Common use of Future Financings Clause in Contracts

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security"), if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof (a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached to

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the CompanyCompany prior to the date hereof, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; or (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security")Person, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock Securities are outstanding at (a) an effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock Securities as of the date thereof or (b) an effective price per share greater than the Conversion Price but less than the Average Per Share Market Value (as defined in the Certificate of Designation) on the date of such issuance or sale (either of (a) or (b) a "Down Future Financing"), the Company shall provide to the Purchasers Purchaser by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached toto which shall be a term sheet or similar document relating thereto (the "Future Financing Notice"). Upon receiving the Future Financing Notice, the Purchaser shall have the right to purchase, on the same terms as the Future Financing, an amount of New Securities having a purchase price which shall not exceed the sum of the then outstanding principal amount of the Purchaser's Securities (valued at the greater of the Conversion Price or the Average Per Share Market Price (as such terms are defined in the Certificate of Designation) on the date of the Future Financing Notice). In the event the Purchaser desires to exercise the right granted under this Section 3.9, the Purchaser must notify the Company on or prior to the fifth (5th) Trading Day after the Purchaser has received the Future Financing Notice. In the event the terms and conditions of a proposed Future Financing are amended in any respect after delivery of the Future Financing Notice but prior to the closing of the proposed Future Financing to which such Future Financing Notice relates, the Company shall deliver a new notice to the Purchaser describing the amended terms and conditions of the proposed Future Financing and the Purchaser thereafter shall have an option during the five (5) Trading Days period following delivery of such new notice to purchase New Securities being offered on the same terms as contemplated by such proposed Future Financing, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Financing. If the Purchaser desires to purchase additional shares of Common Stock, it must notify the Company of its intention to do so within five (5) Trading Days after the Company has informed the Purchaser of its right to purchase additional shares of Common Stock. Within five (5) Trading Days of the termination of the final notice period, the transactions contemplated by this Section 3.9 shall close, subject to the completion of mutually satisfactory documentation, and the Company shall tender to the Purchaser certificates representing the New Securities that it agreed to purchase and the Purchaser shall make payment for the entire purchase price in immediately available funds at the closing of such sale. "

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any contract, plan or agreement which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; or (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security")Person, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock Debentures are outstanding at (a) an ------------ effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than an amount equal to the Conversion Price (as defined in the Certificate of DesignationDebentures) of the shares of Preferred Stock Debentures as of the date thereof or (b) an effective price per share greater than the Conversion Price but less than the Average Price (as defined in the Debentures) on the date of such issuance or sale (either of (a) or (b), a "Down Future Financing"), the Company shall provide to the ---------------- Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached toto which shall be a term sheet or similar document relating thereto (the "Future Financing Notice"). Upon receiving the Future ----------------------- Financing Notice, each Purchaser shall have the pro rata right (based on the principal amount of the Debentures held by such Purchaser relative to the aggregate principal amount of Debentures outstanding) to purchase, on the same terms as the Future Financing, an amount of New Securities having a purchase price which shall not exceed the sum of (i) the then outstanding principal amount of and any interest owing on such Purchaser's Debenture and (ii) the number of shares of Common Stock which is the product of the Exercise Price (as defined in the Warrants) multiplied by that number of shares of Common Stock underlying the outstanding Warrants; provided, however, that thirty (30) Trading Days after the effectiveness of the Initial Registration Statement (as defined in the Registration Rights Agreement) and for so long as all registration statements required under the Registration Rights Agreement are effective, the Purchasers, in the aggregate, shall be entitled to purchase up to one-half of the total amount of New Securities being offered pursuant to such Future Financing Notice. In the event a Purchaser desires to exercise the right granted under this Section 3.9, such Purchaser must notify the Company on or prior to the fifth (5th) Trading Day after such Purchaser has received the Future Financing Notice. In the event the terms and conditions of a

