Document:

THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THE SECURITIES MAY NOT BE SOLD,
      TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
      FOR THE SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE
      AND SCOPE CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS THAT
      REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR UNLESS SOLD PURSUANT TO RULE
      144
      OR REGULATION S UNDER SAID ACT.

     

    CALLABLE
      SECURED CONVERTIBLE NOTE

     

    
      	
              St.
                Petersburg, Florida

            	 
	
              September
                30, 2008

            	
              $4,988.07

            

    

    

    FOR
      VALUE RECEIVED,
      CYBER
      DEFENSE SYSTEMS, INC., a
      Florida
      corporation (hereinafter called the “Borrower”),
      hereby promises to pay to the order of New Millennium Partners II, LLC or
      registered assigns (the “Holder”)
      the
      sum of $4,988.07, on September 30, 2011 (the “Maturity
      Date”),
      and
      to pay interest on the unpaid principal balance hereof at the rate of two
      percent (2%) per annum from September 30,2008 (the “Issue
      Date”)
      until
      the same becomes due and payable, whether at maturity or upon acceleration
      or by
      prepayment or otherwise. Any amount of principal or interest on this Note which
      is not paid when due shall bear interest at the rate of fifteen percent (15%)
      per annum from the due date thereof until the same is paid (“Default
      Interest”).
      Interest shall commence accruing on the issue date, shall be computed on the
      basis of a 365-day year and the actual number of days elapsed and shall be
      payable, quarterly on March 31, June 30, September 30 and December 31
      of each year beginning on the last day of the first full quarter after Issue
      Date. All payments due hereunder (to the extent not converted into common stock,
      $.001 par value per share, of the Borrower (the “Common
      Stock”)
      in
      accordance with the terms hereof) shall be made in lawful money of the United
      States of America. All payments shall be made at such address as the Holder
      shall hereafter give to the Borrower by written notice made in accordance with
      the provisions of this Note. Whenever any amount expressed to be due by the
      terms of this Note is due on any day which is not a business day, the same
      shall
      instead be due on the next succeeding day which is a business day and, in the
      case of any interest payment date which is not the date on which this Note
      is
      paid in full, the extension of the due date thereof shall not be taken into
      account for purposes of determining the amount of interest due on such date.
      As
      used in this Note, the term “business day” shall mean any day other than a
      Saturday, Sunday or a day on which commercial banks in the city of New York,
      New
      York are authorized or required by law or executive order to remain closed.
      Each
      capitalized term used herein, and not otherwise defined, shall have the meaning
      ascribed thereto in that certain Securities Purchase Agreement, dated April
      1,
      2005 (the “Purchase
      Agreement”).
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    This
      Note
      is free from all taxes, liens, claims and encumbrances with respect to the
      issue
      thereof and shall not be subject to preemptive rights or other similar rights
      of
      shareholders of the Borrower and will not impose personal liability upon the
      holder thereof. The obligations of the Borrower under this Note shall be secured
      by that certain Security Agreement by and between the Borrower and the Holder
      of
      even date herewith.

     

    The
      following terms shall apply to this Note:

     

    ARTICLE
      I. CONVERSION
      RIGHTS

     

    1.1 Conversion
      Right.
      The
      Holder shall have the right from time to time, and at any time on or prior
      to
      the earlier of (i) the Maturity Date and (ii) the date of payment of the Default
      Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III,
      the Optional Prepayment Amount (as defined in Section 5.1) or (iii) any payments
      pursuant to Section 1.7, each in respect of the remaining outstanding principal
      amount of this Note to convert all or any part of the outstanding and unpaid
      principal amount of this Note into fully paid and non-assessable shares of
      Common Stock, as such Common Stock exists on the Issue Date, or any shares
      of
      capital stock or other securities of the Borrower into which such Common Stock
      shall hereafter be changed or reclassified at the conversion price (the
“Conversion
      Price”)
      determined as provided herein (a “Conversion”);
      provided,
      however,
      that in
      no event shall the Holder be entitled to convert any portion of this Note in
      excess of that portion of this Note upon conversion of which the sum of (1)
      the
      number of shares of Common Stock beneficially owned by the Holder and its
      affiliates (other than shares of Common Stock which may be deemed beneficially
      owned through the ownership of the unconverted portion of the Notes or the
      unexercised or unconverted portion of any other security of the Borrower
      (including, without limitation, the warrants issued by the Borrower pursuant
      to
      the Purchase Agreement) subject to a limitation on conversion or exercise
      analogous to the limitations contained herein) and (2) the number of shares
      of
      Common Stock issuable upon the conversion of the portion of this Note with
      respect to which the determination of this proviso is being made, would result
      in beneficial ownership by the Holder and its affiliates of more than 4.9%
      of
      the outstanding shares of Common Stock. For purposes of the proviso to the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as
      amended, and Regulations 13D-G thereunder, except as otherwise provided in
      clause (1) of such proviso. The number of shares of Common Stock to be issued
      upon each conversion of this Note shall be determined by dividing the Conversion
      Amount (as defined below) by the applicable Conversion Price then in effect
      on
      the date specified in the notice of conversion, in the form attached hereto
      as
      Exhibit A (the “Notice
      of Conversion”),
      delivered to the Borrower by the Holder in accordance with Section 1.4 below;
      provided that the Notice of Conversion is submitted by facsimile (or by other
      means resulting in, or reasonably expected to result in, notice) to the Borrower
      before 6:00 p.m., New York, New York time on such conversion date (the
“Conversion
      Date”).
      The
      term “Conversion
      Amount”
means,
      with respect to any conversion of this Note, the sum of (1) the principal amount
      of this Note to be converted in such conversion plus
      (2)
      accrued and unpaid interest, if any, on such principal amount at the interest
      rates provided in this Note to the Conversion Date plus
      (3)
      Default Interest, if any, on the amounts referred to in the immediately
      preceding clauses (1) and/or (2) plus
      (4) at
      the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and
      1.4(g) hereof or pursuant to Section 2(c) of that certain Registration Rights
      Agreement, dated as of April 1, 2005, executed in connection with the initial
      issuance of this Note and the other Notes issued on the Issue Date (the
“Registration
      Rights Agreement”).

    
      
        
        

      

      
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    1.2 Conversion
      Price.

     

    (a) Calculation
      of Conversion Price.
      The
      Conversion Price shall be the lesser of (i) the Variable Conversion Price (as
      defined herein) and (ii) the Fixed Conversion Price (as defined herein)
      (subject, in each case, to equitable adjustments for stock splits, stock
      dividends or rights offerings by the Borrower relating to the Borrower’s
      securities or the securities of any subsidiary of the Borrower, combinations,
      recapitalization, reclassifications, extraordinary distributions and similar
      events). The “Variable
      Conversion Price”
shall
      mean the Applicable Percentage (as defined herein) multiplied by the Market
      Price (as defined herein). “Market
      Price”
means
      the average of the lowest three (3) Trading Prices (as defined below) for the
      Common Stock during the twenty (20) Trading Day period ending one Trading Day
      prior to the date the Conversion Notice is sent by the Holder to the Borrower
      via facsimile (the “Conversion
      Date”).
      “Trading
      Price”
means,
      for any security as of any date, the intraday trading price on the
      Over-the-Counter Bulletin Board (the “OTCBB”)
      as
      reported by a reliable reporting service mutually acceptable to and hereafter
      designated by Holders of a majority in interest of the Notes and the Borrower
      or, if the OTCBB is not the principal trading market for such security, the
      intraday trading price of such security on the principal securities exchange
      or
      trading market where such security is listed or traded or, if no intraday
      trading price of such security is available in any of the foregoing manners,
      the
      average of the intraday trading prices of any market makers for such security
      that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If
      the Trading Price cannot be calculated for such security on such date in the
      manner provided above, the Trading Price shall be the fair market value as
      mutually determined by the Borrower and the holders of a majority in interest
      of
      the Notes being converted for which the calculation of the Trading Price is
      required in order to determine the Conversion Price of such Notes. “Trading
      Day”
shall
      mean any day on which the Common Stock is traded for any period on the OTCBB,
      or
      on the principal securities exchange or other securities market on which the
      Common Stock is then being traded. “Applicable
      Percentage”
shall
      mean 30%.

     

    (b) Conversion
      Price During Major Announcements.
      Notwithstanding
      anything contained in Section 1.2(a) to the contrary, in the event the Borrower
      (i) makes a public announcement that it intends to consolidate or merge with
      any
      other corporation (other than a merger in which the Borrower is the surviving
      or
      continuing corporation and its capital stock is unchanged) or sell or transfer
      all or substantially all of the assets of the Borrower or (ii) any person,
      group
      or entity (including the Borrower) publicly announces a tender offer to purchase
      50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the
      date of the announcement referred to in clause (i) or (ii) is hereinafter
      referred to as the “Announcement
      Date”),
      then
      the Conversion Price shall, effective upon the Announcement Date and continuing
      through the Adjusted Conversion Price Termination Date (as defined below),
      be
      equal to the lower of (x) the Conversion Price which would have been applicable
      for a Conversion occurring on the Announcement Date and (y) the Conversion
      Price
      that would otherwise be in effect. From and after the Adjusted Conversion Price
      Termination Date, the Conversion Price shall be determined as set forth in
      this
      Section 1.2(a). For purposes hereof, “Adjusted
      Conversion Price Termination Date”
shall
      mean, with respect to any proposed transaction or tender offer (or takeover
      scheme) for which a public announcement as contemplated by this Section 1.2(b)
      has been made, the date upon which the Borrower (in the case of clause (i)
      above) or the person, group or entity (in the case of clause (ii) above)
      consummates or publicly announces the termination or abandonment of the proposed
      transaction or tender offer (or takeover scheme) which caused this Section
      1.2(b) to become operative.

    
      
        
        

      

      
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    1.3 Authorized
      Shares.
      Subject
      to the completion of the Charter Amendment Actions (as defined in the Purchase
      Agreement), the Borrower covenants that during the period the conversion right
      exists, the Borrower will reserve from its authorized and unissued Common Stock
      a sufficient number of shares, free from preemptive rights, to provide for
      the
      issuance of Common Stock upon the full conversion of this Note and the other
      Notes issued pursuant to the Purchase Agreement. The Borrower is required at
      all
      times to have authorized and reserved two times the number of shares that is
      actually issuable upon full conversion of the Notes (based on the Conversion
      Price of the Notes or the Exercise Price of the Warrants in effect from time
      to
      time) (the “Reserved
      Amount”).
      The
      Reserved Amount shall be increased from time to time in accordance with the
      Borrower’s obligations pursuant to Section 4(h) of the Purchase Agreement. The
      Borrower represents that upon issuance, such shares will be duly and validly
      issued, fully paid and non-assessable. In addition, if the Borrower shall issue
      any securities or make any change to its capital structure which would change
      the number of shares of Common Stock into which the Notes shall be convertible
      at the then current Conversion Price, the Borrower shall at the same time make
      proper provision so that thereafter there shall be a sufficient number of shares
      of Common Stock authorized and reserved, free from preemptive rights, for
      conversion of the outstanding Notes. The Borrower (i) acknowledges that it
      has
      irrevocably instructed its transfer agent to issue certificates for the Common
      Stock issuable upon conversion of this Note, and (ii) agrees that its
      issuance of this Note shall constitute full authority to its officers and agents
      who are charged with the duty of executing stock certificates to execute and
      issue the necessary certificates for shares of Common Stock in accordance with
      the terms and conditions of this Note.

    
      
        
        

      

      
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    If,
      at
      any time a Holder of this Note submits a Notice of Conversion, and the Borrower
      does not have sufficient authorized but unissued shares of Common Stock
      available to effect such conversion in accordance with the provisions of this
      Article I (a “Conversion
      Default”),
      subject to Section 4.8, the Borrower shall issue to the Holder all of the shares
      of Common Stock which are then available to effect such conversion. The portion
      of this Note which the Holder included in its Conversion Notice and which
      exceeds the amount which is then convertible into available shares of Common
      Stock (the “Excess
      Amount”)
      shall,
      notwithstanding anything to the contrary contained herein, not be convertible
      into Common Stock in accordance with the terms hereof until (and at the Holder’s
      option at any time after) the date additional shares of Common Stock are
      authorized by the Borrower to permit such conversion, at which time the
      Conversion Price in respect thereof shall be the lesser of (i) the Conversion
      Price on the Conversion Default Date (as defined below) and (ii) the Conversion
      Price on the Conversion Date thereafter elected by the Holder in respect
      thereof. In addition, the Borrower shall pay to the Holder payments
      (“Conversion
      Default Payments”)
      for a
      Conversion Default in the amount of (x) the sum
      of
      (1) the
      then outstanding principal amount of this Note plus
      (2)
      accrued and unpaid interest on the unpaid principal amount of this Note through
      the Authorization Date (as defined below) plus
      (3)
      Default Interest, if any, on the amounts referred to in clauses (1) and/or
      (2),
multiplied
      by
      (y) .24,
multiplied
      by
      (z)
      (N/365), where N = the number of days from the day the holder submits a Notice
      of Conversion giving rise to a Conversion Default (the “Conversion
      Default Date”)
      to the
      date (the “Authorization
      Date”)
      that
      the Borrower authorizes a sufficient number of shares of Common Stock to effect
      conversion of the full outstanding principal balance of this Note. The Borrower
      shall use its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable following the earlier of (i) such time that the
      Holder notifies the Borrower or that the Borrower otherwise becomes aware that
      there are or likely will be insufficient authorized and unissued shares to
      allow
      full conversion thereof and (ii) a Conversion Default. The Borrower shall send
      notice to the Holder of the authorization of additional shares of Common Stock,
      the Authorization Date and the amount of Holder’s accrued Conversion Default
      Payments. The accrued Conversion Default Payments for each calendar month shall
      be paid in cash or shall be convertible into Common Stock (at such time as
      there
      are sufficient authorized shares of Common Stock) at the applicable Conversion
      Price, at the Borrower’s option, as follows:

     

    (a) In
      the
      event the Borrower elects to make such payment in cash, cash payment shall
      be
      made to Holder by the fifth (5th)
      day of
      the month following the month in which it has accrued; and

     

    (b) 
      In the
      event the Borrower elects to make such payment in Common Stock, the Holder
      may
      convert such payment amount into Common Stock at the Conversion Price (as in
      effect at the time of conversion) at any time after the fifth day of the month
      following the month in which it has accrued in accordance with the terms of
      this
      Article I (so long as there is then a sufficient number of authorized shares
      of
      Common Stock).

     

    The
      Borrower’s election shall be made in writing to the Holder at any time prior to
      6:00 p.m., New York, New York time, on the third day of the month following
      the
      month in which Conversion Default payments have accrued. If no election is
      made,
      the Borrower shall be deemed to have elected to remit Common Stock. Nothing
      herein shall limit the Holder’s right to pursue actual damages (to the extent in
      excess of the Conversion Default Payments) for the Borrower’s failure to
      maintain a sufficient number of authorized shares of Common Stock, and each
      holder shall have the right to pursue all remedies available at law or in equity
      (including degree of specific performance and/or injunctive
      relief).

     

    1.4 Method
      of Conversion.

     

    (a) Mechanics
      of Conversion.
      Subject
      to Section 1.1, this Note may be converted by the Holder in whole or in part
      at
      any time from time to time after the Issue Date, by (A) submitting to the
      Borrower a Notice of Conversion (by facsimile or other reasonable means of
      communication dispatched on the Conversion Date prior to 6:00 p.m., New York,
      New York time) and (B) subject to Section 1.4(b), surrendering this Note at
      the principal office of the Borrower. 

    
      
        
        

      

      
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    (b) Surrender
      of Note Upon Conversion.
      Notwithstanding
      anything to the contrary set forth herein, upon conversion of this Note in
      accordance with the terms hereof, the Holder shall not be required to physically
      surrender this Note to the Borrower unless the entire unpaid principal amount
      of
      this Note is so converted. The Holder and the Borrower shall maintain records
      showing the principal amount so converted and the dates of such conversions
      or
      shall use such other method, reasonably satisfactory to the Holder and the
      Borrower, so as not to require physical surrender of this Note upon each such
      conversion. In the event of any dispute or discrepancy, such records of the
      Borrower shall be controlling and determinative in the absence of manifest
      error. Notwithstanding the foregoing, if any portion of this Note is converted
      as aforesaid, the Holder may not transfer this Note unless the Holder first
      physically surrenders this Note to the Borrower, whereupon the Borrower will
      forthwith issue and deliver upon the order of the Holder a new Note of like
      tenor, registered as the Holder (upon payment by the Holder of any applicable
      transfer taxes) may request, representing in the aggregate the remaining unpaid
      principal amount of this Note. The Holder and any assignee, by acceptance of
      this Note, acknowledge and agree that, by reason of the provisions of this
      paragraph, following conversion of a portion of this Note, the unpaid and
      unconverted principal amount of this Note represented by this Note may be less
      than the amount stated on the face hereof.

     

    (c) Payment
      of Taxes.
      The
      Borrower shall not be required to pay any tax which may be payable in respect
      of
      any transfer involved in the issue and delivery of shares of Common Stock or
      other securities or property on conversion of this Note in a name other than
      that of the Holder (or in street name), and the Borrower shall not be required
      to issue or deliver any such shares or other securities or property unless
      and
      until the person or persons (other than the Holder or the custodian in whose
      street name such shares are to be held for the Holder’s account) requesting the
      issuance thereof shall have paid to the Borrower the amount of any such tax
      or
      shall have established to the satisfaction of the Borrower that such tax has
      been paid.

     

    (d) Delivery
      of Common Stock Upon Conversion.
      Upon
      receipt by the Borrower from the Holder of a facsimile transmission (or other
      reasonable means of communication) of a Notice of Conversion meeting the
      requirements for conversion as provided in this Section 1.4, the Borrower shall
      issue and deliver or cause to be issued and delivered to or upon the order
      of
      the Holder certificates for the Common Stock issuable upon such conversion
      within five (5) business days after such receipt (and, solely in the case of
      conversion of the entire unpaid principal amount hereof, surrender of this
      Note)
      (such second business day being hereinafter referred to as the “Deadline”)
      in
      accordance with the terms hereof and the Purchase Agreement (including, without
      limitation, in accordance with the requirements of Section 2(g) of the Purchase
      Agreement that certificates for shares of Common Stock issued on or after the
      effective date of the Registration Statement upon conversion of this Note shall
      not bear any restrictive legend).

    
      
        
        

      

      
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    (e) Obligation
      of Borrower to Deliver Common Stock.
      Upon
      receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed
      to
      be the holder of record of the Common Stock issuable upon such conversion,
      the
      outstanding principal amount and the amount of accrued and unpaid interest
      on
      this Note shall be reduced to reflect such conversion, and, unless the Borrower
      defaults on its obligations under this Article I, all rights with respect to
      the
      portion of this Note being so converted shall forthwith terminate except the
      right to receive the Common Stock or other securities, cash or other assets,
      as
      herein provided, on such conversion. If the Holder shall have given a Notice
      of
      Conversion as provided herein, the Borrower’s obligation to issue and deliver
      the certificates for Common Stock shall be absolute and unconditional,
      irrespective of the absence of any action by the Holder to enforce the same,
      any
      waiver or consent with respect to any provision thereof, the recovery of any
      judgment against any person or any action to enforce the same, any failure
      or
      delay in the enforcement of any other obligation of the Borrower to the holder
      of record, or any setoff, counterclaim, recoupment, limitation or termination,
      or any breach or alleged breach by the Holder of any obligation to the Borrower,
      and irrespective of any other circumstance which might otherwise limit such
      obligation of the Borrower to the Holder in connection with such conversion.
      The
      Conversion Date specified in the Notice of Conversion shall be the Conversion
      Date so long as the Notice of Conversion is received by the Borrower before
      6:00
      p.m., New York, New York time, on such date.

     

    (f) Delivery
      of Common Stock by Electronic Transfer.
      In
      lieu
      of delivering physical certificates representing the Common Stock issuable
      upon
      conversion, provided the Borrower’s transfer agent is participating in the
      Depository Trust Company (“DTC”)
      Fast
      Automated Securities Transfer (“FAST”)
      program, upon request of the Holder and its compliance with the provisions
      contained in Section 1.1 and in this Section 1.4, the Borrower shall use its
      best efforts to cause its transfer agent to electronically transmit the Common
      Stock issuable upon conversion to the Holder by crediting the account of
      Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission
      (“DWAC”)
      system.

     

    (g) Failure
      to Deliver Common Stock Prior to Deadline.
      Without
      in any way limiting the Holder’s right to pursue other remedies, including
      actual damages and/or equitable relief, the parties agree that if delivery
      of
      the Common Stock issuable upon conversion of this Note is more than two (2)
      days
      after the Deadline (other than a failure due to the circumstances described
      in
      Section 1.3 above, which failure shall be governed by such Section) the Borrower
      shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline
      that the Borrower fails to deliver such Common Stock. Such cash amount shall
      be
      paid to Holder by the fifth day of the month following the month in which it
      has
      accrued or, at the option of the Holder (by written notice to the Borrower
      by
      the first day of the month following the month in which it has accrued), shall
      be added to the principal amount of this Note, in which event interest shall
      accrue thereon in accordance with the terms of this Note and such additional
      principal amount shall be convertible into Common Stock in accordance with
      the
      terms of this Note.

