Document:

EXHIBIT 4.1(e) 

EMCOR GROUP, INC.

FIRST AMENDMENT TO 

AMENDED AND RESTATED CREDIT AGREEMENT

To the Lenders
Party to the Credit

    Agreement identified below

Ladies and
Gentlemen:

          We
refer to the Amended and Restated Credit Agreement dated as of October 14, 2005
among EMCOR Group, Inc., a Delaware corporation, Comstock Canada Ltd., a
Canadian corporation, and EMCOR Group (UK) plc., a United Kingdom public
limited company (collectively the “Borrowers”), Harris N.A., as Agent for
the Lenders, and the financial institutions from time to time parties thereto
as Lenders, all as amended and currently in effect between us (the “Credit
Agreement”). Capitalized terms used herein without definition to
have the meanings ascribed to them in the Credit Agreement. 

          The
Borrowers have requested that the Lenders make certain amendments to the Credit
Agreement, and the Lenders are willing to do so under the terms and conditions
set forth in this Agreement (herein, the “Amendment”).

SECTION 1. AMENDMENTS.

          Subject
to the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement shall be and hereby is amended and supplemented as
follows:

          1.1. Section
3.5(b) of the Credit Agreement shall be amended and restated in its entirety as
follows:

	
 

	
 

	
 

	
 

	
          (b) Asset
  Dispositions. (i) Subject to the terms of the Intercreditor
  Agreement, if any Borrower or any Restricted Subsidiary shall at any time or
  from time to time make or agree to make a Disposition or shall suffer an
  Event of Loss resulting in Net Cash Proceeds in excess of $5,000,000
  individually or on a cumulative basis in any fiscal year of the Borrowers, to
  the extent the aggregate amount of all such Net Cash Proceeds received by the
  Borrowers and the Restricted Subsidiaries during the period from and
  including the date hereof to and including the date of such Disposition or
  Event of Loss exceed 10% of the book value of assets of the Borrowers and the
  Restricted Subsidiaries as of such date, then (x) the Company shall
  promptly notify the Agent of such proposed Disposition or Event of Loss
  (including the amount of the estimated Net Cash Proceeds to be received by
  such Borrower or such Subsidiary in respect thereof) and (y) such Net
  Cash Proceeds shall be paid over to the Agent promptly upon

	
 

	
 

	
 

	
 

	
 

	
receipt by
  such Borrower or such Restricted Subsidiary of the Net Cash Proceeds of such
  Disposition or Event of Loss for application as set forth herein. Subject to
  the terms of the Intercreditor Agreement, immediately upon receipt by the
  Borrower or such Restricted Subsidiary of such Net Cash Proceeds, the
  Commitments shall ratably terminate in an aggregate amount equal to 100% of
  the amount of all such Net Cash Proceeds and the Agent shall apply such Net
  Cash Proceeds to the payment of all amounts, if any, required by
  Section 3.5(c) hereof; provided that in the case of each
  Disposition and Event of Loss so long as no Default or Event of Default shall
  have occurred and is then continuing, if the Company states in its notice of
  such event that the applicable Borrower or the applicable Subsidiary intends
  to reinvest, within 180 days of the applicable Disposition or receipt of Net
  Cash Proceeds from an Event of Loss, the Net Cash Proceeds thereof in assets
  similar to the assets which were subject to such Disposition or Event of
  Loss, then the Agent shall deposit such Net Cash Proceeds in the Collateral
  Account and the Commitments shall not so terminate under this Section to the
  extent such Net Cash Proceeds are actually reinvested in such similar assets
  within such 180-day period. Concurrently with any such reinvestment, the
  Agent shall return the amount of such Net Cash Proceeds to be reinvested to
  the Company. Subject to the terms of the Intercreditor Agreement, promptly
  after the end of such 180-day period, in the event that the applicable
  Borrower or Restricted Subsidiary has not reinvested any of such Net Cash
  Proceeds in such similar assets, the Commitments shall immediately terminate
  in an amount equal to 100% of such Net Cash Proceeds and the Agent shall
  promptly apply such Net Cash Proceeds to the payment of all amounts, if any,
  required by Section 3.5(c) below and release the balance thereof to the
  Company. In the event and to the extent that any Commitment reduction
  pursuant to this Section 3.5(b) does not require a prepayment of Loans
  or prefunding of L/C Obligations pursuant to Section 3.5(c) below, the
  Agent shall promptly return the Net Cash Proceeds not required for such purpose
  to the Company.

	
 

          1.2. Section
5.13 of the Credit Agreement shall be amended and restated in its entirety to
read as follows:

	
 

	
 

	
 

	
 

	
          Section 5.13. Investment
  Company. No Borrower nor any Subsidiary is an
  “investment company” or a company “controlled” by an “investment company”
  within the meaning of the Investment Company Act of 1940, as amended.

	
 

          1.3. Section
7.10(b) of the Credit Agreement shall be amended and restated to read in its
entirety as follows:

	
 

	
 

	
 

	
 

	
          (b) Long-term
  secured indebtedness of the Borrowers in an aggregate principal amount not to
  exceed an amount equal to $500,000,000 (less the aggregate principal amount
  of all Commitment Amount Increases over $25 million pursuant to
  Section 1.10 hereof at any one time outstanding) on terms and conditions
  reasonably satisfactory to the Required Lenders including without limitation
  that the holders of such indebtedness have entered into an intercreditor
  agreement with the Agent in form and substance reasonably satisfactory to the
  Required Lenders.

	
 

2-

          1.4. Section
7.10(e) of the Credit Agreement shall be and hereby is amended by deleting the
amount “$10,000,000”
appearing in the last line thereof and inserting in its place the
amount “$20,000,000”.

          1.5. Section 7.10
of the Credit Agreement is hereby further amended by (i) striking the word
“and”
appearing at the end of clause (m) thereof, (ii) striking the period
appearing at the end of clause (n) thereof and substituting therefor a
semi-colon, (iii) striking the period appearing at the end of
clause (o) thereof and substituting therefor a semi-colon followed by the
word “and”
and (iv) adding thereto a new subsection (p) which reads as follows:

	
 

	
 

	
 

	
 

	
          (p) To
  the extent the Company incurs long-term secured indebtedness permitted by
  Section 7.10(b), the Company may incur subordinated indebtedness to
  refinance such secured indebtedness; provided such subordinated indebtedness
  is subordinated to the Obligations and Hedging Liability and any other outstanding
  long-term secured indebtedness permitted by Section 7.10(b) pursuant to
  a subordination agreement in form and substance reasonably satisfactory to
  the Required Lenders.

	
 

          1.6. Section
7.11(d) of the Credit Agreement shall be and hereby is amended by deleting the
phrase “the
Agent” in the first line thereof and inserting in its place the
phrase “the
Collateral Agent”.

          1.7 Section
7.12(j) of the Credit Agreement shall be and hereby is amended by (a) deleting
the amount “$300,000,000”
appearing in clause (iv) thereof and inserting in its place the
amount “$500,000,000”,
(b) deleting the amount “$25,000,000” appearing in clause (iv)
thereof and inserting in its place the amount “$50,000,000” and (c)
inserting the parenthetical “(the parties
hereto hereby confirm and agree that the foregoing provisions of this Section
7.12(j) shall not apply to the FR Acquisition which is permitted hereby)” immediately following the phrase
“investments
in Restricted Subsidiaries which are not Guarantors” in the last
line thereof.

          1.8. Section
7.16(i)(x) of the Credit Agreement shall be amended and restated to read in its
entirety as follows:

	
 

	
 

	
 

	
 

	
          (x) $125,000,000
  plus (but not minus in the case of a deficit) 50% of Net Income for the period
  (taken as a single accounting period) from July 1, 2007 to the last day
  of the calendar quarter most recently completed prior to the Restricted
  Payment in question and

	
 

          1.10. The
definition of “Change in Control” appearing in Section 9.1 of the Credit
Agreement shall be and hereby is amended by deleting the name “Leicle
Chesser” and inserting in its place the name “Mark A. Pompa”.

          1.11. The
definition of “Collateral Documents” appearing in Section 9.1 of the
Credit Agreement shall be amended and restated to read in its entirety as
follows:

	
 

	
 

	
 

	
 

	
          “Collateral
  Documents” means the Intercreditor Agreement and all security
  agreements, pledge agreements, hypothecs, assignments, financing

	
 

3-

	
 

	
 

	
 

	
 

	
statements,
  debentures and other documents as shall from time to time secure the
  Revolving Credit Notes or any other Obligations.

	
 

          1.12. The
definition of “Permitted Acquisitions” appearing in Section 9.1 of the
Credit Agreement shall be and hereby is amended by adding the sentence “The parties
hereto hereby agree that the FR Acquisition shall constitute a Permitted
Acquisition for all purposes of this Agreement.” immediately after
clause (e) in the definition.

          1.13. Section
9.1 of the Credit Agreement shall be further amended by adding the following
definitions, each to appear in the proper alphabetical order to read as
follows:

	
 

	
 

	
 

	
 

	
          “Collateral
  Agent” means Harris N.A., or any successor Collateral Agent appointed
  pursuant to the terms of the Intercreditor Agreement.

	
 

	
 

	
 

	
 

	
 

	
          “FR
  Acquisition” means the acquisition by the Borrower of substantially all of the
  outstanding capital stock of the Target. 

	
 

	
 

	
 

	
 

	
 

	
          “Intercreditor
  Agreement” means that certain Intercreditor and Collateral Agency Agreement to be
  entered into by and among the Collateral Agent, the Agent and the Term Loan
  Agent, as such agreement may be amended, modified, restated or supplemented
  from time to time.

	
 

	
 

	
 

	
 

	
 

	
          “Target”
means FR X Ohmstede Acquisitions
  Co., a Delaware corporation and its Subsidiaries.

	
 

	
 

	
 

	
 

	
 

	
          “Term
  Loan Agent” means Bank of Montreal or any successor agent under the Term Loan
  Agreement.

	
 

	
 

	
 

	
 

	
 

	
          “Term
  Loan Agreement” means that certain Term Loan
  Agreement to be entered into by and among the Company, the Lenders party
  thereto and the Term Loan Agent, as such agreement may be amended, modified,
  restated or supplemented from time to time.

	
 

          1.10. Section
10.1 of the Credit Agreement shall be and hereby is amended by adding the following
sentence “Each
Lender hereby appoints Harris N.A. as Collateral Agent.” Immediately
following the last sentence thereof.

          1.14. Section
10.11 of the Credit Agreement shall be amended and restated to read in its
entirety as follows:

	
 

	
 

	
 

	
 

	
          Section 10.11. Authorization
  to Enter into, and Enforcement of, the Collateral Documents.
  Each of the Agent and the Collateral Agent is hereby irrevocably authorized
  by each of the Lenders to execute and deliver the Collateral Documents
  (including the Intercreditor Agreement) on behalf of each of the Lenders and
  their Affiliates and to take such action and exercise such powers under the
  Collateral Documents as the Agent or Collateral Agent, as applicable,
  considers appropriate, provided that neither the Agent nor
  Collateral Agent shall amend the Collateral Documents unless such amendment
  is agreed to in writing 

	
 

4-

	
 

	
 

	
 

	
 

	
by the
  Required Lenders. Each Lender acknowledges and agrees that it will be bound
  by the terms and conditions of the Collateral Documents upon the execution
  and delivery thereof by the Agent and/or the Collateral Agent, as applicable.
  Except as otherwise specifically provided for herein, no Lender (or its
  Affiliates) other than the Collateral Agent shall have the right to institute
  any suit, action or proceeding in equity or at law for the foreclosure or
  other realization upon any Collateral or for the execution of any trust or
  power in respect of the Collateral or for the appointment of a receiver or
  for the enforcement of any other remedy under the Collateral Documents; it
  being understood and intended that no one or more of the Lenders (or their
  Affiliates) shall have any right in any manner whatsoever to affect, disturb
  or prejudice the Lien of the Collateral Agent (or any security trustee
  therefor) under the Collateral Documents by its or their action or to enforce
  any right thereunder, and that all proceedings at law or in equity shall be
  instituted, had, and maintained by the Collateral Agent (or its security
  trustee) in the manner provided for in the relevant Collateral Documents for
  the benefit of the Lenders and their Affiliates.

	
 

          1.15. Section
11.17 of the Credit Agreement shall be and hereby is amended by deleting the
parenthetical “(provided, that the Company may withhold its consent to an assignment
by the Agent in its sole discretion if after giving effect thereto the Agent
would have Commitment, computed prior to giving effect to any reductions or
termination of the Commitments, of less than $25,000,000)” appearing
in clause (iii) therein.

          1.16. Schedules
4.2, 5.2, 5.9, 7.10, 7.11 and 7.12 of the Credit Agreement shall be amended and
restated by Schedules 4.2, 5.2, 5.9, 7.10, 7.11 and 7.12 attached hereto.

SECTION 2. CONDITIONS PRECEDENT. 

          The
effectiveness of this Amendment is subject to the satisfaction of all of the
following conditions precedent:

	
 

	
 

	
 

	
          2.1. The
  Borrowers and the Required Lenders shall have executed this Amendment.

	
 

	
 

	
 

	
          2.2. Legal
  matters incident to the execution and delivery of this Amendment shall be
  satisfactory to the Agent and its counsel.

SECTION 3. REPRESENTATIONS AND WARRANTIES.

          Each
of the Borrowers, by its execution of this Amendment, hereby certifies and
warrants the following:

	
 

	
 

	
 

	
          (a) after
  giving effect to the amendments to the Credit Agreement set forth herein,
  each of the representations and warranties set forth in Section 5 of the
  Credit Agreement is true and correct as of the date hereof as if made on the
  date hereof, except that the representations and warranties made under
  Section 5.5 of the Credit Agreement shall be deemed to refer to the most
  recent annual report furnished to the Lenders by the Borrowers; and

5-

	
 

	
 

	
 

	
          (b) each
  of the Borrowers is in full compliance with all of the terms and conditions
  of the Credit Agreement and no Default or Event of Default has occurred and
  is continuing thereunder.

SECTION 4. MISCELLANEOUS.

          4.1. The
  Borrowers and the Guarantors heretofore executed and delivered to the Agent
  and Collateral Agent the Collateral Documents. Each Borrower hereby
  acknowledges and agrees that the Liens created and provided for by the
  Collateral Documents continue to secure, among other things, the Obligations
  arising under the Credit Agreement as amended hereby; and the Collateral
  Documents and the rights and remedies of the Agent, the Collateral Agent and
  the Lenders thereunder, the obligations of the Borrowers and the Guarantors
  thereunder, and the Liens created and provided for thereunder remain in full
  force and effect and shall not be affected, impaired or discharged hereby.
  Nothing herein contained shall in any manner affect or impair the priority of
  the liens and security interests created and provided for by the Collateral Documents
  as to the indebtedness which would be secured thereby prior to giving effect
  to this Amendment. The Borrowers and the Guarantors heretofore executed and
  delivered to the Agent that certain Amended and Restated Guaranty Agreement
  dated as of October 14, 2005 (the “Guaranty”). Each Borrower hereby
  acknowledges and agrees that the “indebtedness hereby guaranteed” set
  forth in the Guaranty continues to include, among other things, the
  Obligations arising under the Credit Agreement as amended hereby; and the
  Guaranty and the rights and remedies of the Agent and the Lenders thereunder,
  the Obligations of the Borrowers thereunder, remain in full force and effect
  and shall not be affected, impaired or discharged hereby. 

          4.2 No
  reference to this Amendment need be made in any Loan Document or other
  instrument or document referring to the Credit Agreement, a reference to the
  Credit Agreement in any of such to be deemed to be a reference to the Credit
  Agreement as amended hereby. The Borrowers hereby certify to the Lenders that
  no Default or Event of Default has occurred and is continuing. This Amendment
  may be executed in any number of counterparts and by different parties hereto
  on separate counterparts, all of such counterparts taken together to be
  deemed to constitute one and the same instrument. This Amendment shall be
  construed in accordance with and governed by the internal laws of the state
  of Illinois.

          4.3. By
  its execution hereof, each Lender hereby confirms that for purposes of
  Section 7.10(b) of the Credit Agreement, as amended hereby, each of the
  Intercreditor Agreement and the Term Loan Agreement substantially in the form
  attached hereto as Exhibits A and B, respectively, is reasonably satisfactory
  in form and substance.

          4.4. Each
  of the Borrowers hereby agree to pay all reasonable costs and expenses,
  including without limitation attorneys fees, incurred by the Agent in
  connection with the preparation, negotiation, execution and delivery of this
  Amendment and the other documents contemplated hereby.

[SIGNATURE PAGES TO FOLLOW]

6-

          Dated as of
  this ___ day of September, 2007.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR GROUP,
  INC.

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
Its

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
COMSTOCK
  CANADA LTD.

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
Its

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR GROUP
  (UK) PLC.

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
Its

	
 

	
 

	
 

	

	
 

          Accepted and agreed to as of the day and years last above
written.

	
 

	
 

	
 

	
 

	
 

	
HARRIS N.A.,

	
 

	
 

	
individually
 and as Agent

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
BANK OF MONTREAL

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
BANK HAPOALIM B.M.

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
BANK OF AMERICA, N.A.

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
THE GOVERNOR AND COMPANY
 OF BANK OF SCOTLAND

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
FIFTH THIRD BANK

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

-2-

	
 

	
 

	
 

	
 

	
 

	
JPMORGAN CHASE BANK, N.A.

	
 

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
LASALLE BANK NATIONAL ASSOCIATION

	
 

	
 

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
NATIONAL CITY BANK

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
THE NORTHERN TRUST COMPANY

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
SOVEREIGN BANK

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
U.S. BANK, NATIONAL ASSOCIATION

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

	
 

	
 

	
 

	
WEBSTER BANK, NATIONAL ASSOCIATION

	
 

	
 

	
 

	
By

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Name:

	
 

	
 

	
 

	
 

	

	
 

	
 

	
Title:

	
 

	
 

	
 

	

-3-

EXHIBIT A

INTERCREDITOR AND COLLATERAL
AGENCY AGREEMENT

EXHIBIT B

TERM LOAN AGREEMENT

SCHEDULE
4.2

THE
GUARANTORS

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Group, Inc.

	
 

	
Delaware

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Government Services, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Aircond Corporation

	
 

	
Georgia

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Betlem Service Corporation

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CES Facilities Management Services, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Combustioneer Corporation

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Services Midwest, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Services New York/New Jersey, Inc.

	
 

	
Trimech Plumbing, LLC

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Services New York/New Jersey, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Viox Services, Inc.

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dyn Specialty Contracting, Inc.

	
 

	
Virginia

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company

	
 

	
Delaware

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company of Nevada

	
 

	
Nevada

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Contra Costa Electric

	
 

	
California

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
B&B Contracting & Supply Company

	
 

	
Texas

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
KDC, Inc.

	
 

	
California

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Construction Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Heritage Mechanical Services, Inc.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Welsbach Electric Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Forest Electric Corp.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Welsbach Electric Corp. of L.I.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Penguin Maintenance and Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Penguin Air Conditioning

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Inte-Fac Corp.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
R.S. Harritan & Company, Inc.

	
 

	
Virginia

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

-2-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
J.C. Higgins Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Illingworth Corporation

	
 

	
Wisconsin

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
New England Mechanical Services of Massachusetts,
  Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
New England Mechanical Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
New England Mechanical Services, Inc.

	
 

	
Connecticut

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Labov Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
J.C. Higgins Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Midland Fire Protection, Inc.

	
 

	
Rhode Island

	
 

	
100%

	
 

	
J.C. Higgins Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Labov Plumbing, Inc.

	
 

	
Delaware

	
 

	
90%

	
 

	
Labov Mechanical, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Duffy Mechanical Corp.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Hyre Electric Co. of Indiana, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company of Ohio

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Gibson Electric Co., Inc.

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric of Michigan, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Mechanical & Engineering Contractors,
  Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Pace Mechanical Services, Inc.

	
 

	
Michigan

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc.

-3-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Fred B. DeBra Co.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Mechanical & Engineering Contractors,
  Inc.

	
 

	
Arizona

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc., a California corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Hansen Mechanical Contractors

	
 

	
Nevada

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc., a California corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Trautman & Shreve, Inc.

	
 

	
Colorado

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc., a California corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Gowan, Inc.

	
 

	
Texas

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR International, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Marelich Mechanical Co., Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Design Air, Limited

	
 

	
Washington

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
S.A. Comunale

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Marelich Mechanical, Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Energy Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Mesa Energy Systems, Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

-4-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Services Northeast, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Services New York/New Jersey, Inc.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Building Technology Engineers, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
BTE Service, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Fluidics, Inc.

	
 

	
Pennsylvania

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Air Systems, Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Monumental Investment Corporation

	
 

	
Maryland

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Poole and Kent Corporation

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole and Kent - Connecticut, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole and Kent - New England, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Monumental Heating, Ventilating and Air Conditioning
  Contractors, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Forti/Poole and Kent, L.L.C.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Heating, Ventilating and Air Conditioning
  Contractors, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
HVAC, Ltd.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

-5-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Great Monument Construction Company

	
 

	
Maryland

	
 

	
100%

	
 

	
HVAC, Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Atlantic Coast Mechanical, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
HVAC, Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Poole and Kent Company

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole & Kent Company of Florida

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR-CSI Holding Co.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CSUSA Holdings, L. L. C.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CS48 Acquisition Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
CSUSA Holdings, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Shambaugh & Son, L.P.

	
 

	
Texas

	
 

	
General Partner

	
 

	
CSUSA Holdings, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Texas

	
 

	
Limited Partner

	
 

	
CS48 Acquisition Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Border Electric Co., L.P.

	
 

	
Texas

	
 

	
General Partner

	
 

	
CSUSA Holdings, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Texas

	
 

	
Limited Partner

	
 

	
CS48 Acquisition Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Border Mechanical Co., L.P.

	
 

	
Texas

	
 

	
General Partner

	
 

	
CSUSA Holdings, LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Texas

	
 

	
Limited Partner

	
 

	
CS48 Acquisition Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Central Mechanical Construction Co., Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F & G Mechanical Corporation

	
 

	
Delaware

	
 

	
90%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F & G Plumbing, Inc.

	
 

	
New Jersey

	
 

	
100%

	
 

	
F & G Mechanical Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F & G Management, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Hillcrest Sheet Metal, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

-6-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER          

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Kilgust Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Kuempel Service, Inc.