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the CompanyCompany prior to the date hereof, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition (including earn-out payments funded with stock, which payments are set forth on SCHEDULE 3.9 hereof) by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person Person; (v) the issuance of any securities (including, but not limited to, subordinated debt, preferred stock or (viiwarrants) shares of Common Stock issued upon conversion of the Series A Preferred Stock to General Electric Capital Corporation or its affiliates (collectively, "GE") in connection with certain financing currently being negotiated by the "Excluded Security"Company and GE (which negotiation has not been finalized as of the Closing Date); or (vi) securities to be issued by the Company or selling stockholders in connection with a public offering by the Company, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New SecurityNEW SECURITY") while any shares of Preferred Stock Securities are outstanding at (a) an effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock Securities as of the date thereof or (b) an effective price per share greater than the Conversion Price but less than the Average Price (as defined in the Certificate of Designation) on the date of such issuance or sale (either of (a) or (b) a "Down Future FinancingFUTURE FINANCING"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached to which shall be a term sheet or similar document relating thereto (the "FUTURE FINANCING NOTICE"). Upon receiving the Future Financing Notice, each Purchaser shall have the pro rata right (based on the principal amount of the Securities held by such Purchaser relative to the aggregate principal amount of Securities outstanding) to purchase, on the same terms as the Future Financing, an amount of New Securities having a purchase price which shall not exceed the sum of (i) the number of shares of Common Stock issuable upon conversion of the Security (ii) the number of shares of Common Stock which is the product of the Exercise Price (as defined in the Warrants) multiplied by that number of shares of Common Stock underlying the outstanding Warrants. In the event a Purchaser desires to exercise the right granted under this Section 3.9, such Purchaser must notify the Company on or prior to the fifth (5th)Trading Day after such Purchaser has received the Future Financing Notice. In the event the terms and conditions of a proposed Future Financing are amended in any respect after delivery of the Future Financing Notice but prior to the closing of the proposed Future Financing to which such Future Financing Notice relates, the Company shall deliver a new notice to each Purchaser describing the amended terms and conditions of the proposed Future Financing and each Purchaser thereafter shall have an option during the five (5) Trading Days period following delivery of such new notice to purchase its pro rata share (based on the Purchaser's percentage of the principal amount of the outstanding Securities such Purchaser owns) of the New Securities being offered on the same terms as contemplated by such proposed Future Financing, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Financing. In the event one or more Purchasers elects not to exercise its rights granted hereby, the Company shall permit those Purchasers electing to exercise the right granted under this Section 3.9 to purchase, on a pro rata basis equal to its percentage ownership of the then outstanding principal amount of the Securities, the sum of the number of shares of Common Stock that the other Purchaser(s) were eligible to purchase, if they had exercised their right hereunder. Those Purchasers desiring to

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the CompanyCompany prior to the date hereof, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; or (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security")Person, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock Securities are outstanding at (a) an effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock Securities as of the date thereof or (b) an effective price per share greater than the Conversion Price but less than the Average Per Share Market Value (as defined in the Certificate of Designation) on the date of such issuance or sale (either of (a) or (b) a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached toto which shall be a term sheet or similar document relating thereto (the "Future Financing Notice"). Upon receiving the Future Financing Notice, each Purchaser shall have the pro rata right (based on the principal amount of the Securities held by such Purchaser relative to the aggregate principal amount of Securities outstanding) to purchase, on the same terms as the Future Financing, an amount of New Securities having a purchase price which shall not exceed the sum of the then outstanding principal amount of, and any dividends owing on, such Purchaser's Securities (valued at the greater of the Conversion Price or the Average Per Share Market Price (as such terms are defined in the Certificate of Designation) on the date of the Future Financing Notice). In the event a Purchaser desires to exercise the right granted under this Section 3.9, such Purchaser must notify the Company on or prior to the fifth (5th) Trading Day after such Purchaser has received the Future Financing Notice. In the event the terms and conditions of a proposed Future Financing are amended in any respect after delivery of the Future Financing Notice but prior to the closing of the proposed Future Financing to which such Future Financing Notice relates, the Company shall deliver a new notice to each Purchaser describing the amended terms and conditions of the proposed Future Financing and each Purchaser thereafter shall have an option during the five (5) Trading Days period following delivery of such new notice to purchase its pro rata share (based on the Purchaser's percentage of the principal amount of the outstanding Securities such Purchaser owns) of the New Securities being offered on the same terms as contemplated by such proposed Future

