Document:

Exhibit 4.3 Securities Purchase Agreement dated as of October 26, 2006 by and
      among Dyadic International, Inc. and Abengoa Bioenergy R&D, Inc.

     

    SECURITIES
      PURCHASE AGREEMENT

    THIS
      SECURITIES PURCHASE AGREEMENT
      (the
“Agreement”),
      dated
      as of October 26, 2006 (the “Agreement
      Date”),
      by
      and among DYADIC INTERNATIONAL, INC., a Delaware corporation
      with
      headquarters located at 140 Intracoastal Pointe Drive, Suite 404, Jupiter,
      Florida 33477 (the “Company”),
      and
      ABENGOA BIOENERGY R&D, INC., a Missouri corporation (“ABRD”).
      The
      Company and ABRD are sometimes collectively referred to as the “Parties”
and
      individually as a “Party.”
      Certain capitalized terms have the meanings assigned them in Article I hereof.
      

     

    BACKGROUND

     

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

     

    B. Concurrently
      with the execution and delivery of this Agreement, the Company and ABRD are
      executing and delivering to each other that certain Research and Development
      Agreement pertaining to the Company’s conduct of certain research and
      development activities for the mutual benefit of the Company and ABRD (the
      “R&D
      Agreement”).

     

    C. Upon
      the
      terms and conditions of this Agreement, ABRD wishes to purchase from the
      Company, and the Company wishes to sell to ABRD, the “Purchased Securities” (as
      that term is hereinafter defined).

     

    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 ABRD agree as follows:

     

    ARTICLE
      I  

     

    DEFINITIONS

     

    1.1  Definitions.
      In
      addition to the terms defined elsewhere in this Agreement, the following terms
      have the meanings indicated:

     

    “ABRD
      Group”
has
      the
      meaning set forth in Section
      4.7(b).

     

    “Adjustment
      Common Shares”
has
      the
      meaning set forth in Section
      2.2.

     

    “Adjusted
      Spending Deficit Amount”
has
      the
      meaning set forth in Section
      4.6(b).

     

    “Adjustment
      Convertible Securities”
has
      the
      meaning set forth in Section
      3.1(c).

     

    “Adjustment
      Convertible Securities Shares”
has
      the
      meaning set forth in Section
      3.1(c).

     

    “Advisor”
has
      the
      meaning set forth in Section
      3.1(l).

     

    “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, as such
      terms are used in and construed under Rule 144
      under
      the Securities Act.

     

    “Agreement”
has
      the
      meaning set forth in the Preamble.

     

    “Annual
      R&D Spend Certificate”
has
      the
      meaning set forth in Section
      4.6.

     

    “Applicable
      Lower Price”
has
      the
      meaning set forth in Section
      2.2.

     

    “Applicable
      R&D Spend”
has
      the
      meaning set forth in Section
      4.6.

     

    “Best
      Efforts”
means
      the efforts that a prudent Person desirous of achieving a result would use
      in
      similar circumstances to ensure that such result is achieved as expeditiously
      as
      practical; provided,
      however,
      that an
      obligation to use Best Efforts under this Agreement does not require the Company
      to dispose of or make any change to its business, expend any material funds
      or
      incur any other material burden.

     

    “Business
      Day”
means
      any day other than Saturday, Sunday or other day on which commercial banks
      in
      The City of New York or Madrid, Spain are authorized or required by law to
      remain closed.

     

    “Closing”
means
      the closing of the purchase and sale of the Purchased Securities pursuant to
      Section 2.1.

     

    “Closing
      Date”
means
      the date and time of the Closing, and shall be 10:00 a.m., New York City Time,
      on the later of (x) two (2) Business Days following the Agreement Date or (y)
      two (2) Business Days following the date of the approval of the listing of
      the
      Common Shares and the Extraordinary Circumstance Warrant Shares, if any, by
      the
      Trading Market; provided that by the written agreement of the parties, the
      Closing Date shall be such other date and time as the Company and ABRD mutually
      agree.

     

    “Closing
      Date Shares”
has
      the
      meaning set forth in Section
      2.1.

     

    “Closing
      Price”
means,
      for any date, the closing price per share of the Common Stock for such date
      (or
      the nearest preceding date) on the American Stock Exchange, or if the Common
      Stock is not then listed on the American Stock Exchange, such other primary
      Eligible Market or exchange or quotation system on which the Common Stock is
      then listed or quoted.

     

    “Closing
      Sales Price”
means
      the closing sales price of the Common Shares on the Trading Market on the
      Trading Date immediately preceding the Agreement Date.

     

    “Company”
      has
      the
      meaning set forth in the Preamble.

     

    “Company
      Counsel”
means
      Greenberg
      Traurig, LLP,
      counsel
      to the Company.

     

    “Common
      Shares”
or
      “Common
      Stock”
means
      the common stock of the Company, par value
      $0.001
      per share.

     

    “Common
      Stock Equivalents”
means,
      collectively, Options, Warrants and Convertible Securities. 

     

    “Confidentiality
      Agreement”
has
      the
      meaning set forth in Section
      3.2(e).

     

    “Contingent
      Obligation”
has
      the
      meaning set forth in Section
      3.1(aa).
      

     

    “Convertible
      Securities”
means
      any stock or securities (other than Options or Warrants) convertible into or
      exercisable or exchangeable for Common Stock. 

     

    “Corporate
      Partnering Transaction”
means
      any issuance of Securities to a Person in connection with a transaction in
      which, companion thereto, and as a condition of such issuance, the Company
      (either directly or indirectly through any of its Affiliates) and such Person
      enter into any material commercial agreement pertaining to the purchase or
      sale
      of the Company’s products or services or the Company’s purchase and sale of
      products or services of such Person, it being acknowledged by ABRD for the
      avoidance of doubt, that the transaction contemplated by this Agreement is
      a
      Corporate Partnering Transaction.

     

    “Cure
      Date”
has
      the
      meaning set forth in Section
      6.1(d).

     

    “Disclosure
      Materials”
has
      the
      meaning set forth in Section 3.1(g).

     

    “Effective
      Date”
means
      the date that the Registration Statement is first declared effective by the
      SEC.

     

    “Effectiveness
      Period”
has
      the
      meaning set forth in Section 6.1(b).

     

    “8-K
      Filing”
has
      the
      meaning set forth in Section
      4.5. 

     

    “Eligible
      Market”
means
      any of the New York Stock Exchange, the American Stock Exchange, The Nasdaq
      National Market or The Nasdaq Capital Market.

     

    “ERISA”
means
      the Employee Retirement Income Security Act of 1974, as amended, and the rules
      and regulations promulgated thereunder

     

    “ERISA
      Affiliate”
      ”
has
      the
      meaning set forth in Section
      3.1(gg).
      

     

    “Environmental
      Laws”
has
      the
      meaning set forth in Section
      3.1(dd).
      

     

    “Event”
has
      the
      meaning set forth in Section 6.1(d).

     

    “Event
      Payments”
has
      the
      meaning set forth in Section 6.1(d).

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended.

     

    “Excluded
      Events”
has
      the
      meaning set forth in Section 6.1(d)(ii).

     

    “Excluded
      Investors”
means
      Cowen and Company, LLC and its Affiliates.

     

    “Extraordinary
      Circumstance Warrant”
      means,
      if
      applicable as determined pursuant to the provisions of Section 2.4 hereof,
      either (x) the Parity Warrant or (y) the No Qualified Transaction Warrant.
      

     

    “Extraordinary
      Circumstance Warrant Coverage Ratio”
means,
      in the case of the closing of a Qualified Transaction in which QO Warrants
      were
      issued, the ratio of (x) the aggregate number of Common Shares or Convertible
      Securities, as the case may be, purchasable pursuant to exercises of all of
      the
      QO Warrants issued by the Company to the Person(s) purchasing Common Shares
      or
      Convertible Securities, as the case may be, in that Qualified Transaction to
      (y)
      the aggregate number of Common Shares or Convertible Securities, as the case
      may
      be, issued by the Company to such Person(s) in that Qualified Transaction on
      the
      date of the closing thereof.

     

    “Extraordinary
      Circumstance Warrant Shares”
means
      the Common Shares purchasable upon the exercise of the Extraordinary
      Circumstance Warrant, if any, the number of which shall be determined in
      accordance with the provisions of Section
      2.4.

     

    “Field
      of Research”
has
      the
      meaning set forth in Section 4.6
      hereof.

     

    “Filing
      Date”
means
      forty-five (45) days after the Closing Date.

    

    “GAAP”
has
      the
      meaning set forth in Section
      3.1(g).
      

     

    “Hazardous
      Materials”
has
      the
      meaning set forth in Section
      3.1(dd).

     

    “Indebtedness”
has
      the
      meaning set forth in Section
      3.1(aa).

     

    “Indemnified
      Party”
has
      the
      meaning set forth in Section 6.4(c).

     

    “Indemnifying
      Party”
has
      the
      meaning set forth in Section 6.4(c).

     

    “Insolvent”
has
      the
      meaning set forth in Section
      3.1(h).
      

     

    “Intellectual
      Property Rights”
has
      the
      meaning set forth in Section 3.1(t).

     

    “Lien”
means
      any lien, charge, claim, security interest, encumbrance, right of first refusal
      or other restriction.

     

    “Lock-Up
      Period”
has
      the
      meaning set forth in Section
      4.7(a).

     

    “Losses”
means
      any and all losses, claims, damages, liabilities, settlement costs and expenses,
      including, without limitation and reasonable attorneys’ fees.

     

    “Material
      Adverse Effect”
means
      (i) a material adverse effect on the results of operations, assets, business
      or
      financial condition of the Company and the Subsidiaries, taken as a whole on
      a
      consolidated basis, or (ii) an event or occurrence that materially and
      adversely impairs the Company's ability to perform its obligations under any
      of
      the Transaction Documents, provided, that none of the following alone shall
      be
      deemed, in and of itself, to constitute a Material Adverse Effect: (x) a change
      in the market price or trading volume of the Common Stock or (y) changes in
      general economic conditions or changes affecting the industry in which the
      Company operates generally (as opposed to Company-specific changes) so long
      as
      such changes do not have a disproportionate effect on the Company and its
      Subsidiaries taken as a whole.

     

    “Material
      Permits”
has
      the
      meaning set forth in Section 3.1(v).

     

    “No
      Qualified Transaction Warrant”
means
      the Warrant, if any, issuable by the Company to ABRD pursuant to the provisions
      of Section
      2.4(a)
      hereof.

     

    “No
      Qualified Transaction Warrant Shares”
means
      the Common Shares issuable upon the exercise(s) of the No Qualified Transaction
      Warrant, if any, the
      number of which shall be determined in accordance with the provisions of
Section
      2.4(a).

     

    “Options”
means
      any outstanding rights, Warrants or options to subscribe for or purchase Common
      Stock, Warrants or Convertible Securities.

     

    “Parity
      Warrant”
means
      the Warrant, if any, issuable by the Company to ABRD pursuant to the provisions
      of Section
      2.4(b)
      hereof.

     

    “Parity
      Warrant Shares”
means
      the Common Shares issuable upon the exercise(s) of the Parity Warrant, if any,
      the
      number of which shall be determined in accordance with the provisions of
Section
      2.4(b).

     

    “Person”
means
      any individual or corporation, partnership, trust, incorporated or
      unincorporated association, joint venture, limited liability company, or joint
      stock company. 

     

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

    “Prospectus”
means
      the prospectus included in the Registration Statement (including, without
      limitation, a prospectus that includes any information previously omitted from
      a
      prospectus filed as part of an effective registration statement in reliance
      upon
      Rule 430A
      promulgated under the Securities Act), as amended or supplemented by any
      prospectus supplement, with respect to the terms of the offering of any portion
      of the Registrable Securities covered by the Registration Statement, and all
      other amendments and supplements to the Prospectus including post-effective
      amendments, and all material incorporated by reference or deemed to be
      incorporated by reference in such Prospectus.

    

    “Purchased
      Securities”
means
      the number of Common Shares fixed pursuant to the provisions of Sections 2.1
      and
      2.2 hereof, the Extraordinary Circumstance Warrant, if any, and the
      Extraordinary Circumstance Warrant Shares, if any, that may be purchased
      pursuant to exercise(s) of the Extraordinary Circumstance Warrant.

    

    “Purchased
      Shares”
has
      the
      meaning set forth in Section
      2.1.

    

    “QO
      Warrants”
has
      the
      meaning set forth in Section
      2.4(b).

    

    “Qualified
      Transaction”
shall
      mean any sale of Common Shares or Convertible Securities by the Company to
      any
      other Person or Persons occurring within one hundred eighty (180) days following
      the Closing Date, other than the
      issuance of Securities in connection with: (a) employee benefit plans or other
      plans approved by the Board of Directors of the Company for the benefit of
      employees, consultants or directors of the Company or its Subsidiaries; (b)
      any
      stock dividends, stock splits or other distributions on any class of Securities
      that is payable in Shares, or in connection with Options or Convertible
      Securities outstanding immediately prior to the Closing; (c) this Agreement;
      or
      (d) a Corporate Partnering Transaction. 

     

    “Registrable
      Securities”
means
      the Common Shares and the Extraordinary Circumstance Warrant Shares, if any,
      issued or issuable pursuant to the Transaction Documents, together with any
      securities issued or issuable upon any stock split, dividend or other
      distribution, recapitalization or similar event with respect to the
      foregoing.

     

    “Registration
      Statement”
means
      each registration statement required to be filed under Article VI,
      including (in each case) the Prospectus, amendments and supplements to such
      registration statement or Prospectus, including pre- and post-effective
      amendments, all exhibits thereto, and all material incorporated by reference
      or
      deemed to be incorporated by reference in such registration
      statement.

     

    “Regulation
      D”
has
      the
      meaning set forth in the Preamble. 

     

    “Related
      Person”
has
      the
      meaning set forth in Section 4.6.

     

    “Repurchase
      Notice”
has
      the
      meaning set forth in Section 6.1.

     

    “Repurchase
      Price”
has
      the
      meaning set forth in Section 6.1.

     

    “Required
      Effectiveness Date”
means
      the
      date
      which is the earliest of (i) if the Registration Statement does not become
      subject to review by the SEC, (a) one hundred eighty (180) days after the
      Closing Date or (b) five (5) Trading Days after the Company receives
      notification from the SEC that the Registration Statement will not become
      subject to review and the Company fails to request to accelerate the
      effectiveness of the Registration Statement, or (ii) if the Registration
      Statement becomes subject to review by the SEC, two hundred and ten (210) days
      after the Closing Date.

     

    “R&D
      Agreement”
has
      the
      meaning set forth in the Preambles.

     

    “R&D
      Spend Measurement Period”
has
      the
      meaning assigned in Section
      4.6.
      

     

    “Rule 144,”
      “Rule 415,”
and
      “Rule 424”
means
      Rule 144,
      Rule 415
      and
      Rule 424,
      respectively, promulgated by the SEC pursuant to the Securities Act, as such
      Rules may be amended from time to time, or any similar rule or regulation
      hereafter adopted by the SEC having substantially the same effect as such
      Rule.

     

    “SEC”
      has the
      meaning set forth in Recital A.

     

    “SEC
      Reports”
has
      the
      meaning set forth in Section 3.1(g).

     

    “Securities”
means
      Common Shares, Options, Warrants and Convertible Securities.

     

    “Securities
      Act”
has
      the
      meaning set forth in Recital
      A.
      

     

    “Shares”
means
      shares of the Company’s Common Stock.

     

    “Short
      Sales”
has
      the
      meaning set forth in Section
      3.2(h).
      

     

    “Spending
      Deficit”
has
      the
      meaning set forth in Section
      4.6(b).

     

    “Subsidiary”
means
      any direct
      or
      indirect consolidated subsidiary of the Company.

     

    “Trading
      Day”
means
      (a) any day on which the Common Stock is listed or quoted and traded on its
      primary Trading Market, (b) if the Common Stock is not then listed or
      quoted and traded on any Eligible Market, then a day on which trading occurs
      on
      the The Nasdaq National Market (or any successor thereto), or (c) if
      trading ceases to occur on the The Nasdaq National Market (or any successor
      thereto), any Business Day.

     

    “Trading
      Market”
means
      the The American Stock Exchange or any other Eligible Market, or any national
      securities exchange, market or trading or quotation facility on which the Common
      Stock is then listed or quoted.

     

    “Transaction
      Documents”
means
      this Agreement, the schedules and exhibits attached hereto, the Extraordinary
      Circumstance Warrant, if any, and the R&D Agreement, including the schedules
      and exhibits attached thereto.

     

    “Transfer
      Agent”
means
      Continental Stock Transfer & Trust Company, or
      any
      successor transfer agent for the Company.

     

    “Warrants”
means
      warrants to purchase Common Stock or Convertible Securities.

     

    “Warrant
      Shares”
means
      Common Shares issuable upon the exercise of any Warrant.

     

    ARTICLE
      II  

     

    PURCHASE
      AND SALE

     

    2.1  Closing.
      Subject
      to the terms and conditions set forth in this Agreement, generally, and the
      provisions of Section 2.2 and Section 2.3 hereof, specifically, at the Closing
      the Company shall issue and sell to ABRD and ABRD shall purchase from the
      Company, a
      number
      of Common Shares equal to quotient obtained by dividing (x) $10,000,000 by
      (y)
      the Closing Sale Price (the “Closing
      Date Shares”
and
      inclusive of any “Adjustment Common Shares” to be issued by the Company to ABRD
      pursuant to the provisions of Section 2.2 hereof, collectively, the
“Purchased
      Shares”).
      The
      time of the closing shall be 11:00 a.m.,
      New York
      City Time, on the Closing Date (the
      “Closing”).
      The
      Closing shall take place at the offices of the Company’s Counsel.  

     

    2.2  Issuance
      of Adjustment Common Shares to ABRD Upon Closing of Qualified
      Transaction.
      Subject
      to the provisions of Section 2.3 hereof, if, within one hundred eighty (180)
      days following the Closing Date, the Company closes a sale of its Common Shares
      or Convertible Securities to any other Person in a Qualified Transaction for
      a
      gross per Common Share purchase price paid to the Company for an amount which
      is
      less than the Closing Sales Price (the “Applicable
      Lower Price”),
      then
      the Company shall, within five (5) Business Days of obtaining any required
      regulatory or stockholder approvals (which approvals the Company covenants
      to
      ABRD that the Company shall use its Best Efforts to obtain as expeditiously
      as
      is practicable), issue to ABRD a number of additional Common Shares equal to
      the
      amount by which (x) the quotient obtained by dividing (i) $10,000,000 by (ii)
      the Applicable Lower Price, exceeds (y) the number of Closing Date Shares (such
      additional Common Shares being heretofore and hereinafter referred to as the
      “Adjustment
      Common Shares”).
      

     

    2.3  Conversion
      of Common Shares Into Convertible Securities If Company Issues Convertible
      Securities in Qualified Transaction.
      If the
      Company closes a Qualified Transaction in which the Company, in lieu of issuing
      only Common Shares, issues Convertible Securities (either in whole or in part),
      then following written notice thereof which the Company shall promptly furnish
      to ABRD, at the election of ABRD made in writing within ten (10) Business Days
      following its receipt of such notice, the Company shall accept the tender by
      ABRD of all of its certificates evidencing the Purchased Shares, and within
      ten
      (10) Business Days following its receipt of such certificate(s), issue to ABRD
      certificates for a number of Convertible Securities which are convertible into
      the number of Common Shares comprising the Purchased Shares (after taking into
      account the effect of Section 2.2 hereof), provided that if such Qualified
      Offering included the issuance of both Common Shares and Convertible Securities,
      then only that portion of the Purchased Shares shall be subject to tender and
      convertible into Convertible Securities as bears the same ratio to the aggregate
      number of Purchased Shares as the Convertible Securities issued in the Qualified
      Transaction bears to the aggregate number of Common Shares and Convertible
      Securities (on an as-if-converted basis). If the provisions of this Section
      2.3
      shall apply, all subsequent references to the “Purchased Shares” shall mean and
      include the Convertible Securities issued to ABRD pursuant hereto. In the event
      the Company closes a Qualified Transaction within the purview of this Section
      2.3 that also involves the issuance of QO Warrants and ABRD elects to tender
      its
      Purchased Shares hereunder, the Company shall issue to ABRD a Parity Warrant
      (in
      lieu of the No Qualified Transaction Warrant), in accordance with the terms
      and
      conditions of clauses (i) and (ii) of Section 2.4(b). 

     

    2.4  Issuance
      of Extraordinary Circumstance Warrant to ABRD Upon Failure to Close Qualified
      Transaction or Closing of Qualified Transaction in Which Warrants Are Issued
      Companion to Issuance of Common Shares.
      

     

    (a) If,
      within one hundred eighty (180) days following the Closing Date, the Company
      fails to close a sale of its Common Shares to any other Person in a Qualified
      Transaction involving gross proceeds to the Company of not less than
      $20,000,000, then in that event the Company shall issue to ABRD a Warrant,
      in
      the form of Exhibit A attached hereto (the “No
      Qualified Transaction Warrant”)
      to
      purchase a number of Common Shares equal to twenty percent (20%) of the
      Purchased Shares (the “Extraordinary
      Circumstance Warrant Shares”)
      within
      five (5) Business Days following the expiration of the said one hundred eighty
      (180) day period, exercisable for a period of three years following the date
      of
      issuance, at an exercise price of one hundred twenty-five percent (125%) of
      the
      Closing Sale Price. 

     

    (b) If
      the
      Company does close a sale of its Common Shares or Convertible Securities
to
      any
      other Person(s) in a Qualified Transaction involving gross proceeds to the
      Company of not less than $20,000,000 within one hundred eighty (180) days
      following the Closing Date in which, in addition to the Company’s issuance of
      Common Shares to such other Person(s), the Company issues Warrants to purchase
      Common Shares (“QO
      Warrants”),
      then
      in that event:

     

    (i) in
      lieu
      of the No Qualified Transaction Warrant to purchase No Qualified Transaction
      Warrant Shares set forth in subsection (a), above, the Company shall issue
      to
      ABRD a Parity Warrant having terms and conditions identical to the terms and
      conditions of the QO Warrants, except as to the number of Parity Warrant Shares
      which ABRD shall be entitle to purchase pursuant thereto; and

     

    (ii) the
      number of Parity Warrant Shares which ABRD shall be entitled to purchase
      pursuant to the Parity Warrant shall be an amount equal to equal to the product
      of (x) the Extraordinary Circumstance Warrant Coverage Ratio multiplied by
      (y)
      number of Purchased Shares (after giving effect to the provisions of Section
      2.2
      hereof, if applicable).

     

    2.5  Closing
      Deliveries.

     

    (a)  At
      the
      Closing, the Company shall deliver or cause to be delivered to ABRD the
      following:

     

    (i)  A
      stock
      certificate, free and clear of all restrictive and other legends (except as
      expressly provided in Section 4.1(b)
      hereof), evidencing the Closing Date Shares registered in the name of
      ABRD;

     

    (ii)  a
      legal
      opinion of Company Counsel, in the form of Exhibit C,
      executed by such counsel and delivered to ABRD; 

     

    (iii)  approval
      by the American Stock Exchange of an additional shares listing application
      covering all of the Closing Date Shares and the No Qualified Transaction Warrant
      Shares; 

     

    (iv) a
      certificate of the Company signed by the Chief Executive Officer of the Company
      that (A) the
      representations and warranties of the Company contained herein are true and
      correct in all material respects as of the date when made and as of the Closing
      as though made on and as of such date and (B) the Company
      has
      performed or satisfied and complied in all material respects with all covenants,
      agreements and conditions required by the Transaction Documents to be performed,
      satisfied or complied with by it at or prior to the Closing;

     

    (v) copies
      of
      each of the following, in each case, certified to be in full force and effect
      on
      the Closing Date by the Secretary of the Company:

     

    (A) the
      Certificate of Incorporation of the Company;

     

    (B) a
      good
      standing certificate with respect to the Company certified by the Secretary
      of
      State of the State of Delaware as of a date not more than five days prior to
      the
      Closing Date;

     

    (C) the
      By-Laws of the Company; and

     

    (D) resolutions
      of the Board of Directors of the Company authorizing the execution, delivery
      and
      performance of this Agreement and the other Transaction Documents, the issuance
      and sale of the Purchased Securities, and the reservation of Common Shares
      issuable upon the exercise of any Extraordinary Circumstance Warrant, if any.
      

     

    (b)  At
      the
      Closing, ABRD shall deliver or cause to be delivered to the
      Company:

     

    (i) 
      the sum
      of TEN MILLION and NO\100ths DOLLARS ($10,000,000.00) in United States dollars
      and in immediately available funds, by wire transfer to an account designated
      in
      writing to ABRD by the Company for such purpose;

     

    (ii) a
      certificate of ABRD signed by the Chief Executive Officer of the ABRD that
      (A)
      the
      representations and warranties of the ABRD contained herein are true and correct
      in all material respects as of the date when made and as of the Closing as
      though made on and as of such date and (B) ABRD
      has
      performed or satisfied and complied in all material respects with all covenants,
      agreements and conditions required by the Transaction Documents to be performed,
      satisfied or complied with by it at or prior to the Closing; and

     

    (iii) copies
      of
      resolutions of the Board of Directors of ABRD authorizing the execution,
      delivery and performance of this Agreement and the other Transaction Documents,
      certified to be in full force and effect on the Closing Date by the Secretary
      of
      ABRD.

