Common use of SELLING Clause in Contracts

SELLING. STOCKHOLDERS The shares of Common Stock being offered by the selling stockholders are issuable upon conversion of the convertible notes and upon exercise of the warrants. For additional information regarding the issuance of those convertible notes and warrants, see "Private Placement of Convertible Notes and Warrants" above. We are registering the shares of Common Stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes and the Warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling stockholders. The second column lists the number of shares of Common Stock beneficially owned by each selling stockholder, based on its ownership of the convertible notes and warrants, as of ________, 200_, assuming conversion of all convertible notes and exercise of the warrants held by the selling stockholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholders. In accordance with the terms of registration rights agreement among the Company and the selling stockholders, this prospectus covers the resale of (i) [ ] shares of Common Stock issuable upon conversion of the convertible notes as of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii) [ ] shares of Common Stock issuable upon exercise of the related warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus. Under the terms of the convertible notes and the warrants, a selling stockholder may not convert the convertible notes or exercise the warrants to the extent such conversion or exercise would cause such selling stockholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible notes which have not been converted and upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS (1) 0

SELLING. STOCKHOLDERS SHAREHOLDERS The shares of Common Stock being offered by the selling stockholders shareholders are issuable upon conversion of the convertible notes and upon exercise of the warrants. For additional information regarding the issuance of those convertible notes and warrants, see "Private Placement of Shares of Common Stock, Convertible Notes and Warrants" above. We are registering the shares of Common Stock in order to permit the selling stockholders shareholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes and the Warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders shareholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling stockholdersshareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling stockholdershareholder, based on its ownership of the convertible notes and warrants, as of ________, 200_, assuming conversion of all convertible notes and exercise of the warrants held by the selling stockholders shareholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholdersshareholders. In accordance with the terms of a registration rights agreement among the Company and agreements with the selling stockholdersshareholders, this prospectus generally covers the resale of at least the sum of (i) [ ] 110% of the number of shares of Common Stock issuable upon conversion of the convertible notes as of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii) [ ] 110% of the number of shares of Common Stock issuable upon exercise of the related warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders shareholders pursuant to this prospectus. Under the terms of the convertible notes and the warrants, a selling stockholder shareholder may not convert the convertible notes or exercise the warrants to the extent such conversion or exercise would cause such selling stockholdershareholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible notes which have not been converted and upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders shareholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS (1) 0"

SELLING. STOCKHOLDERS SHAREHOLDERS The shares of Common Stock being offered by the selling stockholders shareholders are issuable upon conversion of the convertible notes (including convertible notes issuable upon exercise of additional investment rights which were issued pursuant to a Securities Purchase Agreement dated as of October ___, 2004) and upon exercise of the warrants. For additional information regarding the issuance of those convertible notes notes, warrants and warrantsadditional investment rights, see "Private Placement of Shares of Common Stock, Convertible Notes Notes, Warrants and WarrantsAdditional Investment Rights" above. We are registering the shares of Common Stock in order to permit the selling stockholders shareholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes Notes, the Warrants and the Warrants Additional Investment Rights issued pursuant to the Securities Purchase Agreement, the selling stockholders shareholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling stockholdersshareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling stockholdershareholder, based on its ownership of the convertible notes notes, warrants and warrantsadditional investment rights, as of ________, 200_, assuming conversion of all convertible notes (including convertible notes issuable upon exercise of all of the additional investment rights held by the selling shareholders) and exercise of the warrants held by the selling stockholders shareholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholdersshareholders. In accordance with the terms of registration rights agreement among the Company and agreements with the selling stockholdersshareholders, this prospectus generally covers the resale of at least 130% of the sum of (i) [ ] the number of shares of Common Stock issuable upon conversion of the convertible notes (including convertible notes issuable upon exercise of all of the additional investment rights which were issued pursuant to a Securities Purchase Agreement) as of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii) [ ] the number of shares of Common Stock issuable upon exercise of the related warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes and the exercise price of the warrants and the additional investment rights may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders shareholders pursuant to this prospectus. Under the terms of the convertible notes and the warrants, a selling stockholder shareholder may not convert the convertible notes or exercise the warrants to the extent such conversion or exercise would cause such selling stockholdershareholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible notes which have not been converted and upon exercise of the warrants and additional investment rights which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders shareholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING Maximum Number of Shares Number of Shares Owned to be Sold Pursuant to Number of Shares Name of Selling Shareholder Prior to Offering this Prospectus Owned After Offering --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS Smithfield Fiduciary LLC (1) 00 Iroquois Capital LP (2) Bluegrass Growth Fund, LP (3) Bluegrass Growth Fund, Ltd (4)

