Document:

exh101.htm

    
      	 
      	
              Execution
      Version

            

    

    

     

    SECOND AMENDMENT TO CREDIT
AGREEMENT

     

    THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is made as of the 15th
day of January, 2009, by and among COMPX INTERNATIONAL INC. (the “Borrower”),
COMPX SECURITY PRODUCTS INC., COMPX PRECISION SLIDES INC., COMPX MARINE INC.,
CUSTOM MARINE INC. (f/k/a CUSTOM MARINE ACQUISITION, INC.), LIVORSI MARINE,
INC., WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia”), as Administrative Agent
(in such capacity, the “Administrative Agent”) and a Lender, COMPASS BANK and
COMERICA BANK (collectively with Wachovia referred to herein as the
“Lenders”).

     

    R E C I T A L
S:

     

    The
Borrower, the Administrative Agent and the Lenders have entered into a certain
Credit Agreement dated as of December 23, 2005, as amended by the First
Amendment thereto dated as of October 16, 2007 (as so amended, the “Credit
Agreement”).  Capitalized terms used in this Amendment that are not
otherwise defined in this Amendment shall have the respective meanings assigned
to them in the Credit Agreement.  In connection with the Credit
Agreement, the Subsidiary Guarantors have executed the Subsidiary Guaranty
Agreement in favor of the Administrative Agent, for the ratable benefit of the
Administrative Agent and the Lenders.

     

    The
Borrower and the Subsidiary Guarantors have requested that the Administrative
Agent and the Lenders extend the term of the Credit Agreement, and, subject to
the terms and conditions in this Amendment and in the Credit Agreement, as
amended hereby, the Administrative Agent and the Lenders have agreed to such
extension.

     

    In
connection with the extension of the term of the Credit Agreement, the Lenders,
the Administrative Agent, the Subsidiary Guarantors and the Borrower desire to
amend the Credit Agreement upon the terms and conditions hereinafter set
forth.

     

    NOW,
THEREFORE, in consideration of these Recitals and the mutual promises contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, the Subsidiary
Guarantors, the Administrative Agent and the Lenders, intending to be legally
bound hereby, agree as follows:

     

    SECTION
1.  Recitals.  The
Recitals are incorporated herein by reference and shall be deemed to be a part
of this Amendment.

     

    SECTION
2.  Amendments.  The
Credit Agreement is hereby amended as set forth in this Section
2.

     

    (a)           Amendments to Section
1.1.  Section 1.1 of the Credit Agreement is amended as
follows:

     

    (1)           By
amending and restating the definition of “Base Rate” set forth therein to read
in its entirety as follows:

     

    “ “Base
Rate” means, at any time, the highest of (a) the Prime Rate, (b) the Federal
Funds Rate plus 1/2 of 1% and (c) the one-month LIBOR Rate plus
3.25%.  Each change in the Base Rate shall take effect simultaneously
(x) in the case of clauses (a) and (b), with the corresponding change or changes
in the Prime Rate or  the Federal Funds Rate or (y) in the case of
clause (c), on the first day of each calendar month, and if such day is not a
Business Day (including for purposes of this definition, a Business Day
described in clause (b) of the definition of Business Day), then on the
immediately preceding Business Day.”

     

    (2)           By
deleting the definition of “Calculation Date” set forth therein;
and

     

    (3)           By
amending and restating the definition of “Consolidated Net Worth” set forth
therein to read in its entirety as follows:

     

    “ “Consolidated Net
Worth”  means, with respect to the Borrower and its
Subsidiaries, on any date of determination, the total stockholders’ equity
(including capital stock, additional paid-in capital and retained earnings after
deducting the treasury stock) of the Borrower and its Subsidiaries appearing on
a Consolidated balance sheet of the Borrower and its Subsidiaries prepared in
accordance with GAAP (excluding on a cumulative basis any adjustments for
foreign currency translation).”

     

    (4)           By
inserting the following new definition in appropriate alphabetical order to read
in its entirety as follows:

     

     “
“Initial Extension
Date”  means January 15, 2009.”

     

    (b)           Amendment to Section
2.8.  Section 2.8 of the Credit Agreement is amended and
restated to read in its entirety as follows:

    

    “SECTION
2.8  Termination of Credit
Facility.  The Credit Facility shall terminate on the earliest
of (a) January 15, 2012, (b) the date of termination by the Borrower pursuant to
Section 2.7 or (c) the date of termination by the Administrative Agent on behalf
of the Lenders pursuant to Section 11.2(a).”

    

    (c)           Amendment to Section
4.1.  Clause (c) of Section 4.1 of the Credit Agreement is
amended and restated to read in its entirety as follows:

    

    “(c)
“Applicable
Margin” shall mean:  (i) in the case of each LIBOR Rate Loan,
3.25% and (ii) in the case of each Base Rate Loan, 1.00%.”

    

    (d)           Amendment to Section
4.3.  Clause (a) of Section 4.3 of the Credit Agreement is
amended and restated to read in its entirety as follows:

    

    “(a)           Commitment
Fee.  Commencing on the Closing Date, the Borrower shall pay to
the Administrative Agent, for the account of the Lenders, a non-refundable
commitment fee at a rate per annum equal to 0.50% on the average daily unused
portion of the Aggregate Commitment; provided that the amount of outstanding
Swingline Loans and Alternative Currency Loans shall not be considered usage of
the Revolving Credit Commitment for the purpose of calculating such commitment
fee with regard to any Lender other than the Swingline Lender (as to outstanding
Swingline Loans) and the Alternative Currency Lender (as to outstanding
Alternative Currency Loans).  The commitment fee shall be payable in
arrears on the last Business Day of each calendar quarter during the term of
this Agreement commencing March 31, 2009, and on the Revolving Credit
Termination Date.  Such commitment fee shall be distributed by the
Administrative Agent to the Lenders pro rata in accordance with the Lenders’
respective Commitment Percentages.”

    

    (e)           Amendment to Section
9.2.  Section 9.2 of the Credit Agreement is amended and
restated to read in its entirety as follows:

     

    “SECTION
9.2  Consolidated Net
Worth.  Permit, at any time, Consolidated Net Worth to be less
than $77,000,000.”

