Document:

Unassociated Document

    SECURITIES
PURCHASE AGREEMENT

     

    This
SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of April
18, 2010, is by and among Bovie Medical Corporation, a Delaware corporation with
headquarters located at 734 Walt Whitman Road, Melville, New York 11747
(the “Company”),
and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer”
and collectively, the “Buyers”).

    

    RECITALS

     

    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.           Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, (i) the aggregate number of shares of the
common stock, par value $0.001 per share, of the Company (the “Common Stock”), set forth
opposite such Buyer’s name in column (3) on the Schedule of Buyers (which
aggregate amount for all Buyers shall be 571,429 shares of Common Stock and
shall collectively be referred to herein as the “Common Shares”), and (ii) a
warrant to acquire up to that number of additional shares of Common Stock set
forth opposite such Buyer’s name in column (4) on the Schedule of Buyers, in the
form attached hereto as Exhibit
A (the “Warrants”) (as exercised,
collectively, the “Warrant
Shares”).

     

    C.           At
the Closing, the parties hereto shall execute and deliver a Registration Rights
Agreement, in the form attached hereto as Exhibit
B (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.

     

    D.           The
Common Shares, the Warrants and the Warrant Shares are collectively referred to
herein as the “Securities.”

     

    AGREEMENT

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each Buyer hereby agree as
follows:

     

    
      	
              1.

            	
              PURCHASE
      AND SALE OF COMMON SHARES AND
WARRANTS.

            

    

     

    (a)           Common 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, and each Buyer severally, but not jointly, shall purchase from the
Company on the Closing Date (as defined below), the number of Common Shares, as
is set forth opposite such Buyer’s name in column (3) on the Schedule of
Buyers, along with
the Warrants to acquire up to that number of Warrant
Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule
of Buyers.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    (b)           Closing.  The
closing (the “Closing”)
of the purchase of the Common Shares and the Warrants by the Buyers shall occur
at the offices of Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 3100,
Chicago, Illinois 60601. The date and time of the Closing (the “Closing Date”) shall be 10:00
a.m., New York time, on the first (1st)
Business Day on which the conditions to the Closing set forth in Sections 6 and 7 below are
satisfied or waived (or such later date as is mutually agreed to by the Company
and each Buyer). As used herein “Business Day” means any day
other than a Saturday, Sunday or other day on which commercial banks in New
York, New York are authorized or required by law to remain closed.

     

    (c)           Purchase Price. The
aggregate purchase price for the Common 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 (5) on the Schedule of Buyers. Each Buyer shall pay its respective
Purchase Price for its Common Shares and related Warrants to be purchased by
such Buyer at the Closing.

     

    (d)           Form of Payment. On
the Closing Date, (i) each Buyer shall pay its respective Purchase Price to the
Company for the Common 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 (ii) the
Company shall deliver to each Buyer (A) one or more stock certificates, free and
clear of all restrictive and other legends (except as expressly provided in
Section 5(c) hereof), evidencing the number of
Common Shares such Buyer is purchasing as is set forth opposite such Buyer’s
name in column (3) of the Schedule of Buyers, and (B) a Warrant pursuant to
which such Buyer shall have the right to acquire up to such number of Warrant
Shares as is set forth opposite such Buyer’s name in column (4) of the Schedule
of Buyers, in all cases, duly executed on behalf of the Company and registered
in the name of such Buyer or its designee.

     

    
      	
              2.

            	
              BUYER’S
      REPRESENTATIONS AND WARRANTIES.

            

    

     

    Each
Buyer, severally and not jointly, represents and warrants to the Company with
respect to only itself that:

     

    (a)           Organization;
Authority. 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.

     

    (b)           No Public Sale or
Distribution. Such Buyer is (i) acquiring the Common Shares and the
Warrants and (ii) upon exercise of its Warrants will acquire the Warrant
Shares issuable upon exercise thereof, 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 in violation of applicable securities laws, except pursuant
to sales registered or exempted under the 1933 Act; provided, however, by making
the representations herein, such Buyer does not agree, or make any
representation or warranty, 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 distribute any of the Securities in violation of applicable securities
laws.

       

    

     

    
      
         

      

      
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    (c)           Accredited Investor
Status.  Such Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D.

     

    (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 or any representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or delivered in
connection with this Agreement or the consummation of the transaction
contemplated hereby. 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.
Such Buyer has not relied upon any representation of the Placement Agent (as
defined below) in deciding to enter into the transactions contemplated by this
Agreement.

     

    (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.

     

    (g)           Transfer or Resale.
Such Buyer understands that except as provided in the Registration Rights
Agreement and Section 4(h) hereof: (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 (if requested by the Company) an opinion of
counsel to such Buyer, in a form reasonably acceptable to the Company, to the
effect that such Securities to be sold, assigned or transferred may be sold,
assigned or transferred pursuant to an exemption from such registration, or (C)
such Buyer provides the Company with reasonable assurance that such Securities
can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A
promulgated under the 1933 Act (or a successor rule thereto) (collectively,
“Rule 144”); (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
below) 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 promulgated
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.

       

    

     

    
      
         

      

      
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    (h)           Validity;
Enforcement.  This Agreement has been duly and validly
authorized, executed and delivered on behalf of such Buyer and constitutes 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.

     

    (i)           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 ability of such Buyer to perform its obligations hereunder.

     

    (j)           Residency. Such Buyer
is a resident of that jurisdiction specified below its address on the Schedule
of Buyers.

     

    (k)           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 transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities) during the
period commencing as of the time that such Buyer was first contacted by the
Placement Agent regarding the specific investment in the Company contemplated by
this Agreement and ending immediately prior to the execution of this Agreement
by such Buyer. “Short
Sales” means all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the 1934 Act (but shall not be deemed to include the
location and/or reservation of borrowable shares of Common Stock). Such Buyer
does not as of the date hereof, and will not immediately following the Closing,
own 10% or more of the Company’s issued and outstanding shares of Common Stock
(calculated based on the assumption that all Equivalents (as defined below)
owned by such Buyer, whether or not presently exercisable or convertible, have
been fully exercised or converted (as the case may be) but taking into account
any limitations on exercise or conversion (including “blockers”) contained
therein).

     

    (l)           General Solicitation.
Such Buyer is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in any
newspaper,
magazine or similar media or broadcast over television or radio or presented at
any seminar.

     

    
      
         

      

      
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              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 each of its Subsidiaries 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 and as presently proposed to be conducted. Each of the Company
and each of 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 have a Material Adverse Effect. As used in this
Agreement, “Material Adverse
Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof),
condition (financial or otherwise) or prospects of the Company or any
Subsidiary, individually or taken as a whole, (ii) the transactions contemplated
hereby or in any of the other Transaction Documents (as defined below) or (iii)
the authority or ability of the Company to perform any of its obligations under
any of the Transaction Documents. Other than the Persons (as defined below) set
forth on Schedule 3(a), the Company has no Subsidiaries. “Subsidiaries” means any Person
in which the Company, directly or indirectly, (I) owns any of the outstanding
capital stock or holds any equity or similar interest of such Person or (II)
controls or operates all or any part of the business, operations or
administration of such Person, and each of the foregoing, is individually
referred to herein as a “Subsidiary.”

     

    

    (b)           Authorization; Enforcement;
Validity. The Company has the requisite power and authority to enter into
and perform its obligations under this Agreement and the other Transaction
Documents and to issue the Securities in accordance with the terms hereof and
thereof.  The execution and delivery of this Agreement and the other
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 Common 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 filing with the SEC of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, a Form D
with the SEC and any other filings as may be required by any state securities
agencies) no further filing, consent or authorization is required by the
Company, its board of directors or its stockholders or other governing body.
This Agreement and the other Transaction Documents have been duly executed and
delivered by the Company, and constitutes 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 or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies and except as rights to
indemnification and to contribution may be limited by federal or state
securities law. “Transaction
Documents” means, collectively, this Agreement, the Warrants, the
Registration Rights
Agreement, the Irrevocable Transfer Agent Instructions (as defined below) and
each of the other agreements and instruments entered into by the parties hereto
in connection with the transactions contemplated hereby and thereby, as may be
amended from time to time.

     

    
      
         

      

      
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    (c)           Issuance of
Securities. The issuance of the Common Shares and the Warrants are duly
authorized and upon issuance in accordance with the terms of the Transaction
Documents shall be validly issued, fully paid and non-assessable and free from
all taxes, liens, charges and other encumbrances with respect to the issue
thereof. As of the Closing, the Company shall have reserved from its duly
authorized capital stock not less than 133% of the maximum number of shares of
Common Stock issuable upon exercise of the Warrants (without taking into account
any limitations on the exercise of the Warrants set forth therein). The issuance
of the Warrant Shares is duly authorized, and upon exercise in accordance with
the Warrants, the Warrant Shares, when issued, will be validly issued, fully
paid and nonassessable and free from all preemptive or similar rights, taxes,
liens, charges and other encumbrances 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 is
exempt from registration under the 1933 Act.

     

    (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 Common Shares, the
Warrants and Warrant Shares and the reservation for issuance of the Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation (as
defined below) (including, without limitation, any certificates of designation
contained therein) or other organizational documents of the Company or any of
its Subsidiaries, any capital stock of the Company, or Bylaws (as defined
below), (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) result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, foreign,
federal and state securities laws and regulations and the rules and regulations
of the NYSE Amex (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 clause (ii) or (iii) above, to the extent such violations that could not
reasonably be expected to have a Material Adverse Effect.

     

    (e)           Consents.  The
Company is not required to obtain any consent (other than from the Principal
Market), authorization or order of, or make any filing or registration with
(other than the filing with the SEC of one or more Registration Statements in
accordance with the requirements of the Registration Rights Agreement, a Form D
with the SEC and any other filings as may be required by any state securities
agencies), 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. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to Transaction Documents at or prior to the Closing have been
obtained or effected on or prior to the Closing Date, and neither the Company
nor any of its Subsidiaries are aware of any facts or circumstances which might
prevent
the Company from obtaining or effecting any of the registration, application or
filings contemplated by the Transaction Documents. The Company is not in
violation of the requirements of the Principal Market and has no knowledge of
any facts or circumstances which could reasonably lead to delisting or
suspension of the Common Stock in the foreseeable future.

     

    
      
         

      

      
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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 an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of its Subsidiaries or (iii) to its
knowledge, 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 (other than the Placement Agent).

     

    (g)           No General Solicitation;
Placement Agent’s Fees

     

    . Neither
the Company, nor any of its Subsidiaries or affiliates, nor 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. The Company shall 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. Other than Rodman and
Renshaw, LLC and Gilford Securities Incorporated (collectively, the “Placement Agent”), neither the
Company nor any of its Subsidiaries has engaged any placement agent or other
agent in connection with the sale of the Securities.

     

    (h)           No Integrated
Offering. None of the Company, its Subsidiaries or any of their
affiliates, nor 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 the issuance of
any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require
approval of stockholders of the Company under 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 nor any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of the issuance of any of the Securities under the
1933 Act or cause the offering of any 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 Warrant Shares will
increase in certain circumstances. The Company further acknowledges that its
obligation to issue the Warrant Shares upon exercise of the Warrants in
accordance with this Agreement and the Warrants is, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interests of other stockholders of the Company.

     

    (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 Articles of Incorporation, Bylaws or other organizational documents or
the laws of the jurisdiction of its incorporation or otherwise which is or could
become applicable to any Buyer as a result of the transactions contemplated by
this Agreement, including, without limitation, the Company’s issuance of the
Securities and any Buyer’s ownership of the Securities. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any stockholder rights plan or similar arrangement relating to
accumulations of beneficial ownership of shares of Common Stock or a change in
control of the Company or any of its Subsidiaries.

     

    (k)           SEC Documents; Financial
Statements. Except as set forth on Schedule 3(k)(i), during the two
(2) years prior to the date hereof, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC pursuant to the reporting requirements of the 1934 Act (all of the
foregoing filed prior to the date hereof 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. 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, 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. Except as set forth on
Schedule 3(k)(ii),
such financial statements have been prepared in accordance with generally
accepted accounting principles, 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 which will not be material, either
individually or in the aggregate). 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 not
misleading, in the light of the circumstance under which they are or were
made.

     

    
      
         

      

      
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    (l)           Absence of Certain
Changes. Since the date of the Company’s most recent audited or reviewed
financial statements contained in a Form 10-K, there has been no material
adverse change and no material adverse development in the business, assets,
liabilities, properties, operations (including results thereof), condition
(financial or otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial statements
contained in a Form 10-K, neither the Company nor any of its Subsidiaries has
(i) declared or paid any dividends, (ii) sold any assets, individually or in the
aggregate, outside of the ordinary course of business or (iii) made any material
capital expenditures, individually or in the aggregate. Neither the Company nor
any of its Subsidiaries has taken any steps to seek protection pursuant to any
law or statute relating to bankruptcy, insolvency, reorganization, liquidation
or winding up, nor does the Company or any Subsidiary have any knowledge or
reason to believe that any of their respective 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,
(I) with respect to the Company and its Subsidiaries, on a consolidated basis,
(i) the present fair saleable value of the Company’s and its Subsidiaries’
assets is less than the amount required to pay the Company’s and its
Subsidiaries’ total Indebtedness (as defined below), (ii) the Company and its
Subsidiaries are unable to pay their debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured or (iii) the Company and its Subsidiaries intend to incur or believe
that they will incur debts that would be beyond their ability to pay as such
debts mature; and (II) with respect to the Company and each Subsidiary,
individually, (i) the present fair saleable value of the Company’s or such
Subsidiary’s (as the case may be) assets is less than the amount required to pay
its respective total Indebtedness, (ii) the Company or such Subsidiary (as the
case may be) is unable to pay its respective debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured or (iii) the Company or such Subsidiary (as the case may
be) intends to incur or believes that it will incur debts that would be beyond
its respective ability to pay as such debts mature. Neither the Company nor any
of its Subsidiaries has engaged in business or in any transaction, and is not
about to engage in business or in any transaction, for which the Company’s or
such Subsidiary’s remaining assets constitute unreasonably small
capital.

     

    (m)           No Undisclosed Events,
Liabilities, Developments or Circumstances. No event, liability,
development or circumstance has occurred or exists, or is reasonably expected to
exist or occur with respect to the Company, any of its Subsidiaries or their
respective business, properties, liabilities, prospects, operations (including
results thereof) or condition (financial or otherwise), that (i) 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 or (ii) could have a material adverse effect on any Buyer’s investment
hereunder or could have a Material Adverse Effect.

     

    
      
         

      

      
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      (n)        
Conduct of Business; Regulatory
Permits. Neither the Company nor any of its Subsidiaries is in violation
of any term of or in default under its Articles of Incorporation, any
certificate of designation, preferences or rights of any other outstanding
series of preferred stock of the Company or any of its Subsidiaries or Bylaws or
their organizational charter, certificate of formation 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 any of 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
possible violations which could not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing,
except as set forth on Schedule 3(n), the Company is not in violation of any of the
rules, regulations or requirements of the Principal Market and has no knowledge
of any facts or circumstances that could reasonably lead to delisting or
suspension of the Common Stock by the Principal Market in the foreseeable
future. Since January 1, 2007, (i) the Common Stock has been listed or
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 each of 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.