     

    ARTICLE
      III  

     

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Company.
      The
      Company hereby represents and warrants to ABRD as follows (which representations
      and warranties shall be deemed to apply, where appropriate, to each Subsidiary
      of the Company):

     

    (a)  Subsidiaries.
      The
      Company has no Subsidiaries other than those listed in Schedule 3.1(a)
      hereto.
      Except as disclosed in Schedule 3.1(a)
      hereto,
      the Company owns, directly or indirectly, all of the capital stock or comparable
      equity interests of each Subsidiary free and clear of any Lien and all the
      issued and outstanding shares of capital stock or comparable equity interest
      of
      each Subsidiary are validly issued and are fully paid, non-assessable and free
      of preemptive and similar rights. 

     

    (b)  Organization
      and Qualification.
      Each of
      the Company and the Subsidiaries is an entity duly organized, validly existing
      and in good standing under the laws of the jurisdiction of its incorporation
      or
      organization (as applicable), with the requisite legal 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 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 do 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,
      would not, individually or in the aggregate, have or reasonably be expected
      to
      result in a Material Adverse Effect.

     

    (c)  Authorization;
      Enforcement.
      The
      Company has the requisite corporate authority to enter into and to consummate
      the transactions contemplated by each of the Transaction Documents to which
      it
      is a party and otherwise to carry out its obligations hereunder and thereunder.
      The execution and delivery of each of the Transaction Documents to which it
      is a
      party by the Company and the consummation by it of the transactions contemplated
      hereby and thereby have been duly authorized by all necessary action on the
      part
      of the Company and no further consent or action is required by the Company,
      its
      Board of Directors or its stockholders (except for stockholder approval that
      may
      be required in connection with any of the issuance of the Adjustment Common
      Shares, any Convertible Securities issuable under Section 2.3 (the “Adjustment
      Convertible Securities”),
      any
      Common Shares issuable upon conversion of the Adjustment Convertible Securities
      (the “Adjustment
      Convertible Securities Shares”),
      the
      Parity Warrant and the Parity Warrant Shares). Each of the Transaction Documents
      to which it is a party has been (or upon delivery will be) duly executed by
      the
      Company and is, or when delivered in accordance with the terms hereof, will
      constitute, the valid and binding obligation of the Company enforceable against
      the Company in accordance with its terms, except as may be limited by
      (i) applicable bankruptcy, insolvency, reorganization or other laws of
      general application relating to or affecting the enforcement of creditors rights
      generally, and (ii) the effect of rules of law governing the availability
      of specific performance and other equitable remedies.

     

    (d)  No
      Conflicts.
      The
      execution, delivery and performance of the Transaction Documents to which it
      is
      a party by the Company and the consummation by the Company of the 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,
      (ii) conflict with, or constitute a default (or an event that with notice
      or lapse of time or both would become a default) under, or give to others any
      rights of termination, amendment, acceleration or cancellation (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, except
      to the extent that such conflict, default, termination, amendment, acceleration
      or cancellation right would not reasonably be expected to have a Material
      Adverse Effect, or (iii) 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, assuming the accuracy of the representations and warranties of
      ABRD
      set forth in Section 3.2 hereof, federal and state securities laws and
      regulations and, assuming in the case of the Adjustment Common Shares, the
      Adjustment Convertible Securities, the Parity Warrant and the Parity Warrant
      Shares the receipt of all required stockholder and regulatory approval, the
      rules and regulations of any self-regulatory organization to which the Company
      or its securities are subject, including all applicable Trading Markets), or
      by
      which any property or asset of the Company or a Subsidiary is bound or affected,
      except to the extent that such violation would not reasonably be expected to
      have a Material Adverse Effect.

     

    (e)  The
      Purchased Securities.
      The
      Closing Date Shares
      (including the No Qualified Transaction Warrant Shares issuable upon the
      exercise of the No Qualified Transaction Warrant, if any) are duly authorized
      and, when issued and paid for in accordance with the Transaction Documents,
      will
      be duly and validly issued, fully paid and nonassessable, free and clear of
      all
      Liens except for restrictions on transfer imposed by applicable federal and
      state securities laws and the provisions of Section 4.7 hereof, and will not
      be
      subject to preemptive or similar rights of stockholders (other than those
      imposed by ABRD). The Adjustment Common Shares, the Adjustment Convertible
      Securities, the Adjustment Convertible Securities Shares issuable upon
      conversion of the Adjustment Convertible Securities, and the Parity Warrant
      Shares issuable upon exercise of the Parity Warrant Shares, if any, assuming
      the
      receipt of all required stockholder and regulatory approvals, are duly
      authorized and, when issued and paid for in accordance with the Transaction
      Documents, will be duly and validly issued, fully paid and nonassessable, free
      and clear of all Liens except for restrictions on transfer imposed by applicable
      federal and state securities laws and the provisions of Section 4.7 hereof,
      and
      will not be subject to preemptive or similar rights of stockholders (other
      than
      those imposed by ABRD). The Company shall maintain a reserve from its duly
      authorized shares of Common Stock the maximum number of shares of Common Stock
      issuable upon exercise of the Adjustment Convertible Securities and/or
      Extraordinary Circumstance Warrant, if any. The offer, issuance and sale to
      ABRD
      pursuant to the Agreement of the Closing Date Shares and the other Purchased
      Securities, if any, are
      exempt from the registration requirements of the Securities Act.

     

    (f)  Capitalization.
      The
      aggregate number of shares and type of all authorized, issued and outstanding
      classes of capital stock, options and other Securities of the Company (whether
      or not presently convertible into or exercisable or exchangeable for shares
      of
      capital stock of the Company) as of September 30, 2006 is set forth in
Schedule 3.1(f)
      hereto.
      All outstanding shares of capital stock are duly authorized, validly issued,
      fully paid and nonassessable and have been issued in compliance in all material
      respects with all applicable securities laws. Except as disclosed in
Schedule 3.1(f)
      hereto,
      the Company did not have outstanding at September 30, 2006 any other options,
      warrants, script 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 entered into any agreement giving any Person
      any right to subscribe for or acquire, any shares of Common Stock, or securities
      or rights convertible or exchangeable into shares of Common Stock. Except as
      set
      forth on Schedule
      3.1(f)
      hereto,
      and except for customary adjustments as a result of stock dividends, stock
      splits, combinations of shares, reorganizations, recapitalizations,
      reclassifications or other similar events, there are no anti-dilution or price
      adjustment provisions contained in any security issued by the Company (or in
      any
      agreement providing rights to security holders) and the issuance and sale of
      the
      Purchased Securities will not obligate the Company to issue shares of Common
      Stock or other securities to any Person (other than ABRD) and will not result
      in
      a right of any holder of securities to adjust the exercise, conversion, exchange
      or reset price under such securities. To the knowledge of the Company, except
      as
      disclosed in the SEC Reports and any Schedules filed with the SEC pursuant
      to
      Rule 13d-1 of the Exchange Act by reporting persons or in Schedule
      3.1(f)
      hereto,
      no Person or group of related Persons beneficially owns (as determined pursuant
      to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement
      with or by obligation binding upon the Company, beneficial ownership of in
      excess of 5% of the outstanding Common Stock.

     

    (g)  SEC
      Reports; Financial Statements.
      The
      Company has filed all reports required to be filed by it under the Exchange
      Act,
      including pursuant to Section 13(a)
      or
15(d)
      thereof, for the 12 months preceding the date hereof 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 and has filed all reports
      required to be filed by it under the Exchange Act, including pursuant to Section
      13(a) or 15(d) thereof, for the two years preceding the date hereof. Such
      reports required to be filed by the Company under the Exchange Act, including
      pursuant to Section 13(a) or 15(d) thereof, together with any materials filed
      or
      furnished by the Company under the Exchange Act, whether or not any such reports
      were required being collectively referred to herein as the “SEC
      Reports”
and,
      together with this Agreement and the Schedules to this Agreement, the
“Disclosure
      Materials”.
      As of
      their respective dates, the SEC Reports filed by the Company complied in all
      material respects with the requirements of the Securities Act and the Exchange
      Act and the rules and regulations of the SEC promulgated thereunder, and none
      of
      the SEC Reports, when filed by the Company, 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 SEC 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, the notes
      thereto and except that unaudited financial statements may not contain all
      footnotes required by GAAP or may be condensed or summary statements, and fairly
      present in all material respects the consolidated 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, year-end audit adjustments. All
      material agreements to which the Company or any Subsidiary is a party or to
      which the property or assets of the Company or any Subsidiary are subject are
      included as part of or identified in the SEC Reports, to the extent such
      agreements are required to be included or identified pursuant to the rules
      and
      regulations of the SEC.

     

    (h)  Since
      the
      date of the latest audited financial statements included within the SEC Reports,
      except as disclosed in the SEC Reports or in Schedule
      3.1(h)
      hereto,
      (i) there has been no event, occurrence or development that, individually
      or in the aggregate, has had or that would result in a Material Adverse Effect,
      (ii) the Company has not incurred any material liabilities 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 required
      to be disclosed in filings made with the SEC, (iii) the Company has not
      altered its method of accounting or changed its auditors, except as disclosed
      in
      its SEC Reports, (iv) the Company has not declared or made any dividend or
      distribution of cash or other property to its stockholders, in their capacities
      as such, or purchased, redeemed or made any agreements to purchase or redeem
      any
      shares of its capital stock (except for repurchases by the Company of shares
      of
      capital stock held by employees, officers, directors, or consultants pursuant
      to
      an option of the Company to repurchase such shares upon the termination of
      employment or services), (v) the Company has not issued any Securities or
      Common Stock Equivalents to any officer, director or Affiliate, except pursuant
      to existing Company stock-based plans and Convertibles Securities acquired
      and
      exercised by the Chief Executive Officer of the Company, and (vi) other than
      in
      the ordinary course of business, the Company has not sold, leased, licensed,
      transferred or assigned any of its assets. The Company has not taken any steps
      to seek protection pursuant to any bankruptcy law nor does the Company have
      any
      knowledge or reason to believe that its creditors intend to initiate involuntary
      bankruptcy proceedings or any actual knowledge of any fact which would
      reasonably lead a creditor to do so. The Company is not as of the date hereof,
      and after giving effect to the transactions contemplated hereby to occur at
      the
      applicable Closing, will not be Insolvent (as defined below). For purposes
      of
      this Section 3.1(h), “Insolvent” means (i) the present fair saleable value of
      the Company's assets is less than the amount required to pay the Company's
      total
      Indebtedness (as defined in Section 3.1(aa)), (ii) the Company is unable to
      pay
      its debts and liabilities, subordinated, contingent or otherwise, as such debts
      and liabilities become absolute and matured, or (iii) the Company intends to
      incur or believes that it will incur debts that would be beyond its ability
      to
      pay as such debts mature.

     

    (i)  Absence
      of Litigation.
      Except
      as disclosed in the SEC Reports, there is no action, suit, claim, or proceeding,
      or, to the Company's knowledge, inquiry or investigation, before or by any
      court, public board, government agency, self-regulatory organization or body
      pending or, to the knowledge of the Company, threatened against or affecting
      the
      Company or any of its Subsidiaries that could, individually or in the aggregate,
      have a Material Adverse Effect.

     

    (j)  Compliance.
      Except
      as described in Schedule
      3.1(j),
      neither
      the Company nor any Subsidiary, except in each case as would not, individually
      or in the aggregate, reasonably be expected to have or result in a Material
      Adverse Effect, (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 written 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) is or has been in violation of
      any statute, rule or regulation of any governmental authority.  

     

    (k)  Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title to all real property
      owned and used in the conduct of their business as it is presently conducted,
      and the Company and the Subsidiaries and good and marketable title in all
      personal property owned and used in the conduct of their business as it is
      presently conducted, in each case, other than the security interest described
      in
Schedule
      3.1(aa),
      free
      and clear of all Liens, except for Liens that do not, individually or in the
      aggregate, have or result in a Material Adverse Effect. Any real property and
      facilities held under lease by the Company and the Subsidiaries are held by
      them
      under valid, subsisting and enforceable leases of which the Company and the
      Subsidiaries are in material compliance.

     

    (l)  No
      General Solicitation; Advisor.
      Neither
      the Company, nor any of its Affiliates, nor any Person acting on its or their
      behalf, has engaged in any form of general solicitation or general advertising
      (within the meaning of Regulation D) in connection with the offer or sale
      of the Purchased Securities. The Company shall be responsible for the payment
      of
      any placement agent’s fees, financial advisory fees, or brokers’ commission
      (other than for Persons engaged by or on behalf of ABRD or its investment
      advisor) relating to or arising out of the issuance of the Purchased Securities
      pursuant to this Agreement. The Company shall pay, and hold ABRD harmless
      against, any liability, loss or expense (including, without limitation,
      reasonable attorney's fees and out-of-pocket expenses) arising in connection
      with any such claim for fees arising out of the issuance of the Purchased
      Securities pursuant to this Agreement. The Company acknowledges that is has
      engaged Cowen and Company, LLC as its exclusive advisor (the “Advisor”)
      in
      connection with the sale of the Purchased Securities. Other than the Advisor,
      the Company has not engaged any advisor or other agent in connection with the
      sale of the Purchased Securities.

     

    (m)   Private
      Placement.
      Neither
      the Company nor any of its Affiliates nor, any Person acting on the Company’s
      behalf has, directly or indirectly, at any time within the past six months,
      made
      any offer or sale of any security or solicitation of any offer to buy any
      security under circumstances that would (i) eliminate the availability of
      the exemption from registration under Regulation D under the Securities Act
      in connection with the offer and sale by the Company of the Purchased Securities
      as contemplated hereby or (ii) cause the offering of the Purchased
      Securities pursuant to the Transaction Documents to be integrated with prior
      offerings by the Company for purposes of any applicable law, regulation or
      stockholder approval provisions, including, without limitation, under the rules
      and regulations of any Trading Market. The Company is not required to be
      registered as, and is not an Affiliate of, an “investment company” within the
      meaning of the Investment Company Act of 1940, as amended. The Company is not
      required to be registered as a United States real property holding corporation
      within the meaning of the Foreign Investment in Real Property Tax Act of
      1980.

     

    (n)  Form
      S-3 Eligibility.
      The
      Company is eligible to register the Common Shares and
      the
      Warrant Shares for resale
      by ABRD
      using Form S-3 promulgated under the Securities Act.

     

    (o)  Listing
      and Maintenance Requirements.
      The
      Company has not, in the twelve months preceding the date hereof, received notice
      (written or oral) 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
      in compliance with all such listing and maintenance requirements.

     

    (p)  Registration
      Rights.
      Except
      as described in Schedule
      3.1(p),
      the
      Company has not granted or agreed to grant to any Person any rights (including
      “piggy-back” registration rights) to have any securities of the Company
      registered with the SEC or any other governmental authority that have not been
      satisfied or waived.

     

    (q)  Application
      of Takeover Protections.
      There
      is no control share acquisition, business combination, poison pill (including
      any distribution under a rights agreement) or other similar anti-takeover
      provision under the Company’s charter documents or the laws of its state of
      incorporation that is or could become applicable to any of ABRD as a result
      of
      ABRD 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 Purchased Securities and ABRD’ ownership of the
      Purchased Securities.

     

    (r)  Disclosure.
      All
      disclosure provided by the Company to ABRD regarding the Company, its business
      and the transactions contemplated hereby, including the Schedules to this
      Agreement, furnished by or on the behalf of the Company are true and correct
      in
      all material respects and do not contain any untrue statement of a material
      fact
      or omit to state any material fact necessary in order to make the statements
      made therein, in the light of the circumstances under which they were made,
      not
      misleading. To the Company's knowledge, except for the transactions contemplated
      by this Agreement, no event or circumstance has occurred or information exists
      with respect to the Company or any of its Subsidiaries or its or their business,
      properties, operations or financial conditions, which, under applicable law,
      rule or regulation, requires public disclosure or announcement by the Company
      but which has not been so publicly announced or disclosed. 

     

    (s)  THERE
      IS NO SUBSECTION (s).
      

     

    (t)  Patents
      and Trademarks.
      The
      Company and its Subsidiaries own all right, title and interest in and to, or
      possess adequate rights or licenses to use, all registered and unregistered
      trademarks, trade names, service marks, service mark registrations, service
      names, patents, patent rights, copyrights, inventions, licenses, approvals,
      governmental authorizations, applications for registrations of copyrights and
      trademarks, brand names, discoveries, formulas, technical assistance, trade
      secrets and other intellectual property rights (“Intellectual
      Property Rights”)
      necessary to conduct their respective businesses
      as now
      conducted. Except as set forth in Schedule 3.1(t), none of the Company's
      Intellectual Property Rights have expired or terminated, or are expected to
      expire or terminate, within three years from the date of this Agreement. The
      Company does not have any knowledge of any infringement on or misappropriation
      by the Company or its Subsidiaries of Intellectual Property Rights of others
      or
      the infringement on or misappropriation by others of the Intellectual Property
      Rights of the Company. Except as disclosed in the SEC Reports, there is no
      claim, action or proceeding being made or brought, or to the knowledge of the
      Company, being threatened, against the Company or its Subsidiaries regarding
      its
      Intellectual Property Rights. Except
      for anti-pirating and confidentiality obligations of certain employees to their
      former employers pre-dating their commencement of employment by the Company
      or
      any of its Subsidiaries, no employee of the Company or any of its Subsidiaries
      is obligated under any contract (including licenses, covenants or legal
      commitments or any nature) or any agreement, or subject to any judgment, decree
      or order of any court or administrative agency, that would interfere with the
      use of his or her best efforts to promote the interests of the Company or any
      of
      its Subsidiaries in the operation of the Company’s business as conducted on the
      date hereof or that would conflict with the operation of the Company’s business
      as conducted on the date hereof. Title and ownership of any and all rights
      with
      respect to any inventions of the Company’s and its Subsidiaries’ employees
      during employment vests in the Company or its Subsidiaries, as applicable,
      (except to the extent that applicable local law provides otherwise). Except
      for
      patent applications filed by the Company since June 30, 2006, in respect of
      which the Company is currently in the process of securing all necessary
      assignments, all inventors named in patent applications or in issued patents
      have entered into agreements with the Company or a Subsidiary, as applicable,
      assigning the Company or any such Subsidiary, as applicable, all of the
      inventors’ right, title and interest in and to such patent application(s) and
      patents describing and claiming their inventions(s). All Persons involved in
      the
      conception, making, development and work related to the Company’s Intellectual
      Property Rights have entered into agreements with the Company or a Subsidiary,
      as applicable, assigning to the Company or any such Subsidiary, to the extent
      deemed necessary or appropriate by the Company, all of such Persons’ right,
      title and interest in and to the Company’s Intellectual Property Rights. All
      licenses or other material rights or permission to use any third party
      intellectual property used by the Company or any Subsidiary in the operation
      of
      the business have been obtained by the Company or any such Subsidiary, as
      applicable, and all license fees, royalties and any other amounts (if any)
      due
      and payable under such license agreements have been paid. 

     

    (u)  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 and location in which the Company and the
      Subsidiaries are engaged. 

     

    (v)  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 (“Material
      Permits”),
      except
      where the failure to possess such permits does not, individually or in the
      aggregate, have or reasonably be expected to result in a Material Adverse
      Effect, and neither the Company nor any Subsidiary has received any written
      notice of proceedings relating to the revocation or modification of any Material
      Permit.

     

    (w)  Transactions
      With Affiliates and Employees.
      Except
      as set forth or incorporated by reference in the Company’s SEC Reports, none of
      the officers, directors or employees of the Company is presently a party to
      any
      transaction that would be required to be reported on Form 10-KSB with the
      Company or any of its Subsidiaries (other than for ordinary course services
      as
      employees, officers or directors), including any contract, agreement or other
      arrangement providing for the furnishing of services to or by, providing for
      rental of real or personal property to or from, or otherwise requiring payments
      to or from any such officer, director or employee or, to the Company's
      knowledge, any corporation, partnership, trust or other entity in which any
      such
      officer, director, or employee has a substantial interest or is an officer,
      director, trustee or partner.

     

    (x)  Internal
      Accounting Controls.
      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 generally accepted accounting principles
      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.

     

    (y)  Sarbanes-Oxley
      Act.
      The
      Company is in compliance in all material respects with applicable requirements
      of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations
      promulgated by the SEC thereunder, except where such noncompliance would not
      have, individually or in the aggregate, a Material Adverse Effect.

     

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

     

    (aa)  Indebtedness.
      Except
      as disclosed in Schedule 3.1(aa) or the SEC Reports, neither the Company nor
      any
      of its Subsidiaries (i) has any outstanding Indebtedness (as defined below),
      (ii) is in violation of any term of or in default under any contract, agreement
      or instrument relating to any Indebtedness, except where such violations and
      defaults would not result, individually or in the aggregate, in a Material
      Adverse Effect, or (iii) is a party to any contract, agreement or instrument
      relating to any Indebtedness, the performance of which, in the judgment of
      the
      Company's officers, has or is expected to have a Material Adverse Effect.
      Schedule 3.1(aa) provides a detailed description of the material terms of any
      such outstanding Indebtedness. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication (A) all
      indebtedness for borrowed money, (B) all obligations issued, undertaken or
      assumed as the deferred purchase price of property or services (other than
      trade
      payables entered into in the ordinary course of business), (C) all reimbursement
      or payment obligations with respect to letters of credit, surety bonds and
      other
      similar instruments, (D) all obligations evidenced by notes, bonds, debentures
      or similar instruments, including obligations so evidenced incurred in
      connection with the acquisition of property, assets or businesses, (E) all
      indebtedness created or arising under any conditional sale or other title
      retention agreement, or incurred as financing, in either case with respect
      to
      any property or assets acquired with the proceeds of such indebtedness (even
      though the rights and remedies of the seller or bank under such agreement in
      the
      event of default are limited to repossession or sale of such property), (F)
      all
      monetary obligations under any leasing or similar arrangement which, in
      connection with generally accepted accounting principles, consistently applied
      for the periods covered thereby, is classified as a capital lease, (G) all
      indebtedness referred to in clauses (A) through (F) above secured by (or for
      which the holder of such Indebtedness has an existing right, contingent or
      otherwise, to be secured by) any mortgage, lien, pledge, charge, security
      interest or other encumbrance upon or in any property or assets (including
      accounts and contract rights) owned by any Person, even though the Person which
      owns such assets or property has not assumed or become liable for the payment
      of
      such indebtedness, and (H) all Contingent Obligations in respect of indebtedness
      or obligations of others of the kinds referred to in clauses (A) through (G)
      above; and (y) “Contingent Obligation” means, as to any Person, any direct or
      indirect liability, contingent or otherwise, of that Person with respect to
      any
      indebtedness, lease, dividend or other obligation of another Person if the
      primary purpose or intent of the Person incurring such liability, or the primary
      effect thereof, is to provide assurance to the obligee of such liability that
      such liability will be paid or discharged, or that any agreements relating
      thereto will be complied with, or that the holders of such liability will be
      protected (in whole or in part) against loss with respect thereto.

     

    (bb)  Employee
      Relations.
      Neither
      Company nor any of its Subsidiaries is a party to any collective bargaining
      agreement or employs any member of a union. The Company believes that its
      relations with its employees are as disclosed in the SEC Reports. Except as
      disclosed in the SEC Reports, during the period covered by the SEC Reports,
      no
      executive officer of the Company or any of its Subsidiaries (as defined in
      Rule
      501(f) of the 1933 Act) has notified the Company or any such Subsidiary that
      such officer intends to leave the Company or any such Subsidiary or otherwise
      terminate such officer's employment with the Company or any such Subsidiary.
      To
      the knowledge of the Company or any such Subsidiary, no executive officer of
      the
      Company or any of its Subsidiaries is in violation of any material term of
      any
      employment contract, confidentiality, disclosure or proprietary information
      agreement, non-competition agreement, or any other contract or agreement or
      any
      restrictive covenant, and the continued employment of each such executive
      officer does not subject the Company or any such Subsidiary to any liability
      with respect to any of the foregoing matters.

     

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

     

    (dd)  Environmental
      Laws.
      The
      Company and its Subsidiaries (i) have complied and are in compliance in all
      material respects with any and all Environmental Laws (as hereinafter defined),
      (ii) have received all permits, licenses or other approvals required of
      them under applicable Environmental Laws to conduct their respective businesses
      and (iii) are in compliance in all material respects with all terms and
      conditions of any such permit, license or approval where, in each of the
      foregoing clauses (i), (ii) and (iii), the failure to so comply would be
      reasonably expected to have, individually or in the aggregate, a Material
      Adverse Effect. The Company has not received any written notice, report or
      other
      information regarding any actual or alleged violation of Environmental Laws,
      or
      any liabilities or potential liabilities, including any investigatory, remedial
      or corrective obligations, relating to any of them or its facilities. To its
      knowledge, the Company has not treated, stored, disposed of, arranged for or
      permitted the disposal of, transported, handled, or released any substance,
      including any hazardous substance, or owned or operated any property or facility
      in a manner that has given rise or would give rise to any liabilities pursuant
      to any Environmental Laws. With the exception of an above-ground diesel fuel
      storage tank located at the main facility of the Company’s Hong Kong subsidiary
      used for its generator and heating system for its reactors, to the Company’s
      knowledge, no aboveground or underground storage tanks are currently or have
      been located at any real property now or previously owned, leased or otherwise
      used by the Company, and to the Company’s knowledge, no real property owned,
      leased or otherwise used by the Company has been at any time as a gasoline
      service station or any other facility for storing, pumping, dispensing, or
      producing gasoline or other petroleum products or waste. The term “Environmental
      Laws” means all federal, state, local or foreign laws relating to pollution or
      protection of human health or the environment (including, without limitation,
      ambient air, surface water, groundwater, land surface or subsurface strata),
      including, without limitation, laws relating to emissions, discharges, releases
      or threatened releases of chemicals, pollutants, contaminants, or toxic or
      hazardous substances or wastes (collectively, “Hazardous Materials”) into the
      environment, or otherwise relating to the manufacture, processing, distribution,
      use, treatment, storage, disposal, transport or handling of Hazardous Materials,
      as well as all authorizations, codes, decrees, demands or demand letters,
      injunctions, judgments, licenses, notices or notice letters, orders, permits,
      plans or regulations issued, entered, promulgated or approved
      thereunder. 

