<SEC-DOCUMENT>0001062993-14-001492.txt : 20140319
<SEC-HEADER>0001062993-14-001492.hdr.sgml : 20140319
<ACCEPTANCE-DATETIME>20140319170603
ACCESSION NUMBER:		0001062993-14-001492
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20140313
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20140319
DATE AS OF CHANGE:		20140319

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ANAVEX LIFE SCIENCES CORP.
		CENTRAL INDEX KEY:			0001314052
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731]
		IRS NUMBER:				208365999
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-51652
		FILM NUMBER:		14704633

	BUSINESS ADDRESS:	
		STREET 1:		51 W 52ND STREET,
		STREET 2:		7TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019-6163
		BUSINESS PHONE:		800-689-3939

	MAIL ADDRESS:	
		STREET 1:		51 W 52ND STREET,
		STREET 2:		7TH FLOOR
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10019-6163

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Thrifty Printing Inc.
		DATE OF NAME CHANGE:	20050111
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>

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<P align=center><B><FONT size=5>UNITED STATES</FONT></B><BR><B><FONT
size=5>SECURITIES AND EXCHANGE COMMISSION </FONT></B><BR>Washington, D.C.
20549<B> </B></P>
<P align=center><B><FONT size=5>FORM 8-K </FONT></B></P>
<P align=center>Current Report <BR>Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934 </P>
<P align=center>Date of Report (Date of earliest event reported): <B><U>March
13, 2014</U></B></P>
<P align=center><B><U><FONT size=5>ANAVEX LIFE SCIENCES CORP.</FONT></U></B><B>
</B><BR>
(Exact name of registrant as specified in its charter) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center><B><U>Nevada </U></B></TD>
    <TD align=center width="33%"><B><U>000-51652 </U></B></TD>
  <TD align=center width="33%"><B><U>20-8365999 </U></B></TD>
  </TR>
  <TR vAlign=top>
    <TD align=center>(State or other jurisdiction </TD>
    <TD align=center width="33%">(Commission </TD>
  <TD align=center width="33%">(IRS Employer </TD>
  </TR>
  <TR vAlign=top>
    <TD align=center>of incorporation) </TD>
    <TD align=center width="33%">File Number) </TD>
  <TD align=center width="33%">Identification No.) </TD>
  </TR></TABLE>
<P align=center><B><U>51 West 52nd Street, 7th Floor, New York, NY USA
10019</U></B><BR>(Address of principal executive offices) (Zip Code) </P>
<P align=center>Registrant's telephone number, including area code
<B><U>1-800-689-3939</U></B></P>
<P align=center><B><U>Not Applicable</U></B><BR>(Former name or former address,
if changed since last report.)</P>
<P align=justify>Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):</P>
<P align=justify>[&nbsp;&nbsp; ] Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425) </P>
<P align=justify>[&nbsp;&nbsp; ] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a -12) </P>
<P align=justify>[&nbsp; &nbsp;] Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b)) </P>
<P align=justify>[&nbsp;&nbsp; ] Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))</P>
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<P align=justify><STRONG>Item
1.01</STRONG>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<STRONG>
Other Events. </STRONG></P>
<P align=justify><B>Securities Purchase Agreement</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 13, 2014, Anavex Life Sciences Corp. (the &#147;<U>Company</U>&#148;) entered into a
Securities Purchase Agreement (the &#147;<U>Purchase Agreement</U>&#148;) with certain
purchasers identified therein (the &#147;<U>Purchasers</U>&#148;) pursuant to which the
Company agreed to sell, and the Purchasers agreed to purchase, Senior
Convertible Debentures due March 18, 2044 (the &#147;<U>Debentures</U>&#148;) in the
aggregate principal amount of $10,000,000. In addition to the Debentures, the
Company agreed to issue to the Purchasers two series of warrants representing
the right to purchase up to an aggregate of 67,666,666 shares of the Company&#146;s common
stock (the &#147;<U>Warrants</U>&#148; and together with the Debentures, the
&#147;<U>Securities</U>&#148;). The purchase and sale of the Securities was consummated on
March 18, 2014, and resulted in gross proceeds to the Company in the amount of
$10,000,000, before deducting agent fees and other transaction-related expenses.
The Purchase Agreement contains customary representations, warranties and
covenants by each of the Company and the Purchasers. Maxim Group LLC served as exclusive placement agent for the offering.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing summary of the Purchase Agreement is qualified in its entirety by
reference to the complete form of agreement, a copy of which is attached hereto
as <U>Exhibit 10.1</U> and incorporated herein by reference. Capitalized terms
referred to in this Form 8-K have the meanings set forth in the Purchase
Agreement, Debentures and Warrants, as applicable.</P>
<P align=justify><B>Terms of</B> <B>Debentures.</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Debentures are unsecured obligations, have a term of thirty (30) years and are
convertible into shares of the Company&#146;s common stock at each respective
Purchaser&#146;s election at an initial conversion price of $0.30, subject to
adjustment for distributions payable in shares of common stock, subdivisions of
outstanding shares of common stock into larger number of shares, combinations,
and reclassification events. No regularly scheduled interest payments shall be
made on the Debentures. Under the Debentures, the Company may exercise its right
to effectuate an Optional Redemption pursuant to which the Company must pay the
sum of 110% of the then outstanding principal amount of the Debenture and all
liquidated damages and other amounts due in respect of the Debenture. Except for
the foregoing, or as otherwise set forth in the Debentures, the Company may not
prepay any portion of the principal amount of the Debentures without the prior
written consent of the applicable Purchaser.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
an &#147;Event of Default,&#148; the Purchasers of the Debentures are entitled to receive
the outstanding principal amount under the Debentures, plus accrued but unpaid
interest, liquidated damages and other amounts owing in respect thereof through
the date of acceleration at the &#147;Mandatory Default Amount,&#148; defined as the sum
of (a) the greater of (i) the outstanding principal amount of the Debenture,
plus all accrued and unpaid interest thereon, divided by the Conversion Price on
the date the Mandatory Default Amount is either (A) demanded (if demand or
notice is required to create an Event of Default) or otherwise due or (B) paid
in full, whichever has a lower Conversion Price, multiplied by the VWAP on the
date the Mandatory Default Amount is either (x) demanded or otherwise due or (y)
paid in full, whichever has a higher VWAP, or (ii) 130% of the outstanding
principal amount of the Debenture, plus 100% of accrued and unpaid interest
hereon, and (b) all other amounts, costs, expenses and liquidated damages due in
respect of the Debenture. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing summary of the Debentures is qualified in its entirety by reference to
the complete form of Debenture, a copy of which is attached hereto as <U>Exhibit
10.3</U> and incorporated herein by reference. </P>
<P align=justify><B>Terms of the Warrants.</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition to the Debentures, the Company issued to the Purchasers &#147;Series A
Warrants&#148; to purchase, for a period of five years from the date of issuance,
up to 33,333,333 shares of its common stock at an initial exercise price of $0.30 per
share, subject to adjustment for stock splits, combinations, and
reclassification events. The Company also issued to the Purchasers &#147;Series B
Warrants&#148; to purchase, for a period of five (5) years from the date of issuance,
an additional up to 33,333,333 shares of common stock at an initial exercise price of
$0.42 per share, subject to adjustment for stock splits, combinations, and
reclassification events.</P>
<P align=center>2</P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing summary of the Warrants is qualified in its entirety by reference to
the complete form of Warrant, a copy of which is attached hereto as <U>Exhibit
10.4</U> and incorporated herein by reference. </P>
<P align=justify><B>Registration Rights Agreement</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the entry into the Purchase Agreement, and as contemplated
thereby, on March 13, 2014, the Company entered into a Registration Rights
Agreement with each Purchaser (the &#147;<U>Registration Rights</U>
<U>Agreement</U>&#148;). Pursuant to the terms of the Registration Rights Agreement,
the Company agreed to file, on or before the 30th calendar day following the
execution thereof (the &#147;<U>Filing Date</U>&#148;), a registration statement under the
Securities Act covering the resale of the shares issuable upon conversion of the
Debentures and upon exercise of the Warrants (the &#147;<U>Registration
Statement</U>&#148;), and to cause such Registration Statement to be declared
effective by the Commission as soon as practicable thereafter, but not later
than the 60th day following the date of the Registration Rights Agreement or, if
the Registration Statement is subject to review by the Commission staff, not
later than 90th calendar day following the date of the Registration Rights
Agreement (the &#147;<U>Effectiveness Date</U>&#148;). If the Company does not file the
Registration Statement by the Filing Date or obtain its effectiveness by the
Effectiveness Date, then the Company is required to pay an amount in cash, as
partial liquidated damages and not as a penalty, to the Purchasers equal to the
product of 1.5% multiplied by the aggregate purchase price paid by such
Purchaser for the Securities per month until the Registration Statement is filed
or declared effective, as applicable. The Company is required to maintain the
effectiveness of the Registration Statement until all of the shares covered
thereby are sold or may be sold pursuant to Rule 144 under the Securities Act
without volume or manner-of-sale restrictions and without the requirement that
the Company be in compliance with the current public information requirements of
Rule 144. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
foregoing summary of the Registration Rights Agreement is qualified in its
entirety by reference to the complete form of such agreement, a copy of which is
attached hereto as <U>Exhibit 10.2</U> and incorporated herein by reference.
</P>
<P align=justify><B>Item
2.03.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>Creation of a
Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.</B> </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The disclosures set forth above under <U>Item 1.01</U> of this
Current Report on Form 8-K are incorporated by reference hereto. </P>
<P align=justify><B>Item
3.02.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>Unregistered
Sales of Equity Securities.</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
March 13, 2014, pursuant to the terms of the Purchase Agreement, the Company
sold Debentures in the aggregate principal amount of $10,000,000 and Warrants to
purchase 67,666,666 shares of the Company&#146;s common stock. The offer and sale of
such Securities pursuant to the terms of the Purchase Agreement constituted a
private placement under Section 4(a)(2) of the Securities Act of 1933, as
amended, in accordance with Regulation D promulgated thereunder. The information
set forth under <U>Item 1.01</U> is incorporated herein by reference. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Securities offered and sold pursuant to the Purchase Agreement will not be or
have not been registered under the Securities Act of 1933, as amended or state
securities laws and may not be offered or sold in the United States absent
registration with the Securities and Exchange Commission or an applicable
exemption from such registration requirements. As described under <U>Item
1.01</U>, above, the Company has agreed to file a registration statement with
the Commission covering the resale of the shares of common stock issuable upon
conversion of the Debentures and exercise of the Warrants. </P>
<P align=justify><B>Item
9.01.</B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B>Financial
Statements and Exhibits. </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>Not applicable</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(b) </TD>
    <TD>
      <P align=justify>Not applicable</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(c) </TD>
    <TD>
      <P align=justify>Not applicable</P></TD></TR>
  <TR>
    <TD vAlign=top width="5%">(d) </TD>
    <TD>
      <P align=justify><U>Exhibits</U>.</P></TD></TR></TABLE>
<P align=center>3</P>
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  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><B>EXHIBIT
      NO.</B> </TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="60%"
    ><B>DESCRIPTION</B> </TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="15%"><B>LOCATION</B> </TD></TR>
  <TR>
    <TD align=center >&nbsp;</TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD align=center width="60%"  >&nbsp;</TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit10-1.htm">Exhibit 10.1 </a></TD>
    <TD align=left width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
    <TD align=left width="60%" bgColor=#eeeeee ><a href="exhibit10-1.htm">Form of Securities
      Purchase Agreement, dated March 13, 2014, by and among the Company and the
      Purchasers named therein </a></TD>
    <TD align=center width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
  <TD align=center width="15%" bgColor=#eeeeee><a href="exhibit10-1.htm">Provided herewith </a></TD>
  </TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="2%"  >&nbsp;</TD>
    <TD align=left width="60%"  >&nbsp;</TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit10-2.htm">Exhibit 10.2 </a></TD>
    <TD align=left width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
    <TD align=left width="60%" bgColor=#eeeeee ><a href="exhibit10-2.htm">Form of Registration
      Rights Agreement, dated March 13, 2014, by and among the Company and the
      parties identified therein </a></TD>
    <TD align=center width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
    <TD align=center width="15%" bgColor=#eeeeee><a href="exhibit10-2.htm">Provided herewith </a></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="2%"  >&nbsp;</TD>
    <TD align=left width="60%"  >&nbsp;</TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit10-3.htm">Exhibit 10.3 </a></TD>
    <TD align=left width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
    <TD align=left width="60%" bgColor=#eeeeee ><a href="exhibit10-3.htm">Form of Senior
      Convertible Debenture </a></TD>
    <TD align=center width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
    <TD align=center width="15%" bgColor=#eeeeee><a href="exhibit10-3.htm">Provided herewith </a></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="2%"  >&nbsp;</TD>
    <TD align=left width="60%"  >&nbsp;</TD>
    <TD align=center width="2%"  >&nbsp;</TD>
    <TD align=center width="15%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left bgColor=#eeeeee><a href="exhibit10-4.htm">Exhibit 10.4 </a></TD>
    <TD align=left width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
    <TD align=left width="60%" bgColor=#eeeeee ><a href="exhibit10-4.htm">Form of Series
      A/B Warrant </a></TD>
    <TD align=center width="2%"  bgColor=#eeeeee
    >&nbsp;</TD>
  <TD align=center width="15%" bgColor=#eeeeee><a href="exhibit10-4.htm">Provided herewith  </a></TD></TR></TABLE>
<P align=center>4</P>
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<P align=center><B><U>SIGNATURES</U></B> </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%"><B>ANAVEX LIFE SCIENCES CORP.</B> </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%"><I><U>/s/ Christopher Missling</U></I> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">Name: Christopher Missling, PhD </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">Title: Chief Executive </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">Officer </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">Date: March 19, 2014 </TD></TR></TABLE>
<P align=center>5</P>
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<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>exhibit10-1.htm
<DESCRIPTION>EXHIBIT 10.1
<TEXT>

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<P align=center><B>SECURITIES PURCHASE AGREEMENT</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Securities Purchase Agreement (this &#147;<U>Agreement</U>&#148;) is dated as of March 13,
2014, between Anavex Life Sciences Corp., a Nevada corporation (the
&#147;<U>Company</U>&#148;), and each purchaser identified on the signature pages hereto
(each, including its successors and assigns, a &#147;<U>Purchaser</U>&#148; and
collectively, the &#147;<U>Purchasers</U>&#148;). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(a)(2) of the Securities Act of 1933, as amended (the &#147;<U>Securities
Act</U>&#148;), 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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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: </P>
<P align=center><B>ARTICLE I. <BR>DEFINITIONS</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Definitions</U>. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Debentures (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1: </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Acquiring Person</U>&#148; shall have the meaning ascribed to such term in
Section 4.7. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Action</U>&#148; shall have the meaning ascribed to such term in Section 3.1(j) .
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Affiliate</U>&#148;
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 405 under the
Securities Act.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Board of Directors</U>&#148; means the board of directors of the Company. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business
Day</U>&#148; means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing</U>&#148;
means the closing of the purchase and sale of the Securities pursuant to Section
2.1. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Closing
Date</U>&#148; means the Trading Day on which all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers&#146; obligations to pay the Subscription
Amount and (ii) the Company&#146;s obligations to deliver the Securities, in each
case, have been satisfied or waived.</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Commission</U>&#148; means the United States Securities and Exchange Commission.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common
Stock</U>&#148; 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 be
reclassified or changed. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common
Stock Equivalents</U>&#148; means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right, option, warrant
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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Company
Counsel</U>&#148; means K&amp;L Gates LLP with offices located at 200 South Biscayne
Boulevard, Ste. 3900, Miami, Florida 33131. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion
Price</U>&#148; shall have the meaning ascribed to such term in the Debentures. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion
Shares</U>&#148; shall have the meaning ascribed to such term in the Debentures. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Debentures</U>&#148;
means the Senior Convertible Debentures due, subject to the terms therein,
thirty (30) years from their date of issuance, issued by the Company to the
Purchasers hereunder, in the form of <U>Exhibit A</U> attached hereto. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Disclosure
Schedules</U>&#148; shall have the meaning ascribed to such term in Section 3.1. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>EGS</U>&#148;
means Ellenoff Grossman &amp; Schole LLP, with offices located at 1345 Avenue of
the Americas, New York, New York 10105-0302. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Effective
Date</U>&#148; means the earliest of the date that (a) the initial Registration
Statement has been declared effective by the Commission, (b) all of the
Registrable Securities have been sold pursuant to Rule 144 or may be sold
pursuant to Rule 144 without the requirement for the Company to be in compliance
with the current public information required under Rule 144 and without volume
or manner-of-sale restrictions or (c) following the one year anniversary of the
Closing Date provided that a holder of Registrable Securities is not an
Affiliate of the Company, all of the Registrable Securities may be sold pursuant
to an exemption from registration under Section 4(1) of the Securities Act
without volume or manner-of-sale restrictions and Company counsel has delivered
to such holders a standing written unqualified opinion that resales may then be
made by such holders of the Registrable Securities pursuant to such exemption
which opinion shall be in form and substance reasonably acceptable to such
holders. </P>
<P align=center>2 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Escrow Agent</U>&#148; means Signature Bank, a New York State chartered bank,
with offices at 261 Madison Avenue, New York, New York 10016. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Escrow
Agreement</U>&#148; means the escrow agreement entered into prior to the date hereof,
by and among the Company, the Escrow Agent and the Placement Agent pursuant to
which the Purchasers shall deposit Subscription Amounts with the Escrow Agent to
be applied to the transactions contemplated hereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Evaluation Date</U>&#148; shall have the meaning ascribed to such term in Section
3.1(r) .</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exchange
Act</U>&#148; means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Exempt
Issuance</U>&#148; means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise price,
exchange price or conversion price of such securities, and (c) securities issued
pursuant to acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person (or to the equityholders of a Person) which is, itself or
through its subsidiaries, an operating company or an owner of an asset in a
business synergistic with the business of the Company and shall provide to the
Company additional benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>FCPA</U>&#148; means the Foreign Corrupt Practices Act of 1977, as amended.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FDA</U>&#148; shall have the meaning ascribed to such term in Section 3.1(kk) .  </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FDCA</U>&#148; shall have the meaning ascribed to such term in Section 3.1(kk) .</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  &#147;<U>GAAP</U>&#148; shall have the meaning ascribed to such term in Section 3.1(h) .</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Indebtedness</U>&#148; shall have the meaning ascribed to such term in Section
3.1(aa) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Intellectual
Property Rights</U>&#148; shall have the meaning ascribed to such term in Section
3.1(o) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Legend
Removal Date</U>&#148; shall have the meaning ascribed to such term in Section 4.1(c)
..</P>
<P align=center>3 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Liens</U>&#148;
means a lien, charge, pledge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Material
Adverse Effect</U>&#148; shall have the meaning assigned to such term in Section
3.1(b) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Material
Permits</U>&#148; shall have the meaning ascribed to such term in Section 3.1(m) .
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Maximum Rate</U>&#148; shall have the meaning ascribed to such term in Section
5.17. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Participation
Maximum</U>&#148; shall have the meaning ascribed to such term in Section 4.12(a) .
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Person</U>&#148;
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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Pharmaceutical
Product</U>&#148; shall have the meaning ascribed to such term in Section 3.1(kk) .
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Placement Agent</U>&#148; means Maxim Group LLC. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Pro
Rata Portion</U>&#148; shall have the meaning ascribed to such term in Section
4.12(e) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Proceeding</U>&#148;
means an action, claim, suit, investigation or proceeding (including, without
limitation, an informal investigation or partial proceeding, such as a
deposition), whether commenced or threatened. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Public
Information Failure</U>&#148; shall have the meaning ascribed to such term in Section
4.3(b) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Public
Information Failure Payments</U>&#148; shall have the meaning ascribed to such term
in Section 4.3(b) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Purchaser Party</U>&#148; shall have the meaning ascribed to such term in Section
4.10. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration
Rights Agreement</U>&#148; means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of <U>Exhibit B</U>
attached hereto. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration
Statement</U>&#148; means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale of the Underlying
Shares by each Purchaser as provided for in the Registration Rights Agreement.
</P>
<P align=center>4 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Required
Approvals</U>&#148; shall have the meaning ascribed to such term in Section 3.1(e) .
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Required
Minimum</U>&#148; means, as of any date, the maximum aggregate number of shares of
Common Stock then issued or potentially issuable in the future pursuant to the
Transaction Documents, including any Underlying Shares issuable upon exercise in
full of all Warrants or conversion in full of all Debentures, ignoring any
conversion or exercise limits set forth therein. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Rule
144</U>&#148; 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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Rule
424</U>&#148; means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>SEC Reports</U>&#148; shall have the meaning ascribed to such term in Section
3.1(h) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities</U>&#148;
means the Debentures, the Warrants, the Warrant Shares and the Underlying
Shares. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities
Act</U>&#148; means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Series
A Warrants</U>&#148; means, collectively, the Series A Common Stock purchase warrants
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, in the form of <U>Exhibit C</U> attached hereto. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Series
B Warrants</U>&#148; means, collectively, the Series B Common Stock purchase warrants
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, in the form of <U>Exhibit C</U> attached hereto. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Short
Sales</U>&#148; means all &#147;short sales&#148; as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Subscription Amount</U>&#148; means, as to each Purchaser, the aggregate amount
to be paid for Debentures and Warrants purchased hereunder as specified below
such Purchaser&#146;s name on the signature page of this Agreement and next to the
heading &#147;Subscription Amount,&#148; in United States dollars and in immediately
available funds.</P>
<P align=center>5 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Subsequent
Financing</U>&#148; shall have the meaning ascribed to such term in Section 4.12(a) .