    

     

    (o)           Foreign Corrupt
Practices.  Neither the Company nor any of its Subsidiaries nor
any director, officer, any 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 and each Subsidiary is in compliance with all applicable
requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date
hereof, and all applicable rules and regulations promulgated by the SEC
thereunder that are effective as of the date hereof.

     

    (q)           Transactions With
Affiliates.  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 the date hereof, the authorized capital
stock of the Company consists of (i) 40,000,000 shares of Common Stock, of which
17,114,163 are issued and outstanding and 1,816,671 shares are reserved for
issuance pursuant to securities (other than the Common Shares and the Warrants)
exercisable or exchangeable for, or convertible into, shares of Common Stock and
(ii) 10,000,000 shares of preferred stock, none of which are issued and
outstanding. 143,078 shares of Common Stock are held in treasury.  All
of such outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. To the Company’s
knowledge, 1,883,567 shares of the Company’s issued and outstanding Common Stock
on the date hereof are as of the date hereof owned by Persons who are
“affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the
assumption that only officers, directors and holders of at least 10% of the
Company’s issued and outstanding Common Stock are “affiliates” without conceding
that any such Persons are “affiliates” for purposes of federal securities laws)
of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock
(calculated based on the assumption that all Equivalents, whether or not
presently exercisable or convertible, have been fully exercised or
converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without
conceding that such identified Person is a 10% stockholder for purposes of
federal securities laws). (i) None of the Company’s or any Subsidiary’s capital
stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company or any Subsidiary; (ii)
except as set forth on Schedule 3(r)(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) except as set forth on Schedule 3(r)(iii), there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or
instruments evidencing Indebtedness of the Company or any of its Subsidiaries or
by which the Company or any of its Subsidiaries is or may become bound; (iv)
there are no financing statements securing obligations in any amounts, 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) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) neither the Company nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which
are 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 could not reasonably be
expected to 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 “Articles of Incorporation”),
and the Company’s
bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the 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. Neither the Company nor any of its Subsidiaries (i) except as
set forth on Schedule 3(s)(i), has any outstanding Indebtedness (as defined
below), (ii) except as set forth on Schedule 3(s)(ii), is a party to any contract, agreement or
instrument, the violation of which, or default under which, by the other
party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) 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 (iv) 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. 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, any other entity 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 or its Subsidiaries’ officers or directors which is outside of the
ordinary course of business or individually or in the aggregate material to the
Company or any of its Subsidiaries. There has not been, and to the knowledge of
the Company, there is not pending or contemplated, any investigation by the SEC
involving the Company, any of its Subsidiaries or any current of former director
or officer of the Company or any of its Subsidiaries. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the 1933 Act or the 1934 Act.

       

    

     

    
      
         

      

      
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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 be unable 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.  Neither the Company nor any of its Subsidiaries is
a party to any collective bargaining agreement or employs any member of a union.
The Company believes that its and its Subsidiaries’ relations with their
respective employees are good.  No executive officer (as defined in
Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company
or any of its Subsidiaries 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 or other key employee 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 or other key employee (as the case may be) does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing
matters.  The Company and its Subsidiaries are in compliance with all
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. Except as set
forth on Schedule 3(w), the Company and its Subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them which is material to the business
of the Company and its Subsidiaries, 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 are held
by them under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company or any of its
Subsidiaries.

     

    
      
         

      

      
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    (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, original
works, inventions, licenses, approvals, governmental authorizations, trade
secrets and other intellectual property rights and all applications and
registrations therefor (“Intellectual Property Rights”)
necessary to conduct their respective businesses as now conducted and as
presently proposed to be 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 has no 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 or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries regarding their
Intellectual Property Rights. The Company is not aware of any facts or
circumstances which might give rise to any of the foregoing infringements or
claims, actions or proceedings. The Company and each of its Subsidiaries have
taken reasonable security measures to protect the secrecy, confidentiality and
value of all of their Intellectual Property Rights.

     

    (y)           Environmental Laws.
The Company and its Subsidiaries (i) are in compliance with all Environmental
Laws (as defined below), (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 could 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)           Subsidiary Rights.
The Company or one of its Subsidiaries has the unrestricted right to vote, and
(subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the
Company or such Subsidiary.

     

    (aa)           Tax Status. The
Company and each of its Subsidiaries (i) has timely made or filed all foreign,
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject, (ii) has timely 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) 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 and its
Subsidiaries know of no basis for any such claim. The Company is not operated
in such a manner as to qualify as a passive foreign investment company, as
defined in Section 1297 of the U.S. Internal Revenue Code of 1986, as
amended.

     

    
      
         

      

      
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    (bb)           Internal Accounting and
Disclosure Controls. The Company and each of its Subsidiaries maintains
internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles, including 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-15(e) under the 1934 Act) that are effective in
ensuring 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 ensure
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. Neither the Company nor any of its
Subsidiaries has received any notice or correspondence from any accountant or
other Person relating to any potential material weakness or significant
deficiency in any part of the internal controls over financial reporting of the
Company or any of its Subsidiaries.

     

    (cc)           Off Balance Sheet
Arrangements. There is no transaction, arrangement, or other relationship
between the Company or any of its Subsidiaries 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 could 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,” an affiliate of 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)           Acknowledgement Regarding
Buyers’ Trading Activity. It is understood and acknowledged by the
Company (i) that following the public disclosure of the transactions
contemplated by the Transaction Documents, in accordance with the terms thereof,
none of the Buyers have been asked by the Company or any of its Subsidiaries to
agree, nor has any Buyer agreed with the Company or any of 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; (ii) that any Buyer, and counter parties
in “derivative” transactions to which any such Buyer is a party, directly or
indirectly, presently may have a “short” position in the Common Stock which were
established prior to  such  Buyer’s  knowledge  of  the
 transactions 

     

    
      
         

      

      
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    contemplated by the Transaction Documents, and
(iii) that each Buyer shall not be deemed to have any affiliation with or
control over any arm’s length counter party in any “derivative” transaction. The
Company further understands and acknowledges that following the public
disclosure of the transactions contemplated by the Transaction Documents
pursuant to the Press Release (as defined below) one or more Buyers may engage
in hedging and/or trading activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value of the Warrant Shares deliverable with respect to the 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 or any other
Transaction Document or any of the documents executed in connection herewith or
therewith.

     

    (ff)           Manipulation of
Price. Neither the Company nor any of its Subsidiaries has, and, to the
knowledge of the Company, no Person acting on their 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 or any
of its Subsidiaries to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the Securities (other than the Placement Agent), or (iii) paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company or any of its Subsidiaries.

     

    (gg)           U.S. Real Property Holding
Corporation. Neither the Company nor any of its Subsidiaries is, or has
ever been, and so long as any of the Securities are held by any of the Buyers,
shall 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
and each Subsidiary shall so certify upon any Buyer’s request.

     

    (hh)           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 of the Securities to be sold to each 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.

     

    (ii)           Bank Holding Company
Act.  Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by
the Board of Governors of the Federal Reserve System (the “Federal
Reserve”).  Neither the Company nor any of its Subsidiaries or
affiliates owns or controls, directly or indirectly, five percent (5%) or more
of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any equity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

     

    (jj)           Shell Company Status.
The Company is not, and has never been, an issuer identified in, or subject to,
Rule 144(i).

     

    
      
         

      

      
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    (kk)           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 could reasonably be expected to constitute material, non-public
information concerning the Company or any of its Subsidiaries, other than the
existence of the transactions contemplated by this Agreement and the other
Transaction Documents. 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 businesses and the transactions contemplated
hereby, including the schedules to this Agreement, furnished by or on behalf of
the Company or any of its Subsidiaries is true and correct and does not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. Each press release
issued by the Company or any of 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 its or their
business, properties, liabilities, prospects, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly announced or
disclosed. The Company acknowledges and agrees that no Buyer makes or has made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

     

    (ll)           FDA. As to each
product subject to the jurisdiction of the U.S. Food and Drug Administration
(the “FDA”) under the
Federal Food, Drug and Cosmetic Act, as amended, and the regulations thereunder
(the “FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or any of its Subsidiaries (each such product, a “Medical Device”), such Medical
Device is being manufactured, packaged, labeled, tested, distributed, sold
and/or marketed by the Company or such Subsidiary (as the case may be) in
compliance with all applicable requirements under FDCA and similar laws, rules
and regulations relating to registration, investigational use, premarket
clearance, licensure, or application approval, good manufacturing practices,
good laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse
Effect.  There is no pending, completed or threatened, action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of
its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) contests the premarket clearance,
licensure, registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Medical Device, (ii) withdraws its approval of, requests the
recall, suspension, or seizure of, or withdraws or orders the withdrawal of
advertising or sales promotional materials relating to, any Medical Device,
(iii) imposes a clinical hold on any clinical investigation by the Company or
any of its Subsidiaries, (iv) enjoins production at any facility of the Company
or any of its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or any of its Subsidiaries
 or  (vi)  otherwise  alleges  any violation
of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which,
either individually or in the aggregate, would have a Material Adverse Effect.
The properties, business and operations of the Company subject to the
jurisdiction of the FDA have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the
FDA. The Company has not been informed by the FDA that the FDA will prohibit the
marketing, sale, license or use in the United States of any product proposed to
be developed, produced or marketed by the Company nor has the FDA expressed any
concern as to approving or clearing for marketing any product being developed or
proposed to be developed by the Company.

       

    

    
      
         

      

      
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(mm)           Registration
Eligibility. The Company is eligible to register the Registrable
Securities for resale by the Buyers using Form S-3 promulgated under the 1933
Act.

     

    
      	
              4.

            	
              COVENANTS.

            

    

     

    (a)           Best Efforts. Each
Buyer shall use its best efforts to timely satisfy each of the conditions to be
satisfied by it as provided in Section 6. The Company shall use its best efforts
to timely satisfy each of the conditions to be satisfied by it as provided in
Section 7.

     

    (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 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 shall provide evidence of any such action so taken
to the Buyers on or prior to the Closing Date. 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 following the Closing Date.

     

    (c)           Reporting Status.
Until the date on which the Buyers shall have sold all of the Registrable
Securities (the “Reporting
Period”), the Company shall timely file all reports required to be filed
with the SEC pursuant to the 1934 Act, 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.

     

    (d)           Use of Proceeds. The
Company shall use the proceeds from the sale of the Securities solely for
general working capital purposes.

     

    (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 on Form 10-K and
Quarterly Reports on Form 10-Q, 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) 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.

    
      
         

      

      
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    (f)           Listing.  The
Company shall promptly secure the listing or designation for quotation (as the
case may be) of all of the Registrable Securities upon each national securities
exchange and automated quotation system, if any, upon which the Common Stock is
then listed or designated for quotation (as the case may be) (subject to
official notice of issuance) and shall maintain such listing or designation for
quotation (as the case may be) of all Registrable Securities from time to time
issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain
the Common Stock’s listing or designation for quotation (as the case may be) on
the Principal Market, the New York Stock Exchange, the Nasdaq Capital Market,
the Nasdaq Global Select Market or the Nasdaq Global Market (each, an “Eligible
Market”).  Neither the Company nor any of its Subsidiaries
shall take any action which could be reasonably expected to result in the
delisting or suspension of the Common Stock on an Eligible Market. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 4(f).

     

    (g)           Fees.  The
Company shall reimburse Cranshire Capital, L.P. (“Cranshire”) or its designee(s)
for all costs and expenses incurred by it or its affiliates in connection with
the transactions contemplated by the Transaction Documents (including, without
limitation, all legal fees and disbursements in connection therewith,
documentation and implementation of the transactions contemplated by the
Transaction Documents and due diligence and regulatory filings in connection
therewith), which aggregate amount shall be withheld by Cranshire from its
Purchase Price at the Closing or paid by the Company upon termination of this
Agreement on demand by Cranshire so long as such termination did not occur as a
result of a material breach by Cranshire of any of its obligations hereunder (as
the case may be), less $15,000 which was previously advanced to Cranshire by the
Company. If the amount so withheld at Closing by Cranshire was less than the
aggregate amount of costs and expenses actually incurred by it or its
affiliates in
connection with the transactions contemplated by the Transaction Documents, the
Company shall promptly reimburse Cranshire on demand for all such costs and
expenses not so reimbursed through such withholding at the Closing. The Company
shall be responsible for the payment of any placement agent’s fees, 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, any fees payable to the Placement Agent, who is
the Company’s sole placement agent in connection with the transactions
contemplated by this Agreement). The Company shall pay, and hold each Buyer
harmless against, any liability, loss or expense (including, without limitation,
reasonable attorneys’ fees and out-of-pocket expenses) arising in connection
with any claim relating to any such payment. Except as otherwise set forth in
the Transaction Documents, each party to this Agreement shall bear its own
expenses in connection with the sale of the Securities to the
Buyers.

     

    (h)           Pledge of Securities.
Notwithstanding anything to the contrary contained in Section 2(g), the Company acknowledges and agrees that the
Securities may be pledged by a Buyer 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 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 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 a Buyer.

     

    
      
         

      

      
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    (i)           Disclosure of Transactions
and Other Material Information. The Company shall, on or before
8:30 a.m., New York time, on the first (1st)
Business Day after the date of this Agreement, issue a press release (the “Press Release”) reasonably
acceptable to the Buyers disclosing all the material terms of the transactions
contemplated by the Transaction Documents. On or before 8:30 a.m., New York
time, on the second (2nd)
Business Day following the date of this Agreement, the Company shall file a
Current Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act
and attaching all the material Transaction Documents (including, without
limitation, this Agreement, the form of Warrants and the form of the
Registration Rights Agreement) (including all attachments, the “8-K Filing”). From and after
the issuance of the Press Release, the Company shall have disclosed all
material, non-public information (if any) delivered to any of the Buyers by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. The Company shall not, and the Company shall cause
each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents, not to, provide any Buyer with any material,
non-public information regarding the Company or any of its Subsidiaries from and
after the issuance of the Press Release without the express prior written
consent of such Buyer. In the event of a breach of any of the foregoing
covenants or any of the covenants contained in Section 4(o) by the Company, any
of its Subsidiaries, or any of its or their respective officers, directors,
employees and agents (as determined in the reasonable good faith judgment of
such Buyer), in addition to any other remedy provided herein or in the
Transaction Documents, such Buyer shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise,
of such material, non-public information without the prior approval by the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees or agents. No Buyer shall have any liability to the
Company, any of its Subsidiaries, or any of its or their respective officers,
directors, employees, stockholders or agents, for any such disclosure. 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, 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 the applicable Buyer, the Company shall not (and shall
cause each of its Subsidiaries and affiliates to not) disclose the name of such
Buyer in any filing, announcement, release or otherwise, other than the
Registration Statement.

     

    (j)           Additional Registration
Statements. Until the Applicable Date (as defined below) and at any time
thereafter while any Registration Statement is not effective or the prospectus
contained therein is not available for use, the Company shall not file a
registration statement under the 1933 Act relating to securities that are not
the Registrable Securities.  “Applicable Date” means the
first date on which the resale by the Buyers of all Registrable Securities is
covered by one or more effective Registration Statements (as defined in the
Registration Rights Agreement) (and each prospectus contained therein is
available for use on such date).

