Document:

Unassociated Document

    EMPLOYMENT
      AGREEMENT

     

    This
      Employment Agreement (“Agreement”) is entered into as of June 22, 2007 by and
      between Raymond Talen (“Executive”) and Talen Marine and Fuel, Inc., a Louisiana
      corporation (the “Company”). This Agreement shall become effective as a valid
      and binding contract as of the date first above written, provided that the
      operative provisions hereof shall not become effective until the Closing
      (as
      defined in that certain Stock Purchase and Sale Agreement dated as of June
      22,
      2007,
      by and among the Company, Allegro Biodiesel Corporation (“Parent”) and certain
      other parties (the “Stock Purchase Agreement,” and such Closing being
      hereinafter referred to as the “Effective Date”)).
      In the
      event that the Stock Purchase Agreement is terminated or the transactions
      contemplated by the Stock Purchase Agreement are abandoned, this Agreement
      shall
      be null and void ab
      initio
      and
      shall have no force and effect. 

     

    Whereas,
      in
      connection with the transactions contemplated by the Stock Purchase Agreement,
      the Company desires to employ Executive to provide personal services to the
      Company, and wishes to provide Executive with certain compensation and benefits
      in return for Executive’s services; and

     

    Whereas,
      Executive wishes to be employed by the Company and provide personal services
      to
      the Company in return for certain compensation and benefits.

     

    Now,
      Therefore,
      in
      consideration of the mutual promises and covenants contained herein, it is
      hereby agreed by and between the parties hereto as follows:

     

    ARTICLE
      I

    DEFINITIONS

     

    For
      purposes of the Agreement, the following terms are defined as
      follows:

     

    1.1  “Affiliate”
means,
      with respect to any party, any corporation, limited liability company,
      partnership, joint venture, firm and/or other entity which Controls, is
      Controlled by or is under common Control with such party.

     

    1.2  “Board”
means
      the Board of Directors of the Company.

     

    1.3  “Business”
means
      the business of the Company, which is engaged in the distribution of fuel ,
      lubricant and related materials, including but not limited to, storage and
      transportation, and wholesale and retail distribution of diesel, bio-diesel
      and
      bio-diesel blends, and any other business activity or service in which the
      Company or any Affiliate of the Company is engaged or making an active effort
      to
      develop business at the time of termination of Executive’s employment with the
      Company or any Affiliate of the Company. Executive agrees that the Company
      may
      periodically revise the description of the Business of the Company to reflect
      changes in the Company’s business. Executive acknowledges and agrees that as
      consideration for executing this Agreement, Executive agrees to sign addenda
      to
      this Agreement which update the description of the Business of the Company
      as
      revised by the Company.

     

    1.4  “Cause”
means:
      

     

    (a)  Executive’s
      willful
      failure to substantially perform the duties assigned to Executive in accordance
      with the Agreement or Executive’s breaching in any material respect any
      provisions of this Agreement or the employee policies and procedures of the
      Company;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  Executive’s
      failure to carry out, or comply with, in any material respect any lawful
      directive of the Board or the appropriate individual to whom Executive
      reports; 

     

    (c)  Executive’s
      commission at any time of any act or omission that results in, or that may
      reasonably be expected to result in, a conviction, plea of no contest or
      imposition of unadjudicated probation for any felony or crime involving moral
      turpitude; 

     

    (d)  Executive’s
      unlawful use (including being under the influence) or possession of illegal
      drugs on the Company’s premises or while performing Executive’s duties and
      responsibilities under this Agreement;

     

    (e)  Executive’s
      violation of the Company’s drug and alcohol free workplace policy;
 

     

    (f)  Executive’s
      commission at any time of any act of fraud, embezzlement, material
      misappropriation, material misconduct, or breach of fiduciary duty against
      the
      Company; or

     

    (g)  Executive’s
      violation in any material respect of any federal, state or local law applicable
      to the Company or any Affiliate of the Company.

     

    1.5  “Confidentiality
      Agreement”
means
      the Company’s form of Proprietary Information and Invention Assignment Agreement
      to be executed by Executive contemporaneously with the execution of this
      Agreement and that is attached hereto as Annex A.

     

    1.6  “Control”
means
      (i) in the case of corporate entities, direct or indirect ownership of at least
      fifty percent (50%) of the stock or participating assets entitled to vote for
      the election of directors; and (ii) in the case of non-corporate entities (such
      as individuals, limited liability companies, partnerships or limited
      partnerships), either (A) direct or indirect ownership of at least fifty percent
      (50%) of the equity interest, or (B) the power to direct the management and
      policies of the non-corporate entity.

     

    1.7  “Covered
      Entity”
means
      every Affiliate of Executive, and every business, association, trust,
      corporation, partnership, limited liability company, proprietorship or other
      entity in which Executive has invested (whether through debt or equity
      securities), or has contributed any capital or made any advances to, or in
      which
      any Affiliate of Executive has an ownership interest or profit sharing
      percentage, or a firm from which Executive or any Affiliate of Executive
      receives or is entitled to receive income, compensation or consulting fees
      in
      which Executive or any Affiliate of Executive has an interest as a lender (other
      than solely as a trade creditor for the sale of goods or provision of services
      that do not otherwise violate the provisions of this Agreement); provided,
      however, that only entities whose management decisions are influenced by
      Executive shall be considered Covered Entities for purposes of this Agreement.
      The agreements of Executive contained herein specifically apply to each entity
      which is presently a Covered Entity or which becomes a Covered Entity subsequent
      to the date of this Agreement, and in both cases is a Covered Entity at the
      time
      of a violation of Article V of this Agreement. Notwithstanding anything
      contained in the foregoing provisions to the contrary, the term “Covered Entity”
shall not include the Company or any Affiliate of the Company. 

     

    
      
        
        

      

      
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    1.8  “Disability”
means
      a
      determination that Executive is unable or unwilling to substantially perform
      the
      material duties and responsibilities contemplated by this Agreement as a result
      of a disability within the meaning of the Company’s disability insurance plan,
      which inability continues for a period exceeding ninety (90) consecutive days
      or
      shorter periods exceeding ninety (90) days in the aggregate during any twelve
      (12) month period.

     

    1.1  “Involuntary
      Termination Without Cause”
means
      either Executive’s dismissal or discharge by the Company for any reason other
      than for Cause or
      Executive’s resignation within 12 months after a Sale of the Company as a result
      of a material diminution in Executive’s duties or responsibilities. The
      termination of Executive’s employment as a result of Executive’s death or
      Disability shall not be deemed to be an Involuntary Termination Without
      Cause.

     

    1.2  “Restricted
      Area”
means
      each and every state, county, parish, city or other political subdivision or
      geographic location in the United States or in any other territory or
      jurisdiction outside the United States, in which the Company or any Affiliate
      of
      the Company is engaged in or conducts the Business. The Restricted Area includes
      the geographic territory specifically set forth in Annex
      C
      of this
      Agreement. Executive agrees that the Company may periodically revise the
      Restricted Area to reflect any changes in the geographic territory in which
      the
      Company is conducting Business. Executive acknowledges and agrees that as
      consideration for this Agreement, Executive agrees to sign addenda to this
      Agreement which update the Restricted Area to reflect the geographic territory
      in which the Company conducts its Business as revised by the Company.

     

    1.3  “Restricted
      Period”
means
      the period commencing on the Effective Date and continuing until the second
      anniversary of Executive’s termination (whether voluntary or not) of employment
      with the Company and all Affiliates of the Company.

     

    1.4  “Sale
      of the Company”
means
      the consummation of any of the following: (i) the closing of a business
      combination (e.g., merger) of the Company with any other corporation or other
      type of business entity, which results in the voting securities of the Company
      outstanding immediately prior thereto not continuing to represent at least
      fifty
      percent (50%) of the total voting power represented by the voting securities
      of
      the Company or such controlling surviving entity outstanding immediately after
      such business combination; or (ii) the sale or other transfer or disposition
      by
      the Company of all or substantially all of the Company’s assets by value; or
      (iii) an acquisition of any voting securities of the Company by any “person” (as
      the term “person” is used for purposes of Section 13(d) or Section 14(d) of the
      Securities Exchange Act of 1934, as amended (the “1934 Act”)) immediately after
      which such person has “beneficial ownership” (within the meaning of Rule 13d-3
      promulgated under the 1934 Act) of fifty percent (50%) or more of the combined
      voting power of the Company’s then outstanding voting securities.

     

    
      
        
        

      

      
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    1.5  “Section
      409A”
means
      Section 409A of the Internal Revenue Code of 1986, as amended and the Department
      of Treasury Regulations and other interpretive guidance issued thereunder.
      

     

    1.6  “Stock
      Plan”
means
      Parent’s 2006 Incentive Compensation Plan, as may be amended from time to
      time.

     

    1.7  “Term”
means
      the period commencing on the Effective Date and terminating on the second
      (2nd)
      anniversary thereof, subject to earlier termination pursuant to the provisions
      of Article IV hereof. 

     

    ARTICLE
      II

    EMPLOYMENT
      BY THE COMPANY

     

    2.1  Position
      and Duties.  During
      the Term, the Company hereby agrees initially to employ Executive in the
      position of Senior Advisor and Executive hereby agrees to provide services
      for
      the Company, on such terms and conditions as provided in this Agreement.
      Executive shall perform such duties as are customarily associated with the
      position of Senior Advisor and such other duties as are commensurate with
      Executive’s position and are assigned to Executive by the Company. Executive
      understands and agrees that the Company may change Executive’s position and/or
      duties from time to time in its sole discretion (provided, however, that any
      change in Executive’s position or duties that requires the Executive to relocate
      to any location that represents a material change in the geographical location
      where Executive must perform services (within the meaning of Section 409A)
      and
      is more than 30 miles from each of Lafayette LA, Baton Rouge LA and New Orleans
      LA to which the Executive does not consent shall constitute an Involuntary
      Termination Without Cause). While Executive is employed by the Company during
      the Term, Executive shall devote Executive’s efforts and substantially all of
      Executive’s business time and attention (except for vacation periods and
      reasonable periods of illness or other incapacities permitted by the Company’s
      general employment policies or as otherwise set forth in this Agreement) to
      the
      business of the Company. Except with the prior written consent of the Company,
      Executive shall not during the Term undertake or engage in any other employment,
      occupation or business enterprise, other than ones which do not detract from
      Executive’s business time and attention devoted to the Company (if Executive is
      employed by the Company at such time) or in which Executive is a passive
      investor and are not in violation of the provisions in Article V. Executive
      may
      engage in civic and not-for-profit activities so long as such activities do
      not
      materially interfere with the performance of Executive’s duties
      hereunder.

     

    2.2  Employment
      Policies. The
      employment relationship between the parties shall also be governed by the
      employment policies of the Company, including but not limited to, those relating
      to protection of confidential information and assignment of inventions, except
      that when the terms of this Agreement differ from or are in conflict with the
      Company’s employment policies, this Agreement shall control.

