in this Warrant shall be cumulative and in addition to all
      other remedies available under this Warrant and the other Transaction Documents,
      at law or in equity (including a decree of specific performance and/or other
      injunctive relief), and nothing herein shall limit the right of the Holder
      right
      to pursue actual damages for any failure by the Company to comply with the
      terms
      of this Warrant. The Company acknowledges that a breach by it of its obligations
      hereunder will cause irreparable harm to the Holder and that the remedy at
      law
      for any such breach may be inadequate. The Company therefore agrees that, in
      the
      event of any such breach or threatened breach, the holder of this Warrant shall
      be entitled, in addition to all other available remedies, to an injunction
      restraining any breach, without the necessity of showing economic loss and
      without any bond or other security being required.

     

    15.  TRANSFER.This
      Warrant may be offered for sale, sold, transferred or assigned without the
      consent of the Company, except as may otherwise be required by Section 2(f)
      of
      the Securities Purchase Agreement, provided that any such offer, sale, transfer
      or assignment is in compliance with applicable securities law, and the terms
      and
      conditions hereof and of the Securities Purchase Agreement .

     

    
      
        
        

      

      
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    16.  CERTAIN
      DEFINITIONS.
      For
      purposes of this Warrant, the following terms shall have the following
      meanings:

     

    (a)  "Black
      Scholes Value"
      means
      the value of this Warrant based on the Black and Scholes Option Pricing Model
      obtained from the "OV" function on Bloomberg determined as of the day
      immediately following the public announcement of the applicable Fundamental
      Transaction and reflecting (i) a risk-free interest rate corresponding to the
      U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as
      of such date of request and (ii) an expected volatility equal to the greater
      of
      60% and the 100 day volatility obtained from the HVT function on
      Bloomberg.

     

    (b)  "Bloomberg"
      means
      Bloomberg Financial Markets.

     

    (c)  "Business
      Day"
      means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (d)  "Certificate
      of Designations"
      means
      the certificate of designations for the Series B Convertible Preferred Stock
      in
      the form attached as Exhibit
      A
      to the
      Securities Purchase Agreement.

     

    (e)  "Closing
      Bid Price"
      and
      "Closing
      Sale Price"
      means,
      for any security as of any date, the last closing bid price and last closing
      trade price, respectively, for such security on the Principal Market, as
      reported by Bloomberg, or, if the Principal Market begins to operate on an
      extended hours basis and does not designate the closing bid price or the closing
      trade price, as the case may be, then the last bid price or the last trade
      price, respectively, of such security prior to 4:00:00 p.m., New York Time,
      as
      reported by Bloomberg, or, if the Principal Market is not the principal
      securities exchange or trading market for such security, the last closing bid
      price or last trade price, respectively, of such security on the principal
      securities exchange or trading market where such security is listed or traded
      as
      reported by Bloomberg, or if the foregoing do not apply, the last closing bid
      price or last trade price, respectively, of such security in the
      over-the-counter market on the electronic bulletin board for such security
      as
      reported by Bloomberg, or, if no closing bid price or last trade price,
      respectively, is reported for such security by Bloomberg, the average of the
      bid
      prices, or the ask prices, respectively, of any market makers for such security
      as reported in the "pink sheets" by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Closing Bid Price or the Closing Sale Price
      cannot be calculated for a security on a particular date on any of the foregoing
      bases, the Closing Bid Price or the Closing Sale Price, as the case may be,
      of
      such security on such date shall be the fair market value as mutually determined
      by the Company and the Holder. If the Company and the Holder are unable to
      agree
      upon the fair market value of such security, then such dispute shall be resolved
      pursuant to Section 12. All such determinations to be appropriately adjusted
      for
      any stock dividend, stock split, stock combination or other similar transaction
      during the applicable calculation period.

     

    (f)  "Common
      Stock"
      means
      (i) the Company's shares of Common Stock, par value $0.005 per share, and
      (ii) any share capital into which such Common Stock shall have been changed
      or any share capital resulting from a reclassification of such Common
      Stock.

     

    
      
        
        

      

      
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    (g)  "Common
      Stock Deemed Outstanding"
      means,
      at any given time, the number of shares of Common Stock actually outstanding
      at
      such time, plus the number of shares of Common Stock deemed to be outstanding
      pursuant to Sections 2(a)(i) and 2(a)(ii) hereof regardless of whether the
      Options or Convertible Securities are actually exercisable at such time, but
      excluding any shares of Common Stock owned or held by or for the account of
      the
      Company or issuable upon exercise of the SPA Warrants. 

     

    (h)  "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock.

     

    (i)  "Demand
      Registration Statement"
      shall
      mean a registration statement of the Company which covers the Registrable
      Securities requested to be included therein pursuant to the provisions of
      Section 8.1 and all amendments and supplements to such registration statement,
      including post-effective amendments, in each case including the prospectus
      contained therein, all exhibits thereto and all material incorporated by
      reference (or deemed to be incorporated by reference) therein.

     

    (j)  "Eligible
      Market"
      means
      the NASDAQ Capital Market, the American Stock Exchange, the New York Stock
      Exchange, the NASDAQ Global Market or the NASDAQ Global Select
      Market.

     

    (k)  "Expiration
      Date"
      means
      the date sixty (60) months after the Issuance Date or, if such date falls on
      a
      day other than a Trading Day or on which trading does not take place on the
      Principal Market (a "Holiday"),
      the
      next date that is not a Holiday.

     

    (l)  "Fundamental
      Transaction"
      means
      that the Company (or in the case of clause (vi) any “person” or “group” (as
      these terms are used for purposes of Sections 13(d) and 14(d) of the Exchange
      Act)) shall, directly or indirectly, in one or more related transactions, (i)
      consolidate or merge with or into (whether or not the Company is the surviving
      corporation) another Person, or (ii) sell, assign, transfer, convey or otherwise
      dispose of all or substantially all of the properties or assets of the Company
      to another Person, or (iii) allow another Person to make a purchase, tender
      or
      exchange offer that is accepted by the holders of more than the 50% of either
      the outstanding shares of Common Stock (not including any shares of Common
      Stock
      held by the Person or Persons making or party to, or associated or affiliated
      with the Persons making or party to, such purchase, tender or exchange offer),
      or (iv) consummate a stock purchase agreement or other business combination
      (including, without limitation, a reorganization, recapitalization, spin-off
      or
      scheme of arrangement) with another Person whereby such other Person acquires
      more than the 50% of the outstanding shares of Common Stock (not including
      any
      shares of Common Stock held by the other Person or other Persons making or
      party
      to, or associated or affiliated with the other Persons making or party to,
      such
      stock purchase agreement or other business combination), (v) reorganize,
      recapitalize or reclassify its Common Stock, or (vi) is or shall become the
      "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
      or indirectly, of 50% of the aggregate ordinary voting power represented by
      issued and outstanding Common Stock.

     

    
      
        
        

      

      
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    (m)  "Initiating
      Holders"
      shall
      mean, with respect to a particular registration, the Holders who initiated
      the
      Request for such registration.

     

    (n)  “Mandatory
      Exercise Period” means
      any
      period of thirty (30) consecutive Trading Days during which the Closing Sale
      Price of the Common Stock on each such Trading Day is equal to or greater than
      the Mandatory Exercise Trigger Price.

     

    (o)  “Mandatory
      Exercise Trigger Price” means
      Thirty Dollars ($30.00) (subject to adjustment for stock splits, stock dividends
      and other similar events after the Issuance Date).

     

    (p)  "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities.

     

    (q)  "Parent
      Entity"
      of a
      Person means an entity that, directly or indirectly, controls the applicable
      Person and whose common stock or equivalent equity security is quoted or listed
      on an Eligible Market, or, if there is more than one such Person or Parent
      Entity, the Person or Parent Entity with the largest public market
      capitalization as of the date of consummation of the Fundamental
      Transaction.

     

    (r)  "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization, any other entity and
      a
      government or any department or agency thereof.

     

    (s)  "Registration
      Expenses"
      shall
      mean any and all expenses incident to performance of or compliance with the
      provisions of Section 8 of this Warrant by the Company and its subsidiaries,
      including, without limitation (i) all SEC, stock exchange, NASD and other
      registration, listing and filing fees, (ii) all fees and expenses incurred
      in
      connection with compliance with state securities or blue sky laws and compliance
      with the rules of any stock exchange (including fees and disbursements of
      counsel in connection with such compliance and the preparation of a blue sky
      memorandum and legal investment survey), (iii) all expenses of any Persons
      in
      preparing or assisting in preparing, word processing, printing, distributing,
      mailing and delivering any Registration Statement, any prospectus, any
      underwriting agreements, transmittal letters, securities sales agreements,
      securities certificates and other documents relating to the performance of
      or
      compliance with the provisions of Section 8 of this Warrant, (iv) the fees
      and
      disbursements of counsel for the Company, (v) the fees and disbursements of
      counsel to the Holders', (vi) the fees and disbursements of all independent
      public accountants (including the expenses of any audit and/or "cold comfort"
      letters) and the fees and expenses of other Persons, including experts, retained
      by the Company, (vii) the expenses incurred in connection with making road
      show
      presentations and holding meetings with potential investors to facilitate the
      distribution and sale of Registrable Securities which are customarily borne
      by
      the issuer, (viii) any fees and disbursements of underwriters customarily paid
      by issuers or sellers of securities, and (ix) premiums and other costs of
      policies of insurance against liabilities arising out of the public offering
      of
      the Registrable Securities being registered; provided,
      however,
      Registration Expenses shall not include discounts and commissions payable to
      underwriters, selling brokers, dealer managers or other similar Persons engaged
      in the distribution of any of the Registrable Securities; and provided further,
      that in
      any case where Registration Expenses are not to be borne by the Company, such
      expenses shall not include salaries of Company personnel or general overhead
      expenses of the Company, auditing fees, premiums or other expenses relating
      to
      liability insurance required by underwriters of the Company or other expenses
      for the preparation of financial statements or other data normally prepared
      by
      the Company in the ordinary course of its business or which the Company would
      have incurred in any event; and provided,
      further,
      that in
      the event the Company shall, in accordance with Section 8.2 hereof, not register
      any securities with respect to which it had given written notice of its
      intention to register to Holders, notwithstanding anything to the contrary
      in
      the foregoing, all of the costs incurred by such Holders in connection with
      such
      registration shall be deemed to be Registration Expenses.

     

    
      
        
        

      

      
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    (t)  "Principal
      Market"
      means
      the NASDAQ Capital Market.

     

    (u)  "Registration
      Rights Agreement"
      means
      that certain Registration Rights Agreement dated as of the Issuance Date by
      and
      among the Company and the Buyers.

     

    (v)  "Required
      Holders"
      means
      the holders of the SPA Warrants representing at least a majority of shares
      of
      Common Stock underlying the SPA Warrants then outstanding.

     

    (w)  "SPA
      Securities"
      means
      the Preferred Shares issued pursuant to the Securities Purchase
      Agreement.

     

    (x)  "Successor
      Entity"
      means
      the Person (or, if so elected by the Required Holders, the Parent Entity) formed
      by, resulting from or surviving any Fundamental Transaction or the Person (or,
      if so elected by the Required Holders, the Parent Entity) with which such
      Fundamental Transaction shall have been entered into.

     

    (y)  "Trading
      Day"
      means
      any day on which the Common Stock is scheduled to trade on the Principal Market,
      or, if the Principal Market is not the principal trading market for the Common
      Stock, then on the principal securities exchange or securities market on which
      the Common Stock is then traded; provided that "Trading Day" shall not include
      any day on which the Common Stock is scheduled to trade on such exchange or
      market for less than 4.5 hours or any day that the Common Stock is suspended
      from trading during the final hour of trading on such exchange or market (or
      if
      such exchange or market does not designate in advance the closing time of
      trading on such exchange or market, then during the hour ending at 4:00:00
      p.m.,
      New York Time).

     

    (z)  "Underwriters"
      shall
      mean the underwriters, if any, of the offering being registered under the
      Securities Act.

     

    (aa)  "Underwritten
      Offering"
      shall
      mean a sale of securities of the Company to an Underwriter or Underwriters
      for
      reoffering to the public.

     

    (bb)  "Weighted
      Average Price"
      means,
      for any security as of any date, the dollar volume-weighted average price for
      such security on the Principal Market during the period beginning at 9:30:01
      a.m., New York City time, and ending at 4:00:00 p.m., New York City time, as
      reported by Bloomberg through its "Volume at Price" function or, if the
      foregoing does not apply, the dollar volume-weighted average price of such
      security in the over-the-counter market on the electronic bulletin board for
      such security during the period beginning at 9:30:01 a.m., New York City time,
      and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg, or,
      if
      no dollar volume-weighted average price is reported for such security by
      Bloomberg for such hours, the average of the highest closing bid price and
      the
      lowest closing ask price of any of the market makers for such security as
      reported in the "pink sheets" by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated
      for
      such security on such date on any of the foregoing bases, the Weighted Average
      Price of such security on such date shall be the fair market value as mutually
      determined by the Company and the Required Holders. If the Company and the
      Required Holders are unable to agree upon the fair market value of the such
      security, then such dispute shall be resolved pursuant to Section 12 with the
      term "Weighted Average Price" being substituted for the term "Exercise Price."
      All such determinations shall be appropriately adjusted for any share dividend,
      share split or other similar transaction during such period.

     

    
      
        
        

      

      
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    (cc)  "Withdrawn
      Demand Registration"
      shall
      have the meaning set forth in Section 8.1(a).

     

    (dd)  "Withdrawn
      Request"
      shall
      have the meaning set forth in Section 8.1(a). 

     

    [Signature
      Page Follows]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to Purchase Common Stock to be duly executed
      as
      of the Issuance Date set out above.

     

    
      	 	 	 
	 	CLEVELAND
              BIOLABS, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Michael
              Fonstein
	 	
              
Name: Michael
              Fonstein
	 	Title: Chief
              Executive Officer and President

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT
      A

    

    EXERCISE
      NOTICE

    TO
      BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

    WARRANT
      TO PURCHASE COMMON STOCK

    

    CLEVELAND
      BIOLABS, INC.

    The
      undersigned holder hereby exercises the right to purchase _________________
      of
      the shares of Common Stock ("Warrant
      Shares")
      of
      Cleveland BioLabs, Inc., a Delaware corporation (the "Company"),
      evidenced by the attached Warrant to Purchase Common Stock (the "Warrant").
      Capitalized terms used herein and not otherwise defined shall have the
      respective meanings set forth in the Warrant.

    

    1.
      Form
      of Exercise Price. The Holder intends that payment of the Exercise Price shall
      be made as:

    

    ____________ a
      "Cash
      Exercise"
      with
      respect to _________________ Warrant Shares; and/or

    

    ____________ a
      "Cashless
      Exercise"
      with
      respect to _______________ Warrant Shares (to the extent
      permitted).

    

    2.
      Payment of Exercise Price. In the event that the holder has elected a Cash
      Exercise with respect to some or all of the Warrant Shares to be issued pursuant
      hereto, the holder shall pay the Aggregate Exercise Price in the sum of
      $___________________ to the Company in accordance with the terms of the
      Warrant.

    

    3.
      Delivery of Warrant Shares. The Company shall deliver to the holder __________
      Warrant Shares in accordance with the terms of the Warrant.

    

    Date:
      _______________ __, ______

    

    

    ____________________________

    Name
      of
      Registered Holder

     

     

    By:
      _____________________________    

    Name:

    Title:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ACKNOWLEDGMENT

    

    The
      Company hereby acknowledges this Exercise Notice and hereby directs Continental
      Stock Transfer & Trust Company to issue the above indicated number of shares
      of Common Stock in accordance with the Transfer Agent Instructions dated March
      __, 2007 from the Company and acknowledged and agreed to by Continental Stock
      Transfer & Trust Company.

     

    
      	 	 	 
	 	CLEVELAND
              BIOLABS, INC.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
Name:
	 	Title:EXECUTION
      COPY

     

    SECURITIES
      PURCHASE AGREEMENT 

     

    SECURITIES
      PURCHASE AGREEMENT
      (the
      "Agreement"),
      dated
      as of March 16, 2007, by and among Cleveland BioLabs, Inc., a Delaware
      corporation, with headquarters located at 11000 Cedar Ave., Suite 290,
      Cleveland, Ohio 44106 (the "Company"),
      and
      the investors listed on the Schedule of Buyers attached hereto (individually,
      a
      "Buyer"
      and
      collectively, the "Buyers").

     

    WHEREAS:

     

    A. The
      Company and each Buyer is executing and delivering this Agreement in reliance
      upon the exemption from securities registration afforded by Section 4(2) of
      the
      Securities Act of 1933, as amended (the "1933
      Act"),
      and
      Rule 506 of Regulation D ("Regulation D")
      as
      promulgated by the United States Securities and Exchange Commission (the
      "SEC")
      under
      the 1933 Act.

     

    B. The
      Company has authorized a new series of convertible preferred stock of the
      Company designated as Series
      B
      Convertible Preferred Stock,
      the
      terms of which are set forth in the certificate of designation for such series
      of preferred stock (the "Certificate
      of Designations")
      in the
      form attached hereto as Exhibit
      A
      (together with any share of convertible preferred stock issued in replacement
      thereof in accordance with the terms thereof, the "Preferred
      Shares"),
      which
      Preferred Shares shall be convertible into the Company's common stock, par
      value
      $0.005 per share (the "Common
      Stock"),
      in
      accordance with the terms of the Certificate of Designations. 