    
      
        
        

      

      
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    1.5 Concerning
      the Shares.
      The
      shares of Common Stock issuable upon conversion of this Note may not be sold
      or
      transferred unless (i) such shares are sold pursuant to an effective
      registration statement under the Act or (ii) the Borrower or its transfer agent
      shall have been furnished with an opinion of counsel (which opinion shall be
      in
      form, substance and scope customary for opinions of counsel in comparable
      transactions) to the effect that the shares to be sold or transferred may be
      sold or transferred pursuant to an exemption from such registration or
      (iii) such shares are sold or transferred pursuant to Rule 144 under the
      Act (or a successor rule) (“Rule
      144”)
      or
      (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of
      the Borrower who agrees to sell or otherwise transfer the shares only in
      accordance with this Section 1.5 and who is an Accredited Investor (as defined
      in the Purchase Agreement). Except as otherwise provided in the Purchase
      Agreement (and subject to the removal provisions set forth below), until such
      time as the shares of Common Stock issuable upon conversion of this Note have
      been registered under the Act as contemplated by the Registration Rights
      Agreement or otherwise may be sold pursuant to Rule 144 without any restriction
      as to the number of securities as of a particular date that can then be
      immediately sold, each certificate for shares of Common Stock issuable upon
      conversion of this Note that has not been so included in an effective
      registration statement or that has not been sold pursuant to an effective
      registration statement or an exemption that permits removal of the legend,
      shall
      bear a legend substantially in the following form, as appropriate:

     

    “THE
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, TRANSFERRED
      OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
      SECURITIES UNDER SAID ACT, OR AN OPINION OF COUNSEL IN FORM, SUBSTANCE AND
      SCOPE
      CUSTOMARY FOR OPINIONS OF COUNSEL IN COMPARABLE TRANSACTIONS, THAT REGISTRATION
      IS NOT REQUIRED UNDER SAID ACT UNLESS SOLD PURSUANT TO RULE 144 OR REGULATION
      S
      UNDER SAID ACT.”

     

    The
      legend set forth above shall be removed and the Borrower shall issue to the
      Holder a new certificate therefor free of any transfer legend if (i) the
      Borrower or its transfer agent shall have received an opinion of counsel, in
      form, substance and scope customary for opinions of counsel in comparable
      transactions, to the effect that a public sale or transfer of such Common Stock
      may be made without registration under the Act and the shares are so sold or
      transferred, (ii) such Holder provides the Borrower or its transfer agent with
      reasonable assurances that the Common Stock issuable upon conversion of this
      Note (to the extent such securities are deemed to have been acquired on the
      same
      date) can be sold pursuant to Rule 144 or (iii) in the case of the Common Stock
      issuable upon conversion of this Note, such security is registered for sale
      by
      the Holder under an effective registration statement filed under the Act or
      otherwise may be sold pursuant to Rule 144 without any restriction as to the
      number of securities as of a particular date that can then be immediately sold.
      Nothing in this Note shall (i) limit the Borrower’s obligation under the
      Registration Rights Agreement or (ii) affect in any way the Holder’s obligations
      to comply with applicable prospectus delivery requirements upon the resale
      of
      the securities referred to herein.

     

    1.6 Effect
      of Certain Events.

     

    (a) Effect
      of Merger, Consolidation, Etc.
      At the
      option of the Holder, the sale, conveyance or disposition of all or
      substantially all of the assets of the Borrower, the effectuation by the
      Borrower of a transaction or series of related transactions in which more than
      50% of the voting power of the Borrower is disposed of, or the consolidation,
      merger or other business combination of the Borrower with or into any other
      Person (as defined below) or Persons when the Borrower is not the survivor
      shall
      either: (i) be deemed to be an Event of Default (as defined in Article III)
      pursuant to which the Borrower shall be required to pay to the Holder upon
      the
      consummation of and as a condition to such transaction an amount equal to the
      Default Amount (as defined in Article III) or (ii) be treated pursuant to
      Section 1.6(b) hereof. “Person”
shall
      mean any individual, corporation, limited liability company, partnership,
      association, trust or other entity or organization.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    (b) Adjustment
      Due to Merger, Consolidation, Etc.
      If,
      at
      any time when this Note is issued and outstanding and prior to conversion of
      all
      of the Notes, there shall be any merger, consolidation, exchange of shares,
      recapitalization, reorganization, or other similar event, as a result of which
      shares of Common Stock of the Borrower shall be changed into the same or a
      different number of shares of another class or classes of stock or securities
      of
      the Borrower or another entity, or in case of any sale or conveyance of all
      or
      substantially all of the assets of the Borrower other than in connection with
      a
      plan of complete liquidation of the Borrower, then the Holder of this Note
      shall
      thereafter have the right to receive upon conversion of this Note, upon the
      basis and upon the terms and conditions specified herein and in lieu of the
      shares of Common Stock immediately theretofore issuable upon conversion, such
      stock, securities or assets which the Holder would have been entitled to receive
      in such transaction had this Note been converted in full immediately prior
      to
      such transaction (without regard to any limitations on conversion set forth
      herein), and in any such case appropriate provisions shall be made with respect
      to the rights and interests of the Holder of this Note to the end that the
      provisions hereof (including, without limitation, provisions for adjustment
      of
      the Conversion Price and of the number of shares issuable upon conversion of
      the
      Note) shall thereafter be applicable, as nearly as may be practicable in
      relation to any securities or assets thereafter deliverable upon the conversion
      hereof. The Borrower shall not effect any transaction described in this Section
      1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days
      prior written notice (but in any event at least fifteen (15) days prior written
      notice) of the record date of the special meeting of shareholders to approve,
      or
      if there is no such record date, the consummation of, such merger,
      consolidation, exchange of shares, recapitalization, reorganization or other
      similar event or sale of assets (during which time the Holder shall be entitled
      to convert this Note) and (b) the resulting successor or acquiring entity (if
      not the Borrower) assumes by written instrument the obligations of this Section
      1.6(b). The above provisions shall similarly apply to successive consolidations,
      mergers, sales, transfers or share exchanges.

     

    (c) Adjustment
      Due to Distribution.
      If
      the
      Borrower shall declare or make any distribution of its assets (or rights to
      acquire its assets) to holders of Common Stock as a dividend, stock repurchase,
      by way of return of capital or otherwise (including any dividend or distribution
      to the Borrower’s shareholders in cash or shares (or rights to acquire shares)
      of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”),
      then
      the Holder of this Note shall be entitled, upon any conversion of this Note
      after the date of record for determining shareholders entitled to such
      Distribution, to receive the amount of such assets which would have been payable
      to the Holder with respect to the shares of Common Stock issuable upon such
      conversion had such Holder been the holder of such shares of Common Stock on
      the
      record date for the determination of shareholders entitled to such
      Distribution.

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    (d) Adjustment
      Due to Dilutive Issuance.
      If, at
      any time when any Notes are issued and outstanding, the Borrower issues or
      sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued
      or sold, any shares of Common Stock for no consideration or for a consideration
      per share (before deduction of reasonable expenses or commissions or
      underwriting discounts or allowances in connection therewith) less than the
      Fixed Conversion Price in effect on the date of such issuance (or deemed
      issuance) of such shares of Common Stock (a “Dilutive
      Issuance”),
      then
      immediately upon the Dilutive Issuance, the Fixed Conversion Price will be
      reduced to the amount of the consideration per share received by the Borrower
      in
      such Dilutive Issuance; provided
      that
      only one adjustment will be made for each Dilutive Issuance.

     

    The
      Borrower shall be deemed to have issued or sold shares of Common Stock if the
      Borrower in any manner issues or grants any warrants, rights or options, whether
      or not immediately exercisable, to subscribe for or to purchase Common Stock
      or
      other securities convertible into or exchangeable for Common Stock
      (“Convertible
      Securities”)
      (such
      warrants, rights and options to purchase Common Stock or Convertible Securities
      are hereinafter referred to as “Options”)
      and
      the price per share for which Common Stock is issuable upon the exercise of
      such
      Options is less than the Fixed Conversion Price then in effect, then the Fixed
      Conversion Price shall be equal to such price per share. For purposes of the
      preceding sentence, the “price per share for which Common Stock is issuable upon
      the exercise of such Options” is determined by dividing (i) the total amount, if
      any, received or receivable by the Borrower as consideration for the issuance
      or
      granting of all such Options, plus the minimum aggregate amount of additional
      consideration, if any, payable to the Borrower upon the exercise of all such
      Options, plus, in the case of Convertible Securities issuable upon the exercise
      of such Options, the minimum aggregate amount of additional consideration
      payable upon the conversion or exchange thereof at the time such Convertible
      Securities first become convertible or exchangeable, by (ii) the maximum total
      number of shares of Common Stock issuable upon the exercise of all such Options
      (assuming full conversion of Convertible Securities, if applicable). No further
      adjustment to the Conversion Price will be made upon the actual issuance of
      such
      Common Stock upon the exercise of such Options or upon the conversion or
      exchange of Convertible Securities issuable upon exercise of such
      Options.

     

    Additionally,
      the Borrower shall be deemed to have issued or sold shares of Common Stock
      if
      the Borrower in any manner issues or sells any Convertible Securities, whether
      or not immediately convertible (other than where the same are issuable upon
      the
      exercise of Options), and the price per share for which Common Stock is issuable
      upon such conversion or exchange is less than the Fixed Conversion Price then
      in
      effect, then the Fixed Conversion Price shall be equal to such price per share.
      For the purposes of the preceding sentence, the “price per share for which
      Common Stock is issuable upon such conversion or exchange” is determined by
      dividing (i) the total amount, if any, received or receivable by the Borrower
      as
      consideration for the issuance or sale of all such Convertible Securities,
      plus
      the minimum aggregate amount of additional consideration, if any, payable to
      the
      Borrower upon the conversion or exchange thereof at the time such Convertible
      Securities first become convertible or exchangeable, by (ii) the maximum total
      number of shares of Common Stock issuable upon the conversion or exchange of
      all
      such Convertible Securities. No further adjustment to the Fixed Conversion
      Price
      will be made upon the actual issuance of such Common Stock upon conversion
      or
      exchange of such Convertible Securities.

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    (e) Purchase
      Rights.
      If,
      at
      any time when any Notes are issued and outstanding, the Borrower issues any
      convertible securities or rights to purchase stock, warrants, securities or
      other property (the “Purchase
      Rights”)
      pro
      rata to the record holders of any class of Common Stock, then the Holder of
      this
      Note will be entitled to acquire, upon the terms applicable to such Purchase
      Rights, the aggregate Purchase Rights which such Holder could have acquired
      if
      such Holder had held the number of shares of Common Stock acquirable upon
      complete conversion of this Note (without regard to any limitations on
      conversion contained herein) immediately before the date on which a record
      is
      taken for the grant, issuance or sale of such Purchase Rights or, if no such
      record is taken, the date as of which the record holders of Common Stock are
      to
      be determined for the grant, issue or sale of such Purchase Rights.

     

    (f) Notice
      of Adjustments.
      Upon
      the
      occurrence of each adjustment or readjustment of the Conversion Price as a
      result of the events described in this Section 1.6, the Borrower, at its
      expense, shall promptly compute such adjustment or readjustment and prepare
      and
      furnish to the Holder of a certificate setting forth such adjustment or
      readjustment and showing in detail the facts upon which such adjustment or
      readjustment is based. The Borrower shall, upon the written request at any
      time
      of the Holder, furnish to such Holder a like certificate setting forth (i)
      such
      adjustment or readjustment, (ii) the Conversion Price at the time in effect
      and
      (iii) the number of shares of Common Stock and the amount, if any, of other
      securities or property which at the time would be received upon conversion
      of
      the Note.

     

    1.7 Trading
      Market Limitations.
      Unless
      permitted by the applicable rules and regulations of the principal securities
      market on which the Common Stock is then listed or traded, in no event shall
      the
      Borrower issue upon conversion of or otherwise pursuant to this Note and the
      other Notes issued pursuant to the Purchase Agreement more than the maximum
      number of shares of Common Stock that the Borrower can issue pursuant to any
      rule of the principal United States securities market on which the Common Stock
      is then traded (the “Maximum
      Share Amount”),
      which
      shall be 19.99% of the total shares outstanding on the Closing Date (as defined
      in the Purchase Agreement), subject to equitable adjustment from time to time
      for stock splits, stock dividends, combinations, capital reorganizations and
      similar events relating to the Common Stock occurring after the date hereof.
      Once the Maximum Share Amount has been issued (the date of which is hereinafter
      referred to as the “Maximum
      Conversion Date”),
      if
      the Borrower fails to eliminate any prohibitions under applicable law or the
      rules or regulations of any stock exchange, interdealer quotation system or
      other self-regulatory organization with jurisdiction over the Borrower or any
      of
      its securities on the Borrower’s ability to issue shares of Common Stock in
      excess of the Maximum Share Amount (a “Trading
      Market Prepayment Event”),
      in
      lieu of any further right to convert this Note, and in full satisfaction of
      the
      Borrower’s obligations under this Note, the Borrower shall pay to the Holder,
      within fifteen (15) business days of the Maximum Conversion Date (the
“Trading
      Market Prepayment Date”),
      an
      amount equal to 130% times
      the
sum
      of (a)
      the then outstanding principal amount of this Note immediately following the
      Maximum Conversion Date, plus
      (b)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      Trading Market Prepayment Date, plus
      (c)
      Default Interest, if any, on the amounts referred to in clause (a) and/or (b)
      above, plus
      (d) any
      optional amounts that may be added thereto at the Maximum Conversion Date by
      the
      Holder in accordance with the terms hereof (the then outstanding principal
      amount of this Note immediately following the Maximum Conversion Date,
plus
      the
      amounts referred to in clauses (b), (c) and (d) above shall collectively be
      referred to as the “Remaining
      Convertible Amount”).
      With
      respect to each Holder of Notes, the Maximum Share Amount shall refer to such
      Holder’s pro rata
      share
      thereof determined in accordance with Section 4.8 below. In the event that
      the
      sum of (x) the aggregate number of shares of Common Stock issued upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement
      plus
      (y) the
      aggregate number of shares of Common Stock that remain issuable upon conversion
      of this Note and the other Notes issued pursuant to the Purchase Agreement,
      represents at least one hundred percent (100%) of the Maximum Share Amount
      (the
“Triggering
      Event”),
      the
      Borrower will use its best efforts to seek and obtain Shareholder Approval
      (or
      obtain such other relief as will allow conversions hereunder in excess of the
      Maximum Share Amount) as soon as practicable following the Triggering Event
      and
      before the Maximum Conversion Date. As used herein, “Shareholder
      Approval”
means
      approval by the shareholders of the Borrower to authorize the issuance of the
      full number of shares of Common Stock which would be issuable upon full
      conversion of the then outstanding Notes but for the Maximum Share
      Amount.

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    1.8 Status
      as Shareholder.
      Upon
      submission of a Notice of Conversion by a Holder, (i) the shares covered thereby
      (other than the shares, if any, which cannot be issued because their issuance
      would exceed such Holder’s allocated portion of the Reserved Amount or Maximum
      Share Amount) shall be deemed converted into shares of Common Stock and (ii)
      the
      Holder’s rights as a Holder of such converted portion of this Note shall cease
      and terminate, excepting only the right to receive certificates for such shares
      of Common Stock and to any remedies provided herein or otherwise available
      at
      law or in equity to such Holder because of a failure by the Borrower to comply
      with the terms of this Note. Notwithstanding the foregoing, if a Holder has
      not
      received certificates for all shares of Common Stock prior to the tenth (10th)
      business day after the expiration of the Deadline with respect to a conversion
      of any portion of this Note for any reason, then (unless the Holder otherwise
      elects to retain its status as a holder of Common Stock by so notifying the
      Borrower) the Holder shall regain the rights of a Holder of this Note with
      respect to such unconverted portions of this Note and the Borrower shall, as
      soon as practicable, return such unconverted Note to the Holder or, if the
      Note
      has not been surrendered, adjust its records to reflect that such portion of
      this Note has not been converted. In all cases, the Holder shall retain all
      of
      its rights and remedies (including, without limitation, (i) the right to receive
      Conversion Default Payments pursuant to Section 1.3 to the extent required
      thereby for such Conversion Default and any subsequent Conversion Default and
      (ii) the right to have the Conversion Price with respect to subsequent
      conversions determined in accordance with Section 1.3) for the Borrower’s
      failure to convert this Note.

     

    ARTICLE
      II. CERTAIN
      COVENANTS

     

    2.1 Distributions
      on Capital Stock.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent (a) pay, declare or set apart for such
      payment, any dividend or other distribution (whether in cash, property or other
      securities) on shares of capital stock other than dividends on shares of Common
      Stock solely in the form of additional shares of Common Stock or (b) directly
      or
      indirectly or through any subsidiary make any other payment or distribution
      in
      respect of its capital stock except for distributions pursuant to any
      shareholders’ rights plan which is approved by a majority of the Borrower’s
      disinterested directors.

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    2.2 Restriction
      on Stock Repurchases.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not without the Holder’s written consent redeem, repurchase or otherwise acquire
      (whether for cash or in exchange for property or other securities or otherwise)
      in any one transaction or series of related transactions any shares of capital
      stock of the Borrower or any warrants, rights or options to purchase or acquire
      any such shares.

     

    2.3 Borrowings.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, create, incur, assume or suffer to
      exist any liability for borrowed money in excess of $50,000, except (a)
      borrowings in existence or committed on the date hereof and of which the
      Borrower has informed Holder in writing prior to the date hereof, (b)
      indebtedness to trade creditors or financial institutions incurred in the
      ordinary course of business or (c) borrowings, the proceeds of which shall
      be
      used to repay this Note.

     

    2.4 Sale
      of Assets.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, sell, lease or otherwise dispose of
      any significant portion of its assets outside the ordinary course of business.
      Any consent to the disposition of any assets may be conditioned on a specified
      use of the proceeds of disposition.

     

    2.5 Advances
      and Loans.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, lend money, give credit or make
      advances to any person, firm, joint venture or corporation, including, without
      limitation, officers, directors, employees, subsidiaries and affiliates of
      the
      Borrower, except loans, credits or advances (a) in existence or committed on
      the
      date hereof and which the Borrower has informed Holder in writing prior to
      the
      date hereof, (b) made in the ordinary course of business or (c) not in excess
      of
      $50,000.

     

    2.6 Contingent
      Liabilities.
      So long
      as the Borrower shall have any obligation under this Note, the Borrower shall
      not, without the Holder’s written consent, assume, guarantee, endorse,
      contingently agree to purchase or otherwise become liable upon the obligation
      of
      any person, firm, partnership, joint venture or corporation, except by the
      endorsement of negotiable instruments for deposit or collection and except
      assumptions, guarantees, endorsements and contingencies (a) in existence or
      committed on the date hereof and which the Borrower has informed Holder in
      writing prior to the date hereof, and (b) similar transactions in the ordinary
      course of business. 