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Lowrie Electric Company

	
 

	
Tennessee

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Mandell Mechanical Corporation

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Maximum Refrigeration & Air Conditioning Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Meadowlands Fire Protection Corp.

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
North Jersey Mechanical Contractors, Inc.

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Nogle & Black Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Fagan Company

	
 

	
Kansas

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Walker J Walker, Inc.

	
 

	
Tennessee

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MES Holdings Corporation

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Group, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
FR X Ohmstede Acquisitions Co.*

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
HNT Holdings Inc.*

	
 

	
Delaware

	
 

	
100%

	
 

	
FR X Ohmstede Acquisitions Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Partners LLC*

	
 

	
Delaware

	
 

	
100%

	
 

	
HNT Holdings Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Holdings LLC*

	
 

	
Delaware

	
 

	
100%

	
 

	
HNT Holdings Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Ltd.*

	
 

	
Texas

	
 

	
1%

	
 

	
Ohmstede Partners LLC

	
 

	
 

	
 

	
 

	
99%

	
 

	
Ohmstede Holdings LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Industrial Services, Inc.*

	
 

	
Texas

	
 

	
100%

	
 

	
Ohmstede Ltd.

-7-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
        OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Beaumont Real Estate Holding Company*

	
 

	
Texas

	
 

	
100%

	
 

	
Ohmstede Ltd.

* Effective upon the acquisition of FR X Ohmstede
  Acquisitions Co. By EMCOR Group, Inc.

-8-

SCHEDULE
5.2

RESTRICTED
SUBSIDIARIES

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF

  INCORPORATION

	
 

	
PERCENTAGE

  OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Aircond Corporation

	
 

	
Georgia

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Aircond Atlanta Corporation

	
 

	
Georgia

	
 

	
100%

	
 

	
Aircond Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Betlem Service Corporation

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CES Facilities Management Services, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Combustioneer Corporation

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Services Midwest, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Illingworth Corporation

	
 

	
Wisconsin

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
New England Mechanical Services of Massachusetts,
  Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
New England Mechanical Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
New England Mechanical Services, Inc.

	
 

	
Connecticut

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Trimech Plumbing, L.L.C.

	
 

	
Delaware

	
 

	
90%

	
 

	
EMCOR Services New York/New Jersey, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Viox Services, Inc.

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR Government Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
Virginia

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company

	
 

	
DELAWARE

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company of Nevada

	
 

	
Nevada

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Contra Costa Electric, Inc.

	
 

	
California

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
B&B Contracting & Supply Company

	
 

	
Texas

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
KDC, Inc.

	
 

	
California

	
 

	
100%

	
 

	
DYN Specialty Contracting, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Construction Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Defender Indemnity, Ltd.

	
 

	
Vermont

	
 

	
100%

	
 

	
EMCOR Risk Holdings, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Risk Holdings, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Mechanical/Electrical Services, (East), Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Heritage Mechanical Services, Inc.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Heritage M& S, Inc.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Welsbach Electric Corp.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Welsbach Electric Corp. of L.I.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Forest Electric Corp.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

-2-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Penguin Maintenance and Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Inte-Fac Corp.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Penguin Air Conditioning Corp.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
R.S. Harritan & Company, Inc.

	
 

	
Virginia

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
J.C. Higgins Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Midland Fire Protection, Inc.

	
 

	
Rhode Island

	
 

	
100%

	
 

	
J. C. Higgins Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Labov Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
J.C. Higgins Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Labov Plumbing, Inc.

	
 

	
Delaware

	
 

	
90%

	
 

	
Labov Mechanical, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Duffy Mechanical Corp.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corp. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Mesa Energy Systems, Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Newcomb Anderson Associates

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Services Northeast, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Government Services, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Services New York/New Jersey, Inc.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Consolidated Engineering Services, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

-3-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
BTE Service, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Building Technology Engineers, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Fluidics, Inc.

	
 

	
Pennsylvania

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Air Systems, Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Trimech Corporation

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Gotham Air Conditioning Service, Inc.

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company of Ohio

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Dynalectric Company of Michigan

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Gibson Electric Co., Inc.

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Hyre Electric Co. of Indiana, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Fred B. DeBra Co.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Mechanical & Engineering Contractors,
  Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
S. A. Comunale Co., Inc.

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
BALCO, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Commonwealth Air Conditioning and Heating, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CommAir, Inc.

	
 

	
Massachusetts

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

-4-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Pace Mechanical Services, Inc.

	
 

	
Michigan

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Mechanical & Engineering Contractors,
  Inc.

	
 

	
Arizona

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc., a California corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MES Holdings Corporation

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Group, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Hansen Mechanical Contractors, Inc.

	
 

	
Nevada

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc., a California corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Trautman & Shreve, Inc.

	
 

	
Colorado

	
 

	
100%

	
 

	
University Mechanical & Engineering Contractors,
  Inc., a California corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Marelich Mechanical Co., Inc.

	
 

	
California

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Design Air, Limited

	
 

	
Washington

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Gowan, Inc.

	
 

	
Texas

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Marelich Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Energy Services, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Construction Services, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR International, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Monumental Investment Corporation

	
 

	
Maryland

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Poole and Kent Corporation

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

-5-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole and Kent – Connecticut, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole and Kent – New England, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole & Kent Company of Florida

	
 

	
Delaware

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Monumental Heating, Ventilating and Air Conditioning
  Contractors, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Forti/Poole and Kent L.L.C.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Heating, Ventilating and Air Conditioning
  Contractors, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
HVAC, Ltd.

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Atlantic Coast Mechanical, Inc.

	
 

	
Maryland

	
 

	
100%

	
 

	
HVAC, Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Great Monument Construction Company

	
 

	
Maryland

	
 

	
100%

	
 

	
HVAC, Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Poole and Kent Company

	
 

	
Maryland

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR-CSI Holdings Co.

	
 

	
Delaware

	
 

	
100%

	
 

	
MES Holdings Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CSUSA Holdings L.L.C.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
CS48 Acquisition Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
CSUSA Holdings L.L.C. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Shambaugh & Son, L.P.

	
 

	
Texas

	
 

	
General Partner

	
 

	
CSUSA Holdings L.L.C. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Shambaugh & Son, L.P.

	
 

	
Texas

	
 

	
Limited Partner

	
 

	
CS48 Acquisition Corp. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Border Electric Co., L.P.

	
 

	
Texas

	
 

	
General Partner

	
 

	
CSUSA Holdings L.L.C. 

-6-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
                  OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Border Electric Co., L.P.

	
 

	
Texas

	
 

	
Limited Partner

	
 

	
CS48 Acquisition Corp. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Border Mechanical Co., L.P.

	
 

	
Texas

	
 

	
General Partner

	
 

	
CSUSA Holdings L.L.C. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Border Mechanical Co., L.P.

	
 

	
Texas

	
 

	
Limited Partner

	
 

	
CS48 Acquisition Corp. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
AM Contractors 1, Inc.

	
 

	
Michigan

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Central Mechanical Construction Co., Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F & G Mechanical Corporation

	
 

	
Delaware

	
 

	
90%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F & G Plumbing, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
F & G Mechanical Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
F & G Management, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holdings, L.L.C. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Hillcrest Sheet Metal, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Kilgust Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Kuempel Service, Inc.

	
 

	
Ohio

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Lowrie Electric Company, Inc.

	
 

	
Tennessee

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Mandell Mechanical Corporation

	
 

	
New York

	
 

	
100%

	
 

	
EMCOR Mechanical/Electrical Services (East), Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Maximum Refrigeration & Air Conditioning Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Meadowlands Fire Protection Corp.

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Nogle & Black Mechanical, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
North Jersey Mechanical Contractors, Inc.

	
 

	
New Jersey

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
The Fagan Company

	
 

	
Kansas

	
 

	
100%

	
 

	
EMCOR CSI Holding Co. 

-7-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
OWNER      

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Walker-J-Walker, Inc.

	
 

	
Tennessee

	
 

	
100%

	
 

	
EMCOR CSI Holding Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
FR X Ohmstede Acquisitions Co.*

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Facilities Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
HNT Holdings Inc.*

	
 

	
Delaware

	
 

	
100%

	
 

	
FR X Ohmstede Acquisitions Co.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Partners LLC*

	
 

	
Delaware

	
 

	
100%

	
 

	
HNT Holdings Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Holdings LLC*

	
 

	
Delaware

	
 

	
100%

	
 

	
HNT Holdings Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede LTD.*

	
 

	
Texas

	
 

	
1%

	
 

	
Ohmstede Partners LLC

	
 

	
 

	
 

	
 

	
99%

	
 

	
Ohmstede Holdings LLC

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Ohmstede Industrial Services, Inc.*

	
 

	
Texas

	
 

	
100%

	
 

	
Ohmstede Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Beaumont Real Estate Holding Company*

	
 

	
Texas

	
 

	
100%

	
 

	
Ohmstede Ltd. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
3072455 Nova Scotia Company

	
 

	
Canada

	
 

	
100%

	
 

	
EMCOR International, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Comstock Canada, Ltd.

	
 

	
Canada

	
 

	
100%

	
 

	
3072454 Nova Scotia Company

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
3072454 Nova Scotia Company

	
 

	
Canada

	
 

	
100%

	
 

	
EMCOR International, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Comstock Power Ltd.

	
 

	
Canada

	
 

	
100%

	
 

	
Comstock Canada, Ltd. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Holdings LP

	
 

	
Canada

	
 

	
99%

	
 

	
3072454 Nova Scotia Company

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR (UK) Limited

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR International, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Group (UK) plc

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR (UK) Limited

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Facilities Services Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull Airport Services, Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Energy Services, Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

-8-

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF INCORPORATION

	
 

	
PERCENTAGE OWNERSHIP

	
 

	
                  OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull International, Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Rail Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Energy Services,
  Inc.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake &Scull Holdings Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Delcommerce (Contract Services) Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR (UK) Limited

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull (Scotland) Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR (UK) Limited

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
DSE (Far East) Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
BL Distribution Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR (UK) Limited

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull Properties, Ltd.

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR (UK) Limited

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Businessland Holdings

	
 

	
UK

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

-9-

FOREIGN
SUBSIDIARIES

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF

  INCORPORATION

	
 

	
PERCENTAGE

  OWNERSHIP

	
 

	
OWNER

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Emcor (Cayman Islands) Ltd.

	
 

	
Cayman Islands

	
 

	
100%

	
 

	
EMCOR International Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull (Cayman Islands) No. 2 Limited

	
 

	
Cayman Islands

	
 

	
100%

	
 

	
EMCOR International Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
EMCOR Drake & Scull International Limited

	
 

	
Jebel Ali Free Zone

	
 

	
100%

	
 

	
Drake & Scull (Cayman Islands) Ltd. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Technical Services (Malaysia) Sdn Bhd

	
 

	
Malaysia

	
 

	
100%

	
 

	
EMCOR International Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull France EURL

	
 

	
France

	
 

	
100%

	
 

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Langgit Tinggi Sdn Bhd

	
 

	
Malaysia

	
 

	
100%

	
 

	
EMCOR (UK) Ltd. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Poole and Kent, Ltd.

	
 

	
Bermuda

	
 

	
100%

	
 

	
Monumental Investment Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Atlas Indemnity, Ltd.

	
 

	
Bermuda

	
 

	
100%

	
 

	
EMCOR Risk Holdings, Inc. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
University Mechanical deMexico S.A. Dec.V.

	
 

	
Mexico

	
 

	
98%

	
 

	
University Mechanical & Engineering Contractors,
  Inc.

* Effective upon the acquisition of FR X Ohmstede
  Acquisitions Co. by EMCOR Group, Inc.

-10-

UNRESTRICTED SUBSIDIARIES 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
NAME

	
 

	
JURISDICTION OF

  INCORPORATION

	
 

	
PERCENTAGE

  OWNERSHIP

	
 

	
OWNER       

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Afgo Engineering Corp. of Washington

	
 

	
Delaware

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Antwerp Education Center N.V.

	
 

	
Belgium

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Businessland Canada Ltd.

	
 

	
Canada

	
 

	
100%

	
 

	
JWP Information Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Businessland (Hong Kong) Limited

	
 

	
Hong Kong

	
 

	
100%

	
 

	
JWP Information Services, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Drake & Scull France SARL

	
 

	
France

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Guzovsky/JWP Electrical Inc.

	
 

	
Rhode Island

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Jamaica Water Securities Corp.

	
 

	
New York

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Espana SA

	
 

	
Spain

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP France SARL

	
 

	
France

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP/HCII Corp.

	
 

	
Delaware

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Information Services, Inc.

	
 

	
California

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Information Services SARL

	
 

	
France

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP TS Corp.

	
 

	
New Jersey

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Micro Avenue

	
 

	
Belgium

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MicroCom

	
 

	
Belgium

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Sivea Benelux

	
 

	
Belgium

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
SLR Constructors Inc.

	
 

	
New York

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Teletime Limited

	
 

	
Ontario

	
 

	
100%

	
 

	
Sellco Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Sellco Corporation

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Group, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Energy Products, Inc.

	
 

	
Idaho

	
 

	
100%

	
 

	
EMCOR Group, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Telecom, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
EMCOR Group, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Standard Telecommunications Equipment, Inc.

	
 

	
New Jersey

	
 

	
100%

	
 

	
JWP Telecom, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
MEC Constructors, Inc.

	
 

	
Delaware

	
 

	
100%

	
 

	
MEC Constructors, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Technical Services (C.N.M.I.), Inc.

	
 

	
Northern Marianas

	
 

	
100%

	
 

	
MEC Constructors, Inc.

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
JWP Thailand Ltd.

	
 

	
Thailand

	
 

	
100%

	
 

	
MEC Constructors, Inc.

-11-

SCHEDULE
5.9

LITIGATION

          The
information set forth in the Legal Proceedings Sections of the Company’s Form
10-K for the year ended December 31, 2006 and of the Company’s Form 10-Q for
the Quarter ended June 30, 2007 is hereby incorporated herein by reference
thereto.

SCHEDULE
7.10

INDEBTEDNESS

	
 

	
 

	
1.

	
Monumental Investment Corp.

	
 

	
 

	
 

	
Monumental is obligated in respect of obligations
  arising out of or incurred in connection with the sale of by the Maryland
  Energy Financing Administration (the “Administration”) of Maryland Energy
  Financing Administration Limited Obligation Local District Cooling Facilities
  Revenue Bonds (Comfort Link Project) 2001 series in the principal amount of
  $25,000,000 and the loan in December 2001 of such bond proceeds by the
  Administration to District Chilled Water General Partnership d/b/a Comfort
  Link (“Comfort Link”) of which Monumental is a general partner, including
  Monumental’s obligations to guarantee the payment of such indebtedness and
  related costs and expenses by Comfort Link.

	
 

	
 

	
2.

	
EMCOR Group, Inc. and various EMCOR Subsidiaries

	
 

	
 

	
a.

	
$2.0 million payable under finance leases and
  purchase money mortgages.

	
 

	
 

	
b.

	
EMCOR and its subsidiaries have guaranteed the
  obligations of one another in respect of bonds issued by surety companies.
  Certain of these obligations are secured by a lien upon the assets of each
  guarantor.

	
 

	
 

	
3.

	
EMCOR Group (UK) plc

	
 

	
 

	
 

	
D&S and EMCOR (UK) Limited are guarantors of a
  Saudi Investment Bank credit facility of NESMA EMCOR Saudi Arabia Ltd. which
  guaranteed amount is not to exceed £450,000 (approximately $625,000).

	
 

	
 

	
4.

	
The information contained in Schedules 7.11 and 7.12
  is hereby incorporated herein by reference thereto.

SCHEDULE
7.11

LIENS

	
 

	
 

	
 

	
1.

	
EMCOR and various EMCOR Subsidiaries

	
 

	
 

	
 

	
 

	
a.

	
EMCOR subsidiaries have obtained bonds from surety
  companies. The agreements pursuant to which the bonds were issued and will be
  issued in the future provide that EMCOR and most EMCOR subsidiaries agree to
  hold such surety companies harmless in respect of such bonds and grant liens
  upon certain of their assets in favor of the bonding companies to secure such
  “hold harmless” obligations.

	
 

	
 

	
 

	
 

	
b.

	
Miscellaneous finance leases and purchase money
  mortgages of EMCOR subsidiaries approximately $2.0 million.

	
 

	
 

	
 

	
2.

	
UK Companies

	
 

	
 

	
 

	
a.

	
Letter of Charge in favor of The Bank of Scotland by
  EMCOR Group (IK) plc. 

	
 

	
 

	
 

	
 

	
c.

	
Bank Account Security Deed relating to Peacehaven
  Schools PFI Project in favor of ING Bank by EMCOR Facilities Services Limited.

SCHEDULE 7.12

INVESTMENTS,
LOANS, ADVANCES AND GUARANTIES

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
INVESTMENTS

	
 

	
AMOUNT OF INVESTMENT

	
 

	
PAYEE OR HOLDER

	
 

	

	
 

	

	
 

	

	
 

	
 

	
 

	
 

	
 

	
 

	
1. 

	
State of Israel Bonds

	
 

	
$40,000 aggregate principal amount

	
 

	
Welsbach Electric Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
2. 

	
Colony Holdings Ltd. (Bermuda)

	
 

	
60,000 shares —12% interest

	
 

	
Monumental Investment Corp. 

	
 

	
 

	
 

	
 

	
 

	
 

	
3. 

	
District Chilled Water Partnership

	
 

	
40% General Partnership in interest; equity
  approximately $20,000,000

	
 

	
Monumental Investment Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
4. 

	
Baltimore Ravens

	
 

	
License (right) for 16 seats

	
 

	
The Poole & Kent Corporation

	
 

	
 

	
 

	
 

	
 

	
 

	
5. 

	
T.P.C. of Boston

	
 

	
$35,000 investment in country club membership

	
 

	
J. C. Higgins Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
6. 

	
Cash Surrender Value of split dollar insurance
  policy

	
 

	
$1,229,000

	
 

	
Penguin Air Condition Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
7. 

	
Specialty Trade Insurance Borrower

	
 

	
$15,000 investment in mutual insurance company

	
 

	
Shambaugh & Son, LP

	
 

	
 

	
 

	
 

	
 

	
 

	
8. 

	
Cash Surrender Value of split dollar life insurance
  policy

	
 

	
$709,000

	
 

	
Shambaugh & Son, LP

	
 

	
 

	
 

	
 

	
 

	
 

	
9. 

	
EMCOR Facilities Services Ltd. (UAE)

	
 

	
25% Interest

	
 

	
EMCOR (Cayman Islands) No. 2 Ltd.

	
 

	
 

	
 

	
 

	
 

	
 

	
10. 

	
F&G Mechanical Inc. (New York)

	
 

	
90 shares – 45% interest

	
 

	
F&G Mechanical Corp.

	
 

	
 

	
 

	
 

	
 

	
 

	
11. 

	
C & H Services LLC*

	
 

	
50% Interest

	
 

	
Ohmstede Ltd.

	
 

	
 

	

	
* Effective upon the acquisition of FR X Ohmstede
  Acquisitions Co. by EMCOR Group, Inc.

Guaranties

The information contained in Schedules 7.11 and 7.12
is hereby incorporated herein by reference thereto. 

-2-Exhibit 10.1

3,833,108
Shares

Warrants to Purchase 1,916,554 Shares

DELCATH SYSTEMS, INC.

Common Stock

PLACEMENT AGENCY AGREEMENT

September 18, 2007

Canaccord
Adams Inc.

535 Madison Avenue

New York, New York 10022

ThinkEquity
Partners LLC

600 Montgomery Street

8th Floor

San Francisco, California 94111

Ladies and
Gentlemen:

          Delcath
Systems, Inc., a Delaware corporation (the “Company”),
proposes, subject to the terms and conditions stated in this Placement Agency
Agreement (this “Agreement”) and
the Subscription Agreements in the form of Exhibit A attached hereto
(the “Subscription Agreements”)
entered into with the investors identified therein (each, an “Investor” and collectively, the
“Investors”), to issue and sell up to an
aggregate of 3,833,108 shares (the “Shares”)
of the Company’s common stock, par value $0.01 per share (the “Common Stock”). Each Investor shall also
receive a warrant, in the form of Exhibit B attached hereto, to purchase
up to a number of shares of the Company’s Common Stock (the “Warrant Shares”) equal to fifty percent
(50%) of the number of Shares purchased by such Investor, at an exercise price
equal to $4.53 per share, exercisable beginning six months after the issuance
thereof and on or prior to the fifth anniversary of the issuance thereof (the “Warrants” and together with the
Shares,
the “Securities”). The Company
hereby confirms its agreement with Canaccord Adams Inc. (“Canaccord”) and ThinkEquity Partners LLC
(“ThinkEquity,” and together with
Canaccord, the “Placement Agents”)
as set forth below. Canaccord is acting as the lead placement agent (the “Lead Placement Agent”). The Securities are
more fully described in the Prospectus (as defined below).

          1.
Agreement
to Act as Placement Agents; Delivery and Payment. On the basis of the representations,
warranties and agreements of the Company herein contained, and subject to the
terms and conditions set forth in this Agreement:

                    (a)
The Company hereby engages the Placement Agents, as agents of the Company, to,
on commercially reasonable efforts basis, solicit offers to purchase Securities
from the Company on the terms and subject to the conditions set forth in the
Prospectus (as defined below). Each Placement Agent shall use commercially
reasonable efforts to assist the Company in obtaining performance by each
Investor whose offer to purchase the Securities was solicited by such Placement

Agent and
accepted by the Company, but the Placement Agents shall not, except as
otherwise provided in this Agreement, have any liability to the Company in the
event any such purchase is not consummated for any reason. Under no
circumstances will any Placement Agent or any of their affiliates be obligated
to underwrite or purchase any of the Securities for their own account or
otherwise provide any financing. Each Placement Agent shall act solely as the
Company’s agent and not as principal. Neither Placement Agent shall have any
authority to bind the Company with respect to any prospective offer to purchase
Securities and the Company shall have the sole right to accept offers to
purchase Securities and may reject any such offer, in whole or in part.
Notwithstanding the foregoing, it is understood and agreed that each Placement
Agent (or its affiliates) may, solely in its discretion and without any
obligation to do so, purchase Securities as principal.

