Document:

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                                                                   EXHIBIT 10.11

                                                       [Assistant Vice President
                                                                   Single Bonus]

         EMPLOYMENT AGREEMENT dated June 1, 2004 between PALL CORPORATION, a New
York corporation (the "Company"), and Lisa McDermott ("Executive").

         In consideration of the mutual agreements hereinafter set forth, the
parties hereto agree as follows:

SECTION 1. EMPLOYMENT AND TERM

         The Company hereby employs Executive, and Executive hereby agrees to
serve, as an executive employee of the Company with the duties set forth in
ss.2, for a term (hereinafter called the "Term of Employment") beginning June 1,
2004 (the "Term Commencement Date") and ending, unless sooner terminated under
ss.4, on the effective date specified in a notice of termination given by either
party to the other except that such effective date shall not be earlier than the
first anniversary of the date on which such notice is given.

SECTION 2. DUTIES

         (a) Executive agrees that during the Term of Employment she will hold
             such offices or positions with the Company, and perform such duties
             and assignments relating to the business of the Company, as the
             Chief Executive Officer of the Company shall direct except that
             Executive shall not be required to hold any office or position or
             to perform any duties or assignment inconsistent with her
             experience and qualifications.

         (b) If the Chief Executive Officer of the Company so directs, Executive
             shall serve as an officer of one or more subsidiaries of the
             Company (provided that the duties of such office are not
             inconsistent with Executive's experience and qualifications) and
             part or all of the compensation to which Executive is entitled
             hereunder may be paid by such subsidiary or subsidiaries. However,

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             such employment and/or payment of Executive by a subsidiary or
             subsidiaries shall not relieve the Company from any of its
             obligations under this Agreement except to the extent of payments
             actually made to Executive by a subsidiary.

         (c) During the Term of Employment Executive shall, except during
             customary vacation periods and periods of illness, devote
             substantially all of her business time and attention to the
             performance of her duties hereunder and to the business and affairs
             of the Company and its subsidiaries and to promoting the best
             interests of the Company and its subsidiaries and she shall not,
             either during or outside of such normal business hours, engage in
             any activity inimical to such best interests.

SECTION 3. COMPENSATION DURING TERM OF EMPLOYMENT

         (a) Base Salary. With respect to the period beginning on the Term
             Commencement Date and ending on the 31st day of July next following
             the Term Commencement Date, the Company shall pay Executive a Base
             Salary (in addition to the compensation provided for elsewhere in
             this Agreement) at the rate of $180,000 per annum (hereinafter
             called the "Original Base Salary"). With respect to each Contract
             Year beginning with the Contract Year which starts on the first day
             of August next following the Term Commencement Date, the Company
             shall pay Executive a Base Salary at such rate as the Chief
             Executive Officer may determine but not less than the Original Base
             Salary adjusted as follows: The term "Contract Year" as used herein
             means the period from August 1 of each year through July 31 of the
             following year. The term "Consumer Price Index" as herein used
             means the "Consumer Price Index for all Urban Consumers" compiled
             and published by the Bureau of Labor Statistics of the United
             States Department of Labor for "New York - Northern N. J. - Long
             Island, NY-NJ-CT-PA". For each Contract Year during the Term of
             Employment beginning with the Contract Year which starts on the
             first day of August next following the Term Commencement Date, the
             minimum compensation payable to Executive under this ss.3(a)
             (hereinafter called the "Minimum Base Salary") shall be determined
             by

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             increasing (or decreasing) the Original Base Salary by the
             percentage increase (or decrease) of the Consumer Price Index for
             the month of June immediately preceding the start of the Contract
             Year in question over (or below) the Consumer Price Index for the
             month of June next preceding the Term Commencement Date. [To
             illustrate the operation of the foregoing provisions of this
             paragraph: In an Employment Agreement as to which the Term
             Commencement Date was August 1, 2004, the executive's base salary
             for the Contract Year August 1, 2005 through July 31, 2006 would be
             not less than the Original Base Salary under that Employment
             Agreement adjusted by the percentage increase (or decrease) of the
             Consumer Price Index for June 2005 over (or below) said Index for
             June 2004.] Further adjustment in the Minimum Base Salary shall be
             made for each ensuing Contract Year, in each case (i) using the
             Consumer Price Index for the month of June next preceding the Term
             Commencement Date as the base except as provided in the immediately
             following paragraph hereof and (ii) applying the percentage
             increase (or decrease) in the Consumer Price Index since said base
             month to the Original Base Salary to determine the Minimum Base
             Salary. The Base Salary shall be paid in such periodic installments
             as the Company may determine but not less often than monthly.

                 If with respect to any Contract Year (including the Contract
             Year beginning on the first day of August next following the Term
             Commencement Date) the Chief Executive Officer fixes the Base
             Salary at an amount higher than the Minimum Base Salary, then
             (unless the order fixing such higher Base Salary provides
             otherwise), for the purpose of determining the Minimum Base Salary
             for subsequent Contract Years: (i) the amount of the higher Base
             Salary so fixed shall be deemed substituted for the Original Base
             Salary wherever the Original Base Salary is referred to in the
             immediately preceding paragraph hereof, and (ii) the base month for
             determining the Consumer Price Index adjustment shall be June of
             the calendar year in which the Contract Year to which such higher
             Base Salary is applicable begins. [To illustrate the operation of
             the foregoing provisions of this paragraph: If the Chief Executive
             Officer were to fix a Base Salary for a Contract Year beginning,
             say, August 1, 2006 which is higher than

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             the Minimum Base Salary for that Contract Year, then June 2006
             would become the base month for the purposes of making the Consumer
             Price Index adjustment to determine the Minimum Base Salary for
             subsequent Contract Years unless and until the Chief Executive
             Officer were to fix a Base Salary higher than the Minimum Base
             Salary for a subsequent Contract Year.]

         (b) Bonus Compensation.

             (i) With respect to each Fiscal Year of the Company falling in
             whole or in part within the Term of Employment beginning with the
             Fiscal Year ending on the Saturday nearest to the 31st day of the
             month of July next following the Term Commencement Date, Executive
             shall be entitled to receive a Bonus pursuant to this Agreement in
             an amount determined in accordance with, and subject to all of the
             terms of, the Pall Corporation Executive Incentive Bonus Plan
             adopted by the Compensation Committee of the Board of Directors of
             the Company on October 16, 2003, approved by shareholders at the
             annual meeting of shareholders on November 19, 2003 effective for
             the Fiscal Year beginning August 3, 2003, a copy of which is
             annexed hereto and incorporated herein by reference (the "Bonus
             Plan"). Words and terms used herein with initial capital letters
             and not defined herein are used herein as defined in the Bonus
             Plan. For purposes of determining the amount of the Bonus payable
             to Executive for any Fiscal Year under the Bonus Plan (the "Plan
             Bonus"), Executive's Target Bonus Percentage shall be 82.5% of her
             Base Salary for such Fiscal Year.

             (ii) Executive's Bonus Compensation shall be paid in accordance
             with ss.5 of the Bonus Plan. With respect to any Fiscal Year which
             falls in part but not in whole within the Term of Employment, the
             pro rata portion of the Bonus Compensation to which Executive is
             entitled under this ss.3(b) shall be determined in accordance with
             ss.3(c) of the Bonus Plan.

         (c) Fringe Benefits and Perquisites. During the Term of Employment,
             Executive shall enjoy the customary perquisites of office,
             including, but not limited to, office space and furnishings,
             secretarial services, expense reimbursements and

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             any similar emoluments customarily afforded to senior executive
             officers of the Company at the same level as Executive. Executive
             shall also be entitled to receive or participate in all "fringe
             benefits" and employee benefit plans provided or made available by
             the Company to its executives or management personnel generally
             (such as, but not limited to, group hospitalization, medical, life
             and disability insurance, and pension, retirement, profit-sharing
             and stock option or purchase plans), at such time and on such terms
             and conditions as each such plan provides.

         (d) Vacations. Executive shall be entitled to three weeks vacation
             through December 6, 2004 and to four weeks vacation thereafter in
             accordance with the policies of the Company as determined by the
             Board or by an authorized senior officer of the Company from time
             to time. The Company shall not pay Executive any additional
             compensation for any vacation time not used by Executive.

SECTION 4.   TERMINATION BY REASON OF DISABILITY, DEATH, RETIREMENT OR CHANGE
             IN CONTROL

         (a) Disability or Death. If, during the Term of Employment, Executive,
             by reason of physical or mental disability, is incapable of
             performing her principal duties hereunder for an aggregate of 130
             working days out of any period of twelve consecutive months, the
             Company at its option may terminate the Term of Employment
             effective immediately by notice to Executive given within 90 days
             after the end of such twelve-month period. If Executive shall die
             during the Term of Employment or if the Company terminates the Term
             of Employment pursuant to the immediately preceding sentence by
             reason of Executive's disability, the Company shall pay to
             Executive, or to Executive's legal representatives, or in
             accordance with a direction given by Executive to the Company in
             writing, the following: (i) Executive's Base Salary to the end of
             the month in which such death or termination for disability occurs
             and Executive's Bonus Compensation prorated to said last day of the
             month and (ii) for each month in the period from the end of the
             month in which such death or termination for disability occurs
             until the earlier of (x) the first

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             anniversary of the date of death or termination and (y) the date on
             which the Term of Employment would have ended but for such death or
             termination for disability, monthly payments of an amount equal to
             1/12th of 91.25% of the annual rate of Base Salary in effect for
             Executive immediately prior to the date on which Executive's death
             or termination for disability occurs (such 91.25% being comprised
             of one-half of such Base Salary and one-half of Executive's Target
             Bonus Percentage set forth in ss.3(b) hereof).

         (b) Retirement. (i) The Term of Employment shall end automatically,
             without action by either party, on Executive's 65th birthday
             unless, prior to such birthday, Executive and the Company have
             agreed in writing that the Term of Employment shall continue past
             such 65th birthday. In that event, unless the parties have agreed
             otherwise, the Term of Employment shall be automatically renewed
             and extended each year, as of Executive's birthday, for an
             additional one-year term, unless either party has given a
             Non-Renewal Notice. A Non-Renewal Notice shall be effective as of
             Executive's ensuing birthday only if given not less than 60 days
             before such birthday, and shall state that the party giving such
             notice elects that this Agreement shall not automatically renew
             itself further, with the result that the Term of Employment shall
             end on Executive's ensuing birthday. (ii) If the Term of Employment
             ends pursuant to this paragraph by reason of a notice given by
             either party as herein permitted or automatically at age 65 or any
             subsequent birthday, the Company shall pay to Executive, or to
             another payee specified by Executive to the Company in writing,
             Executive's Base Salary and Bonus Compensation prorated to the date
             on which the Term of Employment ends. (iii) Anything hereinabove to
             the contrary notwithstanding, if any provision of this paragraph
             violates federal or applicable state law relating to discrimination
             on account of age, such provision shall be deemed modified or
             suspended to the extent necessary to eliminate such violation of
             law. If at a later date, by reason of changed circumstances or
             otherwise, the enforcement

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             of such provision as set forth herein would no longer constitute a
             violation of law, then it shall be enforced in accordance with its
             terms as set forth herein.

