Document:

EXHIBIT
4.13

FAVRILLE,
INC.

and

                ,
AS WARRANT AGENT

FORM OF
DEBT SECURITIES

WARRANT AGREEMENT

DATED
AS OF

_______________________________

FAVRILLE,
INC.

FORM OF
DEBT SECURITIES WARRANT AGREEMENT

DEBT
SECURITIES WARRANT AGREEMENT, dated as of             ,
between FAVRILLE, INC., a Delaware corporation (the “COMPANY”)
and               ,
a [corporation] [national banking association] organized and existing under the
laws of                
and having a corporate trust office in                ,
as warrant agent (the “WARRANT AGENT”).

WHEREAS, the Company has entered into an indenture
dated as of [                
(the “SENIOR INDENTURE”), with                ,
as trustee (such trustee, and any successors to such trustee, herein called the
“SENIOR TRUSTEE”), providing for the issuance from time to time of its
unsubordinated debt securities, to be issued in one or more series as provided
in the Senior Indenture (the “DEBT SECURITIES”);] [                (the
“SUBORDINATED INDENTURE”), with                 ,
as trustee (such trustee, and any successors to such trustee, herein called the
“SUBORDINATED TRUSTEE”), providing for the issuance from time to time of its
subordinated debt securities, to be issued in one or more series as provided in
the Subordinated Indenture (the “DEBT SECURITIES”);]

WHEREAS, the Company proposes to sell [If Warrants are
sold with other securities—title of such other Securities being offered (the “OTHER
SECURITIES”) with] warrant certificates evidencing one or more warrants (the “WARRANTS”
or, individually, a “WARRANT”) representing the right to purchase [title of
Debt Securities purchasable through exercise of Warrants] (the “WARRANT DEBT
SECURITIES”), such warrant certificates and other warrant certificates issued
pursuant to this Agreement being herein called the “WARRANT CERTIFICATES”; and

WHEREAS, the Company desires the Warrant Agent to act
on behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, registration, transfer, exchange, exercise and
replacement of the Warrant Certificates, and in this Agreement wishes to set
forth, among other things, the form and provisions of the Warrant Certificates
and the terms and conditions on which they may be issued, registered,
transferred, exchanged, exercised and replaced;

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NOW, THEREFORE, in consideration of the premises and
of the mutual agreements herein contained, the parties hereto agree as follows:

ARTICLE 1

ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF
WARRANT CERTIFICATES

1.1           Issuance
of Warrants. [If Warrants alone—Upon issuance, each Warrant
Certificate shall evidence one or more Warrants.][If Other Securities and
Warrants—Warrant Certificates shall be [initially] issued in connection with
the issuance of the Other Securities [but shall be separately transferable on
and after                   
(the “DETACHABLE DATE”)] [and shall not be separately transferable] and each
Warrant Certificate shall evidence one or more Warrants.] Each Warrant
evidenced thereby shall represent the right, subject to the provisions
contained herein and therein, to purchase one Warrant Debt Security. [If Other
Securities and Warrants—Warrant Certificates shall be initially issued in units
with the Other Securities and each Warrant Certificate included in such a unit
shall evidence                   
Warrants for each [$                  
principal amount] [                  
shares] of Other Securities included in such unit.].

1.2          Execution and Delivery of Warrant
Certificates. Each Warrant Certificate, whenever issued,
shall be in registered form substantially in the form set forth in Exhibit A
hereto, shall be dated the date of its countersignature by the Warrant Agent
and may have such letters, numbers, or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval) and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto
or with any rule or regulation of any securities exchange on which the
Warrants may be listed, or to conform to usage. The Warrant Certificates shall
be signed on behalf of the Company by any of its present or future chief
executive officers, presidents, senior vice presidents, vice presidents, chief
financial officers, chief legal officers, treasurers, assistant treasurers,
controllers, assistant controllers, secretaries or assistant secretaries under
its corporate seal reproduced thereon. Such signatures may be manual or
facsimile signatures of such authorized officers and may be imprinted or
otherwise reproduced on the Warrant Certificates. The seal of the Company may
be in the form of a facsimile thereof and may be impressed, affixed, imprinted
or otherwise reproduced on the Warrant Certificates.

No Warrant Certificate shall be valid for any purpose,
and no Warrant evidenced thereby shall be exercisable, until such Warrant
Certificate has been countersigned by the manual signature of the Warrant
Agent. Such signature by the Warrant Agent upon any Warrant Certificate
executed by the Company shall be conclusive evidence that the Warrant
Certificate so countersigned has been duly issued hereunder.

In case any officer of the Company who shall have
signed any of the Warrant Certificates either manually or by facsimile
signature shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned and delivered by the Warrant Agent, such

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Warrant Certificates may be countersigned and
delivered notwithstanding that the person who signed Warrant Certificates
ceased to be such officer of the Company; and any Warrant Certificate may be
signed on behalf of the Company by such persons as, at the actual date of the
execution of such Warrant Certificate, shall be the proper officers of the
Company, although at the date of the execution of this Agreement any such
person was not such officer.

The term “holder” or “holder of a Warrant Certificate”
as used herein shall mean any person in whose name at the time any Warrant
Certificate shall be registered upon the books to be maintained by the Warrant
Agent for that purpose [If Other Securities and Warrants are not immediately
detachable—or upon the registration of the Other Securities prior to the
Detachable Date. Prior to the Detachable Date, the Company will, or will cause
the registrar of the Other Securities to, make available at all times to the
Warrant Agent such information as to holders of the Other Securities as may be
necessary to keep the Warrant Agent’s records up to date].

1.3          Issuance of Warrant Certificates.
Warrant Certificates evidencing the right to purchase Warrant Debt Securities
may be executed by the Company and delivered to the Warrant Agent upon the
execution of this Warrant Agreement or from time to time thereafter. The
Warrant Agent shall, upon receipt of Warrant Certificates duly executed on
behalf of the Company, countersign such Warrant Certificates and shall deliver
such Warrant Certificates to or upon the order of the Company.

ARTICLE 2

WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

2.1          Warrant Price. During
the period specified in Section 2.2, each Warrant shall, subject to the
terms of this Warrant Agreement and the applicable Warrant Certificate, entitle
the holder thereof, to purchase the principal amount of Warrant Debt Securities
specified in the applicable Warrant Certificate at an exercise price of              %
of the principal amount thereof [plus accrued amortization, if any, of the
original issue discount of the Warrant Debt Securities] [plus accrued interest,
if any, from the most recent date from which interest shall have been paid on
the Warrant Debt Securities or, if no interest shall have been paid on the
Warrant Debt Securities, from the date of their initial issuance.] [The
original issue discount ($         
for each $1,000 principal amount of Warrant Debt Securities) will be amortized
at a      % annual rate, computed on a[n][semi-]
annual basis [using a 360-day year consisting of twelve 30-day
months].] Such purchase price for the Warrant Debt Securities is referred to in
this Agreement as the “WARRANT PRICE.”

2.2          Duration of Warrants.
Each Warrant may be exercised in whole or in part at any time, as specified
herein, on or after [the date thereof] [         ]
and at or before           p.m.,
[City] time, on or such later date as the Company may designate by notice to
the Warrant Agent and the holders of Warrant Certificates mailed to their
addresses as set forth in the record books of the Warrant Agent (the “EXPIRATION
DATE”). Each Warrant not exercised at or before          p.m.,
[City] time, on the Expiration Date shall become void, and all rights of the
holder of the Warrant Certificate evidencing such Warrant under this Agreement
shall cease.

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2.3          Exercise of Warrants.

(a)           During the period
specified in Section 2.2, the Warrants may be exercised to purchase a
whole number of Warrant Debt Securities in registered form by providing certain
information as set forth on the reverse side of the Warrant Certificate and by
paying in full, in lawful money of the United States of America, [in cash or by
certified check or official bank check in New York Clearing House funds] [by
bank wire transfer in immediately available funds] the Warrant Price for each
Warrant Debt Security with respect to which a Warrant is being exercised to the
Warrant Agent at its corporate trust office, provided that such exercise is
subject to receipt within five business days of such payment by the Warrant
Agent of the Warrant Certificate with the form of election to purchase Warrant
Debt Securities set forth on the reverse side of the Warrant Certificate
properly completed and duly executed. The date on which payment in full of the
Warrant Price is received by the Warrant Agent shall, subject to receipt of the
Warrant Certificate as aforesaid, be deemed to be the date on which the Warrant
is exercised; provided, however, that if, at the date of receipt of such
Warrant Certificates and payment in full of the Warrant Price, the transfer
books for the Warrant Debt Securities purchasable upon the exercise of such
Warrants shall be closed, no such receipt of such Warrant Certificates and no
such payment of such Warrant Price shall be effective to constitute the person
so designated to be named as the holder of record of such Warrant Debt
Securities on such date, but shall be effective to constitute such person as
the holder of record of such Warrant Debt Securities for all purposes at the
opening of business on the next succeeding day on which the transfer books for
the Warrant Debt Securities purchasable upon the exercise of such Warrants
shall be opened, and the certificates for the Warrant Debt Securities in
respect of which such Warrants are then exercised shall be issuable as of the
date on such next succeeding day on which the transfer books shall next be
opened, and until such date the Company shall be under no duty to deliver any
certificate for such Warrant Debt Securities. The Warrant Agent shall deposit
all funds received by it in payment of the Warrant Price in an account of the
Company maintained with it and shall advise the Company by telephone at the end
of each day on which a payment for the exercise of Warrants is received of the
amount so deposited to its account. The Warrant Agent shall promptly confirm
such telephone advice to the Company in writing.

(b)           The Warrant Agent
shall, from time to time, as promptly as practicable, advise the Company of (i) the
number of Warrant Debt Securities with respect to which Warrants were
exercised, (ii) the instructions of each holder of the Warrant
Certificates evidencing such Warrants with respect to delivery of the Warrant
Debt Securities to which such holder is entitled upon such exercise, (iii) delivery
of Warrant Certificates evidencing the balance, if any, of the Warrants for the
remaining Warrant Debt Securities after such exercise, and (iv) such other
information as the Company or the [Senior][Subordinated] Trustee shall
reasonably require.

(c)           As soon as
practicable after the exercise of any Warrant, the Company shall issue,
pursuant to the Indenture, in authorized denominations, to or upon the order of
the holder of the Warrant Certificate evidencing such Warrant, the Warrant Debt
Securities to which such holder is entitled, in fully registered form,
registered in such name or names as may be directed by such holder. If fewer
than all of the Warrants evidenced by such Warrant Certificate were exercised,
the Company shall execute, and an authorized officer of the Warrant Agent shall
manually countersign and deliver, a new Warrant Certificate evidencing Warrants
for the number of Warrant Debt Securities remaining unexercised.

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(d)           The Company shall
not be required to pay any stamp or other tax or other governmental charge
required to be paid in connection with any transfer involved in the issue of
the Warrant Debt Securities, and in the event that any such transfer is
involved, the Company shall not be required to issue or deliver any Warrant
Debt Securities until such tax or other charge shall have been paid or it has
been established to the Company’s satisfaction that no such tax or other charge
is due.

ARTICLE 3

OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF
WARRANT CERTIFICATES

3.1          No Rights as Holders
of Warrant Debt Securities Conferred by Warrants or Warrant Certificates. No
Warrant Certificate or Warrant evidenced thereby shall entitle the holder
thereof to any of the rights of a holder of Warrant Debt Securities, including,
without limitation, the right to receive the payment of principal of (or
premium, if any) or interest, if any, on the Warrant Debt Securities or to
enforce any of the covenants in the Indenture.

3.2          Lost, Stolen, Mutilated or Destroyed
Warrant Certificates. Upon receipt by the Warrant Agent of
evidence reasonably satisfactory to it and the Company of the ownership of and
the loss, theft, destruction or mutilation of any Warrant Certificate and/or indemnity
reasonably satisfactory to the Warrant Agent and the Company and, in the case
of mutilation, upon surrender of the mutilated Warrant Certificate to the
Warrant Agent for cancellation, then, in the absence of notice to the Company
or the Warrant Agent that such Warrant Certificate has been acquired by a bona
fide purchaser, the Company shall execute, and an authorized officer of the
Warrant Agent shall manually countersign and deliver, in exchange for or in
lieu of the lost, stolen, destroyed or mutilated Warrant Certificate, a new
Warrant Certificate of the same tenor and evidencing Warrants for a like
principal amount of Warrant Debt Securities. Upon the issuance of any new
Warrant Certificate under this Section 3.2, the Company may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Warrant Agent) in connection therewith. Every substitute
Warrant Certificate executed and delivered pursuant to this Section 3.2 in
lieu of any lost, stolen or destroyed Warrant Certificate shall represent an
additional contractual obligation of the Company, whether or not the lost,
stolen or destroyed Warrant Certificate shall be at any time enforceable by
anyone, and shall be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly executed and
delivered hereunder. The provisions of this Section 3.2 are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.

