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<SEC-DOCUMENT>0001085037-06-000676.txt : 20060405
<SEC-HEADER>0001085037-06-000676.hdr.sgml : 20060405
<ACCEPTANCE-DATETIME>20060404192932
ACCESSION NUMBER:		0001085037-06-000676
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20060403
ITEM INFORMATION:		Unregistered Sales of Equity Securities
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20060405
DATE AS OF CHANGE:		20060404

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			PLURISTEM LIFE SYSTEMS INC
		CENTRAL INDEX KEY:			0001158780
		STANDARD INDUSTRIAL CLASSIFICATION:	BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836]
		IRS NUMBER:				980351734
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-31392
		FILM NUMBER:		06740001

	BUSINESS ADDRESS:	
		STREET 1:		MATAM ADVANCED TECHNOLOGY PARK
		STREET 2:		BUILDING NO. 20
		CITY:			HAIFA
		STATE:			L3
		ZIP:			31905
		BUSINESS PHONE:		972-4-850-1080

	MAIL ADDRESS:	
		STREET 1:		MATAM ADVANCED TECHNOLOGY PARK
		STREET 2:		BUILDING NO. 20
		CITY:			HAIFA
		STATE:			L3
		ZIP:			31905

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AI SOFTWARE INC
		DATE OF NAME CHANGE:	20010906
</SEC-HEADER>
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<TYPE>8-K
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<FILENAME>form8k.htm
<DESCRIPTION>FORM 8-K
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>UNITED STATES SECURITIES AND</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>EXCHANGE COMMISSION</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>Washington, D.C. 20549</font></b></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><B><font FACE="ARIAL" SIZE=2>FORM 8-K</font></B></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><B><font SIZE=2>CURRENT REPORT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><font size=2>Date of Report (Date of earliest event reported)  </font><b><font size=2>April 3, 2006</font></b></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>(Exact name of registrant as specified in its charter)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>Nevada</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(State or other jurisdiction of incorporation)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>001-31392</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(Commission File Number)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>98-0351734</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(IRS Employer Identification No.)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>MATAM Advanced Technology Park, Building No. 20, Haifa, Israel  31905</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(Address of principal executive offices and Zip Code)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>011-972-4-850-1080</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Registrant's telephone number, including area code  </font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>Not Applicable</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>(Former name or former address, if changed since last report)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2>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:</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2><font face=Wingdings>o</font> Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2><font face=Wingdings>o</font> Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2><font face=Wingdings>o</font> Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2><font face=Wingdings>o</font> Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>Item 3.02.  Unregistered Sales of Equity Securities</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Effective April 3, 2006, we issued 7% Senior Secured Convertible Debentures Series 06-01, for gross proceeds of $3,000,000. In conjunction with this financing, we issued 47,393,364 common share purchase warrants exercisable for three years at an exercise price of $0.075. We paid a finder&#146;s fee of 10% in cash and 9,478,672 three year common share purchase warrants, half of which are exercisable at $0.075 and half of which are exercisable at $0.077. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The 7% Senior Secured Convertible Debentures, which mature on April 3, 2008, are convertible to common shares at the lower of 75% of the volume weighted average trading price for the 20 days prior to issuance of a notice of conversion by a holder of a Debenture, or, if while these Debentures remain outstanding we enter into one or more financing transactions involving the issuance of common stock or securities convertible or exercisable for common </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<table border="0" cellspacing=0 cellpadding=0 width="343" style=' border-collapse:collapse'>
    <tr>
        <td width="302" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="41" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>- 2 -</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>stock, the lowest transaction price for those new transactions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Interest accrues on the Debentures at the rate of 7% per annum, payable semi-annually on June 30 and December 31 of each year and on conversion and at the maturity date. Interest is payable, at the option of the Company, either (i) in cash, or (2) in shares of Common Stock at the then applicable conversion price.  If the Company fails to deliver stock certificates upon the conversion of these Debentures at the specified time and in the specified manner, the Company will be required to make substantial payments to the holders of the Debentures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>We have agreed to register the common shares issuable upon conversion of the Debentures and exercise of the warrants.  We have agreed to file the registration statement within 30 days after the Closing Date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:6pt; margin-top:0pt;text-align:left;'><font size=2>Provided the Registration Statement is effective, the Company may prepay the amounts outstanding on the Debentures by giving advance notice and paying an amount equal to 120% of the sum of (x) the principal being prepaid plus (y) the accrued interest thereon.  Holders will continue to have the right to convert their Debentures prior to the actual prepayment. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Holders of the Debentures may require the Company to redeem any or all of the outstanding Debentures upon the occurrence of any one or more of events of default specified in the Debentures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>The Warrants, issued as of April 3, 2006, become first exercisable on the earlier of (i) the 65th day after issuance or (ii) the effective date of the Registration Statement.  Holders of the Warrants are entitled to exercise their warrants on a cashless basis following the first anniversary of issuance if the Registration Statement is not in effect at the time of exercise.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Holders of Debentures are subject to certain limitations on their rights to convert the Debentures.  The principal limitation is that the holder may not, with certain limited exceptions, convert into a number of shares that would, together with other shares held by the holder, exceed 4.99% of the then outstanding shares of the Company after such conversion.  The exercise of the Warrants is subject to a similar limitation.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>To secure the Company&#146;s obligations under the Debentures and other transaction agreements, the Company has granted a security interest in substantially all of its assets, including without limitation, its intellectual property, in favour of the investors under the terms and conditions of a Security Interest Agreement dated as of the date of the Debentures.  The security interest terminates upon the earlier of (i) the date on which less than one-fourth of the original principal amount of the Debentures issued on the Closing Date are outstanding or (ii) payment or satisfaction of all of the Company&#146;s obligations under the Securities Purchase Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>The conversion price of the Debentures and the exercise price of the Warrants are subject to adjustment. Under the agreements with the holders of the Debentures, the Company agreed that if the Company makes certain offers or sales of its Common Stock (or securities convertible into Common Stock) to any third party during the period from the Closing Date until the date that less than one-fourth of the aggregate principal amount of the Debentures issued remain unconverted, adjustments would be made to the conversion price of the then unconverted Debentures and to the exercise price of the then unexercised Warrants. The exercise price of the Warrants also are subject to adjustment in the event of certain capital adjustments or similar transactions, such as a stock split or merger.  In addition, in certain cases, the investors may be entitled to receive additional warrants to purchase additional shares.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>The Company also agreed that until less than one-fourth of the aggregate principal amount of the Debentures issued remain unconverted, without the prior written consent of more than 51% of the then outstanding Debentures, the Company will not enter into any new transaction for the offer or sale of the Company&#146;s securities when such transaction provides for a variable conversion price or a variable exercise price.  The Company also agreed that until the effective date of the Registration Statement it will not enter into any other transaction for the offer or sale of any of its securities and, commencing on the effective date and for six months thereafter, the Company will not enter into any transaction granting the investors in that new transaction registration rights.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Under certain circumstances, the Company will be obligated to pay liquidated damages to the holders of the Convertible Debentures if the Registration Statement is filed late and/or is not declared effective by the Securities </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<table border="0" cellspacing=0 cellpadding=0 width="343" style=' border-collapse:collapse'>
    <tr>
        <td width="302" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="41" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>- 3 -</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>and Exchange Commission within 120 days after the Closing Date.  Similar payments will be required if the registration is subsequently suspended beyond certain agreed upon periods.  The amount of liquidated damages that may become payable may be substantial. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Directors and officers of our company have also agreed not to sell any of their shares in our company, unless purchased in the open market or as part of certain private placements, until 6 months after the investors&#146; registration statement has been declared effective,  and have also agreed to limit the volume of their share sales thereafter.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2>These securities were issued pursuant to the exemption from registration under the United States Securities Act of 1933 provided by Section 4(2), Section 4(6) and/or Rule 506 of Regulation D promulgated under the 1933 Act to the investors and brokers who are &#147;accredited investors&#148; within the respective meanings ascribed to that term in Rule 501(a) under the 1933 Act.  No advertising or general solicitation was employed in offering the securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Copies of the Securities Purchase Agreement, Form of Debenture, Form of Warrant, Registration Rights Agreement and Security Interest Agreement relating to the above transactions, and a copy of a press release of the Company, dated April 4, 2006, are attached hereto.  The foregoing descriptions of the above transactions are qualified in their entirety by reference to such exhibits, which are incorporated by reference herein.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>Item 5.02.  Departure of Directors or Principal Officers; Election of Directors&#146; Appointment of Principal Officers.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2>Effective April 3, 2006, Doron Shorrer resigned as our Chairman of the board of directors and Zami Aberman was appointed as our Acting Chairman of the board.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><b><font size=2>Item 9.01.  Financial Statements and Exhibits.</font></b></p>


<table border="0" cellspacing=0 cellpadding=0 width="417" style=' border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>99.1</font></p> </td>
        <td  nowrap colspan="2" valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>News Release dated April 4, 2006</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.1</font></p> </td>
        <td  nowrap colspan="4" valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Form of Securities Purchase Agreement</font></p> </td>
        <td  width="136">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="48" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.2</font></p> </td>
        <td  nowrap colspan="5" valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Form of 7% Senior Secured Convertible Debentures Series 06-01</font></p> </td> </tr>
    <tr >
        <td width="48" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.3</font></p> </td>
        <td width="116" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Form of Warrants</font></p> </td>
        <td   colspan="4">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.4</font></p> </td>
        <td  nowrap colspan="4" valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Form of Registration Rights Agreement</font></p> </td>
        <td  width="136">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10.5:</font></p> </td>
        <td  nowrap colspan="3" valign=top style='padding:12.0pt 0in 0in 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Form of Security Interest Agreement</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="89" ></td>

        <td width="215" ></td>

        <td width="158" ></td>

        <td width="30" ></td>

        <td width="30" ></td>

        <td width="252" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:center;'><B><font SIZE=2>SIGNATURES</font></B></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><font size=2>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.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:left;'><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>/s/ Zami Aberman </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Zami Aberman </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Chief Executive Officer </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Date:  April 4, 2006</font></p>

<p style=' margin-bottom:0pt; margin-top:24pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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<DESCRIPTION>EXHIBIT 99.1
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<p style=' margin-bottom:5pt; margin-top:5pt;text-align:right;'><b><font face="Arial" size=2>Exhibit 99.1</font></b></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font face="Arial" size=2>Pluristem announces closing of 7% Senior Secured Convertible Debenture Private Placement </font></b></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font face="Arial" size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><b><font face="Arial" size=2>Haifa, Israel &#150; April 4, 2006-- Pluristem Life Systems, Inc. (OTC BB:PLRS), </font></b><i><b><font face="Arial" size=2>a biotechnology company dedicated to the commercialization of cell therapy products, today announced that on April 3, 2006, we closed a 7% Senior Secured Convertible Debenture private placement for gross proceeds of $3,000,000. We will use the net proceeds to further develop a suite of stem cell therapy products and for working capital.</font></b></i></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:justify;'><font size=2>In conjunction with this financing, we issued 47,393,364 common share purchase warrants exercisable for three years at an exercise price of $0.075. We paid a finder&#146;s fee of 10% in cash and 9,478,672 three year common share purchase warrants, half of which are exercisable at $0.075 and half of which are exercisable at $0.077. </font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:justify;'><font size=2>The 7% Senior Secured Convertible Debentures, which mature on April 3, 2008, are convertible to common shares at the lower of 75% of the volume weighted average trading price for the 20 days prior to issuance of a notice of conversion by a holder of a Debenture, or, if while these Debentures remain outstanding, we enter into one or more financing transactions involving the issuance of common stock or securities convertible or exercisable for common stock, the lowest transaction price for those new transactions.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:justify;'><font size=2>Interest accrues on the Debentures at the rate of 7% per annum, payable semi-annually on June 30 and December 31 of each year and on conversion and at the maturity date.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:justify;'><font size=2>We have agreed to register the common shares issuable upon conversion of the Debentures and exercise of the warrants. </font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:justify;'><font size=2>Directors and officers of our company have also agreed not to sell any of their shares in our company, unless purchased in the open market or as part of certain private placements, until 6 months after the investors&#146; registration statement has been declared effective and to limit the volume of their share sales thereafter.</font></p>

<p style=' margin-bottom:0pt; margin-top:12pt;text-align:justify;'><font size=2>Yossi Keret, CFO stated, "The Private Placement will enable us to support the implementation of the strategy change we announced recently. The market for cell-based products is enormous and we hope to become a significant player in this exciting potential market."</font></p>

<p style=' margin-bottom:0pt; margin-top:5pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:left;'><font size=2>The Company also announces the resignation of Doron Shorrer as the Chairman of our board of directors and the appointment of Zami Aberman as the Acting Chairman of our board.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:left;'><font size=2>Zami Aberman, President &amp; CEO stated, "We would like to thank Doron Shorrer for his contribution to the company. I am proud that I have been elected to lead the strategic change of our company . I believe that together with the management team of the company we will accomplish the challenging task to become a significant player in the cell therapy market."</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>About Pluristem:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:6pt; margin-top:0pt;text-align:left;'><font size=2>Pluristem Life Systems, Inc. is a biotechnology company dedicated to the commercialization of cell therapy products for the treatment of severe blood disorders. Pluristem is discovering and developing call-based therapeutics utilizing adult stem cells expanded in a proprietary bio-reactor that mimics different naturally-occurring physiological environments. Pluristem expects its first products to be  cell grafts that will provide an efficient and superior alternative to the standard procedure of bone marrow transplantation to treat blood cancer and other blood disorders.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Safe Harbor Statement</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>This press release contains statements, which may constitute "forward-looking statements". Those statements include statements regarding the intent, belief or current expectations of Pluristem Life Systems, Inc., and members of our management as well as the assumptions on which such statements are based. Forward-looking statements in this release include statements that include Pluristem&#146;s intention to market actual stem cell therapy products and our hope to be a significant player in the cell therapy market. Factors which may significantly change or prevent our forward looking statements from fruition include that we may be unsuccessful in developing any products; that our technology may not be validated as we progress further and our methods may not be accepted by the scientific community; that unforeseen scientific difficulties develop with our process; that our patents are not sufficient to protect
essential aspects of our technology; that competitors may invent better technology; that our products may not work as well as hoped or worse, that our products may harm recipients; and that we may not be able raise funds for development or working capital when we require it. As well, our products may never develop into useful products and even if they do, they may not be approved for sale to the public. For further risk factors see the Company&#146;s latest 10-KSB filed with the SEC.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font face="Arial" size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font face="Arial" size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>For more information visit our website at  www.pluristem.com</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Or contact Yossi Keret</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Email: Yossi@pluristem.com</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Phone: ++972-54-800-8404</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font face="Arial" size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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<DESCRIPTION>EXHIBIT 10.1
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>Exhibit 10.1</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>SECURITIES PURCHASE AGREEMENT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><B><font SIZE=2>THIS SECURITIES PURCHASE AGREEMENT</font></B><font size=2>, dated as of April 3, 2006 (this &#147;Agreement&#148;), is entered into by and between </font><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B><font size=2>, a Nevada corporation with headquarters located at MATAM Advanced Technology Park, Building No. 20, Haifa, Israel 31905 (the &#147;Company&#148;), and each individual or entity named on an executed counterpart of the signature page hereto (each such signatory is referred to as a &#147;Buyer&#148;) (each agreement with a Buyer being deemed a separate and independent agreement between the Company and such Buyer, except that each Buyer acknowledges and consents to the rights granted to each other Buyer [each, an &#147;Other Buyer&#148;] under such agreement and the Transaction Agreements, as defined below, referred to therein).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>W I T N E S S E T H</font></B><font size=2>:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><B><font SIZE=2>WHEREAS</font></B><font size=2>, the Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded, </font><u><font size=2>inter</font></u><font size=2> </font><u><font size=2>alia</font></u><font size=2>, by Rule 506 under Regulation D (&#147;Regulation D&#148;) as promulgated by the United States Securities and Exchange Commission (the &#147;SEC&#148;) under the Securities Act of 1933, as amended (the &#147;1933 Act&#148;), and/or Section 4(2) of the 1933 Act; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><B><font SIZE=2>WHEREAS</font></B><font size=2>, the Buyer wishes to lend to the Company, subject to and  upon  the terms and conditions of this Agreement and acceptance of this Agreement by the Company, the Purchase Price (as defined below), the repayment of which will be represented by 7% Senior Secured Convertible Debentures Series 06-01 of the Company (the &#147;Convertible Debentures&#148;), which Convertible Debentures will be convertible into shares of Common Stock, $.00001 par value per share, of the Company (the &#147;Common Stock&#148;), upon the terms and subject to the conditions of such Convertible Debentures, together with the Warrants (as defined below) exercisable for the purchase of shares of Common Stock;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><B><font SIZE=2>NOW THEREFORE</font></B><font size=2>, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="479" style=' border-collapse:collapse'>
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        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>1.</font></b></p> </td>
        <td width="335" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>AGREEMENT TO PURCHASE; PURCHASE PRICE.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="219" style=' border-collapse:collapse'>
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        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>a.</font></b></p> </td>
        <td width="75" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Purchase.</font></b></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of this Agreement and the other Transaction Agreements, the undersigned Buyer hereby agrees to loan to the Company the principal amount set forth on the Buyer&#146;s signature page of this Agreement (the &#147;Purchase Price&#148;), out of the aggregate amount being loaned by all Buyers of not less than the Minimum Aggregate Purchase Price and not more than the Maximum Aggregate Purchase Price (as those terms are defined below).  The actual aggregate Purchase Price of all Buyers is referred to as the &#147;Aggregate Purchase Price.&#148; The obligation to repay the loan from the Buyer shall be evidenced by the Company&#146;s issuance of one or more Convertible Debentures to the Buyer in such principal amount (the Convertible Debentures issued to the Buyer, the
&#147;Debentures&#148;).  Each Debenture (i) shall provide for a Conversion Price (as defined below), which price may be adjusted from time to as provided in the Debenture, (ii) shall have the terms and conditions of, and be substantially in the form attached hereto as, </font><b><font size=2>Annex I</font></b><font size=2>, and (iii) shall be secured pursuant to the terms of the Security Interest Agreement substantially in the form annexed hereto as </font><b><font size=2>Annex VIII</font></b><font size=2> (the &#147;Security Interest Agreement&#148;).</font><font size=2><sup></sup></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2>By signing this Agreement, the Buyer subject to acceptance by the Agent named in the Security Interest Agreement, agrees to all of the terms and conditions of, and becomes a party to, the Security Interest Agreement, all of the provisions of which are incorporated herein by this reference as if set forth in full.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 2 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The loan to be made by the Buyer and the issuance of the Debentures and the Warrants (collectively, the &#147;Purchased Securities&#148;) to the Buyer are sometimes referred to herein and in the other Transaction Agreements as the purchase and sale of the Debentures and the Warrants. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Certain Definitions.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Affiliate&#148; means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled by or is under common control with such specified Person.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Buyer Control Person&#148; means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Buyer pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act (as defined below).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Certificates&#148; means the (x) the original ink-signed Debentures and (y) the original ink-signed Warrants, each duly executed by the Company and issued in the name of the Buyer on the Closing Date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="543" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Closing Date&#148; means the date of the closing of the purchase and sale of the Purchased Securities.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Closing Price&#148; means the 4:00 P.M. closing bid price of the Common Stock on the Principal Trading Market on the relevant Trading Day(s), as reported by the Reporting Service for the relevant date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.11in;text-align:justify;'><font size=2> &#147;Company Control Person&#148; means each director, executive officer, promoter, and such other Persons as may be deemed in control of the Company pursuant to Rule 405 under the 1933 Act or Section 20 of the 1934 Act.</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="540" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="444" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Company Principal&#146;s Agreement&#148; has the meaning ascribed to in Section 4(h).</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Company's SEC Documents&#148; means the Company&#146;s filings on the SEC&#146;s EDGAR system which are listed on </font><b><font size=2>Annex VI</font></b><font size=2> annexed hereto, to the extent available on EDGAR or otherwise provided to the Buyer as indicated on said Annex VI.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Conversion Certificates&#148; means certificates representing the Conversion Shares or the Warrant Shares, as the case may be.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Conversion Date&#148; means the date a Holder submits a Notice of Conversion, as provided in the Debentures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Conversion Price&#148; means the lower of (i) the Variable Conversion Price or (ii) the Lowest Fixed Conversion Price.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Conversion Shares&#148; means the shares of Common Stock issuable upon conversion of the Debentures and/or in payment of accrued interest, as contemplated in the Debentures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Converting Holder&#148; means the Holder of Debentures or Warrants, as the case may be, who or which has submitted a Notice of Conversion (as contemplated by the Debentures) or a Notice of Exercise (as contemplated by the Warrants).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Delivery Date&#148; has the meaning ascribed to it, as may be relevant, (x) in the Debentures (with respect to Conversion Shares), (y) in the Warrants (with respect to Warrant Shares), or (z) in the Registration Rights Agreement (with respect to Payment Shares).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Disclosure Annex&#148; means </font><b><font size=2>Annex X </font></b><font size=2>to this Agreement; provided, however, that the Disclosure Annex shall be arranged in sections corresponding to the identified Sections of this Agreement, but the disclosure in </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 3 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>any such section of the Disclosure Annex shall qualify other provisions in this Agreement to the extent that it would be readily apparent to an informed reader from a reading of such section of the Disclosure Annex that it is also relevant to other provisions of this Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Escrow Agent&#148; means Krieger &amp; Prager LLP, the escrow agent identified in the Joint Escrow Instructions attached hereto as </font><b><font size=2>Annex II</font></b><font size=2> (the &#147;Joint Escrow Instructions&#148;).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Effective Percentage&#148; means, initially, twenty-five percent (25%), which percentage is subject to increase as provided herein.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Effective Date&#148; means the date the Registration Statement covering the Registrable Securities is declared effective by the SEC.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Escrow Agent&#148; means Krieger &amp; Prager LLP, the escrow agent identified in the Joint Escrow Instructions attached hereto as </font><b><font size=2>Annex II</font></b><font size=2> (the &#147;Joint Escrow Instructions&#148;).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Escrow Funds&#148; means the Purchase Price delivered to the Escrow Agent as contemplated by Sections 1(c) and (d) hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Escrow Property&#148; means the Escrow Funds and the Certificates delivered to the Escrow Agent, as contemplated by Section 1(c) hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="521" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="425" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Exercise Price&#148; means the per share exercise price of the relevant Warrant.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="379" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="283" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Finder&#148; means Yokim Asset Management Corp.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="536" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="440" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Holder&#148; means the Person holding the relevant Securities at the relevant time.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Issue Date Conversion Share&#148; means the number of shares of Common Stock equal to (x) the Purchase Price paid by the Buyer, divided by (y) the amount which would have been the  Conversion Price on the Closing Date, were such date a Conversion Date (without regard to whether or not the Debentures were convertible on such date in accordance with their terms).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="343" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="247" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Last Audited Date&#148; means June 30, 2005.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Lowest Fixed Conversion Price&#148; means the lowest New Transaction Price (as defined below; as that amount may subsequently be adjusted as provided in the Debentures or herein).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Majority in Interest of the Holders&#148; means one or more Holders whose respective outstanding principal amounts of the Debentures held by each of them, as of the relevant date, aggregate more than fifty-one percent (51%) of the aggregate outstanding principal amounts of the outstanding Debentures held by the Buyer and all Other Buyers on that date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Material Adverse Effect&#148; means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (x) adversely affect the legality, validity or enforceability of the Purchased Securities or any of the Transaction Agreements, (y)  have or result in a material adverse effect on the results of operations, assets, or financial condition of the Company and its subsidiaries, taken as a whole, or (z) adversely impair the Company's ability to perform fully on a timely basis its material obligations under any of the Transaction Agreements or the transactions contemplated thereby.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="536" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="440" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Maturity Date&#148;  has the meaning ascribed to it in the Convertible Debentures.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="444" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="348" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Maximum Aggregate Purchase Price&#148; means $3,000,000.00.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 4 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="442" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="346" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Minimum Aggregate Purchase Price&#148; means $2,000,000.00.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;New Common Stock&#148; means  shares of Common Stock and/or securities convertible into, and/or other rights exercisable for, Common Stock, which are offered or sold in a New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;New Investor&#148; means the third party investor, purchaser or lender (howsoever denominated) in a New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;New Transaction&#148; means, unless consented to by a Majority in Interest of the Holders (which consent is in the sole discretion of the Holders and may be withheld for any reason or for no reason whatsoever),</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(i) the offer or sale of New Common Stock by or on behalf of the Company to a New Investor and/or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(ii) the grant of a security interest in or pledge of (x) any or all of the Company&#146;s assets by the Company and/or (y) shares of the Company&#146;s Common Stock or securities convertible into or exercisable for the Company&#146;s Common Stock by any other party in connection with a transaction in which the Company borrows or is otherwise obligated to pay funds to a third party,</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>in a transaction offered or consummated after the date hereof; provided, however, that it is specifically understood that the term &#147;New Transaction&#148; (1) unless consented to otherwise by a Majority in Interest of the Holders (which consent is in the sole discretion of the Holders and may be withheld for any reason or for no reason whatsoever), includes, but is not limited to, a sale of Common Stock or of a security convertible into Common Stock or an equity or credit line transaction, but (2) does not include (a) the sale of the Purchased Securities to the Buyer and the Other Buyers, (b) the issuance of Common Stock upon the exercise or conversion of options, warrants or convertible securities outstanding on the date hereof, or in respect of any other financing agreements as in effect on the date hereof and identified in the Disclosure Annex (provided the same is not amended after the date hereof)
or in the Company&#146;s SEC Documents (provided the same is not amended after the date hereof), (c) the issuance of an Employee Stock Option Plan (an &#147;ESOP&#148;) of the Company, (d) the issuance of a non-employee director stock option plan of the Company, (e) the issuance of a consultants&#146; stock option plan of the Company, as in effect on the Closing Date, (f) the issuance of Common Stock upon the exercise of any options or warrants referred to in the preceding clauses of this paragraph (provided the same is not amended after the date hereof), (g) the issuance of stock options or warrants to employees, officers or directors of the Company, provided that all such shares are or are made subject to a Company Principal&#146;s Agreement simultaneously with such issuance, or (h) the issuance of shares to a Strategic Partner.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="581" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="485" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Payment Shares&#148; has the meaning ascribed to it in the Registration Rights Agreement.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Person&#148; means any living person or any entity, such as, but not necessarily limited to,  a corporation, partnership or trust.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Principal Trading Market&#148; means the Over the Counter Bulletin Board or such other market on which the Common Stock is principally traded at the relevant time, but shall not include the &#147;pink sheets.&#148;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="612" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="516" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Registrable Securities&#148; has the meaning ascribed to it in the Registration Rights Agreement.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Registration Rights Agreement&#148; means the Registration Rights Agreement in the form annexed hereto as </font><b><font size=2>Annex IV</font></b><font size=2> as executed by the Buyer and the Company simultaneously with the execution of this Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Registration Statement&#148; means an effective registration statement covering the Registrable Securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 5 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Regular Trading Day&#148; means the regular trading hours of a Trading Day on the Principal Trading Market shall be open for business (as of the date of this Agreement, such hours are, for most Trading Days, approximately 9:30AM to approximately 4PM Eastern Time; provided, however, that certain Trading Days may have shorter regular trading hours; and provided, further, that the regular trading hours may be subsequently changed for the Principal Trading Market).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Reporting Service&#148; means Bloomberg LP or if that service is not then reporting the relevant information regarding the Common Stock, a comparable reporting service of national reputation selected by a Majority in Interest of the Holders and reasonably acceptable to the Company.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.11in;text-align:justify;'><font size=2> &#147;Rule 144" means (i) Rule 144 promulgated under the 1933 Act or (ii) any other similar rule or regulation of the SEC that may at any time permit Holder to sell securities of the Company to the public without registration.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="436" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="340" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Securities&#148; means the Purchased Securities and the Shares.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Shares&#148; means the shares of Common Stock representing any or all of the Conversion Shares, the Warrant Shares and the Payment Shares.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="330" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="234" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;State of Incorporation&#148; means Nevada.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Strategic Partner&#148; means a third party, whether or not affiliated with the Company as of the date hereof, which party (i) is engaged in a business which is the business in which the Company is engaged or a similar, related or complementary business, and (ii) subsequently purchases (or enters into an agreement to purchase) equity securities of the Company (or securities convertible into equity securities of the Company), where such purchase is accompanied or followed by one or more of the following: the licensing by the Company of all or any portion of its technology to such third party, the licensing by such third party of all or any portion of its technology to the Company, or any other coordination of all or a portion of their respective business activities or operations by the Company and such third party.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Trading Day&#148; means any day during which the Principal Trading Market shall be open for business.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Transaction Agreements&#148; means this Agreement, the Debentures, the Joint Escrow Instructions, the Registration Rights Agreement, the Disclosure Annex, the Security Interest Agreement, and the Warrants, and includes all ancillary documents referred to in those agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="508" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Transfer Agent&#148; means, at any time, the transfer agent for the Company&#146;s Common Stock.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Variable Conversion Price&#148; means (i) the VWAP for the twenty (20) Regular Trading Days ending on the Trading Day immediately before the Conversion Date, multiplied by (ii) a percentage equal to (x) one hundred percent (100%), less (y) the Effective Percentage.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;VWAP&#148; means the volume weighted average price of the Common Stock on the Principal  Trading Market for the relevant Regular Trading Day(s), as reported by the Reporting Service.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Warrants&#148; means (i) the warrants referred to in Section 4 hereof and (ii) the Additional Warrants (as defined below), if any. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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        <td width="523" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Warrant Shares&#148; means the shares of Common Stock issuable upon exercise of the Warrants.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> &#147;Wire Instructions&#148; means the Purchase Price Wire Instructions as provided in </font><b><font size=2>Annex IX</font></b><font size=2> annexed hereto.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 6 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>c.</font></b></p> </td>
        <td width="263" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Form of Payment; Delivery of Certificates.</font></b></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Buyer shall pay the Purchase Price by delivering immediately available good funds in United States Dollars to the Escrow Agent no later than the date prior to the Closing Date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Within three (3) Trading Days after the Escrow Agent notifies the Company that the Escrow Agent has on deposit cleared funds from or on behalf of one or more Buyers an aggregate amount equal to the Aggregate Purchase Price and the Company shall have accepted the Buyer&#146;s subscription hereunder, but in no event later than the Closing Date, the Company will deliver the Certificates to the Escrow Agent.  Such Certificates shall be held in escrow as provided in the Joint Escrow Instructions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By signing this Agreement, each of the Buyer and the Company, subject to acceptance by the Escrow Agent, agrees to all of the terms and conditions of, and becomes a party to, the Joint Escrow Instructions, all of the provisions of which are incorporated herein by this reference as if set forth in full.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Method of Payment.</font></b><font size=2>  Payment into escrow of the Purchase Price shall be made to the Escrow Agent as provided in the Wire Instructions (see Annex IX).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>2.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=2>BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>The Buyer represents and warrants to, and covenants and agrees with, the Company, as of the date hereof and as of the Closing Date, as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without limiting Buyer's right to sell the Securities pursuant to an effective registration statement or otherwise in compliance with the 1933 Act, the Buyer is purchasing the Securities for its own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Buyer is (i) an &#147;accredited investor&#148; as that term is defined in Rule 501 of the General Rules and Regulations under the 1933 Act, (ii) experienced in making investments of the kind described in this Agreement and the other Transaction Agreements, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its Affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement and the other Transaction Agreements, and to evaluate the merits and risks of an investment in the Securities, and (iv) able to afford the entire loss of its investment in the Securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All subsequent offers and sales of the Securities by the Buyer shall be made pursuant to registration of the relevant Securities under the 1933 Act or pursuant to an exemption from such registration.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the 1933 Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>e.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Buyer and its advisors, if any, have been furnished with or have been given access to all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Purchased Securities which have been requested by the Buyer, including those set forth in any annex attached hereto. The Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management and have received complete and satisfactory answers to any such inquiries.  Without </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 7 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>limiting the generality of the foregoing, the Buyer has also had the opportunity to obtain and to review the Company's SEC Documents.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>f.</font></b></p> </td>
        <td width="498" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The Buyer understands that its investment in the Securities involves a high degree of risk.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>g.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Buyer is not a United States person (as defined by Section 7701(a)(30) of the Internal Revenue Code, as currently in effect), such Buyer hereby represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with any invitation to subscribe for the Purchased Securities or any use of this Agreement, including (i) the legal requirements within its jurisdiction for the purchase of the Purchased Securities, (ii) any foreign exchange restrictions applicable to such purchase, (iii) any governmental or other consents that may need to be obtained, and (iv) the income tax and other tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities. The Buyer&#146;s subscription and payment for
and continued beneficial ownership, if any, of the Securities will not violate any applicable securities or other laws of the Buyer&#146;s jurisdiction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>h.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the Buyer is an individual, then the Buyer resides in the state or province identified in the address of the Buyer set forth on the Buyer&#146;s signature page to this Agreement.  If the Buyer is a partnership, corporation, limited liability company or other entity, then the office or offices of the Buyer in which its principal place of business is identified in the address or addresses of the Buyer set forth on the Buyer&#146;s signature page to this Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>i.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Buyer hereby represents that, in connection with the Buyer&#146;s investment or the Buyer&#146;s decision to  its purchase of the Securities, the Buyer has not relied on any statement or representation of any Person, including any such statement or representation by the Company or the Finder or any of their respective controlling Persons,  officers, directors, partners, agents and employees or any of their respective attorneys, except as specifically set forth herein.  In furtherance of the foregoing, and not in limitation thereof,  the Buyer acknowledges that the Buyer is not relying upon any Person, other than the Company and its controlling Persons, officers and directors, as and to the extent specifically set forth herein,  in making such investment.  The Buyer agrees that none of
(i) any Other Buyer, (ii) any controlling Persons, officers, directors, partners, agents, or employees of each respective Other Buyer or (iii) any of their respective attorneys shall be liable to the Buyer for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Purchased Securities or in connection with the Securities. Each of the Finder, each Other Buyer and each of their respective controlling Persons, officers, directors, partners, agents and employees and each of their respective attorneys is a third party beneficiary of this provision.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>j.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>k.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement and the other Transaction Agreements to which the Buyer is a party, and the transactions contemplated thereby, have been duly and validly authorized, executed and delivered on behalf of the Buyer and are valid and binding agreements of the Buyer enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>3.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=2>COMPANY REPRESENTATIONS, ETC. </font></B><font size=2>  The Company represents and warrants to the Buyer as of the date hereof and as of the Closing Date that, except as otherwise provided in the Disclosure Annex or in the Company&#146;s SEC Documents: </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Rights of Others Affecting the Transactions.  </font></b><font size=2>There are no preemptive rights of any stockholder of the Company, as such, to acquire the Purchased Securities or the Shares.  No other party has a currently exercisable right of first refusal which would be applicable to any or all of the transactions contemplated by the Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 8 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Status.</font></b><font size=2>  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have or result in a Material Adverse Effect.  The Company has registered its stock and is obligated to file reports pursuant to Section 12 or Section 15(d) of the Securities and Exchange Act of 1934, as amended
(the &#147;1934 Act&#148;).  The Common Stock is quoted on the Principal Trading Market.  The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such quotation on the Principal Trading Market, and the Company has maintained all requirements on its part for the continuation of such quotation. </font></p>