         (c) Change in Control. In event of a Change in Control (as defined
             in the Bonus Plan), Executive shall have the right to terminate the
             Term of Employment, by notice to the Company given at any time
             after such Change in Control, effective on the date specified in
             such notice, which date shall not be more than (but can be less
             than) one year after the giving of such notice.

SECTION 5. COVENANT NOT TO COMPETE

         For a period of eighteen months after the end of the Term of Employment
if the Term of Employment is terminated by notice to the Company given by
Executive under ss.1 or ss.4 hereof, or for a period of twelve months after the
end of the Term of Employment if the Term of Employment is terminated by notice
to Executive given by the Company under ss.1 or ss.4 hereof or terminates under
ss.4 by reason of Executive attaining the age of 65, Executive shall not render
services to any corporation, individual or other entity engaged in any activity,
or herself engage directly or indirectly in any activity, which is competitive
to any material extent with the business of the Company or any of its
subsidiaries, provided, however, that if the Company terminates under ss.1
following a Change in Control (as defined in the Bonus Plan), the foregoing
covenant not to compete shall not apply.

SECTION 6. COMPANY'S RIGHT TO INJUNCTIVE RELIEF

         Executive acknowledges that her services to the Company are of a unique
character, which gives them a peculiar value to the Company, the loss of which
cannot be reasonably or adequately compensated in damages in an action at law,
and that therefore, in addition to any other remedy which the Company may have
at law or in equity, the Company shall be entitled to injunctive relief for a
breach of this Agreement by Executive.

SECTION 7. INVENTIONS AND PATENTS

         All inventions, ideas, concepts, processes, discoveries, improvements
and trademarks (hereinafter collectively referred to as intangible rights),
whether patentable or registrable or not, which are conceived, made, invented or
suggested either by Executive alone

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or by Executive in collaboration with others during the Term of Employment, and
whether or not during regular working hours, shall be disclosed to the Company
and shall be the sole and exclusive property of the Company. If the Company
deems that any of such intangible rights are patentable or otherwise registrable
under any federal, state or foreign law, Executive, at the expense of the
Company, shall execute all documents and do all things necessary or proper to
obtain patents and/or registrations and to vest the Company with full title
thereto.

SECTION 8. TRADE SECRETS AND CONFIDENTIAL INFORMATION

         Executive shall not, either directly or indirectly, except as required
in the course of her employment by the Company, disclose or use at any time,
whether during or subsequent to the Term of Employment, any information of a
proprietary nature owned by the Company, including but not limited to, records,
data, formulae, documents, specifications, inventions, processes, methods and
intangible rights which are acquired by her in the performance of her duties for
the Company and which are of a confidential information or trade-secret nature.
All records, files, drawings, documents, equipment and the like, relating to the
Company's business, which Executive shall prepare, use, construct or observe,
shall be and remain the Company's sole property. Upon the termination of her
employment or at any time prior thereto upon request by the Company, Executive
shall return to the possession of the Company any materials or copies thereof
involving any confidential information or trade secrets and shall not take any
material or copies thereof from the possession of the Company.

SECTION 9. MERGERS AND CONSOLIDATIONS; ASSIGNABILITY

         In the event that the Company, or any entity resulting from any merger
or consolidation referred to in this ss.9 or which shall be a purchaser or
transferee so referred to, shall at any time be merged or consolidated into or
with any other entity or entities, or in the event that substantially all of the
assets of the Company or any such entity shall be sold or otherwise transferred
to another entity, the provisions of this Agreement shall be binding upon and
shall inure to the benefit of the continuing entity in or the entity resulting
from such merger or consolidation or the entity to which such assets shall be
sold or transferred. Except as provided in the immediately preceding sentence of
this ss.9, this Agreement shall not be assignable by the Company or by any
entity referred to in such immediately preceding sentence. This Agreement

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shall not be assignable by Executive, but in the event of her death it shall be
binding upon and inure to the benefit of her legal representatives to the extent
required to effectuate the terms hereof.

SECTION 10. CAPTIONS

         The captions in this Agreement are not part of the provisions hereof,
are merely for the purpose of reference and shall have no force or effect for
any purpose whatsoever, including the construction of the provisions of this
Agreement, and if any caption is inconsistent with any provisions of this
Agreement, said provisions shall govern.

SECTION 11. CHOICE OF LAW

         This Agreement is made in, and shall be governed by and construed in
accordance with the laws of, the State of New York.

SECTION 12. ENTIRE CONTRACT

         This instrument contains the entire agreement of the parties on the
subject matter hereof except that the rights of the Company hereunder shall be
deemed to be in addition to and not in substitution for its rights under the
Company's standard printed form of "Employee's Secrecy and Invention Agreement"
or "Employee Agreement" if heretofore or hereafter entered into between the
parties hereto so that the making of this Agreement shall not be construed as
depriving the Company of any of its rights or remedies under any such Secrecy
and Invention Agreement or Employee Agreement. This Agreement may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.

SECTION 13. NOTICES

         All notices given hereunder shall be in writing and shall be sent by
registered or certified mail or overnight courier service such as Federal
Express or UPS Air or delivered by hand, and, if intended for the Company, shall
be addressed to it (if sent by mail or overnight courier service) or delivered
to it (if delivered by hand) at its principal office for the attention of the
Corporate

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Secretary of the Company, or at such other address and for the attention of such
other person of which the Company shall have given notice to Executive in the
manner herein provided, and, if intended for Executive, shall be delivered to
her personally or shall be addressed to her (if sent by mail or overnight
courier service) at her most recent residence address shown in the Company's
employment records or at such other address or to such designee of which
Executive shall have given notice to the Company in the manner herein provided.
Each such notice shall be deemed to be given on the date of mailing thereof or
delivery to the overnight courier service, or if delivered personally, on the
date so delivered.

SECTION 14. TERMINATION OF ANY EXISTING AGREEMENT

         Any employment agreement between the parties hereto which is in effect
on the date hereof is hereby terminated and replaced and superseded by this
Agreement, effective on the Term Commencement Date. All payments, of Base Salary
or otherwise, made by the Company under any such existing agreement with respect
to any period commencing on or after the Term Commencement Date shall be
credited against the corresponding payment obligations of the Company under this
Agreement with respect to such period.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                               PALL CORPORATION

                                               By:____________________________
                                                     Name:
                                                     Title:

                                               EXECUTIVE

                                               _______________________________
                                                   Lisa McDermott

[Form prepared 2/03]

revised by MAB 6/04

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                                PALL CORPORATION

                         EXECUTIVE INCENTIVE BONUS PLAN

                                      -----

1. PURPOSE

         This document sets forth the Pall Corporation Executive Incentive Bonus
Plan as adopted by the Committee on and effective July 17, 2001, approved by
shareholders on November 14, 2001 and amended by the Committee on July 16, 2002
and November 1, 2002 effective for the Fiscal Year beginning August 4, 2002.

         The purpose of the Plan is to encourage greater focus on performance
among the key executives of the Corporation by relating a significant portion of
their total compensation to the achievement of annual financial objectives.

2. CERTAIN DEFINITIONS

         As used herein with initial capital letters, the following terms shall
have the following meanings:

         "AVERAGE EQUITY" shall mean, for any Fiscal Year, the average of
stockholders' equity as shown on the fiscal year-end consolidated balance sheet
of the Corporation and its subsidiaries as of the end of such Fiscal Year and as
of the end of the immediately preceding Fiscal Year except that the amounts
shown on said balance sheets as "Accumulated other comprehensive" income or
loss, as the case may be, shall be disregarded.

         "BASE SALARY" shall mean, with respect to any Executive and for any
Fiscal Year, the annual rate of base salary in effect for the Executive as of
the first day of such year or, if later, as of the first day of the Executive's
Term of Employment, as determined under the Executive's Employment Agreement.

         "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Corporation.

         "BONUS" shall mean the bonus payable to an Executive under this Plan
for any Fiscal Year.

         "CEO" shall mean the Chief Executive Officer of the Corporation.

         "CHANGE IN CONTROL" means the occurrence of any of the following:

         (a)      the "Distribution Date" as defined in Section 3 of the Rights
                  Agreement dated as of November 17, 1989 between the
                  Corporation and United States Trust Company of New York as
                  Rights Agent, as amended by Amendment No. 1 thereto dated
                  April 20, 1999, and as the same may have been further amended
                  or

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                  extended to the time in question or in any successor agreement
                  (the "Rights Agreement"); or

         (b)      any event described in Section 11(a)(ii)(B) of the Rights
                  Agreement; or

         (c)      any event described in Section 13 of the Rights Agreement; or

         (d)      the date on which the number of duly elected and qualified
                  directors of the Corporation who were not either elected by
                  the Board of Directors or nominated by the Board of Directors
                  or its Nominating Committee for election by the shareholders
                  shall equal or exceed one-third of the total number of
                  directors of the Corporation as fixed by its by-laws;

provided, however, that no Change in Control shall be deemed to have occurred,
and no rights arising upon a Change in Control as provided in Section 6 shall
exist, to the extent that the Board of Directors so determines by resolution
adopted prior to the Change in Control.

         "CODE" shall mean the Internal Revenue Code of 1986, as amended.

         "COMMITTEE" shall mean the Compensation Committee of the Board of
Directors.

         "CORPORATION" shall mean Pall Corporation.

         "COVERED EXECUTIVE" shall mean, with respect to any Fiscal Year, each
individual who is a "Covered Employee" of the Corporation for such year for the
purpose of section 162(m) of the Code.

         "EMPLOYMENT AGREEMENT" shall mean, with respect to any executive
employee of the Corporation, an employment agreement between the Corporation and
such employee which provides that the employee shall be eligible to receive
annual bonuses under this Plan.

         "EXECUTIVE" shall mean an executive employee of the Corporation with
whom the Corporation has entered into an Employment Agreement.

         "FISCAL YEAR" shall mean the fiscal year of the Corporation ending on
August 3, 2002, and each subsequent fiscal year of the Corporation.

         "MAXIMUM R.O.E. TARGET" shall mean, for any Fiscal Year, the Return on
Equity that must be achieved or exceeded in order for the Performance Percentage
for the year to equal 100%, as determined by the Committee prior to the first
day of such year or within such period of time thereafter as may be permitted
under the regulations issued under section 162(m) of the Code.