3.3          Holder of Warrant Certificate May Enforce
Rights. Notwithstanding any of the provisions of this Agreement,
any holder of any Warrant Certificate, without the consent of the Warrant
Agent, the [Senior] [Subordinated] Trustee, the holder of any Warrant Debt
Securities or the holder of any other Warrant Certificate, may, in such holder’s
own behalf and for such holder’s own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the Company suitable to
enforce, or otherwise in respect of, such holder’s

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right to exercise the Warrants evidenced by such
holder’s Warrant Certificate in the manner provided in such holder’s Warrant
Certificates and in this Agreement.

3.4          Merger, Sale, Conveyance or Lease.
In case of (a) any share exchange, merger or similar transaction of the
Company with or into another person or entity (other than a share exchange,
merger or similar transaction in which the Company is the acquiring or
surviving corporation) or (b) the sale, exchange, lease, transfer or other
disposition of all or substantially all of the properties and assets of the
Company as an entirety (in any such case, a “REORGANIZATION EVENT”), then, as a
condition of such Reorganization Event, lawful provisions shall be made, and
duly executed documents evidencing the same from the Company’s successor shall
be delivered to the holders of the Warrants, so that such successor shall
succeed to and be substituted for the Company, and assume all the Company’s
obligations under, this Agreement and the Warrants. The Company shall thereupon
be relieved of any further obligation hereunder or under the Warrants, and the
Company as the predecessor corporation may thereupon or at any time thereafter
be dissolved, wound up or liquidated. Such successor or assuming entity
thereupon may cause to be signed, and may issue either in its own name or in
the name of the Company, any or all of the Warrants issuable hereunder which
heretofore shall not have been signed by the Company, and may execute and
deliver securities in its own name, in fulfillment of its obligations to
deliver Warrant Debt Securities upon exercise of the Warrants. All the Warrants
so issued shall in all respects have the same legal rank and benefit under this
Agreement as the Warrants theretofore or thereafter issued in accordance with
the terms of this Agreement as though all of such Warrants had been issued at
the date of the execution hereof. In any case of any such Reorganization Event,
such changes in phraseology and form (but not in substance) may be made in the
Warrants thereafter to be issued as may be appropriate.

The Warrant Agent may receive a written opinion of
legal counsel as conclusive evidence that any such Reorganization Event
complies with the provisions of this Section 3.4.

3.5          Notice to Warrantholders.
In case the Company shall (a) effect any Reorganization Event or (b) make
any distribution on or in respect of the [title of Warrant Debt Securities] in
connection with the dissolution, liquidation or winding up of the Company, then
the Company shall mail to each holder of Warrants at such holder’s address as
it shall appear on the books of the Warrant Agent, at least ten days prior to
the applicable date hereinafter specified, a notice stating the date on which
such Reorganization Event, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that holders of
[title of Warrant Debt Securities] of record shall be entitled to exchange
their shares of [title of Warrant Debt Securities] for securities or other
property deliverable upon such Reorganization Event, dissolution, liquidation
or winding up. No failure to mail such notice nor any defect therein or in the
mail in thereof shall affect any such transaction.

ARTICLE 4

EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES

4.1          Exchange and Transfer of Warrant
Certificates. [If Other Securities with Warrants which are
immediately detachable—Upon][If Other Securities with Warrants which are not
immediately detachable—Prior to the Detachable Date, a Warrant Certificate may
be

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exchanged or transferred only together with the Other
Security to which the Warrant Certificate was initially attached, and only for
the purpose of effecting or in conjunction with an exchange or transfer of such
Other Security. Prior to any Detachable Date, each transfer of the Other
Security shall operate also to transfer the related Warrant Certificates. After
the Detachable Date, upon] surrender at the corporate trust office of the
Warrant Agent, Warrant Certificates evidencing Warrants may be exchanged for
Warrant Certificates in other denominations evidencing such Warrants or the
transfer thereof may be registered in whole or in part; provided that such
other Warrant Certificates evidence Warrants for the same aggregate principal
amount of Warrant Debt Securities as the Warrant Certificates so surrendered. The
Warrant Agent shall keep, at its corporate trust office, books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and exchanges and transfers of outstanding Warrant
Certificates, upon surrender of the Warrant Certificates to the Warrant Agent
at its corporate trust office for exchange or registration of transfer,
properly endorsed or accompanied by appropriate instruments of registration of
transfer and written instructions for transfer, all in form satisfactory to the
Company and the Warrant Agent. No service charge shall be made for any exchange
or registration of transfer of Warrant Certificates, but the Company may
require payment of a sum sufficient to cover any stamp or other tax or other
governmental charge that may be imposed in connection with any such exchange or
registration of transfer. Whenever any Warrant Certificates are so surrendered
for exchange or registration of transfer, an authorized officer of the Warrant
Agent shall manually countersign and deliver to the person or persons entitled
thereto a Warrant Certificate or Warrant Certificates duly authorized and
executed by the Company, as so requested. The Warrant Agent shall not be
required to effect any exchange or registration of transfer which will result
in the issuance of a Warrant Certificate evidencing a Warrant for a fraction of
a Warrant Debt Security or a number of Warrants for a whole number of Warrant
Debt Securities and a fraction of a Warrant Debt Security. All Warrant Certificates
issued upon any exchange or registration of transfer of Warrant Certificates
shall be the valid obligations of the Company, evidencing the same obligations
and entitled to the same benefits under this Agreement as the Warrant
Certificate surrendered for such exchange or registration of transfer.

4.2          Treatment of Holders of Warrant
Certificates. [If Other Securities and Warrants are not
immediately detachable—Prior to the Detachable Date, the Company, the Warrant
Agent and all other persons may treat the owner of the Other Security as the
owner of the Warrant Certificates initially attached thereto for any purpose
and as the person entitled to exercise the rights represented by the Warrants
evidenced by such Warrant Certificates, any notice to the contrary
notwithstanding. After the Detachable Date and prior to due presentment of a
Warrant Certificate for registration of transfer, the][The] Company, the
Warrant Agent and all other persons may treat the registered holder of a
Warrant Certificate as the absolute owner thereof for any purpose and as the
person entitled to exercise the rights represented by the Warrants evidenced
thereby, any notice to the contrary notwithstanding.

4.3          Cancellation of Warrant Certificates.
Any Warrant Certificate surrendered for exchange, registration of transfer or
exercise of the Warrants evidenced thereby shall, if surrendered to the
Company, be delivered to the Warrant Agent and all Warrant Certificates
surrendered or so delivered to the Warrant Agent shall be promptly canceled by
the Warrant Agent and shall not be reissued and, except as expressly permitted
by this Agreement, no Warrant Certificate shall be issued hereunder in exchange
therefor or in lieu thereof. The

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Warrant Agent shall deliver to the Company from time
to time or otherwise dispose of canceled Warrant Certificates in a manner
satisfactory to the Company.

ARTICLE 5

CONCERNING THE WARRANT AGENT

5.1          Warrant Agent. The
Company hereby appoints                   
as Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and subject to the conditions herein set forth, and
                  
hereby accepts such appointment. The Warrant Agent shall have the powers and
authority granted to and conferred upon it in the Warrant Certificates and
hereby and such further power and authority to act on behalf of the Company as
the Company may hereafter grant to or confer upon it. All of the terms and
provisions with respect to such power and authority contained in the Warrant
Certificates are subject to and governed by the terms and provisions hereof.

5.2          Conditions of Warrant Agent’s
Obligations. The Warrant Agent accepts its obligations herein
set forth upon the terms and conditions hereof, including the following to all
of which the Company agrees and to all of which the rights hereunder of the
holders from time to time of the Warrant Certificates shall be subject:

(a)           Compensation and Indemnification.
The Company agrees promptly to pay the Warrant Agent the compensation to be
agreed upon with the Company for all services rendered by the Warrant Agent and
to reimburse the Warrant Agent for reasonable out-of-pocket expenses (including
reasonable counsel fees) incurred without negligence, bad faith or willful
misconduct by the Warrant Agent in connection with the services rendered
hereunder by the Warrant Agent. The Company also agrees to indemnify the
Warrant Agent for, and to hold it harmless against, any loss, liability or
expense incurred without negligence, bad faith or willful misconduct on the
part of the Warrant Agent, arising out of or in connection with its acting as
Warrant Agent hereunder, including the reasonable costs and expenses of
defending against any claim of such liability.

(b)           Agent for the Company.
In acting under this Warrant Agreement and in connection with the Warrant
Certificates, the Warrant Agent is acting solely as agent of the Company and
does not assume any obligations or relationship of agency or trust for or with
any of the holders of Warrant Certificates or beneficial owners of Warrants.

(c)           Counsel. The
Warrant Agent may consult with counsel satisfactory to it, which may include
counsel for the Company, and the written advice of such counsel shall be full
and complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with the
advice of such counsel.

(d)           Documents. The
Warrant Agent shall be protected and shall incur no liability for or in respect
of any action taken or omitted by it in reliance upon any Warrant Certificate,
notice, direction, consent, certificate, affidavit, statement or other paper or
document reasonably believed by it to be genuine and to have been presented or
signed by the proper parties.

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(e)           Certain Transactions.
The Warrant Agent, and its officers, directors and employees, may become the
owner of, or acquire any interest in, Warrants, with the same rights that it or
they would have if it were not the Warrant Agent hereunder, and, to the extent
permitted by applicable law, it or they may engage or be interested in any
financial or other transaction with the Company and may act on, or as
depositary, trustee or agent for, any committee or body of holders of Warrant
Securities or other obligations of the Company as freely as if it were not the
Warrant Agent hereunder. Nothing in this Warrant Agreement shall be deemed to
prevent the Warrant Agent from acting as [Senior] [Subordinated] Trustee under
the [Senior][Subordinated] Indenture.

(f)            No Liability for Interest.
Unless otherwise agreed with the Company, the Warrant Agent shall have no
liability for interest on any monies at any time received by it pursuant to any
of the provisions of this Agreement or of the Warrant Certificates.

(g)           No Liability for Invalidity.
The Warrant Agent shall have no liability with respect to any invalidity of
this Agreement or any of the Warrant Certificates (except as to the Warrant
Agent’s countersignature thereon).

(h)           No Responsibility for Representations.
The Warrant Agent shall not be responsible for any of the recitals or
representations herein or in the Warrant Certificates (except as to the Warrant
Agent’s countersignature thereon), all of which are made solely by the Company.

(i)            No Implied Obligations.
The Warrant Agent shall be obligated to perform only such duties as are herein
and in the Warrant Certificates specifically set forth and no implied duties or
obligations shall be read into this Agreement or the Warrant Certificates
against the Warrant Agent. The Warrant Agent shall not be under any obligation
to take any action hereunder which may tend to involve it in any expense or
liability, the payment of which within a reasonable time is not, in its
reasonable opinion, assured to it. The Warrant Agent shall not be accountable
or under any duty or responsibility for the use by the Company of any of the
Warrant Certificates authenticated by the Warrant Agent and delivered by it to
the Company pursuant to this Agreement or for the application by the Company of
the proceeds of the Warrant Certificates. The Warrant Agent shall have no duty
or responsibility in case of any default by the Company in the performance of
its covenants or agreements contained herein or in the Warrant Certificates or
in the case of the receipt of any written demand from a holder of a Warrant
Certificate with respect to such default, including, without limiting the
generality of the foregoing, any duty or responsibility to initiate or attempt
to initiate any proceedings at law or otherwise or, except as provided in Section 6.2
hereof, to make any demand upon the Company.

5.3          Resignation, Removal and Appointment
of Successors.

(a)           The Company agrees,
for the benefit of the holders from time to time of the Warrant Certificates,
that there shall at all times be a Warrant Agent hereunder until all the
Warrants have been exercised or are no longer exercisable.

(b)           The Warrant Agent
may at any time resign as agent by giving written notice to the Company of such
intention on its part, specifying the date on which its desired 

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resignation shall become
effective; provided that such date shall not be less than three months after
the date on which such notice is given unless the Company otherwise agrees. The
Warrant Agent hereunder may be removed at any time by the filing with it of an
instrument in writing signed by or on behalf of the Company and specifying such
removal and the intended date when it shall become effective. Such resignation
or removal shall take effect upon the appointment by the Company, as
hereinafter provided, of a successor Warrant Agent (which shall be a bank or
trust company authorized under the laws of the jurisdiction of its organization
to exercise corporate trust powers) and the acceptance of such appointment by
such successor Warrant Agent. The obligation of the Company under Section 5.2(a) shall
continue to the extent set forth therein notwithstanding the resignation or
removal of the Warrant Agent.