                    (b)
As compensation for services rendered by the Placement Agents hereunder, on the
Closing Date (as defined below), the Company shall pay or cause to be paid to
the Placement Agents by wire transfer of immediately available funds to an
account or accounts designated by the Lead Placement Agent, an aggregate amount
equal to six percent (6.0%) of the gross proceeds received by the Company from
its sale of the Securities on such Closing Date (the “Agency Fee”), with seventy percent (70%)
of the Agency Fee payable to Canaccord and thirty percent (30%) of the Agency
Fee payable to ThinkEquity. Such gross purchase price does not include any
consideration that may be paid to the Company in the future upon exercise of
the Warrants. Each Placement Agent agrees that the foregoing compensation,
together with any expense reimbursement payable hereunder, constitutes all of
the cash compensation that such Placement Agent shall be entitled to receive in
connection with the Offering contemplated hereby.

                    (c)
The Securities are being sold to the Investors at a price of $3.70 per unit
(the “Purchase Price”) as set
forth on the cover page of the Prospectus (as defined below). The purchases of
Securities by the Investors shall be evidenced by the execution of the
Subscription Agreements by each of the parties thereto in the form attached
hereto as Exhibit A. 

                    (d)
Prior to the earlier of (i) the date on which this Agreement is terminated and
(ii) the Closing Date, the Company shall not, without the prior written consent
of the Lead Placement Agent, solicit or accept offers to purchase Securities of
the Company (other than pursuant to the exercise of options or warrants to
purchase shares of Common Stock that are outstanding at the date hereof)
otherwise than through the Placement Agents in accordance herewith.

                    (e)
No Securities which the Company has agreed to sell pursuant to this Agreement
and the Subscription Agreements shall be deemed to have been purchased and paid
for, or sold by the Company, until such Securities shall have been delivered to
the Investor purchasing such Securities against payment therefor by such Investor.
If the Company shall default in its obligations to deliver Securities to an
Investor whose offer it has accepted, the Company shall indemnify and hold each
Placement Agent harmless against any loss, claim, damage or liability directly
or indirectly arising from or as a result of such default by the Company in
accordance with the procedures set forth in Section 6(c) hereof.

                    (f)
Payment of the purchase price for, and delivery of the Securities shall be made
at a closing (the “Closing”) at
the offices of Gersten Savage LLP, counsel for the Company, located at 600
Lexington Avenue, New York, New York, at 10:00 a.m., local time, on September
21, 2007 or at such other time and date as the Lead Placement Agent and the
Company determine pursuant to Rule 15c6-1(a) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)(such
date of payment and delivery being herein referred to as the “Closing Date”). Unless

- 2 -

otherwise
specified in the applicable Subscription Agreement, the Shares will be settled
through the facilities of The Depository Trust Company’s DWAC system and the
Warrants will be issued in registered physical form. Concurrently with the
execution and delivery of this Agreement, the Company, the Placement Agents and
JPMorgan Chase Bank, N.A., as escrow agent (the “Escrow Agent”), shall enter into an escrow agreement (the
“Escrow Agreement”), pursuant to which an
escrow account (the “Escrow Account”)
will be established for the benefit of the Company and the Investors. Subject
to the terms hereof and of the Escrow Agreement, payment of the purchase price
for the Securities shall be made to the Company in the manner set forth below
by Federal Funds wire transfer, against delivery of the Securities to such
persons and shall be registered in the name or names and shall be in such
denominations as the Placement Agents may request at least one business day
before the Closing Date. Payment of the purchase price for the Securities to be
purchased by Investors shall be made by such Investors directly to the Escrow
Agent and the Escrow Agent agrees to hold such purchase price in escrow in
accordance herewith. Prior to the Closing, each such Investor shall deposit
into the Escrow Account an amount (the “Purchase
Amount”) equal to the product of (x) the number of Securities such
Investor has agreed to purchase and (y) the Purchase Price. The aggregate of
all such Purchase Amounts is herein referred to as the “Escrow Funds.” Subject
to the terms and conditions hereof and of the Subscription Agreements and the
Escrow Agreement, the Escrow Agent shall, on the Closing Date, deliver to the
Company, by Federal Funds wire transfer, the Escrow Funds so held by such
person in escrow, reduced by an amount equal to the sum of the aggregate Agency
Fee payable to each Placement Agent and each Placement Agent’s bona fide
estimate of the amount, if any, of expenses for which such Placement Agent is
entitled to reimbursement pursuant hereto. Each of the Company and the each
Placement Agent hereby agree to deliver to the Escrow Agent a Closing Notice in
the form attached as Exhibit C to the Escrow Agreement at least one
day prior to the Closing Date. At least one day prior to the Closing Date, each
Placement Agent shall submit to the Company its bona fide estimate of the
amount, if any, of expenses for which such Placement Agent is entitled to
reimbursement pursuant hereto. As soon as reasonably practicable after the
Closing Date, each Placement Agent shall submit to the Company its expense reimbursement
invoice and the Company or such Placement Agent, as applicable, shall make any
necessary reconciling payment(s) within thirty days of receipt of such
invoices.

          2.
Representations
and Warranties of the Company.
The Company represents and warrants to each Placement Agent as of the
date hereof, and as of the Closing Date and agrees with each Placement Agent,
as follows:

                    (a)
Filing of Registration Statement.
The Company has prepared and filed, in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities
Act”), and the published rules and regulations thereunder (the “Rules and Regulations”) adopted by the
Securities and Exchange Commission (the “Commission”), a registration
statement, including a prospectus, on Form S-3 (File No. 333-143280), which
became effective as of June 7, 2007, relating to the Securities and the
offering thereof (the “Offering”)
from time to time in accordance with Rule 415(a)(1)(x) of the Rules and
Regulations, and such amendments thereof as may have been required to the date
of this Agreement. The term “Registration
Statement” as used in this Agreement means the aforementioned
registration statement, as amended at the time of such registration statement’s
effectiveness for purposes of Section 11 of the Securities Act, as such section
applies to each Placement Agent (the “Effective
Time”), including (i) all documents filed as a part thereof or
incorporated or deemed to be incorporated by reference therein and (ii) any information
in the corresponding Base Prospectus (as defined below) or a prospectus
supplement filed with the Commission pursuant to Rule 424(b) under the
Securities Act, to the extent such information is deemed pursuant to Rule 430A
(“Rule 430A”), 430B (“Rule 430B”) or 430C (“Rule 430C”) under the

- 3 -

Securities Act
to be a part thereof at the Effective Time. If the Company has filed an
abbreviated registration statement to register additional Securities pursuant
to Rule 462(b) under the Rules and Regulations (the “Rule 462(b) Registration Statement”), then any reference
herein to the term “Registration Statement”
shall also be deemed to include such Rule 462(b) Registration Statement. For
purposes of this Agreement, all references to the Registration Statement, the
Base Prospectus, any Preliminary Prospectus (as defined below), the Prospectus
(as defined in below) or any amendment or supplement to any of the foregoing
shall be deemed to include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”). All references in this Agreement
to amendments or supplements to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
mean and include the subsequent filing of any document under the Exchange Act
and which is deemed to be incorporated therein by reference therein or
otherwise deemed to be a part thereof.

                    (b)
Effectiveness of Registration Statement;
Certain Defined Terms. The Company and the transactions contemplated
by this Agreement meet the requirements and comply with the conditions for the
use of Form S-3 under the Securities Act. The Company has complied, to the
Commission’s satisfaction, with all requests of the Commission for additional
or supplemental information. No stop order preventing or suspending use of the
Registration Statement, any Preliminary Prospectus or the Prospectus or the
effectiveness of the Registration Statement has been issued by the Commission,
and no proceedings for such purpose pursuant to Section 8A of the Securities
Act against the Company or related to the Offering have been instituted or are
pending or, to the Company’s knowledge, are contemplated or threatened by the
Commission, and any request received by the Company on the part of the
Commission for additional information has been complied with. As used in this
Agreement:

	
 

	
 

	
 

	
          (1)
 “Base Prospectus” means the
 prospectus included in the Registration Statement at the Effective Time. 

	
 

	
 

	
 

	
          (2) “Disclosure
 Package” means (i) the Statutory Prospectus, (ii) each
 Issuer Free Writing Prospectus, if any, filed or used by the Company on or
 before the Effective Time and listed on Schedule I hereto (other than
 a roadshow that is an Issuer Free Writing Prospectus but is not required to
 be filed under Rule 433 of the Rules and Regulations) and (iii) the pricing
 and other information as set forth on Exhibit G hereto, all considered
 together.

	
 

	
 

	
 

	
          (3)
 “Issuer
 Free Writing Prospectus” means any “issuer free writing prospectus,”
 as defined in Rule 433 of the Rules and Regulations relating to the
 Securities in the form filed or required to be filed with the Commission or,
 if not required to be filed, in the form retained in the Company’s records
 pursuant to Rule 433(g) of the Rules and Regulations.

	
 

	
 

	
 

	
          (4)
 “Preliminary Prospectus” means
 any preliminary prospectus supplement, subject to completion, relating to the
 Securities, filed by the Company with the Commission pursuant to Rule 424(b)
 under the Securities Act for use in connection with the offering and sale of
 the Securities, together with the Base Prospectus attached to or used with
 such preliminary prospectus supplement. 

	
 

	
 

	
 

	
          (5)
 “Prospectus” means the final
 prospectus supplement, relating to the Securities, filed by the Company with
 the Commission pursuant to Rule 424(b) under 

- 4 -

	
 

	
 

	
 

	
the
 Securities Act on or before the second business day after the date hereof (or
 such earlier time as may be required under the Securities Act), in the form
 furnished by the Company to the Placement Agents, for use in connection with
 the offering and sale of the Securities that discloses the public offering
 price and other final terms of the Securities, together with the Base
 Prospectus attached to or used with such final prospectus supplement.

	
 

	
 

	
 

	
          (6)
 “Statutory Prospectus” means
 the Preliminary Prospectus, if any, and the Base Prospectus, each as amended
 and supplemented immediately prior to the Time of Sale, including any
 document incorporated by reference therein and any prospectus supplement
 deemed to be a part thereof.

	
 

	
 

	
 

	
          (7) “Time of Sale” means 8:30 a.m., New
York City
 time, on the date of this Agreement.

                    (c)
Contents of Registration Statement.
The Registration Statement complied when it became effective, complies as of
the date hereof and, as amended or supplemented, at the Time of Sale and at all
times during which a prospectus is required by the Securities Act to be
delivered (whether physically or through compliance with Rule 172 under the
Securities Act or any similar rule) in connection with any sale of Securities
(the “Prospectus Delivery Period”),
will comply, in all material respects, with the requirements of the Securities
Act and the Rules and Regulations; the Registration Statement did not, as of
the Effective Time, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading, provided,
that the Company makes no representation or warranty in this paragraph with
respect to statements in or omissions from the Registration Statement in
reliance upon, and in conformity with, written information furnished to the
Company by each Placement Agent specifically for inclusion therein, which
information the parties hereto agree is limited to the Placement Agents’
Information (as defined in Section 7 hereof). 

                    (d)
Contents of Prospectus. The
Prospectus will comply, as of the date that it is filed with the Commission,
the date of its delivery to Investors and at all times during the Prospectus
Delivery Period, in all material respects, with the requirements of the
Securities Act; at no time during the period that begins on the date the
Prospectus is filed with the Commission and ends at the end of the Prospectus
Delivery Period will the Prospectus, as then amended or supplemented, include
an untrue statement of a material fact or omit 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, provided, that the Company makes no
representation or warranty with respect to statements in or omissions from the
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by each Placement Agent specifically for inclusion
therein, which information the parties hereto agree is limited to the Placement
Agents’ Information.

                    (e)
Incorporated Documents. Each of
the documents incorporated or deemed to be incorporated by reference in the
Registration Statement, at the time such document was filed with the Commission
or at the time such document became effective, as applicable, complied, in all
material respects, with the requirements of the Exchange Act, were filed on a
timely basis with the Commission and did not include an untrue statement of a
material fact or omit 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.

- 5 -

                    (f)
Disclosure Package. The
Disclosure Package, as of the Time of Sale, did not, and at the Closing Date
will not, contain any untrue statement of a material fact or omit to state any
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; provided,
that the Company makes no representations or warranty in this paragraph with
respect to statements in or omissions from the Disclosure Package in reliance
upon, and in conformity with, written information furnished to the Company by
each Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’ Information.

                    (g)
Distributed Materials; Conflict with
Registration Statement. Other than the Base Prospectus, any
Preliminary Prospectus and the Prospectus, the Company has not made, used,
prepared, authorized, approved or referred to and will not make, use, prepare,
authorize, approve or refer to any “written communication” (as defined in Rule
405 under the Securities Act) that constitutes an offer to sell or a
solicitation of an offer to buy the Securities other than (i) any document not
constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act
or Rule 134 under the Securities Act or (ii) the documents listed on Schedule
I hereto and other written communications approved in advance by the Lead
Placement Agent. 

                    (h)
Issuer Free Writing Prospectuses.
Each Issuer Free Writing Prospectus, if any, conformed or will conform in all
material respects to the requirements of the Securities Act and the Rules and
Regulations on the date of first use, and the Company has complied or will
comply with any filing requirements applicable to such Issuer Free Writing
Prospectus pursuant to the Rules and Regulations. Each Issuer Free Writing
Prospectus, if any, when considered together with the Disclosure Package, as of
its issue date and at all subsequent times through the completion of the
Prospectus Delivery Period did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Statutory Prospectus or the
Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified, or includes an untrue statement of a material fact or omitted or
would omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
prevailing at the subsequent time, not misleading; provided, that the Company makes no representation or
warranty with respect to statements in or omissions from any Issuer Free
Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by each Placement Agent specifically for
inclusion therein, which information the parties hereto agree is limited to the
Placement Agents’ Information. 

                    (i)
Not an Ineligible Issuer. (1) At
the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Securities and (2)
at the date hereof, the Company was not and is not an “ineligible issuer,” as
defined in Rule 405 (“Rule 405”)
under the Securities Act. 

                    (j)
Due Incorporation. The Company
has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as currently being
conducted and as described in the Registration Statement, the Prospectus and
the Disclosure Package. The Company is duly qualified to
transact business and is in good standing as a foreign corporation or other
legal entity in

- 6 -

each other
jurisdiction in which its ownership or leasing of property or the conduct of
its business requires such qualification, except where the failure to be so
qualified and in good standing or have such power or authority (i) would not
have, individually or in the aggregate, a material adverse effect upon, the
general affairs, business, operations, prospects, properties, financial
condition, or results of operations of the Company, taken as a whole, or (ii)
impair in any material respect the power or ability of the Company to perform
its obligations under this Agreement or to consummate any transactions
contemplated by the Agreement and the Subscription Agreements, including the
issuance and sale of the Securities (any such effect as described in clauses
(i) or (ii), a “Material Adverse Effect”).

                    (k)
Subsidiaries. The Company has no
subsidiaries and does not own any beneficial interest, directly or indirectly,
in any corporation, partnership, joint venture or other business entity.

                    (l)
Due Authorization and Enforceability.
The Company has the full right, power and authority to enter into this
Agreement, each of the Subscription Agreements and the Escrow Agreement, and to
perform and discharge its obligations hereunder and thereunder; and each of
this Agreement, the Escrow Agreement and each Subscription Agreement has been
duly authorized, executed and delivered by the Company, and constitutes a
valid, legal and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnity hereunder
may be limited by federal or state securities laws and except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity. 

                    (m)
The Securities. The issuance of
the Shares has been duly and validly authorized by the Company and, when
issued, delivered and paid for in accordance with the terms of this Agreement
and the Subscription Agreements, will have been duly and validly issued and
will be fully paid and nonassessable, will not be subject to any statutory or
contractual preemptive rights or other rights to subscribe for or purchase or
acquire any shares of Common Stock of the Company, which have not been waived
or complied with and will conform in all material respects to the description
thereof contained in the Disclosure Package and the Prospectus and such
description conforms in all material respects to the rights set forth in the
instruments defining the same. The Warrants conform, or when issued will
conform, to the description thereof contained in the Disclosure Package and the
Prospectus and have been duly and validly authorized by the Company and upon
delivery to the Investors at the Closing Date will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights and remedies of
creditors generally or subject to general principles of equity. The Warrant
Shares initially issuable upon exercise of the Warrants have been duly and
validly authorized and reserved for issuance by the Company and when issued,
delivered and paid for in accordance with the terms thereof, will have been
duly and validly issued and will be fully paid and nonassessable and will not
be subject to any statutory or contractual preemptive rights or other rights to
subscribe for or to purchase or acquire any shares of Common Stock of the
Company which have not been waived or complied with. 

                    (n)
Capitalization. The information set forth under the
caption “Capitalization” in the Statutory Prospectus (and any similar sections
or information, if any, contained in the Disclosure Package) is fairly
presented on a basis consistent with the Company’s financial statements. The
authorized capital stock of the Company conforms as to legal matters to the

- 7-

description
thereof contained in the Prospectus under the caption “Description of Capital
Stock” (and any similar sections or information, if any, contained in the
Disclosure Package). The issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, and have been issued in compliance with all federal and state
securities laws. None of the outstanding shares of Common Stock was issued in
violation of any preemptive rights, rights of first refusal or other similar
rights to subscribe for or purchase or acquire any securities of the Company.
There are no authorized or outstanding shares of capital stock, options,
warrants, preemptive rights, rights of first refusal or other rights to
purchase, or equity or debt securities convertible into or exchangeable for,
any capital stock of the Company other than those described in the Prospectus
and the Disclosure Package. The description of the Company’s stock option,
stock bonus and other stock plans or arrangements, and the options or other
rights granted thereunder, as described in the Prospectus and the Disclosure
Package, accurately and fairly present the information required to be shown
with respect to such plans, arrangements, options and rights.

                    (o)
No Conflict. The execution,
delivery and performance by the Company of this Agreement, the Subscription
Agreements and the Escrow Agreement and the consummation of the transactions
contemplated hereby and thereby, including the issuance and sale by the Company
of the Securities and the issuance of the Warrant Shares upon due exercise of
the Warrants in accordance with their terms, will not conflict with or result
in a breach or violation of, or constitute a default under (nor constitute any
event which with notice, lapse of time or both would result in any breach or
violation of or constitute a default under), give rise to any right of
termination or other right or the cancellation or acceleration of any right or
obligation or loss of a benefit under, or give rise to the creation or
imposition of any lien, encumbrance, security interest, claim or charge upon
any property or assets of the Company pursuant to (i) any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company is a party or by which any of them or any of their respective
properties may be bound or to which any of the property or assets of the
Company is subject, (ii) result in any violation of the provisions of the charter
or by-laws of the Company, or (iii) result in any violation of any law,
statute, rule, regulation, judgment, order or decree of any court or
governmental agency or body, domestic or foreign, having jurisdiction over the
Company or any of their properties or assets.

                    (p)
No Consents Required. No
approval, authorization, consent or order of or filing, qualification or
registration with, any court or governmental agency or body, foreign or
domestic, which has not been made, obtained or taken and is not in full force
and effect, is required in connection with the execution, delivery and
performance of this Agreement, the Subscription Agreements and the Escrow
Agreement by the Company, the issuance and sale of the Securities and the issuance
of the Warrant Shares upon due exercise of the Warrants in accordance with
their terms or the consummation by the Company of the transactions contemplated
hereby or thereby other than (i) as may be required under the Securities
Act, (ii) any necessary qualification of the Securities under the
securities or blue sky laws of the various jurisdictions in which the
Securities are being offered by any Placement Agent, (iii) under the
rules and regulations of the Financial Industry Regulatory Authority (“FINRA”) or (iv) the NASDAQ Capital Market
in connection with the distribution of the Securities by any Placement Agent. 

                    (q)
Preemptive Rights. Except as
otherwise described in the Registration Statement, the Prospectus and the
Disclosure Package, there are no preemptive rights or other rights (other than
rights which have been waived in writing in connection with the transactions
contemplated by this Agreement or otherwise satisfied) to subscribe for or to
purchase any shares of Common Stock or shares of any other capital stock or
other equity interests of the Company, or any 

- 8 -

agreement or
arrangement between the Company and any of the Company’s stockholders, or to
the Company’s knowledge, between or among any of the Company’s stockholders,
which grant special rights with respect to any shares of the Company’s capital
stock or which in any way affect any stockholder’s ability or right freely to
alienate or vote such shares. 

                    (r)
Registration Rights. Except as
otherwise described in the Registration Statement, the Prospectus and the
Disclosure Package, there are no contracts, agreements or understandings
between the Company and any person granting such person the right (other than
rights which have been waived in writing in connection with the transactions
contemplated by this Agreement or otherwise satisfied) to require the Company
to register any securities with the Commission.

                    (s)
Lock-Up Agreements. The Company
has received copies of the executed Lock-Up Agreements, substantially in the
form of Exhibit C hereto (the “Lock-Up
Agreement”) executed by each person listed on Exhibit D
hereto, and such Lock-Up Agreements shall be in full force and effect on the
Closing Date.

                    (t)
Independent Accountants. Carlin,
Charron & Rosen, LLP, whose reports on the consolidated financial
statements of the Company are incorporated by reference in the Registration
Statement, the Prospectus and the Disclosure Package, is (i) an independent
public accounting firm within the meaning of the Securities Act, (ii) a
registered public accounting firm (as defined in Section 2(a)(12) of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley
Act”)), and (iii) to the Company’s knowledge, not in violation of
the auditor independence requirements of the Sarbanes-Oxley Act.

                    (u)
Financial Statements. The
financial statements of the Company, together with the related schedules and
notes thereto, set forth or incorporated by reference in the Registration
Statement, the Prospectus and the Disclosure Package, comply in all material
respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and present fairly in all material respects (i)
the financial condition of the Company as of the dates indicated and (ii) the
consolidated results of operations, stockholders’ equity and changes in cash
flows of the Company for the periods therein specified; and such financial
statements and related schedules and notes thereto have been prepared in
conformity with United States generally accepted accounting principles,
consistently applied throughout the periods involved (except as otherwise
stated therein and subject, in the case of unaudited financial statements, to
the absence of footnotes and normal year-end adjustments). There are no other
financial statements (historical or pro forma) that are required to be included
or incorporated by reference in the Registration Statement, the Prospectus or
the Disclosure Package; and the Company does not have any material liabilities
or obligations, direct or contingent (including any off-balance sheet
obligations), not disclosed in the Registration Statement, the Disclosure
Package and the Prospectus; and all disclosures contained in the Registration
Statement, the Disclosure Package and the Prospectus regarding “non-GAAP
financial measures” (as such term is defined by the rules and regulations of
the Commission) comply with Regulation G of the Exchange Act and Item 10(e) of
Regulation S-K under the Securities Act, to the extent applicable, and present
fairly the information shown therein and the Company’s basis for using such
measures.