         "MINIMUM R.O.E. TARGET" shall mean, for any Fiscal Year, the Return on
Equity that must be exceeded in order for any Bonus to be paid to any Executive
for the year, as determined by the Committee prior to the first day of such year
or within such period of time

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thereafter as may be permitted under the regulations issued under section 162(m)
of the Code.

         "NET EARNINGS" shall mean, for any Fiscal Year, the after-tax
consolidated net earnings of the Corporation and its subsidiaries as certified
by the Corporation's independent accountants for inclusion in the annual report
to shareholders ("Annual Report"), adjusted so as to eliminate the effects of
any decreases in or charges to earnings for (a) the effect of foreign currency
exchange rates, (b) any acquisitions, divestitures, discontinuance of business
operations, restructuring or any other special charges, (c) the cumulative
effect of any accounting changes, and (d) any "extraordinary items" as
determined under generally accepted accounting principles, to the extent such
decreases or charges referred to in clauses (a) through (d) are separately
disclosed in the Corporation's Annual Report for the year.

         "PLAN" shall mean the Pall Corporation Executive Incentive Bonus Plan,
as set forth herein and as amended from time to time.

         "RETURN ON EQUITY" shall mean, for any Fiscal Year, the percentage
determined by dividing the Net Earnings for the year by the Average Equity for
the year.

         "TARGET BONUS PERCENTAGE" shall mean, with respect to any Executive,
the target bonus percentage specified for such Executive in his or her
Employment Agreement.

3.       DETERMINATION OF BONUS AMOUNTS

         For each Fiscal Year falling in whole or in part within an Executive's
Term of Employment, as defined in his or her Employment Agreement, the Executive
shall be entitled to receive a Bonus in an amount determined in accordance with
the provisions of this Section 3, subject, however, to the provisions of Section
4.

         (a) The amount of the Bonus payable to an Executive for each such
Fiscal Year shall be equal to (i) the Target Bonus Percentage of the Executive's
Base Salary for such year, multiplied by (ii) the Performance Percentage for
such year, as determined under (b) below.

         (b) The Performance Percentage for any Fiscal Year shall be determined
in accordance with the following provisions:

                  (i) If the Return on Equity equals or exceeds the Maximum
         R.O.E. Target for the year, the Performance Percentage for the year
         shall be 100%.

                  (ii) If the Return on Equity is less than the Maximum R.O.E.
         Target for the year but exceeds the Minimum R.O.E. Target for the year,
         the Performance Percentage for the year shall be equal to the quotient
         resulting from dividing (A) the excess of the Return on Equity for the
         year over the Minimum R.O.E. Target for the year, by (B) the excess of
         the Maximum R.O.E. Target for the year over the Minimum R.O.E. Target
         for the year.

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                  (iii) If the Return on Equity equals or is less than the
         Minimum R.O.E. Target for the year, the Performance Percentage for the
         year shall be zero, and no Bonus shall be payable under the Plan for
         such year to any Executive.

         (c) If an Executive's Term of Employment commences after the start of a
Fiscal Year, or ends prior to the close of a Fiscal Year, the amount of the
Bonus payable to the Executive for the Fiscal Year in which the Executive's Term
of Employment commences, or for the Fiscal Year in which the Executive's Term of
Employment ends, as determined in accordance with the other applicable
provisions of the Plan, shall be prorated on the basis of the number of days of
such Fiscal Year that fall within the Executive's Term of Employment; provided,
however, that (i) if an Executive's Term of Employment ends within 5 days prior
to the close of a Fiscal Year, there shall be no proration and the Executive
shall be entitled to receive the entire amount of the Bonus payable to the
Executive for such year, as determined in accordance with such other provisions,
and (ii) if the Executive's Term of Employment ends within 5 days following the
start of a Fiscal Year, the Executive shall not be entitled to receive any Bonus
with respect to such Fiscal Year.

4. ADJUSTMENT OF AND LIMITATION ON BONUS AMOUNTS

         The amount of the Bonus otherwise payable to an Executive for any
Fiscal Year in accordance with Section 3 shall be subject to the following
adjustments and limitation:

         (a) The Committee may, in its discretion, reduce the amount of the
Bonus otherwise payable to any Executive in accordance with Section 3, (i) to
reflect any decreases in or charges to earnings that were not taken into account
in determining Net Earnings for the year pursuant to clause (a), (b), (c) or (d)
contained in the definition of such term in Section 2, (ii) to reflect any
credits to earnings for extraordinary items of income or gain that were taken
into account in determining Net Earnings for the year, (iii) to reflect the
Committee's evaluation of the Executive's individual performance, or (iv) to
reflect any other events, circumstances or factors which the Committee believes
to be appropriate in determining the amount of the Bonus to be paid to the
Executive for the year.

         (b) The Committee may, in its discretion, increase the amount of the
Bonus otherwise payable to any Executive who is not a Covered Executive, as
determined under Section 3, to reflect the Committee's evaluation of the
Executive's individual performance, or to reflect such other circumstances or
factors as the Committee believes to be appropriate in determining the amount of
the Bonus to be paid to the Executive for the year. The Committee shall not have
any discretion to increase the amount of the Bonus payable to any Covered
Executive for the year, as determined under Section 3.

         (c) Notwithstanding any other provision herein to the contrary, the
amount of the Bonus otherwise payable to any Executive for any Fiscal Year shall
not exceed the lesser of (i) $1.0 million and (ii) 100% of the Executive's Base
Salary for the Fiscal Year ending August 3, 2002 and 150% of the Executive's
Base Salary for each subsequent Fiscal Year.

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5. PAYMENT OF BONUSES

         The Bonus payable to an Executive for any Fiscal Year shall be paid in
accordance with the following provisions:

         (a) Except as otherwise provided in (b) or (c) below,

                  (i) if the Executive is not a Covered Executive for such year,
         50% of the estimated amount of the Executive's Bonus shall be paid to
         the Executive on such date in September next following the close of
         such year as the Committee in its discretion shall determine (the first
         "Bonus Payment Date"), and the remaining amount of the Executive's
         Bonus shall be paid to the Executive by no later than January 15 next
         following the close of such year;

                  (ii) if the Executive is a Covered Executive for such year,
         50% of the amount of the Executive's Bonus shall be paid to the
         Executive as soon as practicable after the Committee has certified in
         writing that all conditions for the payment of such Bonus to the
         Executive for such year have been satisfied, and the remaining amount
         of the Executive's Bonus shall be paid to the Executive by no later
         than January 15 next following the close of such year;

                  (iii) each amount payable to an Executive under (i) and (ii)
         above, reduced by the amount of all federal, state and local taxes
         required by law to be withheld therefrom, shall be paid to the
         Executive in the form of a single lump sum cash payment.

         (b) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Management Stock Purchase Plan (the "MSPP")
to have any part of the Bonus payable to the Executive for any Fiscal Year paid
in the form of Restricted Units to be credited to the Executive's account under
the MSPP, no cash payments shall be made to the Executive pursuant to (a) above
with respect to the part of the Executive Bonus that is subject to such
election; and the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged upon the
crediting of Restricted Units to the Executive's account under the MSPP in
accordance with the applicable provisions of such Plan.

         (c) To the extent that an Executive has elected under the applicable
provisions of the Pall Corporation Profit-Sharing Plan (the "Profit-Sharing
Plan") to have any part of the Bonus payable to the Executive for any Fiscal
Year reduced, and to have an amount equal to such part of the Executive's Bonus
contributed to the Profit-Sharing Plan as a 401(k) Contribution on the
Executive's behalf, an amount equal to such part of the Executive's Bonus shall
be contributed to the Profit-Sharing Plan on behalf of the Executive; and
thereupon, the obligation of the Corporation under this Plan with respect to
payment of such part of the Executive's Bonus shall be fully discharged.
However, no such contribution shall be made to the extent it would cause any
limitation applicable under the 401(k) Plan to be exceeded.

                                       5
<PAGE>

6. CHANGE IN CONTROL

         Notwithstanding any other provision in the Plan to the contrary (but
subject to the "provided, however" clause contained in the definition of "Change
in Control" in Section 2), upon the occurrence of a Change in Control, the
following provisions shall apply.

         (a) The amount of the Bonus payable to any Executive for the Fiscal
Year in which a Change in Control occurs shall be at least equal to the Target
Bonus Percentage of the Executive's Base Salary for such year or, in the case of
any Executive whose Term of Employment commences after the start of such year or
ends prior to the close of such year, a pro rata portion thereof determined on
the basis of the number of days of such Fiscal Year that fall within the
Executive's Term of Employment.

         (b) Each Executive whose Term of Employment has not ended prior to the
occurrence of a Change in Control shall be entitled to receive a Bonus for each
Contract Year (as defined in the Executive's Employment Agreement) that falls in
whole or in part within the Executive's Term of Employment and that ends after
the Fiscal Year in which the Change in Control occurs. The amount of the Bonus
payable to the Executive for each such Contract Year shall be at least equal to
the Target Bonus Percentage of the Executive's Base Salary for such Contract
Year or, in the case of any Executive whose Term of Employment ends after the
start of such Contract Year but prior to the close of such year, a pro rata
portion thereof determined on the basis of the number of days of such Contract
Year that fall within the Executive's Term of Employment.

         (c) The entire amount of the Bonus payable to an Executive for any
Fiscal Year or Contract Year pursuant to (a) or (b) above, reduced by the amount
of all federal, state and local taxes required to be withheld therefrom, shall
be paid to the Executive in a single cash lump sum as soon as practicable after
the close of such Fiscal Year or Contract Year.

7. RIGHTS OF EXECUTIVES

         An Executive's rights and interests under the Plan shall be subject to
the following provisions:

         (a) An Executive's rights to payments under the Plan shall not be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, attachment, or garnishment by creditors of the Executive.

         (b) Neither the Plan nor any action taken hereunder shall be construed
as giving any Executive any right to be retained in the employment of the
Corporation or any of its subsidiaries.

8. ADMINISTRATION

         The Plan shall be administered by the Committee. A majority of the
members of the Committee shall constitute a quorum. The Committee may act at a
meeting, including a

                                       6
<PAGE>

telephone meeting, by action of a majority of the members present, or without a
meeting by unanimous written consent. In addition to the responsibilities and
powers assigned to the Committee elsewhere in the Plan, the Committee shall have
the authority, in its discretion, to establish from time to time guidelines or
regulations for the administration of the Plan, interpret the Plan, and make all
determinations considered necessary or advisable for the administration of the
Plan.

         The Committee may delegate any ministerial or nondiscretionary function
pertaining to the administration of the Plan to any one or more officers of the
Corporation.

         All decisions, actions or interpretations of the Committee under the
Plan shall be final, conclusive and binding upon all parties. Notwithstanding
the foregoing, any determination made by the Committee after the occurrence of a
Change in Control that denies in whole or in part any claim made by any
individual for benefits under the Plan shall be subject to judicial review,
under a "de novo", rather than a deferential standard.