Future Financings. a. As long From the date hereof until 60 days after the Effective Date, other than as shares contemplated by this Agreement, neither the Company nor any Subsidiary shall issue or sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to the contrary, the 60 day period set forth in this Section 4.13 shall be extended for the number of Trading Days during such period in which (y) trading in the Preferred Common Stock are outstandingis suspended by any Principal Market, except or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for (i) issuance the resale of the Underlying Shares; . Notwithstanding anything to the contrary herein, this Section 4.13 shall not apply to the following (iia) the granting or issuance of shares of Common Stock deemed or options to have been employees, officers and directors of the Company pursuant to any stock option plan or employee incentive plan or agreement duly adopted or approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) the exercise of a Debenture or any other security issued by the Company in connection with the offer and sale of this Company’s securities pursuant to this Agreement, or (c) the exercise of or conversion of any plan Capital Shares Equivalents issued and outstanding on the date hereof, provided that such securities have not been amended since the date hereof, or (d) the issuance of Capital Shares or Capital Shares Equivalents in connection with acquisitions, strategic investments or strategic partnering arrangements, the primary purpose of which has been approved by is not to raise capital, or (e) the Board issuance of Directors investment units pursuant to that certain private placement memorandum of the CompanyCompany dated April 28, pursuant 2003, not to exceed $1,400,000 in the aggregate (the “PPM Offering”). Additionally, in additional to the limitations set forth herein, from the date hereof until such time as the Purchasers no longer hold any of the Securities, other than the issuance of Capital Shares or Capital Shares Equivalents as part of the consideration paid for an acquisition, the Company shall be prohibited from effecting or enter into an agreement to effect any Subsequent Financing involving a “Variable Rate Transaction” or an “MFN Transaction” (each as defined below). The term “Variable Rate Transaction” shall mean a transaction in which the Company's Company issues or sells (i) any debt or equity securities may be issued that are convertible into, exchangeable or exercisable for, or include the right to any employee, officer, director or consultant of the Company; (iii) receive additional shares of Common Stock issuable either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the exercise trading prices of any options or warrants outstanding on quotations for the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued at any time after the initial issuance of such debt or deemed to have been issued as consideration for an acquisition by the Company of a divisionequity securities, assets or business (or stock constituting any portion thereof) from another Person or (viiB) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectivelywith a conversion, the "Excluded Security"), if the Company agrees exercise or exchange price that is subject to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding being reset at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the some future date thereof (a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue initial issuance of such debt or equity security or upon the New Security has been made, written notice occurrence of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached tospecified or contingent events directly or

Future Financings. a. As long as shares of the Preferred Stock any Debentures are outstanding, except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; or (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security")Person, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at (a) ------------ an effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of DesignationDebenture) of the shares of Preferred Stock Debentures as of the date thereof or (b) an effective price per share greater than the Conversion Price but less than the Average Price (as defined in the Debenture) on the date of such issuance or sale (either of (a) or (b) a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. ---------------- (New York time) on or before the third (3rd3/rd/) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached toto which shall be a term sheet or similar document relating thereto (the "Future ------ Financing Notice"). Upon receiving the Future Financing Notice, each Purchaser ---------------- shall have the pro rata right (based on the principal amount of the Debentures held by such Purchaser relative to the aggregate principal amount of Debentures outstanding) to purchase, on the same terms as the Future Financing, an amount of New Securities for an aggregate purchase price which shall not exceed the sum of fifty percent (50%) of the amount of proceeds that will be raised in such Future Financing, not to exceed the lesser of (i) $8,000,000 or (ii) the outstanding principal amount of, and interest owing on, such Purchaser's Debenture. In the event a Purchaser desires to exercise the right granted under this Section 3.9, such Purchaser must notify the Company on or prior to the fifth (5/th/)Trading Day after such Purchaser has received the Future Financing Notice. In the event the terms and conditions of a proposed Future Financing are amended in any respect after delivery of the Future Financing Notice but prior to the closing of the proposed Future Financing to which such Future Financing Notice relates, the Company shall deliver a new notice to each Purchaser describing the amended terms and conditions of the proposed Future Financing and each Purchaser thereafter shall have an option during the five (5) Trading Days period following delivery of such new notice to purchase its

Future Financings. a. As long From the date hereof until 90 days after ----------------- the Effective Date, other than as shares contemplated by this Agreement, neither the Company nor any Subsidiary shall (a) incur, issue, create, guarantee, assume or otherwise become liable on account of any indebtedness other than with a federally regulated financial institution or (b) increase any amounts owing or to which such Person is liable under any existing obligations or (c) issue or sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to the Preferred contrary, the 90 day period set forth in this Section 4.9 shall be extended for the number of Trading Days during such period in which (y) trading in the Common Stock are outstandingis suspended by any Principal Market, except or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for (i) issuance the resale of the Underlying Shares; . Notwithstanding anything to the contrary herein, this Section 4.9 shall not apply to the following (iieach of which, an "Exempt Transaction"): (a) shares the granting of Common Stock deemed options to have been employees, officers and directors of the Company pursuant to any stock option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) the exercise of a Debenture or any other security issued by the Company in connection with any plan which has been approved by the Board offer and sale of Directors of the Company, pursuant to which the this Company's securities may be pursuant to this Agreement, or (c) the exercise of or conversion of any Convertible Securities, options or warrants issued and outstanding on the Closing Date, provided that such securities have not been amended since the date hereof, or (d) acquisitions or strategic investments, the primary purpose of which is not to any employeeraise capital, officeror (e) the lending or borrowing of money between or among the Company and its direct or indirect subsidiaries (including, director for this purpose, DOC and InfoTechUSA, Inc. and each of their subsidiaries), or consultant (f) the potential [OMITTED FOR CONFIDENTIALITY], or (g) in connection with the share issuances or re-pricing to certain former officers as described in the Proxy, or (h) in a transaction involving the issuance of Common Stock to satisfy a bona fide payable if less than $100,000 and if the Company; (iii) shares of Common Stock issuable upon so issued are valued at or above the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a divisionthen market price, assets or business (or stock constituting any portion thereof) from another Person or (viii) shares any transaction involving the issuance of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security"), if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for warrants to acquire Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change if in connection with the settlement of bona fide litigation and if the shares so issued are valued at or above the then market price of and if the Common Stock) than options, if any, have an exercise price at or above the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof (a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached tothen market price.