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Subsequent
Financing Notice</U>&#148; shall have the meaning ascribed to such term in Section
4.12(b) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Subsidiary</U>&#148;
means any subsidiary of the Company as set forth on <U>Schedule</U>
<U>3.1(a)</U> and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Trading
Day</U>&#148; means a day on which the principal Trading Market is open for trading.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Trading
Market</U>&#148; means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange, the OTC Bulletin Board, OTCQX or OTCQB (or
any successors to any of the foregoing). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Transaction Documents</U>&#148; means this Agreement, the Debentures, the
Warrants, the Registration Rights Agreement, all exhibits and schedules thereto
and hereto and any other documents or agreements executed in connection with the
transactions contemplated hereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Transfer
Agent</U>&#148; means Nevada Agency and Transfer Company, the current transfer agent
of the Company, with a mailing address of 50 West Liberty Street, Suite 880,
Reno, Nevada 89501 and a facsimile number of 775.322.5623, and any successor
transfer agent of the Company. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Underlying
Shares</U>&#148; means the shares of Common Stock issued and issuable upon conversion
or redemption of the Debentures and upon exercise of the Warrants. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Uplisting
Date</U>&#148; means the date on which the Common Stock is listed for trading and is
actually trading on a Trading Market other than the OTC Bulletin Board, OTCQX or
OTCQB. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Variable
Rate Transaction</U>&#148; shall have the meaning ascribed to such term in Section
4.13(b) . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>VWAP</U>&#148;
means, for any date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a Trading
Market, the daily volume weighted average price of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common
Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if the OTC Bulletin Board is not a Trading Market, the volume weighted average
price of the Common Stock for such date (or the nearest preceding date) on the
OTC Bulletin Board, (c) if the Common Stock is not then listed or
quoted for trading on the OTC Bulletin Board and if prices for the Common Stock
are then reported in the &#147;Pink Sheets&#148; published by Pink OTC Markets, Inc. (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) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Purchasers of a
majority in interest of the Securities then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company. </P>
<P align=center>6 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Warrants</U>&#148; means, collectively, the Series A Warrants and the Series B
Warrants. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Warrant
Shares</U>&#148; means the shares of Common Stock issuable upon exercise of the
Warrants. </P>
<P align=center><B>ARTICLE II. <BR>PURCHASE AND SALE</B> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Closing</U>. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to sell,
and the Purchasers, severally and not jointly, agree to purchase, up to an
aggregate of $10,000,000 in principal amount of the Debentures and Warrants.
Each Purchaser shall deliver to the Escrow Agent, via wire transfer or a
certified check, immediately available funds equal to such Purchaser&#146;s
Subscription Amount as set forth on the signature page hereto executed by such
Purchaser, and the Company shall deliver to each Purchaser its respective
Debenture and a Warrant, as determined pursuant to Section 2.2(a), and the
Company and each Purchaser shall deliver the other items set forth in Section
2.2 deliverable at the Closing. Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of EGS or such other location as the parties shall mutually agree. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Deliveries</U>.
</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following: </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; this Agreement duly
executed by the Company; </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
a legal opinion of Company Counsel, substantially in the form of <U>Exhibit
D</U> attached hereto;</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
a Debenture with a principal amount equal to such Purchaser&#146;s Subscription
Amount, registered in the name of such Purchaser; </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
a Series A Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 100% of such Purchaser&#146;s Conversion
Shares on the date hereof, with an exercise price equal to $0.30 , subject to adjustment therein
(such Warrant certificate may be delivered within three Trading Days of the
Closing Date);</P>
<P align=center>7 </P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
a Series B Warrant registered in the name of such Purchaser to purchase up to a
number of shares of Common Stock equal to 100% of such Purchaser&#146;s Conversion
Shares on the date hereof, with an exercise price equal to $0.42 , subject to
adjustment therein (such Warrant certificate may be delivered within three
Trading Days of the Closing Date); and </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(vi)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the Registration
Rights Agreement duly executed by the Company. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company or the Escrow Agent, as applicable, the following:</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; this Agreement duly
executed by such Purchaser; </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
to Escrow Agent, such Purchaser&#146;s Subscription Amount by wire transfer to the
account specified in the Escrow Agreement; and </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Registration Rights Agreement duly executed by such Purchaser. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Closing
Conditions</U>.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met: </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the accuracy in all material respects on the Closing Date of the representations
and warranties of the Purchasers contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date); </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed; and </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met: </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; the accuracy in all
material respects when made and on the Closing Date of the representations and
warranties of the Company contained herein (unless as of a specific date
therein); </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been performed;</P>
<P align=center>8 </P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
from the date hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company&#146;s principal Trading Market
and, at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by such service, or on any Trading Market, nor shall a banking moratorium have
been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of such Purchaser, makes it impracticable or inadvisable to
purchase the Securities at the Closing. </P>
<P align=center><B>ARTICLE III. <BR>REPRESENTATIONS AND WARRANTIES </B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Representations and Warranties of the Company</U>. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties
to each Purchaser:<B> </B></P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Subsidiaries</U>. All of the direct and indirect subsidiaries of the Company
are set forth on <U>Schedule 3.1(a)</U>. 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 of 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. If the Company has no subsidiaries, all other references
to the Subsidiaries or any of them in the Transaction Documents shall be
disregarded. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Organization and Qualification</U>. 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, 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 nor 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,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company&#146;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
&#147;<u>Material</u> <u>Adverse Effect</u>&#148;) 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. </P>
<P align=center>9 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Authorization; Enforcement</U>. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement and each of the other Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The execution and delivery
of this Agreement and each of the other Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the
Company&#146;s stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party 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&#146; 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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Conflicts</U>. The execution, delivery and performance by the Company of
this Agreement and the other Transaction Documents to which it is a party, the
issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company&#146;s or any Subsidiary&#146;s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (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. </P>
<P align=center>10 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Filings, Consents and Approvals</U>. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii)
the filing with the Commission pursuant to the Registration Rights Agreement,
(iii) if required, the notice and/or application(s) to each applicable Trading
Market for the issuance and sale of the Securities and the listing of the
Conversion Shares and Warrant Shares for trading thereon in the time and manner
required thereby, and (iv) if required, the filing of Form D with the Commission
and such filings as are required to be made under applicable state securities
laws (collectively, the &#147;<U>Required Approvals</U>&#148;). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Issuance of the Securities</U>. 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 Underlying 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
other than restrictions on transfer provided for in the Transaction Documents.
The Company has reserved from its duly authorized capital stock a number of
shares of Common Stock for issuance of the Underlying Shares at least equal to
the Required Minimum on the date hereof.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Capitalization</U>. The capitalization of the Company is as set forth on
<U>Schedule 3.1(g)</U>, which <U>Schedule 3.1(g)</U> shall also include the
number of shares of Common Stock owned beneficially, and of record, by
Affiliates of the Company as of the date hereof. Except as set forth on
<U>Schedule 3.1(g)</U>, 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&#146;s stock option
plans, the issuance of shares of Common Stock to employees pursuant to the
Company&#146;s employee stock purchase plans and pursuant to the conversion and/or
exercise of Common Stock Equivalents outstanding as of the date of the most
recently filed periodic report under the Exchange Act. No Person has any right
of first refusal, preemptive right, right of participation, or any similar right
to participate in the transactions contemplated by the Transaction Documents.
Except as set forth on <U>Schedule 3.1(g)</U>, and except a result of the
purchase and sale of the Securities, there are no outstanding options, warrants,
scrip rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents. Except as set forth on <u>Schedule 3.1(g)</u>, the
issuance and sale of the Securities will not obligate the Company to issue
shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Company are
duly authorized, 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 or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company&#146;s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company&#146;s stockholders. </P>
<P align=center>11 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>SEC Reports; Financial Statements</U>. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company 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 or regulation to file
such material) (the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively referred to
herein as the &#147;<U>SEC Reports</U>&#148;) 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, as applicable, 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 (&#147;<U>GAAP</U>&#148;), 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. </P>
<P align=center>12 </P>
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<P style="MARGIN-LEFT: 5%" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Material Changes; Undisclosed Events, Liabilities or Developments</u>. Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report filed prior
to the date hereof: (i)&nbsp;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&#146;s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate, except
pursuant to existing Company stock option plans. The Company does not have
pending before the Commission any request for confidential treatment of
information. Except for the issuance of the Securities contemplated by this
Agreement or as set forth on <U>Schedule 3.1(i)</U>, no event, liability, fact,
circumstance, occurrence or development has occurred or exists or is reasonably
expected to occur or exist with respect to the Company or its Subsidiaries or
their respective businesses, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 Trading Day prior to the
date that this representation is made. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Litigation</U>. 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 &#147;<U>Action</U>&#148;) 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.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Labor Relations</U>. No 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. None of the
Company&#146;s or its Subsidiaries&#146; employees is a member of a union that relates to
such employee&#146;s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining
agreement, and the Company and its Subsidiaries believe that their relationships
with their employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such
executive officer does not subject the Company or any of its Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local and foreign
laws and regulations relating to employment and employment practices, terms and
conditions of employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. </P>
<P align=center>13 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Compliance</U>. 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
judgment, decree or order of any court, arbitrator or other governmental
authority or (iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without limitation all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Regulatory Permits</U>. 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 reasonably be expected to result in a Material
Adverse Effect (&#147;<U>Material Permits</U>&#148;), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Title to Assets</U>. The Company and the Subsidiaries have good and
marketable title in fee simple to all real property owned by them 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 (i) 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 (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and, the payment of which is neither
delinquent nor subject to penalties. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance. </P>
<P align=center>14 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Intellectual Property</U>. The Company and the Subsidiaries have, or have
rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the SEC Reports as necessary or required for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the &#147;<U>Intellectual Property</U> <U>Rights</U>&#148;).
None of, and neither the Company nor any Subsidiary has received a notice
(written or otherwise) that any of, the Intellectual Property Rights has
expired, terminated or been abandoned, or is expected to expire or terminate or
be abandoned, within two (2) years from the date of this Agreement. Neither the
Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC Reports, a written notice of a
claim or otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as could not have or
reasonably be expected to not have a Material Adverse Effect. 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. The Company and its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of all of their
intellectual properties, except where failure to do so could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Insurance</U>. 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.
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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Transactions With Affiliates and Employees</U>. Except as set forth in the
SEC Reports, none of the officers or directors of the Company or any Subsidiary
and, to the knowledge of the Company, none of the employees of the Company or
any Subsidiary 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 providing for the borrowing of money from or lending of
money to, 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, stockholder, member or partner, in each case in
excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company. </P>
<P align=center>15 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Sarbanes-Oxley; Internal Accounting Controls</U>. The Company and the
Subsidiaries are in compliance with any and all applicable requirements of the
Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and
all applicable rules and regulations promulgated by the Commission thereunder
that are effective as of the date hereof and 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&#146;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&#146;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 and the Subsidiaries have
established disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission&#146;s rules and forms. The Company&#146;s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the most
recently filed periodic report under the Exchange Act (such date, the
&#147;<U>Evaluation Date</U>&#148;). 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 changes in the internal control over financial reporting (as such
term is defined in the Exchange Act) that have materially affected, or is
reasonably likely to materially affect, the internal control over financial
reporting of the Company and its Subsidiaries. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Certain Fees</U>. No brokerage or finder&#146;s fees or commissions are or will be
payable by the Company or any Subsidiaries 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.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Private Placement</U>. Assuming the accuracy of the Purchasers&#146;
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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Investment Company</U>. 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 &#147;investment company&#148; 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 an &#147;investment company&#148;
subject to registration under the Investment Company Act of 1940, as amended. </P>
<P align=center>16 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Registration Rights</U>. Other than each of the Purchasers, no Person has any
right to cause the Company to effect the registration under the Securities Act
of any securities of the Company or any Subsidiaries. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Listing and Maintenance Requirements</U>. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements. The Common Stock is currently eligible for
electronic transfer through the Depository Trust Company or another established
clearing corporation and the Company is current in payment of the fees to the
Depository Trust Company (or such other established clearing corporation) in
connection with such electronic transfer. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Application of Takeover Protections</U>. The Company and the 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&#146;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&#146;s
issuance of the Securities and the Purchasers&#146; ownership of the Securities. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Disclosure</U>. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of
the Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the Company. All of
the disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when 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. </P>
<P align=center>17 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Integrated Offering</U>. Assuming the accuracy of the Purchasers&#146;
representations and warranties set forth in Section 3.2, neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Solvency</U>. Based on the consolidated 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 fair saleable value
of the Company&#146;s assets exceeds the amount that will be required to be paid on
or in respect of the Company&#146;s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company&#146;s assets do not
constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
consolidated 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 liabilities 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. <U>Schedule
3.1(aa)</U> sets forth as of the date hereof 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,
&#147;<U>Indebtedness</U>&#148; means (x) any liabilities for borrowed money or amounts
owed in excess of $50,000 (other than trade accounts payable incurred in the
ordinary course of business), (y) 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&#146;s consolidated 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 (z) the present value of any lease payments
in excess of $50,000 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. </P>
<P align=center>18 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Tax Status</U>. 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 its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, reports or declarations apply. There are
no unpaid taxes in any material amount claimed to be due by the taxing authority
of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No General Solicitation</U>. 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 &#147;accredited
investors&#148; within the meaning of Rule 501 under the Securities Act. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Foreign Corrupt Practices</U>. Neither the Company nor any Subsidiary, nor to
the knowledge of the Company or any Subsidiary, any agent or other person acting
on behalf of the Company or any Subsidiary, 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 any
Subsidiary (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 FCPA. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Accountants</U>. The Company&#146;s accounting firm is set forth on
<U>Schedule</U> <U>3.1(ee)</U> of the Disclosure Schedules. To the knowledge and
belief of the Company, such accounting firm: (i) is a registered public
accounting firm as required by the Exchange Act and (ii) shall express its
opinion with respect to the financial statements to be included in the Company&#146;s
Annual Report for the fiscal year ending September 30, 2014. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Seniority</U>. Except as set forth on <U>Schedule 3.1(ff)</U>, as of the
Closing Date, no Indebtedness or other claim against the Company is senior to
the Debentures in right of payment, whether with respect to interest or upon
liquidation or dissolution, or otherwise, other than indebtedness secured by
purchase money security interests (which is senior only as to underlying assets
covered thereby) and capital lease obligations (which is senior only as to the
property covered thereby). </P>
<P align=center>19 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Disagreements with Accountants and Lawyers</U>. There are no disagreements
of any kind presently existing, or reasonably anticipated by the Company to
arise, between the Company and the accountants and lawyers formerly or presently
employed by the Company and the Company is current with respect to any fees owed
to its accountants and lawyers which could affect the Company&#146;s ability to
perform any of its obligations under any of the Transaction Documents. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Acknowledgment Regarding Purchasers&#146; Purchase of Securities</U>. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm&#146;s length purchaser with respect to the Transaction Documents
and the transactions contemplated thereby. The Company further acknowledges that
no Purchaser is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and the
transactions contemplated thereby and any advice given by any Purchaser or any
of their respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers&#146; purchase of the Securities. The Company further represents to each
Purchaser that the Company&#146;s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Acknowledgment Regarding Purchaser&#146;s Trading Activity</U>. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(g) and 4.15 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers has been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or &#147;derivative&#148; securities based on securities
issued by the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by any Purchaser, specifically
including, without limitation, Short Sales or &#147;derivative&#148; transactions, before
or after the closing of this or future private placement transactions, may
negatively impact the market price of the Company&#146;s publicly-traded securities,
(iii) any Purchaser, and counter-parties in &#147;derivative&#148; transactions to which
any such Purchaser is a party, directly or indirectly, may presently have a
&#147;short&#148; position in the Common Stock and (iv) each Purchaser shall not be deemed
to have any affiliation with or control over any arm&#146;s length counter-party in
any &#147;derivative&#148; transaction. The Company further understands and acknowledges
that (y) 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 Underlying Shares
deliverable with respect to Securities are being determined, and (z) 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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Regulation M Compliance</U>. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
any compensation for soliciting purchases of, any of the Securities, or (iii)
paid or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company, other than, in the case of clauses
(ii) and (iii), compensation paid to the Company&#146;s placement agent in connection
with the placement of the Securities. </P>
<P align=center>20 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>FDA</U>. As to each product subject to the jurisdiction of the U.S. Food and
Drug Administration (&#147;<U>FDA</U>&#148;) under the Federal Food, Drug and Cosmetic
Act, as amended, and the regulations thereunder (&#147;<U>FDCA</U>&#148;) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or any of its Subsidiaries (each such product, a &#147;<U>Pharmaceutical
Product</U>&#148;), such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company in compliance
with all applicable requirements under FDCA and similar laws, rules and
regulations relating to registration, investigational use, premarket clearance,
licensure, or application approval, good manufacturing practices, good
laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect. There is
no pending, completed or, to the Company's knowledge, threatened, action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or any of
its Subsidiaries, and none of the Company or any of its Subsidiaries has
received any notice, warning letter or other communication from the FDA or any
other governmental entity, which (i) contests the premarket clearance,
licensure, registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Pharmaceutical Product, (ii) withdraws its approval of,
requests the recall, suspension, or seizure of, or withdraws or orders the
withdrawal of advertising or sales promotional materials relating to, any
Pharmaceutical Product, (iii) imposes a clinical hold on any clinical
investigation by the Company or any of its Subsidiaries, (iv) enjoins production
at any facility of the Company or any of its Subsidiaries, (v) enters or
proposes to enter into a consent decree of permanent injunction with the Company
or any of its Subsidiaries, or (vi) otherwise alleges any violation of any laws,
rules or regulations by the Company or any of its Subsidiaries, and which,
either individually or in the aggregate, would have a Material Adverse Effect.
The properties, business and operations of the Company have been and are being
conducted in all material respects in accordance with all applicable laws, rules
and regulations of the FDA. The Company has not been informed by the FDA that
the FDA will prohibit the marketing, sale, license or use in the United States
of any product proposed to be developed, produced or marketed by the Company nor
has the FDA expressed any concern as to approving or clearing for marketing any
product being developed or proposed to be developed by the Company. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Stock Option Plans</U>. Each stock option granted by the Company under the
Company&#146;s stock option plan was granted (i) in accordance with the terms of the
Company&#146;s stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the
date such stock option would be considered granted under GAAP and applicable
law. No stock option granted under the Company&#146;s stock option plan has been
backdated. The Company has not knowingly granted, and there is no and has been
no Company policy or practice to knowingly grant, stock options prior to, or
otherwise knowingly coordinate the grant of stock options with, the release or
other public announcement of material information regarding the Company or its
Subsidiaries or their financial results or prospects. </P>
<P align=center>21 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Office of Foreign Assets Control</U>. Neither the Company nor any Subsidiary
nor, to the Company's knowledge, any director, officer, agent, employee or
affiliate of the Company or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (&#147;<U>OFAC</U>&#148;). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>U.S. Real Property Holding Corporation</U>. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so
certify upon Purchaser&#146;s request. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Bank Holding Company Act</U>. Neither the Company nor any of its Subsidiaries
or Affiliates is subject to the Bank Holding Company Act of 1956, as amended
(the &#147;<U>BHCA</U>&#148;) and to regulation by the Board of Governors of the Federal
Reserve System (the &#147;<U>Federal Reserve</U>&#148;). Neither the Company nor any of
its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent or more of the total equity of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Money Laundering</U>. The operations of the Company and its Subsidiaries are
and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (collectively, the
&#147;<U>Money Laundering Laws</U>&#148;), and no action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company or any Subsidiary, threatened. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Disqualification Events</U>. With respect to the Securities to be offered
and sold hereunder in reliance on Rule 506 under the Securities Act, none of the
Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of 20% or more of the Company&#146;s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected with the
Company in any capacity at the time of sale (each, an &#147;<u>Issuer Covered
Person</u>&#148; and, together, &#147;<u>Issuer Covered Persons</u>&#148;) is subject to any of
the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act (a &#147;<u>Disqualification Event</u>&#148;), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Purchasers a copy of any disclosures provided thereunder. </P>
<P align=center>22</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Other Covered Persons</U>. Other than the Placement Agent, the Company is not
aware of any person (other than any Issuer Covered Person) that has been or will
be paid (directly or indirectly) remuneration for solicitation of purchasers in
connection with the sale of any Regulation D Securities. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notice of Disqualification Events</U>. The Company will notify the Purchasers
and the Placement Agent in writing, prior to the Closing Date of (i) any
Disqualification Event relating to any Issuer Covered Person and (ii) any event
that would, with the passage of time, become a Disqualification Event relating
to any Issuer Covered Person. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Representations and Warranties of the Purchasers</U>. Each Purchaser, for
itself and for no other Purchaser, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein): </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Organization; Authority</U>. Such Purchaser is either an individual or an
entity duly incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar 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 and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, 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&#146; 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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Own Account</U>. Such Purchaser understands that the Securities are
&#147;restricted securities&#148; 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 direct or indirect
arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting
such Purchaser&#146;s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business. </P>
<P align=center>23 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Purchaser Status</U>. At the time such Purchaser was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants or converts any Debentures it will be either: (i) an &#147;accredited
investor&#148; as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a &#147;qualified institutional buyer&#148; as defined in Rule
144A(a) under the Securities Act. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Experience of Such Purchaser</U>. 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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>General Solicitation</U>. 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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Access to Information</U>. Such Purchaser acknowledges that it has had the
opportunity to review the Transaction Documents (including all exhibits and
schedules thereto) and the SEC Reports and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Shares and the merits and risks of investing in the Shares; (ii)
access to information about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Such Purchaser acknowledges and agrees
that neither the Placement Agent nor any Affiliate of the Placement Agent has
provided such Purchaser with any information or advice with respect to the
Securities nor is such information or advice necessary or desired. Neither the
Placement Agent nor any Affiliate has made or makes any representation as to the
Company or the quality of the Securities and the Placement Agent and any
Affiliate may have acquired non-public information with respect to the Company which such
Purchaser agrees need not be provided to it. In connection with the issuance of
the Securities to such Purchaser, neither the Placement Agent nor any of its
Affiliates has acted as a financial advisor or fiduciary to such Purchaser. </P>
<P align=center>24 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Certain Transactions and Confidentiality</U>. Other than consummating the
transactions contemplated hereunder, such Purchaser has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Purchaser, executed any purchases or sales, including
Short Sales, of the securities of the Company during the period commencing as of
the time that such Purchaser first received a term sheet (written or oral) from
the Company or any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and ending immediately
prior to the execution hereof. 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&#146;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&#146;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). Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future. </P>
<P align=justify>The Company acknowledges and agrees that the representations
contained in Section 3.2 shall not modify, amend or affect such Purchaser&#146;s
right to rely on the Company&#146;s representations and warranties contained in this
Agreement or any representations and warranties contained in any other
Transaction Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of the
transaction contemplated hereby. </P>
<P align=center><B>ARTICLE IV. <BR></B><B>OTHER AGREEMENTS OF THE PARTIES
</B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Transfer
Restrictions</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 the Registration Rights Agreement and shall have the rights
and obligations of a Purchaser under this Agreement and the Registration Rights
Agreement.</P>
<P style="MARGIN-LEFT: 0%"
align=center> 25 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Purchasers agree to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Securities in the following form: </P>
<P style="MARGIN-LEFT: 5%" align=justify>[NEITHER] THIS SECURITY [NOR THE
SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [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 &#147;SECURITIES ACT&#148;), AND, ACCORDINGLY,
MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY
[AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] 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 &#147;ACCREDITED
INVESTOR&#148; AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
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 &#147;accredited investor&#148; 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&#146;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 (as defined in the
Registration Rights Agreement) thereunder. </P>
<P align=center>26 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certificates evidencing the Underlying Shares shall not contain any legend
(including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement (including the Registration Statement) covering the
resale of such security is effective under the Securities Act, (ii) following
any sale of such Underlying Shares pursuant to Rule 144, (iii) if such
Underlying Shares are eligible for sale under Rule 144, without the requirement
for the Company to be in compliance with the current public information required
under Rule 144 as to such Underlying Shares and without volume or manner-of-sale
restrictions 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 Transfer Agent promptly after the
Effective Date if required by the Transfer Agent to effect the removal of the
legend hereunder. If all or any portion of a Debenture is converted or Warrant
is exercised at a time when there is an effective registration statement to
cover the resale of the Underlying Shares, or if such Underlying Shares may be
sold under Rule 144 without the requirement for the Company to be in compliance
with the current public information required under Rule 144 as to such
Underlying Shares and without volume or manner-of-sale restrictions or if such
legend is not otherwise required under applicable requirements of the Securities
Act (including judicial interpretations and pronouncements issued by the staff
of the Commission) then such Underlying 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 to the Company or
the Transfer Agent of a certificate representing Underlying Shares, as
applicable, issued with a restrictive legend (such third Trading Day, the
&#147;<U>Legend Removal Date</U>&#148;), 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 the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4. Certificates for Underlying Shares
subject to legend removal hereunder shall be transmitted by the Transfer Agent
to the Purchaser by crediting the account of the Purchaser&#146;s prime broker with
the Depository Trust Company System as directed by such Purchaser. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to such Purchaser&#146;s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the
date such Securities are submitted to the Transfer Agent) delivered for removal
of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day for
each Trading Day after the Legend Removal Date until such certificate is
delivered without a legend. Nothing herein shall limit such Purchaser&#146;s right to
pursue actual damages for the Company&#146;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. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Each Purchaser, severally and not jointly with the other Purchasers, agrees with
the Company that such 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, and that if Securities are sold pursuant to a Registration
Statement, they will be sold in compliance with the plan of distribution set
forth therein, and acknowledges that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 4.1 is
predicated upon the Company&#146;s reliance upon this understanding. </P>
<P align=center>27 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Acknowledgment of Dilution</U>. The Company acknowledges that the issuance of
the Securities may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including, without limitation, its obligation to issue the Underlying Shares
pursuant to the Transaction Documents, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction, regardless of
the effect of any such dilution or any claim the Company may have against any
Purchaser and regardless of the dilutive effect that such issuance may have on
the ownership of the other stockholders of the Company. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Furnishing of
Information; Public Information</U>.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the Common Stock is not registered under Section 12(b) or 12(g) of the
Exchange Act on the date hereof, the Company agrees to cause the Common Stock to
be registered under Section 12(g) of the Exchange Act on or before the
60<SUP>th</SUP> calendar day following the date hereof. Until the earliest of
the time that (i) no Purchaser owns Securities or (ii) the Warrants have
expired, the Company covenants to maintain the registration of the Common Stock
under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain
extensions in respect thereof and file within the applicable grace period) all
reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act even if the Company is not then subject to the reporting
requirements of the Exchange Act.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At any time during the period commencing from the six (6) month anniversary of
the date hereof and ending at such time that all of the Securities may be sold
without the requirement for the Company to be in compliance with Rule 144(c)(1)
and otherwise without restriction or limitation pursuant to Rule 144, if the
Company shall fail for any reason to satisfy the current public information
requirement under Rule 144(c) (a &#147;<U>Public Information Failure</U>&#148;) then, in
addition to such Purchaser&#146;s other available remedies, the Company shall pay to
a Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Securities,
an amount in cash equal to one and a half percent (1.5%) of the aggregate
Subscription Amount of such Purchaser&#146;s Securities on the day of a Public
Information Failure and on every thirtieth (30<SUP>th</SUP>) day (pro rated for
periods totaling less than thirty days) thereafter until the earlier of (a) the
date such Public Information Failure is cured and (b) such time that such public
information is no longer required for the Purchasers to transfer the Underlying
Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled
pursuant to this Section 4.3(b) are referred to herein as &#147;<U>Public Information
Failure Payments</U>.&#148; Public Information Failure<B> </B>Payments shall be paid on the earlier of (i) the last day
of the calendar month during which such Public Information Failure<b> </b>Payments are incurred and (ii) the third (3<sup>rd</sup>) Business Day after
the event or failure giving rise to the Public Information Failure<b> </b>Payments is cured. In the event the Company fails to make Public Information
Failure<b> </b>Payments in a timely manner, such Public Information Failure<b> </b>Payments shall bear interest at the rate of 1.5% per month (prorated for
partial months) until paid in full. Nothing herein shall limit such Purchaser&#146;s
right to pursue actual damages for the Public Information Failure, and such
Purchaser shall have the right to pursue all remedies available to it at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief. </P>
<P align=center>28 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Integration</U>. 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 or that would be integrated with the offer or
sale of the Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained before the
closing of such subsequent transaction.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Conversion and Exercise Procedures</U>. Each of the form of Notice of
Exercise included in the Warrants and the form of Notice of Conversion included
in the Debentures<B> </B>set forth the totality of the procedures required of
the Purchasers in order to exercise the Warrants or convert the Debentures.
