Document:

Form of Purchase Agreement, dated April 29, 2008

 Exhibit 10.1 
 SECURITIES PURCHASE AGREEMENT 
 This Securities Purchase Agreement (this
“Agreement”) is dated as of April 29, 2008, among Cell Therapeutics, Inc., a Washington corporation (the “Company”), and each purchaser (if more than one) identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively the “Purchasers”). 
 WHEREAS, subject
to the terms and conditions set forth in this Agreement and pursuant to an effective registration statement under the Securities Act, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company as more fully described in this Agreement. 
 NOW, THEREFORE, IN CONSIDERATION of the
mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows: 
 ARTICLE I. 
 DEFINITIONS 
 1.1 Definitions 
 In addition to the terms defined
elsewhere in this Agreement, (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Certificate of Designation (as defined herein) and (b) the following terms have the meanings set forth in
this Section 1.1: 
 “Action” shall have the meaning ascribed to such term in Section 3.1(j). 
 “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed under Rule 144 under the Securities Act. With respect to a Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager
as such Purchaser will be deemed to be an Affiliate of such Purchaser. 
 “Authorized Share Approval” means (i) the
vote by the shareholders of the company to approve an amendment to the Company’s articles or certificate of incorporation that increases the number of authorized shares of Common Stock and authorizes the board of directors of the Company to
effect such increase (the “Amendment”) and (ii) the filing by the Company of the Amendment with the Secretary of State of the State of Washington and the acceptance of the Amendment by the Secretary of State of the State of
Washington. 
 “Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the
United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. 

 “Certificate of Designation” means the Articles of Amendment to the Company’s
Amended and Restated Articles of Incorporation, as amended filed by the Company with the Secretary of State of the State of Washington on or before April 30, 2008, in the form of Exhibit A attached hereto. 
 “Closing” means the closing of the purchase and sale of certain Securities pursuant to Section 2.1. 
 “Closing Date” means April 30, 2008, provided that all conditions precedent to (i) the Purchasers’ obligations to pay the
Subscription Amount and (ii) the Company’s obligations to deliver the Preferred Stock and Warrants have been satisfied or waived on or before such date. 
 “Commission” means the Securities and Exchange Commission. 
 “Common
Stock” means the common stock of the Company, no par value per share, and any other class of securities into which such securities may hereafter be reclassified or changed into. 
 “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof, pursuant to
the terms of such securities, to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock. 
 “Company Counsel” means Heller Ehrman LLP with offices
located at 333 Bush Street, San Francisco, California 94104. 
 “Conversion Price” shall have the meaning ascribed to such
term in the Indenture or the Certificate of Designation, as applicable. 
 “Convertible Notes” means the 13.5% Convertible
Senior Notes of the Company due April 30, 2014 issued under that certain Trust Indenture dated April 30, 2008 between the Corporation and US Bank National Association as Trustee. 
 “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 

“Exempt Issuance” means equity issuances for service provider compensation, or pursuant to the terms of pre-Closing derivative
securities and contracts, or for acquisitions or corporate partnering. 
 “FWS” means Feldman Weinstein & Smith LLP
with offices located at 420 Lexington Avenue, Suite 2620, New York, New York 10170-0002. 
 “GAAP” shall have the meaning
ascribed to such term in Section 3.1(h). 
  

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 “Indebtedness” means (a) any liabilities for borrowed money or amounts owed in
excess of $250,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of
any lease payments in excess of $250,000 due under leases required to be capitalized in accordance with GAAP. 
 “Indenture”
means the Trust Indenture dated April 30, 2008 between the Company and US Bank National Association as Trustee pursuant to which the Convertible Notes are being issued. 
 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o). 
 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). 
 “Material Permits” shall have the meaning ascribed to such term in Section 3.1(l). 
 “Per Share Purchase Price” equals $1,000, subject to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after the date of this Agreement. 
 “Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 “Preferred Stock” means up to 9,000 shares of the Company’s Series E 13.5% Convertible Exchangeable Preferred Stock
issued hereunder having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto. 
 “Proceeding” means an action, claim, suit, investigation or proceeding. 
 “Prospectus” means the
final prospectus filed for the Registration Statement. 
 “Prospectus Supplement” means the supplement to the Prospectus
complying with Rule 424(b) of the Securities Act that is filed with the Commission and delivered by the Company to each Purchaser at the Closing. 
 “Purchaser Party” shall have the meaning ascribed to such term in Section 4.7. 
  

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 “Registration Statement” means collectively the effective registration statements with
Commission file Nos. 333-143452 and 333-149982 which registers the sale of the Convertible Notes, the Preferred Stock, and the Underlying Shares to the Purchasers. 
 “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). 
 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule. 
 “SEC Reports” shall have the meaning ascribed to such term in
Section 3.1(h). 
 “Securities” means the Convertible Notes, the Series B Convertible Notes, the Preferred Stock, the
Underlying Shares, the Warrants, the Units and the Warrant Shares. 
 “Securities Act” means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder. 
 “Series B Convertible Notes” means the 12.50% Series B
Convertible Notes of the Company to be issued under a Trust Indenture between the Company and US Bank National Association as Trustee, and of like tenor as the Convertible Notes except for the different issuance date, the absence of an optional
redemption right, a 3-year term, a 12.50% annual interest rate, and a make-whole provision based on the 3-year term and the 12.50% annual interest rate. 
 “Series B Units” means the Units consisting of Series B Convertible Notes with $1,000 principal amount and Series A Warrants to purchase 50% of the number of Underlying Shares underlying such Series B
Convertible Notes. 
 “Short Sales” shall include all “short sales” as defined in Rule 200 of Regulation SHO under
the Exchange Act (but shall be deemed to not include the location and/or reservation of borrowable shares of Common Stock).
 “Stated
Value” means $1,000 per share of Preferred Stock, subject to increase as set forth in Section 3(a) of the Certificate of Designation. 
 “Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for the Convertible Notes, Preferred Stock, Series A Warrants and Series B Warrants purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds, which amount shall be 143.512658% of the sum of the principal amount
of Convertible Note and Stated Value of Preferred Stock to be issued. 
 “Trading Day” means a day on which the Common Stock
is traded on a Trading Market. 
  

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 “Trading Market” means the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the American Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market or the New York Stock Exchange. 
 “Transaction Documents” means this Agreement, the Indenture, the Certificate of Designation, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated hereunder. 
 “Underlying Shares” means the shares of
Common Stock issued and issuable upon conversion of the Convertible Notes in accordance with the Indenture and the Preferred Stock in accordance with the terms of the Certificate of Designation. 
 “Warrants” means, collectively, the Series A Common Stock purchase warrants and the Series B Unit purchase warrants delivered to the
Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Series A Warrants shall be exercisable immediately after Authorized Share Approval, and have a term of exercise equal to 5 years from Authorized Share Approval, and be in
the form of Exhibit C-1 attached hereto; and which Series B Warrants shall be exercisable immediately after the Closing Date, and have a term equal to one year from the Closing Date, and be in the form of Exhibit C-2 attached hereto.