9. AMENDMENT OR TERMINATION

         The Board of Directors may, with prospective or retroactive effect,
amend, suspend or terminate the Plan or any portion thereof at any time;
provided, however, that (a) no amendment, suspension or termination of the Plan
shall adversely affect the rights of any Executive with respect to any Bonus
that has become payable to the Executive under the Plan, without his or her
written consent, and (b) following a Change in Control, no amendment to Section
6, and no termination of the Plan, shall be effective if such amendment or
termination adversely affects the rights of any Executive under the Plan.

10. SUCCESSOR CORPORATION

         The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to substantially all of the assets and
business of the Corporation. The Corporation agrees that it will make
appropriate provision for the preservation of Executives' rights under the Plan
in any agreement or plan which it may enter into or adopt to effect any such
merger, consolidation, reorganization or transfer of assets.

11. GOVERNING LAW

         The Plan shall be governed by and construed in accordance with the laws
of the State of New York.

12. EFFECTIVE DATE

         The Plan was adopted effective as of July 17, 2001 by the Board of
Directors, acting by the Committee, subject, however, to approval by the
shareholders of the Corporation by a majority of the votes cast in person or by
proxy at the 2001 annual meeting of the

                                       7
<PAGE>

Corporation's shareholders, including any adjournment thereof. The Plan was
approved by shareholders on November 14, 2001 and amended by the Committee on
July 16, 2002 and November 1, 2002 effective for the Fiscal Year beginning
August 4, 2002.

                                       8Exhibit 10.1

    
      

    

    SECURITIES
      PURCHASE AGREEMENT

    

    SECURITIES
      PURCHASE AGREEMENT (this “Agreement”),
      dated
      as of October 10, 2005, between Cenuco, Inc., a corporation organized under
      the
      laws of the State of Delaware (the “Company”),
      and
      each of the purchasers (individually, a “Purchaser”
      and
      collectively the “Purchasers”)
      set
      forth on the execution pages hereof (the “Execution
      Pages”).

    

    W 
      H  E  R  E  A 
S:

    

    A.     The
      Company desires to sell, the Purchasers desire to purchase, upon the terms
      and
      conditions stated in this Agreement, 6,578,947 units (the “Units”),
      each
      Unit consisting of (i) one ten thousandth of a share of the Company’s Series B
      Junior Participating Convertible Preferred Stock, par value $0.001 per share
      (the “Preferred
      Shares”),
      convertible into shares of the Company’s common stock, par value $0.001 per
      share (the “Common
      Stock”),
      and
      (ii) a warrant, in the form attached hereto as Exhibit
      B
      (the
“Warrants”),
      to
      acquire 0.3 shares of Common Stock. The rights, preferences and privileges
      of
      the Preferred Shares, including the terms upon which such Preferred Shares
      are
      convertible into shares of Common Stock, are set forth in the form of
      Certificate of Designations, Preferences and Rights attached hereto as
Exhibit
      A
      (the
“Certificate
      of Designation”).
      The
      shares of Common Stock issuable upon conversion of the Preferred Shares or
      otherwise pursuant to the Certificate of Designation are referred to herein
      as
      the “Conversion
      Shares”
and
      the
      shares of Common Stock issuable upon exercise of or otherwise pursuant to the
      Warrants are referred to herein as the “Warrant
      Shares.”
The
      Preferred Shares, the Warrants, the Conversion Shares and the Warrant Shares
      are
      collectively referred to herein as the “Securities”
and
      each of them may individually be referred to herein as a “Security.”

    

    B.     Contemporaneous
      with the execution and delivery of this Agreement, the parties hereto are
      executing and delivering a Registration Rights Agreement, in the form attached
      hereto as Exhibit
      C
      (the
“Registration
      Rights Agreement”),
      pursuant to which the Company has agreed to provide certain registration rights
      under the Securities Act of 1933, as amended (the “Securities
      Act”)
      and the
      rules and regulations promulgated thereunder, and applicable state securities
      laws.

    

    NOW,
      THEREFORE, the Company and the Purchasers hereby agree as follows:

    

    1.    
PURCHASE
      AND SALE OF UNITS.

    

    (a)     Purchase
      of Units.
      On the
      Closing Date (as defined below), subject to the satisfaction (or waiver) of
      the
      conditions set forth in Section 6 and Section 7 below, the Company shall issue
      and sell to each Purchaser, and each Purchaser shall purchase from the Company,
      such number of Units as is set forth on such Purchaser’s Execution Page attached
      hereto. The purchase price (the “Purchase
      Price”)
      per
      Unit shall be equal to Three Dollars and Eighty Cents ($3.80). Each Purchaser’s
      obligation to purchase Units hereunder is distinct and separate from each other
      Purchaser’s obligation to purchase Units and no Purchaser shall be required to
      purchase hereunder more than the number of Units set forth on such Purchaser’s
      Execution Page hereto notwithstanding any failure by any other Purchaser to
      purchase Units hereunder nor shall any Purchaser have any liability by reason
      of
      any such failure by any other Purchaser.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)     Form
      of Payment.
      On the
      Closing Date, each Purchaser shall pay the aggregate Purchase Price for the
      Units being purchased by such Purchaser on the Closing Date by wire transfer
      to
      the Company, in accordance with the Company’s written wiring instructions,
      against delivery of duly executed certificates representing the Preferred Shares
      and duly executed Warrants being purchased by such Purchaser and the Company
      shall deliver such certificates and Warrants against delivery of such aggregate
      Purchase Price.

    

    (c)     Closing
      Date.
      The
      issuance and sale of the Units to each of the Purchasers pursuant to this
      Agreement (the “Closing”)
      shall
      be at the offices of Wolf, Block, Schorr and Solis-Cohen LLP, 250 Park Avenue,
      New York, New York 10177, at 10:00 a.m., New York City time, on the date that
      the closing occurs in connection with the Preferred Stock Purchase Agreement
      and
      the Debenture Purchase Agreement (as such terms are defined in Section 6 hereof
      provided
      that
      all
      of the conditions to Closing set forth in Section 6 and Section 7 shall have
      been so satisfied or waived (other than those conditions that are intended
      to be
      satisfied at the Closing), or at such other place, time and day as shall be
      agreed upon by the Company and the Purchasers (the “Closing
      Date”).

    

    2.    
PURCHASERS’
      REPRESENTATIONS AND WARRANTIES

    

    Each
      Purchaser severally, but not jointly, represents and warrants to the Company
      as
      follows:

    

    (a)     Purchase
      for Own Account, etc.
      Such
      Purchaser is purchasing the Units for such Purchaser’s own account for
      investment purposes only and not with a present view towards the public sale
      or
      distribution thereof, except pursuant to sales that are exempt from the
      registration requirements of the Securities Act and/or sales registered under
      the Securities Act. Such Purchaser understands that Purchaser must bear the
      economic risk of this investment indefinitely, unless the Securities are
      registered pursuant to the Securities Act and any applicable state securities
      or
      blue sky laws or an exemption from such registration is available, and that
      the
      Company has no present intention of registering the resale of any such
      Securities other than as contemplated by the Registration Rights Agreement.
      Notwithstanding anything in this Section 2(a) to the contrary, by making the
      representations herein, the Purchaser does not agree to hold the Securities
      for
      any minimum or other specific term and reserves the right to dispose of the
      Securities at any time in accordance with or pursuant to a registration
      statement or an exemption from the registration requirements under the
      Securities Act.

    

    (b)     Accredited
      Investor Status.
      Such
      Purchaser is an “Accredited
      Investor”
as
      that
      term is defined in Rule 501(a) of Regulation D as promulgated by the United
      States Securities and Exchange Commission (“SEC”)
      under
      the Securities Act.

    

    (c)     Reliance
      on Exemptions.
      Such
      Purchaser understands that the Units are being offered and sold to such
      Purchaser in reliance upon specific exemptions from the registration
      requirements of United States federal and state securities laws and that the
      Company is relying upon the truth and accuracy of, and such Purchaser’s
      compliance with, the representations, warranties, agreements, acknowledgments
      and understandings of such Purchaser set forth herein in order to determine
      the
      availability of such exemptions and the eligibility of such Purchaser to acquire
      the Securities.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

    (d)     Information.
      Such
      Purchaser and its counsel, if any, have been furnished all materials relating
      to
      the business, finances and operations of the Company and materials relating
      to
      the offer and sale of the Securities that have been specifically requested
      by
      such Purchaser or its counsel. Such Purchaser and its counsel have been afforded
      the opportunity to ask questions of the Company and have received what such
      Purchaser believes to be satisfactory answers to any such inquiries. Neither
      such inquiries nor any other investigation conducted by such Purchaser or its
      counsel or any of its representatives shall modify, amend or affect such
      Purchaser’s right to rely on the Company’s representations and warranties
      contained in Section 3 below. Such Purchaser understands that such Purchaser’s
      investment in the Securities involves a high degree of risk.

    

    (e)     Governmental
      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.

    

    (f)     Transfer
      or Resale.
      Such
      Purchaser understands that (i) except as provided in the Registration Rights
      Agreement, the sale or resale of the Securities have not been and are not being
      registered under the Securities Act or any state securities laws, and the
      Securities may not be transferred unless (a) the resale of the Securities has
      been registered thereunder; or (b) such Purchaser shall have delivered to the
      Company an opinion of counsel (which opinion shall be in form, substance and
      scope customary for opinions of counsel in comparable transactions) to the
      effect that the Securities to be sold or transferred may be sold or transferred
      pursuant to an exemption from such registration; or (c) sold under and in
      compliance with Rule 144 promulgated under the Securities Act (or a successor
      rule) (“Rule
      144”);
      or
      (d) sold or transferred to an affiliate of such Purchaser who agrees to sell
      or
      otherwise transfer the Securities only in accordance with the provisions of
      this
      Section 2(f) and who is an Accredited Investor; and (ii) neither the Company
      nor
      any other person or entity is under any obligation to register such Securities
      under the Securities Act or any state securities laws (other than pursuant
      to
      the Registration Rights Agreement). Notwithstanding the foregoing or anything
      else contained herein to the contrary, the Securities may be pledged as
      collateral in connection with a bona fide margin account or other lending
      arrangement, provided such pledge is consistent with applicable laws, rules
      and
      regulations.

    

    (g)     Legends.
      Such
      Purchaser understands that the certificates for the Preferred Shares, Warrants
      and, until such time as the Conversion Shares and Warrant Shares have been
      registered under the Securities Act (including registration pursuant to Rule
      416
      thereunder) as contemplated by the Registration Rights Agreement or otherwise
      may be sold by such Purchaser under Rule 144, the certificates for the
      Conversion Shares and Warrant Shares may bear a restrictive legend in
      substantially the following form:

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

    The
      securities represented by this certificate have not been registered under the
      Securities Act of 1933, as amended, or the securities laws of any state of
      the
      United States or in any other jurisdiction. The securities represented hereby
      may not be offered, sold or transferred in the absence of an effective
      registration statement for the securities under applicable securities laws
      unless offered, sold or transferred pursuant to an available exemption from
      the
      registration requirements of those laws.