Without limiting the preceding sentences, no ink-original Notice of Exercise or
Notice of Conversion shall be required, nor shall any medallion guarantee (or
other type of guarantee or notarization) of any Notice of Exercise or Notice of
Conversion form be required in order to exercise the Warrants or convert the
Debenture. No additional legal opinion, other information or instructions shall
be required of the Purchasers to exercise their Warrants or convert their
Debentures. The Company shall honor exercises of the Warrants and conversions of
the Debentures and shall deliver Underlying Shares in accordance with the terms,
conditions and time periods set forth in the Transaction Documents. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Securities Laws Disclosure; Publicity</U>. The Company shall (a) by 9:30 a.m.
(New York City time) on the Trading Day immediately following the date hereof,
issue a press release disclosing the material terms of the transactions
contemplated hereby and (b) file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the Commission within the time
required by the Exchange Act. From and after the issuance of such press release,
the Company represents to the Purchasers that it shall have publicly disclosed
all material, non-public information delivered to any of the Purchasers by the
Company or any of its Subsidiaries, or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated
by the Transaction Documents. 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 nor otherwise make any such public statement without the
prior consent of the Company, with respect to any press release of any
Purchaser, or without the prior consent of each Purchaser, with respect to any
press release of the Company, which consent shall not unreasonably be withheld
or delayed, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except:
(a) as required by federal securities law in connection with any registration
statement contemplated by the Registration Rights Agreement and (b) to the
extent such disclosure is required by law or Trading Market regulations, in
which case the Company shall provide the Purchasers with prior notice of such
disclosure permitted under this clause (b). </P>
<P align=center>29 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Shareholder Rights Plan</U>. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Purchaser is an
&#147;Acquiring Person&#148; under any control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or similar
anti-takeover 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.
</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Non-Public Information</U>. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company covenants and agrees that neither it, nor any other Person acting on its
behalf, will provide any Purchaser or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Purchaser shall have entered into a written agreement with
the Company regarding the confidentiality and use of such information. The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Use of
Proceeds</U>. Except as set forth on <U>Schedule 4.9</U> attached hereto, the
Company shall use the net proceeds from the sale of the Securities hereunder for
working capital purposes and shall not use such proceeds: (a) for the
satisfaction of any portion of the Company&#146;s debt (other than payment of trade
payables in the ordinary course of the Company&#146;s business and prior practices),
(b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for
the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC
regulations.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Indemnification of Purchasers</U>. Subject to the provisions of this Section
4.10, the Company will indemnify and hold each Purchaser and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
&#147;<U>Purchaser Party</U>&#148;) 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&#146;
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 the Purchaser Parties in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser Party, with respect to any of the transactions contemplated by
the Transaction Documents (unless such action is based upon a breach of such
Purchaser Party&#146;s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser Party may have with
any such stockholder or any violations by such Purchaser Party of state or
federal securities laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall
be brought against any Purchaser Party in respect of which indemnity may be
sought pursuant to this Agreement, such Purchaser Party shall promptly notify
the Company in writing, and the Company shall have the right to assume the
defense thereof with counsel of its own choosing reasonably acceptable to the
Purchaser Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Purchaser Party
except to the extent that (i) the employment thereof has been specifically
authorized by the Company in writing, (ii) the Company has failed after a
reasonable period of time to assume such defense and to employ counsel or (iii)
in such action there is, in the reasonable opinion of counsel, a material
conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (y)
for any settlement by a Purchaser Party effected without the Company&#146;s prior
written consent, which shall not be unreasonably withheld or delayed; or (z) to
the extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party&#146;s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. The indemnification required by
this Section 4.10 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or are incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser Party against
the Company or others and any liabilities the Company may be subject to pursuant
to law. </P>
<P align=center>30 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Reservation and
Listing of Securities</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company shall maintain a reserve from its duly authorized shares of Common
Stock for issuance pursuant to the Transaction Documents in such amount as may
then be required to fulfill its obligations in full under the Transaction
Documents. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If, on any date, the number of authorized but unissued (and otherwise
unreserved) shares of Common Stock is less than the Required Minimum on such
date, then the Board of Directors shall use commercially reasonable efforts to
amend the Company&#146;s certificate or articles of incorporation to increase the
number of authorized but unissued shares of Common Stock to at least the
Required Minimum at such time, as soon as possible and in any event not later
than the 75th day after such date. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company shall, if applicable: (i) in the time and manner required by the
principal Trading Market, prepare and file with such Trading Market an
additional shares listing application covering a
number of shares of Common Stock at least equal to the Required Minimum on the
date of such application, (ii) take all steps necessary to cause such shares of
Common Stock to be approved for listing or quotation on such Trading Market as
soon as possible thereafter, (iii) provide to the Purchasers evidence of such
listing or quotation and (iv) maintain the listing or quotation of such Common
Stock on any date at least equal to the Required Minimum on such date on such
Trading Market or another Trading Market. The Company agrees to maintain the
eligibility of the Common Stock for electronic transfer through the Depository
Trust Company or another established clearing corporation, including, without
limitation, by timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such electronic
transfer. </P>
<P style="MARGIN-LEFT: 0%"
align=justify> 31 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Participation in
Future Financing</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From the date hereof until the date that is the twelve (12) month anniversary of
the Closing Date, upon any issuance by the Company or any of its Subsidiaries of
Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a
combination of units hereof (a &#147;<U>Subsequent Financing</U>&#148;), each Purchaser
shall have the right to participate in up to an amount of the Subsequent
Financing equal to 50% of the Subsequent Financing (the &#147;<U>Participation
Maximum</U>&#148;) on the same terms, conditions and price provided for in the
Subsequent Financing </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approximately three (3) Trading Days prior to the closing of the Subsequent
Financing, the Company shall deliver to each Purchaser a written notice of its
intention to effect a Subsequent Financing (a &#147;<U>Subsequent Financing
Notice</U>&#148;). The Subsequent Financing Notice shall describe in reasonable
detail the proposed terms of such Subsequent Financing, the amount of proceeds
intended to be raised thereunder and the Person or Persons through or with whom
such Subsequent Financing is proposed to be effected and shall include a term
sheet or similar document relating thereto as an attachment. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time)
on the second (2nd) Trading Day after all of the Purchasers have received the
Subsequent Financing Notice that such Purchaser is willing to participate in the
Subsequent Financing, the amount of such Purchaser&#146;s participation, and
representing and warranting that such Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice. If the Company receives no such notice from a Purchaser as of such
second (2nd) Trading Day, such Purchaser shall be deemed to have notified the
Company that it does not elect to participate. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all
of the Purchasers have received the Subsequent Financing Notice, notifications
by the Purchasers of their willingness to participate in the Subsequent
Financing (or to cause their designees to participate) is, in the aggregate,
less than the total amount of the Participation Maximum, then the Company may
effect the remaining portion of such Subsequent Financing on the terms and
with the Persons set forth in the Subsequent Financing Notice. </P>
<P align=center>32 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If by 5:30 p.m. (New York City time) on the second (2nd) Trading Day after all
of the Purchasers have received the Subsequent Financing Notice, the Company
receives responses to the Subsequent Financing Notice from Purchasers seeking to
purchase more than the aggregate amount of the Participation Maximum, each such
Purchaser shall have the right to purchase its Pro Rata Portion (as defined
below) of the Participation Maximum. &#147;<U>Pro Rata Portion</U>&#148; means the ratio
of (x) the Subscription Amount of Securities purchased on the Closing Date by a
Purchaser participating under this Section 4.12 and (y) the sum of the aggregate
Subscription Amounts of Securities purchased on the Closing Date by all
Purchasers participating under this Section 4.12. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company must provide the Purchasers with a second Subsequent Financing
Notice, and the Purchasers will again have the right of participation set forth
above in this Section 4.12, if the Subsequent Financing subject to the initial
Subsequent Financing Notice is not consummated for any reason on the terms set
forth in such Subsequent Financing Notice within thirty (30) Trading Days after
the date of the initial Subsequent Financing Notice. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company and each Purchaser agree that if any Purchaser elects to participate
in the Subsequent Financing, the transaction documents related to the Subsequent
Financing shall not include any term or provision whereby such Purchaser shall
be required to agree to any restrictions on trading as to any of the Securities
purchased hereunder or be required to consent to any amendment to or termination
of, or grant any waiver, release or the like under or in connection with, this
Agreement, without the prior written consent of such Purchaser. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding anything to the contrary in this Section 4.12 and unless
otherwise agreed to by such Purchaser, the Company shall either confirm in
writing to such Purchaser that the transaction with respect to the Subsequent
Financing has been abandoned or shall publicly disclose its intention to issue
the securities in the Subsequent Financing, in either case in such a manner such
that such Purchaser will not be in possession of any material, non-public
information, by the sixth (6th) Trading Day following delivery of the Subsequent
Financing Notice. If by such sixth (6th) Trading Day, no public disclosure
regarding a transaction with respect to the Subsequent Financing has been made,
and no notice regarding the abandonment of such transaction has been received by
such Purchaser, such transaction shall be deemed to have been abandoned and such
Purchaser shall not be deemed to be in possession of any material, non-public
information with respect to the Company or any of its Subsidiaries. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of
an Exempt Issuance. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
4.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Subsequent Equity
Sales</U>.</P>
<P align=center>33 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From the date hereof until 90 days after the Effective Date, neither the Company
nor any Subsidiary shall issue, enter into any agreement to issue or announce
the issuance or proposed issuance of any shares of Common Stock or Common Stock
Equivalents. Additionally, until the six (6) month anniversary of the Effective
Date, the Company shall not be permitted to draw down or make any sales pursuant
to the Company&#146;s existing purchase agreement, dated July 5, 2013, with Lincoln
Park Capital Fund, LLC (&#147;<U>Lincoln Park Facility</U>&#148;); provided, however that
nothing under this Section 4.13 shall prohibit the Company from amending or
entering into a new agreement relating to the Lincoln Park Facility provided
that the restriction on draw-downs or sales hereunder shall remain in effective
during the required period. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
From the date hereof until such time as no Purchaser holds any of the Warrants,
the Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction. &#147;<U>Variable Rate Transaction</U>&#148; means a
transaction in which the Company (i) issues or sells any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price that is based
upon, and/or varies with, the trading prices of or quotations for the shares of
Common Stock at any time after the initial issuance of such debt or equity
securities or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such debt or
equity security or upon the occurrence of specified or contingent events
directly or indirectly related to the business of the Company or the market for
the Common Stock or (ii) enters into any agreement, including, but not limited
to, an equity line of credit (other than the Lincoln Park Facility, which shall
be subject to Section 4.13(a) instead), whereby the Company may issue securities
at a future determined price. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of
an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance. Notwithstanding anything herein to the contrary, from the date hereof
until the six (6) month anniversary of the Effective Date. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Equal Treatment of Purchasers</U>. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration is also offered to all of the parties to
this Agreement. Further, the Company shall not make any payment of principal or
interest on the Debentures in amounts which are disproportionate to the
respective principal amounts outstanding on the Debentures at any applicable
time. 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 for the Company to treat 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. </P>
<P align=center>34 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Certain Transactions and Confidentiality</U>. Each Purchaser, severally and
not jointly with the other Purchasers, covenants that neither it, nor any
Affiliate acting on its behalf or pursuant to any understanding with it will
execute any purchases or sales, including Short Sales, of any of the Company&#146;s
securities during the period commencing with the execution of this Agreement and
ending at such time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as described in
Section 4.6. 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 pursuant to the initial
press release as described in Section 4.6, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents and the Disclosure Schedules.
Notwithstanding the foregoing, and notwithstanding anything contained in this
Agreement to the contrary, the Company expressly acknowledges and agrees that
(i) no Purchaser makes any representation, warranty or covenant hereby that it
will not engage in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in Section 4.6,
(ii) no Purchaser shall be restricted or prohibited from effecting any
transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.6 and (iii) no Purchaser shall have any duty
of confidentiality to the Company or its Subsidiaries after the issuance of the
initial press release as described in Section 4.6. 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&#146;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&#146;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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Form D; Blue Sky Filings</U>. If required, the Company agrees to timely file
a Form D with respect to the Securities as required under Regulation D and to
provide a copy thereof, promptly upon request of any Purchaser. The Company
shall take such action as the Company shall reasonably determine is necessary in
order to obtain an exemption for, or to qualify the Securities for, sale to the
Purchasers at the Closing under applicable securities or &#147;Blue Sky&#148; laws of the
states of the United States, and shall provide evidence of such actions promptly
upon request of any Purchaser. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Capital Changes</U>. Until the one year anniversary of the Closing Date, the
Company shall not undertake a reverse or forward stock split or reclassification
of the Common Stock without the prior written consent of the Purchasers holding
a majority in principal amount outstanding of the Debentures. </P>
<P align=center><B>ARTICLE V. <BR>MISCELLANEOUS </B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Termination</U>. This Agreement may be terminated by any Purchaser, as to
such Purchaser&#146;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 March
20, 2014; <u>provided</u>, <u>however</u>, that such termination will not affect
the right of any party to sue for any breach by any other party (or parties). </P>
<P align=center>35 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_36></A>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Fees and Expenses</U>. 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 (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any conversion
or exercise notice delivered by a Purchaser), stamp taxes and other taxes and
duties levied in connection with the delivery of any Securities to the
Purchasers. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Entire Agreement</U>. 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 thereof 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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notices</U>. 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 at or prior to 5:30 p.m. (New
York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second (2<SUP>nd</SUP>) 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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Amendments; Waivers</U>. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Purchasers holding at least 67% in
interest of the Securities then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought. No waiver
of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to exercise any
right hereunder in any manner impair the exercise of any such right. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Headings</U>. 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. </P>
<P align=center>36 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Successors and Assigns</U>. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser (other than by merger). Any
Purchaser may assign any or all of its rights under this Agreement to any Person
to whom such Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions of the Transaction Documents that apply to the
&#147;Purchasers.&#148; </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Third Party Beneficiaries</U>. The Placement Agent shall be the third
party beneficiary of the representations and warranties of the Company in
Section 3.1 and the representations and warranties of the Purchasers in Section
3.2. 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 4.10 and this Section 5.8. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Governing Law</U>. 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, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law. If
either party shall commence an action, suit or proceeding to enforce any
provisions of the Transaction Documents, then, in addition to the obligations of
the Company under Section 4.10, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its reasonable attorneys&#146;
fees and other costs and expenses incurred with the investigation, preparation
and prosecution of such action or proceeding. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Survival</U>. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities. </P>
<P align=center>37 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<A name=page_38></A>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Execution</U>. 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 each other party, it being understood that the parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a &#147;.pdf&#148; format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or &#147;.pdf&#148; signature page were an original thereof. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Severability</U>. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.13&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Rescission and Withdrawal Right</U>. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; <U>provided</U>,
<U>however</U>, that in the case of a rescission of a conversion of a Debenture
or exercise of a Warrant, the applicable Purchaser shall be required to return
any shares of Common Stock subject to any such rescinded conversion or exercise
notice concurrently with the return to such Purchaser of the aggregate exercise
price paid to the Company for such shares and the restoration of such
Purchaser&#146;s right to acquire such shares pursuant to such Purchaser&#146;s Warrant
(including, issuance of a replacement warrant certificate evidencing such
restored right). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.14&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Replacement of Securities</U>. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof (in the case of mutilation), or in lieu of and substitution therefor, a
new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction. The applicant
for a new certificate or instrument under such circumstances shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.15&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Remedies</U>. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents
and hereby agree to waive and not to assert in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.</P>
<P align=center>38 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_39></A>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.16&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Payment Set Aside</U>. 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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.17&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Usury</U>. To the extent it may lawfully do so, the Company hereby agrees not
to insist upon or plead or in any manner whatsoever claim, and will resist any
and all efforts to be compelled to take the benefit or advantage of, usury laws
wherever enacted, now or at any time hereafter in force, in connection with any
claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the &#147;<U>Maximum
Rate</U>&#148;), and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with any other
sums in the nature of interest that the Company may be obligated to pay under
the Transaction Documents exceed such Maximum Rate. It is agreed that if the
maximum contract rate of interest allowed by law and applicable to the
Transaction Documents is increased or decreased by statute or any official
governmental action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to the
Transaction Documents from the effective date thereof forward, unless such
application is precluded by applicable law. If under any circumstances
whatsoever, interest in excess of the Maximum Rate is paid by the Company to any
Purchaser with respect to indebtedness evidenced by the Transaction Documents,
such excess shall be applied by such Purchaser to the unpaid principal balance
of any such indebtedness or be refunded to the Company, the manner of handling
such excess to be at such Purchaser&#146;s election. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.18&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Independent Nature of Purchasers&#146; Obligations and Rights</U>. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto
or 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 its review
and negotiation of the Transaction Documents. For reasons of administrative
convenience only, each Purchaser and its respective counsel have chosen to
communicate with the Company through EGS. EGS does not represent any of the
Purchasers and only represents the Placement Agent. 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 any of the Purchasers. </P>
<P align=center>39 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.19&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Liquidated Damages</U>. The Company&#146;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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.20&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Saturdays, Sundays, Holidays, etc</U>. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.21&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Construction</U>. The parties agree that each of them and/or their respective
counsel have 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 thereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction Document shall be 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. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.22&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><U>WAIVER OF JURY TRIAL</U></B><B>. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.</B></P>
<P align=center><I>(Signature Pages Follow) </I></P>
<P align=center>40 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left><B>ANAVEX LIFE SCIENCES CORP.</B> </TD>
    <TD align=left width="40%" ><U>Address for Notice:</U> </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="40%" >&nbsp; </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="40%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>By:__________________________________________ </TD>
    <TD align=left width="40%" ><U>Fax:</U> </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Name: </TD>
    <TD align=left width="40%" >&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;Title: </TD>
    <TD align=left width="40%" >&nbsp; </TD></TR></TABLE>
<P align=justify>With a copy to (which shall not constitute notice): </P>
<P align=justify>&nbsp;</P>
<P align=justify>&nbsp;</P>
<P align=justify>&nbsp;</P>
<P align=center>[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK <BR>SIGNATURE PAGE
FOR PURCHASER FOLLOWS] </P>
<P align=center>41 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_42></A>
<P align=center>[PURCHASER SIGNATURE PAGES TO AVXL SECURITIES PURCHASE
AGREEMENT] </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </P>
<P align=justify>Name of Purchaser:
________________________________________________________<BR></P>
<P align=justify><I>Signature of Authorized Signatory of Purchaser</I>:
__________________________________</P>
<P align=justify>Name of Authorized Signatory:
____________________________________________________</P>
<P align=justify>Title of Authorized Signatory:
_____________________________________________________</P>
<P align=justify>Email Address of Authorized Signatory:
_____________________________________________</P>
<P align=justify>Facsimile Number of Authorized Signatory:
__________________________________________</P>
<P align=justify>Address for Notice to Purchaser: </P>
<P align=justify>&nbsp;</P>
<P align=justify>Address for Delivery of Securities to Purchaser (if not same as
address for notice): </P>
<P align=justify>&nbsp;</P>
<P align=justify>Subscription Amount: $_____________</P>
<P align=justify>Series A Warrant Shares: _________________</P>
<P align=justify>Series B Warrant Shares: _________________</P>
<P align=justify>EIN Number: _______________________ </P>
<P align=center>[SIGNATURE PAGES CONTINUE] </P>
<P align=center>42 </P>
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<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>exhibit10-2.htm
<DESCRIPTION>EXHIBIT 10.2
<TEXT>

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   <TITLE>Anavex Life Sciences Corp. - Exhibit 10.2 - Filed by newsfilecorp.com</TITLE>
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<P align=center><B>REGISTRATION RIGHTS AGREEMENT </B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This Registration Rights Agreement (this &#147;<U>Agreement</U>&#148;) is made and entered
into as of March __, 2014, between Anavex Life Sciences Corp., a Nevada
corporation (the &#147;<U>Company</U>&#148;), and each of the several purchasers signatory
hereto (each such purchaser, a &#147;<U>Purchaser</U>&#148; and, collectively, the
&#147;<U>Purchasers</U>&#148;). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of the
date hereof, between the Company and each Purchaser (the &#147;<U>Purchase</U>
<U>Agreement</U>&#148;). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company and each Purchaser hereby agrees as follows: </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Definitions</U>.