 “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Series A Warrants. 
 ARTICLE II. 
 PURCHASE AND SALE 
 2.1 Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchasers
agree to purchase, in the aggregate, severally and not jointly, for $64,580,696, Convertible Notes and Preferred Stock (in the ratio of 51,664,557 of Notes to 12,881,392 of Preferred Stock) with an aggregate combined principal amount and Stated
Value equal to $45,000,000 and Warrants as determined pursuant to Section 2.2(a). The aggregate number of shares of Preferred Stock sold hereunder shall be up to 9,000, and the aggregate principal amount of Convertible Notes shall be
$36,000,000. Each Purchaser shall deliver to the Trustee via wire transfer immediately available funds equal to its Subscription Amount (provided that
                 may deliver its remaining $5,250,000 principal amount of the 9% Convertible Note of the Company due 2012 at face value plus accrued but unpaid
interest, together with the common stock purchase warrants issued together with such notes, as partial payment of its Subscription Amount) and the Company shall deliver or cause the Trustee to deliver to each Purchaser its respective Convertible
Notes, shares of Preferred Stock and Warrants as determined pursuant to Section 2.2(a) and the other items set forth in Section 2.2 issuable at the Closing. Upon satisfaction of the conditions set forth in Sections 2.2 and 2.3, the Closing
shall occur at the offices of FWS or such other location as the parties shall mutually agree. 
 2.2 Deliveries. 
 . 
  

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 (a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered
to each Purchaser the following: 
 (i) this Agreement duly executed by the Company; 
 (ii) a legal opinion of Company Counsel, substantially in the form of Exhibit B attached hereto; 
 (iii) a Convertible Note in the principal amount allocated to such Purchaser, registered in the name of such Purchaser; 
 (iv) a number of shares of Preferred Stock allocated to such Purchaser, registered in the name of such Purchaser; 
 (v) a Series A Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 50% of the
number of Underlying Shares attributable to such Purchaser, with an exercise price equal to $0.95 per share, subject to adjustment therein (such Warrant may be delivered within three Business Days of the Closing Date), in the form of Exhibit
C-1 attached hereto; 
 (vi) a Series B Warrant registered in the name of such Purchaser to purchase up to such
Purchaser’s pro-rata share of 67,500 Series B Units, with an exercise price equal to $1,000 per Series B Unit, subject to adjustment therein (such Warrant may be delivered within three Business Days of the Closing Date), in the form of
Exhibit C-2 attached hereto; 
 (vii) the executed Paying Agent Agreement; and 
 (viii) the Prospectus and Prospectus Supplement (unless the conditions set forth under Rule 172 under the Securities Act have been
satisfied). 
 (b) Each Purchaser shall deliver or cause to be delivered to the Company this Agreement duly executed by such
Purchaser; and on or before the Closing Date, such Purchaser’s Subscription Amount by wire transfer to the Trustee’s account as specified in writing by the Company. 
 2.3 Closing Conditions. 
 (a) The obligations of the Company hereunder in connection with the Closing as to any Purchaser are subject to the following conditions being met: 
 (i) the accuracy in all material respects when made and on the Closing Date of the representations and warranties of such Purchaser contained herein; 
  

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 (ii) all obligations, covenants and agreements of such Purchaser required to be performed
at or prior to the Closing Date shall have been performed; and 
 (iii) the delivery by such Purchaser of the items set forth
in Section 2.2(b) of this Agreement. 
 (b) The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met: 
 (i) the accuracy in all material respects when made and on the
Closing Date of the representations and warranties of the Company contained herein; 
 (ii) all obligations, covenants and
agreements of the Company required to be performed at or prior to the Closing Date shall have been performed; 
 (iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; 
 (iv) there shall have been no
Material Adverse Effect with respect to the Company since the date hereof; and 
 (v) from the date hereof to the Closing
Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated
prior to the Closing), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades
are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of each Purchaser, makes it impracticable or inadvisable to purchase
the Convertible Notes and the Preferred Stock at the Closing. 
 2.4 Additional
Closing. The Company shall have the right to require the Purchasers, pro rata, to exercise $8,000,000 of the Series B Warrant within 45 calendar days of the Closing Date, provided that the average daily VWAP for the 10 Trading Days before the
written notice is at least $0.50 per share; and if such VWAP is less than $0.50 per share, the Company shall have the right to require the Purchasers, pro rata, to purchase for $5,000,000 the number of common shares equal to the quotient of
$5,000,000 divided by such VWAP, and also Warrants of like tenor as the Series A Warrants for 50% of such number of common shares (with an exercise price of 120% of such VWAP), (provided that the 45-day period shall automatically be extended to 65
days if on the 45th day the Company does not have a sufficient number of authorized but unreserved common shares available). To exercise this right,
the Company must give at least 15 

  

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calendar days prior written notice to each Purchaser, and each Purchaser shall be required to close on such additional purchase within 5 Business Days of the
date specified in such notice. It is agreed that the number of common shares which could be “put” to the Purchasers in this manner shall be subject to a 9.99% blocker provision, similar to those in the Convertible Notes and Series A
Warrants. In the event, the Company would deliver to the Purchasers as many as possible of the indicated common shares up to the 9.99% blocker threshold; and for the “blocked” shares the Company would instead issue a one-year convertible
note, bearing interest at the minimum applicable federal rate and with no make-whole provision, with a principal amount equal to the product of the “blocked” share portion and such VWAP, and convertible (subject to the note’s own
9.99% blocker provision) into common stock at a conversion price equal to such VWAP. 
 ARTICLE III. 
 REPRESENTATIONS AND WARRANTIES 
 3.1
Representations and Warranties of the Company. 
 Except as set forth in the Prospectus or the Prospectus Supplement, which Prospectus and Prospectus
Supplement shall be deemed a part hereof and to qualify any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes the representations and warranties set forth below to each Purchaser: 

(a) Subsidiaries. All of the direct and indirect subsidiaries (each, a “Subsidiary”) of the Company are set
forth on the Company’s most recently filed Form 10-K. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of
capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. 
 (b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the
Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to
perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and 

  

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no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority
or qualification. 
 (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in
connection therewith other than in connection with the Required Approvals. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies. 
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the
Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any
of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected or (iii) subject
to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected, except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect. 
 (e) Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person or other entity of any kind, including,
without limitation, any Trading Market, in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than any filings required to be made under applicable federal and state securities laws
(collectively, the “Required Approvals”). 
  

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 (f) Issuance of the Securities. The Convertible Notes, the Series B Convertible
Notes, the Preferred Stock and the Warrants are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company. The Underlying Shares are duly authorized and, when issued in accordance with the terms of the Convertible Notes and the Preferred Stock, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by
the Company. The Warrant Shares are duly authorized and, when issued in accordance with the terms of the Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Units are duly
authorized and, when issued in accordance with the terms of the Series B Warrants, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company has reserved from its duly authorized capital
stock the shares of Common Stock issuable upon conversion of the Convertible Note and the Preferred Stock and upon exercise of the Series A Warrants, including the Preferred Stock and the Series A Warrants issuable upon exercise of the Series B
Warrants. The Securities are being issued pursuant to the Registration Statement and the issuance of the Securities has been registered by the Company under the Securities Act. The Registration Statement is effective and available for the issuance
of the Securities thereunder and the Company has not received any notice that the Commission has issued or intends to issue a stop-order with respect to the Registration Statement or that the Commission otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently, or intends or has threatened in writing to do so. The “Plan of Distribution” section under the Registration Statement permits the issuance of the Securities
hereunder. Upon receipt of the Convertible Notes, the Preferred Stock and the Warrants and, upon respective conversion of the Convertible Notes, the Preferred Stock and exercise of the Warrants, the Underlying Shares and the Warrant Shares, the
Purchasers will have good and marketable title to such Securities and the Underlying Shares and Warrant Shares will be freely tradable on the Trading Market. At the time the Registration Statement and any amendments thereto became effective, at the
date of this Agreement and at the Closing Date, the Registration Statement and any amendments thereto conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus and any amendments or supplements thereto, at the time the Prospectus or any amendment
or supplement thereto was issued and at the Closing Date, conformed and will conform in all material respects to the requirements of the Securities Act and did not and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. 
 (g) Capitalization. The capitalization of the Company is substantially as set forth in, or as incorporated by reference into, the Registration Statement. Except as set forth in the SEC Reports, the Company has
not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of 