    

    The
      Company agrees that it shall, immediately prior to the Registration Statement
      (as defined in the Registration Rights Agreement) being declared effective,
      deliver to its transfer agent an opinion letter of counsel, opining that at
      any
      time the Registration Statement is effective, the transfer agent shall issue,
      in
      connection with the issuance of the Conversion Shares and Warrant Shares,
      certificates representing such Conversion Shares and Warrant Shares without
      the
      restrictive legend above, provided such Conversion Shares and Warrant Shares
      are
      to be sold pursuant to the prospectus contained in the Registration Statement.
      Upon receipt of such opinion, the Company shall cause the transfer agent to
      confirm, for the benefit of the holders, that no further opinion of counsel
      is
      required at the time of transfer in order to issue such shares without such
      restrictive legend.

    

    The
      legend set forth above shall be removed and the Company shall issue a
      certificate without such legend to the holder of any Security upon which it
      is
      stamped, if, unless otherwise required by state securities laws, (a) the sale
      of
      such Security is registered under the Securities Act (including registration
      pursuant to Rule 416 thereunder) as contemplated by the Registration Rights
      Agreement; (b) such holder provides the Company with an opinion of counsel,
      in
      form, substance and scope customary for opinions of counsel in comparable
      transactions, to the effect that a public sale or transfer of such Security
      may
      be made without registration under the Securities Act; or (c) such holder
      provides the Company with reasonable assurances that such Security can be sold
      under Rule 144. In the event the above legend is removed from any Security
      and
      thereafter the effectiveness of a registration statement covering such Security
      is suspended or the Company determines that a supplement or amendment thereto
      is
      required by applicable securities laws, then upon reasonable advance written
      notice to such Purchaser the Company may require that the above legend be placed
      on any such Security that cannot then be sold pursuant to an effective
      registration statement or under Rule 144 and such Purchaser shall cooperate
      in
      the replacement of such legend. Such legend shall thereafter be removed when
      such Security may again be sold pursuant to an effective registration statement
      or under Rule 144.

    

    (h)     Authorization;
      Enforcement.
      This
      Agreement and the Registration Rights Agreement have been duly and validly
      authorized, executed and delivered on behalf of such Purchaser and are valid
      and
      binding agreements of such Purchaser enforceable against such Purchaser in
      accordance with their terms.

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

    (i)     Residency.
      Such
      Purchaser is a resident of or domiciled in the jurisdiction set forth under
      such
      Purchaser’s name on the Execution Page hereto executed by such
      Purchaser.

    

    (j)     No
      Short Position.
      Neither
      such Purchaser nor any affiliate of such Purchaser has an open short position
      in
      the Common Stock.

    

    3.     REPRESENTATIONS
      AND WARRANTIES OF THE COMPANY.

    

    The
      Company represents and warrants to each Purchaser as follows:

    

    (a)     Organization
      and Qualification.
      The
      Company and each of its subsidiaries is a corporation or limited liability
      company duly organized and existing in good standing under the laws of the
      jurisdiction in which it is organized, and has the requisite corporate or
      limited liability company power to own its properties and to carry on its
      business as now being conducted. The Company and each of its subsidiaries is
      duly qualified as a foreign corporation or foreign limited liability company
      to
      do business and is in good standing in every jurisdiction in which the nature
      of
      the business conducted by it makes such qualification necessary and where the
      failure so to qualify would have a Material Adverse Effect. “Material
      Adverse Effect”
means
      any material adverse effect on (i) the Securities, (ii) the ability of the
      Company to perform its obligations hereunder or under the Certificate of
      Designation, the Warrants or the Registration Rights Agreement or (iii) the
      business, operations, properties or financial condition of the Company and
      its
      subsidiaries, taken as a whole.

    

    (b)     Authorization;
      Enforcement.
      (i) The
      Company has the requisite corporate power and authority to enter into and
      perform its obligations under this Agreement, the Warrants and the Registration
      Rights Agreement, to issue and sell the Units in accordance with the terms
      hereof, to issue the Conversion Shares upon conversion of the Preferred Shares
      in accordance with the terms of the Certificate of Designation and to issue
      the
      Warrant Shares upon exercise of the Warrants in accordance with the terms of
      such Warrants; (ii) the execution, delivery and performance of this Agreement,
      the Warrants and the Registration Rights Agreement by the Company and the
      consummation by it of the transactions contemplated hereby and thereby
      (including, without limitation, the issuance of the Preferred Shares and
      Warrants and the issuance and reservation for issuance of the Conversion Shares
      and Warrant Shares) have been duly authorized by the Company’s Board of
      Directors and no further consent or authorization of the Company, its Board
      of
      Directors, any or committee of the Board of Directors is required, and (iii)
      this Agreement constitutes, and, upon execution and delivery by the Company
      of
      the Warrants and the Registration Rights Agreement, such agreements will
      constitute, valid and binding obligations of the Company enforceable against
      the
      Company in accordance with their terms.

    

    (c)     Stockholder
      Authorization.
      Except
      for the approval of (i) the issuance of the Conversion Shares and Warrant Shares
      as required by Section 713 of the American Stock Exchange Guide and (ii) an
      amendment to the Certificate of Incorporation of the Company increasing the
      number of authorized shares of Common Stock, in each case by a majority of
      the
      votes cast at a duly convened meeting of the stockholders of the Company at
      which a quorum is present, neither the execution, delivery or performance by
      the
      Company of this Agreement, the Warrants or the Registration Rights Agreement
      nor
      the consummation by it of the transactions contemplated hereby or thereby
      (including, without limitation, the issuance of the Preferred Shares or Warrants
      or the issuance or reservation for issuance of the Conversion Shares or Warrant
      Shares) requires any consent or authorization of the Company’s
      stockholders.

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

    (d)     Capitalization.
      The
      capitalization of the Company as of the date hereof, including the authorized
      capital stock, the number of shares issued and outstanding, the number of shares
      issuable and reserved for issuance pursuant to the Company’s stock option plans,
      the number of shares issuable and reserved for issuance pursuant to securities
      (other than the Preferred Shares and Warrants) exercisable or exchangeable
      for,
      or convertible into, any shares of capital stock and the number of shares to
      be
      reserved for issuance upon conversion of the Preferred Shares and exercise
      of
      the Warrants is set forth on Schedule
      3(d).
      All of
      such outstanding shares of capital stock have been, or upon issuance in
      accordance with the terms of any such warrants, options or preferred stock,
      will
      be, validly issued, fully paid and non-assessable. No shares of capital stock
      of
      the Company (including the Preferred Shares, the Conversion Shares and the
      Warrant Shares) are subject to preemptive rights or any other similar rights
      of
      the stockholders of the Company or any liens or encumbrances. Except for the
      Securities and as set forth on Schedule
      3(d),
      as of
      the date of this Agreement, (i) there are no outstanding options, warrants,
      scrip, rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities or rights convertible into or exercisable or
      exchangeable for, any shares of capital stock of the Company or any of its
      subsidiaries, or arrangements by which the Company or any of its subsidiaries
      is
      or may become bound to issue additional shares of capital stock of the Company
      or any of its subsidiaries, nor are any such issuances or arrangements
      contemplated, and (ii) there are no agreements or arrangements under which
      the
      Company or any of its subsidiaries is obligated to register the sale of any
      of
      its or their securities under the Securities Act (except the Registration Rights
      Agreement). Schedule
      3(d)
      sets
      forth all of the Company issued securities or instruments containing
      antidilution or similar provisions that will be triggered by, and all of the
      resulting adjustments that will be made to such securities and instruments
      as a
      result of, the issuance of the Securities in accordance with the terms of this
      Agreement, the Certificate of Designation or the Warrants. The Company has
      furnished to the Purchasers true and correct copies of the Company’s Certificate
      of Incorporation as in effect on the date hereof (“Certificate
      of Incorporation”),
      the
      Company’s By-laws as in effect on the date hereof (the “By-laws”),
      and
      all other instruments and agreements governing securities convertible into
      or
      exercisable or exchangeable for capital stock of the Company. The Certificate
      of
      Designation, in the form attached hereto, will be duly filed prior to Closing
      with the Secretary of State of the State of Delaware and, upon the issuance
      of
      the Preferred Shares in accordance with the terms hereof, each Purchaser shall
      be entitled to the rights set forth therein.

    

    (e)     Issuance
      of Shares.
      The
      Preferred Shares are, or on the Closing Date will be, duly authorized and,
      upon
      issuance in accordance with the terms of this Agreement, will be validly issued,
      fully paid and non-assessable, and free from all taxes, liens, claims and
      encumbrances and will not be subject to preemptive rights, rights of first
      refusal or other similar rights of stockholders of the Company and will not
      impose personal liability on the holders thereof. The Conversion Shares and
      Warrant Shares are duly authorized and reserved for issuance, and, upon
      conversion of the Preferred Shares and exercise of the Warrants in accordance
      with the terms thereof, will be validly issued, fully paid and non-assessable,
      and free from all taxes, liens, claims and encumbrances and will not be subject
      to preemptive rights, rights of first refusal or other similar rights of
      stockholders of the Company and will not impose personal liability upon the
      holder thereof.