     

    
      
        
        

      

      
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    ARTICLE
      III

    COMPENSATION

     

    3.1  Base
      Salary.
      During
      the Term, Executive
      shall receive for services to be rendered hereunder an annual base salary of
      $250,000 (as may be increased from time to time, the “Salary”), pro-rated
      for less than full time employment and payable on the regular payroll dates
      of
      the Company as may be in effect from time to time.
      

     

    3.2  Stock
      Option.
      The
      Company shall grant to Executive under the Stock Plan an option to purchase
      500,000 shares of common stock of Allegro Biodiesel Corporation (the “Stock
      Option”). The Stock Option shall have an exercise price equal to the per share
      price at which Allegro Biodiesel Corporation raises equity financing in
      connection with its acquisition of the Company. The Stock Option shall vest
      as
      to one-sixth (1/6th)
      of the
      shares subject thereto on each of January 1, 2008 and January 1, 2009, subject
      to Executives continued employment with the Company or an Affiliate of the
      Company hereunder. The Stock Option shall further vest as to one-third
      (1/3rd)
      of the
      shares subject thereto on each of January 1, 2008 and January 1, 2009, subject
      to Executive’s continued employment with the Company or an Affiliate of the
      Company hereunder and the Company’s achievement of the performance criteria set
      forth in Annex B. The Stock Option shall become exercisable as it vests and
      remain exercisable until the date that is two and one-half months after the
      last
      day of the calendar year in which the relevant Stock Option vests (that is,
      March 15, 2009 and March 15, 2010, respectively, in the case vesting were to
      occur on January 1, 2008 and January 1, 2009). The parties acknowledge and
      agree
      that they each intend the vesting and exercise provisions of the Stock Option
      to
      be made in a manner compliant with the provisions of Section 409A of the
      Internal Revenue Code.

     

    3.3  Standard
      Company Benefits.
      During
      the Term, Executive
      shall be entitled to all rights and benefits under the terms and conditions
      of
      the standard Company benefits and compensation practices that may be in effect
      from time to time and are provided by the Company to similarly situated
      employees generally. Such benefits shall include, without limitation, (i) a
      car
      allowance of $750 per month or provision of a mutually-agreed vehicle, (ii)
      maintenance and upkeep (including repairs) on Executive’s vehicle (other than
      power train) and (iii) provision of or reimbursement for fuel used in
      Executive’s vehicle in connection with the Company’s business.

     

    ARTICLE
      IV

    TERMINATION

     

    4.1  Termination
      for Cause; Resignation.
      In the
      event that the Company terminates Executive’s employment for Cause or Executive
      resigns for any reason other than in an Involuntary Termination without Cause,
      the Company shall have no obligation to Executive except for payment of any
      Salary, vacation and expense reimbursement accrued and unpaid through the
      effective date of termination and except as otherwise required by law
      (collectively, the “Accrued Obligations”). Termination of Executive’s employment
      for Cause shall be communicated by delivery to Executive of a written notice
      from the Company stating that Executive’s employment will be terminated for
      Cause, specifying the particulars thereof and the effective date of such
      termination. The date of a resignation by Executive shall be the date specified
      in a written notice of resignation from Executive to the Company, provided
      that
      Executive shall provide at least sixty (60) days’ advance written notice of his
      resignation. In the event Executive resigns his employment pursuant to this
      Section 4.1, the Company may, at its sole discretion, relieve Executive of
      some
      or all of his duties prior to the effective date of the resignation. Company
      shall pay Executive the Accrued Obligations through the effective date of the
      resignation, but shall thereafter have no further obligation to
      Executive.

     

    
      
        
        

      

      
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    4.2  Involuntary
      Termination Without Cause.
      In the
      event that, prior to the expiration of the Term, Executive’s employment
      terminates due to an Involuntary Termination Without Cause, (a) Executive shall
      receive payment of his Accrued Obligations, and (b) subject to Executive’s
      delivery and nonrevocation of an executed, effective general release of
      employment-related claims against the Company and the Affiliates of the Company,
      Executive shall be entitled to (i) severance consisting of a lump sum cash
      payment equal to six (6) months of Executive’s Salary and (ii) 100% of
      Executive’s outstanding options to purchase common stock of Allegro Biodiesel
      Corporation shall become vested and exercisable. Except as provided in this
      Section 4.2 or as otherwise required by applicable law, Executive shall have
      no
      right under this Agreement or otherwise to receive any other compensation or
      to
      participate in any other plan, program or arrangement, including, without
      limitation, any employee benefit plans, after an Involuntary Termination Without
      Cause with respect to the year of such termination and later years. The date
      of
      Executive’s Involuntary Termination Without Cause shall be the date specified in
      a written notice of termination to Executive.

     

    4.3  Termination
      Due to Disability.
      In the
      event of Executive’s Disability, the Company shall be entitled to terminate his
      employment upon written notice by the Company to Executive. In the case that
      the
      Company terminates Executive’s employment due to Disability, the Company shall
      have no further obligations to Executive, except for payment of the Accrued
      Obligations through the date of termination and the vesting of all Stock Options
      as described in Section 3.4 of this Agreement on a pro rata basis based on
      the
      length of employment at the time of termination of Executive’s employment due to
      Disability.

     

    4.4  Termination
      Upon Death.
      This
      Agreement shall immediately terminate without action or notice by either party
      upon the death of Executive and without further obligation by the Company,
      except for payment of the Accrued Obligations through the effective date of
      termination and the vesting of all Stock Options as described in Section 3.4
      of
      this Agreement on a pro rata basis based on the length of employment at the
      time
      of termination of Executive’s employment due to death.

     

    ARTICLE
      V

    COVENANTS
      OF EXECUTIVE

     

    5.1  Confidentiality
      Agreement. Executive
      hereby acknowledges that he has executed and delivered to the Company,
      contemporaneously with the execution and delivery of this Agreement, the
      Confidentiality Agreement. Executive hereby acknowledges and understands that
      the provisions of the Confidentiality Agreement shall survive any termination
      of
      this Agreement or of Executive’s employment relationship with the Company as set
      forth in the Confidentiality Agreement.

     

    5.2  Non-Solicitation. During
      the Restricted Period, Executive shall not, either directly or indirectly,
      either on Executive’s own account or jointly with or as a manager, agent,
      officer, employee, consultant, independent contractor, partner, joint venturer,
      owner, financier, shareholder, or otherwise on behalf of any other person,
      firm,
      corporation or entity, offer employment to, solicit, or attempt to solicit
      away
      from the Company or any of its Affiliates any of their officers or employees
      or
      offer employment to any person who, during the six (6) months immediately
      preceding the date of such solicitation or offer, is or was an officer or
      employee of the Company or any of its Affiliates.

     

    
      
        
        

      

      
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    5.3  Non-Competition.
      Executive agrees that at all times during the Restricted Period, Executive
      shall
      not, directly or indirectly, whether personally or through agents, associates,
      or co-workers, whether individually or in connection with any corporation,
      partnership, or other business entity, and whether as an employee, member,
      owner, partner, financier, joint venturer, shareholder, officer, manager, agent,
      independent contractor, consultant, or otherwise, establish, carry on, or engage
      in a Business similar to or the same as that of the Company or any of its
      Affiliates, in the Restricted Area. This prohibition includes, without
      limitation, that Executive will not perform the following in the Restricted
      Area:

     

    (a) Solicit
      or take any action intended to solicit, or provide, directly or indirectly,
      services similar to or the same as the Business, to any persons or entities
      who
      are or were customers of the Company or any of its Affiliates at any time prior
      to Executive’s separation from employment;

     

    (b) Establish,
      own, become employed with, consult on business matters with, or participate
      in
      any way in a business or enterprise providing services similar to or the same
      as
      the Business; and

     

    (c) Provide
      consulting services for, invest in, become employed by, or otherwise become
      associated from a business perspective with competitors of the Company or any
      of
      its Affiliates in the pursuit of work similar to or the same as the
      Business.

     

    This
      prohibition does not preclude Executive from engaging in a business or
      enterprise solely within an area or areas not contained in the Restricted Area,
      so long as that business or enterprise does not provide, in the Restricted
      Area,
      services similar to or the same as the Business. 

     

    5.4  Enforcement;
      Remedies.
      Executive hereby agrees and acknowledges that the Company has a valid and
      legitimate business interest in protecting the Business in the Restricted Area
      from any activity prohibited by Article V hereof. Executive acknowledges that
      Executive’s position and expertise in the Business is of a special and unique
      character which gives this expertise a particular value, and that a breach
      of
      the covenants in Article V hereof by Executive will cause serious and
      irreparable harm to the Company. Executive therefore acknowledges that a breach
      of any or all of the covenants in Article V hereof by Executive cannot be
      adequately compensated in an action for damages at law, and, in addition to
      any
      other legal remedy it may be entitled to, equitable relief would be necessary
      to
      protect the Company from a violation of this Agreement and from the harm which
      this Agreement is intended to prevent. By reason thereof, Executive acknowledges
      that the Company is entitled, in addition to any other legal remedies it may
      have under this Agreement or otherwise, to preliminary and permanent injunctive
      and other equitable relief to prevent or curtail any breach of this Agreement
      without any requirement to prove actual damages or post a bond and without
      the
      necessity of proving irreparable injury. Executive acknowledges that no
      specification in this Agreement of a particular legal or equitable remedy may
      be
      construed as a waiver of or prohibition against pursuing other legal or
      equitable remedies in the event of a breach of this Agreement by
      Executive.

     

    
      
        
        

      

      
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    ARTICLE
      VI

    GENERAL
      PROVISIONS

     

    6.1  Notices. All
      notices and other communications under or in connection with this Agreement
      shall be in writing and shall be deemed given (i) if delivered personally,
      upon delivery, (ii) if delivered by registered or certified mail (return
      receipt requested), upon the earlier of actual delivery or
      three (3) business days after being mailed, (iii) if given by
      overnight courier with receipt acknowledgment requested, the next business
      day
      following the date sent, or (iv) if given by facsimile or telecopy, upon
      confirmation of transmission by facsimile or telecopy, in each case to the
      parties at the following addresses:

     

    
      	 	
              To
                the Company:

            	 	
              Talen
                Marine & Fuel, Inc. 
                225
                  Pleasant Street

                Lake
                  Arthur, LA 70549

                Facsimile:
                  (337)
                  774-3503

                Attention:
                  Bryan
                  Caillier

              

            
	 	 	 	 
	 	with a copy to:	 	Latham
              & Watkins LLP
              140
                Scott Drive

              Menlo
                Park, California 94025

              Facsimile:
                (650) 463-2600

              Attention:
                Joseph M. Yaffe, Esq.