SELLING. STOCKHOLDERS The shares of Common Stock common stock being offered by the selling stockholders are those previously issued to the Selling Stockholders and those issuable upon conversion of to the convertible notes and Selling Stockholders upon exercise of the warrants. For additional information regarding the issuance issuances of those convertible notes common stock and the warrants, see "Private Placement of Convertible Notes Common Shares and Warrants" above. We are registering the shares of Common Stock common stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes shares of common stock and the Warrants issued pursuant to the Securities Purchase Agreementwarrants, the selling stockholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of Common Stock common stock by each of the selling stockholders. The second column lists the number of shares of Common Stock common stock beneficially owned by each selling stockholdershareholder, based on its ownership of the convertible notes shares of common stock and the warrants, as of ________, 200_2007, assuming conversion of all convertible notes and exercise of the warrants held by the selling stockholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock common stock being offered by this prospectus by the selling stockholders. In accordance with the terms of registration rights agreement among agreements with the Company holders of the shares of common stock and the selling stockholderswarrants, this prospectus generally covers the resale of at least the sum of (i) [ ] the number of shares of Common Stock common stock issued and (ii) 110% of the number of shares of common stock issued and issuable upon conversion exercise of the convertible notes related warrants, determined as if the outstanding warrants were exercised, as applicable, in full, as of the trading day immediately preceding the date the this registration statement is initially filed with the SEC and (ii) [ ] shares of Common Stock issuable upon exercise of the related warrants as of the trading day immediately preceding the date the registration statement is was initially filed with the SEC. Because the conversion price of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus. Under the terms of the convertible notes and the warrants, a selling stockholder may not convert the convertible notes or exercise the warrants warrants, to the extent such conversion or exercise would cause such selling stockholder, together with its affiliates, to beneficially own a number of shares of Common Stock common stock which would exceed 4.99% of our then outstanding shares of Common Stock common stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock common stock issuable upon conversion of the convertible notes which have not been converted and upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." NUMBER OF SHARES OF MAXIMUM NUMBER OF SHARES OF NUMBER OF SHARES OF COMMON STOCK OWNED COMMON STOCK TO BE SOLD PURSUANT TO NUMBER OF SHARES COMMON STOCK OWNED NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING PURSUANT TO THIS PROSPECTUS OWNED AFTER OFFERING --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS ------------------- --------------------------- ------------------- ▇▇▇▇▇▇ BAY FUND LP (1) 0▇▇▇▇▇▇ BAY OVERSEAS FUND LTD (2) ENABLE GROWTH PARTNERS LP (3) ENABLE OPPORTUNITY PARTNERS LP (4) ▇▇▇▇▇▇ DIVERSIFIED STRATEGY MASTER FUND LLC, ENA (5)