</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Capitalized
terms used and not otherwise defined herein that are defined in the Purchase
Agreement shall have the meanings given such terms in the Purchase
Agreement.</B> As used in this Agreement, the following terms shall have the
following meanings: </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Advice</U>&#148; shall have the meaning set forth in Section 6(d). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Effectiveness
Date</U>&#148; means, with respect to the Initial Registration Statement required to
be filed hereunder, the 60th calendar day following the date hereof (or, in the
event of a &#147;full review&#148; by the Commission, the 90th calendar day following the
date hereof) and with respect to any additional Registration Statements which
may be required pursuant to Section 2(c) or Section 3(c), the 60th calendar day
following the date on which an additional Registration Statement is required to
be filed hereunder (or, in the event of a &#147;full review&#148; by the Commission, the
90th calendar day following the date such additional Registration Statement is
required to be filed hereunder); <U>provided</U>, <U>however</U>, that in the
event the Company is notified by the Commission that one or more of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement
shall be the fifth Trading Day following the date on which the Company is so
notified if such date precedes the dates otherwise required above, provided,
further, if such Effectiveness Date falls on a day that is not a Trading Day,
then the Effectiveness Date shall be the next succeeding Trading Day. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Effectiveness Period</U>&#148; shall have the meaning set forth in Section 2(a).
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Event</U>&#148; shall have the meaning set forth in Section 2(d). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Event Date</U>&#148; shall have the meaning set forth in Section 2(d). </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Filing
Date</U>&#148; means, with respect to the Initial Registration Statement required
hereunder, the 30th calendar day following the date hereof and, with respect to
any additional Registration Statements which may be required pursuant to Section
2(c) or Section 3(c), the earliest practical date on which the Company is
permitted by SEC Guidance to file such additional Registration Statement related
to the Registrable Securities. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Holder</U>&#148;
or &#147;<U>Holders</U>&#148; means the holder or holders, as the case may be, from time
to time of Registrable Securities. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Indemnified Party</U>&#148; shall have the meaning set forth in Section 5(c).
</P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Indemnifying Party</U>&#148; shall have the meaning set forth in Section 5(c).
</P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Initial
Registration Statement</U>&#148; means the initial Registration Statement filed
pursuant to this Agreement. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Losses</U>&#148; shall have the meaning set forth in Section 5(a). </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Plan of Distribution</U>&#148; shall have the meaning set forth in Section
2(a).</P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Prospectus</U>&#148;
means the prospectus included in a Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated by the Commission pursuant to the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registrable
Securities</U>&#148; means, as of any date of determination, (a) all of the shares of
Common Stock then issued and issuable upon conversion in full of the Debentures
(assuming on such date the Debentures are converted in full without regard to
any conversion limitations therein), (b) all shares of Common Stock issued and
issuable as interest or principal on the Debentures assuming all permissible
interest and principal payments are made in shares of Common Stock and the
Debentures are held until maturity, (c) all Warrant Shares then issued and
issuable upon exercise of the Warrants (assuming on such date the Warrants are
exercised in full without regard to any exercise limitations therein), (d) any
additional shares of Common Stock issued and issuable in connection with any
anti-dilution provisions in the Debentures or the Warrants (in each case,
without giving effect to any limitations on conversion set forth in the
Debentures or limitations on exercise set forth in the Warrants) and (e) any
securities issued or then issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect
to the foregoing; <u>provided,</u> <u>however</u>, that any such Registrable
Securities shall cease to be Registrable Securities (and the Company shall not
be required to maintain the effectiveness of any, or file another, Registration
Statement hereunder with respect thereto) for so long as (a) a Registration
Statement with respect to the sale of such Registrable Securities is declared
effective by the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Holder in accordance with such effective
Registration Statement, (b) such Registrable Securities have been previously
sold in accordance with Rule 144, or (c) such securities become eligible for
resale without volume or manner-of-sale restrictions and without current public
information pursuant to Rule 144 as set forth in a written opinion letter to
such effect, addressed, delivered and acceptable to the Transfer Agent and the
affected Holders (assuming that such securities and any securities issuable upon
exercise, conversion or exchange of which, or as a dividend upon which, such
securities were issued or are issuable, were at no time held by any Affiliate of
the Company, and all Warrants are exercised by &#147;cashless exercise&#148; as provided
in Section 2(c) of each of the Warrants), as reasonably determined by the
Company, upon the advice of counsel to the Company. </P>
<P align=center>2</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration
Statement</U>&#148; means any registration statement required to be filed hereunder
pursuant to Section 2(a) and any additional registration statements contemplated
by Section 2(c) or Section 3(c), including (in each case) the Prospectus,
amendments and supplements to any such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
any such registration statement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Rule 415</U>&#148; means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Rule
424</U>&#148; means Rule 424 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Selling
Stockholder Questionnaire</U>&#148; shall have the meaning set forth in Section 3(a).
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>SEC
Guidance</U>&#148; means (i) any publicly-available written or oral guidance of the
Commission staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Shelf
Registration</U>. </P>
<P align=center>3</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On or prior to each Filing Date, the Company shall prepare and file with the
Commission a Registration Statement covering the resale of all of the
Registrable Securities that are not then registered on an effective Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415.
Each Registration Statement filed hereunder shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith, subject to the provisions of Section 2(e)) and
shall contain (unless otherwise directed by at least 85% in interest of the
Holders) substantially the &#147;<U>Plan of Distribution</U>&#148; attached hereto as
<U>Annex A</U>. Subject to the terms of this Agreement, the Company shall use
its best efforts to cause a Registration Statement filed under this Agreement
(including, without limitation, under Section 3(c)) to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event no later than the applicable Effectiveness Date, and shall use its
best efforts to keep such Registration Statement continuously effective under
the Securities Act until all Registrable Securities covered by such Registration
Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be
sold without volume or manner-of-sale restrictions pursuant to Rule 144 and
without the requirement for the Company to be in compliance with the current
public information requirement under Rule 144, as determined by the counsel to
the Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Transfer Agent and the affected Holders (the &#147;<U>Effectiveness
Period</U>&#148;). The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The
Company shall promptly (but prior to the filing of the notice of effectiveness)
notify the Holders via facsimile or by e-mail of the effectiveness of a
Registration Statement on the same Trading Day that the Company telephonically
confirms effectiveness with the Commission, which shall be the date requested
for effectiveness of such Registration Statement. The Company shall, by 9:30
a.m. Eastern Time on the Trading Day after the effective date of such
Registration Statement, file a final Prospectus with the Commission as required
by Rule 424. Failure to so notify the Holder within one (1) Trading Day of such
notification of effectiveness or failure to file a final Prospectus as foresaid
shall be deemed an Event under Section 2(d).</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding the registration obligations set forth in Section 2(a), if the
Commission informs the Company that all of the Registrable Securities cannot, as
a result of the application of Rule 415 and other applicable regulations, be
registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly inform each of the Holders thereof and
use its commercially reasonable efforts to file amendments to the Initial
Registration Statement as required by the Commission, covering the maximum
number of Registrable Securities permitted to be registered by the Commission,
on Form S-3 or such other form available to register for resale the Registrable
Securities as a secondary offering, subject to the provisions of Section 2(e); with respect to filing on Form
S-3 or other appropriate form, and subject to the provisions of Section 2(d)
with respect to the payment of liquidated damages; <u>provided</u>, <u>however</u>, that prior to filing such amendment, the Company shall be
obligated to use diligent efforts to advocate with the Commission for the
registration of all of the Registrable Securities in accordance with the SEC
Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09.</P>
<P align=center>4</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notwithstanding any other provision of this Agreement and subject to the payment
of liquidated damages pursuant to Section 2(d), if the Commission or any SEC
Guidance sets forth a limitation on the number of Registrable Securities
permitted to be registered on a particular Registration Statement as a secondary
offering (and notwithstanding that the Company used diligent efforts to advocate
with the Commission for the registration of all or a greater portion of
Registrable Securities), unless otherwise directed in writing by a Holder as to
its Registrable Securities, the number of Registrable Securities to be
registered on such Registration Statement will be reduced as follows:</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">a. </TD>
    <TD>
      <P align=justify>First, the Company shall reduce or eliminate any
      securities to be included by any Person other than a Holder;</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">b. </TD>
    <TD>
      <P align=justify>Second, the Company shall reduce Registrable Securities
      represented by Warrant Shares (applied, in the case that some Warrant
      Shares may be registered, to the Holders on a pro rata basis based on the
      total number of unregistered Warrant Shares held by such Holders);
    and</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">c. </TD>
    <TD>
      <P align=justify>Third, the Company shall reduce Registrable Securities
      represented by Conversion Shares (applied, in the case that some
      Conversion Shares may be registered, to the Holders on a pro rata basis
      based on the total number of unregistered Conversion Shares held by such
      Holders).</P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify>In the event of a cutback hereunder,
the Company shall give the Holder at least five (5) Trading Days prior written
notice along with the calculations as to such Holder&#146;s allotment. In the event
the Company amends the Initial Registration Statement in accordance with the
foregoing, the Company will use its best efforts to file with the Commission, as
promptly as allowed by Commission or SEC Guidance provided to the Company or to
registrants of securities in general, one or more registration statements on
Form S-3 or such other form available to register for resale those Registrable
Securities that were not registered for resale on the Initial Registration
Statement, as amended. </P>
<P align=center>5</P>
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<P style="MARGIN-LEFT: 5%" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; If: (i) the Initial
Registration Statement is not filed on or prior to its Filing Date (if the
Company files the Initial Registration Statement without affording the Holders
the opportunity to review and comment on the same as required by Section 3(a)
herein, the Company shall be deemed to have not satisfied this clause (i)), or
(ii) the Company fails to file with the Commission a request for acceleration of a
Registration Statement in accordance with Rule 461 promulgated by the Commission
pursuant to the Securities Act, within five (5) Trading Days of the date that
the Company is notified (orally or in writing, whichever is earlier) by the
Commission that such Registration Statement will not be &#147;reviewed&#148; or will not
be subject to further review, or (iii) prior to the effective date of a
Registration Statement, the Company fails to file a pre-effective amendment and
otherwise respond in writing to comments made by the Commission in respect of
such Registration Statement within twelve (12) Trading Days after the receipt of
comments by or notice from the Commission that such amendment is required in
order for such Registration Statement to be declared effective, or (iv) a
Registration Statement registering for resale all of the Registrable Securities
is not declared effective by the Commission by the Effectiveness Date of the
Initial Registration Statement, or (v) after the effective date of a
Registration Statement, such Registration Statement ceases for any reason to
remain continuously effective as to all Registrable Securities included in such
Registration Statement, or the Holders are otherwise not permitted to utilize
the Prospectus therein to resell such Registrable Securities, for more than ten
(10) consecutive Trading Days or more than an aggregate of fifteen (15) Trading
Days (which need not be consecutive calendar days) during any 12-month period
(any such failure or breach being referred to as an &#147;<U>Event</U>&#148;, and for
purposes of clauses (i) and (iv), the date on which such Event occurs, and for
purpose of clause (ii) the date on which such five (5) Trading Day period is
exceeded, and for purpose of clause (iii) the date which such twelve (12)
Trading Day period is exceeded, and for purpose of clause (v) the date on which
such ten (10) or fifteen (15) Trading Day period, as applicable, is exceeded
being referred to as &#147;<U>Event Date</U>&#148;), then, in addition to any other rights
the Holders may have hereunder or under applicable law, on each such Event Date
and on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the
Company shall pay to each Holder an amount in cash, as partial liquidated
damages and not as a penalty, equal to the product of 1.5% multiplied by the
aggregate Subscription Amount paid by such Holder pursuant to the Purchase
Agreement. The parties agree that the maximum aggregate liquidated damages
payable to a Holder under this Agreement shall be 9% of the aggregate
Subscription Amount paid by such Holder pursuant to the Purchase Agreement. If
the Company fails to pay any partial liquidated damages pursuant to this Section
in full within seven days after the date payable, the Company will pay interest
thereon at a rate of 18% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing daily from the
date such partial liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The partial liquidated damages pursuant to
the terms hereof shall apply on a daily pro rata basis for any portion of a
month prior to the cure of an Event. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Form S-3 is not available for the registration of the resale of Registrable
Securities hereunder, the Company shall (i) register the resale of the
Registrable Securities on another appropriate form and (ii) undertake to
register the Registrable Securities on Form S-3
as soon as such form is available, <u>provided</u> that the Company shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the Commission. </P>
<P align=center>6</P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Registration
Procedures</U>. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the Company&#146;s registration obligations hereunder, the Company
shall: </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Not less than five (5) Trading Days prior to the filing of each Registration
Statement and not less than one (1) Trading Day prior to the filing of any
related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Holder copies of all such
documents proposed to be filed, which documents (other than those incorporated
or deemed to be incorporated by reference) will be subject to the review of such
Holders, and (ii) cause its officers and directors, counsel and independent
registered public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to each Holder, to
conduct a reasonable investigation within the meaning of the Securities Act.
Notwithstanding the above, the Company shall not be obligated to provide the
Holders advance copies of any universal shelf registration statement registering
securities in addition to those required hereunder, or any Prospectus prepared
thereto. The Company shall not file a Registration Statement or any such
Prospectus or any amendments or supplements thereto to which the Holders of a
majority of the Registrable Securities shall reasonably object in good faith,
provided that, the Company is notified of such objection in writing no later
than five (5) Trading Days after the Holders have been so furnished copies of a
Registration Statement or one (1) Trading Day after the Holders have been so
furnished copies of any related Prospectus or amendments or supplements thereto.
Each Holder agrees to furnish to the Company a completed questionnaire in the
form attached to this Agreement as <U>Annex B</U> (a &#147;<U>Selling Stockholder</U>
<U>Questionnaire</U>&#148;) on a date that is not less than two (2) Trading Days
prior to the Filing Date or by the end of the fourth (4<SUP>th</SUP>) Trading
Day following the date on which such Holder receives draft materials in
accordance with this Section.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities, (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as
promptly as reasonably possible to any comments received from the Commission
with respect to a Registration Statement or any amendment thereto and provide as
promptly as reasonably possible to the Holders true and complete copies of all
correspondence from and to the Commission relating to a Registration Statement
(provided that, the Company shall excise any information contained therein which
would constitute material non-public information regarding the Company or any of
its Subsidiaries), and (iv) comply in all material respects with the applicable
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by a Registration Statement
during the applicable period in accordance (subject to the terms of this
Agreement) with the intended methods of disposition by the Holders thereof set
forth in such Registration Statement as so amended or in such Prospectus as so
supplemented. </P>
<P align=center>7</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If for the five (5) consecutive Trading Days during the Effectiveness Period,
the number of Registrable Securities at any time exceeds 100% of the number of
shares of Common Stock then registered in a Registration Statement, then the
Company shall file as soon as reasonably practicable, but in any case prior to
the applicable Filing Date, an additional Registration Statement covering the
resale by the Holders of not less than the number of such Registrable
Securities.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notify the Holders of Registrable Securities to be sold (which notice shall,
pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction
to suspend the use of the Prospectus until the requisite changes have been made)
as promptly as reasonably possible (and, in the case of (i)(A) below, not less
than one (1) Trading Day prior to such filing) and (if requested by any such
Person) confirm such notice in writing no later than one (1) Trading Day
following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed,
(B) when the Commission notifies the Company whether there will be a &#147;review&#148; of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement, and (C) with respect to a Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose, (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus, <u>provided</u>, <u>however</u>, in no event shall any
such notice contain any information which would constitute material, non-public
information regarding the Company or any of its Subsidiaries. </P>
<P align=center>8</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Use its best efforts to avoid the issuance of, or, if issued, obtain the
withdrawal of (i) any order stopping or suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable time. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Furnish to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical
form. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subject to the terms of this Agreement, the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 3(d). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration
Statement; provided, that, the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified,
subject the Company to any material tax in any such jurisdiction where it is not
then so subject or file a general consent to service of process in any such
jurisdiction. </P>
<P align=center>9</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If requested by a Holder, cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
and applicable securities regulations, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in such
names as any such Holder may request. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the occurrence of any event contemplated by Section 3(d), as promptly as
reasonably possible under the circumstances taking into account the Company&#146;s
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 3(d) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its best efforts to
ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this
Section 3(k) to suspend the availability of a Registration Statement and
Prospectus, subject to the payment of partial liquidated damages otherwise
required pursuant to Section 2(d), for a period not to exceed 60 calendar days
(which need not be consecutive days) in any 12-month period. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comply with all applicable rules and regulations of the Commission. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company may require each selling Holder to furnish to the Company a
certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares. During any
periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any
Holder fails to furnish such information within three Trading Days of the Company&#146;s request, any liquidated
damages that are accruing at such time as to such Holder only shall be tolled
and any Event that may otherwise occur solely because of such delay shall be
suspended as to such Holder only, until such information is delivered to the
Company. </P>
<P align=center>10</P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Registration Expenses</U>. All fees and expenses incident to the performance
of or compliance with, this Agreement by the Company shall be borne by the
Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company&#146;s counsel and
independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading, (C) in compliance
with applicable state securities or Blue Sky laws reasonably agreed to by the
Company in writing (including, without limitation, fees and disbursements of
counsel for the Company in connection with Blue Sky qualifications or exemptions
of the Registrable Securities) and (D) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the
broker is receiving no more than a customary brokerage commission in connection
with such sale, (ii) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities), (iii) messenger, telephone
and delivery expenses, (iv) fees and disbursements of counsel for the Company,
(v) Securities Act liability insurance, if the Company so desires such
insurance, and (vi) fees and expenses of all other Persons retained by the
Company in connection with the consummation of the transactions contemplated by
this Agreement. In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions of any Holder or, except to
the extent provided for in the Transaction Documents, any legal fees or other
costs of the Holders. </P>
<p align=center>11</p>
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<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;
5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Indemnification</U>.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Indemnification by the Company</U>. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder, the
officers, directors, members, partners, agents, brokers (including brokers who
offer and sell Registrable Securities as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees (and any other Persons with a functionally equivalent role of a
Person holding such titles, notwithstanding a lack of such title or any other
title) of each of them, each Person who controls any such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, members, stockholders, partners, agents and employees (and any other
Persons with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys&#146; fees) and expenses (collectively,
&#147;<U>Losses</U>&#148;), as incurred, arising out of or relating to (1) any untrue or
alleged untrue statement of a material fact contained in a Registration
Statement, any Prospectus or any form of prospectus or in any amendment or
supplement thereto or in any preliminary prospectus, or arising out of or
relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any
Prospectus or supplement thereto, in light of the circumstances under which they
were made) not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder&#146;s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an occurrence
of an event of the type specified in Section 3(d)(iii)-(vi), the use by such
Holder of an outdated, defective or otherwise unavailable Prospectus after the
Company has notified such Holder in writing that the Prospectus is outdated,
defective or otherwise unavailable for use by such Holder and prior to the
receipt by such Holder of the Advice contemplated in Section 6(d), but only if
and to the extent that following the receipt of the Advice the misstatement or
omission giving rise to such Loss would have been corrected. The Company shall
notify the Holders promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Company is aware. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such indemnified person and shall survive the transfer of any Registrable
Securities by any of the Holders in accordance with Section 6(h). </P>
<p align=center>12</p>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Indemnification by Holders</U>. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based upon: (x) such Holder&#146;s failure to comply with
any applicable prospectus delivery requirements of the Securities Act through no
fault of the Company or (y) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, any Prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading (i) to the
extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished in writing by such Holder to the
Company expressly for inclusion in such Registration Statement or such
Prospectus or (ii) to the extent, but only to the extent, that such information
relates to such Holder&#146;s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement (it being understood that the
Holder has approved Annex A hereto for this purpose), such Prospectus or in any
amendment or supplement thereto or (iii) in the case of an occurrence of an
event of the type specified in Section 3(d)(iii)-(vi), to the extent, but only
to the extent, related to the use by such Holder of an outdated, defective or
otherwise unavailable Prospectus after the Company has notified such Holder in
writing that the Prospectus is outdated, defective or otherwise unavailable for
use by such Holder and prior to the receipt by such Holder of the Advice
contemplated in Section 6(d), but only if and to the extent that following the
receipt of the Advice the misstatement or omission giving rise to such Loss
would have been corrected. In no event shall the liability of any selling Holder
under this Section 5(b) be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Conduct of Indemnification Proceedings</U>. If any Proceeding shall be
brought or asserted against any Person entitled to indemnity hereunder (an
&#147;<U>Indemnified Party</U>&#148;), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the &#147;<U>Indemnifying Party</U>&#148;) in
writing, and the Indemnifying Party shall have the right to assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that, the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have materially and adversely prejudiced the Indemnifying Party.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses, (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to
employ counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding, or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of no more than one separate counsel shall be
at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding. </P>
<P align=center>13</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject
to the terms of this Agreement, all reasonable fees and expenses of the
Indemnified Party (including reasonable fees and expenses to the extent incurred
in connection with investigating or preparing to defend such Proceeding in a
manner not inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within ten Trading Days of written notice thereof to the
Indemnifying Party; provided, that, the Indemnified Party shall promptly
reimburse the Indemnifying Party for that portion of such fees and expenses
applicable to such actions for which such Indemnified Party is finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) not to be entitled to indemnification
hereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Contribution</U>. If the indemnification under Section 5(a) or 5(b) is
unavailable to an Indemnified Party or insufficient to hold an Indemnified Party
harmless for any Losses, then each Indemnifying Party shall contribute to the
amount paid or payable by such Indemnified Party, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties&#146; relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in this Agreement, any reasonable attorneys&#146; or
other fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms. </P>
<P align=center>14</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be required
to contribute pursuant to this Section 5(d), in the aggregate, any amount in
excess of the amount by which the net proceeds actually received by such Holder
from the sale of the Registrable Securities subject to the Proceeding exceeds
the amount of any damages that such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Miscellaneous</U>.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Remedies</U>. In the event of a breach by the Company or by a Holder of any
of their respective obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
shall be entitled to specific performance of its rights under this Agreement.