  

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shares of Common Stock to employees pursuant to the Company’s employee stock purchase plan and pursuant to the conversion or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any
Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the
Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or
other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders. 
 (h) SEC Reports; Financial Statements. The Company has complied in all material respects with requirements to file all reports,
schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (the foregoing
materials, including the exhibits thereto and documents incorporated by reference therein being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved, except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its 

  

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consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments. 
 (i) Material Changes; Undisclosed Events,
Liabilities or Developments. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports or the Prospectus Supplement, (i) there has been no event,
occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth in the Prospectus Supplement, no event, liability or development has occurred or exists
with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is
made that has not been publicly disclosed at least 1 Business Day prior to the date that this representation is made. 
 (j)
Litigation. Except as disclosed in the Registration Statement or the Prospectus Supplement, there is no Proceeding pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, reasonably be expected to result in a Material Adverse Effect. Except as disclosed
in the Registration Statement or the Prospectus Supplement, neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or
officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 
 (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the
employees of the Company which 

  

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could reasonably be expected to result in a Material Adverse Effect. The Company and its Subsidiaries believe that their relationships with their employees
are good. No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition
agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing
matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 
 (l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would
result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement
or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is
or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in
each case as could not reasonably be expected to have a Material Adverse Effect. 
 (m) Regulatory Permits. The Company
and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not have or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings
relating to the revocation or modification of any Material Permit. 
 (n) Title to Assets. The Company and the
Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such
property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance. 
  

 13 

 (o) Patents and Trademarks. The Company and the Subsidiaries have, or have rights
to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other similar intellectual property rights currently employed by them in connection with
the business currently operated by them that are necessary for use in the conduct of their respective businesses as described in the SEC Reports, except where the failure to so have could not reasonably be expected to have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary has received any written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any Person. 
 (p) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance
coverage. To the best knowledge of the Company, such insurance contracts are accurate and complete. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost. 
 (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee
has a substantial interest or is an officer, director, trustee or partner, other than for (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including restricted stock programs and stock option agreements under any stock option plan of the Company. 
 (r) Sarbanes-Oxley. The Company is in material compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the date hereof and of the Closing Date. 
 (s) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. 
  

 14 

 (t) Investment Company. The Company is not, and immediately after receipt of
payment for the Securities will not be, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 
 (u) Registration Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company, which rights are currently not satisfied. 

(v) Listing and Maintenance Requirements. The Company’s Common Stock is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification
that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and
maintenance requirements. 
 (w) Application of Takeover Protections. The Company and its Board of Directors have taken
all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities. 
 (x) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public
information which is not otherwise disclosed in the Prospectus Supplement. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All disclosure
furnished by or on behalf of the Company to the Purchasers regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof. 
  

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 (y) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers
to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of any applicable shareholder approval provisions of any Trading Market on which any of the
securities of the Company are listed or designated. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market. 
 (z) Solvency. Except as disclosed in the Registration Statement or the Prospectus Supplement, based on the financial condition of
the Company as of the Closing Date after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder, during the next 12 months, the Company’s assets do not constitute unreasonably small capital to
carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital
availability thereof. The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Neither the Company nor any Subsidiary
is in default with respect to any Indebtedness. 
 (aa) Tax Status. Except for matters that could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as
due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary. 
 (bb) Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended. 
 (cc)
Accountants. To the knowledge of the Company, Stonefield Josephson, Inc. (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be
included in the Company’s Annual Report on Form 10-K for the year ending December 31, 2008. 
  

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 (dd) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no
Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective
representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the
Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 
 (ee) Acknowledgement Regarding Purchasers’ Trading Activity. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Sections 3.2(e) and 4.11 hereof), it is understood and acknowledged by the Company (i) that none of the Purchasers have been asked to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) that past or future open market or other transactions by any
Purchaser, including Short Sales, and specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future transactions, may negatively impact the market price of the
Company’s publicly-traded securities; (iii) that any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, presently may have a “short” position in
the Common Stock, and (iv) that each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that
(a) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Warrant Shares deliverable with respect
to the exercise of the Warrant are being determined and (b) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being
conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents. 
 (ff) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or
(iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent
in connection with the placement of the Securities. 
  

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

 (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable
against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’
rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable
law. 
 (b) Own Account. Such Purchaser is acquiring the Securities as principal for its own account and not with a
view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting such
Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law. Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. 
 (c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in
Rule 144A(a) under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. 
 (d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present
time, is able to afford a complete loss of such investment. Such Purchaser understands that nothing in the Agreement or any other materials 

  

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

(f) No Government Review. Such Purchaser understands that no United States federal or state agency or any other government or
governmental agency has passed upon or made any recommendation or endorsement of the Securities purchased hereunder. 
 (g)
No Intent to Effect a Change of Control. Such Purchaser has no present intent to effect a “change of control” of the Company as such term is understood under the rules promulgated pursuant to Section 13(d) of the Exchange Act.

 (h) Voting of Series E Preferred Stock. Such Purchaser shall vote, unless its fiduciary interests require otherwise,
all of its shares of Series E Preferred Stock (to the extent it is permitted to vote under the Certificate of Designations) in favor of all matters submitted by the Board of Directors for a vote of the Company’s shareholders at any meeting duly
called, except to the extent such vote on a particular matter would be prohibited by the rules of any Trading Market. 
 ARTICLE IV.

 OTHER AGREEMENTS OF THE PARTIES 
 4.1 Warrant Shares. If all or any portion of a Series 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 Series A 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 

  

 19 

 
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 Series A 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, after the Authorized Share Approval, institute and then keep a registration statement (including the Registration Statement) registering the issuance or resale of the Warrant Shares effective during the
term of the Series A Warrants. 
 4.2 Furnishing of Information 
 (a) Until the earliest of the time that (i) no Purchaser owns Securities or (ii) the Series A Warrants have expired, the Company
covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may
reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144. 
 (b) At any time during the period commencing from the six (6) month
anniversary of the date hereof and ending at such time that all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if
the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a
Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of
such Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30th) day (pro rated for periods totaling
less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer the Underlying Shares
pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be
paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information
Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. 
  

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 4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 
 4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by 8:30 a.m. (New York City time) on the Business Day immediately following the date hereof, issue a press release disclosing the material
terms of the transactions contemplated hereby, and (b) by 8:30 a.m. (New York City time) on the third Trading Day following the date hereof, file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby
and including the Transaction Documents as exhibits thereto. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and, except as may be required by
law, neither the Company nor any Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the filing of final Transaction Documents (including signature pages thereto) with the Commission
and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this subclause (ii). 
 4.5 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company. 
 4.6 Use of Proceeds. The use of proceeds shall be as described in the
Prospectus Supplement. 
  

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 4.7 Indemnification of Purchasers. Subject to the provisions of this Section 4.7, the Company
will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title
or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees
(and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may
suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted
against a Purchaser, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser may have with any such stockholder or any violations by the Purchaser of state
or federal securities laws or any conduct by such Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought
pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents. 
 4.8 Reservation and Registration of Common Stock.
As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue all
of the Underlying Shares, and following the date of Authorized Share Approval, the Warrant Shares in full. 
  