     

    ARTICLE
      III. EVENTS
      OF DEFAULT

     

    If
      any of
      the following events of default (each, an “Event
      of Default”)
      shall
      occur:

     

    3.1 Failure
      to Pay Principal or Interest.
      The
      Borrower fails to pay the principal hereof or interest thereon when due on
      this
      Note, whether at maturity, upon a Trading Market Prepayment Event pursuant
      to
      Section 1.7, upon acceleration or otherwise;

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

     

    3.2 Conversion
      and the Shares.
      The
      Borrower fails to issue shares of Common Stock to the Holder (or announces
      or
      threatens that it will not honor its obligation to do so) upon exercise by
      the
      Holder of the conversion rights of the Holder in accordance with the terms
      of
      this Note (for a period of at least sixty (60) days, if such failure is solely
      as a result of the circumstances governed by Section 1.3 and the Borrower is
      using its best efforts to authorize a sufficient number of shares of Common
      Stock as soon as practicable), fails to transfer or cause its transfer agent
      to
      transfer (electronically or in certificated form) any certificate for shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights
      Agreement, or fails to remove any restrictive legend (or to withdraw any stop
      transfer instructions in respect thereof) on any certificate for any shares
      of
      Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note or the Registration Rights Agreement
      (or makes any announcement, statement or threat that it does not intend to
      honor
      the obligations described in this paragraph) and any such failure shall continue
      uncured (or any announcement, statement or threat not to honor its obligations
      shall not be rescinded in writing) for ten (10) days after the Borrower shall
      have been notified thereof in writing by the Holder;

     

    3.3 Breach
      of Covenants.
      The
      Borrower breaches any material covenant or other material term or condition
      contained in Sections 1.3, 1.6 or 1.7 of this Note, or Sections 4(c), 4(e),
      4(h), 4(i), 4(j) or 5 of the Purchase Agreement and such breach continues for
      a
      period of ten (10) days after written notice thereof to the Borrower from the
      Holder;

     

    3.4 Breach
      of Representations and Warranties.
      Any
      representation or warranty of the Borrower made herein or in any agreement,
      statement or certificate given in writing pursuant hereto or in connection
      herewith (including, without limitation, the Purchase Agreement and the
      Registration Rights Agreement), shall be false or misleading in any material
      respect when made and the breach of which has (or with the passage of time
      will
      have) a material adverse effect on the rights of the Holder with respect to
      this
      Note, the Purchase Agreement or the Registration Rights Agreement;

     

    3.5 Receiver
      or Trustee.
      The
      Borrower or any subsidiary of the Borrower shall make an assignment for the
      benefit of creditors, or apply for or consent to the appointment of a receiver
      or trustee for it or for a substantial part of its property or business, or
      such
      a receiver or trustee shall otherwise be appointed;

     

    3.6 Judgments.
      Any
      money judgment, writ or similar process shall be entered or filed against the
      Borrower or any subsidiary of the Borrower or any of its property or other
      assets for more than $50,000, and shall remain unvacated, unbonded or unstayed
      for a period of twenty (20) days unless otherwise consented to by the Holder,
      which consent will not be unreasonably withheld;

     

    3.7 Bankruptcy.
      Bankruptcy, insolvency, reorganization or liquidation proceedings or other
      proceedings for relief under any bankruptcy law or any law for the relief of
      debtors shall be instituted by or against the Borrower or any subsidiary of
      the
      Borrower;

     

    3.8 Delisting
      of Common Stock.
      The
      Borrower shall fail to maintain the listing of the Common Stock on at least
      one
      of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market,
      the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock
      Exchange; or

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    3.9 Default
      Under Other Notes.
      An Event
      of Default has occurred and is continuing under any of the other Notes issued
      pursuant to the Purchase Agreement, then, upon the occurrence and during the
      continuation of any Event of Default specified in Section 3.1, 3.2, 3.3, 3.4,
      3.5, 3.7, 3.9, or 3.10, at the option of the Holders of a majority of the
      aggregate principal amount of the outstanding Notes issued pursuant to the
      Purchase Agreement exercisable through the delivery of written notice to the
      Borrower by such Holders (the “Default
      Notice”),
      and
      upon the occurrence of an Event of Default specified in Section 3.6 or 3.8,
      the
      Notes shall become immediately due and payable and the Borrower shall pay to
      the
      Holder, in full satisfaction of its obligations hereunder, an amount equal
      to
      the greater of (i) 130% times
      the
sum
      of (w)
      the then outstanding principal amount of this Note plus
      (x)
      accrued and unpaid interest on the unpaid principal amount of this Note to
      the
      date of payment (the “Mandatory
      Prepayment Date”)
      plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and/or
      (x)
plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Default
      Sum”)
      or
      (ii) the “parity value” of the Default Sum to be prepaid, where parity value
      means (a) the highest number of shares of Common Stock issuable upon conversion
      of or otherwise pursuant to such Default Sum in accordance with Article I,
      treating the Trading Day immediately preceding the Mandatory Prepayment Date
      as
      the “Conversion Date” for purposes of determining the lowest applicable
      Conversion Price, unless the Default Event arises as a result of a breach in
      respect of a specific Conversion Date in which case such Conversion Date shall
      be the Conversion Date), multiplied
      by
      (b) the
      highest Closing Price for the Common Stock during the period beginning on the
      date of first occurrence of the Event of Default and ending one day prior to
      the
      Mandatory Prepayment Date (the “Default
      Amount”)
      and
      all other amounts payable hereunder shall immediately become due and payable,
      all without demand, presentment or notice, all of which hereby are expressly
      waived, together with all costs, including, without limitation, legal fees
      and
      expenses, of collection, and the Holder shall be entitled to exercise all other
      rights and remedies available at law or in equity. If the Borrower fails to
      pay
      the Default Amount within five (5) business days of written notice that such
      amount is due and payable, then the Holder shall have the right at any time,
      so
      long as the Borrower remains in default (and so long and to the extent that
      there are sufficient authorized shares), to require the Borrower, upon written
      notice, to immediately issue, in lieu of the Default Amount, the number of
      shares of Common Stock of the Borrower equal to the Default Amount divided
      by
      the Conversion Price then in effect.

     

    ARTICLE
      IV. MISCELLANEOUS

     

    4.1 Failure
      or Indulgence Not Waiver.
      No
      failure or delay on the part of the Holder in the exercise of any power, right
      or privilege hereunder shall operate as a waiver thereof, nor shall any single
      or partial exercise of any such power, right or privilege preclude other or
      further exercise thereof or of any other right, power or privileges. All rights
      and remedies existing hereunder are cumulative to, and not exclusive of, any
      rights or remedies otherwise available.

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    4.2 Notices.
      Any
      notice herein required or permitted to be given shall be in writing and may
      be
      personally served or delivered by courier or sent by United States mail and
      shall be deemed to have been given upon receipt if personally served (which
      shall include telephone line facsimile transmission) or sent by courier or
      three
      (3) days after being deposited in the United States mail, certified, with
      postage pre-paid and properly addressed, if sent by mail. For the purposes
      hereof, the address of the Holder shall be as shown on the records of the
      Borrower; and the address of the Borrower shall be 10901 Roosevelt Boulevard,
      St. Petersburg, FL 33716, facsimile number: 727-577-0873. Both the Holder and
      the Borrower may change the address for service by service of written notice
      to
      the other as herein provided.

     

    4.3 Amendments.
      This
      Note and any provision hereof may only be amended by an instrument in writing
      signed by the Borrower and the Holder. The term “Note” and all reference
      thereto, as used throughout this instrument, shall mean this instrument (and
      the
      other Notes issued pursuant to the Purchase Agreement) as originally executed,
      or if later amended or supplemented, then as so amended or
      supplemented.

     

    4.4 Assignability.
      This
      Note shall be binding upon the Borrower and its successors and assigns, and
      shall inure to be the benefit of the Holder and its successors and assigns.
      Each
      transferee of this Note must be an “accredited investor” (as defined in Rule
      501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary,
      this Note may be pledged as collateral in connection with a bona fide
      margin
      account or other lending arrangement.

     

    4.5 Cost
      of Collection.
      If
      default is made in the payment of this Note, the Borrower shall pay the Holder
      hereof costs of collection, including reasonable attorneys’ fees.

     

    4.6 Governing
      Law.
      THIS
      NOTE SHALL BE ENFORCED, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
      WITHIN SUCH STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
      BORROWER HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
      FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING
      UNDER THIS NOTE, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
      TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE
      THE
      DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
      BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
      CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
      THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER
      PARTY’S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. BOTH
      PARTIES AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR
      PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
      SUIT ON SUCH JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT
      PREVAIL IN ANY DISPUTE ARISING UNDER THIS NOTE SHALL BE RESPONSIBLE FOR ALL
      FEES
      AND EXPENSES, INCLUDING ATTORNEYS’ FEES, INCURRED BY THE PREVAILING PARTY IN
      CONNECTION WITH SUCH DISPUTE.

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

     

    4.7 Certain
      Amounts.
      Whenever
      pursuant to this Note the Borrower is required to pay an amount in excess of
      the
      outstanding principal amount (or the portion thereof required to be paid at
      that
      time) plus accrued and unpaid interest plus Default Interest on such interest,
      the Borrower and the Holder agree that the actual damages to the Holder from the
      receipt of cash payment on this Note may be difficult to determine and the
      amount to be so paid by the Borrower represents stipulated damages and not
      a
      penalty and is intended to compensate the Holder in part for loss of the
      opportunity to convert this Note and to earn a return from the sale of shares
      of
      Common Stock acquired upon conversion of this Note at a price in excess of
      the
      price paid for such shares pursuant to this Note. The Borrower and the Holder
      hereby agree that such amount of stipulated damages is not plainly
      disproportionate to the possible loss to the Holder from the receipt of a cash
      payment without the opportunity to convert this Note into shares of Common
      Stock.

     

    4.8 Allocations
      of Maximum Share Amount and Reserved Amount.
      The
      Maximum Share Amount and Reserved Amount shall be allocated pro rata among
      the
      Holders of Notes based on the principal amount of such Notes issued to each
      Holder. Each increase to the Maximum Share Amount and Reserved Amount shall
      be
      allocated pro rata among the Holders of Notes based on the principal amount
      of
      such Notes held by each Holder at the time of the increase in the Maximum Share
      Amount or Reserved Amount. In the event a Holder shall sell or otherwise
      transfer any of such Holder’s Notes, each transferee shall be allocated a pro
      rata portion of such transferor’s Maximum Share Amount and Reserved Amount. Any
      portion of the Maximum Share Amount or Reserved Amount which remains allocated
      to any person or entity which does not hold any Notes shall be allocated to
      the
      remaining Holders of Notes, pro rata based on the principal amount of such
      Notes
      then held by such Holders.

     

    4.9 Damages
      Shares.
      The
      shares of Common Stock that may be issuable to the Holder pursuant to Sections
      1.3 and 1.4(g) hereof and pursuant to Section 2(c) of the Registration Rights
      Agreement (“Damages
      Shares”)
      shall
      be treated as Common Stock issuable upon conversion of this Note for all
      purposes hereof and shall be subject to all of the limitations and afforded
      all
      of the rights of the other shares of Common Stock issuable hereunder, including
      without limitation, the right to be included in the Registration Statement
      filed
      pursuant to the Registration Rights Agreement. For purposes of calculating
      interest payable on the outstanding principal amount hereof, except as otherwise
      provided herein, amounts convertible into Damages Shares (“Damages
      Amounts”)
      shall
      not bear interest but must be converted prior to the conversion of any
      outstanding principal amount hereof, until the outstanding Damages Amounts
      is
      zero.

     

    4.10 Denominations.
      At the
      request of the Holder, upon surrender of this Note, the Borrower shall promptly
      issue new Notes in the aggregate outstanding principal amount hereof, in the
      form hereof, in such denominations of at least $50,000 as the Holder shall
      request.

     

    4.11 Purchase
      Agreement.
      By its
      acceptance of this Note, each Holder agrees to be bound by the applicable terms
      of the Purchase Agreement.

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

     

    4.12 Notice
      of Corporate Events.
      Except
      as otherwise provided below, the Holder of this Note shall have no rights as
      a
      Holder of Common Stock unless and only to the extent that it converts this
      Note
      into Common Stock. The Borrower shall provide the Holder with prior notification
      of any meeting of the Borrower’s shareholders (and copies of proxy materials and
      other information sent to shareholders). In the event of any taking by the
      Borrower of a record of its shareholders for the purpose of determining
      shareholders who are entitled to receive payment of any dividend or other
      distribution, any right to subscribe for, purchase or otherwise acquire
      (including by way of merger, consolidation, reclassification or
      recapitalization) any share of any class or any other securities or property,
      or
      to receive any other right, or for the purpose of determining shareholders
      who
      are entitled to vote in connection with any proposed sale, lease or conveyance
      of all or substantially all of the assets of the Borrower or any proposed
      liquidation, dissolution or winding up of the Borrower, the Borrower shall
      mail
      a notice to the Holder, at least twenty (20) days prior to the record date
      specified therein (or thirty (30) days prior to the consummation of the
      transaction or event, whichever is earlier), of the date on which any such
      record is to be taken for the purpose of such dividend, distribution, right
      or
      other event, and a brief statement regarding the amount and character of such
      dividend, distribution, right or other event to the extent known at such time.
      The Borrower shall make a public announcement of any event requiring
      notification to the Holder hereunder substantially simultaneously with the
      notification to the Holder in accordance with the terms of this Section
      4.12.

     

    4.13 Remedies.
      The
      Borrower acknowledges that a breach by it of its obligations hereunder will
      cause irreparable harm to the Holder, by vitiating the intent and purpose of
      the
      transaction contemplated hereby. Accordingly, the Borrower acknowledges that
      the
      remedy at law for a breach of its obligations under this Note will be inadequate
      and agrees, in the event of a breach or threatened breach by the Borrower of
      the
      provisions of this Note, that the Holder shall be entitled, in addition to
      all
      other available remedies at law or in equity, and in addition to the penalties
      assessable herein, to an injunction or injunctions restraining, preventing
      or
      curing any breach of this Note and to enforce specifically the terms and
      provisions thereof, without the necessity of showing economic loss and without
      any bond or other security being required.

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      V. CALL
      OPTION

     

    5.1 Call
      Option.
      Notwithstanding anything to the contrary contained in this Article V, so long
      as
      (i) no Event of Default or Trading Market Prepayment Event shall have
      occurred and be continuing, (ii) the Borrower has a sufficient number of
      authorized shares of Common Stock reserved for issuance upon full conversion
      of
      the Notes, then at any time after the Issue Date, and (iii) the Common
      Stock is trading at or below $.041 per share, the Borrower shall have the right,
      exercisable on not less than ten (10) Trading Days prior written notice to
      the
      Holders of the Notes (which notice may not be sent to the Holders of the Notes
      until the Borrower is permitted to prepay the Notes pursuant to this Section
      5.1), to prepay all of the outstanding Notes in accordance with this Section
      5.1. Any notice of prepayment hereunder (an “Optional
      Prepayment”)
      shall
      be delivered to the Holders of the Notes at their registered addresses appearing
      on the books and records of the Borrower and shall state (1) that the Borrower
      is exercising its right to prepay all of the Notes issued on the Issue Date
      and
      (2) the date of prepayment (the “Optional
      Prepayment Notice”).
      On
      the date fixed for prepayment (the “Optional
      Prepayment Date”),
      the
      Borrower shall make payment of the Optional Prepayment Amount (as defined below)
      to or upon the order of the Holders as specified by the Holders in writing
      to
      the Borrower at least one (1) business day prior to the Optional Prepayment
      Date. If the Borrower exercises its right to prepay the Notes, the Borrower
      shall make payment to the holders of an amount in cash (the “Optional
      Prepayment Amount”)
      equal
      to either (i) 135% (for prepayments occurring within thirty (30) days of
      the Issue Date), (ii) 145% for prepayments occurring between thirty-one
      (31) and ninety (90) days of the Issue Date, or (iii) 150% (for prepayments
      occurring after the ninetieth (90th)
      day
      following the Issue Date), multiplied by the sum of (w) the then outstanding
      principal amount of this Note plus
      (x) accrued and unpaid interest on the unpaid principal amount of this Note
      to the Optional Prepayment Date plus
      (y)
      Default Interest, if any, on the amounts referred to in clauses (w) and (x)
      plus
      (z) any
      amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof or
      pursuant to Section 2(c) of the Registration Rights Agreement (the then
      outstanding principal amount of this Note to the date of payment plus
      the
      amounts referred to in clauses (x), (y) and (z) shall collectively be known
      as
      the “Optional
      Prepayment Sum”).
      Notwithstanding notice of an Optional Prepayment, the Holders shall at all
      times
      prior to the Optional Prepayment Date maintain the right to convert all or
      any
      portion of the Notes in accordance with Article I and any portion of Notes
      so
      converted after receipt of an Optional Prepayment Notice and prior to the
      Optional Prepayment Date set forth in such notice and payment of the aggregate
      Optional Prepayment Amount shall be deducted from the principal amount of Notes
      which are otherwise subject to prepayment pursuant to such notice. If the
      Borrower delivers an Optional Prepayment Notice and fails to pay the Optional
      Prepayment Amount due to the Holders of the Notes within two (2) business days
      following the Optional Prepayment Date, the Borrower shall forever forfeit
      its
      right to redeem the Notes pursuant to this Section 5.1.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF,
      Borrower has caused this Note to be signed in its name by its duly authorized
      officer this 30th
      day of
      September, 2008.

    

    
      	
              CYBER
                DEFENSE SYSTEMS, INC.

            
	 	 
	
              By:
                

            	 
	 	
              William
                C. Robinson

            
	 	
              Chief
                Executive Officer

            

    

    
      
        
        

      

      
        20

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    NOTICE
      OF CONVERSION

    (To
      be
      Executed by the Registered Holder

    in
      order
      to Convert the Notes)

     

    The
      undersigned hereby irrevocably elects to convert $__________ principal amount
      of
      the Note (defined below) into shares of common stock, par value $.001 per share
      (“Common
      Stock”),
      of
      Cyber Defense Systems, Inc., a Florida corporation (the “Borrower”)
      according to the conditions of the convertible Notes of the Borrower dated
      as of
      September 30, 2008 (the “Notes”), as of the date written below. If securities
      are to be issued in the name of a person other than the undersigned, the
      undersigned will pay all transfer taxes payable with respect thereto and is
      delivering herewith such certificates. No fee will be charged to the Holder
      for
      any conversion, except for transfer taxes, if any. A copy of each Note is
      attached hereto (or evidence of loss, theft or destruction
      thereof).

     

    The
      Borrower shall electronically transmit the Common Stock issuable pursuant to
      this Notice of Conversion to the account of the undersigned or its nominee
      with
      DTC through its Deposit Withdrawal Agent Commission system (“DWAC
      Transfer”).

     

    Name
      of
      DTC Prime
      Broker:_____________________________________________________________

    Account
      Number:______________________________________________________________________

     

    In
      lieu
      of receiving shares of Common Stock issuable pursuant to this Notice of
      Conversion by way of a DWAC Transfer, the undersigned hereby requests that
      the
      Borrower issue a certificate or certificates for the number of shares of Common
      Stock set forth below (which numbers are based on the Holder’s calculation
      attached hereto) in the name(s) specified immediately below or, if additional
      space is necessary, on an attachment hereto:

     

    Name:_______________________________________________________________________________

    Address:_____________________________________________________________________________

     

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable to the undersigned upon conversion of the Notes
      shall
      be made pursuant to registration of the securities under the Securities Act
      of
      1933, as amended (the “Act”),
      or
      pursuant to an exemption from registration under the Act.

     

    Date
      of
      Conversion:___________________________

    Applicable
      Conversion Price:____________________

    Number
      of
      Shares of Common Stock to be Issued Pursuant to

    Conversion
      of the Notes:______________

    Signature:___________________________________

    Name:______________________________________

    Address:____________________________________

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    The
      Borrower shall issue and deliver shares of Common Stock to an overnight courier
      not later than three business days following receipt of the original Note(s)
      to
      be converted, and shall make payments pursuant to the Notes for the number
      of
      business days such issuance and delivery is late.

     

    
      
        
        

      

      
        22Unassociated Document

    Execution
      Copy

    

    

      COMMON
        STOCK PURCHASE AGREEMENT

       

      by
        and between

       

      KINGSBRIDGE
        CAPITAL LIMITED

       

      and

       

      MICROMET,
        INC.

       

      dated
        as of December 1, 2008

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE
      OF CONTENTS

     

    
      	 	 	
              Page

            
	 	 	 
	
              ARTICLE
                I                
                DEFINITIONS

            	
              3

            
	 	 	 
	
              Section
                1.01.

            	
              “Alternative
                Draw Down Amount” .

            	
              3

            
	
              Section
                1.02.

            	
              “Average
                Trading Volume” .

            	
              3

            
	
              Section
                1.03.

            	
              “Blackout
                Amount”

            	
              3

            
	
              Section
                1.04.

            	
              “Blackout
                Shares”

            	
              3

            
	
              Section
                1.05.

            	
              “Business
                Day”

            	
              3

            
	
              Section
                1.06.

            	
              “Bylaws”

            	
              3

            
	
              Section
                1.07.

            	
              “Certificate”

            	
              3

            
	
              Section
                1.08.

            	
              “Closing
                Date”

            	
              3

            
	
              Section
                1.09.

            	
              “Closing
                Price” .

            	
              3

            
	
              Section
                1.10.

            	
              “Commission”

            	
              3

            
	
              Section
                1.11.

            	
              “Commission
                Documents”

            	
              3

            
	
              Section
                1.12.

            	
              “Commitment
                Period”

            	
              3

            
	
              Section
                1.13.

            	
              “Common
                Stock”

            	
              4

            
	
              Section
                1.14.

            	
              “Condition
                Satisfaction Date”

            	
              4

            
	
              Section
                1.15.

            	
              “Consolidated
                Subsidiary”

            	
              4

            
	
              Section
                1.16.

            	
              “Convertible
                Security”

            	
              4

            
	
              Section
                1.17.

            	
              “Conversion
                Price”

            	
              4

            
	
              Section
                1.18.

            	
              “Damages”

            	
              4

            
	
              Section
                1.19.

            	
              “Draw
                Down”

            	
              4

            
	
              Section
                1.20.

            	
              “Draw
                Down Amount”

            	
              4

            
	
              Section
                1.21.

            	
              “Draw
                Down Discount Price”

            	
              4

            
	
              Section
                1.22.

            	
              “Draw
                Down Notice”

            	
              4

            
	
              Section
                1.23.

            	
              “Draw
                Down Pricing Period”

            	
              4

            
	
              Section
                1.24.

            	
              “DTC”

            	
              4

            
	
              Section
                1.25.

            	
              “Effective
                Date”

            	
              4

            
	
              Section
                1.26.