     

    C. Each
      Buyer (other than the Agent (as defined below) and the Non-Convertible Buyers
      (as defined below)) (collectively, as identified on the Schedule of Buyers,
      the
      "Convertible
      Buyers")
      wishes
      to purchase, and the Company wishes to sell, upon the terms and conditions
      stated in this Agreement, (i) that aggregate number of Preferred Shares (the
      "Investor
      Convertible Preferred Shares")
      set
      forth opposite such Buyer's name in column (3) on the Schedule of Buyers (which
      aggregate number for all Buyers shall be 2,376,000) (the shares of Common Stock
      issuable upon conversion thereof, collectively, the "Investor
      Convertible Conversion Shares")
      and
      (ii) Series B Warrants in substantially the form attached hereto as Exhibit
      B-1
      (the
      "Investor
      Convertible Warrants")
      to
      acquire up to that number of shares of Common Stock (the shares of Common Stock
      issuable upon exercise thereof, collectively, the "Investor
      Convertible Warrant Shares")
      as set
      forth opposite such Buyer's name in column (4) on the Schedule of Buyers, with
      each two (2) Investor Convertible Preferred Shares and Investor Convertible
      Warrant with respect to the right to acquire one (1) Investor Convertible
      Warrant Share (each, a "Convertible
      Unit")
      constituting an "investment unit" for purposes of Section 1273(c)(2) of the
      Internal Revenue Code, as amended (the "Code"),
      as
      described below.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    D. Each
      Buyer (other than the Agent (as defined below) and the Convertible Buyers)
      (collectively, as identified on the Schedule of Buyers, the "Non-Convertible
      Buyers")
      wishes
      to purchase, and the Company wishes to sell, upon the terms and conditions
      stated in this Agreement, the
      following securities, which are not convertible or exercisable into Common
      Stock
      until the Stockholder Approval Date (as defined below),
      (i) that
      aggregate number of Preferred Shares (the "Investor
      Non-Convertible Preferred Shares",
      and
      together with the Investor Convertible Preferred Shares, the "Investor
      Preferred Shares")
      set
      forth opposite such Buyer's name in column (5) on the Schedule of Buyers (which
      aggregate number for all Buyers shall be 1,912,712) (the shares of Common Stock
      issuable upon conversion thereof, collectively, the "Investor
      Non-Convertible Conversion Shares",
      and
      together with the Investor Convertible Conversion Shares, the "Investor
      Conversion Shares")
      and
      (ii) Series B Warrants in substantially the form attached hereto as Exhibit
      B-1
      (the
      "Investor
      Non-Convertible Warrants",
      and
      together with the Investor Convertible Warrants, the "Investor
      Warrants")
      to
      acquire up to that number of shares of Common Stock (the shares of Common Stock
      issuable upon exercise thereof, collectively, the "Investor
      Non-Convertible Warrant Shares",
      and
      together with the Investor Convertible Warrant Shares, the "Investor
      Warrant Shares")
      as set
      forth opposite such Buyer's name in column (6) on the Schedule of Buyers, with
      each two (2) Investor Non-Convertible Preferred Shares and Investor
      Non-Convertible Warrant with respect to the right to acquire one (1) Investor
      Non-Convertible Warrant Share (each, a "Non-Convertible
      Unit",
      and
      together with the Convertible Units, each a "Unit")
      constituting an "investment unit" for purposes of Section 1273(c)(2) of the
      Code, as described below.

     

    E. Sunrise
      Securities Corp. ("Sunrise"),
      which
      is a Buyer hereunder, has agreed to act as placement agent in connection with
      the transactions contemplated by this Agreement and, subject to the closing
      of
      the transaction contemplated hereby, the Company agreed to issue to Sunrise
      and/or its designees and certain other placement agents set forth on the
      Schedule of Buyers (collectively, the "Agents")
      the
      following securities, which are not convertible or exercisable into Common
      Stock
      until the Stockholder Approval Date,
      (i) that
      aggregate number of Preferred Shares (the "Agent
      Preferred Shares",
      and
      together with the Investor Non-Convertible Preferred Shares, the "Non-Convertible
      Preferred Shares")
      set
      forth opposite such Agent's name in column (5) on the Schedule of Buyers (the
      shares of Common Stock issuable upon conversion thereof, collectively, the
      "Agent
      Conversion Shares",
      and
      together with the Investor Conversion Shares, the "Conversion
      Shares"),
      (ii)
      Series B Warrants in substantially the form attached hereto as Exhibit
      B-1
      (the
      "Agent
      Warrants")
      to
      acquire up to that number of shares of Common Stock (the shares of Common Stock
      issuable upon exercise thereof, collectively, the "Agent
      Warrant Shares")
      as set
      forth opposite such Agent's name in column (6) on the Schedule of Buyers and
      (iii) Series C Warrants in substantially the form attached hereto as
Exhibit
      B-2
      (the
      "Retainer
      Warrants",
      and
      together with the Agent Warrants and the Investor Non-Convertible Warrants,
      the
      "Non-Convertible
      Warrants"
      and
      together with the Investor Convertible Warrants, the "Warrants")
      to
      acquire up to that number of shares of Common Stock (the shares of Common Stock
      issuable upon exercise thereof, collectively, the "Retainer
      Warrant Shares",
      and
      together with the Agent Warrant Shares and the Investor Warrant Shares, the
      "Warrant
      Shares")
      as set
      forth opposite such Agent's name in column (7) on the Schedule of Buyers. For
      the avoidance of doubt, the amount of securities set forth opposite each Agent's
      name in the Schedule of Buyers (to the extent such Agent has elected to have
      each of the foregoing commissions paid in such securities) represents (a) a
      commission to be paid to each such Agent (and/or its designees) in such number
      of units (comprised of two (2) Agent Preferred Shares and one (1) Agent Warrant
      exercisable into one
      (1)
Agent
      Warrant Share) equal to the quotient of (i) 8% of the aggregate Purchase Price
      of the Units placed by such Agent, divided by (ii) $12.88 and (b) an additional
      commission to be paid to each such Agent (and/or its designees) as (x) in the
      case of Sunrise, Retainer Warrants and (y) in the case of any Agent other than
      Sunrise, additional Agent Warrants, in each case, exercisable into such number
      of Warrant Shares equal to the quotient of (i) 8% of the aggregate Purchase
      Price of the Units placed by such Agent, divided by (ii) $7.00.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

       

    

    F. Contemporaneously
      with the execution and delivery of this Agreement, the parties hereto are
      executing and delivering a Registration Rights Agreement, substantially in
      the
      form attached hereto as Exhibit
      C
      (the
      "Registration
      Rights Agreement"),
      pursuant to which the Company has agreed to provide certain registration rights
      with respect to the Registrable Securities (as defined in the Registration
      Rights Agreement), under the 1933 Act and the rules and regulations promulgated
      thereunder, and applicable state securities laws. 

     

    G. The
      Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares and
      the Units are collectively referred to herein as the "Securities".

     

    NOW,
      THEREFORE,
      the
      Company and each Buyer hereby agree as follows:

     

    1.     PURCHASE
      AND SALE OF PREFERRED STOCK AND WARRANTS.

     

    (a) Preferred
      Shares and Warrants.
      Subject
      to the satisfaction (or waiver) of the conditions set forth in Sections 6 and
      7
      below, the Company shall issue and sell to each Buyer (other than the Agents),
      and each Buyer (other than the Agents) severally, but not jointly, agrees to
      purchase from the Company on the Closing Date (as defined below), (x) if such
      Buyer is a Convertible Buyer, the number of Investor Convertible Preferred
      Shares as is set forth opposite such Buyer's name in column (3) on the Schedule
      of Buyers, along
      with Investor Convertible Warrants to acquire that number of Investor
      Convertible Warrant Shares as is set forth opposite such Buyer's name in column
      (4) on the Schedule of Buyers, or (y) if such Buyer is a Non-Convertible Buyer,
      the number of Investor Non-Convertible Preferred Shares as is set forth opposite
      such Buyer's name in column (5) on the Schedule of Buyers, along
      with Investor Non-Convertible Warrants to acquire that number of Investor
      Non-Convertible Warrant Shares as is set forth opposite such Buyer's name in
      column (6) on the Schedule of Buyers. Concurrently with the issuance of the
      Investor Preferred Shares and the Investor Warrants, the Company shall issue
      to
      each Agents (and/or its designees), and such Agent (and/or its designees) agrees
      to accept from the Company on the Closing Date (as defined below), collectively,
      the number of Agent Preferred Shares as is set forth opposite such Agent's
      name
      in column (5) on the Schedule of Buyers, along
      with Agent Warrants to acquire that number of Agent Warrant Shares as is set
      forth opposite such Agent's name in column (6) on the Schedule of Buyers and
      the
      Retainer Warrants to acquire that number of Retainer Warrant Shares as is set
      forth opposite such Agent's name in column (7) on the Schedule of
      Buyers.

     

    (b) Closing.
      The
      closing (the "Closing")
      of the
      acquisition of the Preferred Shares and the Warrants by the Buyers shall occur
      at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New
      York 10022. The date and time of the Closing (the "Closing
      Date")
      shall
      be 10:00 a.m., New York City time, on the date hereof after the notification
      of
      satisfaction (or waiver) of the conditions to the Closing set forth in Sections
      6 and 7 below (or such other date and time as is mutually agreed to by the
      Company and each Buyer). 

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    (c) Purchase
      Price.
      The
      aggregate purchase price for the Preferred Shares and the Warrants to be
      purchased by each Buyer (the "Purchase
      Price")
      shall
      be the amount set forth opposite such Buyer's name in column (8) on the Schedule
      of Buyers. Each Buyer (other than the Agents) shall pay $14.00 for each Unit
      to
      be purchased by such Buyer at the Closing. The Buyers and the Company agree
      that
      each Unit constitutes an "investment unit" for purposes of Section 1273(c)(2)
      of
      the Code. The Buyers (other than the Agents) and the Company mutually agree
      that
      the allocation of the issue price of each such Unit between the Preferred Shares
      and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury
      Regulation Section 1.1273-2(h) shall be the Purchase Price in full allocated
      to
      the Preferred Shares and no portion of the Purchase Price allocated to the
      Warrants, and neither the Buyers (other than the Agents) nor the Company shall
      take any position inconsistent with such allocation in any tax return or in
      any
      judicial or administrative proceeding in respect of taxes. The Units shall
      not
      constitute securities separate from the Preferred Shares and Warrants and shall
      not be represented by certificates or other instruments. The Agent Preferred
      Shares, Agent Warrants and Agent Retainer Shares shall be issued to each Agent
      (or its designees) in exchange for placement agent services rendered in
      connection with the transactions contemplated hereby and without any additional
      cash consideration to be paid to the Company.

     

    (d) Form
      of Payment.
      On the
      Closing Date, (A) each Buyer (other than the Agents) shall pay its portion
      of
      the Purchase Price to the Company for the Preferred Shares and the Warrants
      to
      be issued and sold to such Buyer at the Closing, by wire transfer of immediately
      available funds in accordance with the Company's written wire instructions
      and
      (B) the Company shall deliver to (x) each Convertible Buyer, the Investor
      Convertible Preferred Shares (in
      such
      denominations
      as is
      set forth opposite such Buyer's name in column (3) on the Schedule
      of
      Buyers),
      along with the Investor
      Convertible Warrants
      (exercisable for the number of shares of Common Stock as is set forth opposite
      such Buyer's name in column (4) on the Schedule of Buyers), (y) each
      Non-Convertible Buyer, the Investor Non-Convertible Preferred Shares
(in
      such
      denominations
      as is
      set forth opposite such Buyer's name in column (5) on the Schedule
      of
      Buyers),
      along with the Investor
      Non-Convertible Warrants
      (exercisable for the number of shares of Common Stock as is set forth opposite
      such Buyer's name in column (6) on the Schedule of Buyers), and (z) each
      Agent, the Agent Preferred Shares (in
      such
      denominations
      as is
      set forth opposite such Agent's name in column (5) on the Schedule
      of
      Buyers),
      along with the Agent Warrants (exercisable for the number of shares of Common
      Stock as is set forth opposite such Agent's name in column (6) on the Schedule
      of Buyers) and the Retainer Warrants (exercisable for the number of shares
      of
      Common Stock as is set forth opposite such Agent's name in column (7) on the
      Schedule of Buyers), each duly executed on behalf of the Company and registered
      in the name of such Buyer or its designees.

     

    2.    BUYER'S
      REPRESENTATIONS AND WARRANTIES.

     

    Each
      Buyer represents and warrants with respect to only itself that: 

     

    (a) Organization;
      Authority; Legal Capacity.
      

     

    (i) If
      such
      Buyer is a legal entity, such Buyer is an entity duly organized, validly
      existing and in good standing under the laws of the jurisdiction of its
      organization with the requisite power and authority to enter into and to
      consummate the transactions contemplated by the Transaction Documents (as
      defined below) to which it is a party and otherwise to carry out its obligations
      hereunder and thereunder.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

       

    

    (ii) If
      such
      Buyer is a natural person, such Buyer has the legal capacity and right to
      execute, deliver, enter into, consummate and perform the transactions
      contemplated by the Transaction Documents to which it is a party and otherwise
      to carry out its obligations hereunder and thereunder.

     

    (b) No
      Public Sale or Distribution.
      Such
      Buyer is (i) acquiring the Preferred Shares and the Warrants, (ii) upon
      conversion of the Preferred Shares will acquire the Conversion Shares, and
      (iii) upon exercise of the Warrants will acquire the Warrant Shares, in
      each case, for its own account and not with a view towards, or for resale in
      connection with, the public sale or distribution thereof, except pursuant to
      sales registered or exempted under the 1933 Act; provided,
      however,
      that by
      making the foregoing representations, such Buyer does not agree to hold any
      of
      the Securities for any minimum or other specific term and reserves the right
      to
      dispose of the Securities at any time in accordance with or pursuant to a
      registration statement or an exemption under the 1933 Act. Such Buyer is
      acquiring the Securities hereunder in the ordinary course of its business.
      Such
      Buyer does not presently have any agreement or understanding, directly or
      indirectly, with any Person to resell or distribute any of the
      Securities.

     

    (c) Accredited
      Investor Status.
      Such
      Buyer is an "accredited investor" as that term is defined in Rule 501(a) of
      Regulation D (or to the extent such Buyer is a resident of Canada, of that
      term
      as defined under applicable Canadian securities laws), and shall be an
      "accredited" investor at the time of any conversion by such Buyer of any of
      the
      Preferred Shares or exercise by such Buyer of any of the Warrants. Such Buyer
      has such knowledge and experience in financial and business matters that such
      Buyer is capable of evaluating the merits and risks of its investment in the
      Securities.

     

    (d) Reliance
      on Exemptions.
      Such
      Buyer understands that the Securities are being offered and sold to it in
      reliance on specific exemptions from the registration requirements of United
      States federal and state securities laws and that the Company is relying in
      part
      upon the truth and accuracy of, and such Buyer's compliance with, the
      representations, warranties, agreements, acknowledgments and understandings
      of
      such Buyer set forth herein in order to determine the availability of such
      exemptions and the eligibility of such Buyer to acquire the
      Securities.

     

    (e) Information.
      Such
      Buyer and its advisors, if any, have been furnished with all materials relating
      to the business, finances and operations of the Company and materials relating
      to the offer and sale of the Securities which have been requested by such Buyer.
      Such Buyer and its advisors, if any, have been afforded the opportunity to
      ask
      questions of the Company. Neither such inquiries nor any other due diligence
      investigations conducted by such Buyer or its advisors, if any, or its
      representatives shall modify, amend or affect such Buyer's right to rely on
      the
      Company's representations and warranties contained herein. Such Buyer
      understands that its investment in the Securities involves a high degree of
      risk. Such Buyer has sought such accounting, legal and tax advice as it has
      considered necessary to make an informed investment decision with respect to
      its
      acquisition of the Securities.

     

    (f) No
      Governmental Review.
      Such
      Buyer understands that no United States federal or state agency or any other
      government or governmental agency has passed on or made any recommendation
      or
      endorsement of the Securities or the fairness or suitability of the investment
      in the Securities nor have such authorities passed upon or endorsed the merits
      of the offering of the Securities.

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

       

    

    (g) Transfer
      or Resale.
      Such
      Buyer understands that except as provided in the Registration Rights Agreement
      or in the Retainer Warrants: (i) the Securities have not been and are not being
      registered under the 1933 Act or any state securities laws, and may not be
      offered for sale, sold, assigned or transferred unless (A) subsequently
      registered thereunder, (B) such Buyer shall have delivered to the Company an
      opinion of counsel, in a generally acceptable form, to the effect that such
      Securities to be sold, assigned or transferred are being sold, assigned or
      transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act,
      as
      amended, (or a successor rule thereto) (collectively, "Rule
      144")
      or any
      other exemption from such registration or may be sold, assigned or transferred
      pursuant to Rule 144(k), or (C) such Buyer provides the Company with reasonable
      assurance that such Securities either are being (or have been) sold, assigned
      or
      transferred pursuant to Rule 144 or can be sold, assigned or transferred
      pursuant to Rule 144(k); (ii) any sale of the Securities made in reliance on
      Rule 144 may be made only in accordance with the terms of Rule 144 and further,
      if Rule 144 is not applicable, any resale of the Securities under circumstances
      in which the seller (or the Person (as defined in Section 3(s)) through whom
      the
      sale is made) may be deemed to be an underwriter (as that term is defined in
      the
      1933 Act) may require compliance with some other exemption under the 1933 Act
      or
      the rules and regulations of the SEC thereunder; and (iii) neither the Company
      nor any other Person is under any obligation to register the Securities under
      the 1933 Act or any state securities laws or to comply with the terms and
      conditions of any exemption thereunder. Notwithstanding the foregoing, the
      Securities may be pledged in connection with a bona fide margin account or
      other
      loan or financing arrangement secured by the Securities and such pledge of
      Securities shall not be deemed to be a transfer, sale or assignment of the
      Securities hereunder, and no Buyer effecting a pledge of Securities shall be
      required to provide the Company with any notice thereof or otherwise make any
      delivery to the Company pursuant to this Section 2(g).

     

    (h) Legends.
      

     

    (i) Such
      Buyer understands that the certificates or other instruments representing the
      Preferred Shares and the Warrants and, until such time as the resale of the
      applicable Conversion Shares and the Warrant Shares have been registered under
      the 1933 Act as contemplated by the Registration Rights Agreement, the stock
      certificates representing the Conversion Shares and the Warrant Shares, except
      as set forth below, shall bear any legend as required by the "blue sky" laws
      of
      any state and a restrictive legend in substantially the following form (and
      a
      stop-transfer order may be placed against transfer of such stock
      certificates):

     

    [NEITHER
      THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR
      THE
      SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE] [EXERCISABLE] HAVE
      BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
      LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED
      (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
      UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL,
      IN A
      GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
      AND
      APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER
      SAID ACT.  NOTWITHSTANDING
      THE FOREGOING, THE SECURITIES MAY BE PLEDGED PURSUANT TO AN AVAILABLE EXEMPTION
      FROM REGISTRATION UNDER THE 1933 ACT IN CONNECTION WITH A BONA FIDE MARGIN
      ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
      SECURITIES.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

       

    

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of the Securities upon
      which it is stamped or issue to such holder by electronic delivery at the
      applicable balance account at DTC, if, unless otherwise required by state
      securities laws, (i) such Securities are registered for resale under the 1933
      Act, (ii) in connection with a sale, assignment or other transfer, such holder
      provides the Company with an opinion of counsel, in a generally acceptable
      form,
      to the effect that such sale, assignment or transfer of the Securities is being
      made under the applicable requirements of Rule 144 of the 1933 Act, or (iii)
      such holder provides the Company with reasonable assurance that the Securities
      can be sold, assigned or transferred pursuant to Rule 144(k). Such Buyer
      acknowledges, covenants and agrees to sell the Securities represented by a
      certificate(s) from which the legend has been removed only (x) pursuant to
      a
      registration statement effective under the 1933 Act and in accordance with
      the
      plan of distribution contained therein, (y) pursuant to a transaction exemption
      from registration under the 1933 Act and any applicable state securities laws,
      in which such Buyer's rights under the Registration Rights Agreement with
      respect to such Securities are assigned to the Transferee in accordance with
      the
      terms of the Registration Rights Agreement, or (z) in a transaction pursuant
      to
      Rule 144 (including Rule 144(k)).