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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>c.</font></b></p> </td>
        <td width="129" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Authorized Shares.</font></b></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.6in;text-align:justify;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The authorized capital stock of the Company consists of 1,400,000,000 shares of Common Stock, $0.00001 par value per share, of which approximately 63,733,483 are outstanding as of March 14, 2006.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.6in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no outstanding securities which are convertible into shares of Common Stock, whether such conversion is currently exercisable or exercisable only upon some future date or the occurrence of some event in the future.  If any such securities are listed on the Disclosure Annex, the number or amount of each such outstanding convertible security and the conversion terms are set forth in said Disclosure Annex.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.6in;text-align:justify;'><font size=2> (iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All issued and outstanding shares of Common Stock have been duly authorized and validly issued and are fully paid and non-assessable.  The Company has sufficient authorized and unissued shares of Common Stock as may be necessary to effect the issuance of the Shares on the Closing Date, were the Debentures fully converted and were the Warrant fully exercised on that date. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.6in;text-align:justify;'><font size=2> (iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Shares have been duly authorized by all necessary corporate action on the part of the Company, and, when issued on conversion of, or in payment of interest on, the Debentures or upon exercise of the Warrants, in each case in accordance with their respective terms, will have been duly and validly issued, fully paid and non-assessable and will not subject the Holder thereof to personal liability by reason of being such Holder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Transaction Agreements and Stock.</font></b><font size=2>  This Agreement and each of the other Transaction Agreements, and the transactions contemplated hereby and thereby, have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement is, and the Debentures, the Warrants and each of the other Transaction Agreements, when executed and delivered by the Company, will be, valid and binding obligations of the Company enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>e.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Non-contravention.  </font></b><font size=2>The execution and delivery of this Agreement and each of the other Transaction Agreements by the Company, the issuance of the Securities, and the consummation by the Company of the other transactions contemplated by this Agreement, the Debentures, the Warrants and the other Transaction Agreements do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the certificate of incorporation or by-laws of the Company, each as currently in effect, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, including any listing
agreement for the Common Stock except as herein set forth, or (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets, except such conflict, breach or default which would not have or result in a Material Adverse Effect.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>f.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Approvals.</font></b><font size=2>  No authorization, approval or consent of any court, governmental body, regulatory agency, self-regulatory organization, or stock exchange or market or the stockholders of the Company is </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 9 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>required to be obtained by the Company for the issuance and sale of the Securities to the Buyer as contemplated by this Agreement, except such authorizations, approvals and consents that have been obtained.</font><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>g.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Filings.</font></b><font size=2>  None of the Company&#146;s SEC Documents contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.  Since February 1, 2005, the Company has filed all annual and quarterly reports required to be filed by the Company with the SEC under Section 13(a) or 15(d) of the 1934 Act.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>h.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Absence of Certain Changes.</font></b><font size=2>  Since the Last Audited Date, there has been no Material Adverse Effect, except as disclosed in the Company&#146;s SEC Documents. Since the Last Audited Date, except as provided in the Company&#146;s SEC Documents, the Company has not (i) incurred or become subject to any material liabilities (absolute or contingent) except liabilities incurred in the ordinary course of business consistent with past practices; (ii) discharged or satisfied any material lien or encumbrance or paid any material obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business consistent with past practices; (iii) declared or made any payment or distribution of cash or other property to
stockholders with respect to its capital stock, or purchased or redeemed, or made any agreements to purchase or redeem, any shares of its capital stock; (iv) sold, assigned or transferred any other material tangible assets, or canceled any material debts owed to the Company by any third party  or material claims of the Company against any third party, except in the ordinary course of business consistent with past practices; (v) waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of existing business; (vi) made any increases in employee compensation, except in the ordinary course of business consistent with past practices; or (vii) experienced any material problems with labor or management in connection with the terms and conditions of their employment.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>i.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Full Disclosure.</font></b><font size=2>  To the Company&#146;s knowledge, there is no fact known to the Company (other than general economic conditions known to the public generally or as disclosed in the Company&#146;s SEC Documents) that has not been disclosed in writing to the Buyer that would reasonably be expected to have or result in a Material Adverse Effect.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>j.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Absence of Litigation.</font></b><font size=2>  There is no action, suit, proceeding, inquiry or investigation before or by any court, public board or body pending or, to the knowledge of the Company, threatened against or affecting the Company before or by any governmental authority or non-governmental department, commission, board, bureau, agency or instrumentality or any other person, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect or which would adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, any of the Transaction Agreements.  The Company is not aware of any valid basis for any such claim that (either individually or in the aggregate with all
other such events and circumstances) could reasonably be expected to have a Material Adverse Effect. There are no outstanding or unsatisfied judgments, orders, decrees, writs, injunctions or stipulations to which the Company is a party or by which it or any of its properties is bound, that involve the transaction contemplated herein or that, alone or in the aggregate, could reasonably be expect to have a Material Adverse Effect.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>k.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Absence of Events of Default.</font></b><font size=2>  Except as set forth in Section 3(e) hereof, no Event of Default (or its equivalent term), as defined in the respective agreement to which the Company or its subsidiary is a party, and no event which, with the giving of notice or the passage of time or both, would become an Event of Default (or its equivalent term) (as so defined in such agreement), has occurred and is continuing, which would have a Material Adverse Effect.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>l.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Absence of Certain Company Control Person Actions or Events.</font></b><font size=2>  To the Company&#146;s knowledge, none of the following has occurred during the past five (5) years with respect to a Company Control Person:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 10 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>(1) A petition under the federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such Company Control Person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>(2) Such Company Control Person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>(3) Such Company Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(i) acting, as an investment advisor, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, any other Person regulated by the Commodity Futures Trading Commission (&#147;CFTC&#148;) or engaging in or continuing any conduct or practice in connection with such activity;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(ii) engaging in any type of business practice; or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(iii) engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>(4) Such Company Control Person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such Company Control Person to engage in any activity described in paragraph (3) of this item, or to be associated with Persons engaged in any such activity; or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>(5) Such Company Control Person was found by a court of competent jurisdiction in a civil action or by the CFTC or SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the CFTC or SEC has not been subsequently reversed, suspended, or vacated.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>m.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>No Undisclosed Liabilities or Events.</font></b><font size=2>  To the best of the Company&#146;s knowledge, the Company has no liabilities or obligations other than those disclosed in the Transaction Agreements or the Company's SEC Documents or those incurred in the ordinary course of the Company's business since the Last Audited Date, or which individually or in the aggregate, do not or would not have a Material Adverse Effect.  No event or circumstance has occurred or exists with respect to the Company or its properties, business, operations, condition (financial or otherwise), or results of operations, which, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly
announced or disclosed.  There are no proposals currently under consideration or currently anticipated to be under consideration by the Board of Directors or the executive officers of the Company which proposal would (x) change the articles or certificate of incorporation or other charter document or by-laws of the Company, each as currently in effect, with or without stockholder approval, which change would reduce or otherwise adversely affect the rights and powers of the stockholders of the Common Stock or (y) materially or substantially change the business, assets or capital of the Company, including its interests in subsidiaries.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>n.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>No Integrated Offering.</font></b><font size=2>  Neither the Company nor any of its Affiliates nor any Person acting on its or their behalf has, directly or indirectly, at any time since September 1, 2005, made any offer or sales of any security or solicited any offers to buy any security under circumstances that would eliminate the availability </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 11 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>of the exemption from registration under Regulation D in connection with the offer and sale of the Securities as contemplated hereby.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>o.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Dilution.</font></b><font size=2>  The number of shares issuable on conversion of the Debentures, upon exercise of the Warrants or pursuant to the other terms of the Transaction Agreements may have a dilutive effect on the ownership interests of the other stockholders (and Persons having the right to become stockholders) of the Company.  The Company's executive officers and directors have studied and fully understand the nature of the Securities being sold hereby and recognize that they have such a potential dilutive effect.  The board of directors of the Company has concluded, in its good faith business judgment, that such issuance is in the best interests of the Company.  The Company specifically acknowledges that its obligation to issue the Conversion Shares upon
conversion of the Debentures, the Warrant Shares upon exercise of the Warrants or the Payment Shares as provided in the Registration Rights Agreement is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other stockholders of the Company, and the Company will honor such obligations, including honoring every Notice of Conversion (as contemplated by the Debentures), every Notice of Exercise (as contemplated by the Warrants), and every demand for Payment Shares (as contemplated by the Registration Rights Agreement), unless the Company is subject to an injunction (which injunction was not sought by the Company) prohibiting the Company from doing so.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>p.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Fees to Brokers, Placement Agents and Others.</font></b><font size=2>  The Company has taken no action which would give rise to any claim by any Person for brokerage commission, placement agent or finder's fees or similar payments by Buyer relating to this Agreement or the transactions contemplated hereby.  Notwithstanding the foregoing, the Company acknowledges that it has agreed to pay the Finder&#146;s Compensation (as defined in the Joint Escrow Instructions) to the Finder in connection with the transactions contemplated hereby.  Except for such fees arising as a result of any agreement or arrangement entered into by the Buyer without the knowledge of the Company (a  &#147;Buyer&#146;s Fee&#148;), Buyer shall have no obligation with respect to such fees or with
respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this paragraph that may be due in connection with the transactions contemplated hereby.  The Company shall indemnify and hold harmless each of Buyer, its employees, officers, directors, agents, and partners, and their respective Affiliates, from and against all claims, losses, damages, costs (including the costs of preparation and attorney's fees) and expenses suffered in respect of any such claimed or existing fees (other than a Buyer&#146;s Fee).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>q.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Disclosure.</font></b><font size=2>  All information relating to or concerning the Company set forth in the Transaction Agreements or in the Company&#146;s public filings with the SEC is true and correct in all material respects and have not omitted to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.  No event or circumstance has occurred or exists with respect to the Company or its business, properties, prospects, operations or financial conditions, which under applicable law, rule or regulation, requires public disclosure or announcement by the Company.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>r.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Confirmation.</font></b><font size=2>  The Company confirms that all statements of the Company contained herein shall survive acceptance of this Agreement by the Buyer for a period of three (3) years from the Closing Date.  The Company agrees that, if, to the knowledge of the Company, any events occur or circumstances exist prior to the release of the Escrow Funds to the Company which would make any of the Company&#146;s representations, warranties, agreements or other information set forth herein materially untrue or materially inaccurate as of such date, the Company shall immediately notify the Buyer (directly or through its counsel, if any) and the Escrow Agent in writing prior to such date of such fact, specifying which representation, warranty or covenant is
affected and the reasons therefor.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 12 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'>
<font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>4.</font></b><B><font SIZE=2>CERTAIN COVENANTS AND ACKNOWLEDGMENTS.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Transfer Restrictions.</font></b><font size=2>  The Buyer acknowledges that (1) the Securities have not been and are not being registered under the provisions of the 1933 Act and, except as provided in the Registration Rights Agreement or otherwise included in an effective registration statement, the Shares have not been and are not being registered under the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Buyer shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (2) any sale of the Securities made in reliance on Rule
144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the Person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither the Company nor any other Person is under any obligation to register the Securities (other than pursuant to the Registration Rights Agreement) under the 1933 Act or to comply with the terms and conditions of any exemption thereunder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Restrictive Legend.</font></b><font size=2>  The Buyer acknowledges and agrees that, until such time as the relevant Shares have been registered under the 1933 Act, as contemplated by the Registration Rights Agreement, and may be sold in accordance with an effective Registration Statement or otherwise in accordance with another effective registration statement, or until such Shares can otherwise be sold without restriction, whichever is earlier, the certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities):</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font SIZE=2>THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Filings</font></b><font size=2>.  The Company undertakes and agrees to make all filings required to be made by it in connection with the sale of the Securities to the Buyer under the 1933 Act, the 1934 Act or any United States state securities laws and regulations thereof applicable to the Company or by any domestic securities exchange or trading market, and, unless such filing is publicly available on the SEC&#146;s EDGAR system (via the SEC&#146;s web site at no additional charge), to provide a copy thereof to the Buyer promptly after such filing.  Reference is made to the Section titled &#147;Publicity, Filings, Releases, Etc.&#148; below.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Reporting Status</font></b><font size=2>.  So long as the Buyer beneficially owns any of the Purchased Securities and for at least twenty (20) Trading Days thereafter, the Company shall file all reports required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934 Act, shall take all reasonable action under its control to ensure that adequate current public information with respect to the Company, as required in accordance with Rule 144(c)(2) of the 1933 Act, is publicly available, and shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would permit such termination.  The Company will take all reasonable action under its control to maintain the continued
listing and quotation and trading of its Common Stock (including, without limitation, all Registrable Securities) on the Principal Trading Market or a listing on the NASDAQ/Small Cap or National Markets or AMEX and, to the extent applicable to it, will comply in all material respects with the Company&#146;s reporting, filing and other obligations under the by-laws or rules of the Principal Trading Market and/or the National Association of Securities Dealers, Inc., as the case may be, applicable to it at least through the date which is sixty (60) days after the later of the date on which (x) all of the Debentures have been converted or have been paid in full or (y) all of the Warrants have been exercised or have expired.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>e.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Use of Proceeds</font></b><font size=2>.  The Company will use the net  proceeds received hereunder (excluding amounts paid as contemplated by the Joint Escrow Instructions) for general corporate purposes, provided, however, </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 13 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>that such proceeds shall not be used to pay fees payable to another party relating to any financing transaction effected prior to the Closing Date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="222" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>f.</font></b></p> </td>
        <td width="78" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Warrants.</font></b></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees to issue to the Buyer on the Closing Date a transferable warrants (each, a &#147;Warrant&#148; and, collectively, the &#147;Warrants&#148;) for the purchase of the number of shares of Common Stock equal to one hundred percent (100%) of the Issue Date Conversion Shares.  The Warrants shall have an exercise price (the &#147;Exercise Price&#148;) equal to the Closing Price for the Trading Date immediately preceding the Closing Date; provided, however, that the Exercise Price will be subject to adjustment as provided in the Warrant. The Warrants shall be exercisable commencing on the Commencement Date specified in the Warrants and shall expire at the close of business on the date  which is the last day of the calendar month in which the third annual anniversary of the Effective Date occurs.  The Warrant
shall have cashless exercise rights as provided in the Warrant. Except as specified above, each Warrant shall generally be in the form annexed hereto as </font><b><font size=2>Annex V</font></b><font size=2>.  </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Warrant Shares shall be subject to the provisions of the Registration Rights Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="282" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>g.</font></b></p> </td>
        <td width="138" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Certain Agreements</font></b><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="611" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(i)</font></p> </td>
        <td width="467" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>For purposes of this Agreement, the following terms shall have meanings indicated:</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;New Transaction Period&#148; means the period commencing on the Closing Date and continuing through and including the Final Lock-up Date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Final Lock-up Date&#148; means the date on which the aggregate principal amount of all outstanding Debentures is twenty-five percent (25%) or less of the Aggregate Purchase Price; except that, if all, but not less than all, of the New Transaction Prepayment Conditions (defined below) apply, then the Trading Day prior to the closing date of such New Transaction shall be deemed the Final Lock-up Date (provided, however, that if the prepayment is not effected in a timely manner as contemplated in the New Transaction Prepayment Conditions, any adjustments to the Debentures or Warrants contemplated by this Section 4(g) shall be deemed to have been made as of the closing date of such New Transaction, and if a Holder effected any conversions of the Debentures or exercises of the Warrants in the interim, which were made without
giving effect to such adjustments, the Company will, at the election of the Holder, issue additional shares and/or make a cash refund to reflect the appropriate adjustment).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(C)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;New Transaction Price&#148; means the Basic New Transaction Price (as defined below) except that if the New Transaction Exercise Price is lower than the Basic New Transaction Price, it means the New Transaction Exercise Price. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(D)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Basic New Transaction Price&#148; means, as may be applicable, on a per share basis, the lower of (1) the lowest fixed purchase price of any shares of the New Common Stock contemplated in the New Transaction, or (2) the lowest conversion price or put or call price which would be applicable under the terms of the New Transaction; in each such case, whether such purchase or conversion price or put or call price is stated or otherwise specified or is determined on the closing date of the New Transaction by the application of a formula set in the documents reflecting the New Transaction or could result from adjustments or revisions contemplated in the relevant agreements for the New Transaction and whenever such adjustment or revision would be applicable (and if no minimum purchase price,  conversion price or put or call
price, as the case may be, is set, it shall be assumed that such minimum purchase price or conversion price is $.01); and provided, further, that, if the securities issued in the New Transaction are </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 14 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>issued at a Face Value Discount (as defined below), the New Transaction Price shall be adjusted to reflect such discount.</font><font size=2><sup></sup></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="486" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(E)</font></p> </td>
        <td width="390" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>&#147;Exercise Threshold Price&#148; means the then applicable Exercise Price.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(F)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;New Transaction Exercise Price&#148; means the lowest exercise price per share applicable to the warrants, option or similar instrument (howsoever denominated; collectively, &#147;New Transaction Warrants&#148;) included in such New Transaction, whether such exercise price is stated or could result from adjustments or revisions contemplated in the relevant agreements for the New Transaction and whenever such exercise price would be applicable (and,  if no minimum exercise price is set, it shall be assumed that such minimum exercise price is $.01).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(G)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;New Transaction Effective Percentage&#148; means  the percentage equal to the excess, if any, of (1) one hundred percent (100%) over (2) the percentage equal to (x) the New Transaction Price, divided by (y) the VWAP for the twenty (20) Trading Days ending on the Trading Day immediately before the closing date of the New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(H)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Alternative Warrant Percentage&#148; means, with respect to the relevant New Transaction, (1) the number of shares which are eligible to be purchased under the New Transaction Warrants, divided by (2) the aggregate of the shares of New Common Stock issued or issuable in such transaction (excluding the shares issuable on exercise of the New Transaction Warrants).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(I)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Current Warrant Percentage&#148; means, as of immediately before the consummation of the relevant New Transaction, the higher of (1) one hundred percent (100%) or (2) the highest Alternative Warrant Percentage of any preceding New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(J)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Outstanding Warrant Shares&#148; means, for the Warrants or for any previously issued Additional Warrants (as defined below), the then outstanding number of Warrant Shares which would then be issuable upon the exercise in full of such Warrants (without regard to any limitations which may then restrict the Holder&#146;s full exercise of such Warrant at any time) or such Additional Warrants, if any, as in effect immediately prior to the relevant New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(K)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Original Warrant Shares&#148; means, for the Warrants or for any previously issued Additional Warrants, the original number of Warrant Shares issuable on exercise of such Warrants on the Closing Date or as Additional Warrants, as the case may be (in each case without regard to any limitations which may then restrict the Holder&#146;s full exercise of such Warrant at any time).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(L)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;Face Value Discount&#148; means consideration less than, as the case may be, (x) the number of shares being issued multiplied by the stated purchase price, (y) the stated principal amount of a debenture, note or similar instrument or (z) the stated value of the shares of convertible stock.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(M)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;New Transaction Prepayment Conditions&#148; means</font><font size=2><sup></sup></font><font size=2> all, and not less than all, of the following conditions are satisfied:  (i) within four (4) Trading Days after the closing date of a New Transaction, the Company elects to give all, but not less than all, the Holders of the then outstanding Debentures a Prepayment Notice for the prepayment of all, but not less than all, of the then outstanding Debentures, on  a</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font><font size=2>By way of illustration, if convertible preferred shares having a stated value of $1 million and a fixed conversion price of $0.05 were sold for a purchase price of $800,000, the effective New Transaction Price would be $0.04.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;Note: Capitalized terms used in the balance of this subparagraph and not otherwise def</font><font size=2>i</font><font size=2>ned in this Agreement have the meanings ascribed to them in the Debentures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 15 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Prepayment Date which is twenty (20) Trading Days after the date of such Prepayment Notice; provided, however, that such Prepayment Notice may not be </font><font size=2>given prior to the time that the Company has made public disclosure of such New Transaction, and (ii) such Prepayment Notice is accompanied by the confirmation from the Prepayment Source that the amount equal to the Prepayment Principal Amount plus all accrued but unpaid interest thereon through such Prepayment Date will be paid out of proceeds of such offering; it being understood that the terms of Section 4(F) (including, but not limited to, the provisions of subparagraph (iii) thereof) shall otherwise apply to the prepayment election contemplated by such Prepayment Notice. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (ii)  The Company covenants and agrees that, if, during the New Transaction Period, without the prior written consent of a Majority in Interest of the Holders in each instance (which consent is in the sole discretion of the Holders and may be withheld for any reason or for no reason whatsoever), the Company enters into a New Transaction, then </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the New Transaction Price shall be the Lowest Fixed Conversion Price for all Unconverted Debentures; provided, however, if there was a previous New Transaction Price, the Lowest Fixed Conversion Price shall be the lowest New Transaction Price</font><font size=2><sup></sup></font><font size=2>; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the New Transaction Effective Percentage is higher than the then applicable Effective Percentage, the Effective Percentage shall be adjusted for all Unconverted Debentures to such New Transaction Effective Percentage; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(C)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the New Transaction Exercise Price of any of the New Transaction Warrants is lower than the Exercise Threshold Price of the Warrants, then the Exercise Price of the then outstanding Warrants shall be adjusted to be equal to the New Transaction Exercise Price of such New Transaction Warrants; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(D)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if the provisions applicable to the convertible preferred stock, convertible debenture or similar instrument (howsoever denominated), if any, of the New Transaction are more beneficial to the holder of such instrument than the corresponding terms applicable to the Debentures or in or to the Warrants, as the case may be, or if the terms which are beneficial to the Company in the relevant Transaction Agreements are not included in the corresponding instrument in the New Transaction, then, unless waived by the Holder, the terms of the Transaction Agreements applying to the then outstanding Debentures or the Warrants or to the other Transaction Agreements, as the case may be, shall be modified to reflect similar terms (based, if relevant, on the Closing Date); provided, however, that nothing in this provision shall be read to mean
that the Purchased Securities shall be changed to any other form of security;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(E)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;if either (1) the Conversion Price is adjusted  and/or the Effective Percentage is increased as contemplated by clause (A) and/or (B) above, and/or (2) the Alternative Warrant Percentage is greater than the Current Warrant Percentage (whether or not the Conversion Price or Effective Percentage has been adjusted as a result of the New Transaction), the Company shall issue to the Holder additional warrants (&#147;Additional Warrants&#148;) for the purchase of the number of shares equal to the excess, if any, of </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in; text-indent:0.6in;text-align:left;'><font size=2> (x) (I) the higher of (a) the Alternative Warrant Percentage or (b) the Current Warrant Percentage, multiplied by (II) (a) the Purchase Price, divided by (b) the Conversion Price as determined on the Closing Date or on the closing date of the New Transaction, whichever is lower, multiplied by (III) a fraction, of which the numerator is the Outstanding Warrant Shares for all Warrants (including previously issued Additional Warrants) and the denominator is Original Warrant Shares for all Warrants (including previously issued Additional Warrants); over</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font><font size=2>Any New Transaction Price shall be adjusted for subsequent events as contemplated by the Debentures.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 16 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in; text-indent:0.61in;text-align:left;'><font size=2> (y) the aggregate Outstanding Warrant Shares for all Warrants (including previously issued Additional Warrants);</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>the terms of such Additional Warrants (including, but not limited, to term of exercisability, exe</font><font size=2>rcise price, manner and limitations, if any, on exercise, registration rights) shall be the same as the shall be the same as the applicable New Transaction Warrants issued in such New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company covenants and agrees that, any of the foregoing provisions of this Section 4(g) or any other provision of this Agreement or any of the other Transaction Agreements to the contrary notwithstanding, without the prior written consent of a Majority in Interest of the Holders in each instance (which consent is in the sole discretion of the Holders and may be withheld for any reason or for no reason whatsoever),</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(A)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;during the New Transaction Period, the Company will not enter into any New Transaction where such transaction provides for a variable conversion price or a variable exercise price; </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(B)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;during the period commencing on the Closing Date and continuing through the Effective Date, the Company will not enter into any New Transaction whatsoever, and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:left;'><font size=2>(C)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;during the period commencing on the Effective Date and continuing through the date which is the sixth monthly anniversary of the Effective Date, the Company will not enter into any New Transaction where such New Transaction provides for any registration rights (including, but not limited to demand or piggy-back registration rights) to any one or more of the New Investors in such New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>The Company acknowledges that each of the foregoing provisions is independent of the others and that a breach of any of the foregoing provisions might result in adjustments referred to in other provisions of this Section 4(g) and, in addition (and not in lieu of such adjustments, if any) shall constitute an event of default under the Debenture and the other Transaction Agreements.  The Company is aware that if such event of default occurs, a Holder of a Debenture will have certain redemption rights contemplated by the Debenture.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Nothing in the foregoing provisions reflects either an obligation on the part of any Buyer to participate in any New Transaction or a limitation on any Buyer from participating in any New Transaction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of the foregoing provisions of this Section 4(g) or any other provision of this Agreement or any of the other Transaction Agreements to the contrary notwithstanding, the Company shall not engage in any offers, sales or other transactions of its securities which would adversely affect the exemption from registration available for the transactions contemplated by the Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (vi)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees that, prior to the Effective Date, the Company will not file any registration statement for the sale of shares by the Company or any other stockholder other than the Registration Statement contemplated by the Registration Rights Agreement. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>h.</font></b></p> </td>
        <td width="215" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><b><font size=2>Company Principal&#146;s Agreements</font></b><font size=2>.  </font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby agrees that, no later than the Closing Date, the Company will cause each of its principal officers and all of its directors (each, a &#147;Company Principal&#148;), and certain Persons who are related to or controlled by such Company Principal, to execute and deliver an agreement (each, a &#147;Company Principal&#146;s Agreement&#148;) regarding limitations on the sale or other disposition of the shares of the Company&#146;s Common Stock (or instruments convertible into or exercisable for such shares) held by such Company Principal or other Principal (as defined in the Company Principal&#146;s Agreement), except that, notwithstanding its terms, the Company Principal&#146;s Agreement will be deemed not apply to the sale of shares of Common Stock bought by a Principal in open market transactions.  Subject
to the foregoing, each Company Principal&#146;s Agreement shall be substantially in the form set forth in </font><b><font size=2>Annex VII</font></b><font size=2> attached hereto.  </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 17 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.08in;text-align:left;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, under certain circumstances as contemplated by the definition of &#147;New Transaction&#148; in this Agreement, certain future issuances by the Company to persons identified in clause (g) of such definition are conditioned on such shares being subject to a Company Principal&#146;s Agreement being executed by the relevant party (who, whether or not included in the definition of Company Principal in the preceding subparagraph (i), shall, for purposes of this Section 4(h), be deemed to be a &#147;Company Principal&#148; identified in such definition).  The Company covenants that it will obtain such executed Company Principal&#146;s Agreement from the relevant party no later than the issuance of the relevant security to such party and that it will promptly provide a copy thereof to the Escrow Agent on behalf of the
Buyer and the Other Buyers.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:left;'><b><font size=2>h.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Available Shares</font></b><font size=2>.  The Company shall have at all times authorized and reserved for issuance, free from preemptive rights, a number of shares (the &#147;Reserved Amount&#148;) at least equal to one hundred twenty-five percent (125%) of the sum of (x) the number of shares of Common Stock issuable as may be required, at any time, to satisfy the conversion rights of the Holders of principal on all outstanding Convertible Debentures plus interest thereon through the Maturity Date, plus (y) the number of shares issuable upon exercise of all outstanding Warrants held by all Holders (in each case, whether any of such outstanding Convertible Debentures or Warrants were originally issued to the Holder, the Buyer or to any other party and without regard to any
restrictions which might limit any Holder&#146;s right to convert any of the Debentures or to exercise any of the Warrants held by any Holder).  The Reserved Amount shall be determined on the first Trading Day after the end of each calendar quarter and the number of shares to be reserved shall be based on (q) all outstanding Convertible Debentures and the Conversion Price as of such date and (r) unexercised Warrants as of such date.  The Reserved Amount determined on such date shall remain the Reserved Amount until the next quarterly determination.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:left;'><b><font size=2>j.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Publicity, Filings, Releases, Etc.</font></b><font size=2>  Each of the parties agrees that it will not disseminate any information relating to the Transaction Agreements or the transactions contemplated thereby, including issuing any press releases, holding any press conferences or other forums, or filing any reports (collectively, &#147;Publicity&#148;), without giving the other party reasonable advance notice and an opportunity to comment on the contents thereof.  Neither party will include in any such Publicity any statement or statements or other material to which the other party reasonably objects, unless in the reasonable opinion of counsel to the party proposing such statement, such statement is legally required to be included.  In furtherance of the foregoing,
the Company will provide to the Investor&#146;s Counsel (as defined in the Registration Rights Agreement) drafts of the applicable text the first filing of a Current Report on Form 8-K or a Quarterly or Annual Report on Form 10-Q or 10-K (or equivalent SB forms) intended to be made with the SEC which refers to the Transaction Agreements or the transactions contemplated thereby as soon as practicable (but at least two (2) Trading Days before such filing will be made) and will not include in such filing (or any other filing filed before then) any statement or statements or other material to which the other party reasonably objects, unless in the reasonable opinion of counsel to the party proposing such statement, such statement is legally required to be included.  Notwithstanding the foregoing, each of the parties hereby consents to the inclusion of the text of the Transaction Agreements in filings made with the SEC (but any descriptive text accompanying or part of such filing shall be
subject to the other provisions of this paragraph).  Notwithstanding, but subject to, the foregoing provisions of this  Section 4(j), the Company will, after the Closing Date, promptly issue a press release and file a Current Report on Form 8-K or, if appropriate, a quarterly or annual report on the appropriate form, referring to the transactions contemplated by the Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:left;'><b><font size=2>k.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Independent Nature of Buyers' Obligations and Rights.</font></b><font size=2>  The obligations of each Buyer under the Transaction Agreements are several and not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any Other Buyer under any one or more of the Transaction Agreements.  The decision of each Buyer or Other Buyer to purchase Purchased Securities pursuant to the Transaction Agreements has been made by such Buyer independently of any Other Buyer and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of its
subsidiaries, if any, which may been made or given by any Other Buyer or any of their respective officers, directors, principals, employees, agents, counsel or representatives (collectively, including the Buyer, the &#147;Buyer Representatives&#148;).  No Buyer Representative shall have any liability to any Other Buyer or the Company relating to or arising from any such information, materials, statements or opinions, if any.  Each Buyer acknowledges that no </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 18 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Other Buyer has acted as agent for such Buyer in connection with making its investment hereunder and that no Buyer will be acting as agent of such Other Buyer in connection with monitoring its investment in the Purchased Securities or enforcing its rights under the Transaction Agreements.  Each Buyer 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 Agreements, and it shall not be necessary for any Other Buyer to be joined as an additional party in any proceeding for such purpose.  The Company acknowledges that, for reasons of administrative convenience, (x) the Transaction Agreements have been prepared by counsel for one of the Buyers and such counsel does not represent all of the Buyers with respect to the transactions contemplated hereby, and each other Buyer has retained its own counsel
(or had the opportunity to do so) with respect to such transactions, and (y) the Company has elected to provide each of the Buyers with the same Transaction Agreements for the purpose of closing a transaction with multiple Buyers and not because it was required or requested to do so by any Buyer.  In furtherance of the foregoing, and not in limitation thereof, the Company acknowledges that nothing contained in this Agreement or in any Transaction Agreement, and no action taken by any Buyer pursuant thereto, shall be deemed to constitute any two or more Buyers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Buyers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:left;'><b><font size=2>l.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Equal Treatment of Buyers.</font></b><font size=2>  No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Agreements unless the same consideration is also offered to all of the parties to the Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:left;'><b><font size=2>m.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Independent Investment Decision.</font></b><font size=2>  No Buyer has agreed to act with any Other Buyer for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Buyer is acting independently with respect to its investment in the Securities.  The decision of each Buyer to purchase Purchased Securities pursuant to this Agreement has been made by such Buyer independently of any other purchase and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or its subsidiaries which may have made or given by any Other
Buyer or by any agent or employee of any Other Buyer, and no Buyer or any of its agents or employees shall have any liability to any Other Buyer (or any other person) relating to or arising from any such information, materials, statements or opinions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:left;'><b><font size=2>n. </font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>NASD Rule 2710.</font></b><font size=2> The Company is aware that the Corporate Financing Rule 2710 (&#147;NASD Rule 2710") of the National Association of Securities Dealers (&#147;NASD&#148;) is or may become applicable to the transactions contemplated by the Transaction Agreements or to the sale by a Holder of any of the Securities. If NASD Rule 2710 is so applicable, the Company shall, to the extent required by such rule, cooperate with any broker or selling stockholder in respect of any consents, authorizations or approvals that may be necessary for the NASD to timely and expeditiously permit the stockholder to sell the securities.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:left;'><b><font size=2>o.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>Keeping of Records and Books of Account.</font></b><font size=2>  The Company shall keep and cause each subsidiary, if any, to keep adequate records and books of account, in which complete entries will be made in accordance with GAAP consistently applied, reflecting all financial transactions of the Company and such subsidiaries, and in which, for each fiscal year, all proper reserves for depreciation, depletion, obsolescence, amortization, taxes, bad debts and other purposes in connection with its business shall be made.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 19 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
<font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>5.</font></b><B><font SIZE=2>TRANSFER AGENT INSTRUCTIONS.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:left;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company warrants that, with respect to the Securities, other than the stop transfer instructions to give effect to Section 4(a) hereof, it will give the Transfer Agent no instructions inconsistent with instructions to issue Common Stock from time to time upon conversion of the Debentures or exercise of the Warrants or in connection with the issuance of Payment Shares, as may be applicable from time to time, in such amounts as specified from time to time by the Company to the Transfer Agent, bearing the restrictive legend specified in Section 4(b) of this Agreement prior to registration of the Shares under the 1933 Act, registered in the name of the Buyer or its nominee and in such denominations to be specified by the Holder in connection therewith.  Except as so provided, the Shares shall
otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the other Transaction Agreements.  Nothing in this Section shall affect in any way the Buyer's obligations and agreement to comply with all applicable securities laws upon resale of the Securities.  If the Buyer provides the Company with an opinion of counsel reasonably satisfactory to the Company that registration of a resale by the Buyer of any of the Securities in accordance with clause (1)(B) of Section 4(a) of this Agreement is not required under the 1933 Act or upon request from a Holder while the Registration Statement is effective, the Company shall (except as provided in clause (2) of Section 4(a) of this Agreement) permit the transfer of the Securities and, in the case of the Conversion Shares, the Warrant Shares or the Payment Shares, as may be applicable, promptly instruct the Transfer Agent to issue one or more certificates for Common Stock without
legend in such name and in such denominations as specified by the Buyer.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:left;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company understands that a delay in the delivery of Conversion Certificates, whether on conversion of the Debenture and/or in payment of accrued interest or on exercise of the Warrants, beyond the relevant Delivery Date (as defined in the Debenture or Warrant, as the case may be) could result in economic loss to the Holder.  As compensation to the Holder for such loss, the Company agrees to pay late payments to the Holder for late issuance of the Conversion Certificates in accordance with the following schedule (where &#147;No. Business Days Late&#148; is defined as the number of Trading Days beyond two (2) Trading Days</font><font size=2><sup></sup></font><font size=2> after the Delivery Date):</font><font size=2><sup></sup></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font><font size=2>    For purposes of this provision only, the following days shall also not be considered to be &#147;Trading Days&#148;: (1) 2006 - April 13-14, 19-20; June 1, 2; and October 2; and (2) 2007 - April 3, 4, 10, 11; May 23, 24; September 13-14; and September 27-28.  Each such date is referred to as an &#147;Excluded Trading Day.&#148;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2> Example: Notice of Conversion or Notice of Exercise is delivered on Monday, May 1, 2006.  The Delivery Date would be Thursday, May 4 (the third Trading Day after such delivery).  If the certificate is delivered by Monday, May 8 (2 Trading Days after the Delivery Date), no payment under this provision is due.  If</font><font size=2> the certificates are delivered on May 9, that is 1 &#147;Trading Day Late&#148; in the table below; if delivered on May 16, that is 6 &#147;Trading Days Late&#148; in the table.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 20 -</font></p>