            	
              “Exchange
                Act”

            	
              5

            
	
              Section
                1.27.

            	
              “Excluded
                Merger or Sale”

            	
              5

            
	
              Section
                1.28.

            	
              “FINRA”.

            	
              5

            
	
              Section
                1.29.

            	
              “Knowledge”

            	
              5

            
	
              Section
                1.30.

            	
              “LIBOR”

            	
              5

            
	
              Section
                1.31.

            	
              “Liquidity
                Ratio”

            	
              5

            
	
              Section
                1.32.

            	
              “Make
                Whole Amount”

            	
              5

            
	
              Section
                1.33.

            	
              “Market
                Capitalization”

            	
              5

            
	
              Section
                1.34.

            	
              “Material
                Adverse Effect”

            	
              5

            
	
              Section
                1.35.

            	
              “Maximum
                Commitment Amount”

            	
              5

            
	
              Section
                1.36.

            	
              “Maximum
                Draw Down Amount”

            	
              6

            
	
              Section
                1.37.

            	
              “NASD”

            	
              6

            
	
              Section
                1.38.

            	
              “Permitted
                Transaction”

            	
              6

            
	
              Section
                1.39.

            	
              “Person”

            	
              6

            
	
              Section
                1.40.

            	
              “Principal
                Market”

            	
              6

            
	
              Section
                1.41.

            	
              “Prohibited
                Transaction”

            	
              6

            
	
              Section
                1.42.

            	
              “Prospectus”

            	
              6

            

    

     

    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    
      	
              Section
                1.43.

            	
              “Registrable
                Securities”

            	
              6

            
	
              Section
                1.44.

            	
              “Registration
                Rights Agreement”

            	
              6

            
	
              Section
                1.45.

            	
              “Registration
                Statement”

            	
              7

            
	
              Section
                1.46.

            	
              “Regulation
                D”

            	
              7

            
	
              Section
                1.47.

            	
              “Section 4(2)”

            	
              7

            
	
              Section
                1.48.

            	
              “Securities
                Act”

            	
              7

            
	
              Section
                1.49.

            	
              “Settlement
                Date”

            	
              7

            
	
              Section
                1.50.

            	
              “Shares”

            	
              7

            
	
              Section
                1.51.

            	
              “Trading
                Day”

            	
              7

            
	
              Section
                1.52.

            	
              “VWAP”

            	
              7

            
	
              Section
                1.53.

            	
              “Warrant”

            	
              7

            
	
              Section
                1.54.

            	
              “Warrant
                Shares”

            	
              7

            
	 	 
	
              ARTICLE
                II               
                PURCHASE AND SALE OF COMMON STOCK

            	
              8

            
	 	 	 
	
              Section
                2.01.

            	
              Purchase
                and Sale of Stock.

            	
              8

            
	
              Section
                2.02.

            	
              Closing.

            	
              8

            
	
              Section
                2.03.

            	
              Registration
                Statement and Prospectus.

            	
              8

            
	
              Section
                2.04.

            	
              Warrant.

            	
              8

            
	
              Section
                2.05.

            	
              Blackout
                Shares.

            	
              8

            
	 	 
	
              ARTICLE
                III               DRAW
                DOWN TERMS

            	
              8

            
	 	 	 
	
              Section
                3.01.

            	
              Draw
                Down Notice.

            	
              8

            
	
              Section
                3.02.

            	
              Number
                of Shares.

            	
              9

            
	
              Section
                3.03.

            	
              Limitation
                on Draw Downs.

            	
              9

            
	
              Section
                3.04.

            	
              Trading
                Cushion.

            	
              9

            
	
              Section
                3.05.

            	
              Settlement.

            	
              9

            
	
              Section
                3.06.

            	
              Delivery
                of Shares; Payment of Draw Down Amount.

            	
              9

            
	
              Section
                3.07.

            	
              Failure
                to Deliver Shares.

            	
              10

            
	 	 
	
              ARTICLE
                IV               REPRESENTATIONS
                AND WARRANTIES OF THE COMPANY

            	
              11

            
	 	 	 
	
              Section
                4.01.

            	
              Organization,
                Good Standing and Power.

            	
              11

            
	
              Section
                4.02.

            	
              Authorization;
                Enforcement.

            	
              11

            
	
              Section
                4.03.

            	
              Capitalization.

            	
              11

            
	
              Section
                4.04.

            	
              Issuance
                of Shares.

            	
              12

            
	
              Section
                4.05.

            	
              No
                Conflicts.

            	
              12

            
	
              Section
                4.06.

            	
              Commission
                Documents, Financial Statements.

            	
              13

            
	
              Section
                4.07.

            	
              No
                Material Adverse Change.

            	
              14

            
	
              Section
                4.08.

            	
              No
                Undisclosed Liabilities.

            	
              14

            
	
              Section
                4.09.

            	
              No
                Undisclosed Events or Circumstances.

            	
              14

            
	
              Section
                4.10.

            	
              Actions
                Pending.

            	
              14

            
	
              Section
                4.11.

            	
              Compliance
                with Law.

            	
              14

            
	
              Section
                4.12.

            	
              Certain
                Fees.

            	
              15

            
	
              Section
                4.13.

            	
              Disclosure.

            	
              15

            
	
              Section
                4.14.

            	
              Material
                Non-Public Information.

            	
              15

            

    

     

    
      
        
        

      

      
        ii

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                4.15.

            	
              Exemption
                from Registration; Valid Issuances.

            	
              15

            
	
              Section
                4.16.

            	
              No
                General Solicitation or Advertising in Regard to this
                Transaction.

            	
              15

            
	
              Section
                4.17.

            	
              No
                Integrated Offering.

            	
              16

            
	
              Section
                4.18.

            	
              Acknowledgment
                Regarding Investor’s Purchase of Shares.

            	
              16

            
	 	 
	
              ARTICLE
                V               
                REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR

            	
              16

            
	 	 	 
	
              Section
                5.01.

            	
              Organization
                and Standing of the Investor.

            	
              16

            
	
              Section
                5.02.

            	
              Authorization
                and Power.

            	
              16

            
	
              Section
                5.03.

            	
              No
                Conflicts.

            	
              17

            
	
              Section
                5.04.

            	
              Financial
                Capability.

            	
              17

            
	
              Section
                5.05.

            	
              Information.

            	
              17

            
	
              Section
                5.06.

            	
              Selling
                Restrictions.

            	
              17

            
	
              Section
                5.07.

            	
              Statutory
                Underwriter Status.

            	
              18

            
	
              Section
                5.08.

            	
              Not
                an Affiliate.

            	
              18

            
	
              Section
                5.09.

            	
              Manner
                of Sale.

            	
              18

            
	
              Section
                5.10.

            	
              Prospectus
                Delivery.

            	
              18

            
	 	 
	
              ARTICLE
                VI               COVENANTS
                OF THE COMPANY

            	
              19

            
	 	 	 
	
              Section
                6.01.

            	
              Securities.

            	
              19

            
	
              Section
                6.02.

            	
              Reservation
                of Common Stock.

            	
              19

            
	
              Section
                6.03.

            	
              Registration
                and Listing.

            	
              19

            
	
              Section
                6.04.

            	
              Registration
                Statement.

            	
              19

            
	
              Section
                6.05.

            	
              Compliance
                with Laws.

            	
              20

            
	
              Section
                6.06.

            	
              Reporting
                Requirements.

            	
              20

            
	
              Section
                6.07.

            	
              Other
                Financing.

            	
              20

            
	
              Section
                6.08.

            	
              Prohibited
                Transactions.

            	
              21

            
	
              Section
                6.09.

            	
              Corporate
                Existence.

            	
              21

            
	
              Section
                6.10.

            	
              Non-Disclosure
                of Non-Public Information.

            	
              22

            
	
              Section
                6.11.

            	
              Notice
                of Certain Events Affecting Registration; Suspension of Right to
                Request a
                Draw Down.

            	
              22

            
	
              Section
                6.12.

            	
              Amendments
                to the Registration Statement.

            	
              22

            
	
              Section
                6.13.

            	
              Prospectus
                Delivery.

            	
              22

            
	 	 
	
              ARTICLE
                VII             
                CONDITIONS TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW

                                                   
                DOWN

            	
              23

            
	 	 	 
	
              Section
                7.01.

            	
              Accuracy
                of the Company’s Representations and Warranties.

            	
              23

            
	
              Section
                7.02.

            	
              Performance
                by the Company.

            	
              23

            
	
              Section
                7.03.

            	
              Compliance
                with Law.

            	
              23

            
	
              Section
                7.04.

            	
              Effective
                Registration Statement.

            	
              23

            
	
              Section
                7.05.

            	
              No
                Knowledge.

            	
              23

            
	
              Section
                7.06.

            	
              No
                Suspension.

            	
              24

            
	
              Section
                7.07.

            	
              No
                Injunction.

            	
              24

            
	
              Section
                7.08.

            	
              No
                Proceedings or Litigation.

            	
              24

            

    

     

    
      
        
        

      

      
        iii

        
          

        

      

      
        
        

      

    

    

    
      	
              Section
                7.09.

            	
              Sufficient
                Shares Registered for Resale.

            	
              24

            
	
              Section
                7.10.

            	
              Warrant.

            	
              24

            
	
              Section
                7.11.

            	
              Opinion
                of Counsel.

            	
              24

            
	
              Section
                7.12.

            	
              Accuracy
                of Investor’s Representation and Warranties.

            	
              24

            
	
              Section
                7.13.

            	
              Payment
                of Fees.

            	
              24

            
	 	 
	
              ARTICLE
                VIII            TERMINATION

            	
              25

            
	 	 	 
	
              Section
                8.01.

            	
              Term.

            	
              25

            
	
              Section
                8.02.

            	
              Other
                Termination.

            	
              25

            
	
              Section
                8.03.

            	
              Effect
                of Termination.

            	
              25

            
	 	 	 
	
              ARTICLE
                IX              INDEMNIFICATION

            	
              26

            
	 	 	 
	
              Section
                9.01.

            	
              Indemnification.

            	
              26

            
	
              Section
                9.02.

            	
              Notification
                of Claims for Indemnification.

            	
              27

            
	 	 
	
              ARTICLE
                X               
                MISCELLANEOUS

            	
              28

            
	 	 	 
	
              Section
                10.01.

            	
              Fees
                and Expenses.

            	
              28

            
	
              Section
                10.02.

            	
              Reporting
                Entity for the Common Stock.

            	
              29

            
	
              Section
                10.03.

            	
              Brokerage.

            	
              29

            
	
              Section
                10.04.

            	
              Notices.

            	
              29

            
	
              Section
                10.05.

            	
              Assignment.

            	
              31

            
	
              Section
                10.06.

            	
              Amendment;
                No Waiver.

            	
              31

            
	
              Section
                10.07.

            	
              Entire
                Agreement.

            	
              31

            
	
              Section
                10.08.

            	
              Severability.

            	
              32

            
	
              Section
                10.09.

            	
              Title
                and Subtitles.

            	
              32

            
	
              Section
                10.10.

            	
              Counterparts.

            	
              32

            
	
              Section
                10.11.

            	
              Choice
                of Law.

            	
              32

            
	
              Section
                10.12.

            	
              Specific
                Enforcement, Consent to Jurisdiction.

            	
              32

            
	
              Section
                10.13.

            	
              Survival.

            	
              32

            
	
              Section
                10.14.

            	
              Publicity.

            	
              33

            
	
              Section
                10.15.

            	
              Further
                Assurances.

            	
              33

            
	
              Section
                10.16.

            	
              Absence
                of Presumption.

            	
              33

            

    

     

    
      
        
        

      

      
        iv

        
          

        

      

      
        
        

      

    

    COMMON
      STOCK PURCHASE AGREEMENT

     

    by
      and between

     

    KINGSBRIDGE
      CAPITAL LIMITED

     

    and

     

    MICROMET,
      INC.

     

    dated
      as December 1, 2008

     

    This
      COMMON STOCK PURCHASE AGREEMENT (this “Agreement”)
      is
      entered into as of December 1, 2008, by and between KINGSBRIDGE
      CAPITAL LIMITED,
      an
      entity organized and existing under the laws of the British Virgin Islands,
      whose business address is P.O. Box 1075, Elizabeth House, 9 Castle Street,
      St.
      Helier, Jersey, Channel Islands (the “Investor”)
      and
      MICROMET, INC., a corporation organized and existing under the laws of the
      State
      of Delaware (the “Company”).

     

    WHEREAS,
      the parties desire that, upon the terms and subject to the conditions and
      limitations set forth herein, the Company may issue and sell to the Investor,
      from time to time as provided herein, and the Investor shall purchase from
      the
      Company, up to $75 million worth of shares of Common Stock (as defined below);
      and

     

    WHEREAS,
      such investments will be made in reliance upon the provisions of
      Section 4(2) (“Section 4(2)”)
      and
      Regulation D (“Regulation
      D”)
      of the
      United States Securities Act of 1933, as amended and the rules and regulations
      promulgated thereunder (the “Securities
      Act”),
      and/or upon such other exemption from the registration requirements of the
      Securities Act as may be available with respect to any or all of the investments
      in Common Stock to be made hereunder; and

     

    WHEREAS,
      the parties previously entered into a Common Stock Purchase Agreement dated
      as
      of August 30, 2006 (the "Prior
      Purchase Agreement"),
      pursuant to which the Investor agreed to purchase up to $25 million worth of
      shares of Common Stock from the Company on the terms and conditions set forth
      in
      the Prior Purchase Agreement; and

     

    WHEREAS,
      the parties hereto are concurrently entering into a Registration Rights
      Agreement in the form of Exhibit A hereto (the “Registration
      Rights Agreement”)
      pursuant to which the Company shall register the Common Stock issued and sold
      to
      the Investor under this Agreement and under the Warrant (as defined below),
      upon
      the terms and subject to the conditions and limitations set forth therein;
      and

     

    WHEREAS,
      the Company desires to terminate the Prior Purchase Agreement pursuant to
      Section 8.02(d) thereunder upon the effectiveness of the registration statement
      referred to in the Registration Rights Agreement; and

     

    WHEREAS,
      in consideration for the Investor’s execution and delivery of, and its
      performance of its obligations under, this Agreement, the Company is
      concurrently issuing to the Investor a warrant in the form of Exhibit
      B
      hereto
      (the “Warrant”) pursuant to which the Investor may purchase from the Company up
      to 135,000 shares of Common Stock, upon the terms and subject to the conditions
      and limitations set forth therein;

     

    NOW,
      THEREFORE, the parties hereto agree as follows:

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    ARTICLE
      I

     

    DEFINITIONS

     

    Section
      1.01. “Alternative
      Draw Down Amount”
means
      the product of (i) Average Trading Volume, (ii) the Closing Price on the Trading
      Day preceding the issuance of the Draw Down Notice, and (iii) four (4) (being
      the number of Trading Days during a Draw Down Pricing Period multiplied by
      the
      Liquidity Ratio). 

     

    Section
      1.02. “Average
      Trading Volume”
means
      the average trading volume of the twenty (20) Trading Days during the thirty
      (30) Trading Days prior to the issuance of the Draw Down Notice that results
      from excluding the five (5) highest and five (5) lowest Trading Days during
      such
      period.

     

    Section
      1.03. “Blackout
      Amount”
shall
      have the meaning assigned to such term in the Registration Rights
      Agreement.

     

    Section
      1.04. “Blackout
      Shares”
shall
      have the meaning assigned to such term in the Registration Rights
      Agreement.

     

    Section
      1.05. “Business
      Day”
shall
      mean any day other than a Saturday, a Sunday or a day on which banks in New
      York
      City, New York are authorized or obligated by executive order to
      close.

     

    Section
      1.06. “Bylaws”
shall
      have the meaning assigned to such term in Section 4.03 hereof.

     

    Section
      1.07. “Certificate”
shall
      have the meaning assigned to such term in Section 4.03 hereof.

     

    Section
      1.08. “Closing
      Date”
means
      the date on which this Agreement is executed and delivered by the Company and
      the Investor.

     

    Section
      1.09. “Closing
      Price”
as
      of
      any particular day shall mean the closing price per share of the Common Stock
      as
      reported by the Principal Market on such day. 

     

    Section
      1.10. “Commission”
means
      the United States Securities Exchange Commission.

     

    Section
      1.11. “Commission
      Documents”
shall
      have the meaning assigned to such term in Section 4.06 hereof.

     

    Section
      1.12. “Commitment
      Period”
means
      the period commencing on the Effective Date and expiring on the earliest to
      occur of (i) the date on which the Investor shall have purchased Shares
      pursuant to this Agreement for an aggregate purchase price equal to the Maximum
      Commitment Amount, (ii) the date this Agreement is terminated pursuant to
      Article VIII hereof, and (iii) December 1, 2011. 

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    Section
      1.13. “Common
      Stock”
means
      the common stock of the Company, par value $0.00004 per share.

     

    Section
      1.14. “Condition
      Satisfaction Date”
shall
      have the meaning assigned to such term in Article VII hereof.

     

    Section
      1.15. “Consolidated
      Subsidiary”
means
      any subsidiary that the Company consolidates in the preparation of its audited
      consolidated financial statements.

     

    Section
      1.16. “Convertible
      Security”
shall
      have the meaning assigned to such term in Section 6.08 hereof.

     

    Section
      1.17. “Conversion
      Price”
shall
      have the meaning assigned to such term in Section 6.08 hereof.

     

    Section
      1.18. “Damages”
means
      any loss, claim, damage, liability, costs and expenses (including, without
      limitation, reasonable attorneys’ fees and expenses and costs and reasonable
      expenses of expert witnesses and investigation).

     

    Section
      1.19. “Draw
      Down”
shall
      have the meaning assigned to such term in Section 3.01 hereof.

     

    Section
      1.20. “Draw
      Down Amount”
means
      the actual amount of a Draw Down paid to the Company.

     

    Section
      1.21. “Draw
      Down Discount Price”
means
      (i) 86% of the VWAP on any Trading Day during a Draw Down Pricing Period when
      the VWAP equals or exceeds $2.00 but is less than or equal to $2.50, (ii) 88%
      of
      the VWAP on any Trading Day during a Draw Down Pricing Period when the VWAP
      exceeds $2.50 but is less than or equal to $4.35, (iii) 90% of the VWAP on
      any
      Trading Day during a Draw Down Pricing Period when the VWAP exceeds $4.35 but
      is
      less than or equal to $8.00, (iv) 92% of the VWAP on any Trading Day during
      a
      Draw Down Pricing Period when the VWAP exceeds $8.00 but is less than or equal
      to $10.00, or (v) 94% of the VWAP on any Trading Day during a Draw Down Pricing
      Period when VWAP exceeds $10.00.

     

    Section
      1.22. “Draw
      Down Notice”
shall
      have the meaning assigned to such term in Section 3.01 hereof.

     

    Section
      1.23. “Draw
      Down Pricing Period”
shall
      mean, with respect to each Draw Down, a period of eight (8) consecutive Trading
      Days beginning on the first Trading Day specified in a Draw Down
      Notice.

     

    Section
      1.24. “DTC”
shall
      mean the Depository Trust Company, or any successor thereto.

     

    Section
      1.25. “Effective
      Date”
means
      the first Trading Day immediately following the date on which the Registration
      Statement is declared effective by the Commission.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

    Section
      1.27. “Excluded
      Merger or Sale”
shall
      have the meaning assigned to such term in the Warrant.

     

    Section
      1.28. “FINRA”
      means the Financial Industry Regulatory Authority. 

     

    Section
      1.29. “Knowledge”
with
      respect to the Company means the actual knowledge of the President, Chief
      Executive Officer, Vice President-Business Development, Senior Vice President,
      General Counsel and Secretary, Chief Financial Officer, Senior Vice
      President-Clinical Development, Director-Human Resources, Vice President-Process
      Development, Vice President Preclinical Development, Vice President Research
      and
      the Senior Vice President and Chief Scientific Officer or any other Vice
      President of the Company.

     

    Section
      1.30. “LIBOR”
means
      the three month London interbank offered rate as reported in the Money Rates
      table of the Wall Street Journal on the day that is two (2) Business Days prior
      to the beginning of the relevant period.

     

    Section
      1.31. “Liquidity
      Ratio”
means
      fifty percent (50%).

     

    Section
      1.32. “Make
      Whole Amount”
shall
      have the meaning specified in Section 3.07.

     

    Section
      1.33. “Market
      Capitalization”
means,
      as of any Trading Day, the product of (i) the closing sale price of the
      Common Stock as reported by Bloomberg L.P. using the AQR function and
      (ii) the number of outstanding shares of Common Stock of the Company as
      reported by Bloomberg L.P. using the DES function.