     

    (ii) Such
      Non-Convertible Buyer and Agent understands that until the Stockholder Approval
      Date, the certificates or other instruments representing the Non-Convertible
      Preferred Shares and Non-Convertible Warrants shall bear the following
      legend:

     

    THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE [CONVERTED][EXERCISED]
      UNTIL THE STOCKHOLDER APPROVAL DATE (AS DEFINED IN THE SECURITIES PURCHASE
      AGREEMENT, DATED MARCH 16, 2007, BY AND AMONG THE COMPANY AND THE BUYERS PARTY
      THERETO).

     

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of such Securities upon request
      at
      any time following the Stockholder Approval Date.

     

    (i) Validity;
      Enforcement.
      This
      Agreement and the Registration Rights Agreement have been duly and validly
      authorized, executed and delivered on behalf of such Buyer and shall constitute
      the legal, valid and binding obligations of such Buyer enforceable against
      such
      Buyer in accordance with their respective terms, except as such enforceability
      may be limited by general principles of equity or to applicable bankruptcy,
      insolvency, reorganization, moratorium, liquidation and other similar laws
      relating to, or affecting generally, the enforcement of applicable creditors'
      rights and remedies.

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

       

    

    (j) No
      Conflicts.
      The
      execution, delivery and performance by such Buyer of this Agreement and the
      Registration Rights Agreement and the consummation by such Buyer of the
      transactions contemplated hereby and thereby will not (i) result in a violation
      of the organizational documents of such Buyer or (ii) conflict with, or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which such Buyer is a party, or (iii) result in a violation of
      any
      law, rule, regulation, order, judgment or decree (including federal and state
      securities laws) applicable to such Buyer, except in the case of clauses (ii)
      and (iii) above, for such conflicts, defaults, rights or violations which would
      not, individually or in the aggregate, reasonably be expected to have a material
      adverse effect on the transactions contemplated hereby or in the other
      Transaction Documents or the authority or ability of such Buyer to perform
      its
      obligations under the Transaction Documents.

     

    (k) Residency.
      Such
      Buyer is a resident of that jurisdiction set forth opposite such Buyer's name
      in
      column (2) on the Schedule of Buyers.

     

    (l) Certain
      Trading Activities.
      Such
      Buyer has not directly or indirectly, nor has any Person acting on behalf of
      or
      pursuant to any understanding with such Buyer, engaged in any purchase or sale
      of Common Stock (including, without limitation, any Short Sales (as defined
      below) involving the Company's securities) since the date that such Buyer first
      became aware of the transactions contemplated hereby. For purposes of this
      Section, "Short
      Sales"
      include, without limitation, all "short sales" as defined in Rule 200 of
      Regulation SHO adopted under the 1934 Act (as defined in Section 3(f) below)
      and
      all types of direct and indirect stock pledges, forward sale contracts, options,
      puts, calls, short sales, swaps and similar arrangements (including on a total
      return basis), and sales and other transactions through non-US broker-dealers
      or
      foreign regulated brokers having the effect of hedging the securities of the
      Company or the investment contemplated under this Agreement. Such Buyer
      covenants that neither it, nor any person acting on its behalf or pursuant
      to
      any understanding with it, will engage in any transactions in the securities
      of
      the Company (including Short Sales) prior to the filing of the 8-K Filing (as
      defined below).

     

    3.     REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

     

    The
      Company represents and warrants to each of the Buyers that:

     

    (a) Organization
      and Qualification.
      Each of
      the Company and its "Subsidiaries"
      (which
      for purposes of this Agreement means any joint venture or any entity in which
      the Company, directly or indirectly, owns capital stock or holds an equity
      or
      similar interest, other than a publicly traded entity of which the Company
      directly or indirectly owns less than 5% of the outstanding equity) are entities
      duly organized and validly existing and in good standing under the laws of
      the
      jurisdiction in which they are formed, and have the requisite power and
      authorization to own their properties and to carry on their business as now
      being conducted. Each of the Company and its Subsidiaries is duly qualified
      as a
      foreign entity to do business and is in good standing in every jurisdiction
      in
      which its ownership of property or the nature of the business conducted by
      it
      makes such qualification necessary, except to the extent that the failure to
      be
      so qualified or be in good standing would not reasonably be expected to have
      a
      Material Adverse Effect. As used in this Agreement, "Material
      Adverse Effect"
      means
      any material adverse effect on the business, properties, assets, operations,
      results of operations, condition (financial or otherwise) or prospects of the
      Company and its Subsidiaries taken as a whole, or on the transactions
      contemplated hereby or in the other Transaction Documents, or on the authority
      or ability of the Company to perform its obligations under the Transaction
      Documents (as defined below). The Company has no Subsidiaries.

     

    
      
        
        

      

      
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    (b) Authorization;
      Enforcement; Validity.
      The
      Company has the requisite power and authority to enter into and perform its
      obligations under this Agreement, the Certificate of Designations, the Warrants,
      the Registration Rights Agreement, the Irrevocable Transfer Agent Instructions
      (as defined in Section 5(b)), and each of the other agreements entered into
      by
      the parties hereto in connection with the transactions contemplated by this
      Agreement (collectively, the "Transaction
      Documents")
      and to
      issue the Securities in accordance with the terms hereof and thereof. The
      execution and delivery of the Transaction Documents by the Company and the
      consummation by the Company of the transactions contemplated hereby and thereby,
      including, without limitation, the issuance of the Preferred Shares, the
      reservation for issuance and the issuance of the Conversion Shares issuable
      upon
      conversion of the Preferred Shares, the issuance of the Warrants and the
      reservation for issuance and issuance of the Warrant Shares issuable upon
      exercise of the Warrants, have been duly authorized by the Company's board
      of
      directors and (other than the Stockholder Approval and related filing (as set
      forth in Section 4(m)), the 8-K Filing (as set forth in Section 4(i)), the
      filing with the SEC of one or more registration statements in accordance with
      the requirements of the Registration Rights Agreement and the Retainer Warrants
      and any other filings as may be required by any state or foreign securities
      agencies, the National Association of Securities Dealers, Inc. or the Principal
      Market (as defined in Section 3(d)) or the Boston Stock Exchange, no further
      filing, consent, or authorization is required by the Company, except as set
      forth on Schedule
      3(b),
      its
      board of directors or its stockholders with respect to the transactions
      contemplated hereby. This Agreement and the other Transaction Documents of
      even
      date herewith have been duly executed and delivered by the Company, and
      constitute the legal, valid and binding obligations of the Company, enforceable
      against the Company in accordance with their respective terms, except as such
      enforceability may be limited by general principles of equity, applicable
      bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
      laws
      relating to, or affecting generally, the enforcement of applicable creditors'
      rights and remedies or as indemnification or contribution may be limited by
      the
      securities laws and public policy relating thereto and subject to Schedule
      3(b).
      The
      Certificate of Designations in the form attached hereto as Exhibit
      A
      has been
      filed with the Secretary of State of the State of Delaware and is in full force
      and effect, enforceable against the Company in accordance with its terms and
      has
      not been amended.

     

    (c) Issuance
      of Securities.
      The
      issuance of the Preferred Shares and the Warrants are duly authorized and upon
      issuance in accordance with the terms of the Transaction Documents shall be
      free
      from all taxes, liens and charges with respect to the issue thereof, and the
      Preferred Shares shall be entitled to the rights and preferences set forth
      in
      the Certificate of Designations. As of the Closing, a number of shares of Common
      Stock shall have been duly authorized and reserved for issuance which equals
      at
      least 130% of the sum of (i) the maximum number of shares of Common Stock then
      issuable upon conversion of the Preferred Shares (assuming for purposes hereof,
      that the Preferred Shares are convertible at the Conversion Price and without
      taking into account any limitations on the conversion of the Preferred Shares
      set forth in the Certificate of Designations) and (ii) the maximum number of
      shares of Common Stock then issuable upon exercise of the Warrants (without
      taking into account any limitations on the exercise of the Warrants set forth
      in
      the Warrants). Upon issuance or conversion in accordance with the Certificate
      of
      Designations or exercise in accordance with the Warrants, as the case may be,
      the Conversion Shares and the Warrant Shares, respectively, will be validly
      issued, fully paid and nonassessable and free from all preemptive or similar
      rights, taxes, liens and charges with respect to the issue thereof, with the
      holders being entitled to all rights accorded to a holder of Common Stock.
      Subject to the accuracy of the representations and warranties of the Buyers
      in
      this Agreement, the offer and issuance by the Company of the Securities to
      each
      of the Buyers is exempt from registration under the 1933 Act.

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

       

    

    (d) No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents by the Company
      and the consummation by the Company of the transactions contemplated hereby
      and
      thereby (including, without limitation, the issuance of the Preferred Shares,
      the Warrants, and reservation for issuance of the Conversion Shares and the
      Warrant Shares) will not (i) result in a violation of the Certificate of
      Incorporation (as defined in Section 3(r)) of the Company or any certificate
      of
      incorporation, certificate of formation, any certificate of designations or
      other constituent document of any of its Subsidiaries, any capital stock of
      the
      Company or Bylaws (as defined in Section 3(r)) or the Certificate of
      Designations or Existing Certificates of Designations (as defined in Section
      3(r)) of the Company or any of its Subsidiaries bylaws or (ii) conflict with,
      or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which the Company or any of its Subsidiaries is a party, or (iii)
      subject to Schedule
      3(d),
      result
      in a violation of any law, rule, regulation, order, judgment or decree
      (including federal and state securities laws and regulations and the rules
      and
      regulations of The NASDAQ
      Capital
      Market (the "Principal
      Market"))
      applicable to the Company or any of its Subsidiaries or by which any property
      or
      asset of the Company or any of its Subsidiaries is bound or affected, except
      in
      the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights
      or violations which would not, individually or in the aggregate, reasonably
      be
      expected to have a Material Adverse Effect..

     

    (e) Consents.
      The
      Company is not required to obtain any consent, authorization or order of, or
      make any filing or registration with, any court, governmental agency or any
      regulatory or self-regulatory agency or any other Person in order for it to
      execute, deliver or perform any of its obligations under or contemplated by
      the
      Transaction Documents, in each case in accordance with the terms hereof or
      thereof, except for any such consent, authorization, order, filing or
      registration contemplated hereby or by any of the other Transaction Documents.
      Except as set forth on Schedule
      3(e),
      all
      consents, authorizations, orders, filings and registrations which the Company
      is
      required to obtain on or prior to the Closing Date pursuant to the preceding
      sentence shall have been obtained or effected on or prior to the Closing Date,
      and the Company and its Subsidiaries are unaware of any facts or circumstances
      which might prevent the Company from obtaining or effecting any of the
      registration, application or filings pursuant to the preceding sentence.

     

    
      
        
        

      

      
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    (f) Acknowledgment
      Regarding Buyer's Purchase of Securities.
      The
      Company acknowledges and agrees that each Buyer is acting solely in the capacity
      of arm's length purchaser with respect to the Transaction Documents and the
      transactions contemplated hereby and thereby and that, except as set forth
      on
Schedule
      3(f),
      no
      Buyer is (i) an officer or director of the Company, (ii) to the knowledge of
      the
      Company, an "affiliate" of the Company or any of its Subsidiaries (as defined
      in
      Rule 144) or (iii) to the knowledge of the Company, a "beneficial owner" of
      more
      than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3
      of
      the Securities Exchange Act of 1934, as amended (the "1934
      Act")).
      The
      Company further acknowledges that no Buyer is acting as a financial advisor
      or
      fiduciary of the Company or any of its Subsidiaries (or in any similar capacity)
      with respect to the Transaction Documents and the transactions contemplated
      hereby and thereby, and any advice given by a Buyer or any of its
      representatives or agents in connection with the Transaction Documents and
      the
      transactions contemplated hereby and thereby is merely incidental to such
      Buyer's purchase of the Securities. The Company further represents to each
      Buyer
      that the Company's decision to enter into the Transaction Documents has been
      based solely on the independent evaluation by the Company and its
      representatives.

     

    (g) No
      General Solicitation; Restricting Third Parties; Placement Agent's
      Fees.
      Neither
      the Company, nor any of its Subsidiaries or affiliates, nor, to the Company's
      knowledge, any Person acting on its or their behalf, has engaged in any form
      of
      general solicitation or general advertising (within the meaning of Regulation
      D)
      in connection with the offer or sale of the Securities. To the extent the
      Company has entered into any agreement with any third party (a "Restricting
      Third Party")
      that
      would otherwise restrict or prevent the Company from consummating the
      transactions contemplated hereby without breaching the provisions thereof,
      the
      Company has received a written release of such Restricting Third Party on or
      prior to the date hereof. The Buyers shall not be responsible for the payment
      of
      any placement agent's fees, financial advisory fees, or brokers' commissions
      (other than for persons engaged by any Buyer or its investment advisor) relating
      to or arising out of the transactions contemplated hereby or any fees or other
      amounts payable to any Restricting Third Party. The Company shall pay, and
      hold
      each Buyer harmless against, any liability, loss or expense (including, without
      limitation, attorney's fees and out-of-pocket expenses) arising in connection
      with any such claim. The Company acknowledges that it has engaged the Agents
      as
      placement agents in connection with the sale of the Securities. Other than
      as
      set forth on Schedule
      3(g),
      neither
      the Company nor any of its Subsidiaries has engaged any placement agent or
      other
      agent other than the Agents in connection with the sale of the Securities.
      

     

    (h) No
      Integrated Offering.
      None of
      the Company, its Subsidiaries, any of their affiliates, and any Person acting
      on
      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 require registration of any of the Securities under the 1933 Act or cause
      this offering of the Securities to be integrated with prior offerings by the
      Company for purposes of the 1933 Act or any applicable stockholder approval
      provisions, including, without limitation, under the rules and regulations
      of
      any exchange or automated quotation system on which any of the securities of
      the
      Company are listed or designated. None of the Company, its Subsidiaries, their
      affiliates and any Person acting on their behalf will take any action or steps
      referred to in the preceding sentence that would require registration of any
      of
      the Securities under the 1933 Act or cause the offering of the Securities to
      be
      integrated with other offerings.

     

    
      
        
        

      

      
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    (i) Dilutive
      Effect.
      The
      Company understands and acknowledges that the number of Conversion Shares
      issuable upon conversion of the Preferred Shares, and, the Warrant Shares
      issuable upon exercise of the Warrants, will increase in certain circumstances.
      The Company further acknowledges that its obligation to issue Conversion Shares
      upon conversion of the Preferred Shares, all in accordance with this Agreement
      and the Certificate of Designations and subject to the limitations set forth
      therein, and its obligation to issue the Warrant Shares upon exercise of the
      Warrants in accordance with this Agreement and the Warrants is, in each case,
      absolute and unconditional regardless of the dilutive effect that such issuance
      may have on the ownership interests of other stockholders of the Company and
      subject to the limitations set forth therein.

     

    (j) Application
      of Takeover Protections; Rights Agreement.
      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 Certificate of Incorporation
      or any certificates of designations or the laws of the jurisdiction of its
      formation or incorporation which to the extent any such provision would limit,
      prevent or otherwise restrict any of the transactions contemplated by this
      Agreement, including, without limitation, the Company's issuance of the
      Securities in accordance with the terms thereof and any Buyer's ownership of
      the
      Securities. The Company has not adopted a stockholder rights plan or similar
      arrangement relating to accumulations of beneficial ownership of Common Stock
      or
      a change in control of the Company.

     

    (k) SEC
      Documents; Financial Statements.
      During
      the period beginning on the date of the effectiveness of the Company's
      registration statement on Form SB-2 relating to its initial public offering
      of
      Common Stock through the date hereof, the Company has timely filed (which,
      for
      avoidance of doubt, include, any filing made within an extension of time
      pursuant to rule 12b-25 under the 1934 Act (as defined below)), all reports,
      schedules, forms, statements and other documents required to be filed by it
      with
      the SEC pursuant to the reporting requirements of the Securities Exchange Act
      of
      1934, as amended (the "1934
      Act")
      (all
      of the foregoing filed prior to the date hereof, as amended from time to time,
      and all exhibits included therein and financial statements, notes and schedules
      thereto and documents incorporated by reference therein being hereinafter
      referred to as the "SEC
      Documents").
      The
      Company has delivered to the Buyers or their respective representatives true,
      correct and complete copies of each of the SEC Documents not available on the
      EDGAR system that have been requested by each Buyer. As of their respective
      dates, the SEC Documents complied in all material respects with the requirements
      of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
      applicable to the SEC Documents, and none of the SEC Documents, at the time
      they
      were filed with the SEC (or, if amended thereafter, as so amended), 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. As of their respective dates, the financial statements of the
      Company included in the SEC Documents complied as to form in all material
      respects with applicable accounting requirements and the published rules and
      regulations of the SEC with respect thereto as in effect as of the time of
      filing. Such financial statements were prepared in accordance with U.S.
      generally accepted accounting principles ("GAAP"),
      consistently applied, during the periods involved (except (i) as may be
      otherwise indicated in such financial statements or the notes thereto, or (ii)
      in the case of unaudited interim statements, to the extent they may exclude
      footnotes or may be condensed or summary statements) and fairly present in
      all
      material respects the financial position of the Company as of the dates thereof
      and the results of its operations and cash flows for the periods then ended
      (subject, in the case of unaudited statements, to normal year-end audit
      adjustments). No other information provided by or on behalf of the Company
      to
      the Buyers which is not included in the SEC Documents, including, without
      limitation, information referred to in Section 2(e) of this Agreement, contains
      any untrue statement of a material fact or omits to state any material fact
      necessary in order to make the statements therein, in the light of the
      circumstance under which they are or were made not misleading.

