SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K


                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


       Date of Report (date of earliest event reported): December 30, 2008


                               CEL-SCI CORPORATION
                          ------ --------------------
             (Exact name of Registrant as specified in its charter)


     Colorado                          0-11503                  84-0916344
-------------------------------------------------------------------------------
(State or other jurisdiction    (Commission File No.)         (IRS Employer
of incorporation)                                           Identification No.)

                              8229 Boone Blvd. #802
                                Vienna, VA 22182
                -------------------------------------------------
          (Address of principal executive offices, including Zip Code)


       Registrant's telephone number, including area code: (703) 506-9460
                                                           --------------

                                       N/A
                 ----------------------------------------- ----
          (Former name or former address if changed since last report)


<PAGE>


Item 1.01   Entry Into a Material Definitive Agreement

Equity Line of Credit
---------------------

     On  December  30,  2008,  CEL-SCI  entered  into an  equity  line of credit
agreement with  Ascendiant  Capital Group,  LLC in order to establish a possible
source of funding for CEL-SCI.  The equity line of credit agreement  establishes
what is sometimes also referred to as an equity drawdown facility.

     Under the equity line of credit agreement, Ascendiant has agreed to provide
CEL-SCI with up to $5,000,000  of funding prior to January 6, 2011.  During this
period,  CEL-SCI  may  request a  drawdown  under the  equity  line of credit by
selling  shares  of its  common  stock  to  Ascendiant  and  Ascendiant  will be
obligated to purchase the shares.  CEL-SCI may request a drawdown once every ten
trading days,  although  CEL-SCI is under no obligation to request any drawdowns
under the equity  line of credit.  There must be a minimum of two  trading  days
between each drawdown request.

     During the ten trading  days  following a drawdown  request,  CEL-SCI  will
calculate the amount of shares it will sell to Ascendiant and the purchase price
per share.  The  purchase  price per share of common  stock will be based on the
daily volume weighted average price of CEL-SCI's common stock during each of the
ten trading days immediately following the drawdown date, less a discount of 9%.

     CEL-SCI may request a drawdown by faxing a drawdown  notice to  Ascendiant,
stating  the amount of the  drawdown  and the  lowest  price,  if any,  at which
CEL-SCI is willing to sell the shares. The lowest price will be set by CEL-SCI's
Chief Executive Officer in his sole and absolute discretion.

Calculation of Drawdown Amount, Purchase Price and Number of Shares Sold
------------------------------------------------------------------------

     There is no  minimum  amount  CEL-SCI  can draw down at any one  time.  The
maximum amount CEL-SCI can draw down at any one time is an amount equal to:

     o    10% of the total trading volume of CEL-SCI's  common stock for the ten
          trading days prior to the date of the drawdown request, multiplied by

     o    the weighted  average price of CEL-SCI's common stock for the same ten
          trading days,

       or any other amount mutually agreed upon by CEL-SCI and Ascendiant.

     On the day  following  the  delivery of the  drawdown  notice,  a valuation
period of ten trading days will start:

     o    On each of the ten  trading  days  during the  valuation  period,  the
          number  of  shares  to be sold to  Ascendiant  will be  determined  by
          dividing  1/10 of the drawdown  amount by the  purchase  price on each


                                       2

<PAGE>

          trading  day. The  purchase  price will be 91% of the volume  weighted
          average price of CEL-SCI's common stock on that day.

     o    If the  purchase  price on any  trading day during the ten trading day
          calculation  period is below the minimum  price  specified by CEL-SCI,
          then  Ascendiant  will not  purchase  any shares on that day,  and the
          drawdown amount will be reduced by 1/10.

     Using the formula  described  above, if CEL-SCI had requested a drawdown on
December  12,  2008,  the  maximum  amount  CEL-SCI  could draw down  during the
subsequent ten trading days would have been  approximately  $72,125.  Based upon
the volume  weighted  average of  CEL-SCI's  common stock during the ten trading
days subsequent to December 12, 2008,  CEL-SCI would have sold 258,000 shares of
its common stock to Ascendiant and would have received proceeds from the sale of
these shares of approximately $72,125.

     If CEL-SCI sets a minimum price which is too high and CEL-SCI's stock price
does not  consistently  meet that level  during the ten  trading  days after its
drawdown  request,  the amount CEL-SCI can draw and the number of shares CEL-SCI
will sell to  Ascendiant  will be reduced.  On the other hand, if CEL-SCI sets a
minimum price which is too low and its stock price falls significantly but stays
above the minimum  price,  CEL-SCI will have to issue a greater number of shares
to Ascendiant based on the reduced market price.

Payment for Shares
------------------

     The shares  purchased on the ten trading days following a drawdown  request
will be issued  and paid for on the 13th  trading  day  following  the  drawdown
request.

Termination of the Equity Line of Credit Agreement
--------------------------------------------------

     The equity line of credit agreement will be terminated if:

     o    CEL-SCI's  common stock is de-listed  from the American Stock Exchange
          unless the  de-listing  is in  connection  with  CEL-SCI's  subsequent
          listing of its common stock on the NASDAQ National Market,  the NASDAQ
          SmallCap Market, the New York Stock Exchange, the OTC Bulletin Board,

     o    CEL-SCI  files for  protection  from its  creditors  under the Federal
          Bankruptcy laws,

     o    The shares  which are to be sold to  Ascendiant  are not covered by an
          effective registration statement,

     o    Ascendiant fails to honor a drawdown notice, or

     o    the equity line of credit  agreement  violates any other  agreement to
          which CEL-SCI is a party.


                                       3

<PAGE>


General
-------

     On the trading day  immediately  prior to the date CEL-SCI  sends its first
drawdown  notice to Ascendiant,  and in  consideration  for providing the equity
drawdown facility, CEL-SCI will deliver to Ascendiant shares of its common stock
equal in number to the amount determined by:

     o    dividing $250,000 by

     o    the greater of the weighted average price of CEL-SCI's common stock or
          the closing bid price of CEL-SCI's  common stock on the second trading
          day immediately preceding the drawdown notice.

     CEL-SCI  paid  $20,000 to Feldman  Weinstein  Smith LLP,  legal  counsel to
Ascendiant,  for  Ascendiant's  legal  expenses  relating  to the equity line of
credit.

     Ascendiant  is entitled to customary  indemnification  from CEL-SCI for any
losses or  liabilities  it  suffers  as a result of any breach by CEL-SCI of any
provisions of the equity line of credit agreement, or as a result of any lawsuit
brought by any shareholder of CEL-SCI,  provided the shareholder instituting the
lawsuit is not an officer, director or principal shareholder of CEL-SCI.


Item 9.01     Financial Statements and Exhibits

      Exhibit Number    Description
      --------------    -----------

      10(j)             Equity Line of Credit Agreement


                                       4

<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date:  January 2, 2009

                                 CEL-SCI CORPORATION



                                 By:  /s/ Patricia B. Prichep
                                     -----------------------------------------
                                     Patricia B. Prichep, Senior Vice President
                                     of Operations





<PAGE>

                               CEL-SCI CORPORATION

                                    FORM 8-K

                                    EXHIBITS

<PAGE>



                                  EXHIBIT 10(j)



<PAGE>


                          SECURITIES PURCHASE AGREEMENT

     This  Securities  Purchase  Agreement  (this  "Agreement")  is  dated as of
December 30, 2008 by and between  Cel-Sci  Corporation,  a Colorado  corporation
(the "Company") and Ascendiant Capital Group, LLC (the "Purchaser"). Capitalized
terms used in this  Agreement and not otherwise  defined shall have the meanings
ascribed to them in Article 1.

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein, the Company shall have the right to issue and sell
to  Purchaser  from time to time as  provided  herein,  and  Purchaser  shall be
obligated  to  purchase  from the  Company up to  $5,000,000  worth of shares of
Common Stock pursuant to the Company's  effective  registration  statement under
the Securities Act, file no. 333-151667.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  premises,  and  the
promises and covenants  herein  contained,  the receipt and sufficiency of which
are hereby  acknowledged  by the parties  hereto,  the parties,  intending to be
legally bound, hereby agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

            "Aggregate Purchase Price" shall have the meaning ascribed to such
      term in Section 6.1(e).

            "Business Day" means any day except Saturday, Sunday, any day which
      shall be a federal legal holiday in the United States or any day on which
      banking institutions in the State of New York are authorized or required
      by law or other governmental action to close.

            "Commission" means the Securities and Exchange Commission.

            "Commencement Date" shall mean the Trading Day immediately following
      the date.

            "Commitment Amount" shall have the meaning assigned to such term in
      Section 2.1 hereof.

<PAGE>

            "Commitment Period" shall mean the period of 24 consecutive months
      commencing immediately after the date that the Company files a prospectus
      supplement disclosing the terms hereunder.

            "Common Stock" means the common stock of the Company, and any other
      class of securities into which such securities may hereafter be
      reclassified or changed into.

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

            "Company  Counsel" means Hart & Trinen,  1624  Washington  Street,
      Denver, Colorado 80206.

            "Consolidation Event" shall mean a sale of all or substantially all
      of the Company's assets or a merger pursuant to which the holders of the
      voting securities of the Company prior to the merger do not own a majority
      of the voting securities of the surviving entity.

            "Disclosure Schedules" means the Disclosure Schedules of the Company
      delivered concurrently herewith.

            "Draw Down" shall have the meaning assigned to such term in Section
      6.1(a) hereof.

            "Draw Down Notice" shall have the meaning assigned to such term in
      Section 6.1(e) hereof.

            "Draw Down Pricing Period" shall mean a period of 10 consecutive
      Trading Days, beginning on the date specified in the Draw Down Notice and,
      absent a subsequent suspension notice delivered to the Purchaser on or
      before the end of the prior Draw Down Pricing Period, beginning on the
      third Trading Day following the prior Draw down Pricing Period; provided,
      however, the Draw Down Pricing Period shall not begin before the day on
      which receipt of such notice is delivered to Purchaser pursuant to Section
      8.3 herein.

            "Draw Down Shares" or "Shares" shall mean the shares of Common Stock
      issuable pursuant to a Draw Down.

            "DTC" shall have the meaning assigned to such term in Section
      6.1(f).

            "DWAC" shall have the meaning assigned to such term in Section
      6.1(f).

            "Equity Conditions" shall mean, during the period in question, (i)
      there is an effective and available Registration Statement pursuant to
      which the Company is permitted to utilize the prospectus thereunder to
      sell all of the Draw Down Shares (issued and to be issued pursuant to the


                                       2
<PAGE>

      applicable Draw Down), (ii) the Common Stock is trading on the Trading
      Market and all of the shares issuable pursuant to the Transaction
      Documents are listed or quoted (if applicable) for trading on a Trading
      Market (and the Company believes, in good faith, that trading of the
      Common Stock on a Trading Market will continue uninterrupted for the
      foreseeable future), (iii) there is a sufficient number of authorized but
      unissued and otherwise unreserved shares of Common Stock for the issuance
      of all of the Draw Down Shares (issued and to be issued pursuant to the
      applicable Draw Down), (iv) the Company, directly or indirectly, has not
      provided the Purchaser with any material, non-public information that has
      not been made publicly available in a widely disseminated release; and (v)
      the issuance in question shall not exceed 4.9% of the then outstanding
      shares of Common Stock on the date that such Draw Down Shares are issued.

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

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

            "FWS" means Feldman Weinstein & Smith LLP with offices located at
      420 Lexington Avenue, Suite 2620, New York, New York 10170-0002.

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

            "Initial Closing" shall have the meaning assigned to such term in
      Section 2.2 hereof.

            "Initial Closing Date" shall have the meaning assigned to such term
      in Section 2.2 hereof.

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

            "Investment Amount" shall have the meaning assigned to such term in
      Section 6.1(e) hereof.

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

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

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

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


                                       3
<PAGE>

            "Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Purchase Price" shall mean, with respect to Draw Down Shares
      purchased during each applicable Settlement Period, 91% of the VWAP on the
      date in question.

            "Purchaser Party" shall have the meaning ascribed to such term in
      Section 4.7.

            "Registration Statement" means the registration statement file no.
      333-151667, covering the sale by the Company to the Purchaser of the Draw
      Down Shares and the shares issuable pursuant to Section 5.2(g) below.

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

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

            "Rule 424" means Rule 424 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

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

            "Securities" means the Draw Down Shares, and the shares of Common
      Stock issuable to the Purchaser pursuant to Section 5.2(g) below.

            "Securities Act" means the Securities Act of 1933, as amended, and
      the rules and regulations promulgated thereunder.

            "Settlement" shall mean the delivery of the Draw Down Shares into
      the Purchaser's DTC account via DTC's DWAC system and the Purchaser's
      delivery of payment therefor.

            "Settlement Date" shall have the meaning assigned to such term in
      Section 6.1(b).

            "Settlement Period" shall have the meaning assigned to such term in
      Section 6.1(b).

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

            "Threshold Price" shall mean a price specified by the Company in
      each Draw Down Notice.


                                       4
<PAGE>

            "Trading Cushion" shall mean the mandatory 2 Trading Days between
      Draw Down Pricing Periods.

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

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the Nasdaq Capital Market, the American Stock Exchange, the New York Stock
      Exchange or the Nasdaq Global Market.

            "Transaction Documents" means this Agreement and any other documents
      or agreements executed in connection with the transactions contemplated
      hereunder.

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies: (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest preceding date) on the Trading
      Market on which the Common Stock is then listed or quoted for trading as
      reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30
      a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the
      Common Stock is not listed or traded on a Trading Market but is quoted on
      the OTC Bulletin Board, the volume weighted average price of the Common
      Stock for such date (or the nearest preceding date) on the OTC Bulletin
      Board; (c) if the Common Stock is not then quoted for trading on a Trading
      Market or the OTC Bulletin Board and if prices for the Common Stock are
      then reported in the "Pink Sheets" published by Pink Sheets, LLC (or a
      similar organization or agency succeeding to its functions of reporting
      prices), the most recent bid price per share of the Common Stock so
      reported; or (d) in all other cases, the fair market value of a share of
      Common Stock as determined by an independent appraiser selected in good
      faith by the Holder and reasonably acceptable to the Company.

                                  ARTICLE II.
                                PURCHASE AND SALE

     2.1 Purchase  and Sale of Draw Down  Shares.  Upon the terms and subject to
the conditions of this Agreement,  at its  discretion,  the Company may sell and
issue to the Purchaser and the Purchaser shall be obligated to purchase from the
Company,  up to an aggregate of $5,000,000  worth of shares of Common Stock (the
"Commitment  Amount"),  provided  that in no event shall the  Commitment  Amount
exceed  24,615,000  shares of Common Stock without first  obtaining  stockholder
approval of such excess issuance.

     2.2 Initial  Closing.  The execution and delivery of this Agreement and the
other agreements  referred to herein (the "Initial Closing") shall take place at
the offices of FWS, 420 Lexington  Avenue,  Suite 2620, New York, New York 10170
(i) at 10:00 a.m.  local time within 5 Trading Days of the date hereof,  or (ii)
at such other time and place or on such date as the  Purchaser  and the  Company
may agree upon (the  "Initial  Closing  Date").  Each party  shall  deliver  the
following  documents,  instruments  and  writings  at or  prior  to the  Initial
Closing:


                                       5
<PAGE>

          (a)  the  Company  shall  deliver  or  cause  to be  delivered  to the
     Purchaser the following:

          (i)  this Agreement duly executed by the Company;

          (ii) the legal  opinion from  Company  Counsel,  in the form  attached
               hereto as Exhibit B; and

          (iii) the  base  prospectus  in the  Registration  Statement  shall be
               accepted by FINRA under Rule 2710.

          (b) the  Purchaser  shall  deliver  or  cause to be  delivered  to the
     Company this Agreement duly executed by the Purchaser.


                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1  Representations  and  Warranties  of the Company.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall be deemed a part  hereof and to qualify any  representation  or
warranty  otherwise  made herein to the extent of such  disclosure,  the Company
hereby  makes  the  representations  and  warranties  set  forth  below  to  the
Purchaser:

          (a) Subsidiaries.  All of the direct and indirect  subsidiaries of the
     Company are set forth on Schedule  3.1(a).  The Company  owns,  directly or
     indirectly,  all of the capital  stock or other  equity  interests  of each
     Subsidiary free and clear of any Liens,  and all the issued and outstanding
     shares of capital stock of each Subsidiary are validly issued and are fully
     paid, non-assessable and free of preemptive and similar rights to subscribe
     for or purchase  securities.  If the Company has no subsidiaries,  then all
     other references in the Transaction Documents to the Subsidiaries or any of
     them will be disregarded.

          (b)  Organization  and  Qualification.  The  Company  and  each of the
     Subsidiaries is an entity duly incorporated or otherwise organized, validly
     existing and in good  standing  under the laws of the  jurisdiction  of its
     incorporation or organization (as applicable), with the requisite power and
     authority  to own and use its  properties  and  assets  and to carry on its
     business as currently conducted.  Neither the Company nor any Subsidiary is
     in  violation  or  default  of  any  of the  provisions  of its  respective
     certificate or articles of incorporation, bylaws or other organizational or
     charter  documents.  Each  of the  Company  and  the  Subsidiaries  is duly
     qualified  to  conduct  business  and  is in  good  standing  as a  foreign
     corporation or other entity in each jurisdiction in which the nature of the
     business  conducted  or  property  owned  by it  makes  such  qualification
     necessary, except where the failure to be so qualified or in good standing,
     as the case may be, could not have or  reasonably  be expected to result in
     (i) a material adverse effect on the legality,  validity or  enforceability
     of any Transaction Document,  (ii) a material adverse effect on the results
     of  operations,  assets,  business,  prospects or condition  (financial  or
     otherwise) of the Company and the Subsidiaries,  taken as a whole, or (iii)
     a  material  adverse  effect on the  Company's  ability  to  perform in any


                                       6
<PAGE>

     material  respect on a timely basis its  obligations  under any Transaction
     Document (any of (i), (ii) or (iii),  a "Material  Adverse  Effect") and no
     Proceeding has been instituted in any such jurisdiction revoking,  limiting
     or  curtailing  or  seeking  to  revoke,  limit or  curtail  such power and
     authority or qualification.