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 4.9 Listing of Common Stock. The Company hereby agrees to use commercially reasonable best efforts
to maintain the listing of the Common Stock on a Trading Market, and as soon as reasonably practicable following the Closing to list all of the Underlying Shares and Warrant Shares on such Trading Market subject to issuance. The Company further
agrees that if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Underlying Shares and Warrant Shares, and will take such other action as is necessary to cause all of the
Underlying Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible subject to issuance. The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading
Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market. 
 4.10 Indenture. The Company shall, when and as needed, enter into a Trust Indenture with US Bank National Association as Trustee, with respect to the Series B Convertible Notes. 
 4.11 Limitation of Sales; Short Sales and Confidentiality After The Date Hereof. Each Purchaser agrees, severally for itself and not jointly with
any other Purchaser, that it shall retain record ownership of all of the shares of Preferred Stock purchased by it on the Closing Date (or the Underlying Shares from any conversion thereof) at least through May 31, 2008. Each Purchaser,
severally and not jointly with the other Purchasers, covenants that neither it nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any Short Sales during the period commencing at the Discussion Time and
ending at the time that the transactions contemplated by this Agreement are first publicly announced as described in Section 4.4. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, no Purchaser makes any representation, warranty or covenant hereby that it will not engage in Short Sales in the securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced as described in Section 4.4. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate
portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above shall only
apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. 
 4.12 Subsequent Equity Sales and Exchange Offers. 
 (a) From the date hereof until one
year from the Closing Date, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction in
which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon and/or varies with the trading prices of or 

  

 23 

 
quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or
the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price, except that the Company may enter into and/or
utilize any equity line of credit after July 15, 2008. 
 (b) The Company shall not redeem, refinance or exchange or
offer to exchange any of its outstanding convertible debt and/or preferred stock prior to July 31, 2008, except for that series of convertible debentures which matures by its present terms on June 15, 2008. Additionally, the Company is
prohibited from issuing any equity of the Company as consideration of an extension of maturity of such convertible debentures unless such equity may not be publicly traded prior to November 15, 2008; provided, that if the Company exercises its
forced exercise rights under Section 5 of the Series B Warrant, such prohibition shall extend until five months following the closing of the sale of such additional Units. 
 (c) From the date hereof until June 15, 2008, the Company shall not issue any equity securities or convertible instruments
convertible into equity of the Company, except as expressly set forth in this Section 4.12 or pursuant to an Exempt Issuance; provided, that if the Company requires the Purchasers to purchase additional Convertible Notes pursuant to
Section 2.4 hereof, such prohibition shall extend to July 31, 2008, and provided further, that if the Company exercises its forced exercise rights under Section 5 of the Series B Warrant, such prohibition shall extend until five
months following the closing of the sale of such additional Units. 
 (d) If the Holder of the Series B Warrant makes a
partial, but not full, exercise of the Series B Warrant (other than a forced exercise under Section 2.4 of this Agreement), the five-month periods referenced in subsections (b) and (c) above shall be reduced pro rata; e.g., if only
20% of the Series B Warrant is exercised, the five-month period shall be reduced to a one-month period. 
 4.13 Delivery of Securities
After Closing. The Company shall deliver, or cause to be delivered, the respective Securities purchased by each Purchaser to such Purchaser within 3 Business Days of the Closing Date. 
 4.14 Increase in Authorized Common Stock. The Company agrees to call a special meeting of shareholders (which may also be at the annual meeting of
shareholders) within 60 calendar days of the date hereof for the purpose of obtaining Authorized Share Approval, with the recommendation of the Company’s Board of Directors that such proposal is approved, and the Company shall solicit proxies
from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. If the Company does not obtain
Authorized Share Approval at the first meeting, the Company shall call a meeting every 4 months thereafter to seek Authorized Share Approval until the earlier of the date 

  

 24 

 
Authorized Share Approval is obtained or the date on which no Series A Warrants remain outstanding. The Company shall notify the Purchasers promptly upon
receipt of Authorized Share Approval. 
 ARTICLE V. 
 MISCELLANEOUS 
 5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before May 2,
2008; provided, however, that no such termination will affect the right of any party to sue for any breach by the other party (or parties). 
 5.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection
with the delivery of any Securities to the Purchasers. 
 5.3 Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, the Prospectus and the Prospectus Supplement, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to
such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 
 5.4 Notices. Any and all
notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto. 
 5.5 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and the holders of at least 67% of the Convertible Notes or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of
any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. 
  

 25 

 5.6 Headings. The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions hereof. 
 5.7 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by
merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the “Purchasers”. 
 5.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.7. 
 5.9 Governing Law. All questions concerning the construction, validity, enforcement and
interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an
inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. The parties hereby waive all rights to a trial by jury. If either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and
prosecution of such action or proceeding. 
  

 26 

 5.10 Survival. The representations and warranties contained herein shall survive the Closing and
the delivery of the Convertible Notes, Preferred Stock and Warrants for a period of two years. 
 5.11 Execution. This Agreement may
be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof. 
 5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
 5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any
of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 
 5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance
of such replacement Securities. 
 5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
  

 27 

 5.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under
any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any
other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party
in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. For reasons of administrative convenience only, Purchasers and their respective
counsel have chosen to communicate with the Company through FWS. FWS does not represent any of the Purchasers but only Rodman & Renshaw, LLC, which has acted as placement agent to the transaction. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers. 
 5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not
terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been
canceled. 
 5.18 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an
opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents
or any amendments hereto. 
  
  
  
 (Signature Pages Follow) 
  

 28 

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

									
	CELL THERAPEUTICS, INC.	 		 		 	Address for Notice:
					
	By:	 	 	 	 	 		 	501 Elliot Avenue West, Suite 400
		 	 Name: James A. Bianco, M.D.
 Title: President and Chief
Executive Officer
	 		 		 	 Seattle, Washington 98119
 Facsimile: (206) 272-4302

 Attention: James A. Bianco, M.D.

 With a copy to (which shall not constitute notice): 
 Heller Ehrman LLP 
 333 Bush Street 
 San Francisco, CA 94104 
 Facsimile: (415) 772-6268 
 Attention: Karen Dempsey, Esq. 
  
  
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGE FOR PURCHASER FOLLOWS] 
  

 29 

 [PURCHASER SIGNATURE PAGES TO CTIC SECURITIES PURCHASE AGREEMENT] 
 IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above. 
 Name of Purchaser:
_                                        
                                        
                                        
                                        
          
  
 Signature of Authorized
Signatory of
Purchaser:                                     
                                        
                                        
        
  
 Name of Authorized
Signatory:                                      
                                        
                                        
                                        

 
 Title of Authorized
Signatory:                                      
                                        
                                        
                                         

  
 Email Address of
Purchaser:                                      
                                        
                                        
                                        
     
  
 Fax Number of
Purchaser:                                      
                                        
                                        
                                        
         
  
 Address for Notice of
Purchaser: 
  
  
  
 Address for Delivery of Securities for Purchaser (if not same as address for notice): 
  
  
  
 Total Subscription
Amount: $                                     
        
  
 Principal Amount of Convertible
Notes: $                         
  
 Shares of Series E Preferred
Stock:                                    
  
 Series A Warrant
Shares:                                       
             
  
 Series B
Warrants:  $                                    
                       
  
 EIN
Number:                                       
                               
  

 30SUGUO SUPERMARKET CO., LTD.