     

    (ee)  Subsidiary
      Rights.
      The
      Company or one of its Subsidiaries has the unrestricted right to vote, and
      (subject to limitations imposed by applicable law) to receive dividends and
      distributions on, all capital securities of its Subsidiaries as owned by the
      Company or such Subsidiary.

     

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

     

    (gg) 
Employee
      Benefits.
      The
      Company’s SEC Reports contain a true and correct copy of each equity
      compensation plan of the Company. The Company maintains standard and customary
      severance or termination pay, medical, life or other insurance, a 401(k) pension
      plan, sponsored, maintained, or contributed to or required to be contributed
      to
      by the Company or by an trade or business, whether or not incorporated (an
      “ERISA
      Affiliate”),
      that
      together with the Company would be deemed a “single employer” within the meaning
      of Section 4001(b)(1) of the ERISA, for the benefit of any employee or former
      employee of the Company (the “Benefit
      Plans”).
      Each
      of the Benefit Plans has been and is operated and administered in accordance
      with its terms and in material compliance with applicable requirements of the
      Code, ERISA, and other applicable legal requirements and may, in accordance
      with
      its terms, be amended or terminated at any time. Neither the Company nor any
      ERISA Affiliate contributes, is obligated to contribute, or has ever been
      obligated to contribute to a Multiemployer Plans, as such term is defined in
      ERISA. No Benefit Plan is (i) a “defined benefit plan” (within the meaning of
      Section 3(35) of ERISA) or (ii) subject to the minimum funding requirements
      of
      Section 412 of the Code or Part 3 of Title I of ERISA. Other than claims in
      the
      ordinary course for benefits with respect to the Benefit Plans, there are no
      pending, anticipate, or to the Company’s knowledge, threatened claims by or on
      behalf of any employee or beneficiary covered under any Benefit Plan with
      respect to such Benefit Plan and there are no proceedings by a governmental
      entity, pending or, to the Company’s knowledge, threatened with respect to any
      Benefit Plan, or to the Company’s knowledge, any circumstances which might give
      rise to any liability of the Company under any such proceeding.

     

    3.2  Representations
      and Warranties of ABRD.
      ABRD
      hereby represents and warrants to the Company as follows:

     

    (a)  Organization;
      Authority.
      ABRD is
      an entity duly organized, validly existing and in good standing under the laws
      of the jurisdiction of its organization with the requisite corporate,
      partnership or other power and authority to enter into and to consummate the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations hereunder and thereunder. The purchase by ABRD of the
      Purchased Securities hereunder has been duly authorized by all necessary action
      on the part of ABRD. This Agreement and the Transaction Documents to which
      ABRD
      is a party have been duly executed and delivered by ABRD and constitutes the
      valid and binding obligation of ABRD, enforceable against it in accordance
      with
      its terms, except as may be limited by (i) applicable bankruptcy,
      insolvency, reorganization or other laws of general application relating to
      or
      affecting the enforcement of creditors rights generally, and (ii) the
      effect of rules of law governing the availability of specific performance and
      other equitable remedies.

     

    (b)  No
      Public Sale or Distribution.
      ABRD
      is
      (i) acquiring the Common Shares and the Extraordinary Circumstance Warrant,
      if any, and (ii) upon exercise of the Extraordinary Circumstance Warrant,
      if any, will acquire the Extraordinary Circumstance Warrant Shares issuable
      upon
      exercise thereof, in the ordinary course of
      business
      for its own account and not with a view towards, or for resale in connection
      with, the public sale or distribution thereof, except pursuant to sales
      registered under the Securities Act or under an exemption from such registration
      and in compliance with applicable federal and state securities laws, and ABRD
      does not have a present arrangement to effect any distribution of the Purchased
      Securities to or through any Person or entity.

     

    (c)  Investor
      Status.
      At the
      time ABRD was offered the Purchased Securities, it was, and at the date hereof
      it is, an “accredited investor” as defined in Rule 501(a) under the Securities
      Act or a “qualified institutional buyer” as defined in Rule 144A(a) under the
      Securities Act. ABRD is not a registered broker dealer registered under Section
      15(a) of the Exchange Act, or a member of the NASD, Inc. or an entity engaged
      in
      the business of being a broker dealer. Except as otherwise disclosed in writing
      to the Company on Exhibit B-2 (attached hereto) on or prior to the date of
      this
      Agreement, ABRD is not affiliated with any broker dealer registered under
      Section 15(a) of the Exchange Act, or a member of the NASD, Inc. or an entity
      engaged in the business of being a broker dealer.

     

    (d)  Experience
      of ABRD.
      ABRD,
      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
      Purchased Securities, and has so evaluated the merits and risks of such
      investment. ABRD understands that it must bear the economic risk of this
      investment in the Purchased Securities indefinitely, and is able to bear such
      risk and is able to afford a complete loss of such investment.

     

    (e)  Access
      to Information.
      ABRD
      acknowledges that it has reviewed the Disclosure Materials and has been
      afforded: (i) the opportunity to ask such questions as it has deemed
      necessary of, and to receive answers from, representatives of the Company
      concerning the terms and conditions of the offering of the Purchased Securities
      and the merits and risks of investing in the Purchased Securities;
      (ii) access to information about the Company and the Subsidiaries and their
      respective financial condition, results of operations, business, properties,
      management and prospects sufficient to enable it to evaluate its investment,
      subject to the terms of a confidentiality agreement heretofore entered into
      by
      the Company and ABRD (the “Confidentiality
      Agreement”);
      and
      (iii) the opportunity to obtain such additional information that the
      Company possesses or can acquire without unreasonable effort or expense that
      is
      necessary to make an informed investment decision with respect to the
      investment. Neither such inquiries nor any other investigation conducted by
      or
      on behalf of ABRD or its representatives or counsel shall modify, amend or
      affect ABRD’s right to rely on the truth, accuracy and completeness of the
      Disclosure Materials and the Company’s representations and warranties contained
      in the Transaction Documents. ABRD acknowledges that it has been afforded full
      and complete access to copies of the SEC Reports.

     

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

     

    (g)  No
      Conflicts.
      The
      execution, delivery and performance by ABRD of this Agreement and the other
      Transaction Documents to which ABRD is a party and the consummation by ABRD
      of
      the transactions contemplated hereby and thereby will not (i) result in a
      violation of the organizational documents of ABRD or (ii) conflict with, or
      constitute a default (or an event which with notice or lapse of time or both
      would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation of, any agreement, indenture or
      instrument to which ABRD is a party, or (iii) result in a violation of any
      law, rule, regulation, order, judgment or decree (including federal and state
      securities laws) applicable to ABRD, except in the case of clauses (ii) and
      (iii) above, for such that are not material and do not otherwise affect the
      ability of ABRD to consummate the transactions contemplated hereby or perform
      its obligations under the R&D Agreement.

     

    (h)  Illegal
      Transactions.
      Neither
      ABRD, directly or indirectly, nor any Person acting on behalf of or pursuant
      to
      any understanding with ABRD, has engaged in any transactions in the securities
      of the Company (including, without limitation, any Short Sales involving any
      of
      the Company’s securities) since the time that ABRD was first contacted by the
      Company regarding an investment in the Company. ABRD covenants that, except
      as
      permitted by the provisions of Section 4.7 hereof, neither it nor any Person
      acting on its behalf or pursuant to any understanding with ABRD will engage,
      directly or indirectly, in any transactions in the securities of the Company
      (including Short Sales). “Short Sales” include, without limitation, all “short
      sales” as defined in Rule 200 promulgated under Regulation SHO under the
      Exchange Act and all types of direct and indirect stock pledges, forward sale
      contracts, options, puts, calls, short sales, swaps, derivatives and similar
      arrangements (including on a total return basis), and sales and other
      transactions through non-U.S. broker-dealers or foreign regulated
      brokers.

     

    (i) Restricted
      Securities. ABRD
      understands that the Purchased Securities are characterized as “restricted
      securities” under the U.S. federal securities laws inasmuch as they are being
      acquired from the Company in a transaction not involving a public offering
      and
      that under such laws and applicable regulations such securities may be resold
      without registration under the Securities Act only in certain limited
      circumstances.

     

    (j) Legends. It
      is
      understood that certificates evidencing such Purchased Securities shall bear
      the
      legend set forth in Section 4.1(b)

     

    (k) No
      Legal, Tax or Investment Advice.
      

     

    ABRD
      understands that nothing in this Agreement or any other materials presented
      by
      or on behalf of the Company to ABRD in connection with the purchase of the
      Purchased Securities constitutes legal, tax or investment advice. ABRD has
      consulted such legal, tax and investment advisors as it, in its sole discretion,
      has deemed necessary or appropriate in con-nection with its purchase of the
      Purchased Securities. ABRD understands that the Advisor has acted solely as
      the
      agent of the Company in this placement of the Purchased Securities, and that
      the
      Advisor makes no representation or warranty with regard to the merits of this
      transaction or as to the accuracy of any information ABRD may have received
      in
      connection therewith. ABRD acknowledges that it has not relied on any
      information or advice furnished by or on behalf of the Advisor.

     

    ARTICLE
      IV  

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1  Transfer
      Restrictions.

     

    (a)  ABRD
      covenants that the Purchased Securities will only be disposed of pursuant to
      an
      effective registration statement under, and in compliance with the requirements
      of, the Securities Act or pursuant to an available exemption from the
      registration requirements of the Securities Act, and in compliance with any
      applicable state securities laws. In connection with any transfer of Purchased
      Securities other than pursuant to an effective registration statement or to
      the
      Company, or pursuant to Rule 144, the Company may require the transferor to
      provide to the Company an opinion of counsel reasonably satisfactory 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 under the Securities Act. Notwithstanding the foregoing, the
      Company hereby consents to and agrees to register on the books of the Company
      and with its transfer agent, without any such legal opinion, except to the
      extent that the transfer agent requests such legal opinion, any transfer of
      Purchased Securities by ABRD to an Affiliate of ABRD, provided that the
      transferee certifies to the Company that it is an “accredited investor” as
      defined in Rule 501(a) under the Securities Act and provided that such Affiliate
      does not request any removal of any existing legends on any certificate
      evidencing the Purchased Securities.

     

    (b)  ABRD,
      on
      behalf of itself and any transferee contemplated by the provisions of subsection
      (a), above, agrees to the imprinting of the following legend on any certificate
      evidencing any of the Purchased Securities: 

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
      OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      OR
      ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR
      SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
      ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
      TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
      APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE
      FOREGOING, THESE SECURITIES ARE SUBJECT TO CONTRACTUAL RESTRICTIONS ON
      ALIENATION THAT PRECLUDE ALL OR ANY PORTION OF THEM FROM BEING OFFERED, SOLD,
      HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL OCTOBER 26, 2007.

     

    4.2  Furnishing
      of Information.
      Until
      the date that ABRD may sell
      all of
      the Purchased Securities under Rule 144(k) of the Securities Act (or any
      successor provision), the Company covenants to use its Best Efforts 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. 

     

    4.3  Integration.
      The
      Company shall not, and shall use its Best Efforts to ensure that no Affiliate
      thereof shall, 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 Purchased
      Securities in a manner that would require the registration under the Securities
      Act of the sale of the Purchased Securities to ABRD or that would be integrated
      with the offer or sale of the Purchased Securities for purposes of the rules
      and
      regulations of any Trading Market.

     

    4.4  Reservation
      of Securities.
      The
      Company shall maintain a reserve from its duly authorized shares of Common
      Stock
      for issuance pursuant to the Transaction Documents in such amount as may be
      required to fulfill its obligations to issue such Common Shares under the
      Transaction Documents. In the event that at any time the then authorized shares
      of Common Stock are insufficient for the Company to satisfy its obligations
      to
      issue such Shares under the Transaction Documents, the Company shall promptly
      take such actions as may be required to increase the number of authorized
      shares.

     

    4.5  Securities
      Laws Disclosure; Publicity.
      The
      Company shall, on or before 8:30 a.m., New York time, on the first Trading
      Day
      following execution of this Agreement, issue a press release reasonably
      acceptable to ABRD disclosing all material terms of the transactions
      contemplated hereby. Within four (4) Business Days following the Agreement
      Date,
      the Company shall file a Current Report on Form 8-K with the SEC (the
“8-K
      Filing”)
      describing the terms of the transactions contemplated by the Transaction
      Documents, provided that the Company shall, at its election, make a confidential
      treatment request to the SEC in connection with the R&D Agreement, and in
      any event timely file copies of the Agreement (including as exhibits) as
      required by applicable SEC rules and regulations. 

     

    4.6  Use
      of
      Proceeds.
      The
      Company shall use the net proceeds from the sale of the Purchased Securities
      to
      fund its wholly-owned subsidiary, Dyadic International (USA), Inc.
      (“Dyadic-Florida”)
      with
      funds adequate to enable Dyadic-Florida to perform foundational and applications
      research in the cellulosic ethanol field (the “Field
      of Research”),
      and
      references in this Section 4.6 to the Company shall mean and include
      Dyadic-Florida, as one and the same corporation with the Company’s express
      agreement that it jointly and severally unconditionally guarantees to ABRD
      Dyadic-Florida’s punctual payment and performance of its obligations to ABRD
      under the R&D Agreement. The Company hereby covenants to ABRD that during
      the R&D Spend Measurement Period (as such term is defined in the R&D
      Agreement), whether related to the Company’s performance of its obligations
      under the R&D Agreement, or its performance of foundational research (but
      not applications research) for its own account or for the benefit of itself
      and
      any other Person, the Company will spend not less than $10,000,000 on the
      conduct of research, development and related activities associated therewith
      in
      the Field of Research (collectively, “Applicable
      R&D Spend”),
      including but not limited to, by way of illustration, and not in limitation:
      (i)
      the employment of scientific and non-scientific personnel to perform such
      activities; (ii) the engagement of consultants and other independent contractors
      to perform such activities for the Company’s benefit in whole or in part; (iii)
      the in-licensing of relevant technologies; and (iv) the purchase or lease of
      necessary equipment, materials and supplies for use in connection therewith,
      provided that in calculating the amount of the Company’s Applicable R&D
      Spend, each full-time equivalent scientist employed by the Company in the
      conduct of research, development and related activities associated therewith
      in
      the Field of Research, the Company shall be deemed to have incurred $250,000
      of
      Applicable R&D Spend for each year during the R&D Spend Measurement
      Period such scientist is so employed, pro-rated for any partial year. The
      Company’s obligations to make Applicable R&D Spend hereunder shall
      permanently terminate and this Section 4.6 shall be null and void and of no
      force and effect upon the earlier of (x) the Program Completion Date (as such
      term is defined in the R&D Agreement) and (y) the date on which the R&D
      Agreement is terminated by the Company in accordance with the terms and
      conditions of Sections 9.2 or 9.3 of the R&D Agreement. For the avoidance of
      doubt, the termination of the Company’s obligations hereunder to make Applicable
      R&D Spend shall be in addition to, and in no way in abrogation of, any other
      rights and remedies available to the Company under the R&D Agreement.

     

    (a) Within
      one hundred twenty (120) days following the close of each calendar year
      beginning or ending within the R&D Spend Measurement Period, the Company’s
      Chief Financial Officer shall furnish ABRD with a written report (the
“Annual
      R&D Spend Certificate”)
      certifying the amount of the Applicable R&D Spend made by the Company in the
      year then ended and the cumulative amount of the Applicable R&D Spend made
      by the Company since the Closing Date; provided that representatives of ABRD,
      upon reasonable advance notice and at ABRD’s expense, shall have the right to
      have an independent accounting firm review the books and records of the Company
      upon the condition that such independent accounting firm execute and deliver
      to
      the Company a confidentiality agreement in form and substance reasonably
      acceptable to the Company’s legal counsel, to verify the accuracy of the
      calculations set forth in the CFO’s Annual R&D Spend Certificate, further
      provided that if such examination shall disclose a more than 5% negative
      variance between the amount of the Applicable R&D Spend for the applicable
      year, the Company shall pay all of the expenses of such independent accounting
      firm.

     

    (b) The
      Company hereby covenants and agrees that if the Company breaches its covenant
      to
      ABRD to achieve an aggregate cumulative Applicable R&D Spend of not less
      than $10,000,000.00 on or before the close of the R&D Spend Measurement
      Period (the amount by which $10,000,000 exceeds the actual deemed Applicable
      R&D Spend made by the Company within that period of time being hereinafter
      referred to as the “Spending
      Deficit”),
      then
      in that event, and in no way in abrogation of the rights of ABRD under the
      R&D Agreement and without regard to the consequences to the Company fixed by
      the applicable provisions of the R&D Agreement, the Company shall, at ABRD’s
      election, within ten (10) days following the date of the determination that
      the
      Company had a Spending Deficit, either (i) remit to ABRD a cash amount equal
      to
      the “Adjusted Spending Deficit Amount” (as that term is hereinafter defined) or
      (ii) issue to ABRD a number of Common Shares equal to the quotient obtained
      by
      dividing (x) the Adjusted Spending Deficit Amount by (y) the greater of (A)
      the
      per Common Share price paid by ABRD for the Purchased Shares or (B) the Closing
      Bid Price on the last Trading Day in the R&D Spend Measurement Period. As
      used herein, the term “Adjusted
      Spending Deficit Amount”
means:
      (A) if ABRD has made not disposition of any of the Purchased Shares, the
      Spending Deficit; and (B) if ABRD has made a disposition of any of the Purchased
      Shares (and Extraordinary Circumstance Warrant Shares, if any), an amount (but
      less than zero) equal to (x) the Spending Deficit minus (y) the net profit
      derived by ABRD from all dispositions of Purchased Shares (and Extraordinary
      Circumstance Warrant Shares, if any) prior to the date of the expiration of
      the
      R&D Spend Measurement Period. For the avoidance of doubt, in addition to the
      foregoing remedy, ABRD also shall be granted a license under Section 10.5 of
      the
      R&D Agreement.

     

    4.7  Certain
      Agreements of ABRD.
      ABRD
      hereby agrees as follows:

     

    (a) ABRD
      agrees that it shall maintain exclusive beneficial ownership (as determined
      in
      accordance with Rule 13d-3 of the Exchange Act) of, as well as an exclusive
      pecuniary interest in, the Purchased Securities for the one (1) year period
      following the Closing Date (the “Lock-Up
      Period”).

    

    (b) Without
      the prior written consent of the Company, for a period of two (2) years
      following the Closing Date, neither ABRD nor any of ABRD’s agents, nor any other
      Person acting on ABRD’s behalf or any of their behalf or in concert with ABRD or
      any of them (the “ABRD
      Group”),
      shall
      directly or indirectly other than as expressly contemplated by this Agreement,
      acquire, offer or propose to acquire or cause to be acquired by purchase or
      otherwise, any voting Securities of the Company or any direct or indirect rights
      to acquire any voting Securities of the Company or of any successor to or Person
      in control of the Company, with or without the payment of money, that would
      cause the ABRD Group or any member thereof to beneficially own, or have a
      pecuniary interest in, more than fifteen percent (15%) of the Common Stock
      (or
      the voting Securities of any successor to or Person in control of the Company).
      

     

    ARTICLE
      V  

    CONDITIONS

     

    5.1  Conditions
      Precedent to the Obligations of ABRD.
      The
      obligation of ABRD to acquire the Purchased Securities at the Closing is subject
      to the satisfaction or waiver by ABRD, at or before the Closing, of each of
      the
      following conditions:

     

    (a)  Representations
      and Warranties.
      The
      representations and warranties of the Company contained herein shall be true
      and
      correct in all material respects as of the date when made and as of the Closing
      as though made on and as of such date; and

     

    (b)  Performance.
      The
      Company shall have performed, satisfied and complied in all material respects
      with all covenants, agreements and conditions required by the Transaction
      Documents to be performed, satisfied or complied with by it at or prior to
      the
      Closing.

     

    (c) Deliveries.
      The
      Company shall have delivered or caused to be delivered to ABRD the Closing
      deliveries specified in Section 2.5(a).

     

    5.2  Conditions
      Precedent to the Obligations of the Company.
      The
      obligation of the Company to sell the Purchased Securities at the Closing is
      subject to the satisfaction or waiver by the Company, at or before the Closing,
      of each of the following conditions:

     

    (a)  Representations
      and Warranties.
      The
      representations and warranties of ABRD contained herein shall be true and
      correct in all material respects as of the date when made and as of the Closing
      Date as though made on and as of such date; and

     

    (b)  Performance.
      ABRD
      shall have performed, satisfied and complied in all material respects with
      all
      covenants, agreements and conditions required by the Transaction Documents
      to be
      performed, satisfied or complied with by ABRD at or prior to the
      Closing.

     

    (c) Deliveries.
      ABRD
      shall have delivered or caused to be delivered to the Company the Closing
      deliveries specified in Section 2.4(b).

     

    ARTICLE
      VI  

     

    REGISTRATION
      RIGHTS

     

    6.1  Registration
      Statement.

     

    (a)  As
      promptly as possible, and in any event on or prior to the Filing Date, the
      Company shall prepare and file with the SEC a Registration Statement covering
      the resale of all Registrable Securities for an offering to be made on a
      continuous basis pursuant to Rule 415. The Registration Statement shall be
      on
      Form S-3 (except if the Company is not then eligible to register for resale
      the
      Registrable Securities on Form S-3, in which case such registration shall be
      on
      another appropriate form in accordance with the Securities Act and the Exchange
      Act) and shall contain (except if otherwise directed by ABRD or requested by
      the
      SEC) the “Plan of Distribution” in substantially the form attached hereto as
Exhibit D.

     

    (b)  The
      Company shall use its commercially reasonable efforts to cause the Registration
      Statement to be declared effective by the SEC as promptly as possible after
      the
      filing thereof, but in any event prior to the Required Effectiveness Date,
      and
      shall use its Best Efforts to keep the Registration Statement continuously
      effective under the Securities Act until the earlier of the date that all Common
      Shares and Extraordinary Circumstance Warrant Shares, if any, covered by such
      Registration Statement have been sold or can be sold publicly under Rule 144(k)
      (the “Effectiveness
      Period”);
      provided that, upon notification by the SEC that a Registration Statement will
      not be reviewed or is no longer subject to further review and comments, the
      Company shall request acceleration of such Registration Statement within
      five (5) Trading Days after receipt of such notice and request that it
      become effective on 4:00 p.m. New York City time on the Effective
      Date.

     

    (c)  The
      Company shall notify ABRD in writing promptly (and in any event within two
      Trading Days) after receiving notification from the SEC that the Registration
      Statement has been declared effective.

     

    (d)  Should
      an
      Event (as defined below) occur following the expiration of the Lock-Up Period,
      then upon the occurrence of such Event, and on every monthly anniversary thereof
      until the applicable Event is cured, or until such time as the Common Shares
      shall have been disposed of by ABRD or are saleable under Rule 144(k), whichever
      occurs earlier (each a “Cure
      Date”),
      the
      Company shall pay to ABRD an amount in cash, as liquidated damages and not
      as a
      penalty, equal to one percent (1.0%) of (i) the number of Common Shares held
      by
      ABRD as of the date of such Event, multiplied by (ii) the purchase price paid
      by
      ABRD for such Common Shares then held; provided, however, that the total amount
      of payments pursuant to this Section 6.1(d) shall not exceed ten percent
      (10%) of the aggregate purchase price. The payments to which ABRD shall be
      entitled pursuant to this Section 6.1(d)
      are
      referred to herein as “Event
      Payments.”
Any
      Event Payments payable pursuant to the terms hereof shall apply on a pro rated
      basis for any portion of a month prior to the applicable Cure Date. In the
      event
      the Company fails to make Event Payments in a timely manner, such Event Payments
      shall bear interest at the rate of one percent (1.0%) per month (prorated for
      partial months) until paid in full. All pro rated calculations made pursuant
      to
      this paragraph shall be based upon the actual number of days in such pro rated
      month. 

     

    For
      such
      purposes, each of the following shall constitute an “Event”:

     

    (i)  the
      Registration Statement is not filed on or prior to the Filing Date or is not
      declared effective on or prior to the Required Effectiveness Date (in each
      instance other than due to the fault of ABRD); 

     

    (ii)  except
      as
      provided for in Section
      6.1(e)
      (the
“Excluded
      Events”),
      after
      the expiration of the Lock-Up Period, ABRD is not permitted to sell Registrable
      Securities under the Registration Statement (or a subsequent Registration
      Statement filed in replacement thereof) for any reason (other than the fault
      of
      ABRD) for five (5) or more consecutive Trading Days in any ninety (90) Trading
      Day period;

     

    (iii)  except
      as
      a result of the Excluded Events, the Common Stock is not listed or quoted,
      or is
      suspended from trading, on an Eligible Market for a period of ten (10)
      consecutive Trading Days during the Effectiveness Period following the
      expiration of the Lock-Up Period;
      or

     

    (iv)  during
      the Effectiveness Period following the expiration of the Lock-Up Period, except
      as a result of the Excluded Events, the Company fails to have any Shares listed
      on an Eligible Market.