            
	 	 	 	 
	 	To Executive:	 	
              Raymond
                Talen

              1216
                Pom Roy Road

              Lake
                Arthur, LA 70549

            

    

     

    6.2  Severability.
      If a
      court of competent jurisdiction or arbitrator(s) finds any covenant or provision
      of the Agreement to be invalid or unenforceable as to any person, circumstance,
      scope or geographic area, such finding shall not render that covenant or
      provision invalid or unenforceable as to any other persons, circumstances,
      scope
      or geographic area. If feasible, any such offending covenant or provision shall
      be deemed to be modified to be within the limits of enforceability or validity;
      however, if the offending covenant or provision cannot be so modified, it shall
      be stricken and all other covenants and provisions of this Agreement in all
      other respects shall remain valid and enforceable. 

     

    6.3  Modifications;
      Waivers. Waivers
      or modifications of this Agreement, or of any covenant, provision, condition,
      or
      limitation contained herein, are valid only if in writing duly executed by
      the
      parties hereto. If
      either
      party should waive any breach of any provisions of this Agreement, they shall
      not thereby be deemed to have waived any preceding or succeeding breach of
      the
      same or any other provision of this Agreement.

     

    
      
        
        

      

      
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    6.4  Entire
      Agreement.

     

    (a)  This
      Agreement (including any attachments and exhibits hereto) contains the parties’
sole and entire agreement regarding the subject matter hereof, and supersedes
      any and all other agreements, understandings, statements and representations
      of
      the parties, including, but not limited to, any employment agreement or other
      agreement regarding Executive’s compensation or terms of employment entered into
      prior to the Effective Date.

     

    (b)  The
      parties acknowledge and agree that, except for those representations
      specifically referenced herein, no party has made any representations (i)
      concerning the subject matter hereof or (ii) inducing the other party to execute
      and deliver this Agreement. The parties have relied on their own judgment in
      entering into this Agreement.

     

    6.5  Counterparts. This
      Agreement may be executed in one or more separate counterparts, including
      electronically transmitted counterparts, any one of which need not contain
      signatures of more than one party, but all of which shall be deemed an original
      and taken together will constitute one and the same Agreement.

     

    6.6  Headings. The
      headings of the sections hereof are inserted for convenience only and shall
      not
      be deemed to constitute a part hereof nor to affect the meaning
      thereof.

     

    6.7  Successors
      and Assigns. This
      Agreement is intended to bind and inure to the benefit of and be enforceable
      by
      Executive and the Company, and their respective successors, assigns, heirs,
      executors and administrators, except that Executive may not assign any of
      Executive’s duties hereunder and Executive may not assign any of Executive’s
      rights or other interest herein (except in connection with any assignment of
      rights to receive consideration hereunder by or to Executive’s estate made upon
      the death of Executive) to any party without the prior written consent of the
      Company, and any such purported assignment shall be null and void.
      Notwithstanding the foregoing, the Company may, without obtaining the consent
      of
      Executive, assign any or all of its rights and obligations under this Agreement
      to any of its Affiliates; provided, however, that any such assignment shall
      not
      expand the obligations or restrictions of Executive. 

     

    6.8  Survival
      of Rights and Obligations.
      The
      rights and obligations of the parties as stated herein shall survive the
      termination of this Agreement. This specifically includes, but is not limited
      to, the covenants and provisions set forth in Article V of this Agreement
      regarding Confidentiality, Non-Competition, Non-Solicitation and all related
      provisions.

     

    6.9  Joint
      Preparation.
      All
      parties to this Agreement have negotiated it at length, and have had the
      opportunity to consult with and be represented by their own competent counsel.
      This Agreement is therefore deemed to have been jointly prepared by the parties,
      and any uncertainty or ambiguity existing in it shall not be interpreted against
      any party, but rather shall be interpreted according to the rules generally
      governing the interpretation of contracts.

     

    
      
        
        

      

      
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    6.10  Third-Party
      Beneficiaries.
      No term
      or provision of this Agreement is intended to be, or shall be, for the benefit
      of any person, firm, organization, corporation or entity not a party hereto,
      and
      no such other person, firm, organization, corporation or entity shall have
      any
      right or cause of action hereunder.

     

    6.11  Withholding.
      The
      Company shall be entitled to withhold from any amounts payable under this
      Agreement any federal, state, local or foreign withholding or other taxes or
      charges which the Company is required to withhold. The Company shall be entitled
      to rely on an opinion of counsel if any questions as to the amount or
      requirement of withholding shall arise. 

     

    6.12  Attorneys’
      Fees.
      If
      either
      party hereto brings any action to enforce rights hereunder, fees shall be
      recoverable by the prevailing party.

     

    6.13  Choice
      of Law. All
      questions concerning the construction, validity and interpretation of this
      Agreement will be governed by the laws of the State of Louisiana without regard
      to the conflicts of law provisions thereof. 

     

    6.14  Internal
      Revenue Code Section 409A. 

     

    (a)  Notwithstanding
      any provision to the contrary in the Agreement, if the Executive is deemed
      at
      the time of his separation from service to be a “specified employee” for
      purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed
      commencement of any portion of the benefits to which Executive is entitled
      under
      this Agreement is required in order to avoid a prohibited distribution under
      Section 409A(a)(2)(B)(i) of the Code, such portion of Executive’s benefits shall
      not be provided to Executive prior to the earlier of (a) the expiration of
      the
      six-month period measured from the date of the Executive’s “separation from
      service” with the Company (as such term is defined in the Treasury Regulations
      issued under Section 409A of the Code) or (b) the date of Executive’s death.
      Upon the expiration of the applicable Code Section 409A(a)(2)(B)(i) period,
      all
      payments deferred pursuant to this Section 6.14 shall be paid in a lump sum
      to
      the Executive, and any remaining payments due under the Agreement shall be
      paid
      as otherwise provided herein.

     

    (b)  The
      parties acknowledge and agree that, to the extent applicable, this Agreement
      shall be interpreted in accordance with, and the parties agree to use their
      best
      efforts to achieve timely compliance with Section 409A, including, without
      limitation, any such regulations or other guidance that may be issued after
      the
      Effective Date. Notwithstanding any provision of this Agreement to the contrary,
      in the event that the Company determines that any amounts payable hereunder
      would otherwise be taxable to Executive under Section 409A, the Company may
      adopt such amendments to this Agreement and appropriate policies and procedures,
      including amendments and policies with retroactive effect, that the Company
      determines in its sole discretion are necessary or appropriate to comply with
      the requirements of Section 409A and thereby avoid the application of penalty
      taxes under such Section.

     

    (Signature
      page follows)

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

      IN
        WITNESS WHEREOF,  the
        parties have executed this Employment Agreement on the day and year first
        above
        written.

    

     

    
      	 	 	 
	 	
              TALEN
                MARINE AND FUEL, INC.

            
	 
 	 
 	 
 
	
            	By:  	  /s/ J. Bryan Caillier
	 	
               

              Name:

            	
              
 
J.
              Bryan Caillier
	 	
               

              Title:
                

            	
              
 
Chief
              Financial Officer
	 	
              

            

    

    
       

      
        	 	
                
                            
                    

                

              	 
	 	
                
                  EXECUTIVE

                  
                    /s/
                      Raymond Talen

                  

                  
                    

                    Raymond
                      Talen

                  

                

              

      

       

      SIGNATURE
        PAGE TO EMPLOYMENT
        AGREEMENT

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

        

          ANNEX
            A

        

         

      

    

    [PROPRIETARY
      INFORMATION AND INVENTIONS ASSIGNMENT AGREEMENT]

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      B

    Performance
      Criteria

    

    For
      the
      each vesting date, the performance criteria shall be considered satisfied upon
      the attainment by the Company of financial performance metrics as of the fiscal
      year end immediately preceding such vesting date which are no less favorable
      than the financial performance metrics for the Company for fiscal year 2006,
      as
      determined by the Board of Directors, in its sole discretion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ANNEX
      C

    

    TO
      BE UPDATED PRIOR TO CLOSING

     

    The
      Restricted Area includes the following geographical territory:

     

    Louisiana

     

    The
      following counties and parishes within Louisiana:

    

    Jefferson
      Davis 

    Cameron
      

    Vermilion
      

    Calcasieu
      

    Terrebonne
      

    Lafourche
      Parish

    Iberville
      Parish

    Plaquemine
      Parish

    West
      Baton Rouge Parish

     

    Texas

     

    The
      following counties within Texas:

    

    Jefferson
      County

    Galveston
      CountySECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of June 22, 2007, between Targeted Genetics Corporation, a Washington
      corporation (the “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject
      to the terms and conditions set forth in this Agreement and pursuant to Section
      4(2) of the Securities Act of 1933, as amended (the “Securities
      Act”),
      and
      Rule 506 promulgated thereunder, the Company desires to issue and sell to each
      Purchaser, and each Purchaser, severally and not jointly, desires to purchase
      from the Company, securities of the Company as more fully described in this
      Agreement.

     

    NOW,
      THEREFORE, IN CONSIDERATION
      of the
      mutual covenants contained in this Agreement, and for other good and valuable
      consideration the receipt and adequacy of which are hereby acknowledged, the
      Company and each Purchaser agree as follows:

     

    ARTICLE
      I.

    DEFINITIONS

     

    1.1  Definitions

     

    .
      In
      addition to the terms defined elsewhere in this Agreement, for all purposes
      of
      this Agreement, the following terms have the meanings set forth in this Section
      1.1:

     

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

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person. For
      this
      Agreement and the transactions contemplated by this Agreement, “control” shall
      mean direct or indirect beneficial ownership of fifty percent (50%) or more
      of
      the voting or income interest in such corporation or other business entity.
      With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

     

    “Board
      of Directors”
means
      the board of directors of the Company.

     

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

     

    “Closing”
means
      the closing of the purchase and sale of the Securities pursuant to and in
      satisfaction of Section 2.1, when all of the Transaction Documents have been
      executed and delivered by the applicable parties thereto, and all conditions
      precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and
      (ii) the Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Closing
      Date”
means
      date of Closing.

     

    “Commission”
means
      the Securities and Exchange Commission.

     

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

     

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

     

    “Company
      Counsel”
means
      Orrick, Herrington & Sutcliffe LLP, with offices located at 719 Second
      Avenue, Suite 900, Seattle, Washington, 98104. 

     

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

     

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

     

    “Effectiveness
      Date”
means
      the date on which the initial Registration Statement is required to be declared
      effective by the Commission under the terms of the Registration Rights
      Agreement.