     

    Section
      1.34. “Material
      Adverse Effect”
means
      any effect that is not negated, corrected, cured or otherwise remedied by the
      Company within a reasonable period of time on the business, operations,
      properties or financial condition of the Company and its Consolidated
      Subsidiaries that is material and adverse to the Company and such subsidiaries,
      taken as a whole, and/or any condition, circumstance, or situation that would
      prohibit or otherwise interfere with the ability of the Company to perform
      any
      of its obligations under this Agreement, the Registration Rights Agreement
      or
      the Warrant in any material respect; provided,
      that
      none of the following shall constitute a “Material Adverse Effect”: (i) the
      effects of conditions or events that are generally applicable to the capital,
      financial, banking, currency, biotechnology or pharmaceutical industries,
      (ii) any changes or effects resulting from the announcement or consummation
      of the transactions contemplated by this Agreement, including, without
      limitation, any changes or effects associated with any particular Draw Down,
      and
      (iii) changes in the market price of the Common Stock.

     

    Section
      1.35. “Maximum
      Commitment Amount”
means
      the lesser of (i) (x) $75 million in aggregate Draw Down Amounts minus (y)
      the
      aggregate Draw Down Amounts made pursuant to the Prior Purchase Agreement;
      or
      (ii) (x) 10,104,919 shares of Common Stock minus (y) the number of shares of
      Common Stock issued to the Investor pursuant to the Prior Purchase Agreement
      (as
      adjusted for stock splits, stock combinations, stock dividends,
      recapitalizations and the like that occur on or after the date of this Agreement
      minus the number of Blackout Shares, if any, delivered to the Investor under
      the
      Registration Rights Agreement), provided,
      however,
      that
      the Maximum Commitment Amount shall not exceed that number of shares of Common
      Stock which the Company may issue pursuant to the Agreement and the transactions
      contemplated herein, without breaching the Company’s obligations under the rules
      and regulations of the Principal Market.

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    Section
      1.36. “Maximum
      Draw Down Amount”
means
      the lesser of:

     

    (a) $10
      million, or

     

    (b) the
      greater of (x) (i) if the Company’s Market Capitalization is equal to or greater
      than $225 million at the time of the Draw Down, 1.5% of the Company’s Market
      Capitalization at the time of the Draw Down; (ii) if the Company’s Market
      Capitalization is equal to or exceeds $175 million but is less than $225 million
      at the time of the Draw Down, 1.25% of the Company’s Market Capitalization at
      the time of the Draw Down; (iii) if the Company’s Market Capitalization is equal
      to or exceeds $62.8 million but is less than $175 million at the time of the
      Draw Down, 1% of the Company’s Market Capitalization at the time of the Draw
      Down; and (y) the Alternative Draw Down Amount.

     

    Section
      1.37. “NASD”
means
      the National Association of Securities Dealers, Inc.

     

    Section
      1.38. “Permitted
      Transaction”
shall
      have the meaning assigned to such term in Section 6.07 hereof.

     

    Section
      1.39. “Person”
means
      any individual, corporation, partnership, limited liability company,
      association, trust or other entity or organization, including any government
      or
      political subdivision or an agency or instrumentality thereof.

     

    Section
      1.40. “Principal
      Market”
means
      the NASDAQ National Market, NASDAQ Global Market, the NASDAQ Capital Market,
      the
      American Stock Exchange or the New York Stock Exchange, whichever is at the
      time
      the principal trading exchange or market for the Common Stock.

     

    Section
      1.41. “Prior
      Purchase Agreement”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.42. “Prohibited
      Transaction”
shall
      have the meaning assigned to such term in Section 6.08 hereof.

     

    Section
      1.43. “Prospectus”
as
      used
      in this Agreement means the prospectus in the form included in the Registration
      Statement, as supplemented from time to time pursuant to Rule 424(b) of the
      Securities Act.

     

    Section
      1.44. “Registrable
      Securities”
means
      (i) the Shares, (ii) the Warrant Shares, and (iii) any securities
      issued or issuable with respect to any of the foregoing by way of exchange,
      stock dividend or stock split or in connection with a combination of shares,
      recapitalization, merger, consolidation or other reorganization or otherwise.
      As
      to any particular Registrable Securities, once issued such securities shall
      cease to be Registrable Securities when (w) the Registration Statement has
      been
      declared effective by the Commission and such Registrable Securities have been
      disposed of pursuant to the Registration Statement, (x) such Registrable
      Securities have been sold under circumstances under which all of the applicable
      conditions of Rule 144 (or any similar provision then in force) under the
      Securities Act (“Rule
      144”)
      are
      met, (y) such time as such Registrable Securities have been otherwise
      transferred to holders who may trade such shares without restriction under
      the
      Securities Act, and the Company has delivered a new certificate or other
      evidence of ownership for such securities not bearing a restrictive legend
      or
      (z) in the opinion of inside or outside counsel to the Company such
      Registrable Securities may be sold without registration and without any time,
      volume or manner limitations pursuant to Rule 144(k) (or any similar provision
      then in effect) under the Securities Act.

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    Section
      1.45. “Registration
      Rights Agreement”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.46. “Registration
      Statement”
shall
      have the meaning assigned to such term in the Registration Rights
      Agreement.

     

    Section
      1.47. “Regulation
      D”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.48. “Section 4(2)”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.49. “Securities
      Act”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.50. “Settlement
      Date”
shall
      have the meaning assigned to such term in Section 3.05 hereof.

     

    Section
      1.51. “Shares”
means
      the shares of Common Stock of the Company that are and/or may be purchased
      hereunder.

     

    Section
      1.52. “Trading
      Day”
means
      any day other than a Saturday or a Sunday on which the Principal Market is
      open
      for trading in equity securities.

     

    Section
      1.53. “VWAP”
means
      the volume weighted average price (the aggregate sales price of all trades
      of
      Common Stock during each Trading Day divided by the total number of shares
      of
      Common Stock traded during such Trading Day) of the Common Stock during any
      Trading Day as reported by Bloomberg, L.P. using the AQR function.

     

    Section
      1.54. “Warrant”
shall
      have the meaning set forth in the recitals of this Agreement.

     

    Section
      1.55. “Warrant
      Shares”
means
      the shares of Common Stock issuable to the Investor upon exercise of the
      Warrant.

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    ARTICLE
      II

     

    PURCHASE
      AND SALE OF COMMON STOCK

     

    Section
      2.01. Purchase
      and Sale of Stock.
      Upon
      the terms and subject to the conditions set forth in this Agreement, the Company
      shall, to the extent it elects to make Draw Downs in accordance with
      Article III hereof, issue and sell to the Investor and the Investor shall
      purchase from the Company Common Stock for an aggregate in Draw Down Amounts
      of
      up to the Maximum Commitment Amount, consisting of purchases based on Draw
      Downs
      in accordance with Article III hereof.

     

    Section
      2.02. Closing.
      In
      consideration of and in express reliance upon the representations, warranties,
      covenants, terms and conditions of this Agreement, the Company agrees to issue
      and sell to the Investor, and the Investor agrees to purchase from the Company,
      that number of the Shares to be issued in connection with each Draw Down. The
      execution and delivery of this Agreement (the “Closing”)
      shall
      take place on the date hereof (the “Closing
      Date”).
      Each
      party shall deliver at or prior to the Closing all documents, instruments and
      writings required to be delivered at the Closing by such party pursuant to
      this
      Agreement.

     

    Section
      2.03. Registration
      Statement and Prospectus.
      The
      Company shall prepare and file with the Commission the Registration Statement
      (including the Prospectus) in accordance with the provisions of the Securities
      Act and the Registration Rights Agreement.

     

    Section
      2.04. Warrant.
      On the
      Closing Date, the Company shall issue and deliver the Warrant to the
      Investor.

     

    Section
      2.05. Blackout
      Shares.
      The
      Company shall deliver any Blackout Amount or issue and deliver any Blackout
      Shares to the Investor in accordance with Section 1(e) of the Registration
      Rights Agreement.

     

    ARTICLE
      III

     

    DRAW
      DOWN TERMS

     

    Subject
      to the satisfaction of the conditions hereinafter set forth in this Agreement,
      the parties agree as follows:

     

    Section
      3.01. Draw
      Down Notice.
      During
      the Commitment Period, the Company may, in its sole discretion, issue a Draw
      Down Notice (defined below) specifying the dollar amount of Shares it elects
      to
      sell to the Investor (each such election a “Draw
      Down”)
      up to
      a Draw Down Amount equal to the Maximum Draw Down Amount, which Draw Down the
      Investor will be obligated to accept. The Company shall inform the Investor
      in
      writing via e-mail to the addresses set forth in Section 10.04 and via facsimile
      transmission to the number set forth in Section 10.04, with a copy to the
      Investor’s counsel, as to such Draw Down Amount before commencement of trading
      on the first Trading Day of the related Draw Down Pricing Period (the
“Draw
      Down Notice”).
      In
      addition to the Draw Down Amount, each Draw Down Notice shall designate the
      first Trading Day of the Draw Down Pricing Period. In no event shall any Draw
      Down Amount exceed the Maximum Draw Down Amount. Each Draw Down Notice shall
      be
      accompanied by a certificate, signed by the Chief Executive Officer or Chief
      Financial Officer and dated as of the date of such Draw Down Notice, in the
      form
      of Exhibit C
      hereof.

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    Section
      3.02. Number
      of Shares.
      Subject
      to Section 3.06(b), the number of Shares to be issued in connection with
      each Draw Down shall be equal to the sum of the number of shares issuable on
      each Trading Day of the Draw Down Pricing Period. Subject to Section 3.06(b),
      the number of Shares issuable on a Trading Day during a Draw Down Pricing Period
      shall be equal to the quotient of one eighth (1/8th)
      of the
      Draw Down Amount divided by the Draw Down Discount Price for such Trading
      Day.

     

    Section
      3.03. Limitation
      on Draw Downs.
      Only
      one Draw Down shall be permitted for each Draw Down Pricing Period.

     

    Section
      3.04. Trading
      Cushion.
      Unless
      the parties agree in writing otherwise, there shall be a minimum of ten (10)
      Trading Days between the expiration of any Draw Down Pricing Period and the
      beginning of the next succeeding Draw Down Pricing Period.

     

    Section
      3.05. Settlement.
      Subject
      to Section 3.06(b), the number of Shares purchased by the Investor in any Draw
      Down shall be determined and settled on two separate dates. Shares purchased
      by
      the Investor during the first four Trading Days of any Draw Down Pricing Period
      shall be determined and settled no later than the sixth Trading Day of such
      Draw
      Down Pricing Period. Shares purchased by the Investor during the second four
      Trading Days of any Draw Down Pricing Period shall be determined and settled
      no
      later than the second Trading Day after the last Trading Day of such Draw Down
      Pricing Period. Each date on which settlement of the purchase and sale of Shares
      occurs hereunder being referred to as a “Settlement
      Date.”
The
      Investor shall provide the Company with delivery instructions for the Shares
      to
      be issued at each Settlement Date at least two Trading Days in advance of such
      Settlement Date. The number of Shares actually issued shall be rounded to the
      nearest whole number of Shares.

     

    Section
      3.06. Delivery
      of Shares; Payment of Draw Down Amount. 

     

    (a) On
      each
      Settlement Date, the Company shall deliver the Shares purchased by the Investor
      to the Investor or its designees exclusively via book-entry through the DTC
      to
      an account designated by the Investor, and upon receipt of the Shares, the
      Investor shall cause payment therefor to be made to the Company’s designated
      account by wire transfer of immediately available funds, if the Shares are
      received by the Investor no later than 12:00 p.m. (Eastern Time), or next day
      available funds, if the Shares are received thereafter. Upon the written request
      of the Company, the Investor will cause its banker to confirm to the Company
      that the Investor has provided irrevocable instructions to cause payment for
      the
      Shares to be made as set forth above, upon confirmation by such banker that
      the
      Shares have been delivered through the DTC in unrestricted form.

     

    (b) For
      each
      Trading Day during a Draw Down Pricing Period that the VWAP is less than the
      greater of (i) 85% of the Closing Price of the Company’s Common Stock on the
      Trading Day immediately preceding the commencement of such Draw Down Pricing
      Period, or (ii) $2.00, such Trading Day shall not be used in calculating
      the number of Shares to be issued in connection with such Draw Down, and the
      Draw Down Amount in respect of such Draw Down Pricing Period shall be reduced
      by
      one eighth (1/8th)
      of the
      initial Draw Down Amount specified in the Draw Down Notice. If trading in the
      Company’s Common Stock is suspended for any reason for more than three (3)
      consecutive or non-consecutive hours during any Trading Day during a Draw Down
      Pricing Period, such Trading Day shall not be used in calculating the number
      of
      Shares to be issued in connection with such Draw Down, and the Draw Down Amount
      in respect of such Draw Down Pricing Period shall be reduced by one eighth
      (1/8th) of the initial Draw Down Amount specified in the Draw Down Notice.
      In
      the event that the Company delivers a Blackout Notice to the Investor at any
      time on or after the date that a Draw Down Notice is issued, each Trading Day
      during the applicable Draw Down Pricing Period after the delivery of such
      Blackout Notice shall be disregarded (subject to waiver by the Investor) for
      the
      purposes of calculating the number of Shares to be issued in respect of the
      applicable Draw Down, and the Draw Down Amount in respect of such Draw Down
      Pricing Period shall be reduced by one eighth (1/8th) of the initial Draw Down
      Amount specified in the Draw Down Notice for each such Trading Day that is
      so
      disregarded.

    
      
        
        

      

      
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    Section
      3.07. Failure
      to Deliver Shares.
      If the
      Company fails, on any Settlement Date, to take all actions within its reasonable
      control to cause the delivery of the Shares purchased by the Investor, and
      such
      failure is not cured within two (2) Trading Days following such Settlement
      Date,
      the Company shall pay to the Investor on demand in cash by wire transfer of
      immediately available funds to an account designated by the Investor the
“Make
      Whole Amount;”
      provided,
      however,
      that in
      the event that the Company is prevented from delivering Shares in respect of
      any
      such Settlement Date in a timely manner by any fact or circumstance that is
      reasonably within the control of, or directly attributable to, the Investor,
      then such two (2) Trading Day period shall be automatically extended until
      such
      time as such fact or circumstance is cured. As used herein, the Make Whole
      Amount shall be an amount equal to the sum of (i) the Draw Down Amount actually
      paid by the Investor in respect of such Shares plus (ii) an amount equal to
      the
      actual loss suffered by the Investor in respect of sales to subsequent
      purchasers, pursuant to transactions entered into before the Settlement Date,
      of
      the Shares that were required to be delivered by the Company, which shall be
      based upon documentation reasonably satisfactory to the Company demonstrating
      the difference (if greater than zero) between (A) the price per share paid
      by
      the Investor to purchase such number of shares of Common Stock necessary for
      the
      Investor to meet its share delivery obligations to such subsequent purchasers
      minus (B) the average Draw Down Discount Price during the applicable Draw Down
      Pricing Period. In the event that the Make Whole Amount is not paid within
      two
      (2) Trading Days following a demand therefor from the Investor, the Make Whole
      Amount shall accrue interest compounded daily at a rate of LIBOR plus 300 basis
      points per annum, up to and including the date on which the Make Whole Amount
      is
      actually paid. Notwithstanding anything to the contrary set forth in this
      Agreement, in the event that the Company pays the Make Whole Amount (plus
      interest, if applicable) in respect of any Settlement Date in accordance with
      this Section 3.07, such payment shall be the Investor’s sole remedy in respect
      of the Company’s failure to deliver Shares in respect of such Settlement Date,
      and the Company shall not be obligated to deliver such Shares. 

    
      
        
        

      

      
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    ARTICLE
      IV

     

    REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY

     

    The
      Company hereby makes the following representations and warranties to the
      Investor except as set forth on the Disclosure Schedule:

     

    Section
      4.01. Organization,
      Good Standing and Power.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of Delaware and has all requisite power and
      authority to own, lease and operate its properties and to carry on its business
      as now being conducted. Except as set forth in the Commission Documents (as
      defined below), as of the date hereof the Company does not own more than fifty
      percent (50%) of the outstanding capital stock of or control any other business
      entity, other than any wholly-owned subsidiary that is not “significant” within
      the meaning of Regulation S-X promulgated by the Commission. The Company is
      duly
      qualified as a foreign corporation to do business and is in good standing in
      every jurisdiction in which the nature of the business conducted or property
      owned by it makes such qualification necessary, other than those in which the
      failure so to qualify or be in good standing would not have a Material Adverse
      Effect.

     

    Section
      4.02. Authorization;
      Enforcement.
      (i) The Company has the requisite corporate power and authority to enter
      into and perform its obligations under this Agreement, the Registration Rights
      Agreement and the Warrant and to issue the Shares, the Warrant, the Warrant
      Shares and any Blackout Shares (except to the extent that the number of Blackout
      Shares required to be issued exceeds the number of authorized shares of Common
      Stock under the Certificate); (ii) the execution and delivery of this
      Agreement and the Registration Rights Agreement, and the execution, issuance
      and
      delivery of the Warrant, by the Company and the consummation by it of the
      transactions contemplated hereby and thereby have been duly authorized by all
      necessary corporate action and no further consent or authorization of the
      Company or its Board of Directors or stockholders is required (other than as
      contemplated by Section 6.05); and (iii) each of this Agreement and
      the Registration Rights Agreement has been duly executed and delivered, and
      the
      Warrant has been duly executed, issued and delivered, by the Company and
      constitutes a valid and binding obligation of the Company enforceable against
      the Company in accordance with its terms, except as such enforceability may
      be
      limited by applicable bankruptcy, securities, insolvency, or similar laws
      relating to, or affecting generally the enforcement of, creditors’ rights and
      remedies, or indemnification or by other equitable principles of general
      application.

     

    Section
      4.03. Capitalization.
      The
      authorized capital stock of the Company and the shares thereof issued and
      outstanding as of November 3, 2008 are set forth in the Commission Documents.
      All of the outstanding shares of the Common Stock as of November 3, 2008 have
      been duly and validly authorized and issued, and are fully paid and
      non-assessable. Except as set forth in this Agreement or in the Commission
      Documents, as of November 3, 2008, no shares of Common Stock were entitled
      to
      preemptive rights or registration rights, and there were no outstanding options,
      warrants, scrip, rights issued by the Company to subscribe to, call or
      commitments of any character whatsoever issued by the Company relating to,
      or
      securities or rights convertible into or exchangeable for or giving any right
      to
      subscribe for, any shares of capital stock of the Company. Except as set forth
      in this Agreement or in the Commission Documents, as of November 3, 2008, there
      were no contracts, commitments, understandings, or arrangements by which the
      Company is or may become bound to issue additional shares of the capital stock
      of the Company or options, securities or rights convertible into or exchangeable
      for or giving any right to subscribe for any shares of capital stock of the
      Company. Except as described in the Commission Documents, as of the date hereof
      the Company is not a party to any agreement granting registration rights to
      any
      Person with respect to any of its equity or debt securities. Except as set
      forth
      in the Commission Documents or as previously disclosed to the Investor in
      writing, as of the date hereof the Company is not a party to, and it has no
      Knowledge of, any agreement restricting the voting or transfer of any shares
      of
      the capital stock of the Company. The offer and sale of all capital stock,
      convertible securities, rights, warrants, or options of the Company issued
      during the twenty-four month period immediately prior to the Closing complied
      in
      all material respects with all applicable federal and state securities laws,
      and
      no stockholder has a right of rescission or damages with respect thereto that
      could reasonably be expected to have a Material Adverse Effect. The Company
      has
      furnished or made available to the Investor true and correct copies of the
      Amended and Restated Certificate of Incorporation of the Company, as amended,
      as
      in effect on the date hereof (the “Certificate”),
      and
      the Amended and Restated Bylaws of the Company, as amended, as in effect on
      the
      date hereof (the “Bylaws”).

    
      
        
        

      

      
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    Section
      4.04. Issuance
      of Shares.
      Subject
      to Section 6.05, the Shares, the Warrant and the Warrant Shares have been,
      and
      any Blackout Shares will be, duly authorized by all necessary corporate action
      (except to the extent that the number of Blackout Shares required to be issued
      exceeds the number of authorized shares of Common Stock under the Certificate)
      and, when issued and paid for in accordance with the terms of this Agreement,
      the Registration Rights Agreement and the Warrant, the Shares and the Warrant
      Shares shall be validly issued and outstanding, fully paid and non-assessable,
      and the Investor shall be entitled to all rights accorded to a holder of shares
      of Common Stock.