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        <td  colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="191" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Late Payment For Each $10,000</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>of Principal or Interest Being Converted or</font></p> </td> </tr>
    <tr >
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="192" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>No. Business Days Late&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font></u><font size=2>  </font></p> </td>
        <td  colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>of Exercise Price of Warrant Being Exercised  </font></u></p> </td>
        <td  width="33">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="48" ></td>

        <td width="192" ></td>

        <td width="48" ></td>

        <td width="0" ></td>

        <td width="191" ></td>

        <td width="25" ></td>

        <td width="33" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="488" style=' border-collapse:collapse'>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>1</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$100</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>2</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$200</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>3</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$300</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>4</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$400</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>5</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$500</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>6</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$600</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>7</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$700</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>8</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$800</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>9</font></p> </td>
        <td width="45" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$900</font></p> </td>
        <td  width="10">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="192" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>10</font></p> </td>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$1,000</font></p> </td> </tr>
    <tr>
        <td width="192" ></td>

        <td width="0" ></td>

        <td width="240" ></td>

        <td width="1" ></td>

        <td width="45" ></td>

        <td width="10" ></td> </tr> </table>



<table border="0" cellspacing=0 cellpadding=0 width="624" style=' border-collapse:collapse'>
    <tr>
        <td width="192" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="240" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>&#62;10</font></p> </td>
        <td width="192" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$1,000 + $200 for each Business Day Late beyond 10 days</font></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>The Company shall pay any payments incurred under this Section in immediately available funds upon demand. Nothing herein shall limit the Holder&#146;s right to pursue actual damages for the Company&#146;s failure to issue and deliver the Conversion Certificates to the Holder within a reasonable time.  Furthermore, in addition to any other remedies which may be available to a Holder, in the event that the Company fails for any reason to effect delivery of such Conversion Certificates within two (2) Trading Days after the Delivery Date, the Converting Holder will be entitled to revoke the relevant Notice of Conversion or Notice of Exercise by delivering a notice to such effect to the Company prior to the Converting Holder&#146;s receipt of the relevant Conversion Certificates, whereupon the Company and the Converting Holder shall each be restored to their respective positions immediately prior to delivery of
such Notice of Conversion or Notice of Exercise, as the case may be; </font><u><font size=2>provided</font></u><font size=2>, </font><u><font size=2>however</font></u><font size=2>, that any payments contemplated by this Section 5(b) of this Agreement which have accrued through the date of such revocation notice shall remain due and owing to the Converting Holder notwithstanding such revocation.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If, by the tenth Trading Day after the  relevant Delivery Date, the Company fails for any reason to deliver the Conversion Certificates, but at any time after the Delivery Date, the Converting Holder purchases, in an arm&#146;s-length open market transaction or otherwise, shares of Common Stock (the &#147;Covering Shares&#148;) in order to make delivery in satisfaction of a sale of Common Stock by the Converting Holder (the &#147;Sold Shares&#148;), which delivery such Converting Holder anticipated to make using the shares to be issued upon such conversion (a &#147;Buy-In&#148;), the Converting Holder shall have the right to require the Company to pay to the Converting Holder, in addition to and not in lieu of  the amounts contemplated in other provisions of the Transaction Agreements, including, but not limited to, the
provisions of the immediately preceding Section 5(b)(i)), the Buy-In Adjustment Amount (as defined below).  The &#147;Buy-In Adjustment Amount&#148; is the amount equal to the number of Sold Shares multiplied by the excess, if any, of (x) the Holder's total purchase price per share (including brokerage commissions, if any) for the Covering Shares over (y) the net proceeds per share (after brokerage commissions, if any) received by the Holder from the sale of the  Sold Shares.  The Company shall pay the Buy-In Adjustment Amount to the Holder in immediately available funds immediately upon demand by the Converting Holder.  By way of illustration and not in limitation of the foregoing, if the Holder purchases shares of Common Stock having a total purchase price (including brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount which Company will be required to pay to the Holder will be
$1,000.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this paragraph apply on or after the Effective Date. After such Effective Date, the Company will issue Shares without legend and without transfer restrictions on the books of the Transfer Agent, and, at the request of the Holder, will use it best efforts to have previously issued certificates representing the Shares re-issued without legend and without transfer restrictions on the books of the Transfer Agent.  In lieu of delivering physical certificates representing the Common Stock issuable upon conversion of the </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 21 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Debenture or exercise of a Warrant or at the request of the Holder with respect to any Shares previously issued, provided the Transfer Agent is participating in the Depository Trust Company (&#147;DTC&#148;) Fast Automated Securities Transfer program, upon request of the Holder and the Holder&#146;s compliance with the provisions contained in this paragraph, so long as the certificates therefor do not bear a legend and the Holder thereof is not obligated to return such certificate for the placement of a legend thereon, the Company shall use its best efforts to cause the Transfer Agent to electronically transmit to the Holder the Common Stock issuable upon conversion of the Debenture or exercise of the Warrant or in replacement of any Shares previously issued by crediting the account of Holder&#146;s Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.   Anything to the contrary
herein or in any other Transaction Agreement notwithstanding, the Buyer acknowledges that the Buyer is aware that the Company&#146;s current Transfer Agent does not currently participate in the DTC program.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company shall assume any fees or charges of the Transfer Agent or Company counsel regarding (i) the removal of a legend or stop transfer instructions with respect to Registrable Securities, and (ii) the issuance of certificates or DTC registration to or in the name of  the Holder or the Holder&#146;s designee or to a transferee as contemplated by an effective Registration Statement.  Notwithstanding the foregoing, it shall be the Holder&#146;s responsibility to obtain all needed formal requirements (specifically: medallion guarantee and prospectus delivery compliance) in connection with any electronic issuance of shares of Common Stock.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>e.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Holder of a Debenture or a Warrant shall be entitled to exercise its conversion or exercise privilege with respect to the Debenture or the Warrant, as the case may be, notwithstanding the commencement of any case under 11 U.S.C. &sect;101 </font><u><font size=2>et</font></u><font size=2> </font><u><font size=2>seq.</font></u><font size=2> (the &#147;Bankruptcy Code&#148;).  In the event the Company is a debtor under the Bankruptcy Code, the Company hereby waives, to the fullest extent permitted, any rights to relief it may have under 11 U.S.C. &sect;362 in respect of such holder&#146;s exercise privilege.  The Company hereby waives, to the fullest extent permitted, any rights to relief it may have under 11 U.S.C. &sect;362 in respect of the conversion of the Debenture or the exercise
of the Warrant. The Company agrees, without cost or expense to such Holder, to take or to consent to any and all action necessary to effectuate relief under 11 U.S.C. &sect;362.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>f.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company will authorize the Transfer Agent to give information relating to the Company directly to the Holder or the Holder&#146;s representatives upon the request of the Buyer or any such representative, to the extent such information relates to (i) the status of shares of Common Stock issued or claimed to be issued to the Holder in connection with a Notice of Conversion or a Notice of Exercise, or (ii) the aggregate number of outstanding shares of Common Stock of all stockholders (as a group and not individually) as of a current or other specified date.  At the request of the Holder, the Company will provide the Holder with a copy of the authorization so given to the Transfer Agent.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="268" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>6.</font></b></p> </td>
        <td width="124" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>CLOSING DATE.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a. </font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Closing Date shall occur on the date which is the first Trading Day after each of the conditions contemplated by Sections 7 and 8 hereof shall have either been satisfied or been waived by the party in whose favor such conditions run.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The closing of the purchase and issuance of the Purchased Securities shall occur on the Closing Date at the offices of the Escrow Agent. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding anything to the contrary contained herein, the Escrow Agent will be authorized to release the Escrow Funds to the Company and to others and to release the other Escrow Property on the Closing Date upon satisfaction of the conditions set forth in Sections 7 and 8 hereof and as provided in the Joint Escrow Instructions.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="541" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>7.</font></b></p> </td>
        <td width="397" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>The Buyer understands that the Company's obligation to sell the Purchased Securities to the Buyer pursuant to this Agreement on the Closing Date is conditioned upon:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 22 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The execution and delivery of this Agreement by the Buyer on or before the Closing Date;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delivery by the Buyer to the Funds Escrow Agent by the Closing Date of good funds as payment in full of an amount equal to the Purchase Price in accordance with this Agreement; and delivery by the Buyer and all Other Buyers of the Aggregate Purchase Price in amount at least equal to the Minimum Aggregate Purchase Price and not more than the Maximum Aggregate Purchase Price;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accuracy on such Closing Date of the representations and warranties of the Buyer contained in this Agreement, each as if made on such date, and the performance by the Buyer on or before such date of all covenants and agreements of the Buyer required to be performed on or before such date; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained.</font></p>

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<table border="0" cellspacing=0 cellpadding=0 width="558" style=' border-collapse:collapse'>
    <tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>8.</font></b></p> </td>
        <td width="414" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>The Company understands that the Buyer's obligation to purchase the Purchased Securities on the Closing Date is conditioned upon:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The execution and delivery of this Agreement and the other Transaction Agreements by the Company on or before the Closing Date;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The delivery by the Company to the Escrow Agent of the Certificates in accordance with this Agreement;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delivery by the Company to the Escrow Agent of the executed Company Principal&#146;s Agreements from each Company Principal and the related Principals (as defined in each Company Principal&#146;s Agreement) of such Company Principal;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On such Closing Date, each of the Transaction Agreements executed by the Company on or before such date shall be in full force and effect and the Company shall not be in default thereunder;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>e.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accuracy in all material respects on such Closing Date of the representations and warranties of the Company contained in this Agreement, each as if made on such date, and the performance by the Company on or before such date of all covenants and agreements of the Company required to be performed on or before such date;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>f.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The delivery to the Escrow Agent of an opinion of counsel for the Company, dated such Closing Date, addressed to the Buyer and the Other Buyers, in form, scope and substance reasonably satisfactory to the Buyer, substantially to the effect set forth in </font><b><font size=2>Annex III</font></b><font size=2> attached hereto;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>g.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval which shall not have been obtained; and</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>h.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From and after the date hereof to and including such Closing Date, each of the following conditions will remain in effect: (i) the trading of the Common Stock shall not have been suspended by the SEC or on the Principal Trading Market; (ii) trading in securities generally on the Principal Trading Market shall not have been suspended or limited; (iii), no minimum prices shall been established for securities traded on the Principal Trading Market; and  (iv) there shall not have been any material adverse change in any financial market.</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 23 -</font></p>

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<font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><b><font size=2>9.</font></b><B><font SIZE=2>INDEMNIFICATION AND REIMBURSEMENT.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a. </font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)  The Company agrees to indemnify and hold harmless the Buyer and its officers, directors, employees, and agents, and each Buyer Control Person from and against any losses, claims, damages, liabilities or expenses incurred (collectively, &#147;Damages&#148;), joint or several, and any action in respect thereof to which the Buyer, its partners, Affiliates, officers, directors, employees, and duly authorized agents, and any such Buyer Control Person becomes subject to, resulting from, arising out of or relating to any misrepresentation, breach of warranty or nonfulfillment of or failure to perform any covenant or agreement on the part of Company contained in this Agreement, as such Damages are incurred, except to the extent such Damages result primarily from Buyer's failure to perform any covenant
or agreement contained in this Agreement or the Buyer's or its officer&#146;s, director&#146;s, employee&#146;s, agent&#146;s or Buyer Control Person&#146;s illegal or willful misconduct, gross negligence, recklessness or bad faith (in each case, as determined by a non-appealable judgment to such effect) in performing its obligations under this Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby agrees that, if the Buyer, other than by reason of its gross negligence or willful misconduct (in each case, as determined by a non-appealable judgment to such effect), (x) becomes involved in any capacity in any action, proceeding or investigation brought by any stockholder of the Company, in connection with or as a result of the consummation of the transactions contemplated by this Agreement or the other Transaction Agreements, or if the Buyer is impleaded in any such action, proceeding or investigation by any Person, or (y) becomes involved in any capacity in any action, proceeding or investigation brought by the SEC, any self-regulatory organization or other body having jurisdiction, against or involving the Company or in connection with or as a result of the consummation of the transactions
contemplated by this Agreement or the other Transaction Agreements, or (z) is impleaded in any such action, proceeding or investigation by any Person, then in any such case, the Company shall indemnify, defend and hold harmless the Buyer from and against and in respect of all losses, claims, liabilities, damages or expenses resulting from, imposed upon or incurred by the Buyer, directly or indirectly, and reimburse such Buyer for its reasonable legal and other expenses (including the cost of any investigation and preparation) incurred in connection therewith, as such expenses are incurred.  The indemnification and reimbursement obligations of the Company under this paragraph shall be in addition to any liability which the Company may otherwise have, shall extend upon the same terms and conditions to any Affiliates of the Buyer who are actually named in such action, proceeding or investigation, and partners, directors, agents, employees and Buyer Control Persons (if any), as the case
may be, of the Buyer and any such Affiliate, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Company, the Buyer, any such Affiliate and any such Person.  The Company also agrees that neither the Buyer nor any such Affiliate, partner, director, agent, employee or Buyer Control Person shall have any liability to the Company or any Person asserting claims on behalf of or in right of the Company in connection with or as a result of the consummation of this Agreement or the other Transaction Agreements, except as may be expressly and specifically provided in or contemplated by this Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All claims for indemnification by any Indemnified Party (as defined below) under this Section shall be asserted and resolved as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event any claim or demand in respect of which any Person claiming indemnification under any provision of this Section (an &#147;Indemnified Party&#148;) might seek indemnity under paragraph (a) of this Section is asserted against or sought to be collected from such Indemnified Party by a Person other than a party hereto or an Affiliate thereof (a &#147;Third Party Claim&#148;), the Indemnified Party shall deliver a written notification, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party's claim for indemnification that is being asserted under any provision of this Section against any Person (the &#147;Indemnifying Party&#148;), together with the amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such Third Party Claim (a &#147;Claim Notice&#148;) with reasonable promptness to the Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice with reasonable promptness after the Indemnified Party receives notice of such Third Party Claim, the Indemnifying Party shall not be obligated to indemnify the Indemnified Party with respect to such Third Party Claim to the extent that the Indemnifying Party's ability to defend has been prejudiced by such failure of the Indemnified Party. The </font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 24 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Indemnifying Party shall notify the Indemnified Party as soon as practicable within the period ending thirty (30) calendar days following receipt by the Indemnifying Party of either a Claim Notice or an Indemnity Notice (as defined below) (the &#147;Dispute Period&#148;) whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party under this Section and whether the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such Third Party Claim.  The following provisions shall also apply.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(x)  If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this paragraph (b) of this Section, then the Indemnifying Party shall have the right to defend, with counsel reasonably satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings shall be vigorously and diligently prosecuted by the Indemnifying Party to a final conclusion or will be settled at the discretion of the Indemnifying Party (but only with the consent of the Indemnified Party in the case of any settlement that provides for any relief other than the payment of monetary damages or that provides for the payment of monetary damages as to which the Indemnified Party shall not
be indemnified in full pursuant to paragraph (a) of this Section). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnified Party may, at the sole cost and expense of the Indemnified Party, at any time prior to the Indemnifying Party's delivery of the notice referred to in the first sentence of this subparagraph (x), file any motion, answer or other pleadings or take any other action that the Indemnified Party reasonably believes to be necessary or appropriate protect its interests; and provided further, that if requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnifying Party in contesting any Third Party Claim that the Indemnifying Party elects to contest. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim
controlled by the Indemnifying Party pursuant to this subparagraph (x), and except as provided in the preceding sentence, the Indemnified Party shall bear its own costs and expenses with respect to such participation. Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under paragraph (a) of this Section with respect to such Third Party Claim. </font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(y)  If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to paragraph (b) of this Section, or if the Indemnifying Party gives such notice but fails to prosecute vigorously and diligently or settle the Third Party Claim, each in a reasonable manner, or if the Indemnifying Party fails to give any notice whatsoever within the Dispute Period, then the Indemnified Party shall have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings shall be prosecuted by the Indemnified Party in a reasonable manner and in good faith or will be settled at the discretion of the Indemnified Party (with the consent of the Indemnifying Party, which consent will not be unreasonably withheld). The Indemnified
Party will have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, provide reasonable cooperation to the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting. Notwithstanding the foregoing provisions of this subparagraph (y), if the Indemnifying Party has notified the Indemnified Party within the Dispute Period that the Indemnifying Party disputes its liability or the amount of its liability hereunder to the Indemnified Party with respect to such Third Party Claim and if such dispute is resolved in favor of the Indemnifying Party in the manner provided in subparagraph(z) below, the Indemnifying Party will not be required to bear the costs and expenses of the Indemnified Party's defense pursuant to this subparagraph (y) or of the
Indemnifying Party's participation therein at the Indemnified Party's request, and the Indemnified Party shall reimburse </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 25 -</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>the Indemnifying Party in full for all reasonable costs and expenses incurred by the Indemnifying Party in connection with such litigation. The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this subparagraph (y), and the Indemnifying Party shall bear its own costs and expenses with respect to such participation. </font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(z)  If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability or the amount of its liability to the Indemnified Party with respect to the Third Party Claim under paragraph (a) of this Section or fails to notify the Indemnified Party within the Dispute Period  whether the Indemnifying Party disputes its liability or the amount of its liability to the Indemnified Party with respect to such Third Party Claim, the amount of Damages specified in the Claim Notice shall be conclusively deemed a liability of the Indemnifying Party under paragraph (a) of this Section and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith
to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event any Indemnified Party should have a claim under paragraph (a) of this Section against the Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver a written notification of a claim for indemnity under paragraph (a) of this Section specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim (an &#147;Indemnity Notice&#148;) with reasonable promptness to the Indemnifying Party. The failure by any Indemnified Party to give the Indemnity Notice shall not impair such party's rights hereunder except to the extent that the Indemnifying Party demonstrates that it has been irreparably prejudiced thereby. If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim or the amount of the claim described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes the claim or the amount of the claim described in such Indemnity Notice, the amount of Damages specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under paragraph (a) of this Section and the Indemnifying Party shall pay the amount of such Damages to the Indemnified Party on demand. If the Indemnifying Party has timely disputed its liability or the amount of its liability with respect to such claim, the Indemnifying Party and the Indemnified Party shall proceed in good faith to negotiate a resolution of such dispute; provided, however, that if the dispute is not resolved within thirty (30) days after the Claim Notice, the Indemnifying Party shall be entitled to institute such legal action as it deems appropriate.</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The indemnity agreements contained herein shall be in addition to (i) any cause of action or similar rights of the indemnified party against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to.</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>10.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=2>JURY TRIAL WAIVER. </font></B><font size=2>  The Company and the Buyer hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with the Transaction Agreements.</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>11.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=2>SPECIFIC PERFORMANCE.</font></B><font size=2>  The Company and  the Buyer acknowledge and agree that irreparable damage would occur in the event that any provision of this Agreement or any of the other Transaction Agreements were not performed in accordance with its specific terms or were otherwise breached.  It is accordingly agreed that the parties (including any Holder) shall be entitled to an injunction or injunctions, without (except as specified below) the necessity to post a bond, to prevent or cure breaches of the provisions of this Agreement or such other Transaction Agreement and to enforce specifically the terms and provisions hereof or thereof, this being in addition to any other remedy to which any of them may be entitled by law or equity; provided, however that
the Company, upon receipt of a Notice of Conversion or a Notice of Exercise, may not fail or refuse to </font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 26 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>deliver the stock certificates and the related legal opinions, if any, based on any claim that the Holder has violated any provision hereof or for any other reason, unless the Company has first posted a bond for one hundred fifty percent (150%) of the principal amount and then obtained a court order specifically directing it not to deliver said stock certificates to the Holder.  This provision is deemed incorporated by reference into each of the Transaction Agreements as if set forth therein in full.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="414" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><b><font size=2>12.</font></b></p> </td>
        <td width="270" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>GOVERNING LAW:  MISCELLANEOUS.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>a.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.  Each of the parties consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the County of New York or the state courts of the State of New York sitting in the County of New York in connection with any dispute arising under this Agreement or any of the other Transaction Agreements and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on</font><i><font size=2> forum non conveniens</font></i><font size=2>, to the bringing of any such proceeding in such jurisdictions or
to any claim that such venue of the suit, action or proceeding is improper. To the extent determined by such court, the Company shall reimburse the Buyer for any reasonable legal fees and disbursements incurred by the Buyer in enforcement of or protection of any of its rights under any of the Transaction Agreements.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>b.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>c.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><b><font size=2>d.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>e.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto.  </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>f.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be signed in one or more counterparts, each of which shall be deemed an original.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>g.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>h.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>i.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof.  </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>j.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>k.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All dollar amounts referred to or contemplated by this Agreement or any other Transaction Agreement shall be deemed to refer to US Dollars, unless otherwise explicitly stated to the contrary.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>13</font></b><font size=2>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=2>NOTICES.</font></B><font size=2>  Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 27 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in; text-indent:0.6in;text-align:justify;'><font size=2> (a) the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission,</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in; text-indent:0.6in;text-align:justify;'><font size=2> (b) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1in; text-indent:0.6in;text-align:justify;'><font size=2> (c) the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid,</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) days&#146; advance written notice similarly given to each of the other parties hereto):</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="404" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>COMPANY</font></B><font size=2>:  </font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>At the address set forth at the head of this Agreement.</font></p> </td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Attn: President  </font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telephone No.: (011 972 4) 850-1080</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telecopier No.: (011 972 4) 850-1085</font></p> </td>
        <td  width="37">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="96" ></td>