     

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

     

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

    

    “Exempt
      Issuance”
means
      the issuance of (a) shares of Common Stock or options to employees, officers
      or
      directors of the Company pursuant to any stock or option plan duly adopted
      for
      such purpose, by a majority of the non-employee members of the Board of
      Directors or a majority of the members of a committee of non-employee directors
      established for such purpose, (b) securities upon the exercise or exchange
      of or
      conversion of any Securities issued hereunder and/or other securities
      exercisable or exchangeable for or convertible into shares of Common Stock
      issued and outstanding on the date of this Agreement, provided that such
      securities have not been amended since the date of this Agreement to increase
      the number of such securities or to decrease the exercise, exchange or
      conversion price of such securities, and (c) securities issued pursuant to
      acquisitions or strategic transactions approved by a majority of the
      disinterested directors of the Company, provided that any such issuance shall
      only be to a Person which is, itself or through its subsidiaries, an operating
      company in a business synergistic with the business of the Company and in which
      the Company receives benefits in addition to the investment of funds, but shall
      not include a transaction in which the Company is issuing securities primarily
      for the purpose of raising capital or to an entity whose primary business is
      investing in securities. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Per
      Share Purchase Price”
equals
      $2.905,
      subject
      to adjustment for reverse and forward stock splits, stock dividends, stock
      combinations and other similar transactions of the Common Stock that occur
      after
      the date of this Agreement.

     

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

     

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

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.8.

     

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

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Shares and
      the
      Warrant Shares. 

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

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

     

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

     

    “Securities”
means
      the Shares, the Warrants and the Warrant Shares.

     

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

     

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      this
      Agreement.

     

    “Short
      Sales”
means
      all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
      Act (but
      shall not be deemed to include the location and/or reservation of borrowable
      shares of Common Stock). 

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount to be paid for Shares and Warrants
      purchased hereunder as specified below such Purchaser’s name on the signature
      page of this Agreement and next to the heading “Subscription Amount,” in United
      States dollars and in immediately available funds.

     

    "Supermajority
      Purchasers"
      shall
      mean the Purchasers which, at any given time, hold greater than sixty-six and
      two-thirds percent (66-2/3%) of the voting power of the outstanding Shares
      that
      have not been resold pursuant to an effective registration statement under
      the
      Securities Act or Rule 144 of the Securities Act, provided that at least 20%
      of
      such Shares remain held by the Purchasers and if less than 20% of the Shares
      are
      then outstanding and held by Purchasers, sixty-six and two-thirds percent
      (66-2/3%) of the Shares and exercised and unexercised Warrant Shares then
      outstanding that have not been resold pursuant to an effective registration
      statement under the Securities Act or Rule 144 of the Securities
      Act.

     

    “Subsidiary”
means
      any subsidiary of the Company, and shall, where applicable, include any
      subsidiary of the Company formed or acquired after the date hereof.

     

    “Trading
      Day”
means
      a
      day on which the NASDAQ Capital Market is open for trading.

     

    “Trading
      Market”
means
      the NASDAQ Capital Market.

     

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

     

    “Transfer
      Agent”
means
      Mellon Investor Services, LLC, the current transfer agent of the Company, with
      a
      mailing address of 201 Columbine Street, Suite 200, Denver, Colorado, 80206
      and
      a facsimile number of 303-209-9520, and any successor transfer agent of the
      Company.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

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

     

    “Warrants”
means,
      collectively, the Common Stock purchase warrants delivered to the Purchasers
      at
      the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
      be
      exercisable immediately and have a term of exercise equal to six (6) years,
      in
      the form of Exhibit
      C
      attached
      hereto.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    ARTICLE
      II.

    PURCHASE
      AND SALE

     

    2.1  Closing.
      On the
      Closing Date, upon the terms and subject to the conditions set forth herein,
      concurrent with the execution and delivery of this Agreement by the parties
      hereto, the Company agrees to sell, and the Purchasers, severally and not
      jointly, agree to purchase, up to (i) an aggregate of 6,700,000 Shares, at
      a
      purchase price of $2.905 and (ii) an aggregate of 6,700,000 Warrants having
      an
      exercise price of $3.25 per Warrant Share. The aggregate purchase price payable
      by the Purchasers to the Company for all of the Securities shall be
      approximately $19,463,500. Each Purchaser shall deliver to the Company, via
      wire
      transfer or a certified check, immediately available funds equal to its
      Subscription Amount and the Company shall deliver to each Purchaser its
      respective Shares and a Warrant as determined pursuant to Section 2.2(a), and
      the Company and each Purchaser shall deliver the other items set forth in
      Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants
      and
      conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
      offices of the Company Counsel.

     

    2.2  Deliveries.

     

    (a)  On
      or
      prior to the Closing Date, the Company shall deliver or cause to be delivered
      to
      each Purchaser the following:

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (i)  this
      Agreement duly executed by the Company;

     

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

     

    (iii)  a
      copy of
      the irrevocable instructions to the Transfer Agent instructing the Transfer
      Agent to deliver, on an expedited basis, a certificate evidencing a number
      of
      Shares equal to such Purchaser’s Subscription Amount divided by the Per Share
      Purchase Price, registered in the name of such Purchaser;

     

    (iv)  a
      Warrant
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 100% of such Purchaser’s Shares, with an exercise price
      equal to $3.25, subject to adjustment therein; and

     

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

     

    (b)
      On
      or
      prior to the Closing Date, each Purchaser shall deliver or cause to be delivered
      to the Company the following:

     

    (i)  this
      Agreement duly executed by such Purchaser;

     

    (ii)  such
      Purchaser’s Subscription Amount by wire transfer to the account as specified in
      writing by the Company; and

     

    (iii)  the
      Registration Rights Agreement duly executed by such Purchaser.

     

    2.3  Closing
      Conditions. 

     

    (a)
      The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met:

     

    (i)  the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Purchasers contained herein; 

     

    (ii)  all
      obligations, covenants and agreements of each Purchaser required to be performed
      at or prior to the Closing Date shall have been performed in all material
      respects;

     

    (iii)  the
      delivery by each Purchaser of the items set forth in Section 2.2(b) of this
      Agreement;

     

    (iv)  No
      proceeding challenging this Agreement or the transactions contemplated hereby,
      or seeking to prohibit, alter, prevent or materially delay the Closing, shall
      have been instituted before any court, arbitrator or governmental body, agency
      or official and shall be pending;

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (v)  The
      sale
      of the Securities by the Company shall not be prohibited by any law or
      governmental order or regulation. All necessary consents, approvals, licenses,
      permits, orders and authorizations of, or registrations, declarations and
      filings with, any governmental, administrative agency or of any other person
      with respect to any of the transactions contemplated hereby shall have been
      duly
      obtained or made and shall be in full force and effect; and

     

    (vi)  The
      Company shall have received a staff interpretative letter from the Trading
      Market that the transactions contemplated hereunder comply with the rules of
      the
      Trading Market such that shareholder approval is not required.

     

    (b)  The
      respective obligations of the Purchasers hereunder in connection with the
      Closing are subject to the following conditions being met:

     

    (i)  the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

     

    (ii)  all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed in all material respects;
      

     

    (iii)  the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement; 

     

    (iv)  there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof;

     

    (v)  from
      the
      date hereof to the Closing Date, trading in the Common Stock shall not have
      been
      suspended by the Commission or the Company’s principal Trading Market (except
      for any suspension of trading of limited duration agreed to by the Company,
      which suspension shall be terminated prior to the Closing), and, at any time
      prior to the Closing Date, trading in securities generally as reported by
      Bloomberg L.P. shall not have been suspended or limited, or minimum prices
      shall
      not have been established on securities whose trades are reported by such
      service, or on any Trading Market, nor shall a banking moratorium have been
      declared either by the United States or New York State authorities nor shall
      there have occurred any material outbreak or escalation of hostilities or other
      national or international calamity of such magnitude in its effect on, or any
      material adverse change in, any financial market which, in each case, in the
      reasonable judgment of each Purchaser, makes it impracticable or inadvisable
      to
      purchase the Securities at the Closing;

     

    (vi)  The
      Company shall have received from the Purchasers an aggregate purchase price
      of
      at least $15,000,000; and

     

    (vii)  The
      Company shall have received a staff interpretative letter from the Trading
      Market that the transactions contemplated hereunder comply with the rules of
      the
      Trading Market such that shareholder approval is not required.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    ARTICLE
      III.

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Company.
      Except
      as
      set forth under the corresponding section of the disclosure schedules delivered
      to the Purchasers concurrently herewith (the “Disclosure Schedules”) which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to each Purchaser Except
      as
      set forth in the Disclosure Schedules, which Disclosure Schedules shall be
      deemed a part hereof and shall qualify any representation or otherwise made
      herein to the extent of the disclosure contained in the corresponding section
      of
      the Disclosure Schedules, the Company hereby makes the following representations
      and warranties to each Purchaser:

     

    (a)  Subsidiaries.
      Except
      as disclosed in the SEC Reports, the Company owns, directly or indirectly,
      all
      of the capital stock or other equity interests of each Subsidiary free and
      clear
      of any Liens, and all of the issued and outstanding shares of capital stock
      of
      each Subsidiary are validly issued and are fully paid, non-assessable and free
      of preemptive and similar rights to subscribe for or purchase
      securities.

     

    (b)  Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and, in those jurisdictions recognizing the concept,
      in good standing under the laws of the jurisdiction of its incorporation or
      organization (as applicable), with the requisite power and authority to own
      and
      use its properties and assets and to carry on its business as currently
      conducted. Neither the Company nor any Subsidiary is in violation or default
      of
      any of the provisions of its respective certificate or articles of
      incorporation, bylaws or other organizational or charter documents. Each of
      the
      Company and the Subsidiaries is duly qualified to conduct business and is in
      good standing as a foreign corporation or other entity in each jurisdiction
      in
      which the nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good
      standing, as the case may be, could not have or reasonably be expected to result
      in (i) a material adverse effect on the legality, validity or enforceability
      of
      any Transaction Document, (ii) a material adverse effect on the results of
      operations, assets, business or condition (financial or otherwise) of the
      Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
      effect on the Company’s ability to perform in any material respect on a timely
      basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
      a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

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

     

    
      
        
        

      

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

     

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

     

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

     

    
      
        
        

      

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

     

    (h)  SEC
      Reports; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by the Company under the Securities Act and the Exchange
      Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was required
      by
      law or regulation to file such material) (the foregoing materials, including
      the
      exhibits thereto and documents incorporated by reference therein, being
      collectively referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act, as applicable,
      and
      none of the SEC Reports, when filed, contained any untrue statement of a
      material fact or omitted to state a material fact required to be stated therein
      or necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading. The financial
      statements of the Company included in the SEC Reports comply in all material
      respects with applicable accounting requirements and the rules and regulations
      of the Commission with respect thereto as in effect at the time of filing.
      Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis during
      the periods involved (“GAAP”),
      except as may be otherwise specified in such financial statements or the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP, and fairly present in all material respects the
      financial position of the Company and its consolidated subsidiaries as of and
      for the dates thereof and the results of operations and cash flows for the
      periods then ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

     

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

     

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

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    (k)  Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could reasonably
      be
      expected to result in a Material Adverse Effect. None of the Company’s or its
      Subsidiaries’ employees is a member of a union that relates to such employee’s
      relationship with the Company or such Subsidiary, and neither the Company nor
      any of its Subsidiaries is a party to a collective bargaining agreement. No
      executive officer, to the knowledge of the Company, is, or is now expected
      to
      be, in violation of any material term of any employment contract,
      confidentiality, disclosure or proprietary information agreement or
      non-competition agreement, or any other contract or agreement or any restrictive
      covenant in favor of any third party, and the continued employment of each
      such
      executive officer does not subject the Company or any of its Subsidiaries to
      any
      liability with respect to any of the foregoing matters. To the knowledge of
      the
      Company, the Company and its Subsidiaries are in compliance with all U.S.
      federal, state, local and foreign laws and regulations relating to employment
      and employment practices, terms and conditions of employment and wages and
      hours, except where the failure to be in compliance could not, individually
      or
      in the aggregate, reasonably be expected to have a Material Adverse
      Effect.