(c)           In case at any time
the Warrant Agent shall resign, or shall be removed, or shall become incapable
of acting, or shall be adjudged a bankrupt or insolvent, or shall commence a
voluntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or under any other applicable Federal or state bankruptcy, insolvency
or similar law or shall consent to the appointment of or taking possession by a
receiver, custodian, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Warrant Agent or its property or affairs, or shall
make an assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall take
corporate action in furtherance of any such action, or a decree or order for
relief by a court having jurisdiction in the premises shall have been entered
in respect of the Warrant Agent in an involuntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or any other applicable
Federal or state bankruptcy, insolvency or similar law, or a decree or order by
a court having jurisdiction in the premises shall have been entered for the
appointment of a receiver, custodian, liquidator, assignee, trustee,
sequestrator (or similar official) of the Warrant Agent or of its property or
affairs, or any public officer shall take charge or control of the Warrant
Agent or of its property or affairs for the purpose of rehabilitation,
conservation, winding up or liquidation, a successor Warrant Agent, qualified
as aforesaid, shall be appointed by the Company by an instrument in writing,
filed with the successor Warrant Agent. Upon the appointment as aforesaid of a
successor Warrant Agent and acceptance by the successor Warrant Agent of such
appointment, the Warrant Agent shall cease to be Warrant Agent hereunder.

(d)           Any successor
Warrant Agent appointed hereunder shall execute, acknowledge and deliver to its
predecessor and to the Company an instrument accepting such appointment
hereunder, and thereupon such successor Warrant Agent, without any further act,
deed or conveyance, shall become vested with all the authority, rights, powers,
trusts, immunities, duties and obligations of such predecessor with like effect
as if originally named as Warrant Agent hereunder, and such predecessor, upon
payment of its charges and disbursements then unpaid, shall thereupon become
obligated to transfer, deliver and pay over, and such successor Warrant Agent
shall be entitled to receive, all monies, securities and other property on
deposit with or held by such predecessor, as Warrant Agent hereunder.

(e)           Any corporation
into which the Warrant Agent hereunder may be merged or converted or any
corporation with which the Warrant Agent may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Warrant Agent shall be a party, or any corporation to which the Warrant Agent
shall sell or otherwise transfer all or substantially all the assets and
business of the Warrant Agent, provided that it shall be 

 10
 

 

qualified as aforesaid,
shall be the successor Warrant Agent under this Agreement without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.

ARTICLE 6

MISCELLANEOUS

6.1          Amendment. This
Agreement may be amended by the parties hereto, without the consent of the holder
of any Warrant Certificate, for the purpose of curing any ambiguity, or of
curing, correcting or supplementing any defective provision contained herein,
or making any other provisions with respect to matters or questions arising
under this Agreement as the Company and the Warrant Agent may deem necessary or
desirable; provided that such action shall not materially adversely affect the
interests of the holders of the Warrant Certificates.

6.2          Notices and Demands to the Company and
Warrant Agent. If the Warrant Agent shall receive any notice
or demand addressed to the Company by the holder of a Warrant Certificate
pursuant to the provisions of the Warrant Certificates, the Warrant Agent shall
promptly forward such notice or demand to the Company.

6.3          Addresses. Any
communication from the Company to the Warrant Agent with respect to this
Agreement shall be addressed to                                             ,
Attention:                            ,
and any communication from the Warrant Agent to the Company with respect to
this Agreement shall be addressed to Favrille, Inc., 10421 Pacific Center
Court, Suite 150, San Diego, CA 92121, Attention:  Corporate Secretary (or such other address as
shall be specified in writing by the Warrant Agent or by the Company).

6.4          Governing Law. This
Agreement and each Warrant Certificate issued hereunder shall be governed by
and construed in accordance with the laws of the State of New York.

6.5          Delivery of Prospectus.
The Company shall furnish to the Warrant Agent sufficient copies of a
prospectus meeting the requirements of the Securities Act of 1933, as amended,
relating to the Warrant Debt Securities deliverable upon exercise of the
Warrants (the “PROSPECTUS”), and the Warrant Agent agrees that upon the
exercise of any Warrant, the Warrant Agent will deliver to the holder of the
Warrant Certificate evidencing such Warrant, prior to or concurrently with the
delivery of the Warrant Debt Securities issued upon such exercise, a
Prospectus. The Warrant Agent shall not, by reason of any such delivery, assume
any responsibility for the accuracy or adequacy of such Prospectus.

6.6          Obtaining of Governmental Approvals.
The Company will from time to time take all action which may be necessary to
obtain and keep effective any and all permits, consents and approvals of
governmental agencies and authorities and securities act filings under United
States Federal and state laws (including without limitation a registration
statement in respect of the Warrants and Warrant Debt Securities under the
Securities Act of 1933, as amended), which may be or become requisite in
connection with the issuance, sale, transfer, and delivery of the Warrant Debt
Securities issued upon exercise of the Warrants, the issuance, sale, transfer
and delivery of the Warrants or upon the expiration of the period during which
the Warrants are exercisable.

 11
 

 

6.7          Persons Having Rights Under Warrant
Agreement. Nothing in this Agreement shall give to any person
other than the Company, the Warrant Agent and the holders of the Warrant
Certificates any right, remedy or claim under or by reason of this Agreement.

6.8          Headings. The
descriptive headings of the several Articles and Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

6.9          Counterparts. This
Agreement may be executed in any number of counterparts, each of which as so
executed shall be deemed to be an original, but such counterparts shall
together constitute but one and the same instrument.

6.10        Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times at the
principal corporate trust office of the Warrant Agent for inspection by the
holder of any Warrant Certificate. The Warrant Agent may require such holder to
submit his Warrant Certificate for inspection by it.

 12
 

 

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

	
  

  	
   

  	
  FAVRILLE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  

Attest:

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

	
  

  	
   

  	
  WARRANT
  AGENT

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  

Attest:

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

[SIGNATURE PAGE TO DEBT SECURITIES WARRANT AGREEMENT]

 

 13

 

EXHIBIT
A

FORM OF
WARRANT CERTIFICATE

[FACE OF WARRANT CERTIFICATE]

[[Form if Warrants are attached to Other
Securities and are not immediately detachable.]

[Prior to                                     ,
this Warrant Certificate cannot be transferred or exchanged unless attached to
a [Title of Other Securities].]

[Form of Legend if Warrants are not immediately
exercisable.]

[Prior to                                   ,
Warrants evidenced by this Warrant Certificate cannot be exercised.]

EXERCISABLE ONLY
IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED HEREIN

VOID AFTER                      P.M.,
[CITY] TIME, ON                                         

 1
 

 

FAVRILLE,
INC.

WARRANT
CERTIFICATE REPRESENTING

WARRANTS
TO PURCHASE

[TITLE
OF WARRANT DEBT SECURITIES]

No.                                                                                                                                                                                         Warrants

This certifies that                                   
or registered assigns is the registered owner of the above indicated number of
Warrants, each Warrant entitling such owner [If Warrants are attached to Other
Securities and are not immediately detachable—, subject to the registered owner
qualifying as a “Holder” of this Warrant Certificate, as hereinafter defined)]
to purchase, at any time [after                    p.m.,
[City] time, on                     
and] on or before                p.m.,
[City] time, on                           ,
$                  
principal amount of [Title of Warrant Debt Securities] (the “WARRANT DEBT
SECURITIES”), of Favrille, Inc. (the “COMPANY”), issued or to be issued
under the Indenture (as hereinafter defined), on the following basis: during
the period from                     ,
through and including                           ,
each Warrant shall entitle the Holder thereof, subject to the provisions of
this Agreement, to purchase the principal amount of Warrant Debt Securities
stated in the Warrant Certificate at the warrant price (the “WARRANT PRICE”) of
       % of the principal amount thereof
[plus accrued amortization, if any, of the original issue discount of the
Warrant Debt Securities] [plus accrued interest, if any, from the most recent
date from which interest shall have been paid on the Warrant Debt Securities
or, if no interest shall have been paid on the Warrant Debt Securities, from
the date of their original issuance]. [The original issue discount ($            
for each $1,000 principal amount of Warrant Debt Securities) will be amortized
at a          % annual rate,
computed on a[n] [semi-]annual basis [using a 360-day year consisting of
twelve 30-day months]. The Holder may exercise the Warrants evidenced
hereby by providing certain information set forth on the back hereof and by
paying in full, in lawful money of the United States of America, [in cash or by
certified check or official bank check in New York Clearing House funds] [by
bank wire transfer in immediately available funds], the Warrant Price for each
Warrant Debt Security with respect to which this Warrant is exercised to the
Warrant Agent (as hereinafter defined) and by surrendering this Warrant
Certificate, with the purchase form on the back hereof duly executed, at the
corporate trust office of [name of Warrant Agent], or its successor as warrant
agent (the “WARRANT AGENT”), which is, on the date hereof, at the address
specified on the reverse hereof, and upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement (as hereinafter
defined).

The term “HOLDER” as used herein shall mean [If
Warrants are attached to Other Securities and are not immediately detachable—,
prior to                     ,
(the “DETACHABLE DATE”), the registered owner of the Company’s [title of Other
Securities] to which this Warrant Certificate was initially attached, and after
such Detachable Date,] the person in whose name at the time this Warrant Certificate
shall be registered upon the books to be maintained by the Warrant Agent for
that purpose pursuant to Section 4 of the Warrant Agreement.

 2
 

 

The Warrants evidenced by this Warrant Certificate may
be exercised to purchase Warrant Debt Securities in the principal amount of
$1,000 or any integral multiple thereof in registered form. Upon any exercise
of fewer than all of the Warrants evidenced by this Warrant Certificate, there
shall be issued to the Holder hereof a new Warrant Certificate evidencing Warrants
for the aggregate principal amount of Warrant Debt Securities remaining
unexercised.

This Warrant Certificate is issued under and in
accordance with the Warrant Agreement dated as of                           
(the “WARRANT AGREEMENT”), between the Company and the Warrant Agent and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents
by acceptance hereof. Copies of the Warrant Agreement are on file at the
above-mentioned office of the Warrant Agent.

The Warrant Debt Securities to be issued and delivered
upon the exercise of Warrants evidenced by this Warrant Certificate will be
issued under and in accordance with an Indenture, [dated as of                           
(the “SENIOR INDENTURE”), between the Company and                              ,
as trustee (such trustee, and any successors to such trustee, the “SENIOR
TRUSTEE”)] [dated as of                           
(the “SUBORDINATED INDENTURE”), between the Company and                                     ,
as trustee (such trustee, and any successors to such trustee, the “SUBORDINATED
TRUSTEE”)] and will be subject to the terms and provisions contained in the
Warrant Debt Securities and in the Indenture. Copies of the [Senior]
[Subordinated] Indenture, including the form of the Warrant Debt Securities,
are on file at the corporate trust office of the Trustee.

[If Warrants are attached to Other Securities and are
not immediately detachable—Prior to the Detachable Date, this Warrant
Certificate may be exchanged or transferred only together with the [Title of
Other Securities] (the “OTHER SECURITIES”) to which this Warrant Certificate
was initially attached, and only for the purpose of effecting or in conjunction
with, an exchange or transfer of such Other Security. Additionally, on or prior
to the Detachable Date, each transfer of such Other Security on the register of
the Other Securities shall operate also to transfer this Warrant Certificate. After
such date, transfer of this] [If Warrants are attached to Other Securities and
are immediately detachable—Transfer of this] Warrant Certificate may be
registered when this Warrant Certificate is surrendered at the corporate trust
office of the Warrant Agent by the registered owner or such owner’s assigns, in
the manner and subject to the limitations provided in the Warrant Agreement.

[If Other Securities with Warrants which are not
immediately detachable-Except as provided in the immediately preceding paragraph,
after] [If Other Securities with Warrants which are immediately detachable or
Warrants alone—After] countersignature by the Warrant Agent and prior to the
expiration of this Warrant Certificate, this Warrant Certificate may be
exchanged at the corporate trust office of the Warrant Agent for Warrant
Certificates representing Warrants for the same aggregate principal amount of
Warrant Debt Securities.

This Warrant Certificate shall not entitle the Holder
hereof to any of the rights of a holder of the Warrant Debt Securities,
including, without limitation, the right to receive payments of principal of
(and premium, if any) or interest, if any, on the Warrant Debt Securities or to
enforce any of the covenants of the Indenture.

 3
 

 

Reference is hereby made to the further provisions of
this Warrant Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.

This Warrant Certificate shall be governed by and
construed in accordance with the laws of the State of New York.

This Warrant Certificate shall not be valid or
obligatory for any purpose until countersigned by the Warrant Agent.

 4
 

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be executed in its name and on its
behalf by the facsimile signatures of its duly authorized officers.

 

	
  Dated:

  	
   

  	
   

  	
  Favrille, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
							

 

Attest:

	
  

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 

	
  

  	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  As Warrant Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signature

  	
   

  	
   

  

 

 5

 

[REVERSE
OF WARRANT CERTIFICATE]

(Instructions for
Exercise of Warrant)

To exercise any Warrants evidenced hereby for Warrant
Debt Securities (as hereinafter defined), the Holder must pay, in lawful money
of the United States of America, [in cash or by certified check or official
bank check in New York Clearing House funds] [by bank wire transfer in
immediately available funds], the Warrant Price in full for Warrants exercised,
to [Warrant Agent] [address of Warrant Agent], Attn:                                ,
which payment must specify the name of the Holder and the number of Warrants
exercised by such Holder. In addition, the Holder must complete the information
required below and present this Warrant Certificate in person or by mail
(certified or registered mail is recommended) to the Warrant Agent at the
appropriate address set forth above. This Warrant Certificate, completed and
duly executed, must be received by the Warrant Agent within five business days
of the payment.