SELLING. STOCKHOLDERS SHAREHOLDERS1 The shares of Common Stock common stock being offered by the selling stockholders shareholders are those previously issued to the selling shareholders, and those issuable upon conversion of to the convertible notes and selling shareholders, upon exercise of the warrants. For additional information regarding the issuance issuances of those convertible notes shares of common stock and warrants, see "“Private Placement of Convertible Notes Shares of Preferred Stock and Warrants" ” above. We are registering the shares of Common Stock common stock in order to permit the selling stockholders shareholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes shares of common stock and the Warrants issued pursuant to the Securities Purchase Agreementwarrants, the selling stockholders shareholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders shareholders and other information regarding the beneficial ownership of the shares of Common Stock common stock by each of the selling stockholdersshareholders. The second column lists the number of shares of Common Stock common stock beneficially owned by each selling stockholdershareholder, based on its ownership of the convertible notes shares of common stock and warrants, as of ________, 200_2022, assuming conversion of all convertible notes and exercise of the warrants held by the selling stockholders shareholders on that date, without regard to any limitations on conversions or exerciseexercises. The third column lists the shares of Common Stock common stock being offered by this prospectus by the selling stockholdersshareholders. In accordance with the terms of a registration rights agreement among the Company and with the selling stockholdersshareholders, this prospectus generally covers the resale of the sum of (i) [ ] the number of shares of Common common stock issued to the selling shareholders in the “Private Placement of Shares of Preferred Stock and Warrants” described above and (ii) the maximum number of shares of common stock issuable upon conversion exercise of the convertible notes related warrants, determined as if the outstanding warrants were exercised in full as of the trading day immediately preceding the date the this registration statement is was initially filed with the SEC and (ii) [ ] shares of Common Stock issuable upon exercise of the related warrants SEC, each as of the trading day immediately preceding the applicable date of determination and all subject to adjustment as provided in the registration statement is initially filed with right agreement, without regard to any limitations on the SEC. Because the conversion price exercise of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectuswarrants. The fourth column assumes the sale of all of the shares offered by the selling stockholders shareholders pursuant to this prospectus. Under the terms of the convertible notes preferred stock and the warrants, a selling stockholder shareholder may not convert the convertible notes or exercise the exercise, as applicable, shares of preferred stock and/or warrants to the extent such conversion or exercise would cause such selling stockholdershareholder, together with its affiliatesaffiliates and attribution parties, to beneficially own a number of shares of Common Stock common stock which would exceed 4.99% or 9.99%, as applicable, of our then outstanding shares of Common Stock common stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock common stock issuable upon conversion of the convertible notes which have not been converted and upon exercise of the such warrants which have not been exercised. The number of shares in the second column does and fourth columns do not reflect this limitation. The selling stockholders shareholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS 1 If the Registration Statement filed covers both the Warrant Shares and Conversion Shares, then this description and related disclosure will be updated accordingly. The undersigned beneficial owner of common stock (1the “Registrable Securities”) 0of NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement. Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

SELLING. STOCKHOLDERS SHAREHOLDER ---------------------------------- Print Name ----------------------------------- Signature or, if entity ----------------------------------- Name of Entity By: ------------------------------------ Name: Title: EXHIBIT B SELLING SHAREHOLDERS The shares of Common Stock being offered by the selling stockholders shareholders are issuable upon conversion of the convertible notes secured debentures and upon exercise of the warrants. For additional information regarding the issuance of those convertible notes secured debentures and warrants, see "Private Placement of Shares of Convertible Notes and WarrantsSecured Debentures" above. We are registering the shares of Common Stock in order to permit the selling stockholders shareholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes Secured Debentures and the Warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders shareholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling stockholdersshareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling stockholdershareholder, based on its ownership of the convertible notes and warrants, as of __________, 200_2006, assuming conversion of all convertible notes and exercise of the warrants held by the selling stockholders shareholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholdersshareholders. In accordance with the terms of registration rights agreement among the Company and agreements with the selling stockholdersshareholders, this prospectus generally covers the resale of at least 130% of the sum of (i) [ ] the number of shares of Common Stock issuable upon conversion of the convertible notes (and the interest accrued and payable thereunder) as of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii) [ ] the number of shares of Common Stock issuable upon exercise of the related warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders shareholders pursuant to this prospectus. Under the terms of the convertible notes and the warrants, a selling stockholder shareholder may not convert the convertible notes or exercise the warrants to the extent such conversion or exercise would cause such selling stockholdershareholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible notes which have not been converted and upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders shareholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER PLAN OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS (1) 0DISTRIBUTION We are registering the shares of Common Stock issuable upon conversion of the convertible notes and upon exercise of the warrants to permit the resale of these shares of Common Stock by the holders of the convertible notes and warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the shares of Common Stock. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock. The selling shareholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent's commissions. The shares of Common Stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, o on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; o in the over-the-counter market; o in transactions otherwise than on these exchanges or systems or in the over-the-counter market; o through the writing of options, whether such options are listed on an options exchange or otherwise; o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange;