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

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

          (e) Filings,  Consents and  Approvals.  The Company is not required to
     obtain any consent, waiver,  authorization or order of, give any notice to,
     or make any filing or registration with, any court or other federal, state,
     local or other  governmental  authority or other Person in connection  with
     the execution,  delivery and  performance by the Company of the Transaction


                                       7
<PAGE>

     Documents,  other than (i) filings required pursuant to Section 4.4 of this
     Agreement,  (ii) the filing with the Commission of a prospectus  supplement
     to the  Registration  Statement  describing the  transactions  contemplated
     hereby,  (iii)  application(s)  to each  applicable  Trading Market for the
     listing  of the  Securities  for  trading  thereon  in the time and  manner
     required  thereby,  and (iv) such  filings as are required to be made under
     applicable state securities laws (collectively, the "Required Approvals").

          (f) Issuance of the  Securities.  The Securities  are duly  authorized
     and, when issued and paid for in accordance with the applicable Transaction
     Documents,  will be duly and validly issued,  fully paid and nonassessable,
     free and clear of all Liens imposed by the Company other than  restrictions
     on transfer  provided  for in the  Transaction  Documents.  The Company has
     reserved  from its duly  authorized  capital  stock the  maximum  number of
     shares of Common Stock issuable  pursuant to this Agreement.  The Draw Down
     Shares and the other shares of Common  Stock  issuable  hereunder  will be,
     upon issuance,  duly registered under the Securities Act and will be freely
     tradable by the Purchaser,  subject to any prospectus delivery requirements
     under Rule 172 under the Securities Act.

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


                                       8
<PAGE>

     the  Company's  capital  stock to which the  Company  is a party or, to the
     knowledge  of  the  Company,   between  or  among  any  of  the   Company's
     stockholders.

          (h) SEC  Reports;  Financial  Statements.  The  Company  has filed all
     reports,  schedules,  forms, statements,  registration statements and other
     documents  required  to be  filed by it under  the  Securities  Act and the
     Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
     two years  preceding the date hereof (or such shorter period as the Company
     was required by law or regulation  to file such  material)  (the  foregoing
     materials,  including the exhibits  thereto and documents  incorporated  by
     reference  therein,  being  collectively  referred  to  herein  as the "SEC
     Reports") on a timely basis or has received a valid  extension of such time
     of filing and has filed any such SEC Reports prior to the expiration of any
     such extension.  As of their respective  dates, the SEC Reports complied in
     all material  respects with the  requirements of the Securities Act and the
     Exchange  Act,  as  applicable,  and none of the SEC  Reports,  when filed,
     contained  any untrue  statement  of a material  fact or omitted to state a
     material fact  required to be stated  therein or necessary in order to make
     the statements  therein, in the light of the circumstances under which they
     were made, not misleading. The financial statements of the Company included
     in  the  SEC  Reports  comply  in all  material  respects  with  applicable
     accounting  requirements  and the rules and  regulations  of the Commission
     with  respect  thereto as in effect at the time of filing.  Such  financial
     statements  have been prepared in accordance  with United States  generally
     accepted  accounting  principles  applied on a consistent  basis during the
     periods  involved  ("GAAP"),  except as may be otherwise  specified in such
     financial  statements  or the  notes  thereto  and  except  that  unaudited
     financial  statements  may not contain all footnotes  required by GAAP, and
     fairly  present in all  material  respects  the  financial  position of the
     Company and its  consolidated  subsidiaries as of and for the dates thereof
     and the results of  operations  and cash flows for the periods  then ended,
     subject,  in the  case of  unaudited  statements,  to  normal,  immaterial,
     year-end audit adjustments.

          (i) Material Changes; Undisclosed Events, Liabilities or Developments.
     Since the date of the latest audited financial  statements  included within
     the SEC Reports,  except as  specifically  disclosed  in a  subsequent  SEC
     Report or on Schedule  3.1(i),  (i) there has been no event,  occurrence or
     development  that has had or that could reasonably be expected to result in
     a  Material  Adverse  Effect,   (ii)  the  Company  has  not  incurred  any
     liabilities  (contingent  or otherwise)  other than (A) trade  payables and
     accrued  expenses  incurred in the ordinary  course of business  consistent
     with past practice and (B)  liabilities not required to be reflected in the
     Company's  financial  statements  pursuant to GAAP or  disclosed in filings
     made with the  Commission,  (iii) the Company has not altered its method of
     accounting,  (iv) the  Company  has not  declared  or made any  dividend or
     distribution  of cash or other property to its  stockholders  or purchased,
     redeemed  or made any  agreements  to  purchase or redeem any shares of its
     capital  stock and (v) the Company has not issued any equity  securities to
     any officer,  director or Affiliate,  except  pursuant to existing  Company
     stock option plans. The Company does not have pending before the Commission
     any request  for  confidential  treatment  of  information.  Except for the
     issuance of the Securities  contemplated  by this Agreement or as set forth
     on Schedule  3.1(i),  no event,  liability or  development  has occurred or
     exists with respect to the Company or its  Subsidiaries or their respective
     business,  properties,  operations  or financial  condition,  that would be


                                       9
<PAGE>

     required to be disclosed by the Company under applicable securities laws at
     the time this  representation is made that has not been publicly  disclosed
     at least 1 Trading Day prior to the date that this representation is made.

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

          (k) Labor  Relations.  No  material  labor  dispute  exists or, to the
     knowledge of the Company,  is imminent with respect to any of the employees
     of the Company,  which could reasonably be expected to result in a Material
     Adverse Effect.  None of the Company's or its Subsidiaries'  employees is a
     member of a union that  relates to such  employee's  relationship  with the
     Company, and neither the Company or any of its Subsidiaries is a party to a
     collective  bargaining  agreement,  and the  Company  and its  Subsidiaries
     believe  that  their  relationships  with  their  employees  are  good.  No
     executive officer, to the knowledge of the Company,  is, or is now expected
     to be,  in  violation  of any  material  term of any  employment  contract,
     confidentiality,   disclosure  or  proprietary   information  agreement  or
     non-competition  agreement,  or any  other  contract  or  agreement  or any
     restrictive  covenant,  and the continued employment of each such executive
     officer  does not  subject the  Company or any of its  Subsidiaries  to any
     liability with respect to any of the foregoing matters. The Company and its
     Subsidiaries  are in compliance  with all U.S.  federal,  state,  local and
     foreign  laws  and  regulations   relating  to  employment  and  employment
     practices,  terms and conditions of employment and wages and hours,  except
     where the failure to be in  compliance  could not,  individually  or in the
     aggregate, reasonably be expected to have a Material Adverse Effect.

          (l)  Compliance.  Neither  the Company  nor any  Subsidiary  (i) is in
     default  under or in violation  of (and no event has occurred  that has not
     been waived that,  with notice or lapse of time or both,  would result in a
     default by the Company or any Subsidiary under), nor has the Company or any
     Subsidiary  received  notice of a claim that it is in default under or that
     it is in violation of, any indenture, loan or credit agreement or any other
     agreement or instrument to which it is a party or by which it or any of its
     properties  is bound  (whether or not such  default or  violation  has been
     waived),  (ii) is in  violation  of any order of any court,  arbitrator  or
     governmental  body,  or (iii) is or has been in  violation  of any statute,


                                       10
<PAGE>

     rule  or  regulation  of  any  governmental  authority,  including  without
     limitation  all foreign,  federal,  state and local laws  applicable to its
     business and all such laws that affect the environment, except in each case
     as could not have or reasonably be expected to result in a Material Adverse
     Effect.

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

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

          (o) Patents and Trademarks.  The Company and the Subsidiaries have, or
     have rights to use, all patents, patent applications, trademarks, trademark
     applications,  service  marks,  trade  names,  trade  secrets,  inventions,
     copyrights,  licenses and other  intellectual  property  rights and similar
     rights  necessary or material for use in connection  with their  respective
     businesses as described in the SEC Reports and which the failure to so have
     could have a  Material  Adverse  Effect  (collectively,  the  "Intellectual
     Property  Rights").  Neither the Company nor any  Subsidiary has received a
     notice (written or otherwise) that the Intellectual Property Rights used by
     the Company or any Subsidiary  violates or infringes upon the rights of any
     Person.  To the knowledge of the Company,  all such  Intellectual  Property
     Rights are  enforceable  and there is no existing  infringement  by another
     Person of any of the  Intellectual  Property  Rights.  The  Company and its
     Subsidiaries  have  taken  reasonable  security  measures  to  protect  the
     secrecy, confidentiality and value of all of their intellectual properties,
     except where failure to do so could not,  individually or in the aggregate,
     reasonably be expected to have a Material Adverse Effect.

          (p)  Insurance.  The  Company  and the  Subsidiaries  are  insured  by
     insurers of  recognized  financial  responsibility  against such losses and
     risks and in such amounts as are prudent and customary in the businesses in
     which the Company and the  Subsidiaries  are  engaged,  including,  but not
     limited to, directors and officers insurance coverage at least equal to the
     aggregate Commitment Amount. Neither the Company nor any Subsidiary has any
     reason to believe that it will not be able to renew its existing  insurance


                                       11
<PAGE>

     coverage as and when such coverage  expires or to obtain  similar  coverage
     from similar  insurers as may be necessary to continue its business without
     a significant increase in cost.

          (q) Transactions With Affiliates and Employees. Except as set forth in
     the SEC Reports,  and in Schedule 3.1(q), none of the officers or directors
     of the Company and, to the knowledge of the Company,  none of the employees
     of the Company, is presently a party to any transaction with the Company or
     any  Subsidiary  (other  than  for  services  as  employees,  officers  and
     directors),   including  any  contract,   agreement  or  other  arrangement
     providing for the furnishing of services to or by,  providing for rental of
     real or personal property to or from, or otherwise requiring payments to or
     from any officer,  director or such  employee  or, to the  knowledge of the
     Company,  any entity in which any officer,  director,  or any such employee
     has a substantial interest or is an officer,  director, trustee or partner,
     in each case in excess of $60,000  other than (i) for  payment of salary or
     consulting  fees for services  rendered,  (ii)  reimbursement  for expenses
     incurred on behalf of the Company  and (iii) for other  employee  benefits,
     including  stock  option  agreements  under  any stock  option  plan of the
     Company.

          (r) Sarbanes-Oxley;  Internal Accounting  Controls.  The Company is in
     material  compliance with all provisions of the  Sarbanes-Oxley Act of 2002
     which are  applicable  to it as of the  Closing  Date.  The Company and the
     Subsidiaries  maintain a system of internal  accounting controls sufficient
     to provide  reasonable  assurance  that (i)  transactions  are  executed in
     accordance  with  management's  general or  specific  authorizations,  (ii)
     transactions  are recorded as necessary to permit  preparation of financial
     statements in conformity  with GAAP and to maintain  asset  accountability,
     (iii) access to assets is permitted  only in accordance  with  management's
     general or specific authorization, and (iv) the recorded accountability for
     assets is compared  with the existing  assets at  reasonable  intervals and
     appropriate  action is taken with respect to any  differences.  The Company
     has established  disclosure controls and procedures (as defined in Exchange
     Act Rules  13a-15(e)  and  15d-15(e))  for the  Company and  designed  such
     disclosure  controls and procedures to ensure that information  required to
     be  disclosed  by the Company in the reports it files or submits  under the
     Exchange Act is recorded,  processed,  summarized and reported,  within the
     time periods  specified in the Commission's  rules and forms. The Company's
     certifying  officers  have  evaluated  the  effectiveness  of the Company's
     disclosure  controls and  procedures as of the end of the period covered by
     the Company's most recently  filed  periodic  report under the Exchange Act
     (such date,  the  "Evaluation  Date").  The Company  presented  in its most
     recently  filed periodic  report under the Exchange Act the  conclusions of
     the certifying  officers about the effectiveness of the disclosure controls
     and procedures based on their  evaluations as of the Evaluation Date. Since
     the Evaluation Date,  there have been no changes in the Company's  internal
     control over  financial  reporting (as such term is defined in the Exchange
     Act) that has materially  affected,  or is reasonably  likely to materially
     affect, the Company's internal control over financial reporting.

          (s) Certain Fees. Except as set forth on Schedule 3.1(s), no brokerage
     or finder's  fees or  commissions  are or will be payable by the Company to
     any broker,  financial  advisor or  consultant,  finder,  placement  agent,
     investment  banker,  bank or other Person with respect to the  transactions


                                       12
<PAGE>

     contemplated  by the  Transaction  Documents.  The Purchaser  shall have no
     obligation  with  respect to any fees or with respect to any claims made by
     or on  behalf  of other  Persons  for fees of a type  contemplated  in this
     Section that may be due in connection with the transactions contemplated by
     the Transaction Documents.

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

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

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

          (w)  Disclosure.  Except  with  respect  to  the  material  terms  and
     conditions of the transactions  contemplated by the Transaction  Documents,
     the Company  confirms  that,  neither it nor any other Person acting on its
     behalf has  provided  any of the  Purchaser or their agents or counsel with
     any information that it believes  constitutes or might constitute material,
     non-public  information.  The Company  understands  and  confirms  that the
     Purchaser   will  rely  on  the  foregoing   representation   in  effecting
     transactions in securities of the Company.  All disclosure  furnished by or
     on behalf of the  Company  to the  Purchaser  regarding  the  Company,  its
     business and the transactions contemplated hereby, including the Disclosure
     Schedules  to this  Agreement,  with  respect  to the  representations  and
     warranties   made  herein  are  true  and  correct  with  respect  to  such
     representations and warranties and do not contain any untrue statement of a
     material fact or omit to state any material fact necessary in order to make
     the statements made therein, in light of the circumstances under which they
     were made, not misleading.  The press releases  disseminated by the Company


                                       13
<PAGE>

     during the twelve months  preceding the date of this  Agreement  taken as a
     whole do not contain  any untrue  statement  of a material  fact or omit to
     state a material fact  required to be stated  therein or necessary in order
     to make the statements, in light of the circumstances under which they were
     made and when made, not  misleading.  The Company  acknowledges  and agrees
     that no Purchaser makes or has made any  representations or warranties with
     respect  to  the   transactions   contemplated   hereby  other  than  those
     specifically set forth in Section 3.2 hereof.

          (x) No  Integrated  Offering.  Neither  the  Company,  nor  any of its
     affiliates,  nor any Person acting on its or their behalf has,  directly or
     indirectly,  made any  offers or sales of any  security  or  solicited  any
     offers to buy any  security,  under  circumstances  that  would  cause this
     offering of the  Securities  to be integrated  with prior  offerings by the
     Company for purposes of any applicable  shareholder  approval provisions of
     any Trading Market on which any of the securities of the Company are listed
     or designated. -

          (y) Solvency.  Based on the  financial  condition of the Company as of
     the Closing  Date,  (i) the fair  saleable  value of the  Company's  assets
     exceeds the amount that will be required to be paid on or in respect of the
     Company's existing debts and other liabilities  (including known contingent
     liabilities)  as they mature;  (ii) the Company's  assets do not constitute
     unreasonably small capital to carry on its business as now conducted and as
     proposed to be conducted  including  its capital  needs taking into account
     the  particular  capital  requirements  of the  business  conducted  by the
     Company,  and  projected  capital  requirements  and  capital  availability
     thereof; and (iii) the current cash flow of the Company,  together with the
     proceeds the Company would receive, were it to liquidate all of its assets,
     after  taking  into  account  all  anticipated  uses of the cash,  would be
     sufficient to pay all amounts on or in respect of its liabilities when such
     amounts are required to be paid. The Company does not intend to incur debts
     beyond its ability to pay such debts as they mature  (taking  into  account
     the timing and amounts of cash to be payable on or in respect of its debt).
     The Company has no knowledge of any facts or circumstances which lead it to
     believe  that it will  file for  reorganization  or  liquidation  under the
     bankruptcy or reorganization  laws of any jurisdiction within one year from
     the Closing  Date.  The SEC  Reports set forth as of the dates  thereof all
     outstanding  secured  and  unsecured  Indebtedness  of the  Company  or any
     Subsidiary, or for which the Company or any Subsidiary has commitments. For
     the  purposes  of  this  Agreement,   "Indebtedness"  shall  mean  (a)  any
     liabilities  for borrowed money or amounts owed in excess of $50,000 (other
     than trade accounts  payable  incurred in the ordinary course of business),
     (b) all  guaranties,  endorsements  and  other  contingent  obligations  in
     respect of Indebtedness of others, whether or not the same are or should be
     reflected in the  Company's  balance sheet (or the notes  thereto),  except
     guaranties  by  endorsement  of  negotiable   instruments  for  deposit  or
     collection or similar transactions in the ordinary course of business;  and
     (c) the present value of any lease  payments in excess of $50,000 due under
     leases  required to be  capitalized  in accordance  with GAAP.  Neither the
     Company nor any Subsidiary is in default with respect to any Indebtedness.

          (z) Tax Status.  Except for matters that would not, individually or in
     the  aggregate,  have or  reasonably  be  expected  to result in a Material
     Adverse  Effect,  the Company and each  Subsidiary  has filed all necessary
     federal, state and foreign income and franchise tax returns and has paid or


                                       14
<PAGE>

     accrued all taxes shown as due thereon, and the Company has no knowledge of
     a tax deficiency which has been asserted or threatened  against the Company
     or any Subsidiary.

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

          (bb)  Accountants.  The  Company's  accountants  are set  forth in the
     Registration  Statement. To the knowledge of the Company, such accountants,
     who the Company  expects  will  express  their  opinion with respect to the
     financial  statements to be included in the Company's Annual Report on Form
     10-K for the  year  ended  September  30,  2008,  are a  registered  public
     accounting firm as required by the Exchange Act.