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the CompanyCompany prior to the date hereof, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued an Underwritten Offering (as defined in a transaction registered under the Securities ActRegistration Rights Agreement) occurring before December 31, 2000; or (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security")Person, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at (a) an effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof or (b) an effective price per share greater than the Conversion Price but less than the Average Price (as defined in the Certificate of Designation) on the date of such issuance or sale (either of (a) or (b) a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached toto which shall be a term sheet or similar document relating thereto (the "Future Financing Notice"). Upon receiving the Future Financing Notice, each Purchaser shall have the pro rata right (based on the purchase price of the shares of Preferred Stock held by such Purchaser relative to the aggregate purchase price of shares of

Future Financings. a. As long From the Closing Date until 90 days after the Effective Date, other than as contemplated by this Agreement, neither the Company nor any Subsidiary shall issue or sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to the contrary, the 90 day period set forth in this Section 4.13 shall be extended for the number of Trading Days during such period in which (y) trading in the Common Stock is suspended by any Principal Market, or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Underlying Shares. Notwithstanding anything to the contrary herein, this Section 4.13 shall not apply to the following (a) the granting or issuance of shares of Common Stock or options (or exercise thereof) to or by employees, officers, directors, and consultants (provided that in the case of consultants, such issuance of Capital Shares and grants of Capital Share Equivalents does not exceed, in the aggregate, 200,000 Capital Shares or Capital Shares Equivalents convertible into or exchangeable for 200,000 Capital Shares per any 12 month period) of the Company pursuant to any stock option plan or employee incentive plan or agreement duly adopted or approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, or (b) the exercise of the Preferred Stock are outstanding, except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been or any other security issued by the Company in connection with any plan which has been approved by the Board offer and sale of Directors of the Company, pursuant to which the this Company's securities may be issued pursuant to any employeethe Transaction Documents, officer, director or consultant of the Company; (iiic) shares of Common Stock issuable upon the exercise of or conversion of any options or warrants Capital Shares Equivalents issued and outstanding on the Closing Date, provided that such securities have not been amended since the Closing Date in order to reduce the effective exercise price, increase the number of shares issuable or accelerate the date hereof and listed in Schedule 2.1(c) hereto; on which such Capital Share Equivalents may be exercised, or (ivd) the securities issuance of Capital Shares or Capital Shares Equivalents in connection with acquisitions, strategic investments or strategic partnering arrangements, the primary purpose of which is not to be issued in raise capital, or subsequent exercise of any such Capital Share Equivalents. In addition to the transactions limitations set forth on herein, from the Closing Date until such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued time as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security"), if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof (a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached tono longer hold

Future Financings. a. As long From the date hereof until 90 days after the Effective Date, other than as shares contemplated by this Agreement, neither the Company nor any Subsidiary shall issue or sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to the contrary, the 120 day period set forth in this Section 4.13 shall be extended for the number of Trading Days during such period in which (y) trading in the Preferred Common Stock are outstandingis suspended by any Principal Market, except or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for (i) issuance the resale of the Underlying Shares; . Notwithstanding anything to the contrary herein, this Section 4.13 shall not apply to the following (iia) the granting or issuance of shares of Common Stock deemed or options to have been employees, officers and directors of the Company pursuant to any stock option plan or employee incentive plan or agreement duly adopted or approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, (b) the exercise of a Debenture or any other security issued by the Company in connection with any plan which has been approved by the Board offer and sale of Directors of the Company, pursuant to which the this Company's securities may be issued pursuant to any employeethis Agreement, officer, director or consultant of the Company; (iiic) shares of Common Stock issuable upon the exercise of or conversion of any options or warrants Capital Shares Equivalents issued and outstanding on the date hereof and listed in Schedule 2.1(c) hereto; hereof, provided that such securities have not been amended since the date hereof, or (ivd) the securities issuance of Capital Shares or Capital Shares Equivalents in connection with acquisitions, strategic investments or strategic partnering arrangements, the primary purpose of which is not to be issued raise capital, or (e) the granting of stock, stock options and/or warrants to an investment group in connection with the transactions advancement of $1 million to the Company, which transaction is described in Item 13 of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2003. Additionally, in additional to the limitations set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a divisionherein, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security"), if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof (a "Down Future Financing")hereof until such time as there are no longer any Debentures, the Company shall provide be prohibited from effecting or enter into an agreement to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future effect any Subsequent Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached to