                    (v)
Absence of Material Changes.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Prospectus and the Disclosure Package, and except
as may be otherwise stated or incorporated by reference in the Registration
Statement, the

- 9 -

Prospectus and
the Disclosure Package, there has not been (i) any Material Adverse Effect,
(ii) any transaction which is material to the Company, (iii) any obligation,
direct or contingent (including any off-balance sheet obligations), incurred by
the Company, which is material to the Company, (iv) any dividend or
distribution of any kind declared, paid or made on the capital stock of the
Company, (v) any change in the capital stock (other than a change in the number of outstanding
shares of Common Stock due to the issuance of shares upon the exercise of outstanding
options or warrants or the conversion of convertible indebtedness), or material
change in the short-term debt or long-term debt of the Company
(other than upon conversion of convertible indebtedness) or any issuance of
options, warrants, convertible securities or other rights to purchase the
capital stock (other than grants of stock options under the Company’s stock
option plans existing on the date hereof) of the Company.

                    (w)
Legal Proceedings. There are no
legal or governmental actions, suits, claims or proceedings pending or, to the
Company’s knowledge, threatened or contemplated to which the Company is or
would be a party or of which any of their respective properties is or would be
subject at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency, or
before or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, the Food and Drug
Administration of the U.S. Department of Health and Human Services (the “FDA”)) which are required to be described
in the Registration Statement, the Disclosure Package or the Prospectus or a
document incorporated by reference therein and are not so described therein, or
which, singularly or in the aggregate, if resolved adversely to the Company,
would reasonably be likely to result in a Material Adverse Effect or prevent or
materially and adversely affect the ability of the Company to consummate the
transactions contemplated hereby. To the Company’s knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others. 

                    (x)
No
Violation. The Company is not in breach or violation of or in
default (nor has any event occurred which with notice, lapse of time or both
would result in any breach or violation of, or constitute a default) (i) under
the provisions of its charter or bylaws (or analogous governing instrument, as
applicable) or (ii) in the performance or observance of any term,
covenant, obligation, agreement or condition contained in any indenture,
mortgage, deed of trust, bank loan or credit agreement or other evidence of
indebtedness, or any license, lease, contract or other agreement or instrument
to which the Company is a party or by which any of them or any of their
properties may be bound or affected, or (iii) in the performance or observance
of any statute, law, rule, regulation, ordinance, judgment, order or decree of
any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of
its properties, as applicable (including, without limitation, those
administered by the FDA or by any foreign, federal, state or local governmental
or regulatory authority performing functions similar to those performed by the
FDA), except, with respect to clauses (ii) and (iii) above, to the extent any
such contravention has been waived or would not result in a Material Adverse Effect. 

                    (y)
Permits. The
Company has made all filings, applications and submissions required by, and
owns or possesses all approvals, licenses, certificates, certifications,
clearances, consents, exemptions, marks, notifications, orders, permits and
other authorizations issued by, the appropriate federal, state or foreign
regulatory authorities (including, without limitation, the FDA, and any other
foreign, federal state or local government or regulatory authorities performing
functions similar to those performed by the FDA) necessary to conduct its business
as described in the Disclosure Package (collectively, “Permits”), except for such Permits which
the failure to obtain would not have a Material Adverse Effect (the “Immaterial Permits”), and is in compliance
in all

- 10 -

material
respects with the terms and conditions of all such Permits other than the
Immaterial Permits (the “Required Permits”).
All such Required Permits held by the Company are valid and in full force and
effect. The Company has not received any notice of any proceedings relating to
revocation or modification of, any such Required Permit, which, individually or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a Material Adverse Effect. 

                    (z)
Not an Investment Company. The
Company is not or, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Disclosure Package and the Prospectus, will not be (i) required to register as
an “investment company” as defined in the Investment Company Act of 1940, as
amended (the “Investment Company Act”),
and the rules and regulations of the Commission thereunder or (ii) a
“business development company” (as defined in Section 2(a)(48) of the
Investment Company Act). 

                    (aa)
No Price Stabilization. Neither
the Company nor, to the Company’s knowledge, any of its officers, directors,
affiliates or controlling persons has taken or will take, directly or
indirectly, any action designed to or that might be reasonably expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities.

                    (bb)
Good Title to Property. The
Company has good and valid title to all property (whether real or personal)
described in the Registration Statement, the Disclosure Package and the
Prospectus as being owned by it, in each case free and clear of all liens,
claims, security interests, other encumbrances or defects (collectively, “Liens”), except such as are described in
the Registration Statement, the Disclosure Package and the Prospectus and those
that would not, individually or in the aggregate materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company. All of the property described in the
Registration Statement, Disclosure Package and the Prospectus as being held
under lease by the Company is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that, individually or in the aggregate, are not material and
do not materially interfere with the use made and proposed to be made of such
property by the Company.

                    (cc)
Intellectual Property Rights. The
Company owns or possesses the right to use all patents, trademarks, trademark
registrations, service marks, service mark registrations, trade names,
copyrights, licenses, inventions, software, databases, know-how, Internet
domain names, trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures, and other
intellectual property (collectively, “Intellectual
Property”) necessary to carry on their respective businesses as
currently conducted, and as proposed to be conducted and described in the
Disclosure Package and the Prospectus, and the Company is not aware of any claim
to the contrary or any challenge by any other person to the rights of the
Company with respect to the foregoing except for those that could not have a
Material Adverse Effect. The Intellectual Property licenses described in the
Disclosure Package and the Prospectus are, to the knowledge of the Company,
valid, binding upon, and enforceable by or against the parties thereto in
accordance to their terms. The Company has complied in all material respects
with, and is not in breach nor has received any asserted or threatened claim of
breach of, any Intellectual Property license, and the Company has no knowledge
of any breach or anticipated breach by any other person to any Intellectual
Property license. The Company’s businesses as now conducted and as proposed to
be conducted, to the knowledge of the Company, do not and will not infringe or
conflict with any 

- 11 -

patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses or
other Intellectual Property or franchise right of any person. The Company has
not received notice of any material claim against the Company alleging the
infringement by the Company of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property right or franchise
right of any person. The Company has taken all reasonable steps to protect,
maintain and safeguard its rights in all Intellectual Property, including the
execution of appropriate nondisclosure and confidentiality agreements. The
consummation of the transactions contemplated by this Agreement will not result
in the loss or impairment of or payment of any additional amounts with respect
to, nor require the consent of any other person in respect of, the Company’s
right to own, use, or hold for use any of the Intellectual Property as owned,
used or held for use in the conduct of the businesses as currently conducted.
The Company has duly and properly filed or caused to be filed with the United
States Patent and Trademark Office (the “PTO”)
and applicable foreign and international patent authorities all patent
applications owned by the Company (the “Company
Patent Applications”). To the knowledge of the Company, the Company
has complied with the PTO’s duty of candor and disclosure for the Company
Patent Applications and has made no material misrepresentation in the Company
Patent Applications. The Company is not aware of any information material to a
determination of patentability regarding the Company Patent Applications not
called to the attention of the PTO or similar foreign authority. The Company is
not aware of any information not called to the attention of the PTO or similar
foreign authority that would preclude the grant of a patent for the Company
Patent Applications. The Company has no knowledge of any information that would
preclude the Company from having clear title to the Company Patent
Applications. 

                    (dd)
No Labor Disputes. No labor
problem or dispute with the employees of the Company exists, or, to the
Company’s knowledge, is threatened or imminent, which would reasonably be
expected to result in a Material Adverse Effect. The Company is not aware that
any key employee or significant group of employees of the Company plans to
terminate employment with the Company. The Company has not engaged in any
unfair labor practice; except for matters which would not, individually or in
the aggregate, result in a Material Adverse Effect, (i) there is (A) no unfair
labor practice complaint pending or, to the Company’s knowledge, threatened
against the Company before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending or to the Company’s knowledge, threatened, (B) no strike,
labor dispute, slowdown or stoppage pending or, to the Company’s knowledge,
threatened against the Company and (C) no union representation dispute
currently existing concerning the employees of the Company and (ii) to the
Company’s knowledge, (A) no union organizing activities are currently taking
place concerning the employees of the Company and (B) there has been no
violation of any federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees, any applicable
wage or hour laws or any provision of the Employee Retirement Income Security
Act of 1974 (“ERISA”) or the
rules and regulations promulgated thereunder concerning the employees of the
Company.

                    (ee)
Taxes. The Company has (i) timely
filed all necessary federal, state, local and foreign income and franchise tax
returns (or timely filed applicable extensions therefore) that have been
required to be filed and (ii) are not in default in the payment of any taxes
which were payable pursuant to said returns or any assessments with respect
thereto, other than any which the Company is contesting in good faith and for
which adequate reserves have been provided and reflected in the Company’s
financial statements included in the Registration Statement, the Disclosure Package
and the Prospectus. The Company does not have any tax deficiency that has 

- 12 -

been or, to
the knowledge of the Company, is reasonably likely to be asserted or threatened
against it that would result in a Material Adverse Effect.

                    (ff)
ERISA. The Company is in
compliance in all material respects with all presently applicable provisions of
ERISA; no “reportable event” (as defined in ERISA) has occurred with respect to
any “pension plan” (as defined in ERISA) for which the Company would have any
liability; the Company has not incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “pension plan” or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the “Code”); and each
“pension plan” for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification. 

                    (gg)
Compliance with Environmental Laws.
The Company (i) is in compliance with any and all applicable foreign, federal,
state and local laws, orders, rules, regulations, directives, decrees and
judgments relating to the use, treatment, storage and disposal of hazardous or
toxic substances or waste and protection of human health and safety or the
environment which are applicable to their businesses (“Environmental Laws”), (ii) has received
and is in compliance with all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct its business; and (iii) is
in compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, result in a Material Adverse Effect. There
are no costs or liabilities associated with Environmental Laws (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating activities
and any potential liabilities to third parties) which would, individually or in
the aggregate, result in a Material Adverse Effect. 

                    (hh)
Insurance. The Company maintains
or is covered by insurance provided by recognized, financially sound and
reputable institutions with insurance policies in such amounts and covering
such risks as is adequate for the conduct of its business and the value of its
properties and as is customary for companies engaged in similar businesses in
similar industries. All such insurance is fully in force on the date hereof and
will be fully in force as of the Closing Date. The Company has no reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect. 

                    (ii)
Accounting Controls. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (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 existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences. 

- 13 -

 

                    (jj)
Disclosure Controls. The Company
has established, maintains and evaluates “disclosure controls and procedures”
(as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act), which (i) are designed to ensure that material information
relating to the Company is made known to the Company’s principal executive
officer and its principal financial officer by others within those entities,
particularly during the periods in which the periodic reports required under
the Exchange Act are being prepared, (ii) have been evaluated for effectiveness
as of the end of the last fiscal period covered by the Registration Statement;
and (iii) such disclosure controls and procedures are effective to perform the
functions for which they were established. There are no significant
deficiencies and material weaknesses in the design or operation of internal
controls which could adversely affect the Company’s ability to record, process,
summarize, and report financial data to management and the Board of Directors
of the Company. The Company is not aware of any fraud, whether or not material,
that involves management or other employees who have a role in the Company’s
internal controls; and since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses.

                    (kk)
Contracts; Off-Balance Sheet Interests. There is no document, contract, permit or instrument, or off-balance sheet
transaction (including without limitation, any “variable interests” in
“variable interest entities,” as such terms are defined in Financial Accounting
Standards Board Interpretation No. 46) of a character required by the
Securities Act or the Rules and Regulations to be described in the Registration
Statement or the Disclosure Package or to be filed as an exhibit to the
Registration Statement or document incorporated by reference therein, which is
not described or filed as required. The contracts described in the immediately
preceding sentence to which the Company is a party have been duly authorized,
executed and delivered by the Company, constitute valid and binding agreements
of the Company, are enforceable against and by the Company in accordance with
the terms thereof and are in full force and effect on the date hereof.

                    (ll)
No Undisclosed Relationships. No
relationship, direct or indirect, exists between or among the Company on the
one hand and the directors, officers, stockholders, customers or suppliers of
the Company or any of their affiliates on the other hand, which is required to
be described in the Registration Statement, the Disclosure Package and the
Prospectus or a document incorporated by reference therein and which has not
been so described. 

                    (mm)
Brokers Fees. Except as disclosed
in the Disclosure Package, there are no contracts, agreements or understandings
between the Company and any person (other than this Agreement) that would give
rise to a valid claim against the Company or any Placement Agent for a
brokerage commission, finder’s fee or other like payment in connection with the
offering and sale of the Securities.

                    (nn)
Forward-Looking Statements. No
forward-looking statements (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) contained in either the Disclosure
Package or the Prospectus has been made or reaffirmed without a reasonable
basis or has been disclosed other than in good faith.

                    (oo)
NASDAQ; Exchange Act Registration.
The Common Stock is registered pursuant to Section 12(b) or 12(g) of the
Exchange Act and is listed on the NASDAQ Capital Market, and the Company has
taken no action designed to, or reasonably likely to have the effect of,
termination the registration of the Common Stock under the Exchange Act or delisting
the Common

- 14 -

Stock from the
NASDAQ Capital Market, nor has the Company received any notification that the
Commission or the NASDAQ is contemplating terminating such registration or
listing. The Company has complied in all material respects with the applicable
requirements of the NASDAQ Capital Market for maintenance of inclusion of the
Common Stock thereon. The Company has filed a notification of the listing of
the Shares and the Warrant Shares on the NASDAQ Capital Market.

                    (pp)
Sarbanes-Oxley Act.
The Company, and to its knowledge, all of the Company’s directors or officers,
in their capacities as such, is in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act and any related rules
and regulations promulgated by the Commission. Each of the principal executive
officer and the principal financial officer of the Company (or each former
principal executive officer of the Company and each former principal financial
officer of the Company as applicable) has made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports,
schedules, forms, statements and other documents required to be filed by it
with the Commission. For purposes of the preceding sentence, “principal
executive officer” and “principal financial officer” shall have the meanings
given to such terms in the Sarbanes-Oxley Act.

                    (qq)
Corporate Records.
The minute books of the Company, representing all existing records of all
meetings and actions of the board of directors (including, Audit, Compensation
and Stock Option, and Nominating Committees) and stockholders of the Company
(collectively, the “Corporate Records”)
through the date of the latest meeting and action have been made available to
the Placement Agents and counsel for the Placement Agents. All such Corporate
Records are complete and accurately reflect, in all material respects, all
transactions referred to in such Corporate Records. There are no material
transactions, agreements or other actions that have been consummated by the
Company that are not properly approved and/or recorded in the Corporate Records
of the Company.

                    (rr)
Foreign Corrupt Practices.
Neither the Company nor, to the Company’s knowledge, any other person
associated with or acting on behalf of the Company, including without
limitation any director, officer, agent or employee of the Company has,
directly or indirectly, while acting on behalf of the Company (i) used any
corporate funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or failed to disclose fully
any contribution in violation of law, (ii) made any payment to any federal or
state governmental officer or official, o other person charged with similar
public or quasi-public duties, other than payments required or permitted by the
laws of the United States or any jurisdiction thereof, (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 bribe, rebate, payoff, influence payment, kickback
or other unlawful payment.

                    (ss)
Statistical or Market-Related Data.
Any statistical, industry-related and market-related data included or
incorporated by reference in the Registration Statement, the Prospectus or the
Disclosure Package, are based on or derived from sources that the Company
reasonably and in good faith believes to be reliable and accurate, and such
data agree with the sources from which they are derived. 

                    (tt)
Money Laundering Laws. The
operations of the Company are and have been conducted at all times in
compliance in all material respects with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act
of 1970, as amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any

- 15 -

governmental
agency (collectively, the “Money Laundering
Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
with respect to the Money Laundering Laws is pending, or to the knowledge of
the Company, threatened against the Company. 

                    (uu)
OFAC. Neither the Company nor, to
the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and
the Company will not directly or indirectly use the proceeds of the offering,
or lend, contribute or otherwise make available such proceeds to any affiliate,
joint venture partner or other person or entity, which, to the Company’s
knowledge, will use such proceeds for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered by OFAC.

                    (vv)
Margin Securities. The Company
does not own any “margin securities” as that term is defined in Regulation U of
the Board of Governors of the Federal Reserve System (the “Federal Reserve Board”), and none of the
proceeds of the sale of the Securities will be used, directly or indirectly,
for the purpose of purchasing or carrying any margin security, for the purpose
of reducing or retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might cause any of
the Securities to be considered a “purpose credit” within the meanings of
Regulation T, U or X of the Federal Reserve Board;

                    (ww)
Rated Securities. At the Time of
Sale there were, and as of the Closing Date there will be, no securities of or
guaranteed by the Company that are rated by a “nationally recognized
statistical rating organization,” as that term is defined in Rule 436(g)(2)
promulgated under the Act;

                    (xx)
FINRA Affiliations. There are no
affiliations or associations between (i) any member of the FINRA and (ii) the
Company or any of the Company’s officers, directors or 5% or greater
securityholders or any beneficial owner of the Company’s unregistered equity
securities that were acquired at any time on or after the one hundred eightieth
(180th) day immediately preceding the date the Registration Statement was
initially filed with the Commission, except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus.

                    (yy)
Exchange Act Requirements. The
Company has filed in a timely manner all reports required to be filed pursuant
to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the preceding
12 months (except to the extent that Section 15(d) requires reports to be filed
pursuant to Sections 13(d) and 13(g) of the Exchange Act, which shall be
governed by the next clause of this sentence); and the Company has filed in a timely
manner all reports required to be filed pursuant to Sections 13(d) and 13(g) of
the Exchange Act since January 1, 2004, except where the failure to timely file
could not reasonably be expected individually or in the aggregate to have a
Material Adverse Effect.

                    (zz)
Trading Market. Assuming the
accuracy of the representations of the Investors in the Subscription
Agreements, no approval of the shareholders of the Company under the rules and
regulations of any trading market (including Rule 4350 of the NASDAQ
Marketplace Rules) is required for the Company to issue and deliver to the
Investors the Securities.

- 16 -

                    (aaa)
Clinical Studies. The clinical,
pre-clinical and other studies and tests conducted by or on behalf of or
sponsored by the Company or in which the Company or products or product
candidates have participated that are described in the Registration Statement,
the Disclosure Package and the Prospectus were and, if still pending, are being
conducted in accordance in all material respects with all applicable federal,
state or foreign statutes, laws, rules and regulations, as applicable
(including, without limitation, those administered by the FDA or by any
foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA and current Good
Laboratory and Good Clinical Practices) and in accordance with experimental
protocols, procedures and controls pursuant to, where applicable, accepted
professional scientific methods. The descriptions in the Registration
Statement, the Prospectus and the Disclosure Package of the results of such
studies, tests and trials are accurate and complete in all material respects
and fairly present the published data derived from such studies, tests and
trials. The Company has not received any notices or other correspondence from
the FDA or any other foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by the FDA
with respect to any ongoing clinical or pre-clinical studies or tests requiring
the termination, suspension or material modification of such studies, tests or
preclinical or clinical trials, which termination, suspension or material
modification would reasonably be expected to result in a Material Adverse
Effect. No filing or submission to the FDA or any other federal, state or
foreign regulatory body, that is intended to be the basis for any approval,
contains any material statement or material false information. The Company is
in compliance with all applicable federal, state, local and foreign laws,
regulations, orders and decrees governing their business as prescribed by the
FDA, or any other federal, state or foreign agencies or bodies, including those
bodies and agencies engaged in the regulation of pharmaceuticals or
biohazardous substances or materials, except where noncompliance would not,
singly or in the aggregate, result in a Material Adverse Effect.

          Any
certificate signed by any officer of the Company and delivered to each
Placement Agent or to counsel for the Placement Agents in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company to each Placement Agent and the Investors as to the matters covered
thereby.

          3.
Covenants.
The Company covenants and agrees with each Placement Agent as follows:

                    (a)
Reporting Obligations; Exchange Act
Compliance. The Company will file: (i) each Preliminary Prospectus
and the Prospectus with the Commission within the time periods specified by
Rule 424(b) and Rules 430A, 430B or 430C under the Securities Act, as
applicable, (ii) any Issuer Free Writing Prospectus to the extent required by
Rule 433 under the Securities Act, if applicable, (iii) all reports and any
definitive proxy or information statements required to be filed by the Company
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus during the Prospectus
Delivery Period, and (iv) furnish copies of each Issuer Free Writing
Prospectus, if any, (to the extent not previously delivered) to each Placement
Agent prior to 11:00 a.m. Eastern time, on the second business day next
succeeding the date of this Agreement in such quantities as each Placement
Agent shall reasonably request.

                    (b)
Filing of Amendments. The Company
will promptly advise each Placement Agent of any proposal to amend or
supplement the Registration Statement, the Prospectus or the Disclosure Package
until the completion of the purchase and sale of the Securities contemplated
herein and will afford each Placement Agent a reasonable opportunity to comment
on any such

- 17 -

proposed
amendment or supplement and to file no such amendment or supplement to which
any Placement Agent shall object in writing, which objection shall not be
unreasonable; and the Company will also advise such Placement Agent promptly of
(i) the filing of any such amendment or supplement, (ii) any request
by the Commission or its staff for any amendment to the Registration Statement,
for any supplement to any Preliminary Prospectus or for any additional
information, (iii) the time and date when any post-effective amendment to the
Registration Statement becomes effective, but only during the Prospectus
Delivery Period; (iv) receipt by the Company of any notification with respect
to any suspension or the approval of the Shares and Warrant Shares from any
securities exchange upon which it is listed for trading or included or
designated for quotation, or the initiation or threatening of any proceeding
for such purpose, (v) the institution by the Commission of any stop order
proceedings in respect of the Registration Statement or the threatening of any
proceeding for that purpose, and (vi) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Securities in any jurisdiction or the institution or threatening of any
proceedings for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order or the suspension of any such qualification
and, if issued, to obtain as soon as possible the withdrawal thereof. 