(To be executed
upon exercise of Warrants)

The undersigned hereby irrevocably elects to exercise                                 
Warrants, evidenced by this Warrant Certificate, to purchase $                      
principal amount of the [Title of Warrant Debt Securities], (the “WARRANT DEBT
SECURITIES”), of Favrille, Inc. and represents that he has tendered
payment for such Warrant Debt Securities, in lawful money of the United States
of America, [in cash or by certified check or official bank check in New York
Clearing House funds] [by bank wire transfer in immediately available funds],
to the order of Favrille, Inc., c/o [insert name and address of Warrant
Agent], in the amount of $                          
in accordance with the terms hereof. The undersigned requests that said Warrant
Debt Securities be in fully registered form in the authorized denominations,
registered in such names and delivered all as specified in accordance with the
instructions set forth below.

If the number of Warrants exercised is less than all
of the Warrants evidenced hereby, the undersigned requests that a new Warrant
Certificate evidencing the Warrants for the number of Warrant Debt Securities
remaining unexercised be issued and delivered to the undersigned unless
otherwise specified in the instructions below.

	
  Dated

  	
   

  	
   

  	
  Name

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Please Print)

  	
   

  
	
  Address

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Insert Social Security or Other Identifying Number
  of Holder)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Signature Guaranteed

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
   

  	
   

  
								

 

(Signature must conform in all respects to name of
holder as specified on the face of this Warrant Certificate and must bear a
signature guarantee by a bank, trust company or member broker of 

 1
 

 

the New York, Midwest or Pacific Stock Exchange). This
Warrant may be exercised at the following addresses:

	
  By hand at

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By mail at

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

[Instructions as to form and delivery of Warrant Debt
Securities and, if applicable, Warrant Certificates evidencing Warrants for the
number of Warrant Debt Securities remaining unexercised—complete as
appropriate.]

 2
 

 

ASSIGNMENT

[Form of
assignment to be executed if Warrant Holder desires to transfer Warrant)

FOR VALUE RECEIVED,                                       
hereby sells, assigns and transfers unto:

	
  

  
	
   

  
	
   

  
	
   

  
	
   

  

 

	
  

  	
   

  	
   

  
	
  (Please print name and address including zip code)

  	
   

  	
  Please insert Social Security or other

  identifying number

  

 

the right represented by the within Warrant to
purchase $                    
aggregate principal amount of [Title of Warrant Debt Securities] of
Favrille,  Inc. to which the within
Warrant relates and appoints                               
attorney to transfer such right on the books of the Warrant Agent with full
power of substitution in the premises.

	
  Dated

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

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

	
  Signature Guaranteed

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

 3Unassociated Document

    Exhibit
      10.74

     

    SECURITIES
      PURCHASE AGREEMENT

     

    This
      Securities Purchase Agreement (this “Agreement”)
      is
      dated as of June 19, 2006, by and among Xfone, Inc., a Nevada corporation (the
      “Company”),
      and
      each purchaser identified on the signature pages hereto (each, including its
      successors and assigns, a “Purchaser”
and
      collectively the “Purchasers”).

     

    WHEREAS,
      subject to the terms and conditions set forth in this Agreement and pursuant
      to
      Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”)
      and Rule 506 promulgated thereunder, the Company desires to issue and sell
      to
      each Purchaser, and each Purchaser, severally and not jointly, desires to
      purchase from the Company, securities of the Company as more fully described
      in
      this Agreement.

     

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

     

    ARTICLE
      I.

     

    DEFINITIONS

     

    1.1 Definitions

     

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

     

    “Action”
shall
      have the meaning ascribed to such term in Section 3.1(j).

     

    “Affiliate”
means
      any Person that, directly or indirectly through one or more intermediaries,
      controls or is controlled by or is under common control with a Person as such
      terms are used in and construed under Rule 144 under the Securities Act. With
      respect to a Purchaser, any investment fund or managed account that is managed
      on a discretionary basis by the same investment manager as such Purchaser will
      be deemed to be an Affiliate of such Purchaser.

     

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

     

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    “Closing
      Date”
means
      the Trading Day when all of the Transaction Documents have been executed and
      delivered by the applicable parties thereto, and all conditions precedent to
      (i)
      the Purchasers’ obligations to pay the Subscription Amount and (ii) the
      Company’s obligations to deliver the Securities have been satisfied or
      waived.

     

    “Closing
      Price”
means
      on any particular date (a) the last reported closing bid price per share of
      Common Stock on such date on the Trading Market (as reported by Bloomberg L.P.
      at 4:15 PM (New York time)), or (b) if there is no such price on such date,
      then
      the closing bid price on the Trading Market on the date nearest preceding such
      date (as reported by Bloomberg L.P. at 4:15 PM (New York time)), or (c)  if
      the Common Stock is not then listed or quoted on the Trading Market and if
      prices for the Common Stock are then reported in the “pink sheets” published by
      the National Quotation Bureau Incorporated (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid price
      per
      share of the Common Stock so reported, or (d) if the shares of Common Stock
      are not then publicly traded the fair market value of a share of Common Stock
      as
      determined by an appraiser selected in good faith by the Purchasers of a
      majority in interest of the Shares then outstanding.

     

    “Commission”
means
      the U.S. Securities and Exchange Commission.

     

    “Common
      Stock”
means
      the common stock of the Company, par value $0.001 per share, and any other
      class
      of securities into which such securities may hereafter have been reclassified
      or
      changed into.

     

    “Common
      Stock Equivalents”
means
      any securities of the Company which would entitle the holder thereof to acquire
      at any time Common Stock, including, without limitation, any debt, preferred
      stock, rights, options, warrants or other instrument that is at any time
      convertible into or exercisable or exchangeable for, or otherwise entitles
      the
      holder thereof to receive, Common Stock.

     

    “Disclosure
      Schedules”
means
      the Disclosure Schedules of the Company delivered concurrently herewith.

     

    “Effective
      Date”
means
      the date that the initial Registration Statement filed by the Company pursuant
      to the Registration Rights Agreement is first declared effective by the
      Commission.

     

    “Escrow
      Agent”
shall
      have the meaning set forth in the Escrow Agreement.

     

    “Escrow
      Agreement”
      shall
      mean the Escrow Agreement in substantially the form of Exhibit
      C
      hereto
      executed and delivered contemporaneously with this Agreement.

     

    “Evaluation
      Date”
shall
      have the meaning ascribed to such term in Section 3.1(r). 

     

    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      promulgated thereunder.

    

    “GAAP”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    “Intellectual
      Property Rights”
shall
      have the meaning ascribed to such term in Section 3.1(o).

     

    “Legend
      Removal Date”
shall
      have the meaning ascribed to such term in Section 4.1(c). 

     

    “Liens”
means
      a
      lien, charge, security interest, encumbrance, right of first refusal, preemptive
      right or other restriction.

     

    “Material
      Adverse Effect”
shall
      have the meaning assigned to such term in Section 3.1(b).

     

    “Material
      Permits”
shall
      have the meaning ascribed to such term in Section 3.1(m).

     

    “Per
      Share Purchase Price”
equals
      $2.90, subject to adjustment for reverse and forward stock splits, stock
      dividends, stock combinations and other similar transactions of the Common
      Stock
      that occur after the date of this Agreement.

     

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

     

    “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.

     

    “Purchaser
      Party”
shall
      have the meaning ascribed to such term in Section 4.9.

     

    “Registration
      Rights Agreement”
means
      the Registration Rights Agreement, dated the date hereof, among the Company
      and
      the Purchasers, in the form of Exhibit
      A
      attached
      hereto.

     

    “Registration
      Statement”
means
      a
      registration statement meeting the requirements set forth in the Registration
      Rights Agreement and covering the resale by the Purchasers of the Shares and
      the
      Warrant Shares. 

     

    “Required
      Approvals”
shall
      have the meaning ascribed to such term in Section 3.1(e).

     

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

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    “SEC
      Reports”
shall
      have the meaning ascribed to such term in Section 3.1(h).

     

    “Securities”
means
      the Shares, the Warrants and the Warrant Shares.

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended.

     

    “Shareholder
      Approval”
means
      such approval as may be required by the applicable rules and regulations of
      the
      American Stock Exchange (or any successor entity) from the shareholders of
      the
      Company with respect to the transactions contemplated by the Transaction
      Documents, including issuance of shares of Common Stock.

     

    “Shares”
means
      the shares of Common Stock issued or issuable to each Purchaser pursuant to
      this
      Agreement.

     

    “Short
      Sales”
shall
      include all “short sales” as defined in Rule 200 of Regulation SHO under the
      Exchange Act. 

     

    “Subscription
      Amount”
means,
      as to each Purchaser, the aggregate amount to be paid for Shares and Warrants
      purchased hereunder as specified below such Purchaser’s name on the signature
      page of this Agreement and next to the heading “Subscription Amount”, in United
      States Dollars and in immediately available funds.

     

    “Subsidiary”
means
      any subsidiary of the Company as set forth on Schedule
      3.1(a).

     

    “Trading
      Day”
means
      a
      day on which the Common Stock is traded on a Trading Market.

     

    “Trading
      Market”
means
      the following markets or exchanges on which the Common Stock is listed or quoted
      for trading on the date in question: the Nasdaq SmallCap Market, the American
      Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or
      the
      OTC Bulletin Board.

     

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

     

    “Warrants”
means
      collectively the Common Stock purchase warrants, in the form of Exhibit
      B
      delivered to the Purchasers at the Closing in accordance with Section 2.2(a)
      hereof, which Warrants shall be exercisable immediately and have a term of
      exercise equal to 5 years.

     

    “Warrant
      Shares”
means
      the shares of Common Stock issuable upon exercise of the Warrants.

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    ARTICLE
      II.

     

    PURCHASE
      AND SALE

     

    2.1 Closing.
      On the Closing Date, upon the terms and subject to the conditions set forth
      herein, concurrent with the execution and delivery of this Agreement by the
      parties hereto, the Company agrees to sell, and each Purchaser agrees to
      purchase, severally and not jointly, the Common Stock and the Warrants in an
      amount not to exceed 19.99% of the issued and outstanding Common Stock on the
      Closing Date. Each Purchaser shall deliver to the Company via wire transfer
      immediately available funds equal to their Subscription Amount and the Company
      shall deliver to each Purchaser their respective Shares and Warrants as
      determined pursuant to Section 2.2(a) and the other items set forth in Section
      2.2 issuable at the Closing. Upon satisfaction of the conditions set forth
      in
      Sections 2.2 and 2.3, the Closing shall occur at the offices of the Escrow
      Agent, or such other location as the parties shall mutually agree.

     

    2.2 Deliveries.

     

    (a) On
      the
      Closing Date, the Company shall deliver or cause to be delivered to the Escrow
      Agent the following:

     

    (i) this
      Agreement duly executed by the Company;

     

    (ii) a
      certificate evidencing a number of Shares equal to such Purchaser’s Subscription
      Amount divided by the Per Share Purchase Price, registered in the name of such
      Purchaser;

     

    (iii) a
      Warrant
      registered in the name of such Purchaser to purchase up to a number of shares
      of
      Common Stock equal to 50% of the number of Shares purchased by such Purchaser
      at
      the Closing, with an exercise price equal to $3.40, subject to adjustment
      therein;

     

    (iv) the
      Escrow Agreement duly executed by the Company; and

     

    (v) the
      Registration Rights Agreement duly executed by the Company.

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (b) On
      the
      Closing Date, each Purchaser shall deliver or cause to be delivered to the
      Escrow Agent the following:

     

    (i) this
      Agreement duly executed by such Purchaser;

     

    (ii) such
      Purchaser’s Accredited Investor Questionnaire in the form of Annex
      B
      attached
      to the Registration Rights Agreement;

     

    (iii) such
      Purchaser’s Subscription Amount by wire transfer to the account of the Escrow
      Agent;

     

    (iv) the
      Escrow Agreement duly executed by such Purchaser; and

     

    (v) the
      Registration Rights Agreement duly executed by such Purchaser.

     

    2.3 Closing
      Conditions. 

     

    (a) The
      obligations of the Company hereunder in connection with the Closing are subject
      to the following conditions being met:

     

    (i) the
      accuracy in all material respects when made and on the Closing Date of the
      representations and warranties of the Purchasers contained herein; 

     

    (ii) all
      obligations, covenants and agreements of the Purchasers required to be performed
      at or prior to the Closing Date shall have been performed;
      and

     

    (iii) the
      delivery by the Purchasers of the items set forth in Section 2.2(b) of this
      Agreement.