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    (k)           Additional Issuance of
Securities. The Company agrees that for the period commencing on the date
hereof and ending on the date immediately following the sixty (60) Trading Day
(as defined in the Warrants) anniversary of the Applicable Date (provided that
such period shall be extended by the number of Trading Days during such period
and any extension thereof contemplated by this proviso on which any Registration
Statement is not effective or any prospectus contained therein is not available
for use) (the “Restricted Period”), neither the Company
nor any of its Subsidiaries shall directly or indirectly issue, offer, sell,
grant any option to purchase, or otherwise dispose of (or announce any issuance,
offer, sale, grant or any option to purchase or other disposition of) any of
their respective equity or equity equivalent securities, including, without
limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time and under any circumstances convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, capital
stock and other securities of the Company (including, without limitation, any
securities of the Company or any Subsidiary which entitle the holder thereof to
acquire Common Stock at any time, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any
time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder to
receive, directly or indirectly, Common Stock) (collectively with such capital
stock or other securities of the Company, “Equivalents”) (any such
issuance, offer, sale, grant, disposition or announcement (whether occurring
during the Restricted Period or at any time thereafter) is referred to as a
“Subsequent Placement”).
Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of the issuance of (A)
shares of Common Stock or standard options to purchase Common Stock to
directors, officers or employees of the Company in their capacity as such
pursuant to an Approved Share Plan (as defined below), provided that (1) all
such issuances (taking into account the shares of Common Stock issuable upon
exercise of such options) after the date hereof pursuant to this clause (A) do
not, in the aggregate, exceed more than 5% of the Common Stock issued and
outstanding immediately prior to the date hereof and (2) such options are not
amended to increase the number of shares issuable thereunder or to lower the
exercise price thereof or to otherwise materially change the terms or conditions
thereof in any manner that adversely affects any of the Buyers, (B) shares of
Common Stock issued upon the conversion or exercise of Equivalents issued prior
to the date hereof, provided that such Equivalents have not been amended since
the date of this Agreement to increase the number of shares issuable thereunder
or to lower the exercise or conversion price thereof or otherwise materially
change the terms or conditions thereof in any manner that adversely affects any
of the Buyers, and (C) the Warrant Shares (each of the foregoing in clauses (A)
through (C), collectively the “Excluded Securities”). “Approved Share Plan” means any
employee benefit plan which has been approved by the board of directors of the
Company prior to or subsequent to the date hereof pursuant to which shares of
Common Stock and standard options to purchase Common Stock may be issued to any
employee, officer or director for services provided to the Company in their
capacity as such; “Placement
Agent Warrant” means the warrants to be issued by the Company to the
Placement Agent on the Closing Date to purchase, in the aggregate, up to 52,857
shares of Common Stock at an initial exercise price of $6.00 per share, in the
form provided to the Buyers on the date hereof; and “Placement Agent Warrant
Shares” means the shares of Common Stock issuable to the Placement Agent
upon exercise of the Placement Agent Warrant.

     

    (l)           Reservation of
Shares. So long as any of the Warrants remain outstanding, the Company
shall take all action necessary to at all times have authorized, and reserved
for the purpose of issuance, no less than 133% of the maximum number of shares
of Common Stock issuable
upon exercise of all the Warrants (without regard to any limitations on the
exercise of the Warrants set forth therein).

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    (m)           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.

     

    (n)           Variable Rate
Transaction. Until all of the Registrable Securities have been sold by
the Buyers, the Company and each Subsidiary shall be prohibited from effecting
or entering into an agreement to effect any Subsequent Placement involving a
Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company or any Subsidiary (i) issues or sells
any Equivalents either (A) at a conversion, exercise or exchange rate or other
price that is based upon and/or varies with the trading prices of or quotations
for the shares of Common Stock at any time after the initial issuance of such
Equivalents, or (B) with a conversion, exercise or exchange price that is
subject to being reset at some future date after the initial issuance of such
Equivalents or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common
Stock, other than pursuant to a customary “weighted average” anti-dilution
provision or (ii) enters into any agreement (including, without limitation, an
equity line of credit) whereby the Company or any Subsidiary may sell securities
at a future determined price (other than standard and customary “preemptive” or
“participation” rights). Each Buyer shall be entitled to obtain injunctive
relief against the Company and its Subsidiaries to preclude any such issuance,
which remedy shall be in addition to any right to collect damages.

     

    (o)           Participation Right.
From the date hereof until the eighteen (18) month anniversary of the Applicable
Date, neither the Company nor any of its Subsidiaries shall, directly or
indirectly, effect any Subsequent Placement unless the Company shall have first
complied with this Section 4(o).  The Company acknowledges and agrees
that the right set forth in this Section 4(o) is a right granted by the Company, separately,
only to each Buyer whose Purchase Price hereunder is greater than $475,000 (a
“Qualified
Buyer”).

     

    (i)           At
least five (5) Trading Days prior to any proposed or intended Subsequent
Placement, the Company shall deliver to each Qualified Buyer a written notice of
its proposal or intention to effect a Subsequent Placement (each such notice, a
“Pre-Notice”), which
Pre-Notice shall not contain any information (including, without limitation,
material, non-public information) other than: (i) a statement that the Company
proposes or intends to effect a Subsequent Placement, (ii) a statement that the
statement in clause (i) above does not constitute material, non-public
information and (iii) a statement informing such Qualified Buyer that it is
entitled to receive an Offer Notice (as defined below) with respect to such
Subsequent Placement upon its written request. Upon the written request of
a Qualified Buyer within three (3) Trading Days after the Company’s delivery to
such Qualified Buyer of such Pre-Notice, and only upon a written request by such
Qualified Buyer, the Company shall promptly, but no later than one (1) Trading
Day after such request, deliver to such Qualified Buyer an irrevocable written
notice (the “Offer
Notice”) of any proposed or intended issuance or sale or exchange (the
“Offer”) of the
securities being offered (the “Offered Securities”) in 
a Subsequent  Placement,  which  Offer  Notice 
shall  (w)  identify and describe  the Offered
Securities, (x) describe the price and other terms upon which they are to be
issued, sold or exchanged, and the number or amount of the Offered Securities to
be issued, sold or exchanged, (y) identify the Persons (if known) to which or
with which the Offered Securities are to be offered, issued, sold or exchanged
and (z) offer to issue and sell to or exchange with such Qualified Buyer in
accordance with the terms of the Offer all of the Offered Securities, provided
that the number of Offered Securities which such Qualified Buyer shall have the
right to subscribe for under this Section 4(o) shall be (a)
based on such Qualified Buyer’s pro rata portion of the aggregate number of
Common Shares purchased hereunder by all Qualified Buyers (the “Basic Amount”),
and (b) with respect to each Qualified Buyer that elects to purchase its Basic
Amount, any additional portion of the Offered Securities attributable to the
Basic Amounts of other Qualified Buyers as such Qualified Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than
their Basic Amounts (the “Undersubscription Amount”).

       

    

    
      
         

      

      
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    (ii)           To
accept an Offer, in whole or in part, such Qualified Buyer must deliver a
written notice to the Company prior to the end of the fifth (5th)
Business Day after such Qualified Buyer’s receipt of the Offer Notice (the
“Offer Period”), setting
forth the portion of such Qualified Buyer’s Basic Amount that such Qualified
Buyer elects to purchase and, if such Qualified Buyer shall elect to purchase
all of its Basic Amount, the Undersubscription Amount, if any, that such
Qualified Buyer elects to purchase (in either case, the “Notice of Acceptance”). If the
Basic Amounts subscribed for by all Qualified Buyers are less than the total of
all of the Basic Amounts, then such Qualified Buyer who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, if the Undersubscription
Amounts subscribed for exceed the difference between the total of all the Basic
Amounts and the Basic Amounts subscribed for (the “Available Undersubscription
Amount”), such Qualified Buyer who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Qualified Buyer
bears to the total Basic Amounts of all Qualified Buyers that have subscribed
for Undersubscription Amounts, subject to rounding by the Company to the extent
it deems reasonably necessary. Notwithstanding the foregoing, if the Company
desires to modify or amend the terms and conditions of the Offer prior to the
expiration of the Offer Period, the Company may deliver to each Qualified Buyer
a new Offer Notice and the Offer Period shall expire on the fifth (5th)
Business Day after such Qualified Buyer’s receipt of such new Offer
Notice.

    

    (iii)           The
Company shall have five (5) days from the expiration of the Offer Period above
(i) to offer, issue, sell or exchange all or any part of such Offered Securities
as to which a Notice of Acceptance has not been given by a Qualified Buyer (the
“Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement
Agreement”), but only to the offerees described in the Offer Notice (if
so described therein) and only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable to the
acquiring Person or Persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of
such Subsequent Placement Agreement, and (b) either (x) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (y) the
termination of such Subsequent Placement Agreement, which shall be filed
with the SEC on a Current Report on Form 8-K with such Subsequent Placement
Agreement and any documents contemplated therein filed as exhibits
thereto.

       

      
        (iv)         
In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in
Section 4(o)(iii) above),
then such Qualified Buyer may, at its sole option and in its sole discretion,
reduce the number or amount of the Offered Securities specified in its Notice of
Acceptance to an amount that shall be not less than the number or amount of the
Offered Securities that such Qualified Buyer elected to purchase pursuant to
Section 4(o)(ii) above
multiplied by a fraction, (i) the numerator of which shall be the number or
amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Qualified Buyers
pursuant to this Section 4(o) prior to such
reduction) and (ii) the denominator of which shall be the original amount of the
Offered Securities. In the event that any Qualified Buyer so elects to reduce
the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Qualified Buyers in accordance with Section 4(o)(i)
above.

         

      

    

    
      
         

      

      
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    (v)           Upon
the closing of the issuance, sale or exchange of all or less than all of the
Refused Securities, such Qualified Buyer shall acquire from the Company, and the
Company shall issue to such Qualified Buyer, the number or amount of Offered
Securities specified in its Notice of Acceptance. The purchase by such Qualified
Buyer of any Offered Securities is subject in all cases to the preparation,
execution and delivery by the Company and such Qualified Buyer of a separate
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to such Qualified Buyer and its counsel.

    

    (vi)           Any
Offered Securities not acquired by a Qualified Buyer or other Persons in
accordance with this Section 4(o) may not be issued, sold or exchanged until they
are again offered to such  Qualified Buyer under the procedures
specified in this Agreement.

    

    (vii)           The
Company and each Qualified Buyer agree that if any Qualified Buyer elects to
participate in the Offer, neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto
(collectively, the “Subsequent
Placement Documents”) shall include any term or provision whereby such
Buyer shall be required to agree to any restrictions on trading as to any
securities of the Company or be required to consent to any amendment to or
termination of, or grant any waiver, release or the like under or in connection
with, any agreement previously entered into with the Company or any instrument
received from the Company.

    

    (viii)          Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to by such
Buyer, the Company shall either confirm in writing to such Buyer that the
transaction with respect to the Subsequent Placement has been abandoned or shall
publicly disclose its intention to issue the Offered Securities, in either case
in such a manner such that such Buyer will not be in possession of any material,
non-public information, by the fifth (5th)
Business Day following delivery of the Offer Notice. If by such fifth (5th)
Business Day, no public disclosure regarding a transaction with respect to the
Offered Securities has been made, and no notice regarding the abandonment of
such transaction has been received by such Buyer, such transaction shall be
deemed to have been abandoned and such Buyer shall not be deemed to be in
possession of any material, non-public information with respect to the Company
or any of its Subsidiaries. Should the Company decide to pursue such transaction
with respect to the Offered Securities, the Company shall provide such Buyer
with another Offer Notice and such Buyer will again have the right of
participation set forth in this Section 4(o). The Company shall not be permitted to
deliver more than one such Offer Notice to such Buyer in any sixty (60) day
period.

    
       

    

    
      
         

      

      
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    (ix)           The
restrictions contained in this Section 4(o) shall not apply in connection with the issuance of
any Excluded Securities. The Company shall not circumvent the provisions of this
Section 4(o) by
providing terms or conditions to one Buyer that are not provided to
all.

     

    (p)           Passive Foreign Investment
Company.  The Company shall conduct its business in such a
manner as will ensure that the Company will not be deemed to constitute a
passive foreign investment company within the meaning of Section 1297 of the
U.S. Internal Revenue Code of 1986, as amended.

     

    
      	
              5.

            	
              REGISTER;
      TRANSFER AGENT INSTRUCTIONS;
LEGEND.

            

    

     

    (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 Common Shares and the Warrants in which the
Company shall record the name and address of the Person in whose name the Common
Shares and the
Warrants have been issued (including the name and address of each transferee),
the number of Common Shares held by such Person 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 in a form acceptable to each of
the Buyers (the “Irrevocable
Transfer Agent Instructions”) 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 Common Shares and the
Warrant Shares in such amounts as specified from time to time by each Buyer to
the Company upon delivery of the Common Shares or the exercise of the Warrants
(as the case may be). The Company represents and 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(g) 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, to the extent provided in this Agreement and the other Transaction
Documents. If a Buyer effects a sale, assignment or transfer of the Securities
in accordance with Section 2(g), 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 Common Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144,
the transfer agent shall issue such shares to such Buyer, assignee or transferee
(as the case may be) without any restrictive legend in accordance with Section
5(d) below. 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. The Company shall cause its counsel to issue the legal opinion
referred to in the Irrevocable Transfer Agent Instructions to the Company’s
transfer agent on each Effective Date (as defined in the Registration Rights
Agreement). Any fees (with respect to the transfer agent, counsel to the Company
or otherwise) associated with the issuance of such opinion or the removal of any
legends on any of the Securities shall be borne by the Company.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

    (c)           Legends. Each Buyer
understands that the Securities have been issued (or will be issued in the case
of the Warrant Shares) pursuant to an exemption from registration or
qualification under the 1933 Act and applicable state securities laws, and
except as set forth below, the Securities 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 [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 TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD OR ELIGIBLE TO BE 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.

     

    (d)           Removal of Legends.
Certificates evidencing Securities shall not be required to contain the legend
set forth in Section 5(c) above or any other legend (i) while a registration
statement (including a Registration Statement) covering the resale of such
Securities is effective under the 1933 Act, (ii) following any sale of such
Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of
the Company), (iii) if such Securities are eligible to be sold, assigned or
transferred under Rule 144 (provided that a Buyer provides the Company with
reasonable assurances that such Securities are eligible for sale, assignment or
transfer under Rule 144 which shall not include an opinion of counsel), (iv) in
connection with a sale, assignment or other transfer (other than under Rule
144), provided that such Buyer provides the Company with an opinion of counsel
to such Buyer, in a generally acceptable form, to the effect that such sale,
assignment or transfer of the Securities may be made without registration under
the applicable requirements of the 1933 Act or (v) if such legend is not
required under applicable requirements of the 1933 Act (including, without
limitation, controlling judicial interpretations and pronouncements issued
by  the  SEC).  