        <td width="48" ></td>

        <td width="0" ></td>

        <td width="101" ></td>

        <td width="121" ></td>

        <td width="1" ></td>

        <td width="37" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="244" style=' border-collapse:collapse'>
    <tr>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="100" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>with a copy to:</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="436" style=' border-collapse:collapse'>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="121" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Clark, Wilson LLP</font></p> </td>
        <td   colspan="4">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Attn: Bernard Pinsky, Esq.</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Suite 800 - 885 West Georgia Street</font></p> </td>
        <td  width="79">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="5" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Vancouver, British Columbia V6C 3H1 CANADA</font></p> </td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telephone No.: (604) 687-5700</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="144" ></td>

        <td width="121" ></td>

        <td width="42" ></td>

        <td width="26" ></td>

        <td width="24" ></td>

        <td width="79" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Telecopier No.: (604) 687-6314</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="507" style=' border-collapse:collapse'>
    <tr>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>BUYER:</font></B></p> </td>
        <td width="363" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>At the address set forth on the signature page of this Agreement.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="243" style=' border-collapse:collapse'>
    <tr>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="99" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>with a copy to:</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="411" style=' border-collapse:collapse'>
    <tr>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Krieger &amp; Prager </font><small>LLP</small><font size=2>, Esqs.</font></p> </td> </tr>
    <tr >
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>39 Broadway</font></p> </td>
        <td   colspan="5">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="76" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Suite 1440</font></p> </td>
        <td   colspan="6">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="143" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>New York, NY 10006</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Attn: Ronald J. Nussbaum, Esq.</font></p> </td>
        <td  width="77">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telephone No.: (212) 363-2900</font></p> </td>
        <td  width="77">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telecopier No.  (212) 363-2999</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="143" ></td>

        <td width="0" ></td>

        <td width="0" ></td>

        <td width="76" ></td>

        <td width="15" ></td>

        <td width="5" ></td>

        <td width="42" ></td>

        <td width="51" ></td>

        <td width="1" ></td>

        <td width="77" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="333" style=' border-collapse:collapse'>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>ESCROW AGENT:</font></B></p> </td>
        <td  colspan="5" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Krieger &amp; Prager </font><small>LLP</small><font size=2>, Esqs.</font></p> </td>
        <td  width="18">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>39 Broadway</font></p> </td>
        <td   colspan="4">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="76" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Suite 1440</font></p> </td>
        <td   colspan="5">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>New York, NY 10006</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Attn: Samuel Krieger, Esq.</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telephone No.: (212) 363-2900</font></p> </td> </tr>
    <tr>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telecopier No.  (212) 363-2999</font></p> </td> </tr>
    <tr>
        <td width="144" ></td>

        <td width="76" ></td>

        <td width="15" ></td>

        <td width="48" ></td>

        <td width="27" ></td>

        <td width="6" ></td>

        <td width="18" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><b><font size=2>14.</font></b><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><B><font SIZE=2>SURVIVAL OF REPRESENTATIONS AND WARRANTIES</font></B><font size=2>. The Company&#146;s and the Buyer&#146;s representations and warranties herein shall survive the execution and delivery of this Agreement and the delivery of the Certificates and the payment of the Purchase Price, for a period of three (3) years after the Closing Date and shall inure to the benefit of the Buyer and the Company and their respective successors and assigns.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 28 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><b><font size=2>[SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.06in;text-align:justify;'><B><font SIZE=2>IN WITNESS WHEREOF</font></B><font size=2>, with respect to the Purchase Price specified below, each the undersigned represents that the foregoing statements made by it above are true and correct and that it has caused this Agreement to be duly executed on its behalf (if an entity, by one of its officers thereunto duly authorized) as of the date first above written. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="572" style=' border-collapse:collapse'>
    <tr>
        <td width="384" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PURCHASE PRICE:</font></B></p> </td>
        <td width="188" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>$________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><U><B><font SIZE=2>BUYER:</font></B></U></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="501" style=' border-collapse:collapse'>
    <tr>
        <td width="240" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>________________________________</font></p> </td>
        <td  colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>____________________________________</font></p> </td> </tr>
    <tr >
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Address</font></p> </td>
        <td width="143" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Printed Name of Buyer</font></p> </td>
        <td  width="118">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="240" ></td>

        <td width="0" ></td>

        <td width="143" ></td>

        <td width="118" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>________________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="552" style=' border-collapse:collapse'>
    <tr>
        <td width="288" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telephone No. _________________</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By: _________________________________</font></p> </td> </tr>
    <tr >
        <td width="288" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Telecopier No. _________________</font></p> </td>
        <td width="197" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(Signature of Authorized Person)</font></p> </td>
        <td  width="67">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>e-mail Address: ________________</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="556" style=' border-collapse:collapse'>
    <tr>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________________________________</font></p> </td> </tr>
    <tr >
        <td width="240" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>______________________________</font></p> </td>
        <td  colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Printed Name and Title</font></p> </td>
        <td  width="172">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="240" ></td>

        <td width="48" ></td>

        <td width="96" ></td>

        <td width="172" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Jurisdiction of Incorporation</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>or Organization</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><i><font size=2>If the above Notice Address is </font></i><u><i><font size=2>not</font></i></u><i><font size=2> the Residence (for individual Buyer) or Principal Place of Business (for Buyer which is not an individual)</font></i><font size=2>, such Residence or Principal Place of Business is:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><i><font size=2>_____________________________</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><i><font size=2>_____________________________</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><i><font size=2>_____________________________</font></i></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><U><B><font SIZE=2>COMPANY:</font></B></U></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="290" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font></p> </td>
        <td width="194" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>__________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="290" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Title:</font></p> </td>
        <td width="194" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>__________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 29 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'>
</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="352" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX I</font></p> </td>
        <td width="160" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>FORM OF DEBENTURE</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="486" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX II</font></p> </td>
        <td width="294" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>JOINT DOCUMENT ESCROW INSTRUCTIONS</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="351" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX III</font></p> </td>
        <td width="159" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>OPINION OF COUNSEL</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="445" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX IV</font></p> </td>
        <td width="253" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>REGISTRATION RIGHTS AGREEMENT</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="340" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX V</font></p> </td>
        <td width="148" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>FORM OF WARRANT</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="555" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX VI</font></p> </td>
        <td width="363" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>COMPANY&#146;S SEC DOCUMENTS AVAILABLE ON EDGAR</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="447" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX VII</font></p> </td>
        <td width="255" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>COMPANY PRINCIPAL&#146;S AGREEMENT</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="428" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX VIII</font></p> </td>
        <td width="236" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>SECURITY INTEREST AGREEMENT</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="459" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX IX</font></p> </td>
        <td width="267" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>PURCHASE PRICE WIRE INSTRUCTIONS</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="363" style=' border-collapse:collapse'>
    <tr>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="144" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>ANNEX X</font></p> </td>
        <td width="171" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>COMPANY DISCLOSURE</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>ex10-2.htm
<DESCRIPTION>EXHIBIT 10.2
<TEXT>
<!DOCTYPE HTML PUBLIC "exhibit10_2.pdf">


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<!--$$/page=--><A name=page_1></A>
<P align=right><FONT face=serif>Exhibit 10.2</FONT><BR><B><FONT face=serif>ANNEX
I</FONT></B><BR><B><FONT face=serif>TO</FONT></B><BR><B><FONT
face=serif>SECURITIES PURCHASE AGREEMENT</FONT></B><BR><B><FONT
face=serif>&lt;PROTOTYPE FOR EACH ISSUANCE&gt;</FONT></B><BR></P>
<P align=center><B><FONT face=serif>FORM OF DEBENTURE</FONT></B><BR></P>
<P align=left><FONT face=serif>THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE
ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="90%" border=0>

  <TR vAlign=bottom>
    <TD align=left width="5%"><FONT face=serif
     >No.</FONT>&nbsp; </TD>
    <TD align=left width="12%"><U><FONT
      face=serif>06-01-
      </FONT></U><U><SUP><FONT face=serif
     >1</FONT></SUP></U>&nbsp; </TD>
    <TD align=left width="82%"
     >&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;&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;&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;&nbsp;&nbsp;&nbsp;&nbsp;<FONT
      face=serif>US $_____________&nbsp;<BR></FONT>&nbsp;</TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=3><B><FONT
      face=serif>PLURISTEM LIFE SYSTEMS,
      INC.</FONT></B> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=3><FONT face=serif
     >7% SENIOR SECURED CONVERTIBLE DEBENTURE</FONT> </TD></TR>
  <TR vAlign=bottom>
    <TD align=center width="99%" colSpan=3><FONT face=serif
     >SERIES 06-01 DUE <BR>__________<BR>,
      200_</FONT><SUP><FONT face=serif>2</FONT></SUP>
  </TD></TR></TABLE><BR>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>THIS DEBENTURE is
one of a duly authorized issue of up to $__________</FONT><SUP><FONT
face=serif>3</FONT></SUP><FONT face=serif> in Debentures of </FONT><B><FONT
face=serif>PLURISTEM LIFE SYSTEMS, INC.</FONT></B><FONT face=serif>, a
corporation organized and existing under the laws of the State of Nevada (the
"Company") designated as its 7% Senior Secured Convertible Debentures Series
06-01.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>FOR VALUE RECEIVED,
the Company promises to pay to ___________________, the registered holder hereof
(the "Holder"), the principal sum of _________________ and 00/100 Dollars (US
$___________________) on ______________, 200_</FONT><SUP><FONT
face=serif>4</FONT></SUP><FONT face=serif> (the &#147;Maturity Date&#148;) and to pay
interest, on a compound basis, on the principal sum outstanding from time to
time in arrears at the rate of 7% per annum, accruing from ____________,
200_</FONT><SUP><FONT face=serif>5</FONT></SUP><FONT face=serif>, the date of
initial issuance of this Debenture (the &#147;Issue Date&#148;), on the date (each, an
&#147;Interest Payment Date&#148;) which is the earlier of (i) the last calendar day of
June and December of each calendar year (each, a &#147;Scheduled Interest Payment
Date&#148;), except that the first Scheduled Interest Payment Date shall be June 30,
2006, (ii) a Conversion Date (as defined below) or (iii) the Maturity Date, as
the case</FONT><SUP><FONT face=serif>1</FONT></SUP><FONT face=serif>Insert
unique Debenture number for each issuance. </FONT><SUP><FONT
face=serif>2</FONT></SUP><FONT face=serif>Insert date which is second
anniversary of the Closing Date </FONT><SUP><FONT face=serif>3</FONT></SUP><FONT
face=serif>Insert the Aggregate Purchase Price.</FONT></P>
<P align=left><SUP><FONT face=serif>4</FONT></SUP><FONT face=serif>See footnote
2</FONT></P>
<P align=left><SUP><FONT face=serif>5</FONT></SUP><FONT face=serif>Insert the
Closing Date. </FONT></P>
<P align=left><FONT face=serif size=1>D/BIP/832197.1</FONT><BR></P>
<P align=left><FONT face=serif size=1>3/31/06</FONT><BR></P>
<P align=left><FONT face=monospace>1</FONT></P>
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<P align="left">
<FONT face="serif">may be. Interest shall accrue semi-annually (pro-rated on a daily basis for any period longer or shorter than a half year) from the later of the Issue Date or the previous Interest Payment Date) and shall be payable in cash or, at
the Company&#146;s option but subject to the other provisions of this Debenture, in Common Stock. If not paid in full on an Interest Payment Date, interest shall be fully cumulative and shall accrue on a daily basis, based on a 365-day year
semi-annually or until paid, whichever is earlier.  Additional provisions regarding the payment of interest are provided in Section 4(D) below (the terms of which shall govern as if this sentence were not included in this Debenture). </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">This Debenture is being issued pursuant to the terms of the Securities Purchase Agreement, dated as of April 3, 2006 (the &#147;Securities Purchase Agreement&#148;), to which the Company and the
Holder (or the Holder&#146;s predecessor in interest) are parties. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Securities Purchase Agreement.</FONT></P>
<P align="left">
<FONT face="serif">This Debenture is subject to the following additional provisions:</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">1. The Debentures will initially be issued in denominations determined by the Company, but are exchangeable for an equal aggregate principal amount of Debentures of different denominations, as
requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">2. The Company shall be entitled to withhold from all payments of principal of, and interest on, this Debenture any amounts required to be withheld under the applicable provisions of the United States
income tax laws or other applicable laws at the time of such payments, and Holder shall execute and deliver all required documentation in connection therewith.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">3. This Debenture has been issued subject to investment representations of the original purchaser hereof and may be transferred or exchanged only in compliance with the Securities Act of 1933, as
amended (the "Act"), and other applicable state and foreign securities laws and the terms of the Securities Purchase Agreement. In the event of any proposed transfer of this Debenture, the Company may require, prior to issuance of a new Debenture in
the name of such other person, that it receive reasonable transfer documentation that is sufficient to evidence that such proposed transfer complies with the Act and other applicable state and foreign securities laws and the terms of the Securities
Purchase Agreement. Prior to due presentment for transfer 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 Company's 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 be overdue, and neither the Company nor any such agent shall be affected by notice to the contrary.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">4. A. (i)  At any time on or after the Issue Date and prior to the time this Debenture is paid in full in accordance with its terms (including, without limitation, after the Prepayment Date, as
defined below, and after the occurrence of an Event of Default, as those terms are defined below, or, if the Debenture is not fully paid or converted after the Maturity Date), the Holder of this Debenture is entitled, at its option, subject to the
following provisions</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">2</FONT></P>

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<P align="left">
<FONT face="serif">of this Section 4, to convert this Debenture at any time into shares of Common Stock, &#36;0.00001 par value ("Common Stock"), of the Company at the Conversion Price (as defined below). The minimum principal amount of each
conversion shall be &#36;10,000 or, if the outstanding principal amount of this Debenture is less than &#36;10,000, the outstanding principal balance of this Debenture.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(ii)  On the Maturity Date the Company shall pay the principal and accrued interest (through the actual date of payment) of any portion of this Debenture which is then outstanding.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iii) For purposes of this Debenture, the following terms shall have the meanings indicated below:</FONT></P>
<P align="left">
<FONT face="serif">&#147;Conversion Price&#148; means the lower of (x) the Variable Conversion Price or (y) the Lowest Fixed Conversion Price (each of which amount is subject to adjustment as provided herein).</FONT></P>
<P align="left">
<FONT face="serif">&#147;Variable Conversion Price&#148; means the amount equal to (x) the VWAP for the twenty (20) Regular Trading Days ending on the Trading Day immediately preceding the relevant Conversion Date, multiplied by (y) (1) one hundred
percent (100%), less (2) the Effective Percentage.</FONT></P>
<P align="left">
<FONT face="serif">&#147;VWAP&#148; means the volume weighted average price of the Common Stock on the Principal Trading Market for the relevant Regular Trading Day(s), as reported by the Reporting Service.</FONT></P>
<P align="left">
<FONT face="serif">&#147;Reporting Service&#148; means Bloomberg LP or if that service is not then reporting the relevant information regarding the Common Stock, a comparable reporting service of national reputation selected by a Majority in
Interest of the Holders and reasonably acceptable to the Company.</FONT></P>
<P align="left">
<FONT face="serif">&#147;Effective Percentage&#148; means twenty-five percent (25%), which percentage is subject to increase under certain conditions as contemplated in the Securities Purchase Agreement.</FONT></P>
<P align="left">
<FONT face="serif">&#147;Lowest Fixed Conversion Price&#148; means the lowest New Transaction Price from any New Transaction (as those terms are defined in the Securities Purchase Agreement) (which amount, if any, is subject to subsequent adjustment
as provided herein).</FONT></P>
<P align="left">
<FONT face="serif">&#147;Acceptable Trading Market&#148; means any of the following: (w) the Over the Counter Bulletin Board Market, (x) the NASDAQ/SmallCap or National Market, (y) the American Stock Exchange or (z) the New York Stock
Exchange.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">B. Conversion shall be effectuated by faxing a Notice of Conversion (as defined below) to the Company as provided in this paragraph. The Notice of Conversion shall</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">3</FONT></P>

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<P align="left">
<FONT face="serif">be executed by the Holder of this Debenture and shall evidence such Holder's intention to convert this Debenture or a specified portion hereof in the form annexed hereto as Exhibit A. If paid in Common Stock as contemplated
hereby, interest accrued or accruing from the Issue Date to the relevant Interest Payment Date and not previously paid shall be paid in Common Stock at the Conversion Price applicable as of such Interest Payment Date. No fractional shares of Common
Stock or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The date on which notice of conversion is given (the "Conversion Date") shall be deemed to
be the date on which the Holder faxes or otherwise delivers the conversion notice ("Notice of Conversion") to the Company so that it is received by the Company on or before such specified date, provided that, if such conversion would convert the
entire remaining principal of this Debenture, the Holder shall deliver to the Company the original Debentures being converted no later than five (5) Trading Days thereafter.  Delivery of the Notice of Conversion shall be accepted by the Company by
hand, mail or courier delivery at the address specified in said Exhibit A or at the facsimile number specified in said Exhibit A (each of such address or facsimile number may be changed by notice given to the Holder in the manner provided in the
Securities Purchase Agreement). Certificates representing Common Stock upon conversion (&#147;Conversion Certificates&#148;) will be delivered to the Holder at the address specified in the Notice of Conversion (which may be the Holder&#146;s address
for notices as contemplated by the Securities Purchase Agreement or a different address), via express courier, by electronic transfer or otherwise, within three (3) Trading Days (such third Trading Day, the &#147;Delivery Date&#148;) after the
relevant Conversion Date and, if interest is paid by Common Stock with respect to any other Interest Payment Date, the Interest Payment Date. The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions
of this Section 4(B) on the Conversion Date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">C. Notwithstanding any other provision hereof or of any of the other Transaction Agreements, in no event (except (i) as specifically provided herein as an exception to this provision, or (ii) while
there is outstanding a tender offer for any or all of the shares of the Company&#146;s Common Stock) shall the Holder be entitled to convert any portion of this Debenture, or shall the Company have the obligation to convert such Debenture (and the
Company shall not have the right to pay interest hereon in shares of Common Stock) to the extent that, after such conversion or issuance of stock in payment of interest, the sum of (1) the number of shares of Common Stock beneficially owned by the
Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Debentures or other convertible securities or of the unexercised portion of warrants or other
rights to purchase Common Stock), and (2) the number of shares of Common Stock issuable upon the conversion of the Debentures with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder
and its affiliates of more than 4.99% of the outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such conversion). For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, except as otherwise provided in clause (1) of such sentence.  The Holder, by its acceptance of this Debenture, further agrees that if
the Holder transfers or assigns any of the Debentures to a party who or which would not be considered such an affiliate, such assignment shall be made subject to the transferee&#146;s or assignee&#146;s specific agreement to be bound by the
provisions of this Section</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">4</FONT></P>

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<P align="left">
<FONT face="serif">4(C) as if such transferee or assignee were the original Holder hereof.  Nothing herein shall preclude the Holder from disposing of a sufficient number of other shares of Common Stock beneficially owned by the Holder so as to
thereafter permit the continued conversion of this Debenture.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">D. (i) Subject to the terms of Section 4(C) and to the other terms of this Section 4(D), interest on the principal amount of this Debenture converted pursuant to a Notice of Conversion shall be due
and payable, at the option of the Company, in cash or Common Stock on the Interest Payment Date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(ii)  If the interest is to be paid in cash, the Company shall make such payment within three (3) Trading Days of the Interest Payment Date. If the interest is not paid by such third Trading Day, the
interest must be paid in Common Stock in accordance with the provisions of this Section 4(D), unless the Holder consents otherwise in each specific instance.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iii) If interest is to be paid in Common Stock (whether at the election of the Company or as required hereunder), the number of shares of Common Stock to be received shall be determined by dividing
the dollar amount of the interest by the Conversion Price in effect on the relevant Interest Payment Date.  In such event, the Common Stock shall be delivered to the Holder, or per Holder&#146;s instructions, (i) if being issued in connection with a
conversion of this Debenture, on the Delivery Date for the related Conversion Certificates pursuant to the preceding provisions of this Section 4 (such date, a &#147;Delivery Date&#148;), and (ii) with respect to all other instances, within five (5)
Trading Days after the Interest Payment Date (such fifth Trading Day, a &#147;Delivery Date&#148;), with the shares issuable then based on the cumulative accrued interest through such effective date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iv) If not paid in full on an Interest Payment Date, interest shall be fully cumulative and shall accrue on a daily basis, based on a 365-day year, semi-annually or until paid, whichever is
earlier.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(v) Anything herein to the contrary notwithstanding, if the Company does not pay any monetary amounts due hereunder by the earlier of (x) ten (10) Trading Days after the same was due in accordance
with the terms hereof (without regard to any grace or cure periods provided for herein with respect to such payment) or (y) the expiration of any grace or cure periods provided for herein with respect to such payment, then following such date and
during the pendency of an Event of Default, interest on the outstanding principal hereof shall accrue at a default interest rate of eighteen percent (18%) per annum.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">E. Reference is made to the provisions of Section 4(g) of the Securities Purchase Agreement, the terms of which are incorporated herein by reference. The Conversion Price and other provisions of this
Debenture shall be adjusted as provided in the applicable provisions of said Section 4(g) of the Securities Purchase Agreement.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">F. (i) Anything in the other provisions of this Debenture or any of the other Transaction Agreements to the contrary notwithstanding, the Company shall have the right to prepay the outstanding
principal of this Debenture, together with all accrued interest thereon, in</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">5</FONT></P>

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<FONT face="serif">whole or in part, on the terms and conditions provided in this Section 4(F).  If the Company elects to make such a prepayment, the Company shall give the Holder a written notice (the &#147;Prepayment Notice&#148;) of its election
to prepay all or a portion of then outstanding Debenture. The prepayment amount shall be equal to one hundred twenty percent (120%) of the sum of (x) the principal of this Debenture being prepaid, plus (y) accrued interest thereon through the
Prepayment Date. Additional terms regarding this prepayment right are provided below.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(ii)  The Company may give a Prepayment Notice and make the prepayment only if, (x) on the date on which the Prepayment Notice is given and (y) on every Trading Day thereafter through and including
the Prepayment Date,</FONT></P>
<P align="left">
<FONT face="serif">(x) there is an effective Registration Statement covering the resale of the shares issuable on conversion of this Debenture, and</FONT></P>
<P align="left">
<FONT face="serif">(y) there is no Event of Default hereunder or any event which, with the giving of notice or the passage of time (that is, without regard to any grace or cure periods), could be declared an Event of Default hereunder, and
</FONT></P>
<P align="left">
<FONT face="serif">(z) the Common Stock of the Company, including any Conversion Shares to be issued on conversion of the Debenture during the Prepayment Conversion Period (as defined below), are eligible for trading on an Acceptable Trading
Market.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iii) The Prepayment Notice shall specify (x) the principal amount of the Debenture being prepaid by the Company (the &#147;Prepayment Principal Amount&#148;), (y) the date (the &#147;Prepayment
Date&#148;), which shall be not less than twenty (20) Trading Days after the Prepayment Notice is received by the Holder, on which such prepayment will be made, and (z) identify the bank or other source of the funds (collectively, the
&#147;Prepayment Source&#148;).  The Prepayment Notice shall be accompanied by the Prepayment Source&#146;s confirmation to the Holder that funds (the &#147;Prepayment Funds&#148;) equal to the Prepayment Principal Amount plus all accrued but unpaid
interest thereon through the Prepayment Date will be available and instructions for the method by which the Holder can provide instructions to the Prepayment Source to make payment of the Prepayment Funds to the Holder (such payment to made by check
or wire, as specified by the Holder) on the Prepayment Date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iv)  Even after the issuance of a Prepayment Notice, the Holder may continue to convert this Debenture as provided in the other provisions of this Debenture until this Debenture is paid in full. If
the Holder converts any portion of this Debenture after the date of the Prepayment Notice and prior to the payment of the Prepayment Funds to the Holder (the &#147;Prepayment Conversion Period&#148;), so that the then outstanding principal of this
Debenture is less than the Prepayment Principal Amount, the Holder shall notify the Prepayment Source of the then outstanding principal of this Debenture; provided, however, if the Prepayment Principal Amount is less than the principal of the then
Unconverted Debenture, any such conversions made during the Prepayment Conversion Period shall be deemed made in the following order of priority: (x) first, out of principal of the Unconverted Debenture in excess of the Prepayment Principal Amount,
and (y) then, out of the Prepayment Principal Amount. To the extent that any conversions made during the Prepayment Conversion Period are deemed made out of the Prepayment Principal Amount, the Prepayment Funds will then be adjusted to and be deemed
to</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">6</FONT></P>

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<P align="left">
<FONT face="serif">be equal such outstanding principal plus all accrued but unpaid interest thereon through the Prepayment Date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(v) If the Prepayment Funds are not timely paid or made available to the Holder, the Holder will have the option, exercisable at any time prior to the actual payment of the Prepayment Funds (together
with any additional interest accruing on the Prepayment Principal Amount after the Prepayment Date) to effect either or both of the following actions: (x) cancellation, ab initio, of  the prepayment contemplated by the Prepayment Notice and (y)
cancellation of the Company&#146;s prepayment right under this Section 4(F).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">5. A. Subject to the terms of the Securities Purchase Agreement, 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 interest on, this Debenture at the time, place, and rate, and in the coin or currency or where contemplated herein in shares of its Common Stock, as applicable, as herein prescribed.  This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">B. Payment of this Debenture is secured pursuant to the terms of the Security Interest Agreement, dated as of April 3, 2006 (the &#147;Security Interest Agreement&#148;) executed by the Company, as
debtor, in favor of the Buyer and the Other Buyers, as secured parties. The terms of the Security Interest Agreement are incorporated herein by reference.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">6. No recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator,
shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">7. All payments contemplated hereby to be made &#147;in cash&#148; shall be made in immediately available good funds of United States of America currency by wire transfer to an account designated in
writing by the Holder to the Company (which account may be changed by notice similarly given).  All payments of cash and each delivery of shares of Common Stock issuable to the Holder as contemplated hereby shall be made to the Holder at the address
last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time; except that the Holder can designate, by notice to the Company, a different delivery address for any one or more specific payments or
deliveries.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">8. If, for as long as this Debenture remains outstanding, the Company enters into a merger (other than where the Company is the surviving entity) or consolidation with another corporation or other
entity or a sale or transfer of all or substantially all of the assets of the Company to another person (collectively, a "Sale"), the Company will require, in the agreements reflecting such transaction, that the surviving entity expressly assume the
obligations of the Company hereunder. Notwithstanding the foregoing, if the Company enters into a Sale and the holders of the Common Stock are entitled to receive stock, securities or property in respect of or in exchange for Common Stock, then as a
condition of such Sale, the Company and any such</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">7</FONT></P>

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<FONT face="serif">successor, purchaser or transferee will agree that the Debenture may thereafter be converted on the terms and subject to the conditions set forth above into the kind and amount of stock, securities or property receivable upon such
merger, consolidation, sale or transfer by a holder of the number of shares of Common Stock into which this Debenture might have been converted immediately before such merger, consolidation, sale or transfer, subject to adjustments which shall be as
nearly equivalent as may be practicable. In the event of any such proposed Sale, (i) the Holder hereof shall have the right to convert by delivering a Notice of Conversion to the Company within fifteen (15) days of receipt of notice of such Sale
from the Company, except that Section 4(C) shall not apply to such conversion.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">9. If, at any time while any portion of this Debenture remains outstanding, the Company spins off or otherwise divests itself of a part of its business or operations or disposes of all or of a part of
its assets in a transaction (the &#147;Spin Off&#148;) in which the Company, in addition to or in lieu of any other compensation received and retained by the Company for such business, operations or assets, causes securities of another entity (the
&#147;Spin Off Securities&#148;) to be issued to security holders of the Company, the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder&#146;s
Debentures outstanding on the record date (the &#147;Record Date&#148;) for determining the amount and number of Spin Off Securities to be issued to security holders of the Company (the &#147;Outstanding Debentures&#148;) been converted as of the
close of business on the Trading Day immediately before the Record Date (the &#147;Reserved Spin Off Shares&#148;), and (ii) to be issued to the Holder on the conversion of all or any of the Outstanding Debentures, such amount of the Reserved Spin
Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction, of which (I) the numerator is the principal amount of the Outstanding Debentures then being converted, and (II) the denominator is the principal amount of the
Outstanding Debentures.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">10. If, at any time while any portion of this Debenture remains outstanding, the Company effectuates a stock split or reverse stock split of its Common Stock or issues a dividend on its Common Stock
consisting of shares of Common Stock, the Conversion Price or the Lowest Fixed Conversion Price, if any, and any other fixed amounts calculated as contemplated hereby or by any of the other Transaction Agreements shall be equitably adjusted to
reflect such action.  By way of illustration, and not in limitation, of the foregoing,  (i) if the Company effectuates a 2:1 split of its Common Stock, thereafter, with respect to any conversion for which the Company issues shares after the record
date of such split, the Lowest Fixed Conversion Price, if any, shall be deemed to be one-half of what it had been immediately prior to such split; (ii) if the Company effectuates a 1:10 reverse split of its Common Stock, thereafter, with respect to
any conversion for which the Company issues shares after the record date of such reverse split, the Lowest Fixed Conversion Price shall be deemed to be ten times what it had been calculated to be immediately prior to such split; and (iii) if the
Company declares a stock dividend of one share of Common Stock for every 10 shares outstanding, thereafter, with respect to any conversion for which the Company issues shares after the record date of such dividend, the Conversion Price (whether or
not based on a Lowest Fixed Conversion Price) shall be deemed to be such amount multiplied by a fraction, of which the numerator is the number of shares (10 in the example) for which a dividend share will be issued and the denominator is such number
of shares plus the dividend share(s) issuable or issued thereon (11 in the example).</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">8</FONT></P>

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<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">11. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or
the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">12. This Debenture shall be governed by and construed in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the
principles thereof regarding the conflict of laws. Each of the parties consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the County of New York or the state courts of the State of New York sitting in
the County of New York in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on </FONT><I><FONT face="serif">forum non
coveniens</FONT></I><FONT face="serif">, to the bringing of any such proceeding in such jurisdictions. To the extent determined by such court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by the
Holder in enforcement of or protection of any of its rights under any of this Debenture. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">13. </FONT><B><FONT face="serif">JURY TRIAL WAIVER. </FONT></B><FONT face="serif">The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of
the Parties hereto against the other in respect of any matter arising out of or in connection with this Debenture. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">14. (i) Prior to the Maturity Date, the following shall constitute an "Event of Default":</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<FONT face="serif">a.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">The Company shall default in the payment of principal or interest on this Debenture or any other Debenture in this Series or any other amount due hereunder or thereunder, and, (i) with respect to a payment of interest on a
Scheduled Interest Payment Date, such default shall continue for a period of five (5) Trading Days after the Holder gives the Company&#146;s written notice thereof, and (ii) in all other instances, such default shall continue for a period of five
(5) Trading Days; or</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">b.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">Any of the representations or warranties made by the Company herein, in the Securities Purchase Agreement or any of the other Transaction Agreements or in any certificate or financial or other written statements heretofore or
hereafter furnished by the Company in connection with the execution and delivery of this Debenture or the Securities Purchase Agreement shall be false or misleading in any material respect at the time made; or</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">c.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">Subject to the terms of the Securities Purchase Agreement, the Company fails to authorize or to cause its Transfer Agent to issue shares of Common Stock upon exercise by the Holder of the conversion rights of the Holder in
accordance with the terms of this Debenture (provided, however, that for purposes of this provision, such failure to cause the Transfer Agent to</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">9</FONT></P>