     

    (b) The
      obligations of the Purchasers hereunder in connection with the Closing are
      subject to the following conditions being met:

     

    (i) the
      accuracy in all material respects on the Closing Date of the representations
      and
      warranties of the Company contained herein;

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    (ii) all
      obligations, covenants and agreements of the Company required to be performed
      at
      or prior to the Closing Date shall have been performed; 

     

    (iii) the
      delivery by the Company of the items set forth in Section 2.2(a) of this
      Agreement; 

     

    (iv) there
      shall have been no Material Adverse Effect with respect to the Company since
      the
      date hereof;

     

    (v) either
      (1) Shareholder Approval shall have been obtained and deemed effective; or
      (2)
      the American Stock Exchange shall have approved that the Closing may occur
      without Shareholder Approval; 

     

    (vi) the
      American Stock Exchange shall have approved for listing the Shares
      and the Warrant Shares;
      and

     

    (vii) from
      the
      date hereof to the Closing Date, trading in the Common Stock shall not have
      been
      suspended by the Commission (except for any suspension of trading of limited
      duration agreed to by the Company, which suspension shall be terminated prior
      to
      the Closing), and, at any time prior to the Closing Date, trading in securities
      generally as reported by Bloomberg Financial Markets shall not have been
      suspended or limited, or minimum prices shall not have been established on
      securities whose trades are reported by such service, or on any Trading Market,
      nor shall a banking moratorium have been declared either by the United States
      or
      New York State authorities nor shall there have occurred any material outbreak
      or escalation of hostilities or other national or international calamity of
      such
      magnitude in its effect on, or any material adverse change in, any financial
      market which, in each case, in the reasonable judgment of each Purchaser, makes
      it impracticable or inadvisable to purchase the Shares at the
      Closing.

     

    ARTICLE
      III.

     

    REPRESENTATIONS
      AND WARRANTIES

     

    3.1 Representations
      and Warranties of the Company. 

     

    Except
      as set forth under the corresponding section of the disclosure schedules
      delivered to the Purchasers concurrently herewith (the “Disclosure Schedules”)
      which Disclosure Schedules shall be deemed a part hereof, the Company hereby
      makes the representations and warranties set forth below to each
      PurchaserExcept
      as
      set forth under the corresponding section of the Disclosure Schedules which
      Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
      the
      representations and warranties set forth below to each Purchaser:

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (a) Subsidiaries.
      All of
      the direct and indirect subsidiaries of the Company are set forth on
Schedule
      3.1(a).
      The
      Company owns, directly or indirectly, all of the capital stock or other equity
      interests of each Subsidiary free and clear of any Liens, and all the issued
      and
      outstanding shares of capital stock of each Subsidiary are validly issued and
      are fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities.

     

    (b) Organization
      and Qualification.
      The
      Company and each of the Subsidiaries is an entity duly incorporated or otherwise
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its incorporation or organization (as applicable), with the
      requisite power and authority to own and use its properties and assets and
      to
      carry on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its respective
      certificate or articles of incorporation, bylaws or other organizational or
      charter documents. Each of the Company and the Subsidiaries is duly qualified
      to
      conduct business and is in good standing as a foreign corporation or other
      entity in each jurisdiction in which the nature of the business conducted or
      property owned by it makes such qualification necessary, except where the
      failure to be so qualified or in good standing, as the case may be, could not
      have or reasonably be expected to result in (i) a material adverse effect on
      the
      legality, validity or enforceability of any Transaction Document, (ii) a
      material adverse effect on the results of operations, assets, business or
      condition (financial or otherwise) of the Company and the Subsidiaries, taken
      as
      a whole, or (iii) a material adverse effect on the Company’s ability to perform
      in any material respect on a timely basis its obligations under any Transaction
      Document (any of (i), (ii) or (iii), a “Material
      Adverse Effect”)
      and no
      Proceeding has been instituted in any such jurisdiction revoking, limiting
      or
      curtailing or seeking to revoke, limit or curtail such power and authority
      or
      qualification.

     

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

     

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

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (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) filings required pursuant to Section
      4.4
      of this Agreement, (ii) the filing with the Commission of the Registration
      Statement, (iii) application(s) to each applicable Trading Market for the
      listing of the Shares and Warrant Shares for trading thereon in the time and
      manner required thereby, and (iv) the filing of Form D with the Commission
      and
      such filings as are required to be made under applicable federal and/or state
      securities laws (collectively, the “Required
      Approvals”).

     

    (f) Issuance
      of the Securities.
      The
      Securities are duly authorized and, when issued and paid for in accordance
      with
      the applicable Transaction Documents, will be duly and validly issued, fully
      paid and nonassessable, free and clear of all Liens imposed by the Company
      other
      than restrictions on transfer provided for in the Transaction Documents. The
      Warrant Shares, when issued in accordance with the terms of the Transaction
      Documents, will be validly issued, fully paid and nonassessable, free and clear
      of all Liens imposed by the Company. The Company has reserved from its duly
      authorized capital stock the maximum number of shares of Common Stock issuable
      pursuant to this Agreement and the Warrants.

     

    (g) Capitalization.
      The
      capitalization of the Company is as set forth on Schedule
      3.1(g).
      The
      Company has not issued any capital stock since its most
      recently filed periodic report under the Exchange Act, other
      than pursuant to the exercise of employee stock options under the Company’s
      stock option plans, the issuance of shares of Common Stock to employees pursuant
      to the Company’s employee stock purchase plan and pursuant to the conversion or
      exercise of outstanding Common Stock Equivalents. No Person has any right of
      first refusal, preemptive right, right of participation, or any similar right
      to
      participate in the transactions contemplated by the Transaction Documents.
      Except as disclosed in the SEC Reports and except as a result of the purchase
      and sale of the Securities, there are no outstanding options, warrants, script
      rights to subscribe to, calls or commitments of any character whatsoever
      relating to, or securities, rights or obligations convertible into or
      exercisable or exchangeable for, or giving any Person any right to subscribe
      for
      or acquire, any shares of Common Stock, or contracts, commitments,
      understandings or arrangements by which the Company or any Subsidiary is or
      may
      become bound to issue additional shares of Common Stock or Common Stock
      Equivalents. The issuance and sale of the Securities will not obligate the
      Company to issue shares of Common Stock or other securities to any Person (other
      than the Purchasers) and will not result in a right of any holder of Company
      securities to adjust the exercise, conversion, exchange or reset price under
      such securities. All of the outstanding shares of capital stock of the Company
      are validly issued, fully paid and nonassessable, have been issued in compliance
      with all federal and state securities laws, and none of such outstanding shares
      was issued in violation of any preemptive rights or similar rights to subscribe
      for or purchase securities. No further approval or authorization of any
      stockholder, the Board of Directors of the Company or others is required for
      the
      issuance and sale of the Securities. Except as disclosed in the SEC Reports,
      there are no stockholders agreements, voting agreements or other similar
      agreements with respect to the Company’s capital stock to which the Company is a
      party or, to the knowledge of the Company, between or among any of the Company’s
      stockholders.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    (h) SEC
      Reports; Financial Statements.
      The
      Company has filed all reports, schedules, forms, statements and other documents
      required to be filed by it under the Securities Act and the Exchange Act,
      including pursuant to Section 13(a) or 15(d) thereof, for the two years
      preceding the date hereof (or such shorter period as the Company was required
      by
      law to file such material) (the foregoing materials, including the exhibits
      thereto and documents incorporated by reference therein, being collectively
      referred to herein as the “SEC
      Reports”)
      on a
      timely basis or has received a valid extension of such time of filing and has
      filed any such SEC Reports prior to the expiration of any such extension. As
      of
      their respective dates, the SEC Reports complied in all material respects with
      the requirements of the Securities Act and the Exchange Act and 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 the light of the circumstances under
      which they were made, not misleading. The financial statements of the Company
      included in the SEC Reports comply in all material respects with applicable
      accounting requirements and the rules and regulations of the Commission with
      respect thereto as in effect at the time of filing. Such financial statements
      have been prepared in accordance with United States generally accepted
      accounting principles 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,
      immaterial, year-end audit adjustments.

     

    (i) Material
      Changes.
      Since
      the date of the latest audited financial statements included within the SEC
      Reports, except as specifically disclosed in the SEC Reports, (i) there has
      been
      no event, occurrence or development that has had or that could reasonably be
      expected to result in a Material Adverse Effect, (ii) the Company has not
      incurred any liabilities (contingent or otherwise) other than (A) trade payables
      and accrued expenses incurred in the ordinary course of business consistent
      with
      past practice and (B) liabilities not required to be reflected in the Company’s
      financial statements pursuant to GAAP or required to be disclosed in filings
      made with the Commission, (iii) the Company has not altered its method of
      accounting, (iv) the Company has not declared or made any dividend or
      distribution of cash or other property to its stockholders or purchased,
      redeemed or made any agreements to purchase or redeem any shares of its capital
      stock and (v) the Company has not issued any equity securities to any officer,
      director or Affiliate, except pursuant to existing Company stock option plans.
      The Company does not have pending before the Commission any request for
      confidential treatment of information.

     

    (j) Litigation.
      Except
      as disclosed in the SEC Reports, there is no action, suit, inquiry, notice
      of
      violation, proceeding or investigation pending or, to the knowledge of the
      Company, threatened against or affecting the Company, any Subsidiary or any
      of
      their respective properties before or by any court, arbitrator, governmental
      or
      administrative agency or regulatory authority (federal, state, county, local
      or
      foreign) (collectively, an “Action”)
      which
      (i) adversely affects or challenges the legality, validity or enforceability
      of
      any of the Transaction Documents or the Securities or (ii) could, if there
      were
      an unfavorable decision, have or reasonably be expected to result in a Material
      Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
      officer thereof, is or has been the subject of any Action involving a claim
      of
      violation of or liability under federal or state securities laws or a claim
      of
      breach of fiduciary duty. There has not been, and to the knowledge of the
      Company, there is not pending or contemplated, any investigation by the
      Commission involving the Company or any current or former director or officer
      of
      the Company. The Commission has not issued any stop order or other order
      suspending the effectiveness of any registration statement filed by the Company
      or any Subsidiary under the Exchange Act or the Securities Act.

     

    (k) Labor
      Relations.
      No
      material labor dispute exists or, to the knowledge of the Company, is imminent
      with respect to any of the employees of the Company which could reasonably
      be
      expected to result in a Material Adverse Effect.

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    (l) Compliance.
      Neither
      the Company nor any Subsidiary (i) is in default under or in violation of (and
      no event has occurred that has not been waived that, with notice or lapse of
      time or both, would result in a default by the Company or any Subsidiary under),
      nor has the Company or any Subsidiary received notice of a claim that it is
      in
      default under or that it is in violation of, any indenture, loan or credit
      agreement or any other agreement or instrument to which it is a party or by
      which it or any of its properties is bound (whether or not such default or
      violation has been waived), (ii) is in violation of any order of any court,
      arbitrator or governmental body, or (iii) is or has been in violation of any
      statute, rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its business
      except in each case as could not have a Material Adverse Effect.

     

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

     

    (n) Title
      to Assets.
      The
      Company and the Subsidiaries have good and marketable title in fee simple to
      all
      real property owned by them that is material to the business of the Company
      and
      the Subsidiaries and good and marketable title in all personal property owned
      by
      them that is material to the business of the Company and the Subsidiaries,
      in
      each case free and clear of all Liens, except for Liens as do not materially
      affect the value of such property and do not materially interfere with the
      use
      made and proposed to be made of such property by the Company and the
      Subsidiaries and Liens for the payment of federal, state or other taxes, the
      payment of which is neither delinquent nor subject to penalties. Any real
      property and facilities held under lease by the Company and the Subsidiaries
      are
      held by them under valid, subsisting and enforceable leases of which the Company
      and the Subsidiaries are in compliance.

     

    (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 necessary or material for use
      in
      connection with their respective businesses as described in the SEC Reports
      and
      which the failure to so have could have 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. To the knowledge 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 of
      others.

     

    (p) Insurance.
      The
      Company and the Subsidiaries are insured by insurers of recognized financial
      responsibility against such losses and risks and in such amounts as are prudent
      and customary in the businesses in which the Company and the Subsidiaries are
      engaged, including, but not limited to, directors and officers insurance
      coverage at least equal to the aggregate Subscription Amount. To the best
      knowledge of the Company, such insurance contracts and policies are accurate
      and
      complete. Neither the Company nor any Subsidiary has any reason to believe
      that
      it will not be able to renew its existing insurance coverage as and when such
      coverage expires or to obtain similar coverage from similar insurers as may
      be
      necessary to continue its business without a significant increase in
      cost.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    (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, in each case in excess of $100,000
      other than (i) for payment of salary or consulting fees for services rendered,
      (ii) reimbursement for expenses incurred on behalf of the Company and (iii)
      for
      other employee benefits, including stock option agreements under any stock
      option plan of the Company.