Future Financings. a. As long From the Closing Date until 90 days after the Effective Date, other than as shares contemplated by this Agreement, neither the Company nor any Subsidiary shall issue or sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to the contrary, the 90 day period set forth in this Section 4.13 shall be extended for the number of Trading Days during such period in which (y) trading in the Common Stock is suspended by any Principal Market, or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Preferred Stock are outstandingShares and Underlying Shares. Notwithstanding anything to the contrary herein, except for this Section 4.13 shall not apply to the following (ia) the granting or issuance of the Underlying Shares; (ii) shares of Common Stock deemed or options (or exercise thereof) to have been or by employees, officers, directors, and consultants (provided that in the case of consultants, such issuance of Capital Shares and grants of Capital Share Equivalents does not exceed, in the aggregate, 200,000 Capital Shares or Capital Shares Equivalents convertible into or exchangeable for 200,000 Capital Shares per any 12 month period) of the Company pursuant to any stock option plan or employee incentive plan or agreement duly adopted or approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, or (b) the exercise of a Debenture or any other security issued by the Company in connection with any plan which has been approved by the Board offer and sale of Directors of the Company, pursuant to which the this Company's securities pursuant to the Transaction Documents, or (c) the exercise of or conversion of any Capital Shares Equivalents issued and outstanding on the Closing Date, provided that such securities have not been amended since the Closing Date in order to reduce the effective exercise price, increase the number of shares issuable or accelerate the date on which such Capital Share Equivalents may be issued exercised, or (d) the issuance of Capital Shares or Capital Shares Equivalents in connection with acquisitions, strategic investments or strategic partnering arrangements, the primary purpose of which is not to raise capital, or subsequent exercise of any employeesuch Capital Share Equivalents. In addition to the limitations set forth herein, officer, director or consultant from the Closing Date until such time as the Purchasers no longer hold any of the Company; Securities, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing (iiias defined in Section 4.14) involving a "Variable Rate Transaction" or an "MFN Transaction" (each as defined below). The term "Variable Rate Transaction" shall mean a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of, Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock issuable at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the exercise occurrence of any options specified or warrants outstanding on contingent events directly or indirectly related to the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares business of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security"), if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of for the Common Stock) than . The term "MFN Transaction" shall mean a transaction in which the Conversion Price (as defined Company issues or sells any securities in a capital raising transaction or series of related transactions which grants to an investor the Certificate of Designation) right to receive additional shares based upon future transactions of the shares of Preferred Stock as of the date thereof (a "Down Future Financing"Company on terms more favorable than those granted to such investor in such offering. In addition, unless Shareholder Approval has been obtained and deemed effective in accordance with Section 4.5(c), the Company shall provide not make any issuance whatsoever of Capital Shares or Capital Shares Equivalents which would cause any adjustment of the Set Price (other than pursuant to Section 4(c)(ii) of the Debentures) to the Purchasers by 5:00 p.m. (New York timeextent the holders of Debentures would not be permitted, pursuant to Section 4(a)(ii)(B) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing Debenture, to convert their respective outstanding Debentures and exercise their respective Warrants in reasonable detail (i) the proposed terms of the Down Future Financingfull, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom ignoring for such Down Future Financing shall be effected, and attached topurposes any conversion or exercise limitations therein.