    

    (f)           Amendments to Section
10.3.  Section 10.3 of the Credit Agreement is amended as
follows:

     

    (1)           by
amending clause (c) of such Section to (A) insert the word “and” at the end of
subsection (x) therein and (B) insert a new subsection (xi) at the end of such
clause (c) to read in its entirety as follows:

    

    “(xi)
without the prior written consent of the Required Lenders, the Costs of
Acquisition of the Permitted Acquisition (regardless of the form of
consideration) together with the aggregate Costs of Acquisition of all other
Permitted Acquisitions pursuant to this Section 10.3(c) shall not exceed
$20,000,000 during the period from and including the Initial Extension Date to
the termination of this Credit Facility; provided that, for
purposes of this subsection (xi), the Required Lenders shall in no event consist
of fewer than two Lenders;”

    

    (2)           by
amending subsection (ii) of clause (d) of such Section to replace the text
“during the term of this Agreement” appearing therein with the text “during the
period from and including the Initial Extension Date to the termination of this
Credit Facility”; and

     

    (3)           by
deleting clause (h) of such Section in its entirety, adding the word “and”
immediately after the semicolon in clause (f) of such Section and replacing the
text “; and” at the end of clause (g) of such Section with a
period.

     

    (g)           Amendment to Section
10.5.  Section 10.5 of the Credit Agreement is amended by
replacing the text “during the term of this Agreement” appearing in clause (h)
of such Section with the text “during the period from and including the Initial
Extension Date to the termination of this Credit Facility”.

     

    (h)           Amendment to Section
10.6.  Clause (e) of Section 10.6 of the Credit Agreement is
amended and restated to read in its entirety as follows:

     

    “(e) in
addition to transactions permitted under subsection (c) above, the Borrower may
pay cash dividends on its capital stock, purchase, redeem, retire or otherwise
acquire, directly or indirectly, shares of its capital stock (including
purchases of treasury stock), or make distributions of cash, property or assets
among its shareholders in an aggregate amount not to exceed, during the period
from and including the Initial Extension Date to the termination of this Credit
Facility, the sum of (i) $20,000,000 plus (ii) an amount
equal to fifty percent (50%) of aggregate Net Income of the Borrower and its
Subsidiaries since September 30, 2008.”

     

    (i)           Amendment to Section
11.1.  Clause (d) of Section 11.1 of the Credit Agreement is
amended by deleting the text “(during which time the Applicable Margin shall be
based on Pricing Level I)” appearing therein.

     

    SECTION
3.  Conditions to
Effectiveness.  The effectiveness of this Amendment and the
obligations of the Lenders hereunder are subject to the following conditions,
unless the Required Lenders waive such conditions:

     

    (a) receipt
by the Administrative Agent from each of the parties hereto of a duly executed
counterpart of this Amendment signed by such party;

     

    (b) receipt
by the Administrative Agent of all documents which the Administrative Agent may
reasonably request;

     

    (c) the fact
that the representations and warranties of the Borrower and Subsidiary
Guarantors contained in Section 5 of this Amendment shall be true on and as of
the date hereof except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties were true on and as of such earlier date; and

     

    (d) all other
documents and legal matters in connection with the transactions contemplated by
this Amendment shall be reasonably satisfactory in form and substance to the
Administrative Agent and its counsel.

     

    SECTION
4.  No Other
Amendment.  Except for the amendments set forth above, the text
of the Credit Agreement shall remain unchanged and in full force and
effect.  On and after the Second Amendment Effective Date (as defined
in Section 7 of this Agreement), all references to the Credit Agreement in each
of the Loan Documents shall hereafter mean the Credit Agreement as amended by
this Amendment.  This Amendment is not intended to effect, nor shall
it be construed as, a novation.  The Credit Agreement and this
Amendment shall be construed together as a single agreement.  This
amendment shall constitute a Loan Document under the terms of the Credit
Agreement.  Nothing herein contained shall waive, annul, vary or
affect any provision, condition, covenant or agreement contained in the Credit
Agreement, except as herein amended, nor affect nor impair any rights, powers or
remedies under the Credit Agreement as hereby amended.  The Lenders
and the Administrative Agent do hereby reserve all of their rights and remedies
against all parties who may be or may hereafter become secondarily liable for
the repayment of the Notes.  The Borrower and Subsidiary Guarantors
promise and agree to perform all of the requirements, conditions, agreements and
obligations under the terms of the Credit Agreement, as heretofore and hereby
amended, the Credit Agreement, as amended, and the other Loan Documents being
hereby ratified and affirmed.  The Borrower and Subsidiary Guarantors
hereby expressly agree that the Credit Agreement, as amended, and the other Loan
Documents are in full force and effect.

     

    SECTION
5.  Representations and
Warranties.  The Borrower and Subsidiary Guarantors hereby
represent and warrant to each of the Lenders as follows:

     

    (a) No
Default or Event of Default under the Credit Agreement or any other Loan
Document has occurred and is continuing unwaived by the Lenders on the date
hereof.

     

    (b) The
Borrower and Subsidiary Guarantors have the power and authority to enter into
this Amendment and to do all acts and things as are required or contemplated
hereunder to be done, observed and performed by them.

     

    (c) This
Amendment has been duly authorized, validly executed and delivered by one or
more authorized officers of the Borrower and Subsidiary Guarantors and
constitutes the legal, valid and binding obligations of the Borrower and
Subsidiary Guarantors enforceable against them in accordance with its terms,
provided that such enforceability is subject to general principles of
equity.

     

    (d) The
execution and delivery of this Amendment and the performance by the Borrower and
Subsidiary Guarantors hereunder does not and will not, as a condition to such
execution, delivery and performance, require the consent or approval of any
regulatory authority or governmental authority or agency having jurisdiction
over the Borrower, or any Subsidiary Guarantor, nor be in contravention of or in
conflict with the articles of incorporation, bylaws or other organizational
documents of the Borrower, or any Subsidiary Guarantor or the provision of any
statute, or any judgment, order or indenture, instrument, agreement or
undertaking, to which the Borrower, or any Subsidiary Guarantor is party or by
which the assets or properties of the Borrower, and Subsidiary Guarantors are or
may become bound.