     

    Section
      4.05. No
      Conflicts.
      The
      execution, delivery and performance of this Agreement, the Registration Rights
      Agreement, the Warrant and any other document or instrument contemplated hereby
      or thereby, by the Company and the consummation by the Company of the
      transactions contemplated hereby and thereby do not: (i) violate any
      provision of the Certificate or Bylaws, (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 material agreement, mortgage, deed of
      trust, indenture, note, bond, license, lease agreement, instrument or obligation
      to which the Company is a party where such default or conflict would constitute
      a Material Adverse Effect, (iii) create or impose a lien, charge or
      encumbrance on any property of the Company under any agreement or any commitment
      to which the Company is a party or by which the Company is bound or by which
      any
      of its respective properties or assets are bound which would constitute a
      Material Adverse Effect, (iv) result in a violation of any federal, state,
      local or foreign statute, rule, regulation, order, writ, judgment or decree
      (including federal and state securities laws and regulations) applicable to
      the
      Company or any of its Consolidated Subsidiaries or by which any property or
      asset of the Company or any of its Consolidated Subsidiaries are bound where
      such violation would constitute a Material Adverse Effect, or (v) require any
      consent of any third-party that has not been obtained pursuant to any material
      contract to which the Company is subject or to which any of its assets,
      operations or management may be subject where the failure to obtain any such
      consent would constitute a Material Adverse Effect. The Company is not required
      under federal, state or local law, rule or regulation to obtain any consent,
      authorization or order of, or make any filing or registration with, any court
      or
      governmental agency in order for it to execute, deliver or perform any of its
      obligations under this Agreement, the Registration Rights Agreement or the
      Warrant, or issue and sell the Shares, the Warrant Shares or the Blackout Shares
      (except to the extent that the number of Blackout Shares required to be issued
      exceeds the number of authorized shares of Common Stock under the Certificate)
      in accordance with the terms hereof and thereof (other than any filings that
      may
      be required to be made by the Company with the Commission, the FINRA/NASDAQ
      or
      state securities commissions subsequent to the Closing, and, any registration
      statement (including any amendment or supplement thereto) which may be filed
      pursuant hereto); provided
      that,
      for purposes of the representation made in this sentence, the Company is
      assuming and relying upon the accuracy of the relevant representations and
      agreements of the Investor herein.

    
      
        
        

      

      
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    Section
      4.06. Commission
      Documents, Financial Statements.
      The
      Common Stock is registered pursuant to Section 12(b) or 12(g) of the
      Exchange Act, and since January 1, 2008, the Company has timely filed all
      reports, schedules, forms, statements and other documents required to be filed
      by it with the Commission pursuant to the reporting requirements of the Exchange
      Act, including material filed pursuant to Section 13(a) or 15(d) of the
      Exchange Act (all of the foregoing, including
      any such reports, schedules, forms, statements and other documents filed after
      the date hereof,
      including filings incorporated by reference in any such filings, being referred
      to herein as the “Commission
      Documents”).
      Except as previously disclosed to the Investor in writing, since January 1,
      2008, the Company has maintained all requirements for the continued listing
      or
      quotation of its Common Stock, and such Common Stock is currently listed or
      quoted on the Nasdaq Global Market. To the extent not available on the
      Commission’s EDGAR filing system, the Company has made available to the Investor
      true and complete copies of the Commission Documents filed with the Commission
      since January 1, 2008, and prior to the Closing Date. The Company has not
      provided to the Investor any information which, according to applicable law,
      rule or regulation, should have been disclosed publicly by the Company but
      which
      has not been so disclosed, other than with respect to the transactions
      contemplated by this Agreement. As of its date, the Company’s Form 10-K for
      the year ended December 31, 2007 complied in all material respects with the
      requirements of the Exchange Act and the rules and regulations of the Commission
      promulgated thereunder applicable to such document, and, as of its date, after
      giving effect to the information disclosed and incorporated by reference
      therein, such Form 10-K did not contain any untrue statement of a material
      fact or omit to state a material fact required to be stated therein or necessary
      in order to make the statements therein, in 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 Commission Documents filed
      with the Commission since January 1, 2008, complied as to form and substance
      in
      all material respects with applicable accounting requirements and the published
      rules and regulations of the Commission or other applicable rules and
      regulations with respect thereto. Such financial statements have been prepared
      in accordance with generally accepted accounting principles (“GAAP”)
      applied on a consistent basis 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
      not include footnotes or may be condensed or summary statements), and fairly
      present in all material respects the financial position of the Company and
      its
      Consolidated Subsidiaries as of the dates thereof and the results of operations
      and cash flows for the periods then ended (subject, in the case of unaudited
      statements, to normal year-end audit adjustments).

    
      
        
        

      

      
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    Section
      4.07. No
      Material Adverse Change.
      Except
      as disclosed in the Commission Documents, since September 30, 2008 no event
      or
      series of events has or have occurred that would, individually or in the
      aggregate, have a Material Adverse Effect on the Company.

     

    Section
      4.08. No
      Undisclosed Liabilities.
      Neither
      the Company nor any of its Consolidated Subsidiaries has any liabilities,
      obligations, claims or losses (whether liquidated or unliquidated, secured
      or
      unsecured, absolute, accrued, contingent or otherwise) that would be required
      to
      be disclosed on a balance sheet of the Company or any Consolidated Subsidiary
      (including the notes thereto) in conformity with GAAP and are not disclosed
      in
      the Commission Documents, other than those incurred in the ordinary course
      of
      the Company’s or its Consolidated Subsidiaries respective businesses since
      September 30, 2008, or which, individually or in the aggregate, do not or would
      not have a Material Adverse Effect on the Company.

     

    Section
      4.09. No
      Undisclosed Events or Circumstances.
      To the
      Company’s Knowledge, no event or circumstance has occurred or exists with
      respect to the Company or its Consolidated Subsidiaries or their respective
      businesses, properties, operations or financial condition, which, under
      applicable law, rule or regulation, requires public disclosure or announcement
      by the Company but which has not been so publicly announced or disclosed and
      which, individually or in the aggregate, would have a Material Adverse Effect
      on
      the Company.

     

    Section
      4.10. Actions
      Pending.
      There
      is no action, suit, claim, investigation or proceeding of which the Company
      is
      aware or which has been served on the Company or, to the Knowledge of the
      Company, threatened against the Company or any Consolidated Subsidiary which
      questions the validity of this Agreement or the transactions contemplated hereby
      or any action taken or to be taken pursuant hereto or thereto. Except as set
      forth in the Commission Documents, there is no action, suit, claim,
      investigation or proceeding pending or, to the Knowledge of the Company,
      threatened against or involving the Company, any Consolidated Subsidiary or
      any
      of their respective properties or assets that could be reasonably expected
      to
      have a Material Adverse Effect on the Company. Except as set forth in the
      Commission Documents or as previously disclosed to the Investor in writing,
      no
      judgment, order, writ, injunction or decree or award has been issued by or,
      to
      the Knowledge of the Company, requested of any court, arbitrator or governmental
      agency which could be reasonably expected to result in a Material Adverse
      Effect.

     

    Section
      4.11. Compliance
      with Law.
      The
      businesses of the Company and its Consolidated Subsidiaries have been and are
      presently being conducted in accordance with all applicable federal, state
      and
      local governmental laws, rules, regulations and ordinances, except as set forth
      in the Commission Documents or such that would not reasonably be expected to
      cause a Material Adverse Effect. Except as set forth in the Commission
      Documents, the Company and each of its Consolidated Subsidiaries have all
      franchises, permits, licenses, consents and other governmental or regulatory
      authorizations and approvals necessary for the conduct of its business as now
      being conducted by it, except for such franchises, permits, licenses, consents
      and other governmental or regulatory authorizations and approvals, the failure
      to possess which, individually or in the aggregate, could not reasonably be
      expected to have a Material Adverse Effect.

    
      
        
        

      

      
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    Section
      4.12. Certain
      Fees.
      Except
      as expressly set forth in this Agreement, no brokers, finders or financial
      advisory fees or commissions will be payable by the Company or any of its
      Consolidated Subsidiaries in respect of the transactions contemplated by this
      Agreement.

     

    Section
      4.13. Disclosure.
      To the
      Company’s Knowledge, neither this Agreement nor any other documents,
      certificates or instruments furnished to the Investor by or on behalf of the
      Company or any Consolidated Subsidiary in connection with the transactions
      contemplated by this Agreement, the Registration Rights Agreement or the Warrant
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary in order to make the statements made herein or therein, in the light
      of the circumstances under which they were made herein or therein, not
      misleading.

     

    Section
      4.14. Material
      Non-Public Information.
      Except
      for this Agreement and the transactions contemplated hereby, neither the
      Company, nor its employees nor its agents have disclosed to the Investor, any
      material non-public information that, according to applicable law, rule or
      regulation, should have been disclosed publicly by the Company prior to the
      date
      hereof but which has not been so disclosed.

     

    Section
      4.15. Exemption
      from Registration; Valid Issuances.
      Subject
      to, and in reliance on the representations, warranties and covenants made herein
      by the Investor, the issuance and sale of the Shares, the Warrant, the Warrant
      Shares and any Blackout Shares in accordance with the terms and on the bases
      of
      the representations and warranties set forth in this Agreement, may and shall
      be
      properly issued pursuant to Section 4(2), Regulation D and/or any other
      applicable federal and state securities laws; provided,
      however,
      that at
      the request of and with the express agreement of the Investor, the Shares and,
      under certain circumstances, the Warrant Shares, will be delivered to the
      Investor via book entry through DTC and shall not bear legends noting
      restrictions as to resale of such shares under federal and state securities
      laws, nor shall such shares be subject to stop transfer instructions. Neither
      the sales of the Shares, the Warrant, the Warrant Shares or any Blackout Shares
      pursuant to, nor the Company’s performance of its obligations under, this
      Agreement, the Registration Rights Agreement, or the Warrant shall
      (i) result in the creation or imposition of any liens, charges, claims or
      other encumbrances upon the Shares, the Warrant Shares, any Blackout Shares
      or
      any of the assets of the Company, or (ii) except as previously disclosed to
      the Investor in writing, entitle the holders of any outstanding shares of
      capital stock of the Company to preemptive or other rights to subscribe to
      or
      acquire the shares of Common Stock or other securities of the
      Company.

     

    Section
      4.16. No
      General Solicitation or Advertising in Regard to this
      Transaction.
      Neither
      the Company nor any of its affiliates or any person acting on its or their
      behalf (i) has conducted any general solicitation (as that term is used in
      Rule 502(c) of Regulation D) or general advertising with respect to any of
      the
      Shares, the Warrant, the Warrant Shares or any Blackout Shares or (ii) has
      made any offers or sales of any security or solicited any offers to buy any
      security under any circumstances that would require registration of the Shares
      under the Securities Act.

     

    
      
        
        

      

      
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    Section
      4.17. No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, other than pursuant to this Agreement
      and employee benefit plans, under circumstances that would require registration
      under the Securities Act of shares of the Common Stock issuable hereunder with
      any other offers or sales of securities of the Company.

     

    Section
      4.18. Acknowledgment
      Regarding Investor’s Purchase of Shares.
      The
      Company acknowledges and agrees that the Investor is acting solely in the
      capacity of an arm’s length investor with respect to this Agreement and the
      transactions contemplated hereunder. The Company further acknowledges that
      the
      Investor is not acting as a financial advisor or fiduciary of the Company (or
      in
      any similar capacity) with respect to this Agreement and the transactions
      contemplated hereunder, and that any advice given by the Investor or any of
      its
      representatives or agents in connection with this Agreement and the transactions
      contemplated hereunder is merely incidental to the Investor’s purchase of the
      Shares.

     

    ARTICLE
      V

     

    REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF THE INVESTOR

     

    The
      Investor hereby makes the following representations, warranties and covenants
      to
      the Company:

     

    Section
      5.01. Organization
      and Standing of the Investor.
      The
      Investor is a company duly organized, validly existing and in good standing
      under the laws of the British Virgin Islands.

     

    Section
      5.02. Authorization
      and Power.
      The
      Investor has the requisite power and authority to enter into and perform its
      obligations under this Agreement, the Registration Rights Agreement and the
      Warrant and to purchase the Shares, the Blackout Shares, the Warrant and the
      Warrant Shares in accordance with the terms hereof and thereof. The execution,
      delivery and performance of this Agreement and the Registration Rights Agreement
      by the Investor and the consummation by it of the transactions contemplated
      hereby or thereby have been duly authorized by all necessary corporate action,
      and no further consent or authorization of the Investor, its Board of Directors
      or stockholders is required. Each of this Agreement and the Registration Rights
      Agreement has been duly executed and delivered by the Investor and constitutes
      a
      valid and binding obligation of the Investor enforceable against the Investor
      in
      accordance with its terms, except as such enforceability may be limited by
      applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
      conservatorship, receivership, or similar laws relating to, or affecting
      generally the enforcement of creditor’s rights and remedies or by other
      equitable principles of general application.

     

    
      
        
        

      

      
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    Section
      5.03. No
      Conflicts.
      The
      execution, delivery and performance of this Agreement, the Warrant, the
      Registration Rights Agreement and any other document or instrument contemplated
      hereby, by the Investor and the consummation of the transactions contemplated
      thereby do not (i) violate any provision of the Investor’s charter
      documents or bylaws, (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 material agreement, mortgage, deed of trust, indenture,
      note, bond, license, lease agreement, instrument or obligation to which the
      Investor is a party, (iii) create or impose a lien, charge or encumbrance
      on any property of the Investor under any agreement or any commitment to which
      the Investor is a party or by which the Investor is bound or by which any of
      its
      respective properties or assets are bound, (iv) result in a violation of
      any federal, state, local or foreign statute, rule, regulation, order, writ,
      judgment or decree (including federal and state securities laws and regulations)
      applicable to the Investor or by which any property or asset of the Investor
      are
      bound or affected, or (v) require the consent of any third-party that has
      not been obtained pursuant to any material contract to which Investor is subject
      or to which any of its assets, operations or management may be subject. The
      Investor is not required under federal, state, foreign or local law, rule or
      regulation to obtain any consent, authorization or order of, or make any filing
      or registration with, any court or governmental agency in order for it to
      execute, deliver or perform any of its obligations under this Agreement or
      to
      purchase the Shares or the Warrant in accordance with the terms hereof,
provided
      that,
      for purposes of the representation made in this sentence, the Investor is
      assuming and relying upon the accuracy of the relevant representations and
      agreements of the Company herein.

     

    Section
      5.04. Financial
      Capability.
      The
      Investor has the financial capability to perform all of its obligations under
      this Agreement, including the capability to purchase the Shares, the Warrant
      and
      the Warrant Shares in accordance with the terms hereof. The Investor has such
      knowledge and experience in business and financial matters that it is capable
      of
      evaluating the merits and risks of an investment in Common Stock and the
      Warrant. The Investor is an “accredited investor” as defined in Regulation D.
      The Investor is a “sophisticated investor” as described in Rule
      506(b)(2)(ii) of Regulation D. The Investor acknowledges that an investment
      in the Common Stock and the Warrant is speculative and involves a high degree
      of
      risk.

     

    Section
      5.05. Information.
      The
      Investor 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 Shares, the Blackout Shares, the Warrant
      and the Warrant Shares which have been requested by the Investor. The Investor
      has reviewed or received copies of the Commission Documents. The Investor and
      its advisors, if any, have been afforded the opportunity to ask questions of
      the
      Company. The Investor 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 Shares, the Warrant and the Warrant Shares. The Investor
      understands that it (and not the Company) shall be responsible for its own
      tax
      liabilities that may arise as a result of this investment or the transactions
      contemplated by this Agreement.

     

    Section
      5.06. Selling
      Restrictions.

     

    (a) The
      Investor has not directly or indirectly, nor has any Person acting on behalf
      of
      or pursuant to any understanding with the Investor, engaged in any transactions
      in the Company’s securities (including, without limitation, any “short sale”, as
      such term is defined in Rule 200 of Regulation SHO, or any successor regulation,
      promulgated by the Commission under the Exchange Act involving Common Stock)
      since the time that the Investor was first contacted by the Company, or any
      Person acting on behalf of the Company, regarding the transactions contemplated
      hereby.

     

    
      
        
        

      

      
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    (b) The
      Investor covenants that during the Commitment Period, neither the Investor
      nor
      any of its affiliates nor any entity managed or controlled by the Investor
      will
      ever (i) enter into or execute or cause any Person to enter into or execute
      any
“short sale” (as such term is defined in Rule 200 of Regulation SHO or any
      successor regulation promulgated by the Commission under the Exchange Act)
      of
      any shares of Common Stock, (ii) sell, during the term of a Draw Down Pricing
      Period, Common Stock other than Common Stock purchased (or to be purchased)
      pursuant to the Draw Down pertaining to such Draw Down Pricing Period or (iii)
      engage, through related parties or otherwise, in any derivative transaction
      directly related to shares of Common Stock (including, without limitation,
      the
      purchase of any option or contract to sell). Notwithstanding the foregoing,
      the
      Investor shall have the right during any Draw Down Pricing Period to sell shares
      of Common Stock equal in number to the aggregate number of the Shares purchased
      (or to be purchased) pursuant to the Draw Down pertaining to such Draw Down
      Pricing Period.

     

    Section
      5.07. Statutory
      Underwriter Status.
      The
      Investor acknowledges that, pursuant to the Commission’s current interpretations
      of the Securities Act, the Investor will be disclosed as an “underwriter” within
      the meaning of the Securities Act in the Registration Statement (and amendments
      thereto) and in any Prospectus contained therein to the extent required by
      applicable law. The Company acknowledges that the Investor does not necessarily
      agree with such characterization.

     

    Section
      5.08. Not
      an
      Affiliate.
      The
      Investor is not an officer, director or “affiliate” (as defined in Rule 405 of
      the Securities Act) of the Company.

     

    Section
      5.09. Manner
      of Sale.
      At no
      time was Investor presented with or solicited by or through any leaflet, public
      promotional meeting, television advertisement or any other form of general
      solicitation or advertising by or on behalf of the Company.

     

    Section
      5.10. Prospectus
      Delivery.
      The
      Investor agrees that unless the Shares and Warrant Shares are eligible for
      resale pursuant to all the conditions of Rule 144, it will resell the Shares
      and
      Warrant Shares only pursuant to the Registration Statement, in a manner
      described under the caption “Plan of Distribution” in the Registration
      Statement, and in a manner in compliance with all applicable securities laws,
      including, without limitation, the insider trading restrictions of the Exchange
      Act and the prospectus delivery requirements of the Securities Act, if any,
      as
      applicable to it in connection with sales of Registrable Securities pursuant
      to
      the Registration Statement, and the Investor shall have delivered a current
      prospectus in connection with such sale or shall have confirmed that a current
      prospectus is deemed to be delivered in connection with such sale, or relied
      on
      an exemption from such prospectus delivery requirements. The Investor,
      acknowledges that the delivery of the Shares or Warrant Shares through DTC
      is
      predicated upon the Company’s reliance that the Investor will sell any Shares or
      Warrant Shares pursuant to either (i) the registration requirements of the
      Securities Act, or (ii) an exemption therefrom. The Investor further
      acknowledges and agrees that the Company shall be under no obligation to
      supplement the Prospectus to reflect the issuance of any Shares pursuant to
      a
      Draw Down at any time prior to the day following the Settlement Date with
      respect to such Shares.

     

    
      
        
        

      

      
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    ARTICLE
      VI

     

    COVENANTS
      OF THE COMPANY

     

    The
      Company covenants with the Investor as follows, which covenants are for the
      benefit of the Investor and its permitted assignees (as defined
      herein):

     

    Section
      6.01. Securities.
      The
      Company shall notify the Commission and the Principal Market, if and as
      applicable, in accordance with their rules and regulations, of the transactions
      contemplated by this Agreement, and shall use commercially reasonable efforts
      to
      take all other necessary action and proceedings as may be required and permitted
      by applicable law, rule and regulation, for the legal and valid issuance of
      the
      Shares, the Warrant Shares and the Blackout Shares, if any, to the Investor;
      provided,
      that in
      no event shall the Company be under any obligation to supplement the Prospectus
      to reflect the issuance of any Shares pursuant to a Draw Down at any time prior
      to the day following the Settlement Date with respect to such
      Shares.

     

    Section
      6.02. Reservation
      of Common Stock.
      As of
      the date hereof, the Company has available and the Company shall reserve and
      keep available at all times, free of preemptive rights and other similar
      contractual rights of stockholders, shares of Common Stock for the purpose
      of
      enabling the Company to satisfy any obligation to issue the Shares in connection
      with all Draw Downs contemplated hereunder and the Warrant Shares. The number
      of
      shares so reserved from time to time, as theretofore increased or reduced as
      hereinafter provided, may be reduced by the number of shares actually delivered
      hereunder.

     

    Section
      6.03. Registration
      and Listing.
      During
      the Commitment Period, the Company shall use commercially reasonable efforts:
      (i) to take all action necessary to cause its Common Stock to continue to
      be registered under Section 12(b) or 12(g) of the Exchange Act,
      (ii) to comply in all material respects with its reporting and filing
      obligations under the Exchange Act, (iii) to prevent the termination or
      suspension of such registration, or the termination or suspension of its
      reporting and filing obligations under the Exchange Act or Securities Act
      (except as expressly permitted herein). The Company shall use commercially
      reasonable efforts to maintain the listing and trading of its Common Stock
      and
      the listing of the Shares purchased by Investor hereunder on the Principal
      Market (including, without limitation, maintaining sufficient net tangible
      assets) and will comply in all material respects with the Company’s reporting,
      filing and other obligations under the bylaws or rules of FINRA and the
      Principal Market. The Company will not be required to carry out any action
      pursuant to this Agreement, the Registration Rights Agreement or the Warrant
      that would adversely impact the listing of the Company’s securities on the
      Principal Market as now in effect or as subsequently modified by applicable
      rules and regulations.