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

          (dd) Acknowledgement Regarding Purchaser's Trading Activity.  Anything
     in this Agreement or elsewhere herein to the contrary  notwithstanding,  it
     is understood  and  acknowledged  by the Company (i) that the Purchaser has
     not  been  asked  to  agree,  nor has  Purchaser  agreed,  to  desist  from
     purchasing  or selling  securities  of the  Company;  and (ii) that past or
     future open market or other  transactions by Purchaser  before or after the
     closing of this Agreement or future  private  placement  transactions,  may
     negatively  impact  the  market  price  of  the  Company's  publicly-traded
     securities.  The Company further  understands and acknowledges that (a) the
     Purchaser  may engage in selling  activities  at various  times  during the
     period that the Securities are outstanding,  including, without limitation,
     during  the  periods  that the  value of the Draw  Down  Shares  are  being
     determined  and (b) such selling  activities  could reduce the value of the
     existing  stockholders'  equity  interests  in the Company at and after the
     time  that  the  selling  activities  are  being  conducted.   The  Company


                                       15
<PAGE>

     acknowledges that such aforementioned  selling activities do not constitute
     a breach of any of the Transaction Documents.

          (ee) Regulation M Compliance. The Company has not, and will not during
     the term of this  Agreement,  and to its  knowledge  no one  acting  on its
     behalf has, or will during the term of this Agreement,  (i) taken, directly
     or  indirectly,   any  action  designed  to  cause  or  to  result  in  the
     stabilization  or  manipulation of the price of any security of the Company
     to facilitate the sale or resale of any of the  Securities,  (ii) sold, bid
     for, purchased,  or, paid any compensation for soliciting purchases of, any
     of the  Securities,  or  (iii)  paid or  agreed  to pay to any  person  any
     compensation for soliciting another to purchase any other securities of the
     Company,  other than,  in the case of clauses (ii) and (iii),  compensation
     paid to the Company's  placement  agent in connection with the placement of
     the Securities.

          (ff) FDA. As to each product  subject to the  jurisdiction of the U.S.
     Food and Drug  Administration  ("FDA")  under the  Federal  Food,  Drug and
     Cosmetic Act, as amended,  and the regulations  thereunder ("FDCA") that is
     manufactured, packaged, labeled, tested, distributed, sold, and/or marketed
     by  the  Company  or  any  of  its  Subsidiaries   (each  such  product,  a
     "Pharmaceutical   Product"),   such   Pharmaceutical   Product   is   being
     manufactured,  packaged, labeled, tested, distributed, sold and/or marketed
     by the Company in compliance  with all applicable  requirements  under FDCA
     and  similar  laws,   rules  and  regulations   relating  to  registration,
     investigational  use,  premarket  clearance,   licensure,   or  application
     approval,  good manufacturing  practices,  good laboratory practices,  good
     clinical practices, product listing, quotas, labeling,  advertising, record
     keeping and filing of reports, except where the failure to be in compliance
     would not have a Material  Adverse Effect.  There is no pending,  completed
     or, to the Company's knowledge,  threatened, action (including any lawsuit,
     arbitration,  or legal or administrative or regulatory proceeding,  charge,
     complaint,   or   investigation)   against   the  Company  or  any  of  its
     Subsidiaries,  and  none  of the  Company  or any of its  Subsidiaries  has
     received any notice,  warning letter or other communication from the FDA or
     any other governmental  entity, which (i) contests the premarket clearance,
     licensure,  registration, or approval of, the uses of, the distribution of,
     the  manufacturing  or  packaging  of, the  testing of, the sale of, or the
     labeling and promotion of any  Pharmaceutical  Product,  (ii) withdraws its
     approval of, requests the recall,  suspension,  or seizure of, or withdraws
     or orders the  withdrawal of  advertising  or sales  promotional  materials
     relating to, any Pharmaceutical  Product,  (iii) imposes a clinical hold on
     any clinical investigation by the Company or any of its Subsidiaries,  (iv)
     enjoins   production  at  any  facility  of  the  Company  or  any  of  its
     Subsidiaries,  (v) enters or  proposes  to enter  into a consent  decree of
     permanent  injunction with the Company or any of its Subsidiaries,  or (vi)
     otherwise  alleges any violation of any laws,  rules or  regulations by the
     Company or any of its Subsidiaries,  and which,  either  individually or in
     the  aggregate,  would  have a Material  Adverse  Effect.  The  properties,
     business and operations of the Company have been and are being conducted in
     all material  respects in accordance  with all applicable  laws,  rules and
     regulations  of the FDA. The Company has not been  informed by the FDA that
     the FDA will  prohibit the  marketing,  sale,  license or use in the United
     States of any product proposed to be developed, produced or marketed by the


                                       16
<PAGE>

     Company nor has the FDA  expressed  any concern as to approving or clearing
     for marketing  any product  being  developed or proposed to be developed by
     the Company.

     3.2  Representations  and  Warranties of the  Purchaser.  Purchaser  hereby
represents and warrants as of the date hereof and as of each Closing Date to the
Company as follows:

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

          (b) Ordinary Course of Business. Purchaser is acquiring the Securities
     hereunder in the ordinary course of its business.

          (c)  Purchaser  Status.  At the time the  Purchaser  was  offered  the
     Securities,  it  was,  and  at  the  date  hereof  it  is,  either:  (i) an
     "accredited investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3), (a)(7)
     or  (a)(8)  under the  Securities  Act or (ii) a  "qualified  institutional
     buyer" as defined in Rule 144A(a) under the Securities Act.

          (d) Experience of Purchaser.  Purchaser, either alone or together with
     its representatives,  has such knowledge,  sophistication and experience in
     business and financial matters so as to be capable of evaluating the merits
     and  risks of the  prospective  investment  in the  Securities,  and has so
     evaluated  the merits and risks of such  investment.  Purchaser  is able to
     bear the  economic  risk of an  investment  in the  Securities  and, at the
     present time, is able to afford a complete loss of such investment.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 No Transfer  Restrictions;  DWAC Delivery.  Securities issued hereunder
shall not  contain any  legend.  The  Company  may not make any  notation on its
records or give  instructions  to any  transfer  agent of the Company that place
restrictions  on the  Securities.  All  Securities  shall be  transmitted by the
transfer  agent of the Company to the  Purchaser by crediting the account of the
Purchaser's prime broker with the Depository Trust Company System.


                                       17
<PAGE>

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

     4.3  Integration.  The  Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would be integrated with the offer or sale of
the Securities  for purposes of the rules and  regulations of any Trading Market
such that it would  require  shareholder  approval  prior to the closing of such
other transaction unless shareholder  approval is obtained before the closing of
such subsequent transaction.

     4.4 Securities Laws Disclosure;  Publicity. The Company shall, by 8:30 a.m.
Eastern time on the second  Trading Day  immediately  following the date hereof,
issue a  Current  Report  on Form  8-K,  disclosing  the  material  terms of the
transactions  contemplated  hereby,  and shall attach the Transaction  Documents
thereto,  and,  within the time periods  required by Rule 424, file a prospectus
supplement  containing all information  required to be contained therein.  Other
than as required by this Agreement,  the Company and the Purchaser shall consult
with each  other in  issuing  any  other  press  releases  with  respect  to the
transactions  contemplated  hereby,  and neither  the Company nor the  Purchaser
shall issue any such press release or otherwise  make any such public  statement
without the prior  consent of the Company,  with respect to any press release of
the Purchaser,  or without the prior consent of the  Purchaser,  with respect to
any press  release of the  Company,  which  consent  shall not  unreasonably  be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.

     4.5  Shareholder  Rights  Plan.  No claim will be made or  enforced  by the
Company  or,  with the  consent  of the  Company,  any  other  Person,  that the
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination,  poison pill (including any distribution  under a rights agreement)
or similar  anti-takeover  plan or arrangement in effect or hereafter adopted by
the Company,  or that the Purchaser could be deemed to trigger the provisions of
any such  plan or  arrangement,  by  virtue of  receiving  Securities  under the
Transaction  Documents or under any other agreement  between the Company and the
Purchaser.

     4.6 Non-Public  Information.  Except with respect to the material terms and
conditions of the transactions  contemplated by the Transaction  Documents,  the
Company  covenants and agrees that neither it nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any  information
that the Company believes  constitutes material non-public  information,  unless
prior thereto the Purchaser  shall have executed a written  agreement  regarding


                                       18
<PAGE>

the  confidentiality  and use of such information.  The Company  understands and
confirms that the Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

     4.7 Indemnification of Purchaser. Subject to the provisions of this Section
4.7,  the Company  will  indemnify  and hold the  Purchaser  and its  directors,
officers,  shareholders,  members, partners, employees and agents (and any other
Persons  with a  functionally  equivalent  role of a Person  holding such titles
notwithstanding  a lack of such  title or any  other  title),  each  Person  who
controls the Purchaser  (within the meaning of Section 15 of the  Securities Act
and Section 20 of the Exchange Act), and the directors, officers,  shareholders,
agents,   members,   partners  or  employees  (and  any  other  Persons  with  a
functionally  equivalent role of a Person holding such titles  notwithstanding a
lack of such title or any other  title) of such  controlling  persons  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any the  Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or (b) any  action  instituted  against  the
Purchaser,  or any of its  Affiliates,  by any stockholder of the Company who is
not an  Affiliate  of the  Purchaser,  with  respect to any of the  transactions
contemplated  by the Transaction  Documents  (unless such action is based upon a
breach of the  Purchaser's  representations,  warranties or covenants  under the
Transaction Documents or any agreements or understandings the Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser which constitutes  fraud,  gross
negligence,  willful misconduct or malfeasance).  If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this  Agreement,  the Purchaser  Party shall  promptly  notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing  reasonably  acceptable to the Purchaser  Party. Any
Purchaser  Party  shall  have the right to employ  separate  counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Purchaser Party except to the extent that
(i) the employment  thereof has been  specifically  authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the  Company and the  position of the  Purchaser
Party,  in which case the Company shall be responsible  for the reasonable  fees
and  expenses  of no more  than  one such  separate  counsel  for all  Purchaser
Parties.  The  Company  will not be liable to any  Purchaser  Party  under  this
Agreement (i) for any  settlement by the Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,
damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties,  covenants or agreements made by the Purchaser
Party in this Agreement or in the other Transaction Documents.

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


                                       19
<PAGE>

     4.9 Listing of Common Stock.  The Company hereby agrees to use best efforts
to maintain the listing of the Common Stock on a Trading Market,  and as soon as
reasonably  practicable  following the Initial Closing to list all of the Shares
on such Trading Market.  The Company  further agrees,  if the Company applies to
have the Common Stock  traded on any other  Trading  Market,  it will include in
such  application  all of the  Shares,  and will  take such  other  action as is
necessary to cause all of the Shares to be listed on such other  Trading  Market
as promptly as possible.  The Company will take all action reasonably  necessary
to continue the listing and trading of its Common Stock on a Trading  Market and
will  comply in all  respects  with the  Company's  reporting,  filing and other
obligations under the bylaws or rules of the Trading Market.

     4.10 Blue Sky  Filings.  The Company  shall take such action as the Company
shall reasonably  determine is necessary in order to obtain an exemption for, or
to qualify the  Securities  for,  sale to the  Purchaser  at the  Closing  under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of Purchaser.

     4.11 Accuracy of  Registration  Statement.  On each  Settlement  Date,  the
Registration  Statement and the  prospectus  therein  (including  any prospectus
supplement) shall not contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary in order to
make the statements  therein not misleading in light of the circumstances  under
which they were made; and on such Settlement Date the Registration Statement and
the  prospectus  included  therein  will not include any untrue  statement  of a
material  fact or omit to state a material  fact  necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading; provided, however, the Company makes no representations or
warranties as to the information  contained in or omitted from the  Registration
Statement and the prospectus included therein in reliance upon and in conformity
with the  information  furnished  in  writing to the  Company  by the  Purchaser
specifically  for inclusion in the  Registration  Statement  and the  prospectus
therein.

     4.12 Notice of Certain Events Affecting  Registration;  Suspension of Right
to Request a Draw Down.  The  Company  will  promptly  notify the  Purchaser  in
writing  upon  the  occurrence  of any of the  following  events:  (a)  when any
Prospectus supplement or post-effective  amendment to the Registration Statement
is  proposed  to be filed;  (b) of any  request by the  Commission  or any other
Federal or state  governmental  authority for  amendments or  supplements to the
Registration Statement or prospectus or for additional  information;  (c) of the
issuance by the Commission or any other federal or state governmental  authority
of any stop order  suspending  the  effectiveness  of a  Registration  Statement
covering any or all of the Securities or the initiation of any  Proceedings  for
that purpose; (d) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Securities for sale in any jurisdiction, or the initiation or threatening of
any Proceeding  for such purpose;  (e) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement
ineligible  for  inclusion  therein or any  statement  made in the  Registration
Statement  or  prospectus  or  any  document   incorporated   or  deemed  to  be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires  any  revisions  to the  Registration  Statement,  prospectus  or other
documents so that, in the case of the Registration  Statement or the prospectus,
as the case may be, it will not contain any untrue  statement of a material fact


                                       20
<PAGE>

or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading;  and (f) the  occurrence  or  existence  of any  pending
corporate  development with respect to the Company that the Company believes may
be material and that, in the  determination of the Company,  makes it not in the
best interest of the Company to allow continued availability of the Registration
Statement  or  prospectus;  provided  that the Company  shall not  disclose  the
substance of such corporate development to the Purchaser.  The Company shall not
deliver to the Purchaser any Draw Down Notice during the  continuation of any of
the foregoing events. The Company shall promptly make available to the Purchaser
any such  supplements or amendments to the prospectus,  at which time,  provided
that the registration  statement and any supplements and amendments  thereto are
then effective, the Company may recommence the delivery of Draw Down Notices.

                                   ARTICLE V.
                  CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS

     5.1  Conditions  Precedent  to the  Obligation  of the  Company to Sell the
Shares.  The  obligation  hereunder  of the  Company  to  proceed  to close this
Agreement  and to issue and sell the Shares to the  Purchaser  is subject to the
satisfaction  or  waiver,  at or  before  the  Initial  Closing,  and as of each
Settlement Date of each of the conditions set forth below.  These conditions are
for the  Company's  sole  benefit and may be waived by the Company in writing at
any time in its sole discretion.

          (a) Accuracy of the Purchaser's  Representations  and Warranties.  The
     representations  and warranties of the Purchaser  shall be true and correct
     in all  material  respects  as of the date when made and as of the  Initial
     Closing and as of each  Settlement Date as though made at that time (except
     for  representations  and  warranties  that speak as of a particular  date,
     which shall be true and correct in all material respects as of such dates).

          (b) Performance by the Purchaser.  The Purchaser shall have performed,
     satisfied  and  complied  in all  material  respects  with  all  covenants,
     agreements  and  conditions  required by this  Agreement  to be  performed,
     satisfied  or  complied  with by the  Purchaser  at or prior to the Initial
     Closing and as of each Settlement Date.

          (c) No Injunction.  No statute,  rule,  regulation,  executive  order,
     decree, ruling or injunction shall have been enacted, entered,  promulgated
     or  endorsed  by  any  court  or   governmental   authority   of  competent
     jurisdiction  which prohibits the  consummation of any of the  transactions
     contemplated by this Agreement.

          (d) No Proceedings or Litigation.  No material  Action shall have been
     commenced against the Purchaser or the Company or any subsidiary, or any of
     the officers,  directors or  affiliates  of the Company or any  subsidiary,
     seeking to restrain,  prevent or change the  transactions  contemplated  by
     this Agreement, or seeking damages in connection with such transactions.


                                       21
<PAGE>

     5.2 Conditions  Precedent to the Obligation of the Purchaser to Close.  The
obligation  hereunder  of the  Purchaser to perform its  obligations  under this
Agreement and to purchase the Shares is subject to the  satisfaction  or waiver,
at or before the Initial  Closing,  of each of the  conditions  set forth below.
These  conditions are for the Purchaser's  sole benefit and may be waived by the
Purchaser in writing at any time in its sole discretion.

          (a) Accuracy of the Company's Representations and Warranties.  Each of
     the representations and warranties of the Company shall be true and correct
     in all  material  respects  as of the date when made and as of the  Initial
     Closing  as  though  made at that  time  (except  for  representations  and
     warranties  that speak as of a  particular  date,  which  shall be true and
     correct in all material respects as of such date).

          (b)  Performance  by the Company.  The Company  shall have  performed,
     satisfied  and  complied  in  all  material   respects  with  all  material
     covenants,  agreements  and  conditions  required by this  Agreement  to be
     performed,  satisfied  or  complied  with by the Company at or prior to the
     Initial Closing.

          (c) No Injunction.  No statute,  rule,  regulation,  executive  order,
     decree, ruling or injunction shall have been enacted, entered,  promulgated
     or  endorsed  by  any  court  or   governmental   authority   of  competent
     jurisdiction  which prohibits the  consummation of any of the  transactions
     contemplated by this Agreement.

          (d) No Proceedings or Litigation.  No material  Action shall have been
     commenced,  against the Purchaser or the Company or any subsidiary,  or any
     of the officers,  directors or affiliates of the Company or any  subsidiary
     seeking to restrain,  prevent or change the  transactions  contemplated  by
     this Agreement, or seeking damages in connection with such transactions.

          (e) Initial  Closing  Deliveries.  The  delivery by the Company of the
     items set forth in Section 2.2(a) of this Agreement.

          (f) AMEX Approval.  The American Stock Exchange shall have approved an
     Additional  Shares  Listing  Application in respect of all shares of Common
     Stock  issuable  hereunder,  and  the  Company  shall  have  delivered  the
     Purchaser evidence thereof.

          (g) Commitment  Shares.  On the Trading Day  immediately  prior to the
     commencement of the first Draw Down Pricing Period,  in  consideration  for
     agreeing to the terms of this Agreement and no additional  consideration at
     such time,  the Company  shall have  delivered to the Purchaser a number of
     shares of Common  Stockequal to $250,000 divided by the greater of the VWAP
     or the  closing  bid price of the Common  Stock on the second  Trading  Day
     immediately  preceding the Draw Down Pricing  Period.  Such shares shall be
     delivered to the DTC account  specified by the  Purchaser in writing to the
     Company.