                             Main Purchase Agreement

                                                                    Page 1 of 13
<PAGE>

Supplier: Songyuan City ErMaPao Green Rice Ltd.
(Hereafter refers to as "Party A")

SUGUO SUPERMARKET CO., LTD.
(Hereafter refers to as "Party B" or "SUGUO SUPERMARKET")

Both of Party A and B should abide by the principle of voluntary, fair and the
equivalence paid. According to "PRC General Principles of Civil Law", "PRC
Contract Law", "PRC Product Quality Law" and other provisions of such law and
regulations, through friendly consultations, Party A and B reached the following
agreement on supply of goods from Party A to Party B which can be complied by
both sides.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
<S>                        <C>
Party A enterprise         _X_ Manufacturers  ___ Wholesalers  ___ Agents
category                   ___ Traders (Import and export)
--------------------------------------------------------------------------------------
Party A the nature of an   ___ State-Operating  ___ Collective  ___ Foreign Investment
enterprise                 _X_ Private
--------------------------------------------------------------------------------------
Party A business coverage  ___ Headquarter     Coverage:______________________________
                           ___ Branch          Coverage:______________________________
                           ___ Agents          Coverage:______________________________
--------------------------------------------------------------------------------------
Party A business
category
--------------------------------------------------------------------------------------
Party A registered         ____0,000 Yuan  Sales revenues for     ____0,000 Yuan
capital                                    last year
--------------------------------------------------------------------------------------
</TABLE>

Article 1 - New Entry Goods
1.1  Party B will introduce Party A's goods positively in accordance with its
     own needs.
1.2  Party A should provide to Party B all the documents which are relative to
     Party A and its goods. The specific requirements are executed in accordance
     with the quality requirement in the Annex 2 of this agreement.
1.3  New entry goods
(1)  When Party A's new commodities want to be sold in Party B's retailers, they
     should comply with Party B's procedures regulations for the introduction of
     new goods; apply to Party B's Commodity Management headquarters; fill out
     the relevant information with Party A's sealing and agree after Party B's
     audit.
(2)  If Party A were a producer, it should at least successfully introduce 3 new
     products for sale in Party B before June 30, 2007 and no less than 6 new
     products in the entire year. If Party A were not a producer, it should at
     least successfully introduce 6 new products for sale in Party B before June
     30, 2007and no less than 12 new products in the entire year. If Party A's
     successful introduction of new products' numbers in a specific time did not
     achieve the numbers as above, Party B could eliminate any products which
     have already been sold by Party B in accordance with the number of
     unfinished. When finished out all of varieties, Party A will be seemed as
     automatic clearance and the specific rehabilitation work will be processed
     in accordance with the Article 9, Weeding out and clearance, in this
     agreement.

                                                                    Page 2 of 13
<PAGE>

(3)  Party B allows the displays of Party A's new goods for market test at some
     fixed-point stores for three months. The fees for the display of new goods
     will be paid by Party A or Party B can deduct the various fees such as new
     goods displayed fees from Party B to Party A's account payable. The details
     will be signed in the further agreement by both sides.
(4)  Party B has the right to decide whether to stop the marketing of the new
     goods during or after the market test. If the new goods were determined by
     Party B to stop sales and due to the high upfront investment has been made
     by Party B for the market test, the various fees including new goods
     displayed fees which Party A has already paid would not be refunded. If
     Party B had stocks of Party A's eliminated new goods, it would be wed out
     and cleaned in accordance with the Article 8 and 9 in this agreement.

Article 2 - Goods Quality
2.1  Party A promises to provide the best quality of goods to Party B and the
     deliveries of goods have the same quality as well as the samples which have
     been shown to Party B.
2.2  The quality of goods from Party A should be strictly complied with Annex 2
     of this agreement.

Article 3 - Price
3.1 Price agreement
(1)  The Party B's purchase prices which Party A promised are the lowest one
     within the prices which Party A gave to any other venders. The purchase
     price is the confirmed goods price (taxed price per unit) which was
     recorded on the value-added tax invoices from Part A. The price can be seen
     in Annex.
(2)  If the purchase price which Party A offered to the third party were lower
     than the price to Party B or if there were any third party's retail sales
     price lower than Party B's purchase price, these would all be seen as Party
     A's violation to the agreement and Party A's default. Party A should
     accumulate the total amounts of stocks since Party A started to deliver to
     Party B as a base; multiply the price difference between Party B's purchase
     price and above and pay the product's double for Party B's economic losses.
     The amount paid is at least RMB 2,000 Yuan. Party B also has the right to
     decide by itself whether to reduce sales price.
(3)  The settled prices which Party A determined to sell in the Hualian
     Hypermarket are the purchase price which was claimed above 3.1 (1) and (2).
     For each variation of price, Party A should attach the confirmed price list
     as an Annex in this agreement.

3.2 Price variation
(1)  The purchase price which agreed by both sides should maintain stably and
     without the permission from Party B, Party A can not change prices by
     itself.
(2)  If Party A wanted to change the price, it should have advance written
     notice to Party B. The new purchase price would be accepted after Party B's
     written confirmation. The new price should enter into force no later than
     two months after Party B accepted the change of the price and the effective
     date will be based on written conformation by both sides.
(3)  Before the change of the price enter into force, Party A shall not limit
     Party B's orders by the original purchase price. If Party A had supply
     shortage, the shortage should be full complemented within 3 working days
     after the order notification was received; it should also pay RMB

                                                                    Page 3 of 13
<PAGE>
     5,000-10,000 Yuan to compensate Party B's economic losses. Otherwise,
     starting from the fourth day, Party B has the right to receive RMB 500 Yuan
     daily for compensation from Party A in order to compensate its economic
     losses until Party A fulfilled the shortages by the original purchase
     price.
3.3  According to it own situation, Party B has the right to confirm the retail
     price of goods which was supplied by Party A.
3.4  Price compensation. Once the current purchase price which Party A provided
     to Party B is lower than the original one, Party A must fully compensate
     the difference between current purchase price and original one for the
     goods which Party B did not sell before the change of the price. The amount
     is based on the Party B's inventory.
3.5  Without the written agreement from Party B, Party A can not provide any
     type of price tag on goods packing. Otherwise, Party B has the right to ask
     for change or return the goods and has the right to do weeding processing
     depend on the situation, the caused losses will be absorbed by Party A.

Article 4 - Supply
4.1  Supply destination: Party A should deliver goods to each Party B's designed
     supermarket stores (including hypermarkets), subsidiaries (branches), or
     distribution centers.
4.2  The supply from Party A to Party B (including distribution or direct
     delivery) should be strictly complied with the agreement in Annex 3, Supply
     Requirements, of this agreement.
4.3  Supply responsibility
(1)  Without the written approval from commodity management headquarters of
     Party B (All approvals before January 1, 2006 has been cancelled), Party A
     are not allowed to supply any goods to any of Party B's stores (including
     directly-managed and franchised stores). When Party A violated this
     commitment, it should pay loss compensation to Party B for RMB 100,000 Yuan
     each time. If Party B required, Party A should clear from Party B without
     any condition in accordance with Article 9 about the clearance processing
     agreement in this agreement.
(2)  Restrictions on imported goods: When Party A provided imported goods to
     Party B, it should deliver to the designated locations on time in
     accordance with the agreement between both sides. When the goods was
     delayed, Party A should pay the compensation for RMB 10,000 - 50,000 Yuan
     and Party B has the right to decide whether to accept.
(3)  The invoices from Party A must conform to the facts. If the things such as
     did not consistent with the actual number of delivery and the agreed price
     happened, Party A should pay Party B the compensation for RMB 100,000 Yuan.
     If Party B required, Party A should clean from Party B in accordance with
     the Article 9 of this agreement on the clearance processing agreement
(4)  If Party A expected to be a shortage of goods or out of it, it should
     inform the commodity management headquarter of Party B in 7 days early.
     Unless Party A and B achieve an agreement for the shortage matters,
     otherwise, Party A should cover all of Party B's losses.