     

    
      
        
        

      

      
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    (l) Absence
      of Certain Changes.
      Except
      as disclosed in Schedule
      3(l),
      since
      September 30, 2006, there has been no material adverse change and no material
      adverse development in the business, assets, properties, operations, condition
      (financial or otherwise), results of operations or prospects of the Company
      and
      its Subsidiaries, taken as a whole. Except as disclosed in Schedule
      3(l),
      since
      September 30, 2006, neither the Company nor any of its Subsidiaries has (i)
      declared or paid any dividends, (ii) sold any assets, individually or in the
      aggregate, in excess of $100,000 outside of the ordinary course of business
      or
      (iii) had capital expenditures, individually or in the aggregate, in excess
      of
      $250,000. Neither the Company nor any of its Subsidiaries has taken any steps
      to
      seek protection pursuant to any bankruptcy law nor does the Company have any
      knowledge or reason to believe that its creditors intend to initiate involuntary
      bankruptcy proceedings or any actual knowledge of any fact which would
      reasonably lead a creditor to do so. The Company and its Subsidiaries,
      individually and on a consolidated basis, are not as of the date hereof, and
      after giving effect to the transactions contemplated hereby to occur at the
      Closing will not, be Insolvent (as defined below). For purposes of this Section
      3(l), "Insolvent"
      means,
      with respect to any Person (as defined in Section 3(s)) (i) the present fair
      saleable value of such Person's assets is less than the amount required to
      pay
      such Person's total Indebtedness (as defined in Section 3(s)), (ii) such Person
      is unable to pay its debts and liabilities, subordinated, contingent or
      otherwise, as such debts and liabilities become absolute and matured, (iii)
      such
      Person intends to incur or believes that it will incur debts that would be
      beyond its ability to pay as such debts mature or (iv) such Person has
      unreasonably small capital with which to conduct the business in which it is
      engaged as such business is now conducted and is proposed to be
      conducted.

     

    (m) No
      Undisclosed Events, Liabilities, Developments or Circumstances.
      Except
      as set forth on Schedule 3(m), no event, liability, development or circumstance
      has occurred or exists, or is contemplated to occur with respect to the Company,
      its Subsidiaries or their respective business, properties, prospects, operations
      or financial condition, that would be required to be disclosed by the Company
      under applicable securities laws on a registration statement on Form S-1 filed
      with the SEC relating to an issuance and sale by the Company of its Common
      Stock
      and which has not been publicly announced, except which would not, individually
      or in the aggregate, reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
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    (n) Conduct
      of Business; Regulatory Permits.
      Neither
      the Company nor its Subsidiaries is in violation of any term of or in default
      under its Certificate of Incorporation, the Certificate of Designations, the
      Existing Certificate of Designations, any other certificate of designation,
      preferences or rights of any other outstanding series of preferred stock of
      the
      Company or Bylaws or their organizational charter or certificate of
      incorporation or bylaws, respectively. Neither the Company nor any of its
      Subsidiaries is in violation of any judgment, decree or order or any statute,
      ordinance, rule or regulation applicable to the Company or its Subsidiaries,
      and
      neither the Company nor any of its Subsidiaries will conduct its business in
      violation of any of the foregoing, except in all cases for violations which
      would not, individually or in the aggregate, reasonably be expected to have
      a
      Material Adverse Effect. Without limiting the generality of the foregoing,
      the
      Company is not in violation of any of the material rules, regulations or
      requirements of the Principal Market and has no knowledge of any facts or
      circumstances that would reasonably lead to delisting or suspension of the
      Common Stock by the Principal Market in the foreseeable future. During the
      period beginning on the date of effectiveness of the Company's Registration
      Statement on Form SB-2 relating to its initial public offering of Common Stock
      through the date hereof, (i) the Common Stock has been designated for quotation
      on the Principal Market, (ii) trading in the Common Stock has not been suspended
      by the SEC or the Principal Market and (iii) the Company has received no
      communication, written or oral, from the SEC or the Principal Market regarding
      the suspension or delisting of the Common Stock from the Principal Market.
      The
      Company and its Subsidiaries possess all certificates, authorizations and
      permits issued by the appropriate regulatory authorities necessary to conduct
      their respective businesses, except where the failure to possess such
      certificates, authorizations or permits would not have, individually or in
      the
      aggregate, a Material Adverse Effect, and neither the Company nor any such
      Subsidiary has received any notice of proceedings relating to the revocation
      or
      modification of any such certificate, authorization or permit, except where
      such
      revocation or modification would not have a Material Adverse
      Effect..

     

    (o) Foreign
      Corrupt Practices.
      Neither
      the Company nor any of its Subsidiaries nor any director, officer, agent,
      employee or other Person acting on behalf of the Company or any of its
      Subsidiaries has, in the course of its actions for, or on behalf of, the Company
      or any of its Subsidiaries (i) used any corporate funds for any unlawful
      contribution, gift, entertainment or other unlawful expenses relating to
      political activity; (ii) made any direct or indirect unlawful payment to any
      foreign or domestic government official or employee from corporate funds; (iii)
      violated or is in violation of any provision of the U.S. Foreign Corrupt
      Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
      payoff, influence payment, kickback or other unlawful payment to any foreign
      or
      domestic government official or employee.

     

    (p) Sarbanes-Oxley
      Act.
      The
      Company is in compliance with any and all applicable requirements of the
      Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any
      and
      all applicable rules and regulations promulgated by the SEC thereunder that
      are
      effective as of the date hereof.

     

    (q) Transactions
      With Affiliates.
      Except
      as set forth on Schedule
      3(q)
      or in
      the SEC Documents or in the Company's Registration Statement on Form SB-2 (File
      No. 333-136904)(including, without limitation, the prospectus contained therein,
      dated September 21, 2006, as supplemented prior to the date hereof)(the
      "2006
      Registration Statement"),
      none
      of the officers, directors or employees of the Company or any of its
      Subsidiaries is presently a party to any transaction with the Company or any
      of
      its Subsidiaries (other than for ordinary course services as employees, officers
      or 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
      such officer, director or employee or, to the knowledge of the Company or any
      of
      its Subsidiaries, any corporation, partnership, trust or other entity in which
      any such officer, director, or employee has a substantial interest or is an
      officer, director, trustee or partner.

     

    
      
        
        

      

      
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    (r) Equity
      Capitalization.
      As of
      March 13, 2007, the authorized capital stock of the Company consisted of (i)
      40,000,000 shares of Common Stock, of which, 11,889,099 are issued and
      outstanding and 1,333,209 shares are reserved for issuance pursuant to
      securities (other than the Preferred Shares and the Warrants) exercisable or
      exchangeable for, or convertible into, shares of Common Stock and (ii) (x)
      10,000,000 shares of Preferred Stock (the "Existing
      Preferred Stock",
      and
      the certificates of designations with respect to such Existing Preferred Stock,
      the "Existing
      Certificates of Designations"),
      of
      which none are outstanding. All of such outstanding shares have been, or upon
      issuance will be, validly issued and are fully paid and nonassessable. Except
      as
      set forth on Schedule
      3(r):
      (i)
      none of the Company's capital stock is subject to preemptive rights or any
      other
      similar rights or any liens or encumbrances suffered or permitted by the
      Company; (ii) there are no outstanding options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, or exercisable or exchangeable for,
      any
      capital stock of the Company or any of its Subsidiaries, or contracts,
      commitments, understandings or arrangements by which the Company or any of
      its
      Subsidiaries is or may become bound to issue additional capital stock of the
      Company or any of its Subsidiaries or options, warrants, scrip, rights to
      subscribe to, calls or commitments of any character whatsoever relating to,
      or
      securities or rights convertible into, or exercisable or exchangeable for,
      any
      capital stock of the Company or any of its Subsidiaries; (iii) there are no
      outstanding debt securities, notes, credit agreements, credit facilities or
      other agreements, documents or instruments evidencing Indebtedness (as defined
      in Section 3(s)) of the Company or any of its Subsidiaries or by which the
      Company or any of its Subsidiaries is bound; (iv) there are no financing
      statements securing obligations in any material amounts, either singly or in
      the
      aggregate, filed in connection with the Company or any of its Subsidiaries;
      (v)
      there are no agreements or arrangements under which the Company or any of its
      Subsidiaries is obligated to register the sale of any of their securities under
      the 1933 Act (except pursuant to the Registration Rights Agreement); (vi) there
      are no outstanding securities or instruments of the Company or any of its
      Subsidiaries which contain any redemption or similar provisions, and there
      are
      no contracts, commitments, understandings or arrangements by which the Company
      or any of its Subsidiaries is or may become bound to redeem a security of the
      Company or any of its Subsidiaries; (vii) there are no securities or instruments
      containing anti-dilution or similar provisions that will be triggered by the
      issuance of the Securities; (viii) the Company does not have any stock
      appreciation rights or "phantom stock" plans or agreements or any similar plan
      or agreement; and (ix) the Company and its Subsidiaries have no liabilities
      or
      obligations required to be disclosed in the SEC Documents but not so disclosed
      in the SEC Documents, other than those incurred in the ordinary course of the
      Company's or its Subsidiaries' respective businesses and which, individually
      or
      in the aggregate, do not or would not have a Material Adverse Effect. The
      Company has furnished to the Buyers true, correct and complete copies of the
      Company's Certificate of Incorporation, as amended and as in effect on the
      date
      hereof (the "Certificate
      of Incorporation"),
      and
      the Company's Bylaws, as amended and as in effect on the date hereof (the
      "Bylaws"),
      and
      the material terms of all securities convertible into, or exercisable or
      exchangeable for, shares of Common Stock and the material rights of the holders
      thereof in respect thereto. 

     

    
      
        
        

      

      
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    (s) Indebtedness
      and Other Contracts.
      Except
      as set forth on Schedule
      3(s)
      or set
      forth in the SEC Documents or the 2006 Registration Statement, neither the
      Company nor any of its Subsidiaries (i) has any outstanding Indebtedness (as
      defined below), (ii) is in violation of any term of or in default under any
      contract, agreement or instrument relating to any Indebtedness, except where
      such violations and defaults would not result, individually or in the aggregate,
      in a Material Adverse Effect, or (iii) is a party to any contract, agreement
      or
      instrument relating to any Indebtedness, the performance of which, in the
      judgment of the Company's officers, has or is expected to have a Material
      Adverse Effect. Schedule
      3(s)
      provides
      a detailed description of the material terms of any such outstanding
      Indebtedness. For purposes of this Agreement: (x) "Indebtedness"
      of any
      Person means, without duplication (A) all indebtedness for borrowed money,
      (B)
      all obligations issued, undertaken or assumed as the deferred purchase price
      of
      property or services (including, without limitation, "capital leases" in
      accordance with generally accepted accounting principles) (other than trade
      payables entered into in the ordinary course of business), (C) all reimbursement
      or payment obligations with respect to letters of credit, surety bonds and
      other
      similar instruments, (D) all obligations evidenced by notes, bonds, debentures
      or similar instruments, including obligations so evidenced incurred in
      connection with the acquisition of property, assets or businesses, (E) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement, or incurred as financing, in either case with respect
      to
      any property or assets acquired with the proceeds of such indebtedness (even
      though the rights and remedies of the seller or bank under such agreement in
      the
      event of default are limited to repossession or sale of such property), (F)
      all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (G) all
      indebtedness referred to in clauses (A) through (F) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
      or obligations of others of the kinds referred to in clauses (A) through (G)
      above; (y) "Contingent
      Obligation"
      means,
      as to any Person, any direct or indirect liability, contingent or otherwise,
      of
      that Person with respect to any indebtedness, lease, dividend or other
      obligation of another Person if the primary purpose or intent of the Person
      incurring such liability, or the primary effect thereof, is to provide assurance
      to the obligee of such liability that such liability will be paid or discharged,
      or that any agreements relating thereto will be complied with, or that the
      holders of such liability will be protected (in whole or in part) against loss
      with respect thereto; and (z) "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

     

    (t) Absence
      of Litigation.
      There
      is no action, suit, proceeding, inquiry or investigation before or by the
      Principal Market, any court, public board, government agency, self-regulatory
      organization or body pending or, to the knowledge of the Company, threatened
      against or affecting the Company or any of its Subsidiaries, the Common Stock
      or
      any of the Company's Subsidiaries or any of the Company's or its Subsidiaries'
      officers or directors, whether of a civil or criminal nature or otherwise,
      except which would not, individually or in the aggregate, reasonably be expected
      to have a Material Adverse Effect.

     

    
      
        
        

      

      
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    (u) Insurance.
      The
      Company and each of its Subsidiaries are insured by insurers of recognized
      financial responsibility against such losses and risks and in such amounts
      as
      management of the Company believes to be prudent and customary in the businesses
      in which the Company and its Subsidiaries are engaged. Neither the Company
      nor
      any such Subsidiary has been refused any insurance coverage sought or applied
      for and neither the Company nor any such 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 at a cost that would not have a Material
      Adverse Effect.

     

    (v) Employee
      Relations.
      i)
      Neither
      the Company nor any of its Subsidiaries is a party to any collective bargaining
      agreement or employs any member of a union. No executive officer of the Company
      or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has
      notified the Company or any such Subsidiary that such officer intends to leave
      the Company or any such Subsidiary or otherwise terminate such officer's
      employment with the Company or any such Subsidiary. No executive officer of
      the
      Company or any of its Subsidiaries is, or is now expected to be, in violation
      of
      any material term of any employment contract, confidentiality, disclosure or
      proprietary information agreement, 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.

     

    (ii) The
      Company and its Subsidiaries are in compliance with all federal, state, local
      and foreign laws and regulations respecting labor, employment and employment
      practices and benefits, terms and conditions of employment and wages and hours,
      except where failure to be in compliance would not, either individually or
      in
      the aggregate, reasonably be expected to result in a Material Adverse
      Effect.

     

    (w) Title.
      The
      Company and its Subsidiaries do not own any real property. The Company and
      its
      Subsidiaries have good and marketable title to all personal property owned
      by
      them which is material to the business of the Company and its Subsidiaries,
      taken as a whole, in each case free and clear of all liens, encumbrances and
      defects except such as do not materially affect the value of such property
      and
      do not interfere with the use made and proposed to be made of such property
      by
      the Company and any of its Subsidiaries. Any real property and facilities held
      under lease by the Company or any of its Subsidiaries that are material to
      the
      business of the Company and its Subsidiaries, taken as a whole, are held by
      them
      under valid, subsisting and enforceable leases with such exceptions as are
      not
      material to the Company and its Subsidiaries, taken as a whole, and do not
      materially interfere with the use made and proposed to be made of such property
      and buildings by the Company and its Subsidiaries.

     

    (x) Intellectual
      Property Rights.
      The
      Company and its Subsidiaries own or possess adequate rights or licenses to
      use
      all trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, original works of authorship, trade secrets and
      other intellectual property rights and all applications related thereto
      ("Intellectual
      Property Rights")
      necessary to conduct their respective businesses as now conducted. None of
      the
      Company's or its Subsidiaries' Intellectual Property Rights have expired,
      terminated or been abandoned, or are expected to expire, terminate or be
      abandoned, within three years from the date of this Agreement. The Company
      does
      not have any knowledge of any infringement by the Company or any of its
      Subsidiaries of Intellectual Property Rights of others. There is no claim,
      action or proceeding being made or brought, or to the knowledge of the Company,
      being threatened, against the Company or any of its Subsidiaries regarding
      its
      Intellectual Property Rights. The Company is unaware of any facts or
      circumstances which would reasonably be expected to give rise to any of the
      foregoing infringements or claims, actions or proceedings. The Company and
      its
      Subsidiaries have taken reasonable security measures to protect the secrecy,
      confidentiality and value of all of their Intellectual Property
      Rights.

     

    
      
        
        

      

      
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    (y) Environmental
      Laws.
      The
      Company and its Subsidiaries (i) are in compliance with any and all
      Environmental Laws (as hereinafter defined), (ii) have received all permits,
      licenses or other approvals required of them under applicable Environmental
      Laws
      to conduct their respective businesses and (iii) are in compliance with all
      terms and conditions of any such permit, license or approval where, in each
      of
      the foregoing clauses (i), (ii) and (iii), the failure to so comply would be
      reasonably expected to have, individually or in the aggregate, a Material
      Adverse Effect. The term "Environmental
      Laws"
      means
      all federal, state, local or foreign laws relating to pollution or protection
      of
      human health or the environment (including, without limitation, ambient air,
      surface water, groundwater, land surface or subsurface strata), including,
      without limitation, laws relating to emissions, discharges, releases or
      threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, "Hazardous
      Materials") into
      the
      environment, or otherwise relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of Hazardous Materials,
      as well as all authorizations, codes, decrees, demands or demand letters,
      injunctions, judgments, licenses, notices or notice letters, orders, permits,
      plans or regulations issued, entered, promulgated or approved
      thereunder.

     

    (z) [Intentionally
      Omitted]

     

    (aa) Tax
      Status.
      The
      Company and each of its Subsidiaries (i) has made or filed all material foreign,
      federal and state income and all other material tax returns, reports and
      declarations required by any jurisdiction to which it is subject, (ii) has
      paid
      all taxes and other governmental assessments and charges that are material
      in
      amount, shown or determined to be due on such returns, reports and declarations,
      except those being contested in good faith and (iii) to the extent required
      by
      GAAP, has set aside on its books provision reasonably adequate for the payment
      of all taxes for periods subsequent to the periods to which such returns,
      reports or declarations apply. There are no unpaid taxes in any material amount
      claimed to be due by the taxing authority of any jurisdiction, and the officers
      of the Company know of no basis for any such claim.

     

    (bb) Internal
      Accounting and Disclosure Controls.
      The
      Company and each of its 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 generally accepted accounting principles and
      to
      maintain asset and liability accountability, (iii) access to assets or
      incurrence of liabilities is permitted only in accordance with management's
      general or specific authorization and (iv) the recorded accountability for
      assets and liabilities is compared with the existing assets and liabilities
      at
      reasonable intervals and appropriate action is taken with respect to any
      difference. The Company maintains disclosure controls and procedures (as such
      term is defined in Rule 13a-14 under the 1934 Act) that are effective to
      providing reasonably assurance that information required to be disclosed by
      the
      Company in the reports that it files or submits under the 1934 Act is recorded,
      processed, summarized and reported, within the time periods specified in the
      rules and forms of the SEC, including, without limitation, controls and
      procedures designed to provide reasonable assurance that information required
      to
      be disclosed by the Company in the reports that it files or submits under the
      1934 Act is accumulated and communicated to the Company's management, including
      its principal executive officer or officers and its principal financial officer
      or officers, as appropriate, to allow timely decisions regarding required
      disclosure. During the twelve months prior to the date hereof the Company has
      not received any notice or correspondence from its independent public
      accountants to the effect that there is a "material weakness" in the internal
      accounting controls of the Company.