     5.3  Conditions  Precedent to the  Obligation  of the Purchaser to Accept a
Draw Down and Purchase the Shares. The obligation  hereunder of the Purchaser to
accept a Draw Down  request  and to acquire and pay for the Shares is subject to
the  satisfaction at or before each  Settlement  Date, of each of the conditions
set forth below.


                                       22
<PAGE>

          (a) Satisfaction of Conditions to Initial  Closing.  The Company shall
     have satisfied at the Initial  Closing,  or the Purchaser shall have waived
     at the Initial Closing, the conditions set forth in Section 5.2 hereof.

          (b) No  Suspension.  Trading in the Common  Stock  shall not have been
     suspended  by  the  Commission  or  the  Trading  Market  (except  for  any
     suspension of trading of limited  duration agreed to by the Company,  which
     suspension  shall be  terminated  prior to the  delivery  of each Draw Down
     Notice),  and,  at any time  prior to such Draw  Down  Notice,  trading  in
     securities  generally as reported on the Trading Market shall not have been
     suspended or limited,  or minimum prices shall not have been established on
     securities  whose  trades are  reported  on the Trading  Market  unless the
     general  suspension or limitation  shall have been terminated  prior to the
     delivery of such Draw Down Notice.

          (c)  Material  Adverse  Effect.  No  Material  Adverse  Effect  and no
     Consolidation Event where the successor entity has not agreed to deliver to
     the  Purchaser  such shares of stock and/or  securities as the Purchaser is
     entitled to receive pursuant to this Agreement.

          (d) Opinion of Counsel.  The Purchaser  shall have received an opinion
     of Company Counsel, substantially in the form of Exhibit B hereto.

          (e) Equity Conditions. During the Draw Down Pricing Period through the
     Settlement Date, all of the Equity Conditions shall have been met.

                                   ARTICLE VI.
                                 DRAW DOWN TERMS

     6.1 Draw Down Terms.  Subject to the  satisfaction  of the  conditions  set
forth in this Agreement, the parties agree as follows:

          (a) The Company may, in its sole  discretion,  issue and exercise draw
     downs  against  the  Commitment  Amount  (each a "Draw  Down")  during  the
     Commitment  Period,  which Draw Downs the  Purchaser  shall be obligated to
     accept,  subject to the terms and conditions of this Agreement.  Before the
     Company  shall  exercise  a Draw Down,  the  Company  shall  have  caused a
     sufficient  number of shares of Common Stock to be  registered to cover the
     Draw Down Shares to be issued in connection with such Draw Down.

          (b) Only one Draw Down  shall be  allowed  in each  Draw Down  Pricing
     Period and any subsequent Draw Down Pricing Period shall not commence until
     the Trading  Cushion has elapsed  since the end of the  previous  Draw Down
     Pricing  Period.  The  number of shares of Common  Stock  purchased  by the
     Purchaser  with respect to each Draw Down shall be  determined as set forth
     in Section 6.1(d) herein and settled on the second Trading Day  immediately
     following  the end of the  applicable  Draw Down Pricing  period (each such
     settlement   period  and  each  such  settlement  date  referred  to  as  a
     "Settlement Period" and a "Settlement Date", respectively).


                                       23
<PAGE>

          (c) The maximum  Investment Amount as to each Draw Down shall be equal
     to A  multiplied  by B,  where A equals a number of shares of Common  Stock
     equal  to 10% of the  total  trading  volume  during  the 10  Trading  Days
     immediately  prior to the applicable  Draw Down Pricing Period and B equals
     the average of each of the VWAPs  during such 10 Trading Day period,  or an
     amount mutually agreed upon in writing by the Company and the Purchaser.

          (d) The  number  of  Shares  of  Common  Stock  to be  issued  on each
     Settlement  Date  shall  be a  number  of  shares  equal  to the sum of the
     quotients (for each Trading Day within the Settlement Period) of (x) 10% of
     the Investment Amount divided by (y) the Purchase Price on each Trading Day
     within the Settlement Period, subject to the following adjustments:

               (i) if the Purchase Price on a given Trading Day is less than the
          applicable  Threshold Price,  then such Trading Day shall be withdrawn
          from the Draw Down Pricing Period; and

               (ii) if during  any  Trading  Day  during  the Draw Down  Pricing
          Period  trading of the Common Stock on the Trading Market is suspended
          for more than 3 hours, in the aggregate,  or if any Trading Day during
          the Draw Down Pricing Period is shortened because of a public holiday,
          then such  Trading Day shall be  withdrawn  from the Draw Down Pricing
          Period; and

               (iii) if during any  Trading  Day  during  the Draw Down  Pricing
          Period  sales  of  Draw  Down  Shares  pursuant  to  the  Registration
          Statement  are suspended by the Company for more than three (3) hours,
          in the  aggregate,  then such Trading Day shall be withdrawn  from the
          Draw Down Pricing Period.

          (e) The Company must inform the  Purchaser  by  delivering a draw down
     notice,  in the form of  Exhibit D hereto  (the "Draw  Down  Notice"),  via
     facsimile  transmission in accordance with Section 8.3, as to the amount of
     the Draw Down (the "Investment Amount") the Company wishes to exercise. The
     Draw Down Notice  shall also inform the  Purchaser  of the first day of the
     Draw Down Pricing Period,  which,  unless otherwise agreed to in writing by
     the parties,  shall be the first  Trading Day  following the date such Draw
     Down Notice is received  (the  "Commencement  Date").  At no time shall the
     Purchaser be required to purchase more than the maximum  Investment  Amount
     for a given Draw Down Pricing  Period.  The Company shall have the right to
     notify the Purchaser that Draw Downs shall be continuous pursuant to a Draw
     Down Notice  until such time that the Company  elects to suspend  such Draw
     Down  Notice.  In the event of a continuous  Draw Down Notice,  the Company
     must give at least 2 Trading  Days'  written  notice of  suspension  to the
     Purchaser  and in no event shall a suspension of a Draw Down occur prior to
     the end of any pending Draw Down Pricing Periods.  On or before any Trading
     Day that a Draw Down Notice is  delivered or notice of  suspension  of Draw
     Downs is  delivered,  the Company  shall have filed with the  Commission  a
     prospectus supplement pursuant to Rule 424 under the Securities Act setting
     forth the terms of the Draw Down Notice or suspension notice.


                                       24
<PAGE>

          (f) On the  Trading  Day  immediately  following  the  last day of the
     Settlement  Period,  the  Company  shall  deliver and the  Purchaser  shall
     acknowledge a settlement  statement (the  "Settlement  Statement")  setting
     forth the number of Draw Down Shares  issuable and the  aggregate  Purchase
     Price as to such Settlement  Period. On the Settlement Date as to such Draw
     Down, the Draw Down Shares purchased pursuant to such Settlement  Statement
     shall be delivered to the Depository  Trust Company  ("DTC") account of the
     Purchaser,  or  its  designees,  as  designated  by  the  Purchaser  in the
     Settlement Statement,  via DTC's Deposit Withdrawal Agent Commission system
     ("DWAC"). Upon the Company electronically  delivering such Draw Down Shares
     to the DTC account of the  Purchaser,  or its  designees,  via DWAC by 1:00
     p.m. ET, the Purchaser  shall, on the same day (or the next Business Day if
     such day is not a Business Day) wire transfer  immediately  available funds
     to  the  Company's  bank  account,  as  designated  by the  Company  in the
     Settlement  Statement,  for the amount of the aggregate  Purchase  Price of
     such Draw Down Shares. Upon the Company electronically  delivering the Draw
     Down Shares to the Purchaser or its  designee's  DTC account via DWAC after
     1:00 p.m. ET, the Purchaser shall wire transfer next day available funds to
     the Company's  designated  account on such day. At the sole election of the
     Purchaser,  the Purchaser may elect to pay any broker fees disclosed in the
     schedules  attached to this Agreement  directly to the brokers  pursuant to
     written instructions from any such broker broker.

          (g) The Company understands that a delay in the delivery of the Shares
     to the Purchaser  beyond the Settlement  Date could result in economic loss
     to the Purchaser.  In addition to the Purchaser's other available remedies,
     the Company  shall pay to the  Purchaser,  in cash,  as partial  liquidated
     damages  and not as a  penalty,  for each  $1,000 of  Shares  (based on the
     Closing  Price of the  Common  Stock  on the  applicable  Settlement  Date)
     required  to be  delivered  on the  Settlement  Date,  $10 per  Trading Day
     (increasing to $20 per Trading Day five (5) Trading Days after such damages
     have begun to accrue) for each Trading Day after the Settlement  Date until
     such Shares are delivered pursuant to this Article VI. Nothing herein shall
     limit the  Purchaser's  right to pursue  actual  damages for the  Company's
     failure to deliver certificates  representing any Securities as required by
     the Transaction Documents, and the Purchaser shall have the right to pursue
     all  remedies  available  to it at  law  or in  equity  including,  without
     limitation, a decree of specific performance and/or injunctive relief.

                                  ARTICLE VII.
                                   TERMINATION

     7.1 Term.  The term of this  Agreement  shall  begin on the date hereof and
shall end 24 months  from the date hereof or as  otherwise  set forth in Section
7.2.

     7.2 Other Termination.

          (a)  This  Agreement  shall  terminate  if (i)  the  Common  Stock  is
     de-listed from the Trading  Market unless such  de-listing is in connection
     with a subsequent listing on another Trading Market, (ii) the Company files
     for protection from creditors under any applicable law or (iii) the Company
     withdraws the Registration Statement.


                                       25
<PAGE>

          (b) The Company may  terminate  this  Agreement  upon 5 Trading  Day's
     notice if the  Purchaser  shall fail to fund a properly  noticed  Draw Down
     within 5 Trading Days of the end of the applicable Settlement Period.

          (c) The Company may terminate  this  Agreement  upon one Trading Day's
     written notice to the Purchaser if this Agreement violates or may result in
     a breach of any other  agreement  to which the Company is party;  provided,
     however,  that no such termination  shall be effective until after the full
     completion and settlement of any pending Draw Down Pricing Periods pursuant
     to the terms of this Agreement.

     7.3 Effect of  Termination.  In the event of  termination of this Agreement
pursuant to Section 7.2 herein,  written notice thereof shall forthwith be given
to the other party and the transactions  contemplated by this Agreement shall be
terminated  without  further  action  by  either  party.  If this  Agreement  is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further  force and  effect,  except for Section 4.7 and Article 8
herein,  which shall survive the termination of this Agreement.  Nothing in this
Section  7.3 shall be deemed to release the  Company or the  Purchaser  from any
liability  for any breach under this  Agreement,  or to impair the rights of the
Company or the Purchaser to compel  specific  performance  by the other party of
its obligations under this Agreement.

                                 ARTICLE VIII.
                                  MISCELLANEOUS

     8.1 Fees and Expenses.  At the Initial  Closing,  the Company has agreed to
reimburse the Purchaser the non-accountable  sum of $20,000,  for its legal fees
and  expenses,  $10,000  which has been  paid  prior to the  Closing.  Except as
expressly set forth in the  Transaction  Documents to the  contrary,  each party
shall pay the fees and expenses of its advisers, counsel,  accountants and other
experts,  if any, and all other expenses  incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer  agent fees,  stamp taxes and other taxes and
duties  levied  in  connection  with  the  delivery  of  any  Securities  to the
Purchaser.

     8.2 Entire Agreement. The Transaction Documents, together with the exhibits
and  schedules  thereto,  contain the entire  understanding  of the parties with
respect to the subject  matter  hereof and supersede  all prior  agreements  and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

     8.3  Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c) the 2nd Trading  Day  following  the date of mailing,  if sent by U.S.


                                       26
<PAGE>

nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

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

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

     8.6 Successors and Assigns.  This Agreement shall be binding upon and inure
to the  benefit of the parties and their  successors.  Neither  party may assign
this Agreement or any rights or obligations hereunder (other than by merger).

     8.7 No  Third-Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.

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


                                       27
<PAGE>

prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its reasonable  attorneys' fees and other costs and expenses  incurred
with  the   investigation,   preparation  and  prosecution  of  such  action  or
proceeding.

     8.9 Survival.  The  representations  and warranties  contained herein shall
survive the Closing and the delivery of the Securities.

     8.10 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken  together shall be considered one and the same agreement
and shall become effective when  counterparts have been signed by each party and
delivered to the other  party,  it being  understood  that both parties need not
sign the same  counterpart.  In the event that any  signature  is  delivered  by
facsimile  transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.

     8.11 Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     8.12 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated,  lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange  and  substitution  for and upon  cancellation
thereof (in the case of mutilation),  or in lieu of and substitution therefor, a
new  certificate  or  instrument,  but only upon receipt of evidence  reasonably
satisfactory to the Company of such loss,  theft or  destruction.  The applicant
for a new certificate or instrument under such circumstances  shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities.

     8.13  Remedies.  In  addition  to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchaser  and the Company  will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  contained in the  Transaction  Documents and hereby agrees to waive
and not to assert in any action for specific  performance of any such obligation
the defense that a remedy at law would be adequate.

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


                                       28
<PAGE>

damages or other amounts are due and payable shall have been canceled.

     8.15  Construction.  The  parties  agree  that  each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction  Documents or any amendments hereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction  Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.





                            (Signature Pages Follow)




                                       29
<PAGE>


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


CEL-SCI CORP.                                     Address for Notice:
                                                  ------------------



By: /s/ Patricia B. Prichep                       8229 Boone Blvd. #802
     Name: Patricia B. Prichep                    Vienna, VA 22182
     Title: Senior Vice President of Operations

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






                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                    SIGNATURE PAGE FOR PURCHASER FOLLOWS]



                                       30
<PAGE>

        [PURCHASER SIGNATURE PAGES TO CVM SECURITIES PURCHASE AGREEMENT]

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


Name of Purchaser: Ascendiant Capital Group, LLC
                   ---------------------------------------------------------
Signature of Authorized Signatory of Purchaser:   /s/ Mark Bergendahl
                                                ----------------------------
Name of Authorized Signatory:  Mark Bergendahl
                               ---------------------------------------------
Title of Authorized Signatory: Managing Director
                               ---------------------------------------------
Email Address of Purchaser:
                            ------------------------------------------------
Fax Number of Purchaser:
                            ------------------------------------------------

Address for Notice of Purchaser:

18881 Von Karman
Suite 1600
Irvine, CA 92612


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





Commitment Amount:
Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]


                           [SIGNATURE PAGES CONTINUE]



                                       31
<PAGE>

                               CEL-SCI CORPORATION

Schedule 3.1(a):    Viral Technologies  Inc.  -  wholly  owned  subsidiary  of
                    CEL-SCI Corporation

Schedule 3.1(g):

Common Stock
------------

     Between July 1, 2008 and December 30, 2008 CEL-SCI issued  5,745,595 shares
of its common stock to various  persons for  $500,000 in cash,  payment of rent,
payment of principal  and interest on  outstanding  convertible  notes,  and for
services provided to CEL-SCI.

                                                     Number of
                                                       Shares
                                                     ---------
   Shares of common stock outstanding as of
   December 30, 2008                                123,578,969

      The following lists additional shares of CEL-SCI's common stock which may
be issued:

                                                          Number of      Note
                                                            Shares    Reference

   Shares issuable upon exercise of Series L
    and M warrants                                        20,043,335        A

   Shares issuable as payment of interest on
      the Series K notes between now and due date            519,102        B

   Shares issuable as payment of principal on
      the Series K notes                                   2,500,955        B

   Shares issuable upon the exercise of the
     Series K warrants                                     6,601,394        B

   Shares issuable upon the exercise of the Series N
      warrants                                             2,075,084        C

   Shares issuable upon the exercise of warrants
     held by private investors                             8,764,272        D

   Shares issuable upon exercise of options granted
     to CEL-SCI's officers,  directors, employees,
     consultants, and third parties                       13,149,831        E


                                       32
<PAGE>

A. In April 2007, CEL-SCI sold 20,000,000 Units to Korral Partners, an
institutional investor, for $15,000,000. Each Unit was priced at $0.75 and
consisted of one share of CEL-SCI's common stock, one-half of a Series L warrant
and one-half of a Series M warrant. Immediately after this sale Korral Partners
sold the 20,000,000 shares of CEL-SCI's common stock and the 10,000,000 Series M
warrants to 19 foreign investors. Korral Partners retained the 10,000,000 Series
L warrants.

      Pursuant to a previously granted right of participation two investors in
CEL-SCI's August 2006 financing purchased 43,333 Units, which were identical to
the Units sold to Korral Partners, at a price of $0.75 per Unit.

      Each Series L warrant allows the holder to purchase one share of CEL-SCI's
common stock for $0.75. Each Series M warrant allows the holder to purchase one
share of CEL-SCI's common stock for $2.00. The Series L and M warrants expire on
April 17, 2012.

      In September 2008, 2,250,000 of the Series L warrants were repriced to
$0.56 and their expiration date was extended one year to April 17, 2013.

B. In August 2006, CEL-SCI sold Series K convertible notes, plus Series K
warrants, to independent private investors for $8,300,000. The notes bear
interest annually at the greater of 8% or 6 month LIBOR plus 3% per year. The
Notes are due and payable on August 4, 2011 and are secured by substantially all
of CEL-SCI's assets.

      At the holder's option, the Series K notes are convertible into shares of
CEL-SCI's common stock at a Conversion Price of $0.75. The Series K warrants
allow the holders to purchase up to 6,601,394 shares of CEL-SCI's common stock
at a price of $0.75 per share at any time prior to February 4, 2012.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price, the Conversion Price will be lowered to the price at which the shares
were sold or the lowest price at which the securities are convertible, as the
case may be. If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price above the Conversion Price,
but below the average closing price of CEL-SCI's common stock over the five
trading days prior to the sale of the shares, the Conversion Price will be
lowered to a price determined by a formula contained in the Notes. The
Conversion Price will also be proportionately adjusted in the event of any stock
splits.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series K warrants, the warrant exercise price will be lowered to
the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be.

      At CEL-SCI's election, and under certain conditions, CEL-SCI may use
shares of its common stock to make interest or principal payments on the Series


                                       33
<PAGE>

K notes. The actual number of shares which may be issued as payment of interest
or principal may increase if the price of CEL-SCI's common stock is below the
then applicable conversion price of the Series K notes.