Each of the Company and each Holder agrees that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall not assert or shall waive the defense that a remedy at law would be
adequate. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Piggyback on Registrations; Prohibition on Filing Other Registration</U>
<U>Statements</U>. Except as set forth on <U>Schedule 6(b)</U> attached hereto,
neither the Company nor any of its security holders (other than the Holders in
such capacity pursuant hereto) may include securities of the Company in any
Registration Statements other than the Registrable Securities. The Company shall
not file any other registration statements until all Registrable Securities are
registered pursuant to a Registration Statement that is declared effective by
the Commission, provided that this Section 6(b) (i) shall not prohibit the
Company from filing amendments to registration statements filed prior to the
date of this Agreement and (ii) shall not prohibit the Company from filing a
shelf registration statement on Form S-3 for a primary offering by the Company,
provided that the Company makes no offering of securities pursuant to such shelf
registration statement prior to the effective date of the Registration Statement
required hereunder that includes all of the Registrable Securities. </P>
<P align=center>15</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Compliance</U>. Each Holder covenants and agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it
(unless an exemption therefrom is available) in connection with sales of
Registrable Securities pursuant to a Registration Statement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Discontinued Disposition</U>. By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 3(d)(iii) through (vi),
such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the
&#147;<U>Advice</U>&#148;) by the Company that the use of the applicable Prospectus (as it
may have been supplemented or amended) may be resumed. The Company will use its
best efforts to ensure that the use of the Prospectus may be resumed as promptly
as is practicable. The Company agrees and acknowledges that any periods during
which the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section 2(d). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Piggy-Back Registrations</U>. If, at any time during the Effectiveness
Period, there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company&#146;s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; <U>provided</U>,
<U>however</U>, that the Company shall not be required to register any
Registrable Securities pursuant to this Section 6(e) that are eligible for
resale pursuant to Rule 144 (without volume restrictions or current public
information requirements) promulgated by the Commission pursuant to the
Securities Act or that are the subject of a then effective Registration
Statement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Amendments and Waivers</U>. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders of
67% or more of the then outstanding Registrable Securities (for purposes of
clarification, this includes any Registrable Securities issuable upon exercise
or conversion of any Security). If a Registration Statement does not register
all of the Registrable Securities pursuant to a waiver or amendment done in
compliance with the previous sentence, then the number of Registrable Securities
to be registered for each Holder shall be reduced pro rata among all Holders and
each Holder shall have the right to designate which of its Registrable
Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the
rights of a Holder or some Holders and that does not directly or indirectly
affect the rights of other Holders may be given only by such Holder or Holders
of all of the Registrable Securities to which such waiver or consent relates;
<u>provided</u>, <u>however</u>, that the provisions of this sentence may not be
amended, modified, or supplemented except in accordance with the provisions of
the first sentence of this Section 6(f). No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of this Agreement unless the same consideration also is offered to all
of the parties to this Agreement. </P>
<P align=center>16</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notices</U>. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set forth
in the Purchase Agreement.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Successors and Assigns</U>. This Agreement shall inure to the benefit of and
be binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign (except by
merger) its rights or obligations hereunder without the prior written consent of
all of the Holders of the then outstanding Registrable Securities. Each Holder
may assign their respective rights hereunder in the manner and to the Persons as
permitted under Section 5.7 of the Purchase Agreement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Inconsistent Agreements</U>. Neither the Company nor any of its
Subsidiaries has entered, as of the date hereof, nor shall the Company or any of
its Subsidiaries, on or after the date of this Agreement, enter into any
agreement with respect to its securities, that would have the effect of
impairing the rights granted to the Holders in this Agreement or otherwise
conflicts with the provisions hereof. Except as set forth on <U>Schedule
6(i)</U>, neither the Company nor any of its Subsidiaries has previously entered
into any agreement granting any registration rights with respect to any of its
securities to any Person that have not been satisfied in full. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Execution and Counterparts</U>. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a &#147;.pdf&#148; format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or &#147;.pdf&#148; signature page were an original
thereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Governing Law</U>. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Purchase Agreement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Cumulative Remedies</U>. The remedies provided herein are cumulative and not
exclusive of any other remedies provided by law. </P>
<P align=center>17</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_18></A>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Severability</U>. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Headings</U>. The headings in this Agreement are for convenience only, do not
constitute a part of the Agreement and shall not be deemed to limit or affect
any of the provisions hereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Independent Nature of Holders&#146; Obligations and Rights</U>. The obligations of
each Holder hereunder are several and not joint with the obligations of any
other Holder hereunder, and no Holder shall be responsible in any way for the
performance of the obligations of any other Holder hereunder. Nothing contained
herein or in any other agreement or document delivered at any closing, and no
action taken by any Holder pursuant hereto or thereto, shall be deemed to
constitute the Holders as a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Holders are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by this Agreement or any other
matters, and the Company acknowledges that the Holders are not acting in concert
or as a group, and the Company shall not asset any such claim, with respect to
such obligations or transactions. Each Holder shall be entitled to protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any proceeding for such purpose. The use of a single
agreement with respect to the obligations of the Company contained was solely in
the control of the Company, not the action or decision of any Holder, and was
done solely for the convenience of the Company and not because it was required
or requested to do so by any Holder. It is expressly understood and agreed that
each provision contained in this Agreement is between the Company and a Holder,
solely, and not between the Company and the Holders collectively and not between
and among Holders. </P>
<P align=center>******************** </P>
<P align=center><I>(Signature Pages Follow) </I></P>
<P align=center>18</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_19></A>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as
of the date first written above. </P>
<P style="MARGIN-LEFT: 50%" align=justify><B>ANAVEX LIFE SCIENCES CORP. </B></P>
<P style="MARGIN-LEFT: 50%" align=justify>&nbsp;</P>
<P style="MARGIN-LEFT: 50%"
align=justify>By:__________________________________________<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title: <BR></P>
<P align=center>&nbsp;</P>
<P align=center>[SIGNATURE PAGE OF HOLDERS FOLLOWS] </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_20></A>
<P align=center>[SIGNATURE PAGE OF HOLDERS TO AVXL RRA] </P>
<P align=justify>&nbsp;</P>
<P align=justify>Name of Holder: __________________________<BR></P>
<P align=justify><I>Signature of Authorized Signatory of Holder</I>:
__________________________</P>
<P align=justify>Name of Authorized Signatory: _________________________</P>
<P align=justify>Title of Authorized Signatory:
__________________________<BR></P>
<P align=center>[SIGNATURE PAGES CONTINUE] </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_21></A>
<P align=center><B><U>Annex A</U></B><B> </B></P>
<P align=center><U>Plan of Distribution</U> </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Selling Stockholder (the &#147;<U>Selling Stockholders</U>&#148;) of the securities and
any of their pledgees, assignees and successors-in-interest may, from time to
time, sell any or all of their securities covered hereby on the OCTQB or any
other stock exchange, market or trading facility on which the securities are
traded or in private transactions. These sales may be at fixed or negotiated
prices. A Selling Stockholder may use any one or more of the following methods
when selling securities: </P>
<UL style="TEXT-ALIGN: justify">
  <LI>
  <P>ordinary brokerage transactions and transactions in which the broker-dealer
  solicits purchasers; </P>
  <LI>
  <P>block trades in which the broker-dealer will attempt to sell the securities
  as agent but may position and resell a portion of the block as principal to
  facilitate the transaction; </P>
  <LI>
  <P>purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account; </P>
  <LI>
  <P>an exchange distribution in accordance with the rules of the applicable
  exchange; </P>
  <LI>
  <P>privately negotiated transactions; </P>
  <LI>
  <P>settlement of short sales; </P>
  <LI>
  <P>in transactions through broker-dealers that agree with the Selling
  Stockholders to sell a specified number of such securities at a stipulated
  price per security; </P>
  <LI>
  <P>through the writing or settlement of options or other hedging transactions,
  whether through an options exchange or otherwise; </P>
  <LI>
  <P>a combination of any such methods of sale; or </P>
  <LI>
  <P>any other method permitted pursuant to applicable law. </P></LI></UL>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Stockholders may also sell securities under Rule 144 under the
Securities Act of 1933, as amended (the &#147;<U>Securities Act</U>&#148;), if available,
rather than under this prospectus. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of securities, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an
agency transaction not in excess of a customary brokerage commission in
compliance with FINRA Rule 2440; and in the case of a principal transaction a
markup or markdown in compliance with FINRA IM-2440.</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_22></A>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
connection with the sale of the securities or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the
securities in the course of hedging the positions they assume. The Selling
Stockholders may also sell securities short and deliver these securities to
close out their short positions, or loan or pledge the securities to
broker-dealers that in turn may sell these securities. The Selling Stockholders
may also enter into option or other transactions with broker-dealers or other
financial institutions or create one or more derivative securities which require
the delivery to such broker-dealer or other financial institution of securities
offered by this prospectus, which securities such broker-dealer or other
financial institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the securities may be deemed to be &#147;underwriters&#148; within the meaning of
the Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the securities.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the securities. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because
Selling Stockholders may be deemed to be &#147;underwriters&#148; within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus. The
Selling Stockholders have advised us that there is no underwriter or
coordinating broker acting in connection with the proposed sale of the resale
securities by the Selling Stockholders. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
agreed to keep this prospectus effective until the earlier of (i) the date on
which the securities may be resold by the Selling Stockholders without
registration and without regard to any volume or manner-of-sale limitations by
reason of Rule 144, without the requirement for the Company to be in compliance
with the current public information under Rule 144 under the Securities Act or
any other rule of similar effect or (ii) all of the securities have been sold
pursuant to this prospectus or Rule 144 under the Securities Act or any other
rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required
under applicable state securities laws. In addition, in certain states, the
resale securities covered hereby may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.</P>
<P align=center>2</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_23></A>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale securities may not simultaneously engage in
market making activities with respect to the common stock for the applicable
restricted period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of the common stock by the Selling Stockholders or any other person. We
will make copies of this prospectus available to the Selling Stockholders and
have informed them of the need to deliver a copy of this prospectus to each
purchaser at or prior to the time of the sale (including by compliance with Rule
172 under the Securities Act). </P>
<P align=center>3</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_24></A>
<P align=right><B>Annex B </B></P>
<P align=center><B>AVANEX LIFE SCIENCES CORP. </B></P>
<P align=center><B>Selling Stockholder Notice and Questionnaire </B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned beneficial owner of common stock (the &#147;<U>Registrable
Securities</U>&#148;) of Anavex Life Sciences Corp., a Nevada corporation (the
&#147;<U>Company</U>&#148;), understands that the Company has filed or intends to file
with the Securities and Exchange Commission (the &#147;<U>Commission</U>&#148;) a
registration statement (the &#147;<U>Registration Statement</U>&#148;) for the
registration and resale under Rule 415 of the Securities Act of 1933, as amended
(the &#147;<U>Securities Act</U>&#148;), of the Registrable Securities, in accordance with
the terms of the Registration Rights Agreement (the &#147;<U>Registration Rights
Agreement</U>&#148;) to which this document is annexed. A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
legal consequences arise from being named as a selling stockholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling stockholder in the Registration Statement and the related
prospectus. </P>
<P align=center><B>NOTICE </B></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The undersigned beneficial owner (the &#147;<U>Selling
Stockholder</U>&#148;) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement. </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_25></A>
<P align=justify>The undersigned hereby provides the following information to
the Company and represents and warrants that such information is accurate: </P>
<P align=center><B>QUESTIONNAIRE </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>1.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Name.</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>Full Legal Name of Selling Stockholder</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%" >&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" >&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD>
      <P align=justify>Full Legal Name of Registered Holder (if not the same as
      (a) above) through which Registrable Securities are held:</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD width="5%" >&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD>
      <P align=justify>Full Legal Name of Natural Control Person (which means a
      natural person who directly or indirectly alone or with others has power
      to vote or dispose of the securities covered by this
  Questionnaire):</P></TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%" >&nbsp;</TD>
    <TD >&nbsp;</TD></TR>
  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid"
  >&nbsp;</TD></TR></TABLE>
<P align=justify><B>2. Address for Notices to Selling Stockholder: </B></P>
<P
align=justify>_______________________________________________________________________________________________________________________________________<BR>_______________________________________________________________________________________________________________________________________<BR>_______________________________________________________________________________________________________________________________________<BR>Telephone:
______________________________________________________________________________________________________<BR>Fax:
___________________________________________________________________________________________________________<BR>Contact
Person:
__________________________________________________________________________________________________</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>3.</B> </TD>
    <TD colSpan=2>
      <P align=justify><B>Broker-Dealer Status:</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>Are you a broker-dealer?</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD
      align=center>Yes&nbsp;[ &nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
      &nbsp; &nbsp;No&nbsp;[&nbsp;&nbsp;]</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD vAlign=top width="5%">(b) </TD>
    <TD>
      <P align=justify>If &#147;yes&#148; to Section 3(a), did you receive your
      Registrable Securities as compensation for investment banking services to
      the Company?</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD width="5%"></TD>
    <TD align=center>
      <P
      align=center>Yes&nbsp;[ &nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
  &nbsp; &nbsp;No&nbsp;[&nbsp;&nbsp;]</P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>
      <P align=justify>Note: </P></TD>
    <TD align=left width="85%">
      <P align=justify>If &#147;no&#148; to Section 3(b), the Commission&#146;s staff has
      indicated that you should be identified as an underwriter in the
      Registration Statement. </P></TD></TR></TABLE>
<P align=center>2</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_26></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(c) </TD>
    <TD>
      <P align=justify>Are you an affiliate of a broker-dealer?</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD
      align=center>Yes&nbsp;[ &nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &nbsp; &nbsp;No&nbsp;[&nbsp;&nbsp;]</TD>
  </TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">(d) </TD>
    <TD>
      <P align=justify>If you are an affiliate of a broker-dealer, do you
      certify that you purchased the Registrable Securities in the ordinary
      course of business, and at the time of the purchase of the Registrable
      Securities to be resold, you had no agreements or understandings, directly
      or indirectly, with any person to distribute the Registrable
      Securities?</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%"></TD>
    <TD
      align=center>Yes&nbsp;[ &nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    &nbsp; &nbsp;No&nbsp;[&nbsp;&nbsp;]</TD>
  </TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="5%" >&nbsp;</TD>
    <TD align=left>Note: </TD>
    <TD align=left width="85%">
      <P align=justify>If &#147;no&#148; to Section 3(d), the Commission&#146;s staff has
      indicated that you should be identified as an underwriter in the
      Registration Statement. </P></TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>4.</B> </TD>
    <TD>
      <P align=justify><B>Beneficial Ownership of Securities of the Company
      Owned by the Selling Stockholder.</B></P></TD></TR></TABLE>
<P style="MARGIN-LEFT: 5%" align=justify><I>Except as set forth below in this
Item 4, the undersigned is not the beneficial or registered owner of any
securities of the Company other than the securities issuable pursuant to the
Purchase Agreement. </I></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="5%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(a) </TD>
    <TD>
      <P align=justify>Type and Amount of other securities beneficially owned by
      the Selling Stockholder:</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD vAlign=top width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD></TR></TABLE>
<P align=center>3</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_27></A><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD vAlign=top width="5%"><B>5.</B> </TD>
    <TD>
      <P align=justify><B>Relationships with the Company:</B></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify><I>Except as set forth below, neither the undersigned nor
      any of its affiliates, officers, directors or principal equity holders
      (owners of 5% of more of the equity securities of the undersigned) has
      held any position or office or has had any other material relationship
      with the Company (or its predecessors or affiliates) during the past three
      years.</I></P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%"></TD>
    <TD>
      <P align=justify>State any exceptions here:</P></TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD></TR>
  <TR>
    <TD width="5%">&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD></TR></TABLE>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus and any amendments or supplements thereto. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF the undersigned, by authority
duly given, has caused this Notice and Questionnaire to be executed and
delivered either in person or by its duly authorized agent. </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Date: _______________________________________________</TD>
    <TD align=left width="5%">&nbsp;</TD>
    <TD align=left width="45%">Beneficial Owner: </TD></TR>
  <TR>
    <TD>&nbsp; </TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="5%">By: </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="45%">&nbsp;
    </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="5%">&nbsp;</TD>
    <TD align=left width="45%">Name: </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp; </TD>
    <TD align=left width="5%">&nbsp;</TD>
    <TD align=left width="45%">Title: </TD></TR></TABLE>
<P align=justify><B>PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED
AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT
MAIL, TO: </B></P>
<P align=center>4</P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3
<SEQUENCE>4
<FILENAME>exhibit10-3.htm
<DESCRIPTION>EXHIBIT 10.3
<TEXT>

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<HEAD>
   <TITLE>Anavex Life Sciences Corp. - Exhibit 10.3 - Filed by newsfilecorp.com</TITLE>
   <META name="HandheldFriendly" content="true">
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<HR noshade align="center" width=100% size=3 color="black">
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<P align=justify>NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS
SECURITY IS CONVERTIBLE HAVE 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
&#147;SECURITIES ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. </P>
<P align=justify>Original Issue Date: March ___, 2014 <BR>No.
__________<BR>Original Conversion Price (subject to adjustment herein):
<B>$0.30</B> <BR></P>
<P align=right>$_______________</P>
<P align=center><B>SENIOR CONVERTIBLE DEBENTURE </B><BR><B>DUE MARCH ___, 2044
</B><BR></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
THIS SENIOR CONVERTIBLE DEBENTURE is one of a series of duly authorized and
validly issued Senior Convertible Debentures of ANAVEX LIFE SCIENCES CORP., a
Nevada corporation (the &#147;<U>Company</U>&#148;), having its principal place of
business at 51 West 52nd Street, 7th Floor, New York, New York 10019, designated
as its Senior Convertible Debenture due March ___, 2044 (this debenture, the
&#147;<U>Debenture</U>&#148; and, collectively with the other debentures of such series,
the &#147;<U>Debentures</U>&#148;). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR
VALUE RECEIVED, the Company promises to pay to ________________________ or its
registered assigns (the &#147;<U>Holder</U>&#148;), or shall have paid pursuant to the
terms hereunder, the principal sum of $_______________ on March ___, 2044 (the
&#147;<U>Maturity Date</U>&#148;) or such earlier date as this Debenture is required or
permitted to be repaid as provided hereunder. This Debenture is subject to the
following additional provisions: </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Section
1</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Definitions</U>.