     

    (e)  Notwithstanding
      anything in this Agreement to the contrary, after 60 consecutive Trading Days
      of
      continuous effectiveness of the initial Registration Statement filed and
      declared effective pursuant to this Agreement, the Company may, by written
      notice to ABRD, suspend sales under a Registration Statement after the Effective
      Date thereof and/or require that ABRD immediately cease the sale of shares
      of
      Common Stock pursuant thereto and/or defer the filing of any subsequent
      Registration Statement if the Company is engaged in a material merger,
      acquisition or sale and the Board of Directors determines in good faith, by
      appropriate resolutions, that, as a result of such activity, (A) it would
      be materially detrimental to the Company to maintain a
      Registration Statement at such time or (B) it is in the best interests of
      the Company to suspend sales under such registration at such time. Upon receipt
      of such notice, ABRD shall immediately discontinue any sales of Registrable
      Securities pursuant to such registration until ABRD is advised in writing by
      the
      Company that the current Prospectus or amended Prospectus, as applicable, may
      be
      used. In no event, however, shall this right be exercised to suspend sales
      beyond the period during which (in the good faith determination of the Company’s
      Board of Directors) the failure to require such suspension would be materially
      detrimental to the Company. The Company’s rights under this Section
      6(e)
      may be
      exercised for a period of no more than 20 Trading Days at a time and not more
      than two times in any twelve-month period, without such suspension being
      considered as part of an Event Payment determination. Immediately after the
      end
      of any suspension period under this Section
      6(e),
      the
      Company shall take all necessary actions (including filing any required
      supplemental prospectus) to restore the effectiveness of the applicable
      Registration Statement and the ability of ABRD to publicly resell their
      Registrable Securities pursuant to such effective Registration
      Statement.

     

    6.2  Registration
      Procedures.
      In
      connection with the Company’s registration obligations hereunder, the Company
      shall:

     

    (a)  Not
      less
      than three Trading Days prior to the filing of a Registration Statement or
      any
      related Prospectus or any amendment or supplement thereto, furnish via email
      to
      ABRD copies of all such documents proposed to be filed, which documents (other
      than any document that is incorporated or deemed to be incorporated by reference
      therein) will be subject to the review of ABRD. The Company shall reflect in
      each such document when so filed with the SEC such comments regarding ABRD
      and
      the plan of distribution as ABRD may reasonably and promptly propose no later
      than two Trading Days after ABRD have been so furnished with copies of such
      documents as aforesaid.

     

    (b)   (i) Subject
      to Section
      6.1(e),
      prepare
      and file with the SEC such amendments, including post-effective amendments,
      to
      each Registration Statement and the Prospectus used in connection therewith
      as
      may be necessary to keep the Registration Statement continuously effective,
      as
      to the applicable Registrable Securities for the Effectiveness Period and
      prepare and file with the SEC such additional Registration Statements in order
      to register for resale under the Securities Act all of the Registrable
      Securities; (ii) cause the related Prospectus to be amended or supplemented
      by any required Prospectus supplement, and as so supplemented or amended to
      be
      filed pursuant to Rule 424; (iii) respond as promptly as reasonably
      possible, and in any event within 12 Trading Days (except to the extent that
      the
      Company reasonably requires additional time to respond to accounting comments),
      to any comments received from the SEC with respect to the Registration Statement
      or any amendment thereto; and (iv) comply in all material respects with the
      provisions of the Securities Act and the Exchange Act with respect to the
      disposition of all Registrable Securities covered by the Registration Statement
      during the applicable period in accordance with the intended methods of
      disposition by ABRD thereof set forth in the Registration Statement as so
      amended or in such Prospectus as so supplemented.

     

    (c)  Notify
      ABRD as promptly as reasonably possible, and (if requested by ABRD confirm
      such
      notice in writing no later than two Trading Days thereafter, of any of the
      following events: (i) the SEC notifies the Company whether there will be a
“review” of any Registration Statement; (ii) the SEC comments in writing on
      any Registration Statement; (iii) any Registration Statement or any
      post-effective amendment is declared effective; (iv) the SEC or any other
      Federal or state governmental authority requests any amendment or supplement
      to
      any Registration Statement or Prospectus or requests additional information
      related thereto; (v) the SEC issues any stop order suspending the
      effectiveness of any Registration Statement or initiates any Proceedings for
      that purpose; (vi) the Company receives notice of any suspension of the
      qualification or exemption from qualification of any Registrable Securities
      for
      sale in any jurisdiction, or the initiation or threat of any Proceeding for
      such
      purpose; or (vii) the financial statements included in any Registration
      Statement become ineligible for inclusion therein or any Registration Statement
      or Prospectus or other document contains any untrue statement of a material
      fact
      or omits to state any material fact required to be stated therein or necessary
      to make the statements therein, in the light of the circumstances under which
      they were made, not misleading.

     

    (d)  Use
      its
      Best Efforts to avoid the issuance of or, if issued, obtain the withdrawal
      of
      (i) any order suspending the effectiveness of any Registration Statement,
      or (ii) any suspension of the qualification (or exemption from
      qualification) of any of the Registrable Securities for sale in any
      jurisdiction, as soon as possible.

     

    (e)  If
      requested by ABRD, provide ABRD, without charge, at least one conformed copy
      of
      each Registration Statement and each amendment thereto, including financial
      statements and schedules, and all exhibits to the extent so requested (including
      those previously furnished or incorporated by reference) promptly after the
      filing of such documents with the SEC.

     

    (f)  Promptly
      deliver to ABRD, without charge, as many copies of the Prospectus or
      Prospectuses (including each form of prospectus) and each amendment or
      supplement thereto as ABRD may reasonably request. The Company hereby consents
      to the use of such Prospectus and each amendment or supplement thereto by ABRD
      in connection with the offering and sale of the Registrable Securities covered
      by such Prospectus and any amendment or supplement thereto to the extent
      permitted by federal and state securities laws and regulations and in accordance
      with the terms and conditions of this Agreement.

     

    (g)  (i) In
      the time and manner required by each Trading Market, prepare and file with
      such
      Trading Market an additional shares listing application covering all of the
      Registrable Securities; (ii) take all steps necessary to cause such Common
      Shares to be approved for listing on each Trading Market as soon as possible
      thereafter; (iii) provide to ABRD evidence of such listing; and
      (iv) except as a result of the Excluded Events, during the Effectiveness
      Period following the expiration of the Lock-Up Period, maintain the listing
      of
      such Common Shares on each such Trading Market or another Eligible
      Market.

     

    (h)  Prior
      to
      any public offering of Registrable Securities, use its Best Efforts to register
      or qualify or cooperate with ABRD in connection with the registration or
      qualification (or exemption from such registration or qualification) of such
      Registrable Securities for offer and sale under the securities or Blue Sky
      laws
      of such jurisdictions within the United States as ABRD requests in writing,
      to
      keep each such registration or qualification (or exemption therefrom) effective
      for so long as required, but not to exceed the duration of the Effectiveness
      Period following the expiration of the Lock-Up Period, and to do any and all
      other acts or things reasonably necessary or advisable to enable the disposition
      in such jurisdictions of the Registrable Securities covered by a Registration
      Statement; provided,
      however,
      that
      the Company shall not be obligated to file any general consent to service of
      process or to qualify as a foreign corporation or as a dealer in securities
      in
      any jurisdiction in which it is not so qualified or to subject itself to
      taxation in respect of doing business in any jurisdiction in which it is not
      otherwise so subject.

     

    (i)  Cooperate
      with ABRD to facilitate the timely preparation and delivery of certificates
      representing Registrable Securities to be delivered to a transferee pursuant
      to
      a Registration Statement, which certificates shall be free, to the extent
      permitted by this Agreement and under law, of all restrictive legends, and
      to
      enable such Registrable Securities to be in such denominations and registered
      in
      such names as ABRD may reasonably request.

     

    (j)  Upon
      the
      occurrence of any event described in Section
      6.2(c)(vii),
      as
      promptly as reasonably possible, prepare a supplement or amendment, including
      a
      post-effective amendment, to the Registration Statement or a supplement to
      the
      related Prospectus or any document incorporated or deemed to be incorporated
      therein by reference, and file any other required document so that, as
      thereafter delivered, neither the Registration Statement nor such Prospectus
      will contain an untrue statement of a material fact or omit to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in the light of the circumstances under which they were made, not
      misleading.

     

    (k)  Cooperate
      with any reasonable due diligence investigation undertaken by ABRD in connection
      with the sale of Registrable Securities, including, without limitation, by
      making available documents and information; provided that the Company will
      not
      deliver or make available to ABRD material, nonpublic information unless ABRD
      requests in advance in writing to receive material, nonpublic information and
      agrees to keep such information confidential.

     

    (l)  Comply
      with all rules and regulations of the SEC applicable to the registration of
      the
      Purchased Securities.

     

    (m)  It
      shall
      be a condition precedent to the obligations of the Company to complete the
      registration pursuant to this Agreement with respect to the Registrable
      Securities of any particular Investor or to make any Event Payments set forth
      in
      Section 6.1(c) to ABRD that ABRD furnish to the Company the information
      specified in Exhibits B-1, B-2 and B-3 hereto and such other information
      regarding itself, the Registrable Securities and other shares of Common Stock
      held by it and the intended method of disposition of the Registrable Securities
      held by it (if different from the Plan of Distribution set forth on Exhibit
      D
      hereto) as shall be reasonably required to effect the registration of such
      Registrable Securities and shall complete and execute such documents in
      connection with such registration as the Company may reasonably
      request.

     

    (n)  The
      Company shall comply with all applicable rules and regulations of the SEC under
      the Securities Act and the Exchange Act, including, without limitation, Rule
      172
      under the Securities Act, file any final Prospectus, including any supplement
      or
      amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act,
      promptly inform ABRD in writing if, at any time during the Effectiveness Period,
      the Company does not satisfy the conditions specified in Rule 172 and, as a
      result thereof, ABRD is required to make available a Prospectus in connection
      with any disposition of Registrable Securities and take such other actions
      as
      may be reasonably necessary to facilitate the registration of the Registrable
      Securities hereunder.

     

    6.3  Registration
      Expenses.
      The
      Company shall pay all fees and expenses incident to the performance of or
      compliance with Article VI of this Agreement by the Company, including
      without limitation (a) all registration and filing fees and expenses,
      including without limitation those related to filings with the SEC, any Trading
      Market and in connection with applicable state securities or Blue Sky laws,
      (b) printing expenses (including without limitation expenses of printing
      certificates for Registrable Securities), (c) messenger, telephone and
      delivery expenses, (d) fees and disbursements of counsel for the Company,
      (e) fees and expenses of all other Persons retained by the Company in connection
      with the consummation of the transactions contemplated by this Agreement, and
      (f) all listing fees to be paid by the Company to the Trading
      Market.

     

    6.4  Indemnification

     

    (a)  Indemnification
      by the Company.
      The
      Company shall, notwithstanding any termination of this Agreement, indemnify
      and
      hold harmless ABRD, its officers, directors, agents and employees of each of
      them, each Person who controls ABRD (within the meaning of Section 15 of
      the Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the fullest
      extent permitted by applicable law, from and against any and all Losses, as
      incurred, arising out of or relating to (i) any misrepresentation or breach
      of
      any representation or warranty made by the Company in the Transaction Documents
      or any other certificate, instrument or document contemplated hereby or thereby,
      (ii) any breach of any covenant, agreement or obligation of the Company
      contained in the Transaction Documents or any other certificate, instrument
      or
      document contemplated hereby or thereby, (iii) any cause of action, suit or
      claim brought or made against such Indemnified Party (as defined in Section
      6.4(c) below) by a third party (including for these purposes a derivative action
      brought on behalf of the Company), arising out of or resulting from (x)
      execution, delivery, performance or enforcement of the Transaction Documents
      or
      any other certificate, instrument or document contemplated hereby or thereby
      or
      (y) the status of Indemnified Party as holder of the Purchased Securities or
      (iv) any untrue or alleged untrue statement of a material fact contained in
      the
      Registration Statement, any Prospectus or any form of Company prospectus or
      in
      any amendment or supplement thereto or in any Company preliminary prospectus,
      or
      arising out of or relating to any omission or alleged omission of a material
      fact required to be stated therein or necessary to make the statements therein
      (in the case of any Prospectus or form of prospectus or supplement thereto,
      in
      the light of the circumstances under which they were made) not misleading,
      except to the extent, but only to the extent, that (A) such untrue
      statements, alleged untrue statements, omissions or alleged omissions are based
      upon information regarding ABRD furnished in writing to the Company by or on
      behalf of ABRD for use therein, or to the extent that such information relates
      to ABRD or ABRD's proposed method of distribution of Registrable Securities
      and
      was reviewed and expressly approved by ABRD expressly for use in the
      Registration Statement, or (B) with respect to any prospectus, if the untrue
      statement or omission of material fact contained in such prospectus was
      corrected on a timely basis in the prospectus, as then amended or supplemented,
      if such corrected prospectus was timely made available by the Company to ABRD,
      and ABRD seeking indemnity hereunder was advised in writing not to use the
      incorrect prospectus prior to the use giving rise to Losses. The preceding
      to
      the contrary notwithstanding: (I) the maximum liability to the Company under
      clauses (i) through (iii) of this Section 6.4(a) shall in no event exceed
      $10,000,000.00; and (II) other than the obligations of the Company to ABRD
      the
      performance of which is to be made or continue to be made by the Company on
      or
      after the first anniversary of the Agreement Date, all of the other obligations
      of the Company under clauses (i) through (iii) of this Section 6.4(a) shall
      terminate and be without further force and effect on the first anniversary
      of
      the Closing Date. ABRD acknowledges and agrees the Company’s payment of
      liquidated damages under Section 6.1(d) hereof shall automatically preclude
      ABRD
      from seeking indemnity under this Section 6.4(a) and automatically relieve
      the
      Company of any related indemnification obligations hereunder.

     

    (b)  Indemnification
      by ABRD.
      ABRD
      shall indemnify and hold harmless the Company, its directors, officers, agents
      and employees, each Person who controls the Company (within the meaning of
      Section 15
      of the
      Securities Act and Section 20
      of the
      Exchange Act), and the directors, officers, agents or employees of such
      controlling Persons, to the fullest extent permitted by applicable law, from
      and
      against all Losses arising out of or relating to (i) any misrepresentation
      or
      breach of any representation or warranty made by ABRD in the Transaction
      Documents or any other certificate, instrument or document contemplated hereby
      or thereby, (ii) any breach of any covenant, agreement or obligation of ABRD
      contained in the Transaction Documents or any other certificate, instrument
      or
      document contemplated hereby or thereby, (iii) primarily out of any untrue
      statement of a material fact contained in the Registration Statement, any
      Prospectus, or any form of prospectus, or in any amendment or supplement
      thereto, or arising out of or relating to any omission of a material fact
      required to be stated therein or necessary to make the statements therein (in
      the case of any Prospectus or form of prospectus or supplement thereto, in
      the
      light of the circumstances under which they were made) not misleading, but
      only
      to the extent that such untrue statement or omission is contained in any
      information so furnished by or on behalf of ABRD in writing to the Company
      specifically for inclusion in such Registration Statement or such Prospectus
      or
      to the extent that such untrue statements or omissions are based solely upon
      information regarding ABRD furnished to the Company by or on behalf of ABRD
      in
      writing expressly for use therein, or to the extent that such information
      relates to ABRD or ABRD’s proposed method of distribution of Registrable
      Securities and was reviewed and expressly approved by ABRD expressly for use
      in
      the Registration Statement (it being understood that the information provided
      by
      or on behalf of ABRD to the Company in Exhibits B-1, B-2 and B-3 and the Plan
      of
      Distribution set forth on Exhibit D, as the same may be modified by ABRD and
      other information provided by ABRD to the Company in or pursuant to the
      Transaction Documents constitutes information reviewed and expressly approved
      by
      ABRD in writing expressly for use in the Registration Statement), such
      Prospectus or such form of Prospectus or in any amendment or supplement thereto.
      In no event shall the liability of ABRD hereunder be greater in amount than
      the
      dollar amount of the net proceeds received by ABRD upon the sale of the
      Registrable Securities giving rise to such indemnification obligation. The
      preceding to the contrary notwithstanding: (I) the maximum liability to ABRD
      under clauses (i) and (ii) of this Section 6.4(b) shall in no event exceed
      $10,000,000.00; and (II) other than the obligations of ABRD to the Company
      the
      performance of which is to be made or continue to be made by ABRD on or after
      the first anniversary of the Agreement Date, all of the other obligations of
      the
      Company under the obligations of ABRD under clauses (i) and (ii) of this Section
      6.4(b) shall terminate and be without further force and effect on the first
      anniversary of the Closing Date. In all cases, the Company hereby agrees that
      ABRD shall not be liable for any special, indirect, incidental, punitive or
      consequential damages, including lost profits arising from or related to this
      Agreement or any of the Transaction Documents. 

     

    (c)  Conduct
      of Indemnification Proceedings.
      If any
      Proceeding shall be brought or asserted by any third party against any Person
      entitled to indemnity hereunder (an “Indemnified
      Party”),
      such
      Indemnified Party shall promptly notify the Person from whom indemnity is sought
      (the “Indemnifying
      Party”)
      in
      writing, and the Indemnifying Party shall assume the defense thereof, including
      the employment of counsel reasonably satisfactory to the Indemnified Party
      and
      the payment of all fees and expenses incurred in connection with defense
      thereof; provided, that the failure of any Indemnified Party to give such notice
      shall not relieve the Indemnifying Party of its obligations or liabilities
      pursuant to this Agreement, except (and only) to the extent that it shall be
      finally determined by a court of competent jurisdiction (which determination
      is
      not subject to appeal or further review) that such failure shall have
      proximately and materially adversely prejudiced the Indemnifying
      Party.

     

    An
      Indemnified Party shall have the right to employ separate counsel in any such
      Proceeding and to participate in the defense thereof, but the fees and expenses
      of such counsel shall be at the expense of such Indemnified Party or Parties
      unless: (i) the Indemnifying Party has agreed in writing to pay such fees
      and expenses; or (ii) the Indemnifying Party shall have failed promptly to
      assume the defense of such Proceeding and to employ counsel reasonably
      satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
      named parties to any such Proceeding (including any impleaded parties) include
      both such Indemnified Party and the Indemnifying Party, and such Indemnified
      Party shall have been advised by counsel that a conflict of interest is likely
      to exist if the same counsel were to represent such Indemnified Party and the
      Indemnifying Party (in which case, if such Indemnified Party notifies the
      Indemnifying Party in writing that it elects to employ separate counsel at
      the
      expense of the Indemnifying Party, the Indemnifying Party shall not have the
      right to assume the defense thereof and the reasonable fees and expenses of
      separate counsel shall be at the expense of the Indemnifying Party). It being
      understood, however, that the Indemnifying Party shall not, in connection with
      any one such Proceeding (including separate Proceedings that have been or will
      be consolidated before a single judge) be liable for the fees and expenses
      of
      more than one separate firm of attorneys at any time for all Indemnified
      Parties, which firm shall be appointed by a majority of the Indemnified Parties.
      The Indemnifying Party shall not be liable for any settlement of any such
      Proceeding effected without its written consent, which consent shall not be
      unreasonably withheld. No Indemnifying Party shall, without the prior written
      consent of the Indemnified Party, which consent shall not be unreasonably
      withheld or delayed, effect any settlement of any pending Proceeding in respect
      of which any Indemnified Party is a party, unless such settlement includes
      an
      unconditional release of such Indemnified Party from all liability on claims
      that are or could have been the subject matter of such Proceeding.

     

    All
      reasonable fees and expenses of the Indemnified Party (including reasonable
      fees
      and expenses to the extent incurred in connection with investigating or
      preparing to defend such Proceeding in a manner not inconsistent with this
      Section) shall be paid to the Indemnified Party, as incurred, within 20 Trading
      Days of written notice thereof to the Indemnifying Party (provided, that the
      Indemnifying Party may require such Indemnified Party to undertake to reimburse
      all such fees and expenses to the extent it is finally judicially determined
      that such Indemnified Party is not entitled to indemnification
      hereunder). 

     

    (d)  Contribution.
      If a
      claim for indemnification under Section
      6.4(a)
      or  (b)
      is
      unavailable to an Indemnified Party (by reason of public policy or otherwise),
      then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of such Losses, in such proportion as is appropriate to reflect the
      relative fault of the Indemnifying Party and Indemnified Party in connection
      with the actions, statements or omissions that resulted in such Losses as well
      as any other relevant equitable considerations. The relative fault of such
      Indemnifying Party and Indemnified Party shall be determined by reference to,
      among other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or alleged omission
      of a
      material fact, has been taken or made by, or relates to information supplied
      by
      or on behalf of, such Indemnifying Party or Indemnified Party, and the parties’
relative intent, knowledge, access to information and opportunity to correct
      or
      prevent such action, statement or omission. The amount paid or payable by a
      Party as a result of any Losses shall be deemed to include, subject to the
      limitations set forth in Section
      6.4(c),
      any
      reasonable attorneys’ or other reasonable fees or expenses incurred by such
      Party in connection with any Proceeding to the extent such Party would have
      been
      indemnified for such fees or expenses if the indemnification provided for in
      this Section was
      available to such Party in accordance with its terms.

     

    The
      parties hereto agree that it would not be just and equitable if contribution
      pursuant to this Section
      6.4(d)
      were
      determined by pro rata allocation or by any other method of allocation that
      does
      not take into account the equitable considerations referred to in the
      immediately preceding paragraph. Notwithstanding the provisions of this
Section
      6.4(d),
      ABRD
      shall not be required to contribute, in the aggregate, any amount in excess
      of
      the amount by which the proceeds actually received by ABRD from the sale of
      the
      Registrable Securities subject to the Proceeding exceeds the amount of any
      damages that ABRD has otherwise been required to pay by reason of such untrue
      or
      alleged untrue statement or omission or alleged omission. No Person guilty
      of
      fraudulent misrepresentation (within the meaning of Section
      11(f)
      of the
      Securities Act) shall be entitled to contribution from any Person who was not
      guilty of such fraudulent misrepresentation.

     

    Except
      as
      expressly provided in the last sentence of Section 6.4(a), the indemnity and
      contribution agreements contained in this Section  are
      in
      addition to any liability that the Indemnifying Parties may have to the
      Indemnified Parties.

     

    6.5  Dispositions.
      ABRD
      agrees that it will comply with the prospectus delivery requirements of the
      Securities Act as applicable to it in connection with sales of Registrable
      Securities pursuant to the Registration Statement and shall sell its Registrable
      Securities in accordance with the Plan of Distribution set forth in the
      Prospectus. ABRD further agrees that, upon receipt of a notice from the Company
      of the occurrence of any event of the kind described in Sections
      6.2(c)(v),
      (vi)
      or
(vii),
      ABRD
      will discontinue disposition of such Registrable Securities under the
      Registration Statement until ABRD is advised in writing by the Company that
      the
      use of the Prospectus, or amended Prospectus, as applicable, may be used. The
      Company may provide appropriate stop orders to enforce the provisions of this
      paragraph.

     

    6.6  Piggyback
      on Registrations.
      The
      Company may include Securities of the Company for its own account or the
      accounts of others in the Registration Statement other than the Registrable
      Securities.

     

           
      6.7  Piggy-Back
      Registrations.
      If at
      any time during the Effectiveness Period after the Lock-Up Period there is
      not
      an effective Registration Statement covering all of the Registrable Securities
      and the Company shall determine to prepare and file with the SEC a registration
      statement relating to an offering for its own account or the account of others
      under the Securities Act of any of its equity securities, other than on Form
      S-4
      or Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to Securities to be issued solely in connection with any
      acquisition of any entity or business or equity securities issuable in
      connection with stock option or other employee benefit plans, then the Company
      shall send to ABRD, if it is not then eligible to sell all of its Registrable
      Securities under Rule 144 in a three-month period, written notice of such
      determination and if, within ten days after receipt of such notice, ABRD shall
      so request in writing, the Company shall include in such registration statement
      all or any part of such Registrable Securities ABRD requests to be registered.
       Notwithstanding
      the foregoing, in the event that, in connection with any underwritten public
      offering, the managing underwriter(s) thereof shall impose a limitation on
      the
      number of Common Shares which may be included in the Registration Statement
      because, in such underwriter(s)’ judgment, marketing or other factors dictate
      such limitation is necessary to facilitate public distribution, then the Company
      shall be obligated to include in such Registration Statement only such limited
      portion of the Registrable Securities with respect to which ABRD has requested
      inclusion hereunder as the underwriter shall permit; provided,
      however,
      that
      (i) the Company shall not exclude any Registrable Securities unless the Company
      has first excluded all outstanding securities, the holders of which are not
      contractually entitled to inclusion of such securities in such Registration
      Statement or are not contractually entitled to pro rata inclusion with the
      Registrable Securities and (ii) after giving effect to the immediately preceding
      proviso, any such exclusion of Registrable Securities shall be made pro rata
      among ABRD and the holders of other Securities having the contractual right
      to
      inclusion of their Securities in such Registration Statement by reason of demand
      registration rights, in proportion to the number of Registrable Securities
      or
      other Securities, as applicable, sought to be included by each ABRD or other
      holder(s). If an offering in connection with which ABRD is entitled to
      registration under this Section 6.7 is an underwritten offering, then ABRD
      shall, unless otherwise agreed by the Company, offer and sell such Registrable
      Securities in an underwritten offering using the same underwriter or
      underwriters and, subject to the provisions of this Agreement, on the same
      terms
      and conditions as other Common Shares included in such underwritten offering
      and
      shall
      enter into an underwriting agreement in a form and substance reasonably
      satisfactory to the Company and the underwriter or underwriters. Upon the
      effectiveness of the registration statement for which piggy-back registration
      has been provided in this Section 6.7, any Event Payments payable to ABRD shall
      terminate.