Future Financings. a. As long From the Closing Date until 90 days after the Effective Date, other than as contemplated by this Agreement, neither the Company nor any Subsidiary shall issue or sell any Capital Shares or Capital Shares Equivalents. Notwithstanding anything herein to the contrary, the 90 day period set forth in this Section 4.13 shall be extended for the number of Trading Days during such period in which (y) trading in the Common Stock is suspended by any Principal Market, or (z) following the Effective Date, the Registration Statement is not effective or the prospectus included in the Registration Statement may not be used by the Purchasers for the resale of the Underlying Shares. Notwithstanding anything to the contrary herein, this Section 4.13 shall not apply to the following (a) the granting or issuance of shares of Common Stock or options (or exercise thereof) to or by employees, officers, directors, and consultants (provided that in the case of consultants, such issuance of Capital Shares and grants of Capital Share Equivalents does not exceed, in the aggregate, 200,000 Capital Shares or Capital Shares Equivalents convertible into or exchangeable for 200,000 Capital Shares per any 12 month period) of the Company pursuant to any stock option plan or employee incentive plan or agreement duly adopted or approved by a majority of the non-employee members of the Board of Directors of the Company or a majority of the members of a committee of non-employee directors established for such purpose, or (b) the exercise of the Preferred Stock are outstanding, except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been or any other security issued by the Company in connection with any plan which has been approved by the Board offer and sale of Directors of the Company, pursuant to which the this Company's securities pursuant to the Transaction Documents, or (c) the exercise of or conversion of any Capital Shares Equivalents issued and outstanding on the Closing Date, provided that such securities have not been amended since the Closing Date in order to reduce the effective exercise price, increase the number of shares issuable or accelerate the date on which such Capital Share Equivalents may be issued exercised, or (d) the issuance of Capital Shares or Capital Shares Equivalents in connection with acquisitions, strategic investments or strategic partnering arrangements, the primary purpose of which is not to raise capital, or subsequent exercise of any employeesuch Capital Share Equivalents ((a)-(d), officereach, director or consultant an "Exempt Issuance"). In addition to the limitations set forth herein, from the Closing Date until such time as the Purchasers no longer hold any of the Company; Securities, the Company shall be prohibited from effecting or entering into an agreement to effect any Subsequent Financing (iiias defined in Section 4.14) involving a "Variable Rate Transaction" or an "MFN Transaction" (each as defined below). The term "Variable Rate Transaction" shall mean a transaction in which the Company issues or sells (i) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of, Common Stock either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the shares of Common Stock issuable at any time after the initial issuance of such debt or equity securities, or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the exercise occurrence of any options specified or warrants outstanding on contingent events directly or indirectly related to the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares business of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security"), if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of for the Common Stock) . The term "MFN Transaction" shall mean a transaction in which the Company issues or sells any securities in a capital raising transaction or series of related transactions which grants to an investor the right to exchange their securities for securities issued in future transactions of the Company on terms more favorable than those granted to such investor in their original offering. In addition, unless Shareholder Approval has been obtained and deemed effective in accordance with Section 4.5(c), the Company shall not make any issuance whatsoever of Capital Shares or Capital Shares Equivalents which would cause any adjustment of the Conversion Price (as defined in other than pursuant to Section 7(a) of the Certificate of Designation) to the extent the holders of the shares of Preferred Stock as would not be permitted, pursuant to Section 6(d) of the date thereof (a "Down Future Financing")Certificate of Designation, to convert their respective outstanding Preferred Stock and exercise their respective Warrants in full, ignoring for such purposes any conversion or exercise limitations therein. Additionally, unless Shareholder Approval has been obtained and deemed effective, the Company shall provide not make any issuance whatsoever of Common Stock or Common Stock Equivalents which would cause any adjustment of the Conversion Price to the Purchasers by 5:00 p.m. (New York timeextent the holders of Preferred Stock would not be permitted, pursuant to Section 6(d) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing Certificate of Designation, to convert their respective outstanding Debentures and exercise their respective Warrants in reasonable detail (i) full, ignoring for such purposes the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing conversion or exercise limitations therein. Any Purchaser shall be effectedentitled to obtain injunctive relief against the Company to preclude any such issuance, and attached towhich remedy shall be in addition to any right to collect damages.