     

    (e) The
Collateral Agreement continues to create a valid security interest in, and Lien
upon, the Collateral, in favor of the Administrative Agent, for the benefit of
the Lenders, which security interests and Liens are perfected in accordance with
the terms of the Collateral Agreement and prior to all Liens other than Liens
permitted under Section 10.2 of the Credit Agreement.

     

    SECTION
6.  Counterparts; Governing
Law.  This Amendment may be executed in multiple counterparts,
each of which shall be deemed to be an original and all of which, taken
together, shall constitute one and the same agreement.  This Amendment
shall be construed in accordance with and governed by the laws of the State of
North Carolina.

     

    SECTION
7.  Effective
Date.  This Amendment shall be effective as of January 15, 2009
(such date, the “Second Amendment Effective Date”).

     

    SECTION
8.  Expenses.  The
Borrower and Subsidiary Guarantors agree to pay all reasonable costs and
expenses of the Administrative Agent in connection with the preparation,
execution and delivery of this Amendment, including without limitation the
reasonable fees and expenses of the Administrative Agent’s legal
counsel.

     

    SECTION
9.  Further
Assurances.  The Loan Parties agree to promptly take such
action, upon the request of the Administrative Agent, as is necessary to carry
out the intent of this Amendment.

     

    SECTION
10.  Consent
by Subsidiary Guarantors.  The Subsidiary Guarantors consent to
the foregoing amendments.  The Subsidiary Guarantors promise and agree
to perform all of the requirements, conditions, agreements and obligations under
the terms of the Subsidiary Guaranty Agreement, said Subsidiary Guaranty
Agreement being hereby ratified and affirmed in all respects.  The
Subsidiary Guarantors hereby expressly agree that the Subsidiary Guaranty
Agreement is in full force and effect.

     

    SECTION
11.  Amendment and Extension
Fee.  The Borrower and Subsidiary Guarantors shall pay to the
Administrative Agent for the account of each Lender an amendment and extension
fee in an amount equal to 0.10% of the Aggregate Commitment, which amendment and
extension fee shall be fully earned and due and payable on the date of this
Amendment.

     

    SECTION
12.  Severability.  Any
provision of this Amendment that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other
jurisdiction.

     

    SECTION
13.  Waiver
of Claims or Defenses.  The Borrower and Subsidiary Guarantors
represent that none of them has any set-offs, defenses, recoupments, offsets,
counterclaims or other causes of action against the Administrative Agent or the
Lenders relating to the Loan Documents and the indebtedness evidenced and
secured thereby and agree that, if any such set-off, defense, counterclaim,
recoupment or offset otherwise exists on the date of this Amendment, each such
defense, counterclaim, recoupment, offset or cause of action is hereby waived
and released forever.

     

    SECTION
14.  Release of Claims.  For and in consideration of the
obligations set forth herein and intending to be legally bound hereby, the
Borrower and Subsidiary Guarantors do remise, release and forever discharge the
Administrative Agent and the Lenders, and their respective successors and
assigns, of and from and all manner of actions, causes of actions, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims, and demands of whatsoever nature, in
law, in equity or in admiralty, direct or indirect, known or unknown, matured or
not matured, including for contribution and/or indemnity, that the Borrower or
any Subsidiary Guarantor ever had or now has, including, without limitation,
those with respect to any and all matters alleged or which could have been
alleged, with respect to the Loan Documents or the making or administration of
the Loans up to and including the date of this Amendment.  The general
release hereby entered into and executed by Borrower and Subsidiary Guarantors
is intended by Borrower and Subsidiary Guarantors to be final, complete and
total as to all matters that have arisen or occurred up to and including the
date of this Amendment.

     

    

     

    [Remainder
of this page intentionally left blank]

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

     

    

      IN
WITNESS WHEREOF, the parties hereto have executed and delivered, or have caused
their respective duly authorized officers or representatives to execute and
deliver, this Amendment as of the day and year first above written.

       

      
        

        [CORPORATE
SEAL]                                                                                  COMPX
INTERNATIONAL INC.

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    

            

          

        

        

        

        [CORPORATE
SEAL]                                                                                  COMPX
SECURITY PRODUCTS INC.

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    

            

          

        

        

        [CORPORATE
SEAL]                                                                                  COMPX
PRECISION SLIDES INC.

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:       Darryl R. Halbert

                    
	 
      	
                      Title:         Chief Financial Officer

                    

            

          

        

        

        [CORPORATE
SEAL]                                                                                 
COMPX MARINE INC.

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    

            

          

        

        

        [CORPORATE
SEAL]                                                                                 
CUSTOM MARINE INC.

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    

            

          

        

        

        [CORPORATE
SEAL]                                                                                 
LIVORSI MARINE, INC.

        

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Darryl R.
      Halbert (SEAL)

                    
	 
      	
                      Name:      Darryl R. Halbert

                    
	 
      	
                      Title:        Chief Financial Officer

                    

            

          

        

        

        
          
            
              Signature
page to Second Amendment

              

               

            

             

          

          
             

            
              

            

          

          
             

          

        

        WACHOVIA BANK, NATIONAL
ASSOCIATION,

        as Administrative Agent and as a
Lender

        

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Thomas F.
      Snider                                                                 

                    
	 
      	
                      Name:      Thomas F. Snider

                    
	 
      	
                      Title:        Senior Vice President

                    

            

          

        

        

        

        [Signature
pages continued on the following page]

        
          
            
              

               

            

             

          

          
             

            
              

            

          

          
             

          

        

        

        COMPASS BANK,

        as Lender

        

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Key
      Coker                                                                 

                    
	 
      	
                      Name:      Key Coker

                    
	 
      	
                      Title:        Executive Vice President

                    

            

          

        

        

        

        [Signature
pages continued on the following page]

        

        
          
            
               

            

             

          

          
             

            
              

            

          

          
             

          

        

        

        COMERICA BANK,

        as Lender

        

        

        
          
            
              	 
      	 
      
	 
      	
                      By:            /s/Gerald R. Finney,
      Jr.                                                                 

                    
	 
      	
                      Name:      Gerald R. Finney, Jr.