      To the extent CEL-SCI uses its shares to make principal payments on the
notes, the number of shares which may be issued upon the conversion of the notes
may be less due to reduction in the outstanding principal balance of the notes.

      The actual number of shares which will ultimately be issued upon the
payment or conversion of the Series K notes (if any) will vary depending upon a
number of factors, including CEL-SCI's election to use shares of its common
stock to pay principal or interest on the Series K notes.

      Since August 2006 the principal balance of the notes have been reduced as
a result of conversions and payments by CEL-SCI. As of December 30, 2008 notes
in the principal amount of $1,875,716 were outstanding.

      So long as the Series K notes are outstanding, the holders of the Series K
notes have the right to participate in any subsequent financings involving
CEL-SCI.

C. On August 18, 2008, CEL-SCI sold 1,383,389 shares of common stock and
2,075,084 Series N warrants in a private financing for $1,037,500. The shares
were sold at a price of $0.75 per share. Each Series N warrant entitles the
holder to purchase one share of CEL-SCI's common stock at a price of $0.75 per
share at any time prior to August 18, 2014. The securities sold in August 2008
are restricted securities and do not have any registration rights.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series N warrants, the warrant exercise price will be lowered to
the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be.

D. Between May 30, 2003 and August 18, 2008 CEL-SCI sold shares of its common
stock in private transactions. In some cases warrants were issued as part of
financings. As of December 30, 2008 warrants to purchase 8,764,272 shares of
CEL-SCI's common stock were outstanding. The warrants are exercisable at prices
ranging between $0.47 and $2.00 per share and expire at various dates between
April 2009 and February 2015.

E. The options are exercisable at prices ranging from $0.16 to $4.50 per share.
CEL-SCI may also grant options to purchase additional shares under its Incentive
Stock Option and Non-Qualified Stock Option Plans.

Schedule 3.1(i): Between July 1, 2008 and December 30, 2008 CEL-SCI issued
5,745,595 shares of its common stock to various persons for $500,000 in cash,
payment of rent, payment of principal and interest on outstanding convertible
notes, and for services provided to CEL-SCI. Of the shares issued since July 1,
2008, 334,448 shares were issued to Maximilian de Clara, the President and a
director of CEL-SCI, in payment of salary.


                                       34
<PAGE>

      In December 2008 CEL-SCI borrowed $100,000 from Maximilian de Clara,
CEL-SCI's President and a director. The loan bears interest at 15% per year and
is payable on March 27, 2009.

Schedule 3.1(q): In December 2008 CEL-SCI borrowed $100,000 from Maximilian de
Clara, CEL-SCI's president and a director. The loan bears interest at 15% per
year and is payable on March 27, 2009.

Schedule 3.1(s):  None






                                       35
<PAGE>

                                HART & TRINEN, LLP                    EXHIBIT B
                                 ATTORNEYS AT LAW
                              1624 Washington Street
                                 Denver, CO 80203
William T. Hart, P.C.                ________         Email:  harttrinen@aol.com
Donald T. Trinen                                      Facsimile:  (303) 839-5414
                                 (303) 839-0061

                                December 30, 2008

Ascendiant Capital Group, LLC
18881 Von Karman
16th Floor
Irvine, CA  92612


      We have acted as counsel to CEL-SCI Corp., a Colorado corporation (the
"Company"), in connection with the execution and delivery by the Company of the
Securities Purchase Agreement dated as of December 30, 2008 (the "Agreement"),
by and among the Company and the purchasers identified on the signature pages
thereto (the "Purchasers"). This opinion is given to you pursuant to Article V
of the Agreement. (Capitalized terms not otherwise defined herein are defined as
set forth in the Agreement.)

      We have participated in the preparation and negotiation of the Agreement
and the Exhibits and Schedules thereto, and the other documents referred to
therein. We also have examined such certificates of public officials, corporate
documents and records and other certificates, opinions, agreements and
instruments and have made such other investigations as we have deemed necessary
in connection with the opinions hereinafter set forth.

      Based on the foregoing and upon such investigation as we have deemed
necessary, we give you our opinion as follows:

     1. The Company is a corporation  duly  organized,  validly  existing and in
good standing  under the laws of Colorado.  The Company has all requisite  power
and authority, and all material governmental licenses, authorizations,  consents
and  approvals,  required to own and operate  its  properties  and assets and to
carry on its business as now conducted  and as proposed to be conducted  (all as
described in the Company's SEC Reports filed in the last 12 months). The Company
is  duly  qualified  to  transact  business  and is in  good  standing  in  each
jurisdiction  in which the  failure  to qualify  could  have a Material  Adverse
Effect on the Company.

     2. Each of the following  subsidiaries of the Company (the  "Subsidiaries")
is a  corporation,  duly  organized and in good  standing  under the laws of the
state of organization, as noted: Viral Technologies Inc. - Delaware.

     3. The Company has all requisite  power and  authority to execute,  deliver
and perform the Transaction Documents, to issue, sell and deliver the Securities
pursuant  to the  Transaction  Documents  and  to  carry  out  and  perform  its
obligations  under,  and to consummate  the  transactions  contemplated  by, the
Transaction Documents.


<PAGE>


     4.  All  action  on  the  part  of  the  Company,  its  directors  and  its
stockholders  necessary  for the  authorization,  execution  and delivery by the
Company of the Transaction  Documents,  the  authorization,  issuance,  sale and
delivery of the Securities  pursuant to the Agreement,  and the  consummation by
the Company of the  transactions  contemplated by the Transaction  Documents has
been duly taken.  The Transaction  Documents have been duly and validly executed
and  delivered  by the  Company  and  constitute  the legal,  valid and  binding
obligation of the Company,  enforceable  against the Company in accordance  with
their terms,  except (a) that such  enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'  rights
in general and (b) that the remedies of specific  performance and injunctive and
other forms of injunctive relief may be subject to equitable defenses.

     5. After giving effect to the  transactions  contemplated by the Agreement,
and immediately after the Closing,  the authorized  capital stock of the Company
will consist of: an aggregate of  300,000,000  shares of Common Stock,  of which
123,578,969  shares will be issued and outstanding and 38,984,058 shares will be
reserved  for  issuance  upon  conversion  of issued  and  outstanding  options,
warrants and other derivative securities, 12,594,831 shares will be reserved for
issuance to employees,  officers and directors under the Company's [Stock Option
Plans], of which 4,745,266 shares are subject to currently outstanding incentive
stock option  grants and 7,849,565  shares are subject to currently  outstanding
non-qualified  stock option grants.  All presently issued and outstanding shares
of Common Stock have been duly  authorized and validly issued and are fully paid
and  nonassessable  and free of any preemptive or similar rights,  and have been
issued in compliance with applicable securities laws and regulations. The shares
of Common  Stock  which are being  issued  on the date  hereof  pursuant  to the
Agreement  have been duly  authorized  and validly issued and are fully paid and
nonassessable and free of preemptive or similar rights,  and have been issued in
compliance  with  applicable  securities  laws,  rules and  regulations.  To our
knowledge,  except for rights  described  in Schedule  3.1(g) of the  Agreement,
there are no other  options,  warrants,  conversion  privileges  or other rights
presently  outstanding  to purchase or  otherwise  acquire  from the Company any
capital  stock or other  securities of the Company,  or any other  agreements to
issue any such securities or rights.  The rights,  privileges and preferences of
the Common Stock are as stated in the Company's Articles of Incorporation.

     6. To our knowledge,  the Company has filed all reports (the "SEC Reports")
required to be filed by it under Sections 13(a) and 15(d) of the Exchange Act of
1934, as amended (the "Exchange Act"). As of their respective  filing dates, the
SEC Reports  complied in all material  respects as to form with the requirements
of the  Exchange  Act and  the  rules  and  regulations  of the SEC  promulgated
thereunder.

     7. The  execution,  delivery  and  performance  by the  Company of, and the
compliance by the Company with the terms of, the  Transaction  Documents and the
issuance,  sale and delivery of the Securities  pursuant to the Agreement do not
(a)  conflict  with or result in a violation of any  provision  of law,  rule or
regulation  having  applicability  to the Company or its  Subsidiaries or of the
certificate  of  incorporation  or  by-laws  or  other  similar   organizational
documents of the Company or its  Subsidiaries,  (b) conflict  with,  result in a
breach of or  constitute  a default  (or an event  which with notice or lapse of
time or both  would  become  a  default)  under,  or  result  in or  permit  the
termination or modification of, any agreement, instrument, order, writ, judgment

<PAGE>

or decree known to us to which the Company of its  Subsidiaries is a party or is
subject  or (c)  result in the  creation  or  imposition  of any lien,  claim or
encumbrance on any of the Company's or its Subsidiaries' assets or properties.

     8.  To  our  knowledge,  there  is  no  claim,  action,  suit,  proceeding,
arbitration,  investigation or inquiry, pending or threatened,  before any court
or governmental or  administrative  body or agency,  or any private  arbitration
tribunal,  against  the  Company or its  Subsidiaries,  or any of its  officers,
directors  or employees  (in  connection  with the  discharge of their duties as
officers,  directors  and  employees),  or affecting  any of its  properties  or
assets.

     9. No consent,  license,  permit, waiver,  approval or authorization of, or
designation,  declaration,  registration or filing with, any court, governmental
or  regulatory  authority,  or  self-regulatory  organization,  is  required  in
connection with the valid execution,  delivery and performance by the Company of
the  Transaction  Documents,  or the offer,  sale,  issuance  or delivery of the
Securities or the consummation of the transactions contemplated thereby.

     10. The  Company is not an  Investment  Company  within the  meaning of the
Investment Company Act of 1940, as amended.

     11.  The  Registration   Statement  has  been  declared  effective  by  the
Commission  and no stop  order is in effect  with  respect  to the  Registration
Statement.  Assuming compliance by the Purchaser with the "Plan of Distribution"
caption of the  Registration  Statement  and timely  compliance by the Purchaser
with  all  prospectus  delivery   requirements,   the  shares  shall  be  freely
transferable by Purchaser.

     12.  Nothing has come to our  attention  that has caused us to believe that
the  Registration  Statement  and the  Prospectus  at the time the  Registration
Statement  became  effective  and as of the date of this  opinion  contained  or
contains an untrue  statement of a material  fact or omitted or omits to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading;  however,  we  express  no opinion  with  respect  to the  financial
statements  and the notes  thereto and the  schedules  and other  financial  and
statistical data derived therefrom included in the Registration Statement or the
Prospectus.]

                                          Very truly yours,

                                          HART & TRINEN, LLP


                                          By   /s/ William T. Hart
                                               -------------------------
                                                William T. Hart




<PAGE>

                                    EXHIBIT D

                   DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE

                                  CEL-SCI CORP.

      The undersigned hereby certifies, with respect to shares of Common Stock
of Cel-Sci Corp (the "Company") issuable in connection with this Draw Down
Notice and Compliance Certificate dated _____________ (the "Notice"), delivered
pursuant to the Securities Purchase Agreement dated as of ______, 2008 (the
"Agreement"), as follows:

            1. The undersigned is the duly appointed Chief Executive Officer or
      Chief Financial Officer of the Company.


            2. Except as set forth on the schedules attached hereto or in the
      SEC Documents (as defined in the Agreement), the representations and
      warranties of the Company set forth in the Agreement are true and correct
      in all material respects as though made on and as of the date hereof,
      except for representations and warranties are expressly made as of a
      particular date.

            3. The Company has performed in all material respects all covenants
      and agreements and conditions required under the Agreement to be performed
      by the Company on or prior to the date of this Draw Down Notice.

            4.    The Investment Amount is $___________.

            5. Draw Downs shall commence on ____________ and end after [check
      one]:

                  a. ______ the completion of ___ Draw Down Pricing Periods.

                  b. ______ until written notice to you that Draw Downs have
                  been suspended provided that no pending Draw Down may be
                  suspended.

            .6. The Threshold Price for purposes of this Draw Down is
                  $-------.

      The  undersigned  has  executed  this   Certificate  this  ____  day  of
__________, _____.

                                          CEL-SCI CORP.


                                          By:
                                               -------------------------------
                                               Name:
                                               Title:
[{"type": "8-K", "sequence": "1", "filename": "equityline8k1-09.txt", "secsgml_size_bytes": 136050}]
{"company-data": {"conformed-name": "CEL SCI CORP", "cik": "0000725363", "assigned-sic": "2836", "irs-number": "840916344", "state-of-incorporation": "CO", "fiscal-year-end": "0930"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-11889", "film-number": "09507427"}, "business-address": {"street1": "8229 BOONE BLVD .", "street2": "SUITE 802", "city": "VIENNA", "state": "VA", "zip": "22182", "phone": "7035069460"}, "mail-address": {"street1": "8229 BOONE BLVD.", "street2": "SUITE 802", "city": "VIENNA", "state": "VA", "zip": "22182"}, "former-company": {"former-conformed-name": "INTERLEUKIN 2 INC", "date-changed": "19880317"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

       Date of Report (date of earliest event reported): December 30, 2008

                               CEL-SCI CORPORATION
                          ------ --------------------
             (Exact name of Registrant as specified in its charter)

     Colorado                          0-11503                  84-0916344
-------------------------------------------------------------------------------
(State or other jurisdiction    (Commission File No.)         (IRS Employer
of incorporation)                                           Identification No.)

                              8229 Boone Blvd. #802
                                Vienna, VA 22182
                -------------------------------------------------
          (Address of principal executive offices, including Zip Code)

       Registrant's telephone number, including area code: (703) 506-9460
                                                           --------------

                                       N/A
                 ----------------------------------------- ----
          (Former name or former address if changed since last report)
Item 1.01   Entry Into a Material Definitive Agreement

Equity Line of Credit
---------------------

     On  December  30,  2008,  CEL-SCI  entered  into an  equity  line of credit
agreement with  Ascendiant  Capital Group,  LLC in order to establish a possible
source of funding for CEL-SCI.  The equity line of credit agreement  establishes
what is sometimes also referred to as an equity drawdown facility.

     Under the equity line of credit agreement, Ascendiant has agreed to provide
CEL-SCI with up to $5,000,000  of funding prior to January 6, 2011.  During this
period,  CEL-SCI  may  request a  drawdown  under the  equity  line of credit by
selling  shares  of its  common  stock  to  Ascendiant  and  Ascendiant  will be
obligated to purchase the shares.  CEL-SCI may request a drawdown once every ten
trading days,  although  CEL-SCI is under no obligation to request any drawdowns
under the equity  line of credit.  There must be a minimum of two  trading  days
between each drawdown request.

     During the ten trading  days  following a drawdown  request,  CEL-SCI  will
calculate the amount of shares it will sell to Ascendiant and the purchase price
per share.  The  purchase  price per share of common  stock will be based on the
daily volume weighted average price of CEL-SCI's common stock during each of the
ten trading days immediately following the drawdown date, less a discount of 9%.

     CEL-SCI may request a drawdown by faxing a drawdown  notice to  Ascendiant,
stating  the amount of the  drawdown  and the  lowest  price,  if any,  at which
CEL-SCI is willing to sell the shares. The lowest price will be set by CEL-SCI's
Chief Executive Officer in his sole and absolute discretion.

Calculation of Drawdown Amount, Purchase Price and Number of Shares Sold
------------------------------------------------------------------------

     There is no  minimum  amount  CEL-SCI  can draw down at any one  time.  The
maximum amount CEL-SCI can draw down at any one time is an amount equal to:

     o    10% of the total trading volume of CEL-SCI's  common stock for the ten
          trading days prior to the date of the drawdown request, multiplied by

     o    the weighted  average price of CEL-SCI's common stock for the same ten
          trading days,

       or any other amount mutually agreed upon by CEL-SCI and Ascendiant.

     On the day  following  the  delivery of the  drawdown  notice,  a valuation
period of ten trading days will start:

     o    On each of the ten  trading  days  during the  valuation  period,  the
          number  of  shares  to be sold to  Ascendiant  will be  determined  by
          dividing  1/10 of the drawdown  amount by the  purchase  price on each

                                       2
trading  day. The  purchase  price will be 91% of the volume  weighted
          average price of CEL-SCI's common stock on that day.

     o    If the  purchase  price on any  trading day during the ten trading day
          calculation  period is below the minimum  price  specified by CEL-SCI,
          then  Ascendiant  will not  purchase  any shares on that day,  and the
          drawdown amount will be reduced by 1/10.

     Using the formula  described  above, if CEL-SCI had requested a drawdown on
December  12,  2008,  the  maximum  amount  CEL-SCI  could draw down  during the
subsequent ten trading days would have been  approximately  $72,125.  Based upon
the volume  weighted  average of  CEL-SCI's  common stock during the ten trading
days subsequent to December 12, 2008,  CEL-SCI would have sold 258,000 shares of
its common stock to Ascendiant and would have received proceeds from the sale of
these shares of approximately $72,125.

     If CEL-SCI sets a minimum price which is too high and CEL-SCI's stock price
does not  consistently  meet that level  during the ten  trading  days after its
drawdown  request,  the amount CEL-SCI can draw and the number of shares CEL-SCI
will sell to  Ascendiant  will be reduced.  On the other hand, if CEL-SCI sets a
minimum price which is too low and its stock price falls significantly but stays
above the minimum  price,  CEL-SCI will have to issue a greater number of shares
to Ascendiant based on the reduced market price.

Payment for Shares
------------------

     The shares  purchased on the ten trading days following a drawdown  request
will be issued  and paid for on the 13th  trading  day  following  the  drawdown
request.

Termination of the Equity Line of Credit Agreement
--------------------------------------------------

     The equity line of credit agreement will be terminated if:

     o    CEL-SCI's  common stock is de-listed  from the American Stock Exchange
          unless the  de-listing  is in  connection  with  CEL-SCI's  subsequent
          listing of its common stock on the NASDAQ National Market,  the NASDAQ
          SmallCap Market, the New York Stock Exchange, the OTC Bulletin Board,

     o    CEL-SCI  files for  protection  from its  creditors  under the Federal
          Bankruptcy laws,

     o    The shares  which are to be sold to  Ascendiant  are not covered by an
          effective registration statement,

     o    Ascendiant fails to honor a drawdown notice, or

     o    the equity line of credit  agreement  violates any other  agreement to
          which CEL-SCI is a party.