     

    (r) Sarbanes-Oxley;
      Internal Accounting Controls.
      The
      Company is in material compliance with all provisions of the Sarbanes-Oxley
      Act
      of 2002 which are applicable to the Company as of the Closing Date. 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 GAAP 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 most recently
      filed periodic report under the Exchange Act, as the case may be, is being
      prepared. The Company’s certifying officers have evaluated the effectiveness of
      the Company’s controls and procedures as of the date prior to the filing date of
      the most recently filed periodic report under the Exchange Act (such date,
      the
“Evaluation
      Date”).
      The
      Company presented in its most recently filed periodic report under the Exchange
      Act the conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company’s internal controls or, to the knowledge of the Company,
      in other factors that could significantly affect the Company’s internal
      controls.

     

    (s) Certain
      Fees.
      No
      brokerage or finder’s fees or commissions are or will be payable by the Company
      to any broker, financial advisor or consultant, finder, placement agent,
      investment banker, bank or other Person with respect to the transactions
      contemplated by the Transaction Documents. The Purchasers shall have no
      obligation with respect to any fees or with respect to any claims made by or
      on
      behalf of other Persons for fees of a type contemplated in this Section that
      may
      be due in connection with the transactions contemplated by the Transaction
      Documents.

     

    (t) Private
      Placement.
      Assuming the accuracy of the Purchasers representations and warranties set
      forth
      in Section 3.2, no registration under the Securities Act is required for the
      offer and sale of the Securities by the Company to the Purchasers as
      contemplated hereby. The issuance and sale of the Securities hereunder does
      not
      contravene the rules and regulations of the Trading Market.

     

    (u) Investment
      Company.
      The
      Company is not, and is not an Affiliate of, and immediately after receipt of
      payment for the Securities, will not be or be an Affiliate of, an “investment
      company” within the meaning of the Investment Company Act of 1940, as amended.
      The Company shall conduct its business in a manner so that it will not become
      subject to the Investment Company Act.

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    (v) [RESERVED]

     

    (w) Listing
      and Maintenance Requirements.
      The
      Company’s Common Stock is registered pursuant to Section 12(b) of the Exchange
      Act, and the Company has taken no action designed to, or which to its knowledge
      is likely to have the effect of, terminating the registration of the Common
      Stock under the Exchange Act nor has the Company received any notification
      that
      the Commission is contemplating terminating such registration. The Company
      has
      not, in the 12 months preceding the date hereof, received notice from any
      Trading Market on which the Common Stock is or has been listed or quoted to
      the
      effect that the Company is not in compliance with the listing or maintenance
      requirements of such Trading Market. The Company is, and has no reason to the
      best of its knowledge to believe that it will not in the foreseeable future
      continue to be, in compliance with all such listing and maintenance
      requirements.

     

    (x) Application
      of Takeover Protections.
      The
      Company and its Board of Directors have taken all necessary action, if any,
      in
      order to render inapplicable any control share acquisition, business
      combination, poison pill (including any distribution under a rights agreement)
      or other similar anti-takeover provision under the Company’s Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a result
      of the Purchasers and the Company fulfilling their obligations or exercising
      their rights under the Transaction Documents, including without limitation
      as a
      result of the Company’s issuance of the Securities and the Purchasers’ ownership
      of the Securities.

     

    (y) Disclosure.
      Other
      than information that shall be made public pursuant to the first sentence of
      Section 4.4, the Company confirms that, neither it nor any other Person acting
      on its behalf has provided any of the Purchasers or their agents or counsel
      with
      any information that constitutes or might constitute material, non-public
      information. The Company understands and confirms that the Purchasers will
      rely
      on the foregoing representations and covenants in effecting transactions in
      securities of the Company. All disclosure provided to the Purchasers regarding
      the Company, its business and the transactions contemplated hereby, including
      the Disclosure Schedules to this Agreement, furnished by or on behalf of the
      Company with respect to the representations and warranties made herein are
      true
      and correct with respect to such representations and warranties 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. The Company
      acknowledges and agrees that no Purchaser makes or has made any representations
      or warranties with respect to the transactions contemplated hereby other than
      those specifically set forth in Section 3.2 hereof.

     

    (z) [RESERVED] 

     

    (aa) Solvency.
      Based
      on the financial condition of the Company as of the Closing Date after giving
      effect to the receipt by the Company of the proceeds from the sale of the
      Securities hereunder, (i) the Company’s fair saleable value of its assets
      exceeds the amount that will be required to be paid on or in respect of the
      Company’s existing debts and other liabilities (including known contingent
      liabilities) as they mature; (ii) the Company’s assets do not constitute
      unreasonably small capital to carry on its business for the current fiscal
      year
      as now conducted and as proposed to be conducted including its capital needs
      taking into account the particular capital requirements of the business
      conducted by the Company, and projected capital requirements and capital
      availability thereof; and (iii) the current cash flow of the Company, together
      with the proceeds the Company would receive, were it to liquidate all of its
      assets, after taking into account all anticipated uses of the cash, would be
      sufficient to pay all amounts on or in respect of its debt when such amounts
      are
      required to be paid. The Company does not intend to incur debts beyond its
      ability to pay such debts as they mature (taking into account the timing and
      amounts of cash to be payable on or in respect of its debt). The Company has
      no
      knowledge of any facts or circumstances which lead it to believe that it will
      file for reorganization or liquidation under the bankruptcy or reorganization
      laws of any jurisdiction within one year from the Closing Date. The SEC Reports
      set forth as of the dates thereof all outstanding secured and unsecured
      Indebtedness of the Company or any Subsidiary, or for which the Company or
      any
      Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness”
shall
      mean (a) any liabilities for borrowed money or amounts owed in excess of
      $100,000 (other than trade accounts payable incurred in the ordinary course
      of
      business), (b) all guaranties, endorsements and other contingent obligations
      in
      respect of Indebtedness of others, whether or not the same are or should be
      reflected in the Company’s balance sheet (or the notes thereto), except
      guaranties by endorsement of negotiable instruments for deposit or collection
      or
      similar transactions in the ordinary course of business; and (c) the present
      value of any lease payments
      in excess of $100,000 due under leases required to be capitalized in accordance
      with GAAP. Neither
      the Company nor any Subsidiary is in default with respect to any
      Indebtedness.

     

    
      
         

      

      
        -13-

        
          

        

      

      
         

      

    

    (bb) Form
      SB-2 Eligibility.
      The
      Company is eligible to register the resale of the Securities for resale by
      the
      Purchaser on Form SB-2 promulgated under the Securities Act.

     

    (cc) Tax
      Status.
      Except
      for matters that would not, individually or in the aggregate, have or reasonably
      be expected to result in a Material Adverse Effect, the Company and each
      Subsidiary has filed all necessary federal, state and foreign income and
      franchise tax returns and has paid or accrued all taxes shown as due thereon,
      and the Company has no knowledge of a tax deficiency which has been asserted
      or
      threatened against the Company or any Subsidiary.

     

    (dd) No
      General Solicitation.
      Neither
      the Company nor any person acting on behalf of the Company has offered or sold
      any of the Securities by any form of general solicitation or general
      advertising. The Company has offered the Securities for sale only to the
      Purchasers and certain other “accredited investors” within the meaning of Rule
      501 under the Securities Act.

     

    (ee) Foreign
      Corrupt Practices.
      Neither
      the Company, nor to the knowledge of the Company, any agent or other person
      acting on behalf of the Company, has (i) directly or indirectly, used any funds
      for unlawful contributions, gifts, entertainment or other unlawful expenses
      related to foreign or domestic political activity, (ii) made any unlawful
      payment to foreign or domestic government officials or employees or to any
      foreign or domestic political parties or campaigns from corporate funds, (iii)
      failed to disclose fully any contribution made by the Company (or made by any
      person acting on its behalf of which the Company is aware) which is in violation
      of law, or (iv) violated in any material respect any provision of the Foreign
      Corrupt Practices Act of 1977, as amended.

     

    (ff) Accountants.
      The
      Company’s existing accountants are set forth on Schedule
      3.1(ff)
      of the
      Disclosure Schedule. To the knowledge of the Company, such accountants are
      a
      registered public accounting firm as required by the Securities
      Act.

     

    (gg) Acknowledgment
      Regarding Purchasers’ Purchase of Securities.
      The
      Company acknowledges and agrees that each of the Purchasers is acting solely
      in
      the capacity of an arm’s length purchaser with respect to the Transaction
      Documents and the transactions contemplated hereby. The Company further
      acknowledges that no Purchaser is acting as a financial advisor or fiduciary
      of
      the Company (or in any similar capacity) with respect to this Agreement and
      the
      transactions contemplated hereby and any advice given by any Purchaser or any
      of
      their respective representatives or agents in connection with this Agreement
      and
      the transactions contemplated hereby is merely incidental to the Purchasers’
purchase of the Securities. The Company further represents to each Purchaser
      that the Company’s decision to enter into this Agreement has been based solely
      on the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

     

    
      
         

      

      
        -14-

        
          

        

      

      
         

      

    

    (hh) Acknowledgement
      Regarding Purchasers’ Trading Activity.
      Anything in this Agreement or elsewhere herein to the contrary notwithstanding
      (except for Section 4.15 hereof), it is understood and agreed by the Company
      (i)
      that none of the Purchasers have been asked to agree, nor has any Purchaser
      agreed, to desist from purchasing or selling, long and/or short, securities
      of
      the Company, or “derivative” securities based on securities issued by the
      Company or to hold the Securities for any specified term; (ii) that past or
      future open market or other transactions by any Purchaser, including Short
      Sales, and specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
      placement transactions, may negatively impact the market price of the Company’s
      publicly-traded securities; (iii) that any Purchaser, and counter parties in
      “derivative” transactions to which any such Purchaser is a party, directly or
      indirectly, presently may have a “short” position in the Common Stock, and (iv)
      that each Purchaser shall not be deemed to have any affiliation with or control
      over any arm’s length counter-party in any “derivative” transaction.
The
      Company further understands and acknowledges that (a) one or more Purchasers
      may
      engage in hedging activities at various times during the period that the
      Securities are outstanding, including, without limitation, during the periods
      that the value of the Warrant Shares deliverable with respect to Securities
      are
      being determined and (b) such hedging activities (if any) could reduce the
      value
      of the existing stockholders' equity interests in the Company at and after
      the
      time that the hedging activities are being conducted.  The Company
      acknowledges that such aforementioned hedging activities do not constitute
      a
      breach of any of the Transaction Documents.

     

    (ii) Manipulation
      of Price. 
      The Company has not, and to its knowledge no one acting on its behalf has,
      (i)
      taken, directly or indirectly, any action designed to cause or to result in
      the
      stabilization or manipulation of the price of any security of the Company to
      facilitate the sale or resale of any of the Securities, (ii) sold, bid for,
      purchased, or, paid any compensation for soliciting purchases of, any of the
      Securities (other than for the placement agent’s placement of the Securities),
      or (iii) paid or agreed to pay to any person any compensation for soliciting
      another to purchase any other securities of the Company.

     

    3.2 Representations
      and Warranties of the Purchasers

     

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

     

    (a) Organization;
      Authority.
      Such
      Purchaser is an entity duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its organization with full right,
      corporate or partnership power and authority to enter into and to consummate
      the
      transactions contemplated by the Transaction Documents and otherwise to carry
      out its obligations hereunder and thereunder. The execution, delivery and
      performance by such Purchaser of the transactions contemplated by this Agreement
      have been duly authorized by all necessary corporate or similar action on the
      part of such Purchaser. Each Transaction Document to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in
      accordance with the terms hereof, will constitute the valid and legally binding
      obligation of such Purchaser, enforceable against it in accordance with its
      terms, except (i) as limited by general equitable principles and applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of general
      application affecting enforcement of creditors’ rights generally, (ii) as
      limited by laws relating to the availability of specific performance, injunctive
      relief or other equitable remedies and (iii) insofar as indemnification and
      contribution provisions may be limited by applicable law.

     

    (b) Own
      Account.
      Such
      Purchaser understands that the Securities are “restricted securities” and have
      not been registered under the Securities Act or any applicable state securities
      law and is acquiring the Securities as principal for its own account and not
      with a view to or for distributing or reselling such Securities or any part
      thereof in violation of the Securities Act or any applicable state securities
      law, has no present intention of distributing any of such Securities in
      violation of the Securities Act or any applicable state securities law and
      has
      no arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not limiting
      such Purchaser’s right to sell the Securities pursuant to the Registration
      Statement or otherwise in compliance with applicable federal and state
      securities laws) in violation of the Securities Act or any applicable state
      securities law. Such Purchaser is acquiring the Securities hereunder in the
      ordinary course of its business. Such Purchaser does not have any agreement
      or
      understanding, directly or indirectly, with any Person to distribute any of
      the
      Securities.