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (i) issuance of the Underlying Shares; (ii) shares the issuance of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors securities upon exercise or conversion of the Company's options, warrants or other convertible securities outstanding as of the date hereof and listed on Schedule 2(c); (iii) the grant of additional options or warrants, or the issuance of additional securities, under any Company stock or compensation plan pursuant to which the Company's securities Common Stock may be issued to any employee, officer, director or consultant of the Company which is either (a) approved by the stockholders of the Company or (b) approved by the compensation committee of the Company's Board of Directors for legitimate compensation purposes which provides for the purchase of the Common Stock at a purchase price of no less than 85% of the market price of the Common Stock on the date of issuance of such option, warrant, or other security; (iiiiv) shares of Common Stock issuable upon the exercise of any options issued or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities deemed to be have been issued in the transactions set forth on such Schedule 2.1(ca Strategic Venture (as defined below); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or person; (vi) securities sold by the Company in a firm commitment underwritten public offering excluding a continuous offering pursuant to Rule 415 under the Securities Act; (vii) shares the issuance of Common Stock issued upon conversion pursuant to an equity line of credit arrangement (an "EQUITY LINE"); provided that the Company does not exercise its option to make draw downs under the Equity Line until at least thirty (30) days following the effectiveness of the Series A Preferred Stock Registration Statement (collectivelyas defined herein); or (viii) the issuance by any Subsidiary of its capital stock or securities convertible into its capital stock ("Subsidiary Securities"); provided that the Subsidiary Securities are not convertible into, or otherwise exchangeable for, Common Stock, the "Excluded Security")Company will not, if without the Company agrees prior written consent of Rose Xxxx, xxgotiate or contract with any party to issue shares obtain additional equity financing (including debt financing with an equity component) that involves (A) the issuance of Common Stock (whether upon conversion or other securities exercise of a security convertible into or exchangeable or exercisable for Common Stock (the "New SecurityCONVERTIBLE SECURITIES") while any shares of Preferred Stock are outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock otherwise) at a price which may change with discount to the market price of the Common StockStock on the date of issuance thereof or, in the case of Convertible Securities, the date of issuance of such Convertible Securities (in each case taking into account the value of any warrants or options to acquire Common Stock issued in connection therewith) than or where the Conversion Price issuance price of such Common Stock is subject to reduction in the future or (B) the issuance of Convertible Securities that are convertible into an indeterminate number of shares of Common Stock or where the issuance price of the Common Stock upon conversion or exercise of such Convertible Securities (including, based upon any conversion, exchange or reset formula) changes at any time after the date of issuance of such Convertible Securities, during the period (the "LOCK-UP PERIOD") beginning on the Closing Date and ending one hundred eighty (180) days from the date the Registration Statement (as defined in the Certificate of DesignationRegistration Rights Agreement) is declared effective (plus any days after the Registration Statement is initially declared effective in which sales cannot be made thereunder). In addition, subject to the exceptions described in clauses (i) through (vii) of the shares first sentence of Preferred Stock as of the date thereof (a "Down Future Financing")this Section 3.9, the Company will not conduct any equity financing (including debt with an equity component) ("FUTURE OFFERINGS") during the period beginning on the Closing Date and ending one hundred eighty-five (185) days after the end of the Lock-up Period (plus any days after the Registration Statement is initially declared effective in which sales cannot be made thereunder) unless it shall provide have first delivered to Rose Xxxx, xx least fifteen (15) business days prior to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been madeclosing of such Future Offering, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached tonotice

Future Financings. a. As long as Until the earlier to occur of (i) the date that the Purchasers (collectively) own less than 850,000 shares of the Preferred Company's Common Stock are outstanding(or shares exercisable or exchangeable for or convertible into shares of the Company's Common Stock) or (ii) August 24, 2001, and except for the issuance of (i) issuance of the Underlying Shares; , (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan (as such plan may be amended from time to time) which has been approved by the Board of Directors of the CompanyCompany prior to the date hereof, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; , (iii) shares of Common Stock issuable upon the exercise of any options options, warrants, convertible securities or warrants debentures outstanding on the date hereof and listed included in Schedule 2.1(cSCHEDULE 2.1(C) hereto; , (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person Person, or (viiv) shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock issued upon conversion of in an offering registered under the Series A Preferred Stock (collectively, the "Excluded Security")Securities Act, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New NEW Security") while any shares of Preferred Stock Shares are outstanding at an effective price per share which is less or may be less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof $4.50 (a "Down Future FinancingFUTURE FINANCING"), the Company shall provide to the Purchasers by 5:00 p.m. (New York time) on or before the third (3rd) Trading Day (as defined below) business day after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached toto which shall be a term sheet or similar document relating thereto (the "FUTURE FINANCING NOTICE"). Upon receiving the Future Financing Notice, each Purchaser shall have the pro rata right (based on the number of Shares then held by such Purchaser relative to the number of Shares issued pursuant to this Agreement) to purchase, on the same terms and conditions as the Future Financing, an amount of New Securities having a per share purchase price equal to the per share purchase price paid in the Future Financing. In the event a Purchaser desires to exercise the right granted under this Section 3.16, such Purchaser must notify the Company on or prior to the fifth (5th) business day after such Purchaser has received the Future Financing Notice. In the event the terms and conditions of a proposed Future Financing are amended in any respect after delivery of the Future Financing Notice but prior to the closing of the proposed Future Financing to which such Future Financing Notice relates, the Company shall deliver a new notice to each Purchaser describing the amended terms and conditions of the proposed Future Financing and each Purchaser thereafter shall have an option during the five (5) business day period following delivery of such new notice to purchase its pro rata share (based on the Purchaser's percentage of the number of Shares then outstanding that such Purchaser owns) of the New Securities being offered on the same terms as contemplated by such proposed Future Financing, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Financing. Those Purchasers desiring to purchase additional shares of Common Stock must notify the Company of their intention to do so within five (5) business days after the Company has informed the Purchasers of their right to purchase additional shares of Common Stock. Within five (5) business days of the termination of the final notice period, the transactions contemplated by this Section 3.16 shall close, subject to the completion of mutually satisfactory documentation, and the Company shall tender to each Purchaser certificates representing the New Securities that it agreed to purchase and the Purchasers shall make payment for the entire purchase price in immediately available funds at the closing of such sale.