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

    (f)     No
      Conflicts.
      The
      execution, delivery and performance of this Agreement, the Warrants and the
      Registration Rights Agreement by the Company, the performance by the Company
      of
      its obligations under the Certificate of Designation, and the consummation
      by
      the Company of the transactions contemplated hereby and thereby (including,
      without limitation, the issuance and reservation for issuance, as applicable,
      of
      the Preferred Shares, Warrants, Conversion Shares and Warrant Shares) will
      not
      (i) result in a violation of the Certificate of Incorporation or By-laws 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, or give to others any rights of
      termination, amendment (including, without limitation, the triggering of any
      anti-dilution provisions), acceleration or cancellation of, any agreement,
      indenture or instrument to which the Company or any of its subsidiaries is
      a
      party, or result in a violation of any law, rule, regulation, order, judgment
      or
      decree (including United States federal and state securities laws and
      regulations and rules or regulations of any self-regulatory organizations to
      which either the Company or its securities are subject) applicable to the
      Company or any of its subsidiaries or by which any property or asset of the
      Company or any of its subsidiaries is bound or affected (except, with respect
      to
      clause (ii), for such conflicts, defaults, terminations, amendments,
      accelerations, cancellations and violations that would not, individually or
      in
      the aggregate, have a Material Adverse Effect). Neither the Company nor any
      of
      its subsidiaries is in violation of its Certificate of Incorporation, By-laws
      or
      other organizational documents and neither the Company nor any of its
      subsidiaries is in default (and no event has occurred that, with notice or
      lapse
      of time or both, would put the Company or any of its subsidiaries in default)
      under, nor has there occurred any event giving others (with notice or lapse
      of
      time or both) any rights of termination, amendment, acceleration or cancellation
      of, any agreement, indenture or instrument to which the Company or any of its
      subsidiaries is a party, except for actual or possible violations, defaults
      or
      rights that would not, individually or in the aggregate, have a Material Adverse
      Effect. The businesses of the Company and its subsidiaries are not being
      conducted, and shall not be conducted so long as a Purchaser owns any of the
      Securities, in violation of any law, ordinance or regulation of any governmental
      entity, except for possible violations the sanctions for which either singly
      or
      in the aggregate would not have a Material Adverse Effect. Except as
      specifically contemplated by this Agreement and the Registration Rights
      Agreement, the Company is not required to obtain any consent, approval,
      authorization or order of, or make any filing or registration with, any court
      or
      governmental agency or any regulatory or self regulatory agency in order for
      it
      to execute, deliver or perform any of its obligations under this Agreement,
      the
      Warrants or the Registration Rights Agreement or to perform its obligations
      under the Certificate of Designation, in each case in accordance with the terms
      hereof or thereof. Except as disclosed in its Current Report on Form 8-K as
      filed with the SEC (the “Form
      8-K”),
      the
      Company is not in violation of the listing requirements of the American Stock
      Exchange (“Amex”).

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

    (g)     SEC
      Documents, Financial Statements.
      Except
      as disclosed in the Form 8-K and except for the need to file an interim Annual
      Report on Form 10-K for the period ended February 28, 2005, if required, since
      January 1, 2004, the Company has timely filed (within applicable extension
      periods) all reports, schedules, forms, statements and other documents required
      to be filed by it with the SEC pursuant to the reporting requirements of the
      Securities Exchange Act of 1934, as amended (the “Exchange
      Act”)
      (all
      of the foregoing filed prior to the date hereof and all exhibits included
      therein and financial statements and schedules thereto and documents
      incorporated by reference therein, being hereinafter referred to herein as
      the
“SEC
      Documents”).
      The
      Company has made available to each Purchaser true and complete copies of the
      SEC
      Documents. As of their respective dates, except as disclosed in the Form 8-K,
      the SEC Documents complied in all material respects with the requirements of
      the
      Exchange Act or the Securities Act, as the case may be, and the rules and
      regulations of the SEC promulgated thereunder applicable to the SEC Documents,
      and none of the SEC Documents, at the time they were filed with the SEC,
      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 light of the circumstances under which they were made, not
      misleading. Except as disclosed in the Form 8-K, none of the statements made
      in
      any such SEC Documents is, or has been, required to be amended or updated under
      applicable law (except for such statements as have been amended or updated
      in
      subsequent filings made prior to the date hereof). As of their respective dates,
      except as disclosed in the Form 8-K, the financial statements of the Company
      included in the SEC Documents complied as to form in all material respects
      with
      applicable accounting requirements and the published rules and regulations
      of
      the SEC applicable with respect thereto. Such financial statements have been
      prepared in accordance with U.S. generally accepted accounting principles
      (“GAAP”),
      consistently applied, during the periods involved (except (i) as may be
      otherwise indicated in such financial statements or the notes thereto, or (ii)
      in the case of unaudited interim statements, to the extent they may not include
      footnotes or may be condensed or summary statements) and fairly present in
      all
      material respects the consolidated financial position of the Company and its
      consolidated subsidiaries as of the dates thereof and the consolidated results
      of their operations and cash flows for the periods then ended (subject, in
      the
      case of unaudited statements, to immaterial year-end audit adjustments). Except
      as set forth in the financial statements of the Company included in the SEC
      Documents filed prior to the date hereof, the Company has no liabilities,
      contingent or otherwise, required to be disclosed in financial statements
      prepared in accordance with GAAP, other than liabilities incurred in the
      ordinary course of business subsequent to the date of such financial statements,
      which liabilities and obligations, individually or in the aggregate, are not
      material to the financial condition or operating results of the
      Company.

    

    (h)     Absence
      of Certain Changes.
      Since
      January 1, 2004, there has been no material adverse change in the business,
      properties, operations, financial condition or results of operations of the
      Company and its subsidiaries, taken as a whole, except as disclosed in the
      SEC
      Documents filed prior to the date hereof.

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

    (i)     Absence
      of Litigation.
      Except
      as disclosed in the SEC Documents filed prior to the date hereof, there is
      no
      action, suit, proceeding, inquiry or investigation before or by any court,
      public board, government agency, self-regulatory organization or body,
      including, without limitation, the SEC or the Amex, pending or, to the knowledge
      of the Company or any of its subsidiaries, threatened against or affecting
      the
      Company, any of its subsidiaries, or any of their respective directors or
      officers in their capacities as such. To the knowledge of the Company, there
      are
      no facts that, if known by a potential claimant or governmental authority,
      could
      give rise to a claim or proceeding which, if asserted or conducted with results
      unfavorable to the Company or any of its subsidiaries, could reasonably be
      expected to have a Material Adverse Effect.

    

    (j)     Intellectual
      Property.
      Each of
      the Company and its subsidiaries owns or is licensed to use all patents, patent
      applications, trademarks, trademark applications, trade names, service marks,
      copyrights, copyright applications, licenses, permits, inventions, discoveries,
      processes, scientific, technical, engineering and marketing data, object and
      source codes, know-how (including trade secrets and other unpatented and/or
      unpatentable proprietary or confidential information, systems or procedures)
      and
      other similar rights and proprietary knowledge (collectively, “Intangibles”)
      necessary for the conduct of its business as now being conducted. To the best
      knowledge of the Company, neither the Company nor any subsidiary of the Company
      infringes or is in conflict with any right of any other person with respect
      to
      any Intangibles. Neither the Company nor any of its subsidiaries has received
      written notice of any pending conflict with or infringement upon such third
      party Intangibles. The termination of the Company’s ownership of, or right to
      use, any single Intangible would not reasonably be expected to result in a
      Material Adverse Effect on the Company. Neither the Company nor any of its
      subsidiaries has entered into any consent agreement, indemnification agreement,
      forbearance to sue or settlement agreement with respect to the validity of
      the
      Company’s or its subsidiaries’ ownership or right to use its Intangibles and, to
      the best knowledge of the Company, there is no reasonable basis for any such
      claim to be successful. The Intangibles are valid and enforceable and no
      registration relating thereto has lapsed, expired or been abandoned or canceled
      or is the subject of cancellation or other adversarial proceedings, and all
      applications therefor are pending and in good standing. The Company and its
      subsidiaries have complied, in all material respects, with their respective
      contractual obligations relating to the protection of the Intangibles used
      pursuant to licenses. To the best knowledge of the Company, no person is
      infringing on or violating the Intangibles owned or used by the Company or
      its
      subsidiaries and no employee of the Company is infringing on or violating the
      Intantibles of any other person. To the knowledge of the Company, none of the
      employees of the Company is in violation of any covenant not to compete that
      restricts the rights of such employee to conduct the activities on behalf of
      the
      Company that such employee presently conducts.

    

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

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (l)     Disclosure.
      All
      information relating to or concerning the Company set forth in this Agreement
      or
      provided to any Purchaser pursuant to Section 2(d) hereof or otherwise in
      connection with the transactions contemplated hereby is true and correct in
      all
      material respects and the Company has not omitted to state any material fact
      necessary in order to make the statements made herein or therein, in light
      of
      the circumstances under which they were made, not misleading. 

    

    (m)     Acknowledgment
      Regarding Purchasers’ Purchase of the Units.
      The
      Company acknowledges and agrees that none of the Purchasers is acting as a
      financial advisor or fiduciary of the Company (or in any similar capacity)
      with
      respect to this Agreement or the transactions contemplated hereby, the
      relationship between the Company and the Purchasers is “arms-length” and any
      statement made by any Purchaser or any of its representatives or agents in
      connection with this Agreement and the transactions contemplated hereby is
      merely incidental to such Purchaser’s purchase of Securities and has not been
      relied upon by the Company, its officers or directors in any way. The Company
      further acknowledges that the Company’s decision to enter into this Agreement
      has been based solely on an independent evaluation by the Company and its
      representatives.

    

    (n)     No
      General Solicitation.
      Neither
      the Company nor any distributor participating on the Company’s behalf in the
      transactions contemplated hereby (if any) nor any person acting for the Company,
      or any such distributor, has conducted any “general solicitation,” as such term
      is defined in Regulation D, with respect to any of the Securities being offered
      hereby.

    

    (o)     No
      Integrated Offering.
      Neither
      the Company, nor any of its affiliates, nor any person acting on its or their
      behalf, has directly or indirectly made any offers or sales of any security
      or
      solicited any offers to buy any security under circumstances that would require
      registration of the Securities being offered hereby under the Securities Act
      or
      cause this offering of Securities to be integrated with any prior offering
      of
      securities of the Company for purposes of the Securities Act or any applicable
      stockholder approval provisions, including, without limitation, Rule 4460(i)
      of
      the NASD or any similar rule.

    

    (p)     No
      Brokers.
      Except
      for the engagement of Stanford Group Company and Hermes Group, the Company
      has
      taken no action which would give rise to any claim by any person for brokerage
      commissions, finder’s fees or similar payments by any Purchaser relating to this
      Agreement or the transactions contemplated hereby.

    

    (q)     Acknowledgment
      Regarding Securities.
      The
      number of Conversion Shares issuable upon conversion of the Preferred Shares
      may
      increase in certain circumstances, including if the bid price of the Common
      Stock declines. The Company’s executive officers have studied and fully
      understand the nature of the Securities being sold hereunder. The Company
      acknowledges that its obligation to issue Conversion Shares upon conversion
      of
      the Preferred Shares in accordance with the Certificate of Designation is
      absolute and unconditional, regardless of the dilution that such issuance may
      have on the ownership interests of other stockholders. Taking the foregoing
      into
      account, the Company’s Board of Directors has determined in its good faith
      business judgment that the issuance of the Preferred Shares and Warrants
      hereunder and the consummation of the other transactions contemplated hereby
      are
      in the best interests of the Company and its stockholders.