Article 5 - Payment
5.1  Party B will pay the purchase price of goods to Party A in accordance with
     this agreement.
5.2  Payment conditions

                                                                    Page 4 of 13
<PAGE>

(1)  For the goods which have already been delivered to the Party B's designated
     locations on the specific time in accordance with the agreement, unless the
     quality of goods are defects or Party B returns the goods, and after Party
     B have already received the invoices which comply with the agreement, it
     should settle and pay to Party B within _30_ days after received the goods
     (no more than 60 days).
(2)  Party A should submit the invoices to the Party B's designated location on
     the specific time which can cooperate with Party B to check account and
     settle with Party B on the agreed date.
(3)  Special goods payments are agreed by both sides separately.
5.3  Both sides agree that ____/____ (Month/Day) is the settlement date
     (postponed if met holiday). On that day, Party A should assigned agents to
     Party B's designated locations to settle money. If there were no notice for
     the agents, the person which Party A authorized signatory of this agreement
     or the person who represented for Party A to settle last month is Party A's
     absolute agent. Party B can be reasonably confident that he has
     comprehensive special authorization from Party A and has the right to
     represent Party A to settle, sign documents, collect money and etc.
5.4  Party B's payment can be delayed due to the special reasons. It won't be
     seen as a default and it needs to be consulted friendly by both sides.
5.5  Special terms. If the judiciary (people's court) or other administrations
     of the law enforcement agencies require Party B's assistance to shut down,
     freeze, and transfer Party A's payments or assist in the implementation of
     the other Party A's property, Party B will assist in the implementation of
     its legal obligations. Party A shall not raise objections to this claim and
     asks for compensation; Party B has no responsibility for any results. The
     damages which resulted from the assistance in the implementation of
     obligations, Party A should bear full responsibility for compensating all
     of Party B's losses.

Article 6 - Fee
6.1  Party A should pay the following fees in accordance with this agreement by
     Party B's pre- deduction from Party B to Party A's account payable.
(1)  The fees for display in new open stores.
___  Due to the needs to display its goods in Party B's new opened store, Party
     A should pay the one-time fee for RMB 6,000 Yuan for display in the new
     open store.
___  Each time when Party B open a new store (including direct-managerial store,
     franchise, hypermarket), and due to the needs to display its goods in the
     new open store, Party A should pay the new opened store display fees to
     Party B as the following.

Quantity of Party A's            Supermarket                   Hypermarket
goods in Party B :          (less than 4,000m(2))          (more than 4,000m2)

     < 5 items                   RMB 100 Yuan             500-600 Yuan/per item
     =
     6-15 items                  RMB 200 Yuan                 5,000 Yuan
    16-30 items                  RMB 300 Yuan                 8,000 Yuan
    > 30 items                   RMB 400 Yuan                10,000 Yuan
    =
(2)  Party A agrees that every time when Party B makes a payment, it can deduct
     3.5% of total amount on the taxed invoice from account payable or fixed
     amount for RMB _______ Yuan. This money will become the managerial fee
     which Party A commissions Party B to have special management for that
     goods.

                                                                    Page 5 of 13
<PAGE>

(3)  As Party B's sales of Party A's goods are more than 1 million Yuan per
     year, Party A should pay 1.5 % of the year's total amount of the actual
     taxed receipts as goal deduction rate to Party B. As Party B's sales of
     Party A's goods are less than 1 million Yuan per year, Party A should pay 3
     % of the year's total amount of the actual taxed receipts as goal deduction
     rate to Party B. (If the early termination of this agreement and the
     clearance happened, Party A should pay 3 % of the year's total amount of
     the actual taxed receipts as goal deduction rate to Party B and complete
     that payment before the clearance.)
(4)  Sales incentives: As Party B's sales of Party A's goods grew ____ % over
     the previous year, Party A should pay ____ % of the year's total amount of
     the actual taxed receipts as sales incentives to Party B. This fee will be
     deducted from Party B to Party A's account payable. (The previous sales
     will be based on RMB ______ Yuan which was confirmed by both Party A and
     B.)
(5)  If the factors caused the early termination of this agreement came from
     Party A, no matter a full year or not and as long as Party B's sales
     achieved the above amount, Party A should pay to comply with the conditions
     of special management fees, goal deduction rate and sales incentives.
(6)  Shopping Bag commission processing
     When Party A commissioned Party B to produce the shopping bags for the
     sales of Party A's goods, size and shape are designed by Party B; Party
     B's name can be printed on the shopping bags; Party A also commissioned
     Party B to give the shopping bags to consumers when selling Party A's
     goods. By consulting between both sides, the fees for commission to
     produce shopping bags are _____ % of the total payment amount on the taxed
     receipts which Party B should pay to Party A. If Party A had any special
     requirements for the shopping bags, it should be consulted by both sides.
6.2  If the fees which Party A paid to Party B did not consult in this agreement
     will have further agreement and both of Party A and B should strictly
     comply.

Article 7 - Promotions
The promotional and other fees under this article should be paid by Party A and
Party B can pre-deduct from Party B to Party A's account payable.

7.1  Party A paid the promotional fees for the needs to sell goods. Party A
     hopes that Party B organizes and promises that it will participate in
     various promotional events hold by Party B's organization and paid the
     promotional fees.
(1)  The chain of stores' promotional activities in Shanghai region:
A.   Holiday promotions: Party A should participate in the large promotional
     activities which are hold by Party B's organization no less than two times
     during holidays in a whole year. Party A should pay the promotional fees
     and the specific amount would be agreed by both sides in the further
     agreement.
B.   DM promotions: Party A can not apply to participate less than two times in
     each year but Party B has the right to decide whether Party A was arranged
     to participate. Party A should pay the promotional fees and the specific
     amount would be agreed by both sides in the further agreement.
C.   Franchise orders promotions: Party A participated in the various of
     franchises' promotional activities which are hold by Party B. Party A
     should pay the promotional fees and the specific amount would be agreed by
     both sides in the further agreement.

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(2)  Non-local subsidiary (branch) company's promotional activities: Party A
     holds a large promotional activity with Party B's each subsidiary (branch)
     company every year. Party A should pay the promotional fees to Party B in
     accordance with 2% of Party A's annual sales (included tax) in each
     non-local subsidiary (branch) company.
(3)  Stores' celebration promotional service fees. According to the needs of
     Party A, Party B arranges Party A to participate in stores' celebration
     promotional activities and Party A should pay RMB ______ Yuan to Party B
     for the stores' celebration promotional service fees.
(4)  Billboard support. Party B agrees to help Party A to propagate at least
     twice in a year. Party A should pay the commissioned advertising fees and
     the specific amount would be agreed by both sides in the further agreement.
(5)  Party A should provide displayed supports and DM promotions to Party B's
     stores which sell Party A's products in a whole year. Because Party A can
     not complete the job by itself, it promises to pay the commission to Party
     B based on 1% of the total amount on taxed receipts in order to commission
     Party B for displayed support and DM promotions.
7.2  Gifts support. Party A agrees to provide gifts supports to Party B's newly
     opened stores. The gifts' quality should match up with Annex 2, Quality
     Requirement Annex, of this agreement.
7.3  Special holiday service fees. Party B agreed that during the national
     holidays, it would provide the posters or special displays and propagation
     and other paid services. Party A agrees to pay the special holiday service
     fees for RMB 800 Yuan/ per period.
7.4  Promotional relative matters
(1)  Promotional packaging: Party A agreed to provide at least twice promotional
     packaging to Party B in a whole year and the quantity would be confirmed
     from further consulting.
(2)  During promotional period, Party A guarantees that it will meet the
     availability of supply. If Party A can not meet the requirement, it should
     pay RMB 10,000 - 50,000 Yuan for the loss compensation and bear all the
     losses.
(3)  During the promotional activities, if any mistakes happened on Party B's
     sales job resulted from Party A's faults, Party A should pay RMB 5,000 -
     10,000 Yuan for the loss compensation. If the loss compensation fees are
     not enough to cover Party B's losses, Party A should absorb the
     compensative responsibility.