For the purposes hereof, in addition to the terms defined elsewhere in this
Debenture, (a) capitalized terms not otherwise defined herein shall have the
meanings set forth in the Purchase Agreement and (b) the following terms shall
have the following meanings: </P>
<P align=center>1</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_2></A>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Alternate Consideration</U>&#148; shall have the meaning set forth in Section
5(e). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Beneficial
Ownership Limitation</U>&#148; shall have the meaning set forth in Section 4(d).</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Business
Day</U>&#148; means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Buy-In</U>&#148; shall have the meaning set forth in Section 4(c)(v). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Conversion</U>&#148; shall have the meaning ascribed to such term in Section
4.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Conversion Date</U>&#148; shall have the meaning set forth in Section 4(a). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Conversion Price</U>&#148; shall have the meaning set forth in Section 4(b). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion
Schedule</U>&#148; means the Conversion Schedule in the form of <U>Schedule 1</U>
attached hereto. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Conversion
Shares</U>&#148; means, collectively, the shares of Common Stock issuable upon
conversion of this Debenture in accordance with the terms hereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Debenture
Register</U>&#148; means the formal record maintained by the Company with respect to
the recording of the issuances of Debentures, the amounts thereof, and the
Holders thereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Effective
Date</U>&#148; means the date that the Registration Statement filed by the Company
pursuant to the Registration Rights Agreement is first declared effective by the
Commission. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Equity
Conditions</U>&#148; means, during the period in question, (a) the Company shall have
duly honored all conversions and redemptions scheduled to occur or occurring by
virtue of one or more Notices of Conversion of the Holder, if any, (b) the
Company shall have paid all liquidated damages and other amounts owing to the
Holder in respect of this Debenture, (c)(i) there is an effective Registration
Statement pursuant to which the Holder is permitted to utilize the prospectus
thereunder to resell all of the shares of Common Stock issuable pursuant to the
Transaction Documents (and the Company believes, in good faith, that such
effectiveness will continue uninterrupted for the foreseeable future) or (ii)
all of the Conversion Shares issuable pursuant to the Transaction Documents (and
shares issuable in lieu of cash payments of interest) may be resold pursuant to
Rule 144 without volume or manner-of-sale restrictions or current public
information requirements as determined by the counsel to the Company as set
forth in a written opinion letter to such effect, addressed and acceptable to
the Transfer Agent and the Holder, (d) the Common Stock is trading on a Trading
Market and all of </P>
<P align=center>2</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<A name=page_3></A>
<P align=justify style="margin-left:5%">the shares issuable pursuant to the Transaction Documents are
listed or quoted for trading on such Trading Market (and the Company believes,
in good faith, that trading of the Common Stock on a Trading Market will
continue uninterrupted for the foreseeable future), (e) there is a sufficient
number of authorized but unissued and otherwise unreserved shares of Common
Stock for the issuance of all of the shares then issuable pursuant to the
Transaction Documents, (f) the issuance of the shares in question (or, in the
case of an Optional Redemption, the shares issuable upon conversion in full of
the Optional Redemption Amount) to the Holder would not violate the limitations
set forth in Section 4(d) herein, (h) there has been no public announcement of a
pending or proposed Fundamental Transaction or Change of Control Transaction
that has not been consummated, (i) the applicable Holder is not in possession of
any information provided by the Company that constitutes, or may constitute,
material non-public information and (j) for each Trading Day in a period of 20
consecutive Trading Days prior to the applicable date in question, the daily
dollar trading volume for the Common Stock on the principal Trading Market
exceeds $100,000 per Trading Day. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Event of Default</U>&#148; shall have the meaning set forth in Section 8(a). </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Fundamental Transaction</U>&#148; shall have the meaning set forth in Section
5(e). </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Mandatory
Default Amount</U>&#148; means the sum of (a) the greater of (i) the outstanding
principal amount of this Debenture, plus all accrued and unpaid interest hereon,
divided by the Conversion Price on the date the Mandatory Default Amount is
either (A) demanded (if demand or notice is required to create an Event of
Default) or otherwise due or (B) paid in full, whichever has a lower Conversion
Price, multiplied by the VWAP on the date the Mandatory Default Amount is either
(x) demanded or otherwise due or (y) paid in full, whichever has a higher VWAP,
or (ii) 130% of the outstanding principal amount of this Debenture, plus 100% of
accrued and unpaid interest hereon, and (b) all other amounts, costs, expenses
and liquidated damages due in respect of this Debenture. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>New York Courts</U>&#148; shall have the meaning set forth in Section 9(d). </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Notice of Conversion</U>&#148; shall have the meaning set forth in Section 4(a).
</P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Optional Redemption</U>&#148; shall have the meaning set forth in Section 6(a).
</P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Optional
Redemption Amount</U>&#148; means the sum of (a) 110% of the then outstanding
principal amount of the Debenture and (b) all liquidated damages and other
amounts due in respect of the Debenture. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Optional Redemption Date</U>&#148; shall have the meaning set forth in Section
6(a). </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Optional Redemption Notice</U>&#148; shall have the meaning set forth in Section
6(a). </P>
<P align=center>3</P>
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<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Optional
Redemption Notice Date</U>&#148; shall have the meaning set forth in Section 6(a).
</P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Optional Redemption Period</U>&#148; shall have the meaning set forth in Section
6(a). </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Original
Issue Date</U>&#148; means the date of the first issuance of the Debentures,
regardless of any transfers of any Debenture and regardless of the number of
instruments which may be issued to evidence such Debentures. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Permitted
Indebtedness</U>&#148; means (a) the indebtedness evidenced by the Debentures, (b)
the Indebtedness existing on the Original Issue Date and set forth on
<U>Schedule 3.1(aa)</U> attached to the Purchase Agreement, (c) lease
obligations and purchase money indebtedness of up to $250,000, in the aggregate,
incurred in connection with the acquisition of capital assets and lease
obligations with respect to newly acquired or leased assets. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Permitted
Lien</U>&#148; means the individual and collective reference to the following: (a)
Liens for taxes, assessments and other governmental charges or levies not yet
due or Liens for taxes, assessments and other governmental charges or levies
being contested in good faith and by appropriate proceedings for which adequate
reserves (in the good faith judgment of the management of the Company) have been
established in accordance with GAAP, (b) Liens imposed by law which were
incurred in the ordinary course of the Company&#146;s business, such as carriers&#146;,
warehousemen&#146;s and mechanics&#146; Liens, statutory landlords&#146; Liens, and other
similar Liens arising in the ordinary course of the Company&#146;s business, and
which (x) do not individually or in the aggregate materially detract from the
value of such property or assets or materially impair the use thereof in the
operation of the business of the Company and its consolidated Subsidiaries or
(y) are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing for the foreseeable future the
forfeiture or sale of the property or asset subject to such Lien, (c) Liens
incurred in connection with Permitted Indebtedness under clause (b) thereunder,
and (d) Liens incurred in connection with Permitted Indebtedness under clause
(c) thereunder, provided that such Liens are not secured by assets of the
Company or its Subsidiaries other than the assets so acquired or leased. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Purchase
Agreement</U>&#148; means the Securities Purchase Agreement, dated as of March ___,
2014, among the Company and the original Holders, as amended, modified or
supplemented from time to time in accordance with its terms. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration
Rights Agreement</U>&#148; means the Registration Rights Agreement, dated on or about
the date of the Purchase Agreement, among the Company and the original Holders,
in the form of <U>Exhibit B</U> attached to the Purchase Agreement. </P>
<P
align=justify style="margin-left:5%">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Registration
Statement</U>&#148; means a registration statement meeting the requirements set forth
in the Registration Rights Agreement and covering the resale of the Underlying
Shares by each Holder as provided for in the Registration Rights Agreement. </P>
<P align=center>4</P>
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noShade SIZE=5>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Securities
Act</U>&#148; means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Share Delivery Date</U>&#148; shall have the meaning set forth in Section
4(c)(ii). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Successor Entity</U>&#148; shall have the meaning set forth in Section 5(e).</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Trading
Day</U>&#148; means a day on which the principal Trading Market is open for trading.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Trading
Market</U>&#148; means any of the following markets or exchanges on which the Common
Stock is listed or quoted for trading on the date in question: the NYSE MKT, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the New York Stock Exchange, the OTC Bulletin Board, OTCQX or OTCQB (or
any successors to any of the foregoing). </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
2</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Interest and
Prepayment</U>. No regularly scheduled interest payments shall be made on this
Debenture. Except as otherwise set forth in this Debenture, the Company may not
prepay any portion of the principal amount of this Debenture without the prior
written consent of the Holder. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
3.</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Registration of
Transfers and Exchanges</U>.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Different Denominations</U>. This Debenture is exchangeable for an equal
aggregate principal amount of Debentures of different authorized denominations,
as requested by the Holder surrendering the same. No service charge will be
payable for such registration of transfer or exchange. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Investment Representations</U>. This Debenture has been issued subject to
certain investment representations of the original Holder set forth in the
Purchase Agreement and may be transferred or exchanged only in compliance with
the Purchase Agreement and applicable federal and state securities laws and
regulations.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Reliance on Debenture Register</U>. Prior to due presentment for transfer to
the Company of this Debenture, the Company and any agent of the Company may
treat the Person in whose name this Debenture is duly registered on the
Debenture Register as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this Debenture is
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
4.</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Conversion</U>.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Voluntary Conversion</U>. At any time after the Original Issue Date until
this Debenture is no longer outstanding, this Debenture shall be convertible, in
whole or in part, into shares of Common Stock at the option of the Holder, at
any time and from time to time (subject to the conversion limitations set forth
in Section 4(d) hereof). The Holder shall effect conversions by
delivering to the Company a Notice of Conversion, the form of which is attached
hereto as <u>Annex A</u> (each, a &#147;<u>Notice of Conversion</u>&#148;), specifying
therein the principal amount of this Debenture to be converted and the date on
which such conversion shall be effected (such date, the &#147;<u>Conversion
Date</u>&#148;). If no Conversion Date is specified in a Notice of Conversion, the
Conversion Date shall be the date that such Notice of Conversion is deemed
delivered hereunder. No ink-original Notice of Conversion shall be required, nor
shall any medallion guarantee (or other type of guarantee or notarization) of
any Notice of Conversion form be required.<i> </i>To effect conversions
hereunder, the Holder shall not be required to physically surrender this
Debenture to the Company unless the entire principal amount of this Debenture
has been so converted. Conversions hereunder shall have the effect of lowering
the outstanding principal amount of this Debenture in an amount equal to the
applicable conversion. The Holder and the Company shall maintain records showing
the principal amount(s) converted and the date of such conversion(s). The
Company may deliver an objection to any Notice of Conversion within one (1)
Business Day of delivery of such Notice of Conversion. In the event of any
dispute or discrepancy, the records of the Holder shall be controlling and
determinative in the absence of manifest error. <b>The Holder, and any assignee
by acceptance of this Debenture, acknowledge and agree that, by reason of the
provisions of this paragraph, following conversion of a portion of this
Debenture, the unpaid and unconverted principal amount of this Debenture may be
less than the amount stated on the face hereof.</b> </P>
<P align=center>5</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Conversion Price</U>. The conversion price in effect on any Conversion Date
shall be equal to <B>$0.30</B>,<B> </B>subject to adjustment herein (the
&#147;<U>Conversion Price</U>&#148;). . </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Mechanics of
Conversion</U>. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Conversion Shares Issuable Upon Conversion of Principal</U> <U>Amount</U>.
The number of Conversion Shares issuable upon a conversion hereunder shall be
determined by the quotient obtained by dividing (x) the outstanding principal
amount of this Debenture to be converted by (y) the Conversion Price. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Delivery of Conversion Shares Upon Conversion</U>. Not later than one (1)
Trading Day after each Conversion Date (the &#147;<U>Share Delivery Date</U>&#148;), the
Company shall deliver, or cause to be delivered, to the Holder the number of
Conversion Shares being acquired upon the conversion of this Debenture which, on
or after the earlier of (i) the six (6) month anniversary of the Original Issue
Date or (ii) the Effective Date, shall be free of restrictive legends and
trading restrictions (other than those which may then be required by the
Purchase Agreement) and shall be delivered by the Company under this Section
4(c) electronically through the Depository Trust Company or another established
clearing corporation performing similar functions.</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Failure to Deliver Conversion Shares</U>. If, in the case of any Notice of
Conversion, such Conversion Shares are not delivered to or as directed by the
applicable Holder by the Share Delivery
Date, the Holder shall be entitled to elect by written notice to the Company at
any time on or before its receipt of the Conversion Shares, to rescind such
Conversion, in which event the Company shall promptly return to the Holder any
original Debenture delivered to the Company and the Holder shall promptly return
to the Company the Conversion Shares issued to such Holder pursuant to the
rescinded Conversion Notice.</P>
<P align=center>6</P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Obligation Absolute; Partial Liquidated Damages</U>. The Company&#146;s
obligations to issue and deliver the Conversion Shares upon conversion of this
Debenture in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of such
Conversion Shares; <U>provided</U>, <U>however</U>, that such delivery shall not
operate as a waiver by the Company of any such action the Company may have
against the Holder. In the event the Holder of this Debenture shall elect to
convert any or all of the outstanding principal amount hereof, the Company may
not refuse conversion based on any claim that the Holder or anyone associated or
affiliated with the Holder has been engaged in any violation of law, agreement
or for any other reason, unless an injunction from a court, on notice to Holder,
restraining and or enjoining conversion of all or part of this Debenture shall
have been sought and obtained, and the Company posts a surety bond for the
benefit of the Holder in the amount of 150% of the outstanding principal amount
of this Debenture, which is subject to the injunction, which bond shall remain
in effect until the completion of arbitration/litigation of the underlying
dispute and the proceeds of which shall be payable to the Holder to the extent
it obtains judgment. In the absence of such injunction, the Company shall issue
Conversion Shares or, if applicable, cash, upon a properly noticed conversion.
If the Company fails for any reason to deliver to the Holder the Conversion
Shares pursuant to Section 4(c)(ii) by the Share Delivery Date, the Company
shall pay to the Holder, in cash, as liquidated damages and not as a penalty,
for each $1,000 of principal amount being converted, $10 per Trading Day for
each Trading Day after such Share Delivery Date until such Conversion Shares are
delivered or Holder rescinds such conversion. Nothing herein shall limit a
Holder&#146;s right to pursue actual damages for the Company&#146;s failure to deliver
Conversion Shares within the period specified herein and the Holder shall have
the right to pursue all remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. Nothing herein shall limit a Holder&#146;s right to pursue actual
damages or declare an Event of Default pursuant to Section 8 hereof for the
Company&#146;s failure to deliver Conversion Shares within the period specified herein and the
Holder shall have the right to pursue all remedies available to it hereunder, at
law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief. The exercise of any such rights shall not prohibit the
Holder from seeking to enforce damages pursuant to any other Section hereof or
under applicable law. </P>
<P align=center>7</P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Compensation for Buy-In on Failure to Timely Deliver Conversion</U> <U>Shares
Upon Conversion</U>. In addition to any other rights available to the Holder, if
the Company fails for any reason to deliver to the Holder such Conversion Shares
by the Share Delivery Date pursuant to Section 4(c)(ii), and if after such Share
Delivery Date the Holder is required by its brokerage firm to purchase (in an
open market transaction or otherwise), or the Holder&#146;s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Conversion Shares which the Holder was entitled to receive upon
the conversion relating to such Share Delivery Date (a &#147;<U>Buy-In</U>&#148;), then
the Company shall (A) pay in cash to the Holder (in addition to any other
remedies available to or elected by the Holder) the amount, if any, by which (x)
the Holder&#146;s total purchase price (including any brokerage commissions) for the
Common Stock so purchased exceeds (y) the product of (1) the aggregate number of
shares of Common Stock that the Holder was entitled to receive from the
conversion at issue multiplied by (2) the actual sale price at which the sell
order giving rise to such purchase obligation was executed (including any
brokerage commissions) and (B) at the option of the Holder, either reissue (if
surrendered) this Debenture in a principal amount equal to the principal amount
of the attempted conversion (in which case such conversion shall be deemed
rescinded) or deliver to the Holder the number of shares of Common Stock that
would have been issued if the Company had timely complied with its delivery
requirements under Section 4(c)(ii). For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted conversion of this Debenture with respect to which the actual sale
price of the Conversion Shares (including any brokerage commissions) giving rise
to such purchase obligation was a total of $10,000 under clause (A) of the
immediately preceding sentence, the Company shall be required to pay the Holder
$1,000. The Holder shall provide the Company written notice indicating the
amounts payable to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall limit a
Holder&#146;s right to pursue any other remedies available to it hereunder, at law or
in equity including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company&#146;s failure to timely deliver
Conversion Shares upon conversion of this Debenture as required pursuant to the
terms hereof. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Reservation of Shares Issuable Upon Conversion</U>. The Company covenants
that it will at all times reserve and keep available out of its authorized and
unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Debenture, each as
herein provided, free from preemptive rights or any other actual contingent
purchase rights of Persons other than the Holder (and the other holders of the
Debentures), not less than such aggregate number of shares of the Common Stock
as shall (subject to the terms and conditions set forth in the Purchase
Agreement) be issuable (taking into account the adjustments and restrictions of
Section 5) upon the conversion of the then outstanding principal amount of this
Debenture. The Company covenants that all shares of Common Stock that shall be
so issuable shall, upon issue, be duly authorized, validly issued, fully paid
and nonassessable and, if the Registration Statement is then effective under the
Securities Act, shall be registered for public resale in accordance with such
Registration Statement (subject to such Holder&#146;s compliance with its obligations
under the Registration Rights Agreement). </P>
<P align=center>8</P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Fractional Shares</U>. No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of this Debenture. As to any fraction
of a share which the Holder would otherwise be entitled to purchase upon such
conversion, the Company shall at its election, either pay a cash adjustment in
respect of such final fraction in an amount equal to such fraction multiplied by
the Conversion Price or round up to the next whole share. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Transfer Taxes and Expenses</U>. The issuance of Conversion Shares on
conversion of this Debenture shall be made without charge to the Holder hereof
for any documentary stamp or similar taxes that may be payable in respect of the
issue or delivery of such Conversion Shares, provided that, the Company shall
not be required to pay any tax that may be payable in respect of any transfer
involved in the issuance and delivery of any such Conversion Shares upon
conversion in a name other than that of the Holder of this Debenture so
converted and the Company shall not be required to issue or deliver such
Conversion Shares unless or until the Person or Persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid. The
Company shall pay all Transfer Agent fees required for same-day processing of
any Notice of Conversion and all fees to the Depository Trust Company (or
another established clearing corporation performing similar functions) required
for same-day electronic delivery of the Conversion Shares. </P>
<P align=center>9</P>
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<P style="MARGIN-LEFT: 5%" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Holder&#146;s Conversion Limitations</u>. The Company shall not effect any
conversion of this Debenture, and a Holder shall not have the right to convert
any portion of this Debenture, to the extent that after giving effect to the
conversion set forth on the applicable Notice of Conversion, the Holder
(together with the Holder&#146;s Affiliates, and any Persons acting as a group
together with the Holder or any of the Holder&#146;s Affiliates) would beneficially
own in excess of the Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Common Stock
beneficially owned by the Holder and its Affiliates shall include the number of
shares of Common Stock issuable upon conversion of this Debenture with respect
to which such determination is being made, but shall
exclude the number of shares of Common Stock which are issuable upon (i)
conversion of the remaining, unconverted principal amount of this Debenture
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or unconverted portion of any other securities of
the Company subject to a limitation on conversion or exercise analogous to the
limitation contained herein (including, without limitation, any other Debentures
or the Warrants) beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section
4(d), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder. To the
extent that the limitation contained in this Section 4(d) applies, the
determination of whether this Debenture is convertible (in relation to other
securities owned by the Holder together with any Affiliates) and of which
principal amount of this Debenture is convertible shall be in the sole
discretion of the Holder, and the submission of a Notice of Conversion shall be
deemed to be the Holder&#146;s determination of whether this Debenture may be
converted (in relation to other securities owned by the Holder together with any
Affiliates) and which principal amount of this Debenture is convertible, in each
case subject to the Beneficial Ownership Limitation. To ensure compliance with
this restriction, the Holder will be deemed to represent to the Company each
time it delivers a Notice of Conversion that such Notice of Conversion has not
violated the restrictions set forth in this paragraph and the Company shall have
no obligation to verify or confirm the accuracy of such determination. In
addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. For purposes of this Section 4(d), in
determining the number of outstanding shares of Common Stock, the Holder may
rely on the number of outstanding shares of Common Stock as stated in the most
recent of the following: (i) the Company&#146;s most recent periodic or annual report
filed with the Commission, as the case may be, (ii) a more recent public
announcement by the Company, or (iii) a more recent written notice by the
Company or the Company&#146;s transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written or oral request of a Holder, the
Company shall within one Trading Day confirm orally and in writing to the Holder
the number of shares of Common Stock then outstanding. In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including this
Debenture, by the Holder or its Affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. The
&#147;<U>Beneficial</U> <U>Ownership Limitation</U>&#148; shall be [4.99%] [9.99%] of the
number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon conversion of this
Debenture held by the Holder. The Holder, upon not less than 61 days&#146; prior
notice to the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 4(d), provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the number of shares of the
Common Stock outstanding immediately after giving effect to the issuance of
shares of Common Stock upon conversion of this Debenture held by the Holder and
the Beneficial Ownership Limitation provisions of this Section 4(d) shall
continue to apply.</P>
<P align=center>10</P>
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<P style="MARGIN-LEFT: 5%" align=justify>Any such increase or decrease will not
be effective until the 61st day after such notice is delivered to the Company.
The Beneficial Ownership Limitation provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 4(d) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial Ownership
Limitation contained herein or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The limitations contained
in this paragraph shall apply to a successor holder of this Debenture. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
5</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Certain
Adjustments</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Stock Dividends and Stock Splits</U>. If the Company, at any time while this
Debenture is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions payable in shares of Common Stock on shares of
Common Stock or any Common Stock Equivalents (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company upon
conversion of the Debentures), (ii) subdivides outstanding shares of Common
Stock into a larger number of shares, (iii) combines (including by way of a
reverse stock split) outstanding shares of Common Stock into a smaller number of
shares or (iv) issues, in the event of a reclassification of shares of the
Common Stock, any shares of capital stock of the Company, then the Conversion
Price shall be multiplied by a fraction of which the numerator shall be the
number of shares of Common Stock (excluding any treasury shares of the Company)
outstanding immediately before such event, and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after such event.