     

    ARTICLE
      VII  

     

    MISCELLANEOUS

     

    7.1  Termination.
      This
      Agreement may be terminated by the Company or ABRD, by written notice to the
      other parties, if the Closing has not been consummated by the tenth
      (10th)
      Business Day following the date of this Agreement; provided that no such
      termination will affect the right of any Party to sue for any breach by the
      other Party (or Parties).

     

    7.2  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
      and the other Transaction Documents. The Company shall pay all Transfer Agent
      fees, stamp taxes and other taxes and duties levied in connection with the
      sale
      and issuance of their applicable Securities.

     

    7.3  Entire
      Agreement.
      The
      Transaction Documents and the Confidentiality Agreement, 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. At
      or
      after the Closing, and without further consideration, each Party will execute
      and deliver to the other Party such further documents as may be reasonably
      requested in order to give practical effect to the intention of the parties
      under the Transaction Documents.

     

    7.4  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 or email at the facsimile number or
      email address specified in this Section  prior
      to
      6:30 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 or email at the facsimile number or email address specified in this
      Section on a day that is not a Trading Day or later than 6:30 p.m. (New York
      City time) on any Trading Day, (c) the Trading Day following the date of
      deposit with a nationally recognized overnight courier service, or (d) upon
      actual receipt by the Party to whom such notice is required to be given. The
      addresses, facsimile numbers and email addresses for such notices and
      communications are those set forth on the signature pages hereof, or such other
      address or facsimile number as may be designated in writing hereafter, in the
      same manner, by any such Person.

     

    7.5  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 each of
      ABRD
      or, in the case of a waiver, by the Party against whom enforcement of any such
      waiver 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 either Party to exercise any right hereunder in any manner impair
      the exercise of any such right. 

     

    7.6  Construction.
      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. The language used in this Agreement will be deemed to be the language
      chosen by the parties to express their mutual intent, and no rules of strict
      construction will be applied against any Party.

     

    7.7  Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the Parties and
      their successors and permitted assigns. Neither Party may assign this Agreement
      or any rights or obligations hereunder without the prior written consent of
      the
      other Party, which consent shall not be unreasonably withheld or delayed. In
      connection with a permitted transfer of the Purchased Securities, ABRD may
      assign its rights under Article VII of this Agreement to any Person to whom
      ABRD
      assigns or transfers any Purchased Securities, provided (i)
      such
      transferor agrees in writing with the transferee or assignee to assign such
      rights, and a copy of such agreement is furnished to the Company after such
      assignment, (ii) the Company is furnished with written notice of (x) the name
      and address of such transferee or assignee and (y) the Registrable Securities
      with respect to which such registration rights are being transferred or
      assigned, (iii) following such transfer or assignment, the further disposition
      of such securities by the transferee or assignee is restricted under the
      Securities Act and applicable state securities laws, (iv) such
      transferee agrees in writing to be bound, with respect to the transferred
      Securities, by the provisions hereof that apply to ABRD and (v)
      such
      transfer shall have been made in accordance with the applicable requirements
      of
      this Agreement and with all laws applicable thereto.

     

    7.8  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 that each Indemnified
      Party is an intended third party beneficiary of Section 6.4
      and (in
      each case) may enforce the provisions of such Sections directly against the
      parties with obligations thereunder.

     

    7.9  Governing
      Law; Venue; Waiver of Jury Trial.
      THE
      CORPORATE LAWS OF THE STATE OF DELAWARE
      SHALL
      GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
      STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT
      AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
      ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE COMPANY AND INVESTORS
      HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND
      FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
      ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ABRD HEREUNDER, 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 WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT,
      ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ABRD, ANY CLAIM THAT IT IS NOT
      PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT,
      ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL
      SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION
      OR PROCEEDING BY MAILING A COPY THEREOF 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 MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL
      RIGHTS TO A TRIAL BY JURY.

     

    7.10  Survival.
      The
      representations and warranties, agreements and covenants contained herein shall
      survive the Closing.

     

    7.11  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 email attachment, 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 email-attached
      signature page were an original thereof.

     

    7.12  Severability.
      If any
      provision of this Agreement is held to be invalid or unenforceable in any
      respect, the validity and enforceability of the remaining terms and provisions
      of this Agreement shall not in any way be affected or impaired thereby and
      the
      parties will attempt to agree upon a valid and enforceable provision that is
      a
      reasonable substitute therefor, and upon so agreeing, shall incorporate such
      substitute provision in this Agreement.

     

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

     

    7.14  Replacement
      of Securities.
      If any
      certificate or instrument evidencing any Purchased 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, 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 and the execution by the holder thereof of a customary lost
      certificate affidavit of that fact and an agreement to indemnify and hold
      harmless the Company for any losses in connection therewith. The applicants
      for
      a new certificate or instrument under such circumstances shall also pay any
      reasonable third-party costs associated with the issuance of such replacement
      Purchased Securities.

     

    7.15  Remedies.
      In
      addition to being entitled to exercise all rights provided herein or granted
      by
      law, including recovery of damages, each of ABRD and the Company will be
      entitled to seek 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 described in the foregoing
      sentence and hereby agrees to waive in any action for specific performance
      of
      any such obligation (other than in connection with any action for temporary
      restraining order) the defense that a remedy at law would be adequate.

     

    7.16  Payment
      Set Aside.
      To the
      extent that the Company makes a payment or payments to ABRD hereunder or ABRD
      enforces or exercises its rights hereunder or thereunder, and such payment
      or
      payments or the proceeds of such enforcement or exercise or any part thereof
      are
      subsequently invalidated, declared to be fraudulent or preferential, set aside,
      recovered from, disgorged by or are required to be refunded, repaid or otherwise
      restored to the Company by 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.

     

    7.17  Adjustments
      in Share Numbers and Prices.
      In the
      event of any stock split, subdivision, dividend or distribution payable in
      shares of Common Stock (or other securities or rights convertible into, or
      entitling the holder thereof to receive directly or indirectly shares of Common
      Stock), combination or other similar recapitalization or event occurring after
      the date hereof and prior to the Closing, each reference in any Transaction
      Document to a number of shares or a price per share shall be amended to
      appropriately account for such event.

     

    [SIGNATURE
      PAGES TO FOLLOW]

     

    

     

    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.

     

    DYADIC
      INTERNATIONAL, INC.

     

    

     

    By: /s/
      Mark
      A. Emalfarb 

    Name:
      Mark A. Emalfarb

    Title:
      Chief Executive Officer

     

    Address
      for Notice:

     

    140
      Intracoastal Pointe Drive, Suite 404, Jupiter, Florida 33477 

    Facsimile
      No.: 561-743-8333

    Telephone
      No.: 561-743-8513

    Attn:
      Chief Executive Officer

    

    With
      a
      copy to:      
Greenberg
      Traurig, LLP

              
77
      West Wacker Drive, Suite
      2500

              
Chicago,
      Illinois
      60601

    

    Facsimile:
      312-899-0431

    Telephone:
      312-476-5015

    Attn:
      Robert I. Schwimmer, Esq.

    

    ABENGOA
      BIOENERGY R&D, INC.

    

     

    By: /s/
      Christopher G. Stanclee 

    Name:
      Christopher G. Stanclee

    Title:
      Vice President

     

    Address
      for Notice:

     

    1400
      Elbridge Payne

    Suite
      212

    Chesterfiled,
      MO 63017

    Attention:
      Gerson Santos

     

    Telephone: (636)
      728-0508

    Fax:  (636)
      728-1148

    Attn:
      Chief Executive Officer

    

    With
      a
      copy
      to:                   
Squire,
      Sanders & Dempsey L.L.P

                                                   
      127 Public Square, Suite 4900

                                                   
      Cleveland, Ohio 44114

                                                   
      Telephone: 216-479-8552

    Facsimile:
      216-479-8780

    Attn:
      Laura
      D.
      Nemeth

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

     

    

     

     

    

     

    Exhibits:

     

    A Form
      of
      Extraordinary Circumstance Warrant

    B Registration
      Statement Questionnaire for ABRD

    C Opinion
      of Company Corporate Counsel

    D Plan
      of
      Distribution

     

    

     

    

     

    Exhibit A

     

    FORM
      OF EXTRAORDINARY CIRCUMSTANCE WARRANT

    

     

    THIS
      WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY
      STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
      HYPOTHECATED UNLESS (i) THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
      THE
      ACT COVERING SUCH SECURITIES OR (ii) THE COMPANY RECEIVES AN OPINION OF COUNSEL
      FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE COMPANY
      STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM
      THE
      REGISTRATION REQUIREMENTS OF THE ACT AND IS IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THIS WARRANT AND THE SECURITIES
      ISSUABLE UPON THE EXERCISE HEREOF ARE SUBJECT TO CONTRACTUAL RESTRICTIONS ON
      ALIENATION THAT PRECLUDE ALL OR ANY PORTION OF THEM FROM BEING OFFERED, SOLD,
      ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED UNTIL THE FIRST BUSINESS DAY
      FOLLOWING EXPIRATION OF THE LOCK-UP PERIOD (AS DEFINED IN SECTION 2
      BELOW).

     

    THIS
      WARRANT IS ISSUED PURSUANT TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT (THE
      “PURCHASE AGREEMENT”) BETWEEN THE INITIAL HOLDER OF THIS WARRANT (THE
“INVESTOR”) AND DYADIC INTERNATIONAL, INC., A DELAWARE CORPORATION (THE
“COMPANY”).

     

     

    Dated:
      [Insert date, 2007]

     

    

     

    

    DYADIC
      INTERNATIONAL, INC.

     

    WARRANT
      (“WARRANT”) TO PURCHASE SHARES

     

    OF

     

    COMMON
      STOCK, $0.001 PAR VALUE PER SHARE

     

    [INSERT
      NUMBER] SHARES

     

    1.  Number
      of Shares Subject to Warrant.

     

    This
      is
      to certify that, FOR VALUE RECEIVED, Abengoa Bioenergy R&D, Inc. (the
“Investor”), is entitled to purchase from Dyadic International, Inc., a Delaware
      corporation (the “Company”), at any time before the termination of this Warrant
      pursuant to Section 3 hereof, at an exercise price equal to $______ per share
      (the exercise price in effect from time to time hereafter being called the
      “Warrant Price”), up to [__________] shares (“Warrant Shares”) of the Company’s
      common stock, $0.001 par value per share (“Common Stock”), upon such Investor’s
      exercise of this Warrant pursuant to Section 7 hereof. The number of Warrant
      Shares purchasable upon exercise of this Warrant and the Warrant Price shall
      be
      subject to adjustment from time to time as described herein.

     

    2.  Definitions.

     

    As
      used
      in this Warrant, the following terms shall have definitions ascribed to them
      below:

     

    (a)  “Business
      Day”
shall
      mean any day except Saturday, Sunday and any day which shall be a legal holiday
      or a day on which banking institutions in the state of New York or Madrid,
      Spain
      are authorized or required by law or other government actions to close between
      the hours of 9:30 a.m. and 5:00 p.m. local time.

     

    (b)  “Holder”
shall
      mean the Investor and any permitted transferees.

     

    (c)  “Lock-Up
      Period”
shall
      mean the period commencing on the date of issuance of this Warrant and expiring
      on October [__], 2007.

     

    3.  Termination.

     

    Unless
      terminated sooner under the terms of this Warrant, this Warrant shall terminate
      and no longer be exercisable at 5:00 p.m., Eastern Standard Time, on [enter
      date
      three years from the date of issuance].

     

    4.  Fractional
      Shares.

     

    No
      fractional shares shall be issuable upon exercise of this Warrant and the number
      of shares to be issued shall be rounded up to the nearest whole share.

     

    5.  No
      Shareholder Rights.

     

    This
      Warrant, by itself, as distinguished from any shares purchased hereunder, shall
      not entitle the Holder to any of the rights of a shareholder of the
      Company.

     

    6.  Reservation
      of Stock.

     

    The
      Company will reserve from its authorized and unissued Common Stock a sufficient
      number of shares to provide for the issuance of Warrant Shares upon the exercise
      or conversion of this Warrant. Issuance of this Warrant shall constitute full
      authority to the Company’s officers who are charged with the duty of executing
      stock certificates to execute, issue and deliver the necessary certificates
      for
      shares of Warrant Shares issuable upon the exercise or conversion of this
      Warrant.

     

    7.  Exercise
      of Warrant.

     

    This
      Warrant may be exercised at any time prior to its termination by the surrender
      of this Warrant, together with the Notice of Exercise and the Investment
      Representation Statement in the forms attached hereto as Attachments 1 and
      2,
      respectively, duly completed and executed, at the principal office of the
      Company, specifying the portion of this Warrant to be exercised and accompanied
      by payment in full of the Warrant Price in cash or by check with respect to
      the
      shares of Warrant Shares being purchased. This Warrant shall be deemed to have
      been exercised immediately prior to the close of business on the date of its
      surrender for exercise as provided above, and the person entitled to receive
      the
      shares of Warrant Shares issuable upon exercise shall be treated for all
      purposes as the holder of such shares of record as of the close of business
      on
      such date. As promptly as practicable after such date, the Company shall issue
      and deliver to the person or persons entitled to receive the same a certificate
      or certificates for the number of full shares of Warrant Shares issuable upon
      such exercise. If the Warrant shall be exercised for less than the total number
      of shares of Warrant Shares then issuable upon exercise, promptly after
      surrender of the Warrant upon such exercise, the Company will execute and
      deliver a new Warrant, dated the date hereof, evidencing the right of the Holder
      to the balance of the Warrant Shares purchasable hereunder upon the same terms
      and conditions set forth herein.

     

    8.  Adjustment
      of Exercise Price and Number of Shares.

     

    The
      number of shares issuable upon exercise of this Warrant (or any shares of stock
      or other securities or property at the time receivable or issuable upon exercise
      of this Warrant) and the Warrant Price therefor are subject to adjustment upon
      the occurrence of the following events:

     

    (a)  Adjustment
      for Stock Splits, Stock Dividends, Recapitalizations, etc.
      The
      Warrant Price and the number of shares issuable upon exercise of this Warrant
      shall each be proportionally adjusted to reflect any stock dividend, stock
      split, reverse stock split, combination of shares, reclassification,
      recapitalization or other similar event altering the number of outstanding
      shares of the Company’s common stock.

     

    (b)  Adjustment
      for Other Dividends and Distributions.
      In case
      the Company shall make or issue, or shall fix a record date for the
      determination of eligible holders entitled to receive, a dividend or other
      distribution with respect to the shares payable in securities of the Company
      then, and in each such case, the Holder, on exercise of this Warrant at any
      time
      after the consummation, effective date or record date of such event, shall
      receive, in addition to the Warrant Shares (or such other stock or securities)
      issuable on such exercise prior to such date, the securities of the Company
      to
      which such Holder would have been entitled upon such date if such Holder had
      exercised this Warrant immediately prior thereto (all subject to further
      adjustment as provided in this Warrant).

     

    9.  Adjustment
      for Capital Reorganization, Consolidation, Merger or Sale.

     

    If
      any
      capital reorganization of the capital stock of the Company, or any consolidation
      or merger of the Company with or into another corporation, or the sale of all
      or
      substantially all of the Company’s assets to another corporation shall be
      effected in such a way that holders of the Company’s capital stock will be
      entitled to receive stock, securities or assets with respect to or in exchange
      for the Company’s capital stock, then in each such case the Holder, upon the
      exercise of this Warrant, at any time after the consummation of such capital
      reorganization, consolidation, merger, or sale, shall be entitled to receive,
      in
      lieu of the stock or other securities and property receivable upon the exercise
      of this Warrant prior to such consummation, the stock or other securities or
      property to which such Holder would have been entitled upon such consummation
      if
      such Holder had exercised this Warrant immediately prior to the consummation
      of
      such capital reorganization, consolidation, merger, or sale, all subject to
      further adjustment as provided in this Section 9; and in each such case, the
      terms of this Warrant shall be applicable to the shares of stock or other
      securities or property receivable upon the exercise of this Warrant after such
      consummation. 

     

    10.  Notice
      of Warrant.

     

    On
      the
      happening of an event requiring an adjustment of the Warrant Price or the
      Warrant Shares purchasable hereunder, the Company shall forthwith give a written
      notice to the Holder stating the adjusted Warrant Price and the adjusted number
      and kind of securities or other property purchasable under this Warrant
      resulting from the event and setting forth in reasonable detail the method
      of
      calculation and the facts upon which the calculation is based. The Board of
      Directors of the Company, acting in good faith, shall determine the
      calculation.

     

    11.  Transfer.

     

    (a)  Transfer
      of Warrants.
      This
      Warrant, in whole or in part, may not be offered, sold, assigned, hypothecated
      or otherwise transferred until the first Business Day following the expiration
      of the Lock-Up Period. Thereafter, this Warrant, in whole or in part, may be
      transferred by the Holder, provided that the transferor provides, at the
      Company’s request, an opinion of counsel satisfactory to the Company that such
      transfer does not require registration under the Act and any other applicable
      federal or state securities laws. 

     

    (b)  Transfer
      of Warrant Shares; Registration Rights.
      The
      Warrant Shares are subject to the restrictions on transfer imposed thereon
      under
      the Purchase Agreement until expiration of the Lock-Up Period. The Holder is
      entitled to the benefits of the Purchase Agreement with respect to registration
      of the Warrant Shares under the Act.

     

    12.  Amendments
      and Waivers.

     

    This
      Warrant and any term hereof may only be amended, waived, discharged or
      terminated by a written instrument signed by the Company and the
      Investor.

     

    13.  Miscellaneous.

     

    This
      Warrant shall be governed by the laws of the State of Delaware, as such laws
      are
      applied to contracts to be entered into and performed entirely in Delaware
      by
      Delaware residents. The headings in this Warrant are for purposes of convenience
      and reference only, and shall not be deemed to constitute a part hereof. All
      notices and other communications from the Company to the Holder of this Warrant
      shall be delivered, personally or mailed by first class mail, postage prepaid,
      to the address furnished to the Company in writing by the last Holder of this
      Warrant who shall have furnished an address to the Company in writing, and
      if
      mailed shall be deemed given three Business Days after deposit in the United
      States mail.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Company has caused this Warrant to be duly executed as of the date first written
      above.

     

    

     

    

    DYADIC
      INTERNATIONAL, INC.

     

    

     

    

    By:
      

    Mark
      A.
      Emalfarb, President

     

    

     

    Attachment
      1

     

    

     

    NOTICE
      OF EXERCISE

     

    

     

    TO:
      DYADIC INTERNATIONAL, INC.

     

    

     

    1. The
      undersigned hereby elects to purchase _________ Warrant Shares of Dyadic
International,
      Inc.
      pursuant to the terms of the attached Warrant, and tenders herewith payment
      of
      the purchase price in full, together with all applicable transfer taxes, if
      any.

     

     

    2. Please
      issue a certificate representing said shares of Warrant Shares in the name
      specified below:

     

     

    

     

    ________________________   ___________________________

     

    Name      Name

     

    

     

    ________________________   ___________________________

     

    Street
      Address     Street
      Address 

     

    

     

    ________________________   ___________________________

     

    State,
      City and Zip Code   State,
      City and Zip Code

     

    

     

    

     

    

     

    

     

    HOLDER:

     

    

     

    _______________________________

     

    Signature
      of Holder of Warrant 

     

    

     

    _______________________________

     

    Name
      of
      Holder of Warrant (print)

     

    

     

    __________________________

     

    Date

     

    

     

    

     

    

     

    

     

    

     

    Attachment
      2

     

    INVESTMENT
      REPRESENTATION STATEMENT

     

    

     

    Shares
      of Warrant Shares

     

    (as
      defined in the attached Warrant) of

     

    DYADIC
      INTERNATIONAL, INC.

     

    In
      connection with the purchase of the above-listed securities, the undersigned
      hereby represents to
      Dyadic
      International, Inc. (the “Company”) as follows:

     

    (a) The
      securities to be received upon the exercise of the Warrant (the “Warrant Shares”
as defined in the attached Warrant) will be acquired for investment for the
      undersigned’s own account; not as a
      nominee
      or agent, and not with a view to the sale or distribution of any part thereof,
      and the undersigned has no present intention of selling, granting participation
      in or otherwise distributing the same, but subject, nevertheless, to any
      requirement of law that the disposition of the undersigned’s property shall at
all
      times
      be within
      the undersigned’s control. By executing this Statement, the undersigned further
      represents that the undersigned does not have any contract, undertaking,
      agreement or arrangement with any person to sell, transfer, or grant
      participation to such person or to any third person, with respect to any Warrant
      Shares issuable upon exercise of the Warrant.

     

    (b) The
      undersigned understands that the Warrant Shares issuable upon exercise of the
      Warrant at the time of issuance may not be registered under the Act, and
      applicable state securities laws, on the ground that the issuance of such
      securities is exempt pursuant to Section 4(2) of the Act and state law
      exemptions relating to offers and sales not by means of a public offering,
      and
      that the Company’s reliance on such exemptions is predicated on the
      undersigned’s representations set forth herein.

     

    (c) If
      the
      Warrant Shares are not subject to an effective registration statement and usable
      prospectus forming a part of such registration statement, the undersigned agrees
      that in no event will the undersigned make a disposition of any Warrant Shares
      acquired upon the exercise of the Warrant unless and until the undersigned
      shall
      have furnished the Company with an opinion of counsel satisfactory to the
      Company and Company’s counsel to the effect that (A) appropriate action
      necessary for compliance with the Act and any applicable state securities laws
      has been taken or an exemption from the registration requirements of the Act
      and
      such laws is available, and (B) the proposed transfer will not
      violate any of said laws.

     

    (d) The
      undersigned acknowledges that an investment in the Company is highly speculative
      and represents that the undersigned is able to fend for himself, herself or
      itself in the transactions contemplated by this Statement, has such knowledge
      and experience in financial and business matters as to be capable of evaluating
      the merits and risks of the undersigned’s investments, and has the ability to
      bear the economic risks (including the risk of a total loss) of the
      undersigned’s investment. The undersigned represents that the undersigned has
      had the opportunity to ask questions of the Company concerning the Company’s
      business and assets and to obtain any additional information which the
      undersigned considered necessary to verify the accuracy of or to amplify the
      Company’s disclosures, and has had all questions which have been asked,
      satisfactorily answered by the Company. 

     

    (e) The
      undersigned acknowledges that the Warrant Shares issuable upon exercise of
      the
      Warrant must be held indefinitely unless subsequently registered under the
      Act
      or an
      exemption from such registration is available. The undersigned is aware of
      the
      provisions of Rule
      144
      promulgated under the Act which permit limited resale of shares purchased in
      a
      private placement subject to the satisfaction of certain conditions, including,
      among other things, the existence of a public market for the shares, the
      availability of certain current public information about the Company, the resale
      occurring not less than one year after a party has purchased and paid for the
      security to be sold, the sale being through a “broker’s transaction” or in
      transactions directly with a “market maker” (as provided by Rule 144(f)) and the
      number of shares being sold during any three-month period not exceeding
      specified limitations.

     

    

     

    

     

    HOLDER:

     

    

     

    _______________________________

     

    Signature
      of Holder of Warrant 

     

    

     

    _______________________________

     

    Name
      of
      Holder of Warrant (print)

     

    

     

    __________________________

     

    Date

     

    

     

    

    

     

    

    

     

    

     

    Exhibit B

     

    DYADIC
      INTERNATIONAL, INC.

     

    REGISTRATION
      STATEMENT QUESTIONNAIRE

    

     

    In
      connection with the Registration Statement, please provide us with the following
      information regarding ABRD.

     

    1.  Please
      state your organization’s name exactly as it should appear in the Registration
      Statement: 

     

    ______________________________________________________________________

     

    

    Except
      as
      set forth below, your organization does not hold any equity securities of the
       Company
      on behalf of another Person or entity. 

     

    State
      any
      exceptions here:

     

     

    ______________________________________________________________________

    

     

    2.
      Address
      of your organization:

     

    ______________________________________________________

     

    ______________________________________________________

     

    Telephone:
      __________________________

     

    Fax:
      ________________________________

     

    Contact
      Person: _______________________

     

    3.
      Have
      you
      or your organization had any position, office or other material relationship
      within the past three years with the Company or its affiliates?
      (Include
      any relationships involving you or your affiliates, officers, directors, or
      principal equity holders (5% or more) that has held any position or office
      or
      has had any other material relationship with the Company (or its predecessors
      or
      affiliates) during the past three years.)