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    If a legend is not required pursuant to the
foregoing, the Company shall no later than two (2) Trading Days following the
delivery by a Buyer to the Company or the transfer agent (with notice to the
Company) of a legended certificate representing such Securities (endorsed or
with stock powers attached, signatures guaranteed, and otherwise in form
necessary to affect the reissuance and/or transfer, if applicable), together
with any other deliveries from such Buyer as may be required above in this
Section 5(d), as
directed by such Buyer, either: (A) provided that the Company’s transfer agent
is participating in the DTC Fast Automated Securities Transfer Program and such
Securities are Common Shares or Warrant Shares, credit the aggregate number of
shares of Common Stock to which such Buyer shall be entitled to such Buyer’s or
its designee’s balance account with DTC through its Deposit/Withdrawal at
Custodian system or (B) if the Company’s transfer agent is not participating in
the DTC Fast Automated Securities Transfer Program, issue and deliver (via
reputable overnight courier) to such Buyer, a certificate representing such
Securities that is free from all restrictive and other legends, registered in
the name of such Buyer or its designee (the date by which such credit is so
required to be made to the balance account of such Buyer’s or such Buyer’s
nominee with DTC or such certificate is required to be delivered to such Buyer
pursuant to the foregoing is referred to herein as the “Required Delivery
Date”).

     

    (e)           Failure to Timely Deliver;
Buy-In. If the Company fails to (i) issue and deliver (or cause to be
delivered) to Buyer by the Required Delivery Date a certificate representing the
Securities so delivered to the Company by such Buyer that is free from all
restrictive and other legends or (ii) credit the balance account of such Buyer’s
or such Buyer’s nominee with DTC for such number of shares of Common Shares or
Warrant Shares so delivered to the Company, then, in addition to all other
remedies available to such Buyer, the Company shall pay in cash to such Buyer on
each day after the Required Delivery Date that the issuance or credit of such
shares is not timely effected an amount equal to 2% of the product of (A) the
sum of the number of shares of Common Shares or Warrant Shares (as the case may
be) not issued to such Buyer on a timely basis and to which such Buyer is
entitled and (B) the Closing Sale Price (as defined in the Warrants) of the
Common Stock on the Trading Day immediately preceding the Required Delivery
Date.  In addition to the foregoing, if the Company fails to so
properly deliver such unlegended certificates or so properly credit the balance
account of such Buyer’s or such Buyer’s nominee with DTC by the Required
Delivery Date, and if on or after the Required Delivery Date such Buyer
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Buyer of shares of Common Stock that
such Buyer anticipated receiving from the Company without any restrictive
legend, then, in addition to all other remedies available to such Buyer, the
Company shall, within three (3) Trading Days after such Buyer’s request and in
such Buyer’s sole discretion, either (i) pay cash to such Buyer in an amount
equal to such Buyer’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 to
deliver to such Buyer by the Required Delivery Date times (B) the Closing Sale
Price of the Common Stock on the Trading Day immediately preceding the Required
Delivery Date.Company’s obligation to deliver such certificate or credit such
Buyer’s balance account shall terminate and such shares shall be cancelled, or
(ii) promptly honor its obligation to deliver to such Buyer a certificate or
certificates or credit such Buyer’s DTC account representing such number of
shares of Common Stock that would have been issued if the Company timely
complied with its obligations hereunder and pay cash to such Buyer 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 Shares or Warrant Shares (as the case may be) that
the Company was required.

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

     

    
      	
              6.

            	
              CONDITIONS
      TO THE COMPANY’S OBLIGATION TO
SELL.

            

    

     

    (a)           The
obligation of the Company hereunder to issue and sell the Common 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:

     

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

     

    (ii)           Such
Buyer and each other Buyer shall have delivered to the Company the Purchase
Price (less, in the case of Cranshire, the amounts withheld pursuant to Section
4(g)) for the Common 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.

     

    (iii)           The
representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
originally 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 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.

            

    

     

    (a)           The
obligation of each Buyer hereunder to purchase the Common 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:

     

    (i)           The
Company shall have duly executed and delivered to such Buyer (A) each of
the other Transaction Documents and (B) the Common 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 (for such number of shares of Common Stock as is set forth
across from such Buyer’s name in column (4) of the Schedule of Buyers,
respectively) being purchased by such Buyer at the Closing pursuant to this
Agreement.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (ii)           Such
Buyer shall have received the opinion of Ruskin Moscou Faltischek, P.C., the
Company’s counsel, dated as of the Closing Date, in the form acceptable to such
Buyer.

     

    (iii)           The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer
Agent Instructions, in the form acceptable to such Buyer, which instructions
shall have been delivered to and acknowledged in writing by the Company’s
transfer agent.

     

    (iv)           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
comparable office) of such jurisdiction of formation as of a date within ten
(10) days of the Closing Date.

     

    (v)           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 ten
(10) days of the Closing Date.

     

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

     

    (vii)           The
Company shall have delivered to such Buyer a certificate, in the form acceptable
to such Buyer, 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 Articles of Incorporation
and (iii) the Bylaws, each as in effect at the Closing.

     

    (viii)           Each
and every representation and warranty of the Company shall be true and correct
as of the date when made and as of the Closing Date as though originally 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 date) and the Company shall
have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required 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 acceptable to such
Buyer.

     

    (ix)           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 on the Closing
Date immediately prior to the Closing.

     

    (x)           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.

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

    (xi)           The
Company shall have obtained all governmental, regulatory or third party consents
and approvals, if any, necessary for the sale of the Securities, including
without limitation, those required by the Principal Market.

     

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

     

    (xiii)           Since
the date of execution of this Agreement, no event or series of events shall have
occurred that reasonably would have or result in a Material Adverse
Effect.

     

    (xiv)           The
Company shall have obtained approval of the Principal Market to list or
designate for quotation (as the case may be) the Common Shares and the Warrant
Shares.

     

    (xv)           The
Company shall have delivered to such Buyer such other documents relating to the
transactions contemplated by this Agreement as such Buyer or its counsel may
reasonably request.

     

    
      	
              8.

            	
              TERMINATION.

            

    

     

    In the
event that the Closing shall not have occurred with respect to a Buyer within
ten (10) days of the date hereof, then such Buyer shall have the right to
terminate its obligations under this Agreement with respect to itself at any
time on or after the close of business on such date without liability of such
Buyer to any other party; provided, however, (i) the right to terminate this
Agreement under this Section 8 shall not be
available to such Buyer if the failure of the transactions contemplated by this
Agreement to have been consummated by such date is the result of such Buyer’s
breach of this Agreement and (ii) the abandonment of the sale and purchase of
the Common Shares and the Warrants shall be applicable only to such Buyer
providing such written notice, provided further that no such termination shall
affect any obligation of the Company under this Agreement to reimburse such
Buyer for the expenses described in Section 4(g)
above. Nothing contained in this Section 8 shall be
deemed to release any party from any liability for any breach by such party of
the terms and provisions of this Agreement or the other Transaction Documents or
to impair the right of any party to compel specific performance by any other
party of its obligations under this Agreement or the other Transaction
Documents.

    

    
      	
              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 TO, 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.

       

    

     

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

     

    (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. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original
thereof.

     

    (c)           Headings; Gender. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.”  The terms
“herein,” “hereunder,” “hereof” and words of like import refer to this entire
Agreement instead of just the provision in which they are found.

     

    (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.

     

    (e)           Entire Agreement;
Amendments. This Agreement, the other Transaction Documents and the
schedules and exhibits attached hereto and thereto and the instruments
referenced herein and therein supersede all other prior oral or written
agreements between the Buyers, the Company, their affiliates and Persons acting
on their behalf solely with respect to the matters contained herein and therein,
and this Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein
contain the entire understanding of the parties solely with respect to the
matters covered herein and therein; provided, however, nothing contained in this
Agreement or any other Transaction Document shall (or shall be deemed to) (i)
have any effect on any agreements any Buyer has entered into with the Company or
any of its Subsidiaries prior to the date hereof with respect to any prior
investment made by such Buyer in the Company or (ii) waive, alter, modify or
amend in any respect any obligations of the Company or any of its Subsidiaries,
or any rights of or benefits to any Buyer or any other Person, in any agreement
entered into prior to the date hereof between or among the Company and/or
any of its Subsidiaries and any Buyer and all such agreements shall continue in
full force and effect. 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. For clarification purposes, the
Recitals are part of this Agreement. 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 in interest of the aggregate number of
Registrable Securities issued and issuable under the Transaction Documents, and
any amendment to any provision of 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, provided that no such amendment shall be effective to
the extent that it (1) applies to less than all of the holders of the Securities
then outstanding, (2) imposes any obligation or liability on any Buyer without
such Buyer’s prior written consent (which may be granted or withheld in such
Buyer’s sole discretion) or (3) applies retroactively. No waiver shall be
effective unless it is in writing and signed by an authorized representative of
the waiving party, provided that the holders of at least a majority in interest
of the aggregate number of Registrable Securities issued and issuable under the
Transaction Documents may waive any provision of this Agreement, and any waiver
of any provision of 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, provided that no such waiver shall be effective to the extent that
it (1) applies to less than all of the holders of the Securities then
outstanding (unless a party gives a waiver as to itself only), (2) imposes any
obligation or liability on any Buyer without such Buyer’s prior written consent
(which may be granted or withheld in such Buyer’s sole discretion) or (3)
applies retroactively. 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, all holders of Common Shares or all
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, any Subsidiary or otherwise.

    
       

    

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    (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
(1) Business Day after deposit with an overnight courier service with next day
delivery specified, 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:

     

                                                                   
Bovie Medical Corporation

    734 Walt
Whitman Road

    Melville,
New York 11747

    Telephone:  (631)
421-5452

    Facsimile:   (631)
421-5821

    Attention:  Andrew
Makrides

     

    With a
copy (for informational purposes only) to:

     

    Ruskin
Moscou Faltischek, P.C.

    1425 RXR
Plaza

    East
Tower, 15th
Floor

    Uniondale,
New York 11556

    Telephone:
(516) 663-6600

    Facsimile: 
(516) 663-6719

    Attention:
Adam P. Silvers, Esq.

    

    If to the
Transfer Agent:

     

    Manhattan
Transfer Registrar Company

    57
Eastwood Road

    Miller
Place, New York 11764

    Telephone: 
1-(800) 786-0362

    Facsimile:    (631)
928-6171

    Attention: 
John Ahearn

    

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

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    with a
copy (for informational purposes only) to:

     

    Greenberg
Traurig, LLP

    77 W.
Wacker Drive, Suite 3100

    Chicago,
Illinois 60601

    Telephone:  (312)
456-8400

    Facsimile:  (312)
456-8435

    Attention:  Peter
H. Lieberman, Esq.

        Todd A. Mazur,
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, provided
that Greenberg Traurig, LLP shall only be provided copies of notices sent to
Cranshire. 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, as
contemplated below, any assignee of any of the Securities. 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 under the Transaction Documents,
including, without limitation, by way of a Fundamental Transaction (as defined
in the Warrants) (unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Warrants). A
Buyer may assign some or all of its rights hereunder in connection with any
transfer of any of its Securities 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.

     

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    (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, other
than the Indemnitees referred to in Section 9(k).

     

    (i)           Survival. The
representations, warranties, agreements and covenants shall survive the Closing.
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 holder of any
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”) 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 any of the Transaction Documents, (b) any breach of any covenant,
agreement or obligation of the Company contained in any of 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 any of the Transaction
Documents, (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 properly 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.

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    (l)           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.  Each
Buyer and each holder of any 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, the Company 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 Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages
and without posting a bond or other security.

     

    (n)           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 any Buyer hereunder
or pursuant to any of the other Transaction Documents or any of 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 the Transaction Documents 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, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Buyers are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Buyers are not acting in concert
or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by the Transaction Documents.
The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the Securities or enforcing its rights under the
Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company 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.  The use of a single agreement to effectuate the purchase and
sale of the Securities contemplated hereby was solely in the control of the
Company, not the action or decision of any Buyer, and was done solely for the
convenience of the Company and not because it was required or requested to do so
by any Buyer.  It is expressly understood and agreed that each
provision contained in this Agreement and in each other Transaction Document is
between the Company and a Buyer, solely, and not between the Company and the
Buyers collectively and not between and among the Buyers.

     

    [signature pages
follow]

     

    
      
         

      

      
        35

        
          

        

      

      
         

      

    

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

     

    

    
      	 	
              COMPANY:

               

            
	 	
              BOVIE
      MEDICAL CORPORATION

               

               

              By:___________________________

              Name:
      _______________________

              Title:  __________________

            
	 	 
      

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

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

     

    

    
      	 
      	
              BUYER:

               

            
	 
      	
              CRANSHIRE
      CAPITAL, L.P.

               

              By:           Downsview
      Capital, Inc.

              Its:           General
      Partner

            
	 
      	
               

               

              ______________________________

              By:           Mitchell
      P. Kopin

              Its:           President

            

    

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    SCHEDULE
OF BUYERS

     

    

    
      	
              (1)

            	 	
              (2)

            	 	
              (3)

            	 	
              (4)

            	 	
              (5)

            	 	
              (6)

            
	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	
              
                 

                Buyer

              

            	 	
              
                 

                Address
      and Facsimile Number

              

            	 	
              
                 

                Number
      of Common Shares

              

            	 	
              
                 

                Number
      of Warrant Shares

              

            	 	
              
                Purchase
      Price

              

            	 	
              
                Legal
      Representative’s

                Address
      and Facsimile Number

              

            
	 
      	 	 
      	 	 
      	 	 
      	 	 
      	 	 
      
	
              Cranshire
      Capital, L.P.

            	 	
              3100
      Dundee Road, Suite 703

              Northbrook,
      Illinois 60062

              Attn:  Mitchell
      P. Kopin

              Facsimile:
      (847) 562-9031

               

            	 	
              90,477

            	 	
              45,238

            	 	
              $475,004.25

            	 	
              Greenberg
      Traurig, LLP

              77
      W. Wacker Drive, Suite 3100

              Chicago,
      Illinois 60601

              Attention:  Peter
      H. Lieberman

                                 Todd
      A. Mazur

              Facsimile:
      (312) 456-8435

              Telephone:  (312)
      456-8400

            
	
              Highbridge
      International LLC

            	 	
              c/o
      Highbridge Capital Management, LLC

              40 West
      57th Street, 32th floor

              New
      York, NY 10019

              Attn:
      Eric Colandrea

               

            	 	
              180,953

            	 	
              90,476

            	 	
              $950,003.25

            	 	
              Elected
      not to provide

            
	
              DAFNA
      LifeScience Ltd

            	 	
              DAFNA
      Capital Management, LLC

              10990
      Wilshire Blvd., Ste. 1400

              Los
      Angeles, CA 90024

              Attn:
      Fariba Ghodsian

               

            	 	
              30,000

            	 	
              15,000

            	 	
              $157,500.00

            	 	
              Elected
      not to provide

            
	
              DAFNA
      LifeScience Market Neutral Ltd

            	 	
              DAFNA
      Capital Management, LLC

              10990
      Wilshire Blvd., Ste. 1400

              Los
      Angeles, CA 90024

              Attn:
      Fariba Ghodsian

               

            	 	
              27,800

            	 	
              13,900

            	 	
              $145,950.00

            	 	
              Elected
      not to provide

            
	
              DAFNA
      LifeScience Select Ltd

            	 	
              DAFNA
      Capital Management, LLC

              10990
      Wilshire Blvd., Ste. 1400

              Los
      Angeles, CA 90024

              Attn:
      Fariba Ghodsian

               

            	 	
              85,057

            	 	
              42,529

            	 	
              $446,549.25

            	 	
              Elected
      not to provide

            
	
              2035718
      Ontario Inc

            	 	
              Investor
      Company

              77
      Bloor St West, 3rd floor

              Toronto,
      Ontario Canada M4Y 2T1

              Attn:
      Martin Moral

                       Rick
      Kung

              Please
      ensure certificates are registered as:

              "INVESTOR
      COMPANY c/o 2035718 Ontario Inc"

               

            	 	
              95,238

            	 	
              47,619

            	 	
              $499,999.50

            	 	
              Elected
      not to provide

            
	
              Bristol
      Investment Fund, Ltd.