     

    Section
      6.04. Registration
      Statement.
      Without
      the prior written consent of the Investor, the Registration Statement shall
      be
      used solely in connection with the transactions between the Company and the
      Investor contemplated hereby.

     

    
      
        
        

      

      
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    Section
      6.05. Compliance
      with Laws.

     

    (a) The
      Company shall comply, and cause each Consolidated Subsidiary to comply, with
      all
      applicable laws, rules, regulations and orders, noncompliance with which could
      reasonably be expected to have a Material Adverse Effect.

     

    (b) (b) Without
      the consent of its stockholders in accordance with FINRA and The NASDAQ Stock
      Market LLC rules, the Company will not be obligated to issue, and the Investor
      will not be obligated to purchase, any Shares or Blackout Shares which would
      result in the issuance under this Agreement, the Warrant and the Registration
      Rights Agreement of Shares, Warrant Shares and Blackout Shares (collectively)
      representing more than the applicable percentage under the rules of the FINRA
      and The NASDAQ Stock Market LLC, including, without limitation, NASDAQ
      Marketplace Rule 4350(i), that would require stockholder approval of the
      issuance thereof. Nothing herein shall compel the Company to seek such consent
      of its stockholders. 

     

    Section
      6.06. Reporting
      Requirements.
      Upon
      reasonable written request of the Investor during the Commitment Period, the
      Company shall furnish copies of the following to the Investor within three
      Business Days of such request (but not sooner than filed with or submitted
      to
      the Commission):

     

    (a) Quarterly
      Reports on Form 10-Q;

     

    (b) Annual
      Reports on Form 10-K;

     

    (c) Current
      Reports on Form 8-K; and

     

    (d) any
      other
      documents publicly submitted to the Commission.

     

    Section
      6.07. Other
      Financing.

     

    (a) Nothing
      in this Agreement shall be construed to restrict the right of the Company to
      offer, sell and/or issue securities of any kind whatsoever, provided such
      transaction is not a Prohibited Transaction (as defined below) (any such
      transaction that is not a Prohibited Transaction is referred to in this
      Agreement as a “Permitted Transaction”). Without limiting the generality of the
      preceding sentence, the Company may, without the prior written consent of the
      Investor, (i) establish stock option or award plans or agreements (for
      directors, employees, consultants and/or advisors), and issue securities
      thereunder, and amend such plans or agreements, including increasing the number
      of shares available thereunder, (ii) issue equity securities to finance, or
      otherwise in connection with, the acquisition of one or more other companies,
      equipment, technologies or lines of business, (iii) issue shares of Common
      Stock
      and/or Preferred Stock in connection with the Company’s option or award plans,
      stock purchase plans, rights plans, warrants or options, (iv) issue shares
      of Common Stock and/or Preferred Stock in connection with the acquisition of
      products, licenses, equipment or other assets and strategic partnerships or
      joint ventures; (v) issue shares of Common and/or Preferred Stock to
      consultants and/or advisors as consideration for services rendered or to be
      rendered, (vi) issue and sell equity or debt securities in a public offering,
      (vii) issue and sell any equity or debt securities in a private placement (other
      than in connection with any Prohibited Transaction), (viii) issue equity
      securities to equipment lessors, equipment vendors, banks or similar lending
      institutions in connection with leases or loans, or in connection with strategic
      commercial or licensing transactions, (ix) issue securities in connection with
      any stock split, stock dividend, recapitalization, reclassification or similar
      event by the Company, and (x) issue shares of Common Stock to the Investor
      under any other agreement entered into between the Investor and the
      Company.

     

    
      
        
        

      

      
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    (b) Notwithstanding
      the foregoing, other than in the ordinary course of the Company’s business, the
      Company shall not engage in any Permitted Transaction involving the issuance,
      sale, disposition or other transaction in the capital markets (whether public
      or
      private) involving the Common Stock or any other capital or debt securities
      of
      the Company during any Draw Down Pricing Period.

     

    Section
      6.08. Prohibited
      Transactions.
      During
      the term of this Agreement, the Company shall not enter into any Prohibited
      Transaction without the prior written consent of the Investor, which consent
      may
      be withheld in the sole and absolute discretion of the Investor. For the
      purposes of this Agreement, the term “Prohibited Transaction” shall refer to:
      (i) the issuance by the Company of any rights, warrants or options to subscribe
      for or purchase Common Stock, or any other securities directly or indirectly
      convertible into or exchangeable or exercisable for Common Stock, at an
      effective conversion, exchange or exercise price that varies or may vary with
      or
      is otherwise issuable in relation to the market price of Common Stock, including
      by way of one or more resets to any fixed price; (ii) any “at-the-market
      offering” (as defined in Rule 415(a)(4) under the Securities Act or any
      successor rule thereto) of the Company’s securities by or on behalf of the
      Company, other than (A) a customary, firm-commitment underwritten public
      offering or (B) an unregistered private placement of Common Stock where the
      price per share of such Common Stock is fixed upon signing of definitive
      documentation of the sale, but not afterwards; and (iii) any equity line or
      other form of financing that is substantially similar to the financing provided
      for under this Agreement, provided that any future issuance by the Company
      of a
      convertible security (“Convertible
      Security”)
      that
      contains provisions that adjust the conversion price of such Convertible
      Security (“Conversion
      Price”)
      in the
      event of stock splits, dividends, distributions or similar events or pursuant
      to
      anti-dilution provisions shall not be a Prohibited Transaction for purposes
      of
      this Section 6.08 so long as such Convertible Security does not contain a
      provision that adjusts the Conversion Price as a result of any decline in the
      market price of the Common Stock after the issue date of the Convertible
      Security, other than a decline resulting directly from stock splits, dividends,
      distributions or similar events including, without limitation, the type of
      conversion price adjustments customarily found in a firm commitment Rule 144A
      offering to qualified institutional buyers.

     

    Section
      6.09. Corporate
      Existence.
      The
      Company shall take all steps necessary to preserve and continue the corporate
      existence of the Company; provided,
      however,
      that
      nothing in this Agreement shall be deemed to prohibit the Company from engaging
      in any Excluded Merger or Sale with another Person provided that in the event
      of
      an Excluded Merger or Sale, if the surviving, successor or purchasing Person
      does not agree to assume the obligations under the Warrant, then the Company
      shall deliver a notice to the Investor at least ten (10) days before the
      consummation of such Excluded Merger or Sale (provided that, to the extent
      that
      such transaction has not been publicly disclosed, then the Investor agrees
      to
      maintain the confidentiality of such information and to use such information
      only in connection with a decision to exercise the Warrant), the Investor may
      exercise the Warrant at any time before the consummation of such Excluded Merger
      or Sale (and such exercise may be made contingent upon the consummation of
      such
      Excluded Merger or Sale), and any portion of the Warrant that has not been
      exercised before consummation of such Excluded Merger or Sale shall terminate
      and expire, and shall no longer be outstanding.

     

    
      
        
        

      

      
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    Section
      6.10. Non-Disclosure
      of Non-Public Information.
      Except
      as otherwise expressly provided in this Agreement, including Section 6.10
      hereof, the Registration Rights Agreement or the Warrant, none of the Company,
      its officers, directors, employees nor agents shall disclose material non-public
      information to the Investor, its advisors or representatives.

     

    Section
      6.11. Notice
      of Certain Events Affecting Registration; Suspension of Right to Request a
      Draw
      Down.
      The
      Company shall promptly notify the Investor upon the occurrence of any of the
      following events in respect of the Registration Statement or the Prospectus
      related to the offer, issuance and sale of the Shares and the Warrant Shares
      hereunder: (i) receipt of any request for additional information by the
      Commission or any other federal or state governmental authority during the
      period of effectiveness of the Registration Statement for amendments or
      supplements to the Registration Statement or the Prospectus; (ii) the
      issuance by the Commission or any other federal or state governmental authority
      of any stop order suspending the effectiveness of the Registration Statement
      or
      the initiation of any proceedings for that purpose; and (iii) receipt of
      any notification with respect to the suspension of the qualification or
      exemption from qualification of any of the Registrable Securities for sale
      in
      any jurisdiction or the initiation or threatening of any proceeding for such
      purpose. The Company shall not be required to disclose to the Investor the
      substance or specific reasons of any of the events set forth in clauses (i)
      through (iii) of the previous sentence, only that the event has occurred. The
      Company shall not request a Draw Down during the continuation of any of the
      foregoing events.

     

    Section
      6.12. Amendments
      to the Registration Statement.
      When
      the Registration Statement is declared effective by the Commission, the Company
      shall (i) not file any amendment to the Registration Statement or make any
      amendment or supplement to the Prospectus of which the Investor shall not
      previously have been advised; provided,
      however,
      that
      the Company shall, to the extent it deems advisable, and without the prior
      consent of or notice to Investor, supplement the Prospectus within one Trading
      Day following the Settlement Date for each Draw Down solely to reflect the
      issuance of Shares with respect to such Draw Down and (ii) so long as, in
      the reasonable opinion of counsel for the Investor, a Prospectus is required
      to
      be delivered in connection with sales of the Shares by the Investor, if the
      Company files any information, documents or reports that are incorporated by
      reference in the Registration Statement pursuant to the Exchange Act, the
      Company shall, if requested in writing by the Investor, deliver a copy of such
      information, documents or reports to the Investor promptly following such
      filing.

     

    Section
      6.13. Prospectus
      Delivery.
      From
      time to time for such period as in the reasonable opinion of counsel for the
      Investor a prospectus is required by the Securities Act to be delivered in
      connection with sales by the Investor, the Company will expeditiously deliver
      to
      the Investor, without charge, as many copies of the Prospectus (and of any
      amendment or supplement thereto) as the Investor may reasonably request. The
      Company consents to the use of the Prospectus (and of any amendment or
      supplement thereto) in accordance with the provisions of the Securities Act
      and
      state securities laws in connection with the offering and sale of the Shares
      and
      the Warrant Shares and for such period of time thereafter as the Prospectus
      is
      required by the Securities Act to be delivered in connection with sales of
      the
      Shares and the Warrant Shares.

     

    
      
        
        

      

      
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    ARTICLE
      VII

     

    CONDITIONS
      TO THE OBLIGATION OF THE INVESTOR TO ACCEPT A DRAW DOWN

     

    The
      obligation of the Investor hereunder to accept a Draw Down Notice and to acquire
      and pay for the Shares in accordance therewith is subject to the satisfaction
      or
      waiver, at each Condition Satisfaction Date, of each of the conditions set
      forth
      below. Other than those conditions set forth in Section 7.12 which are for
      the Company’s sole benefit and may be waived by the Company at any time in its
      sole discretion, the conditions are for the Investor’s sole benefit and may be
      waived by the Investor at any time in its sole discretion. As used in this
      Agreement, the term “Condition
      Satisfaction Date”
shall
      mean, with respect to each Draw Down, the date on which the applicable Draw
      Down
      Notice is delivered to the Investor and each Settlement Date in respect of
      the
      applicable Draw Down Pricing Period.

     

    Section
      7.01. Accuracy
      of the Company’s Representations and Warranties.
      Each of
      the representations and warranties of the Company shall be true and correct
      in
      all material respects as of the date when made as though made at that time
      except for representations and warranties that are expressly made as of a
      particular date.

     

    Section
      7.02. Performance
      by the Company.
      The
      Company shall have, in all material respects, performed, satisfied and complied
      with all covenants, agreements and conditions required by this Agreement, the
      Registration Rights Agreement and the Warrant to be performed, satisfied or
      complied with by the Company.

     

    Section
      7.03. Compliance
      with Law.
      The
      Company shall have complied in all respects with all applicable federal, state
      and local governmental laws, rules, regulations and ordinances in connection
      with the execution, delivery and performance of this Agreement and the
      consummation of the transactions contemplated hereby except for any failures
      to
      so comply which could not reasonably be expected to have a Material Adverse
      Effect.

     

    Section
      7.04. Effective
      Registration Statement.
      Upon
      the terms and subject to the conditions set forth in the Registration Rights
      Agreement, the Registration Statement shall have previously become effective
      and
      shall remain effective and (i) neither the Company nor the Investor shall
      have received notice that the Commission has issued or intends to issue a stop
      order with respect to the Registration Statement or that the Commission
      otherwise has suspended or withdrawn the effectiveness of the Registration
      Statement, either temporarily or permanently, or intends or has threatened
      to do
      so (unless the Commission’s concerns have been addressed and the Investor is
      reasonably satisfied that the Commission no longer is considering or intends
      to
      take such action), and (ii) no other suspension of the use or withdrawal of
      the effectiveness of the Registration Statement or the Prospectus shall
      exist.

     

    Section
      7.05. No
      Knowledge.
      The
      Company shall have no Knowledge of any event that could reasonably be expected
      to have the effect of causing the Registration Statement with respect to the
      resale of the Registrable Securities by the Investor to be suspended or
      otherwise ineffective (which event is more likely than not to occur within
      eight
      Trading Days following the Trading Day on which a Draw Down Notice is
      delivered).

     

    
      
        
        

      

      
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    Section
      7.06. No
      Suspension.
      Trading
      in the Company’s Common Stock shall not have been suspended by the Commission,
      the Principal Market or FINRA and trading in securities generally as reported
      on
      the Principal Market shall not have been suspended or limited as of the
      Condition Satisfaction Date.

     

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

     

    Section
      7.08. No
      Proceedings or Litigation.
      No
      action, suit or proceeding before any arbitrator or any governmental authority
      shall have been commenced, and, to the Knowledge of the Company, no
      investigation by any governmental authority shall have been threatened, against
      the Company or any subsidiary, or any of the officers, directors or affiliates
      of the Company or any subsidiary seeking to enjoin, prevent or change the
      transactions contemplated by this Agreement.

     

    Section
      7.09. Sufficient
      Shares Registered for Resale.
      The
      Company shall have sufficient Shares, calculated using the closing trade price
      of the Common Stock as of the Trading Day immediately preceding such Draw Down
      Notice, registered under the Registration Statement to issue and sell such
      Shares in accordance with such Draw Down Notice.

     

    Section
      7.10. Warrant.
      The
      Warrant shall have been duly executed, delivered and issued to the Investor,
      and
      the Company shall not be in default in any material respect under any of the
      provisions thereof, provided that any refusal by or failure of the Company
      to
      issue and deliver Warrant Shares in respect of any exercise (in whole or in
      part) thereof shall be deemed to be material for the purposes of this
      Section 7.10.

     

    Section
      7.11. Opinion
      of Counsel.
      The
      Investor shall have received an opinion of counsel to the Company, dated as
      of
      the Effective Date, in the form reasonably agreed to by the Investor and its
      counsel prior to the date hereof.

     

    Section
      7.12. Accuracy
      of Investor’s Representation and Warranties.
      The
      representations and warranties of the Investor shall be true and correct in
      all
      material respects as of the date when made as though made at that time except
      for representations and warranties that are made as of a particular
      date.

     

    Section
      7.13. Payment
      of Fees.
      The
      Company shall be current on all undisputed expense invoices that the Company
      is
      required to pay pursuant to Section 10.01.

     

    
      
        
        

      

      
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    ARTICLE
      VIII

     

    TERMINATION

     

    Section
      8.01. Term.
      Unless
      otherwise terminated in accordance with Section 8.02 below, this Agreement
      shall terminate upon the earlier to occur of (i) the expiration of the
      Commitment Period or (ii) the issuance of Shares pursuant to this Agreement
      in
      an amount equal to the Maximum Commitment Amount.

     

    Section
      8.02. Other
      Termination.

     

    (a) The
      Investor may terminate this Agreement upon one (1) Business Day’s notice if the
      Company enters into any Prohibited Transaction as set forth in Section 6.08
      without the Investor’s prior written consent.

     

    (b) The
      Investor may terminate this Agreement upon one (1) Business Day’s notice to the
      Company at any time in the event that the Registration Statement is not first
      declared effective in accordance with the Registration Rights Agreement;
provided,
      however,
      that in
      the event the Registration Statement is declared effective prior to the delivery
      of such notice, the Investor shall thereafter have no right to terminate this
      Agreement pursuant to this Section 8.02(b).

     

    (c) Beginning
      on the first anniversary of the Effective Date, the Investor may terminate
      this
      Agreement upon one (1) Business Day’s notice to the Company at any time in the
      event that the Company fails to make cumulative Draw Downs of at least $1.25
      million during any consecutive twelve (12) month period during the
      term.

     

    (d) The
      Company may terminate this Agreement upon one (1) Business Day’s notice;
provided,
      however,
      that
      the Company shall not terminate this Agreement pursuant to this Section 8.02(d)
      during
      any Draw Down Pricing Period; provided further
      that, in
      the event of any termination of this Agreement by the Company hereunder, so
      long
      as the Investor owns Shares purchased hereunder and/or Warrant Shares, unless
      all of such shares of Common Stock may be resold by the Investor without
      registration and without any time, volume or manner limitations pursuant to
      Rule
      144(k) (or any similar provision then in effect) under the Securities Act,
      the
      Company shall not suspend or withdraw the Registration Statement or otherwise
      cause the Registration Statement to become ineffective, or voluntarily delist
      the Common Stock from, the Principal Market without listing the Common Stock
      on
      another Principal Market.

     

    (e) Each
      of
      the parties hereto may terminate this Agreement upon one (1) Business Day’s
      notice if the other party has breached a material representation, warranty
      or
      covenant to this Agreement and such breach is not remedied within ten (10)
      Business Days after notice of such breach is delivered to the breaching
      party.

     

    Section
      8.03. Effect
      of Termination.
      In the
      event of termination by the Company or the Investor, written notice thereof
      shall forthwith be given to the other party and the transactions contemplated
      by
      this Agreement shall be terminated without further action by either party.
      If
      this Agreement is terminated as provided in Section 8.01 or 8.02 herein,
      this Agreement shall become void and of no further force and effect, except
      as
      provided in Section 10.13. Nothing in this Section 8.03 shall be
      deemed to release the Company or the Investor from any liability for any breach
      under this Agreement occurring prior to such termination, or to impair the
      rights of the Company and the Investor to compel specific performance by the
      other party of its obligations under this Agreement arising prior to such
      termination.

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      IX

     

    INDEMNIFICATION

     

    Section
      9.01. Indemnification.

     

    (a) Except
      as
      otherwise provided in this Article IX, unless disputed as set forth in
      Section 9.02, the Company agrees to indemnify, defend and hold harmless the
      Investor and its affiliates and their respective officers, directors, agents,
      employees, subsidiaries, partners, members and controlling persons (each, an
      “Investor
      Indemnified Party”),
      to
      the fullest extent permitted by law from and against any and all Damages
      directly resulting from or directly arising out of any breach of any
      representation or warranty, covenant or agreement by the Company in this
      Agreement, the Registration Rights Agreement or the Warrant; provided,
      however,
      that
      the Company shall not be liable under this Article IX to an Investor
      Indemnified Party to the extent that such Damages resulted or arose from the
      breach by an Investor Indemnified Party of any representation, warranty,
      covenant or agreement of an Investor Indemnified Party contained in this
      Agreement, the Registration Rights Agreement or the Warrant or the negligence,
      recklessness, willful misconduct or bad faith of an Investor Indemnified Party.
      The parties intend that any Damages subject to indemnification pursuant to
      this
      Article IX will be net of insurance proceeds (which the Investor
      Indemnified Party agrees to use commercially reasonable efforts to recover).
      Accordingly, the amount which the Company is required to pay to any Investor
      Indemnified Party hereunder (a “Company
      Indemnity Payment”)
      will
      be reduced by any insurance proceeds actually recovered by or on behalf of
      any
      Investor Indemnified Party in reduction of the related Damages. In addition,
      if
      an Investor Indemnified Party receives a Company Indemnity Payment required
      by
      this Article IX in respect of any Damages and subsequently receives any
      such insurance proceeds, then the Investor Indemnified Party will pay to the
      Company an amount equal to the Company Indemnity Payment received less the
      amount of the Company Indemnity Payment that would have been due if the
      insurance proceeds had been received, realized or recovered before the Company
      Indemnity Payment was made.