                    
	 
      	
                      Title:        Vice President

                    

            

          

        

        

        

        [Remainder
of this page intentionally left blank]securitiespurchaseagreement.htm

    
      

      

    

    

      EXHIBIT
10.1

       

      SECURITIES
PURCHASE AGREEMENT

       

      This
Securities Purchase Agreement (this "Agreement") is dated as of
January 12, 2009, among DOR BioPharma, Inc., a Delaware corporation (the "Company"), and the investors
identified on the signature pages hereto (each, an "Investor" and collectively,
the "Investors").

       

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

       

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

       

      ARTICLE
I.

       

      DEFINITIONS

       

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

       

      "Action" means any action,
suit, inquiry, notice of violation, proceeding (including any partial proceeding
such as a deposition) or investigation pending or threatened in writing against
or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency,
regulatory authority (federal, state, county, local or foreign), stock market,
stock exchange or trading facility.

       

      "Affiliate" means any Person
that, directly or indirectly through one or more intermediaries, controls or is
controlled by or is under common control with a Person, as such terms are used
in and construed under Rule 144.

       

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

       

      "Closing" means the closing of
the purchase and sale of the Securities pursuant to Article II.

       

      "Closing Date" means the
Business Day immediately following the date on which all the conditions set
forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the
parties may agree.

       

      "Commission" means the
Securities and Exchange Commission.

       

      "Common Stock" means the
common stock of the Company, par value $.001 per share, and any securities into
which such common stock may hereafter be reclassified.

       

      "Company Counsel" means
Edwards Angell Palmer & Dodge LLP.

       

      "Delaware Court" has the
meaning set forth in Section 6.8 hereof.

       

      "Disclosure Materials" has the
meaning set forth in Section 3.1(h) hereof.

       

      "Discussion Time" has the
meaning set forth in Section 3.2(g) hereof.

       

      "Effective Date" means the
date that the Registration Statement required by Section 2(a) of the
Registration Rights Agreement is first declared effective by the
Commission.

       

      "Exchange Act" means the
Securities Exchange Act of 1934, as amended.

       

      "GAAP" has the meaning set
forth in Section 3.1(h) hereof.

       

      "Intellectual Property Rights"
has the meaning set forth in Section 3.1(o) hereof.

       

      "Investment Amount" means,
with respect to each Investor, the investment amount indicated below the
Investor's name on the signature page of this Agreement.

       

      "Investor Party" has the
meaning set forth in Section 4.5 hereof.

       

      "Investors" shall mean the
parties listed on the signature pages attached hereto.

       

      "Lien" means any lien, charge,
encumbrance, security interest, right of first refusal or other restrictions of
any kind.

       

      "Losses" shall have the
meaning set forth in Section 4.5 hereof.

       

      "Material Adverse Effect" has
the meaning set forth in Section 3.1(b) hereof.

       

      "Material Permits" has the
meaning set forth in Section 3.1(m) hereof.

       

      "Per Unit Purchase Price"
equals $0.114 per share.

       

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

       

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

       

      "Registration Statement" means
a registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Investors of the
Shares.

       

      "Registration Rights
Agreement" means the Registration Rights Agreement, dated as of the date
of this Agreement, among the Company and the Investors, in the form of Exhibit A
hereto.

       

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

       

      “Securities” means the Shares
and warrants to purchase Common Stock at a purchase price of $0.14 per
share.

       

      "Securities Act" means the
Securities Act of 1933, as amended.

       

      "SEC Reports" has the meaning
set forth in Section 3.1(h) hereof.

       

      "Shares" means the shares of
Common Stock issued or issuable to the Investors pursuant to this
Agreement.

       

      "Short Sales" means, without
limitation, all "short sales" as defined in Rule 3b-3 of the Exchange
Act.

       

      "Subsidiary" means any
"significant subsidiary" as defined in Rule 1-02(w) of the Regulation S-X
promulgated by the Commission under the Exchange Act.

       

      "Trading Day" means (i) a day
on which the Common Stock is traded in the over-the-counter market, as reported
by the OTC Bulletin Board, or (ii) if the Common Stock is not quoted on the OTC
Bulletin Board, a day on which the Common Stock is quoted in the
over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions
of reporting prices); provided, that in the event that the Common Stock is not
listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall
mean a Business Day.

       

      "Trading Market" means the OTC
Bulletin Board on which the Common Stock is listed or quoted for trading on the
date in question.

       

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

       

      

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

       

      ARTICLE
II.

       

      PURCHASE
AND SALE

       

      2.1 Closing.  Subject
to the terms and conditions set forth in this Agreement, at the Closing the
Company shall issue and sell to the Investors, and each Investor shall,
severally and not jointly, purchase from the Company, the Shares representing
each Investor’s Investment Amount.  The Closing shall take place at
the offices of Edwards Angell Palmer & Dodge LLP, 750 Lexington Avenue, New
York, New York 10022 on the Closing Date or at such other location or time
as the parties may agree.

       

      2.2 Closing
Deliveries.  (a)  At the Closing, the Company shall
deliver or cause to be delivered to the Investors the following (the “Company
Deliverables”):

       

      (i) a stock
certificate evidencing a number of Shares equal to each Investor’s Investment
Amount divided by the Per Unit Purchase Price, registered in the name of the
Investor; and

       

      (ii) this
Agreement and the Registration Rights Agreement, duly executed by the
Company.

       

      (iii) The legal
opinion of Company Counsel, in agreed form, addressed to the
Investors.

       

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

       

      (i) its
Investment Amount, in United States dollars and in immediately available funds,
by wire transfer to an account designated in writing by the Company for such
purpose; and

       

      (ii) this
Agreement and the Registration Rights Agreement, duly executed by the
Investors.

       

      ARTICLE
III.

       

      REPRESENTATIONS
AND WARRANTIES

       

      3.1 Representations and
Warranties of the Company.  The Company hereby makes the
following representations and warranties to the Investors:

       

      (a) Subsidiaries.  The
Company has no direct or indirect Subsidiaries other than as specified in the
SEC Reports.  The Company owns, directly or indirectly, all of the
capital stock of each Subsidiary free and clear of any and all Liens, other than
restrictions on transfer under applicable securities laws, and all the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar
rights.