     

    
      
         

      

      
        -15-

        
          

        

      

      
         

      

    

    (c) Purchaser
      Status.
      At the
      time such Purchaser was offered the Securities, it was, and at the date hereof
      it is, and on each date on which it exercises any Warrants, it will be either:
      (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
      (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
      buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
      not required to be registered as a broker-dealer under Section 15 of the
      Exchange Act. 

     

    (d) Experience
      of Such Purchaser.
      Such
      Purchaser, either alone or together with its representatives, has such
      knowledge, sophistication and experience in business and financial matters
      so as
      to be capable of evaluating the merits and risks of the prospective investment
      in the Securities, and has so evaluated the merits and risks of such investment.
      Such Purchaser is able to bear the economic risk of an investment in the
      Securities and, at the present time, is able to afford a complete loss of such
      investment. Such Purchaser, either alone or together with its representatives,
      had the opportunity to ask questions of the Company concerning the investment
      contemplated hereby and to obtain any additional information they have deemed
      necessary as a condition to making such investment and access to information
      filed with the Commission; provided that such access does not relieve the
      Company of its obligation to provide complete and accurate Disclosure Schedules
      without, except as specifically referenced herein or therein, reliance on the
      SEC Reports.

     

    (e) General
      Solicitation.
      Such
      Purchaser 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.

     

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

     

    The
      Company acknowledges and agrees that each Purchaser 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
      and in the Accredited Investment Questionnaire.

     

    
      
         

      

      
        -16-

        
          

        

      

      
         

      

    

    ARTICLE
      IV.

     

    OTHER
      AGREEMENTS OF THE PARTIES

     

    4.1 Transfer
      Restrictions. 

     

    (a) The
      Securities may only be disposed of in compliance with state and federal
      securities laws. In connection with any transfer of Securities other than
      pursuant to an effective registration statement or Rule 144, to the Company
      or
      to an affiliate of a Purchaser 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 and 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. As a condition of transfer, any such transferee shall agree in writing
      to
      be bound by the terms of this Agreement and shall have the rights of a Purchaser
      under this Agreement and the Registration Rights Agreement.

     

    (b) The
      Purchasers agree to the imprinting, so long as is required by this Section
      4.1(b), of a legend on any of the Securities in the following form:

     

    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 OR TRANSFERRED 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 TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN
      CONNECTION WITH SUCH DISPOSITION. THESE SECURITIES MAY BE PLEDGED IN CONNECTION
      WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN
      WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
      501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
      SECURITIES.

     

    The
      Company acknowledges and agrees that a Purchaser may from time to time pledge
      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
      arrangement, such Purchaser may transfer pledged or secured Securities to the
      pledgees or secured parties. Such a pledge or transfer would not be subject
      to
      approval of the Company and no legal opinion of legal counsel of the pledgee,
      secured party or pledgor shall be required in connection therewith. Further,
      no
      notice shall be required of such pledge. At the appropriate Purchaser’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, if the Securities are subject
      to registration pursuant to the Registration Rights Agreement, the preparation
      and filing of any required prospectus supplement under Rule 424(b)(3) under
      the
      Securities Act or other applicable provision of the Securities Act to
      appropriately amend the list of Selling Stockholders thereunder.

     

    
      
         

      

      
        -17-

        
          

        

      

      
         

      

    

    (c) Certificates
      evidencing the Shares and Warrant Shares shall not contain any legend (including
      the legend set forth in Section 4.1(b)), (i) while a registration statement
      (including the Registration Statement) covering the resale of such security
      is
      effective under the Securities Act, or (ii) following any sale of such Shares
      or
      Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares
      are eligible for sale under Rule 144(k), or (iv) if such legend is not required
      under applicable requirements of the Securities Act (including judicial
      interpretations and pronouncements issued by the staff of the Commission).
      The
      Company shall cause its counsel to issue a legal opinion to the Company’s
      transfer agent promptly after the Effective Date if required by the Company’s
      transfer agent to effect the removal of the legend hereunder. If all or any
      portion of a Warrant is exercised at a time when there is an effective
      registration statement to cover the resale of the Warrant Shares, such Warrant
      Shares shall be issued free of all legends. The Company agrees that following
      the Effective Date or at such time as such legend is no longer required under
      this Section 4.1(c), it will, no later than three Trading Days following the
      delivery by a Purchaser and receipt by the Company or the Company’s transfer
      agent of a certificate representing Shares or Warrant Shares, as the case may
      be, issued with a restrictive legend (such third Trading Day, the “Legend
      Removal Date”),
      deliver or cause to be delivered to such Purchaser 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. Certificates for Securities subject to legend removal hereunder shall
      be transmitted by the transfer agent of the Company to the Purchasers by
      crediting the account of the Purchaser’s prime broker with the Depository Trust
      Company System.

    

    (d) In
      addition to such Purchaser’s other available remedies, the Company shall pay to
      a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
      each $2,500 of Shares or Warrant Shares (based on the Closing Price of the
      Common Stock on the date such Securities are submitted to the Company’s transfer
      agent) delivered for removal of the restrictive legend and subject to Section
      4.1(c), $5 per Trading Day (increasing to $10 per Trading Day five (5) Trading
      Days after such damages have begun to accrue) for each Trading Day after the
      Legend Removal Date until such certificate is delivered without a legend.
      Nothing herein shall limit such Purchaser’s right to pursue actual damages for
      the Company’s failure to deliver certificates representing any Securities as
      required by the Transaction Documents, and such Purchaser shall have the right
      to pursue all remedies available to it at law or in equity including, without
      limitation, a decree of specific performance and/or injunctive
      relief.

     

    (e) Each
      Purchaser, severally and not jointly with the other Purchasers, agrees that
      the
      removal of the restrictive legend from certificates representing Securities
      as
      set forth in this Section 4.1 is predicated upon the Company’s reliance that the
      Purchaser will sell any Securities pursuant to either the registration
      requirements of the Securities Act, including any applicable prospectus delivery
      requirements, or an exemption therefrom.

     

    4.2 Furnishing
      of Information

     

    .
      As long
      as any Purchaser owns Securities, the Company covenants to timely file (or
      obtain extensions in respect thereof and file within the applicable grace
      period) all reports required to be filed by the Company after the date hereof
      pursuant to the Exchange Act. As long as any Purchaser owns Securities, if
      the
      Company is not required to file reports pursuant to the Exchange Act, it will
      prepare and furnish to the Purchasers and make publicly available in accordance
      with Rule 144(c) such information as is required for the Purchasers to sell
      the
      Securities under Rule 144. The Company further covenants that it will take
      such
      further action as any holder of Securities may reasonably request, all to the
      extent required from time to time to enable such Person to sell such Securities
      without registration under the Securities Act within the limitation of the
      exemptions provided by Rule 144.

     

    
      
         

      

      
        -18-

        
          

        

      

      
         

      

    

    4.3 Integration

     

    .
      The
      Company shall not sell, offer for sale or solicit offers to buy or otherwise
      negotiate in respect of any security (as defined in Section 2 of the Securities
      Act) that would be integrated with the offer or sale of the Securities in a
      manner that would require the registration under the Securities Act of the
      sale
      of the Securities to the Purchasers.

     

    4.4 Securities
      Laws Disclosure; Publicity. The Company shall, on the 4th
      Trading
      Day following the date hereof, issue a Current Report on Form 8-K, disclosing
      the material terms of the transactions contemplated hereby, and shall attach
      the
      Transaction Documents thereto. The Company and each Purchaser shall consult
      with
      each other in issuing any other press releases with respect to the transactions
      contemplated hereby, and neither the Company nor any Purchaser shall issue
      any
      such press release or otherwise make any such public statement without the
      prior
      consent of the Company, with respect to any press release of any Purchaser,
      or
      without the prior consent of each Purchaser, with respect to any press release
      of the Company, which consent shall not unreasonably be withheld, except if
      such
      disclosure is required by law, in which case the disclosing party shall promptly
      provide the other party with prior notice of such public statement or
      communication. Notwithstanding the foregoing, the Company shall not publicly
      disclose the name of any Purchaser, or include the name of any Purchaser in
      any
      filing with the Commission or any regulatory agency or Trading Market, without
      the prior written consent of such Purchaser, except (i) as required by federal
      securities law in connection with the registration statement contemplated by
      the
      Registration Rights Agreement and (ii) to the extent such disclosure is required
      by law or Trading Market regulations, in which case the Company shall provide
      the Purchasers with prior notice of such disclosure permitted under subclause
      (i) or (ii).

     

    4.5 Shareholder
      Rights Plan. No claim will be made or enforced by the Company or, to the
      knowledge of the Company, any other Person that any Purchaser is an “Acquiring
      Person” under any shareholder rights plan or similar plan or arrangement in
      effect or hereafter adopted by the Company, or that any Purchaser could be
      deemed to trigger the provisions of any such plan or arrangement, by virtue
      of
      receiving Securities under the Transaction Documents or under any other
      agreement between the Company and the Purchasers. The Company shall conduct
      its
      business in a manner so that it will not become subject to the Investment
      Company Act.

     

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

     

    4.7 Use
      of
      Proceeds. Except as set forth on Schedule 4.7 attached hereto, the Company
      shall
      use the net proceeds from the sale of the Securities hereunder for working
      capital purposes and not for the satisfaction of any portion of the Company’s
      debt (other than payment of trade payables in the ordinary course of the
      Company’s business and prior practices), to redeem any Common Stock or Common
      Stock Equivalents or to settle any outstanding litigation.

     

    4.8 [RESERVED]

     

    
      
         

      

      
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    4.9 Indemnification
      of Purchasers. Subject to the provisions of this Section 4.9, the Company will
      indemnify and hold the Purchasers and their directors, officers, shareholders,
      members, partners, employees and agents (each, a “Purchaser Party”) harmless
      from any and all losses, liabilities, obligations, claims, contingencies,
      damages, costs and expenses, including all judgments, amounts paid in
      settlements, court costs and reasonable attorneys’ fees and costs of
      investigation that any such Purchaser Party may suffer or incur as a result
      of
      or relating to (a) any breach of any of the representations, warranties,
      covenants or agreements made by the Company in this Agreement or in the other
      Transaction Documents or (b) any action instituted against a Purchaser, or
      any
      of them or their respective Affiliates, by any stockholder of the Company who
      is
      not an Affiliate of such Purchaser, with respect to any of the transactions
      contemplated by the Transaction Documents (unless such action is based upon
      a
      breach of such Purchaser’s representations, warranties or covenants under the
      Transaction Documents or any agreements or understandings such Purchaser may
      have with any such stockholder or any violations by the Purchaser of state
      or
      federal securities laws or any conduct by such Purchaser which constitutes
      fraud, gross negligence, willful misconduct or malfeasance). If any action
      shall
      be brought against any Purchaser Party in respect of which indemnity may be
      sought pursuant to this Agreement, such Purchaser Party shall promptly notify
      the Company in writing, and the Company shall have the right to assume the
      defense thereof with counsel of its own choosing. Any Purchaser Party shall
      have
      the right to employ separate counsel in any such action and participate in
      the
      defense thereof, but the fees and expenses of such counsel shall be at the
      expense of such Purchaser Party except to the extent that (i) the employment
      thereof has been specifically authorized by the Company in writing, (ii) the
      Company has failed after a reasonable period of time to assume such defense
      and
      to employ counsel or (iii) in such action there is, in the reasonable opinion
      of
      such separate counsel, a material conflict on any material issue between the
      position of the Company and the position of such Purchaser Party. The Company
      will not be liable to any Purchaser Party under this Agreement (i) for any
      settlement by a Purchaser Party effected without the Company’s prior written
      consent, which shall not be unreasonably withheld or delayed; or (ii) to the
      extent, but only to the extent that a loss, claim, damage or liability is
      attributable to any Purchaser Party’s breach of any of the representations,
      warranties, covenants or agreements made by the Purchasers in this Agreement
      or
      in the other Transaction Documents.

     

    4.10 Reservation
      of Common Stock.
      As of
      the date hereof, the Company has reserved and the Company shall continue to
      reserve and keep available at all times, free of preemptive rights, a sufficient
      number of shares of Common Stock for the purpose of enabling the Company to
      issue Shares pursuant to this Agreement and Warrant Shares pursuant to any
      exercise of the Warrants. 

     

    4.11 Listing
      of
      Common Stock.

     

    The
      Company hereby agrees to use best efforts to maintain the listing of the Common
      Stock on a Trading Market, and as soon as reasonably practicable following
      the
      Closing (but not later than the earlier of the Effective Date and the first
      anniversary of the Closing Date) to list all of the Shares and Warrant Shares
      on
      such Trading Market. The Company further agrees, if the Company applies to
      have
      the Common Stock traded on any other Trading Market, it will include in such
      application all of the Shares and Warrant Shares, and will take such other
      action as is necessary to cause all of the Shares and Warrant Shares to be
      listed on such other Trading Market as promptly as possible. The Company will
      take all action reasonably necessary to continue the listing and trading of
      its
      Common Stock on a Trading Market and will comply in all respects with the
      Company’s reporting, filing and other obligations under the bylaws or rules of
      the Trading Market.