            	 	
              c/o
      Bristol Capital Advisors, LLC

              6353
      W. Sunset Blvd., Suite 4006

              Hollywood,
      CA 90028

              Attn:
      Amy Wang, Esq.

                        Paul
      Kessler

               

            	 	
              57,143

            	 	
              28,571

            	 	
              $300,000.75

            	 	
              Elected
      not to provide

            
	
              Freestone
      Advantage Partners, LP

            	 	
              3100
      Dundee Road, Suite 703

              Northbrook,
      Illinois 60062

              Attn:  Mitchell
      P. Kopin

              Facsimile:
      (847) 562-9031

               

            	 	
              4,761

            	 	
              2,380

            	 	
              $24,995.25

            	 	
              Elected
      not to provideUnassociated Document

    REGISTRATION
RIGHTS AGREEMENT

     

     

    This REGISTRATION RIGHTS AGREEMENT
(this “Agreement”),
dated as of April [___], 2010, is by and among Bovie Medical Corporation, a
Delaware corporation with headquarters located at 734 Walt Whitman Road,
Melville, New York 11747 (the “Company”), and the undersigned
buyers (each, a “Buyer,”
and collectively, the “Buyers”).

     

    RECITALS

     

    A.           In
connection with the Securities Purchase Agreement by and among the parties
hereto, dated as of April 18, 2010 (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to each Buyer
(i) shares (the “Common
Shares”) of the Company’s common stock, $0.001 par value per share (the
“Common Stock”) and (ii)
the Warrants (as defined in the Securities Purchase Agreement) which will be
exercisable to purchase Warrant Shares (as defined in the Securities Purchase
Agreement) in accordance with the terms of the Warrants.

     

    B.           To
induce the Buyers to consummate the transactions contemplated by the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
“1933 Act”), and
applicable state securities laws.

     

    AGREEMENT

     

    NOW, THEREFORE, in
consideration of the premises and the mutual covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and each of the Buyers hereby agree as
follows:

     

    
      	
              1.

            	
              Definitions.

            

    

     

    Capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings set forth in the Securities Purchase Agreement.  As used in
this Agreement, the following terms shall have the following
meanings:

     

    (a)           “Business Day” means any day
other than Saturday, Sunday or any other day on which commercial banks in New
York, New York are authorized or required by law to remain closed.

     

    (b)           “Closing Date” shall have the
meaning set forth in the Securities Purchase Agreement.

     

    (c)           “Effective Date” means the date
that the applicable Registration Statement has been declared effective by the
SEC.

     

    (d)           “Effectiveness Deadline” means
(i) with respect to the initial Registration Statement required to be filed
pursuant to Section 2(a), the earlier of the (A)
90th
calendar day after the Closing Date (or the 120th
calendar day after the Closing Date in the event that such Registration
Statement is subject to review by the SEC) and (B) 5th
Business  Day after  the date the
Company is notified (orally or in writing, whichever is earlier) by the SEC that
such Registration Statement will not be reviewed or will not be subject to
further review and (ii) with respect to any additional Registration Statements
that may be required to be filed by the Company pursuant to this Agreement, the
earlier of the (A) 90th calendar day following the date on which the Company was
required to file such additional Registration Statement (or the 120th calendar
day after such date in the event that such Registration Statement is subject to
review by the SEC) and (B) 5th Business Day after the date the Company is
notified (orally or in writing, whichever is earlier) by the SEC that such
Registration Statement will not be reviewed or will not be subject to further
review.

    
       

    

    
      
         

      

      
        
        

        
          

        

      

       

    

     

    (e)           “Filing Deadline” means (i)
with respect to the initial Registration Statement required to be filed pursuant
to Section 2(a), the 30th
calendar day after the Closing Date, and (ii) with respect to any additional
Registration Statements that may be required to be filed by the Company pursuant
to this Agreement, the date on which the Company was required to file such
additional Registration Statement pursuant to the terms of this Agreement.

     

    (f)           “Investor” means a Buyer or any
transferee or assignee of any Registrable Securities or
Warrants, as applicable, to whom a Buyer assigns its rights under this Agreement
and who agrees to become bound by the provisions of this Agreement in accordance
with Section 9 and any transferee or assignee thereof to whom a
transferee or assignee of any Registrable Securities or Warrants, as applicable,
assigns its rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9.

     

    (g)           “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization or a government or any department or
agency thereof.

     

    (h)           “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 and the
declaration of effectiveness of such Registration Statement(s) by the
SEC.

     

    (i)           “Registrable Securities” means
(i) the Common Shares, (ii) the Warrant Shares and (iii) any capital stock of
the Company issued or issuable with respect to the Common Shares, the Warrant
Shares or the Warrants, including, without limitation, (1) as a result of any
stock split, stock dividend, recapitalization, exchange or similar event or
otherwise and (2) shares of capital stock of the Company into which the shares
of Common Stock are converted or exchanged and shares of capital stock of a
Successor Entity (as defined in the Warrants) into which the shares of Common
Stock are converted or exchanged, in each case, without regard to any
limitations on exercise of the Warrants.

     

    (j)           “Registration Statement” means
a registration statement or registration statements of the Company filed under
the 1933 Act covering Registrable Securities.

     

    (k)           “Required Holders” means the
holders of at least a majority of the Registrable Securities.

     

    (l)           “Required Registration Amount”
means the sum of (i) the Common Shares and (ii) 133%
of the maximum number of Warrant Shares issued and issuable pursuant to the
Warrants as of the Trading Day (as defined in the Warrants) immediately
preceding the applicable date of determination (without taking into account any
limitations on the exercise of the Warrants set forth therein), all subject to
adjustment as provided in Section 2(d).

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    (m)           “Rule 144” means Rule 144
promulgated by the SEC under the 1933 Act, as such rule may be amended from time
to time, or any other similar or successor rule or regulation of the SEC that
may at any time permit the Investors to sell securities of the Company to the
public without registration.

     

    (n)           “Rule 415” means Rule 415
promulgated by the SEC under the 1933 Act, as such rule may be amended from time
to time, or any other similar or successor rule or regulation of the SEC
providing for offering securities on a continuous or delayed basis.

     

    (o)           “SEC” means the United States
Securities and Exchange Commission or any successor thereto.

     

    
      	
              2.

            	
              Registration.

            

    

     

    (a)           Mandatory
Registration.  The Company shall prepare and, as soon as
practicable, but in no event later than the Filing Deadline, file with the SEC
an initial Registration Statement on Form S-3 covering the resale of all of the
Registrable Securities, provided that such initial Registration Statement shall
register for resale at least the number of shares of Common Stock equal to the
Required Registration Amount as of the date such Registration Statement is
initially filed with the SEC, provided further that if Form S-3 is unavailable
for such a registration, the Company shall use such other form as is required by
Section 2(c). Such
initial Registration Statement, and each other Registration Statement required
to filed pursuant to the terms of this Agreement, shall contain (except if
otherwise directed by the Required Holders) the “Selling Stockholders”
and “Plan of
Distribution” sections in substantially the form attached hereto as Exhibit
B. The Company shall use its best efforts to have such initial
Registration Statement, and each other Registration Statement required to filed
pursuant to the terms of this Agreement, declared effective by the SEC as soon
as practicable, but in no event later than the applicable Effectiveness Deadline
for such Registration Statement.

     

    (b)           Legal Counsel.
Subject to Section 5 hereof, Cranshire Capital,
L.P. (“Cranshire”) shall
have the right to select one (1) legal counsel to review and oversee, solely on
its behalf, any registration pursuant to this Section 2 (“Legal Counsel”), which shall
be Greenberg Traurig, LLP or such other counsel as thereafter designated by
Cranshire.

     

    (c)           Ineligibility to Use Form
S-3. In the event that Form S-3 is not available for the registration of
the resale of Registrable Securities hereunder, the Company shall (i) register
the resale of the Registrable Securities on another appropriate form reasonably
acceptable to the Required Holders and (ii) undertake to register the resale of
the Registrable Securities on Form S-3 as soon as such form is available,
provided that the Company shall maintain the effectiveness of all Registration
Statements then in effect until such time as a Registration Statement on Form
S-3 covering the resale of all the Registrable Securities has been declared
effective by the SEC.

     

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    
       

       

      (d)     
Sufficient Number of Shares
Registered. In the event the number of shares available under any
Registration Statement is insufficient to cover all of the Registrable
Securities required to be covered by such Registration Statement or an
Investor’s allocated portion of the Registrable Securities pursuant to Section
2(h), the Company
shall amendsuch Registration Statement (if permissible), or file with the
SEC a new Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least the Required Registration Amount
as of the Trading Day immediately preceding the date of the filing of such
amendment or new Registration Statement, in each case, as soon as practicable,
but in any event not later than fifteen (15) days after the necessity therefor
arises (but taking account of any Staff position with respect to the date on
which the Staff will permit such amendment to the Registration Statement and/or
such new Registration Statement (as the case may be) to be filed with the SEC).
The Company shall use its best efforts to cause such amendment to such
Registration Statement and/or such new Registration Statement (as the case may
be) to become effective as soon as practicable following the filing thereof with
the SEC, but in no event later than the applicable Effectiveness Deadline for
such Registration Statement. For purposes of the foregoing provision, the number
of shares available under a Registration Statement shall be deemed “insufficient
to cover all of the Registrable Securities” if at any time the number of shares
of Common Stock available for resale under the applicable Registration Statement
is less than the product determined by multiplying (i) the Required Registration
Amount as of such time by (ii) 0.90. The calculation set forth in the foregoing
sentence shall be made without regard to any limitations on exercise of the
Warrants (and such calculation shall assume that the Warrants are then fully
exercisable for shares of Common Stock at the then-prevailing applicable
Exercise Price).

    

     

    (e)           Effect of Failure to File
and Obtain and Maintain Effectiveness of any Registration Statement. If
(i) a Registration Statement covering the resale of all of the Registrable
Securities required to be covered thereby (disregarding any reduction pursuant
to Section 2(f)) and
required to be filed by the Company pursuant to this Agreement is (A) not filed
with the SEC on or before the Filing Deadline for such Registration Statement (a
“Filing Failure”) (it
being understood that if the Company files a Registration Statement without
affording each Investor the opportunity to review and comment on the same as
required by Section 3(c) hereof, the Company shall
be deemed to not have satisfied this clause (i)(A) and such event shall be
deemed to be a Filing Failure) or (B) not declared effective by the SEC on or
before the Effectiveness Deadline for such Registration Statement (an “Effectiveness Failure”) (it
being understood that if on the Business Day immediately following the Effective
Date for such Registration Statement the Company shall not have filed a “final”
prospectus for such Registration Statement with the SEC under Rule 424(b) in
accordance with Section 3(b) (whether or not such a
prospectus is technically required by such rule), the Company shall be deemed to
not have satisfied this clause (i)(B) and such event shall be deemed to be an
Effectiveness Failure), (ii) other than during an Allowable Grace Period (as
defined below), on any day after the Effective Date of a Registration Statement
sales of all of the Registrable Securities required to be included on such
Registration Statement (disregarding any reduction pursuant to Section 2(f)) cannot be made
pursuant to such Registration Statement (including, without limitation, because
of a failure to keep such Registration Statement effective, a failure to
disclose such information as is necessary for sales to be made pursuant to such
Registration Statement, a suspension or delisting of (or a failure to timely
list) the shares of Common Stock on its principal trading market or exchange, or
a failure to register a sufficient number of shares of Common Stock or by reason
of a stop order) or the prospectus contained therein is not available for use
for any reason (a “Maintenance
Failure”), or (iii) if a  Registration  Statement
 is not effective for any reason or  the 
prospectus  contained  therein  is  not 

       

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    available
for use for any reason, the Company fails to file with the SEC any required
reports under Section 13 or 15(d) of the 1934 Act such that it is not in
compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable) (a “Current Public Information
Failure”) as a result of which any of the Investors are unable to sell
Registrable Securities without restriction under Rule 144 (including, without
limitation, volume restrictions), then, as partial relief for the damages to any
holder by reason of any such delay in, or reduction of, its ability to sell the
underlying shares of Common Stock (which remedy shall not be exclusive of any
other remedies available at law or in equity), the Company shall pay to each
holder of Registrable Securities relating to such Registration Statement an
amount in cash equal to one percent (1%) of the Purchase Price (as defined in
the Securities Purchase Agreement) paid by such Investor pursuant to the
Securities Purchase Agreement (1) on the date of such Filing Failure,
Maintenance Failure or Current Public Information Failure, as applicable, and
(2) on every thirty (30) day anniversary of (I) a Filing Failure until such
Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness
Failure is cured; (III) a Maintenance Failure until such Maintenance Failure is
cured; and (IV) a Current Public Information Failure until the earlier of (i)
the date such Current Public Information Failure is cured and (ii) such time
that such public information is no longer required pursuant to Rule 144 (in each
case, pro rated for periods totaling less than thirty (30) days). The payments
to which a holder of Registrable Securities shall be entitled pursuant to this
Section 2(e) are
referred to herein as “Registration Delay Payments.”
Following the initial Registration Delay Payment for any particular event or
failure (which shall be paid on the date of such event or failure, as set forth
above), without limiting the foregoing, if an event or failure giving rise to
the Registration Delay Payments is cured prior to any thirty (30) day
anniversary of such event or failure, then such Registration Delay Payment shall
be made on the third (3rd)
Business Day after such cure. In the event the Company fails to make
Registration Delay Payments in a timely manner in accordance with the foregoing,
such Registration Delay Payments shall bear interest at the rate of one and
one-half percent (1.5%) per month (prorated for partial months) until paid in
full. Notwithstanding the foregoing, no Registration Delay Payments shall be
owed to an Investor (other than with respect to a Maintenance Failure resulting
from a suspension or delisting of the shares of Common Stock on the Company’s
principal trading market or exchange) with respect to any period during which
all of such Investor’s Registrable Securities may be sold by such Investor
without restriction under Rule 144 (including, without limitation, volume
restrictions) and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

     