     

     

    _______
       Yes   _______
       No

     

    If
      yes,
      please indicate the nature of any such relationship below:

    

     

    4.
      Are
      you
      the beneficial owner of any other securities of the Company?
      (Include
      any equity securities that you beneficially own or have a right to acquire
      within 60 days after the date hereof, and as to which you have sole voting
      power, shared voting power, sole investment power or shared investment
      power.)

     

     

    _______
       Yes   _______
       No

     

    If
      yes,
      please describe the nature and amount of such ownership
      as of a
      recent date.

     

     

     

    5.
      Except
      as set forth below, you wish that all the shares of the Company’s common stock
      beneficially owned by you or that you have the right to acquire from the Company
      be offered for your account in the Registration Statement.

     

    State
      any
      exceptions here:

     

     

     

     

    6.
      Have
      you
      made or are you aware of any arrangements relating to the distribution of the
      shares of the Company pursuant to the Registration Statement?

     

    _______
       Yes   _______
       No

     

    If
      yes,
      please describe the nature and amount of such arrangements.

     

    

     

    

     

    

     

    	7.  	
            NASD
              Matters

          

     

    (a) State
      below whether (i) you or any associate
      or
affiliate
      of yours
      are a member
      of the
      NASD, a controlling
      shareholder of an NASD member,
      a
Person
      associated
      with a member,
      a
      direct or indirect affiliate
      of a
member,
      or an
underwriter
      or related Person
      with
      respect to the proposed offering; (ii) you or any associate
      or
affiliate
      of yours
      owns any stock or other securities of any NASD member
      not
      purchased in the open market; or (iii) you or any associate
      or
affiliate
      of yours
      has made any outstanding subordinated loans to any NASD member.
      If you
      are a general or limited partnership, a no answer asserts that no such
      relationship exists for you as well as for each of your general or limited
      partners.

     

    
      	
               

              Yes:
                __________

            	
               

              No:
                __________

            

    

     

    

     

    If
“yes,”
      please identify the NASD member
      and
      describe your relationship, including, in the case of a general or limited
      partner, the name of the partner:

    

     

    

     

    

     

     

    If
      you
      answer “no” to Question 7(a), you need not respond to Question 7(b).

     

    

     

    (b)  State
      below whether you or any associate
      or
affiliate
      of yours
      has been an underwriter, or a controlling
      Person
      or member of any investment banking or brokerage firm which has been or might
      be
      an underwriter for securities of the Corporation or any affiliate
      thereof
      including, but not limited to, the common stock now being
      registered.

    
      	
               

              Yes:
                __________

            	
               

              No:
                __________

            

    

     

    If
“yes,”
      please identify the NASD member
      and
      describe your relationship, including, in the case of a general or limited
      partner, the name of the partner.

     

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ACKNOWLEDGEMENT

     

    The
      undersigned hereby agrees to notify the Company promptly of any changes in
      the
      foregoing information which should be made as a result of any developments,
      including the passage of time. The undersigned also agrees to provide the
      Company and the Company’s counsel any and all such further information regarding
      the undersigned promptly upon request in connection with the preparation,
      filing, amending, and supplementing of the Registration Statement (or any
      prospectus contained therein). The undersigned hereby consents to the use of
      all
      such information in the Registration Statement.

     

    The
      undersigned understands and acknowledges that the Company will rely on the
      information set forth herein for purposes of the preparation and filing of
      the
      Registration Statement.

     

    The
      undersigned understands that the undersigned may be subject to serious civil
      and
      criminal liabilities if the Registration Statement, when it becomes effective,
      either contains an untrue statement of a material fact or omits to state a
      material fact required to be stated in the Registration Statement or necessary
      to make the statements in the Registration Statement not misleading. The
      undersigned represents and warrants that all information it provides to the
      Company and its counsel is currently accurate and complete and will be accurate
      and complete at the time the Registration Statement becomes effective and at
      all
      times subsequent thereto, and agrees during the Effectiveness Period and any
      additional period in which the undersigned is making sales of Shares under
      and
      pursuant to the Registration Statement, and agrees during such periods to notify
      the Company immediately of any misstatement of a material fact in the
      Registration Statement, and of the omission of any material fact necessary
      to
      make the statements contained therein not misleading.

     

    

     

    Dated:
      __________

    ______________________________

    Name
      

    

    ______________________________

    Signature

    

    ______________________________

    Name
      and
      Title of Signatory

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit C

     

    OPINION
      OF COMPANY
      CORPORATE COUNSEL

     

    

     

    October
      ___, 2006

     

    

    Abengoa
      Bioenergy R&D, Inc. 

    1400
      Elbridge Payne Road

    Suite
      212

    Chesterfield,
      Missouri 63017

     

    
      	 	
              Re:

            	
              Dyadic
                International, Inc.

            

    

     

    Ladies
      and Gentlemen:

     

    We
      have
      acted as special legal counsel for Dyadic International, Inc., a Delaware
      corporation (the “Company”),
      in
      connection with its execution, delivery and performance of the Securities
      Purchase Agreement, dated as of October ___, 2006 (the "Agreement"),
      among
      the Company and Abengoa Bioenergy R&D, Inc., a Missouri corporation
      (“ABRD”),
      relating to the Company’s offer and sale, and ABRD’s purchase from the Company,
      of the Purchased Securities. All capitalized terms used herein but not otherwise
      defined herein shall have the meanings ascribed to them in the Agreement. This
      letter is being furnished to you at the request of the Company pursuant to
      Section 2.5(a) of the Agreement.

     

    A. Basis
      of Opinion.

     

    As
      the
      basis for the opinions expressed in this opinion letter, we have examined,
      considered and relied upon the following:

     

     

    1. The
      Agreement;

     

    2. The
      R&D Agreement;

     

    3. The
      form
      of No Qualified Transaction Warrant (and together with above items 1 and 2,
      the
“Transaction
      Documents”);

     

    4. The
      Amended and Restated Certificate of Incorporation certified by the Secretary
      of
      State of the State of Delaware on October ___, 2006(the “Certificate”),
      Amended and Restated Bylaws (and together with the Certificate, the
“Organizational
      Documents”)
      , and
      corporate minute books of the Company;

     

    5. The
      Amended and Restated Articles of Incorporation certified by the Secretary of
      State of the State of Florida on October ___, 2006 (the “Articles”),
      Bylaws (and together with the Articles, the “Dyadic
      Organizational Documents”)
      , and
      corporate minute books of Dyadic International (USA), Inc., a Florida
      corporation (“Dyadic”).
      

     

    6. A
      certificate of good standing with respect to each of the Company and Dyadic
      issued by the Secretary of State of the State of Delaware and the Secretary
      of
      State of the State of Florida, respectively, as of a date not more than five
      days prior to the date hereof;

     

    7. An
      officer’s certificate, dated the date hereof, of the Company delivered pursuant
      to Section 2.5(a) of the Agreement confirming that that (i) the representations
      and warranties of the Company contained in the Agreement are true and correct
      in
      all material respects as of the date when made and as of the date hereof as
      though made on and as of such date and (ii) the Company has performed or
      satisfied and complied in all material respects with all covenants, agreements
      and conditions required by the Transaction Documents to be performed, satisfied
      or complied with by it at or prior to the date hereof;

     

    8. A
      secretary's certificate, dated the date hereof, of the Company delivered
      pursuant to Section 2.5(a) of the Agreement which has attached to it and
      certifies the Organizational Documents and the authorizing resolutions of the
      Board of Directors of the Company; and

     

    9. Such
      other documents and such matters of law as we have considered necessary or
      appropriate for the expression of the opinions contained herein.

     

    For
      purposes of this opinion letter, the documents and information referred to
      in
      this Section A are collectively referred to as the "Documents."

     

    B. Assumptions.

     

    In
      rendering the opinions set forth in Section C below, we have assumed without
      investigation (i) the genuineness of all signatures (other than signatures
      of
      officers of the Company and Dyadic), (ii) the authenticity of all Documents
      submitted to us as originals, (iii) the conformity to authentic original
      documents of all Documents submitted to us as copies, (iv) the veracity of
      all
      Documents, (v) the power and capacity of each of the parties to the Transaction
      Documents (other than the Company and Dyadic) to enter into and perform their
      respective obligations thereunder; (vi) the due authorization, execution and
      delivery of the Transaction Documents by each of the parties thereto (other
      than
      the Company and Dyadic), and (vii) that the Transaction Documents constitute
      or,
      when so duly executed and delivered by the parties thereto, will constitute
      the
      valid and binding agreement of each party thereto (other than the Company and
      Dyadic).

     

    With
      respect to our opinions expressed below relating to good standing of the Company
      and Dyadic, we have relied, without independent investigation, upon the
      certificates of good standing referenced in item 6 of Section A, and our
      opinions are rendered as of the date of such certificates. We express no opinion
      as to the tax good standing of the Company or Dyadic in any jurisdiction. With
      respect to our opinion expressed below in item 7 of Section C relating to the
      capitalization of the Company, we have relied, without independent
      investigation, upon the officer’s certificate of the Company referenced in item
      7 of Section A and Schedule
      3.1(f)
      to the
      Agreement, as certified by such officer’s certificate, and our opinion is
      rendered as of the date of such officer’s certificate. The preceding
      notwithstanding, our opinion expressed in the second sentence of said item
      7 of
      Section C is not rendered upon reliance on the officer’s certificate of the
      Company referenced in item 7 of Section A or Schedule
      3.1(f)
      to the
      Agreement, but is otherwise rendered based on and subject to the other comments,
      assumptions, exceptions, qualifications and limitations set forth in Sections
      B
      and D hereof. 

     

    As
      to
      questions of fact material to the opinions hereinafter expressed, we have relied
      upon the respective representations and warranties of each of the parties made
      in the Documents. We have made no examination or investigation to verify the
      accuracy or completeness of any financial, accounting, statistical, scientific
      or other factual information set forth in the Documents or otherwise furnished
      to ABRD or material to the opinions expressed herein, and we express no opinion
      with respect thereto.

     

    C. Opinions.

     

    Based
      solely upon our examination and consideration of the Documents, and in reliance
      thereon, and subject to the comments, assumptions, exceptions, qualifications
      and limitations set forth in Sections B and D hereof, we are of the opinion
      that:

     

    1. Each
      of
      the Company and Dyadic is a corporation duly organized, validly existing and
      in
      good standing under the laws of the jurisdiction of its incorporation with
      the
      requisite legal authority to own and use its properties and assets and to carry
      on its business as currently conducted. The Company is not in violation of
      any
      of the provisions of the Organizational Documents. Dyadic is not in violation
      of
      any of the provisions of the Dyadic Organizational Documents. Each of the
      Company and Dyadic is duly qualified to do business and is in good standing
      as a
      foreign corporation 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,
      would not, individually or in the aggregate, have or reasonably be expected
      to
      result in a Material Adverse Effect.

     

    2. Each
      of
      the Company and Dyadic has the requisite corporate authority to enter into
      and
      to consummate the transactions contemplated by each of the Transaction Documents
      to which it is a party and otherwise to carry out its obligations thereunder.
      The execution and delivery of each of the Transaction Documents to which each
      of
      the Company and Dyadic is a party by each of them and the consummation by each
      of them of the transactions contemplated thereby have been duly authorized
      by
      all necessary action on the part of them and no further consent or action is
      required by either the Company or Dyadic, their respective Board of Directors
      or
      the Company’s stockholders (except for stockholder approval that may be required
      in connection with any of the issuance of the Adjustment Common Shares, the
      Adjustment Convertible Securities, the Adjustment Convertible Securities Shares,
      the Parity Warrant and the Parity Warrant Shares. Each of the Transaction
      Documents to which each of the Company and Dyadic is a party has been (or upon
      delivery will be) duly executed by each of them and is, or when delivered in
      accordance with the terms thereof, will constitute, the valid and binding
      obligation of each of the Company and Dyadic enforceable against each of them
      in
      accordance with its terms. 

     

    3. The
      execution, delivery and performance of the Transaction Documents to which each
      of the Company and Dyadic is a party by each of them and the consummation by
      the
      Company and Dyadic of the transactions contemplated thereby do not, and will
      not, (i) conflict with or violate any provision of the Company’s Organizational
      Documents or the Dyadic Organizational Documents, as applicable, (ii) conflict
      with, or constitute a default (or an event that with notice or lapse of time
      or
      both would become a default) under, or give to others any rights of termination,
      amendment, acceleration or cancellation (with or without notice, lapse of time
      or both) of, any agreement, credit facility, debt or other instrument
      (evidencing a Company debt or otherwise) listed as an Exhibit on the Company’s
      Annual Report on Form 10-KSB for the year ended December 31, 2005, except to
      the
      extent that such conflict, default, termination, amendment, acceleration or
      cancellation right would not reasonably be expected to have a Material Adverse
      Effect, or (iii) 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 Dyadic is subject (including, assuming the
      accuracy of the representations and warranties of ABRD set forth in Section
      3.2
      of the Agreement, federal and state securities laws and regulations and,
      assuming in the case of the Adjustment Common Shares, the Adjustment Convertible
      Securities, the Adjustment Convertible Securities Shares, the Parity Warrant
      and
      the Parity Warrant Shares the receipt of all required stockholder and regulatory
      approval, the rules and regulations of any self-regulatory organization to
      which
      the Company or its securities are subject, including all applicable Trading
      Markets), or by which any property or asset of the Company is bound or affected,
      except to the extent that such violation would not reasonably be expected to
      have a Material Adverse Effect.

     

    4. The
      Closing Date Shares (including the No Qualified Transaction Warrant Shares
      issuable upon the exercise of the No Qualified Transaction Warrant, if any)
      are
      duly authorized and, when issued and paid for in accordance with the Transaction
      Documents, will be duly and validly issued, fully paid and nonassessable, free
      and clear of all Liens except for restrictions on transfer imposed by applicable
      federal and state securities laws and the provisions of Section 4.7 of the
      Agreement, and will not be subject to preemptive or similar rights of
      stockholders (other than those imposed by ABRD). The Adjustment Common Shares,
      the Adjustment Convertible Securities, the Adjustment Convertible Securities
      Shares issuable upon exercise of the Adjustment Convertible Securities, and
      the
      Parity Warrant Shares issuable upon exercise of the Parity Warrant, if any,
      assuming the receipt of all required stockholder and regulatory approvals,
      are
      duly authorized and, when issued and paid for in accordance with the Transaction
      Documents, will be duly and validly issued, fully paid and nonassessable, free
      and clear of all Liens except for restrictions on transfer imposed by applicable
      federal and state securities laws and the provisions of Section 4.7 of the
      Agreement, and will not be subject to preemptive or similar rights of
      stockholders (other than those imposed by ABRD). The Company shall maintain
      a
      reserve from its duly authorized shares of Common Stock the maximum number
      of
      shares of Common Stock issuable for the Adjustment Common Shares, if any, and
      issauble upon exercise of the Adjustment Convertible Securities and/or
      Extraordinary Circumstance Warrant, if any. The offer, issuance and sale to
      ABRD
      pursuant to the Agreement of the Closing Date Shares, and the other Purchased
      Securities, if any, are exempt from the registration requirements of the
      Securities Act.

     

    5. Except
      as
      disclosed in the SEC Reports, there is no action, suit, claim, or proceeding,
      or, to our knowledge, inquiry or investigation, before or by any court, public
      board, government agency, self-regulatory organization or body pending or,
      to
      our knowledge, threatened against or affecting the Company that could,
      individually or in the aggregate, have a Material Adverse Effect.

     

    6. There
      is
      no control share acquisition, business combination, poison pill (including
      any
      distribution under a rights agreement) or other similar anti-takeover provision
      under the Company’s Organizational Documents of its state of incorporation that
      is or could become applicable to any of ABRD as a result of ABRD 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 Purchased Securities and ABRD’ ownership of the Purchased
      Securities.

     

    7. The
      aggregate number of shares issued and outstanding classes of capital stock,
      options and other Securities of the Company (whether or not presently
      convertible into or exercisable or exchangeable for shares of capital stock
      of
      the Company) as of September 30, 2006 is as set forth in Schedule
      3.1(f)
      to the
      Agreement. The aggregate number of shares and the type of all authorized classes
      of capital stock of the Company consists of 105,000,000 shares, of which
      100,000,000 shares are common stock, par value $0.001 per share, and 5,000,000
      shares are preferred stock, par value $0.0001 per share, and all outstanding
      shares of capital stock are duly authorized, validly issued, fully paid and
      nonassessable and have been issued in compliance in all material respects with
      all applicable securities laws. Except as disclosed in Schedule
      3.1(f)
      to the
      Agreement, the Company did not have outstanding at September 30, 2006 any other
      options, warrants, script 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 entered into any
      agreement giving any Person any right to subscribe for or acquire, any shares
      of
      Common Stock, or securities or rights convertible or exchangeable into shares
      of
      Common Stock. Except as set forth on Schedule
      3.1(f)
      to the
      Agreement, and except for customary adjustments as a result of stock dividends,
      stock splits, combinations of shares, reorganizations, recapitalizations,
      reclassifications or other similar events, there are no anti-dilution or price
      adjustment provisions contained in any security issued by the Company (or in
      any
      agreement providing rights to security holders) and the issuance and sale of
      the
      Purchased Securities will not obligate the Company to issue shares of Common
      Stock or other securities to any Person (other than ABRD) and will not result
      in
      a right of any holder of securities to adjust the exercise, conversion, exchange
      or reset price under such securities.

     

    8. Based
      on
      our discussions with the Company and the Company’s accountants, no facts have
      come to our attention which lead us to believe that the SEC Reports as of their
      respective dates contained any untrue statement of a material fact or omitted
      to
      state a material fact necessary in order to make the statements therein, in
      the
      light of the circumstances under which they were made, not misleading (it being
      understood that we express no view with respect to the financial statements
      and
      the notes and schedules thereto and other financial, scientific and statistical
      data or information contained or incorporated by reference therein or omitted
      therefrom). 

     

    D. Comments,
      Assumptions, Limitations, Qualifications and Exceptions.

     

    The
      opinions expressed in Section C above are based upon and subject to, the further
      comments, assumptions, limitations, qualifications and exceptions set forth
      below:

     

    1. As
      used
      in the opinions expressed herein, the phrase “to our knowledge” (and phrases of
      similar import) refers only to the actual current knowledge of the attorneys
      within our firm who have given substantive attention to the Company and Dyadic
      in connection with the transactions contemplated by the Agreement and does
      not
      (a) include constructive notice of matters or information, or (b) except for
      our
      conversations with certain representatives of the Company and Dyadic and our
      review of the Documents, imply that we have undertaken any independent
      investigation (i) with any persons outside of our firm or (ii) as to the
      accuracy or completeness of any factual representation, information or other
      matter made or furnished in connection with the transactions contemplated by
      the
      Transaction Documents. Furthermore, such reference means only that we do not
      know of any fact or circumstance contradicting the statement that follows,
      and
      does not imply that we know the statement to be correct or have any basis (other
      than the Documents and such conversations) for that statement.

     

    2. We
      are
      licensed to practice law in the States of Delaware, Florida and New York. The
      Company is incorporated in Delaware, while Dyadic is incorporated in Florida.
      The Agreement is governed by the laws of the State of New York, while the
      R&D Agreement is governed by the laws of the State of Delaware. Accordingly,
      the opinions expressed herein are specifically limited to the laws of the States
      of Delaware, Florida and New York, and the federal law of the United States
      of
      America.

     

    3. Our
      opinions above with respect to enforceability of the Company’s and Dyadic’s
      obligations under the Transaction Documents to which they are parties are
      limited and qualified to the extent that enforceability of the rights,
      obligations, agreements and remedies thereunder are subject to, or affected
      or
      limited by: (i) applicable liquidation, conservatorship, bankruptcy, insolvency,
      moratorium, fraudulent conveyance, reorganization or similar debtor or creditor
      relief laws from time to time in effect under state and/or federal law; (ii)
      general principles of equity (whether considered in a proceeding in equity
      or at
      law); (iii) the exercise of the discretionary powers of any court or other
      authority before which may be brought any proceeding seeking equitable remedies,
      including, without limitation, specific performance and injunctive relief;
      (iv)
      public policy or other applicable limitations on indemnification or contribution
      under the federal securities laws; or (v) other applicable laws (including
      rules
      and regulations) and court decisions that may limit or render unenforceable
      certain rights and remedies of ABRD (or any Person entitled to indemnification
      and contribution under Section 6.4(a) of the Agreement or in any of the other
      Transaction Documents) provided in the documents about which we opine but that
      do not, in our judgment, make such documents inadequate for the ultimate
      practical realization of the benefits intended to be provided thereby, though
      they may result in delays (and we express no opinion as to the economic
      consequences, if any, of such delays). 

     

    4. No
      opinion is expressed as to consents, approvals, authorizations or orders
      required under state securities or blue sky laws or the by laws and rules of
      the
      American Stock Exchange in connection with the Purchased Securities or the
      other
      transactions contemplated by the Agreement. We also express no opinion herein
      as
      to any provision of the Transaction Documents (a) which may be deemed to or
      construed to waive any right of the Company or Dyadic, (b) to the effect that
      rights and remedies are not exclusive, that every right or remedy is cumulative
      and may be exercised in addition to or with any other right or remedy and does
      not preclude recourse to one or more other rights or remedies, (c) relating
      to
      the effect of invalidity or unenforceability of any provision of any of the
      Transaction Documents on the validity or enforceability of any other provision
      thereof, (d) requiring the payment of penalties, consequential damages or
      liquidated damages, (e) which is in violation of public policy, including,
      without limitation, any provision relating to indemnification and contribution,
      (f) purporting to indemnify any Person against his, her or its own negligence
      or
      intentional misconduct, (g) which provides that the terms of any of the
      Transaction Documents may not be waived or modified except in writing or (h)
      relating to venue or consent to jurisdiction. 

     

    5. We
      have
      rendered no opinion herein with respect to any: (a) federal or state tax laws
      or
      regulations, (b) any federal or state antitrust and unfair competition laws
      and
      regulations, (c) any federal or state laws or regulations concerning filing
      or
      notice requirements (e.g., Hart-Scott-Rodino and Exon-Florio), or (d) any
      federal or state environmental laws. 

     

    6. Although
      we have acted as counsel to the Company and Dyadic in connection with certain
      other matters, our engagement is limited to certain matters about which we
      have
      been consulted. Consequently, there may exist matters of a legal nature
      involving the Company and/or Dyadic in connection with which we have not been
      consulted and have not represented them.

     

    7. This
      opinion letter is limited to the matters stated herein and no opinions may
      be
      implied or inferred beyond the matters expressly stated herein.

     

    8. The
      opinions set forth herein are based in part upon the federal and state
      authorities as they are currently compiled and reported on by customary
      reporting services. It is possible that legislation affecting the opinions
      expressed herein might have been enacted into law that are not reflected in
      such
      reporting services. We are not currently aware of the passage of any such
      legislation. However, it is not possible for us to know with certainty as of
      the
      date of this opinion letter whether any such legislation may have been passed
      into law.

     

    9. The
      opinions expressed herein are as of the date hereof, and we assume no obligation
      to update or supplement such opinions to reflect any facts or circumstances
      that
      may hereafter come to our attention or any changes in law that may hereafter
      occur.

     

    10. This
      opinion letter has been issued solely for the benefit of ABRD and no other
      Person shall be entitled to rely hereon without the express written consent
      of
      this firm. Without our prior written consent, this opinion letter may not be
      quoted in whole or in part or otherwise referred to in any document or report
      and may not be furnished to any Person.

     

    Respectfully
      submitted,

     

    Greenberg
      Traurig, LLP

     

    

     

    Exhibit D

     

    PLAN
      OF DISTRIBUTION

    

    The
      selling stockholders may, from time to time, sell any or all of their shares
      of
      common stock on any stock exchange, market or trading facility on which the
      shares are traded or in private transactions. These sales may be at fixed or
      negotiated prices. The selling stockholders may use any one or more of the
      following methods when selling shares:

    

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

          

     

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

          

     

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

          

     

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

          

     

    	·  	
            privately
              negotiated transactions;

          

     

    	·  	
            short
              sales;

          

     

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

          

     

    	·  	
            a
              combination of any such methods of sale;
              and

          

     

    	·  	
            any
              other method permitted pursuant to applicable
              law.

          

     

    The
      selling stockholders may also sell shares under Rule 144 under the Securities
      Act, if available, rather than under this prospectus.

    

    

    Broker-dealers
      engaged by the selling stockholders may arrange for other brokers-dealers to
      participate in sales. Broker-dealers may receive commissions or discounts from
      the selling stockholders (or, if any broker-dealer acts as agent for the
      purchaser of shares, from the purchaser) in amounts to be negotiated. The
      selling stockholders do not expect these commissions and discounts to exceed
      what is customary in the types of transactions involved. Any profits on the
      resale of shares of common stock by a broker-dealer acting as principal might
      be
      deemed to be underwriting discounts or commissions under the Securities Act.
      Discounts, concessions, commissions and similar selling expenses, if any,
      attributable to the sale of shares will be borne by a selling stockholder.
      The
      selling stockholders may agree to indemnify any agent, dealer or broker-dealer
      that participates in transactions involving sales of the shares if liabilities
      are imposed on that Person under the Securities Act.