Any adjustment made pursuant to this Section shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [RESERVED] </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Subsequent Rights Offerings</U>. In addition to any adjustments pursuant to
Section 5(a) above, if at any time the Company grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the &#147;<U>Purchase Rights</U>&#148;), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this
Debenture (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights (provided, however, to the extent that the Holder&#146;s right
to participate in any such Purchase Right would result in the Holder exceeding
the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such shares of Common
Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation). </P>
<P align=center>11</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Pro Rata Distributions</U>. During such time as this Debenture is
outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of
shares of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement, scheme of arrangement or other similar transaction) (a
"<U>Distribution</U>"), at any time after the issuance of this Debenture, then,
in each such case, the Holder shall be entitled to participate in such
Distribution to the same extent that the Holder would have participated therein
if the Holder had held the number of shares of Common Stock acquirable upon
complete exercise of this Debenture (without regard to any limitations on
exercise hereof, including without limitation, the Beneficial Ownership
Limitation) immediately before the date of which a record is taken for such
Distribution, or, if no such record is taken, the date as of which the record
holders of shares of Common Stock are to be determined for the participation in
such Distribution (<U>provided</U>, <U>however</U>, to the extent that the
Holder's right to participate in any such Distribution would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not
be entitled to participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Common Stock as a result of such
Distribution to such extent) and the portion of such Distribution shall be held
in abeyance for the benefit of the Holder until such time, if ever, as its right
thereto would not result in the Holder exceeding the Beneficial Ownership
Limitation). </P>
<P align=center>12</P>
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<P style="MARGIN-LEFT: 5%" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Fundamental Transaction</u>. If, at any time while this Debenture is
outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into
another Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares
of Common Stock held by the other Person or other Persons making or party to, or
associated or affiliated with the other Persons making or party to, such stock
or share purchase agreement or other business combination) (each, a
&#147;<U>Fundamental Transaction</U>&#148;), then, upon any subsequent conversion of this
Debenture, the Holder shall have the right to receive, for each Conversion Share
that would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction (without regard to any limitation in
Section 4(d) on the conversion of this Debenture), the number of shares of
Common Stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and any additional consideration (the
&#147;<U>Alternate Consideration</U>&#148;) receivable as a result of such Fundamental
Transaction by a holder of the number of shares of Common Stock for which this
Debenture is convertible immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 4(d) on the conversion of this
Debenture). For purposes of any such conversion, the determination of the
Conversion Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one (1) share of Common Stock in such Fundamental Transaction, and the
Company shall apportion the Conversion Price among the Alternate Consideration
in a reasonable manner reflecting the relative value of any different components
of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental
Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any conversion of this Debenture following such
Fundamental Transaction. The Company shall cause any successor entity in a
Fundamental Transaction in which the Company is not the survivor (the
&#147;<U>Successor Entity</U>&#148;) to assume in writing all of the obligations of the
Company under this Debenture and the other Transaction Documents (as defined in
the Purchase Agreement) in accordance with the provisions of this Section 5(e)
pursuant to written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay) prior to such
Fundamental Transaction and shall, at the option of the holder of this
Debenture, deliver to the Holder in exchange for this Debenture a security of
the Successor Entity evidenced by a written instrument substantially similar in
form and substance to this Debenture which is convertible for a corresponding
number of shares of capital stock of such Successor Entity (or its parent
entity) equivalent to the shares of Common Stock acquirable and receivable upon
conversion of this Debenture (without regard to any limitations on the
conversion of this Debenture) prior to such Fundamental Transaction, and with a
conversion price which applies the conversion price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
conversion price being for the purpose of protecting the economic value of this
Debenture immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the
Holder. Upon the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and after the date
of such Fundamental Transaction, the provisions of this Debenture and the other Transaction Documents referring to the
&#147;Company&#148; shall refer instead to the Successor Entity), and may exercise every
right and power of the Company and shall assume all of the obligations of the
Company under this Debenture and the other Transaction Documents with the same
effect as if such Successor Entity had been named as the Company herein. </P>
<P align=center>13</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Calculations</U>. All calculations under this Section 5 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 5, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding any treasury shares of the Company) issued and
outstanding. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Notice to the
Holder</U>. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Adjustment to Conversion Price</U>. Whenever the Conversion Price is adjusted
pursuant to any provision of this Section 5, the Company shall promptly deliver
to each Holder a notice setting forth the Conversion Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment.</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notice to Allow Conversion by Holder</U>. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in connection with
any reclassification of the Common Stock, any consolidation or merger to which
the Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
filed at each office or agency maintained for the purpose of conversion of this
Debenture, and shall cause to be delivered to the Holder at its last address as
it shall appear upon the Debenture Register, at least twenty (20) calendar days
prior to the applicable record or effective date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to
be taken, the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer or share exchange,
provided that the failure to deliver such notice or any defect therein or in the
delivery thereof shall not affect the validity of the corporate action required
to be specified in such notice. To the extent that any notice provided hereunder
constitutes, or contains, material, non-public information regarding the Company
or any of the Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The Holder shall
remain entitled to convert this Debenture during the 20-day period commencing on
the date of such notice through the effective date of the event triggering such
notice except as may otherwise be expressly set forth herein.</P>
<P align=center>14</P>
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<P style="MARGIN-LEFT: 5%" align=justify><U>Section
6</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Redemption</U>.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Optional Redemption at Election of Company</U>. Subject to the provisions of
this Section 6(a), at any time after the Original Issue Date, the Company may
deliver to the Holder (an &#147;<U>Optional Redemption Notice</U>&#148; and the date such
notice is deemed delivered hereunder, the &#147;<U>Optional Redemption Notice
Date</U>&#148;) of its irrevocable election to redeem some or all of the then
outstanding principal amount of this Debenture for cash in an amount equal to
the Optional Redemption Amount on the 20th Trading Day following the Optional
Redemption Notice Date (such date, the &#147;<U>Optional Redemption</U> <U>Date</U>&#148;,
such 20 Trading Day period, the &#147;<U>Optional Redemption Period</U>&#148; and such
redemption, the &#147;<U>Optional Redemption</U>&#148;). The Optional Redemption Amount is
payable in full on the Optional Redemption Date. The Company may only effect an
Optional Redemption if each of the Equity Conditions shall have been met (unless
waived in writing by the Holder) on each Trading Day during the period
commencing on the Optional Redemption Notice Date through to the Optional
Redemption Date and through and including the date payment of the Optional
Redemption Amount is actually made in full. If any of the Equity Conditions
shall cease to be satisfied at any time during the Optional Redemption Period,
then the Holder may elect to nullify the Optional Redemption Notice by notice to
the Company within 3 Trading Days after the first day on which any such Equity
Condition has not been met (provided that if, by a provision of the Transaction
Documents, the Company is obligated to notify the Holder of the nonexistence of
an Equity Condition, such notice period shall be extended to the third Trading
Day after proper notice from the Company) in which case the Optional Redemption
Notice shall be null and void, <U>ab</U> <U>initio</U>. The Company covenants
and agrees that it will honor all Notices of Conversion tendered from the time
of delivery of the Optional Redemption Notice through the date all amounts owing
thereon are due and paid in full. The Company&#146;s determination to pay an Optional
Redemption in cash shall be applied ratably to all of the holders of the then
outstanding Debentures based on their (or their predecessor&#146;s) initial purchases
of Debentures pursuant to the Purchase Agreement. </P>
<P align=center>15</P>
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<P style="MARGIN-LEFT: 5%" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Redemption Procedure</u>. The payment of cash or issuance of Common Stock, as
applicable, pursuant to an Optional Redemption shall be payable on the Optional Redemption Date. If any
portion of the payment pursuant to an Optional Redemption shall not be paid by
the Company by the applicable due date, interest shall accrue thereon at an
interest rate equal to the lesser of 18% per annum or the maximum rate permitted
by applicable law until such amount is paid in full. Notwithstanding anything
herein contained to the contrary, if any portion of the Optional Redemption
Amount remains unpaid after such date, the Holder may elect, by written notice
to the Company given at any time thereafter, to invalidate such Optional
Redemption, <U>ab</U> <U>initio</U>, and, with respect to the Company&#146;s failure
to honor the Optional Redemption, the Company shall have no further right to
exercise such Optional Redemption. Notwithstanding anything to the contrary in
this Section 6, the Company&#146;s determination to redeem shall be applied ratably
among the Holders of Debentures. The Holder may elect to convert the outstanding
principal amount of the Debenture pursuant to Section 4 prior to actual payment
in cash for any redemption under this Section 6 by the delivery of a Notice of
Conversion to the Company. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
7</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Negative
Covenants</U>. Until the twelve (12) month anniversary of the Effective Date,
unless the holders of at least 67% in principal amount of the then outstanding
Debentures shall have otherwise given prior written consent, the Company shall
not, and shall not permit any of the Subsidiaries to, directly or
indirectly:</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
other than Permitted Indebtedness, enter into, create, incur, assume, guarantee
or suffer to exist any indebtedness for borrowed money of any kind, including,
but not limited to, a guarantee, on or with respect to any of its property or
assets now owned or hereafter acquired or any interest therein or any income or
profits therefrom; </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
other than Permitted Liens, enter into, create, incur, assume or suffer to exist
any Liens of any kind, on or with respect to any of its property or assets now
owned or hereafter acquired or any interest therein or any income or profits
therefrom; </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
amend its charter documents, including, without limitation, its certificate of
incorporation and bylaws, in any manner that materially and adversely affects
any rights of the Holder;</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
repay, repurchase or offer to repay, repurchase or otherwise acquire more than a
<U>de</U> <U>minimis</U> number of shares of its Common Stock or Common Stock
Equivalents other than as to (i) the Conversion Shares or Warrant Shares as
permitted or required under the Transaction Documents and (ii) repurchases of
Common Stock or Common Stock Equivalents of departing officers and directors of
the Company, provided that such repurchases shall not exceed an aggregate of
$100,000 for all officers and directors during the term of this Debenture;</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
repay, repurchase or offer to repay, repurchase or otherwise acquire any
Indebtedness, other than the Debentures if on a pro-rata basis;</P>
<P align=center>16</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)
pay cash dividends or distributions on any equity securities of the Company;</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g)
enter into any transaction with any Affiliate of the Company which would be
required to be disclosed in any public filing with the Commission, unless such
transaction is made on an arm&#146;s-length basis and expressly approved by a
majority of the disinterested directors of the Company (even if less than a
quorum otherwise required for board approval); or </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; enter into any
agreement with respect to any of the foregoing. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
8</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Events of
Default</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;<U>Event of Default</U>&#148; means, wherever used herein, any of the following
events (whatever the reason for such event and whether such event shall be
voluntary or involuntary or effected by operation of law or pursuant to any
judgment, decree or order of any court, or any order, rule or regulation of any
administrative or governmental body): </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
any material default in the payment of (A) the principal amount of any Debenture
or (B) liquidated damages and other amounts owing to a Holder on any Debenture,
as and when the same shall become due and payable (whether on a Conversion Date
or the Maturity Date or by acceleration or otherwise) which default, solely in
the case of a default under clause (B) above, is not cured within 3 Trading
Days; </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Company shall materially fail to observe or perform any other covenant or
agreement contained in the Debentures (other than a breach by the Company of its
obligations to deliver shares of Common Stock to the Holder upon conversion,
which breach is addressed in clause (viii) below) which failure is not cured, if
possible to cure, within the earlier to occur of (A) 5 Trading Days after notice
of such failure sent by the Holder or by any other Holder to the Company and (B)
10 Trading Days after the Company has become or should have become aware of such
failure;</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
a material default or event of default (subject to any grace or cure period
provided in the applicable agreement, document or instrument) shall occur under
(A) any of the Transaction Documents or (B) any other material agreement, lease,
document or instrument to which the Company or any Subsidiary is obligated (and
not covered by clause (vi) below); </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
any representation or warranty made in this Debenture, any other Transaction
Documents, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder or any other Holder shall be materially
untrue or incorrect in any material respect as of the date when made or deemed
made; </P>
<P align=center>17</P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Common Stock shall not be eligible for listing or quotation for trading on a
Trading Market and shall not be eligible to resume listing or quotation for
trading thereon within five Trading Days; </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Initial Registration Statement (as defined in the Registration Rights
Agreement) shall not have been declared effective by the Commission on or prior
to the 120th calendar day after the Closing Date or the Company does not meet
the current public information requirements under Rule 144 in respect of the
Registrable Securities (as defined under the Registration Rights Agreement);
</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
if, during the Effectiveness Period (as defined in the Registration Rights
Agreement), either (a) the effectiveness of the Registration Statement lapses
for any reason or (b) the Holder shall not be permitted to resell Registrable
Securities (as defined in the Registration Rights Agreement) under the
Registration Statement for a period of more than 20 consecutive Trading Days or
30 non-consecutive Trading Days during any 12 month period; <U>provided</U>,
<U>however</U>, that, if the Company is negotiating a merger, consolidation,
acquisition or sale of all or substantially all of its assets or a similar
transaction and, in the written opinion of counsel to the Company, the
Registration Statement would be required to be amended to include information
concerning such pending transaction(s) or the parties thereto which information
is not available or may not be publicly disclosed at the time, the Company shall
be permitted an additional 10 consecutive Trading Days during any 12 month
period pursuant to this Section 8(a)(vii);</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;viii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the Company shall fail for any reason to deliver certificates to a Holder prior
to the fifth Trading Day after a Conversion Date pursuant to Section 4(c) or the
Company shall provide at any time notice to the Holder, including by way of
public announcement, of the Company&#146;s intention to not honor requests for
conversions of any Debentures in accordance with the terms hereof; or </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ix.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
the electronic transfer by the Company of shares of Common Stock through the
Depository Trust Company or another established clearing corporation is no
longer available or is subject to a &#147;chill&#148;. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Remedies Upon Event of Default</U>. If any Event of Default occurs, the
outstanding principal amount of this Debenture, plus accrued but unpaid
interest, liquidated damages and other amounts owing in respect thereof through
the date of acceleration, shall become, at the Holder&#146;s election, immediately
due and payable in cash at the Mandatory Default Amount. Commencing 5 days after
the occurrence of any Event of Default that results in the eventual acceleration
of this Debenture, the interest rate on this Debenture shall accrue at an
interest rate equal to the lesser of 18% per annum or the maximum rate permitted
under applicable law. Upon the payment in full of the Mandatory Default Amount,
the Holder shall promptly surrender this Debenture to or as directed by the
Company. In connection with such acceleration described herein, the Holder need
not provide, and the Company hereby waives, any presentment, demand, protest or
other notice of any kind, and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and
all other remedies available to it under applicable law. Such acceleration may
be rescinded and annulled by Holder at any time prior to payment hereunder and
the Holder shall have all rights as a holder of the Debenture until such time,
if any, as the Holder receives full payment pursuant to this Section 8(b). No
such rescission or annulment shall affect any subsequent Event of Default or
impair any right consequent thereon. </P>
<P align=center>18</P>
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<P style="MARGIN-LEFT: 5%" align=justify><U>Section
9</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Miscellaneous</U>.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notices</U>. Any and all notices or other communications or deliveries to be
provided by the Holder hereunder, including, without limitation, any Notice of
Conversion, shall be in writing and delivered personally, by facsimile, or sent
by a nationally recognized overnight courier service, addressed to the Company,
at the address set forth above, or such other facsimile number or address as the
Company may specify for such purposes by notice to the Holder delivered in
accordance with this Section 9(a). Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
delivered personally, by facsimile, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number or address of
the Holder appearing on the books of the Company, or if no such facsimile number
or address appears on the books of the Company, at the principal place of
business of such Holder, as set forth in the Purchase Agreement. Any notice or
other communication or deliveries hereunder shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii)
the next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service or (iv) upon actual receipt by the party to whom such
notice is required to be given. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Absolute Obligation</U>. Except as expressly provided herein, no provision of
this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and liquidated damages, as
applicable, on this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture is a direct debt obligation of the
Company. This Debenture ranks <U>pari</U> <U>passu</U> with all other Debentures
now or hereafter issued under the terms set forth herein. </P>
<P align=center>19</P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Lost or Mutilated Debenture</U>. If this Debenture shall be mutilated, lost,
stolen or destroyed, the Company shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated Debenture, or in lieu of
or in substitution for a lost, stolen or destroyed Debenture, a new Debenture
for the principal amount of this Debenture so mutilated, lost, stolen or
destroyed, but only upon receipt of evidence of such loss, theft or destruction
of such Debenture, and of the ownership hereof, reasonably satisfactory to the
Company. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Governing Law</U>. All questions concerning the construction, validity,
enforcement and interpretation of this Debenture 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 conflict of laws thereof. Each party
agrees that all legal proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by any of the Transaction Documents
(whether brought against a party hereto or its respective Affiliates, directors,
officers, shareholders, employees or agents) shall be commenced in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the
&#147;<U>New York Courts</U>&#148;). Each party hereto hereby irrevocably submits to the
exclusive jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (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 such New York Courts, or such New York Courts are
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 Debenture
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by applicable
law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Debenture or the transactions
contemplated hereby. If any party shall commence an action or proceeding to
enforce any provisions of this Debenture, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its attorneys&#146;
fees and other costs and expenses incurred in the investigation, preparation and
prosecution of such action or proceeding. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Waiver</U>. Any waiver by the Company or the Holder of a breach of any
provision of this Debenture shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of
this Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture on any other
occasion. Any waiver by the Company or the Holder must be in writing. </P>
<P align=center>20</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_21></A>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Severability</U>. If any provision of this Debenture is invalid, illegal or
unenforceable, the balance of this Debenture shall remain in effect, and if any
provision is inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it shall be found
that any interest or other amount deemed interest due hereunder violates the
applicable law governing usury, the applicable rate of interest due hereunder
shall automatically be lowered to equal the maximum rate of interest permitted
under applicable law. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Remedies, Characterizations, Other Obligations, Breaches and Injunctive</U>
<U>Relief</U>. The remedies provided in this Debenture shall be cumulative and
in addition to all other remedies available under this Debenture and any of the
other Transaction Documents at law or in equity (including a decree of specific
performance and/or other injunctive relief), and nothing herein shall limit the
Holder&#146;s right to pursue actual and consequential damages for any failure by the
Company to comply with the terms of this Debenture. The Company covenants to the
Holder that there shall be no characterization concerning this instrument other
than as expressly provided herein. Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any such breach or any such threatened breach, without the necessity
of showing economic loss and without any bond or other security being required.
The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company&#146;s
compliance with the terms and conditions of this Debenture. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Next Business Day</U>. Whenever any payment or other obligation hereunder
shall be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Headings</U>. The headings contained herein are for convenience only, do not
constitute a part of this Debenture and shall not be deemed to limit or affect
any of the provisions hereof. </P>
<P align=center>********************* </P>
<P align=center><I>(Signature Page Follows) </I></P>
<P align=center>21</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_22></A>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the Company has caused this
Debenture to be duly executed by a duly authorized officer as of the date first
above indicated. </P>
<P style="MARGIN-LEFT: 50%" align=justify><B>ANAVEX LIFE SCIENCES CORP. </B></P>
<P style="MARGIN-LEFT: 50%" align=justify>&nbsp;</P>
<P style="MARGIN-LEFT: 50%"
align=justify>By:__________________________________________<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name:&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title: <BR>Facsimile No. for
delivery of Notices: _______________<BR></P>
<P align=center>22</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_23></A>
<P align=center><B>ANNEX A </B></P>
<P align=center><B>NOTICE OF CONVERSION </B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The undersigned hereby elects to convert principal under the Senior Convertible
Debenture No. ____ due March ___, 2044 of Anavex Life Sciences Corp., a Nevada
corporation (the &#147;<U>Company</U>&#148;), into shares of common stock (the &#147;<U>Common
Stock</U>&#148;), of the Company according to the conditions hereof, as of the date
written below. If shares of Common Stock are to be issued in the name of a
person other than the undersigned, the undersigned will pay all transfer taxes
payable with respect thereto and is delivering herewith such certificates and
opinions as reasonably requested by the Company in accordance therewith. No fee
will be charged to the holder for any conversion, except for such transfer
taxes, if any. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
By the delivery of this Notice of Conversion the undersigned represents and
warrants to the Company that its ownership of the Common Stock does not exceed
the amounts specified under Section 4 of this Debenture, as determined in
accordance with Section 13(d) of the Exchange Act. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The undersigned agrees to comply with the prospectus delivery requirements under
the applicable securities laws in connection with any transfer of the aforesaid
shares of Common Stock.</P>
<P align=justify>Conversion calculations: </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Date to Effect Conversion: </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Principal Amount of Debenture to be Converted:
    </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Number of shares of Common Stock to be issued:
    </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Signature: </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Name: </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Address for Delivery of Conversion Shares:
  </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%"><U>Or</U> </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">DWAC Instructions: </TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%" >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Broker No: _________________________</TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%">Account No:
  _______________________</TD></TR></TABLE>
<P align=center>23</P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_24></A>
<P align=center><B>Schedule 1</B> </P>
<P align=center><B>CONVERSION SCHEDULE</B> </P>
<P align=justify>The Senior Convertible Debentures No. ____ due on March ___,
2044 in the aggregate principal amount of $_______ are issued by Anavex Life
Sciences Corp., a Nevada corporation. This Conversion Schedule reflects
conversions made under Section 4 of the above referenced Debenture. </P>
<P align=center>&nbsp;</P>
<P align=center>Dated:</P>
<P align=center>&nbsp;</P>
<DIV>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=7 width="100%" border=0>

  <TR vAlign=top>
    <TD
    style="BORDER-TOP: #000000 3px double; BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center><BR>Date of Conversion <BR>(or for first entry,
      <BR>Original Issue Date) </TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 3px double; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">Amount of <BR>Conversion </TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 3px double; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">Aggregate <BR>Principal <BR>Amount
      <BR>Remaining <BR>Subsequent to <BR>Conversion <BR>(or original
      <BR>Principal <BR>Amount) </TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-TOP: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">Company Attest </TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 1px solid"
    vAlign=center align=center width="24%">&nbsp;</TD></TR>
  <TR>
    <TD
    style="BORDER-LEFT: #000000 3px double; BORDER-BOTTOM: #000000 3px double"
    vAlign=center align=center>&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 3px double"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 1px solid; BORDER-LEFT: #000000 1px solid; BORDER-BOTTOM: #000000 3px double"
    vAlign=center align=center width="24%">&nbsp;</TD>
    <TD
    style="BORDER-RIGHT: #000000 3px double; BORDER-BOTTOM: #000000 3px double"
    vAlign=center align=center width="24%">&nbsp;</TD></TR></TABLE></DIV>
<P align=center>24</P>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.4
<SEQUENCE>5
<FILENAME>exhibit10-4.htm
<DESCRIPTION>EXHIBIT 10.4
<TEXT>

<HTML>
<HEAD>
   <TITLE>Anavex Life Sciences Corp. - Exhibit 10.4 - Filed by newsfilecorp.com</TITLE>
   <META name="HandheldFriendly" content="true">
</HEAD>

<BODY style="font-size:10pt;">

<HR noshade align="center" width=100% size=3 color="black">
<A name=page_1></A>
<P align=justify>NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS
SECURITY IS EXERCISABLE HAVE 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
&#147;SECURITIES ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES. </P>
<P align=center><B>SERIES [A/B] COMMON STOCK PURCHASE WARRANT </B></P>
<P align=center><B>ANAVEX LIFE SCIENCES CORP. </B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Warrant Shares: _______________</TD>
    <TD align=right width="50%">Initial Exercise Date: March __, 2014
  </TD></TR></TABLE>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS
SERIES [A/B] COMMON STOCK PURCHASE WARRANT (the &#147;<U>Warrant</U>&#148;) certifies
that, for value received, _____________ or its assigns (the &#147;<U>Holder</U>&#148;) is
entitled, upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after the date hereof (the
&#147;<U>Initial Exercise Date</U>&#148;) and on or prior to the close of business on the
five (5) year anniversary of the Initial Exercise Date (the &#147;<U>Termination
Date</U>&#148;) but not thereafter, to subscribe for and purchase from Anavex Life
Sciences Corp., a Nevada corporation (the &#147;<U>Company</U>&#148;), up to ______ shares
(as subject to adjustment hereunder, the &#147;<U>Warrant Shares</U>&#148;) of Common
Stock. The purchase price of one share of Common Stock under this Warrant shall
be equal to the Exercise Price, as defined in Section 2(b).</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Section
1</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Definitions</U>.