       

      (b) Organization and
Qualification.  The Company and its "Subsidiaries" (which for
purposes of this Agreement means any entity in which the Company, directly or
indirectly, owns 50% or more of the voting stock or capital stock or other
similar equity interests) are corporations duly organized and validly existing
in good standing under the laws of the jurisdiction in which they are
incorporated, and have the requisite corporate power and authority to own their
properties and to carry on their business as now being
conducted.  Each of the Company and its Subsidiaries is duly qualified
as a foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership of property or the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing could not reasonably be
expected to have a Material Adverse Effect.  As used in this
Agreement, "Material Adverse
Effect" means any material adverse effect on any of: (i) the business,
properties, assets, operations, results of operations or financial condition of
the Company and its Subsidiaries, if any, taken as a whole, or (ii) the
authority or ability of the Company to perform its obligations under the
Transaction Documents (as defined in Section 3.1 (b) hereof).  The
Company has no Subsidiaries except as set forth on Schedule 3.1
(b).

       

      (c) Authorization;
Enforcement.  The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its obligations
thereunder.  The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company in
connection therewith other than the filings referred to in Section 3.1(e) hereof
and required pursuant to Section 4.5 hereof.  Each Transaction
Document has been (or upon delivery will have been) duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

       

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

       

      (e) Filings, Consents and
Approvals.  The Company is not required to obtain any consent,
waiver, authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) the filing with the Commission of one or more Registration Statements in
accordance with the requirements Registration Rights Agreement,
(ii) filings required by state securities laws, and the timely filing of a
Notice of Sale of Securities on Form D with the Commission, (iii) the filings
required in accordance with Section 4.4, and (iv) those that have been made or
obtained prior to the date of this Agreement.

       

      (f) Issuance of the
Securities.  The Securities have been duly authorized and, when
issued and paid for in accordance with the Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of all Liens,
other than restrictions on transfer under applicable securities
laws.  The Company has reserved from its duly authorized capital stock
the shares of Common Stock issuable pursuant to this Agreement.

       

      (g) Capitalization.  The
authorized capital stock of the Company consists of: 250,000,000 shares of
Common Stock, of which as of the date hereof, 118,641,953shares are issued
and outstanding, 16,370,039 shares are reserved for issuance pursuant to
the Company's stock option plans of which only approximately 3,597,331 shares
remain available for future grants and 20,200,149 shares are issuable and
reserved for issuance pursuant to securities (other than stock options issued
pursuant to the Company's stock option plans) exercisable or exchangeable for,
or convertible into, shares of Common Stock and (ii) 4,600,000 shares of
Preferred Stock, $0.001 par value, of which as of the date hereof no shares
are issued or outstanding, 200,000 shares of Series B Convertible Preferred
Stock, $0.05 par value, of which as of the date hereof no shares are
issued or outstanding, and 200,000 of Series C Convertible Preferred
Stock, $0.05 par value, of which as of the date hereof, no shares are
issued or outstanding, and no other Preferred Stock is
outstanding.  All of such outstanding shares have been, or upon
issuance will be, validly issued and are fully paid and
nonassessable.  Except as disclosed in Schedule 3.1 (g), (i) no shares
of the Company's capital stock are subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the
Company, (ii) there are no outstanding debt securities, (iii) 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, any shares of capital stock of the Company or any of its
Subsidiaries, or contracts, commitments, understandings 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 or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under
the 1933 Act (except the Registration Rights Agreement and except for agreements
disclosed in Schedule 3.1 (g)), (v) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or "phantom stock" plans or agreements or any
similar plan or agreement.  The Company has furnished to the Buyer
true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof (the "Certificate of
Incorporation"), and the Company's By-laws, as amended and as in effect on the
date hereof (the "By-laws"), and summaries of the terms of all securities
convertible into or exercisable for Common Stock, if any, and copies of any
documents containing the material rights of the holders thereof in respect
thereto.

       

      (h) SEC Reports; Financial
Statements.  The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the 12 months preceding the date hereof (or
such shorter period as the Company was required by law to file such reports)
(the foregoing materials being collectively referred to herein as the "SEC Reports" and, together
with the Schedules to this Agreement (if any), the "Disclosure Materials") on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in
all material respects with the requirements of the Securities Act and the
Exchange Act and the rules and regulations of the Commission promulgated
thereunder, and none of the SEC Reports, when filed, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.  The
financial statements of the Company included in the SEC Reports comply in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of
filing.  Such financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
during the periods involved ("GAAP"), except as may be
otherwise specified in such financial statements or the notes thereto and except
that unaudited financial statements may not contain all footnotes required by
GAAP, and fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal, year-end audit adjustments
disclosed therein.

       

      (i) Absence of Certain
Changes.  As disclosed in the SEC Documents, since September
30, 2008, there has been no material adverse change in the business, properties,
operations, financial condition or results of operations of the Company or its
Subsidiaries.  The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or
insolvency proceedings.

       

      (j) Litigation.  Except
as disclosed in the SEC Reports, there is no Action which (i) adversely affects
or challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) except as specifically disclosed in the SEC
Reports, would, if there were an unfavorable decision, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.  Neither the Company nor any Subsidiary, nor any director or
officer thereof (in his or her capacity as such), is or has been the subject of
any Action involving a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty, except as specifically
disclosed in the SEC Reports.  There has not been, and to the
knowledge of the Company, there is not pending any investigation by the
Commission involving the Company or any current or former director or officer of
the Company (in his or her capacity as such).  The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company or any Subsidiary under the Exchange
Act or the Securities Act.

       

      (k) Labor
Relations.  No material labor dispute exists or, to the actual
knowledge of the executive officers or directors of the Company, is imminent
with respect to any of the employees of the Company.

       

      (l) Compliance.  Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. The Company is in compliance with the applicable
effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the
rules and regulations thereunder, except where such noncompliance would not have
or reasonably be expected to result in a Material Adverse Effect.

       

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

       

      (n) Title to
Assets.  The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company
and the Subsidiaries are held by them under valid, subsisting and enforceable
leases of which the Company and the Subsidiaries are in compliance, except as
would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.

       

      (o) Patents and
Trademarks.  The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have would, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect (collectively, the "Intellectual Property
Rights").  Neither the Company nor any Subsidiary has received
a written notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person where such
infringement would have or could reasonably be expected to have a Material
Adverse Effect.  Except as set forth in the SEC Reports and file
histories of pending patent applications, to the actual knowledge of the
executive officers and directors of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.