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

       

    

    (cc) Off
      Balance Sheet Arrangements.
      There
      is no transaction, arrangement, or other relationship between the Company and
      an
      unconsolidated or other off balance sheet entity that is required to be
      disclosed by the Company in its 1934 Act filings and is not so disclosed or
      that
      otherwise would be reasonably likely to have a Material Adverse
      Effect.

     

    (dd) Investment
      Company Status.
      The
      Company is not, and upon consummation of the sale of the Securities will not
      be,
      an "investment company," a company controlled by an "investment company" or
      an
      "affiliated person" of, or "promoter" or "principal underwriter" for, an
      "investment company" as such terms are defined in the Investment Company Act
      of
      1940, as amended.

     

    (ee) Transfer
      Taxes.
      On the
      Closing Date, all stock transfer or other taxes (other than income or similar
      taxes) which are required to be paid in connection with the sale and transfer
      to
      each of the Buyers of the Preferred Shares and Warrants to be sold to such
      Buyer
      hereunder will be, or will have been, fully paid or provided for by the Company,
      and all laws imposing such taxes will be or will have been complied
      with.

     

    (ff) Acknowledgement
      Regarding Buyers' Trading Activity.
      It is
      understood and acknowledged by the Company (i) that none of the Buyers have
      been
      asked by the Company or its Subsidiaries to agree, nor has any Buyer agreed
      with
      the Company or its Subsidiaries, to desist from purchasing or selling, long
      and/or short, securities of the Company, or "derivative" securities based on
      securities issued by the Company or to hold the Securities for any specified
      term after the filing of the 8-K Filing; (ii) that any Buyer, and counterparties
      in "derivative" transactions to which any such Buyer is a party, directly or
      indirectly, presently may have a "short" position in the Common Stock, and
      (iii)
      that each Buyer shall not be deemed to have any affiliation with or control
      over
      any arm's length counterparty in any "derivative" transaction as a result of
      engaging in such transaction with such counterparty. The Company further
      understands and acknowledges that one or more Buyers may engage in hedging
      and/or trading activities at various times after the filing of the 8-K Filing
      and during the period that the Securities are outstanding, including, without
      limitation, during the periods that the value of the Conversion Shares and
      the
      Warrant Shares deliverable with respect to Securities are being determined
      and
      (b) such hedging and/or trading activities, if any, can reduce the value of
      the
      existing stockholders' equity interest in the Company both at and after the
      time
      the hedging and/or trading activities are being conducted. The Company
      acknowledges that such aforementioned hedging and/or trading activities do
      not
      constitute a breach of this Agreement, the Certificate of Designations, the
      Warrants or any of the documents executed in connection herewith.

     

    
      
        
        

      

      
        -19-

        
          

        

      

      
        
        

      

       

    

    (gg) Manipulation
      of Price.
      The
      Company has not, and to its knowledge no one acting on its behalf has, (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities or (ii) other than the
      Agents, sold, bid for, purchased, or paid any compensation for soliciting
      purchases of, any of the Securities.

     

    (hh) U.S.
      Real Property Holding Corporation.
      The
      Company is not, has never been, and so long as any Preferred Shares or Warrants
      remain outstanding, shall not become, a U.S. real property holding corporation
      within the meaning of Section 897 of the Internal Revenue Code of 1986, as
      amended, and the Company shall so certify upon Buyer's request.

     

    (ii) Disclosure.
      The
      Company confirms that neither it nor any other Person acting on its behalf
      has
      provided any of the Buyers or their agents or counsel with any information
      that
      constitutes or would reasonably be expected to constitute material, nonpublic
      information, except information relating to the transactions contemplated hereby
      and such information as will be disclosed in the 8-K Filing. The Company
      understands and confirms that each of the Buyers will rely on the foregoing
      representations in effecting transactions in securities of the Company. All
      disclosure provided to the Buyers regarding the Company and its Subsidiaries,
      their business and the transactions contemplated hereby, including the Schedules
      to this Agreement, furnished by or on behalf of the Company is does not contain
      any untrue statement of a material fact or, considered in the aggregate, omit
      to
      state any material fact necessary in order to make the statements made therein,
      in the light of the circumstances under which they were made, not misleading.
      Each press release issued by the Company or its Subsidiaries during the twelve
      (12) months preceding the date of this Agreement did not at the time of release
      contain any untrue statement of a material fact or omit to state a material
      fact
      required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they are made, not
      misleading. No event or circumstance has occurred or information exists with
      respect to the Company or any of its Subsidiaries or either of their respective
      businesses, properties, prospects, operations or financial conditions, which,
      under applicable law, rule or regulation, required public disclosure in a filing
      by the Company under the 1934 Act prior to the date of this Agreement, but
      which
      has not been so publicly disclosed.

     

    4.     COVENANTS.

     

    (a) Reasonable
      Best Efforts.
      Each
      party shall use its reasonable best efforts timely to satisfy each of the
      covenants and conditions to be satisfied by it as provided in Sections 4, 6
      and
      7 of this Agreement.

     

    
      
        
        

      

      
        -20-

        
          

        

      

      
        
        

      

       

    

    (b) Form
      D
      and Blue Sky.
      The
      Company agrees to file a Form D with respect to the Securities as required
      under
      Regulation D and to provide a copy thereof to each Buyer promptly after such
      filing. The Company shall, on or before the Closing Date, take such action,
      at
      the Company's sole expense, as the Company shall reasonably determine is
      necessary in order to obtain an exemption for or to qualify the Securities
      for
      sale to the Buyers at the Closing pursuant to this Agreement under applicable
      securities or "Blue Sky" laws of the states of the United States (or to obtain
      an exemption from such qualification) and the applicable securities laws of
      Canada, and shall provide evidence of any such action so taken to the Buyers
      on
      or prior to the Closing Date. At the Company's sole expense, the Company shall
      make all filings and reports relating to the offer and sale of the Securities
      required under applicable securities or "Blue Sky" laws of the states of the
      United States and the applicable securities laws of Canada following the Closing
      Date. 

     

    (c) Reporting
      Status.
      Until
      the date on which the Buyers shall have sold all the Conversion Shares and
      Warrant Shares, and none of the Preferred Shares or Warrants
      is outstanding (the "Reporting
      Period"),
      the
      Company shall timely file all reports required to be filed with the SEC pursuant
      to the 1934 Act (other than Current Reports on Form 8-K that are required solely
      pursuant to Items 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 or 5.02(e) of Form 8-K),
      and the Company shall not terminate its status as an issuer required to file
      reports under the 1934 Act even if the 1934 Act or the rules and regulations
      thereunder would no longer require or otherwise permit such termination, and
      the
      Company shall take all actions reasonably necessary to cause it to become
      eligible to register the Conversion Shares and Warrant Shares for resale by
      the
      Buyers on Form S-3.

     

    (d) Use
      of
      Proceeds.
      The
      Company shall use the proceeds from the sale of the Securities for working
      capital purposes, but not for (A) repayment of any outstanding Indebtedness
      of
      the Company or any of its Subsidiaries or (B) redemption or repurchase of any
      of
      its or its Subsidiaries' equity securities.

     

    (e) Financial
      Information.
      The
      Company agrees to send the following to each Investor (as defined in the
      Registration Rights Agreement) during the Reporting Period (i) unless the
      following are filed with the SEC through EDGAR and are available to the public
      through the EDGAR system, within one (1) Business Day after the filing thereof
      with the SEC, a copy of its Annual Reports and Quarterly Reports on Form 10-K,
      10-KSB, 10-Q or 10-QSB, any interim reports or any consolidated balance sheets,
      income statements, stockholders' equity statements and/or cash flow statements
      for any period other than annual, any Current Reports on Form 8-K and any
      registration statements (other than on Form S-8) or amendments filed pursuant
      to
      the 1933 Act, (ii) unless available through Bloomberg Financial Markets, on
      the
      same day as the release thereof, facsimile copies of all press releases issued
      by the Company or any of its Subsidiaries, and (iii) copies of any notices
      and
      other information made available or given to the stockholders of the Company
      generally, contemporaneously with the making available or giving thereof to
      the
      stockholders. As used herein "Business
      Day"
      means
      any day other than a Saturday, Sunday or other day on which commercial banks
      in
      The City of New York are authorized or required by law to remain
      closed.

     

    (f) Listing.
      The
      Company shall promptly secure the listing of all of the Registrable Securities
      (as defined in the Registration Rights Agreement) upon each national securities
      exchange and automated quotation system, if any, upon which the Common Stock
      is
      then listed (subject to official notice of issuance) and shall maintain such
      listing of all Registrable Securities from time to time issuable under the
      terms
      of the Transaction Documents. The Company shall maintain the Common Stocks'
      authorization for quotation on the Principal Market or another Eligible Market
      (as defined in the Certificate of Designations). Neither the Company nor any
      of
      its Subsidiaries shall take any action that would be reasonably expected to
      result in the delisting or suspension of the Common Stock on the Principal
      Market (or such other Eligible Market). The Company shall pay all fees and
      expenses in connection with satisfying its obligations under this Section
      4(f).

     

    
      
        
        

      

      
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    (g) Fees.
      

     

    (i) The
      Company shall be responsible for the payment of any placement agent's fees
      or
      commissions, financial advisory fees, or broker's commissions (other than for
      Persons engaged by any Buyer) relating to or arising out of the transactions
      contemplated hereby, including, without limitation, the reasonable fees and
      expenses of Schulte Roth & Zabel LLP, counsel to Sunrise, not to exceed
      $95,000, and any fees or commissions payable to the Agents. The Company shall
      pay, and hold each Buyer harmless against, any liability, loss or expense
      (including, without limitation, reasonable attorney's fees and out-of-pocket
      expenses) arising in connection with any claim
      relating
      to any such payment.

     

    (ii) So
      long
      as any Warrants remain outstanding, Sunrise is hereby appointed by the Company
      as exclusive management agent regarding all exercises of the Warrants (which
      for
      purposes of this Section 4(g) shall not include the Retainer Warrants) and/or
      any of the Company's exchanges, swaps, purchases and/or any other related
      agreements with respect to such Warrants (individually a "Warrant
      Transaction",
      and
      collectively, "Warrant
      Transactions").
      In
      connection with the consummation of each Warrant Transaction (the date of
      consummation, the "Warrant
      Transaction Closing Date"),
      the
      Company shall pay to Sunrise warrant management fees ("Warrant
      Management Fees")
      as
      follows: (1) with respect to each Warrant Transaction in the form of a cash
      exercise of one or more of the Warrants, then the Company shall pay to Sunrise
      a
      cash fee equal to three and one half percent (3.5%) of the Aggregate Exercise
      Price (as defined in the applicable Warrant) received by the Company in such
      Warrant Transaction and (2) with respect to each Warrant Transaction in which
      the Company purchases one or more Warrants from the holders of such Warrants
      for
      cash (such payment, the "Company
      Warrant Redemption Payment"),
      the
      Company shall pay Sunrise a cash fee equal to three and one half percent (3.5%)
      of the Company Warrant Redemption Payment in each such Warrant Transaction
      and
      (3) with respect to the exercise by Warrant holders of one or more Warrants
      pursuant to a Cashless Exercise (as defined in the Warrants) or if the Company
      exchanges or swaps (or any other related agreements) (each, an "Exchange")
      one or
      more of the Warrants into other securities of the Company (e.g. including,
      but
      not limited to shares of Common Stock of the Company) (collectively, the
      "Exchange
      Securities"),
      the
      Company shall pay Sunrise a fee payable (x) if pursuant to a Cashless Exercise,
      in Common Stock or (y) if pursuant to an Exchange, in Exchange Securities,
      equal
      to three and one half percent (3.5%) of the total number of shares of Common
      Stock or Exchange Securities, as applicable, issuable pursuant to the Warrants
      surrendered or cancelled or exchanged in such Warrant Transaction (without
      regard to any limitations on exercise set forth therein) and such Common Stock
      and Exchange Securities (and any Common Stock issuable upon exercise or
      conversion of such Exchange Securities, if any) to be issued to Sunrise shall
      be
      deemed to be "Restricted Securities" for purposes of Section 8 of the Retainer
      Warrants. On the third Business Day after the end of the calendar month in
      which
      such Warrant Transaction occurs, the Company shall deliver to Sunrise (x) the
      applicable Warrant Management Fees for such calendar month and (y) a certificate
      executed by an executive officer of the Company certifying the following as
      true
      and accurate as of such date: (I) the calculation of such Warrant Management
      Fee
      and (II) a description in reasonable detail of each such Warrant
      Transaction that occurred in such calendar month.

     

    
      
        
        

      

      
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    (h) Pledge
      of Securities.
      The
      Company acknowledges and agrees that the Securities may be pledged by an
      Investor (as defined in the Registration Rights Agreement) in connection with
      a
      bona fide margin agreement or other loan or financing arrangement that is
      secured by the Securities. The pledge of Securities shall not be deemed to
      be a
      transfer, sale or assignment of the Securities hereunder, and no Investor
      effecting a pledge of Securities shall be required to provide the Company with
      any notice thereof or otherwise make any delivery to the Company pursuant to
      this Agreement or any other Transaction Document. The Company hereby agrees
      to
      execute and deliver such documentation as a pledgee of the Securities may
      reasonably request in connection with a pledge of the Securities to such pledgee
      by an Investor.

     

    (i) Disclosure
      of Transactions and Other Material Information.
      On or
      before 8:30 a.m., New York City time, on the first Business Day following the
      date of this Agreement, the Company shall issue a press release and file a
      Current Report on Form 8-K describing the terms of the transactions contemplated
      by the Transaction Documents in the form required by the 1934 Act and attaching
      the material Transaction Documents (including, without limitation, this
      Agreement (and all schedules to this Agreement), the form of Certificate of
      Designations, the form of Warrant, and the form of the Registration Rights
      Agreement) as exhibits to such filing (including all attachments, the
      "8-K
      Filing").
      From
      and after the filing of the 8-K Filing with the SEC, no Buyer shall be in
      possession of any material, nonpublic information received from the Company,
      any
      of its Subsidiaries or any of its respective officers, directors, employees
      or
      agents. The Company shall not, and shall cause each of its Subsidiaries and
      its
      and each of their respective officers, directors, employees and agents, not
      to,
      provide any Buyer with any material, nonpublic information regarding the Company
      or any of its Subsidiaries from and after the filing of the 8-K Filing with
      the
      SEC without the express written consent of such Buyer or as may be required
      under the terms of the Transaction Documents. If a Buyer has received any such
      material, nonpublic information regarding the Company or any of its
      Subsidiaries, it may provide the Company with written notice thereof. The
      Company shall, within five (5) Trading Days (as defined in the Certificate
      of
      Designations) of receipt of such notice, make public disclosure of such
      material, nonpublic information. Subject to the foregoing, neither the Company,
      its Subsidiaries nor any Buyer shall issue any press releases or any other
      public statements with respect to the transactions contemplated hereby;
provided,
      however,
      that
      the Company shall be entitled, without the prior approval of any Buyer, to
      make
      any press release or other public disclosure with respect to such transactions
      (i) in substantial conformity with the 8-K Filing and contemporaneously
      therewith and (ii) as is required by applicable law and regulations (provided
      that in the case of clause (i) each Buyer shall be consulted by the Company
      in
      connection with any such press release or other public disclosure prior to
      its
      release). Without the prior written consent of any applicable Buyer, neither
      the
      Company nor any of its Subsidiaries or affiliates shall disclose the name of
      such Buyer in any filing, announcement, release or otherwise, unless such
      disclosure is required by law, regulation or the Principal Market.

     

    
      
        
        

      

      
        -23-

        
          

        

      

      
        
        

      

       

    

    (j) Additional
      Registration Statements.
      Without
      the prior written consent of the holders of a majority of the Registrable
      Securities, until the earlier to occur of (i) such date whereafter all
      Registrable Securities shall be registered in a registration statement under
      the
      1933 Act that has been declared effective by the SEC and (ii) date that is
      180
      calendar days after the Initial Effective Date (as defined in the Registration
      Rights Agreement), the Company shall not file a registration statement under
      the
      1933 Act relating to securities that are not the Securities; provided, however,
      that nothing herein shall be deemed to prohibit the Company from amending the
      2006 Registration Statement (or supplementing the prospectus contained therein),
      provided that neither the amendment nor the prospectus supplement increases
      the
      aggregate number of shares of Common Stock registered pursuant to such 2006
      Registration Statement.

     

    (k) Additional
      Preferred Shares; Variable Securities; Dilutive Issuances.
       

     

    (i) So
      long
      as any Buyer beneficially owns any Securities, the Company will not, without
      the
      prior written consent of Buyers holding a majority of the Preferred Shares,
      issue any shares of Series B Preferred Stock (other than to the Buyers as
      contemplated hereby) and the Company shall not issue any other securities that
      would cause a breach or default under the Certificate of Designations or the
      Warrants. For so long as any Preferred Shares or Warrants remain outstanding,
      the Company shall not, in any manner, issue or sell any rights, warrants or
      options to subscribe for or purchase Common Stock or directly or indirectly
      convertible into or exchangeable or exercisable for Common Stock at a
      conversion, exchange or exercise price which varies or may vary after issuance
      with the market price of the Common Stock, including by way of one or more
      reset(s) to any fixed price unless the conversion, exchange or exercise price
      of
      any such security cannot be less than the then applicable Conversion Price
      (as
      defined in the Certificate of Designations) with respect to the Common Stock
      into which any Preferred Shares are convertible or the then applicable Exercise
      Price (as defined in the Warrants) with respect to the Common Stock into which
      any Warrant is exercisable. For so long as any Preferred Shares or Warrants
      remain outstanding, the Company shall not, in any manner, enter into or affect
      any Dilutive Issuance (as such term is defined in the Certificate Designation
      and the Warrants) if the effect of such Dilutive Issuance is to cause the
      Company to be required to issue upon conversion of any Preferred Shares or
      exercise of any Warrant any shares of Common Stock in excess of that number
      of
      shares of Common Stock which the Company may issue upon conversion of the
      Preferred Shares and exercise of the Warrants without breaching the Company's
      obligations under the rules or regulations of the Principal Market (without
      giving effect to (x) the Exchange Cap provisions set forth in the Certificate
      of
      Designations and the Warrants or (y) the floor price provisions specified in
      Section 2(a)(vi) of the Warrants). 