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<A name="page_10"></A>

<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
<TD>&nbsp;</TD>	<TD width=100% colspan=2>
<FONT face="serif">issue such shares shall not be deemed to occur until two (2) Trading Days after the Delivery Date), fails to transfer or to cause its Transfer Agent to transfer any certificate for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by this Debenture or any other Transaction Agreement, and such transfer is otherwise lawful, or fails to remove any restrictive legend on any certificate or fails to cause its Transfer Agent to remove
such restricted legend, in each case where such removal is lawful, as and when required by this Debenture, or any other Transaction Agreement, and any such failure shall continue uncured for five (5) Trading Days; or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">d.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100% colspan=2>
<FONT face="serif">The Company shall fail to perform or observe, in any material respect, any other covenant, term, provision, condition, agreement or obligation of any Debenture in this series and such failure shall continue uncured for a period of
thirty (30) days after the Company&#146;s receipt written notice from the Holder of such failure; or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">e.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100% colspan=2>
<FONT face="serif">The Company shall fail to perform or observe, in any material respect, any covenant, term, provision, condition, agreement or obligation of the Company under any of the Transaction Agreements and such failure, if capable of being
cured, shall continue uncured for a period of thirty (30) days after the Holder gives the Company written notice thereof (but if not capable of being cured, such thirty day period shall be deemed expired immediately upon the giving of such notice);
or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">f.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100% colspan=2>
<FONT face="serif">The Company shall (1) admit in writing its inability to pay its debts generally as they mature; (2) make a general assignment for the benefit of creditors or commence proceedings for its dissolution; or (3) apply for or consent to
the appointment of a trustee, liquidator or receiver for its or for</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>	<TD nowrap valign=top>
<FONT face="serif">a</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">substantial part of its property or business; or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">g.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100% colspan=2>
<FONT face="serif">A trustee, liquidator or receiver shall be appointed for the Company or for</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>	<TD nowrap valign=top>
<FONT face="serif">a</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">substantial part of its property or business without its consent and shall</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>	<TD width=100% colspan=2>
<FONT face="serif">not be discharged within sixty (60) days after such appointment; or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">h.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100% colspan=2>
<FONT face="serif">Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall
not be dismissed within sixty (60) days thereafter; or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT face="serif">i.</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100% colspan=2>
<FONT face="serif">Any money judgment, writ or warrant of attachment, or similar process in excess of Five Hundred Thousand (&#36;500,000) Dollars in the aggregate shall be entered or filed against the Company or any of its properties or other
assets and shall remain unpaid, unvacated, unbonded or unstayed for</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>	<TD nowrap valign=top>
<FONT face="serif">a</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">period of sixty (60) days or in any event later than five (5) days prior to</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR><TR>
<TD>&nbsp;</TD>	<TD width=100% colspan=2>
<FONT face="serif">the date of any proposed sale thereunder; or</FONT>	</TD>
</TR>
<TR><TD colspan=3>&nbsp;</TD></TR></TABLE>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="right">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">10</FONT></P>

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<!--$$/page=--><A name=page_11></A>
<TABLE cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face=serif>j.</FONT>&nbsp; &nbsp; &nbsp; </TD>
    <TD width="100%"><FONT face=serif>Bankruptcy, reorganization, insolvency
      or liquidation proceedings or other proceedings for relief under any
      bankruptcy law or any law for the relief of debtors shall be instituted by
      or against the Company and, if instituted against the Company, shall not
      be dismissed within sixty (60) days after such institution or the Company
      shall by any action or answer approve of, consent to, or acquiesce in any
      such proceedings or admit the material allegations of, or default in
      answering a petition filed in any such proceeding; or</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face=serif>k.</FONT>&nbsp; &nbsp; &nbsp; </TD>
    <TD width="100%"><FONT face=serif>The Company shall have its Common Stock
      suspended from trading on, or delisted from, the Principal Trading Market
      for in excess of fifteen (15) consecutive Trading Days.</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR></TABLE>
<P align=left><FONT face=serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(ii) After the Maturity Date, the following shall constitute an "Event
of</FONT></P>
<P align=left><FONT face=serif>Default":</FONT><BR></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face=serif>a.</FONT>&nbsp; &nbsp; &nbsp; </TD>
    <TD width="100%"><FONT face=serif>The Company shall default in the payment
      of principal or interest on this Debenture or any other amount due
      hereunder, and, in any such instance, the same shall continue for a period
      of five (5) Trading Days; or</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face=serif>b.</FONT>&nbsp; &nbsp; &nbsp; </TD>
    <TD width="100%"><FONT face=serif>Subject to the terms of the Securities
      Purchase Agreement, the Company fails to authorize or to cause its
      Transfer Agent to issue shares of Common Stock upon exercise by the Holder
      of the conversion rights of the Holder in accordance with the terms of
      this Debenture (provided, however, that for purposes of this provision,
      such failure to cause the Transfer Agent to issue such shares shall not be
      deemed to occur until two (2) Trading Days after the Delivery Date), fails
      to transfer or to cause its Transfer Agent to transfer any certificate for
      shares of Common Stock issued to the Holder upon conversion of this
      Debenture and when required by this Debenture or any other Transaction
      Agreement, and such transfer is otherwise lawful, or fails to remove any
      restrictive legend on any certificate or fails to cause its Transfer Agent
      to remove such restricted legend, in each case where such removal is
      lawful, as and when required by this Debenture, or any other Transaction
      Agreement, and any such failure shall continue uncured for five (5)
      Trading Days.</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR></TABLE>
<P align=left><FONT face=serif>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(iii) If an Event of Default shall have occurred and is continuing,
then,</FONT></P>
<P align=left><FONT face=serif>(x) unless and until such Event of Default shall
have been cured or waived in writing by the Holder (which waiver shall not be
deemed to be a waiver of any subsequent default), at the option of the Holder
and in the Holder&#146;s sole discretion, but without further notice from the Holder,
the unpaid amount of this Debenture, computed as of such date, will bear
interest at the rate of eighteen percent (18%) or the highest rate allowed by
law, whichever is lower, from the date of the Event of Default to until and
including the date actually paid; and any</FONT></P>
<P align=left><FONT face=serif size=1>D/BIP/832197.1</FONT><BR></P>
<P align=left><FONT face=serif size=1>3/31/06</FONT><BR></P>
<P align=left><FONT face=monospace>11</FONT></P>
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<P align="left">
<FONT face="serif">partial payments shall be applied first to all accrued interest and then to principal; and </FONT></P>
<P align="left">
<FONT face="serif">(y) at any time thereafter, and in each and every such case, unless such Event of Default shall have been cured or waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), at the
option of the Holder and in the Holder's sole discretion, the Holder may elect to redeem all or part of the Unconverted Debenture (as defined below) on the terms provided in Section 15 hereof.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">15. A. The Company acknowledges that if there is an Event of Default, the Holder may require the Company to immediately redeem all or any part of the outstanding portion of this Debenture for an
amount equal to the Redemption Amount (as defined below).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">B. For purposes of this Debenture, the following terms shall have the meanings indicated below: </FONT></P>
<P align="left">
<FONT face="serif">&#147;Unconverted Debenture&#148; means the principal amount of this Debenture which has not been converted as of the relevant date. </FONT></P>
<P align="left">
<FONT face="serif">&#147;Redemption Payment Date&#148; means the date on which the Company actually pays the Redemption Amount.</FONT></P>
<P align="left">
<FONT face="serif">&#147;Redemption Amount&#148; means the amount equal to:</FONT></P>
<P align="left">
<U><FONT face="serif">V </FONT></U><FONT face="serif">x M CP</FONT></P>
<P align="left">
<FONT face="serif">where:</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;V&#148; means the principal of an Unconverted Debenture plus any accrued but unpaid interest thereon; &#147;CP&#148; means the Conversion Price in effect on the date (the &#147;Redemption Notice
Date&#148;) of the Redemption Notice (as defined below); and </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;M&#148; means the highest closing price per share of the Common Stock  during the period beginning on the Redemption Notice Date and ending on the Redemption Payment Date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">C. The Holder of an Unconverted Debenture may elect to redeem a portion of such Unconverted Debenture without electing to redeem the balance of the Unconverted Debenture. The Holder&#146;s option to
redeem all or part of the Unconverted Debenture shall be exercised by the Holder giving written notice of the exercise of this provision by the Holder (a &#147;Redemption Notice&#148;) at any time after a relevant Event of Default has occurred.  The
Redemption Notice shall specify (a) the date (the &#147;Redemption Due Date&#148;) on which the</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832197.1</FONT><BR>
</P>
<P align="left">
<FONT size=1 face="serif">3/31/06</FONT><BR>
</P>
<P align="left">
<FONT face="monospace">12</FONT></P>

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<FONT face="serif">Redemption Amount shall be paid, which date shall be at least five (5) Trading Days after the date (a &#147;Redemption Notice Date&#148;) on which the Holder Redemption Notice is given, and (b) the wire instructions for the
account to which the Redemption Amount is to be paid; provided, however, that the Company shall have the right to accelerate the date of such payment.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">D. If all of the Unconverted Debentures are being redeemed pursuant to this Section 5, then, upon payment in full of the Redemption Amount for all of the Unconverted Debentures in accordance with the
provisions of this Section 5, the Holder shall deliver the Debenture to the Company marked &#147;paid in full&#148;.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">E. If the Redemption Amount is not timely paid by the Company, the Holder may declare the Redemption Amount due under this Debenture immediately due and payable, without presentment, demand, protest
or notice of any kinds, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately enforce any and all of the Holder's rights and remedies
provided herein or any other rights or remedies afforded by law, including, but not necessarily limited to, the equitable remedy of specific performance and injunctive relief.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">16. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any
meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">17. Any notice required or permitted hereunder shall be given in manner provided in the Section headed "NOTICES" in the Securities Purchase Agreement, the terms of which are incorporated herein by
reference.</FONT></P>
<P align="center">
<FONT face="serif">[Balance of page intentionally blank]</FONT><BR>
</P>
<P align="center">
<FONT face="monospace">13</FONT><BR>
</P>
<P align="left">
<FONT size=2 face="serif">3/31/06</FONT></P>

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<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>18. In the event
for any reason, any payment by or act of the Company or the Holder shall result
in payment of interest which would exceed the limit authorized by or be in
violation of the law of the jurisdiction applicable to this Debenture, then
</FONT><I><FONT face=serif>ipso facto</FONT></I><FONT face=serif> the obligation
of the Company to pay interest or perform such act or requirement shall be
reduced to the limit authorized under such law, so that in no event shall the
Company be obligated to pay any such interest, perform any such act or be bound
by any requirement which would result in the payment of interest in excess of
the limit so authorized. In the event any payment by or act of the Company shall
result in the extraction of a rate of interest in excess of a sum which is
lawfully collectible as interest, then such amount (to the extent of such excess
not returned to the Company) shall, without further agreement or notice between
or by the Company or the Holder, be deemed applied to the payment of principal,
if any, hereunder immediately upon receipt of such excess funds by the Holder,
with the same force and effect as though the Company had specifically designated
such sums to be so applied to principal and the Holder had agreed to accept such
sums as an interest-free prepayment of this Debenture. If any part of such
excess remains after the principal has been paid in full, whether by the
provisions of the preceding sentences of this Section or otherwise, such excess
shall be deemed to be an interest-free loan from the Company to the Holder,
which loan shall be payable immediately upon demand by the Company. The
provisions of this Section shall control every other provision of this
Debenture.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>IN WITNESS WHEREOF,
the Company has caused this instrument to be duly executed by an officer
thereunto duly authorized.</FONT></P>
<P align=left><FONT face=serif>Dated: <BR>_________________,
200__</FONT><BR></P>
<P align=left><B><FONT face=serif>PLURISTEM LIFE SYSTEMS,
INC.</FONT></B><BR></P>
<P align=left><FONT
face=serif>By:<BR>_______________________________________</FONT></P>
<P align=left><FONT
face=serif>__________________________________________<BR>(Print Name)
<BR>__________________________________________<BR>(Title)</FONT></P>
<P align=center><FONT face=monospace>14</FONT><BR></P>
<P align=left><FONT face=serif size=2>3/31/06</FONT></P>
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<!--$$/page=--><A name=page_15></A>
<P align=center><FONT face=serif>EXHIBIT A</FONT><BR></P>
<P align=center><FONT face=serif>PLURISTEM LIFE SYSTEMS, INC.</FONT><BR></P>
<P align=center><FONT face=serif>NOTICE OF CONVERSION OF</FONT></P>
<P align=center>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>7% SENIOR SECURED
CONVERTIBLE DEBENTURE SERIES 06-01 DUE <BR>________<BR>, 200_ (To be Executed by
the Registered Holder in Order to Convert the Debenture)</FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="90%" border=0>

  <TR vAlign=bottom>
    <TD align=left width="9%"><FONT face=serif
     >TO:</FONT>&nbsp; </TD>
    <TD align=left width="25%"><FONT
      face=serif>PLURISTEM LIFE SYSTEMS, INC.</FONT>&nbsp; </TD>
    <TD align=left width="10%"><FONT
      face=serif>VIA FAX:</FONT>&nbsp; </TD>
    <TD align=left width="54%"><FONT
      face=serif>(011 972 4) 850-1085</FONT>&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="25%"><FONT
      face=serif>MATAM Advanced Technology Park</FONT>&nbsp;
</TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="54%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="25%"><FONT
      face=serif>Building No. 20</FONT>&nbsp; </TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="54%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="25%"><FONT
      face=serif>Haifa, Israel 31905</FONT>&nbsp; </TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="54%">&nbsp; </TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="9%">&nbsp; </TD>
    <TD align=left width="25%"><FONT
      face=serif>Attn: CFO</FONT>&nbsp; </TD>
    <TD align=left width="10%">&nbsp; </TD>
    <TD align=left width="54%">&nbsp;
</TD></TR></TABLE><BR>
<P align=left><FONT face=serif>FROM:
<BR>_________________________________________________________<BR>(&#147;Holder&#148;)</FONT></P>
<P align=left><FONT face=serif>DATE:
<BR>_______________________________________________<BR>(the &#147;Conversion
Date&#148;)</FONT></P>
<P align=left><FONT face=serif>RE: Conversion of $_________________ principal
amount (the &#147;Converted Debenture&#148;) of </FONT><FONT face=serif>the 7% Convertible
Debenture Series 06-01-___ Due ________&nbsp;200_ (the &#147;Debenture&#148;) </FONT><FONT
face=serif>of PLURISTEM LIFE SYSTEMS, INC. (the &#147;Company&#148;) into </FONT><FONT
face=serif>________________________ shares (the &#147;Conversion Shares&#148;) of Common
Stock (</FONT><FONT face=serif>defined below)</FONT><BR></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>The captioned
Holder hereby gives notice to the Company, pursuant to the Debenture of
PLURISTEM LIFE SYSTEMS, INC. that the Holder elects to convert the Converted
Debenture into fully paid and non-assessable shares of Common Stock, $0.00001
par value (the &#147;Common Stock&#148;), of the Company as of the Conversion Date
specified above. Said conversion shall be based on the following Conversion
Price</FONT></P>
<TABLE cellSpacing=0 cellPadding=0 border=0>

  <TR>
    <TD vAlign=top noWrap><FONT face=serif size=5>9</FONT>&nbsp; &nbsp; &nbsp;
    </TD>
    <TD width="100%"><FONT face=serif>$<BR>________________, representing the
      Variable Conversion Price (as defined in the Debenture)</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face=serif size=5>9</FONT>&nbsp; &nbsp; &nbsp;
    </TD>
    <TD width="100%"><FONT face=serif>$<BR>________________, representing the
      Lowest Fixed Conversion Price (as defined in the Debenture)</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR>
  <TR>
    <TD vAlign=top noWrap><FONT face=serif size=5>9</FONT>&nbsp; &nbsp; &nbsp;
    </TD>
    <TD width="100%"><FONT face=serif>$<BR>________________, representing the
      Lowest Fixed Conversion Price, adjusted in accordance with the provisions
      of the Debenture</FONT> </TD></TR>
  <TR>
    <TD colSpan=2>&nbsp;</TD></TR></TABLE>
<P align=left><FONT face=serif size=2>3/31/06</FONT></P>
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<A name="page_16"></A>

<P align="left">
<FONT face="serif">Based on this Conversion Price, the number of Conversion Shares indicated above should be issued in the following name(s):</FONT></P>
<P align="left">
<FONT face="serif">Name and Record Address</FONT><BR>
<FONT face="serif">_______________________________</FONT><BR>
<FONT face="serif">_______________________________</FONT><BR>
<FONT face="serif">_______________________________</FONT><BR>
</P>
<P align="left">
<FONT face="serif">Conversion Shares</FONT><BR>
<FONT face="serif">_______________</FONT><BR>
<FONT face="serif">_______________</FONT><BR>
<FONT face="serif">_______________</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">It is the intention of the Holder to comply with the provisions of Section 4(C) of the Debenture regarding certain limits on the Holder's right to convert thereunder.  Based on the analysis on the
attached Worksheet Schedule, the Holder believe this conversion complies with the provisions of said Section 4(C). Nonetheless, to the extent that, pursuant to the conversion effected hereby, the Holder would have more shares than permitted under
said Section, this notice should be amended and revised, ab initio, to refer to the conversion which would result in the issuance of shares consistent with such provision. Any conversion above such amount is hereby deemed void and
revoked.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">As contemplated by the Debenture, this Notice of Conversion is being sent by facsimile to the telecopier number and officer indicated above. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">If this Notice of Conversion represents the full conversion of the outstanding balance of the Converted Debenture, the Holder either (1) has previously surrendered the Converted Debenture to the
Company or (2) will surrender (or cause to be surrendered) the Converted Debenture to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or facsimile transmission of this Notice of Conversion.
</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">The certificates representing the Conversion Shares should be transmitted by the Company to the Holder</FONT></P>
<TABLE border=0 cellspacing=0 cellpadding=0>
<TR>
	<TD nowrap valign=top>
<FONT size=5 face="serif">9</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">via express courier, or</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR><TR>
	<TD nowrap valign=top>
<FONT size=5 face="serif">9</FONT>&nbsp; &nbsp; &nbsp; 	</TD>
	<TD width=100%>
<FONT face="serif">by electronic transfer [Not available if Transfer Agent does not participate]</FONT>	</TD>
</TR>
<TR><TD colspan=2>&nbsp;</TD></TR></TABLE>
<P align="left">
<FONT face="serif">within the time contemplated by the Debenture after receipt of this Notice of Conversion (by facsimile transmission or otherwise) to:</FONT></P>
<P align="left">
<FONT face="serif">_____________________________________<BR> <BR>_____________________________________<BR> <BR>_____________________________________</FONT></P>
<P align="center">
<FONT face="monospace">2</FONT><BR>
</P>
<P align="left">
<FONT size=2 face="serif">3/31/06</FONT></P>

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<A name="page_17"></A>

<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">As contemplated by the Debenture, the Company should also pay all accrued but unpaid interest on the Converted Debenture to the Holder. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">--If the Company elects to pay such interest  in Common Stock, as contemplated by and subject to the provisions of the Debenture, such shares should be issued in the name of the Holder and delivered
in the same manner as, and together with, the Conversion Shares.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">--If the Company elects or is required to pay the dividends in cash, such payment should be made by wire transfer as follows:</FONT><SUP><FONT face="serif">6</FONT></SUP></P>
<P align="center">
<FONT face="serif">___________________________________</FONT><BR>
<FONT face="serif">___________________________________</FONT><BR>
<FONT face="serif">___________________________________ </FONT><BR>
</P>
<P align="left">
<FONT face="serif">_____________________________________</FONT><BR>
<FONT face="serif">(Print name of Holder)</FONT><BR>
<FONT face="serif">By: <BR>__________________________________</FONT><BR>
<FONT face="serif">(Signature of Authorized Person)</FONT><BR>
<FONT face="serif">______________________________________</FONT><BR>
<FONT face="serif">(Printed Name and Title)</FONT><BR>
</P>
<P align="left">
<SUP><FONT size=2 face="serif">6</FONT></SUP><FONT size=2 face="serif">Information should include the following:</FONT></P>
<P align="left">
<FONT size=2 face="serif">All Wires:</FONT></P>
<P align="left">
<FONT size=2 face="serif">(1) Bank Name</FONT></P>
<P align="left">
<FONT size=2 face="serif">(2) Bank Address (including street, city, state) (3) ABA or Wire Routing No. </FONT></P>
<P align="left">
<FONT size=2 face="serif">(4) Account Name (5) Account Number</FONT></P>
<P align="left">
<FONT size=2 face="serif">If Wire is going to International (Non-US) Bank, all of the above </FONT><I><U><FONT size=2 face="serif">plus</FONT></U></I><FONT size=2 face="serif">: (6) SWIFT Number</FONT></P>
<P align="center">
<FONT face="monospace">3</FONT><BR>
</P>
<P align="left">
<FONT size=2 face="serif">3/31/06</FONT></P>



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<!--$$/page=--><A name=page_19></A>
<P align=center><FONT face=serif>NOTICE OF CONVERSION WORKSHEET
SCHEDULE</FONT></P>
<P align=left><FONT face=serif>1. Current Common Stock holdings of Holder and
Affiliates <BR>_____________<BR></FONT></P>
<P align=left><FONT face=serif>2. Shares to be issued on current
conversion</FONT><SUP><FONT face=serif>7 </FONT></SUP><FONT
face=serif>_____________<BR></FONT></P>
<P align=left><FONT face=serif>3. Other shares to be issued on other current
conversion(s) and other current exercise(s) <BR>_____________<BR></FONT></P>
<P align=left><FONT face=serif>4. Other shares eligible to be acquired within
next 60 days without restriction <BR>_____________<BR></FONT></P>
<P align=left><FONT face=serif>5. Total [sum of Lines 1 through 4]
<BR>_____________</FONT></P>
<P align=left><FONT face=serif>6. Outstanding shares of Common
Stock</FONT><SUP><FONT face=serif>8 </FONT></SUP><FONT
face=serif>_____________<BR></FONT></P>
<P align=left><FONT face=serif>7. Adjustments to Outstanding a. Shares known to
Holder as previously issued to Holder or others but not included in Line 6
<BR>____________<BR></FONT></P>
<P align=left><FONT face=serif>b. Shares to be issued per Line(s) 2 and 3
<BR>____________<BR></FONT></P>
<P align=left><FONT face=serif>c. Total Adjustments [Lines 7a and 7b]
<BR>_____________<BR></FONT></P>
<P align=left><FONT face=serif>8. Total Adjusted Outstanding [Lines 6 plus 7c]
<BR>_____________</FONT></P>
<P align=left><FONT face=serif>9. Holder&#146;s Percentage [Line 5 divided by Line 8]
<BR>_____________<BR></FONT><FONT face=serif></FONT></P>
<P align=left><FONT face=serif>% [Note: Line 9 not to be above 4.99%]</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP><FONT
face=serif>7</FONT></SUP><FONT face=serif> Includes conversion of principal and
assumes interest will be paid in Common Stock at the Conversion
Price.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<SUP><FONT
face=serif>8</FONT></SUP><FONT face=serif> Based on latest SEC filing by Company
or information provided by executive officer of Company, counsel to Company or
transfer agent.</FONT></P>
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</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>ex10-3.htm
<DESCRIPTION>EXHIBIT 10.3
<TEXT>
<HTML>
<HEAD>
<TITLE> </TITLE>
</HEAD>
<BODY bgcolor="#ffffff" style='font-family:"Times New Roman"'>

<div style='width:600;'>



<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>Exhibit 10.3</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=2>ANNEX V</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=2>TO</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=2>SECURITIES PURCHASE AGREEMENT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><b><font size=2>&#60;PROTOTYPE FOR EACH ISSUANCE&#62;</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>FORM OF WARRANT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font SIZE=2>THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="461" style=' border-collapse:collapse'>
    <tr>
        <td width="184" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="277" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>COMMON STOCK PURCHASE WARRANT</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>1.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Issuance</font></u><font size=2>.  In consideration of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by </font><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B><font size=2>, a Nevada corporation (the &#147;Company&#148;), </font><b><font size=2>_____________________________ </font></b><font size=2>or registered assigns (the &#147;Holder&#148;) is hereby granted the right to purchase at any time, on or after the Commencement Date (as defined below) until 5:00 P.M., New York City time, on the Expiration Date (as defined below), _________________  Thousand __________ (____________)<sup></sup> fully paid and nonassessable shares of the Company&#146;s Common Stock, $0.00001 par value per share (the &#147;Common Stock&#148;), at
an initial exercise price per share (the &#147;Exercise Price&#148;) of $_____<sup></sup> per share, subject to further adjustment as set forth herein.  This Warrant is being issued pursuant to the terms of that certain Securities Purchase Agreement, dated as of April 3, 2006 (the &#147;Agreement&#148;), to which the Company and Holder (or Holder&#146;s predecessor in interest) are parties.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.  This Warrant was originally issued to the Holder of the Holder&#146;s predecessor in interest on _____________, 2006<sup></sup> (the &#147;Issue Date&#148;).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2>Insert number equal to one hundred percent (100%) of the Buyer&#146;s Issue Date Conversion Shares.</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2>Insert amount equal to Closing Price for the Trading Day immediately preceding the Closing Date</font><font size=2>. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font><font size=2>Insert the Closing Date.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>