Article 8 - Return of Goods
8.1  Party A agrees to accept the return of unsold goods from Party B.
8.2  Party A believes that the sales of goods from Party B have enough
     attractions on the market. Based on this as conditions, Party A supply to
     Party B and commitments are as follows: As the goods' quality guaranteed
     periods are less than 50 days (including 50 days), Party A guaranteed that
     Party B must be able to sell the goods from the date of receipt of goods to
     the expiration of the goods. As the goods' quality guaranteed periods are
     more than 50 days, Party A guaranteed that Party B must be able to sell the
     goods within 50days after the date of receipt of goods. When Party B can
     not sell the goods within the above periods, Party A should withdraw goods
     unconditionally.

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(1)  Party A should withdraw the goods within 10 days after received Party B's
     returned notices (including Party B's direct managerial stores, franchises,
     hypermarkets, or subsidiaries, branch companies). If Party B needed
     replacements, Party A should agree.
(2)  When Party A does not collect the goods which it should, Party B can
     continue selling them; but Party B did not need to pay to Party A until
     goods was sold.
(3)  All of the costs and expenses caused by the returns of goods are covered by
     Party A. If Party A needed Party B's services, the specific costs charged
     implemented in accordance with the standard 8.3 of this agreement for the
     return service charge standards. The charged fees which were less than RMB
     100 Yuan would be counted by RMB 100 Yuan.
(4)  If Party A did not withdraw within 15 days after received the returned
     notice, Party A agreed to pay to Party B 0.1% of total amount of returns of
     goods for the storage fees.
8.3  The goods which sold by Party B, if the returns of goods met the national
     law, regulations, provisions and other relevant requirements for the
     returns of goods, Party B should allow the consumers' returns and Party A
     should bear the economic responsibilities for the returns of goods. When
     Party B provided the return services to consumers directly, Party A agreed
     to pay the return service fees to Party B in accordance with "Return
     Service Charge Standards". The payment can not be lower than RMB 100 Yuan
     each time and Party B pre- deducted it from the purchase payment to Party
     A.

Return Service Charge Standards:
     Gods need to be return                Standards
     Product quality problems              Total amounts of returns * 10%
     Providing false, expired documents    Total amounts of returns * 10%
     or fail to provide the necessary
     document
     Defective goods                       Total amounts of returns * 6%
                                           (Health products 3%)

     Seasonal goods                        Total amounts of returns * 3%
                                           (Health products 2%)
     Others                                Total amounts of returns * 3%
                                           (Health products 2%)
8.4  If Party A did not accept Party B's returns, it should agree that Party B
     can sell the product by _____ % discounts and the total losses caused form
     the discount should be covered by Party A.
8.5  Defective compensation: This is used for compensate Party B's losses when
     dealing with defective goods and Party B deducted it from the payment to
     Party A.
___  Party A agrees to pay ___ % of the total amounts for the compensations.
___  Party A agrees that Party B can fully return the defective goods and pay
     the return service charges instead of compensations.

Article 9 - Weeding Out and the Clearance
9.1  Party b can inform Party A to eliminate the goods under the following
     circumstances:
(1)  Party A's goods which sold by Party B (including the three-months display
     of new test marketed goods) was ranked within the last 30% of the similar
     products;
(2)  Party A stop production or shortage without any reason more than 15 days
     (expect seasonal products);
(3)  Within quality guaranteed period, the consumers complained frequently.
     Party B's inspection departments determined that the good producing place
     did not meet the relevant provisions of country;

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(4)  Due to the quality of products are unstable, customers usually complained
     that the goods do not meet the Annex 2, Quality requirement, of this
     agreement;
(5)  The goods which are claimed as failed goods by the national law enforcement
     departments;
(6)  The goods which are eliminated by one third of Party B's subsidiaries;
(7)  The goods which Party B suggests to eliminate in accordance with the
     consumption rate, the quantity of returns and the cooperating situation
     between both sides.
9.2  Weeding out approach
     The procedure of Party A's weeding out products would follow the Article 8
     of this agreement.
9.3  If the suppliers have the following situations, it should be clear from
     Party B and Party B has the right to ask Party A to clear:
(1)  The goods which Party A supplies to Party B have different quality to
     samples, and Party A does not complete the rectification within 15 day
     after receiving Party B's notice;
(2)  Party A does not follow this agreement and give the lower purchase price
     and more favorable purchase conditions to the third party compared to Party
     B, which caused Party B feel unfair;
(3)  The Party A's goods do not meet the market attraction as Party A's
     description, and the annual total sales do not reach over RMB 500,000 Yuan;
(4)  No acceptable reasons which Party B can forgive, Party A's supply capacity
     can not meet the demand for orders;
(5)  Party A breach of commercial confidentiality obligations. Without written
     permission from Party B, Party A disclosed to any third party with Party
     B's trade secret or commercial information (including goods price,
     marketing plan, customer lists, financial information, contract and
     agreement and other technological secrets);
(6)  Party A breach of regulation to provide any kind of presidents and gifts to
     Party B's employees, part-time job, and branches' staffs.
(7)  Party A suggested that to terminate this agreement.
9.4  Clearance processing
     When Party A clears its products, it should pay the compensation fee for
     RMB 5,000 to RMB 10,000 Yuan. If the compensation were not enough to
     compensate Party B's real loss, Party B has the right to ask for
     compensation.
(1)  The procedure of the clearance processing implies in accordance with the
     Article 8 of this agreement.
(2)  When Party A can not move the clearance goods timely, it should pay RMB 50
     Yuan per day for the place rental fees, but Party B does not have the
     responsibilities of them. Since the notice date, the loss, damage and all
     other risk responsibilities would be covered by Party A.
(3)  When Party A is wed by Party B, it should leave the last payment in Party
     B's sides. If there were no damage within 3 months after clearance, Party B
     should return this payment to Party A. If there were damages to Party B,
     Party B has the right to deduct from the account payable to recover the
     loss. If Party A's payment were not enough to compensate Party B's loss,
     Party B had the right to ask Party A for compensations.
(4)  After clearance, Party A can not ask Party B to return the fees which it
     paid before.

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(5)  Party A guarantees that it will respond for customers' compensation caused
     from the quality problems, and it will continue responding to all of the
     guarantees in the Article 12 of this agreement.
(6)  The availability of the contract will be due until the clearance was
     completed.