SELLING. STOCKHOLDERS SHAREHOLDERS The shares of Common Stock being offered by the selling stockholders shareholders are issuable upon conversion of the convertible notes and upon or exercise of the warrants. For additional information regarding the issuance of those convertible notes and warrants, see "Private Placement of Convertible Notes and Warrants" above. We are registering the shares of Common Stock in order to permit the selling stockholders shareholders to offer the shares for resale from time to time. Except for the ownership of the Convertible Notes (i) convertible notes and the Warrants warrants issued pursuant to the Securities Purchase Agreement, (ii) shares of Common Stock issued pursuant to the Securities Purchase Agreements dated July 15, 2004, and (iii) convertible debentures and warrants issued pursuant to the Securities Purchase Agreement dated September 30, 2003, the selling stockholders shareholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling stockholdersshareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling stockholdershareholder, based on its ownership of the convertible notes and warrants, as of ________, 200_, assuming conversion of all convertible notes and exercise of the all warrants held by the selling stockholders shareholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholdersshareholders. In accordance with the terms of registration rights agreement among the Company and agreements with the selling stockholdersshareholders, this prospectus generally covers the resale of (i) [ ] at least 130% of the number of shares of Common Stock issuable upon conversion of the convertible notes as and 100% of the trading day immediately preceding the date the registration statement is initially filed with the SEC and (ii) [ ] number of shares of Common Stock issuable upon exercise of the related warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders shareholders pursuant to this prospectus. Under the terms of the convertible notes and the warrants, a selling stockholder shareholder may not convert the convertible notes or exercise the warrants to the extent such conversion or exercise would cause such selling stockholdershareholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible notes which have not been converted and or upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders shareholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING Maximum Number of Shares Number of Shares Owned to be Sold Pursuant to Number of Shares Name of Selling Shareholder Prior to Offering this Prospectus Owned After Offering --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS Smithfield Fiduciary LLC (1) [ ] 0

SELLING. STOCKHOLDERS AND PLAN OF DISTRIBUTION ------------------------ Selling Stockholders -------------------- The shares of Common Stock being offered by the selling stockholders are issuable upon conversion of the convertible notes debentures and upon exercise of the warrants. For additional information regarding the issuance of those convertible notes and warrants, see "Private Placement of Convertible Notes Debentures and Warrants" above. We are registering the shares of Common Stock in order to permit the selling stockholders to offer the shares for resale from time to time. Except as otherwise notes and except for the ownership of the Convertible Notes convertible Debentures and the Warrants warrants issued pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material relationship with us within the past three years. The table below lists the selling stockholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling stockholders. The second column lists the number of shares of Common Stock beneficially owned by each selling stockholder, based on its ownership of the convertible notes debentures and warrants, as of ________, 200_, assuming conversion of all convertible notes debentures and exercise of the warrants held by the selling stockholders on that date, without regard to any limitations on conversions or exercise. The third column lists the shares of Common Stock being offered by this prospectus by the selling stockholders. In accordance with the terms of a registration rights agreement among the Company and with the selling stockholders, this prospectus generally covers the resale of at least (i) [ ] shares of Common Stock issuable upon conversion 300% of the number of Conversion Shares issued and issuable pursuant to the convertible notes debentures as of the trading day immediately preceding the date the registration statement is initially filed with the SEC SEC, and (ii) [ ] shares of Common Stock issuable upon exercise 100% of the related number of warrant shares issued and issuable pursuant to the warrants as of the trading day immediately preceding the date the registration statement is initially filed with the SEC. Because the conversion price of the convertible notes debentures and the exercise price of the warrants may be adjusted, the number of shares that will actually be issued may be more or less than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus. Under the terms of the convertible notes debentures and the warrants, a selling stockholder may not convert the convertible notes debentures or exercise the warrants to the extent such conversion or exercise would cause such selling stockholder, together with its affiliates, to beneficially own a number of shares of Common Stock which would exceed 4.99% of our then outstanding shares of Common Stock following such conversion or exercise, excluding for purposes of such determination shares of Common Stock issuable upon conversion of the convertible notes debentures which have not been converted and upon exercise of the warrants which have not been exercised. The number of shares in the second column does not reflect this limitation. The selling stockholders may sell all, some or none of their shares in this offering. See "Plan of Distribution." MAXIMUM NUMBER OF SHARES NUMBER OF SHARES OWNED TO BE SOLD PURSUANT TO NUMBER OF SHARES NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING THIS PROSPECTUS OWNED AFTER OFFERING Maximum Number of Shares Number of Shares Owned to be Sold Pursuant to Number of Shares Name of Selling Stockholder Prior to Offering this Prospectus Owned After Offering --------------------------- ----------------- --------------- -------------------- CASTLERIGG MASTER INVESTMENTS YA Global Investments, L.P. (1) 0)