       

      (p) Insurance.  The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged.  The Company has no reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business on terms consistent with market for the Company’s line of
business.

       

      (q) Transactions With Affiliates
and Employees.  Except as set forth in the SEC Reports, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner.

       

      (r) Internal Accounting
Controls.  The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.  The Company has established disclosure
controls and procedures (as defined in Exchange Act rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s Form 10-KSB or
10-QSB, as the case may be, is being prepared.

       

      (s) Solvency.  Based
on our current rate of cash outflows and cash in the bank, we believe that our
cash will be sufficient to meet our anticipated cash needs for working capital
and capital expenditures into the third quarter of 2009.  At September
30, 2008, the Company had a working capital deficit of $537,997 and a net loss
of $3,103,579 for the nine months ended September 30, 2008.  The
Company also expects to sustain substantial losses over the next twelve
months.  Since its inception in 1987, the Company has incurred
significant and recurring operating losses and negative cash flow from
operations which raises substantial doubt about its ability to continue as a
going concern.  The Company’s ability to continue its operations are
dependent upon its ability to raise sufficient capital.

       

      (t) Certain Registration
Matters. Assuming the accuracy of the Investors' representations and
warranties set forth in Section 3.2(b)-(e), no registration under the Securities
Act is required for the offer and sale of the Shares by the Company to the
Investors under the Transaction Documents.  The Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority that have not been
satisfied.

       

      (u) Listing and Maintenance
Requirements.  The issuance and sale of the Securities under
the Transaction Documents does not contravene the rules and regulations of the
Trading Market on which the Common Stock is currently listed or quoted, and no
approval of the shareholders of the Company thereunder is required for the
Company to issue and deliver to the Investors the maximum number of Securities
contemplated by Transaction Documents.

       

      (v) Investment
Company.  The Company is not, and is not an Affiliate of, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

       

      (w) No Additional
Agreements.  The Company does not have any agreement or
understanding with the Investors with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

       

      (x) Disclosure.  Upon
the filing of the initial Current Report on Form 8-K required under Section 4.4,
the Investors will not have received from the Company or any Person acting on
its behalf any information that the Company believes constitutes material,
non-public information concerning the Company.  The Company
understands and confirms that the Investors will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company.  All written disclosures provided to the Investors regarding
the Company, its business and the transactions contemplated hereby, furnished by
or on behalf of the Company (including the Company’s representations and
warranties set forth in this Agreement) are true and correct and do not contain
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.

       

      (y) D&O
Insurance.  The Company will maintain, a directors’ liability
insurance policy in form and substance reasonably satisfactory to Investor,
covering the directors with Side A of not less than $5,000,000.

       

      3.2 Representations and
Warranties of the Investors.  Each Investor hereby, for itself
and for no other Investor, represents and warrants to the Company as
follows:

       

      (a) Organization;
Authority.  Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations thereunder. The
execution, delivery and performance by such Investor of the transactions
contemplated by this Agreement has been duly authorized by all necessary
corporate or, if such Investor is not a corporation, such partnership, limited
liability company or other applicable like action, on the part of such
Investor.  Each of this Agreement and the Registration Rights
Agreement has been duly executed by such Investor, and when delivered by such
Investor in accordance with terms hereof, will constitute the valid and legally
binding obligation of such Investor, enforceable against it in accordance with
its terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

       

      (b) Investment
Intent.  The Investor is acquiring the Securities as principal
for its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to such Investor's right at all times to sell or otherwise
dispose of all or any part of such Securities in compliance with applicable
federal and state securities laws.  Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a representation or
warranty by such Investor to hold the Securities for any period of
time.  The Investor is acquiring the Securities hereunder in the
ordinary course of its business. The Investor does not have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

       

      (c) Investor
Status.  At the time such Investor was offered the Securities,
it was, and at the date hereof it is an "accredited investor" as defined in Rule
501(a) under the Securities Act.  The Investor is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act.

       

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

       

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

       

      (f) Independent Investment
Decision.  The Investor has independently evaluated the merits
of its decision to purchase Securities pursuant to this Agreement, such decision
has been independently made by such Investor and such Investor confirms that it
has only relied on the advice of its own business and/or legal counsel and not
on the advice of any other Investor’s business and/or legal counsel in making
such decision.

       

      (g) Short
Sales.  The Investor has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Investor, executed any Short Sales in the securities of the Company since the
date that such Investor was first contacted regarding an investment in the
Company ("Discussion
Time").

       

      (h) Residency.  The
Investor is a resident of that jurisdiction specified as the address that such
Investor is to receive notices hereunder on the signature pages
hereto.

       

      The
Company acknowledges and agrees that the Investor does not make or has not made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.

       

      

      ARTICLE
IV.

       

      OTHER
AGREEMENTS OF THE PARTIES

       

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

       

      (b)           Certificates
evidencing the Securities will contain the following legend, until such time as
they are not required under Section 4.1(c):

       

      THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

       

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

       

      (c)           Certificates
evidencing the Shares shall not contain any legend (including the legend set
forth in Section 4.1(b)): (i) following a sale of such Securities pursuant to an
effective registration statement (including the Registration Statement), or (ii)
following a sale of such Shares pursuant to Rule 144 (assuming the transferor is
not an Affiliate of the Company), or (iii) while such Shares are eligible for
sale under Rule 144(k).  Following such time as restrictive legends
are not required to be placed on certificates representing Shares pursuant to
the preceding sentence, the Company will, no later than three Trading Days
following the delivery by such Investor to the Company or the Company's transfer
agent of a certificate representing Shares containing a restrictive legend,
deliver or cause to be delivered to such Investor a certificate representing
such Shares that is free from all restrictive and other legends.  The
Company may not make any notation on its records or give instructions to any
transfer agent of the Company that enlarge the restrictions on transfer set
forth in this Section.

       

      4.2 Integration.  The
Company shall not, and shall use its best efforts to ensure that no Affiliate of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in a
manner that would require the registration under the Securities Act of the sale
of the Securities to such Investor, or that would be integrated with the offer
or sale of the Securities for purposes of the rules and regulations of any
Trading Market in a manner that would require stockholder approval of the sale
of the securities to such Investor.