     

    (ii) Until
      the
      Stockholder Approval Date, the Company will not, directly or indirectly, issue
      or sell any of its Common Stock or Options (as defined in the Warrants) or
      Convertible Securities (as defined in the Warrants) (other than Common Stock
      issuable upon conversion, exercise or exchange of any Options or Convertible
      Securities which are outstanding on the day immediately preceding the Closing
      Date, provided that such issuance of Common Stock upon exercise of such Options
      or Convertible Securities is made pursuant to the terms of such Options or
      Convertible Securities in effect on the date immediately preceding the Closing
      Date and such Options or Convertible Securities are not amended, modified or
      changed on or after the Closing Date), including without limitation any debt,
      preferred stock or other instrument or security that is, at any time during
      its
      life and under any circumstances, convertible into or exchangeable or
      exercisable for shares of Common Stock, if the effect of such issuance or sale
      would result in the shares of Common Stock subject to the Voting Agreements
      (as
      defined below) to fail to sufficient in and of themselves to obtain the
      Stockholder Approval (as defined below).

     

    
      
        
        

      

      
        -24-

        
          

        

      

      
        
        

      

       

    

    (l) Corporate
      Existence.
      So long
      as any Buyer beneficially owns any Securities, the Company shall maintain its
      corporate existence and not sell all or substantially all of the Company's
      assets and not be party to any Fundamental Transaction (as defined in the
      Certificate of Designations) unless the Company is in compliance with the
      applicable provisions governing Fundamental Transactions set forth in the
      Certificate of Designations and the Warrants.

     

    (m) Reservation
      of Shares.
      The
      Company shall take all action necessary to at all times have authorized, and
      reserved for the purpose of issuance, no less than 130% of the sum of
      (i) the maximum number of shares of Common Stock then issuable upon
      conversion of the Preferred Shares (assuming for purposes hereof, that the
      Preferred Shares are convertible at the Conversion Price and without taking
      into
      account any limitations on the conversion of the Preferred Shares set forth
      in
      the Certificate of Designations) and (ii) the maximum number of shares of Common
      Stock then issuable upon exercise of the Warrants (without taking into account
      any limitations on the exercise of the Warrants set forth in the
      Warrants).

     

    (n) Conduct
      of Business.
      The
      business of the Company and its Subsidiaries shall not be conducted in violation
      of any law, ordinance or regulation of any governmental entity, except where
      such violations would not result, either individually or in the aggregate,
      in a
      Material Adverse Effect.

     

    (o) Stockholder
      Approval.
      The
      Company shall provide each stockholder entitled to vote at a special or annual
      meeting of stockholders of the Company (the "Stockholder
      Meeting"),
      which
      initially shall be promptly called and held not later than June 20, 2007 (the
      "Stockholder
      Meeting Deadline"),
      a
      proxy statement, substantially in the form which has been previously reviewed
      by
      the Buyers and Schulte Roth & Zabel LLP at the expense of the Company,
      soliciting each such stockholder's affirmative vote at the Stockholder Meeting
      for approval of resolutions (the "Resolutions")
      providing for the Company's issuance of all of the Securities as described
      in
      the Transaction Documents in accordance with applicable law and the rules and
      regulations of the Principal Market (such affirmative approval being referred
      to
      herein as the "Stockholder
      Approval"
      and the
      date such approval is obtained, the "Stockholder
      Approval Date"),
      and
      the Company shall use its reasonable best efforts to solicit its stockholders'
      approval of the Resolutions and to cause the Board of Directors of the Company
      to recommend to the stockholders that they approve the Resolutions. The Company
      shall be obligated to seek to obtain the Stockholder Approval by the Stockholder
      Meeting Deadline. If, despite the Company's reasonable best efforts the
      Stockholder Approval is not obtained on or prior to the Stockholder Meeting
      Deadline, the Company shall cause an additional Stockholder Meeting to be held
      each three month period thereafter until such Stockholder Approval is
      obtained.

     

    
      
        
        

      

      
        -25-

        
          

        

      

      
        
        

      

       

    

    5.     REGISTER;
      TRANSFER AGENT INSTRUCTIONS.

     

    (a) Register.
      The
      Company shall maintain at its principal executive offices (or such other office
      or agency of the Company as it may designate by notice to each holder of
      Securities), a register for the Preferred Shares and the Warrants in which
      the
      Company shall record the name and address of the Person in whose name the
      Preferred Shares and the
      Warrants have been issued (including the name and address of each transferee),
      the number of Preferred Shares held by such Person, the number of Conversion
      Shares issuable upon conversion of the Preferred Shares and the number of
      Warrant Shares issuable upon exercise of the Warrants held by such Person.
      The
      Company shall keep the register open and available at all times during business
      hours for inspection of any Buyer or its legal representatives.

     

    (b) Transfer
      Agent Instructions.
      The
      Company shall issue irrevocable instructions to its transfer agent, and any
      subsequent transfer agent, to issue certificates or credit shares to the
      applicable balance accounts at The Depository Trust Company ("DTC"),
      registered in the name of each Buyer or its respective nominee(s), for the
      Conversion Shares and the Warrant Shares in
      such
      amounts as specified from time to time by each Buyer to the Company upon
      conversion of the Preferred Shares or exercise of the Warrants in the form
      of
Exhibit
      D
      attached
      hereto (the "Irrevocable
      Transfer Agent Instructions").
      The
      Company warrants that no instruction other than the Irrevocable Transfer Agent
      Instructions referred to in this Section 5(b), and stop transfer instructions
      to
      give effect to Section 2(f) hereof, will be given by the Company to its transfer
      agent with respect to the Securities, and that the Securities shall otherwise
      be
      freely transferable on the books and records of the Company, as applicable,
      and
      to the extent provided in this Agreement and the other Transaction Documents.
      If
      a Buyer effects a sale, assignment or transfer of the shares of Common Stock
      in
      accordance with Section 2(f), the Company shall permit the transfer and shall
      promptly instruct its transfer agent to issue one or more certificates or credit
      shares to the applicable balance accounts at DTC in such name and in such
      denominations as specified by such Buyer to effect such sale, transfer or
      assignment. In the event that such sale, assignment or transfer involves
      Conversion Shares and Warrant Shares sold, assigned or transferred pursuant
      to
      an effective registration statement or pursuant to Rule 144, the transfer agent
      shall issue such Securities to the Buyer, assignee or transferee, as the case
      may be, without any restrictive legend. The Company acknowledges that a breach
      by it of its obligations hereunder will cause irreparable harm to a Buyer.
      Accordingly, the Company acknowledges that the remedy at law for a breach of
      its
      obligations under this Section 5(b) will be inadequate and agrees, in the event
      of a breach or threatened breach by the Company of the provisions of this
      Section 5(b), that a Buyer shall be entitled, in addition to all other available
      remedies, to an order and/or injunction restraining any breach and requiring
      immediate issuance and transfer, without the necessity of showing economic
      loss
      and without any bond or other security being required.

     

    6.     CONDITIONS
      TO THE COMPANY'S OBLIGATION TO SELL.

     

    The
      obligation of the Company hereunder to issue and sell the Preferred
      Shares and
      the
      related Warrants to each Buyer at the Closing is subject to the satisfaction,
      at
      or before the Closing Date, of each of the following conditions, provided that
      these conditions are for the Company's sole benefit and may be waived by the
      Company at any time in its sole discretion by providing each Buyer with prior
      written notice thereof:

     

    
      
        
        

      

      
        -26-

        
          

        

      

      
        
        

      

       

    

    (a) Such
      Buyer shall have executed each of the Transaction Documents to which it is
      a
      party and delivered the same to the Company.

     

    (b) Such
      Buyer and each other Buyer shall have delivered to the Company the Purchase
      Price for the Preferred Shares and the related Warrants being
      purchased by such Buyer at the Closing by wire transfer of immediately available
      funds pursuant to the wire instructions provided by the Company.

     

    (c) The
      representations and warranties of such Buyer shall be true and correct in all
      material respects (except for those representations and warranties that are
      qualified by materiality, which shall be true and correct in all respects)
      as of
      the date when made and as of the Closing Date as though made at that time
      (except for representations and warranties that speak as of a specific date,
      which shall be true and correct as of such specific date), and such Buyer shall
      have performed, satisfied and complied in all material respects with the
      covenants, agreements and conditions required by this Agreement to be performed,
      satisfied or complied with by such Buyer at or prior to the Closing
      Date.

     

    7.     CONDITIONS
      TO EACH BUYER'S OBLIGATION TO PURCHASE. 

     

    The
      obligation of each Buyer hereunder to purchase the Preferred Shares and
      the
      related Warrants at the Closing is subject to the satisfaction, at or before
      the
      Closing Date, of each of the following conditions, provided that these
      conditions are for each Buyer's sole benefit and may be waived by such Buyer
      at
      any time in its sole discretion by providing the Company with prior written
      notice thereof:

     

    (a) The
      Company shall have duly executed and delivered to such Buyer (A) each of
      the Transaction Documents and (B) the Preferred Shares (in such numbers as
      is
      set forth across from such Buyer's name in column (3) of the Schedule of
      Buyers) and
      the
      related Warrants (in such numbers as is set forth across from such Buyer's
      name
      in column (4) of the Schedule of Buyers) being purchased by such Buyer at the
      Closing pursuant to this Agreement.

     

    (b) Such
      Buyer shall have received the opinion of Katten Muchin Rosenman LLP, the
      Company's outside counsel, dated as of the Closing Date, in substantially the
      form of Exhibit
      E
      attached
      hereto.

     

    (c) The
      Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
      Agent Instructions, in the form of Exhibit
      D
      attached
      hereto, which instructions shall have been delivered to and acknowledged in
      writing by the Company's transfer agent.

     

    (d) The
      Company shall have delivered to such Buyer a certificate evidencing the
      formation and good standing of the Company and each of its Subsidiaries in
      each
      such entity's jurisdiction of formation issued by the Secretary of State (or
      equivalent) of such jurisdiction of formation as of a date within ten (10)
      days
      of the Closing Date.

     

    (e) The
      Company shall have delivered to such Buyer a certificate evidencing the
      Company's qualification as a foreign corporation and good standing issued by
      the
      Secretary of State (or comparable office) of each jurisdiction in which the
      Company conducts business and is required to so qualify, as of a date within
      10
      days of the Closing Date.

     

    
      
        
        

      

      
        -27-

        
          

        

      

      
        
        

      

       

    

    (f) The
      Company shall have delivered to such Buyer a certified copy of the Certificate
      of Incorporation as certified by the Secretary of State of the State of Delaware
      within ten (10) days of the Closing Date.

     

    (g) The
      Company shall have delivered to such Buyer a certificate, executed by the
      Secretary of the Company and dated as of the Closing Date, as to (i) the
      resolutions consistent with Section 3(b) as adopted by the Company's board
      of
      directors in a form reasonably acceptable to such Buyer, (ii) the Certificate
      of
      Incorporation and (iii) the Bylaws, each as in effect at the Closing, in the
      form attached hereto as Exhibit
      F.

     

    (h) The
      representations and warranties of the Company shall be true and correct in
      all
      material respects (except for those representations and warranties that are
      qualified by materiality or Material Adverse Effect, which shall be true and
      correct in all respects) as of the date when made and as of the Closing Date
      as
      though made at that time (except for representations and warranties that speak
      as of a specific date, which shall be true and correct as of such specific
      date)
      and the Company shall have performed, satisfied and complied in all material
      respects with the covenants, agreements and conditions required by the
      Transaction Documents to be performed, satisfied or complied with by the Company
      at or prior to the Closing Date. Such Buyer shall have received a certificate,
      executed by the Chief Executive Officer of the Company, dated as of the Closing
      Date, to the foregoing effect and as to such other matters as may be reasonably
      requested by such Buyer in the form attached hereto as Exhibit
      G.

     

    (i) The
      Company shall have delivered to such Buyer a letter from the Company's transfer
      agent certifying the number of shares of Common Stock outstanding as of a date
      within five days of the Closing Date.

     

    (j) The
      Common Stock (I) shall be designated for quotation or listed on the Principal
      Market and (II) shall not have been suspended, as of the Closing Date, by the
      SEC or the Principal Market from trading on the Principal Market nor shall
      suspension by the SEC or the Principal Market have been threatened, as of the
      Closing Date, either (A) in writing by the SEC or the Principal Market or (B)
      by
      falling below the minimum maintenance requirements of the Principal
      Market.

     

    (k) The
      Company shall have obtained all governmental, regulatory or third party consents
      and approvals, if any, necessary for the sale of the Securities to the
      Buyers.

     

    (l) The
      Certificate of Designations in the form attached hereto as Exhibit
      A
      shall
      have been filed with the Secretary of State of the State of Delaware and shall
      be in full force and effect, enforceable against the Company in accordance
      with
      its terms and shall not have been amended.

     

    (m) The
      Company shall have delivered to such Buyer duly executed Voting Agreements,
      in
      the form attached hereto as Exhibit
      H
      (the
      "Voting
      Agreements"),
      executed by stockholders of the Company holding at least 51% of the voting
      capital stock of the Company as of the Closing Date.

     

    (n) The
      Company shall have delivered to Sunrise the duly executed Indemnity Agreement,
      in the form attached hereto as Exhibit
      I
      (the
      "Indemnity
      Agreement").

     

    
      
        
        

      

      
        -28-

        
          

        

      

      
        
        

      

       

    

    8.     TERMINATION.

     

    In
      the
      event that the Closing shall not have occurred with respect to a Buyer on or
      before five (5) Business Days from the date hereof due to the Company's or
      such
      Buyer's failure to satisfy the conditions set forth in Sections 6 and 7 above
      (and the nonbreaching party's failure to waive such unsatisfied condition(s)),
      the nonbreaching party shall have the option to terminate this Agreement with
      respect to such breaching party at the close of business on such date without
      liability of any party to any other party.

    

    9.     MISCELLANEOUS.

     

    (a) Governing
      Law; Jurisdiction; Jury Trial.
      All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      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, 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 brought in an
      inconvenient forum or that the venue of such suit, action or proceeding is
      improper. 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 to such party at the address for such notices to it
      under
      this Agreement and agrees that such service shall constitute good and sufficient
      service of process and notice thereof. Nothing contained herein shall be deemed
      to limit in any way any right to serve process in any manner permitted by law.
      EACH
      PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
      REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
      CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
      HEREBY. 

     

    (b) Counterparts.
      This
      Agreement may be executed in two or more identical counterparts, all of which
      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;
      provided that a signature transmitted by facsimile or other electronic
      transmission shall be considered due execution and shall be binding upon the
      signatory thereto with the same force and effect as if the signature were an
      original.

     

    (c) Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

     

    (d) Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement in that jurisdiction or
      the
      validity or enforceability of any provision of this Agreement in any other
      jurisdiction.

     

    
      
        
        

      

      
        -29-

        
          

        

      

      
        
        

      

       

    

    (e) Entire
      Agreement; Amendments.
      This
      Agreement and the other Transaction Documents supersede all other prior oral
      or
      written agreements between the Buyers, the Company, their Affiliates and Persons
      acting on their behalf with respect to the matters discussed herein, and this
      Agreement, the other Transaction Documents and the instruments referenced herein
      and therein contain the entire understanding of the parties with respect to
      the
      matters covered herein and therein and, except as specifically set forth herein
      or therein, neither the Company nor any Buyer makes any representation,
      warranty, covenant or undertaking with respect to such matters. No provision
      of
      this Agreement may be amended other than by an instrument in writing signed
      by
      the Company and the holders of at least a majority of the Preferred Shares
      issued and issuable hereunder, and any amendment to this Agreement made in
      conformity with the provisions of this Section 9(e) shall be binding on all
      Buyers and holders of Securities, as applicable. No provision hereof may be
      waived other than by an instrument in writing signed by the party against whom
      enforcement is sought. No such amendment shall be effective to the extent that
      it applies to less than all of the holders of the Preferred Shares then
      outstanding. No consideration shall be offered or paid to any Person to amend
      or
      consent to a waiver or modification of any provision of any of the Transaction
      Documents unless the same consideration also is offered to all of the parties
      to
      the Transaction Documents, holders of Preferred Shares or holders of the
      Warrants, as the case may be. The Company has not, directly or indirectly,
      made
      any agreements with any Buyers relating to the terms or conditions of the
      transactions contemplated by the Transaction Documents except as set forth
      in
      the Transaction Documents. Without limiting the foregoing, the Company confirms
      that, except as set forth in this Agreement, no Buyer has made any commitment
      or
      promise or has any other obligation to provide any financing to the Company
      or
      otherwise.

     

    (f) Notices.
      Any
      notices, consents, waivers or other communications required or permitted to
      be
      given under the terms of this Agreement must be in writing and will be deemed
      to
      have been delivered: (i) upon receipt, when delivered personally; (ii) upon
      receipt, when sent by facsimile (provided confirmation of transmission is
      mechanically or electronically generated and kept on file by the sending party);
      or (iii) one Business Day after deposit with an overnight courier service,
      in
      each case properly addressed to the party to receive the same. The addresses
      and
      facsimile numbers for such communications shall be:

     

    If
      to the
      Company:

     

    Cleveland
      BioLabs, Inc. 

    11000
      Cedar Ave., Suite 290

    Cleveland,
      Ohio 44106

    Telephone: 
      (216)
      229-2251

    Facsimile:    (216)
      229-1764

    Attention:   
      Michael
      Fonstein

     

    With
      a
      copy (for informational purposes only) to:

     

    Katten
      Muchin Rosenman LLP

    525
      West
      Monroe Street

    Chicago,
      Illinois 60661

    Telephone: 
      (312)
      902-5200

    Facsimile:    (312)
      902-1061

    Attention:   
      Ram
      Padmanabhan

     

    
      
        
        

      

      
        -30-

        
          

        

      

      
        
        

      

       

    

    If
      to the
      Transfer Agent:

     

    Continental
      Stock Transfer & Trust Company

    17
      Battery Place, 8th Floor

    New
      York,
      New York 10004

    Telephone:
       (212)
      509-4000

    Facsimile:    (212)
      509-5150

    Attention:   
      Gregory
      P. Denman

     

    If
      to a
      Buyer, to its address and facsimile number set forth on Schedule
      I
      attached
      hereto, with copies to such Buyer's representatives as set forth on the Schedule
      of Buyers, 

     

    with
      a
      copy (for informational purposes only) to:

     

       
      Schulte Roth & Zabel LLP 

        919
      Third Avenue

        New
      York, New York 10022

       
      Telephone: (212)
      756-2000

       
      Facsimile:   (212)
      593-5955

       
      Attention:   Eleazer
      N. Klein, Esq.