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    (r)     Tax
      Status.
      Except
      as set forth in the SEC Documents, the Company and each of its subsidiaries
      has
      made or filed all foreign, U.S. federal, state and local income and all other
      tax returns, reports and declarations required by any jurisdiction to which
      it
      is subject (unless and only to the extent that the Company and each of its
      subsidiaries has set aside on its books provisions reasonably adequate for
      the
      payment of all unpaid and unreported taxes) and has paid all taxes and other
      governmental assessments and charges that are material in amount, shown or
      determined to be due on such returns, reports and declarations, except those
      being contested in good faith and has set aside on its books provisions
      reasonably adequate for the payment of all taxes for periods subsequent to
      the
      periods to which such returns, reports or declarations apply. There are no
      unpaid taxes in any material amount claimed to be due by the taxing authority
      of
      any jurisdiction, and the officers of the Company know of no basis for any
      such
      claim. The Company has not executed a waiver with respect to any statute of
      limitations relating to the assessment or collection of any federal, state
      or
      local tax. 

    

    (s)     Sarbanes-Oxley.
      The
      Company is in compliance with the applicable requirements of the Sarbanes-Oxley
      Act of 2002, as amended, and the rules and regulations thereunder, that are
      currently in effect and is actively taking steps to ensure that it will be
      in
      compliance with other applicable provisions of such act not currently in effect
      at all times after the effectiveness of such provisions except where such
      noncompliance would not have or reasonably be expected to result in a Material
      Adverse Effect or that would be reasonably likely to have a material adverse
      effect on the transactions contemplated hereby.

    

    4.     COVENANTS.

    

    (a)     Commercially
      Reasonable Efforts.
      The
      parties shall use their commercially reasonable efforts timely to satisfy each
      of the conditions described in Section 6 and Section 7 of this
      Agreement.

    

    (b)     Reporting
      Status.
      So long
      as any Purchaser beneficially owns any of the Securities, the Company shall
      timely file (within applicable extension periods) all reports required to be
      filed with the SEC pursuant to the Exchange Act, and the Company shall not
      terminate its status as an issuer required to file reports under the Exchange
      Act even if the Exchange Act or the rules and regulations thereunder would
      permit such termination. In addition, the Company shall use its commercially
      reasonable efforts to take all actions necessary to meet the “registrant
      eligibility” requirements set forth in the general instructions to Form S-3 or
      any successor form thereto, to be eligible to register the resale of its Common
      Stock on a registration statement on Form S-3 under the Securities Act. The
      Company shall use reasonable best efforts to cause all applicable officers
      and
      directors to comply with the beneficial ownership reporting requirements under
      the Exchange Act in a timely manner.

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    (c)     Use
      of
      Proceeds.
      The
      Company shall use the proceeds from the sale of the Preferred Shares and
      Warrants as set forth in Schedule
      4(c).

    

    (d)     Expenses;
      Origination Fee.
      The
      Company has paid to Prencen, LLC (“Prentice
      Capital”)
      Twenty
      Thousand Dollars ($20,000), the receipt of which is acknowledged by Prentice
      Capital, and will pay to Prentice Capital at the Closing, an additional Twenty
      Thousand Dollars ($20,000), in addition to reimbursement for the documented
      expenses reasonably incurred by Prentice Capital and its affiliates and advisors
      in connection with the negotiation, preparation, execution and delivery of
      this
      Agreement and the other agreements to be executed in connection herewith,
      including, without limitation, Prentice Capital’s and its affiliates and
      advisors’ reasonable due diligence expenses. In addition, the Company will pay
      to Prentice Capital at the Closing an origination fee of Three Hundred Twelve
      Thousand Five Hundred Dollars ($312,500). The parties acknowledge and agree
      that
      that Prentice Capital shall be permitted to deduct up to Three Hundred Thirty
      Two Thousand Five Hundred Dollars ($332,500) from the Purchase Price payable
      by
      Prentice Capital hereunder in satisfaction of the obligations of the Company
      pursuant to this Paragraph (d). 

    

    (e)     Financial
      Information.
      The
      Company shall send the following reports to each Purchaser until such Purchaser
      transfers, assigns or sells all of its Securities: (i) within fifteen (15)
      days
      after the filing with the SEC, a copy of its Annual Report on Form 10-K, its
      Quarterly Reports on Form 10-Q, its proxy or information statements and any
      Current Reports on Form 8-K as well as any Form 3, 4 or 5 that is filed with
      respect to the Common Stock; and (ii) within five (5) days after release, copies
      of all press releases issued by the Company or any of its
      subsidiaries.

    

    (f)     Special
      Meeting of Stockholders.
      The
      Company, acting through its Board of Directors, shall, in accordance with
      applicable law: (i) duly call, give notice of, convene and hold a special
      meeting of its stockholders (the “Special
      Meeting”)
      as soon
      as reasonably practicable following the date of this Agreement for the purpose,
      among other things, of considering and taking action upon the transactions
      contemplated by this Agreement; (ii) prepare and file with the SEC a preliminary
      proxy or information statement relating, among other things, to this Agreement
      and use its commercially reasonable efforts to obtain and furnish the
      information required to be included by the SEC in the Proxy Statement (as
      defined below) and to respond promptly to any comments made by the SEC with
      respect to the preliminary proxy or information statement and cause a definitive
      proxy or information statement (the “Proxy
      Statement”)
      to be
      mailed to its stockholders; (iii) subject to the fiduciary duties of the Board
      of Directors of the Company, include in the Proxy Statement the recommendation
      of the Board of Directors that stockholders of the Company vote in favor of
      the
      approval of the transactions contemplated by this Agreement; and (iv) use its
      commercially reasonable efforts to solicit from holders of voting securities
      of
      the Company proxies in favor of the transactions contemplated by this Agreement
      and shall take all other action reasonably necessary or advisable to secure
      the
      approval of stockholders required by the Delaware General Corporation Law and
      the rules of the Amex to effect the transactions contemplated by this
      Agreement.

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    (g)     Reservation
      of Shares.
      The
      Company shall at all times after the Special Meeting have authorized and
      reserved for the purpose of issuance a sufficient number of shares of Common
      Stock to provide for the full conversion of the outstanding Preferred Shares
      and
      issuance of the Conversion Shares in connection therewith, the full exercise
      of
      the Warrants and the issuance of the Warrant Shares in connection therewith
      and
      as otherwise required by the Certificate of Designation and the
      Warrants.

    

    (h)     Listing.
      Promptly following the Special Meeting, the Company shall us its commercially
      reasonable efforts to maintain, so long as any Purchaser (or any of their
      affiliates) own any Securities, the listing of all Conversion Shares and Warrant
      Shares from time to time issuable upon conversion of the Preferred Shares and
      exercise of the Warrants on each national securities exchange or automated
      quotation system on which shares of Common Stock are currently listed. The
      Company will use its commercially reasonable efforts to continue the listing
      and
      trading of its Common Stock on the Amex and will comply in all respects with
      the
      reporting, filing and other obligations under the bylaws or rules of the Amex.
      The Company shall promptly provide to each holder of Preferred Shares and/or
      Warrants copies of any notices it receives regarding the continued eligibility
      of the Common Stock for trading on the Amex or, if applicable, any other
      securities exchange or automated quotation system on which securities of the
      same class or series issued by the Company are then listed or quoted, if
      any.

    

    (i)     No
      Integrated Offerings.
      The
      Company shall not make any offers or sales of any security (other than the
      Securities) under circumstances that would require registration of the
      Securities being offered or sold hereunder under the Securities Act or cause
      this offering of the Securities to be integrated with any other offering of
      securities by the Company for purposes of any stockholder approval provision
      applicable to the Company or its securities.

    

    (j)     Legal
      Compliance.
      The
      Company shall conduct its business and the business of its subsidiaries in
      compliance with all laws, ordinances or regulations of governmental entities
      applicable to such businesses, except where the failure to do so would not
      have
      a Material Adverse Effect.

    

    (k)     Board
      of Directors.
      So long
      as Prentice Capital shall hold any Securities with a fair market value of Five
      Million Dollars ($5,000,000) or more, upon the written request of Prentice
      Capital, subject to the approval of the Board of Directors of the Company,
      a
      designee of Prentice Capital shall be appointed to the Board of Directors of
      the
      Company.

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    5.     TRANSFER
      AGENT INSTRUCTIONS.

    

    (a)     The
      Company shall instruct its transfer agent to issue certificates, registered
      in
      the name of each Purchaser or its nominee, for the Conversion Shares and the
      Warrant Shares in such amounts as specified from time to time by such Purchaser
      to the Company upon conversion of the Preferred Shares or exercise of the
      Warrants, as applicable. To the extent and during the periods provided in
      Sections 2(f) and 2(g) of this Agreement, all such certificates shall bear
      the
      restrictive legend specified in Section 2(g) of this Agreement.

    

    (b)     The
      Company warrants that no instruction other than such instructions referred
      to in
      this Section 5, and stop transfer instructions to give effect to Section 2(f)
      hereof in the case of the transfer of the Conversion Shares or Warrant Shares
      prior to registration of the Conversion Shares and Warrant Shares under the
      Securities Act or without an exemption therefrom, will be given by the Company
      to its transfer agent and that the Securities shall otherwise be freely
      transferable on the books and records of the Company as and to the extent
      provided in this Agreement and the Registration Rights Agreement. Nothing in
      this Section shall affect in any way each Purchaser’s obligations and agreement
      set forth in Section 2(g) hereof to resell the Securities pursuant to an
      effective registration statement or under an exemption from the registration
      requirements of applicable securities law.

    

    (c)     If
      any
      Purchaser provides the Company and the transfer agent with an opinion of
      counsel, which opinion of counsel shall be in form, substance and scope
      customary for opinions of counsel in comparable transactions, to the effect
      that
      the Securities to be sold or transferred may be sold or transferred pursuant
      to
      an exemption from registration, or any Purchaser provides the Company with
      reasonable assurances that such Securities may be sold under Rule 144, the
      Company shall permit the transfer and, in the case of the Conversion Shares
      and
      Warrant Shares, promptly instruct its transfer agent to issue one or more
      certificates in such name and in such denominations as specified by such
      Purchaser.

    

    6.     CONDITIONS
      TO THE COMPANY’S OBLIGATION TO SELL.

    

    The
      obligation of the Company hereunder to issue and sell the Units to each
      Purchaser hereunder is subject to the satisfaction, at or before the Closing,
      of
      each of the following conditions thereto, provided that these conditions are
      for
      the Company’s sole benefit and may be waived by the Company at any time in its
      sole discretion.

    

    (a)     Each
      Purchaser shall have executed such Purchaser’s Execution Page to this Agreement
      and the Registration Rights Agreement and delivered the same to the
      Company.

    

    (b)     At
      the
      Special Meeting, the stockholders of the Company shall have approved an
      amendment to the Certificate of Incorporation (i) increasing the number of
      authorized shares of Common Stock and (ii) the issuance of the Preferred Shares,
      Conversion Shares and the Warrant Shares as contemplated by this
      Agreement.

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

    (c)     The
      Company shall have consummated the transactions described on Exhibit
      D
      attached
      hereto.