     

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

     

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

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    (n)  Title
      to Assets.
      Except
      as set forth in the SEC Reports, the Company and the Subsidiaries have good
      and
      marketable title in fee simple to all real property described in the SEC Reports
      and good and marketable title in all personal property described in the SEC
      Reports that is material to the business of the Company and the Subsidiaries,
      in
      each case, except as set forth in the SEC reports, free and clear of all Liens,
      except for Liens as do not materially affect the value of such property and
      do
      not materially interfere with the use made and proposed to be made of such
      property by the Company and the Subsidiaries and Liens for the payment of
      federal, state or other taxes, the payment of which is neither delinquent nor
      subject to penalties. Any real property and facilities held under lease by
      the
      Company and the Subsidiaries and described in the SEC Reports are held by them
      under valid, subsisting and enforceable leases with which the Company and the
      Subsidiaries are in compliance.

     

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

     

    (p)  Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to the amount of ten million dollars ($10,000,000).
      Neither the Company nor any Subsidiary has any reason to believe that it will
      not be able to renew its existing insurance coverage as and when such coverage
      expires or to obtain similar coverage from similar insurers as may be necessary
      to continue its business without a significant increase in cost.

     

    (q)  Transactions
      With Affiliates and Employees.
      Except
      as set forth in the SEC Reports, none of the officers or directors of the
      Company and, to the knowledge of the Company, none of the employees of the
      Company is presently a party to any transaction with the Company or any
      Subsidiary (other than for services as employees, officers and directors),
      including any contract, agreement or other arrangement providing for the
      furnishing of services to or by, providing for rental of real or personal
      property to or from, or otherwise requiring payments to or from any officer,
      director or such employee or, to the knowledge of the Company, any entity in
      which any officer, director, or any such employee has a substantial interest
      or
      is an officer, director, trustee or partner, in each case in excess of $60,000
      other than for (i) payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

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

     

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

     

    (t)  Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

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

     

    (v)  Registration
      Rights.
      Other
      than each of the Purchasers and as except as set forth on Schedule
      3.1(v)
      attached
      hereto, no Person has any right to cause the Company to effect the registration
      under the Securities Act of any securities of the Company.

     

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

     

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

     

    (y)  Disclosure.
      Except
      with respect to the material terms and conditions of the transactions
      contemplated by the Transaction Documents, the Company confirms that neither
      it
      nor any other Person acting on its behalf has provided any of the Purchasers
      or
      their agents or counsel with any information that it believes constitutes or
      might constitute material, non-public information. The Company understands
      and
      confirms that the Purchasers will rely on the foregoing representation in
      effecting transactions in securities of the Company. All disclosure furnished
      by
      or on behalf of the Company to the Purchasers regarding the Company, its
      business and the transactions contemplated hereby, including the Disclosure
      Schedules to this Agreement, is, to the knowledge of the Company, true and
      correct as of the date of such disclosure and does not contain, to the knowledge
      of the Company, any untrue statement of a material fact or omit to state any
      material fact necessary in order to make the statements made therein, in light
      of the circumstances under which they were made, not misleading. The press
      releases disseminated by the Company during the twelve (12) months preceding
      the
      date of this Agreement taken as a whole do not contain any untrue statement
      of a
      material fact or omit to state a material fact required to be stated therein
      or
      necessary in order to make the statements therein, in light of the circumstances
      under which they were made and when made, not misleading. The Company
      acknowledges and agrees that no Purchaser makes or has made any representations
      or warranties with respect to the transactions contemplated hereby other than
      those specifically set forth in Section 3.2 hereof.

     

    
      
        
        

      

      
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    (z)  No
      Integrated Offering.
      Assuming
      the accuracy of the Purchasers’ representations and warranties set forth in
      Section 3.2 and except as set forth on Schedule
      3.1(z),
      neither
      the Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any security
      or
      solicited any offers to buy any security, under circumstances that would cause
      this offering of the Securities to be integrated with prior offerings by the
      Company for purposes of the Securities Act which would require the registration
      of any such securities under the Securities Act.

     

    (aa)  Solvency.
      Based
      on the consolidated financial condition of the Company as of the Closing Date,
      after giving effect to the receipt by the Company of the proceeds from the
      sale
      of the Securities hereunder, (i) the fair saleable value of the Company’s assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature, (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business as now conducted and as
      proposed to be conducted including its capital needs taking into account the
      particular capital requirements of the business conducted by the Company, and
      projected capital requirements and capital availability thereof, and (iii)
      the
      current cash flow of the Company, together with the proceeds the Company would
      receive, were it to liquidate all of its assets, after taking into account
      all
      anticipated uses of the cash, would be sufficient to pay all amounts on or
      in
      respect of its liabilities when such amounts are required to be paid. The
      Company does not intend to incur debts beyond its ability to pay such debts
      as
      they mature (taking into account the timing and amounts of cash to be payable
      on
      or in respect of its debt). The Company has no knowledge of any facts or
      circumstances which lead it to believe that it will file for reorganization
      or
      liquidation under the bankruptcy or reorganization laws of any jurisdiction
      within one year from the Closing Date. Schedule
      3.1(aa)
      sets
      forth as of the date thereof all outstanding secured and unsecured Indebtedness
      of the Company or any Subsidiary, or for which the Company or any Subsidiary
      has
      commitments. For the purposes of this Agreement, “Indebtedness”
means
      (a) any liabilities for borrowed money or amounts owed in excess of $50,000
      (other than trade accounts payable incurred in the ordinary course of business),
      (b) all guaranties, endorsements and other contingent obligations in respect
      of
      indebtedness of others, whether or not the same are or should be reflected
      in
      the Company’s balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of
      any lease payments
      in excess of $50,000 due under leases required to be capitalized in accordance
      with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    (bb)  Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

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

     

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

     

    (ee)   Accountants.
      To the
      knowledge and belief of the Company, the accounting firm employed by the Company
      to review its financial statements (i) is a registered public accounting firm
      as
      required by the Exchange Act and (ii) shall express its opinion with respect
      to
      the financial statements to be included in the Company's Annual Report on Form
      10-K for the year ending December 31, 2007.

     

    (ff)  No
      Disagreements with Accountants and Lawyers.There
      are
      no disagreements of any kind presently existing, or reasonably anticipated
      by
      the Company to arise, between the Company and the accountants and lawyers
      formerly or presently employed by the Company which could affect the Company’s
      ability to perform any of its obligations under any of the Transaction
      Documents, and the Company is current with respect to any fees owed to its
      accountants and lawyers.

     

    (gg)  Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated thereby. The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to the Transaction
      Documents and the transactions contemplated thereby and any advice given by
      any
      Purchaser or any of their respective representatives or agents in connection
      with the Transaction Documents and the transactions contemplated thereby is
      merely incidental to the Purchasers’ purchase of the Securities. The Company
      further represents to each Purchaser that the Company’s decision to enter into
      this Agreement and the other Transaction Documents has been based solely on
      the
      independent evaluation of the transactions contemplated hereby by the Company
      and its representatives.

     

    
      
        
        

      

      
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    (hh)  Acknowledgement
      Regarding Purchaser’s Trading Activity.
      Anything
      in this Agreement or elsewhere herein to the contrary notwithstanding (except
      for Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by
      the
      Company (i) that none of the Purchasers have been asked by the Company to agree,
      nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
      short, securities of the Company, or “derivative” securities based on securities
      issued by the Company or to hold the Securities for any specified term; (ii)
      that past or future open market or other transactions by any Purchaser,
      specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
      transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) that any Purchaser, and counter-parties in
      “derivative” transactions to which any such Purchaser is a party, directly or
      indirectly, presently may have a “short” position in the Common Stock, and (iv)
      that each Purchaser shall not be deemed to have any affiliation with or control
      over any arm’s length counter-party in any “derivative” transaction.
The
      Company further understands and acknowledges that (a) one or more Purchasers
      may
      engage in hedging activities at various times during the period that the
      Securities are outstanding, including, without limitation, during the periods
      that the value of the Warrant Shares deliverable with respect to Securities
      are
      being determined and (b) such hedging activities (if any) could reduce the
      value
      of the existing stockholders' equity interests in the Company at and after
      the
      time that the hedging activities are being conducted.  The Company
      acknowledges that such aforementioned hedging activities do not constitute
      a
      breach of any of the Transaction Documents.

     

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

     

    (jj)  Form
      S-3 Eligibility.
      The
      Company is eligible to register the resale of the Securities for resale by
      the
      Purchaser on Form S-3 promulgated under the Securities Act.

     

    (kk)  Regulatory
      Compliance.

     

    (i)  The
      Company possesses all certificates, authorizations and permits issued by the
      appropriate federal, state or foreign regulatory authorities necessary to
      conduct its business as currently conducted, including without limitation all
      such certificates, authorizations and permits required by the United States
      Food
      and Drug Administration (the “FDA”)
      or any
      other federal, state or foreign agencies or bodies engaged in the regulation
      of
      pharmaceuticals or biohazardous materials, except where the failure to so
      possess such certificates, authorizations and permits, individually or in the
      aggregate, would not result in a Material Adverse Effect. The Company has not
      received any notice of proceedings relating to the revocation or modification
      of
      any such certificate, authorization or permit which, individually or in the
      aggregate, if the subject of an unfavorable decision, ruling or finding, would
      have a Material Adverse Effect.