    (f)           Offering.
Notwithstanding anything to the contrary contained in this Agreement, but
subject to the payment of the Registration Delay Payments pursuant to Section 2(e), in the event the
staff of the SEC (the “Staff”) or the SEC seeks to
characterize any offering pursuant to a Registration Statement filed
pursuant to this Agreement as constituting an offering of securities by, or
on behalf of, the Company, or in any other manner, such that the Staff
or the SEC do not permit such Registration Statement to become
effective and used for resales in a manner that does not constitute such an
offering and that permits the continuous resale at the market by the Investors
participating therein (or as otherwise may be acceptable to each
Investor) without being named therein as an “underwriter,” then the Company
shall first reduce all of the Placement Agent Warrant Shares (as defined in the
Securities Purchase Agreement) and then reduce the number of shares to be
included in such Registration Statement by all Investors until such time as the
Staff and the SEC shall so permit such Registration Statement to become
effective as aforesaid. In making such reduction, the Company shall reduce the
number of shares to be included by all Investors on a pro rata basis (based upon
the number of Registrable Securities otherwise required to be included for each
Investor) unless the inclusion of shares by a particular Investor or a
particular set of Investors are resulting in the Staff or the SEC’s “by or
on behalf of the Company” offering position,  in  which 
event  the  shares  held  by  such  Investor
 or  set  of

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Investors
shall be the only shares subject to reduction (and if by a set of Investors on a
pro rata basis by such Investors or on such other basis as would result in the
exclusion of the least number of shares by all such Investors). In
addition, in the event that the Staff or the SEC requires any Investor seeking
to sell securities under a Registration Statement filed pursuant to this
Agreement to be specifically identified as an “underwriter” in
order to permit such Registration Statement to become effective, and such
Investor does not consent to being so named as an underwriter in such
Registration Statement, then, in each such case, the Company shall
reduce the total number of Registrable Securities to be registered on behalf
of such Investor, until such time as the Staff or the SEC does
not require such identification or until such Investor accepts such
identification and the manner thereof. Any reduction pursuant to this
paragraph will first reduce all Registrable Securities other than those
issued pursuant to the Securities Purchase Agreement. In the event of
any reduction in Registrable Securities pursuant to this paragraph, an
affected Investor shall have the right to require, upon delivery of a written
request to the Company signed by such Investor, the Company to file a
registration statement within thirty (30) days of such request (subject to any
restrictions imposed by Rule 415 or required by the Staff or the SEC)
for resale by such Investor in a manner acceptable to such Investor, and the
Company shall following such request cause to be and keep effective such
registration statement in the same manner as otherwise contemplated in this
Agreement for registration statements hereunder, in each case until such
time as: (i) all Registrable Securities held by such Investor have been
registered and sold pursuant to an effective Registration Statement in a manner
acceptable to such Investor or (ii) all Registrable Securities may be
resold by such Investor without restriction (including, without limitation,
volume limitations) pursuant to Rule 144 (taking account of any Staff position
with respect to “affiliate” status) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or
(iii) such Investor agrees to be named as an underwriter in any such
Registration Statement in a manner acceptable to such Investor as to all
Registrable Securities held by such Investor and that have not theretofore been
included in a Registration Statement under this Agreement (it being understood
that the special demand right under this sentence may be exercised by an
Investor multiple times and with respect to limited amounts of Registrable
Securities in order to permit the resale thereof by such Investor as
contemplated above).

     

    (g)           Piggyback
Registrations. Without limiting any obligation of the Company hereunder
or under the Securities Purchase Agreement, if there is not an effective
Registration Statement covering all of the Registrable Securities or the
prospectus contained therein is not available for use and the Company shall
determine to prepare and file with the SEC a registration statement relating to
an offering for its own account or the account of others under the 1933 Act of
any of its equity securities (other than on Form S-4 or Form S-8 (each as
promulgated under the 1933 Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the Company’s stock
option or other employee benefit plans), then the Company shall deliver to each
Investor a written notice of such determination and, if within fifteen (15) days
after the date of the delivery of such notice, any such Investor shall so
request in writing, the  Company shall  include  in 
such  registration statement
all or any part of such Registrable Securities such Investor requests to be
registered; provided, however, the Company shall not be required to register any
Registrable Securities pursuant to this Section 2(g) that are
eligible for resale pursuant to Rule 144 without restriction (including, without
limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or
that are the subject of a then-effective Registration Statement.

    

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

    (h)           Allocation of Registrable
Securities. The initial number of Registrable Securities included in any
Registration Statement and any increase in the number of Registrable Securities
included therein shall be allocated pro rata among the Investors based on the
number of Registrable Securities held by each Investor at the time such
Registration Statement covering such initial number of Registrable Securities or
increase thereof is declared effective by the SEC. In the event that an Investor
sells or otherwise transfers any of such Investor’s Registrable Securities, each
transferee or assignee (as the case may be) that becomes an Investor shall be
allocated a pro rata portion of the then-remaining number of Registrable
Securities included in such Registration Statement for such transferor or
assignee (as the case may be). Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person which ceases to
hold any Registrable Securities covered by such Registration Statement shall be
allocated to the remaining Investors, pro rata based on the number of
Registrable Securities then held by such Investors which are covered by such
Registration Statement.

     

    (i)           No Inclusion of Other
Securities. In no event shall the Company include any securities other
than Registrable Securities and the Placement Agent Warrant Shares (which it
shall have the right to include on any Registration Statement filed pursuant to
the Agreement) on any Registration Statement without the prior written consent
of the Required Holders. Until the Applicable Date (as defined in the Securities
Purchase Agreement), the Company shall not enter into any agreement providing
any registration rights to any of its security holders.

     

    
      	
              3.

            	
              Related
      Obligations.

            

    

     

    The
Company shall use its best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof, and,
pursuant thereto, the Company shall have the following obligations:

     

    (a)           The
Company shall promptly prepare and file with the SEC a Registration Statement
with respect to all the Registrable Securities (but in no event later than the
applicable Filing Deadline) and use its best efforts to cause such Registration
Statement to become effective as soon as practicable after such filing (but in
no event later than the Effectiveness Deadline). Subject to Allowable Grace
Periods, the Company shall keep each Registration Statement effective (and the
prospectus contained therein available for use) pursuant to Rule 415 for resales
by the Investors on a delayed or continuous basis at then-prevailing market
prices (and not fixed prices) at all times until the earlier of (i) the date as
of which all of the Investors may sell all of the Registrable Securities
required to be covered by such Registration Statement (disregarding any
reduction pursuant to Section 2(f)) without
restriction pursuant to Rule 144 (including, without limitation, volume
restrictions) and without the need for current public information required by
Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or (ii) the date on which the
Investors shall have sold all of the Registrable Securities covered by such

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

      Registration
Statement (the “Registration Period”). Notwithstanding anything to the
contrary contained in this Agreement, the Company shall ensure that, when filed
and at all times while effective, each Registration Statement (including,
without limitation, all amendments and supplements thereto) and the prospectus
(including, without limitation, all amendments and supplements thereto) used in
connection with such Registration Statement (1) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading and (2) will disclose (whether directly or through incorporation by
reference to other SEC filings to the extent permitted) all material information
regarding the Company and its securities. The Company shall submit to the SEC,
within two (2) Business Days after the later of the date that (i) the Company
learns that no review of a particular Registration Statement will be made by the
Staff or that the Staff has no further comments on a particular Registration
Statement (as the case may be) and (ii) the consent of Legal Counsel is obtained
pursuant to Section 3(c) (which consent shall be immediately sought), a
request for acceleration of effectiveness of such Registration Statement to a
time and date not later than forty-eight (48) hours after the submission of such
request.

    

     

    (b)           Subject
to Section 3(r) of
this Agreement, the Company shall prepare and file with the SEC such amendments
(including, without limitation, post-effective amendments) and supplements to
each Registration Statement and the prospectus used in connection with each such
Registration Statement, which prospectus is to be filed pursuant to Rule 424
promulgated under the 1933 Act, as may be necessary to keep each such
Registration Statement effective at all times during the Registration Period for
such Registration Statement, and, during such period, comply with the provisions
of the 1933 Act with respect to the disposition of all Registrable Securities of
the Company required to be covered by such Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement; provided, however, by 8:30
a.m. (New York time) on the Business Day immediately following each Effective
Date, the Company shall file with the SEC in accordance with Rule 424(b) under
the 1933 Act the final prospectus to be used in connection with sales pursuant
to the applicable Registration Statement (whether or not such a prospectus is
technically required by such rule). In the case of amendments and supplements to
any Registration Statement which are required to be filed pursuant to this
Agreement (including, without limitation, pursuant to this Section 3(b)) by reason of the
Company filing a report on Form 10-Q or Form 10-K or any analogous report under
the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall
have incorporated such report by reference into such Registration Statement, if
applicable, or shall file such amendments or supplements with the SEC on the
same day on which the 1934 Act report is filed which created the requirement for
the Company to amend or supplement such Registration Statement.

     

    (c)           The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor
to review and comment upon (i) each Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all amendments and
supplements to each Registration Statement (including, without limitation, the
prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, 

    
 

    
      
        
           

        

        
          8

          
            

          

        

        
           

        

      

    

    

    
      Current
Reports on Form 8-K, and any similar or successor reports) within a reasonable
number of days prior to their filing with the SEC, and (B) not file any
Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel or any legal counsel for any other Investor reasonably objects.
The Company shall not submit a request for acceleration of the effectiveness of
a Registration Statement or any amendment or supplement thereto or to any
prospectus contained therein without the prior consent of Legal Counsel, which
consent shall not be unreasonably withheld. The Company shall promptly furnish
to Legal Counsel and legal counsel for each other Investor, without charge, (i)
copies of any correspondence from the SEC or the Staff to the Company or its
representatives relating to each Registration Statement, provided that such
correspondence shall not contain any material, non-public information regarding
the Company or any of its Subsidiaries (as defined in the Securities Purchase
Agreement), (ii) after the same is prepared and filed with the SEC, one (1)
copy of each Registration Statement and any amendment(s) and supplement(s)
thereto, including, without limitation, financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of each Registration
Statement, one (1) copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company shall
reasonably cooperate with Legal Counsel and legal counsel for each other
Investor in performing the Company’s obligations pursuant to this Section 3.

    

     

    (d)           The
Company shall promptly furnish to each Investor whose Registrable Securities are
included in any Registration Statement, without charge, (i) after the same is
prepared and filed with the SEC, at least one (1) copy of each Registration
Statement and any amendment(s) and supplement(s) thereto, including, without
limitation, financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, all exhibits and each
preliminary prospectus, (ii) upon the effectiveness of each Registration
Statement, ten (10) copies of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request from time to time) and (iii) such
other documents, including, without limitation, copies of any preliminary or
final prospectus, as such Investor may reasonably request from time to time in
order to facilitate the disposition of the Registrable Securities owned by such
Investor.

     

    (e)           The
Company shall use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale by Investors
of the Registrable Securities covered by a Registration Statement under such
other securities or “blue sky” laws of all applicable jurisdictions in the
United States, (ii) prepare and file in those jurisdictions, such amendments
(including, without limitation, post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, the Company shall not be
required in connection therewith or as a condition thereto to (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(e), (y) subject itself to general taxation in any
such jurisdiction, or (z) file a general consent to service of process in any
such jurisdiction. The Company shall promptly notify Legal Counsel, legal
counsel for each other Investor and each Investor who holds Registrable
Securities of the receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the Registrable
Securities for sale under the securities or “blue sky” laws of any jurisdiction
in the United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    (f)           The
Company shall notify Legal Counsel, legal counsel for each other Investor and
each Investor in writing of the happening of any event, as promptly as
practicable after becoming aware of such event, as a result of which the
prospectus included in a Registration Statement, as then in effect, includes an
untrue statement of a material fact or omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, non-public
information regarding the Company or any of its Subsidiaries), and, subject to
Section 3(r), promptly
prepare a supplement or amendment to such Registration Statement and such
prospectus contained therein to correct such untrue statement or omission and
deliver ten (10) copies of such supplement or amendment to Legal Counsel, legal
counsel for each other Investor and each Investor (or such other number of
copies as Legal Counsel, legal counsel for each other Investor or such Investor
may reasonably request). The Company shall also promptly notify Legal Counsel,
legal counsel for each other Investor and each Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, when a Registration Statement or any post-effective amendment has become
effective (notification of such effectiveness shall be delivered to Legal
Counsel, legal counsel for each other Investor and each Investor by facsimile or
e-mail on the same day of such effectiveness and by overnight mail), and when
the Company receives written notice from the SEC that a Registration Statement
or any post-effective amendment will be reviewed by the SEC, (ii) of any request
by the SEC for amendments or supplements to a Registration Statement or related
prospectus or related information, (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate; and (iv) of the receipt of any request by the SEC or any other
federal or state governmental authority for any additional information relating
to the Registration Statement or any amendment or supplement thereto or any
related prospectus. The Company shall respond as promptly as practicable to any
comments received from the SEC with respect to each Registration Statement or
any amendment thereto (it being understood and agreed that the Company’s
response to any such comments shall be delivered to the SEC no later than ten
(10) Business Days after the receipt thereof).

     

    (g)           The
Company shall (i) use its best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of each Registration Statement or the use
of any prospectus contained therein, or the suspension of the qualification, or
the loss of an exemption from qualification, of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or suspension is
issued, to obtain the withdrawal of such order or suspension at the earliest
possible moment and (ii) notify Legal Counsel, legal counsel for each other
Investor and each Investor who holds Registrable Securities of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

     

    (h)           If
any Investor may be required under applicable securities law to be described in
any Registration Statement as an underwriter and such Investor consents to so
being named an underwriter, at the request of any Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of such
Registration  Statement  and  thereafter rom time
to time on such dates as an Investor may reasonably request (i) a letter, dated
such date, from the Company’s independent certified public accountants in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
Investors, and (ii) an opinion, dated as of such date, of counsel representing
the Company for purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering, addressed
to the Investors.

    
       

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (i)           If
any Investor may be required under applicable securities law to be described in
any Registration Statement as an underwriter and such Investor consents to so
being named an underwriter, upon the written request of such Investor, the
Company shall make available for inspection by (i) such Investor, (ii) legal
counsel for such Investor and (iii) one (1) firm of accountants or other agents
retained by such Investor (collectively, the “Inspectors”), all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company (collectively, the “Records”), as shall be
reasonably deemed necessary by each Inspector, and cause the Company’s officers,
directors and employees to supply all information which any Inspector may
reasonably request; provided, however, each Inspector shall agree in writing to
hold in strict confidence and not to make any disclosure (except to such
Investor) or use of any Record or other information which the Company’s board of
directors determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (1) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (2) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (3) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement or any other Transaction
Document (as defined in the Securities Purchase Agreement). Such Investor agrees
that it shall, upon learning that disclosure of such Records is sought in or by
a court or governmental body of competent jurisdiction or through other means,
give prompt notice to the Company and allow the Company, at its expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the Records deemed confidential. Nothing herein (or in any other
confidentiality agreement between the Company and such Investor, if any) shall
be deemed to limit any Investor’s ability to sell Registrable Securities in a
manner which is otherwise consistent with applicable laws and
regulations.