     

    (b) Except
      as
      otherwise provided in this Article IX, unless disputed as set forth in
      Section 9.02, the Investor agrees to indemnify, defend and hold harmless
      the Company and its affiliates and their respective officers, directors, agents,
      employees, subsidiaries, partners, members and controlling persons (each, a
      “Company
      Indemnified Party”),
      to
      the fullest extent permitted by law from and against any and all Damages
      directly resulting from or directly arising out of any breach of any
      representation or warranty, covenant or agreement by the Investor in this
      Agreement, the Registration Rights Agreement or the Warrant; provided,
      however,
      that
      the Investor shall not be liable under this Article IX to a Company
      Indemnified Party to the extent that such Damages resulted or arose from the
      breach by a Company Indemnified Party of any representation, warranty, covenant
      or agreement of a Company Indemnified Party contained in this Agreement, the
      Registration Rights Agreement or the Warrant or negligence, recklessness,
      willful misconduct or bad faith of a Company Indemnified Party. The parties
      intend that any Damages subject to indemnification pursuant to this
      Article IX will be net of insurance proceeds (which the Company agrees to
      use commercially reasonable efforts to recover). Accordingly, the amount which
      the Investor is required to pay to any Company Indemnified Party hereunder
      (an
“Investor
      Indemnity Payment”)
      will
      be reduced by any insurance proceeds theretofore actually recovered by or on
      behalf of any Company Indemnified Party in reduction of the related Damages.
      In
      addition, if a Company Indemnified Party receives an Investor Indemnity Payment
      required by this Article IX in respect of any Damages and subsequently
      receives any such insurance proceeds, then the Company Indemnified Party will
      pay to the Investor an amount equal to the Investor Indemnity Payment received
      less the amount of the Investor Indemnity Payment that would have been due
      if
      the insurance proceeds had been received, realized or recovered before the
      Investor Indemnity Payment was made.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

     

    Section
      9.02. Notification
      of Claims for Indemnification.
      Each
      party entitled to indemnification under this Article IX (an “Indemnified
      Party”)
      shall,
      promptly after the receipt of notice of the commencement of any claim against
      such Indemnified Party in respect of which indemnity may be sought from the
      party obligated to indemnify such Indemnified Party under this Article IX
      (the “Indemnifying
      Party”),
      notify the Indemnifying Party in writing of the commencement thereof. Any such
      notice shall describe the claim in reasonable detail. The failure of any
      Indemnified Party to so notify the Indemnifying Party of any such action shall
      not relieve the Indemnifying Party from any liability which it may have to
      such
      Indemnified Party (a) other than pursuant to this Article IX or (b) under
      this Article IX unless, and only to the extent that, such failure results
      in the Indemnifying Party’s forfeiture of substantive rights or defenses or the
      Indemnifying Party is prejudiced by such delay. The procedures listed below
      shall govern the procedures for the handling of indemnification
      claims.

     

    (a) Any
      claim
      for indemnification for Damages that do not result from a Third Party Claim
      as
      defined in the following paragraph, shall be asserted by written notice given
      by
      the Indemnified Party to the Indemnifying Party. Such Indemnifying Party shall
      have a period of thirty (30) days after the receipt of such notice within which
      to respond thereto. If such Indemnifying Party does not respond within such
      thirty (30) day period, such Indemnifying Party shall be deemed to have refused
      to accept responsibility to make payment as set forth in Section 9.01. If
      such Indemnifying Party does not respond within such thirty (30) day period
      or
      rejects such claim in whole or in part, the Indemnified Party shall be free
      to
      pursue such remedies as specified in this Agreement.

     

    (b) If
      an
      Indemnified Party shall receive notice or otherwise learn of the assertion
      by a
      person or entity not a party to this Agreement of any threatened legal action
      or
      claim (collectively a “Third
      Party Claim”),
      with
      respect to which an Indemnifying Party may be obligated to provide
      indemnification, the Indemnified Party shall give such Indemnifying Party
      written notice thereof within twenty (20) days after becoming aware of such
      Third Party Claim.

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

     

    (c) An
      Indemnifying Party may elect to defend (and, unless the Indemnifying Party
      has
      specified any reservations or exceptions, to seek to settle or compromise)
      at
      such Indemnifying Party’s own expense and by such Indemnifying Party’s own
      counsel, any Third Party Claim. Within thirty (30) days after the receipt of
      notice from an Indemnified Party (or sooner if the nature of such Third Party
      Claim so requires), the Indemnifying Party shall notify the Indemnified Party
      whether the Indemnifying Party will assume responsibility for defending such
      Third Party Claim, which election shall specify any reservations or exceptions.
      If such Indemnifying Party does not respond within such thirty (30) day period
      or rejects such claim in whole or in part, the Indemnified Party shall be free
      to pursue such remedies as specified in this Agreement. In case any such Third
      Party Claim shall be brought against any Indemnified Party, and it shall notify
      the Indemnifying Party of the commencement thereof, the Indemnifying Party
      shall
      be entitled to assume the defense thereof at its own expense, with counsel
      satisfactory to such Indemnified Party in its reasonable judgment; provided,
      however, that any Indemnified Party may, at its own expense, retain separate
      counsel to participate in such defense at its own expense. Notwithstanding
      the
      foregoing, in any Third Party Claim in which both the Indemnifying Party, on
      the
      one hand, and an Indemnified Party, on the other hand, are, or are reasonably
      likely to become, a party, such Indemnified Party shall have the right to employ
      separate counsel and to control its own defense of such claim if, in the
      reasonable opinion of counsel to such Indemnified Party, either (x) one or
      more significant defenses are available to the Indemnified Party that are not
      available to the Indemnifying Party or (y) a conflict or potential conflict
      exists between the Indemnifying Party, on the one hand, and such Indemnified
      Party, on the other hand, that would make such separate representation
      advisable; provided,
      however,
      that in
      such circumstances the Indemnifying Party (i) shall not be liable for the
      fees and expenses of more than one counsel to all Indemnified Parties and
      (ii) shall reimburse the Indemnified Parties for such reasonable fees and
      expenses of such counsel incurred in any such Third Party Claim, as such
      expenses are incurred, provided that the Indemnified Parties agree to repay
      such
      amounts if it is ultimately determined that the Indemnifying Party was not
      obligated to provide indemnification under this Article IX. The
      Indemnifying Party agrees that it will not, without the prior written consent
      of
      the Indemnified Party, settle, compromise or consent to the entry of any
      judgment in any pending or threatened claim relating to the matters contemplated
      hereby (if any Indemnified Party is a party thereto or has been actually
      threatened to be made a party thereto) unless such settlement, compromise or
      consent includes an unconditional release of such Indemnified Party from all
      liability arising or that may arise out of such claim. The Indemnifying Party
      shall not be liable for any settlement of any claim effected against an
      Indemnified Party without the Indemnifying Party’s written consent, which
      consent shall not be unreasonably withheld, conditioned or delayed. The rights
      accorded to an Indemnified Party hereunder shall be in addition to any rights
      that any Indemnified Party may have at common law, by separate agreement or
      otherwise; provided,
      however,
      that
      notwithstanding the foregoing or anything to the contrary contained in this
      Agreement, nothing in this Article IX shall restrict or limit any rights
      that any Indemnified Party may have to seek equitable relief.

     

    ARTICLE
      X

     

    MISCELLANEOUS

     

    Section
      10.01. Fees
      and Expenses.

     

    (a) Each
      of
      the Company and the Investor agrees to pay its own expenses incident to the
      performance of its obligations hereunder, except that the Company shall be
      solely responsible for (i) all reasonable attorneys fees and expenses
      incurred by the Investor in connection with (A) the preparation, negotiation,
      execution and delivery of this Agreement, the Registration Rights Agreement
      and
      the Warrant, and (B) the review of the Registration Statement, correspondence
      with the Commission and amendments and supplements to the Registration Statement
      and Prospectus, (ii) all reasonable fees and expenses incurred by the Investor
      in connection with any amendments, modifications or waivers of this Agreement,
      including, without limitation, all reasonable attorneys fees and expenses,
      (iii) all reasonable fees and expenses incurred in connection with the
      Investor’s enforcement of this Agreement, including, without limitation, all
      reasonable attorneys fees and expenses, (iv) due diligence expenses
      incurred by the Investor during the term of this Agreement equal to $12,500
      per
      calendar quarter, and (v) all stamp or other similar taxes and duties, if
      any, levied in connection with issuance of the Shares pursuant hereto;
provided,
      however,
      that in
      each of the above instances the Investor shall provide customary supporting
      invoices or similar documentation in reasonable detail describing such expenses
      (however, the Investor shall not be obligated to provide detailed time sheets);
      provided further
      that the
      maximum aggregate amount payable by the Company pursuant to clause (i) and
      (ii)
      above shall be $75,000 and the Investor shall bear all fees and expenses in
      excess of $75,000 incurred in connection with the events described under
      clauses (i) and (ii) above.

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    (b) If
      any
      action at law or in equity is necessary to enforce or interpret the terms of
      this Agreement, the Registration Rights Agreement or the Warrant, the prevailing
      party shall be entitled to reasonable fees, costs and necessary disbursements
      in
      addition to any other relief to which such party may be entitled.

     

    Section
      10.02. Reporting
      Entity for the Common Stock.
      The
      reporting entity relied upon for the determination of the trading price or
      trading volume of the Common Stock on any given Trading Day for the purposes
      of
      this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
      mutual consent of the Investor and the Company shall be required to employ
      any
      other reporting entity.

     

    Section
      10.03. Brokerage.
      Each of
      the parties hereto represents that it has had no dealings in connection with
      this transaction with any finder or broker who will demand payment of any fee
      or
      commission from the other party. The Company, on the one hand, and the Investor,
      on the other hand, agree to indemnify the other against and hold the other
      harmless from any and all liabilities to any Persons claiming brokerage
      commissions or finder’s fees on account of services purported to have been
      rendered on behalf of the indemnifying party in connection with this Agreement
      or the transactions contemplated hereby.

     

    Section
      10.04. Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in
      the mail, registered or certified, return receipt requested, postage prepaid,
      (iii) delivered by reputable air courier service with charges prepaid, or
      (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set
      forth below or to such other address as such party shall have specified most
      recently by written notice given in accordance herewith, in each case with
      a
      copy to the e-mail address set forth beside the facsimile number for the
      addressee below. Any notice or other communication required or permitted to
      be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a Business
      Day during normal business hours where such notice is to be received), or the
      first Business Day following such delivery (if delivered other than on a
      Business Day during normal business hours where such notice is to be received)
      or (b) on the second Business Day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be:

     

    
      
        
        

      

      
        29

        
          

        

      

      
        
        

      

    

     

    If
      to the
      Company:

     

    Barclay
      Phillips

    Micromet,
      Inc.

    6707
      Democracy Boulevard - Suite 505

    Bethesda,
      MD  20817

    Fax:
      (240) 752-1425

    Email: 
      buck.phillips@micromet-inc.com

    Attention:
      Chief Financial Officer

     

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

     

    Cooley
      Godward Kronish LLP

    11951
      Freedom Drive

    Reston,
      VA 20190

    Facsimile:
      (703) 456-8100

    Email:
      cplaza@cooley.com

    Attention:
      Christian E. Plaza, Esq.

     

    And
      another a copy (which shall not constitute notice) to:

     

    Micromet
      Legal Department

    Micromet,
      Inc.

    6707
      Democracy Boulevard - Suite 505

    Bethesda,
      MD  20817

    Fax:
      (240) 752-1425 

    Email:
      matthias.alder@micromet-inc.com

    Attention: SVP
      and
      General Counsel

     

    If
      to the
      Investor:

     

    Kingsbridge
      Capital Limited

    Attention:
      Mr. Tony Hillman

    PO
      Box
      1075

    Elizabeth
      House

    9
      Castle
      Street

    St
      Helier

    Jersey

    JE42QP

    Channel
      Islands

    Tel:
      011-44-1534-636-041

    Fax:
      011-44-1534-636-042

    Email:
      admin@kingsbridgecap.com

     

    
      
        
        

      

      
        30

        
          

        

      

      
        
        

      

    

     

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

     

    Kingsbridge
      Corporate Services

    Kingsbridge
      House

    New
      Abbey

    Kilcullen

    Co.Kildare

    Ireland

    Tel:
      011-353-45-481-811

    Fax:
      011-353-45-482-003

    Email:
      adamgurney@kingsbridge.ie; emmagalway@kingsbridge.ie, and 

    pwhelan@kingsbridge.ie

     

    And
      another a copy (which shall not constitute notice) to:

     

    Stroock
      & Stroock & Lavan LLP

    180
      Maiden Lane

    New
      York,
      NY 10038

    Telephone:      
      (212)
      878-8000

    Facsimile:        (212)
      878-8375

    Attention:        
      Keith
      M.
      Andruschak, Esq.

    E-mail:
      kandruschak@stroock.com

     

    Either
      party hereto may from time to time change its address or facsimile number for
      notices under this Section by giving at least ten (10) days’ prior
      written notice of such changed address or facsimile number to the other party
      hereto.

     

    Section
      10.05. Assignment.
      Neither
      this Agreement nor any rights of the Investor or the Company hereunder may
      be
      assigned by either party to any other Person.

     

    Section
      10.06. Amendment;
      No Waiver.
      No
      party shall be liable or bound to any other party in any manner by any
      warranties, representations or covenants except as specifically set forth in
      this Agreement, the Warrant and the Registration Rights Agreement. Except as
      expressly provided in this Agreement, neither this Agreement nor any term hereof
      may be amended, waived, discharged or terminated other than by a written
      instrument signed by both parties hereto. The failure of the either party to
      insist on strict compliance with this Agreement, or to exercise any right or
      remedy under this Agreement, shall not constitute a waiver of any rights
      provided under this Agreement, nor estop the parties from thereafter demanding
      full and complete compliance nor prevent the parties from exercising such a
      right or remedy in the future.

     

    Section
      10.07. Entire
      Agreement.
      This
      Agreement, the Registration Rights Agreement and the Warrant set forth the
      entire agreement and understanding of the parties relating to the subject matter
      hereof and supersede all prior and contemporaneous agreements, negotiations
      and
      understandings between the parties, both oral and written, relating to the
      subject matter hereof.

     

    
      
        
        

      

      
        31

        
          

        

      

      
        
        

      

    

     

    Section
      10.08. Severability.
      In the
      event that any provision of this Agreement becomes or is declared by a court
      of
      competent jurisdiction to be illegal, unenforceable or void, this Agreement
      shall continue in full force and effect without said provision; provided
      that, if
      the severance of such provision materially changes the economic benefits of
      this
      Agreement to either party as such benefits are anticipated as of the date
      hereof, then such party may terminate this Agreement on five (5) Business Days
      prior written notice to the other party.  In such event, the Registration
      Rights Agreement will terminate simultaneously with the termination of this
      Agreement; provided that in the event that this Agreement is terminated by
      the
      Company in accordance with this Section 10.08 and the Warrant Shares either
      have
      not been registered for resale by the Investor in accordance with the
      Registration Rights Agreement or are otherwise not freely tradable (if and
      when
      issued) in accordance with applicable law, then the Registration Rights
      Agreement in respect of the registration of the Warrant Shares shall remain
      in
      full force and effect.

     

    Section
      10.09. Title
      and Subtitles.
      The
      titles and subtitles used in this Agreement are used for the convenience of
      reference and are not to be considered in construing or interpreting this
      Agreement.

     

    Section
      10.10. Counterparts.
      This
      Agreement may be executed in multiple counterparts, each of which may be
      executed by less than all of the parties and shall be deemed to be an original
      instrument which shall be enforceable against the parties actually executing
      such counterparts and all of which together shall constitute one and the same
      instrument.

     

    Section
      10.11. Choice
      of Law.
      This
      Agreement shall be construed under the laws of the State of New
      York.

     

    Section
      10.12. Specific
      Enforcement; Consent to Jurisdiction.

     

    (a) The
      Company and the 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 the parties shall be entitled to an injunction or
      injunctions to prevent or cure breaches of the provisions of this Agreement
      and
      to enforce specifically the terms and provisions hereof or thereof, this being
      in addition to any other remedy to which any of them may be entitled by law
      or
      equity.

     

    (b) Subject
      to Section 9.03, each of the Company and the Investor (i) hereby
      irrevocably submits to the jurisdiction of the United States District Court
      and
      other courts of the United States sitting in the State of New York for the
      purposes of any suit, action or proceeding arising out of or relating to this
      Agreement and (ii) hereby waives, and agrees not to assert in any such
      suit, action or proceeding, any claim that it is not personally subject to
      the
      jurisdiction of such court, that the suit, action or proceeding is brought
      in an
      inconvenient forum or that the venue of the suit, action or proceeding is
      improper. Each of the Company and the Investor consents to process being served
      in any such suit, action or proceeding by mailing a copy thereof to such party
      at the address in effect for notices to it under this Agreement and agrees
      that
      such service shall constitute good and sufficient service of process and notice
      thereof. Nothing in this Section shall affect or limit any right to serve
      process in any other manner permitted by law.

     

    Section
      10.13. Survival.
      The
      representations and warranties of the Company and the Investor contained in
      Articles IV and V of this Agreement and the covenants contained in
      Articles V, VI and X of this Agreement shall survive the execution and
      delivery hereof and the Closing until the termination of this Agreement, and
      the
      agreements and covenants set forth in Article VIII and Article IX of
      this Agreement shall survive the execution and delivery hereof and the Closing
      hereunder.

     

    
      
        
        

      

      
        32

        
          

        

      

      
        
        

      

    

     

    Section
      10.14. Publicity.
      Except
      as otherwise required by applicable law or regulation, or Nasdaq rule or
      judicial process, prior to the Closing, neither the Company nor the Investor
      shall issue any press release or otherwise make any public statement or
      announcement with respect to this Agreement or the transactions contemplated
      hereby or the existence of this Agreement. In the event the Company is required
      by law, regulation, Nasdaq rule or judicial process, based upon reasonable
      advice of the Company’s inside or outside counsel, to issue a press release or
      otherwise make a public statement or announcement with respect to this Agreement
      prior to the Closing, the Company shall consult with the Investor on the form
      and substance of such press release, statement or announcement. Promptly after
      the Closing, each party may issue a press release or otherwise make a public
      statement or announcement with respect to this Agreement or the transactions
      contemplated hereby or the existence of this Agreement; provided
      that,
      prior to issuing any such press release, making any such public statement or
      announcement, the party wishing to make such release, statement or announcement
      consults and cooperates in good faith with the other party in order to formulate
      such press release, public statement or announcement in form and substance
      reasonably acceptable to both parties.

     

    Section
      10.15. Further
      Assurances.
      From
      and after the date of this Agreement, upon the request of the Investor or the
      Company, each of the Company and the Investor shall execute and deliver such
      instruments, documents and other writings as may be reasonably necessary or
      desirable to confirm and carry out and to effectuate fully the intent and
      purposes of this Agreement.

     

    Section
      10.16. Absence
      of Presumption.
      This
      Agreement shall be construed without regard to any presumption or rule requiring
      construction or interpretation against the party drafting or causing any
      instrument to be drafted.

     

    Section
      10.17. Termination
      of Prior Purchase Agreement.
      The
      parties hereby agree that the Prior Purchase Agreement shall terminate and
      be of
      no further force or effect as of the close of business on the date immediately
      prior to the Effective Date.

     

    [Remainder
      of this page intentionally left blank]

    
      
        
        

      

      
        33

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
      executed by their respective authorized officer as of the date first
      written.

    

      
        	
                KINGSBRIDGE
                  CAPITAL LIMITED

              
	 	 
	
                By:

              	
                /s/
                  Antony Gardner-Hillman

              
	 	
                Antony
                  Gardner-Hillman

              
	 	
                Director

              
	 	 
	
                MICROMET,
                  INC.

              
	 	 
	
                By:

              	
                /s/
                  Christian Itin

              
	 	
                Name:
                  Christian Itin

              
	 	
                Title:
                  President and CEO

              

      

    

     

    
      
        
        

      

      
        34

        
          

        

      

      
        
        

      

    

    Exhibit
      A

     

    Form
      of
      Registration Rights Agreement

    

      [The
        Registration Rights Agreement is attached as Exhibit 10.2 to the Current
        Report
        on Form 8-K filed by Micromet, Inc. on December 2, 2008.]

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      B

     

    Warrant

     

    
      [The
        Warrant is attached as Exhibit 10.3 to the Current Report on Form 8-K filed
        by
        Micromet, Inc. on December 2, 2008.]

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      C

     

    Officer’s
      Certificate

     

    I,
      [NAME
      OF OFFICER], do hereby certify to Kingsbridge Capital Limited (the “Investor”),
      with respect to the common stock of Micromet, Inc. (the “Company”) issuable in
      connection with the Draw Down Notice, dated _____________ (the “Notice”)
      attached hereto and delivered pursuant to Article III of the Common Stock
      Purchase Agreement, dated as of December 1, 2008 (the “Agreement”), by and
      between the Company and the Investor, as follows (capitalized terms used but
      undefined herein have the meanings given to such terms in the
      Agreement):

     

    1.
       I
      am the
      duly elected [OFFICER] of the Company.

     

    2.
       The
      representations and warranties of the Company set forth in Article IV of
      the Agreement are true and correct in all material respects as though made
      on
      and as of the date hereof (except for such representations and warranties that
      are made as of a particular date).

     

    3.
       The
      Company has performed in all material respects all covenants and agreements
      to
      be performed by the Company on or prior to the date hereof related to the Notice
      and has satisfied each of the conditions to the obligation of the Investor
      set
      forth in Article VII of the Agreement.

     

    4. The
      Shares issuable in respect of the Notice will be delivered without restrictive
      legend via book entry through the Depositary Trust Company to an account
      designated by the Investor.

     

    The
      undersigned has executed this Certificate this ____ day of ________,
      200[_].

     

    
      	     

	
              Name:

            
	
              Title:

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00150-of-00352.parquet"}]]