<table border="0" cellspacing=0 cellpadding=0 width="322" style=' border-collapse:collapse'>
    <tr>
        <td width="275" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="47" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>- 2 -</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="303" style=' border-collapse:collapse'>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>2.</font></p> </td>
        <td width="159" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Exercise of Warrants.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="266" style=' border-collapse:collapse'>
    <tr>
        <td width="144" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>2.1</font></p> </td>
        <td width="75" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>General.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (a)  This Warrant is exercisable in whole or in part at any time and from time to time commencing on the Commencement Date (as defined below).  Such exercise shall be effectuated by submitting to the Company (either by delivery to the Company or by facsimile transmission as provided in Section 8 hereof) a completed and duly executed Notice of Exercise (substantially in the form attached to this Warrant Certificate) as provided in the Notice of Exercise (or revised by notice given by the Company as contemplated by the Section headed &#147;NOTICES&#148; in the Agreement).  The date such Notice of Exercise is faxed to the Company shall be the &#147;Exercise Date,&#148; provided that, if such exercise represents the full exercise of the outstanding balance of the Warrant, the Holder of this Warrant tenders this Warrant Certificate to the Company within five (5) Trading Days thereafter.  The
Notice of Exercise shall be executed by the Holder of this Warrant and shall indicate (i) the number of shares then being purchased pursuant to such exercise and (ii) if applicable (as provided below), whether the exercise is a cashless exercise. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (b)  The provisions of this Section 2.1(b) shall only be applicable (i) on or after the first anniversary of the Issue Date, and (ii) if, and only if, on the Exercise Date there is no effective Registration Statement covering the Warrant Shares (other than during a Permitted Suspension Period, as defined in the Registration Rights Agreement).  If the Notice of Exercise form elects a &#147;cashless&#148; exercise, the Holder shall thereby be entitled to receive a number of shares of Common Stock equal to (w) the excess of the Current Market Value (as defined below) over the total cash exercise price of the portion of the Warrant then being exercised, divided by (x) the Market Price of the Common Stock.  For the purposes of this Warrant, the terms (y) &#147;Current Market Value&#148; shall mean an amount equal to the Market Price of the Common Stock, multiplied by the number of shares of
Common Stock specified in the applicable Notice of Exercise, and (z) &#147;Market Price of the Common Stock&#148; shall mean the average Closing Price of the Common Stock for the three (3) Trading Days ending on the Trading Day immediately prior to the Exercise Date. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (c)  If the Notice of Exercise form elects a &#147;cash&#148; exercise (or if the cashless exercise referred to in the immediately preceding paragraph (b) is not available in accordance with its terms), the Exercise Price per share of Common Stock for the shares then being exercised shall be payable, at the election of the Holder, in cash or by certified or official bank check or by wire transfer in accordance with instructions provided by the Company at the request of the Holder..</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (d)  Upon the appropriate payment, if any, of the Exercise Price for the shares of Common Stock purchased, together with the surrender of this Warrant Certificate (if required), the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased.  The Company shall deliver such certificates representing the Warrant Shares in accordance with the instructions of the Holder as provided in the Notice of Exercise (the certificates delivered in such manner, the &#147;Warrant Share Certificates&#148;) within three (3) Trading Days (such third Trading Day, a &#147;Delivery Date&#148;) of (i) with respect to a </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 3 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;cashless exercise,&#148; the Exercise Date or, (ii) with respect to a &#147;cash&#148; exercise, the later of the Exercise Date or the date the payment of the Exercise Price for the relevant Warrant Shares is received by the Company.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (e)  The Holder shall be deemed to be the holder of the shares issuable to it in accordance with the provisions of this Section 2.1 on the Exercise Date. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>2.2</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Limitation on Exercise</font></u><font size=2>. Notwithstanding the provisions of this Warrant, the Agreement or of the other Transaction Agreements, in no event (except (i) as specifically provided in this Warrant as an exception to this provision, (ii) during the forty-five (45) day period prior to the Expiration Date, or (iii) while there is outstanding a tender offer for any or all of the shares of the Company&#146;s Common Stock) shall the Holder be entitled to exercise this Warrant, or shall the Company have the obligation to issue shares upon such exercise of all or any portion of this Warrant to the extent that, after such exercise the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of the Warrants or other rights to purchase Common Stock or through the ownership of the unconverted portion of convertible securities), and (2) the number of shares of Common Stock issuable upon the exercise of the Warrants with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock (after taking into account the shares to be issued to the Holder upon such exercise).  For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the &#147;1934 Act&#148;), except as otherwise provided in clause (1) of such sentence.  The Holder, by its acceptance of this Warrant, further agrees that if the Holder transfers or assigns any of the Warrants to a
party who or which would not be considered such an affiliate, such assignment shall be made subject to the transferee&#146;s or assignee&#146;s specific agreement to be bound by the provisions of this Section 2.2 as if such transferee or assignee were the original Holder hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>2.3</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Certain Definitions</font></u><font size=2>.  As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (a)  &#147;Commencement Date&#148; means the date which is the earlier of (i) sixty-five (65) days after the Issue Date, or (ii) the Effective Date. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (b) &#147;Expiration Date&#148; means the date which the last calendar of the month in which the third anniversary of the Effective Date occurs.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>3.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Reservation of Shares</font></u><font size=2>.  The Company hereby agrees that at all times during the term of this Warrant there shall be reserved for issuance upon exercise of this Warrant, one hundred twenty-five percent (125%) of the number of shares of its Common Stock as shall be required for issuance of the Warrant Shares for the then unexercised portion of this Warrant.  For the purposes of such calculations, the Company should assume that the outstanding portion of this Warrants was exercisable in full at any time, without regard to any restrictions </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 4 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>which might limit the Holder&#146;s right to exercise all or any portion of this Warrant held by the Holder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>4.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Mutilation or Loss of Warrant</font></u><font size=2>.  Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>5.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Rights of the Holder</font></u><font size=2>.  The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="498" style=' border-collapse:collapse'>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>6.</font></p> </td>
        <td width="354" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Protection Against Dilution and Other Adjustments</font></u><font size=2>.  </font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>6.1</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustment Mechanism</font></u><font size=2>.  If an adjustment of the Exercise Price is required pursuant to this Section 6 (other than pursuant to Section 6.4), the Holder shall be entitled to purchase such number of shares of Common Stock as will cause (i) (x) the total number of shares of Common Stock Holder is entitled to purchase pursuant to this Warrant following such adjustment, multiplied by (y) the adjusted Exercise Price per share, to equal the result of (ii) (x) the dollar amount of the total number of shares of Common Stock Holder is entitled to purchase before adjustment, multiplied by (y) the total Exercise Price before adjustment.<sup></sup></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>6.2</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Capital Adjustments</font></u><font size=2>.  In case of any stock split or reverse stock split, stock dividend, reclassification of the Common Stock, recapitalization, merger or consolidation (where the Company is not the surviving entity), the provisions of this Section 6 shall be applied as if such capital adjustment event had occurred immediately prior to the date of this Warrant and the original Exercise Price had been fairly allocated to the stock resulting from such capital adjustment; and in other respects the provisions of this Section shall be applied in a fair, equitable and reasonable manner so as to give effect, as nearly as may be, to the purposes hereof.  A rights offering to stockholders shall be deemed a stock dividend to the extent of the bargain purchase element of the
rights.  The Company will not effect any consolidation or  merger,  unless prior to the consummation thereof, the successor or acquiring entity (if other than the Company) and, if an entity different from the successor or acquiring entity, the entity whose capital stock or assets the holders of the Common Stock of the Company are entitled to receive as a result of such consolidation or  merger assumes by written instrument the obligations under</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2>[Note: Actual amounts to be inserted in footnote to executed Warrant based on Exercise Price de</font><font size=2>termined on Closing Date.] Example: Assume 10,000 shares remain under Warrant at original stated Exercise Price of US$[1.00].  Total exercise price (clause (y) in text) is (i) 10,000 x (ii) US$[1.00], or US$[10,000]. Company effects 2:1 stock split.  Exercise Price is adjusted to US$[0.50]. Number of shares covered by Warrant is adjusted to 20,000, because (applying clause (x) in text) (i) 20,000 x (ii) US$[0.50] = US$[10,000].</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 5 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>this Warrant (including under this Section 6) and the obligations to deliver to the holder of this Warrant such shares of stock, securities or assets as, in accordance with the foregoing provisions, the holder may be entitled to acquire.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>6.3</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustment for Spin Off</font></u><font size=2>.  If, for any reason, prior to the exercise of this Warrant in full, the Company spins off or otherwise divests itself of a part of its business or operations or disposes all or of a part of its assets in a transaction (the &#147;Spin Off&#148;) in which the Company does not receive compensation for such business, operations or assets, but causes securities of another entity (the &#147;Spin Off Securities&#148;) to be issued to security holders of the Company, then the Company shall cause (i) to be reserved Spin Off Securities equal to the number thereof which would have been issued to the Holder had all of the Holder&#146;s unexercised Warrants outstanding on the record date (the &#147;Record Date&#148;) for determining the amount and number
of Spin Off Securities to be issued to security holders of the Company (the &#147;Outstanding Warrants&#148;) been exercised as of the close of business on the Trading Day immediately before the Record Date (the &#147;Reserved Spin Off Shares&#148;), and (ii) to be issued to the Holder on the exercise of all or any of the Outstanding Warrants, such amount of the Reserved Spin Off Shares equal to (x) the Reserved Spin Off Shares, multiplied by (y) a fraction, of which (I) the numerator is the amount of the Outstanding Warrants then being exercised, and (II) the denominator is the amount of the Outstanding Warrants.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>6.4</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Adjustment for Certain Transactions</font></u><font size=2>.  Reference is made to the provisions of Section 4(g) of the Agreement, the terms of which are incorporated herein by reference.  The number of shares covered by this Warrant and the Exercise Price shall be adjusted as provided in the applicable provisions of said Section 4(g) of the Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>7.</font></p> </td>
        <td width="432" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Transfer to Comply with the Securities Act; Registration Rights</font></u><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>7.1 </font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Transfer.</font></u><font size=2>  This Warrant has not been registered under the Securities Act of 1933, as amended, (the &#147;Act&#148;) and has been issued to the Holder for investment and not with a view to the distribution of either the Warrant or the Warrant Shares.  Neither this Warrant nor any of the Warrant Shares or any other security issued or issuable upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of an effective registration statement under the Act relating to such security or an opinion of counsel satisfactory to the Company that registration is not required under the Act.  Each certificate for the Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend on the face
thereof, in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.54in;text-align:justify;'><font size=2>7.2</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Registration Rights.</font></u><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>(a)  Reference is made to the Registration Rights Agreement.  The Company&#146;s obligations under the Registration Rights Agreement and the other terms and conditions thereof with respect to the Warrant Shares, including, but not necessarily limited to, the Company&#146;s commitment to file a registration statement including the Warrant Shares, to have the registration of the Warrant Shares completed and effective, and to maintain such registration, are incorporated herein by reference.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 6 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.57in;text-align:justify;'><font size=2> (b)  In addition to the registration rights referred to in the preceding provisions of Section 7.2(a), effective after the expiration of the effectiveness of the Registration Statement as contemplated by the Registration Rights Agreement, the Holder shall have piggy-back registration rights with respect to the Warrant Shares then held by the Holder or then subject to issuance upon exercise of this Warrant (collectively, the &#147;Remaining Warrant Shares&#148;), subject to the conditions set forth below. If, at any time after the Registration Statement has ceased to be effective, the Company participates (whether voluntarily or by reason of an obligation to a third party) in the registration of any shares of the Company&#146;s stock (other than a registration on Form S-8 or on Form S-4), the Company shall give written notice thereof to the Holder and the Holder shall have the right,
exercisable within ten (10) Trading Days after receipt of such notice, to demand inclusion of all or a portion of the Holder&#146;s Remaining Warrant Shares in such registration statement.  If the Holder exercises such election, the Remaining Warrant Shares so designated shall be included in the registration statement at no cost or expense to the Holder (other than any costs or commissions which would be borne by the Holder under the terms of the Registration Rights Agreement).  The Holder&#146;s rights under this Section 7 shall expire at such time as the Holder can sell all of the Remaining Warrant Shares under Rule 144 without volume or other restrictions or limit.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>8.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Late Delivery of Warrant Shares.</font></u><font size=2>    Reference is made to Section 5(b) of the Agreement, the terms of which are incorporated herein by reference.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>9.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Notices</font></u><font size=2>.  Any notice required or permitted hereunder shall be given in manner provided in the Section headed &#147;NOTICES&#148; in the Agreement, the terms of which are incorporated herein by reference.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>10.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Supplements and Amendments; Whole Agreement</font></u><font size=2>.  This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto.  This Warrant contains the full understanding of the parties hereto with respect to the subject matter hereof and thereof and there are no representations, warranties, agreements or understandings other than expressly contained herein and therein.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>11.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Governing Law</font></u><font size=2>.  This Warrant shall be deemed to be a contract made under the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.  Each of the parties consents to the jurisdiction of the federal courts whose districts encompass any part of the County of New York or the state courts of the State of New York sitting in the County of New York in connection with any dispute arising under this Warrant and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on</font><i><font size=2> forum non conveniens</font></i><font size=2>, to the bringing of any such proceeding in such jurisdictions. To the extent determined by such
court, the Company shall reimburse the Holder for any reasonable legal fees and disbursements incurred by the Holder in enforcement of or protection of any of its rights under any of the Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>12.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><U><B><font SIZE=2>JURY TRIAL WAIVER</font></B></U><b><font size=2>. </font></b><font size=2>  The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with this Warrant.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 7 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>13.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Remedies</font></u><font size=2>.  The Company stipulates that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.05in;text-align:justify;'><font size=2>14.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Counterparts</font></u><font size=2>.  This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>[Balance of page intentionally left blank]</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 8 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'>
<font size=2>&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;</font><font size=2>15.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Descriptive Headings</font></u><font size=2>.  Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.53in;text-align:justify;'><font size=2>IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Dated: _________________, 200__</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="565" style=' border-collapse:collapse'>
    <tr>
        <td width="288" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="277" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="592" style=' border-collapse:collapse'>
    <tr>
        <td width="288" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="304" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By: ________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="588" style=' border-collapse:collapse'>
    <tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>___________________________________</font></p> </td> </tr>
    <tr >
        <td width="288" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="104" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(Print Name)</font></p> </td>
        <td  width="196">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>___________________________________</font></p> </td> </tr>
    <tr >
        <td width="288" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="60" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>(Title)</font></p> </td>
        <td  width="240">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'>
</p>


<table border="0" cellspacing=0 cellpadding=0 width="469" style=' border-collapse:collapse'>
    <tr>
        <td width="176" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="292" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>NOTICE OF EXERCISE OF WARRANT</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="620" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>TO:</font></p> </td>
        <td  nowrap colspan="5" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></p> </td>
        <td width="236" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>VIA FAX:  (011 972 4) 850-1085</font></p> </td> </tr>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>MATAM Advanced Technology Park</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Building No. 20</font></p> </td>
        <td   colspan="4">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Haifa, Israel 31905</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="88" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Attn: CFO</font></p> </td>
        <td   colspan="5">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="89" ></td>

        <td width="163" ></td>

        <td width="65" ></td>

        <td width="36" ></td>

        <td width="227" ></td>

        <td width="132" ></td>

        <td width="438" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.53in;text-align:left;'><font size=2>The undersigned hereby irrevocably elects to exercise the right, represented by the Common Stock Purchase Warrant, dated as of _____________________, 20___ , to purchase ___________ shares of the Common Stock, $0.00001 par value (&#147;Common Stock&#148;), of </font><B><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></B><font size=2> and tenders herewith payment in accordance with Section 2 of said Common Stock Purchase Warrant, as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="570" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font face="Arial" size=5>9  </font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>CASH:</font></p> </td>
        <td width="216" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$  </font></p> </td>
        <td width="257" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>=  (Exercise Price x Exercise Shares)</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="490" style=' border-collapse:collapse'>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="6" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Payment is being made by:</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>9</p> </td>
        <td  nowrap colspan="5" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>enclosed check</font></p> </td>
        <td  width="179">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>9</p> </td>
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>wire transfer</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>9</p> </td>
        <td width="53" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>other  </font></p> </td>
        <td   colspan="4">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>9</p> </td>
        <td  nowrap colspan="10" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>CASHLESS EXERCISE [if available pursuant to Section 2.1(b)]:</font></p> </td> </tr>
    <tr>
        <td width="89" ></td>

        <td width="89" ></td>

        <td width="89" ></td>

        <td width="1" ></td>

        <td width="88" ></td>

        <td width="1" ></td>

        <td width="99" ></td>

        <td width="81" ></td>

        <td width="9" ></td>

        <td width="30" ></td>

        <td width="333" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="581" style=' border-collapse:collapse'>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="384" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Net number of Warrant Shares to be issued to Holder :</font></p> </td>
        <td width="101" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>_________*</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="629" style=' border-collapse:collapse'>
    <tr >
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>* based on:</font></p> </td>
        <td  nowrap colspan="5" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Current Market Value - (Exercise Price x Exercise Shares)</font></u></p> </td>
        <td  width="42">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Market Price of Common Stock</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="64" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>where:</font></p> </td>
        <td   colspan="7">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Market Price of Common Stock [&#147;MP&#148;]</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>=</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$_______________</font></p> </td> </tr>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="4" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Current Market Value [MP x Exercise Shares]</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>=</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>$_______________</font></p> </td> </tr>
    <tr>
        <td width="178" ></td>

        <td width="119" ></td>

        <td width="60" ></td>

        <td width="178" ></td>

        <td width="267" ></td>

        <td width="89" ></td>

        <td width="62" ></td>

        <td width="137" ></td>

        <td width="78" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.53in;text-align:left;'><font size=2>It is the intention of the Holder to comply with the provisions of Section 2.2 of the Warrant regarding certain limits on the Holder's right to exercise thereunder.  Based on the analysis on the attached Worksheet Schedule, the Holder believes this exercise complies with the provisions of said Section 2.2. Nonetheless, to the extent that, pursuant to the exercise effected hereby, the Holder would have more shares than permitted under said Section, this notice should be amended and revised, ab initio, to refer to the exercise which would result in the issuance of shares consistent with such provision. Any exercise above such amount is hereby deemed void and revoked.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.53in;text-align:left;'><font size=2>As contemplated by the Warrant, this Notice of Conversion is being sent by facsimile to the telecopier number and officer indicated above. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 2 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.53in;text-align:left;'><font size=2>If this Notice of Exercise represents the full exercise of the outstanding balance of the Warrant, the Holder either (1) has previously surrendered the Warrant to the Company or (2) will surrender (or cause to be surrendered) the Warrant to the Company at the address indicated above by express courier within five (5) Trading Days after delivery or facsimile transmission of this Notice of Exercise.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.53in;text-align:left;'><font size=2>The certificates representing the Warrant Shares should be transmitted by the Company to the Holder</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="259" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>9</p> </td>
        <td width="163" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>via express courier, or</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="596" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'>9</p> </td>
        <td width="500" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>by electronic transfer [Not available if Transfer Agent does not participate]</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>after receipt of this Notice of Exercise (by facsimile transmission or otherwise) to:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="412" style=' border-collapse:collapse'>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="316" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________________________________</font></p> </td> </tr>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="316" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________________________________</font></p> </td> </tr>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="316" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________________________________</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>Dated: ______________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>____________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>[Name of Holder]</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>By: _________________________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<font SIZE=2>NOTICE OF EXERCISE OF WARRANT </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>WORKSHEET SCHEDULE</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="604" style=' border-collapse:collapse'>
    <tr>
        <td width="480" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>1. Current Common Stock holdings of Holder and Affiliates</font></p> </td>
        <td width="124" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________</font></p> </td> </tr>
    <tr>
        <td width="480" nowrap valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>2.  Shares to be issued on current exercise</font></p> </td>
        <td width="124" nowrap valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________</font></p> </td> </tr></table>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:justify;'><font size=2>3. Other shares to be issued on other current exercise(s) and </font></p>


<table border="0" cellspacing=0 cellpadding=0 width="604" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:5.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="432" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>other current conversion(s)<sup>[1]</sup></font></p> </td>
        <td width="124" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________</font></p> </td> </tr></table>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=2>4. Other shares eligible to be acquired within next 60 days</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="604" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:5.0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>without restriction</font></p> </td>
        <td width="124" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________</font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="3" valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>5. Total [sum of Lines 1 through 4]</font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr >
        <td width="48" nowrap valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:justify;margin-top:5.0pt;margin-bottom: 5.0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="124" nowrap valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>_____________</font></p> </td>
        <td   colspan="3">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="89" ></td>

        <td width="230" ></td>

        <td width="135" ></td>

        <td width="436" ></td>

        <td width="230" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=2>6. Outstanding</font><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2> shares of Common Stock<sup></sup></font><font size=2>_____________</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=2>7. Adjustments to Outstanding</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="597" style=' border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0in;text-indent:0pt;text-align:justify;margin-top:5.0pt;margin-bottom: 5.0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top style='padding:5.0pt 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>a. Shares known to Holder as previously issued  </font></p> </td>
        <td   colspan="2">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td  nowrap colspan="2" valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:5.0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>to Holder or others but not included in Line 6</font></p> </td>
        <td width="117" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>____________</font></p> </td> </tr>
    <tr>
        <td width="48" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:5.0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>b. Shares to be issued per Line(s) 2 and 3</font></p> </td>
        <td width="117" nowrap valign=top style='padding:0in 0in 5.0pt 0in; '>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>____________</font></p> </td> </tr>
    <tr>
        <td width="48" ></td>

        <td width="16" ></td>

        <td width="307" ></td>

        <td width="108" ></td>

        <td width="117" ></td> </tr> </table>

<p style=' margin-bottom:5pt; margin-top:5pt; text-indent:0.5in;text-align:justify;'><font size=2>c. Total Adjustments [Lines 7a and 7b] </font><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>_____________</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=2>8. Total Adjusted Outstanding [Lines 6 plus 7c] </font><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>_____________</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=2>9. Holder&#146;s Percentage [Line 5 divided by Line 8]</font><font size=1>&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>_____________% </font></p>

<p style=' margin-bottom:5pt; margin-top:5pt;text-align:justify;'><font size=2>[Note: Line 9 not to be above 4.99%]</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>_________________________</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2>Includes shares issuable on conversion of convertible securities (including assumed payment, if</font><font size=2> relevant, of interest or dividends) or exercise of other rights, including other warrants or options</font></p>

<p style=' margin-bottom:5pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font><font size=2>Based on latest SEC filing by Company or information provided by executive officer of Company, </font><font size=2>counsel to Company or transfer agent</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>ex10-4.htm
<DESCRIPTION>EXHIBIT 10.4
<TEXT>
<!DOCTYPE HTML PUBLIC "ex10-4.pdf">


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<P align="right">
<FONT face="serif">Exhibit 10.4</FONT><BR>
<B><FONT face="serif">ANNEX IV</FONT></B><BR>
<B><FONT face="serif">TO</FONT></B><BR>
<B><FONT face="serif">SECURITIES PURCHASE AGREEMENT</FONT></B><BR>
</P>
<P align="center">
<B><FONT face="serif">REGISTRATION RIGHTS AGREEMENT</FONT></B><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">THIS REGISTRATION RIGHTS AGREEMENT,</FONT></B><FONT face="serif"> dated as of April 3, 2006 (this "Agreement"), is made by and between </FONT><B><FONT face="serif">PLURISTEM LIFE SYSTEMS,
INC.</FONT></B><FONT face="serif">, a Nevada corporation with headquarters located at MATAM Advanced Technology Park, Building No. 20, Haifa, Israel 31905 (the &#147;Company&#148;), and each entity named on a signature page hereto (each, an
&#147;Initial Investor&#148;) (each agreement with an Initial Investor being deemed a separate and independent agreement between the Company and such Initial Investor, except that each Initial Investor acknowledges and consents to the rights granted
to each other Initial Investor under such agreement).</FONT></P>
<P align="center">
<B><FONT face="serif">W I T N E S S E T H:</FONT></B><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">WHEREAS</FONT></B><FONT face="serif">, upon the terms and subject to the conditions of the Securities Purchase Agreement of even date herewith between the Initial Investor and the Company (the
&#147;Securities Purchase Agreement&#148;; capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Securities Purchase Agreement), the Company has agreed to issue and sell to the Initial Investors the
Debentures and the Warrants; and</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">WHEREAS</FONT></B><FONT face="serif">, the Debentures are convertible into shares of Common Stock (the &#147;Conversion Shares&#148;; which term, for purposes of this Agreement, shall include
shares of Common Stock of the Company issuable in lieu of accrued interest through the Maturity Date of the Debentures, as that term is defined in and as contemplated by the Debentures) upon the terms and subject to the conditions contained in the
Debentures; and </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">WHEREAS,</FONT></B><FONT face="serif"> the Warrant Shares may be issued upon the exercise of the Warrants; and</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">WHEREAS,</FONT></B><FONT face="serif"> to induce the Initial Investor to execute and deliver the Securities Purchase Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the &#147;Securities Act&#148;), with respect to the Registrable Securities (as defined below);</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">NOW, THEREFORE,</FONT></B><FONT face="serif"> in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and the Initial Investor hereby agree as follows:</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 2 -</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">1. Definitions. </FONT></B><FONT face="serif">As used in this Agreement, the following terms shall have the following meanings:</FONT></P>
<P align="left">
<FONT face="serif">&#147;Company Counsel&#148; means Clark Wilson LLP.</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Effective Date&#148; means the date the SEC declares a Registration Statement covering Registrable Securities and otherwise meeting the conditions contemplated hereby to be effective.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Held Shares Value&#148; means, for shares of Common Stock acquired by the Investor upon a conversion of a Debenture within the thirty (30) days preceding the Restricted Sale Date, but not yet
sold by the Investor, the principal amount of the Debentures converted into such Conversion Shares; provided, however, that if the Investor effected more than one such conversion during such thirty (30) day period and sold less than all of such
shares, the sold shares shall be deemed to be derived first from the conversions in the sequence of such conversions (that is, for example, until the number of shares from the first of such conversions have been sold, all shares shall be deemed to
be from the first conversion; thereafter, from the second conversion until all such shares are sold).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Increased Shares&#148; means the good faith estimate of number of shares which the Company anticipates will be issuable to the Holder as a result of either or both an adjustment to the
Conversion Price or the issuance of Additional Warrants resulting from the application of Section 4(g) of the Securities Purchase Agreement.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Investor&#148; means the Initial Investor and any permitted transferee or assignee who agrees to become bound by the provisions of this Agreement in accordance with Section 9 hereof and who
holds Debentures or Registrable Securities.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Other Issuable Shares&#148; means (i) the Payment Shares, if any, issued or issuable to the Holder as of the date of the filing of the Registration Statement and any amendment thereto or any
subsequent date, and (ii) the good faith estimate of the Company of the number of the other Payment Shares or the Increased Shares, as the case may be, which the Company anticipates, as of the date of the filing of the Registration Statement and any
amendment thereto, will be issuable to the Holder pursuant to the provisions of the Transaction Agreements.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Payment Shares&#148; means shares of Common Stock issued by the Company as provided in Section 2(b) below.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Permitted Selling Shareholders&#148; has the meaning ascribed to it in Schedule 1 annexed hereto.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">&#147;Permitted Suspension Period&#148; means one or more periods aggregating not more than thirty (30) days during any consecutive 12-month period during which the Holder&#146;s right to sell
Registrable Securities under the Registration Statement is suspended, provided, however, that each of such periods shall neither (i) be for more than twenty (20) days nor (ii) begin less </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align=center><FONT face=serif>- 3 -</FONT><BR></P>
<P align=left><FONT face=serif>than ten (10) Trading Days after the last day of
the preceding suspension period (whether or not such last day was during or
after a Permitted Suspension Period).</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>&#147;Potential Material
Event&#148; means any of the following: (i) the possession by the Company of material
information not ripe for disclosure in a registration statement, which shall be
evidenced by determinations in good faith by the Board of Directors of the
Company that disclosure of such information in the registration statement would
be detrimental to the business and affairs of the Company; or (ii) any material
engagement or activity by the Company which would, in the good faith
determination of the Board of Directors of the Company, be adversely affected by
disclosure in a registration statement at such time, which determination shall
be accompanied by a good faith determination by the Board of Directors of the
Company that the registration statement would be materially misleading absent
the inclusion of such information.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>&#147;Register,&#148;
&#147;Registered,&#148; and &#147;Registration&#148; refer to a registration effected by preparing
and filing a Registration Statement or Statements in compliance with the
Securities Act and pursuant to Rule 415 under the Securities Act or any
successor rule providing for offering securities on a continuous basis (&#147;Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>"Registrable
Securities" means, collectively, the Conversion Shares, the Warrant Shares, and
the Other Issuable Shares.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>&#147;Registration
Statement&#148; means a registration statement of the Company under the Securities
Act covering Registrable Securities on Form SB-2, if the Company is then
eligible to file using such form, and if not eligible, on Form S-1 or other
appropriate form.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>&#147;Required Effective
Date&#148; means, initially, the Initial Required Effective Date or the Increased
Required Effective Date (as those terms are defined below), as the case may
be.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>&#147;Required Filing
Date&#148; means the date as soon as practicable after the Closing Date but no later
than thirty (30) days after the Closing Date.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>&#147;Restricted Sale
Date&#148; means the first date, other than a date during a Permitted Suspension
Period (as defined below), on which the Investor is restricted from making sales
of Registrable Securities pursuant to any previously effective Registration
Statement. </FONT></P>
<TABLE cellSpacing=1 cellPadding=0 width="90%" border=0>