     

    (j)           The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement or is otherwise required
to be disclosed in such Registration Statement pursuant to the 1933 Act, (iii)
the release of such information is ordered pursuant to a subpoena or other
final, non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
Transaction Document. The Company agrees that it shall, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at such
Investor’s expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (k)           Without
limiting any obligation of the Company under the Securities Purchase Agreement,
the Company shall use its best efforts either to (i) cause all of the
Registrable Securities covered by each Registration Statement to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange, (ii) secure
designation and quotation of all of the Registrable Securities covered by each
Registration Statement on the OTC Bulletin Board, or (iii) if, despite the
Company’s best efforts to satisfy the preceding clauses (i) or (ii) the Company
is unsuccessful in satisfying the preceding clauses (i) or (ii), without
limiting the generality of the foregoing, to use its best efforts to arrange for
at least two market makers to register with the Financial Industry Regulatory
Authority (“FINRA”) as
such with respect to such Registrable Securities. In addition, the Company shall
cooperate with each Investor and any broker or dealer through which any such
Investor proposes to sell its Registrable Securities in effecting a filing with
FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 3(k).

     

    (l)           The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such denominations or amounts (as the case may
be) as the Investors may reasonably request from time to time and registered in
such names as the Investors may request.

     

    (m)           If
requested by an Investor, the Company shall as soon as practicable after receipt
of notice from such Investor and subject to Section 3(r) hereof, (i)
incorporate in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included therein relating
to the sale and distribution of Registrable Securities, including, without
limitation, information with respect to the number of Registrable Securities
being offered or sold, the purchase price being paid therefor and any other
terms of the offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such
prospectus supplement or post-effective amendment; and (iii) supplement or make
amendments to any Registration Statement or prospectus contained therein if
reasonably requested by an Investor holding any Registrable
Securities.

     

    (n)           The
Company shall use its best efforts to cause the Registrable Securities covered
by a Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.

     

    (o)           The
Company shall make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with, and in the
manner provided by, the provisions of Rule 158 under the 1933 Act) covering a
twelve-month period beginning not later than the first day of the Company’s
fiscal quarter next following the applicable Effective Date of each Registration
Statement.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (p)           The
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

     

    (q)           Within
one (1) Business Day after a Registration Statement which covers Registrable
Securities is declared effective by the SEC, the Company shall deliver, and
shall cause legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

     

    (r)           Notwithstanding
anything to the contrary herein (but subject to the last sentence of this
Section 3(r)), at any
time after the Effective Date of a particular Registration Statement, the
Company may delay the disclosure of material, non-public information concerning
the Company or any of its Subsidiaries the disclosure of which at the time is
not, in the good faith opinion of the board of directors of the Company, in the
best interest of the Company and, in the opinion of counsel to the Company,
otherwise required (a “Grace
Period”), provided that the Company shall promptly notify the Investors
in writing of the (i) existence of material, non-public information giving rise
to a Grace Period (provided that in each such notice the Company shall not
disclose the content of such material, non-public information to any of the
Investors) and the date on which such Grace Period will begin and (ii) date
on which such Grace Period ends, provided further that (I) no Grace Period shall
exceed ten (10) consecutive days and during any three hundred sixty five (365)
day period all such Grace Periods shall not exceed an aggregate of thirty (30)
days, (II) the first day of any Grace Period must be at least five (5) Trading
Days after the last day of any prior Grace Period and (III) no Grace Period may
exist during the first sixty (60) Trading Days after the Effective Date of such
Registration Statement (each, an “Allowable Grace Period”). For
purposes of determining the length of a Grace Period above, such Grace Period
shall begin on and include the date the Investors receive the notice referred to
in clause (i) above and shall end on and include the later of the date the
Investors receive the notice referred to in clause (ii) above and the date
referred to in such notice. The provisions of Section 3(g) hereof shall not be
applicable during the period of any Allowable Grace Period. Upon expiration of
each Grace Period, the Company shall again be bound by the first sentence of
Section 3(f) with
respect to the information giving rise thereto unless such material, non-public
information is no longer applicable. Notwithstanding anything to the contrary
contained in this Section 3(r), the Company shall cause its transfer agent to
deliver unlegended shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has
entered into a contract for sale, and delivered a copy of the prospectus
included as part of the particular Registration Statement to the extent
applicable, prior to such Investor’s receipt of the notice of a Grace Period and
for which the Investor has not yet settled.

     

    (s)           The
Company shall use its best efforts to maintain eligibility for use of Form S-3
(or any successor form thereto) for the registration of the resale of all the
Registrable Securities.

     

    (t)           The
Company shall take all other reasonable actions necessary to expedite and
facilitate disposition by each Investors of its Registrable Securities pursuant
to each Registration Statement.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    4.            
Obligations of the
Investors.

     

    (a)           At
least five (5) Business Days prior to the first anticipated filing date of each
Registration Statement, the Company shall notify each Investor in writing of the
information the Company requires from each such Investor with respect to such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect and maintain
the effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

     

    (b)           Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of each Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement.

     

    (c)           Each
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the first sentence of 3(f), such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of the copies
of the supplemented or amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary in this Section
4(c), the Company
shall cause its transfer agent to deliver unlegended shares of Common Stock to a
transferee of an Investor in accordance with the terms of the Securities
Purchase Agreement in connection with any sale of Registrable Securities with
respect to which such Investor has entered into a contract for sale prior to the
Investor’s receipt of a notice from the Company of the happening of any event of
the kind described in Section 3(g) or the first
sentence of Section 3(f) and for which such
Investor has not yet settled.

     

    (d)           Each
Investor covenants and agrees that it will comply with the prospectus delivery
requirements of the 1933 Act as applicable to it in connection with sales of
Registrable Securities pursuant to a Registration Statement.

     

    
      	
              5.

            	
              Expenses of
      Registration.

            

    

     

    All
reasonable expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to Sections
2 and 3, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, FINRA filing fees (if any) and fees and disbursements of
counsel for the Company shall be paid by the Company. The Company shall also
reimburse Cranshire for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement
which amount shall be limited to $10,000.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    6.           
Indemnification.

     

    (a)           In
the event any Registrable Securities are included in any Registration Statement
under this Agreement, to the fullest extent permitted by law, the Company will,
and hereby does, indemnify, hold harmless and defend each Investor and each of
its directors, officers, shareholders, members, partners, employees, agents,
advisors, representatives (and any other Persons with a functionally equivalent
role of a Person holding such titles notwithstanding the lack of such title or
any other title) and each Person, if any, who controls such Investor within the
meaning of the 1933 Act or the 1934 Act and each of the directors, officers,
shareholders, members, partners, employees, agents, advisors, representatives
(and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding the lack of such title or any other title) of such
controlling Persons (each, an “Indemnified Person”), against
any losses, obligations, claims, damages, liabilities, contingencies, judgments,
fines, penalties, charges, costs (including, without limitation, court costs,
reasonable attorneys’ fees and costs of defense and investigation), amounts paid
in settlement or expenses, joint or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified Damages”), to
which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). Subject to
Section 6(c), the
Company shall reimburse the Indemnified Persons, promptly as such expenses are
incurred and are due and payable, for any legal fees or other reasonable
expenses incurred by them in connection with investigating or defending any such
Claim. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall not apply
to a Claim by an Indemnified Person arising out of or based upon a Violation
which occurs in reliance upon and in conformity with information furnished in
writing to the Company by such Indemnified Person for such Indemnified Person
expressly for use in connection with the preparation of such Registration
Statement or any such amendment thereof or supplement thereto and (ii) shall not
be available to a particular Investor to the extent such Claim is based on a
failure of such Investor to deliver or to cause to be delivered the prospectus
made available by the  Company (to the
extent applicable), including, without limitation, a corrected prospectus, if
such prospectus or corrected prospectus was timely made available by the Company
pursuant to Section 3(d) and then
only if, and to the extent that, following the receipt of the corrected
prospectus no grounds for such Claim would have existed; and (iii) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of any of the Registrable Securities by
any of the Investors pursuant to Section 9.

       

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

    (b)           In
connection with any Registration Statement in which an Investor is
participating, such Investor agrees to severally and not jointly indemnify, hold
harmless and defend, to the same extent and in the same manner as is set forth
in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within the meaning
of the 1933 Act or the 1934 Act (each, an “Indemnified Party”), against
any Claim or Indemnified Damages to which any of them may become subject, under
the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified
Damages arise out of or are based upon any Violation, in each case, to the
extent, and only to the extent, that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c) and
the below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such Claim; provided, however,
the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7
shall not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Investor, which consent shall
not be unreasonably withheld or delayed, provided further that such Investor
shall be liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
applicable sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of any of the Registrable Securities by any of the
Investors pursuant to Section 9.

     

    (c)           Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be)
under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any governmental
action or proceeding) involving a Claim, such Indemnified Person or Indemnified
Party (as the case may be) shall, if a Claim in respect thereof is to be made
against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party (as the case may be); provided,
however, an Indemnified Person or Indemnified Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such
counsel to be paid by the indemnifying party if: (i) the indemnifying party has
agreed in writing to pay such fees and expenses; (ii) the indemnifying party
shall have failed promptly to assume the defense of such Claim and to employ
counsel reasonably satisfactory to such Indemnified Person or Indemnified Party
(as the case may be) in any such Claim; or (iii) the named parties to any such
Claim
(including, without limitation, any impleaded 

    
 

    
      
        
           

        

        
          16

          
            

          

        

        
           

        

      

    

    
 

    parties) include
both such Indemnified Person or Indemnified Party (as the case may be) and the
indemnifying party, and such Indemnified Person or such Indemnified Party (as
the case may be) shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Person
or such Indemnified Party and the indemnifying party (in which case, if such
Indemnified Person or such Indemnified Party (as the case may be) notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, then the indemnifying party shall not have
the right to assume the defense thereof and such counsel shall be at the expense
of the Indemnifying Party, provided further that in the case of clause (iii)
above the indemnifying party shall not be responsible for the reasonable fees
and expenses of more than one (1) separate legal counsel for such Indemnified
Person or Indemnified Party (as the case may be). The Indemnified Party or
Indemnified Person (as the case may be) shall reasonably cooperate with the
indemnifying party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or
Indemnified Person (as the case may be) which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
(as the case may be) reasonably apprised at all times as to the status of the
defense or any settlement negotiations with respect thereto. No indemnifying
party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent; provided, however, the indemnifying
party shall not unreasonably withhold, delay or condition its
consent.  No indemnifying party shall, without the prior written
consent of the Indemnified Party or Indemnified Person (as the case may be),
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person (as
the case may be) of a release from all liability in respect to such Claim or
litigation, and such settlement shall not include any admission as to fault on
the part of the Indemnified Party. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person (as the case may be) with respect to all
third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party (as the case may be) under this Section
6, except to the extent that the indemnifying party
is materially and adversely prejudiced in its ability to defend such
action.

     

    (d)           No
Person involved in the sale of Registrable Securities who is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to indemnification from any
Person involved in such sale of Registrable Securities who is not guilty of
fraudulent misrepresentation.

     

    (e)           The
indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred.

     

    (f)           The
indemnity and contribution agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    
      	
              7.

            	
              Contribution.

            

    

     

    To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided,
however: (i) no contribution shall be made under circumstances where the maker
would not have been liable for indemnification under the fault standards set
forth in Section 6 of this Agreement, (ii) no
Person involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (iii) contribution by any seller of
Registrable Securities shall be limited in amount to the amount of net proceeds
received by such seller from the applicable sale of such Registrable Securities
pursuant to such Registration Statement. Notwithstanding the provisions of this
Section 7, no Investor shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the
net proceeds actually received by such Investor from the applicable sale of the
Registrable Securities subject to the Claim exceeds the amount of any damages
that such Investor has otherwise been required to pay, or would otherwise be
required to pay under Section 6(b), by reason of
such untrue or alleged untrue statement or omission or alleged
omission.

     

    
      	
              8.

            	
              Reports Under the 1934
      Act.

            

    

     

    With a
view to making available to the Investors the benefits of Rule 144, the Company
agrees to:

     

    (a)           make
and keep public information available, as those terms are understood and defined
in Rule 144;

     

    (b)           file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood and agreed that nothing herein
shall limit any obligations of the Company under the Securities Purchase
Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and

     

    (c)           furnish
to each Investor so long as such Investor owns Registrable Securities, promptly
upon request, (i) a written statement by the Company, if true, that it has
complied with the reporting, submission and posting requirements of Rule 144 and
the 1934 Act, (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company with the
SEC if such reports are not publicly available via EDGAR, and (iii) such other
information as may be reasonably requested to permit the Investors to sell such
securities pursuant to Rule 144 without registration.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    
      	
              9.

            	
              Assignment of
      Registration Rights.

            

    

     

    
    

    All or any portion of the rights under this Agreement
shall be automatically assignable by each Investor to any transferee or assignee
(as the case may be) of all or any portion of such Investor’s Registrable
Securities or Warrants if: (i) such Investor agrees in writing with such
transferee or assignee (as the case may be) to assign all or any portion of such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such transfer or assignment (as the case may be); (ii) the
Company is, within a reasonable time after such transfer or assignment (as the
case may be), furnished with written notice of (a) the name and address of such
transferee or assignee (as the case may be), and (b) the securities with respect
to which such registration rights are being transferred or assigned (as the case
may be); (iii) immediately following such transfer or assignment (as the case
may be) the further disposition of such securities by such transferee or
assignee (as the case may be) is restricted under the 1933 Act or applicable
state securities laws if so required; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence such
transferee or assignee (as the case may be) agrees in writing with the Company
to be bound by all of the provisions contained herein; (v) such transfer or
assignment (as the case may be) shall have been made in accordance with the
applicable requirements of the Securities Purchase Agreement and the Warrants
(as the case may be); and (vi) such transfer or assignment (as the case may be)
shall have been conducted in accordance with all applicable federal and state
securities laws.

     

    
      	
              10.

            	
              Amendment of
      Registration Rights.

            

    

     

    Provisions
of this Agreement may be amended only with the written consent of the Company
and the Required Holders. Any amendment effected in accordance with this Section
10 shall be binding upon each Investor and the
Company, provided that no such amendment shall be effective to the extent that
it applies to less than all of the holders of the holders of Registrable
Securities.  No waiver shall be effective unless it is in writing and
signed by an authorized representative of the waiving party. No consideration
shall be offered or paid to any Person to amend or consent to a waiver or
modification of any provision of this Agreement unless the same consideration
also is offered to all of the parties to this Agreement.

     

    
      	
              11.

            	
              Miscellaneous.

            

    

     

    (a)           Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable
Securities whenever such Person owns, or is deemed to own, of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more Persons with respect to the same
Registrable Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such Registrable
Securities.

     

    (b)           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);
(iii) with respect to Section 3(c), by electronic
mail (provided confirmation of transmission is electronically generated and kept
on file by the sending party); or (iv) one (1) Business Day after deposit with a
nationally recognized overnight delivery service with next day delivery
specified, in each case, properly addressed to the party to receive the same.
The addresses and facsimile numbers for such communications shall
be:

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    If to the
Company:

     

    Bovie
Medical Corporation

    734 Walt
Whitman Road

    Melville,
New York 11747

    Telephone:  (631)
421-5452

    Facsimile:   (631)
421-5821

    Attention:    Andrew
Makrides

    

    With a
copy (for informational purposes only) to:

     

    Ruskin
Moscou Faltischek, P.C.

    1425 RXR
Plaza

    East
Tower, 15th
Floor

    Uniondale,
New York 11556

    Telephone:
(516) 663-6600

    Facsimile: 
(516) 663-6719

    Attention:
Adam P. Silvers, Esq.