                                       3
General
-------

     On the trading day  immediately  prior to the date CEL-SCI  sends its first
drawdown  notice to Ascendiant,  and in  consideration  for providing the equity
drawdown facility, CEL-SCI will deliver to Ascendiant shares of its common stock
equal in number to the amount determined by:

     o    dividing $250,000 by

     o    the greater of the weighted average price of CEL-SCI's common stock or
          the closing bid price of CEL-SCI's  common stock on the second trading
          day immediately preceding the drawdown notice.

     CEL-SCI  paid  $20,000 to Feldman  Weinstein  Smith LLP,  legal  counsel to
Ascendiant,  for  Ascendiant's  legal  expenses  relating  to the equity line of
credit.

     Ascendiant  is entitled to customary  indemnification  from CEL-SCI for any
losses or  liabilities  it  suffers  as a result of any breach by CEL-SCI of any
provisions of the equity line of credit agreement, or as a result of any lawsuit
brought by any shareholder of CEL-SCI,  provided the shareholder instituting the
lawsuit is not an officer, director or principal shareholder of CEL-SCI.

Item 9.01     Financial Statements and Exhibits

      Exhibit Number    Description
      --------------    -----------

      10(j)             Equity Line of Credit Agreement

                                       4
SIGNATURES

      Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

Date:  January 2, 2009

                                 CEL-SCI CORPORATION

                                 By:  /s/ Patricia B. Prichep
                                     -----------------------------------------
                                     Patricia B. Prichep, Senior Vice President
                                     of Operations
CEL-SCI CORPORATION

                                    FORM 8-K

                                    EXHIBITS
EXHIBIT 10(j)
SECURITIES PURCHASE AGREEMENT

     This  Securities  Purchase  Agreement  (this  "Agreement")  is  dated as of
December 30, 2008 by and between  Cel-Sci  Corporation,  a Colorado  corporation
(the "Company") and Ascendiant Capital Group, LLC (the "Purchaser"). Capitalized
terms used in this  Agreement and not otherwise  defined shall have the meanings
ascribed to them in Article 1.

     WHEREAS,  the  parties  desire  that,  upon the  terms and  subject  to the
conditions  contained herein, the Company shall have the right to issue and sell
to  Purchaser  from time to time as  provided  herein,  and  Purchaser  shall be
obligated  to  purchase  from the  Company up to  $5,000,000  worth of shares of
Common Stock pursuant to the Company's  effective  registration  statement under
the Securities Act, file no. 333-151667.

     NOW,  THEREFORE,  in  consideration  of the  foregoing  premises,  and  the
promises and covenants  herein  contained,  the receipt and sufficiency of which
are hereby  acknowledged  by the parties  hereto,  the parties,  intending to be
legally bound, hereby agree as follows:

                                   ARTICLE I.
                                   DEFINITIONS

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

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

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

            "Aggregate Purchase Price" shall have the meaning ascribed to such
      term in Section 6.1(e).

            "Business Day" means any day except Saturday, Sunday, any day which
      shall be a federal legal holiday in the United States or any day on which
      banking institutions in the State of New York are authorized or required
      by law or other governmental action to close.

            "Commission" means the Securities and Exchange Commission.

            "Commencement Date" shall mean the Trading Day immediately following
      the date.

            "Commitment Amount" shall have the meaning assigned to such term in
      Section 2.1 hereof.
"Commitment Period" shall mean the period of 24 consecutive months
      commencing immediately after the date that the Company files a prospectus
      supplement disclosing the terms hereunder.

            "Common Stock" means the common stock of the Company, and any other
      class of securities into which such securities may hereafter be
      reclassified or changed into.

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

            "Company  Counsel" means Hart & Trinen,  1624  Washington  Street,
      Denver, Colorado 80206.

            "Consolidation Event" shall mean a sale of all or substantially all
      of the Company's assets or a merger pursuant to which the holders of the
      voting securities of the Company prior to the merger do not own a majority
      of the voting securities of the surviving entity.

            "Disclosure Schedules" means the Disclosure Schedules of the Company
      delivered concurrently herewith.

            "Draw Down" shall have the meaning assigned to such term in Section
      6.1(a) hereof.

            "Draw Down Notice" shall have the meaning assigned to such term in
      Section 6.1(e) hereof.

            "Draw Down Pricing Period" shall mean a period of 10 consecutive
      Trading Days, beginning on the date specified in the Draw Down Notice and,
      absent a subsequent suspension notice delivered to the Purchaser on or
      before the end of the prior Draw Down Pricing Period, beginning on the
      third Trading Day following the prior Draw down Pricing Period; provided,
      however, the Draw Down Pricing Period shall not begin before the day on
      which receipt of such notice is delivered to Purchaser pursuant to Section
      8.3 herein.

            "Draw Down Shares" or "Shares" shall mean the shares of Common Stock
      issuable pursuant to a Draw Down.

            "DTC" shall have the meaning assigned to such term in Section
      6.1(f).

            "DWAC" shall have the meaning assigned to such term in Section
      6.1(f).

            "Equity Conditions" shall mean, during the period in question, (i)
      there is an effective and available Registration Statement pursuant to
      which the Company is permitted to utilize the prospectus thereunder to
      sell all of the Draw Down Shares (issued and to be issued pursuant to the

                                       2
applicable Draw Down), (ii) the Common Stock is trading on the Trading
      Market and all of the shares issuable pursuant to the Transaction
      Documents are listed or quoted (if applicable) for trading on a Trading
      Market (and the Company believes, in good faith, that trading of the
      Common Stock on a Trading Market will continue uninterrupted for the
      foreseeable future), (iii) there is a sufficient number of authorized but
      unissued and otherwise unreserved shares of Common Stock for the issuance
      of all of the Draw Down Shares (issued and to be issued pursuant to the
      applicable Draw Down), (iv) the Company, directly or indirectly, has not
      provided the Purchaser with any material, non-public information that has
      not been made publicly available in a widely disseminated release; and (v)
      the issuance in question shall not exceed 4.9% of the then outstanding
      shares of Common Stock on the date that such Draw Down Shares are issued.

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

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

            "FWS" means Feldman Weinstein & Smith LLP with offices located at
      420 Lexington Avenue, Suite 2620, New York, New York 10170-0002.

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

            "Initial Closing" shall have the meaning assigned to such term in
      Section 2.2 hereof.

            "Initial Closing Date" shall have the meaning assigned to such term
      in Section 2.2 hereof.

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

            "Investment Amount" shall have the meaning assigned to such term in
      Section 6.1(e) hereof.

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

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

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

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

                                       3
"Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Purchase Price" shall mean, with respect to Draw Down Shares
      purchased during each applicable Settlement Period, 91% of the VWAP on the
      date in question.

            "Purchaser Party" shall have the meaning ascribed to such term in
      Section 4.7.

            "Registration Statement" means the registration statement file no.
      333-151667, covering the sale by the Company to the Purchaser of the Draw
      Down Shares and the shares issuable pursuant to Section 5.2(g) below.

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

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

            "Rule 424" means Rule 424 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

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

            "Securities" means the Draw Down Shares, and the shares of Common
      Stock issuable to the Purchaser pursuant to Section 5.2(g) below.

            "Securities Act" means the Securities Act of 1933, as amended, and
      the rules and regulations promulgated thereunder.

            "Settlement" shall mean the delivery of the Draw Down Shares into
      the Purchaser's DTC account via DTC's DWAC system and the Purchaser's
      delivery of payment therefor.

            "Settlement Date" shall have the meaning assigned to such term in
      Section 6.1(b).

            "Settlement Period" shall have the meaning assigned to such term in
      Section 6.1(b).

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

            "Threshold Price" shall mean a price specified by the Company in
      each Draw Down Notice.

                                       4
"Trading Cushion" shall mean the mandatory 2 Trading Days between
      Draw Down Pricing Periods.

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

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the Nasdaq Capital Market, the American Stock Exchange, the New York Stock
      Exchange or the Nasdaq Global Market.

            "Transaction Documents" means this Agreement and any other documents
      or agreements executed in connection with the transactions contemplated
      hereunder.

            "VWAP" means, for any date, the price determined by the first of the
      following clauses that applies: (a) if the Common Stock is then listed or
      quoted on a Trading Market, the daily volume weighted average price of the
      Common Stock for such date (or the nearest preceding date) on the Trading
      Market on which the Common Stock is then listed or quoted for trading as
      reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30
      a.m. (New York City time) to 4:02 p.m. (New York City time); (b) if the
      Common Stock is not listed or traded on a Trading Market but is quoted on
      the OTC Bulletin Board, the volume weighted average price of the Common
      Stock for such date (or the nearest preceding date) on the OTC Bulletin
      Board; (c) if the Common Stock is not then quoted for trading on a Trading
      Market or the OTC Bulletin Board and if prices for the Common Stock are
      then reported in the "Pink Sheets" published by Pink Sheets, LLC (or a
      similar organization or agency succeeding to its functions of reporting
      prices), the most recent bid price per share of the Common Stock so
      reported; or (d) in all other cases, the fair market value of a share of
      Common Stock as determined by an independent appraiser selected in good
      faith by the Holder and reasonably acceptable to the Company.

                                  ARTICLE II.
                                PURCHASE AND SALE

     2.1 Purchase  and Sale of Draw Down  Shares.  Upon the terms and subject to
the conditions of this Agreement,  at its  discretion,  the Company may sell and
issue to the Purchaser and the Purchaser shall be obligated to purchase from the
Company,  up to an aggregate of $5,000,000  worth of shares of Common Stock (the
"Commitment  Amount"),  provided  that in no event shall the  Commitment  Amount
exceed  24,615,000  shares of Common Stock without first  obtaining  stockholder
approval of such excess issuance.

     2.2 Initial  Closing.  The execution and delivery of this Agreement and the
other agreements  referred to herein (the "Initial Closing") shall take place at
the offices of FWS, 420 Lexington  Avenue,  Suite 2620, New York, New York 10170
(i) at 10:00 a.m.  local time within 5 Trading Days of the date hereof,  or (ii)
at such other time and place or on such date as the  Purchaser  and the  Company
may agree upon (the  "Initial  Closing  Date").  Each party  shall  deliver  the
following  documents,  instruments  and  writings  at or  prior  to the  Initial
Closing:

                                       5
(a)  the  Company  shall  deliver  or  cause  to be  delivered  to the
     Purchaser the following:

          (i)  this Agreement duly executed by the Company;

          (ii) the legal  opinion from  Company  Counsel,  in the form  attached
               hereto as Exhibit B; and

          (iii) the  base  prospectus  in the  Registration  Statement  shall be
               accepted by FINRA under Rule 2710.

          (b) the  Purchaser  shall  deliver  or  cause to be  delivered  to the
     Company this Agreement duly executed by the Purchaser.

                                  ARTICLE III.
                         REPRESENTATIONS AND WARRANTIES

     3.1  Representations  and  Warranties  of the Company.  Except as set forth
under the  corresponding  section of the Disclosure  Schedules which  Disclosure
Schedules  shall be deemed a part  hereof and to qualify any  representation  or
warranty  otherwise  made herein to the extent of such  disclosure,  the Company
hereby  makes  the  representations  and  warranties  set  forth  below  to  the
Purchaser:

          (a) Subsidiaries.  All of the direct and indirect  subsidiaries of the
     Company are set forth on Schedule  3.1(a).  The Company  owns,  directly or
     indirectly,  all of the capital  stock or other  equity  interests  of each
     Subsidiary free and clear of any Liens,  and all the issued and outstanding
     shares of capital stock of each Subsidiary are validly issued and are fully
     paid, non-assessable and free of preemptive and similar rights to subscribe
     for or purchase  securities.  If the Company has no subsidiaries,  then all
     other references in the Transaction Documents to the Subsidiaries or any of
     them will be disregarded.

          (b)  Organization  and  Qualification.  The  Company  and  each of the
     Subsidiaries is an entity duly incorporated or otherwise organized, validly
     existing and in good  standing  under the laws of the  jurisdiction  of its
     incorporation or organization (as applicable), with the requisite power and
     authority  to own and use its  properties  and  assets  and to carry on its
     business as currently conducted.  Neither the Company nor any Subsidiary is
     in  violation  or  default  of  any  of the  provisions  of its  respective
     certificate or articles of incorporation, bylaws or other organizational or
     charter  documents.  Each  of the  Company  and  the  Subsidiaries  is duly
     qualified  to  conduct  business  and  is in  good  standing  as a  foreign
     corporation or other entity in each jurisdiction in which the nature of the
     business  conducted  or  property  owned  by it  makes  such  qualification
     necessary, except where the failure to be so qualified or in good standing,
     as the case may be, could not have or  reasonably  be expected to result in
     (i) a material adverse effect on the legality,  validity or  enforceability
     of any Transaction Document,  (ii) a material adverse effect on the results
     of  operations,  assets,  business,  prospects or condition  (financial  or
     otherwise) of the Company and the Subsidiaries,  taken as a whole, or (iii)
     a  material  adverse  effect on the  Company's  ability  to  perform in any

                                       6
material  respect on a timely basis its  obligations  under any Transaction
     Document (any of (i), (ii) or (iii),  a "Material  Adverse  Effect") and no
     Proceeding has been instituted in any such jurisdiction revoking,  limiting
     or  curtailing  or  seeking  to  revoke,  limit or  curtail  such power and
     authority or qualification.

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

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

          (e) Filings,  Consents and  Approvals.  The Company is not required to
     obtain any consent, waiver,  authorization or order of, give any notice to,
     or make any filing or registration with, any court or other federal, state,
     local or other  governmental  authority or other Person in connection  with
     the execution,  delivery and  performance by the Company of the Transaction

                                       7
Documents,  other than (i) filings required pursuant to Section 4.4 of this
     Agreement,  (ii) the filing with the Commission of a prospectus  supplement
     to the  Registration  Statement  describing the  transactions  contemplated
     hereby,  (iii)  application(s)  to each  applicable  Trading Market for the
     listing  of the  Securities  for  trading  thereon  in the time and  manner
     required  thereby,  and (iv) such  filings as are required to be made under
     applicable state securities laws (collectively, the "Required Approvals").

          (f) Issuance of the  Securities.  The Securities  are duly  authorized
     and, when issued and paid for in accordance with the applicable Transaction
     Documents,  will be duly and validly issued,  fully paid and nonassessable,
     free and clear of all Liens imposed by the Company other than  restrictions
     on transfer  provided  for in the  Transaction  Documents.  The Company has
     reserved  from its duly  authorized  capital  stock the  maximum  number of
     shares of Common Stock issuable  pursuant to this Agreement.  The Draw Down
     Shares and the other shares of Common  Stock  issuable  hereunder  will be,
     upon issuance,  duly registered under the Securities Act and will be freely
     tradable by the Purchaser,  subject to any prospectus delivery requirements
     under Rule 172 under the Securities Act.

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

                                       8
the  Company's  capital  stock to which the  Company  is a party or, to the
     knowledge  of  the  Company,   between  or  among  any  of  the   Company's
     stockholders.

          (h) SEC  Reports;  Financial  Statements.  The  Company  has filed all
     reports,  schedules,  forms, statements,  registration statements and other
     documents  required  to be  filed by it under  the  Securities  Act and the
     Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
     two years  preceding the date hereof (or such shorter period as the Company
     was required by law or regulation  to file such  material)  (the  foregoing
     materials,  including the exhibits  thereto and documents  incorporated  by
     reference  therein,  being  collectively  referred  to  herein  as the "SEC
     Reports") on a timely basis or has received a valid  extension of such time
     of filing and has filed any such SEC Reports prior to the expiration of any
     such extension.  As of their respective  dates, the SEC Reports complied in
     all material  respects with the  requirements of the Securities Act and the
     Exchange  Act,  as  applicable,  and none of the SEC  Reports,  when filed,
     contained  any untrue  statement  of a material  fact or omitted to state a
     material fact  required to be stated  therein or necessary in order to make
     the statements  therein, in the light of the circumstances under which they
     were made, not misleading. The financial statements of the Company included
     in  the  SEC  Reports  comply  in all  material  respects  with  applicable
     accounting  requirements  and the rules and  regulations  of the Commission
     with  respect  thereto as in effect at the time of filing.  Such  financial
     statements  have been prepared in accordance  with United States  generally
     accepted  accounting  principles  applied on a consistent  basis during the
     periods  involved  ("GAAP"),  except as may be otherwise  specified in such
     financial  statements  or the  notes  thereto  and  except  that  unaudited
     financial  statements  may not contain all footnotes  required by GAAP, and
     fairly  present in all  material  respects  the  financial  position of the
     Company and its  consolidated  subsidiaries as of and for the dates thereof
     and the results of  operations  and cash flows for the periods  then ended,
     subject,  in the  case of  unaudited  statements,  to  normal,  immaterial,
     year-end audit adjustments.

          (i) Material Changes; Undisclosed Events, Liabilities or Developments.
     Since the date of the latest audited financial  statements  included within
     the SEC Reports,  except as  specifically  disclosed  in a  subsequent  SEC
     Report or on Schedule  3.1(i),  (i) there has been no event,  occurrence or
     development  that has had or that could reasonably be expected to result in
     a  Material  Adverse  Effect,   (ii)  the  Company  has  not  incurred  any
     liabilities  (contingent  or otherwise)  other than (A) trade  payables and
     accrued  expenses  incurred in the ordinary  course of business  consistent
     with past practice and (B)  liabilities not required to be reflected in the
     Company's  financial  statements  pursuant to GAAP or  disclosed in filings
     made with the  Commission,  (iii) the Company has not altered its method of
     accounting,  (iv) the  Company  has not  declared  or made any  dividend or
     distribution  of cash or other property to its  stockholders  or purchased,
     redeemed  or made any  agreements  to  purchase or redeem any shares of its
     capital  stock and (v) the Company has not issued any equity  securities to
     any officer,  director or Affiliate,  except  pursuant to existing  Company
     stock option plans. The Company does not have pending before the Commission
     any request  for  confidential  treatment  of  information.  Except for the
     issuance of the Securities  contemplated  by this Agreement or as set forth
     on Schedule  3.1(i),  no event,  liability or  development  has occurred or
     exists with respect to the Company or its  Subsidiaries or their respective
     business,  properties,  operations  or financial  condition,  that would be

                                       9
required to be disclosed by the Company under applicable securities laws at
     the time this  representation is made that has not been publicly  disclosed
     at least 1 Trading Day prior to the date that this representation is made.