  <TR vAlign=bottom>
    <TD align=left width="15%"><B><FONT
      face=serif>2.</FONT></B>&nbsp; </TD>
    <TD align=left width="84%"><B><FONT
      face=serif>Registration.</FONT></B>&nbsp;
  </TD></TR>
  <TR>
    <TD align=left width="15%" background=""
   ></TD>
    <TD align=left width="84%" background=""
   ></TD></TR>
  <TR vAlign=bottom>
    <TD align=left width="15%"><B><FONT
      face=serif>(a)</FONT></B>&nbsp; </TD>
    <TD align=left width="84%"><B><FONT
      face=serif>Mandatory
      Registration.</FONT></B>&nbsp; </TD></TR></TABLE><BR>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>(i) The Company
shall prepare and file with the SEC, as soon as practicable after the Closing
Date but no later than the Required Filing Date, a Registration Statement
registering for resale by the Investor a sufficient number of shares of Common
Stock for the Initial Investors to sell the Registrable Securities.
Notwithstanding the requirement to register all Registrable Securities, the
Company&#146;s obligation to register the Registrable Securities shall </FONT></P>
<P align=left><FONT face=serif size=1>D/BIP/832564.2</FONT></P>
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<P align="center">
<FONT face="serif">- 4 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">initially be satisfied by the registration of the Initial Number of Shares to Be Registered (as defined below). The &#147;Initial Number of Shares to Be Registered&#148; is a number of shares of Common Stock which is at least
equal to the sum of (x) two hundred percent (200%) of the number of shares into which the Debentures and all interest thereon through their respective Maturity Dates would be convertible at the time of filing of such Registration Statement (assuming
for such purposes that all Debentures had been eligible to be converted, and had been converted, into Conversion Shares in accordance with their terms, whether or not such eligibility, accrual of interest or conversion had in fact occurred as of
such date) based on the Conversion Price in effect on, or within three (3) Trading Days prior to, the date the Registration Statement is filed (or subsequently amended), (y) the number of Warrant Shares covered by the Warrants (assuming for such
purposes that all the Warrants, including Additional Warrants, had been issued, had been eligible to be exercised and had been exercised for the issuance of Warrant Shares in accordance with their terms, whether or not such issuance, eligibility or
exercise had in fact occurred as of such date), and (z) the number of Other Issuable Shares as of the date of the filing of the Registration Statement or any amendment thereto (provided, however, that for purposes of this provision, the number of
Other Issuable Shares shall not be greater than the number of such shares which the SEC permits to be included in the Registration Statement). Unless otherwise specifically agreed to in writing in advance by the Holder, the Registration Statement
(X) shall include only (1) the Registrable Securities, (2) the shares issuable on exercise of warrants issued to the Finder in connection with the transactions contemplated by the Transaction Agreements, (3) the shares of the Permitted Selling
Shareholders, if any, (Y) shall not restrict or limit the prices at which the shares sold by the selling stockholders thereunder may be sold, and (Z) shall also state that, in accordance with Rule 416 and 457 under the Securities Act, it also covers
such indeterminate number of additional shares of Common Stock as may become issuable upon conversion of the Debentures, exercise of the Warrants or issuances of Other Issuable Securities covered by such Registration Statement to prevent dilution
resulting from stock splits, stock dividends or similar transactions.</FONT></P>
<P align="left">
<FONT face="serif">(ii) The Company will use its reasonable best efforts to cause such </FONT></P>
<P align="left">
<FONT face="serif">Registration Statement to be declared effective on a date (the &#147;Initial Required Effective Date&#148;) which is no later than the earlier of (Y) five (5) days after oral or written notice by the SEC that it may be declared
effective or (Z) ninety (90) days after the Closing Date.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iii) If at any time (an &#147;Increased Registered Shares Date&#148;), the number of shares of Common Stock represented by the Registrable Securities, issued or to be issued as contemplated by the
Transaction Agreements, exceeds eighty percent (80%) of the aggregate number of shares of Common Stock then registered or sought to be registered in a Registration Statement which has not yet been declared effective, the Company shall either
</FONT></P>
<P align="left">
<FONT face="serif">(X) amend the relevant Registration Statement filed by the Company pursuant to the preceding provisions of this Section 2, if such Registration Statement has not been declared effective by the SEC at that time, to register the
Increased Number of Shares to Be Registered (as defined below). The &#147;Increased Number of Shares to Be Registered&#148; is a number of shares of Common Stock which is at least equal to (A) the number of shares theretofore issued on conversion of
the Debentures </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 5 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">(including any interest paid on conversion by the issuance of Conversion Shares) and on exercise of the Warrants, plus (B) the sum of (x) two hundred percent (200%) of the number of shares into which the unconverted Debentures and
all interest thereon through their respective Maturity Dates would be convertible at the time of filing of such Registration Statement or amendment (assuming for such purposes that all Debentures, reduced by any previously converted Debentures, had
been eligible to be converted, and had been converted, into Conversion Shares in accordance with their terms, whether or not such eligibility, accrual of interest or conversion had in fact occurred as of such date) based on the Conversion Price in
effect on, or within three (3) Trading Days prior to, the date the amendment to the Registration Statement is filed, (y) the number of Warrant Shares covered by the unexercised Warrants (assuming for such purposes that all the Warrants, including
Additional Warrants, reduced by any exercised Warrants, had been issued, had been eligible to be exercised and had been exercised for the issuance of Warrant Shares in accordance with their terms, whether or not such issuance, eligibility or
exercise had in fact occurred as of such date), (z) the number of Other Issuable Shares as of the date of the filing of the Registration Statement or any amendment thereto (provided, however, that for purposes of this provision, the number of Other
Issuable Shares shall not be greater than the number of such shares which the SEC permits to be included in the Registration Statement), or</FONT></P>
<P align="left">
<FONT face="serif">(Y) if such Registration Statement has been declared effective by the SEC at that time, file with the SEC an additional Registration Statement (an &#147;Additional Registration Statement&#148;) to register the number of shares
equal to the excess of the Increased Number of Shares to Be Registered (where the number of shares determined by clause (x) is based on the Conversion Price in effect on, or within three (3) Trading Days prior to, the date the additional
Registration Statement (or any amendment thereto) is filed, over the aggregate number of shares of Common Stock already registered.</FONT></P>
<P align="left">
<FONT face="serif">The Company will use its reasonable best efforts to cause such Registration Statement to be declared effective on a date (each, an &#147;Increased Required Effective Date&#148;) which is no later than (q) with respect to a
Registration Statement under clause (X) of this subparagraph (ii), the Initial Required Effective Date and (r) with respect to an Additional Registration Statement, the earlier of (I) five (5) days after notice by the SEC that it may be declared
effective or (II) fifty (50) days after the Increased Registered Shares Date.</FONT></P>
<P align="left">
<B><FONT face="serif">(b) Payments by the Company.</FONT></B><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(i) If the Registration Statement covering the Registrable Securities is not filed as contemplated by this Agreement with the SEC by the Required Filing Date, the Company will make payment to the
Initial Investor in such amounts and at such times as shall be determined pursuant to this Section 2(b). </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 6 -</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(ii) If the Registration Statement covering the Registrable Securities is not effective by the relevant Required Effective Date or if there is a Restricted Sale Date, then the Company will make
payments to the Initial Investor in such amounts and at such times as shall be determined pursuant to this Section 2(b).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iii) The amount (the &#147;Periodic Amount&#148;) to be paid by the Company to the Initial Investor shall be determined as of each Computation Date (as defined below) and such amount shall be equal
to the Periodic Amount Percentage (as defined below) of the principal amount of the Holder&#146;s Debentures for the period from the date following the relevant Required Filing Date or the Required Effective Date or a Restricted Sale Date, as the
case may be, to the first relevant Computation Date, and thereafter to each subsequent Computation Date (each such period, a &#147;Computation Period&#148;). The &#147;Periodic Amount Percentage&#148; means two percent (2) of the Purchase Price of
all Debentures for each Computation Period (and pro rata for any Computation Period which is less than thirty [30] days). Anything in the preceding provisions of this paragraph (iii) to the contrary notwithstanding, after the relevant Effective Date
the Purchase Price shall be deemed to refer to the sum of (X) the principal amount of all Debentures not yet converted and (Y) the Held Shares Value. By way of illustration and not in limitation of the foregoing, if the Registration Statement is
filed on or before the Required Filing Date, but is not declared effective until seventy-five (75) days after the Initial Required Effective Date, the Periodic Amount will aggregate five percent (5%) of the Purchase Price of the Debentures (2% for
days 1-30, plus 2% for days 31-60, plus 1% for days 61-75).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(iv) Each Periodic Amount, if any, will be payable by the Company, except as provided in the other provisions of the immediately succeeding subparagraph (v), in cash or other immediately available
funds to the Investor on the third Trading Day after </FONT></P>
<P align="left">
<FONT face="serif">(A) with respect to Periodic Amounts for Computation Periods ending on or before the Effective Date, (i) the earlier of the Effective Date or the date which is one hundred eighty (180) days after the Initial Required Effective
Date (the &#147;First Specified Periodic Payment Date&#148;) and (ii) if relevant, the last day of each Computation Period after the First Specified Periodic Payment Date, and</FONT></P>
<P align="left">
<FONT face="serif">(B) with respect to all Periodic Amounts accruing after the Effective Date, the last day of the relevant Computation Period,</FONT></P>
<P align="left">
<FONT face="serif">in each case, without requiring demand therefor by the Investor. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(v) Notwithstanding the provisions of the immediately preceding subparagraph (iv),</FONT></P>
<P align="left">
<FONT face="serif">(A) at the option of the Company, exercisable in its discretion on the date the Periodic Amount is due; provided, however, that the Company may exercise this discretion if, but only if the Effective Date is on or before the First
Specified Periodic Payment Date and the Registration Statement covering the Payment Shares is then effective; or</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 7 -</FONT><BR>
</P>
<P align="center">
<FONT face="serif">(B) at the option of the Investor, exercisable in its sole and absolute discretion by written notice to the Company at any time before the Periodic Amount is paid, </FONT></P>
<P align="left">
<FONT face="serif">all or a portion of the Periodic Amount shall be paid by the issuance of additional shares of Common Stock to the Investor (&#147;Payment Shares&#148;) in an amount equal to the Periodic Amount being paid thereby divided by the
then applicable Conversion Price; provided, further that the &#147;Delivery Date&#148; for the Payment Shares shall be three (3) Trading Days after the date the Periodic Amount is due (if the election is made by the Company) or after the Investor
gives the notice contemplated by clause (B) of this subparagraph. The provisions of Section 5(b)(i) of the Securities Purchase Agreement shall apply to the delivery of the certificates of the Payment Shares based on the relevant Periodic
Amount.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(vi) The parties acknowledge that the damages which may be incurred by the Investor if the Registration Statement is not filed by the Required Filing Date or the Registration Statement has not been
declared effective by a Required Effective Date, including if the right to sell Registrable Securities under a previously effective Registration Statement is suspended or the shares of the Company&#146;s stock are not listed on the Principal Trading
Market, may be difficult to ascertain. The parties agree that, subject to the provisions of Section 11(k), the amounts payable pursuant to the foregoing provisions of this Section 2(b) represent a reasonable estimate on the part of the parties, as
of the date of this Agreement, of the amount of such damages.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(vii) Notwithstanding the foregoing, the amounts payable by the Company pursuant to this provision shall not be payable to the extent any delay in the filing or effectiveness of the Registration
Statement occurs because of an act of, or a failure to act or to act timely by the Initial Investor or its counsel.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(viii) "Computation Date" means (A) the date which is the earlier of (1) thirty (30) days after the Required Filing Date, the Required Effective Date or a Restricted Sale Date, as the case may be, or
(2) the date after the Required Filing Date, the Required Effective Date or Restricted Sale Date on which the Registration Statement is filed (with respect to payments due as contemplated by Section 2(b)(i) hereof) or is declared effective or has
its restrictions removed or the shares of the Company&#146;s stock are listed on the Principal Trading Market (with respect to payments due as contemplated by Section 2(b)(ii) hereof), as the case may be, and (B) each date which is the earlier of
(1) thirty (30) days after the previous Computation Date or (2) the date after the previous Computation Date on which the Registration Statement is filed (with respect to payments due as contemplated by Section 2(b)(i) hereof) or is declared
effective or has its restrictions removed or the shares of the Company&#146;s stock are listed on the Principal Trading Market (with respect to payments due as contemplated by Section 2(b)(ii) hereof), as the case may be.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(ix) Anything in the preceding provisions of this Section 2(b) to the contrary notwithstanding, if, but only if, the Registration Statement is declared effective within thirty (30) days following the
Initial Required Effective Date, </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 8 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">(A) the provisions of Section 2(b)(i) shall not apply; and </FONT></P>
<P align="left">
<FONT face="serif">(B) the provisions of Section 2(b)(ii) shall not apply to the fact that the Registration Statement was initially declared effective after the Initial Required Effective Date; </FONT></P>
<P align="left">
<FONT face="serif">and the Company will not have any obligation to pay any Periodic Amount to the Investor with respect thereto; provided, however, that the provisions of Section 2(b)(ii) shall continue to apply to all other events described
therein.</FONT></P>
<P align="left">
<B><FONT face="serif">3. Obligations of the Company. </FONT></B><FONT face="serif">In connection with the registration of the </FONT></P>
<P align="left">
<FONT face="serif">Registrable Securities, the Company shall do each of the following:</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(a) Prepare promptly, and file with the SEC by the Required Filing Date a Registration Statement with respect to not less than the number of Registrable Securities provided in Section 2(a) above, and
thereafter use its reasonable best efforts to cause such Registration Statement relating to Registrable Securities to become effective by the Required Effective Date and keep the Registration Statement effective at all times during the period (the
&#147;Registration Period&#148;) continuing until the earlier of (i) the date when the Investors may sell all Registrable Securities under Rule 144 without volume or other restrictions or limits or (ii) the date the Investors no longer own any of
the Registrable Securities, which Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any 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 in which they were made, not misleading;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(b) Prepare and file with the SEC such amendments (including post-effective amendments) and supplements to the Registration Statement and the prospectus used in connection with the Registration
Statement as may be necessary to keep the Registration Statement effective at all times during the Registration Period, and, during the Registration Period, comply with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller or sellers thereof as set
forth in the Registration Statement;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(c) Permit a single firm of counsel designated by the Initial Investors (which, until further notice, shall be deemed to be Krieger &amp; Prager </FONT><FONT size=2 face="serif">LLP</FONT><FONT
face="serif">, Attn: Samuel Krieger, Esq., which firm has requested to receive such notification; each, an &#147;Investor&#146;s Counsel&#148;) to review the Registration Statement and all amendments and supplements thereto a reasonable period of
time (but not less than three (3) Trading Days) prior to their filing with the SEC, and not file any document in a form to which such counsel reasonably objects;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(d) Notify each Investor (except for provisions marked with an asterisk (*)) and the Investor&#146;s Counsel and any managing underwriters immediately (and, in the case of (i)(A) below, not less than
three (3) Trading Days 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 </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 9 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">(i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B)* whenever the SEC notifies the Company whether there will be a &#147;review&#148; of such
Registration Statement; (C)* whenever the Company receives (or a representative of the Company receives on its behalf) any oral or written comments from the SEC in respect of a Registration Statement (copies or, in the case of oral comments,
summaries of such comments shall be promptly furnished by the Company to the Investor&#146;s Counsel); and (D) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the
SEC or any other Federal or state governmental authority for (A)* amendments or supplements to the Registration Statement or Prospectus, (B)* additional information not pertaining to the Investors or (C) additional information pertaining to the
Investors; (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any proceedings for that purpose; (iv) if at any time any
of the representations or warranties of the Company contained in any agreement (including any underwriting agreement) contemplated hereby ceases to be true and correct in all material respects; (v) 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; and (vi) of the occurrence of
any event that to the best knowledge of the Company makes any statement made in the 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 the Registration Statement, Prospectus or other documents so that, in the case of the 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. In addition, the Company shall communicate with the Investor&#146;s Counsel with
regard to its proposed written responses to the comments contemplated in clause (C) of this Section 3(d), so that, to the extent practicable, the Investor&#146;s Counsel shall have the opportunity to comment thereon;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(e) Unless such filing is publicly available on the SEC&#146;s EDGAR system (via the SEC&#146;s web site at no additional charge), furnish to each Investor and to Investor&#146;s Counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one (1) copy of the Registration Statement, each preliminary prospectus and prospectus, and each amendment or supplement thereto, and (ii) such
number of copies of a prospectus, and all amendments and supplements thereto and such other documents, as such Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(f) As promptly as practicable after becoming aware thereof, notify each Investor of the happening of any event of which the Company has knowledge, as a result of which the prospectus included in the
Registration Statement, as then in effect, includes an untrue statement of a material fact or omits 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, and use its best efforts promptly to prepare a supplement or amendment to </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 10 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">the Registration Statement or other appropriate filing with the SEC to correct such untrue statement or omission, and, unless such filing is publicly available on the SEC&#146;s EDGAR system (via the SEC&#146;s web site at no
additional charge), deliver a number of copies of such supplement or amendment to each Investor as such Investor may reasonably request;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(g) As promptly as practicable after becoming aware thereof, notify each Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters)
of the issuance by the SEC of a Notice of Effectiveness or any notice of effectiveness or any stop order or other suspension of the effectiveness of the Registration Statement at the earliest possible time;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(h) As promptly as practicable after becoming aware thereof, notify each Investor who holds Registrable Securities of the fact that the ability of the Investor to sell Registrable Securities under the
Registration Statement will soon be unavailable, whether as a result of</FONT></P>
<P align="left">
<FONT face="serif">(i) the impending cessation or expiration of the effectiveness of the Registration Statement, for which notice should be given at least thirty (30) days in advance, except that the Company's obligation under this clause shall be
satisfied if the Company has previously given written notice of such date to such Investor and such date has not changed since the date of such written notice; or</FONT></P>
<P align="left">
<FONT face="serif">(ii) the fact that the Company has issued Registrable Shares to the Investor equal to ninety percent (90%) or more of the shares registered for resale by such Investor in the Registration Statement.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(i) Comply with Regulation FD or any similar rule or regulation regarding the dissemination of information regarding the Company, and in furtherance of the foregoing, and not in limitation thereof,
and notwithstanding anything to the contrary in this Agreement or in any of the other Transaction Agreements, not disclose to the Investor any non-public material information regarding the Company;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(j) Notwithstanding the foregoing, if at any time or from time to time after the date of effectiveness of the Registration Statement, the Company notifies the Investors in writing that the
effectiveness of the Registration Statement is suspended for any reason, whether due to a Potential Material Event or otherwise, the Investors shall not offer or sell any Registrable Securities, or engage in any other transaction involving or
relating to the Registrable Securities, from the time of the giving of such notice until such Investor receives written notice from the Company that such the effectiveness of the Registration Statement has been restored, whether because the
Potential Material Event has been disclosed to the public or it no longer constitutes a Potential Material Event or otherwise; </FONT><U><FONT face="serif">provided, however,</FONT></U><FONT face="serif"> that the Company may not so suspend the
right to such holders of Registrable Securities during the periods the Registration Statement is required to be in effect other than during a Permitted Suspension Period (and the applicable provisions of Section 2(b) shall apply with respect to any
such suspension other than during a Permitted Suspension Period);</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<A name="page_11"></A>

<P align="center">
<FONT face="serif">- 11 -</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(k) Use its reasonable efforts to secure and maintain the designation of all the Registrable Securities covered by the Registration Statement on the Principal Trading Market and the quotation of the
Registrable Securities on the Principal Trading Market;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(l) Provide a transfer agent (&#147;Transfer Agent&#148;) and registrar, which may be a single entity, for the Registrable Securities not later than the initial Effective Date; </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(m) Cooperate with the Investors who hold Registrable Securities being offered to facilitate the timely preparation and delivery of certificates for the Registrable Securities to be offered pursuant
to the Registration Statement and enable such certificates for the Registrable Securities to be in such denominations or amounts as the case may be, as the Investors may reasonably request, and, within five (5) Trading Days after a Registration
Statement which includes Registrable Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal counsel selected by the Company to deliver, to the Transfer Agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration Statement) an appropriate instruction and opinion of such counsel, which shall include, without limitation, directions to the Transfer Agent to issue certificates of
Registrable Securities(including certificates for Registrable Securities to be issued after the Effective Date and replacement certificates for Registrable Securities previously issued) without legends or other restrictions, subject to compliance
with applicable law and other rules and regulations, including, without limitation, prospectus delivery requirements;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(n) Take all other reasonable administrative steps and actions (including the participation of Company counsel) necessary to expedite and facilitate disposition by the Investor of the Registrable
Securities pursuant to the Registration Statement; provided, however, that the foregoing does not require that the Company take any steps whatsoever regarding the identification or selection of a broker to sell the Registrable Securities, the
identification of buyers of the Registrable Securities, or the negotiation of the sale terms of the Registrable Securities; and</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(o) Not file any other registration statement (other than the Registration Statement and amendments thereto) during the period commencing on the Closing Date and ending on the Effective
Date.</FONT></P>
<P align="left">
<B><FONT face="serif">4. Obligations of the Investors. </FONT></B><FONT face="serif">In connection with the registration of the </FONT></P>
<P align="left">
<FONT face="serif">Registrable Securities, the Investors shall have the following obligations:</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(a) Each Investor, by such Investor's acceptance of the Registrable Securities, agrees to cooperate with the Company to provide factual information regarding the Investor, as reasonably requested by
the Company in connection with the preparation and filing of the Registration Statement hereunder, unless such Investor has notified the Company in writing of such Investor's election to exclude all of such Investor's Registrable Securities from the
Registration Statement; and</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<A name="page_12"></A>

<P align="center">
<FONT face="serif">- 12 -</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(b) Each Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(f), (g) or (i) above, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Investor's receipt of the copies of the supplemented or amended prospectus contemplated by Section 3(f), (g) or
(i), and, if so directed by the Company, such Investor shall deliver to the Company (at the expense of the Company) or destroy (and deliver to the Company a certificate of destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such notice.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">5. Expenses of Registration</FONT></B><FONT face="serif">. All reasonable expenses (other than underwriting discounts and commissions of the Investor) incurred in connection with registrations,
filings or qualifications pursuant to Section 3, but including, without limitation, all registration, listing, and qualifications fees, printers and accounting fees, the fees and disbursements of counsel for the Company shall be borne by the
Company. In addition, a fee for a single counsel for the Investors (as a group and not individually) equal to &#36;4,500 for the review of each Registration Statement and &#36;2,000 for the review of each post-effective amendment to a Registration
Statement shall be borne by the Company.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">6. Indemnification</FONT></B><FONT face="serif">. In the event any Registrable Securities are included in a Registration Statement under this Agreement:</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(a) To the extent permitted by law, the Company will indemnify and hold harmless each Investor who holds such Registrable Securities, the directors, if any, of such Investor, the officers, if any, of
such Investor, and each Buyer Control Person (each, an &#147;Indemnified Party&#148;), against any losses, claims, damages, liabilities or expenses (joint or several) incurred (collectively, &#147;Claims&#148;) to which any of them may become
subject under the Securities Act, Securities Exchange Act of 1934, as amended (the &#147;Exchange Act&#148;), or otherwise, insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations in the Registration Statement, or any post-effective amendment thereof, or any prospectus included therein: (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective amendment thereof or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the Securities
Act, the Exchange Act, any state securities law or any rule or regulation under the Securities Act, the Exchange Act or any state securities law (the matters in the foregoing clauses (i) through (iii) being, collectively referred to as
&#147;Violations&#148;). Subject to clause (b) of this Section 6, the Company shall reimburse the Investors, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses incurred by them in
connection with </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<A name="page_13"></A>

<P align="center">
<FONT face="serif">- 13 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6(a) shall not (I) apply to any Claim arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Indemnified Party expressly for use in connection with the preparation of the Registration Statement, any such
amendment thereof or supplement thereto or prospectus, if such prospectus (or supplement or amendment thereto) was timely made available by the Company pursuant to Section 3(b) hereof; (II) be available to the extent such Claim is based on a failure
of the Investor to deliver or cause to be delivered the prospectus made available by the Company or the amendment or supplement thereto made available by the Company; (III) be available to the extent such Claim is based on the delivery of a
prospectus by the Investor after receiving notice from the Company under Section 3(f), (g) or (i) hereof (other than a notice regarding the effectiveness of the Registration Statement or any amendment or supplement thereto), or (IV) apply to amounts
paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld or delayed. The Investor will indemnify the Company and its officers, directors and
agents (each, an &#147;Indemnified Party&#148;) against any claims arising out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company, by or on behalf of such Investor,
expressly for use in connection with the preparation of the Registration Statement or the amendment or supplement thereto, subject to such limitations and conditions as are applicable to the indemnification provided by the Company pursuant to this
Section 6. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party and shall survive the transfer of the Registrable Securities by the Investors pursuant to Section
9.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(b) Promptly after receipt by an Indemnified Party under this Section 6 of notice of the commencement of any action (including any governmental action), such Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel satisfactory to the indemnifying party (provided such counsel shall not have a conflict of interest
with the Indemnified Party and provided that all defenses available to the Indemnified Party can be maintained without prejudicing the rights of the indemnifying party). In case any such action is brought against any Indemnified Party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, assume the defense thereof,
subject to the provisions herein stated and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party will not be liable to such Indemnified Party under this Section 6
for any legal or other reasonable out-of-pocket expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation, unless the indemnifying party shall not pursue the action
to its final conclusion. The Indemnified Party shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and reasonable out-of-</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<A name="page_14"></A>

<P align="center">
<FONT face="serif">- 14 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">pocket expenses of such counsel shall not be at the expense of the indemnifying party if the indemnifying party has assumed the defense of the action with counsel as provided above. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnified Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action. The indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable; provided, however, that the Investor shall not obligated to make any indemnification payment to the Company under this Section 6 unless and until there has been a final adjudication of liability on the part of the
Investor.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">7. Contribution</FONT></B><FONT face="serif">. To the extent any indemnification by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; </FONT><U><FONT face="serif">provided</FONT></U><FONT face="serif">, </FONT><U><FONT
face="serif">however</FONT></U><FONT face="serif">, that (a) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards set forth in Section 6; (b) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) except where the seller has committed fraud (other than a fraud by reason of the information included or omitted from the Registration Statement as to which the Company has not given notice as contemplated under Section 3
hereof) or intentional misconduct, contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller from the sale of such Registrable Securities.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">8. Reports under Securities Act and Exchange Act</FONT></B><FONT face="serif">. With a view to making available to Investor the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without Registration (&#147;Rule 144&#148;), the Company agrees to:</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(a) make and keep public information available, as those terms are understood and defined in Rule 144;</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(c) furnish to the Investor so long as the Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange Act, (ii) if not available on the SEC&#146;s EDGAR system, a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company and (iii) such
other information as may be reasonably requested to permit the Investor to sell such securities pursuant to Rule 144 without Registration; and</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 15 -</FONT><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(d) at the request of any Investor holding Registrable Securities (a &#147;Holder&#148;), give its Transfer Agent instructions (supported by an opinion of Company Counsel or other counsel to the
Company, if required or requested by the Transfer Agent) to the effect that, upon the Transfer Agent&#146;s receipt from such Holder of</FONT></P>
<P align="left">
<FONT face="serif">(i) a certificate (a &#147;Rule 144 Certificate&#148;) certifying (A) that the Holder&#146;s holding period (as determined in accordance with the provisions of Rule 144) for the shares of Registrable Securities which the Holder
proposes to sell (the &#147;Securities Being Sold&#148;) is not less than (1) year and (B) as to such other matters as may be appropriate in accordance with Rule 144 under the Securities Act, and </FONT></P>
<P align="left">
<FONT face="serif">(ii) an opinion of counsel acceptable to the Company (for which purposes it is agreed that the initial Investor&#146;s Counsel shall be deemed acceptable if not given by Company Counsel) that, based on the Rule 144 Certificate,
Securities Being Sold may be sold pursuant to the provisions of Rule 144, if the Holder has complied with the requirements of Rule 144, even in the absence of an effective Registration Statement, </FONT></P>
<P align="left">
<FONT face="serif">the Transfer Agent is to effect the transfer of the Securities Being Sold and issue to the buyer(s) or transferee(s) thereof one or more stock certificates representing the transferred Securities Being Sold without any restrictive
legend and without recording any restrictions on the transferability of such shares on the Transfer Agent&#146;s books and records (except to the extent any such legend or restriction results from facts other than the identity of the Holder, as the
seller or transferor thereof, or the status, including any relevant legends or restrictions, of the shares of the Securities Being Sold while held by the Holder). If the Transfer Agent reasonably requires any additional documentation at the time of
the transfer, the Company shall deliver or cause to be delivered all such reasonable additional documentation as may be necessary to effectuate the issuance of an unlegended certificate. </FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">9. Assignment of the Registration Rights</FONT></B><FONT face="serif">. The rights to have the Company register Registrable Securities pursuant to this Agreement and the rights of the Investor
under Section 8 hereof shall be automatically assigned by the Investor to any transferee of the Registrable Securities (excluding any transfer of such Registrable Securities by a sale pursuant to an effective Registration Statement or pursuant to
Rule 144) or of all or any portion of any unconverted Debentures or unexercised Warrants, but , only if the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, (b) the securities with respect to which such registration rights are being transferred or assigned, and (c) written evidence of the transferee&#146;s assumption of the Investor&#146;s obligations under this
Agreement.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face="serif">10. Amendment of Registration Rights</FONT></B><FONT face="serif">. Any provision of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written consent of the Company and Investors who represent a Majority in Interest of the Holders as of the relevant date. Any </FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<P align="center">
<FONT face="serif">- 16 -</FONT><BR>
</P>
<P align="left">
<FONT face="serif">amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company.</FONT></P>
<P align="left">
<B><FONT face="serif">11. Miscellaneous.</FONT></B><BR>
</P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(a) A person or entity is deemed to be a holder of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable
Securities.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(b) Notices required or permitted to be given hereunder shall be given in the manner contemplated by the Securities Purchase Agreement, (i) if to the Company or to the Initial Investor, to their
respective address contemplated by the Securities Purchase Agreement, and (ii) if to any other Investor, at such address as such Investor shall have provided in writing to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 11(b).</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(c) Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(d) This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the
principles thereof regarding the conflict of laws. Each of the parties consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the County of New York or the state courts of the State of New York sitting in
the County of New York in connection with any dispute arising under this Agreement and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on</FONT><I><FONT face="serif"> forum non
coveniens</FONT></I><FONT face="serif">, to the bringing of any such proceeding in such jurisdictions.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(e) The Company and the Investor hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out
of or in connection with this Agreement or any of the other Transaction Agreements.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(f) If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of
this Agreement or the validity or enforceability of this Agreement in any other jurisdiction.</FONT></P>
<P align="left">
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="serif">(g) Subject to the requirements of Section 9 hereof, this Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto.</FONT></P>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<!--$$/page=--><A name=page_17></A>
<P align=center><FONT face=serif>- 17 -</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>(h) All pronouns
and any variations thereof refer to the masculine, feminine or neuter, singular
or plural, as the context may require.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>(i) The headings in
this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning thereof.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>(j) This Agreement
may be executed in one or more counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other party hereto
by telephone line facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>(k) The Company
acknowledges that any failure by the Company to perform its obligations under
Section 3(a) hereof, or any delay in such performance, whether or not as a
result of the Company&#146;s negligence, failure to act or otherwise, could result in
loss to the Investors, and the Company agrees that, in addition to any other
liability the Company may have by reason of such failure or delay, the Company
shall be liable for all direct damages caused by any such failure or delay,
unless the same is the result of force majeure. NEITHER PARTY SHALL BE LIABLE TO
THE OTHER FOR CONSEQUENTIAL DAMAGES.</FONT></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>(l) This Agreement
(including to the extent relevant the provisions of other Transaction
Agreements) constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein.</FONT></P>
<P align=center><FONT face=serif>[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]</FONT></P>
<P align=left><FONT face=serif size=1>D/BIP/832564.2</FONT></P>
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<P align=center><FONT face=serif>- 18 -</FONT><BR></P>
<P align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif>IN WITNESS
WHEREOF,</FONT></B><FONT face=serif> the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.</FONT></P>
<P align=left><FONT face=serif>INITIAL INVESTOR:</FONT><BR><FONT
face=serif>____________________________________</FONT><BR><FONT
face=serif>[</FONT><I><FONT face=serif>Print Name of Initial
Investor</FONT></I><FONT face=serif>]</FONT><BR><FONT face=serif>By:
<BR>_________________________________</FONT><BR><FONT face=serif>Name:
<BR>______________________________</FONT><BR><FONT face=serif>Title:
<BR>_______________________________</FONT><BR></P>
<P align=left><FONT face=serif>COMPANY:</FONT><BR><B><FONT face=serif>PLURISTEM
LIFE SYSTEMS, INC.</FONT></B><BR></P>
<P align=left><FONT face=serif>By:
<BR>_________________________________</FONT><BR><FONT face=serif>Name:
<BR>______________________________</FONT><BR><FONT face=serif>Title:
<BR>_______________________________</FONT><BR></P>
<P align=left><FONT face=serif size=1>D/BIP/832564.2</FONT></P>
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<TABLE border=0 width=90% cellspacing=1 cellpadding=0>
<TR valign="bottom">
	<TD width=40% align=left>
&nbsp;
	</TD>
	<TD width=25% align=left>
<FONT face="serif">SCHEDULE 1</FONT>&nbsp;
	</TD>
	<TD width=33% align=left>
&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
&nbsp;
	</TD>
	<TD width=58% colspan=2 align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="serif">Shares which may be included in</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
<U><FONT face="serif">&#147;Permitted Selling Shareholder&#148;</FONT></U>&nbsp;
	</TD>
	<TD width=58% colspan=2 align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<U><FONT face="serif">Registration Statement</FONT></U>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
 &nbsp;<FONT face="serif">Ernest Muller</FONT>&nbsp;
	</TD>
	<TD width=25% align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="serif">1,000,000</FONT>&nbsp;
	</TD>
	<TD width=33% align=left>
<FONT face="serif">shares on exercise of warrants</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
 &nbsp;<FONT face="serif">Zegal &amp; Ross Capital</FONT>&nbsp;
	</TD>
	<TD width=25% align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="serif">1,400,000</FONT>&nbsp;
	</TD>
	<TD width=33% align=left>
<FONT face="serif">shares</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
 &nbsp;<FONT face="serif">Tayside Trading</FONT>&nbsp;
	</TD>
	<TD width=25% align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="serif">3,600,000</FONT>&nbsp;
	</TD>
	<TD width=33% align=left>
<FONT face="serif">shares</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
 &nbsp;<FONT face="serif">Levi Israel LLC</FONT>&nbsp;
	</TD>
	<TD width=25% align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="serif">3,600,000</FONT>&nbsp;
	</TD>
	<TD width=33% align=left>
<FONT face="serif">shares</FONT>&nbsp;
	</TD>
</TR>
<TR valign="bottom">
	<TD width=40% align=left>
 &nbsp;<FONT face="serif">EDA Capital</FONT>&nbsp;
	</TD>
	<TD width=25% align=left>
 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face="serif">1,400,000</FONT>&nbsp;
	</TD>
	<TD width=33% align=left>
<FONT face="serif">shares</FONT>&nbsp;
	</TD>
</TR>
</TABLE><BR>
<P align="left">
<FONT size=1 face="serif">D/BIP/832564.2</FONT></P>