    

    The
      selling stockholders may from time to time pledge or grant a security interest
      in some or all of the shares of common stock owned by them and, if they default
      in the performance of their secured obligations, the pledgees or secured parties
      may offer and sell the shares of common stock from time to time under this
      prospectus after we have filed a supplement to this prospectus under Rule
      424(b)(3) or other applicable provision of the Securities Act of 1933
      supplementing or amending the list of selling stockholders to include the
      pledgee, transferee or other successors in interest as selling stockholders
      under this prospectus.

    

    The
      selling stockholders also may transfer the shares of common stock in other
      circumstances, in which case the transferees, pledgees or other successors
      in
      interest will be the selling beneficial owners for purposes of this prospectus
      and may sell the shares of common stock from time to time under this prospectus
      after we have filed a supplement to this prospectus under Rule 424(b)(3) or
      other applicable provision of the Securities Act of 1933 supplementing or
      amending the list of selling stockholders to include the pledgee, transferee
      or
      other successors in interest as selling stockholders under this
      prospectus.

    

    The
      selling stockholders and any broker-dealers or agents that are involved in
      selling the shares of common stock may be deemed to be “underwriters” within the
      meaning of the Securities Act in connection with such sales. In such event,
      any
      commissions received by such broker-dealers or agents and any profit on the
      resale of the shares of common stock purchased by them may be deemed to be
      underwriting commissions or discounts under the Securities Act. 

    

    We
      are
      required to pay all fees and expenses incident to the registration of the shares
      of common stock. We have agreed to indemnify the selling stockholders against
      certain losses, claims, damages and liabilities, including liabilities under
      the
      Securities Act.

    

    The
      selling stockholders have advised us that they have not entered into any
      agreements, understandings or arrangements with any underwriters or
      broker-dealers regarding the sale of their shares of common stock, nor is there
      an underwriter or coordinating broker acting in connection with a proposed
      sale
      of shares of common stock by any selling stockholder. If we are notified by
      any
      selling stockholder that any material arrangement has been entered into with
      a
      broker-dealer for the sale of shares of common stock, if required, we will
      file
      a supplement to this prospectus. If the selling stockholders use this prospectus
      for any sale of the shares of common stock, they will be subject to the
      prospectus delivery requirements of the Securities Act.

    

    The
      anti-manipulation rules of Regulation M under the Securities Exchange Act of
      1934 may apply to sales of our common stock and activities of the selling
      stockholders.Exhibit 4.6 Form of Warrant issued to Cowen and Company, LLC

    FORM
      OF WARRANT ISSUED TO COWEN AND COMPANY, LLC

     

    NEITHER
      THESE SECURITIES NOR THE SECURITIES FOR WHICH THESE SECURITIES ARE EXERCISABLE
      HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
      SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
      REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
      EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
      AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
      REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
      SECURITIES LAWS. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE
      OF
      THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      OR
      OTHER LOAN SECURED BY SUCH SECURITIES SO LONG AS A REGISTRATION STATEMENT IS
      EFFECTIVE UNDER THE SECURITIES ACT COVERING THE RESALE OF THESE SECURITIES.
      

     

    DYADIC
      INTERNATIONAL, INC.

    

    

    

    Warrant
      No. ___Dated:
      December 1, 2006

    

    Dyadic
      International, Inc.,
      a
      Delaware corporation (the “Company”),
      hereby certifies that, for value received, Cowen and Company, LLC or its
      registered assigns (the “Holder”),
      is
      entitled to purchase from the Company up to a total of ______shares of common
      stock, $0.001 par value per share (the “Common
      Stock”),
      of
      the Company (each such share, a “Warrant
      Share”
and
      all
      such shares issuable under the warrants, the “Warrant
      Shares”)
      at an
      exercise price equal to $_____ per share (as adjusted from time to time as
      provided in Section 9, the “Exercise
      Price”),
      at
      any time after one hundred eighty (180) days from the date hereof (the first
      calendar day following such 180-day period on which this Warrant may be
      exercised is hereinafter referred to as the “Initial
      Exercise Date”)
      and
      through and including the date that is five (5) years from the Initial Exercise
      Date (the “Expiration
      Date”),
      and
      subject to the following terms and conditions. This Warrant (“Warrant”)
      is
      issued pursuant to that certain Securities Purchase Agreement, dated as of
      November 17, 2006, by and among the Company and the Investors identified therein
      (the “Purchase
      Agreement”)
      and
      that certain Letter Agreement, dated October 11, 2006 and as amended on December
      1, 2006 (the “Letter
      Agreement”),
      by
      and among the Company and Cowen and Company, LLC (“Cowen”).
      All
      such warrants are referred to herein, collectively, as the “Warrants”
and
      the
      holders thereof along with the Holder named herein, the “Holders.”

     

    1.  Definitions.
      In
      addition to the terms defined elsewhere in this Warrant, capitalized terms
      that
      are not otherwise defined herein have the meanings given to such terms in the
      Purchase Agreement.

     

    2.  Registration
      of Warrant.
      The
      Company shall register this Warrant, upon records to be maintained by the
      Company for that purpose (the “Warrant
      Register”),
      in
      the name of the record Holder hereof from time to time. The Company may deem
      and
      treat the registered Holder of this Warrant as the absolute owner hereof for
      the
      purpose of any exercise hereof or any distribution to the Holder, and for all
      other purposes, absent actual notice to the contrary.

     

    3.  Registration
      of Transfers.
      The
      Company shall register the transfer of any portion of this Warrant in the
      Warrant Register, upon surrender of this Warrant, with the Form of Assignment
      attached hereto duly completed and signed, to the Transfer Agent or to the
      Company at its address specified herein. Upon any such registration or transfer,
      a new warrant to purchase Common Stock, in substantially the form of this
      Warrant (any such new warrant, a “New
      Warrant”),
      evidencing the portion of this Warrant so transferred shall be issued to the
      transferee and a New Warrant evidencing the remaining portion of this Warrant
      not so transferred, if any, shall be issued to the transferring Holder. The
      acceptance of the New Warrant by the transferee thereof shall be deemed the
      acceptance by such transferee of all of the rights and obligations of a holder
      of a Warrant.

     

    4.  Exercise
      and Duration of Warrants.
      

     

    (a)  This
      Warrant shall be exercisable by the registered Holder at any time and from
      time
      to time commencing on the Initial Exercise Date to and including the Expiration
      Date. At 6:30 P.M., New York City time on the Expiration Date, the portion
      of
      this Warrant not exercised prior thereto shall be and become void and of no
      value. 

     

    (b)  The
      Holder may exercise this Warrant by delivering to the Company (i) an exercise
      notice, in the form attached hereto (the “Exercise
      Notice”),
      appropriately completed and duly signed, and (ii) payment of the Exercise Price
      for the number of Warrant Shares as to which this Warrant is being exercised
      (which may take the form of a “cashless exercise” if so indicated in the
      Exercise Notice pursuant to Section 10 below), and the date such items are
      delivered to the Company (as determined in accordance with the notice provisions
      hereof) is an “Exercise
      Date.”
The
      Holder shall not be required to deliver the original Warrant in order to effect
      an exercise hereunder. Execution and delivery of the Exercise Notice shall
      have
      the same effect as cancellation of the original Warrant and issuance of a New
      Warrant evidencing the right to purchase the remaining number of Warrant
      Shares.

     

    (c)  Exercise
      Disputes.
      In the
      case of any dispute with respect to the number of Warrant Shares to be issued
      upon exercise of this Warrant, the Company shall promptly issue such number
      of
      Warrant Shares that is not disputed and shall submit the disputed determinations
      or arithmetic calculations to the Holder via facsimile within two (2) Business
      Days of receipt of the Holder's election to purchase Warrant Shares. If the
      Holder and the Company are unable to agree as to the determination of the
      Exercise Price within two (2) Business Days of such disputed determination
      or
      arithmetic calculation being submitted to the Holder, then the Company shall
      in
      accordance with this Section, submit via facsimile the disputed determination
      to
      an independent reputable accounting firm of national standing, selected jointly
      by the Company and the Holder. The Company shall cause such accounting firm
      to
      perform the determinations or calculations and notify the Company and the Holder
      of the results within forty-eight (48) hours from the time it receives the
      disputed determinations of calculations. Such accounting firm's determination
      shall be binding upon all parties absent manifest error. The Company shall
      then
      on the next Business Day issue certificate(s) representing the appropriate
      number of Warrant Shares of Common Stock in accordance with such accounting
      firm's determination and this Section. The prevailing party shall be entitled
      to
      reimbursement of all fees and expenses of such determination and
      calculation.

     

    5.  Delivery
      of Warrant Shares.
      

     

    (a)  Upon
      exercise of this Warrant, the Company shall promptly (but in no event later
      than
      three Trading Days after the Exercise Date) issue or cause to be issued and
      cause to be delivered to or upon the written order of the Holder and in such
      name or names as the Holder may designate, a certificate for the Warrant Shares
      issuable upon such exercise, free of restrictive legends unless a registration
      statement covering the resale of the Warrant Shares and naming the Holder as
      a
      selling stockholder thereunder is not then effective and the Warrant Shares
      are
      not freely transferable without volume restrictions pursuant to Rule 144 under
      the Securities Act. The Holder, or any Person so designated by the Holder to
      receive Warrant Shares, shall be deemed to have become holder of record of
      such
      Warrant Shares as of the Exercise Date. Unless the Warrant Shares are required
      to be certificated with restrictive legends in accordance with this paragraph,
      the Company shall, upon request of the Holder, use its Best Efforts to deliver
      Warrant Shares hereunder electronically through the Depository Trust Corporation
      or another established clearing corporation performing similar
      functions.

     

    (b)  This
      Warrant is exercisable, either in its entirety or, from time to time, for a
      portion of the number of Warrant Shares. Upon surrender of this Warrant
      following one or more partial exercises, the Company shall issue or cause to
      be
      issued, at its expense, a New Warrant evidencing the right to purchase the
      remaining number of Warrant Shares.

     

    (c)  In
      addition to any other rights available to a Holder, if the Company fails to
      deliver to the Holder a certificate representing Warrant Shares by the fifth
      Trading Day after the date on which delivery of such certificate is required
      by
      this Warrant, and if after such fifth Trading Day and prior to the Company’s
      delivery of such certificate representing the Warrant Shares the Holder
      purchases (in an open market transaction) shares of Common Stock to deliver
      in
      satisfaction of a sale by the Holder of the Warrant Shares that the Holder
      anticipated receiving from the Company (a “Buy-In”),
      then
      the Company shall, within five Trading Days after the Holder’s request and in
      the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to
      the Holder’s total purchase price (including brokerage commissions, if any) for
      the shares of Common Stock so purchased (the “Buy-In
      Shares”
and
      the
“Buy-In
      Price,”
      respectively), at which point the Company’s obligation to deliver such
      certificate (and to issue such Warrant Shares) shall terminate, or (ii) promptly
      honor its obligation to deliver to the Holder a certificate or certificates
      representing such Warrant Shares and pay cash to the Holder in an amount equal
      to the excess (if any) of the Buy-In Price over the product of (A) such number
      of Buy-In Shares, times (B) the average of the Closing Prices during the five
      Trading Days after the date on which delivery of such certificate is required
      by
      this Warrant.

     

    (d)  The
      Company’s obligations to issue and deliver Warrant Shares in accordance with the
      terms hereof are absolute and unconditional, irrespective of any action or
      inaction by the Holder to enforce the same, any waiver or consent with respect
      to any provision hereof, the recovery of any judgment against any Person or
      any
      action to enforce the same, or any setoff, counterclaim, recoupment, limitation
      or termination, or any breach or alleged breach by the Holder or any other
      Person of any obligation to the Company or any violation or alleged violation
      of
      law by the Holder or any other Person, and irrespective of any other
      circumstance which might otherwise limit such obligation of the Company to
      the
      Holder in connection with the issuance of Warrant Shares. Nothing herein shall
      limit a Holder’s right to pursue any other remedies available to it hereunder,
      at law or in equity including, without limitation, a decree of specific
      performance and/or injunctive relief with respect to the Company’s failure to
      timely deliver certificates representing Warrant Shares upon exercise of the
      Warrant as required pursuant to the terms hereof.

     

    6.  Charges,
      Taxes and Expenses.
      Issuance and delivery of certificates for Warrant Shares upon exercise of this
      Warrant shall be made without charge to the Holder for any issue or transfer
      tax, withholding tax, transfer agent fee or other incidental tax or expense
      in
      respect of the issuance of such certificates, all of which taxes and expenses
      shall be paid by the Company; provided, however, that the Company shall not
      be
      required to pay any tax which may be payable in respect of any transfer involved
      in the registration of any certificates for Warrant Shares or Warrants in a
      name
      other than that of the Holder. The Holder shall be responsible for all other
      tax
      liability that may arise as a result of holding or transferring this Warrant
      or
      receiving Warrant Shares upon exercise hereof.

     

    7.  Replacement
      of Warrant.
      If this
      Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
      cause to be issued in exchange and substitution for and upon cancellation
      hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
      only
      upon receipt of evidence reasonably satisfactory to the Company of such loss,
      theft or destruction and customary and reasonable bond or indemnity, if
      requested. Applicants for a New Warrant under such circumstances shall also
      comply with such other reasonable regulations and procedures and pay such other
      reasonable third-party costs as the Company may prescribe.

     

    8.  Reservation
      of Warrant Shares.
      The
      Company covenants that it will at all times reserve and keep available out
      of
      the aggregate of its authorized but unissued and otherwise unreserved Common
      Stock, solely for the purpose of enabling it to issue Warrant Shares upon
      exercise of this Warrant as herein provided, 100% of the Warrant Shares which
      are then issuable and deliverable upon the exercise of this entire Warrant,
      free
      from preemptive rights or any other contingent purchase rights of persons other
      than the Holder (after giving effect to the adjustments and restrictions of
      Section
      9,
      if
      any). The Company covenants that all Warrant Shares so issuable and deliverable
      shall, upon issuance and the payment of the applicable Exercise Price in
      accordance with the terms hereof, be duly and validly authorized, issued and
      fully paid and non-assessable. The Company will take all such action as may
      be
      necessary to assure that such Warrant Shares may be issued as provided herein
      without violation of any applicable law or regulation, or of any requirements
      of
      any securities exchange or automated quotation system upon which the Common
      Stock may be listed.

     

    9.  Certain
      Adjustments.
      The
      Exercise Price and number of Warrant Shares issuable upon exercise of this
      Warrant are subject to adjustment from time to time as set forth in this
Section
      9.

     

    (a)  Stock
      Dividends and Splits.
      If the
      Company, at any time while this Warrant is outstanding, (i) pays a stock
      dividend on its Common Stock or otherwise makes a distribution on any class
      of
      capital stock that is payable in shares of Common Stock, (ii) subdivides
      outstanding shares of Common Stock into a larger number of shares, or (iii)
      combines outstanding shares of Common Stock into a smaller number of shares,
      then in each such case the Exercise Price shall be multiplied by a fraction
      of
      which the numerator shall be the number of shares of Common Stock outstanding
      immediately before such event and of which the denominator shall be the number
      of shares of Common Stock outstanding immediately after such event. Any
      adjustment made pursuant to clause (i) of this paragraph shall become effective
      immediately after the record date for the determination of stockholders entitled
      to receive such dividend or distribution, and any adjustment pursuant to clause
      (ii) or (iii) of this paragraph shall become effective immediately after the
      effective date of such subdivision or combination.

     

    (b)  Distributions
      Made Prior to Exercise.
      If the
      Company, at any time while this Warrant is outstanding, distributes pro rata
      to
      holders of Common Stock (i) evidences of its indebtedness, (ii) any security
      (other than a distribution of Common Stock covered by Section 9(a)), (iii)
      rights or warrants to subscribe for or purchase any security (except pursuant
      to
      a shareholder rights plan duly adopted by the Company’s Board of Directors), or
      (iv) any other asset (in each case, a “Distribution”),
      then,
      if, but only if, the Company fails to provide written notice of any such
      Distribution to the Holder sufficiently in advance thereof to permit the Holder
      to exercise this Warrant and be deemed a holder of Common Stock at the record
      date fixed for the determination of holders of Common Stock entitled to receive
      the Distribution (each a “Distribution
      Notice”),
      in
      each such case any Exercise Price in effect immediately prior to the close
      of
      business on the record date fixed for the determination of holders of Common
      Stock entitled to receive the Distribution shall be reduced, effective as of
      the
      close of business on such record date, to a price determined by multiplying
      such
      Exercise Price by a fraction of which (i) the numerator shall be the Weighted
      Average Price1
      of the
      Common Stock on the Trading Day immediately preceding such record date minus
      the
      value of the Distribution (as determined in good faith by the Company's Board
      of
      Directors) applicable to one share of Common Stock, and (ii) the denominator
      shall be the Weighted Average Price of the Common Stock on the Trading Day
      immediately preceding such record date.

     

    (c)  Notwithstanding
      the provisions set forth in Section
      9(b)
      above,
      if the Company, at any time while this Warrant is outstanding, makes a
      Distribution to the holders of Common Stock, and the Company fails to provide
      a
      Distribution Notice to the Holder in accordance with Section
      9(b)
      above,
      then in each such case the Holder shall have the option to receive such
      Distribution which would have been made to the Holder had such Holder been
      the
      holder of such Warrant Shares on the record date for the determination of
      stockholders entitled to such Distribution; provided,
      however,
      if the
      Holder elects to receive such Distribution, it will not be entitled to receive
      the adjustment to the Exercise Price specified in clause (b) above.

     

    (d)  Fundamental
      Transactions.
      (1) If,
      at any time while this Warrant is outstanding, (i) the Company effects any
      merger or consolidation of the Company with or into (whether or not the Company
      is the surviving corporation) another Person, (ii) the Company effects any
      sale,
      assignment, transfer, conveyance or other disposition of all or substantially
      all of its assets in one or a series of related transactions; provided, however,
      that for avoidance of doubt, the granting of a lien on all or substantially
      all
      of the Company's assets as collateral shall not be deemed a Fundamental
      Transaction (as such term is hereinafter defined) hereunder, (iii) the Company
      allows another Person to make a purchase, tender or exchange offer that is
      not
      contested by the Company and is accepted by the holders of more than the 50%
      of
      either the outstanding shares of Common Stock (not including any shares of
      Common Stock held by the Person or Persons making or party to, or associated
      or
      affiliated with the Persons making or party to, such purchase, tender or
      exchange offer), (iv) the Company consummates a stock purchase agreement or
      other business combination (including, without limitation, a reorganization,
      recapitalization, spin-off or scheme of arrangement) with another Person whereby
      such other Person acquires more than the 50% of the outstanding shares of Common
      Stock (not including any shares of Common Stock held by the other Person or
      other Persons making or party to, or associated or affiliated with the other
      Persons making or party to, such stock purchase agreement or other business
      combination), or (v) the Company effects any reclassification of the Common
      Stock or any compulsory share exchange pursuant to which the Common Stock is
      effectively converted into or exchanged for other securities, cash or property
      (other than as a result of a subdivision or combination of shares of Common
      Stock covered by Section
      9(a)
      above)
      (in any such case, a “Fundamental
      Transaction”),
      then
      the Holder shall have the right thereafter to receive, upon exercise of this
      Warrant, the same amount and kind of securities, cash or property as it would
      have been entitled to receive upon the occurrence of such Fundamental
      Transaction if it had been, immediately prior to such Fundamental Transaction,
      the holder of the number of Warrant Shares then issuable upon exercise in full
      of this Warrant (the “Alternate
      Consideration”).
      The
      aggregate Exercise Price for this Warrant will not be affected by any such
      Fundamental Transaction, but the Company shall apportion such aggregate Exercise
      Price among the Alternate Consideration in a reasonable manner reflecting the
      relative value of any different components of the Alternate Consideration.
      If
      holders of Common Stock are given any choice as to the securities, cash or
      property to be received in a Fundamental Transaction, then the Holder shall
      be
      given the same choice as to the Alternate Consideration it receives upon any
      exercise of this Warrant following such Fundamental Transaction. At the Holder’s
      request, any successor to the Company or surviving entity in such Fundamental
      Transaction shall issue to the Holder a new warrant consistent with the
      foregoing provisions and evidencing the Holder’s right to purchase the Alternate
      Consideration for the aggregate Exercise Price upon exercise thereof. The terms
      of any agreement pursuant to which a Fundamental Transaction is effected shall
      include terms requiring any such successor or surviving entity to comply with
      the provisions of this paragraph (d) and insuring that the Warrant (or any
      such
      replacement security) will be similarly adjusted upon any subsequent transaction
      analogous to a Fundamental Transaction. 

     

    (2) Notwithstanding
      the foregoing and the provisions of Section 9(b) above, in the event of a
      Fundamental Transaction in which (i) the surviving entity in the Fundamental
      Transaction is not a publicly traded company and (ii) the consideration to
      be
      delivered to the holders of Common Stock upon the occurrence of such Fundamental
      Transaction does not consist of publicly traded securities representing at
      least
      eighty percent (80%) of the value of such consideration, if the Holder has
      not
      exercised the Warrant in full prior to the consummation of such Fundamental
      Transaction, then
      the
      Holder shall have the right to require any successor to the Company or surviving
      entity in such Fundamental Transaction to purchase this Warrant from the Holder
      by paying to the Holder, simultaneously with the consummation of such
      Fundamental Transaction and
      in lieu
      of the warrant referred to in Section 9(d)(1), cash in an amount equal to the
      value of the remaining unexercised portion of this Warrant on the date of such
      consummation, which value shall be determined by use of the Black and Scholes
      Option Pricing Model reflecting (i) a risk-free interest rate corresponding
      to
      the U.S. Treasury rate for a period equal to the remaining term of this Warrant
      as of such date of request and (ii) an expected volatility equal to the lesser
      of 60% and the 100 day volatility obtained from the HVT function on
      Bloomberg.

     

    (e)  Adjustment
      Upon Issuance of Shares of Common Stock.
      If and
      whenever on or after the issuance date of this Warrant through the first one
      hundred eighty days (180) thereof, the Company issues or sells, or in accordance
      with this Section 9 is deemed to have issued or sold, any shares of Common
      Stock
      (including the issuance or sale of shares of Common Stock owned or held by
      or
      for the account of the Company) for a consideration per share (the "New
      Issuance Price")
      less
      than a price (the "Applicable
      Price")
      equal
      to the Exercise Price in effect immediately prior to such issue or sale or
      deemed issuance or sale (the foregoing a "Dilutive
      Issuance"),
      then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the New Issuance Price.
      If
      and
      whenever after such one hundred eightieth day, the Company issues or sells,
      or
      in accordance with this Section 9 is deemed to have issued or sold, any shares
      of Common Stock (including the issuance or sale of shares of Common Stock owned
      or held by or for the account of the Company) in a Dilutive Issuance, then
      immediately after such Dilutive Issuance, the Exercise Price then in effect
      shall be reduced to an amount equal to the product
      of (A) the Exercise Price in effect immediately prior to such Dilutive Issuance
      and (B) the quotient determined by dividing (1) the sum of (I) the product
      derived by multiplying the Exercise Price in effect immediately prior to such
      Dilutive Issuance and the number of shares of Common Stock Deemed Outstanding
      immediately prior to such Dilutive Issuance plus (II) the consideration, if
      any,
      received by the Company upon such Dilutive Issuance, by (2) the product derived
      by multiplying (I) the Exercise Price in effect immediately prior to such
      Dilutive Issuance by (II) the number of shares of Common Stock Deemed
      Outstanding immediately after such Dilutive Issuance. Upon
      each
      such adjustment of the Exercise Price hereunder, the number of Warrant Shares
      shall be adjusted to the number of shares of Common Stock determined by
      multiplying the Exercise Price in effect immediately prior to such adjustment
      by
      the number of Warrant Shares acquirable upon exercise of this Warrant
      immediately prior to such adjustment and dividing the product thereof by the
      Exercise Price resulting from such adjustment. For purposes of determining
      the
      adjusted Exercise Price under this Section 9(e), the following shall be
      applicable:

     

      (i)Issuance
      of Options.
      If the
      Company in any manner grants any Options and the lowest price per share for
      which one share of Common Stock is issuable upon the exercise of any such Option
      or upon conversion, exercise or exchange of any Convertible Securities issuable
      upon exercise of any such Option is less than the Applicable Price, then such
      share of Common Stock shall be deemed to be outstanding and to have been issued
      and sold by the Company at the time of the granting or sale of such Option
      for
      such price per share. For purposes of this Section 9(e)(i), the "lowest price
      per share for which one share of Common Stock is issuable upon exercise of
      such
      Options or upon conversion, exercise or exchange of such Convertible Securities"
      shall be equal to the sum of the lowest amounts of consideration (if any)
      received or receivable by the Company with respect to any one share of Common
      Stock upon the granting or sale of the Option, upon exercise of the Option
      and
      upon conversion, exercise or exchange of any Convertible Security issuable
      upon
      exercise of such Option. No further adjustment of the Exercise Price or number
      of Warrant Shares shall be made upon the actual issuance of such shares of
      Common Stock or of such Convertible Securities upon the exercise of such Options
      or upon the actual issuance of such shares of Common Stock upon conversion,
      exercise or exchange of such Convertible Securities. 