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

          (k) Labor  Relations.  No  material  labor  dispute  exists or, to the
     knowledge of the Company,  is imminent with respect to any of the employees
     of the Company,  which could reasonably be expected to result in a Material
     Adverse Effect.  None of the Company's or its Subsidiaries'  employees is a
     member of a union that  relates to such  employee's  relationship  with the
     Company, and neither the Company or any of its Subsidiaries is a party to a
     collective  bargaining  agreement,  and the  Company  and its  Subsidiaries
     believe  that  their  relationships  with  their  employees  are  good.  No
     executive officer, to the knowledge of the Company,  is, or is now expected
     to be,  in  violation  of any  material  term of any  employment  contract,
     confidentiality,   disclosure  or  proprietary   information  agreement  or
     non-competition  agreement,  or any  other  contract  or  agreement  or any
     restrictive  covenant,  and the continued employment of each such executive
     officer  does not  subject the  Company or any of its  Subsidiaries  to any
     liability with respect to any of the foregoing matters. The Company and its
     Subsidiaries  are in compliance  with all U.S.  federal,  state,  local and
     foreign  laws  and  regulations   relating  to  employment  and  employment
     practices,  terms and conditions of employment and wages and hours,  except
     where the failure to be in  compliance  could not,  individually  or in the
     aggregate, reasonably be expected to have a Material Adverse Effect.

          (l)  Compliance.  Neither  the Company  nor any  Subsidiary  (i) is in
     default  under or in violation  of (and no event has occurred  that has not
     been waived that,  with notice or lapse of time or both,  would result in a
     default by the Company or any Subsidiary under), nor has the Company or any
     Subsidiary  received  notice of a claim that it is in default under or that
     it is in violation of, any indenture, loan or credit agreement or any other
     agreement or instrument to which it is a party or by which it or any of its
     properties  is bound  (whether or not such  default or  violation  has been
     waived),  (ii) is in  violation  of any order of any court,  arbitrator  or
     governmental  body,  or (iii) is or has been in  violation  of any statute,

                                       10
rule  or  regulation  of  any  governmental  authority,  including  without
     limitation  all foreign,  federal,  state and local laws  applicable to its
     business and all such laws that affect the environment, except in each case
     as could not have or reasonably be expected to result in a Material Adverse
     Effect.

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

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

          (o) Patents and Trademarks.  The Company and the Subsidiaries have, or
     have rights to use, all patents, patent applications, trademarks, trademark
     applications,  service  marks,  trade  names,  trade  secrets,  inventions,
     copyrights,  licenses and other  intellectual  property  rights and similar
     rights  necessary or material for use in connection  with their  respective
     businesses as described in the SEC Reports and which the failure to so have
     could have a  Material  Adverse  Effect  (collectively,  the  "Intellectual
     Property  Rights").  Neither the Company nor any  Subsidiary has received a
     notice (written or otherwise) that the Intellectual Property Rights used by
     the Company or any Subsidiary  violates or infringes upon the rights of any
     Person.  To the knowledge of the Company,  all such  Intellectual  Property
     Rights are  enforceable  and there is no existing  infringement  by another
     Person of any of the  Intellectual  Property  Rights.  The  Company and its
     Subsidiaries  have  taken  reasonable  security  measures  to  protect  the
     secrecy, confidentiality and value of all of their intellectual properties,
     except where failure to do so could not,  individually or in the aggregate,
     reasonably be expected to have a Material Adverse Effect.

          (p)  Insurance.  The  Company  and the  Subsidiaries  are  insured  by
     insurers of  recognized  financial  responsibility  against such losses and
     risks and in such amounts as are prudent and customary in the businesses in
     which the Company and the  Subsidiaries  are  engaged,  including,  but not
     limited to, directors and officers insurance coverage at least equal to the
     aggregate Commitment Amount. Neither the Company nor any Subsidiary has any
     reason to believe that it will not be able to renew its existing  insurance

                                       11
coverage as and when such coverage  expires or to obtain  similar  coverage
     from similar  insurers as may be necessary to continue its business without
     a significant increase in cost.

          (q) Transactions With Affiliates and Employees. Except as set forth in
     the SEC Reports,  and in Schedule 3.1(q), none of the officers or directors
     of the Company and, to the knowledge of the Company,  none of the employees
     of the Company, is presently a party to any transaction with the Company or
     any  Subsidiary  (other  than  for  services  as  employees,  officers  and
     directors),   including  any  contract,   agreement  or  other  arrangement
     providing for the furnishing of services to or by,  providing for rental of
     real or personal property to or from, or otherwise requiring payments to or
     from any officer,  director or such  employee  or, to the  knowledge of the
     Company,  any entity in which any officer,  director,  or any such employee
     has a substantial interest or is an officer,  director, trustee or partner,
     in each case in excess of $60,000  other than (i) for  payment of salary or
     consulting  fees for services  rendered,  (ii)  reimbursement  for expenses
     incurred on behalf of the Company  and (iii) for other  employee  benefits,
     including  stock  option  agreements  under  any stock  option  plan of the
     Company.

          (r) Sarbanes-Oxley;  Internal Accounting  Controls.  The Company is in
     material  compliance with all provisions of the  Sarbanes-Oxley Act of 2002
     which are  applicable  to it as of the  Closing  Date.  The Company and the
     Subsidiaries  maintain a system of internal  accounting controls sufficient
     to provide  reasonable  assurance  that (i)  transactions  are  executed in
     accordance  with  management's  general or  specific  authorizations,  (ii)
     transactions  are recorded as necessary to permit  preparation of financial
     statements in conformity  with GAAP and to maintain  asset  accountability,
     (iii) access to assets is permitted  only in accordance  with  management's
     general or specific authorization, and (iv) the recorded accountability for
     assets is compared  with the existing  assets at  reasonable  intervals and
     appropriate  action is taken with respect to any  differences.  The Company
     has established  disclosure controls and procedures (as defined in Exchange
     Act Rules  13a-15(e)  and  15d-15(e))  for the  Company and  designed  such
     disclosure  controls and procedures to ensure that information  required to
     be  disclosed  by the Company in the reports it files or submits  under the
     Exchange Act is recorded,  processed,  summarized and reported,  within the
     time periods  specified in the Commission's  rules and forms. The Company's
     certifying  officers  have  evaluated  the  effectiveness  of the Company's
     disclosure  controls and  procedures as of the end of the period covered by
     the Company's most recently  filed  periodic  report under the Exchange Act
     (such date,  the  "Evaluation  Date").  The Company  presented  in its most
     recently  filed periodic  report under the Exchange Act the  conclusions of
     the certifying  officers about the effectiveness of the disclosure controls
     and procedures based on their  evaluations as of the Evaluation Date. Since
     the Evaluation Date,  there have been no changes in the Company's  internal
     control over  financial  reporting (as such term is defined in the Exchange
     Act) that has materially  affected,  or is reasonably  likely to materially
     affect, the Company's internal control over financial reporting.

          (s) Certain Fees. Except as set forth on Schedule 3.1(s), no brokerage
     or finder's  fees or  commissions  are or will be payable by the Company to
     any broker,  financial  advisor or  consultant,  finder,  placement  agent,
     investment  banker,  bank or other Person with respect to the  transactions

                                       12
contemplated  by the  Transaction  Documents.  The Purchaser  shall have no
     obligation  with  respect to any fees or with respect to any claims made by
     or on  behalf  of other  Persons  for fees of a type  contemplated  in this
     Section that may be due in connection with the transactions contemplated by
     the Transaction Documents.

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

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

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

          (w)  Disclosure.  Except  with  respect  to  the  material  terms  and
     conditions of the transactions  contemplated by the Transaction  Documents,
     the Company  confirms  that,  neither it nor any other Person acting on its
     behalf has  provided  any of the  Purchaser or their agents or counsel with
     any information that it believes  constitutes or might constitute material,
     non-public  information.  The Company  understands  and  confirms  that the
     Purchaser   will  rely  on  the  foregoing   representation   in  effecting
     transactions in securities of the Company.  All disclosure  furnished by or
     on behalf of the  Company  to the  Purchaser  regarding  the  Company,  its
     business and the transactions contemplated hereby, including the Disclosure
     Schedules  to this  Agreement,  with  respect  to the  representations  and
     warranties   made  herein  are  true  and  correct  with  respect  to  such
     representations and warranties and do not contain any untrue statement of a
     material fact or omit to state any material fact necessary in order to make
     the statements made therein, in light of the circumstances under which they
     were made, not misleading.  The press releases  disseminated by the Company

                                       13
during the twelve months  preceding the date of this  Agreement  taken as a
     whole do not contain  any untrue  statement  of a material  fact or omit to
     state a material fact  required to be stated  therein or necessary in order
     to make the statements, in light of the circumstances under which they were
     made and when made, not  misleading.  The Company  acknowledges  and agrees
     that no Purchaser makes or has made any  representations or warranties with
     respect  to  the   transactions   contemplated   hereby  other  than  those
     specifically set forth in Section 3.2 hereof.

          (x) No  Integrated  Offering.  Neither  the  Company,  nor  any of its
     affiliates,  nor any Person acting on its or their behalf has,  directly or
     indirectly,  made any  offers or sales of any  security  or  solicited  any
     offers to buy any  security,  under  circumstances  that  would  cause this
     offering of the  Securities  to be integrated  with prior  offerings by the
     Company for purposes of any applicable  shareholder  approval provisions of
     any Trading Market on which any of the securities of the Company are listed
     or designated. -

          (y) Solvency.  Based on the  financial  condition of the Company as of
     the Closing  Date,  (i) the fair  saleable  value of the  Company's  assets
     exceeds the amount that will be required to be paid on or in respect of the
     Company's existing debts and other liabilities  (including known contingent
     liabilities)  as they mature;  (ii) the Company's  assets do not constitute
     unreasonably small capital to carry on its business as now conducted and as
     proposed to be conducted  including  its capital  needs taking into account
     the  particular  capital  requirements  of the  business  conducted  by the
     Company,  and  projected  capital  requirements  and  capital  availability
     thereof; and (iii) the current cash flow of the Company,  together with the
     proceeds the Company would receive, were it to liquidate all of its assets,
     after  taking  into  account  all  anticipated  uses of the cash,  would be
     sufficient to pay all amounts on or in respect of its liabilities when such
     amounts are required to be paid. The Company does not intend to incur debts
     beyond its ability to pay such debts as they mature  (taking  into  account
     the timing and amounts of cash to be payable on or in respect of its debt).
     The Company has no knowledge of any facts or circumstances which lead it to
     believe  that it will  file for  reorganization  or  liquidation  under the
     bankruptcy or reorganization  laws of any jurisdiction within one year from
     the Closing  Date.  The SEC  Reports set forth as of the dates  thereof all
     outstanding  secured  and  unsecured  Indebtedness  of the  Company  or any
     Subsidiary, or for which the Company or any Subsidiary has commitments. For
     the  purposes  of  this  Agreement,   "Indebtedness"  shall  mean  (a)  any
     liabilities  for borrowed money or amounts owed in excess of $50,000 (other
     than trade accounts  payable  incurred in the ordinary course of business),
     (b) all  guaranties,  endorsements  and  other  contingent  obligations  in
     respect of Indebtedness of others, whether or not the same are or should be
     reflected in the  Company's  balance sheet (or the notes  thereto),  except
     guaranties  by  endorsement  of  negotiable   instruments  for  deposit  or
     collection or similar transactions in the ordinary course of business;  and
     (c) the present value of any lease  payments in excess of $50,000 due under
     leases  required to be  capitalized  in accordance  with GAAP.  Neither the
     Company nor any Subsidiary is in default with respect to any Indebtedness.

          (z) Tax Status.  Except for matters that would not, individually or in
     the  aggregate,  have or  reasonably  be  expected  to result in a Material
     Adverse  Effect,  the Company and each  Subsidiary  has filed all necessary
     federal, state and foreign income and franchise tax returns and has paid or

                                       14
accrued all taxes shown as due thereon, and the Company has no knowledge of
     a tax deficiency which has been asserted or threatened  against the Company
     or any Subsidiary.

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

          (bb)  Accountants.  The  Company's  accountants  are set  forth in the
     Registration  Statement. To the knowledge of the Company, such accountants,
     who the Company  expects  will  express  their  opinion with respect to the
     financial  statements to be included in the Company's Annual Report on Form
     10-K for the  year  ended  September  30,  2008,  are a  registered  public
     accounting firm as required by the Exchange Act.

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

          (dd) Acknowledgement Regarding Purchaser's Trading Activity.  Anything
     in this Agreement or elsewhere herein to the contrary  notwithstanding,  it
     is understood  and  acknowledged  by the Company (i) that the Purchaser has
     not  been  asked  to  agree,  nor has  Purchaser  agreed,  to  desist  from
     purchasing  or selling  securities  of the  Company;  and (ii) that past or
     future open market or other  transactions by Purchaser  before or after the
     closing of this Agreement or future  private  placement  transactions,  may
     negatively  impact  the  market  price  of  the  Company's  publicly-traded
     securities.  The Company further  understands and acknowledges that (a) the
     Purchaser  may engage in selling  activities  at various  times  during the
     period that the Securities are outstanding,  including, without limitation,
     during  the  periods  that the  value of the Draw  Down  Shares  are  being
     determined  and (b) such selling  activities  could reduce the value of the
     existing  stockholders'  equity  interests  in the Company at and after the
     time  that  the  selling  activities  are  being  conducted.   The  Company

                                       15
acknowledges that such aforementioned  selling activities do not constitute
     a breach of any of the Transaction Documents.

          (ee) Regulation M Compliance. The Company has not, and will not during
     the term of this  Agreement,  and to its  knowledge  no one  acting  on its
     behalf has, or will during the term of this Agreement,  (i) taken, directly
     or  indirectly,   any  action  designed  to  cause  or  to  result  in  the
     stabilization  or  manipulation of the price of any security of the Company
     to facilitate the sale or resale of any of the  Securities,  (ii) sold, bid
     for, purchased,  or, paid any compensation for soliciting purchases of, any
     of the  Securities,  or  (iii)  paid or  agreed  to pay to any  person  any
     compensation for soliciting another to purchase any other securities of the
     Company,  other than,  in the case of clauses (ii) and (iii),  compensation
     paid to the Company's  placement  agent in connection with the placement of
     the Securities.

          (ff) FDA. As to each product  subject to the  jurisdiction of the U.S.
     Food and Drug  Administration  ("FDA")  under the  Federal  Food,  Drug and
     Cosmetic Act, as amended,  and the regulations  thereunder ("FDCA") that is
     manufactured, packaged, labeled, tested, distributed, sold, and/or marketed
     by  the  Company  or  any  of  its  Subsidiaries   (each  such  product,  a
     "Pharmaceutical   Product"),   such   Pharmaceutical   Product   is   being
     manufactured,  packaged, labeled, tested, distributed, sold and/or marketed
     by the Company in compliance  with all applicable  requirements  under FDCA
     and  similar  laws,   rules  and  regulations   relating  to  registration,
     investigational  use,  premarket  clearance,   licensure,   or  application
     approval,  good manufacturing  practices,  good laboratory practices,  good
     clinical practices, product listing, quotas, labeling,  advertising, record
     keeping and filing of reports, except where the failure to be in compliance
     would not have a Material  Adverse Effect.  There is no pending,  completed
     or, to the Company's knowledge,  threatened, action (including any lawsuit,
     arbitration,  or legal or administrative or regulatory proceeding,  charge,
     complaint,   or   investigation)   against   the  Company  or  any  of  its
     Subsidiaries,  and  none  of the  Company  or any of its  Subsidiaries  has
     received any notice,  warning letter or other communication from the FDA or
     any other governmental  entity, which (i) contests the premarket clearance,
     licensure,  registration, or approval of, the uses of, the distribution of,
     the  manufacturing  or  packaging  of, the  testing of, the sale of, or the
     labeling and promotion of any  Pharmaceutical  Product,  (ii) withdraws its
     approval of, requests the recall,  suspension,  or seizure of, or withdraws
     or orders the  withdrawal of  advertising  or sales  promotional  materials
     relating to, any Pharmaceutical  Product,  (iii) imposes a clinical hold on
     any clinical investigation by the Company or any of its Subsidiaries,  (iv)
     enjoins   production  at  any  facility  of  the  Company  or  any  of  its
     Subsidiaries,  (v) enters or  proposes  to enter  into a consent  decree of
     permanent  injunction with the Company or any of its Subsidiaries,  or (vi)
     otherwise  alleges any violation of any laws,  rules or  regulations by the
     Company or any of its Subsidiaries,  and which,  either  individually or in
     the  aggregate,  would  have a Material  Adverse  Effect.  The  properties,
     business and operations of the Company have been and are being conducted in
     all material  respects in accordance  with all applicable  laws,  rules and
     regulations  of the FDA. The Company has not been  informed by the FDA that
     the FDA will  prohibit the  marketing,  sale,  license or use in the United
     States of any product proposed to be developed, produced or marketed by the

                                       16
Company nor has the FDA  expressed  any concern as to approving or clearing
     for marketing  any product  being  developed or proposed to be developed by
     the Company.

     3.2  Representations  and  Warranties of the  Purchaser.  Purchaser  hereby
represents and warrants as of the date hereof and as of each Closing Date to the
Company as follows:

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

          (b) Ordinary Course of Business. Purchaser is acquiring the Securities
     hereunder in the ordinary course of its business.