                    (c)
Continued Compliance with Securities Law.
If, at any time prior to the filing of the Prospectus pursuant to Rule 424(b),
any event occurs as a result of which the Disclosure Package as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, the Company
will (i) promptly notify each Placement Agent so that any use of the Disclosure
Package may cease until it is amended or supplemented and (ii) amend or
supplement the Disclosure Package to correct such statements or omission. If,
during the Prospectus Delivery Period, any event occurs as a result of which
the Prospectus as then amended or supplemented would include an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the
Registration Statement or supplement the Prospectus to comply with the
Securities Act, the Company will (A) promptly notify each Placement Agent of
such event and (B) promptly prepare and file with the Commission and furnish,
at its own expense, to each Placement Agent and, to the extent applicable, the
dealers and any other dealers upon request of each Placement Agent, an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance. 

                    (d)
Issuer Free Writing Prospectuses.
The Company will (i) not make any offer relating to the Securities that would
constitute an Issuer Free Writing Prospectus or that would otherwise constitute
a “free writing prospectus” (as defined in Rule 405 under the Securities Act)
required to be filed by the Company with the Commission under Rule 433 under
the Securities Act unless each Placement Agent approves its use in writing
prior to first use (each, a “Permitted Free
Writing Prospectus”); provided
that the prior written consent of each Placement Agent shall be deemed to have
been given in respect of the Issuer Free Writing Prospectus(es) included in Schedule
I hereto and any electronic road show, (ii) treat each Permitted Free
Writing Prospectus as an Issuer Free Writing Prospectus, (iii) comply with the
requirements of Rules 164 and 433 under the Securities Act applicable to any
Issuer Free Writing Prospectus, including the requirements relating to timely
filing with the Commission, legending and record keeping and (iv) not take any
action that would result in a Placement Agent or the Company being required to
file with the Commission pursuant to Rule 433(d) under the Securities Act a
free writing prospectus prepared by or on behalf of such Placement Agent that
such Placement Agent otherwise would not have been required to file

- 18 -

thereunder.
The Company will satisfy the conditions in Rule 433 under the Securities Act to
avoid a requirement to file with the Commission any electronic road show.

                    (e)
Final Term Sheet. The Company
will prepare a final term sheet (the “Final
Term Sheet”) reflecting the final terms of the Securities, in form
and substance satisfactory to each Placement Agent, and shall file such Final
Term Sheet as an Issuer Free Writing Prospectus pursuant to Rule 433(d)(5)(ii)
under the Securities Act prior to the close of business two business days after
the date hereof. The Company also consents to the use by each Placement Agent
of a free writing prospectus that contains only (i) information describing the
preliminary terms of the shares or their offering or (ii) information that
describes the final terms of the shares or their offering and that is included
in the final term sheet of the Company contemplated in the first sentence of
this subsection, it being understood that any such free writing prospectus
shall not be an Issuer Free Writing Prospectus for purposes of this Agreement.

                    (f)
Conflicting Issuer Free Writing Prospectus.
If at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer
Free Writing Prospectus conflicted or would conflict with the information
contained in the Registration Statement relating to the Securities or included
or would include an untrue statement of a material fact or omitted or would
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company promptly will notify each Placement Agent and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.
The foregoing sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity with,
written information furnished to the Company by each Placement Agent
specifically for inclusion therein, which information the parties hereto agree
is limited to the Placement Agents’ Information.

                    (g)
Delivery of Copies. The Company
will deliver promptly to each Placement Agent and their counsel such number of
the following documents as each Placement Agent shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits), (ii)
copies of any Preliminary Prospectus related to the Securities; (iii) any
Issuer Free Writing Prospectus, (iv) during the Prospectus Delivery Period,
copies of the Prospectus (or any amendments or supplements thereto); (v) any
document incorporated by reference in the Prospectus (other than any such
document that is filed with the Commission electronically via EDGAR or any
successor system) and (vi) all correspondence to and from, and all documents
issued to and by, the Commission in connection with the registration of the
Securities under the Securities Act. 

                    (h)
Blue Sky Laws. The Company will
promptly take or cause to be taken, from time to time, such actions as each
Placement Agent may reasonably request to qualify the Securities for offering
and sale under the state securities, or blue sky, laws of such states or other
jurisdictions as such Placement Agent may reasonably request and to maintain
such qualifications in effect so long as such Placement Agent may request for
the distribution of the Securities, provided,
that in no event shall the Company be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to file a
general consent to service of process in any jurisdiction or subject itself to
taxation as doing business in any jurisdiction. The Company will advise each
Placement Agent promptly of the suspension of the qualification or registration
of (or any exemption relating to) the Securities for offering, sale or trading
in any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification,

- 19 -

registration
or exemption, the Company shall use its best efforts to obtain the withdrawal
thereof at the earliest possible moment.

                    (i)
Earnings Statement. As soon as
practicable, the Company will make generally available to holders of its
securities and deliver to each Placement Agent, an earnings statement of the
Company (which need not be audited) covering a period of at least 12 months
beginning after the date of this Agreement that will satisfy the provisions of
Section 11(a) of the Securities Act and the Rules and Regulations (including,
at the option of the Company, Rule 158). 

                    (j)
Use of Proceeds. The Company will apply the net proceeds
from the sale of the Securities in the manner set forth in the Registration
Statement, the Disclosure Package and the Prospectus under the heading “Use of
Proceeds.”

                    (k)
Lock-Up Agreements. The Company
will cause each of its executive officers and directors whose names are set
forth on Exhibit D hereto to furnish to each Placement Agent, on the
date hereof, a Lock-Up Agreement, substantially in the form of Exhibit C
hereto. The Company will enforce the terms of each Lock-Up Agreement and issue
stop transfer instructions to the transfer agent for the Common Stock with
respect to any transaction or contemplated transaction that would constitute a
breach or default under the applicable Lock-Up Agreement.

                    (l)
Lock-Up Period. Beginning on the
date hereof and continuing for a period of
90 days after the date of the Prospectus (the “Lock-Up
Period”), the Company will not (i) offer to sell,
hypothecate, pledge, announce the intention to sell, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of, directly or indirectly, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning
of Section 16 of the Exchange Act, with respect to, any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for Common
Stock; (ii) file or cause to become effective a registration statement
under the Securities Act relating to the offer and sale of any shares of Common
Stock or securities convertible into or exercisable or exchangeable for Common
Stock except for a registration statement on Form S-8 relating to employee
benefit plans or (iii) enter into any swap, hedge or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership
of the Common Stock, whether any such transaction described in clause (i), (ii)
or (iii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise, without the prior written consent of the Lead
Placement Agent (which consent may be withheld in its sole discretion), other
than (i) the Securities to be sold hereunder, (ii) the issuance of restricted
Common Stock or options to acquire Common Stock pursuant to the Company’s
employee benefit plans, qualified stock option plans or other employee
compensation plans as such plans are in existence on the date hereof and
described in the Registration Statement (excluding the exhibits thereto), the
Disclosure Package and the Prospectus, (iii) issuances of Common Stock upon the
exercise of options or warrants disclosed as outstanding in the Registration
Statement (excluding the exhibits thereto), the Disclosure Package and the
Prospectus or upon the conversion or exchange of convertible or exchangeable
securities outstanding as of the date of this Agreement; (iv) the issuance
by the Company of any shares of Common Stock as consideration for mergers, acquisitions,
other business combinations, or strategic alliances, occurring after the date
of this Agreement; provided that
each recipient of shares pursuant to this clause (iv) agrees that all such
shares remain subject to restrictions substantially similar to those contained
in this subsection 3(l); or (v) the purchase or sale of the
Company’s securities pursuant to a plan, contract or instruction that satisfies
all of the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect
prior to the date hereof. Notwithstanding the foregoing, for the

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purpose of
allowing each Placement Agent to comply with NASD Rule 2711(f)(4), if (1)
during the last 17 days of the Lock-Up Period, the Company releases earnings
results or publicly announces other material news or a material event relating
to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16 day
period beginning on the last day of the Lock-Up Period, then in each case the
Lock-Up Period will be extended until the expiration of the 18 day period
beginning on the date of release of the earnings results or the public
announcement regarding the material news or the occurrence of the material
event, as applicable, unless each Placement Agent waives, in writing, such
extension. The Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any repurchase
right prior to the expiration of the Lock-Up Period. 

                    (m)
Public Communications. Prior to
9:30 a.m. New York City time on the business day immediately subsequent to the
date hereof, the Company shall issue a press release (the “Press Release”) reasonably acceptable to
the Lead Placement Agent disclosing the execution of this Agreement, the
Subscription Agreements and the transaction contemplated hereby and thereby.
Prior to the Closing Date, the Company will not issue any press release or
other communication directly or indirectly or hold any press conference with
respect to the Company, its condition, financial or otherwise, or the earnings,
business, operations or prospects of any of them, or the offering of the
Securities (except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the Company and of
which each Placement Agent is notified), without the prior written consent of
the Lead Placement Agent, unless in the reasonable judgment of the Company and
its counsel, and after notification to each Placement Agent, such press release
or communication is required by law or applicable stock exchange, in which case
the Company shall use its reasonable best efforts to allow the Lead Placement
Agent reasonable time to comment on such release or other communication in advance
of such issuance.

                    (n)
Stabilization. The Company will
not take directly or indirectly any action designed, or that might reasonably
be expected to cause or result in, or that will constitute, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities.

                    (o)
Transfer Agent. The Company shall
engage and maintain, at its expense, a transfer agent and, if necessary under
the jurisdiction of incorporation of the Company, a registrar for the Shares
and Warrant Shares.

                    (p)
Listing. The Company shall use
its best efforts to cause the Shares and Warrant Shares to be listed for
quotation on the NASDAQ Capital Market at the Closing Date and to maintain such
listing. 

                    (q)
Investment Company Act. The
Company shall not invest, or otherwise use the proceeds received by the Company
from its sale of the Securities in such a manner as would require the Company
to register as an investment company under the Investment Company Act.

                    (r)
Sarbanes-Oxley Act. The Company
will comply with all effective applicable provisions of the Sarbanes Oxley Act.

                    (s)
Periodic Reports. The Company
will file with the Commission such periodic and special reports as required by
the Securities Act.

- 21 -

                    (t)
Reservation of Warrant Shares.
The Company shall reserve and keep available at all times a sufficient number
of shares of Common Stock for the purpose of enabling the Company to issue the
Warrant Shares.

          4.
Costs and Expenses. The Company, whether or
not the transactions contemplated hereunder are consummated or this Agreement
is terminated, will pay or reimburse if paid by each Placement Agent all actual
and accountable out-of-pocket expenses incident to the performance of the
obligations of the Company under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to costs and expenses
of or relating to (i) the preparation, printing, filing, delivery and shipping
of the Registration Statement, any Issuer Free Writing Prospectus, each
Preliminary Prospectus, the Disclosure Package and the Prospectus, and any
amendment or supplement to any of the foregoing and the printing and furnishing
of copies of each thereof to each Placement Agent and dealers (including costs
of mailing and shipment), (ii) the registration, issue, sale and delivery of
the Securities including any stock or transfer taxes and stamp or similar
duties payable upon the sale, issuance or delivery of the Shares or Warrant
Shares and the printing, delivery, and shipping of the certificates
representing the Shares or Warrant Shares, (iii) the registration or qualification
of the Securities for offer and sale under the securities or Blue Sky laws of
such jurisdictions designated pursuant to Section 3(h), (including
the reasonable legal fees and filing fees, and other disbursements of counsel
to the Placement Agents in connection therewith), and, if reasonably requested
by the Lead Placement Agent, the preparation and printing and furnishing of
copies of any blue sky surveys to the Lead Placement Agent and to dealers, (iv)
the fees and expenses of any transfer agent or registrar for the Shares or
Warrant Shares, (v) any filings required to be made by each Placement Agent or
the Company with the FINRA, and the reasonable fees, disbursements and other
charges of counsel for the Placement Agents in connection with the FINRA’s review
and approval of each Placement Agent’s participation in the offering (including
all COBRADesk fees), (vi) fees, disbursements and other charges of counsel to
the Company (vii) listing fees, if any, for the listing or quotation of the
Shares or Warrant Shares on the NASDAQ Capital Market, (viii) fees and
disbursements of the Company’s auditor incurred in delivering the letter(s)
described in Section 5(j) of this Agreement, (ix) fees of the Escrow
Agent, and (x) the costs and expenses of the Company and each Placement Agent
in connection with the marketing of the offering and the sale of the Securities
to prospective investors including, but not limited to, those related to any
presentations or meetings undertaken in connection therewith including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged with the written consent
of the Company in connection with the road show presentations, travel, lodging
and other expenses incurred by the officers of the Company and any such
consultants, and the cost of any aircraft or other transportation chartered in
connection with the road show, in an amount not to exceed $25,000. In addition
to the above, the Company shall reimburse each Placement Agent for all actual
and accountable fees, disbursements and other charges of counsel to the
Placement Agents in an amount not to exceed $150,000. 

          5.
Conditions of Placement
Agents’ Obligations. The obligations of each Placement Agent
hereunder and the Investors under the Subscription Agreements are subject to
the following conditions:

                    (a)
Filings with the Commission. Each
Issuer Free Writing Prospectus, if any, and the Prospectus shall have been
filed with the Commission within the applicable time period prescribed for such
filing by, and in compliance with, the Rules and Regulations and in accordance
with Section 3(a) hereof. 

- 22 -

                    (b)
Abbreviated Registration Statement.
If the Company has elected to rely upon Rule 462(b), the registration statement
filed under Rule 462(b) shall have become effective under the Securities Act by
8:00 a.m., Washington, D.C. time, on the business day next succeeding the date
of this Agreement.

                    (c)
No Stop Orders. Prior to the
Closing: (i) no stop order suspending the effectiveness of the Registration
Statement or any part thereof, preventing or suspending the use of the
Prospectus or any Issuer Free Writing Prospectus or any part thereof shall have
been issued under the Securities Act and no proceedings for that purpose or
pursuant to Section 8A under the Securities Act shall have been initiated or
threatened by the Commission, (ii) no order suspending the qualification or
registration of the Securities or the Warrant Shares under the securities or
blue sky laws of any jurisdiction shall be in effect and (iii) all requests for
additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement, the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Lead
Placement Agent. On or prior to the Closing Date, the Registration Statement or
any amendment thereof or supplement thereto shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
neither the Disclosure Package, any Issuer Free Writing Prospectus or the
Prospectus or any amendment thereof or supplement thereto shall 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 light of
the circumstances in which they were made, not misleading.

                    (d)
Action Preventing Issuance. No
action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body
which would prevent the issuance or sale of the Securities or materially and
adversely affect or potentially materially and adversely affect the business or
operations of the Company; and no injunction, restraining order or order of any
other nature by any federal or state court of competent jurisdiction shall have
been issued which would prevent the issuance or sale of the Securities or
materially and adversely affect or potentially materially and adversely affect
the business or operations of the Company.

                    (e)
Objection of the Lead Placement Agent.
No Prospectus or amendment or supplement to the Registration Statement shall
have been filed to which the Lead Placement Agent shall have objected in
writing, which objection shall not be unreasonable. 

                    (f)
Material Adverse Change.
Subsequent to the date of the latest audited financial statements included or
incorporated by reference in the Disclosure Package, (i) the Company has not sustained any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth
in the Disclosure Package, (ii) there
has not been any change in the capital stock (other than a change in the number
of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants or the conversion of convertible indebtedness),
or material change in the short–term debt or long–term debt of the
Company (other than upon conversion of convertible indebtedness) or any
material adverse change, in or affecting the business, assets, general affairs,
management, financial position, prospects, stockholders’ equity or results of
operations of the Company, otherwise than as set forth in the Disclosure
Package, the effect of which, in any such case described in clause (i)
or (ii) of this paragraph (f), is, in the judgment of the Lead Placement
Agent, so material and adverse as to

- 23 -

make it
impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated in the Disclosure
Package.

                    (g)
Representations and Warranties.
Each of the representations and warranties of the Company contained herein
shall be true and correct when made and on and as of the Closing Date, as if
made on such date (except that those representations and warranties that
address matters only as of a particular date shall remain true and correct as
of such date), and all covenants and agreements herein contained to be
performed on the part of the Company and all conditions herein contained to be
fulfilled or complied with by the Company at or prior to the Closing Date shall
have been duly performed, fulfilled or complied with.

                    (h)
Opinions of Counsel to the Company.
Each Placement Agent shall have received from Gersten Savage LLP, counsel to
the Company, such counsel’s written opinion, addressed to each Placement Agent
and the Investors and dated the Closing Date, in form and substance as is set
forth on Exhibit E attached hereto. Such counsel shall also have
furnished to each Placement Agent a written statement (“Negative Assurances”), addressed to each
Placement Agent and dated the Closing Date, in form and substance as set forth
in Exhibit F attached hereto. Each Placement Agent shall have received
from Greenburg Traurig LLP, counsel to the Company, such counsel’s written
opinion, addressed to each Placement Agent and the Investors and dated the
Closing Date, in form and substance satisfactory to the Placement Agent as to
certain intellectual property matters referenced in the Registration Statement.

                    (i)
Opinion of Counsel to the Placement Agents.
Each Placement Agent shall have received from Stroock & Stroock & Lavan
LLP, counsel for the Placement Agents, such opinion or opinions (including
Negative Assurances), dated the Closing Date and addressed to each Placement
Agent, covering such matters as are customarily covered in transactions of this
type.

                    (j)
Accountant’s Comfort
Letter. On the date hereof, each
Placement Agent shall have received a letter dated the date hereof, (the “Comfort Letter”), addressed to each
Placement Agent and in form and substance reasonably satisfactory to the
Placement Agents and their counsel, from Carlin, Charron & Rosen, LLP, (i)
confirming that they are independent public accountants with respect to the
Company within the meaning of the Securities Act and the Rules and Regulations
and (ii) stating, as of the date hereof (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Disclosure Package, as of a date not more
than three days prior to the date hereof), the conclusions and findings of such
firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” to underwriters, delivered according
to Statement of Auditing Standards No. 72 and Statement of Auditing Standard
No. 100 (or successor bulletins), in connection with registered public
offerings.

                    (k)
Bring-Down Letter. On the Closing
Date, each Placement Agent shall have received from Carlin, Charron &
Rosen, LLP a letter (the “Bring-Down Letter”),
dated the Closing Date, addressed to each Placement Agent and in form and
substance reasonably satisfactory to the Placement Agents and their counsel,
(i) confirming that they are independent public accountants with respect to the
Company within the meaning of the Securities Act and the Rules and Regulations,
(ii) stating, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of
which specified financial information is given in the Disclosure Package and
the Prospectus, as of a date not more than three days prior to the date of the
Bring-Down Letter), the conclusions and findings of such firm with respect to
the financial

- 24 -

information
and other matters covered by the Comfort Letter and (iii) confirming in all
material respects the conclusions and findings set forth in the Comfort Letter.

                    (l)
Officer’s Certificate. The Lead
Placement Agent shall have received on the Closing Date a certificate,
addressed to the Lead Placement Agent and dated the Closing Date, of the chief
executive or chief operating officer and the chief financial officer or chief
accounting officer of the Company to the effect that:

                              (i)
each of the representations, warranties and agreements of the Company in this
Agreement were true and correct when originally made and are true and correct
as of the Time of Sale and the Closing Date as if made on each such date
(except that those representations and warranties that address matters only as
of a particular date remain true and correct as of each such date); and the
Company has complied with all agreements and satisfied all the conditions on
its part required under this Agreement to be performed or satisfied at or prior
to the Closing Date;

                              (ii)
there has not been, subsequent to the date of the most recent audited financial
statements included or incorporated by reference in the Disclosure Package, any
material adverse change in the financial position or results of operations of
the Company, or any change or development that, singularly or in the aggregate,
would involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise), results of
operations, business, assets or prospects of the Company except as set forth in
the Prospectus;

                              (iii)
no stop order suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereof or the qualification of the Securities
for offering or sale, nor suspending or preventing the use of the Disclosure
Package, the Prospectus or any Issuer Free Writing Prospectus shall have been
issued, and no proceedings for that purpose or pursuant to Section 8A under the
Securities Act shall be pending or to their knowledge, threatened by the
Commission or any state or regulatory body; 

                              (iv)
the Registration Statement and each amendment thereto, at the Time of Sale and
as of the date of this Agreement and as of the Closing Date did not include any
untrue statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Disclosure Package, as of the Time of Sale and as of the
Closing Date, any Issuer Free Writing Prospectus as of its date and as of the
Closing Date, the Prospectus and each amendment or supplement thereto, as of
the respective date thereof and as of the Closing Date, did not include any
untrue statement of a material fact and did not omit to state a material fact
necessary in order to make the statements therein, in the light of the circumstances
in which they were made, not misleading; and

                              (v)
no event has occurred as a result of which it is necessary to amend or
supplement the Registration Statement, the Prospectus or the Disclosure Package
in order to make the statements therein not untrue or misleading in any
material respect.

                    (m)
Secretary’s Certificate. On the
Closing Date, the Company shall have furnished to the Lead Placement Agent a
Secretary’s Certificate of the Company.

                    (n)
Lock-Up Agreements. Each
executive officer and director of the Company identified on Exhibit D
hereto shall have entered into Lock-Up Agreements substantially in the form

- 25 -

attached as Exhibit
C hereto on or prior to the date hereof, and each such Lock-Up Agreement,
or a copy thereof, shall have been delivered to you and shall be in full force
and effect at the Time of Sale.

                    (o)
The NASDAQ Capital Market. The
Shares and Warrant Shares shall have been listed and authorized for trading on
the NASDAQ Capital Market, and satisfactory evidence of such actions shall have
been provided to the Lead Placement Agent, which shall include verbal
confirmations from a member of the NASDAQ staff.

                    (p)
Other Filings with the Commission.
The Company shall have prepared and filed with the Commission a Current Report
on Form 8-K with respect to the transactions contemplated hereby, including as
an exhibit thereto this Agreement and any other documents relating thereto.