    

    (d)     Each
      Purchaser shall have delivered such Purchaser’s Purchase Price for the Units in
      accordance with Section 1(b) above.

    

    (e)     The
      representations and warranties of each Purchaser shall be true and correct
      in
      all material respects as of the date when made and as of the Closing Date as
      though made at that time (except for representations and warranties that speak
      as of a specific date, which representations and warranties shall be true and
      correct in all material respects as of such date), and such Purchaser shall
      have
      performed, satisfied and complied in all material respects with the covenants,
      agreements and conditions required by this Agreement to be performed, satisfied
      or complied with by such Purchaser at or prior to the Closing Date.

    

    (f)     No
      statute, rule, regulation, executive order, decree, ruling or injunction shall
      have been enacted, entered, promulgated or endorsed by any court or governmental
      authority of competent jurisdiction or any self-regulatory organization having
      authority over the matters contemplated hereby which prohibits the consummation
      of any of the transactions contemplated by this Agreement.

    

    7.     CONDITIONS
      TO EACH PURCHASER’S OBLIGATION TO PURCHASE.

    

    The
      obligation of each Purchaser hereunder to purchase the Units to be purchased
      by
      it at the Closing is subject to the satisfaction, at or before the Closing
      Date,
      of each of the following conditions, provided that such conditions are for
      such
      Purchaser’s sole benefit and may be waived by such Purchaser at any time in such
      Purchaser’s sole discretion:

    

    (a)     The
      Company shall have executed this Agreement, the Warrants and the Registration
      Rights Agreement, and delivered executed original copies of the same to such
      Purchaser.

    

    (b)     At
      the
      Special Meeting, the stockholders of the Company shall have approved an
      amendment to the Certificate of Incorporation (i) increasing the number of
      authorized shares of Common Stock and (ii) the issuance of the Conversion Shares
      and the Warrant Shares as contemplated by this Agreement.

    

    (c)     The
      Company shall have consummated the transactions described on Exhibit
      D
      attached
      hereto.

    

    (d)     The
      Certificate of Designation shall have been accepted for filing with the
      Secretary of State of the State of Delaware and a copy thereof certified by
      the
      Secretary of State of Delaware shall have been delivered to such
      Purchaser.

    

    (e)     The
      Company shall have delivered to such Purchaser duly executed certificates and
      Warrant agreements (each in such denominations as such Purchaser shall request)
      representing the Preferred Shares and Warrants being so purchased by such
      Purchaser in accordance with Section 1(b) above.

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    (f)     The
      Company shall have delivered to such Purchaser such documents as such Purchaser
      shall reasonably request including a recent good standing certificate for the
      Company from the State of Delaware, incumbency certificates and an officer’s
      certification as to general corporate authorizations.

    

    (g)     The
      Common Stock shall be listed on the Amex and trading in the Common Stock shall
      not have been suspended by the SEC or the Amex.

    

    (h)     The
      representations and warranties of the Company shall be true and correct in
      all
      material respects as of the date when made and as of the Closing Date as though
      made at that time (except for representations and warranties that speak as
      of a
      specific date, which representations and warranties shall be true and correct
      in
      all material respects as of such date) and the Company shall have performed,
      satisfied and complied in all material respects with the covenants, agreements
      and conditions required by this Agreement to be performed, satisfied or complied
      with by the Company at or prior to the Closing Date. Each Purchaser shall have
      received a certificate, executed by the Chief Executive Officer of the Company
      after reasonable investigation, dated as of the Closing Date to the foregoing
      effect.

    

    (i)     No
      statute, rule, regulation, executive order, decree, ruling, injunction, action
      or proceeding shall have been enacted, entered, promulgated or endorsed by
      any
      court or governmental authority of competent jurisdiction or any self-regulatory
      organization having authority over the matters contemplated hereby which
      questions the validity of, challenges or prohibits the consummation of, any
      of
      the transactions contemplated by this Agreement.

    

    8.     GOVERNING
      LAW; MISCELLANEOUS.

    

    (a)     Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York applicable to contracts made and to be performed in the State
      of New York. The Company and the Purchasers irrevocably consent to the
      jurisdiction of the United States federal courts and the state courts located
      in
      the State of New York in any suit or proceeding based on or arising under this
      Agreement and irrevocably agree that all claims in respect of such suit or
      proceeding may be determined in such courts. 

    

    (b)     Counterparts.
      This
      Agreement may be executed in two or more counterparts, all of which 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.
      This Agreement, once executed by a party, may be delivered to the other parties
      hereto by facsimile transmission of a copy of this Agreement bearing the
      signature of the party so delivering this Agreement. In the event any signature
      is delivered by facsimile transmission, the party using such means of delivery
      shall cause the manually executed Execution Page(s) hereof to be physically
      delivered to the other party within five (5) days of the execution hereof,
      provided that the failure to so deliver any manually executed Execution Page
      shall not affect the validity or enforceability of this
      Agreement.

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

    (c)     Headings.
      The
      headings of this Agreement are for convenience of reference and shall not form
      part of, or affect the interpretation of, this Agreement.

    

    (d)     Severability.
      If any
      provision of this Agreement shall be invalid or unenforceable in any
      jurisdiction, such invalidity or unenforceability shall not affect the validity
      or enforceability of the remainder of this Agreement or the validity or
      enforceability of this Agreement in any other jurisdiction.

    

    (e)     Entire
      Agreement; Amendments.
      This
      Agreement and the instruments referenced herein contain the entire understanding
      of the Purchasers, the Company, their affiliates and persons acting on their
      behalf with respect to the matters covered herein and therein and, except as
      specifically set forth herein or therein, neither the Company nor any Purchaser
      makes any representation, warranty, covenant or undertaking with respect to
      such
      matters. No provision of this Agreement may be waived other than by an
      instrument in writing signed by the party to be charged with enforcement and
      no
      provision of this Agreement may be amended other than by an instrument in
      writing signed by the Company and each Purchaser.

    

    (f)     Notices.
      Any
      notices required or permitted to be given under the terms of this Agreement
      shall be sent by certified or registered mail (return receipt requested) or
      delivered personally, by responsible overnight carrier or by confirmed
      facsimile, and shall be effective five (5) days after being placed in the mail,
      if mailed, or upon receipt or refusal of receipt, if delivered personally or
      by
      responsible overnight carrier or confirmed facsimile, in each case addressed
      to
      a party. The addresses for such communications shall be:

    

    
      	 	
              If
                to the Company:

            

    

    

    
      	 	
              Cenuco,
                Inc.

              
                2000
                  Lenox Drive, Suite 202

                
                  Lawrenceville,
                    New Jersey 08648

                  
                    Telephone:
                      609-219-0930

                    
                      Facsimile:
                        609-219-1238

                      
                        Attn:
                          Joseph A.
                          Falsetti

                      

                    

                  

                

              

            

    

     

    
      	 	
              with
                a copy simultaneously transmitted by like means
                to:

            

    

    

    
      	 	
              Wolf,
                Block, Schorr and Solis-Cohen LLP

              
                250
                  Park Avenue

                
                  New
                    York, New York 10177

                  
                    Telephone:
                      (212) 883-4992

                    
                      Facsimile:
                        (212) 672-1192

                      
                        Attn:
                          Herbert Henryson
                          II

                      

                    

                  

                

              

            

    

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

    If
      to any
      Purchaser, to such address set forth under such Purchaser’s name on the
      Execution Page hereto executed by such Purchaser.

    

    Each
      party shall provide notice to the other parties of any change in
      address.

    

    (f)     Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of the parties and
      their successors and assigns. Except as provided herein or therein, neither
      the
      Company nor any Purchaser shall assign this Agreement or any rights or
      obligations hereunder. 

    

    (g)     Third
      Party Beneficiaries.
      This
      Agreement is intended for the benefit of the parties hereto and their respective
      permitted successors and assigns, and is not for the benefit of, nor may any
      provision hereof be enforced by, any other person.

    

    (h)     Survival.
      The
      representations and warranties of the Company and the agreements and covenants
      set forth in Sections 3, 4, 5 and 8 hereof shall survive the Closing for a
      period of one year. 

    

    (i)     Publicity.
      The
      Company and each Purchaser shall have the right to approve before issuance
      any
      press releases with respect to the transactions contemplated
      hereby.

    

    (j)     Further
      Assurances.
      Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    

    (k)     Termination.
      In the
      event that the Closing shall not have occurred on or before March 31, 2006,
      unless the parties agree otherwise, this Agreement shall terminate at the close
      of business on such date. Notwithstanding any termination of this Agreement,
      any
      party not in breach of this Agreement shall preserve all rights and remedies
      it
      may have against another party hereto for a breach of this Agreement prior
      to or
      relating to the termination hereof.

    

    (l)     Joint
      Participation in Drafting.
      Each
      party to this Agreement has participated in the negotiation and drafting of
      this
      Agreement, the Certificate of Designation, the Warrants and the Registration
      Rights Agreement. As such, the language used herein and therein shall be deemed
      to be the language chosen by the parties hereto to express their mutual intent,
      and no rule of strict construction will be applied against any party to this
      Agreement.

    

    (m)     Additional
      Acknowledgement.
      Each
      Purchaser acknowledges that has independently evaluated the merits of the
      transactions contemplated by this Agreement, the Certificate of Designation,
      the
      Registration Rights Agreement and the Warrants, that it has independently
      determined to enter into the transactions contemplated hereby and thereby,
      that
      it is not relying on any advice from or evaluation by any other Purchaser,
      and
      that it is not acting in concert with any other Purchaser in making its purchase
      of securities hereunder. The Purchasers and, to its knowledge, the Company
      agree
      that the Purchasers have not taken any actions that would deem such Purchasers
      to be members of a “group” for purposes of Section 13(d) of the Exchange
      Act.

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

     

    
      
        
        

      

      
        -18-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned Purchaser and the Company have caused this
      Agreement to be duly executed as of the date first above written.

     

    
      
        	 	 	 	 CENUCO,
                INC.	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	 	 	 	
                By:

              	
                 

              	 
	 	 	 	 	
                Name:

              	 
	 	 	 	 	
                Title:

              	 
	
                PURCHASER:

              	 	 	 	 
	 	 	 	 	 
	
                PRENCEN,
                  LLC

              	 	 	 	 
	 	 	 	 	 	 
	
                By:

              	 	 	 	 	 
	 	
                Name:

              	 	 	 	 
	 	
                Title:

              	 	 	 	 

      

    

    

    RESIDENCE:
      

    

    ADDRESS:

    

    with
      copies of all notices to:

    

    
 

    AGGREGATE
      SUBSCRIPTION AMOUNT

    

    Number
      of
      Units: 6,578,947

    Purchase
      Price ($3.80 per Unit): $25,000,000

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