     

    
      
        
        

      

      
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    (ii)  Except
      to
      the extent disclosed in the General Disclosure Package, the Company has not
      received any written notices or statements from the FDA, the European Medicines
      Agency (the “EMEA”)
      or any
      other governmental agency, and otherwise has no knowledge or reason to believe,
      that (i) any new drug application or marketing authorization application for
      any
      product or potential product of the Company is or has been rejected or
      determined to be non-approvable or conditionally approvable; (ii) a delay in
      time for review and/or approval of a marketing authorization application or
      marketing approval application in any other jurisdiction for any product or
      potential product of the Company is or may be required, requested or being
      implemented; (iii) one or more clinical studies for any product or potential
      product of the Company shall or may be requested or required in addition to
      the
      clinical studies described in the SEC Reports as a precondition to or condition
      of issuance or maintenance of a marketing approval for such product or potential
      product; (iv) any license, approval, permit or authorization to conduct any
      clinical trial of or market any product or potential product of the Company
      has
      been, will be or may be suspended, revoked, modified or limited, except in
      the
      cases of clauses (i), (ii), (iii) and (iv) where such rejections,
      determinations, delays, requests, suspensions, revocations, modifications or
      limitations might not reasonably be expected to have, individually or in the
      aggregate, a Material Adverse Effect.

     

    (iii)  To
      the
      Company’s knowledge, the preclinical and clinical testing, application for
      marketing approval of, manufacture, distribution, promotion and sale of the
      products and potential products of the Company is in compliance, in all material
      respects, with all laws, rules and regulations applicable to such activities,
      including without limitation applicable good laboratory practices, good clinical
      practices and good manufacturing practices, except for such non-compliance
      as
      would not, individually or in the aggregate, have a Material Adverse Effect.
      The
      descriptions of the results of such tests and trials contained in the SEC
      Reports are accurate in all material respects. The Company has not received
      notice of adverse finding, warning letter or clinical hold notice from the
      FDA
      or any non-U.S. counterpart of any of the foregoing, or any untitled letter
      or
      other correspondence or notice from the FDA or any other governmental authority
      or agency or any institutional or ethical review board alleging or asserting
      noncompliance with any law, rule or regulation applicable in any jurisdiction,
      except notices, letters, and correspondences and non-U.S. counterparts thereof
      alleging or asserting such noncompliance as would not, individually or in the
      aggregate, have a Material Adverse Effect. The Company has not, either
      voluntarily or involuntarily, initiated, conducted or issued, or caused to
      be
      initiated, conducted or issued, any recall, field correction, market withdrawal
      or replacement, safety alert, warning, “dear doctor” letter, investigator
      notice, or other notice or action relating to an alleged or potential lack
      of
      safety or efficacy of any product or potential product of the Company, any
      alleged product defect of any product or potential product of the Company,
      or
      any violation of any material applicable law, rule, regulation or any clinical
      trial or marketing license, approval, permit or authorization for any product
      or
      potential product of the Company, and the Company is not aware of any facts
      or
      information that would cause it to initiate any such notice or action and has
      no
      knowledge or reason to believe that the FDA, the EMEA or any other governmental
      agency or authority or any institutional or ethical review board or other
      non-governmental authority intends to impose, require, request or suggest such
      notice or action. 

     

    3.2  Representations
      and Warranties of the Purchasers.
      Each
      Purchaser, for itself and for no other Purchaser, hereby represents and warrants
      as of the date hereof and as of the Closing Date to the Company as
      follows:

     

    (a)  Organization;
      Authority.
      Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with the corporate,
      limited liability company or partnership power to enter into and to consummate
      the transactions contemplated by the Transaction Documents and otherwise to
      carry out its obligations hereunder and thereunder. The execution and delivery
      of the Transaction Documents and performance by such Purchaser of the
      transactions contemplated by the Transaction Documents have been duly authorized
      by all necessary corporate or similar action on the part of such Purchaser.
      Each
      Transaction Document to which it is a party has been duly executed by such
      Purchaser, and when delivered by such Purchaser in accordance with the terms
      hereof, will constitute the valid and legally binding obligation of such
      Purchaser, enforceable against it in accordance with its terms, except (i)
      as
      limited by general equitable principles and applicable bankruptcy, insolvency,
      reorganization, moratorium and other laws of general application affecting
      enforcement of creditors’ rights generally, (ii) as limited by laws relating to
      the availability of specific performance, injunctive relief or other equitable
      remedies and (iii) insofar as indemnification and contribution provisions may
      be
      limited by applicable law. 

     

    (b)  Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no direct or indirect arrangement or understandings with any other persons
      to
      distribute or regarding the distribution of such Securities (this representation
      and warranty not limiting such Purchaser’s right to sell the Securities pursuant
      to the Registration Statement or otherwise in compliance with applicable federal
      and state securities laws) in violation of the Securities Act or any applicable
      state securities law. Nothing contained herein shall be deemed a representation
      or warranty by such Purchaser to hold the Securities for any period of time.
      Such Purchaser is acquiring the Securities hereunder in the ordinary course
      of
      its business.

     

    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    (c)  Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and at the date hereof
      it is, and on each date on which it exercises any Warrants, it will be either:
      (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
      (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
      buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
      not required to be registered as a broker-dealer under Section 15 of the
      Exchange Act. 

     

    (d)  Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time and on each date which it exercises any
      Warrant, is able to afford a complete loss of such investment.

     

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

     

    (f)  Short
      Sales and Confidentiality Prior To The Date Hereof.
      Other
      than consummating the transactions contemplated hereunder, such Purchaser has
      not, nor has any Person acting on behalf of or pursuant to any understanding
      with such Purchaser, directly or indirectly executed any purchases or sales,
      including Short Sales, of the securities of the Company during the period
      commencing from
      the time
      that such Purchaser first received a term sheet (written or oral) from the
      Company or any other Person representing the Company setting forth the material
      terms of the transactions contemplated hereunder until the date hereof
(“Discussion
      Time”).
      Notwithstanding the foregoing, in the case of a Purchaser that is a
      multi-managed investment vehicle whereby separate portfolio managers manage
      separate portions of such Purchaser's assets and the portfolio managers have
      no
      direct knowledge of the investment decisions made by the portfolio managers
      managing other portions of such Purchaser's assets, the representation set
      forth
      above shall only apply with respect to the portion of assets managed by the
      portfolio manager that made the investment decision to purchase the Securities
      covered by this Agreement. Other than to other Persons party to this Agreement,
      or to its representatives, employees and advisors who had a need to know such
      information, such Person has maintained the confidentiality of all disclosures
      made to it in connection with this transaction (including the existence and
      terms of this transaction). 

     

    (g)  No
      Conflict.
      The
      execution and delivery of this Agreement and the transactions and contemplated
      herein by such Purchaser and the consummation of the transactions contemplated
      hereby and thereby will not conflict with or result in any violation of or
      default by such Purchaser (with or without notice or lapse of time, or both)
      under, or give rise to a right of termination, cancellation or acceleration
      of
      any obligation or to a loss of a material benefit under (i) any provision
      of the organizational documents of such Purchaser, (ii) any material
      agreement or instrument, permit, franchise, or license or (iii) any judgment,
      order, statute, law, ordinance, rule or regulations, applicable to such
      Purchaser or its respective properties or assets.

     

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    (h)  Brokers.
      Each
      Purchaser has not retained, utilized or been represented by any broker or finder
      in connection with the transactions contemplated by this Agreement.

     

    (i)  Information.
      Each
      Purchaser and its advisors, if any, have been furnished with all materials
      relating to the business, finances and operations of the Company, and materials
      relating to the offer and sale of the Securities, if any, that have been
      requested by the Purchaser or its advisors, if any. The Purchaser and its
      advisors, if any, have been afforded the opportunity to ask questions of the
      Company. The Purchaser acknowledges and understands that its investment in
      the
      Securities involves a significant degree of risk, including the risks reflected
      in the SEC Reports. Neither
      such inquiries nor any other due diligence investigation conducted by such
      Purchaser shall modify, limit or otherwise affect such Purchaser’s right to rely
      on the Company’s representations and warranties contained in this
      Agreement.

     

    ARTICLE
      IV.

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
      Restrictions.
      

     

    (a)  The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an Affiliate of a Purchaser or in connection with a pledge as contemplated
      in
      Section 4.1(b), the Company may require the transferor thereof to provide to
      the
      Company an opinion of counsel selected by the transferor and reasonably
      acceptable to the Company, the form and substance of which opinion shall be
      reasonably satisfactory to the Company, to the effect that such transfer does
      not require registration of such transferred Securities under the Securities
      Act. 

     

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

     

    "THE
      SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933 AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
      TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
      STATEMENT UNDER SAID ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION
      UNDER SAID ACT AND, IF REQUESTED BY THE COMPANY, UPON DELIVERY OF AN OPINION
      OF
      COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THE PROPOSED TRANSFER IS
      EXEMPT FROM SAID ACT."

     

    
      
        
        

      

      
        18

        
          

        

      

      
        
        

      

    

    The
      Company acknowledges and agrees that a Purchaser may from time to time, pledge
      pursuant to a bona fide margin agreement with a registered broker dealer or
      grant a security interest in some or all of the Securities to a financial
      institution that is an “accredited investor” as defined in Rule 501(a) under the
      Securities Act and who agrees to be bound by the provisions of this Agreement
      and the Registration Rights Agreement and, if required under the terms of such
      arrangement, such Purchaser may transfer, pledged or secured Securities to
      the
      pledgees or secured parties. Such a pledge or transfer would not be subject
      to
      approval of the Company and no legal opinion of legal counsel of the pledgee,
      secured party or pledgor shall be required in connection therewith. Further,
      no
      notice shall be required of such pledge. At the appropriate Purchaser's expense,
      the Company will execute and deliver such reasonable documentation as a pledgee
      or secured party of Securities may reasonably request in connection with a
      pledge or transfer of the Securities, including, if the Securities are subject
      to registration pursuant to the Registration Rights Agreement, the preparation
      and filing of any required prospectus supplement under Rule 424(b)(3) under
      the
      Securities Act or other applicable provision of the Securities Act to
      appropriately amend the list of Selling Stockholders thereunder.

     

    (c)  Certificates
      evidencing the Shares and Warrant Shares shall not contain any legend (including
      the legend set forth in Section 4.1(b)), (i) while a registration statement
      (including the Registration Statement) covering the resale of such security
      is
      effective under the Securities Act, or (ii) following any sale of such Shares
      or
      Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares
      are eligible for sale under Rule 144(k), or (iv) if such legend is not required
      under applicable requirements of the Securities Act (including judicial
      interpretations and pronouncements issued by the staff of the Commission).
      If
      all or any portion of a Warrant is exercised at a time when there is an
      effective registration statement to cover the resale of the Warrant Shares,
      such
      Warrant Shares shall be issued free of all legends. The Company agrees that
      following the Effective Date or at such time as such legend is no longer
      required under this Section 4.1(c), it will, no later than three (3) Trading
      Days following the delivery by a Purchaser to the Company or the Transfer Agent
      of a certificate representing Shares or Warrant Shares, as the case may be,
      issued with a restrictive legend (such third Trading Day, the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Purchaser a certificate representing
      such shares that is free from all restrictive and other legends. The Company
      may
      not make any notation on its records or give instructions to the Transfer Agent
      that enlarge the restrictions on transfer set forth in this Section.
      Certificates for Securities subject to legend removal hereunder shall be
      transmitted by the Transfer Agent to the Purchaser by crediting the account
      of
      the Purchaser’s prime broker with the Depository Trust Company System as
      directed by such Purchaser unless the Purchaser otherwise requests.