     

    or
      to
      such other address and/or facsimile number and/or to the attention of such
      other
      Person as the recipient party has specified by written notice given to each
      other party five (5) days prior to the effectiveness of such change. Written
      confirmation of receipt (A) given by the recipient of such notice, consent,
      waiver or other communication, (B) mechanically or electronically generated
      by
      the sender's facsimile machine containing the time, date, recipient facsimile
      number and an image of the first page of such transmission or (C) provided
      by an
      overnight courier service shall be rebuttable evidence of personal service,
      receipt by facsimile or receipt from an overnight courier service in accordance
      with clause (i), (ii) or (iii) above, respectively.

     

    (g) Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their respective successors and assigns, including any purchasers of the
      Preferred Shares or the Warrants. The Company shall not assign this Agreement
      or
      any rights or obligations hereunder without the prior written consent of the
      holders of at least a majority of the aggregate number of Registrable Securities
      issued and issuable hereunder, including by way of a Fundamental Transaction
      (unless the Company is in compliance with the applicable provisions governing
      Fundamental Transactions set forth in the Certificate of Designations and the
      Warrants). No Buyer shall assign this Agreement or any rights or obligations
      hereunder without the prior written consent of the Company; provided,
      however,
      that
      after the Closing, a Buyer may assign some or all of its rights hereunder in
      connection with transfer of any of its Preferred Shares or Warrants without
      the
      consent of the Company, in which event such assignee shall be deemed to be
      a
      Buyer hereunder with respect to such assigned rights; provided,
      further,
      that
      notwithstanding the forgoing, any of the Agents may assign some or all of its
      rights hereunder in connection with transfer of any of its Preferred Shares
      or
      Warrants to any broker-dealer (or any affiliates, officers and/or employees
      thereof) and/or any related third party approved by the Company and/or any
      of
      such Agent's affiliates, officers and/or employees.

     

    
      
        
        

      

      
        -31-

        
          

        

      

      
        
        

      

       

    

    (h) No
      Third Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other Person.

     

    (i) Survival.
      Unless
      this Agreement is terminated under Section 8, the representations and warranties
      of the Company and the Buyers contained in Sections 2 and 3 and the agreements
      and covenants set forth in Sections 4, 5 and 9 shall survive the Closing and
      the
      delivery and exercise of Securities, as applicable. Each Buyer shall be
      responsible only for its own representations, warranties, agreements and
      covenants hereunder.

     

    (j) Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as any other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

     

    (k) Indemnification.
      In
      consideration of each Buyer's execution and delivery of the Transaction
      Documents and acquiring the Securities thereunder and in addition to all of
      the
      Company's other obligations under the Transaction Documents, the Company shall
      defend, protect, indemnify and hold harmless each Buyer and each other holder
      of
      the Securities and all of their stockholders, partners, members, officers,
      directors, employees and direct or indirect investors and any of the foregoing
      Persons' agents or other representatives (including, without limitation, those
      retained in connection with the transactions contemplated by this Agreement)
      (collectively, the "Indemnitees"),
      as
      incurred, from and against any and all actions, causes of action, suits, claims,
      losses, costs, penalties, fees, liabilities and damages, and expenses in
      connection therewith (irrespective of whether any such Indemnitee is a party
      to
      the action for which indemnification hereunder is sought), and including
      reasonable attorneys' fees and disbursements (the "Indemnified
      Liabilities"),
      incurred by any Indemnitee as a result of, or arising out of, or relating to
      (a)
      any misrepresentation or breach of any representation or warranty made by the
      Company in the Transaction Documents, (b) any breach of any covenant, agreement
      or obligation of the Company contained in the Transaction Documents or (c)
      any
      cause of action, suit or claim brought or made against such Indemnitee by a
      third party (including for these purposes a derivative action brought on behalf
      of the Company) and arising out of or resulting from (i) the execution,
      delivery, performance or enforcement of the Transaction Documents or any other
      certificate, instrument or document contemplated hereby or thereby, (ii) any
      transaction financed or to be financed in whole or in part, directly or
      indirectly, with the proceeds of the issuance of the Securities, (iii) any
      disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status
      of
      such Buyer or holder of the Securities as an investor in the Company pursuant
      to
      the transactions contemplated by the Transaction Documents. To the extent that
      the foregoing undertaking by the Company may be unenforceable for any reason,
      the Company shall make the maximum contribution to the payment and satisfaction
      of each of the Indemnified Liabilities which is permissible under applicable
      law. Except as otherwise set forth herein, the mechanics and procedures with
      respect to the rights and obligations under this Section 9(k) shall be the
      same
      as those set forth in Section 6 of the Registration Rights
      Agreement.

     

    
      
        
        

      

      
        -32-

        
          

        

      

      
        
        

      

       

    

    (l) No
      Strict Construction.
      The
      language used in this Agreement will be deemed to be the language chosen by
      the
      parties to express their mutual intent, and no rules of strict construction
      will
      be applied against any party.

     

    (m) Remedies.
      The
      Company, each Buyer and each holder of the Securities shall have all rights
      and
      remedies set forth in the Transaction Documents and all rights and remedies
      which such holders have been granted at any time under any other agreement
      or
      contract and all of the rights which such holders have under any law. Any Person
      having any rights under any provision of this Agreement shall be entitled to
      enforce such rights specifically (without posting a bond or other security),
      to
      recover damages by reason of any breach of any provision of this Agreement
      and
      to exercise all other rights granted by law. Furthermore, each party hereto
      recognizes that in the event that it fails to perform, observe, or discharge
      any
      or all of its obligations under the Transaction Documents, any remedy at law
      may
      prove to be inadequate relief to the other parties hereto. Each party hereto
      therefore agrees that the other parties hereto shall be entitled to seek
      temporary and permanent injunctive relief in any such case without the necessity
      of proving actual damages and without posting a bond or other
      security.

     

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

     

    (o) Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to the Buyers hereunder
      or
      pursuant to any of the other Transaction Documents or the Buyers enforce or
      exercise their rights hereunder or thereunder, and such payment or payments
      or
      the proceeds of such enforcement or exercise or any part thereof are
      subsequently invalidated, declared to be fraudulent or preferential, set aside,
      recovered from, disgorged by or are required to be refunded, repaid or otherwise
      restored to the Company, a trustee, receiver or any other Person under any
      law
      (including, without limitation, any bankruptcy law, foreign, state or federal
      law, common law or equitable cause of action), then to the extent of any such
      restoration the obligation or part thereof originally intended to be satisfied
      shall be revived and continued in full force and effect as if such payment
      had
      not been made or such enforcement or setoff had not occurred.

     

    (p) Independent
      Nature of Buyers' Obligations and Rights.
      The
      obligations of each Buyer under any Transaction Document are several and not
      joint with the obligations of any other Buyer, and no Buyer shall be responsible
      in any way for the performance of the obligations of any other Buyer under
      any
      Transaction Document. Nothing contained herein or in any other Transaction
      Document, and no action taken by any Buyer pursuant hereto or thereto, shall
      be
      deemed to constitute the Buyers as a partnership, an association, a joint
      venture or any other kind of entity, or create a presumption that the Buyers
      are
      in any way acting in concert or as a group with respect to such obligations
      or
      the transactions contemplated by the Transaction Documents and the Company
      acknowledges that the Buyers are not acting in concert or as a group, and the
      Company will not assert any such claim, with respect to such obligations or
      the
      transactions contemplated by the Transaction Documents. Each Buyer confirms
      that
      it has independently participated in the negotiation of the transaction
      contemplated hereby with the advice of its own counsel and advisors. Each Buyer
      shall be entitled to independently protect and enforce its rights, including,
      without limitation, the rights arising out of this Agreement or out of any
      other
      Transaction Documents, and it shall not be necessary for any other Buyer to
      be
      joined as an additional party in any proceeding for such purpose.

     

    [Signature
      Page Follows]

     

    

    
      
        
        

      

      
        -33-

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    

    
      	 	 	 
	 	
              COMPANY:

               

              CLEVELAND
                BIOLABS, INC.

            
	 
 	 
 	 
 
	 	By:  	/s/ Michael Fonstein
	 	
              
                
Name:
                Michael Fonstein

            
	 	
              Title:
                Chief Executive Officer &
President

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Securities Purchase Agreement to be duly executed as of the date first written
      above.

     

    

    
      	 	 	 
	 	
              BUYERS:

               

              SUNRISE
                SECURITIES CORP.

            
	 
 	 
 	 
 
	 	By:  	/s/ Marcia Kucher
	 	
              
                
Name:
                Marcia Kucher

            
	 	
              Title:
                

            

    

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

    

    

     

    

     

    [Signature
      pages of other Buyers intentionally omitted]

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SCHEDULE
      OF BUYERS

     

    

    
      	
              (1)

            	
              (2)

            	 	
              (3)

            	
              (4)

            	
              (5)

            	
              (6)

            	
              (7)

            	
              (8)

            	
              (9)

            
	 	 	 	 	 	 	 	 	 	 
	
              Buyer

            	
              Residence

            	
              Type
                of 

              Buyer
                :

               

              Convertible
                

              Buyer
                (CB)

               

              Non-

              Convertible
                

              Buyer
                (NCB)

               

              Agent
                (A)

            	
              Aggregate
                

              Number
                of Investor Convertible Preferred 

              Shares

            	
              Aggregate
                

              Number
                of 

              Investor
                

              Convertible
                

              Series
                B 

              Warrants

            	
              Aggregate
                

              Number
                of 

              Investor
                Non-Convertible

              Preferred

              Shares
                and 

              Agent
                

              Preferred
                

              Shares

            	
              Aggregate
                

              Number
                of 

              Investor
                Non-Convertible 

              Series
                B 

              Warrants

              and
                Agent 

              Series
                B 

              Warrants

            	
              Aggregate
                

              Number
                of Non-

              Convertible

              Retainer
                

              Series
                C 

              Warrants

            	
              Purchase
                

              Price

            	
              Legal
                Representative's

              Address
                and Facsimile 

              Number

            
	 	 	 	 	 	 	 	 	 	 
	
              Sunrise
                Securities Corp.

            	
              New
                York

            	
              A

            	
              —

            	
              
                —

              

            	
              52,174

            	
              26,087

            	
              48,000

            	
              N/A

            	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, New York 10022

              Attention:
                Eleazer Klein, Esq.

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2376

            
	 	 	 	 	 	 	 	 	 	 
	
              1625421

              Ontario
                Inc

            	
              Ontario

            	
              CB

            	
              6,700

            	
              3,350

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $46,900

            	
              N/A

            
	 	 	 	 	 	 	 	 	 	 
	
              Alfred
                M. Gollomp

            	
              New
                York

            	
              CB

            	
              2,000

            	
              1,000

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $14,000

            	
              N/A

            
	 	 	 	 	 	 	 	 	 	 
	
              Andrew
                C. Hart

            	
              New
                York

            	
              CB

            	
              20,000

            	
              10,000

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $140,000

            	
              N/A

            
	 	 	 	 	 	 	 	 	 	 
	
              North
                Pole Capital 

              Master
                Fund

            	
              Canada

            	
              CB

            	
              55,000

            	
              27,500

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $385,000

            	
              N/A

            
	 	 	 	 	 	 	 	 	 	 
	
              CAMHZN
                Master LDC

            	
              Cayman
                Islands

            	
              CB

            	
              35,714

            	
              17,857

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $249,998

            	
              N/A

            
	 	 	 	 	 	 	 	 	 	 
	
               

              CAMOFI
                Master LDC

            	
              Cayman
                Islands

            	
              CB

            	
              3,302

            	
              1,651

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $23,114

            	
              N/A

            
	 	 	 	 	 	 	 	 	 	 
	
              Daniel
                J. Arbess

            	
              New
                York

            	
              CB

            	
              46,000

            	
              23,000

            	
              
                —

              

            	
              
                —

              

            	
              
                —

              

            	
              $322,000

            	
              N/A

            

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    
      
        	
                (1)

              	
                (2)

              	 	
                (3)

              	
                (4)

              	
                (5)

              	
                (6)

              	
                (7)

              	
                (8)

              	
                (9)

              
	 	 	 	 	 	 	 	 	 	 
	
                Buyer

              	
                Residence

              	
                Type
                  of 

                Buyer
                  :

                 

                Convertible
                  

                Buyer
                  (CB)

                 

                Non-

                Convertible
                  

                Buyer
                  (NCB)

                 

                Agent
                  (A)

              	
                Aggregate
                  

                Number
                  of Investor Convertible Preferred 

                Shares

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  

                Convertible
                  

                Series
                  B 

                Warrants

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  Non-Convertible

                Preferred

                Shares
                  and 

                Agent
                  

                Preferred
                  

                Shares

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  Non-Convertible 

                Series
                  B 

                Warrants

                and
                  Agent 

                Series
                  B 

                Warrants

              	
                Aggregate
                  

                Number
                  of Non-

                Convertible

                Retainer
                  

                Series
                  C 

                Warrants

              	
                Purchase
                  

                Price

              	
                Legal
                  Representative's

                Address
                  and Facsimile 

                Number

              
	 	 	 	 	 	 	 	 	 	 
	
                EGATNIV,
                  LLC

              	
                New
                  York

              	
                CB

              	
                8,002

              	
                4,001

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $56,014

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Elie
                  Zrihen

              	
                Ontario

              	
                CB

              	
                1,428

              	
                714

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $9,996

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                F
                  Berdon Co LP

              	
                New
                  York

              	
                CB

              	
                42,000

              	
                21,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $294,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Hudson
                  Bay Fund L.P.

              	
                Delaware

              	
                CB

              	
                31,500

              	
                15,750

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $220,500

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Hudson
                  Bay Overseas 

                Fund
                  Ltd

              	
                Cayman
                  Islands

              	
                CB

              	
                38,500

              	
                19,250

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $269,500

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Iroquois
                  Master 

                Fund
                  Ltd.

              	
                Cayman
                  Islands

              	
                CB

              	
                250,000

              	
                125,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $1,750,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                J.S.A.

                Investments,
                  LLC

              	
                Nevis

              	
                CB

              	
                20,000

              	
                10,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $140,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Jesselson
                  

                Grandchildren
                  

                12/18/80
                  Trust

              	
                New
                  York

              	
                CB

              	
                100,000

              	
                50,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $700,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                JMG
                  Capital Partners, LP

              	
                California

              	
                CB

              	
                280,000

              	
                140,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $1,960,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Laffin
                  Ventures 

                Corporation

              	
                Florida

              	
                CB

              	
                35,000

              	
                17,500

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $245,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Perceptive
                  Life 

                Sciences
                  Master 

                Fund,
                  Ltd

              	
                New
                  York

              	
                CB

              	
                285,000

              	
                142,500

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $1,995,000

              	
                N/A

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    
      

      
        	
                (1)

              	
                (2)

              	 	
                (3)

              	
                (4)

              	
                (5)

              	
                (6)

              	
                (7)

              	
                (8)

              	
                (9)

              
	 	 	 	 	 	 	 	 	 	 
	
                Buyer

              	
                Residence

              	
                Type
                  of 

                Buyer
                  :

                 

                Convertible
                  

                Buyer
                  (CB)

                 

                Non-

                Convertible
                  

                Buyer
                  (NCB)

                 

                Agent
                  (A)

              	
                Aggregate
                  

                Number
                  of Investor Convertible Preferred 

                Shares

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  

                Convertible
                  

                Series
                  B 

                Warrants

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  Non-Convertible

                Preferred

                Shares
                  and 

                Agent
                  

                Preferred
                  

                Shares

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  Non-Convertible 

                Series
                  B 

                Warrants

                and
                  Agent 

                Series
                  B 

                Warrants

              	
                Aggregate
                  

                Number
                  of Non-

                Convertible

                Retainer
                  

                Series
                  C 

                Warrants

              	
                Purchase
                  

                Price

              	
                Legal
                  Representative's

                Address
                  and Facsimile 

                Number

              
	 	 	 	 	 	 	 	 	 	 
	
                Peter
                  M. Yu

              	
                New
                  York

              	
                CB

              	
                14,284

              	
                7,142

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $99,988

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Portside
                  Growth and Opportunity Fund

              	
                Cayman
                  Islands

              	
                CB

              	
                71,000

              	
                35,500

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $497,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Ron
                  Weissberg

              	
                Israel

              	
                CB

              	
                30,000

              	
                15,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $210,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Ruth
                  Low

              	
                California

              	
                CB

              	
                100,000

              	
                50,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $700,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Sam
                  Fendic

              	
                Ontario

              	
                CB

              	
                53,570

              	
                26,785

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $374,990

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                SDS
                  Capital Group SPC, Ltd

              	
                Connecticut

              	
                CB

              	
                30,000

              	
                15,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $210,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                SF
                  Capital Partners Ltd.

              	
                British
                  Virgin Islands

              	
                CB

              	
                354,000

              	
                177,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $2,478,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Starwood
                  Group, L.P.

              	
                New
                  York

              	
                CB

              	
                71,000

              	
                35,500

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $497,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                TCMP3
                  Partners

                 

              	
                New
                  Jersey

              	
                CB

              	
                122,000

              	
                61,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $854,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                UBS
                  O'Connor LLC

                fbo
                  O'Connor Pipes Corporate Strategies Master Limited

              	
                Cayman
                  Islands

              	
                CB

              	
                100,000

              	
                50,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $700,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Uri
                  Rosin

              	
                New
                  York

              	
                CB

              	
                30,000

              	
                15,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $210,000

              	
                N/A

              

      

       

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      

      
        	
                (1)

              	
                (2)

              	 	
                (3)

              	
                (4)

              	
                (5)

              	
                (6)

              	
                (7)

              	
                (8)

              	
                (9)

              
	 	 	 	 	 	 	 	 	 	 
	
                Buyer

              	
                Residence

              	
                Type
                  of 

                Buyer
                  :

                 

                Convertible
                  

                Buyer
                  (CB)

                 

                Non-

                Convertible
                  

                Buyer
                  (NCB)

                 

                Agent
                  (A)

              	
                Aggregate
                  

                Number
                  of Investor Convertible Preferred 

                Shares

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  

                Convertible
                  

                Series
                  B 

                Warrants

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  Non-Convertible

                Preferred

                Shares
                  and 

                Agent
                  

                Preferred
                  

                Shares

              	
                Aggregate
                  

                Number
                  of 

                Investor
                  Non-Convertible 

                Series
                  B 

                Warrants

                and
                  Agent 

                Series
                  B 

                Warrants

              	
                Aggregate
                  

                Number
                  of Non-

                Convertible

                Retainer
                  

                Series
                  C 

                Warrants

              	
                Purchase
                  

                Price

              	
                Legal
                  Representative's

                Address
                  and Facsimile 

                Number

              
	 	 	 	 	 	 	 	 	 	 
	
                Xerion
                  Partners II 

                Master
                  Fund Limited

              	
                Bermuda

              	
                CB

              	
                140,000

              	
                70,000

              	
                
                  —

                

              	
                
                  —

                

              	
                
                  —

                

              	
                $980,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Aram
                  Openden

              	
                Ohio

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                4,000

              	
                2,000

              	
                
                  —

                

              	
                $28,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Basic
                  Investors, Inc.