                    (q)
No FINRA Objection. The Lead
Placement Agent shall have not have received any unresolved objection from the
FINRA as to the fairness and reasonableness of the amount of compensation
allowable or payable to each Placement Agent in connection with the issuance
and sale of the Securities.

                    (r)
Subscription Agreements. The
Company shall have entered into the Subscription Agreements with each of the
Investors, and such agreements shall be in full force and effect on the Closing
Date.

                    (s)
Escrow Agreement. The Company
shall have entered into the Escrow Agreement, and such agreement shall be in
full force and effect on the Closing Date.

                    (t)
Additional Documents. Prior to
the Closing Date, the Company shall have furnished to the Lead Placement Agent
such further information, certificates or documents as the Lead Placement Agent
shall have reasonably requested.

All opinions,
letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only
if they are in form and substance reasonably satisfactory to counsel for the
Placement Agents.

If any condition specified in this Section 5 is not satisfied when and
as required to be satisfied, this Agreement may be terminated by the Lead
Placement Agent by notice to the Company at any time prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 4, Section 6 and Section 8 hereof shall at all
times be effective and shall survive such termination.

          6.
Indemnification and
Contribution.

                    (a)
Indemnification of the Placement Agents.
The Company agrees to indemnify, defend and hold harmless each Placement Agent,
its directors and officers, any person who controls any Placement Agent within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the successors and assigns of all of the foregoing persons, from and
against any losses, claims, damages, expenses or liabilities, joint or several,
to which each Placement Agent may become subject, under the Securities Act, the
Exchange Act, or other federal or state statutory law or regulation, the common
law or otherwise (including in settlement of any litigation if such settlement

- 26 -

is effected
with the written consent of the Company), insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any Preliminary Prospectus, the
Disclosure Package, the Prospectus, or any amendment or supplement thereto, any
Issuer Free Writing Prospectus or in any materials or information provided to
Investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Common Stock (“Marketing Materials”), including any roadshow or investor
presentations made to Investors by the Company (whether in person or
electronically) or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each Placement Agent for any legal or other expenses reasonably incurred by it
in connection with investigating or defending against such loss, claim, damage,
liability, expense or action; or (ii) in whole or in part upon any inaccuracy
in the representations and warranties of the Company contained herein; or (iii)
in whole or in part upon any failure of the Company to perform its obligations
hereunder or under law; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, expense, liability or action arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, any Preliminary
Prospectus, the Disclosure Package, the Prospectus, or any such amendment or
supplement, any Issuer Free Writing Prospectus or in any Marketing Materials,
in reliance upon and in conformity with written information furnished to the
Company by each Placement Agent, specifically for use in the preparation
thereof, which information the parties hereto agree is limited to the Placement
Agents’ Information.

                    (b)
Indemnification of the Company.
Each Placement Agent, severally and not jointly, agrees to indemnify, defend
and hold harmless the Company against any losses, claims, damages, expenses or
liabilities to which the Company may become subject, under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, the
common law or otherwise (including in settlement of any litigation, if such
settlement is effected with the written consent of such Placement Agent),
insofar as such losses, claims, damages, expenses or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
any Preliminary Prospectus, the Disclosure Package, the Prospectus, or any
amendment or supplement thereto or any Issuer Free Writing Prospectus, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary Prospectus,
the Disclosure Package, the Prospectus, or any such amendment or supplement
thereto, or any Issuer Free Writing Prospectus in reliance upon and in
conformity with written information furnished to the Company by each Placement
Agent, specifically for use in the preparation thereof, which information the
parties hereto agree is limited to the Placement Agents’ Information relating
to such Placement Agent, and will reimburse the Company for any legal or other
expenses reasonably incurred by the Company in connection with investigating or
defending against any such loss, claim, damage, liability or action. Notwithstanding
the provisions of this Section 6(b), in no event shall any indemnity by any
Placement Agent under this Section 6(b) exceed the total compensation received
by such Placement Agent in accordance with Section 1(b) hereof.

                    (c)
Notice and Procedures. If any
action, suit or proceeding (each, a “Proceeding”)
is brought against a person (an “Indemnified
Party”) in respect of which indemnity may be sought against the
Company or any Placement Agent (as applicable, the “Indemnifying

- 27 -

Party”) pursuant to subsection
(a) or (b) above, respectively, of this Section 6,
such Indemnified Party shall promptly notify such Indemnifying Party in writing
of the institution of such Proceeding and such Indemnifying Party shall assume
the defense of such Proceeding, including the employment of counsel reasonably
satisfactory to such Indemnified Party (who shall not, except with the consent
of the Indemnified Party, be counsel to the Indemnifying Party) and payment of
all fees and expenses; provided, however,
that the omission to so notify such Indemnifying Party shall not relieve such
Indemnifying Party from any liability which such Indemnifying Party may have to
any Indemnified Party or otherwise, except to the extent the Indemnifying Party
has been materially prejudiced by such failure; and provided, further, that the failure to notify the
Indemnifying Party shall not relieve it from any liability that it may have to
an Indemnified Party otherwise than under subsection (a) or (b) above. The
Indemnified Party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the Indemnifying Party in
connection with the defense of such Proceeding, (ii) the Indemnifying Party
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to defend such Proceeding or (iii) such
Indemnified Party or parties shall have reasonably concluded upon written
advice of counsel that there may be one or more legal defenses available to it
or them which are different from, additional to or in conflict with those
available to such Indemnifying Party (in which case such Indemnifying Party
shall not have the right to direct that portion of the defense of such
Proceeding on behalf of the Indemnified Party or parties, but such Indemnifying
Party or parties may employ counsel and participate in the defense thereof but
the fees and expenses of such counsel shall be at the expense of the
Indemnifying Party), in any of which events such reasonable fees and expenses
shall be borne by such Indemnifying Party and paid as incurred (it being
understood, however, that such Indemnifying Party shall not be liable for the
expenses of more than one separate counsel (in addition to any local counsel)
in any one Proceeding or series of related Proceedings in the same jurisdiction
representing the Indemnified Parties who are parties to such Proceeding). An
Indemnifying Party shall not be liable for any settlement of any Proceeding
effected without its written consent but, if settled with its written consent,
such Indemnifying Party agrees to indemnify and hold harmless the Indemnified
Party or parties from and against any loss or liability by reason of such
settlement. Notwithstanding the foregoing sentence, if at any time an
Indemnified Party shall have requested an Indemnifying Party to reimburse the
Indemnified Party for fees and expenses of counsel as contemplated by the
second sentence of this Section 6(c), then the Indemnifying Party
agrees that it shall be liable for any settlement of any Proceeding effected
without its written consent if (i) such settlement is entered into more
than 60 days after receipt by such Indemnifying Party of the aforesaid request,
(ii) such Indemnifying Party shall not have fully reimbursed the
Indemnified Party in accordance with such request prior to the date of such
settlement and (iii) such Indemnified Party shall have given the
Indemnifying Party at least 30 days’ prior notice of its intention to
settle. No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened Proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject matter of such Proceeding and does not include an
admission of fault or culpability or a failure to act by or on behalf of such
Indemnified Party.

                    (d)
Contribution. If the indemnification provided for in
this Section 6 is unavailable to an Indemnified Party under subsections
(a) or (b) of this Section 6 or insufficient
to hold an Indemnified Party harmless in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then
each applicable Indemnifying Party, in lieu of indemnifying such Indemnified

- 28 -

Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of the losses, claims, damages, liabilities or
expenses referred to in subsection (a) or (b) above,
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Indemnifying Party or parties on the one hand and the
Indemnified Party or parties on the other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Indemnifying Party or
parties on the one hand and the Indemnified Party or parties on the other hand
in connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and each Placement Agent on the other hand shall be deemed to be in
the same respective proportions as the total net proceeds from the offering of
the Securities (before deducting expenses) received by the Company bear to the
discounts and commissions received by such Placement Agent. The relative fault
of the Company on the one hand and such Placement Agent on the other hand shall
be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, on the
one hand, or by such Placement Agent, on the other hand, and the parties’
relevant intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement, omission act or failure to act; provided that the parties hereto agree
that the written information furnished to the Company by a Placement Agent for
use in the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, consists solely of the Placement Agents’ Information
relating to that Placement Agent.

                    (e)
Allocation. The Company and each
Placement Agent agree that it would not be just and equitable if contribution
pursuant to subsection (d) above were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the first sentence of Section
6(d) above. Notwithstanding the provisions of this Section 6(e), no
Placement Agent shall be required to contribute any amount in excess of the
total commissions received by such Placement Agent in accordance with Section
1(b) less the amount of any damages which such Placement Agent has
otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement, omission or alleged omission, act or alleged act or failure
to act or alleged failure to act. 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. Each Placement Agent’s obligations to contribute
as provided in this Section 6(e) are several in proportion to the
compensation received by each of the Placement Agents in accordance with Section
1(b) hereof and not joint. The remedies provided for in this Section 6
are not exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Party at law or in equity.

                    (f)
Representations and Agreements to Survive
Delivery. The obligations of the Company under this Section 6
shall be in addition to any liability which the Company may otherwise have. The
indemnity and contribution agreements contained in this Section 6
and the covenants, agreements, warranties and representations of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation
made by or on behalf of any Placement Agent, any person who controls a
Placement Agent within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act or any affiliate of any Placement
Agent, or by or on behalf of the Company, its directors or officers or any
person who controls the Company within the meaning of either Section 15 of
the Securities Act or Section 20 of the Exchange Act, and (iii) the
issuance and delivery of the Securities. The Company and each Placement Agent
agree promptly to notify each other of the commencement

- 29 -

of any
Proceeding against it and, in the case of the Company, against any of the
Company’s officers or directors in connection with the issuance and sale of the
Securities, or in connection with the Registration Statement, the Disclosure
Package or the Prospectus.

          7.
Information Furnished by Placement Agents. The
Company acknowledges that the statements set forth in the paragraph under the
heading “Plan of Distribution” in the Prospectus (the “Placement Agents’ Information”)
constitute the only information relating to each Placement Agent furnished in
writing to the Company by each Placement Agent as such information is referred
to in Sections 2 and 6 hereof.

          8.Termination. The Lead Placement
Agent shall have the
right to terminate this Agreement on behalf of the Placement Agents by giving
notice as hereinafter specified at any time at or prior to the Closing Date,
without liability on the part of any Placement Agent to the Company, if (i)
prior to delivery and payment for the Securities (A) trading in securities
generally shall have been suspended on or by the New York Stock Exchange, the
American Stock Exchange, the NASDAQ Capital Market or in the over the counter
market (each, a “Trading Market”), (B) trading in the Common Stock of
the Company shall have been suspended on any exchange, in the over-the-counter
market or by the Commission, (C) a general moratorium on commercial
banking activities shall have been declared by federal or New York state
authorities or a material disruption shall have occurred in commercial banking
or securities settlement or clearance services in the United States,
(D) there shall have occurred any outbreak or material escalation of
hostilities or acts of terrorism involving the United States or there shall
have been a declaration by the United States of a national emergency or war,
(E) there shall have occurred any other calamity or crisis or any material
change in general economic, political or financial conditions in the United
States or elsewhere, if the effect of any such event specified in clause (D) or
(E), in the judgment of the Lead Placement Agent, is material and adverse and
makes it impractical or inadvisable to proceed with the completion of the sale
of and payment for the Securities on the Closing Date on the terms and in the
manner contemplated by this Agreement, the Disclosure Package and the
Prospectus, (ii) since the time of execution of this Agreement or the earlier
respective dates as of which information is given in the Disclosure Package or
incorporated by reference therein, there has been any Material Adverse Effect,
(iii) the Company shall have failed, refused or been unable to comply with the
terms or perform any agreement or obligation of this Agreement or any
Subscription Agreement, other than by reason of a default by any Placement
Agent, or (iv) any condition of the Placement Agents’ obligations hereunder is
not fulfilled. Any such termination shall be without liability of any party to
any other party except that the provisions of Section 4, Section 6,
and Section 12 hereof shall at all times be effective notwithstanding
such termination.

          9.
Notices. All statements, requests, notices and
agreements hereunder shall be in writing or by facsimile, and:

                    (a)
if to any Placement Agent, shall be delivered or sent by mail, telex or
facsimile transmission to the Lead
Placement Agent as follows:

	
 

	
 

	
 

	
Canaccord
 Adams Inc.

	
 

	
535 Madison
 Avenue

	
 

	
New York,
 New York 10022, 

	
 

	
Attention:
 David J. Strupp, Jr.

	
 

	
Facsimile
 No.: 212-849-3938

- 30 -

	
 

	
 

	
 

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

	
 

	
 

	
 

	
Stroock
 & Stroock & Lavan LLP

	
 

	
180 Maiden
 Lane

	
 

	
New York,
 New York 10038

	
 

	
Attention:
 Christopher J. Doyle, Esq.

	
 

	
Facsimile
 No.: 212-806-5400

                    (b)
if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to:

	
 

	
 

	
 

	
Delcath
 Systems, Inc.

	
 

	
600 Fifth
 Avenue, 23rd Floor

	
 

	
New York,
 New York 10020 

	
 

	
Attention:
 Paul M. Feinstein

	
 

	
Facsimile
 No.: 212-489-2102

	
 

	
 

	
 

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

	
 

	
 

	
 

	
Gersten
 Savage LLP

	
 

	
600
 Lexington Avenue

	
 

	
New York,
 New York 10022

	
 

	
Attention:
 Arthur S. Marcus, Esq.

	
 

	
Facsimile
 No.: 212-980-5192

          Any
such statements, requests, notices or agreements shall be effective only upon
receipt. Any party to this Agreement may change such address for notices by
sending to the parties to this Agreement written notice of a new address for
such purpose.

          10.
Persons Entitled to
Benefit of Agreement. This Agreement shall inure to the benefit
of and shall be binding upon each Placement Agent, the Company, and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right,
remedy or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person, except that (i) the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the controlling persons,
officers and directors referred to in Section 6(a) hereof and the
indemnities of each Placement Agent shall also be for the benefit of the
controlling persons, officers and directors referred to in Section 6(b)
hereof and (ii) the Investors are relying on the representations made by the
Company under, and are intended third party beneficiaries of, this Agreement.
The term “successors and assigns” as herein used shall not include any
purchaser of the Securities by reason merely of such purchase.

          11. Governing Law; Submission to Jurisdiction.
This Agreement shall be governed by, and construed in accordance with, the laws
of the State of New York, without giving effect to the conflicts of laws
provisions thereof. Except as set forth below, no
Proceeding may be commenced, prosecuted or continued in any court other than
the courts of the State of New York located in the City and County of New York
or in the United States District Court for the Southern 

- 31 -

District of
New York, which courts shall have jurisdiction over the adjudication of such
matters, and the Company hereby consents to the jurisdiction of such courts and
personal service with respect thereto. The Company hereby consents to personal
jurisdiction, service and venue in any court in which any Proceeding arising
out of or in any way relating to this Agreement is brought by any third party
against any Placement Agent. The Company hereby waives all right to trial by
jury in any Proceeding (whether based upon contract, tort or otherwise) in any
way arising out of or relating to this Agreement. The Company agrees that a
final judgment in any such Proceeding brought in any such court shall be
conclusive and binding upon the Company and may be enforced in any other courts
in the jurisdiction of which the Company is or may be subject, by suit upon
such judgment. 

          12.
No Fiduciary
Relationship. The Company hereby acknowledges and agrees that: 

                    (a)
No Other Relationship. The Placement
Agents have been retained solely to act as the exclusive placement agents in
connection with the offering of the Company’s securities. The Company further
acknowledges that each Placement Agent is acting pursuant to a contractual
relationship created solely by this Agreement entered into on an arm’s length
basis and in no event do the parties intend that each Placement Agent act or be
responsible as a fiduciary to the Company, its management, stockholders,
creditors or any other person in connection with any activity that any
Placement Agent may undertake or has undertaken in furtherance of the offering
of the Company’s securities, either before or after the date hereof. Each
Placement Agent hereby expressly disclaims any fiduciary or similar obligations
to the Company, either in connection with the transactions contemplated by this
Agreement or any matters leading up to such transactions, and the Company
hereby confirms its understanding and agreement to that effect. 

                    (b)
Arm’s-Length Negotiations. The
price of the Securities set forth in this Agreement was established by the
Company following discussions and arms-length negotiations with the purchasers
and each Placement Agent, and the Company is capable of evaluating and understanding,
and understands and accepts, the terms, risks and conditions of the
transactions contemplated by this Agreement. 

                    (c)
Absence of Obligation to Disclose.
The Company has been advised that each Placement Agent and its affiliates are
engaged in a broad range of transactions which may involve interests that
differ from those of the Company and that each Placement Agent has no
obligation to disclose such interests and transactions to the Company by virtue
of any fiduciary, advisory or agency relationship; and 

                    (d)
Waiver. The Company hereby waives
and releases, to the fullest extent permitted by law, any claims that the
Company may have against any Placement Agent with respect to any breach or
alleged breach of any fiduciary or similar duty to the Company in connection
with the transactions contemplated by this Agreement or any matters leading up
to such transactions and agrees that each Placement Agent shall have no
liability (whether direct or indirect) to the Company in respect of such a
fiduciary duty claim to any person asserting a fiduciary duty claim on behalf
of the Company, including stockholders, employees or creditors of the Company. 

          13.
Headings.
The Section headings in this Agreement have been inserted as a matter of
convenience of reference and are not a part of this Agreement. 

          14.
Amendments and Waivers.
No supplement, modification or waiver of this Agreement shall be binding unless
executed in writing by the party to be bound thereby. The failure 

- 32 -

of a party to
exercise any right or remedy shall not be deemed or constitute a waiver of such
right or remedy in the future. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (regardless of whether similar), nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided. 

          15.
Counterparts.
This Agreement may be executed in one or more counterparts and, if executed in
more than one counterpart, the executed counterparts shall each be deemed to be
an original and all such counterparts shall together constitute one and the
same instrument. Delivery of an executed counterpart by facsimile shall be
effective as delivery of a manually executed counterpart thereof. 

          16.
Research Analyst
Independence. The Company acknowledges that each Placement
Agent’s research analysts and research departments are required to be
independent from their respective investment banking divisions and are subject
to certain regulations and internal policies, and that such Placement Agent’s
research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company
and/or the offering that differ from the views of their respective investment
banking divisions. The Company hereby waives and releases, to the fullest
extent permitted by law, any claims that the Company may have against any
Placement Agent with respect to any conflict of interest that may arise from
the fact that the views expressed by their independent research analysts and
research departments may be different from or inconsistent with the views or
advice communicated to the Company by such Placement Agent’s investment banking
divisions. The Company acknowledges that each Placement Agent is a full service
securities firm and as such from time to time, subject to applicable securities
laws, rules and regulations, may effect transactions for its own account or the
account of its customers and hold long or short positions in debt or equity
securities of the Company; provided,
however, that nothing in this
Section 16 shall relieve any Placement Agent of any responsibility or liability
they may otherwise bear in connection with activities in violation of
applicable securities laws, rules and regulations. 

          17.
Entire Agreement.
This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter
hereof. 

          18.
Partial Unenforceability.
The invalidity or unenforceability of any section, paragraph, clause or
provision of this Agreement shall not affect the validity or enforceability of
any other section, paragraph, clause or provision hereof. If any section,
paragraph, clause or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable. 

          19.
Effectiveness.
This Agreement shall become effective upon the execution and delivery hereof by
the parties hereto. 

[Signature Page Follows]

- 33 -

          If
the foregoing is in accordance with your understanding of the agreement between
the Company and the Placement Agents, kindly indicate your acceptance in the
space provided for that purpose below. 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
Very truly yours,

	
 

	
 

	
 

	
 

	
 

	
DELCATH SYSTEMS, INC.

	
 

	
 

	
 

	
 

	
 

	
By:

	 	/s/ Richard L. Taney

	
 

	
 

	
 

	

	
 

	
 

	
 

	
Name: Richard L. Taney

	
 

	
 

	
 

	
Title: Chief Executive Officer

	
 

	
 

	
 

	
 

	
Accepted as
 of

	
 

	
 

	
the date
 first above written:

	
 

	
 

	
 

	
 

	
 

	
CANACCORD
 ADAMS INC.

	
 

	
 

	
 

	
 

	
 

	
By:

	 	/s/ David J. Strupp, Jr.
	
 

	
 

	
 

	

	
 

	
 

	
 

	
Name: David J. Strupp, Jr.

	
 

	
 

	
 

	
Title: Managing Director

	
 

	
 

	
 

	
 

	
 

	
THINKEQUITY
 PARTNERS LLC

	
 

	
 

	
 

	
 

	
 

	
By:

	 	/s/ Jerome Joondeph
	
 

	
 

	
 

	

	
 

	
 

	
 

	
Name: Jerome Joondeph

	
 

	
 

	
 

	
Title: CFO & General Counsel

	
 

	
 

	
	
	

Schedules and Exhibits

	
 

	
 

	
 

	
Schedule I:

	
 

	
Issuer Free
 Writing Prospectuses

	
 

	
 

	
 

	
Exhibit A:

	
 

	
Form of
 Subscription Agreement

	
 

	
 

	
 

	
Exhibit B:

	
 

	
Form of
 Warrant

	
 

	
 

	
 

	
Exhibit C:

	
 

	
Form of
 Lock-Up Agreement

	
 

	
 

	
 

	
Exhibit D:

	
 

	
List of
 Directors and Executive Officers Executing Lock-Up Agreements

	
 

	
 

	
 

	
Exhibit E:

	
 

	
Matters to
 be Covered in the Opinion of Corporate Counsel to the Company

	
 

	
 

	
 

	
Exhibit F:

	
 

	
Form of
 Written Statement of Corporate Counsel to the Company

	
 

	
 

	
 

	
Exhibit G:

	
 

	
Pricing
 Information

Schedule I

Issuer Free Writing Prospectuses

Final Term Sheet dated September 18, 2007

Exhibit A

Form of Subscription Agreement

FORM OF SUBSCRIPTION AGREEMENT

Delcath
Systems, Inc.

600 Fifth Avenue

23rd Floor

New York, New York 10017

Ladies and
Gentlemen:

The
undersigned (the “Investor”)
hereby confirms and agrees with you as follows: 

1. This
Subscription Agreement (this “Agreement”)
is made as of the date set forth below between Delcath Systems, Inc., a
Delaware corporation (the “Company”)
and the Investor.