    

    If to the
Transfer Agent:

     

                                    Manhattan
Transfer Registrar Company

    57 Eastwood Road

    Miller Place, New York
11764

    Telephone:  1-
(800) 786-0362

    Facsimile:  (631)
928-6171

    Attention:  John
Ahearn

    

    If to
Legal Counsel:

     

    Greenberg
Traurig, LLP

    77 W.
Wacker Drive, Suite 3100

    Chicago,
Illinois 60601

    Telephone:  (312)
456-8400

    Facsimile:  (312)
456-8435

    Attention:  Peter
H. Lieberman, Esq.

                       
Todd A.
Mazur, Esq.

    

     

    If to a
Buyer, to its address and facsimile number set forth on the Schedule of Buyers
attached to the Securities Purchase Agreement, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, 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, provided that Greenberg
Traurig, LLP shall only be provided notices sent to Cranshire. 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 or electronic mail transmission containing the
time, date, recipient facsimile number or electronic mail address and an image
of the first page of such transmission or (C) provided by a courier or overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

     

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    (c)           Failure
of any party to exercise any right or remedy under this Agreement or otherwise,
or delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof. The Company and each Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that each party hereto shall be
entitled to an injunction or injunctions to prevent or cure breaches of the
provisions of this Agreement by any other party hereto and to enforce
specifically the terms and provisions hereof (without the necessity of showing
economic loss and without any bond or other security being required), this being
in addition to any other remedy to which any party may be entitled by law or
equity.

     

    (d)           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.
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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

     

    (e)           This
Agreement, the other Transaction Documents, the schedules and exhibits attached
hereto and thereto and the instruments referenced herein and therein constitute
the entire agreement among the parties hereto and thereto solely with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents, the schedules and
exhibits attached hereto and thereto and the instruments referenced herein and
therein supersede all prior agreements and understandings among the parties
hereto solely with respect to the subject matter hereof and thereof; provided,
however, nothing contained in this Agreement or any other Transaction Document
shall (or shall be deemed to) (i) have any effect on any agreements any Investor
has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Investor in the
Company, (ii) waive, alter, modify or amend in any respect any obligations of
the Company or any of its Subsidiaries or any rights of or benefits to any
Investor or any other Person in any agreement entered into prior to the date
hereof between or among the Company and/or any of its Subsidiaries and any
Investor and all such agreements shall continue in full force and effect or
(iii) limit any obligations of the Company under any of the other Transaction
Documents.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    (f)           Subject
to compliance with Section 9 (if applicable), this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto. This Agreement is not for
the benefit of, nor may any provision hereof be enforced by, any Person, other
than the parties hereto, their respective permitted successors and assigns and
the Persons referred to in Sections 6 and 7 hereof.

     

    (g)           The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. Unless the context clearly
indicates otherwise, each pronoun herein shall be deemed to include the
masculine, feminine, neuter, singular and plural forms thereof. The terms
“including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement
instead of just the provision in which they are found.

     

    (h)           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. In
the event that any signature is delivered by facsimile transmission or by an
e-mail which contains a portable document format (.pdf) file of an executed
signature page, such signature page shall create a valid and binding obligation
of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such signature page were an original
thereof.

     

    (i)           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.

     

    (j)           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. Notwithstanding anything to the contrary set forth
in Section 10, terms used in this Agreement but
defined in the other Transaction Documents shall have the meanings ascribed to
such terms on the Closing Date in such other Transaction Documents unless
otherwise consented to in writing by each Investor.

     

    (k)           All
consents and other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this Agreement,
by the Required Holders.

     

    (l)           The
obligations of each Investor under this Agreement and the other Transaction
Documents are several and not joint with the obligations of any other Investor,
and no Investor shall be responsible in any way for the performance of the
obligations of any other Investor under this Agreement or any other Transaction
Document. Nothing contained herein or in any other Transaction Document, and no
action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as, and the Company acknowledges that the Investors do
not so constitute, a partnership, an association, a joint venture or any other
kind of group or entity, or create a presumption that the Investors are in any
way acting in concert or as a group or entity with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Investors are not acting in concert or as
a group, and the Company shall not assert any such claim, with respect to such
obligations or the transactions contemplated by this Agreement or any of the
other the Transaction Documents. Each Investor 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 Investor to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained herein was
solely in the control of the Company, not the action or decision of any
Investor, and was done solely for the convenience of the Company and not because
it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and an Investor, solely,
and not between the Company and the Investors collectively and not between and
among Investors.

     

    [signature pages
follow]

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

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

     

    

    
      	 	
              COMPANY:

               

            
	 	
              BOVIE
      MEDICAL CORPORATION

               

               

              By:______________________________

              Name:

              Title:

               

            

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

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

     

    

    
      	 
      	
              BUYER:

               

            
	 
      	
              CRANSHIRE
      CAPITAL, L.P.

               

              By:           Downsview
      Capital, Inc.

              Its:           General
      Partner

            
	 
      	
               

               

              ______________________________

              By:           Mitchell
      P. Kopin

              Its:           President

            

    

    

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    EXHIBIT
A

     

    FORM OF NOTICE OF
EFFECTIVENESS

     

    OF REGISTRATION
STATEMENT

     

    ______________________

     

    ______________________

     

    ______________________

     

    Attention:  _____________

     

    Re:           Bovie
Medical Corporation

     

    Ladies
and Gentlemen:

     

     

    [We
are][I am] counsel to Bovie Medical Corporation, a Delaware corporation (the
“Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities
Purchase Agreement”) entered into by and among the Company and the buyers
named therein (collectively, the “Holders”) pursuant to which
the Company issued to the Holders its shares of common stock, $0.001 par value
per share, of the Company (the “Common Stock”) and warrants
exercisable for shares of Common Stock (the “Warrants”). Pursuant to the
Securities Purchase Agreement, the Company also has entered into a Registration
Rights Agreement with the Holders (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement), including the shares of Common Stock issuable upon exercise of the
Warrants, under the Securities Act of 1933, as amended (the “1933 Act”). In connection with
the Company’s obligations under the Registration Rights Agreement, on
____________ ___, 20__, the Company filed a Registration Statement on Form S-3
(File No. 333-_____________) (the “Registration Statement”) with
the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names each of the Holders as a selling stockholder
thereunder.

     

    In
connection with the foregoing, [we][I] advise you that a member of the SEC’s
staff has advised [us][me] by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and [we][I] have no
knowledge, after telephonic inquiry of a member of the SEC’s staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.

     

    This
letter shall serve as our standing opinion to you that the shares of Common
Stock and the shares of Common Stock underlying the Warrants are freely
transferable by the Holders pursuant to the Registration Statement. You need not
require further letters from us to effect any future legend-free issuance or
reissuance of such shares of Common Stock to the Holders as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated _________ __,
20__.

     

     

    Very
truly yours,

     

    [ISSUER’S
COUNSEL]

     

    By:_____________________

    

     

    CC:           [LIST NAMES OF
HOLDERS]

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    EXHIBIT
B

    

    SELLING
STOCKHOLDERS

     

    The
shares of common stock being offered by the selling stockholders are those that
have been issued to the selling stockholders and those that are issuable to the
selling stockholders upon exercise of the warrants. For additional information
regarding the issuance of the shares of common stock and the warrants, see
“Private Placement of Common Stock and Warrants” above. We are registering the
shares of common stock in order to permit the selling stockholders to offer the
shares for resale from time to time. Except for the ownership of the shares of
common stock and the warrants issued pursuant to the Securities Purchase
Agreement, the selling stockholders have not had any material relationship with
us within the past three years.

     

    The table
below lists the selling stockholders and other information regarding the
beneficial ownership (as determined under Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder) of
the shares of common stock held by each of the selling stockholders. The second
column lists the number of shares of common stock beneficially owned by the
selling stockholders, based on their respective ownership of shares of common
stock and warrants, as of ________, 2010, assuming exercise of the warrants held
by each such selling stockholder on that date but taking account of any
limitations on exercise set forth therein.

     

    The third
column lists the shares of common stock being offered by this prospectus by the
selling stockholders and does not take in account any limitations on exercise of
the warrants set forth therein.

     

    In
accordance with the terms of a registration rights agreement with the holders of
the shares of common stock and the warrants, this prospectus generally covers
the resale of the sum of (i) shares of common stock that have been issued to the
selling stockholders and (ii) 133% the maximum number of shares of common stock
issuable upon exercise of the warrants, determined as if the outstanding
warrants were exercised in full (without regard to any limitations on exercise
contained therein) as of the trading day immediately preceding the date this
registration statement was initially filed with the SEC. Because the exercise
price of the warrants may be adjusted, the number of shares that will actually
be issued may be more or less than the number of shares being offered by this
prospectus. The fourth column assumes the sale of all of the shares offered by
the selling stockholders pursuant to this prospectus.

     

    Under the
terms of the warrants, a selling stockholder may not exercise the warrants to
the extent (but only to the extent) such selling stockholder or any of its
affiliates would beneficially own a number of shares of our common stock which
would exceed 4.9% or 9.9% (as applicable). The number of shares in the second
column reflects these limitations. The selling stockholders may sell all, some
or none of their shares in this offering. See “Plan of
Distribution.”

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      	
               

               

              Name of Selling Stockholder

            	 	
              Number of Shares of Common Stock Owned Prior to
      Offering

            	 	
              Maximum Number of  Shares of Common
      Stock to be Sold Pursuant to this Prospectus

            	 	
              Number of  Shares of Common Stock of
      Owned After Offering

            
	 	 	 	 	 	 	 
	
              Cranshire
      Capital, L.P.

            	 	 
      	 	 
      	 	 
      

    

    

    (1)  Downsview
Capital, Inc. (“Downsview”) is the general partner of Cranshire Capital, L.P.
(“Cranshire”) and consequently has voting control and investment discretion over
securities held by Cranshire. Mitchell P. Kopin (“Mr. Kopin”), President of
Downsview, has voting control over Downsview. As a result, each of Mr. Kopin,
Downsview and Cranshire may be deemed to have beneficial ownership (as
determined under Section 13(d) of the Securities Exchange Act of 1934, as
amended) of the shares owned by Cranshire which are being registered
hereunder.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    PLAN
OF DISTRIBUTION

     

    We are
registering the shares of common stock that have been issued to the selling
stockholders and the shares of common stock that are issuable upon exercise of
the warrants to permit the resale of these shares of common stock by the holders
of the shares of common stock and warrants from time to time after the date of
this prospectus. We will not receive any of the proceeds from the sale by the
selling stockholders of the shares of common stock.  We will bear all
fees and expenses incident to our obligation to register the shares of common
stock.

     

    The
selling stockholders may sell all or a portion of the shares of common stock
held by them and offered hereby from time to time directly or through one or
more underwriters, broker-dealers or agents. If the shares of common stock are
sold through underwriters or broker-dealers, the selling stockholders will be
responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices
determined at the time of sale or at negotiated prices. These sales may be
effected in transactions, which may involve crosses or block transactions,
pursuant to one or more of the following methods:

     

    
      	 	
              ·

            	
              on
      any national securities exchange or quotation service on which the
      securities may be listed or quoted at the time of sale;

               

            
	 	
              ·

            	
              in
      the over-the-counter market;

               

            
	 	
              ·

            	
              in
      transactions otherwise than on these exchanges or systems or in the
      over-the-counter market;

               

            
	 	
              ·

            	
              through
      the writing or settlement of options, whether such options are listed on
      an options exchange or otherwise;

               

            
	 	
              ·

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

               

            
	 	
              ·

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

               

            
	 	
              ·

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

               

            
	 	
              ·

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

               

            
	 	
              ·

            	
              privately
      negotiated transactions;

               

            
	 	
              ·

            	
              short
      sales made after the date the Registration Statement is declared effective
      by the SEC;

               

            
	 	
              ·

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

               

            
	 	
              ·

            	
              a
      combination of any such methods of sale; and

               

            
	 	
              ·

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
selling stockholders may also sell shares of common stock under Rule 144
promulgated under the Securities Act of 1933, as amended, if available, rather
than under this prospectus. In addition, the selling stockholders may transfer
the shares of common stock by other means not described in this prospectus. If
the selling stockholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters,
broker-dealers or agents may receive commissions in the form of discounts,
concessions or commissions from the selling stockholders or commissions from
purchasers of the shares of common stock for whom they may act as agent or to
whom they may sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in excess of those
customary in the types of transactions involved). In connection with sales of
the shares of common stock or otherwise, the selling stockholders may enter into
hedging transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in positions they
assume. The selling stockholders may also sell shares of common stock short and
deliver shares of common stock covered by this prospectus to close out short
positions and to return borrowed shares in connection with such short sales. The
selling stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares.

     

    The
selling stockholders may pledge or grant a security interest in some or all of
the warrants or shares of common stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may
offer and sell the shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3) or other
applicable provision of the Securities Act amending, if necessary, the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus. The selling stockholders
also may transfer and donate the shares of common stock in other circumstances
in which case the transferees, donees, pledgees or other successors in interest
will be the selling beneficial owners for purposes of this
prospectus.

     

    To the
extent required by the Securities Act and the rules and regulations thereunder,
the selling stockholders and any broker-dealer participating in the distribution
of the shares of common stock may be deemed to be “underwriters” within the
meaning of the Securities Act, and any commission paid, or any discounts or
concessions allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a particular
offering of the shares of common stock is made, a prospectus supplement, if
required, will be distributed, which will set forth the aggregate amount of
shares of common stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions
and other terms constituting compensation from the selling stockholders and any
discounts, commissions or concessions allowed or re-allowed or paid to
broker-dealers.

     

    Under the
securities laws of some states, the shares of common stock may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
some states the shares of common stock may not be sold unless such shares have
been registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied with.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    There can
be no assurance that any selling stockholder will sell any or all of the shares
of common stock registered pursuant to the registration statement, of which this
prospectus forms a part.

     

    The
selling stockholders and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder, including, without
limitation, to the extent applicable, Regulation M of the Exchange Act, which
may limit the timing of purchases and sales of any of the shares of common stock
by the selling stockholders and any other participating person. To the extent
applicable, Regulation M may also restrict the ability of any person engaged in
the distribution of the shares of common stock to engage in market-making
activities with respect to the shares of common stock. All of the foregoing may
affect the marketability of the shares of common stock and the ability of any
person or entity to engage in market-making activities with respect to the
shares of common stock.

     

    We will
pay all expenses of the registration of the shares of common stock pursuant to
the registration rights agreement, estimated to be
$[     ] in total, including, without limitation,
Securities and Exchange Commission filing fees and expenses of compliance with
state securities or “blue sky” laws; provided, however, a selling stockholder
will pay all underwriting discounts and selling commissions, if any. We will
indemnify the selling stockholders against liabilities, including some
liabilities under the Securities Act in accordance with the registration rights
agreements or the selling stockholders will be entitled to contribution. We may
be indemnified by the selling stockholders against civil liabilities, including
liabilities under the Securities Act that may arise from any written information
furnished to us by the selling stockholder specifically for use in this
prospectus, in accordance with the related registration rights agreements or we
may be entitled to contribution.

    

    Once sold
under the registration statement, of which this prospectus forms a part, the
shares of common stock will be freely tradable in the hands of persons other
than our affiliates.

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