Future Financings. a. As long as shares of the Preferred Stock are ------------------ outstanding, except for (i) issuance of the Underlying Shares; (ii) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; (iii) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in Schedule 2.1(c) hereto; (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; or (vi) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by the Company of a division, assets or business (or stock constituting any portion thereof) from another Person or (vii) shares of Common Stock issued upon conversion of the Series A Preferred Stock (collectively, the "Excluded Security")Person, if the Company agrees to issue shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares of Preferred Stock are ------------- outstanding at an effective price per share which is less (including, without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof (a "Down Future ------ Financing"), the Company shall provide to the Purchasers by 5:00 p.m. (New York --------- time) on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing in reasonable detail (i) the proposed terms of the Down Future Financingexhibit 10.1, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected, and attached topage 15

Future Financings. a. As long as shares of the Preferred Stock are outstanding, except Except for (ia) the issuance of the Underlying Warrant Shares and the Conversion Shares; , (iib) shares of Common Stock deemed to have been issued by the Company in connection with any plan which has been approved by the Board of Directors of the Company, pursuant to which the Company's securities may be issued to any employee, officer, director or consultant of the Company; , (iiic) shares of Common Stock issuable upon the exercise of any options or warrants outstanding on the date hereof and listed in on Schedule 2.1(c) hereto; , (iv) the securities to be issued in the transactions set forth on such Schedule 2.1(c); (v) shares issued in a transaction registered under the Securities Act; (vid) shares of Common Stock issued or deemed to have been issued as consideration for an acquisition by in connection with strategic transactions between the Company of a divisionand another Person, assets including without limitation, joint ventures, marketing or business distribution arrangements or technology transfer or development arrangements, (or stock constituting any portion thereof) from another Person or (viie) shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock issued in an offering registered under the Securities Act and (f) shares of Common Stock issuable upon conversion or exercise of any other security issued in an offering in which the Series A Preferred Stock (collectively, Purchaser previously had the "Excluded Security")right to participate under this Section 3.8, if the Company agrees to issue for cash shares of Common Stock or other securities convertible into or exchangeable or exercisable for Common Stock (the "New Security") while any shares the Note is outstanding (either of Preferred Stock are outstanding at an effective price per share which is less (includingi) or (ii), without limitation, any security which is convertible into or exchangeable or exercisable for Common Stock at a price which may change with the market price of the Common Stock) than the Conversion Price (as defined in the Certificate of Designation) of the shares of Preferred Stock as of the date thereof (a "Down Future Financing"), the Company shall provide to the Purchasers by 5:00 p.m. Purchaser notice (New York timethe "Future Financing Notice") on or before the third (3rd) Trading Day (as defined below) after the decision to issue the New Security has been made, written notice of the Down Future Financing containing which describes in reasonable detail (i) the proposed terms of the Down Future Financing, (ii) the amount of the proceeds that will be raised and (iii) the Person with whom such Down Future Financing shall be effected. Upon receiving the Future Financing Notice, the Purchaser shall have the right, by notice to the Company within ten days of its receipt of the Future Financing Notice, to purchase, on the same terms as the Future Financing, up to an amount of New Securities which equals the proportion that the number of shares of Common Stock owned beneficially by the Purchaser (assuming for this purpose the exercise and attached toconversion in full of all securities and instruments exercisable or convertible into shares of Common Stock, including without limitation, the Warrants (to the extent then exercisable) and the Note) immediately prior to this completion of the Future Financing bears to the total number of shares of Common Stock owned beneficially by all Persons (assuming for this purpose the exercise and conversion in full of all securities and instruments exercisable for or convertible into shares of Common Stock) immediately prior to completion of the Future Financing.