    

    (d)  The
      Company shall pay to a Purchaser, in cash, as partial liquidated damages and
      not
      as a penalty, for each $2,000 of Shares or Warrant Shares (based on the VWAP
      of
      the Common Stock on the date such Securities are submitted to the Transfer
      Agent) delivered for removal of the restrictive legend and subject to Section
      4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading
      Days after such damages have begun to accrue) for each Trading Day after the
      fourth Trading Day following the Legend Removal Date until such certificate
      is
      delivered without a legend. Nothing
      herein shall limit such Purchaser’s right to pursue all
      equitable
      remedies
      available to it in
      equity
including,
      without limitation, a decree of specific performance and/or injunctive
      relief.
      

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

    (e)  Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      such
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom, and that if Securities are sold
      pursuant to a Registration Statement, they will be sold in compliance with
      the
      plan of distribution set forth therein.

     

    4.2  Furnishing
      of Information.
      Until
      the earlier of the time that (i) the Agreement has been terminated in accordance
      with Section 5.1, (ii) no Purchaser owns Securities or (iii) two years following
      the date that the Warrants have expired, the Company covenants to timely file
      (or obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act even if the Company is not then subject to the
      reporting requirements of the Exchange Act. As long as any Purchaser owns
      Securities, if the Company is not required to file reports pursuant to the
      Exchange Act, it will prepare and furnish to the Purchasers, upon the reasonable
      request of the Purchasers, and make publicly available in accordance with Rule
      144(c) such information as is required for the Purchasers to sell the Securities
      under Rule 144. The Company further covenants that it will take such further
      action as any holder of Securities may reasonably request, to the extent
      required from time to time to enable such Person to sell such Securities without
      registration under the Securities Act within the requirements of the exemption
      provided by Rule 144.

     

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

     

    4.4  Securities
      Laws Disclosure; Publicity.
      The
      Company shall, by 8:30 a.m. (New York City time) on the Trading Day immediately
      following the date hereof, issue a press release disclosing the material terms
      of the transactions contemplated hereby, and, within 1 Trading Day, file a
      Current Report on Form 8-K with the Transaction Documents, including any
      schedules, filed as exhibits thereto. The Company shall consult with Rodman
      & Renshaw, LLC, regarding the issuance of the press release and Form 8-K
      required above and shall make any changes reasonably requested by Rodman &
Renshaw, LLC. Notwithstanding the foregoing, Rodman & Renshaw, LLC
      acknowledges that the Company shall file the press release or Form 8-K if the
      Company, in its reasonable assessment, determines such filing and any contents
      included therein to be required by law. Other than the public disclosure
      required above, the Company shall not publicly disclose the name of any
      Purchaser, or include the name of any Purchaser in any filing with the
      Commission or any regulatory agency or Trading Market, without the prior written
      consent of such Purchaser, except (i) as required by federal securities law
      in
      connection with (A) any registration statement contemplated by the Registration
      Rights Agreement and (B) the filing of final Transaction Documents (including
      signature pages thereto) with the Commission and (ii) to the extent such
      disclosure is required by law or Trading Market regulations, in which case
      the
      Company shall provide the Purchasers with prior notice of such disclosure
      permitted under this clause (ii).

     

    
      
        
        

      

      
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    4.5  Shareholder
      Rights Plan. No claim will be made or enforced by the Company or, with the
      consent of the Company, any other Person, that any Purchaser is an “Acquiring
      Person” under any control share acquisition, business combination, poison pill
      (including any distribution under a rights agreement) or similar anti-takeover
      plan or arrangement in effect or hereafter adopted by the Company, or that
      any
      Purchaser could be deemed to trigger the provisions of any such plan or
      arrangement, by virtue of receiving Securities under the Transaction Documents
      or under any other agreement between the Company and the
      Purchasers.

     

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

     

    4.7  Use
      of
      Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company
      shall use the net proceeds from the sale of the Securities hereunder for working
      capital purposes consistent with companies in its industry and shall not use
      such proceeds for (a) the satisfaction of any portion of the Company’s debt
      (other than payment of trade payables in the ordinary course of the Company’s
      business and prior practices), (b) the redemption of any Common Stock or Common
      Stock Equivalents or (c) the settlement of any outstanding
      litigation.

     

    4.8  Indemnification
      of Purchasers. Subject to the provisions of this Section 4.8, the Company
      will indemnify and hold each Purchaser and its directors, officers,
      shareholders, members, partners, employees and agents (and any other Persons
      with a functionally equivalent role of a Person holding such titles
      notwithstanding a lack of such title or any other title), each Person who
      controls such Purchaser (within the meaning of Section 15 of the Securities
      Act
      and Section 20 of the Exchange Act), and the directors, officers, shareholders,
      agents, members, partners or employees (and any other Persons with a
      functionally equivalent role of a Person holding such titles notwithstanding
      a
      lack of such title or any other title) of such controlling persons (each, a
      “Purchaser Party”) harmless from any and all losses, liabilities, obligations,
      claims, contingencies, damages, costs and expenses, including all judgments,
      amounts paid in settlements, court costs and reasonable attorneys’ fees and
      costs of investigation that any such Purchaser Party may suffer or incur as
      a
      result of or relating to (a) any breach of any of the representations,
      warranties, covenants or agreements made by the Company in this Agreement or
      in
      the other Transaction Documents or (b) any action instituted against a Purchaser
      in any capacity, or any of them or their respective Affiliates, by any
      stockholder of the Company who is not an Affiliate of such Purchaser, with
      respect to any of the transactions contemplated by the Transaction Documents
      (unless such action is based upon a breach of such Purchaser’s representations,
      warranties or covenants under the Transaction Documents or any agreements or
      understandings such Purchaser may have with any such stockholder or any
      violations by the Purchaser of state or federal securities laws or any conduct
      by such Purchaser which constitutes fraud, gross negligence, willful misconduct
      or malfeasance). If any action shall be brought against any Purchaser Party
      in
      respect of which indemnity may be sought pursuant to this Agreement, such
      Purchaser Party shall promptly notify the Company in writing, and the Company
      shall have the right to assume the defense thereof with counsel of its own
      choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party
      shall
      have the right to employ separate counsel in any such action and participate
      in
      the defense thereof, but the fees and expenses of such counsel shall be at
      the
      expense of such Purchaser Party except to the extent that (i) the employment
      thereof has been specifically authorized by the Company in writing, (ii) the
      Company has failed after a reasonable period of time to assume such defense
      and
      to employ counsel or (iii) in such action there is, in the reasonable opinion
      of
      such separate counsel, a material conflict on any material issue between the
      position of the Company and the position of such Purchaser Party, in which
      case
      the Company shall be responsible for the reasonable fees and expenses of no
      more
      than one such separate counsel. The Company will not be liable to any Purchaser
      Party under this Agreement (i) for any settlement by a Purchaser Party effected
      without the Company’s prior written consent, which shall not be unreasonably
      withheld or delayed; or (ii) to the extent, but only to the extent that a loss,
      claim, damage or liability is attributable to any Purchaser Party’s breach of
      any of the representations, warranties, covenants or agreements made by such
      Purchaser Party in this Agreement or in the other Transaction
      Documents.

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

    4.9  Reservation
      of Common Stock.
      The
      Company shall take all necessary corporate action to reserve and keep available
      at all times, free of preemptive rights, a sufficient number of shares of Common
      Stock for the purpose of enabling the Company to issue Shares pursuant to this
      Agreement and Warrant Shares pursuant to any exercise of the Warrants.

     

    4.10  Listing
      of Common Stock.The
      Company hereby agrees to use best efforts to maintain the listing of the Common
      Stock on the Trading Market, and as soon as reasonably practicable following
      the
      Closing (but not later than the earlier of the Effectiveness Date) to list
      all
      of the Shares and Warrant Shares on such Trading Market. The Company further
      agrees, if the Company applies to have the Common Stock traded on any other
      Trading Market, it will include in such application all of the Shares and
      Warrant Shares, and will take such other action as is necessary to cause all
      of
      the Shares and Warrant Shares to be listed on such other Trading Market as
      promptly as possible. The Company will take all action reasonably necessary
      to
      continue the listing and trading of its Common Stock on the Trading Market
      and
      will comply in all respects with the Company’s reporting, filing and other
      obligations under the bylaws or rules of the Trading Market.

     

    4.11  Equal
      Treatment of Purchasers.
      No
      consideration shall be offered or paid to any Person to amend or consent to
      a
      waiver or modification of any provision of any of the Transaction Documents
      unless the same consideration is also offered to all of the parties to the
      Transaction Documents. For clarification purposes, this provision constitutes
      a
      separate right granted to each Purchaser by the Company and negotiated
      separately by each Purchaser, and is intended for the Company to treat the
      Purchasers as a class and shall not in any way be construed as the Purchasers
      acting in concert or as a group with respect to the purchase, disposition or
      voting of Securities or otherwise.

     

    4.12  [INTENTIONALLY
      DELETED]

     

    4.13  Subsequent
      Equity Sales. 

     

    (a)  From
      the
      date hereof until 60 days after the Effective Date, neither the Company nor
      any
      Subsidiary shall issue shares of Common Stock or Common Stock Equivalents;
      provided,
      however,
      the 60
      day period set forth in this Section 4.13 shall be extended for the number
      of
      Trading Days during such period in which (i) trading in the Common Stock is
      suspended by any Trading Market, or (ii) following the Effective Date, the
      Registration Statement is not effective or the prospectus included in the
      Registration Statement may not be used by the Purchasers for the resale of
      the
      Shares and Warrant Shares. 

     

    (b)  From
      the
      date hereof until such time as no Purchaser holds any of the Securities, the
      Company shall be prohibited from effecting or entering into an agreement to
      effect any Subsequent Financing involving a Variable Rate Transaction.
“Variable
      Rate Transaction”
means
      a
      transaction in which the Company issues or sells (i) any debt or equity
      securities that are convertible into, exchangeable or exercisable for, or
      include the right to receive additional shares of Common Stock either (A) at
      a
      conversion, exercise or exchange rate or other price that is based upon and/or
      varies with the trading prices of or quotations for the shares of Common Stock
      at any time after the initial issuance of such debt or equity securities, or
      (B)
      with a conversion, exercise or exchange price that is subject to being reset
      at
      some future date after the initial issuance of such debt or equity security
      or
      upon the occurrence of specified or contingent events directly or indirectly
      related to the business of the Company or the market for the Common Stock or
      (ii) enters into any agreement, including, but not limited to, an equity line
      of
      credit, whereby the Company may sell securities at a future determined price.
      Any Purchaser shall be entitled to obtain injunctive relief against the Company
      to preclude any such issuance, which remedy shall be in addition to any right
      to
      collect damages. 