Article 10 - Defect Warranty
10.1 Warranty for authorized defect. The goods which Party A gives to Party B
     can not be claimed for the rights and requests by the third party. If the
     third party asked the rights and request, no matter it won or not, Party A
     should respond to Party B and cover the travel fees, lawyers fees and all
     other fees which Party B paid.
The specific warranty responsibilities include:
(1)  Party A ensures that the goods which it provides to Party B have legitimate
     and full right.
(2)  Party A ensures that the goods which it provides to Party B do not have any
     collateral, pledge, indwelling, and other security interests and the
     possible existence of other rights flaws.
(3)  Party A ensures that the goods which it provides to Party B does not
     infringe any third party's industrial property, other intellectual property
     rights, other civil right and etc. It's equal that Party A guaranteed that
     the sales in the Party B is not contain any patent infringement, trademark,
     copyright, portrait right and other infringement of third parties' rights
     of goods. If Party A's goods have violations, Party B has the right to
     terminate this agreement immediately and Party A should pay the loss
     compensation for RMB 10,000- 50,000 Yuan. If the loss compensation can not
     make up the Party B's actual loss, Party B has the right to ask Party A's
     compensation.
10.2 Quality Warranty. Party A should provide the goods in accordance with this
     agreement. Otherwise, Party A should bear the responsibility for breach of
     contract.
10.3 Party A should take all the responsibility from all commercial parties in
     the network (e.g. dealers, transport companies, manufactures, agents) when
     implementing of this agreement to its Annexes to Party B.

Article 11 - Infringement and Confidentiality
11.1 Without Party B's permission, Party A can not use Party B's trademark,
     firms, company name, advertising terms, store decoration design and other
     Party B's logo for commercial using and can not borrow Party B's name to do
     misleading commercial advertising externally. Otherwise, Party A's act
     would constitute infringement. When Party A constitutes infringement, it
     should be stop immediately and it should pay the loss compensation for RMB
     30,000-100,000 Yuan to Party B. If it were not enough, Party A should
     compensate Party B's real losses.
11.2 Party A and B are strictly respond for the obligation of confidentiality as
     the following:
(1)  The agreement itself and its contents and the implication of the business
     information;
(2)  Others' basic business information;
(3)  The technological secrets and commercial secrets which were known when
     signed and implement the agreement.

                                                                   Page 10 of 13
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Article 12 - Guarantee, Claims, and Responsibility for Breach of the Contract
12.1 Party A and B should strictly maintain the concepts of honesty and credits
     and imply with the obligation under this agreement.

12.2 Party A's guarantees:
(1)  The goods which were provided to Party B comply with the requirements by
     this agreement and do not have any rights, quality, and product liability's
     defects. Otherwise, if this goods caused any legal problems and economics
     loss to Party B and its subsidiaries, Party A should take the
     responsibility and cover all the charges and Party B and its subsidiaries'
     losses.
(2)  Expect the defective goods, any action or non-action which resulted in
     Party B's legal disputes and suffer any damage of economy and goodwill,
     Party A should cover all the responsibilities and Party B has the right to
     request the loss from Party A.
12.3 Any tolerance, grace, concession or delay the exercise of its obligation
     under this agreement come from Party B to Party A do not affect Party B's
     original rights. It can not be seen as Party B give up the rights and Party
     A escape from the obligation.
12.4 Claims. If the goods which Party A provides to Party B do not meet the
     agreement and Party B's requirement, Party A has the responsibility and
     Party B has the following one or several ways to claim.
(1)  Required the returns to Party A. Party A should refund all the payments to
     Party B and bear all the direct loss and charges, including interest, bank
     charges, freight fees, insurance premiums, inspection fees, warehousing,
     handling, regulatory protection of withdrawal and all of other necessary
     expenses.
(2)  Required Party A's permission for Party B to sell the goods by discounting
     price in accordance with the poor quality goods degree, damaged degree and
     the loss which Party B's losses.
(3)  Required Party A to use the goods which comply with this agreement to
     replace the Party B's defective goods and cover all of Party B's losses and
     expenses.
(4)  Other compensation methods which Party B can request and Party A can bear.

12.5 Liability for breach of contract
(1)  If the Party A's losses came from Party B's fault, Party B would bear the
     legal responsibility and handle properly with a reasonable time.
(2)  If Party A did not fulfilled the obligation of this agreement, it should
     pay the loss compensation to Party B and if the compensation fees were not
     enough, Party should keep bearing the responsibility of compensation. If
     Party A breached the agreement, Party B had the right to terminate this
     agreement.
12.6 If Party A's breach of contract or illegal action caused Party B's risks,
     Party B has the right to maintain Party A's property in order to urge Party
     A to take measures as soon as possible for risk exclusion and protect its
     own rights and interests will not be harmed.

Article 13 - Force Majeure
13.1 Either sides due to the war or serious fires, flood, typhoon, earthquake
     events or other force majeure events which agreed by both sides which can
     affect the implementation of this agreement, the implemented due day can be
     delay and part of agreement can be implemented and part of them will not.
     The time for delay should be equivalent to the time for the impact.

                                                                   Page 11 of 13
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13.2 When affecting by force majeure, one party should telex and fax the
     situation to the other party as soon as possible. And the examined document
     which was issued by the relevant authorities should send by registered
     letter within seven days for other party to confirm.
13.3 When the force majeure events terminated or eliminated, the affected party
     should telex and fax the situation to inform other party and send by
     registered mail within seven days to confirm the informed contents.
13.4 Disclaimer force majeure. If any party's obligations under this agreement
     were affected by the force majeure, the delayed implementation, part of
     implementation and part of non-implementation were allowed. However, the
     affected party should make every effect to avoid or eliminate the affected
     factors and informed the other party immediately in accordance with 13.2
     after the force majeure happened.

Article 14 - Jurisdiction of the Agreement
14.1 For any dispute involving or relating to this agreement, both sides should
     resolve through friendly consultations. If consensus can not be reached,
     the agreement was signed by the people's Court jurisdiction.
14.2 The signing of this agreement are: No.609, Longchang Rd. Shanghai, China

Article 15 - Agreement's Effective, Termination and Other
15.1 This agreement is effective since the date when both sides signed and
     sealed.
15.2 This agreement is valid from January 15, 2008 to December 31. 2008. After
     effective date, the agreement will be expire automatically. However, after
     expire, if both sides do not sing the new agreement or prior the signing of
     a new agreement and there are still practical cooperation between both
     sides, both sides' rights and obligations will continue the implementation
     of this agreement.
15.3 For any changes and modifies of this agreement, both sides must be
     consensus and adding corrective seals or signing the written documents as
     integral part of this agreement or supplemental agreement which has the
     same effect as this agreement.
15.4 At the end of this agreement, the outstanding debt and debt will not be
     affected by the expiration of this agreement. The debtor's creditors to
     continue to pay outstanding debt.
15.5 Under this agreement, the payment which Party A should Pay to Party B such
     as loss compensation fees can be deducted from Party B's account payable to
     Party A.
15.6 The signing of this agreement means that both sides have no discrepancies
     in the text and the application law for this agreement. This agreement is
     duplicated and both sides have one with the same legal effect.
15.7 Any one of both sides can not transfer the rights and obligations under
     this agreement to other side without each other's permission.
15.8 The Annexes of this agreement: Annex 1 (Definition of national supply
     cooperation agreement), Annex 2 (Quality requirements of national supply
     cooperation agreement), Annex 3 (Supply requirements of national supply
     cooperation agreement) are integral parts of this agreement and have the
     same effect as the text of the agreement. The "Party A" and "Party B" in
     the agreement are the same as in the annex.
15.9 None of the provinces of this agreement failure will affect any other
     province.

                                                                   Page 12 of 13
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This agreement will take effect only approval by the business manager. Business
manager of Hualian Supermarket (signature):_____________________

Both sides should guarantee:

All the representatives of the signatories state and ensure that its signing of
this agreement has been fully authorized. The agreement is signed after
consulting by both sides. When signing this agreement, both parties have
carefully read this agreement and its annexes' contents, have no objection with
any provisions of this agreement and it annexes, and understand accurately about
the meaning of various provisions of the law. Complying with the spirit of the
law for freedom of contract, the both parties are binding after the agreement is
signed.

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