2. The
Company has authorized the sale and issuance to certain investors of up to
3,833,108 shares (the “Shares”) of its common stock, par value
$0.01 per share (the “Common Stock”) and warrants (the
“Warrants” in the form attached hereto as Exhibit
B) to purchase up to 1,916,554 shares of Common Stock (the “Warrant
Shares”)(such number being 50% of
the number of Shares so purchased) for a purchase price of $3.70 per unit (the
“Purchase Price”). The Shares and
Warrants are referred to collectively herein as the “Securities.” The
Investor acknowledges that the Company intends
to enter into subscription agreements in substantially the same form as this
Agreement with certain other investors. The Investor acknowledges and agrees
that there is no minimum offering amount.

3. The
offering and sale of the Securities (the “Offering”) is being made
pursuant to (a)
an effective Registration Statement on Form S-3, initially filed on May 25,
2007 (No. 333-143280) by the Company with the Securities Exchange Commission
(the “Commission”)
and any registration statement relating to the Offering and filed pursuant to
Rule 462(b) under the Rules and Regulations (collectively, the “Registration
Statement”), which
contains the base prospectus dated May 25, 2007 (the “Base
Prospectus”), (b) if
applicable, certain “free writing prospectus” (as that term is defined in
Rule
405 under the Securities Act of 1933, as amended), that have or will be filed
with the Commission and delivered to the Investor on or prior to the date
hereof, (c) if applicable, a preliminary prospectus supplement to the Base
Prospectus (together with the Base Prospectus, the “Statutory
Prospectus”), and (d) a final prospectus
supplement (the “Prospectus Supplement” and together with the Base
Prospectus, the “Prospectus”) containing certain supplemental
information
regarding the Securities and terms of the Offering that will be filed with the
Commission and delivered to the Investor (or made available to the Investor by
the filing by the Company of an electronic version thereof with the Commission)
along with the Company’s counterpart to this Agreement. The Investor hereby
consents
to the receipt of the Company’s Prospectus in portable document format, or PDF,
via electronic e-mail. The Investor hereby confirms that it has had full access
to the Base Prospectus and the Company’s periodic reports and other information
incorporated by reference therein, and was able to read, review, download and
print such materials.

4. As
of the Closing (as defined below) and subject to the terms and conditions
hereof, the Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor (i) such number
of shares of Common Stock, and (ii) such number of Warrants as is set forth on
the signature page hereto (the “Signature
Page”) for a purchase price of $3.70 per unit. The Investor acknowledges
that the Offering is not a firm commitment underwriting and that there is no
minimum offering amount. This offering will not clear directly through the

Placement
Agents (as defined below) acting in such capacity. Consequently, the Investor
must instruct their individual broker how to settle the transaction.

5. The
completion of the purchase and sale of the Securities (the
“Closing”)
shall occur at a place and time (the “Closing Date”) to be
specified by the
Company and the Lead Placement Agent (as defined below), and of which the
Investors will be notified in advance by the Placement Agents, in accordance
with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). At the Closing, (a) the Company shall
cause
American Stock Transfer & Trust Company, the Company’s transfer agent, to
deliver to the Investor the number of Securities set forth on the Signature
Page registered in the name of the Investor, or if so indicated on the
Signature Page hereto, in the name of a nominee designated by the Investor and
(b) the aggregate purchase price for the Securities being purchased by the
Investor will be delivered by or on behalf of the Investor to the Company via
Delivery Versus Payment (“DVP”), the provisions set forth in Exhibit
A
hereto shall be incorporated herein by reference as if set forth fully
herein.

6. The
Company has entered into a Placement Agency Agreement (the “Placement
Agreement”), dated September 18, 2007 with Canaccord Adams Inc.
(“Canaccord”) and ThinkEquity Partners LLC
(“ThinkEquity” and together with
Canaccord, the “Placement Agents”), which will act as the
Company’s
placement agents with respect to the Offering and receive a fee in connection
with the sale of the Securities. Canaccord is acting as the lead placement
agent (the “Lead Placement Agent”).
The Placement Agreement contains certain representations and warranties of the
Company. The Company acknowledges and agrees that the Investor may rely on the
representations and warranties made by it to the Placement Agents in Section 2
of the Placement Agreement to the same extent as if such representations and
warranties had been incorporated in full herein and made directly to the
Investor, which shall be third party beneficiary thereof. 

7. The
obligations of the Company and the Investor to complete the transactions
contemplated by this Agreement shall be subject to the following:

          (a)
The Company’s obligation to issue and sell the
Securities to the Investor shall be subject to: (i) the receipt by the Company
of the purchase price for the Securities being purchased hereunder as set forth
on the Signature Page, and (ii) the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the
Investor to be fulfilled prior to the Closing Date.

          (b)
The Investor’s obligation to purchase the Securities
will be subject to the accuracy of the representations and warranties made by
the Company and the fulfillment of those undertakings of the Company to be
fulfilled prior to the Closing Date, including without limitation, those
contained in the Placement Agreement, and to the condition that the Lead
Placement Agent shall not have: (i) terminated the Placement Agreement pursuant
to the terms thereof or (ii) determined that the conditions to closing in the
Placement Agreement have not been satisfied. The Investor’s obligations are
expressly not conditioned on the purchase of the Securities by any or all of
the other Investors that they have agreed to purchase from the Company.

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

          (a)
The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its

obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereunder have been duly
authorized by all necessary action on the part of the Company. This Agreement
has been duly executed by the Company and, 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 any bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally or by general principles of equity.

          (b)
The Company shall (i) before the opening of trading on
The NASDAQ Capital Market on the next trading day after the date hereof, issue
a press release, disclosing all material aspects of the transactions
contemplated hereby and (ii) make such other filings and notices in the manner
and time required by the Commission with respect to the transactions
contemplated hereby. Upon the issuance of the press release described in the
immediately preceding sentence, the Investor will not be in receipt of any
material, non-public information provided to it by the Company, its officers or
directors. The Company shall not identify the Investor by name in any press
release or public filing, or otherwise publicly disclose the Investor’s name,
without the Investor’s prior written consent, unless required by law or the
rules and regulations of any self-regulatory organization which the Company or
its securities are subject.

          (c)
If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the issuance or
resale of the Warrant Shares or if the Warrant is exercised via cashless
exercise, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends. If at any time following the date hereof the
Registration Statement (or any subsequent registration statement registering
the Warrant Shares) is not effective or is not otherwise available for the sale
or resale of the Warrant Shares, the Company shall immediately notify the
holders of the Warrants in writing that such registration statement is not then
effective and thereafter shall promptly notify such holders when the
registration statement is effective again and available for the sale or resale
of the Warrant Shares. The Company shall use best efforts to keep a
registration statement (including the Registration Statement) registering the
issuance or resale of the Warrant Shares effective during the term of the
Warrants.

          (d)
The Company will file with the Commission the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that are specified under Sections 13 and 15(d) of the Exchange Act
within the time periods specified therein or in the relevant forms.

          (e)
The Company will not give the Investor any material
non-public information without the prior written consent of the Investor.

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

          (a)
The Investor represents that (i) it has had full
access to the Base Prospectus and the Company’s periodic reports and other
information incorporated by reference therein, prior to or in connection with
its receipt of this Agreement, (ii) it is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in securities representing an investment decision like that
involved in the purchase of the Securities, and (iii) it does not have any

agreement or
understanding, directly or indirectly, with any person or entity to distribute
any of the Securities.

          (b)
The Investor represents and warrants to, and covenants
with, the Company that (i) the Investor has answered all questions on the
Signature Page for use in preparation of the Prospectus Supplement and the
answers thereto are true and correct as of the date hereof and will be true and
correct as of the Closing Date and (ii) the Investor, in connection with its
decision to purchase the number of Securities set forth on the Signature Page,
is relying only upon the General Disclosure Package (as defined below) and the
representations and warranties of the Company contained herein.

          (c)
(i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights
generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.

          (d)
The Investor understands that nothing in this
Agreement or any other materials presented to the Investor in connection with
the purchase and sale of the Securities constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Securities.

          (e)
The making, execution and performance of this
Agreement by the Investor and the consummation of the transactions contemplated
herein will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, (i) the charter, bylaws
or other organizational documents of such Investor, as applicable, or (ii) any
law, order, rule, regulation, writ, injunction, judgment or decree of any
court, administrative agency, regulatory body, government or governmental
agency or body, domestic or foreign, having jurisdiction over such Investor or
its properties, except for any conflict, breach, violation or default which is
not reasonably likely to have a material adverse effect on such Investor’s
performance of its obligations hereunder or the consummation of the
transactions contemplated hereby. 

          (f)
The Investor will maintain the confidentiality of all
information acquired as a result of the transactions contemplated herein prior
to the public disclosure of that information by the Company. Notwithstanding
the foregoing, other than the existence and terms of this financing, the
Investor is not in possession of any material, non-public information
pertaining to the Company.

          (g)
Neither the Investor nor any person or entity acting
on behalf of, or pursuant to any understanding with or based upon any
information received from, the Investor has, directly or indirectly, engaged in
any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities) since the
earlier to occur of (i) the time that the Investor was first contacted by a
Placement Agent or the Company with respect to the transactions contemplated
hereby and (ii) the date that is the fifth (5th) trading day prior
to the date of this Agreement. “Short Sales” include, without limitation,
all
“short sales” as defined in Rule 200 promulgated under Regulation SHO
under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, swaps,
“put

equivalent
positions” (as such term is defined in Rule 16a-1(h) under the Exchange Act)
and similar arrangements (including on a total return basis), and sales and
other transactions through non-U.S. broker dealers or foreign regulated brokers
(but shall not be deemed to include the location or reservation of borrowable
shares of the Company’s securities). The Investor covenants that neither it,
nor any person acting on behalf of, or pursuant to any understanding with or
based upon any information received from, the Investor will engage in any
transactions in the securities of the Company (including Short Sales) prior to
the time that the transactions contemplated by this Agreement are publicly
disclosed. 

          (h)
The Investor represents that, except as set forth
below, (i) it has had no position, office or other material relationship within
the past three years with the Company or persons known to it to be affiliates
of the Company, (ii) it is not a, and it has no direct or indirect affiliation
or association with any, Financial Industry Regulatory Authority
(“FINRA”) member or an Associated Person (as
such term is defined under the FINRA Membership and Registration Rules Section
1011) as of the date hereof, and (iii) neither it nor any group of investors
(as identified in a public filing made with the Commission) of which it is a
member, acquired, or obtained the right to acquire, 20% or more of the Common
Stock (or securities convertible or exercisable for Common Stock) or the voting
power of the Company on a post-transaction basis. Exceptions:

	
 

	

	
(If no exceptions, write “none.” If left
blank, response will be
 deemed to be “none.”)

          (i)
The Investor represents that it has received (or
otherwise had made available to it by the filing by the Company of an
electronic version thereof with the Commission) the Statutory Prospectus, the
documents incorporated by reference therein, and any free writing prospectus
(collectively, the “General Disclosure Package”), prior to or in connection
with the receipt of this Agreement. The Investor acknowledges that, prior to
delivery of this Agreement to the Company, the Investor will receive certain
additional information regarding the Offering, including pricing information
(the “Offering Information”). Such information may be provided to the
Investor
by any means permitted under the Act, including the Prospectus Supplement, a
free writing prospectus and oral communications. 

          (j)
The Investor acknowledges that no offer by the
Investor to buy Securities will be accepted and no part of the Purchase Price
will be delivered to the Company until the Investor has received the Offering
Information and the Company has accepted such offer by countersigning a copy of
the Agreement, and any such offer may be withdrawn or revoked, without
obligation or commitment of any kind, at any time prior to the Company (or a
Placement Agent on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer. Any indication of
interest will involve no obligation or commitment of any kind until the
Investor has been delivered the Offering Information and this Agreement is
accepted and countersigned by or on behalf of the Company.

          (k)
The Investor, if outside the United States, will
comply with all applicable laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or delivers Securities or has in its
possession or distributes any offering material, in all cases at its own
expense.

10. Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Investor upon exercise of the Warrant 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 Investor and its Affiliates (as such term is defined
in the Warrant) and any other Persons (as such term is defined in the Warrant)
whose beneficial ownership of Common Stock would be aggregated with the
Investor’s for purposes of Section 13(d) of the Exchange Act, does not exceed
9.999% 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.

11. Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the Investor
herein will survive the execution of this Agreement, the delivery to the
Investor of the Securities being purchased and the payment therefor. The
Placement Agents shall be third party beneficiaries with respect to
representations, warranties and agreements of the Investor in Section 9
hereof.

12. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.

13. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein will not in any way be affected or
impaired thereby.

14. This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other
jurisdiction.

15. This
Agreement may be executed in two or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute
but one instrument, and will become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties. The
Company and the Investor acknowledge and agree that the Company shall deliver
its counterpart to the Investor along with the Prospectus Supplement (or the
filing by the Company of an electronic version thereof with the Commission).

16. The
Investor acknowledges and agrees that such Investor’s receipt of the
Company’s
counterpart to this Agreement, together with the Prospectus Supplement (or the
filing by the Company of an electronic version thereof with the Commission),
shall constitute written confirmation of the Company’s sale of Securities to
such Investor.

17. In
the event that the Placement Agreement is terminated by the Lead Placement
Agent pursuant to the terms thereof, this Agreement shall terminate without any
further action on the part of the parties hereto. 

18. This
Agreement constitutes the entire agreement among the parties hereof with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.

INVESTOR SIGNATURE PAGE

	
 

	
 

	
Number of
 Shares:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Number of
 Warrants:

	
 

	
 

	

	
 

	
 

	
(such number
 to be equal to 50% of the number of Shares being purchased by the
Investor)

	
 

	
 

	
Purchase
 Price Per Unit: $3.70

	
 

	
 

	
 

	
 

	
Aggregate
 Purchase Price: $

	
 

	
 

	

Please confirm
that the foregoing correctly sets forth the agreement between us by signing in
the space provided below for that purpose.

Dated as of: September 18, 2007

	
 

	
 

	

	
INVESTOR

	
 

	
 

	
 

	
 

	
By:

	
 

	

	
 

	
 

	
Print Name:

	
 

	

	
 

	
 

	
Title:

	
 

	

	
 

	
 

	
Name that
 Securities are to be registered: 

	
 

	

	
 

	
 

	
Mailing
 Address: 

	
 

	

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
Taxpayer
 Identification Number: 

	
 

	
 

	

	
Manner of
 Settlement: DVP (see Exhibit A for explanation and instructions)

Agreed and
Accepted this 18th day of September 2007:

DELCATH SYSTEMS, INC.

	
 

	
 

	
By:

	
 

	
 

	

	
Name: 

	
Title:

Sales of the Securities purchased hereunder
were made pursuant to a registration statement or in a transaction in which a
final prospectus would have been required to have been delivered in the absence
of Rule 172 promulgated under the Securities Act.

Exhibit A

TO BE COMPLETED BY INVESTOR

SETTLING VIA DVP

Delivery
versus payment (“DVP”) through DTC (i.e., the Company shall deliver
Shares
registered in the Investor’s name and address as set forth on the Signature
Page of the Agreement to which this Exhibit A is attached and released
by American Stock Transfer & Trust Company, the Company’s transfer agent,
to the Investor at the Closing directly to the account(s) at the Placement
Agents identified by the Investor and simultaneously therewith payment shall be
made from such account(s) to the Company through DTC). NO LATER THAN ONE (1)
BUSINESS DAY AFTER
THE EXECUTION OF THE AGREEMENT TO WHICH THIS EXHIBIT A IS ATTACHED BY
THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

	
 

	
 

	
(I)

	
NOTIFY THE PLACEMENT AGENT OF THE ACCOUNT OR ACCOUNTS AT THE
 PLACEMENT AGENT TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH
 INVESTOR, AND 

	
 

	
 

	
(II)

	
CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT THE PLACEMENT AGENT TO BE
 CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM
 BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED
 BY THE INVESTOR. 

If the Shares
are to be further credited to an account held elsewhere than at the Placement
Agents, please complete the information requested below in order to facilitate
such further credit:

	
 

	
 

	
 

	
 

	
 

	
Name of DTC
 Participant (broker-dealer at which the account or accounts to be credited
 with the Shares are maintained)

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
DTC
 Participant Number

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Name of
 Account at DTC Participant being credited with the Shares

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Account
 Number at DTC Participant being credited with the Shares

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Address for
 Notice and Delivery of Warrants

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Facsimile:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Attention:

	
 

	
 

	
 

	
 

	
 

	

Exhibit B

Form of Warrant

Form of Warrant

          THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN SECTION 3
HEREOF.

DELCATH SYSTEMS, INC.

WARRANT

	
 

	
 

	
Warrant No.
 _____

	
Original Issue Date: September __, 2007 

	
 

	
(“Issue Date”)

          DELCATH
SYSTEMS, INC., a Delaware corporation (the “Company”),
hereby certifies that, for value received, __________ or
its permitted registered assigns (the “Holder”),
is entitled to purchase from the Company up to a total of ________ shares of
common stock, $0.01 par value (the “Common Stock”),
of the Company (each such share, a “Warrant
Share” and all such shares, the “Warrant Shares”)
at an exercise price equal to $4.53 per share (as adjusted from time to time
as provided herein, the “Exercise Price”), at any time
and from time to time on or after the date occurring six months after the Closing
Date (the “Trigger Date”) and
through and including September __, 2012 (the “Expiration
Date”), and subject to the following terms and conditions:

          This
Warrant is one of a series of warrants issued pursuant to those certain
Subscription Agreements, each dated September 18, 2007, by and between the
Company and each of the purchasers identified therein (the “Subscription Agreements”). All such
warrants are referred to herein, collectively, as the “Warrants.” The original issuance of the
Warrants by the Company pursuant to the Subscription Agreements has been
registered pursuant to a Registration Statement on Form S-3 (File
No. 333-143280) (together with any registration statement filed by the
Company pursuant to Rule 462(b) under the Securities Act, the “Registration Statement”).

          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 Subscription Agreements.

          “Affiliate” of a person means a person
that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the person specified.

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

          “Options” means any rights, warrants or
options
to subscribe for or purchase shares of Common Stock or Convertible Securities.

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

          “Trading Day” means any day on which
trading
of the Common Stock occurs on the applicable Trading Market.

          “Trading Market” means the NASDAQ Capital
Market or, if the Company’s Common Stock is not then listed on the NASDAQ
Capital Market, then such exchange or quotation system on which the Common
Stock then primarily trades.

          “Weighted Average Price” means, for any
security as of any date, the dollar volume-weighted average price for such security
on the applicable Trading Market during the period beginning at 9:30:01 a.m.,
New York City time, and ending at 4:00:00 p.m., New York City time, as reported
by Bloomberg through its “Volume at Price” function or, if the foregoing does
not apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York City time, and ending at
4:00:00 p.m., New York City time, as reported by Bloomberg, or, if no dollar
volume-weighted average price is reported for such security by Bloomberg for
such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the
“pink sheets” by Pink Sheets LLC (formerly the National Quotation Bureau,
Inc.). If the Weighted Average Price cannot be calculated for such security on
such date on any of the foregoing bases, the Weighted Average Price of such
security on such date shall be the fair market value as mutually determined by
the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be
resolved pursuant to Section 15(b) hereof. All such determinations shall be
appropriately adjusted for any share dividend, share split or other similar
transaction during such period. 

          2.
List of Warrant Holders. 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 (which shall
include the initial Holder or, as the case may be, any registered assignee to
which this Warrant is permissibly assigned hereunder 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.
List of Transfers; Restrictions on Transfer. 

                    (a)
This Warrant and the Warrant Shares are subject to the restrictions on transfer
set forth in this Section 3.

                    (b)
The Company shall register any such transfer of all or 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 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

2

acceptance by
such transferee of all of the rights and obligations in respect of the New
Warrant that the Holder has in respect of this Warrant.

                    (c)
If, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”)
and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect
that such transfer may be made without registration under the Securities Act
and under applicable state securities or blue sky laws, (ii) that the
Holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee
be an “accredited investor” as defined in Rule 501(a) promulgated under the
Securities Act.

          4.
Exercise and Duration of Warrants. 

                    (a)
All or any part of this Warrant shall be exercisable by the registered Holder
in any manner permitted by Section 10 hereof at any time and from time to
time on or after the Trigger Date and through and including the Expiration
Date. Subject to Section 11 hereof, at 5:00 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 and this Warrant shall be terminated
and no longer outstanding. In addition, if cashless exercise would be permitted
under Section 10(b) hereof, then all or part of this Warrant may be exercised
by the registered Holder utilizing such cashless exercise provisions at any
time, or from time to time, on or after the Trigger Date and through and
including the Expiration Date.

                    (b)
The Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached hereto (the “Exercise Notice”),
completed and duly signed, and (ii) if such Holder is not utilizing the
cashless exercise provisions set forth in this Warrant, payment of the Exercise
Price for the number of Warrant Shares as to which this Warrant is being
exercised. 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.

          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 (provided that, if the
Registration Statement is not then effective and the Holder directs the Company
to deliver a certificate for the Warrant Shares in a name other than that of
the Holder or an Affiliate of the Holder, it shall deliver to the Company on
the Exercise

3

Date an
opinion of counsel reasonably satisfactory to the Company to the effect that
the issuance of such Warrant Shares in such other name may be made pursuant to
an available exemption from the registration requirements of the Securities Act
and all applicable state securities or blue sky laws), a certificate for the
Warrant Shares issuable upon such exercise, free of restrictive legends unless
the Registration Statement is not then effective or the Warrant Shares are not
freely transferable without volume restrictions pursuant to Rule 144(k) under
the Securities Act. The Holder, or any Person permissibly so designated by the
Holder to receive Warrant Shares, shall be deemed to have become the holder of
record of such Warrant Shares as of the Exercise Date. If the Warrant Shares
can be issued without restrictive legends, the Company shall, upon the written
request of the Holder, use its best efforts to deliver, or cause to be
delivered, Warrant Shares hereunder electronically through the Depository Trust
and Clearing Corporation or another established clearing corporation performing
similar functions, if available; provided, that, the Company may, but will not
be required to, change its transfer agent if its current transfer agent cannot
deliver Warrant Shares electronically through the Depository Trust and Clearing
Corporation.