     

    (c)  Notwithstanding
      the foregoing, this Section 4.13 shall not apply in respect of an Exempt
      Issuance, except that no Variable Rate Transaction shall be an Exempt
      Issuance.

     

    4.14  Short
      Sales and Confidentiality After The Date Hereof.
      Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      neither it nor any Affiliate acting on its behalf or pursuant to any
      understanding with it will execute any Short Sales during the period commencing
      at the Discussion Time and ending at the time that the transactions contemplated
      by this Agreement are first publicly announced as described in Section
      4.4. 
      Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.4, such Purchaser will
      maintain the confidentiality of the existence and terms of this transaction
      and
      the disclosures made by the parties in this transaction.  Each Purchaser
      severally and not jointly with any other Purchaser, understands and
      acknowledges, and agrees, to act in a manner that will not violate the positions
      of the Commission as set forth in Item 65, Section A, of the Manual of Publicly
      Available Telephone Interpretations, dated July 1997, compiled by the Office
      of
      Chief Counsel, Division of Corporation Finance. Notwithstanding the foregoing,
      no Purchaser makes any representation, warranty or covenant hereby that it
      will
      not engage in Short Sales in the securities of the Company after the time that
      the transactions contemplated by this Agreement are first publicly announced
      as
      described in Section 4.4. Notwithstanding the foregoing, in the case of a
      Purchaser that is a multi-managed investment vehicle whereby separate portfolio
      managers manage separate portions of such Purchaser’s assets and the portfolio
      managers have no direct knowledge of the investment decisions made by the
      portfolio managers managing other portions of such Purchaser’s assets, the
      covenant set forth above shall only apply with respect to the portion of assets
      managed by the portfolio manager that made the investment decision to purchase
      the Securities covered by this Agreement.

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

    4.15  Delivery
      of Securities After Closing. Unless otherwise agreed to with a specific
      Purchaser, the Company shall deliver, or cause to be delivered, the respective
      Securities purchased by each Purchaser to such Purchaser within five (5) Trading
      Days of the Closing Date.

     

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

     

    4.17  Capital
      Changes. Until the earlier of (i) the one (1) year anniversary of the
      Effective Date, or (ii) the time at which the Purchasers own less than fifty
      percent (50%) of the Shares issued pursuant to this Agreement, the Company
      shall
      not undertake a reverse or forward stock split or reclassification of the Common
      Stock without the prior written consent of the Supermajority
      Purchasers.

     

    4.18  [INTENTIONALLY
      DELETED]

     

    4.19  Trading
      Market Covenant. As promptly as possible following the date hereof,
the
      Company shall use best efforts
      to
      obtain
      a staff interpretative letter from the Trading Market that the transactions
      contemplated hereunder comply with the rules of the Trading Market such that
      shareholder approval is not required.

     

    ARTICLE
      V.

    MISCELLANEOUS

     

    5.1  Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the Closing has not been consummated on or before June 29, 2007;
      provided, however, that no such termination will affect the right of any party
      to sue for any breach by the other party (or parties).

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

    5.2  Fees
      and Expenses. Except as expressly set forth in the Transaction Documents to
      the contrary, each party shall pay the fees and expenses of its advisers,
      counsel, accountants and other experts, if any, and all other expenses incurred
      by such party incident to the negotiation, preparation, execution, delivery
      and
      performance of this Agreement. The Company shall pay all Transfer Agent fees,
      stamp taxes and other taxes and duties levied in connection with the delivery
      of
      any Securities to the Purchasers.

     

    5.3  Entire
      Agreement. The Transaction Documents, together with the exhibits and
      schedules thereto, contain the entire understanding of the parties with respect
      to the subject matter hereof and supersede all prior agreements and
      understandings, oral or written, with respect to such matters, which the parties
      acknowledge have been merged into such documents, exhibits and
      schedules.

     

    5.4  Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 5:30 p.m. (New York City time)
      on a
      Trading Day, (b) the next Trading Day after the date of transmission, if such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the
      2nd
      Trading
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

     

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

     

    5.6  Headings.
      The headings herein are for convenience only, do not constitute a part of this
      Agreement and shall not be deemed to limit or affect any of the provisions
      hereof.

     

    5.7  Successors
      and Assigns. This Agreement shall be binding upon and inure to the benefit
      of the parties, their successors and permitted assigns. The Company may not
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of the Supermajority Purchasers. Any Purchaser may assign any
      or
      all of its rights under this Agreement to any person or entity in connection
      with any transfer of Securities complying with applicable securities
      laws.

     

    
      
        
        

      

      
        24

        
          

        

      

      
        
        

      

    

    5.8  No
      Third-Party Beneficiaries. This Agreement is intended for the benefit of the
      parties hereto and their respective successors and permitted assigns and is
      not
      for the benefit of, nor may any provision hereof be enforced by, any other
      Person, except as otherwise set forth in Section 4.8.

     

    5.9  Governing
      Law; Consent to Jurisdiction. All questions concerning the construction,
      validity, enforcement and interpretation of the Transaction Documents shall
      be
      governed by and construed and enforced in accordance with the internal laws
      of
      the State of New York, without regard to the principles of conflicts of law
      thereof. Each party agrees that all legal proceedings concerning the
      interpretations, enforcement and defense of the transactions contemplated by
      this Agreement and any other Transaction Documents (whether brought against
      a
      party hereto or its respective affiliates, directors, officers, shareholders,
      employees or agents) shall be commenced exclusively in the state and federal
      courts sitting in the City of New York. Each party hereby irrevocably submits
      to
      the exclusive jurisdiction of the state and federal courts sitting in the City
      of New York, borough of Manhattan for the adjudication of any dispute hereunder
      or in connection herewith or with any transaction contemplated hereby or
      discussed herein (including with respect to the enforcement of any of the
      Transaction Documents), and hereby irrevocably waives, and agrees not to assert
      in any suit, action or proceeding, any claim that it is not personally subject
      to the jurisdiction of any such court, that such suit, action or proceeding
      is
      improper or is an inconvenient venue for such proceeding. Each party hereby
      irrevocably waives personal service of process and consents to process being
      served in any such suit, action or proceeding by mailing a copy thereof via
      registered or certified mail or overnight delivery (with evidence of delivery)
      to such party at the address in effect for notices to it under this Agreement
      and agrees that such service shall constitute good and sufficient service of
      process and notice thereof. Nothing contained herein shall be deemed to limit
      in
      any way any right to serve process in any other manner permitted by law. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
      and prosecution of such action or proceeding.

     

    5.10  Survival.
      The representations and warranties contained herein shall survive the Closing
      and the delivery of the Shares and Warrant Shares for a period of the earlier
      of
      (a) two (2) years from the date hereof and (b) such date that the applicable
      Purchaser no longer holds any Securities purchased pursuant to this
      Agreement.

     

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

     

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

     

    
      
        
        

      

      
        25

        
          

        

      

      
        
        

      

    

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

     

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

     

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

     

    5.16  Independent
      Nature of Purchasers’ Obligations and Rights. The obligations of each
      Purchaser under any Transaction Document are several and not joint with the
      obligations of any other Purchaser, and no Purchaser shall be responsible in
      any
      way for the performance or non-performance of the obligations of any other
      Purchaser under any Transaction Document. Nothing contained herein or in any
      other Transaction Document, and no action taken by any Purchaser pursuant
      thereto, shall be deemed to constitute the Purchasers as a partnership, an
      association, a joint venture or any other kind of entity, or create a
      presumption that the Purchasers are in any way acting in concert or as a group
      with respect to such obligations or the transactions contemplated by the
      Transaction Documents. Each Purchaser shall be entitled to independently protect
      and enforce its rights, including without limitation, the rights arising out
      of
      this Agreement or out of the other Transaction Documents, and it shall not
      be
      necessary for any other Purchaser to be joined as an additional party in any
      proceeding for such purpose. Each Purchaser has been represented by its own
      separate legal counsel in their review and negotiation of the Transaction
      Documents. For reasons of administrative convenience only, Purchasers and their
      respective counsel have chosen to communicate with the Company through FWS.
      FWS
      does not represent all of the Purchasers but only Rodman & Renshaw, LLC. The
      Company has elected to provide all Purchasers with the same terms and
      Transaction Documents for the convenience of the Company and not because it
      was
      required or requested to do so by the Purchasers.

     

    
      
        
        

      

      
        26

        
          

        

      

      
        
        

      

    

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

     

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

     

    5.19  Construction.
      The parties agree that each of them and/or their respective counsel has reviewed
      and had an opportunity to revise the Transaction Documents and, therefore,
      the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    5.20  WAIVER
      OF JURY TRIAL. IN ANY ACTION, SUIT OR PROCEEDING IN ANY JURISDICTION BROUGHT
      BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
      INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY
      ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL
      BY
      JURY.

    
 

    (Signature
      Pages Follow)

     

    
      
        
        

      

      
        27

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
      Agreement to be duly executed by their respective authorized signatories as
      of
      the date first indicated above.

     

    
      	TARGETED GENETICS
              CORPORATION 	 	 	 
	 	 	 	 
	 	 	 	 
	By:	 	 	 	
              Address
                for Notice:

              1100
                Olive Way Suite 100

              Seattle,
                WA 98101

            
	 	
              
Name:
              H. Stewart Parker	 	 	
            
	 	
              Title:
                Chief Executive Officer & President

            	 	 	
              Fax:

              (206)
                623-7064

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

               

              Orrick,
                Herrington & Sutcliffe LLP

              719
                Second Avenue, Suite 900

              Seattle,
                WA 98104

              Attention:
                Stephen M. Graham

              Facsimile:
                (206) 839-4301

            	 	 	 

    

     

     

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

     

    
      
        
        

      

      
        28

        
          

        

      

      
        
        

      

    

     

    PURCHASER
      SIGNATURE PAGES TO TGEN SECURITIES PURCHASE AGREEMENT

    

    IN
      WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
      to be duly executed by their respective authorized signatories as of the date
      first indicated above.

     

    Name
      of
      Purchaser: ________________________________________________________

    Signature
      of Authorized Signatory of Purchaser:
      __________________________________

    Name
      of
      Authorized Signatory:
      ____________________________________________________

    Title
      of
      Authorized Signatory:
      _____________________________________________________

    Email
      Address of
      Purchaser:________________________________________________

    Fax
      Number of Purchaser:
      ________________________________________________

    Address
      for Notice of Purchaser:

    

    

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

    

    

    Subscription
      Amount: $_________________

    

    Shares:
      _________________

    

    Warrant
      Shares: __________________

    

    EIN
      Number:

    

    

    [SIGNATURE
      PAGES CONTINUE]

     

    
      
        
        

      

      
        29

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