       

      4.3        Subsequent
Registrations.  Except for the items described on Schedule 4.3 and the
Registration Statement, prior to the Effective Date, the Company may not file
any registration statement (other than on Form S-8) with the Commission with
respect to any securities of the Company.

       

      4.4 Securities Laws Disclosure;
Publicity.  By 9:00 a.m. (New York time) on the next Business
Day following the Closing Date, the Company will file a Current Report on Form
8-K disclosing the material terms of the Transaction Documents (and attach as
exhibits thereto the Transaction Documents), and on the Closing Date the Company
will file an additional Current Report on Form 8-K to disclose the
Closing.  In addition, the Company will make such other filings and
notices in the manner and time required by the Commission and the Trading Market
on which the Common Stock is listed.  Notwithstanding the foregoing,
the Company shall not publicly disclose the name of any Investor, or include the
name of any Investor in any filing with the Commission (other than the
Registration Statement and any exhibits to filings made in respect of this
transaction in accordance with periodic filing requirements under the Exchange
Act) or any regulatory agency or Trading Market, without the prior written
consent of such Investor, except to the extent such disclosure is required by
law or Trading Market regulations, in which case the Company shall provide such
Investor with prior notice of such disclosure.

       

      4.5 Indemnification of the
Investors.  In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold each Investor
and its directors, officers, shareholders, partners, employees and agents (each,
an "Investor Party")
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys' fees and costs of
investigation (collectively, "Losses") that any such
Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction
Document.  In addition to the indemnity contained herein, the Company
will reimburse the Investor Party for its reasonable legal and other expenses
(including the cost of any investigation, preparation and travel in connection
therewith) incurred in connection therewith, as such expenses are
incurred.

       

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

       

      4.7 Use of
Proceeds.  The net proceeds from the offer and sale of the
Securities will be used to advance the pre-clinical, clinical and regulatory
development of the Company’s drug and vaccine candidates.  A portion
of the net proceeds shall also be used for general corporate purposes, including
the maintenance of in-licensed patent rights and proprietary intellectual
property patent applications and patents.  No portion of the net
proceeds will be used to redeem outstanding securities of the
Company.

       

      4.8 No Net Short
Position.  Each Investor covenants that neither it nor any
Affiliates acting on its behalf or pursuant to any understanding with it will
execute any Short Sales during the period from the Discussion Time until prior
to the time that the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.4 hereof.  Additionally,
each Investor understands and acknowledges, severally and not jointly with any
other Investor, that the Commission currently takes the position that coverage
of short sales of the Common Stock "against the box" prior to the Effective Date
of the Registration Statement issuable hereunder is a violation of Section 5 of
the Securities Act, as set forth in Item 65, Section 5 under Section A, of the
Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation
Finance.

       

      ARTICLE
V.

      CONDITIONS
PRECEDENT

       

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

       

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

       

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

       

      (c) No
Injunction.  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 that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents;

       

      (d) Adverse
Changes.  Since the date of execution of this Agreement, no
event or series of events shall have occurred that reasonably would be expected
to have or result in a (i) an adverse effect on the legality, validity or
enforceability of any Transaction Document, or (ii) a material and adverse
effect on the results of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole;

       

      (e) No Suspensions of Trading in
Common Stock; Listing.  Trading in the Common Stock shall not
have been suspended by the Commission or any Trading Market (except for any
suspensions of trading of not more than one Trading Day solely to permit
dissemination of material information regarding the Company) at any time since
the date of execution of this Agreement, and the Common Stock shall have been at
all times since such date listed for trading on a Trading Market;

       

      (f) Company
Deliverables.  The Company shall have delivered to such
Investor the Company Deliverables; and

       

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

       

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

       

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

       

      (c) No
Injunction.  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 that
prohibits the consummation of any of the transactions contemplated by the
Transaction Documents; and

       

      ARTICLE
VI.

       

      MISCELLANEOUS

       

      .

      6.1 Fees and
Expenses.  Each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of the Transaction Documents.  The Company
shall pay all stamp and other taxes and duties levied in connection with the
sale of the Securities.

       

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

       

      6.3 Notices.  Any
and all notices or other communications or deliveries required or permitted to
be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile (provided the sender receives a
machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 6:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight courier
service, or (d) upon actual receipt by the party to whom such notice is required
to be given.  The address for such notices and communications shall be
as follows:

       

      If to the
Company:      DOR BioPharma
Inc.

              850
Bear Tavern Road

             
Suite 201

             
Ewing, NJ 08628

             
Attn:  President

             
Facsimile:   (609) 538-8205

      

      With a
copy to:      Edwards Angell Palmer & Dodge
LLP

                               
      One
North Clematis Street, Suite 400

                                                            West
Palm Beach,  FL  33401-5552

                                                            Attn:
Leslie J. Croland, P.A.

                                                            Facsimilie:  (561)
655-8719

      

      
        	
                If
      to an Investor:

              	
                To
      the address set forth under the Investor's
name

              

      

      
        	
                 
      

              	
                on
      the signature pages hereof;

              

      

      

       

      or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.

       

      6.4 Amendments; Waivers; No
Additional Consideration.  No provision of this Agreement may
be waived or amended except in a written instrument signed by the Company and
the Investors holding a majority of the Shares.  No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such
right.  No consideration shall be offered or paid to any Investor to
amend or consent to a waiver or modification of any provision of any Transaction
Document unless the same consideration is also offered to all Investors who then
hold Securities.

       

      6.5 Construction.  The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.  The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of
strict construction will be applied against any party.  This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

       

      6.6 Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted
assigns.  The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the Investor. Each
Investor may assign any or all of its rights under this Agreement to one and
only one Person to whom such Investor assigns or transfers any Securities,
provided such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions hereof that apply to the
"Investor."

       

      6.7 No Third-Party
Beneficiaries.  This Agreement is intended for the benefit of
parties hereto and their respective successors and permitted assigns and is not
for the benefit of, nor may any provision hereof be enforced by, any other
Person, except as otherwise set forth in Section 6.6 (as to the Investor
Party).