     

      (ii)Issuance
      of Convertible Securities.
      If the
      Company in any manner issues or sells any Convertible Securities and the lowest
      price per share for which one share of Common Stock is issuable upon the
      conversion, exercise or exchange thereof is less than the Applicable Price,
      then
      such share of Common Stock shall be deemed to be outstanding and to have been
      issued and sold by the Company at the time of the issuance or sale of such
      Convertible Securities for such price per share. For the purposes of this
      Section 9(e)(ii), the "lowest price per share for which one share of Common
      Stock is issuable upon the conversion, exercise or exchange" shall be equal
      to
      the sum of the lowest amounts of consideration (if any) received or receivable
      by the Company with respect to one share of Common Stock upon the issuance
      or
      sale of the Convertible Security and upon conversion, exercise or exchange
      of
      such Convertible Security. No further adjustment of the Exercise Price or number
      of Warrant Shares shall be made upon the actual issuance of such shares of
      Common Stock upon conversion, exercise or exchange of such Convertible
      Securities, and if any such issue or sale of such Convertible Securities is
      made
      upon exercise of any Options for which adjustment of this Warrant has been
      or is
      to be made pursuant to other provisions of this Section 9(e), no further
      adjustment of the Exercise Price or number of Warrant Shares shall be made
      by
      reason of such issue or sale. 

     

      (iii)Change
      in Option Price or Rate of Conversion.
      If the
      purchase price provided for in any Options, the additional consideration, if
      any, payable upon the issue, conversion, exercise or exchange of any Convertible
      Securities, or the rate at which any Convertible Securities are convertible
      into
      or exercisable or exchangeable for shares of Common Stock increases or decreases
      at any time, the Exercise Price and the number of Warrant Shares in effect
      at
      the time of such increase or decrease shall be adjusted to the Exercise Price
      and the number of Warrant Shares which would have been in effect at such time
      had such Options or Convertible Securities provided for such increased or
      decreased purchase price, additional consideration or increased or decreased
      conversion rate, as the case may be, at the time initially granted, issued
      or
      sold. For purposes of this Section 9(e)(iii), if the terms of any Option or
      Convertible Security that was outstanding as of the date of issuance of this
      Warrant are increased or decreased in the manner described in the immediately
      preceding sentence, then such Option or Convertible Security and the shares
      of
      Common Stock deemed issuable upon exercise, conversion or exchange thereof
      shall
      be deemed to have been issued as of the date of such increase or decrease.
      No
      adjustment pursuant to this Section 9(e) shall be made if such adjustment would
      result in an increase of the Exercise Price then in effect or a decrease in
      the
      number of Warrant Shares.

     

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

     

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

     

    (vi)  Notwithstanding
      the foregoing, no adjustment will be made under this Section
      9(e)
      upon the
      issuance of any Common Stock, Convertible Securities and/or Options (a) in
      connection with employee benefit plans or other plans approved by the Board
      of
      Directors of the Company for the benefit of employees, consultants or directors
      of the Company or its subsidiaries, (b) stock dividends or other events to
      which
Section
      9(a)
      applies,
      or in connection with Options or Convertible Securities outstanding immediately
      prior to the Closing; provided that the terms of such Options or Convertible
      Securities are not amended, modified or changed after the date hereof except
      under the terms of the Abengoa Securities Purchase Agreement, (c) issued under
      the Abengoa Securities Purchase Agreement (as such term is hereinafter defined),
      (d) issued under the Purchase Agreement, (e) issued under the Letter Agreement,
      (f) in connection with a bona fide acquisition by the Company or to strategic
      partners in a transaction the primary purpose of which is not to raise equity
      funds, (g) issued under a Subsequent Purchase Agreement or (h) pursuant to
      a
      firm commitment underwritten public offering with a nationally recognized
      underwriter which generates gross proceeds in excess of $25 million.

     

    (vii)  For
      purposes of this Warrant, (A) "Common
      Stock Deemed Outstanding"
      means,
      at any given time, the number of shares of Common Stock actually outstanding
      at
      such time, plus the number of shares of Common Stock deemed to be outstanding
      pursuant to Sections 9(e)(i) and 9(e)(ii) hereof regardless of whether the
      Options or Convertible Securities are actually exercisable at such time, but
      excluding any shares of Common Stock owned or held by or for the account of
      the
      Company or issuable upon conversion and exercise, as applicable, of the
      Warrants; (B) "Convertible
      Securities"
      means
      any stock or securities (other than Options) directly or indirectly convertible
      into or exercisable or exchangeable for shares of Common Stock; (C)
      "Options"
      means
      any rights, warrants or options to subscribe for or purchase shares of Common
      Stock or Convertible Securities; (D) “Abengoa
      Securities Purchase Agreement”
means
      that certain Securities Purchase Agreement dated as of October 26, 2006 by
      and
      among the Company and Abengoa Bioenergy R&D, Inc. and (E) “Subsequent Purchase
      Agreement”
means
      any other Securities Purchase Agreement (or functionally equivalent agreement)
      entered into after the date of issuance of this Warrant by the Company with
      one
      or more other Persons, pursuant to which the Company sells to such Person(s)
      Common Stock, Convertible Securities or Options or a combination thereof and
      for
      the consummation of which Cowen is paid a Placement Fee by the Company pursuant
      to the terms and conditions of the Letter Agreement.

     

    (f)  Number
      of Warrant Shares.
      Simultaneously with any adjustment to the Exercise Price pursuant to paragraph
      (a) of this Section, the number of Warrant Shares that may be purchased upon
      exercise of this Warrant shall be increased or decreased proportionately, as
      applicable, so that after such adjustment the aggregate Exercise Price payable
      hereunder for the increased or decreased, as applicable, number of Warrant
      Shares shall be the same as the aggregate Exercise Price in effect immediately
      prior to such adjustment.

     

    (g)  Calculations.
      All
      calculations under this Section
      9
      shall be
      made to the nearest cent or the nearest 1/100th of a share, as applicable.
      The
      number of shares of Common Stock outstanding at any given time shall not include
      shares owned or held by or for the account of the Company, and the disposition
      of any such shares shall be considered an issue or sale of Common
      Stock.

     

    (h)  Notice
      of Adjustments.
      Upon
      the occurrence of each adjustment pursuant to this Section
      9,
      the
      Company at its expense will promptly compute such adjustment in accordance
      with
      the terms of this Warrant and prepare a certificate setting forth such
      adjustment, including a statement of the adjusted Exercise Price and adjusted
      number or type of Warrant Shares or other securities issuable upon exercise
      of
      this Warrant (as applicable), describing the transactions giving rise to such
      adjustments and showing in detail the facts upon which such adjustment is based.
      Upon written request, the Company will promptly deliver a copy of each such
      certificate to the Holder and to the Company’s Transfer Agent.

     

    (i)  Notice
      of Corporate Events.
      If the
      Company (i) declares a dividend or any other distribution of cash, securities
      or
      other property in respect of its Common Stock, including without limitation
      any
      granting of rights or warrants to subscribe for or purchase any capital stock
      of
      the Company or any Subsidiary, (ii) authorizes or approves, enters into any
      agreement contemplating or solicits stockholder approval for any Fundamental
      Transaction or (iii) authorizes the voluntary dissolution, liquidation or
      winding up of the affairs of the Company, then the Company shall deliver to
      the
      Holder a notice describing the material terms and conditions of such
      transaction, at least ten calendar days prior to the applicable record or
      effective date on which a Person would need to hold Common Stock in order to
      participate in or vote with respect to such transaction, and the Company will
      take all steps reasonably necessary in order to insure that the Holder is given
      the practical opportunity to exercise this Warrant prior to such time so as
      to
      participate in or vote with respect to such transaction; provided, however,
      that
      the failure to deliver such notice or any defect therein shall not affect the
      validity of the corporate action required to be described in such notice.

     

    10.  Payment
      of Exercise Price.
      The
      Holder, at its election, shall pay the Exercise Price either (x) in immediately
      available funds and/or (y) through a “cashless exercise” transaction
      (i.e.,
      in
      lieu of paying the aggregate purchase price for the Warrant Shares being
      purchased upon exercise of the Warrant in cash, the Holder will forfeit a number
      of shares underlying the Warrant as determined in accordance with the following
      sentence). In the event of a “cashless exercise” transaction, the Company shall
      issue to the Holder the number of Warrant Shares determined as
      follows:

     

    
      	 	
              X
                =
                Y [(A-B)/A]

            
	
              where:

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

            
	 	 
	 	
              Y
                =
                the number of Warrant Shares with respect to which this Warrant is
                being
                exercised (prior to cashless exercise).

            
	 	 
	 	
              A
                =
                the average of the Closing Prices for the five Trading Days immediately
                prior to (but not including) the Exercise Date.

            
	 	 
	 	
              B
                =
                the Exercise Price.

            

    

    

    For
      purposes of Rule 144 promulgated under the Securities Act, it is intended,
      understood and acknowledged that the Warrant Shares issued in a cashless
      exercise transaction shall be deemed to have been acquired by the Holder, and
      the holding period for the Warrant Shares shall be deemed to have commenced,
      on
      the date this Warrant was originally issued pursuant to the Purchase
      Agreement.

     

    11.  Call
      of Warrant.
      At any
      time from time to time after the date of issuance of this Warrant (the
“Effective
      Date”),
      the
      Company shall have the right, upon 15 Trading Days’ prior written notice to the
      Holder (the “Call
      Notice”),
      to
      call all or any portion of this Warrant at a price equal to $.001 per Warrant
      Share (the “Call
      Price”)
      at any
      time, provided that (i) the Warrant Shares are registered for resale pursuant
      to
      the Securities Act and shall have been for at least the 20-trading day period
      preceding the Call Notice, (ii) the prospectus under which such Warrant Shares
      have been registered has not been suspended at any time during the 20-trading
      day period preceding the Call Notice, (iii) the Warrant Shares are currently
      listed (and have not been suspended from trading) on a Trading Market as of
      the
      date the Call Notice is delivered to the Holder through the effective date
      of
      such call and (iv) the average “VWAP” (as defined below) for the Common Stock on
      a Trading Market for any period of at least 10 consecutive Business Days is
      equal to or greater than 150% of the Exercise Price then in effect (the
“Threshold
      Price”).
      The
      Company must exercise this right to call the Warrant within 3 Trading Days
      after
      the satisfaction of the last of the conditions in clauses (i) through (iv)
      of
      the immediately foregoing sentence to be satisfied. At any time prior to the
      Effective Date of such call, the Holder shall have the right to exercise this
      Warrant in accordance with its terms. As soon as practicable after the Effective
      Date of such call, the Company shall mail or deliver to the Holder a check
      in
      the amount of the Call Price times the number of Warrant Shares remaining
      available for purchase under this Warrant at the Effective Date. Upon receipt
      of
      such check, the Holder shall surrender, via mail or delivery, this Warrant
      to
      the Company for cancellation. After the Effective Date of such call, this
      Warrant shall no longer be exercisable. For purposes of this Section 11,
“VWAP”
shall
      mean 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 a Trading
      Market, other that the OTC Bulletin Board, the daily volume weighted average
      trading price of the Common Stock for such date on the primary Trading Market
      on
      which the Common Stock is then listed or quoted as reported by Bloomberg
      Financial L.P. (based on a Trading Day from 9:30 a.m. Eastern Standard Time
      to
      4:02 p.m. Eastern Standard Time) using the AQR function; (b) if the Common
      Stock
      is not then listed or quoted on a Trading Market other than the OTC Bulletin
      Board and if prices for the Common Stock are then quoted on the OTC Bulletin
      Board, the volume weighted average trading price of the Common Stock for such
      date on the OTC Bulletin Board or if there are no trades on that date, then
      the
      average of the closing bid and ask prices of the Common Stock as reported by
      the
      OTC Bulletin Board for that date; (c) if the Common Stock is not then listed
      or
      quoted on a Trading Market or 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 for that date; or (d) in all other cases, the fair market value of
      a
      share of Common Stock as determined by a nationally recognized-independent
      appraiser selected in good faith by the Board of Directors of the
      Company.

     

    12.  Limitation
      on Exercise.
      

     

    (a)  Notwithstanding
      anything to the contrary contained herein, the number of Warrant Shares that
      may
      be acquired by the Holder upon any exercise of this Warrant (or otherwise in
      respect hereof) shall be limited to the extent necessary to insure that,
      following such exercise (or other issuance), the total number of shares of
      Common Stock then beneficially owned by such Holder and its Affiliates and
      any
      other Persons whose beneficial ownership of Common Stock would be aggregated
      with the Holder’s for purposes of Section 13(d) of the Exchange Act, does not
      exceed 9.999% (the “Maximum
      Percentage”)
      of the
      total number of issued and outstanding shares of Common Stock (including for
      such purpose the shares of Common Stock issuable upon such exercise). For such
      purposes, beneficial ownership shall be determined in accordance with Section
      13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
      The Company’s obligation to issue shares of Common Stock in excess of the
      limitation referred to in this Section shall be suspended (and shall not
      terminate or expire notwithstanding any contrary provisions hereof) until such
      time, if any, as such shares of Common Stock may be issued in compliance with
      such limitation, but in no event later than the Expiration Date. By written
      notice to the Company, the Holder may waive the provisions of this Section
      or
      increase or decrease the Maximum Percentage to any other percentage specified
      in
      such notice, but (i) any such waiver or increase will not be effective until
      the
      61st day after such notice is delivered to the Company, and (ii) any such waiver
      or increase or decrease will apply only to the Holder and not to any other
      holder of Warrants.

     

    13.  Fractional
      Shares.
      The
      Company shall not be required to issue or cause to be issued fractional Warrant
      Shares on the exercise of this Warrant. If any fraction of a Warrant Share
      would, except for the provisions of this Section, be issuable upon exercise
      of
      this Warrant, the number of Warrant Shares to be issued will be rounded up
      to
      the nearest whole share.

     

    14.  Notices.
      Any and
      all notices or other communications or deliveries hereunder (including without
      limitation any Exercise Notice) shall be in writing and shall be deemed given
      and effective on the earliest of (i) the date of transmission, if such notice
      or
      communication is delivered via facsimile at the facsimile number specified
      herein below prior to 6:30 p.m. (New York City time) on a Trading Day, (ii)
      the
      next Trading Day after the date of transmission, if such notice or communication
      is delivered via facsimile at the facsimile number specified herein below on
      a
      day that is not a Trading Day or later than 6:30 p.m. (New York City time)
      on
      any Trading Day, (iii) the Trading Day following the date of mailing, if sent
      by
      nationally recognized overnight courier service, or (iv) upon actual receipt
      by
      the party to whom such notice is required to be given. The address and facsimile
      number for each of the Company and Cowen for such notices or communications
      are:
      (1) for the Company, 140 Intracoastal Pointe Drive, Suite 404, Jupiter, Florida
      33477, Attention: Mark A. Emalfarb, Chief Executive Officer, and 561-743-8513
      and (2) for Cowen, 1221 Avenue of the Americas, 15th
      Floor,
      New York, NY 10020, Attention: David A. Ethridge, Managing Director, and
      646-562-1269.

     

    15.  Warrant
      Agent.
      The
      Company shall serve as warrant agent under this Warrant. Upon 30 days' notice
      to
      the Holder, the Company may appoint a new warrant agent. Any corporation into
      which the Company or any new warrant agent may be merged or any corporation
      resulting from any consolidation to which the Company or any new warrant agent
      shall be a party or any corporation to which the Company or any new warrant
      agent transfers substantially all of its corporate trust or stockholders
      services business shall be a successor warrant agent under this Warrant without
      any further act. Any such successor warrant agent shall promptly cause notice
      of
      its succession as warrant agent to be mailed (by first class mail, postage
      prepaid) to the Holder at the Holder's last address as shown on the Warrant
      Register.

     

    16.  Registration
      of Warrant Shares.
      The
      Holder is entitled to the benefits of the Purchase Agreement with respect to
      the
      registration of the Warrant Shares under the Securities Act. 

     

    17.  Miscellaneous.

     

    (a)  Subject
      to the restrictions on transfer set forth on the first page hereof, this Warrant
      may be assigned by the Holder. This Warrant may not be assigned by the Company,
      except to a successor in the event of a Fundamental Transaction. This Warrant
      shall be binding on and inure to the benefit of the parties hereto and their
      respective successors and assigns. Subject to the preceding sentence, nothing
      in
      this Warrant shall be construed to give to any Person other than the Company
      and
      the Holder any legal or equitable right, remedy or cause of action under this
      Warrant. 

     

    (b)  The
      Company will not, by amendment of its governing documents or through any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, seek to call or redeem this
      Warrant or avoid or seek to avoid the observance or performance of any of the
      terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such action as may
      be
      necessary or appropriate in order to protect the rights of the Holder against
      dilution or other impairment. Without limiting the generality of the foregoing,
      the Company (i) will not increase the par value of any Warrant Shares above
      the
      amount payable therefor on such exercise, (ii) will take all such action as
      may
      be reasonably necessary or appropriate in order that the Company may validly
      and
      legally issue fully paid and non-assessable Warrant Shares, free from all taxes,
      liens, security interests, encumbrances, preemptive or similar rights and
      charges of stockholders (other than those imposed by the Investors), on the
      exercise of the Warrant, and (iii) will not close its stockholder books or
      records in any manner which interferes with the timely exercise of this
      Warrant.

     

    (c)  Remedies;
      Specific Performance.
      The
      Company acknowledges and agrees that there would be no adequate remedy at law
      to
      the Holder of this Warrant in the event of any default or threatened default
      by
      the Company in the performance of or compliance with any of the terms of this
      Warrant and accordingly, the Company agrees that, in addition to any other
      remedy to which the Holder may be entitled at law or in equity, the Holder
      shall
      be entitled to seek to compel specific performance of the obligations of the
      Company under this Warrant, without the posting of any bond, in accordance
      with
      the terms and conditions of this Warrant in any court of the United States
      or
      any State thereof having jurisdiction, and if any action should be brought
      in
      equity to enforce any of the provisions of this Warrant, the Company shall
      not
      raise the defense that there is an adequate remedy at law. Except as otherwise
      provided by law, a delay or omission by the Holder hereof in exercising any
      right or remedy accruing upon any such breach shall not impair the right or
      remedy or constitute a waiver of or acquiescence in any such breach. No remedy
      shall be exclusive of any other remedy. All available remedies shall be
      cumulative.

     

    (d)  Amendments
      and Waivers.
      The
      Company may, without the consent of the Holder, by supplemental agreement or
      otherwise, (i) make any changes or corrections in this Agreement that are
      required to cure any ambiguity or to correct or supplement any provision herein
      which may be defective or inconsistent with any other provision herein or (ii)
      add to the covenants and agreements of the Company for the benefit of the Holder
      (including, without limitation, reduce the Exercise Price or extend the
      Expiration Date), or surrender any rights or power reserved to or conferred
      upon
      the Company in this Agreement; provided that, in the case of (i) or (ii), such
      changes or corrections shall not adversely affect the interests of the Holder
      in
      any material respect. . If a new Warrant Agent is appointed by the Company,
      it
      shall at the request of the Company, and without need of independent inquiry
      as
      to whether such supplemental agreement is permitted by the terms of this
Section
      16(d),
      join
      with the Company in the execution and delivery of any such supplemental
      agreements, but shall not be required to join in such execution and delivery
      for
      such supplemental agreement to become effective. 

     

    (e)  GOVERNING
      LAW; VENUE; WAIVER OF JURY TRIAL.
      THE
      CORPORATE LAWS OF THE STATE OF NEW YORK SHALL GOVERN ALL ISSUES CONCERNING
      THE
      RELATIVE RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING
      THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
      SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF NEW YORK. THE COMPANY AND HOLDER HEREBY IRREVOCABLY SUBMIT 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 BROUGHT
      BY
      THE COMPANY OR THE HOLDER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY
      TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN, AND HEREBY IRREVOCABLY
      WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY
      THE
      COMPANY OR THE HOLDER, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
      JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
      IMPROPER. EACH OF THE COMPANY AND HOLDER 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 MANNER PERMITTED BY LAW. THE COMPANY AND THE HOLDER HEREBY WAIVE ALL
      RIGHTS TO A TRIAL BY JURY.

     

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

     

    (g)  In
      case
      any one or more of the provisions of this Warrant shall be invalid or
      unenforceable in any respect, the validity and enforceability of the remaining
      terms and provisions of this Warrant shall not in any way be affected or
      impaired thereby and the parties will attempt in good faith to agree upon a
      valid and enforceable provision which shall be a commercially reasonable
      substitute therefor, and upon so agreeing, shall incorporate such substitute
      provision in this Warrant.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK,

    SIGNATURE
      PAGE FOLLOWS]

    

    

      

      
        1“Weighted
          Average Price" means, for any security as of any date, the dollar
          volume-weighted average price for such security on AMEX during the period
          beginning at 9:30:01 a.m., New York Time (or such other time as AMEX publicly
          announces is the official open of trading), and ending at 4:00:00 p.m.,
          New York
          Time (or such other time as AMEX publicly announces is the official close
          of
          trading) as reported by Bloomberg (means Bloomberg Financial Markets) through
          its "Volume at Price" functions, or, if the foregoing does not apply, the
          dollar
          volume-weighted average price of such security in the over-the-counter
          market on
          the electronic bulletin board for such security during the period beginning
          at
          9:30:01 a.m., New York Time (or such other time as such Principal Market
          publicly announces is the official open of trading), and ending at 4:00:00
          p.m.,
          New York Time (or such other time as such market publicly announces is
          the
          official close of trading) as reported by Bloomberg, if no dollar
          volume-weighted average price is reported for such security by Bloomberg
          for
          such hours, the average of the highest closing bid price and the lowest
          closing
          ask price of any of the market makers for such security as reported in
          the "pink
          sheets" by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).
          If
          the Weighted Average Price cannot be calculated for a security on a particular
          date on any of the foregoing bases, the Weighted Average Price of such
          security
          on such date shall be the fair market value as determined by the Company
          in good
          faith. All such determinations shall be appropriately adjusted for any
          share
          dividend, share split, share combination or other similar transaction during
          the
          applicable calculation period.

      

    

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
      its
      authorized officer as of the date first indicated above.

     

    
      	 
	
              DYADIC
                INTERNATIONAL, INC.

            
	 
	 
	
              By: 

            
	
              Name: 

            
	
              Title: 

            

    

    

    

    FORM
      OF EXERCISE NOTICE

    

    (To
      be
      executed by the Holder to exercise the right to purchase shares of Common Stock
      under the foregoing Warrant)

     

    To:
      Dyadic
      International, Inc.

     

    The
      undersigned is the Holder of Warrant No. _______ (the “Warrant”) issued by
Dyadic
      International, Inc.,
      a
      Delaware corporation (the “Company”). Capitalized terms used herein and not
      otherwise defined have the respective meanings set forth in the
      Warrant.

     

    	(a)  	
            The
              Warrant is currently exercisable to purchase a total of ______________
              Warrant Shares.

          

     

    	(b)  	
            The
              undersigned Holder hereby exercises its right to purchase
              _________________ Warrant Shares pursuant to the
              Warrant.

          

     

    	(c)  	
            The
              Holder intends that payment of the Exercise Price shall be made as
              (check
              one):

          

     

    ____ “Cash
      Exercise” under Section 10

    ____ “Cashless
      Exercise” under Section 10

    

    	(d)  	
            If
              the holder has elected a Cash Exercise, the holder shall pay the sum
              of
              $____________ to the Company in accordance with the terms of the
              Warrant.

          

     

    	(e)  	
            Pursuant
              to this exercise, the Company shall deliver to the holder _______________
              Warrant Shares in accordance with the terms of the
              Warrant.

          

     

    	(f)  	
            Following
              this exercise, the Warrant shall be exercisable to purchase a total
              of
              ______________ Warrant Shares.

          

     

    	(g)  	
            Notwithstanding
              anything to the contrary contained herein, this Exercise Notice shall
              constitute a representation by the Holder that, after giving effect
              to the
              exercise provided for in this Exercise Notice, the Holder (together
              with
              its affiliates) will not have beneficial ownership (together with the
              beneficial ownership of such Person's affiliates) of a number of shares
              of
              Common Stock which exceeds the Maximum Percentage of the total outstanding
              shares of Common Stock as determined pursuant to the provisions of
              Section
              12(a) of the Warrant.

          

     

    
      	
              Dated:
                ,
                

            	 	
              Name
                of Holder:

            
	 	 	 
	 	 	
              (Print)
                

            
	 	 	 
	 	 	
              By:

            
	 	 	
              Name:

            
	 	 	
              Title:

            
	 	 	
              (Signature
                must conform in all respects to name of holder as specified on the
                face of
                the Warrant)

            

    

    

    FORM
      OF ASSIGNMENT

    

    [To
      be
      completed and signed only upon transfer of Warrant]

    

    FOR
      VALUE
      RECEIVED, the undersigned hereby sells, assigns and transfers unto
      ________________________________ the right represented by the within Warrant
      to
      purchase ____________ shares of Common Stock of Dyadic
      International, Inc. to
      which
      the within Warrant relates and appoints _____________________ attorney to
      transfer said right on the books of Dyadic
      International, Inc. with
      full
      power of substitution in the premises.

     

    
      	 	 
	 	 
	
              Dated:
                ,
                

            	 
	 	 
	 	 
	 	
              (Signature
                must conform in all respects to name of holder as specified on the
                face of
                the Warrant)

            
	 	 
	 	 
	 	
              Address
                of Transferee

            
	 	 
	 	 
	 	 
	 	 
	 	 
	 	 
	
              In
                the presence of:

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