Capitalized terms used and not otherwise defined herein shall have the meanings
set forth in that certain Securities Purchase Agreement (the &#147;<U>Purchase</U>
<U>Agreement</U>&#148;), dated March ___, 2014, among the Company and the purchasers
signatory thereto. </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Section
2</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Exercise</U>.</P>
<P align=center>1 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_2></A>
<P style="MARGIN-LEFT: 5%" align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <u>Exercise of Warrant</u>. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before the Termination Date by delivery to the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the registered Holder at the address of
the Holder appearing on the books of the Company) of a duly executed facsimile
copy of the Notice of Exercise in the form annexed hereto and within three (3)
Trading Days of the date said Notice of Exercise is delivered to the Company,
the Company shall have received payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier&#146;s check drawn on a United
States bank or, if available, pursuant to the cashless exercise procedure
specified in Section 2(c) below. No ink-original Notice of Exercise shall be
required, nor shall any medallion guarantee (or other type of guarantee or
notarization) of any Notice of Exercise form be required. Notwithstanding
anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has purchased all of the
Warrant Shares available hereunder and the Warrant has been exercised in full,
in which case, the Holder shall surrender this Warrant to the Company for
cancellation within three (3) Trading Days of the date the final Notice of
Exercise is delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant Shares
available hereunder shall have the effect of lowering the outstanding number of
Warrant Shares purchasable hereunder in an amount equal to the applicable number
of Warrant Shares purchased. The Holder and the Company shall maintain records
showing the number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise within one (1)
Business Day of receipt of such notice. <B>The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant
Shares hereunder, the number of Warrant Shares available for purchase hereunder
at any given time may be less than the amount stated on the face hereof.
</B></P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Exercise Price</U>. The exercise price per share of the Common Stock under
this Warrant shall be [<B>$0.30 </B>]<SUP>1</SUP><B> </B>[<B>$0.42
</B>]<SUP>2</SUP>, subject to adjustment hereunder (the &#147;<U>Exercise</U>
<U>Price</U>&#148;). </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Cashless Exercise</U>. If at any time after the six month anniversary of the
Initial Exercise Date, or any successor provision then in effect, there is no
effective Registration Statement registering, or no current prospectus available
for, the resale of the Warrant Shares by the Holder, then this Warrant may also
be exercised, in whole or in part, at such time by means of a &#147;cashless
exercise&#148; in which the Holder shall be entitled to receive a number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0 BCLLIST>

  <TR>
    <TD width="10%"  >&nbsp;</TD>
    <TD vAlign=top width="5%">(A) =</TD>
    <TD>
      <P align=justify>the VWAP on the Trading Day immediately preceding the
      date on which Holder elects to exercise this Warrant by means of a
      &#147;cashless exercise,&#148; as set forth in the applicable Notice of
    Exercise;</P></TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD>&nbsp;</TD></TR>
  <TR>
    <TD width="10%" >&nbsp;</TD>
    <TD vAlign=top width="5%">(B) =</TD>
    <TD>
      <P align=justify>the Exercise Price of this Warrant, as adjusted
      hereunder; and</P></TD></TR></TABLE>
<P
align=justify><SUP>_______________________________________________________<BR>1</SUP>
Series A Warrant only <BR><SUP>2</SUP> Series B Warrant only <BR></P>
<P align=center>2 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
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<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD width="10%"  >&nbsp;</TD>
    <TD align=left >
      <P align=justify>(X) = </P></TD>
    <TD align=left width="85%" >
      <P align=justify>the number of Warrant Shares that would be issuable upon
      exercise of this Warrant in accordance with the terms of this Warrant if
      such exercise were by means of a cash exercise rather than a cashless
      exercise. </P></TD></TR></TABLE>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding
anything herein to the contrary, on the Termination Date, this Warrant shall be
automatically exercised via cashless exercise pursuant to this Section 2(c).
</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Mechanics of
Exercise</U>.</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Delivery of Warrant Shares Upon Exercise</U>. Within one (1) Trading Day of
receiving a Notice of Exercise, the Company shall have provided instructions to
the Transfer Agent for the issuance of the Warrant Shares. Warrant Shares
purchased hereunder shall be transmitted by the Transfer Agent to the Holder by
crediting the account of the Holder&#146;s prime broker with The Depository Trust
Company through its Deposit or Withdrawal at Custodian system (&#147;<U>DWAC</U>&#148;) if
the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares
to or resale of the Warrant Shares by the Holder or (B) the shares are eligible
for resale by the Holder without volume or manner-of-sale limitations pursuant
to Rule 144, and otherwise by physical delivery to the address specified by the
Holder in the Notice of Exercise by the date that is two (2) Trading Days after
the delivery to the Company of the Notice of Exercise (such date, the
&#147;<U>Warrant Share Delivery Date</U>&#148;), provided that the Company shall not be
obligated to deliver Warrant Shares hereunder unless the Company has received
the aggregate Exercise Price on or before the Warrant Share Delivery Date. The
Warrant Shares shall be deemed to have been issued, and Holder or any other
person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been
exercised, with payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any,
pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been
paid.</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Delivery of New Warrants Upon Exercise</U>. If this Warrant shall have been
exercised in part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder
to purchase the unpurchased Warrant Shares called for by this Warrant, which new
Warrant shall in all other respects be identical with this Warrant. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Rescission Rights</U>. If the Company fails to cause the Transfer Agent to
transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share
Delivery Date, then the Holder will have the right to rescind such exercise.</P>
<P align=center>3 </P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;iv.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Compensation for Buy-In on Failure to Timely Deliver</U> <U>Warrant Shares
Upon Exercise</U>. In addition to any other rights available to the Holder, if
the Company fails to cause the Transfer Agent to transmit to the Holder the
Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery
Date, and if after such date the Holder is required by its broker to purchase
(in an open market transaction or otherwise) or the Holder&#146;s brokerage firm
otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale
by the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a &#147;<U>Buy-In</U>&#148;), then the Company shall (A) pay in cash to the
Holder the amount, if any, by which (x) the Holder&#146;s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (2) the price at which the sell
order giving rise to such purchase obligation was executed, and (B) at the
option of the Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored (in which case
such exercise shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. For example, if
the Holder purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted exercise of shares of Common Stock
with an aggregate sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the Company written
notice indicating the amounts payable to the Holder in respect of the Buy-In
and, upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder&#146;s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief with respect to the Company&#146;s
failure to timely deliver shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Fractional Shares or Scrip</U>. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share. </P>
<P align=center>4 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_5></A>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vi.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Charges, Taxes and Expenses</U>. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of Warrant Shares, all of which taxes and
expenses shall be paid by the Company, and such Warrant Shares shall be issued
in the name of the Holder or in such name or names as may be directed by the
Holder; <U>provided</U>, <U>however</U>, that in the event that Warrant Shares
are to be issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto duly executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto. The Company shall pay all Transfer Agent fees required for
same-day processing of any Notice of Exercise and all fees to the Depository
Trust Company (or another established clearing corporation performing similar
functions) required for same-day electronic delivery of the Warrant Shares. </P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;vii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Closing of Books</U>. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Holder&#146;s Exercise Limitations</U>. The Company shall not effect any exercise
of this Warrant, and a Holder shall not have the right to exercise any portion
of this Warrant, pursuant to Section 2 or otherwise, to the extent that after
giving effect to such issuance after exercise as set forth on the applicable
Notice of Exercise, the Holder (together with the Holder&#146;s Affiliates, and any
other Persons acting as a group together with the Holder or any of the Holder&#146;s
Affiliates), would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and its
Affiliates shall include the number of shares of Common Stock issuable upon
exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable
upon (i) exercise of the remaining, nonexercised portion of this Warrant
beneficially owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this Section
2(e), beneficial ownership shall be calculated in accordance with Section 13(d)
of the Exchange Act and the rules and regulations promulgated thereunder, it
being acknowledged by the Holder that the Company is not representing to the
Holder that such calculation is in compliance with Section 13(d) of the Exchange
Act and the Holder is solely responsible for any schedules required to be filed
in accordance therewith. To the extent that the limitation contained in this
Section 2(e) applies, the determination of whether this Warrant is exercisable
(in relation to other securities owned by the
Holder together with any Affiliates) and of which portion of this Warrant is
exercisable shall be in the sole discretion of the Holder, and the submission of
a Notice of Exercise shall be deemed to be the Holder&#146;s determination of whether
this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership Limitation, and
the Company shall have no obligation to verify or confirm the accuracy of such
determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. For purposes
of this Section 2(e), in determining the number of outstanding shares of Common
Stock, a Holder may rely on the number of outstanding shares of Common Stock as
reflected in (A) the Company&#146;s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the
Company or (C) a more recent written notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding. Upon the written
or oral request of a Holder, the Company shall within two Trading Days confirm
orally and in writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its Affiliates since the
date as of which such number of outstanding shares of Common Stock was reported.
The &#147;<u>Beneficial Ownership Limitation</u>&#148; shall be [4.99%] [9.99%] of the
number of shares of the Common Stock outstanding immediately after giving effect
to the issuance of shares of Common Stock issuable upon exercise of this
Warrant. The Holder, upon not less than 61 days&#146; prior notice to the Company,
may increase or decrease the Beneficial Ownership Limitation provisions of this
Section 2(e), provided that the Beneficial Ownership Limitation in no event
exceeds 9.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of this Section
2(e) shall continue to apply. Any such increase or decrease will not be
effective until the 61<sup>st</sup> day after such notice is delivered to the
Company. The provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this Section 2(e)
to correct this paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation herein contained
or to make changes or supplements necessary or desirable to properly give effect
to such limitation. The limitations contained in this paragraph shall apply to a
successor holder of this Warrant. </P>
<P align=center>5 </P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
<A name=page_6></A>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
3</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Certain
Adjustments</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Stock Dividends and Splits</U>. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any other equity
or equity equivalent securities payable in shares of Common Stock (which, for
avoidance of doubt, shall not include any shares of Common Stock
issued by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii)
combines (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event, and the number of shares issuable upon exercise of
this Warrant shall be proportionately adjusted such that the aggregate Exercise
Price of this Warrant shall remain unchanged. Any adjustment made pursuant to
this Section 3(a) shall become effective immediately after the record date for
the determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification. </P>
<P align=center>6 </P>
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<A name=page_7></A>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; [RESERVED] </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Subsequent Rights Offerings</U>. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or sells any
Common Stock Equivalents or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of shares of Common
Stock (the &#147;<U>Purchase Rights</U>&#148;), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights (provided, however, to the extent that the Holder&#146;s right to
participate in any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial ownership of
such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder
until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Pro Rata Distributions</U>. During such time as this Warrant is outstanding,
if the Company shall declare or make any dividend or other distribution of its
assets (or rights to acquire its assets) to holders of shares of Common Stock,
by way of return of capital or otherwise (including, without limitation, any
distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of
arrangement or other similar transaction) (a "<U>Distribution</U>"), at any time
after the issuance of this Warrant, then, in each such case, the Holder shall be
entitled to participate in such Distribution to the same extent that the Holder
would have participated therein if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Beneficial Ownership Limitation) immediately before the
date of which a record is taken for such Distribution, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to
be determined for the participation in such Distribution (<u>provided</u>, <u>however</u>, to the extent that the Holder's right to participate in any such
Distribution would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any shares of
Common Stock as a result of such Distribution to such extent) and the portion of
such Distribution shall be held in abeyance for the benefit of the Holder until
such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).</P>
<P align=center>7 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Fundamental Transaction</U>. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into
another Person, (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions,
(iii) any, direct or indirect, purchase offer, tender offer or exchange offer
(whether by the Company or another Person) is completed pursuant to which
holders of Common Stock are permitted to sell, tender or exchange their shares
for other securities, cash or property and has been accepted by the holders of
50% or more of the outstanding Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or
exchanged for other securities, cash or property, or (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share
purchase agreement or other business combination (including, without limitation,
a reorganization, recapitalization, spin-off or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires
more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other Person or other Persons making or party
to, or associated or affiliated with the other Persons making or party to, such
stock or share purchase agreement or other business combination) (each a
&#147;<U>Fundamental Transaction</U>&#148;), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each Warrant Share that
would have been issuable upon such exercise immediately prior to the occurrence
of such Fundamental Transaction, at the option of the Holder (without regard to
any limitation in Section 2(e) on the exercise of this Warrant), the number of
shares of Common Stock of the successor or acquiring corporation or of the
Company, if it is the surviving corporation, and any additional consideration
(the &#147;<U>Alternate Consideration</U>&#148;) receivable as a result of such
Fundamental Transaction by a holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(e) on the exercise of
this Warrant). For purposes of any such exercise, the determination of the
Exercise Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect
of one share of Common Stock in such Fundamental Transaction, and the Company
shall apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different components of
the Alternate Consideration. If holders of Common Stock are given any choice as
to the securities, cash or property to be received in a Fundamental Transaction,
then the Holder shall be given the same choice as to the Alternate Consideration
it receives upon any exercise of this Warrant following such Fundamental
Transaction. The Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the &#147;<u>Successor
Entity</u>&#148;) to assume in writing all of the obligations of the Company under
this Warrant and the other Transaction Documents in accordance with the
provisions of this Section 3(e) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the Holder
(without unreasonable delay) prior to such Fundamental Transaction and shall, at
the option of the Holder, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor Entity (or its
parent entity) equivalent to the shares of Common Stock acquirable and
receivable upon exercise of this Warrant (without regard to any limitations on
the exercise of this Warrant) prior to such Fundamental Transaction, and with an
exercise price which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the shares of
Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this
Warrant immediately prior to the consummation of such Fundamental Transaction),
and which is reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor Entity shall
succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant and the other
Transaction Documents referring to the &#147;Company&#148; shall refer instead to the
Successor Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this Warrant and the
other Transaction Documents with the same effect as if such Successor Entity had
been named as the Company herein. </P>
<P align=center>8 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Calculations</U>. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to be issued and
outstanding as of a given date shall be the sum of the number of shares of
Common Stock (excluding treasury shares, if any) issued and outstanding. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Notice to
Holder</U>.</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Adjustment to Exercise Price</U>. Whenever the Exercise Price is adjusted
pursuant to any provision of this Section 3, the Company shall promptly mail to
the Holder a notice setting forth the Exercise Price after such adjustment and
any resulting adjustment to the number of Warrant Shares and setting forth a
brief statement of the facts requiring such adjustment..</P>
<P align=center>9 </P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notice to Allow Exercise by Holder</U>. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common Stock, (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock, (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, or any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company, then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register of the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date as
of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined or
(y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record shall
be entitled to exchange their shares of the Common Stock for securities, cash or
other property deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the validity of
the corporate action required to be specified in such notice. To the extent that
any notice provided hereunder constitutes, or contains, material, non-public
information regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise this Warrant during
the period commencing on the date of such notice to the effective date of the
event triggering such notice except as may otherwise be expressly set forth
herein. </P>
<P style="MARGIN-LEFT: 5%" align=justify><U>Section
4</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Transfer of
Warrant</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Transferability</U>. Subject to compliance with any applicable securities
laws and the conditions set forth in Section 4(d) hereof and to the provisions
of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder
(including, without limitation, any registration rights) are transferable, in
whole or in part, upon surrender of this Warrant at the principal office of the
Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable, and in the denomination or denominations specified in
such instrument of assignment, and shall issue to the assignor a new Warrant
evidencing the portion of this Warrant not so assigned, and this Warrant shall
promptly be cancelled. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company
unless the Holder has assigned this Warrant in full, in which case, the Holder
shall surrender this Warrant to the Company within three (3) Trading Days of the
date the Holder delivers an assignment form to the Company assigning this
Warrant full. The Warrant, if properly assigned in accordance herewith, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.</P>
<P align=center>10 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>New Warrants</U>. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 4(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the Initial Exercise Date and shall be identical with this Warrant
except as to the number of Warrant Shares issuable pursuant thereto.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Warrant Register</U>. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the &#147;<U>Warrant
Register</U>&#148;), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Transfer Restrictions</U>. If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of this Warrant
shall not be either (i) registered pursuant to an effective registration
statement under the Securities Act and under applicable state securities or blue
sky laws or (ii) eligible for resale without volume or manner-of-sale
restrictions or current public information requirements pursuant to Rule 144,
the Company may require, as a condition of allowing such transfer, that the
Holder or transferee of this Warrant, as the case may be, comply with the
provisions of Section 5.7 of the Purchase Agreement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Representation by the Holder</U>. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon any exercise
hereof, will acquire the Warrant Shares issuable upon such exercise, for its own
account and not with a view to or for distributing or reselling such Warrant
Shares or any part thereof in violation of the Securities Act or any applicable
state securities law, except pursuant to sales registered or exempted under the
Securities Act. </P>
<P align=center>11 </P>
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<P style="MARGIN-LEFT: 5%" align=justify><U>Section
5</U>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Miscellaneous</U>. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>No Rights as Stockholder Until Exercise</U>. This Warrant does not entitle
the Holder to any voting rights, dividends or other rights as a stockholder of
the Company prior to the exercise hereof as set forth in Section 2(d)(i), except
as expressly set forth in Section 3.</P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Loss, Theft, Destruction or Mutilation of Warrant</U>. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock certificate of like
tenor and dated as of such cancellation, in lieu of such Warrant or stock
certificate. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Saturdays, Sundays, Holidays, etc</U>. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <U>Authorized
Shares</U>.</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company covenants that, during the period the Warrant is outstanding, it will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of issuing the necessary Warrant Shares upon the exercise
of the purchase rights under this Warrant. The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or regulation,
or of any requirements of the Trading Market upon which the Common Stock may be
listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon
exercise of the purchase rights represented by this Warrant and payment for such
Warrant Shares in accordance herewith, be duly authorized, validly issued, fully
paid and nonassessable and free from all taxes, liens and charges created by the
Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).</P>
<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except
and to the extent as waived or consented to by the Holder, the Company shall not
by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at
all times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (i) not increase the
par value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (ii) take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable Warrant Shares upon the exercise
of this Warrant and (iii) use commercially reasonable efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof, as may be, necessary to enable the Company to perform its
obligations under this Warrant. </P>
<P align=center>12 </P>
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<P style="MARGIN-LEFT: 10%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before
taking any action which would result in an adjustment in the number of Warrant
Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Jurisdiction</U>. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance
with the provisions of the Purchase Agreement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Restrictions</U>. The Holder acknowledges that the Warrant Shares acquired
upon the exercise of this Warrant, if not registered and the Holder does not
utilize cashless exercise, will have restrictions upon resale imposed by state
and federal securities laws. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Nonwaiver and Expenses</U>. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of
such right or otherwise prejudice the Holder&#146;s rights, powers or remedies,
notwithstanding the fact that all rights hereunder terminate on the Termination
Date. If the Company willfully and knowingly fails to comply with any provision
of this Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys&#146; fees,
including those of appellate proceedings, incurred by the Holder in collecting
any amounts due pursuant hereto or in otherwise enforcing any of its rights,
powers or remedies hereunder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Notices</U>. Any notice, request or other document required or permitted to
be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Purchase Agreement. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Limitation of Liability</U>. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the purchase price of any
Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company. </P>
<P align=center>13 </P>
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<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Remedies</U>. The Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that
a remedy at law would be adequate. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Successors and Assigns</U>. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
Company and the successors and permitted assigns of Holder. The provisions of
this Warrant are intended to be for the benefit of any Holder from time to time
of this Warrant and shall be enforceable by the Holder or holder of Warrant
Shares. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Amendment</U>. This Warrant may be modified or amended or the provisions
hereof waived with the written consent of the Company and the Holder. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Severability</U>. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant. </P>
<P style="MARGIN-LEFT: 5%"
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<U>Headings</U>. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
</P>
<P align=center>******************** </P>
<P align=center><I>(Signature Page Follows) </I></P>
<P align=center>14 </P>
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<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated. </P>
<P align=justify>&nbsp;</P>
<P style="MARGIN-LEFT: 50%" align=justify><B>ANAVEX LIFE SCIENCES CORP. </B></P>
<P style="MARGIN-LEFT: 50%" align=justify>&nbsp;</P>
<P style="MARGIN-LEFT: 50%"
align=justify>By:__________________________________________<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Name: <BR>&nbsp;&nbsp;&nbsp;&nbsp; Title: <BR></P>
<P align=center>15 </P>
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<P align=center><B>NOTICE OF EXERCISE </B></P>
<P align=justify>TO:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; ANAVEX LIFE SCIENCES CORP.
</P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The undersigned hereby elects to purchase ________ Warrant Shares of the Company
pursuant to the terms of the attached Warrant (only if exercised in full), and
tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;Payment shall take the form of (check applicable box): </P>
<P style="MARGIN-LEFT: 15%" align=justify>[&nbsp; &nbsp;] in lawful money of the
United States; or </P>
<P style="MARGIN-LEFT: 15%" align=justify>[&nbsp;&nbsp; ] if permitted the
cancellation of such number of Warrant Shares as is necessary, in accordance
with the formula set forth in subsection 2(c), to exercise this Warrant with
respect to the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection 2(c). </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp; Please issue said Warrant Shares in the name of the undersigned or
in such other name as is specified below: </P>
<P
align=justify><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_______________________________<BR></P>
<P align=justify>The Warrant Shares shall be delivered to the following DWAC
Account
Number:&nbsp;<BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_______________________________<BR><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_______________________________<BR><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
_______________________________<BR></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; <U>Accredited Investor</U>.
The undersigned is an &#147;accredited investor&#148; as defined in Regulation D
promulgated under the Securities Act of 1933, as amended. </P>
<P align=justify>[SIGNATURE OF HOLDER] </P>
<P align=justify>Name of Investing Entity:
________________________________________________________________________<BR><I>Signature
of Authorized Signatory of Investing Entity</I>:&nbsp;
_________________________________________________<BR>Name of Authorized
Signatory:&nbsp;
___________________________________________________________________<BR>Title of
Authorized Signatory:&nbsp;
____________________________________________________________________<BR>Date:
_______________________________________________________________________________________<BR>
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</P><A name=page_17></A>
<P align=right><B>EXHIBIT B</B> </P>
<P align=center>ASSIGNMENT FORM </P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I> (To assign the foregoing
Warrant, execute this form and supply required information. Do not use this form
to purchase shares.) </I></P>
<P align=justify>&nbsp;&nbsp;&nbsp;&nbsp; FOR VALUE RECEIVED, the foregoing
Warrant and all rights evidenced thereby are hereby assigned to </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>Name: </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="50%">&nbsp;
    </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">(Please Print) </TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=left>Address: </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="50%">&nbsp;
    </TD></TR>
  <TR vAlign=top>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="50%">(Please Print) </TD></TR></TABLE>
<P align=justify>&nbsp;</P>
<P align=justify>Dated: _______________&nbsp; __, ______</P>
<P align=justify>Holder&#146;s Signature: __________________________</P>
<P align=justify>Holder&#146;s Address: ___________________________</P>
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