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<TYPE>EX-10
<SEQUENCE>7
<FILENAME>ex10-5.htm
<DESCRIPTION>EXHIBIT 10.5
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>Exhibit 10.5</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=2>ANNEX VIII</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=2>TO</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:right;'><B><font SIZE=2>SECURITIES PURCHASE AGREEMENT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>SECURITY INTEREST AGREEMENT</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.56in;text-align:justify;'><B><font SIZE=2>SECURITY INTEREST AGREEMENT</font></B><font size=2> ("Security Interest Agreement"), dated as of April 3, 2006, by and among the persons set forth on Schedule 1 (each a &#147;Secured Party&#148; and collectively, the &#147;Secured Parties&#148;), PLURISTEM LIFE SYSTEMS, INC., a Nevada corporation with headquarters located at MATAM Advanced Technology Park, Building No. 20, Haifa, Israel 31905 (the &#147;Company&#148; or the &#147;Debtor&#148;), and KRIEGER &amp; PRAGER, LLP, as agent for the Secured. Parties (the &#147;Agent&#148;).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><B><font SIZE=2>RECITALS</font></B></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.57in;text-align:justify;'><font SIZE=2>A.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Reference is made to (i) that certain Securities Purchase Agreement of even date herewith (the &#147;Securities Purchase Agreement&#148;) to which the Debtor and the Secured Parties are parties, and (ii) the Transaction Agreements, including, without limitation, the Debentures and the Registration Rights Agreement.  Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the relevant Transaction Agreements.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.57in;text-align:justify;'><font SIZE=2>B.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Pursuant to the Transaction Agreements, the Debtor has certain obligations to the Secured Parties (all such obligations, the &#147;Obligations&#148;), including, but not limited to, obligations pursuant to the Securities Purchase Agreement, the Debentures and the Registration Rights Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.56in;text-align:justify;'><font SIZE=2>C.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>In order to induce the Secured Parties to execute and deliver the Transaction Agreements and to make the advances to the Debtor contemplated thereby, and as contemplated by the Securities Purchase Agreement and the Debenture, the Debtor has agreed to grant to the Secured Parties a security interest in the Collateral (as defined below) to secure the due and punctual fulfillment of the Obligations.  The Secured Parties are willing to enter into the Securities Purchase Agreement and the other Transaction Agreements only upon receiving the Debtor&#146;s execution of this Security Interest Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.56in;text-align:justify;'><font size=2>NOW, THEREFORE, in consideration of the premises, the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="330" style=' border-collapse:collapse'>
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        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Section 1</font></u><font size=2>.</font></p> </td>
        <td width="186" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Grant of Security Interest</font></u><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>In order to secure the due and punctual fulfillment of the Obligations, the Debtor hereby grants, conveys, transfers and assigns to the Secured Parties (and to each of them based </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 2 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>on their respective Allocable Shares, as defined below) a continuing security interest in the following described properties, assets and rights of Debtor, wherever located, whether now owned or hereafter acquired or arising, and all cash and non-cash proceeds and products thereof (all of the same hereinafter collectively called the "Collateral"):</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&#147;COLLATERAL&#148; is all right, title and interest of Debtor in and to all of the following, whether now owned or hereafter arising or acquired and wherever located: All assets of the Debtor, including, but not limited to: all personal and fixture property of every kind and nature, including without limitation all goods (including inventory, equipment and any accessions thereto), instruments (including promissory notes), documents, accounts (including accounts receivable), chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, and all general intangibles (including all payment intangibles); all Equipment; all Intellectual
Property; and any and all claims, rights and interests in any of the above, and all guaranties and security for any of the above, and all substitutions and replacements for, additions, accessions, attachments, accessories, and improvements to, and proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims against third parties) of, any and all of the above, and all Debtor&#146;s books relating to any and all of the above and includes, without limiting the generality of the above, the assets listed in Exhibit B.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;CODE&#148; is the Uniform Commercial Code, in effect in the State of New York as in effect from time to time. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;COPYRIGHTS&#148; are all copyrights, copyright rights, applications or registrations and like protections in each work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing, created, acquired or held. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;EQUIPMENT&#148; has the meaning set forth in the Code and includes all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Debtor has any interest. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;INTELLECTUAL PROPERTY&#148; is all present and future (a) Copyrights, (b) trade secret rights, including all rights to unpatented inventions and know-how, and confidential information; (c) mask work or similar rights available for the protection of semiconductor chips; (d) Patents; (e) Trademarks; (f) computer software and computer software products; (g) designs and design rights; (h) technology; (i) all claims for damages by way of past, present and future infringement of any of the rights included above; (j) all licenses or other rights to use any property or rights of a type described above.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;PATENTS&#148; are patents, patent applications and like protections, including improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 3 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&#147;TRADEMARKS&#148; are trademarks, servicemarks, trade styles, and trade names, whether or not any of the foregoing are registered, and all applications to register and registrations of the same and like protections, and the entire goodwill of the business of Debtor connected with and symbolized by any such trademarks.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The security interests granted pursuant to this Section (the "Security Interests") are granted as security only and shall not subject the Secured Party to, or transfer or in any way affect or modify, any obligation or liability of the Debtor under any of the Collateral or any transaction which gave rise thereto.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The term &#147;Allocable Share&#148; means, with respect to each Secured Party (if there is more than one Secured Party), as of the relevant date, the fraction equal to (i) the outstanding principal of the Debenture then held by such Secured Party, divided by (ii) the aggregate outstanding principal of the Debentures then held by all Secured Parties.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="338" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Section 2</font></u><font size=2>.</font></p> </td>
        <td width="194" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Filing; Further Assurances</font></u><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The Debtor will, at its expense, cause to be searched the public records with respect to the Collateral and will execute, deliver, file and record (in such manner and form as the Secured Party may reasonably require), or permit the Secured Party to file and record, as its attorney in fact for such purpose, any financing statement, any carbon, photographic or other reproduction of a financing statement or this Security Interest Agreement (which shall be sufficient as a financing statement hereunder), any specific assignments or other paper that may be reasonably necessary or desirable, or that the Secured  Party may reasonably request, in order to create, preserve, perfect or validate any Security Interest or to enable the Secured Party to exercise and enforce its rights hereunder with
respect to any of the Collateral.  In cases where the Secured Party, acting through the Agent, has requested an additional financing statement to preserve the rights of the Secured Party, and the Debtor has not provided same within 3 Trading Days of such request, the Debtor hereby appoints the Agent as Debtor's attorney-in-fact to execute in the name and behalf of Debtor such additional financing statements as Secured Party may request.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Each Secured Party has designated an Agent as provided in Section titled &#147;Agent&#148; below.  Among other things, such Agent shall be agent of the Secured Party for execution of and identification on any financing statement or similar instrument referring to or describing the Collateral.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>If Debtor does not comply with Section 2(a) hereof in a prompt manner, the Agent is authorized to execute and file any and all financing statements desired to be filed by the Secured Parties to reflect the security interest in the Collateral in any and all jurisdictions.  For such purposes, the Debtor irrevocably appoints the Agent (acting by Samuel M. Krieger and </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 4 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>Ronald Nussbaum, or either one of them), with full power of substitution to execute and file such financing statements naming the Debtor as debtor thereon.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 3</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Representations and Warranties of Debtor</font></u><font size=2>. The Debtor hereby represents and warrants to the Secured Party (a) that, except as set forth in Exhibit A attached hereto, the Debtor is, or to the extent that certain of the Collateral is to be acquired after the date hereof, will be, the owner of the Collateral free from any adverse lien, security interest or encumbrance; (b) that except for such financing statements as may be described on Exhibit A attached hereto and made a part hereof, no financing statement covering the Collateral is on file in any public office, other than the financing statements filed pursuant to this Security Agreement; and (c) that all additional information, representations and warranties contained in
Exhibit B attached hereto and made a part hereof are true, accurate and complete on the date hereof.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 4</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Covenants of Debtor</font></u><font size=2>. The Debtor hereby covenants and agrees with the Secured Party that the Debtor (a) will, at the  Debtor's sole cost and expense, defend the Collateral against all claims and demands of all persons at any time claiming any interest therein junior to the Secured Party's interest; (b) will provide the Secured Party with prompt written notice of (i) any change in the chief executive officer of the Debtor or the office where the Debtor maintains its books and records pertaining to the Collateral; (ii) the movement or location  of all or a material part of the Collateral to or at any address other than as set forth in said Exhibit B; and (iii) any facts which constitute a Debtor Event of Default (as such term is
defined below), or which, with the giving of notice and/or the passage of time, could  or  would constitute a Debtor Event of Default, pursuant to the Section titled &#147;Debtor Events of Default&#148; below; (c) will promptly pay any and all taxes, assessments and governmental charges upon the Collateral prior to the date penalties are attached thereto, except to the extent that such taxes, assessments and charges shall be contested in good faith by the Debtor; (d) will immediately notify the Secured Party of any event causing a substantial loss or diminution in the value of all or any material part of the Collateral and the amount or an estimate of the amount of such loss or diminution; (e) will not sell or offer to sell or otherwise assign, transfer or dispose of the Collateral or any interest therein, without the prior written consent of the Secured Party, except in the ordinary course of business; (f) will keep the Collateral free from any adverse lien, security interest or
encumbrance (except for encumbrances specified in Exhibit A  attached  hereto) and in good order and repair, reasonable wear and tear excepted, and will not waste or destroy the Collateral or any part thereof, and in furtherance of the foregoing, and not in limitation thereof, will not grant a security interest senior to or pari passu with the security interest of the Secured Parties contemplated hereby to any other party (except to a party such as a government agency, where the priority of such party is provided by relevant law or regulation); and (g) will not use the Collateral in material violation of any statute or ordinance the violation of which could materially and adversely affect the Debtor's business.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 5</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Records Relating To Collateral</font></u><font size=2>. The Debtor will keep its records concerning  the Collateral at its offices designated in the caption of this Security Interest Agreement or at such other place or places of business of which the Secured Party shall have </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
<br>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 5 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>been notified in writing no less than ten (10) days prior thereto. The Debtor will hold and preserve such records and chattel paper and will permit representatives of the Secured Party at any time during normal business hours upon reasonable notice to examine and inspect the Collateral and to make abstracts from such records and chattel paper (collectively, &#147;Audit&#148;), and will furnish to the Secured Party such information and reports regarding the Collateral as the Secured Party may from time to time reasonably request.  As long as no Event of Default has occurred and is continuing, such Audits will be conducted not more often than once every twelve (12) months.  Unless an Event of Default is continuing at the time of the Audit, the Secured Party shall bear its own costs of the Audit.  If an Event of Default has occurred and is continuing, Secured Party may make Audits more frequently and the
Debtor will be responsible for the related costs.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 6</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>General Authority</font></u><font size=2>. From and during the term of any Debtor Event of Default, the Debtor hereby appoints the Secured Party, acting through the Agent, as the Debtor's lawful attorney, with full power of substitution, in the name of the Debtor, for the sole use and benefit of the Secured Party, but at the Debtor's expense, to exercise, all or any of the following powers with respect to all or any of the Collateral:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>to receive, take, endorse, assign and deliver all checks, notes, drafts, documents and other negotiable and non- negotiable instruments and chattel paper taken or received by the Secured Party;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>to settle, compromise, prosecute or defend any action or proceeding with respect thereto;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(d)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>to sell, transfer, assign or otherwise deal in or with the same or  the proceeds thereof or the related goods securing the Collateral, as fully and effectually as if the Secured Party were the sole and absolute owner thereof;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(e)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference thereto; and </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(f)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>to discharge any taxes, liens, security interests or other encumbrances at any time placed thereon;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>provided, however, that the Secured Party shall give the Debtor not less than ten (10) business days&#146; prior written notice of the time and place of any sale or other intended disposition of any of the Collateral.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 6 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>The exercise by Secured Party or by the Agent of, or failure to so exercise, any authority granted herein shall in no manner affect Debtor's liability to Secured Party, and provided, further, that Secured Party and the Agent shall be under no obligation or duty to exercise any of the powers hereby conferred upon them and they shall be without liability for any act or failure to act in connection with the collection of, or the preservation of, any rights under any of the Collateral.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="328" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Section 7</font></u><font size=2>.</font></p> </td>
        <td width="184" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Debtor Events of Default</font></u><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The Debtor shall be in default under this Security Agreement upon the occurrence of any of the following events (a "Debtor Event of Default"):</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(i)</font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>if any representation or warranty made by the Debtor in this Security Interest Agreement, in the Securities Purchase Agreement or in any of the other Transaction Agreements shall be false or misleading in any material respect; or</font></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="100%" style=' border-collapse:collapse'>
    <tr>
        <td width="96" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="48" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>(ii)  </font></p> </td>
        <td  valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>the occurrence of an Event of Default (as defined in the Debenture) by the Debtor</font><b><font size=2>.</font></b></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:1.5in; text-indent:-0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The Debtor hereby irrevocably agrees that, upon the occurrence of a Debtor Event of Default, the Debtor shall be deemed to have consented to an immediate conveyance and transfer to the Secured Party of the copyrights and all other rights the Debtor may have in the software included in the Collateral, including, but not necessarily limited to, the software identified in Schedule B attached hereto. In furtherance of the foregoing, and not in limitation thereof, the Debtor will, upon the occurrence of a Debtor Event of Default, deliver to the Agent copies of the source code of the relevant software, with accompanying written assignment of the software to the Secured Parties.  Without limiting the foregoing, such source code and assignment shall be in form sufficient to enable the Secured
Parties to register the software in name of the Secured Parties with the Copyright Register. The Debtor hereby agrees to take all steps necessary or appropriate, as requested by each Secured Party or the Agent, to effectuate and reflect such conveyance and transfer or assignment to Secured Parties.  In all events, such conveyance, transfer or assignment shall be deemed to vest title in such software in the Secured Parties.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>In furtherance of the foregoing and not in limitation thereof, the Debtor acknowledges and agrees that a Secured Party may, upon the occurrence of a Debtor Event of Default, seek the immediate entry of a preliminary injunction prohibiting the Debtor&#146;s use of such software in any shape, way or manner, including, but not necessarily limited to, through the sale of products that use any of such software, and the Debtor hereby irrevocably agrees that it will not contest an application seeking entry of a preliminary injunction and that it will accept the entry of such injunction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 7 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 8</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Remedies Upon Debtor Event of Default</font></u><font size=2>. If any Debtor Event of Default shall have occurred, then in addition to the provisions of Section 7 hereof, a Secured Party may exercise all the rights and remedies of a secured party under the Code. The Secured Party may require the Debtor to assemble all or any part of the Collateral and make it available to the Secured Party at a place to be designated by the Secured Party which is reasonably convenient. The Secured Party shall give the Debtor ten (10) business days prior written notice of the Secured Party's intention to make any public or private sale or sale at a broker's board or on a securities exchange of the Collateral. At any such sale the Collateral may be sold in one lot as an
entirety or in separate parcels, as the Secured Party, in its sole discretion, may determine. The Secured Party shall not be obligated to make any such sale pursuant to any such notice.  The Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be adjourned.  The Secured Party, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 9</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Application of Collateral and Proceeds</font></u><font size=2>.  The proceeds of any sale of, or other realization upon, all or any part of the Collateral shall be applied in the following order of priorities: (a) first, to pay the reasonable expenses of such sale or other realization, including, without limitation, reasonable attorneys' fees, and all expenses, liabilities and advances reasonably incurred or made by the Secured Party in connection therewith, and any other unreimbursed expenses for which the Secured Party is to be reimbursed pursuant to the Section titled &#147;Expenses; Secured Party's Lien&#148;  below; (b) second, to the payment of the Obligations in such order of priority as the Secured Party, in its sole discretion, shall
determine;  and (c) finally, to pay to the Debtor, or its successors or assigns, or as a court of competent jurisdiction may direct, any surplus then remaining from such proceeds.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 10</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Expenses; Secured Party's Lien</font></u><font size=2>.  If any Debtor Event of Default shall have occurred, the Debtor will forthwith upon demand pay to the Secured Party: (a) the amount which the Secured Party may have been required to pay to free any of the Collateral from any lien thereon; and (b) the amount of any and all reasonable out-of-pocket expenses, including, without limitation, the reasonable fees and disbursements of its counsel, and of any agents not regularly in its employ,  which the Secured Party may incur in connection with (i) the collection, sale or other disposition of any of the Collateral; (ii) the exercise by the Secured Party of any of the powers conferred upon it hereunder, or (iii) any default by the Debtor hereunder.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 11</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Termination of Security Interests; Release of Collateral</font></u><font size=2>.  Upon the earlier of</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(i) the date on which the aggregate principal amount of all outstanding Debentures is less than twenty-five percent (25%) of the Aggregate  Purchase Price; or </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 8 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; margin-left:0.5in;text-align:justify;'><font size=2>(ii) the payment and performance in full of all the Obligations, </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>the Security Interests shall terminate and all rights to the Collateral shall revert to the Debtor. Upon any such termination of the Security Interests or release of Collateral, the Secured Party will, at the Debtor's expense, to the extent permitted by law, execute and deliver to the Debtor such documents as the Debtor shall reasonably request to evidence the termination of the Security Interests or the release of such Collateral, as the case may be.  The Debtor further covenants and agrees that it will not grant any other lien in the Collateral (however denominated) as long as any of the Obligations remains outstanding other than Permitted Liens (as defined below).</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.56in;text-align:justify;'><u><font size=2>Section 12</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Permitted Liens</font></u><font size=2>.  The Debtor further covenants and agrees that it will not grant any other lien in the Collateral (however denominated) as long as any of the Obligations remains outstanding other than Permitted Liens (as defined below).  The term &#147;Permitted Liens&#148; means any one or more of the following:</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>liens shown on Exhibit A attached hereto or arising under the Disclosure Annex or specified in the Company&#146;s SEC Documents;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being actively contested in good faith by the Debtor;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>purchase money liens (i) on equipment acquired or held by the Debtor, where such lien was created in connection with the financing of the acquisition of such equipment, or (ii) existing on equipment when such equipment is or was acquired by the Company; provided, in each case that the lien is limited to the specific item or items of equipment and improvements and proceeds thereof;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (d)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>liens associated with licenses or sublicenses granted by the Debtor in the ordinary course of its business, and not otherwise prohibited by the terms of this Agreement, if such liens have no priority over the Security Interests;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (e)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>liens associated with licenses or sublicenses granted to the Debtor in the ordinary course of its business, in connection with the Debtor&#146;s leased premises or leased property, if such liens have no priority over the Security Interests;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (f)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>leases or subleases granted in the ordinary course of the Debtor&#146;s business, including in connection with the Debtor&#146;s leased premises or leased property; or</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.61in;text-align:justify;'><font size=2> (g)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>liens incurred in the extension, renewal, or refinancing of the indebtedness secured by liens described in subparagraphs (a) through and including (c) above, but any such extension, renewal or replacement lien must be limited to the property encumbered by the existing lien and the principal amount of the indebtedness may not increase.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 9 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 13</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Notices</font></u><font size=2>.  All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (a) personally served, (b) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (c) delivered by reputable air courier service with charges prepaid, or (d) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice given in accordance herewith. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (i) upon hand delivery or delivery by facsimile, with
accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (ii) on the second business day following the date of mailing by express courier service or on the fifth business day after deposited in the mail, in each case, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be for (i) the Debtor as provided in the Securities Purchase Agreement for notices  to the Company, (ii) for each Secured Party as provided in the Securities Purchase Agreement for notices to the relevant Buyer and (iii) for the Agent as provided in the Securities Purchase Agreement for notices to the Escrow
Agent.  Any party hereto may from time to time change its address or facsimile number for notices under this Section in the manner contemplated by the Securities Purchase Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="254" style=' border-collapse:collapse'>
    <tr>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Section 14.</font></u></p> </td>
        <td width="61" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Agent.</font></u></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Anything in the other provisions of this Security Interest Agreement to the contrary notwithstanding, the Secured Party may designate another entity to act as agent (the &#147;Agent&#148;) for the Secured Party with respect to any one or more of the rights of Secured Party hereunder, including, but not necessarily limited to, the right to hold the security interest and/or be named as secured party (as agent for the Secured Party) in any filed financing statement and to take action in the name and stead of the Secured Party hereunder.  Such designation may be made with or without power of substitution,  Such designation shall remain in effect until canceled by the Secured Party, as provided herein; provided, however, that such cancellation shall not affect the validity of any action
theretofore taken by such agent pursuant to this Security Interest Agreement.  The Debtor acknowledges and agrees to honor such designation and acknowledges that the Agent is acting as the agent of the Secured Party and not as a principal.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Each Secured Party hereby confirms that the Secured Party has designated Krieger &amp; Prager, LLP (acting by Samuel M. Krieger and Ronald Nussbaum, or either one of them), as its initial Agent, with full right of substitution.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>If there is more than one Secured Party, the Agent shall act as agent for all Secured Parties.  Any revocation of the authority of the Agent or the designation of an alternate Agent shall be done only by Secured Parties who represent a Majority in Interest of the Holders </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 10 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>at that time; provided that at all times all Secured Parties shall be represented by one and the same Agent.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(d)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Reference is made to the provisions of Sections 2 through 15, inclusive of the Joint Escrow Instructions.  All such provisions are incorporated herein by reference as if set forth herein in full, except that, for such purposes, the references therein to (i) the &#147;Escrow Agent&#148; shall be deemed to be references to the &#147;Agent&#148; under this Security Interest Agreement, (ii) the &#147;Company&#148; shall be deemed to be references to the Debtor under this Security Interest Agreement, and (iii) each &#147;Buyer&#148; shall be deemed to be references to each Secured Party under this Security Interest Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="259" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Section 15</font></u><font size=2>.</font></p> </td>
        <td width="115" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Miscellaneous</font></u><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>No failure on the part of the Secured Party to exercise, and no delay in exercising, and no course of dealing with respect to, any right, power or remedy under this Security Interest Agreement shall operate as a waiver thereof; nor shall any single or partial exercise by the Secured Party of any right, power or remedy under this Security Interest Agreement preclude the exercise, in whole or in part, of any other right, power or remedy. The remedies in this Security Interest Agreement are cumulative and are not exclusive of any other remedies provided by law. Neither this Security Interest Agreement nor any provision hereof may be changed, waived, discharged or terminated orally but only by a statement in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(b)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>Unless otherwise defined herein, or unless the context otherwise requires, all terms used herein which are defined in the New York Uniform Commercial Code have the meanings therein stated. </font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(c)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The execution and delivery by Debtor of this Security Interest Agreement and all documents delivered in connection herewith have been duly and validly authorized by all necessary corporate action of Debtor and this Agreement and all documents delivered in connection herewith have been duly and validly executed and delivered by Debtor.  The execution and delivery by Debtor of this Security Interest Agreement and all documents delivered in connection herewith will not result in a breach or default of or under the Certificate of Incorporation, By-laws or any agreement, contract or indenture of Debtor.  This Security Interest Agreement and all documents delivered in connection therewith are legal, valid and binding obligations of Debtor enforceable against Debtor in accordance with their terms.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(e)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>In the event that any action is taken by Debtor or Secured Party in connection with the this Security Interest Agreement, or any related document or matter, the losing party in such legal action, in addition to such other damages as he or it may be required to pay, shall pay reasonable attorneys&#146; fees to the prevailing party.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 11 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 16</font></u><font size=2>.</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Separability</font></u><font size=2>. If any provision hereof shall prove invalid or unenforceable in any jurisdiction whose laws shall be deemed applicable, the other provisions hereof shall remain in full force and effect in such jurisdiction and shall be liberally construed in favor of the Secured Party.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="268" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="96" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Section 17.</font></u></p> </td>
        <td width="124" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><u><font size=2>Governing Law</font></u><font size=2>.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>(a)</font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>This Security Interest Agreement shall be governed by and construed in accordance with the laws of the State of New York for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws.  Each of the parties consents to the exclusive jurisdiction of the federal courts whose districts encompass any part of the County of New York or (except with respect to issues relating to the copyright in and to the software, as contemplated by Section 7 hereof, which shall exclusively be in the aforesaid federal courts) of the state courts of the State of New York sitting in the County of New York in connection with any dispute arising under this Security Interest Agreement and hereby waives, to the maximum extent permitted by law,
any objection, including any objection based on </font><i><font size=2>forum non coveniens</font></i><font size=2>, to the bringing of any such proceeding in such jurisdictions or to any claim that such venue of the suit, action or proceeding is improper. To the extent determined by such court, the Debtor shall reimburse the Secured Party for any reasonable legal fees and disbursements incurred by the Secured Party in enforcement of or protection of any of its rights under this Security Interest Agreement.  Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:1.11in;text-align:justify;'><font size=2> (b) </font><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><font size=2>The Debtor and the Secured Party acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Security Interest Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions of this Security Interest Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.5in;text-align:justify;'><u><font size=2>Section 18.</font></u><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Jury Trial Waiver</font></u><font size=2>.  The Debtor and the Secured Party hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out of or in connection with the Debenture or this Security Interest Agreement.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.56in;text-align:justify;'><u><font size=2>Section 19.</font></u><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Assignment</font></u><font size=2>.  Only in connection with the transfer of the rights under the Transaction Agreements in accordance with their terms, a Secured Party may assign or transfer the whole or any part of its security interest granted hereunder, and may transfer as collateral security the whole or any part of Secured Party's security interest in the Collateral.  Any transferee of the Collateral shall be vested with all of the rights and powers of the assigning Secured Party hereunder with respect to the Collateral.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 12 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>[Balance of page intentionally left blank]</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 13 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'>
</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'>
<font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Section 20.</font></u><font size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>Waiver</font></u><font size=2>.  The Debtor waives any right that it may have to require Secured Party to proceed against any other person, or proceed against or exhaust any other security, or pursue any other remedy Secured Party may have.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt; text-indent:0.57in;text-align:justify;'><font size=2>IN WITNESS WHEREOF, the Parties have executed this Security Interest Agreement as of the day, month and year first above written.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="362" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>SECURED PARTIES (named in Schedule 1):</font></p> </td> </tr>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="287" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:  Krieger &amp; Prager LLP, as their agent</font></p> </td>
        <td  width="27">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="418" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="370" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font><b><font size=2>_________________________________________</font></b></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="310" style=' border-collapse:collapse'>
    <tr >
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="87" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>DEBTOR:</font></p> </td>
        <td  width="175">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>PLURISTEM LIFE SYSTEMS, INC.</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="426" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:__________________________________________</font></p> </td> </tr>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="79" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>President</font></p> </td>
        <td  width="155">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="89" ></td>

        <td width="268" ></td>

        <td width="146" ></td>

        <td width="287" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="257" style=' border-collapse:collapse'>
    <tr >
        <td  nowrap colspan="2" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="78" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font SIZE=2>AGENT:</font></p> </td>
        <td  width="131">
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></td> </tr>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td  nowrap colspan="3" valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>KRIEGER &amp; PRAGER, LLP</font></p> </td> </tr>
    <tr>
        <td width="89" ></td>

        <td width="1" ></td>

        <td width="144" ></td>

        <td width="243" ></td> </tr> </table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="418" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="370" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>By:</font><b><font size=2>_________________________________________</font></b></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=1></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>SCHEDULE 1</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="223" style=' border-collapse:collapse'>
    <tr>
        <td width="48" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="175" nowrap valign=top >
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The Secured Parties are:</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


<table border="0" cellspacing=0 cellpadding=0 width="612" style=' margin-left:4.85pt;border-collapse:collapse; '>
    <tr style='height:15.35pt'>
        <td width="348" valign=top style='border:solid black 0in; padding:0in 4.85pt 0in 4.85pt;border-color:gray;height:15.35pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Name</font></p> </td>
        <td width="264" valign=top style='border:solid black 0in; border-left:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray; height:15.35pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Address</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Brio Capital L.P.</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10 E. 40th St.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>New York, NY 10016</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Ellis International</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>c/o SDC Capital</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>20 East Sunrise Highway</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Valley Stream, NY 11559</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Double U Master Fund LP</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Harbour House, Waterfront Dr.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Road Town, Tortola, BVI</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Monarch Capital Fund Ltd.</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Harbour House, Waterfront Dr.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Road Town, Tortola, BVI</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Nite Capital LP</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>100 East Cook Avenue, Suite 201</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Libertyville, IL 60045</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Puritan LLC</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>314 McDonald Avenue</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Brooklyn, NY 11218</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Harborview Master Fund LP</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Harbour House, 2d Floor</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Road Town, Tortola, BVI</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Rutgers Casualty Insurance Company</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>444 Madison Avenue, Suite 501</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>New York, NY 10022</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Nachum Stein</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>444 Madison Avenue</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>New York, NY 10022</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>First Mirage, Inc.</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>333 Sandy Springs Circle, Suite 230</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Atlanta, GA 30328</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Generation Capital Associates</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>1085 Riverside Trace</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Atlanta, GA 30328</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Professional Offshore Oppotunity Fund, Ltd.</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>1400 Old Country Road, Suite 206</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Westbury, NY 11590</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Professional Traders Fund, LLC</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>1400 Old Country Road, Suite 206</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Westbury, NY 11590</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Notzer Chesed</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>5107 18th Ave.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Brooklyn, NY 11204</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Bristol Investment Fund, Ltd.</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>c/o Bristol Capital Advisors, LLC</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10990 Wilshire Blvd., Suite 1410</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Los Angeles, CA 90024</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Simon Vogel</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>550 Oak Drive</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Far Rockaway, NY 11691</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Alpha Capital AG</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Pradafant 7</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Furstentums 9490</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Vaduz, Liechtenstein</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Ronald Kimelman</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>31 Evans Rd.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Brookline, MA 02445</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Bursteine and Lindsay Sec. Corp.</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>140 Birmensdorfer Str.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>CH 8003 Zurich, Switzerland</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Quines Financial SA</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>12 Gilda Crescent</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>London N16 6JP United Kingdom</font></p> </td> </tr>
    <tr>
        <td width="348" valign=top style='border:solid black 0in; border-top:none;padding:0in 4.85pt 0in 4.85pt;border-color:gray'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:right;margin-top:0pt;margin-bottom:0pt'><font size=2>.... </font><i><font size=2>Continued</font></i></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font SIZE=2></font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
<br>
<HR noshade align="center" width="100%" size="2">
<p style='page-break-before:always'></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>- 2 -</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=1>&nbsp;</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Anthony Heller</font></p> </td>
        <td width="264" valign=top style='border-top:none;border-left: none;border-bottom:solid black 0in;border-right:solid black 0in;  padding:0in 4.85pt 0in 4.85pt'>
            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>c/o Plazacorp Investments Ltd.</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>10 Wanless Ave., Suite 201</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Toronto, Ont. M4N 1V6 Canada</font></p> </td> </tr>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Marvin Mermelstein</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>3500 W. Northshore</font></p>
<p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>Lindenwood, IL</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'>
</p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>3/31/06</font></p> </td> </tr></table>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'>
<font SIZE=2>EXHIBIT A</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>EXCEPTIONS TO REPRESENTATIONS</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>1.</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Certain encumbrances and liens, including (i) mechanics&#146;, materialmen&#146;s, and similar liens, (ii) liens for taxes not yet due and payable or for taxes that the taxpayer is contesting in good faith through appropriate proceedings, (iii) purchase money liens and liens securing rental payments under capital lease and similar arrangements, and other liens arising in the ordinary course of business and not incurred in connection with the borrowing of money.</font></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>2.</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>The Secured Party acknowledges that the License Agreement between the Company and the Technion dated May 1, 2003, is not transferable without the consent of the Technion. </font></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><b><font size=2>All of the above exceptions to representations on this Exhibit A shall be collectively referred to and defined as the &#147;Permitted Liens&#148; and individually as a &#147;Permitted Lien&#148;.</font></b></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=2>3.</font></p> </td>
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            <p style='margin-left:0pt;text-indent:0pt;text-align:justify;margin-top:0pt;margin-bottom:0pt'><font size=2>Each Permitted Lien has priority over the security interest granted to the Secured Parties named in the current Security Agreement to which this Exhibit A is attached.</font></p> </td> </tr></table>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>3/31/06</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>
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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>EXHIBIT B</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font SIZE=2>ADDITIONAL INFORMATION RE COLLATERAL, ETC.</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:center;'><font size=2>None</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

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<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:justify;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


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            <p style='margin-left:0pt;text-indent:0pt;text-align:left;margin-top:0pt;margin-bottom:0pt'><font size=1>3/31/06</font></p> </td> </tr></table>

<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>


<p style=' margin-bottom:0pt; margin-top:0pt;text-align:left;'><font size=2>&nbsp;</font></p>

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