       

      6.8 Governing
Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law
thereof.  Each party agrees that all Proceedings concerning the
interpretations, enforcement and defense of the transactions contemplated by
this Agreement and any other Transaction Documents (whether brought against a
party hereto or its respective Affiliates, employees or agents) may be commenced
exclusively in the Chancery Court, State of Delaware (the “Delaware
Court”).  Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the Delaware Court for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of the any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such Delaware Court, or that such Proceeding has been
commenced in an improper or inconvenient forum.  Each party hereto
hereby irrevocably waives personal service of process and consents to process
being served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated
hereby.  If either party shall commence a Proceeding to enforce any
provisions of a Transaction Document, then the prevailing party in such
Proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such Proceeding.

       

      6.9 Survival.  The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Shares.

       

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

       

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

       

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

       

      6.13 Replacement of
Securities.  If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested.  The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party
costs associated with the issuance of such replacement Securities.  If
a replacement certificate or instrument evidencing any Securities is requested
due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.

       

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

       

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

       

      6.16 Independent Nature of
Investors' Obligations and Rights.  The obligations of each
Investor under any Transaction Document are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in any
way for the performance of the obligations of any other Investor under any
Transaction Document.  The decision of each Investor to purchase
Securities pursuant to the Transaction Documents has been made by such Investor
independently of any other Investor.  Nothing contained herein or in
any Transaction Document, and no action taken by any Investor pursuant thereto,
shall be deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction
Document.  Each Investor acknowledges that no other Investor has acted
as agent for such Investor in connection with making its investment hereunder
and that no Investor will be acting as agent of such Investor in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents.  Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.  The Company
acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple
Investors and not because it was required or requested to do so by any
Investor.

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

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

       

      DOR
BIOPHARMA, INC.

       

      /s/ Christopher J.
Schaber

      Name:
Christopher J. Schaber, Ph.D.

      Title:   President
& Chief Executive Officer

       

      

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as
of the date first written above.

       

      
        	 
      

      

      [INVESTOR]

      

      
        	 
      	
                McAnna
      Ltd

              
	 
      	 
      
	
                By:

              	
                /s/ Rina Chernaya

              
	
                Name:

              	
                Rina
      Chernaya

              
	
                Title:

              	
                Manager

              

      

      

      
        	
                Investment
      Amount:

              	
                $2,280,000

              
	 
      	 
      
	
                 

              	
                 

              
	 
      	
                 

              
	 
      	
                 

              

      

      

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as
of the date first written above.

       

      
        	 
      

      

      [INVESTOR]

      

      
        	 
      	
                Omacatl
      Capital, LTD

              
	 
      	 
      
	
                By:

              	
                /s/ Baruch Ruttner

              
	
                Name:

              	
                Baruch
      Ruttner

              
	
                Title:

              	
                Director

              

      

      

      
        	
                Investment
      Amount:

              	
                $25,000

              
	 
      	 
      
	
                 

              	
                 

              
	 	
                 

              
	 
      	
                 

              

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as
of the date first written above.

       

      
        	 
      

      

      [INVESTOR]

      

      
        	 
      	 
      
	 
      	 
      
	
                By:

              	
                /s/ Richard
      Molinsky

              
	
                Name:

              	
                Richard
      Molinsky

              
	
                Title:

              	
                Investor

              

      

      

      
        	
                Investment
      Amount:

              	
                $22,800

              
	 
      	 
      
	
                 

              	
                 

              
	 
      	
                 

              
	 
      	 
      

      

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as
of the date first written above.

       

      
        	 
      

      

      [INVESTOR]

      

      
        	 
      	
                Bernard
      or Miriam Pismeny

              
	 
      	 
      
	
                By:

              	
                /s/ Bernard
      Pismeny

              
	
                Name:

              	
                Bernard
      Pismeny

              
	
                Title:

              	
                Co-owner

              

      

      

      
        	
                Investment
      Amount:

              	
                $11,400

              
	 
      	 
      
	
                 

              	
                 

              
	 
      	
                 

              

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as
of the date first written above.

       

      
        	 
      

      

      [INVESTOR]

      

      
        	 
      	 
      
	 
      	 
      
	
                By:

              	
                /s/ Robin B.
      Lipinski

              
	
                Name:

              	
                Robin
      B. Lipinski

              
	
                Title:

              	
                Investor

              

      

      

      
        	
                Investment
      Amount:

              	
                $5,000

              
	 
      	 
      
	
                 

              	
                 

              
	 
      	
                 

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Schedule 3.1
(b)

       

      

       

      

       

      SUBSIDIARIES

       

      

       

      The
following is a list of the Subsidiaries:

       

      

       

      
        	
                Enteron
      Pharmaceuticals, Inc.

              	 
      
	
                Oral
      Solutions, Inc.

              	 
      
	
                Orasomal
      Technologies Inc.

              	 
      

      

      

       

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      SCHEDULE
3.1 (g) (iii)

      

       

      Capitalization

       

      

       

      STOCK OPTIONS AND
WARRANTS

       

      

       

      As of the
date of this Agreement, the Company has: (a) granted stock options with exercise
prices ranging from $0.06 to $3.938 to purchase 16,370,039 shares of common
stock, and (b) issued warrants with exercise prices ranging from $0.12 to $8.11
to purchase 20,200,149 shares of common stock.

       

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      SCHEDULE
4.3

      

      

      The
Company has an obligation to keep the registration statements, as amended,
identified below continuously effective under the Securities Act of 1933 until
the date when all securities registered thereon have been sold or may be sold
(assuming for such purposes that the holder shall elect to utilize the cashless
or net exercise provisions under the warrants) without volume restrictions
pursuant to Rule 144(k) promulgated under the Securities Act of
1933.  The Company will be required to file post-effective amendments
to each of the registration statements set forth below upon filing its Form
10KSB for the year ended December 31, 2007.

      

      
        	
                Registration
      Statement

              	 
      	
                Filing
      Date

              	 
      	
                Effective
      Date

              	 
      	
                File
      Number

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                S-1

                 

              	 
      	
                2-14-2008

                 

              	 
      	
                4-11-2008

                 

              	 
      	
                333-149239

                 

              

      

      

      

      
 

      
 

      
 

      
 

      
 

      
 

      

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      EXHIBIT
A

      

      Registration
Rights Agreement

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]