                    (b)
If by the close of the third Trading Day after delivery of an Exercise Notice,
duly completed and executed by the Holder, the Company fails to deliver to the
Holder a certificate representing the required number of Warrant Shares in the
manner required pursuant to Section 5(a) hereof, and if after such third
Trading Day and prior to the receipt of such Warrant Shares, the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the
Company shall, within three Trading Days after the Holder’s request, and in the
Holder’s sole discretion, either (i) pay in cash to the Holder an amount
equal to the Holder’s total purchase price (including brokerage commissions, if
any) for the shares of Common Stock so purchased (the “Buy-In Price”), at
which point the Company’s obligation to deliver such certificate (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 Warrant
Shares, times (B) the closing bid price on the date of the event giving
rise to the Company’s obligation to deliver such certificate.

                    (c)
To the extent permitted by law, 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 that 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 shares of Common Stock upon exercise of the Warrant
as required pursuant to the terms hereof.

4

          6.
Charges, Taxes and Expenses. Issuance and delivery of certificates for
shares of Common Stock 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 that 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 indemnity (which shall not include a surety bond), 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. If a New Warrant is requested
as a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company’s
obligation to issue the New Warrant.

          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, the number of Warrant Shares that 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 (taking into
account the adjustments and restrictions of Section 9 hereof). 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
nonassessable.

          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

5

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)
Pro Rata Distributions. If the Company, at any time while this Warrant
is outstanding, distributes to all holders of Common Stock for no consideration
(i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or
(iv) any other asset (in each case, “Distributed Property”), then, upon any
exercise of this Warrant that occurs after the record date fixed for
determination of stockholders entitled to receive such distribution, the Holder
shall be entitled to receive, in addition to the Warrant Shares otherwise
issuable upon such exercise (if applicable), the Distributed Property that such
Holder would have been entitled to receive in respect of such number of Warrant
Shares had the Holder been the record holder of such Warrant Shares immediately
prior to such record date.

                    (c)
Fundamental Transactions. If, at any time while this Warrant is
outstanding (i) the Company effects any merger or consolidation of the Company
with or into another Person, in which the shareholders of the Company as of
immediately prior to the transaction own less than a majority of the
outstanding stock of the surviving entity, (ii) the Company effects any
sale of all or substantially all of its assets in one or a series of related
transactions, (iii) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) 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 (each, 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
Company shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, any successor to the Company,
surviving entity or the corporation purchasing or otherwise acquiring such
assets or other appropriate corporation or entity shall assume the obligation
to deliver to the Holder, such Alternate Consideration as, in accordance with
the foregoing provisions, the Holder may be entitled to purchase, and the other
obligations under this Warrant. Notwithstanding anything to the contrary, in
the event of a Fundamental Transaction that is (1) an all cash transaction, (2)
a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”), or (3) a Fundamental Transaction involving a person or
entity not traded on a national securities exchange, the Nasdaq Global Select
Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or
any successor entity shall pay at the Holder’s option, exercisable at any time
concurrently with or within 30 days after the consummation of the Fundamental
Transaction, an amount of cash equal to the value of this Warrant as determined
in accordance with the Black Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg L.P. using (i) a price per share of Common Stock
equal to the VWAP of the Common Stock for the Trading Day immediately preceding
the date of consummation of the applicable Fundamental Transaction, (ii) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period
equal to the remaining term of this Warrant

6

as of the date
of consummation of the applicable Fundamental Transaction and (iii) an expected
volatility equal to the 100 day volatility obtained from the “HVT” function on
Bloomberg L.P. determined as of the Trading Day immediately following the
public announcement of the applicable Fundamental Transaction. The provisions
of this paragraph (c) shall similarly apply to subsequent transactions
analogous to a Fundamental Transaction.

                    (d)
Number of Warrant Shares. Simultaneously with any adjustment to the
Exercise Price pursuant to paragraph (a) of this Section 9, the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.

                    (e)
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.

                    (f)
Adjustment upon issuance of shares of Common Stock. The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time if and whenever on or after
the Issue Date, the Company issues or sells, or 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. 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(f), 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(f)(i), the “lowest price per share for which one share of
 Common Stock is issuable upon exercise of such Options or upon conversion,
 exercise or exchange of such Convertible Securities issuable upon exercise of
 any such Option” shall be equal to the sum of the lowest amounts of
 consideration (if any) received or receivable by the Company with respect to
 any one share of Common

7

	
 

	
 

	
 

	
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(f)(ii), the “lowest price
 per share for which one share of Common Stock is issuable upon the
 conversion, exercise or exchange thereof” shall be equal to the sum of the
 lowest amounts of consideration (if any) received or receivable by the
 Company with respect to one share of Common Stock upon the issuance or sale
 of the Convertible Security and upon conversion, exercise or exchange of such
 Convertible Security. No further adjustment of the Exercise Price or number
 of Warrant Shares shall be made upon the actual issuance of such shares of
 Common Stock upon conversion, exercise or exchange of such Convertible
 Securities, and if any such issue or sale of such Convertible Securities is
 made upon exercise of any Options for which adjustment of this Warrant has
 been or is to be made pursuant to other provisions of this Section 9(f), 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,
 then 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(f)(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(f) 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. 

8

	
 

	
 

	
 

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

	
 

	
 

	
 

	
(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) If the
 Company has not obtained shareholder approval that may be required under
 applicable law, rules or regulations, then the Company may not issue upon
 exercise of this Warrant a number of shares of Common Stock, which, when
 aggregated with any shares of Common Stock issued upon prior exercise of this
 or any other Warrant issued pursuant to the Subscription Agreements, would
 exceed 3,719,814, subject to adjustment for reverse and forward stock splits,
 stock dividends, stock combinations and other similar transactions of the
 Common Stock that occur after the date of the Issue Date (such number of
 shares, 

9

	
 

	
 

	
 

	
the “Issuable Maximum”). The holder hereof
 and the holders of the other Warrants issued pursuant to the Subscription
 Agreements shall be entitled to a portion of the Issuable Maximum equal to
 the quotient obtained by dividing (x) the Holder’s original aggregate
 Purchase Price by (y) the aggregate original aggregate Purchase Price of all
 holders pursuant to the Subscription Agreements. In addition, the Holder may
 allocate its pro-rata portion of the Issuable Maximum among Warrants held by
 it in its sole discretion. Such portion shall be adjusted upward ratably in
 the event a purchaser no longer holds any Warrants and the amount of shares issued
 to such purchaser pursuant to its Warrants was less than such purchaser’s
 pro-rata share of the Issuable Maximum. This provision shall only limit the
 number of Warrant Shares issuable hereunder, not the Exercise Price which
 shall have no limit or floor on adjustments.

	
 

	
 

	
 

	
(vii) For
 purposes of this Section 9(f), the following shall not be deemed issuances of
 Common Stock or securities convertible into or exercisable or exchangeable
 for shares of Common Stock or any options, warrants or other rights to
 acquire shares of Common Stock: options exercisable for shares of Common
 Stock issued pursuant to any duly adopted stock option plan of the Company
 including the Company’s 2000 Stock Option Plan, 2001 Stock Option Plan and
 2004 Stock Incentive Plan.

	
 

	
 

	
                    (g)
 Adjustment upon Subdivision or Combination of Common Stock. If the
 Company at any time on or after the Issue Date subdivides (by any stock
 split, stock dividend, recapitalization or otherwise) one or more classes of
 its outstanding shares of Common Stock into a greater number of shares, the
 Exercise Price in effect immediately prior to such subdivision will be
 proportionately reduced and the number of Warrant Shares will be
 proportionately increased. If the Company at any time on or after the Issue
 Date combines (by combination, reverse stock split or otherwise) one or more
 classes of its outstanding shares of Common Stock into a smaller number of
 shares, the Exercise Price in effect immediately prior to such combination
 will be proportionately increased and the number of Warrant Shares will be
 proportionately decreased. Any adjustment under this Section 9(g) shall
 become effective at the close of business on the date the subdivision or
 combination becomes effective. 

	
 

	
                    (h)
 Other Events. If any event occurs of the type contemplated by the
 provisions of this Section 9 but not expressly provided for by such
 provisions (including, without limitation, the granting of stock appreciation
 rights, phantom stock rights or other rights with equity features), then the
 Company’s Board of Directors will make an appropriate adjustment in the
 Exercise Price and the number of Warrant Shares so as to protect the rights
 of the Holder; provided that no such adjustment pursuant to this Section 9(h)
 will increase the Exercise Price then in effect or decrease the number of
 Warrant Shares as otherwise determined pursuant to this Section 9. 

	
 

	
                    (i)
 De Minimis Adjustments. No adjustment in the Exercise Price shall be
 required unless such adjustment would require an increase or decrease of at
 least $0.01 in such price; provided, however, that any adjustment which by
 reason of this Section 9(i) is not required to be made shall be carried
 forward and taken into account in any subsequent adjustments under this
 Section 9. All calculations under this Section 9 shall be made by the Company
 in good faith 

10

	
 

	
and shall be
 made to the nearest cent or to the nearest one hundredth of a share, as
 applicable. No adjustment need be made for a change in the par value or no
 par value of the Company’s Common Stock.

	
 

	
                    (j)
 Notice of Adjustments. Upon the occurrence of each adjustment pursuant
 to this Section 9, the Company at its expense will, at the written
 request of the Holder, 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 American Stock Transfer &
 Trust Company, the transfer agent of the Company.

	
 

	
                    (k)
 Notice of Corporate Events. If, while this Warrant is outstanding, 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, except if such notice and the contents thereof shall be deemed
 to constitute material non-public information, the Company shall deliver to
 the Holder a notice describing the material terms and conditions of such
 transaction at least 10 Trading 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 reasonable steps to give Holder the practical opportunity to
 exercise this Warrant prior to such time; 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 may pay the Exercise Price in one
of the following manners:

                    (a)
Cash Exercise. The Holder may deliver immediately available funds; or

                    (b)
Cashless Exercise. If an Exercise Notice is delivered at a time when the
Registration Statement (or, in lieu thereof, a resale registration statement on
Form S-3 covering the resale of the Warrant Shares) is not then effective, then
the Holder may notify the Company in an Exercise Notice of its election to
utilize cashless exercise, in which event 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

11

	
 

	
 

	
 

	
 

	
 

	
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.

          If,
but only if, at any time after the Trigger Date there is no effective
Registration Statement registering the Warrant Shares, the Company shall use
its best efforts to file a new Registration Statement on Form S-3 pursuant to
General Instruction I.B.4(a)(3) (including compliance with General Instruction
I.B.4(b) and I.B.4(c) as required thereby) registering the Warrant Shares
issuable upon exercise of the Warrant.

          11.
Limitations 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 4.999% 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. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this Section 11(a) and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this Section 11(a). The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section
11(a) shall be suspended (and, except as provided below, 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; provided, that, if, as of 5:00 p.m., New York City time, on the
Expiration Date, the Company has not received written notice that the shares of
Common Stock may be issued in compliance with such limitation, the Company’s
obligation to issue such shares shall terminate. This provision shall not
restrict the number of shares of Common Stock that a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 hereof. By written notice to the
Company, the Holder may waive the provisions of this Section 11(a) but any such
waiver will not be effective until the 61st day after such notice is delivered
to the Company, nor will any such waiver effect any other Holder. This
provision shall not apply to Holders who, together with Affiliates, as of the
Closing Date beneficially own (as determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated 

12

thereunder) in
excess of 5% of the total number of issued and outstanding shares of Common
Stock.

                    (b)
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% 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. Each delivery of an
Exercise Notice hereunder will constitute a representation by the Holder that
it has evaluated the limitation set forth in this Section 11(b) and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this Section 11(b). The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section
11(b) shall be suspended (and, except as provided below, 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; provided, that, if, as of 5:00 p.m., New York City time, on the
Expiration Date, the Company has not received written notice that the shares of
Common Stock may be issued in compliance with such limitation, the Company’s
obligation to issue such shares shall terminate. This provision shall not
restrict the number of shares of Common Stock that a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 hereof. By written notice to the
Company, the Holder may waive the provisions of this Section 11(b) but any such
waiver will not be effective until the 61st day after such notice is delivered
to the Company, nor will any such waiver effect any other Holder. This provision
shall not apply to Holders who, together with Affiliates, as of the Closing
Date beneficially own (as determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder) in excess of
10% of the total number of issued and outstanding shares of Common Stock.

          12.
No Fractional Shares. No fractional Warrant Shares will be issued in
connection with any exercise of this Warrant. In lieu of any fractional shares
that would otherwise be issuable, the Company shall pay cash equal to the
product of such fraction multiplied by the closing price of one Warrant Share
as reported by the applicable Trading Market on the Exercise Date.

          13.
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 in this Section 13 at or prior to
5:00 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 in this Section 13 on a day
that is not a Trading Day or later than 5:00 p.m.

13

(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 addresses for such notices or communications shall be: (a) if to
the Company, to Delcath Systems, Inc., 600 Fifth Avenue, 23rd Floor, New York,
New York 10017, Attention: Chief Executive Officer, Facsimile No.:
(212) 489-2102 (or such other address as the Company shall indicate in
writing in accordance with this Section 13) or (b) if to the Holder, to
the address or facsimile number appearing on the Warrant Register (or such
other address as the Company shall indicate in writing in accordance with this
Section 13).

          14.
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 shareholders 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.

          15.
Miscellaneous. 

                    (a)
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. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns.

                    (b)
All questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed and enforced
in accordance with the internal laws of the State of New York, without regard
to the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”)
(whether brought against a party hereto or its respective Affiliates, employees
or agents) shall be commenced exclusively in the courts of the State of New
York located in the City and County of New York or in the United States
District Court for the Southern District of New York (the “New York Courts”). Each party hereto
hereby irrevocably submits to the exclusive jurisdiction of the New York Courts
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any Proceeding, any claim that it is not
personally subject to the jurisdiction of any New York Court, or that such
Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to
process being served in any such 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 Warrant and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by

14

applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Warrant or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.

                    (c)
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.

                    (d)
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 therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.

                    (e)
Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by
being a Holder, be entitled to any rights of a stockholder with respect to the
Warrant Shares

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

15

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

	
 

	
 

	
 

	
 

	
DELCATH
 SYSTEMS, INC.

	
 

	
 

	
 

	
 

	
 

	
By:

	
 

	
 

	

	
 

	
Name:
 Richard L. Taney

	
 

	
Title:
   Chief Executive Officer

16

EXERCISE NOTICE

DELCATH SYSTEMS, INC.

WARRANT NO. ___DATED SEPTEMBER __, 2007

Ladies and
Gentlemen:

(1) The
undersigned hereby elects to exercise the above-referenced Warrant with respect
to ____________ shares of Common Stock. Capitalized terms used herein
and not otherwise defined herein have the respective meanings set forth in the
Warrant.

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

	
 

	
 

	
 

	
 

	
o

	
Cash
 Exercise under Section 10(a)

	
 

	
 

	
 

	
 

	
o

	
Cashless
 Exercise under Section 10(b)

(3) 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.

(4) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder the number of
Warrant Shares determined in accordance with the terms of the Warrant.

(5) By
its delivery of this Exercise Notice, the undersigned represents and warrants
to the Company that in giving effect to the exercise evidenced hereby the
Holder will not beneficially own in excess of the number of shares of Common
Stock (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934) permitted to be owned under Section 11 of this
Warrant to which this notice relates.

	
 

	
 

	
 

	
 

	
HOLDER:

	
 

	
 

	
 

	

	
 

	
(Print name)

	
 

	
 

	
 

	
By:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	

WARRANT ORIGINALLY ISSUED SEPTEMBER __, 2007

WARRANT NO. ____

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 to which the within Warrant relates and appoints __________
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.

	
 

	
 

	
 

	
 

	
Dated:

	
TRANSFEROR:

	
 

	

	
 

	
 

	
 

	
 

	
 

	

	
 

	
(Print Name)

	
 

	
 

	
 

	
By:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
TRANSFEREE:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
(Print Name)

	
 

	
 

	
 

	
(Address of
 Transferee)

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	
 

	
 

	
In the
 presence of:

	
 

	
 

	
 

	

	
 

Exhibit C

Form of Lock-Up Agreement

FORM OF LOCKUP AGREEMENT

September 18, 2007

Canaccord
Adams Inc.

535 Madison Avenue

New York, New York 10022

ThinkEquity
Partners LLC

31 West 52nd Street

Suite 1700

New York, New York 10022

Ladies and
Gentlemen:

          The
undersigned understands that you, as Placement Agents, propose to enter into
the Placement Agency Agreement (the “Placement Agreement”) with Delcath
Systems, Inc., a Delaware corporation (the “Company”), providing for the
offering (the “Offering”) of shares (the “Shares”) of common
stock, par value $0.01 per share (the “Common Stock”), of the Company.
Capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Placement Agreement.

          In
consideration of the foregoing, and in order to induce you to participate in
the Offering, and for other good and valuable consideration receipt of which is
hereby acknowledged, the undersigned hereby agrees that, without the
Representative’s prior written consent (which consent may be withheld in the
Representative’s sole discretion), the undersigned will not, during the period
(the “Lock-Up Period”) beginning on the date hereof and ending on the
date 90 days after the date of the final prospectus (including the final
prospectus supplement) to be used in confirming the sale of the Shares, (1)
offer, pledge, announce the intention to sell, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, or file (or participate in the filing of) a
registration statement (other than a registration statement on Form S-8 or any
successor form) with the Securities and Exchange Commission in respect of, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for shares of Common Stock (including without limitation, shares
of Common Stock which may be deemed to be beneficially owned by the undersigned
in accordance with the rules and regulations of the Securities and Exchange
Commission and securities which may be issued upon exercise of a stock option
or warrant), (2) enter into any swap or other agreement that transfers, in
whole or in part, any of the economic consequences of ownership of the shares
of Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of shares of Common Stock or such other
securities, in cash or otherwise, (3) make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for shares of Common Stock, or
(4) publicly announce an intention to effect any transaction specific in clause
(1), (2) or (3) above.

          Notwithstanding
the foregoing, the restrictions set forth in clause (1) and (2) above shall not
apply to (a) transfers (i) as a bona fide gift or gifts, provided that the
donee or donees thereof agree to be bound in writing by the restrictions set
forth herein, (ii) to any trust for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that the
trustee of the trust agrees to be bound in writing by the restrictions set
forth herein, and provided further that any such transfer shall not involve a
disposition for value, (iii) with the Representative’s prior written consent or
(iv) effected pursuant to any exchange of “underwater” options with the
Company, (b) the acquisition or exercise of any stock option issued pursuant to
the Company’s existing stock option plan or employee stock purchase plan,
including any exercise effected by the delivery of shares of Common Stock of
the Company held by the undersigned, or (c) the purchase or sale of the Company’s
securities pursuant to a plan, contract or instruction that satisfies all of
the requirements of Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the
date hereof. For purposes of this Lock-Up Agreement, “immediate family” shall
mean any relationship by blood, marriage or adoption, not more remote than
first cousin. None of the restrictions set forth in this Lock-Up Agreement
shall apply to Common Stock acquired in open market transactions.

          For
the purpose of allowing you to comply with FINRA Rule 2711(f)(4), if (1) during
the last 17 days of the Lock-Up Period, the Company releases earnings results
or publicly announces other material news or a material event relating to the
Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16 day
period beginning on the last day of the Lock-Up Period, then in each case the
Lock-Up Period will be extended until the expiration of the 18 day period
beginning on the date of release of the earnings results or the public
announcement regarding the material news or the occurrence of the material
event, as applicable, unless the Representative waives, in writing, such
extension. The undersigned hereby acknowledges that the Company has agreed not
to accelerate the vesting of any option or warrant or the lapse of any
repurchase right prior to the expiration of the Lock-Up Period. In furtherance
of the foregoing, the Company, and any duly appointed transfer agent or
depositary for the registration or transfer of the securities described herein,
are hereby authorized to decline to make any transfer of securities if such
transfer would constitute a violation or breach of this Lock-Up Agreement.

          The
foregoing restrictions are expressly agreed to preclude the undersigned from
engaging in any hedging or other transaction which is designed to or reasonably
expected to lead to or result in a sale or disposition of the shares of Common
Stock even if such securities would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include
without limitation any short sale or any purchase, sale or grant of any right
(including without limitation any put option or put equivalent position or call
option or call equivalent position) with respect to any of the shares of Common
Stock or with respect to any security that includes, relates to, or derives any
significant part of its value from such shares of Common Stock.

          The
undersigned hereby represents and warrants that the undersigned has full power
and authority to enter into this Lock-Up Agreement. All authority herein

conferred or
agreed to be conferred and any obligations of the undersigned shall be binding
upon the successors, assigns, heirs or personal representatives of the
undersigned.

          The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar or depositary against the
transfer of the undersigned’s shares of Common Stock except in compliance with
the foregoing restrictions.

          The
undersigned understands that, if the Placement Agreement does not become
effective, or if the Placement Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment
for and delivery of the Shares to be sold thereunder, the undersigned shall be
released from all obligations under this Lock-Up Agreement.

          This
Lock-Up Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to the conflict of laws
principles thereof.

	
 

	
 

	
 

	
Very truly
 your,

	
 

	
 

	
 

	

	
 

	
Name:

	
 

	
Address:

Exhibit D

List of Directors and Executive Officers 

Executing Lock-Up Agreements

	
 

	
Richard
 Taney  

	
Paul M. Feinstein
 

	
Seymour Fein
 

	
Harold S.
 Koplewicz, M.D. 

	
Robert B.
 Ladd 

	
Jonathan J.
 Lewis, M.D., Ph.D. 

	
Laura A.
 Philips, M.D. 

Exhibit E

Matters To Be Covered In The 

Opinion Of Counsel To The Company

Exhibit F

Form of Written Statement of 

Corporate Counsel to the Company

Exhibit G

Pricing Information

	
 

	
Number of
 Shares to be Sold: 3,833,108 

	
 

	
Number of
 Warrants to be Sold: 1,916,554 

	
 

	
Offering
 Price: $3.70 per unit 

	
 

	
Aggregate
 Placement Agency Fees: $850,949.98 

	
 

	
Estimated
 Net Proceeds to the Company (before transaction expenses): $13,331,549.62

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