     

    4.12 Equal
      Treatment of Purchasers. No consideration shall be offered or paid to any Person
      to amend or consent to a waiver or modification of any provision of any of
      the
      Transaction Documents unless the same consideration is also offered to all
      of
      the parties to the Transaction Documents. For clarification purposes, this
      provision constitutes a separate right granted to each Purchaser by the Company
      and negotiated separately by each Purchaser, and is intended to treat for the
      Company the Purchasers as a class and shall not in any way be construed as
      the
      Purchasers acting in concert or as a group with respect to the purchase,
      disposition or voting of Securities or otherwise.

     

    
      
         

      

      
        -20-

        
          

        

      

      
         

      

    

    4.13 [RESERVED]
      

     

    4.14 [RESERVED]

     

    4.15 Short
      Sales and Confidentiality After The Date Hereof. Each
      Purchaser severally and not jointly with the other Purchasers 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 after
      the
      Discussion Time and ending at the time that the transactions contemplated by
      this Agreement are first publicly announced as described
      in
      Section 4.4. Each
      Purchaser, severally and not jointly with the other Purchasers, covenants that
      until such time as the transactions contemplated by this Agreement are publicly
      disclosed by the Company as described in Section 4.4, such Purchaser will
      maintain, the confidentiality of all disclosures made to it in connection with
      this transaction (including the existence and terms of this transaction). Each
      Purchaser understands and acknowledges, severally and not jointly with any
      other
      Purchaser, that the Commission currently takes the position that coverage of
      short sales of shares of the Common Stock “against the box” prior to the
      Effective Date of the Registration Statement with the Securities 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. Notwithstanding
      the foregoing, no Purchaser makes any representation, warranty or covenant
      hereby that it will not engage in Short Sales in the securities of the Company
      after the time that the transactions contemplated by this Agreement are first
      publicly announced as described in Section 4.4. Notwithstanding
      the foregoing, in the case of a Purchaser that is a multi-managed investment
      vehicle whereby separate portfolio managers manage separate portions of such
      Purchaser's assets and the portfolio managers have no direct knowledge of the
      investment decisions made by the portfolio managers managing other portions
      of
      such Purchaser's assets, the covenant set forth above shall only apply with
      respect to the portion of assets managed by the portfolio manager that made
      the
      investment decision to purchase the Securities covered by this
      Agreement.

     

    4.16 Delivery
      of Securities After Closing. The Company shall deliver, or cause to be
      delivered, the respective Securities purchased by each Purchaser to such
      Purchaser within 3 Trading Days of the Closing Date.

     

    4.17 [RESERVED].

     

    ARTICLE
      V.

     

    MISCELLANEOUS

     

    5.1 Termination. 
      This Agreement may be terminated by any Purchaser, as to such Purchaser’s
      obligations hereunder only and without any effect whatsoever on the obligations
      between the Company and the other Purchasers, by written notice to the other
      parties, if the Closing has not been consummated on or before December 31,
      2006;
      provided, however, that no such termination will affect the right of any party
      to sue for any breach by the other party (or parties).

     

    
      
         

      

      
        -21-

        
          

        

      

      
         

      

    

    5.2 Fees
      and
      Expenses. Except as expressly set forth in the Transaction Documents to the
      contrary, each party shall pay the fees and expenses of its advisers, counsel,
      accountants and other experts, if any, and all other expenses incurred by such
      party incident to the negotiation, preparation, execution, delivery and
      performance of this Agreement. The Company shall pay all transfer agent fees,
      stamp taxes and other taxes and duties levied in connection with the delivery
      of
      any Securities.

     

    5.3 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 and understandings,
      oral or written, with respect to such matters, which the parties acknowledge
      have been merged into such documents, exhibits and schedules.

     

    5.4 Notices.
      Any and all notices or other communications or deliveries required or permitted
      to be provided hereunder shall be in writing and shall be deemed given and
      effective on the earliest of (a) the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile number set forth
      on
      the signature pages attached hereto prior to 11:00 a.m. (New York City time)
      on
      a Trading Day, (b) the next Trading Day after the date of transmission, if
      such
      notice or communication is delivered via facsimile at the facsimile number
      set
      forth on the signature pages attached hereto on a day that is not a Trading
      Day
      or later than 11:00 a.m. (New York City time) on any Trading Day, (c) the
      3rd
      Trading
      Day following the date of mailing, if sent by U.S. nationally recognized
      overnight courier service, or (d) upon actual receipt by the party to whom
      such
      notice is required to be given. The address for such notices and communications
      shall be as set forth on the signature pages attached hereto.

     

    5.5 Amendments;
      Waivers. No provision of this Agreement may be waived or amended except in
      a
      written instrument signed, in the case of an amendment, by the Company and
      each
      Purchaser or, in the case of a waiver, by the party against whom enforcement
      of
      any such waiver is sought. No waiver of any default with respect to any
      provision, condition or requirement of this Agreement shall be deemed to be
      a
      continuing waiver in the future or a waiver of any subsequent default or a
      waiver of any other provision, condition or requirement hereof, nor shall any
      delay or omission of either party to exercise any right hereunder in any manner
      impair the exercise of any such right.

     

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

     

    5.7 Successors
      and Assigns. This Agreement shall be binding upon and inure to the benefit
      of
      the parties and their successors and permitted assigns. The Company may not
      assign this Agreement or any rights or obligations hereunder without the prior
      written consent of each Purchaser. Any Purchaser may assign any or all of its
      rights under this Agreement to any Person, with the exclusion of any Person
      that
      is an operating company and that is a direct competitor of the Company, to
      whom
      such Purchaser assigns or transfers any Securities, provided such transferee
      agrees in writing to be bound, with respect to the transferred Securities,
      by
      the provisions in this Agreement and the other Transaction Documents that apply
      to the “Purchasers”.

     

    
      
         

      

      
        -22-

        
          

        

      

      
         

      

    

    5.8 No
      Third-Party Beneficiaries. This Agreement is intended for the benefit of the
      parties hereto and their respective successors and permitted assigns and is
      not
      for the benefit of, nor may any provision hereof be enforced by, any other
      Person, except as otherwise set forth in Section 4.9.

     

    5.9 Governing
      Law. All questions concerning the construction, validity, enforcement and
      interpretation of the Transaction Documents shall be governed by and construed
      and enforced in accordance with the internal laws of the State of New York,
      without regard to the principles of conflicts of law thereof. Each party agrees
      that all legal proceedings concerning the interpretations, enforcement and
      defense of the transactions contemplated by this Agreement and any other
      Transaction Documents (whether brought against a party hereto or its respective
      affiliates, directors, officers, shareholders, employees or agents) shall be
      commenced exclusively in the state and federal courts sitting in the City of
      New
      York. Each party hereby irrevocably submits to the exclusive jurisdiction of
      the
      state and federal courts sitting in the City of New York, borough of Manhattan
      for the adjudication of any dispute hereunder or in connection herewith or
      with
      any transaction contemplated hereby or discussed herein (including with respect
      to the enforcement of any of the Transaction Documents), and hereby irrevocably
      waives, and agrees not to assert in any suit, action or proceeding, any claim
      that it is not personally subject to the jurisdiction of any such court, that
      such suit, action or proceeding is improper or inconvenient venue for such
      proceeding. Each party hereby irrevocably waives personal service of process
      and
      consents to process being served in any such suit, action or proceeding by
      mailing a copy thereof via registered or certified mail or overnight delivery
      (with evidence of delivery) to such party at the address in effect for notices
      to it under this Agreement and agrees that such service shall constitute good
      and sufficient service of process and notice thereof. Nothing contained herein
      shall be deemed to limit in any way any right to serve process in any manner
      permitted by law. The parties hereby waive all rights to a trial by jury. If
      either party shall commence an action or proceeding to enforce any provisions
      of
      the Transaction Documents, then the prevailing party in such action or
      proceeding shall be reimbursed by the other party for its attorneys’ fees and
      other costs and expenses incurred with the investigation, preparation and
      prosecution of such action or proceeding.

     

    5.10 Survival.
      The representations and warranties contained herein shall survive the Closing
      and the delivery of the Shares and Warrant Shares.

     

    5.11 Execution
      and Counterparts. 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.

     

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

     

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

     

    
      
         

      

      
        -23-

        
          

        

      

      
         

      

    

    5.14 Replacement
      of Securities. If any certificate or instrument evidencing any Securities is
      mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
      issued in exchange and substitution for and upon cancellation thereof, 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.

     

    5.15 Remedies.
      In addition to being entitled to exercise all rights provided herein or granted
      by law, including recovery of damages, each of the Purchasers and the Company
      will be entitled to specific performance under the Transaction Documents. The
      parties agree that monetary damages may not be adequate compensation for any
      loss incurred by reason of any breach of obligations 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.

     

    5.16 Payment
      Set Aside. To the extent that the Company makes a payment or payments to any
      Purchaser pursuant to any Transaction Document or a Purchaser 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.

     

    5.17 Independent
      Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser
      under any Transaction Document are several and not joint with the obligations
      of
      any other Purchaser, and no Purchaser shall be responsible in any way for the
      performance of the obligations of any other Purchaser under any Transaction
      Document. Nothing contained herein or in any Transaction Document, and no action
      taken by any Purchaser pursuant thereto, shall be deemed to constitute the
      Purchasers as a partnership, an association, a joint venture or any other kind
      of entity, or create a presumption that the Purchasers are in any way acting
      in
      concert or as a group with respect to such obligations or the transactions
      contemplated by the Transaction Documents. Each Purchaser shall be entitled
      to
      independently protect and enforce its rights, including without limitation,
      the
      rights arising out of this Agreement or out of the other Transaction Documents,
      and it shall not be necessary for any other Purchaser to be joined as an
      additional party in any proceeding for such purpose. Each Purchaser has been
      represented by its own separate legal counsel in their review and negotiation
      of
      the Transaction Documents. The Company has elected to provide all Purchasers
      with the same terms and Transaction Documents for the convenience of the Company
      and not because it was required or requested to do so by the
      Purchasers.

     

    5.18 Liquidated
      Damages. The Company’s obligations to pay any partial liquidated damages or
      other amounts owing under the Transaction Documents is a continuing obligation
      of the Company and shall not terminate until all unpaid partial liquidated
      damages and other amounts have been paid notwithstanding the fact that the
      instrument or security pursuant to which such partial liquidated damages or
      other amounts are due and payable shall have been canceled.

     

    5.19 Construction.
      The parties agree that each of them and/or their respective counsel has reviewed
      and had an opportunity to revise the Transaction Documents and, therefore,
      the
      normal rule of construction to the effect that any ambiguities are to be
      resolved against the drafting party shall not be employed in the interpretation
      of the Transaction Documents or any amendments hereto.

     

    (Signature
      Pages Follow)

    
      
         

      

      
        -24-

        
          

        

      

      
         

      

    

    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.

     

    

    
      	
              XFONE,
                INC.

               

            	 
	
              By:
                /s/ Guy Nissenson

              Name:
                Guy Nissenson

              Title:
                President & CEO

               

              Address
                for Notice:

               

              Attn:
                Alon Mualem, CFO

              C/O
                Xfone 018 Ltd.

              1
                Haodem Street, 3rd
                Floor

              Kiryat
                Matalon, Petach Tikva

              Israel

              Fax:
                + 972-39238838

               

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

               

              Attn:
                Guy Nissenson, President & CEO

              C/O
                Xfone USA, Inc.

              2506
                Lakeland Drive Suite 405 Jackson, 

              Mississippi
                39232

            	 

    

    

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK

    SIGNATURE
      PAGE FOR PURCHASER FOLLOWS]

    
      
         

      

      
        -25-

        
          

        

      

      
         

      

    

    [PURCHASER
      SIGNATURE PAGES TO XFN SECURITIES PURCHASE AGREEMENT]

    

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

     

    Name
      of
      Purchaser: ____________________________________________________________

    Signature
      of Authorized Signatory of Purchaser:
      _____________________________________

    Name
      of
      Authorized Signatory:
      ___________________________________________________

    Title
      of
      Authorized Signatory:
      ____________________________________________________

    Email
      Address of
      Purchaser:______________________________________________________

    

    Address
      for Notice of Purchaser:

    _____________________________________________________________________________

    _____________________________________________________________________________

    _____________________________________________________________________________

    _____________________________________________________________________________

    

    Address
      for Delivery of Securities for Purchaser (if not same as above):

    _____________________________________________________________________________

    _____________________________________________________________________________

    _____________________________________________________________________________

    _____________________________________________________________________________

    

    Subscription
      Amount: _______________

    Shares:
      __________

    Warrant
      Shares: __________

    

    

    [SIGNATURE
      PAGES CONTINUE]

    

    
      
         

      

      
        -26-

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