              	
                New
                  York

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                8,000

              	
                4,000

              	
                
                  —

                

              	
                $56,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Bruce
                  Carlow

              	
                New
                  York

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                4,000

              	
                2,000

              	
                
                  —

                

              	
                $28,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Bruce
                  J. & Sandra K. 

                Nielsen
                  Joint Revoc. 

                Trust

              	
                Wisconsin

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                4,000

              	
                2,000

              	
                
                  —

                

              	
                $28,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                CAMOFI
                  Master

                LDC

              	
                Cayman
                  Islands

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                142,856

              	
                71,428

              	
                
                  —

                

              	
                $999,992

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Capital
                  Ventures 

                International

              	
                New
                  York

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                142,858

              	
                71,429

              	
                
                  —

                

              	
                $1,000,006

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                David
                  Steinharter

              	
                New
                  York

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                4,000

              	
                2,000

              	
                
                  —

                

              	
                $28,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                De
                  Parys Holdings 

                Limited

              	
                U.K.

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                3,000

              	
                1,500

              	
                
                  —

                

              	
                $21,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Diane
                  Schwartz

              	
                New
                  York

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                2,000

              	
                1,000

              	
                
                  —

                

              	
                $14,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Douglas
                  Belz

              	
                New
                  York

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                8,000

              	
                4,000

              	
                
                  —

                

              	
                $56,000

              	
                N/A

              
	 	 	 	 	 	 	 	 	 	 
	
                Enable
                  Growth 

                Partners,
                  L.P.

              	
                California

              	
                NCB

              	
                
                  —

                

              	
                
                  —

                

              	
                425,000

              	
                212,500

              	
                
                  —

                

              	
                $2,975,000

              	
                N/A

              

      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        

        
          	
                  (1)

                	
                  (2)

                	 	
                  (3)

                	
                  (4)

                	
                  (5)

                	
                  (6)

                	
                  (7)

                	
                  (8)

                	
                  (9)

                
	 	 	 	 	 	 	 	 	 	 
	
                  Buyer

                	
                  Residence

                	
                  Type
                    of 

                  Buyer
                    :

                   

                  Convertible
                    

                  Buyer
                    (CB)

                   

                  Non-

                  Convertible
                    

                  Buyer
                    (NCB)

                   

                  Agent
                    (A)

                	
                  Aggregate
                    

                  Number
                    of Investor Convertible Preferred 

                  Shares

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    

                  Convertible
                    

                  Series
                    B 

                  Warrants

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    Non-Convertible

                  Preferred

                  Shares
                    and 

                  Agent
                    

                  Preferred
                    

                  Shares

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    Non-Convertible 

                  Series
                    B 

                  Warrants

                  and
                    Agent 

                  Series
                    B 

                  Warrants

                	
                  Aggregate
                    

                  Number
                    of Non-

                  Convertible

                  Retainer
                    

                  Series
                    C 

                  Warrants

                	
                  Purchase
                    

                  Price

                	
                  Legal
                    Representative's

                  Address
                    and Facsimile 

                  Number

                
	 	 	 	 	 	 	 	 	 	 
	
                  Enable
                    Opportunity 

                  Partners,
                    L.P.

                	
                  California

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  50,000

                	
                  25,000

                	
                  
                    —

                  

                	
                  $350,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Eric
                    Abitbol

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  5,000

                	
                  2,500

                	
                  
                    —

                  

                	
                  $35,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Eric
                    Jacobs

                	
                  Florida

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  6,000

                	
                  3,000

                	
                  
                    —

                  

                	
                  $42,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Frank
                    Bua

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  2,000

                	
                  1,000

                	
                  
                    —

                  

                	
                  $14,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Gary
                    Purcell

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  8,000

                	
                  4,000

                	
                  
                    —

                  

                	
                  $56,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Gemini
                    Master 

                  Fund,
                    Ltd

                	
                  California

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  35,714

                	
                  17,857

                	
                  
                    —

                  

                	
                  $250,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Ira
                    Openden

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  James
                    & Nancy Pappas

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Jerold
                    Ladin

                	
                  Illinois

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  JGB
                    Capital Offshore, 

                  Ltd

                	
                  Cayman
                    Islands

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  8,928

                	
                  4,464

                	
                  
                    —

                  

                	
                  $62,500

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  JGB
                    Capital, LP

                	
                  Delaware

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  26,786

                	
                  13,393

                	
                  
                    —

                  

                	
                  $187,500

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Kathleen
                    Belz

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  24,000

                	
                  12,000

                	
                  
                    —

                  

                	
                  $168,000

                	
                  N/A

                

        

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        

        
          	
                  (1)

                	
                  (2)

                	 	
                  (3)

                	
                  (4)

                	
                  (5)

                	
                  (6)

                	
                  (7)

                	
                  (8)

                	
                  (9)

                
	 	 	 	 	 	 	 	 	 	 
	
                  Buyer

                	
                  Residence

                	
                  Type
                    of 

                  Buyer
                    :

                   

                  Convertible
                    

                  Buyer
                    (CB)

                   

                  Non-

                  Convertible
                    

                  Buyer
                    (NCB)

                   

                  Agent
                    (A)

                	
                  Aggregate
                    

                  Number
                    of Investor Convertible Preferred 

                  Shares

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    

                  Convertible
                    

                  Series
                    B 

                  Warrants

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    Non-Convertible

                  Preferred

                  Shares
                    and 

                  Agent
                    

                  Preferred
                    

                  Shares

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    Non-Convertible 

                  Series
                    B 

                  Warrants

                  and
                    Agent 

                  Series
                    B 

                  Warrants

                	
                  Aggregate
                    

                  Number
                    of Non-

                  Convertible

                  Retainer
                    

                  Series
                    C 

                  Warrants

                	
                  Purchase
                    

                  Price

                	
                  Legal
                    Representative's

                  Address
                    and Facsimile 

                  Number

                
	 	 	 	 	 	 	 	 	 	 
	
                  Lorin
                    Wells

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  10,000

                	
                  5,000

                	
                  
                    —

                  

                	
                  $70,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Marc
                    Rubin

                	
                  Florida

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  2,000

                	
                  1,000

                	
                  
                    —

                  

                	
                  $14,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Marilyn
                    S. Adler

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Melchior
                    Ancona

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  2,000

                	
                  1,000

                	
                  
                    —

                  

                	
                  $14,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Michael
                    and Irene 

                  Alter

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Nathan
                    Halequa

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Perceptive
                    Life 

                  Sciences
                    Master 

                  Fund,
                    Ltd

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  107,142

                	
                  53,571

                	
                  
                    —

                  

                	
                  $749,994

                	 
	 	 	 	 	 	 	 	 	 	 
	
                  Peter
                    Weprin

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  5,000

                	
                  2,500

                	
                  
                    —

                  

                	
                  $35,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Pierce
                    Diversified 

                  Strategy
                    Master Fund, 

                  LLC,
                    Ena

                	
                  California

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  25,000

                	
                  12,500

                	
                  
                    —

                  

                	
                  $175,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  PR
                    Diamonds Inc.

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Richard
                    Barber

                	
                  Texas

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                

        

         

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        

        
          	
                  (1)

                	
                  (2)

                	 	
                  (3)

                	
                  (4)

                	
                  (5)

                	
                  (6)

                	
                  (7)

                	
                  (8)

                	
                  (9)

                
	 	 	 	 	 	 	 	 	 	 
	
                  Buyer

                	
                  Residence

                	
                  Type
                    of 

                  Buyer
                    :

                   

                  Convertible
                    

                  Buyer
                    (CB)

                   

                  Non-

                  Convertible
                    

                  Buyer
                    (NCB)

                   

                  Agent
                    (A)

                	
                  Aggregate
                    

                  Number
                    of Investor Convertible Preferred 

                  Shares

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    

                  Convertible
                    

                  Series
                    B 

                  Warrants

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    Non-Convertible

                  Preferred

                  Shares
                    and 

                  Agent
                    

                  Preferred
                    

                  Shares

                	
                  Aggregate
                    

                  Number
                    of 

                  Investor
                    Non-Convertible 

                  Series
                    B 

                  Warrants

                  and
                    Agent 

                  Series
                    B 

                  Warrants

                	
                  Aggregate
                    

                  Number
                    of Non-

                  Convertible

                  Retainer
                    

                  Series
                    C 

                  Warrants

                	
                  Purchase
                    

                  Price

                	
                  Legal
                    Representative's

                  Address
                    and Facsimile 

                  Number

                
	 	 	 	 	 	 	 	 	 	 
	
                  Richard
                    Settducati

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Robert
                    Baffa

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  2,000

                	
                  1,000

                	
                  
                    —

                  

                	
                  $14,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Robert
                    Fuchs

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Robert
                    H. Cohen

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  71,428

                	
                  35,714

                	
                  
                    —

                  

                	
                  $499,996

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Rock
                    Associates

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  7,000

                	
                  3,500

                	
                  
                    —

                  

                	
                  $49,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Serafino
                    Barone

                	
                  New
                    Jersey

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  4,000

                	
                  2,000

                	
                  
                    —

                  

                	
                  $28,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Serge
                    Moyal

                	
                  Ontario

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  3,000

                	
                  1,500

                	
                  
                    —

                  

                	
                  $21,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    Diamond

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  2,000

                	
                  1,000

                	
                  
                    —

                  

                	
                  $14,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Steven
                    H. Lehmann

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  16,000

                	
                  8,000

                	
                  
                    —

                  

                	
                  $112,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Sunrise
                    Equity 

                  Partners,
                    L.P.

                	
                  Delaware

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  600,000

                	
                  300,000

                	
                  
                    —

                  

                	
                  $4,200,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  TCMP3
                    Partners, LP

                   

                	
                  New
                    Jersey

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  80,000

                	
                  40,000

                	
                  
                    —

                  

                	
                  $560,000

                	
                  N/A

                
	 	 	 	 	 	 	 	 	 	 
	
                  Thomas
                    Laundrie

                	
                  New
                    York

                	
                  NCB

                	
                  
                    —

                  

                	
                  
                    —

                  

                	
                  2,000

                	
                  1,000

                	
                  
                    —

                  

                	
                  $14,000

                	
                  N/A

                

        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

        
          

          
            	
                    (1)

                  	
                    (2)

                  	 	
                    (3)

                  	
                    (4)

                  	
                    (5)

                  	
                    (6)

                  	
                    (7)

                  	
                    (8)

                  	
                    (9)

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Buyer

                  	
                    Residence

                  	
                    Type
                      of 

                    Buyer
                      :

                     

                    Convertible
                      

                    Buyer
                      (CB)

                     

                    Non-

                    Convertible
                      

                    Buyer
                      (NCB)

                     

                    Agent
                      (A)

                  	
                    Aggregate
                      

                    Number
                      of Investor Convertible Preferred 

                    Shares

                  	
                    Aggregate
                      

                    Number
                      of 

                    Investor
                      

                    Convertible
                      

                    Series
                      B 

                    Warrants

                  	
                    Aggregate
                      

                    Number
                      of 

                    Investor
                      Non-Convertible

                    Preferred

                    Shares
                      and 

                    Agent
                      

                    Preferred
                      

                    Shares

                  	
                    Aggregate
                      

                    Number
                      of 

                    Investor
                      Non-Convertible 

                    Series
                      B 

                    Warrants

                    and
                      Agent 

                    Series
                      B 

                    Warrants

                  	
                    Aggregate
                      

                    Number
                      of Non-

                    Convertible

                    Retainer
                      

                    Series
                      C 

                    Warrants

                  	
                    Purchase
                      

                    Price

                  	
                    Legal
                      Representative's

                    Address
                      and Facsimile 

                    Number

                  
	 	 	 	 	 	 	 	 	 	 
	
                    William
                      Schmidl

                  	
                    Texas

                  	
                    NCB

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    20,000

                  	
                    10,000

                  	
                    
                      —

                    

                  	
                    $140,000

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Amnon
                      Mandelbaum

                  	
                    New
                      York

                  	
                    A

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    72,771

                  	
                    36,385

                  	
                    60,034

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Basic
                      Investors, 

                    Inc.

                  	
                    New
                      York

                  	
                    A1

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    12,480

                  	
                    
                      —

                    

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    David
                      Goodfriend

                  	
                    New
                      Jersey

                  	
                    A

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    8,086

                  	
                    4,043

                  	
                    6,670

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Eric
                      Abitbol

                  	
                    New
                      York

                  	
                    A

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    228

                  	
                    114

                  	
                    224

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Financial
                      West 

                    Group

                  	
                    California

                  	
                    A2

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    1,590

                  	
                    
                      —

                    

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Jeffrey
                      Meyerson

                  	
                    New
                      Jersey

                  	
                    A

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    3,293

                  	
                    1,647

                  	
                    3,232

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Jewish
                      Communal 

                    Fund—Bone
                      Marrow
                      

                    Testing
                      Fund #3761

                  	
                    New
                      York

                  	
                    A

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    8,000

                  	
                    4,000

                  	
                    
                      —

                    

                  	
                    N/A

                  	
                    N/A

                  
	 	 	 	 	 	 	 	 	 	 
	
                    Lucy
                      DaRita

                  	
                    New
                      York

                  	
                    A

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    
                      —

                    

                  	
                    1,000

                  	
                    N/A

                  	
                    N/A

                  

          

           

            
              

            

          

          1 
            In
            addition, Basic Investors, Inc. will receive a placement agent fee, payable
            in
            cash in lieu of Units, equal to eight percent (8%) of the aggregate amount
            placed by it.

          2 
            In
            addition, Reedland Capital Partners, an Institutional Division of Financial
            West
            Group, will receive a placement agent fee, payable in cash in lieu of
            Units,
            equal to eight percent (8%) of the aggregate amount placed by
            it.

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

          
            

            
              	
                      (1)

                    	
                      (2)

                    	 	
                      (3)

                    	
                      (4)

                    	
                      (5)

                    	
                      (6)

                    	
                      (7)

                    	
                      (8)

                    	
                      (9)

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Buyer

                    	
                      Residence

                    	
                      Type
                        of 

                      Buyer
                        :

                       

                      Convertible
                        

                      Buyer
                        (CB)

                       

                      Non-

                      Convertible
                        

                      Buyer
                        (NCB)

                       

                      Agent
                        (A)

                    	
                      Aggregate
                        

                      Number
                        of Investor Convertible Preferred 

                      Shares

                    	
                      Aggregate
                        

                      Number
                        of 

                      Investor
                        

                      Convertible
                        

                      Series
                        B 

                      Warrants

                    	
                      Aggregate
                        

                      Number
                        of 

                      Investor
                        Non-Convertible

                      Preferred

                      Shares
                        and 

                      Agent
                        

                      Preferred
                        

                      Shares

                    	
                      Aggregate
                        

                      Number
                        of 

                      Investor
                        Non-Convertible 

                      Series
                        B 

                      Warrants

                      and
                        Agent 

                      Series
                        B 

                      Warrants

                    	
                      Aggregate
                        

                      Number
                        of Non-

                      Convertible

                      Retainer
                        

                      Series
                        C 

                      Warrants

                    	
                      Purchase
                        

                      Price

                    	
                      Legal
                        Representative's

                      Address
                        and Facsimile 

                      Number

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Marcia
                        Kucher

                    	
                      New
                        York

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      2,000

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Nathan
                        Low

                    	
                      New
                        York

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      116,883

                    	
                      58,441

                    	
                      113,759

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Paul
                        Scharfer

                    	
                      New
                        York

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      13,766

                    	
                      6,883

                    	
                      13,509

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Peter
                        Weprin

                    	
                      New
                        York

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      163

                    	
                      82

                    	
                      160

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Robert
                        Fuchs

                    	
                      New
                        York

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      130

                    	
                      65

                    	
                      128

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Robert
                        Schacter

                    	
                      California

                    	
                      A3 

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      49,563

                    	
                      
                        —

                      

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Sam
                        Berger

                    	
                      New
                        York

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      14,804

                    	
                      7,402

                    	
                      14,528

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Serge
                        Moyal

                    	
                      Ontario

                    	
                      A

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      3,830

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	
                      Thomas
                        Griesel

                    	
                      California

                    	
                      A4 

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      
                        —

                      

                    	
                      12,390

                    	
                      
                        —

                      

                    	
                      N/A

                    	
                      N/A

                    
	 	 	 	 	 	 	 	 	 	 
	 	
                      TOTAL

                    	
                      
                        —

                      

                    	
                      2,376,000

                    	
                      1,188,000

                    	
                      2,203,010

                    	
                      1,177,528

                    	
                      267,074

                    	
                      $30,020,988

                    	
                      
                        —

                      

                    

            

             

            
              
                

              
3 
              In
              addition, Reedland Capital Partners, an Institutional Division of Financial
              West
              Group, will receive a placement agent fee, payable in cash in lieu
              of Units,
              equal to eight percent (8%) of the aggregate amount placed by
              it.
4 
              In
              addition, Reedland Capital Partners, an Institutional Division of Financial
              West
              Group, will receive a placement agent fee, payable in cash in lieu
              of Units,
              equal to eight percent (8%) of the aggregate amount placed by
              it.

          

        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    EXHIBITS

     

    
      	Exhibit
              A	
              Form
                of Certificate of Designations

            

    

    
      	Exhibit
              B-1	
              Form
                of Series B Investor Warrant and Series B Agent
                Warrant

            

    

    
      	Exhibit
              B-2	
              Form
                of Series C Retainer Warrant

            

    

    
      	Exhibit
              C	
              Form
                of Registration Rights Agreement

            

    

    
      	Exhibit
              D	
              Form
                of Irrevocable Transfer Agent
                Instructions

            

    

    
      	Exhibit
              E	
              Form
                of Outside Company Counsel Opinion

            

    

    
      	Exhibit
              F	
              Form
                of Secretary's Certificate

            

    

    
      	Exhibit
              G	
              Form
                of Officer's Certificate

            

    

    
      	Exhibit
              H	
              Form
                of Voting Agreement

            

    

    
      	Exhibit
              I	
              Form
                of Indemnity Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00119-of-00352.parquet"}]]