          (c)  Purchaser  Status.  At the time the  Purchaser  was  offered  the
     Securities,  it  was,  and  at  the  date  hereof  it  is,  either:  (i) an
     "accredited investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3), (a)(7)
     or  (a)(8)  under the  Securities  Act or (ii) a  "qualified  institutional
     buyer" as defined in Rule 144A(a) under the Securities Act.

          (d) Experience of Purchaser.  Purchaser, either alone or together with
     its representatives,  has such knowledge,  sophistication and experience in
     business and financial matters so as to be capable of evaluating the merits
     and  risks of the  prospective  investment  in the  Securities,  and has so
     evaluated  the merits and risks of such  investment.  Purchaser  is able to
     bear the  economic  risk of an  investment  in the  Securities  and, at the
     present time, is able to afford a complete loss of such investment.

                                  ARTICLE IV.
                         OTHER AGREEMENTS OF THE PARTIES

     4.1 No Transfer  Restrictions;  DWAC Delivery.  Securities issued hereunder
shall not  contain any  legend.  The  Company  may not make any  notation on its
records or give  instructions  to any  transfer  agent of the Company that place
restrictions  on the  Securities.  All  Securities  shall be  transmitted by the
transfer  agent of the Company to the  Purchaser by crediting the account of the
Purchaser's prime broker with the Depository Trust Company System.

                                       17
4.2 Furnishing of  Information.  As long as Purchaser owns any  Securities,
the Company  covenants to timely file (or obtain  extensions in respect  thereof
and file within the applicable grace period) all reports required to be filed by
the Company  after the date hereof  pursuant to the Exchange Act. As long as the
Purchaser  owns any  Securities,  if the Company is not required to file reports
pursuant to the Exchange  Act, it will prepare and furnish to the  Purchaser and
make publicly  available in accordance  with Rule 144(c) such  information as is
required for the  Purchaser to sell the  Securities  under Rule 144. The Company
further  covenants  that it will  take  such  further  action  as any  holder of
Securities may reasonably  request,  to the extent required from time to time to
enable  such  Person  to sell such  Securities  without  registration  under the
Securities Act within the requirements of the exemption provided by Rule 144.

     4.3  Integration.  The  Company  shall not sell,  offer for sale or solicit
offers to buy or  otherwise  negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would be integrated with the offer or sale of
the Securities  for purposes of the rules and  regulations of any Trading Market
such that it would  require  shareholder  approval  prior to the closing of such
other transaction unless shareholder  approval is obtained before the closing of
such subsequent transaction.

     4.4 Securities Laws Disclosure;  Publicity. The Company shall, by 8:30 a.m.
Eastern time on the second  Trading Day  immediately  following the date hereof,
issue a  Current  Report  on Form  8-K,  disclosing  the  material  terms of the
transactions  contemplated  hereby,  and shall attach the Transaction  Documents
thereto,  and,  within the time periods  required by Rule 424, file a prospectus
supplement  containing all information  required to be contained therein.  Other
than as required by this Agreement,  the Company and the Purchaser shall consult
with each  other in  issuing  any  other  press  releases  with  respect  to the
transactions  contemplated  hereby,  and neither  the Company nor the  Purchaser
shall issue any such press release or otherwise  make any such public  statement
without the prior  consent of the Company,  with respect to any press release of
the Purchaser,  or without the prior consent of the  Purchaser,  with respect to
any press  release of the  Company,  which  consent  shall not  unreasonably  be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.

     4.5  Shareholder  Rights  Plan.  No claim will be made or  enforced  by the
Company  or,  with the  consent  of the  Company,  any  other  Person,  that the
Purchaser is an "Acquiring Person" under any control share acquisition, business
combination,  poison pill (including any distribution  under a rights agreement)
or similar  anti-takeover  plan or arrangement in effect or hereafter adopted by
the Company,  or that the Purchaser could be deemed to trigger the provisions of
any such  plan or  arrangement,  by  virtue of  receiving  Securities  under the
Transaction  Documents or under any other agreement  between the Company and the
Purchaser.

     4.6 Non-Public  Information.  Except with respect to the material terms and
conditions of the transactions  contemplated by the Transaction  Documents,  the
Company  covenants and agrees that neither it nor any other Person acting on its
behalf will provide the Purchaser or its agents or counsel with any  information
that the Company believes  constitutes material non-public  information,  unless
prior thereto the Purchaser  shall have executed a written  agreement  regarding

                                       18
the  confidentiality  and use of such information.  The Company  understands and
confirms that the Purchaser shall be relying on the foregoing representations in
effecting transactions in securities of the Company.

     4.7 Indemnification of Purchaser. Subject to the provisions of this Section
4.7,  the Company  will  indemnify  and hold the  Purchaser  and its  directors,
officers,  shareholders,  members, partners, employees and agents (and any other
Persons  with a  functionally  equivalent  role of a Person  holding such titles
notwithstanding  a lack of such  title or any  other  title),  each  Person  who
controls the Purchaser  (within the meaning of Section 15 of the  Securities Act
and Section 20 of the Exchange Act), and the directors, officers,  shareholders,
agents,   members,   partners  or  employees  (and  any  other  Persons  with  a
functionally  equivalent role of a Person holding such titles  notwithstanding a
lack of such title or any other  title) of such  controlling  persons  (each,  a
"Purchaser Party") harmless from any and all losses,  liabilities,  obligations,
claims,  contingencies,  damages,  costs and expenses,  including all judgments,
amounts paid in  settlements,  court costs and  reasonable  attorneys'  fees and
costs of  investigation  that any the  Purchaser  Party may suffer or incur as a
result  of or  relating  to (a)  any  breach  of  any  of  the  representations,
warranties,  covenants or agreements made by the Company in this Agreement or in
the  other  Transaction  Documents  or (b) any  action  instituted  against  the
Purchaser,  or any of its  Affiliates,  by any stockholder of the Company who is
not an  Affiliate  of the  Purchaser,  with  respect to any of the  transactions
contemplated  by the Transaction  Documents  (unless such action is based upon a
breach of the  Purchaser's  representations,  warranties or covenants  under the
Transaction Documents or any agreements or understandings the Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by the Purchaser which constitutes  fraud,  gross
negligence,  willful misconduct or malfeasance).  If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this  Agreement,  the Purchaser  Party shall  promptly  notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing  reasonably  acceptable to the Purchaser  Party. Any
Purchaser  Party  shall  have the right to employ  separate  counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Purchaser Party except to the extent that
(i) the employment  thereof has been  specifically  authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such  defense  and to employ  counsel or (iii) in such  action  there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue  between the  position of the  Company and the  position of the  Purchaser
Party,  in which case the Company shall be responsible  for the reasonable  fees
and  expenses  of no more  than  one such  separate  counsel  for all  Purchaser
Parties.  The  Company  will not be liable to any  Purchaser  Party  under  this
Agreement (i) for any  settlement by the Purchaser  Party  effected  without the
Company's prior written  consent,  which shall not be  unreasonably  withheld or
delayed;  or (ii) to the  extent,  but only to the  extent  that a loss,  claim,
damage or liability is  attributable  to any Purchaser  Party's breach of any of
the representations,  warranties,  covenants or agreements made by the Purchaser
Party in this Agreement or in the other Transaction Documents.

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

                                       19
4.9 Listing of Common Stock.  The Company hereby agrees to use best efforts
to maintain the listing of the Common Stock on a Trading Market,  and as soon as
reasonably  practicable  following the Initial Closing to list all of the Shares
on such Trading Market.  The Company  further agrees,  if the Company applies to
have the Common Stock  traded on any other  Trading  Market,  it will include in
such  application  all of the  Shares,  and will  take such  other  action as is
necessary to cause all of the Shares to be listed on such other  Trading  Market
as promptly as possible.  The Company will take all action reasonably  necessary
to continue the listing and trading of its Common Stock on a Trading  Market and
will  comply in all  respects  with the  Company's  reporting,  filing and other
obligations under the bylaws or rules of the Trading Market.

     4.10 Blue Sky  Filings.  The Company  shall take such action as the Company
shall reasonably  determine is necessary in order to obtain an exemption for, or
to qualify the  Securities  for,  sale to the  Purchaser  at the  Closing  under
applicable securities or "Blue Sky" laws of the states of the United States, and
shall provide evidence of such actions promptly upon request of Purchaser.

     4.11 Accuracy of  Registration  Statement.  On each  Settlement  Date,  the
Registration  Statement and the  prospectus  therein  (including  any prospectus
supplement) shall not contain any untrue statement of a material fact or omit to
state any material fact  required to be stated  therein or necessary in order to
make the statements  therein not misleading in light of the circumstances  under
which they were made; and on such Settlement Date the Registration Statement and
the  prospectus  included  therein  will not include any untrue  statement  of a
material  fact or omit to state a material  fact  necessary in order to make the
statements  therein,  in the light of the  circumstances  under  which they were
made, not misleading; provided, however, the Company makes no representations or
warranties as to the information  contained in or omitted from the  Registration
Statement and the prospectus included therein in reliance upon and in conformity
with the  information  furnished  in  writing to the  Company  by the  Purchaser
specifically  for inclusion in the  Registration  Statement  and the  prospectus
therein.

     4.12 Notice of Certain Events Affecting  Registration;  Suspension of Right
to Request a Draw Down.  The  Company  will  promptly  notify the  Purchaser  in
writing  upon  the  occurrence  of any of the  following  events:  (a)  when any
Prospectus supplement or post-effective  amendment to the Registration Statement
is  proposed  to be filed;  (b) of any  request by the  Commission  or any other
Federal or state  governmental  authority for  amendments or  supplements to the
Registration Statement or prospectus or for additional  information;  (c) of the
issuance by the Commission or any other federal or state governmental  authority
of any stop order  suspending  the  effectiveness  of a  Registration  Statement
covering any or all of the Securities or the initiation of any  Proceedings  for
that purpose; (d) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Securities for sale in any jurisdiction, or the initiation or threatening of
any Proceeding  for such purpose;  (e) of the occurrence of any event or passage
of time that makes the financial statements included in a Registration Statement
ineligible  for  inclusion  therein or any  statement  made in the  Registration
Statement  or  prospectus  or  any  document   incorporated   or  deemed  to  be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires  any  revisions  to the  Registration  Statement,  prospectus  or other
documents so that, in the case of the Registration  Statement or the prospectus,
as the case may be, it will not contain any untrue  statement of a material fact

                                       20
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made,  not  misleading;  and (f) the  occurrence  or  existence  of any  pending
corporate  development with respect to the Company that the Company believes may
be material and that, in the  determination of the Company,  makes it not in the
best interest of the Company to allow continued availability of the Registration
Statement  or  prospectus;  provided  that the Company  shall not  disclose  the
substance of such corporate development to the Purchaser.  The Company shall not
deliver to the Purchaser any Draw Down Notice during the  continuation of any of
the foregoing events. The Company shall promptly make available to the Purchaser
any such  supplements or amendments to the prospectus,  at which time,  provided
that the registration  statement and any supplements and amendments  thereto are
then effective, the Company may recommence the delivery of Draw Down Notices.

                                   ARTICLE V.
                  CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS

     5.1  Conditions  Precedent  to the  Obligation  of the  Company to Sell the
Shares.  The  obligation  hereunder  of the  Company  to  proceed  to close this
Agreement  and to issue and sell the Shares to the  Purchaser  is subject to the
satisfaction  or  waiver,  at or  before  the  Initial  Closing,  and as of each
Settlement Date of each of the conditions set forth below.  These conditions are
for the  Company's  sole  benefit and may be waived by the Company in writing at
any time in its sole discretion.

          (a) Accuracy of the Purchaser's  Representations  and Warranties.  The
     representations  and warranties of the Purchaser  shall be true and correct
     in all  material  respects  as of the date when made and as of the  Initial
     Closing and as of each  Settlement Date as though made at that time (except
     for  representations  and  warranties  that speak as of a particular  date,
     which shall be true and correct in all material respects as of such dates).

          (b) Performance by the Purchaser.  The Purchaser shall have performed,
     satisfied  and  complied  in all  material  respects  with  all  covenants,
     agreements  and  conditions  required by this  Agreement  to be  performed,
     satisfied  or  complied  with by the  Purchaser  at or prior to the Initial
     Closing and as of each Settlement Date.

          (c) No Injunction.  No statute,  rule,  regulation,  executive  order,
     decree, ruling or injunction shall have been enacted, entered,  promulgated
     or  endorsed  by  any  court  or   governmental   authority   of  competent
     jurisdiction  which prohibits the  consummation of any of the  transactions
     contemplated by this Agreement.

          (d) No Proceedings or Litigation.  No material  Action shall have been
     commenced against the Purchaser or the Company or any subsidiary, or any of
     the officers,  directors or  affiliates  of the Company or any  subsidiary,
     seeking to restrain,  prevent or change the  transactions  contemplated  by
     this Agreement, or seeking damages in connection with such transactions.

                                       21
5.2 Conditions  Precedent to the Obligation of the Purchaser to Close.  The
obligation  hereunder  of the  Purchaser to perform its  obligations  under this
Agreement and to purchase the Shares is subject to the  satisfaction  or waiver,
at or before the Initial  Closing,  of each of the  conditions  set forth below.
These  conditions are for the Purchaser's  sole benefit and may be waived by the
Purchaser in writing at any time in its sole discretion.

          (a) Accuracy of the Company's Representations and Warranties.  Each of
     the representations and warranties of the Company shall be true and correct
     in all  material  respects  as of the date when made and as of the  Initial
     Closing  as  though  made at that  time  (except  for  representations  and
     warranties  that speak as of a  particular  date,  which  shall be true and
     correct in all material respects as of such date).

          (b)  Performance  by the Company.  The Company  shall have  performed,
     satisfied  and  complied  in  all  material   respects  with  all  material
     covenants,  agreements  and  conditions  required by this  Agreement  to be
     performed,  satisfied  or  complied  with by the Company at or prior to the
     Initial Closing.

          (c) No Injunction.  No statute,  rule,  regulation,  executive  order,
     decree, ruling or injunction shall have been enacted, entered,  promulgated
     or  endorsed  by  any  court  or   governmental   authority   of  competent
     jurisdiction  which prohibits the  consummation of any of the  transactions
     contemplated by this Agreement.

          (d) No Proceedings or Litigation.  No material  Action shall have been
     commenced,  against the Purchaser or the Company or any subsidiary,  or any
     of the officers,  directors or affiliates of the Company or any  subsidiary
     seeking to restrain,  prevent or change the  transactions  contemplated  by
     this Agreement, or seeking damages in connection with such transactions.

          (e) Initial  Closing  Deliveries.  The  delivery by the Company of the
     items set forth in Section 2.2(a) of this Agreement.

          (f) AMEX Approval.  The American Stock Exchange shall have approved an
     Additional  Shares  Listing  Application in respect of all shares of Common
     Stock  issuable  hereunder,  and  the  Company  shall  have  delivered  the
     Purchaser evidence thereof.

          (g) Commitment  Shares.  On the Trading Day  immediately  prior to the
     commencement of the first Draw Down Pricing Period,  in  consideration  for
     agreeing to the terms of this Agreement and no additional  consideration at
     such time,  the Company  shall have  delivered to the Purchaser a number of
     shares of Common  Stockequal to $250,000 divided by the greater of the VWAP
     or the  closing  bid price of the Common  Stock on the second  Trading  Day
     immediately  preceding the Draw Down Pricing  Period.  Such shares shall be
     delivered to the DTC account  specified by the  Purchaser in writing to the
     Company.

     5.3  Conditions  Precedent to the  Obligation  of the Purchaser to Accept a
Draw Down and Purchase the Shares. The obligation  hereunder of the Purchaser to
accept a Draw Down  request  and to acquire and pay for the Shares is subject to
the  satisfaction at or before each  Settlement  Date, of each of the conditions
set forth below.

                                       22
(a) Satisfaction of Conditions to Initial  Closing.  The Company shall
     have satisfied at the Initial  Closing,  or the Purchaser shall have waived
     at the Initial Closing, the conditions set forth in Section 5.2 hereof.

          (b) No  Suspension.  Trading in the Common  Stock  shall not have been
     suspended  by  the  Commission  or  the  Trading  Market  (except  for  any
     suspension of trading of limited  duration agreed to by the Company,  which
     suspension  shall be  terminated  prior to the  delivery  of each Draw Down
     Notice),  and,  at any time  prior to such Draw  Down  Notice,  trading  in
     securities  generally as reported on the Trading Market shall not have been
     suspended or limited,  or minimum prices shall not have been established on
     securities  whose  trades are  reported  on the Trading  Market  unless the
     general  suspension or limitation  shall have been terminated  prior to the
     delivery of such Draw Down Notice.

          (c)  Material  Adverse  Effect.  No  Material  Adverse  Effect  and no
     Consolidation Event where the successor entity has not agreed to deliver to
     the  Purchaser  such shares of stock and/or  securities as the Purchaser is
     entitled to receive pursuant to this Agreement.

          (d) Opinion of Counsel.  The Purchaser  shall have received an opinion
     of Company Counsel, substantially in the form of Exhibit B hereto.

          (e) Equity Conditions. During the Draw Down Pricing Period through the
     Settlement Date, all of the Equity Conditions shall have been met.

                                   ARTICLE VI.
                                 DRAW DOWN TERMS

     6.1 Draw Down Terms.  Subject to the  satisfaction  of the  conditions  set
forth in this Agreement, the parties agree as follows:

          (a) The Company may, in its sole  discretion,  issue and exercise draw
     downs  against  the  Commitment  Amount  (each a "Draw  Down")  during  the
     Commitment  Period,  which Draw Downs the  Purchaser  shall be obligated to
     accept,  subject to the terms and conditions of this Agreement.  Before the
     Company  shall  exercise  a Draw Down,  the  Company  shall  have  caused a
     sufficient  number of shares of Common Stock to be  registered to cover the
     Draw Down Shares to be issued in connection with such Draw Down.

          (b) Only one Draw Down  shall be  allowed  in each  Draw Down  Pricing
     Period and any subsequent Draw Down Pricing Period shall not commence until
     the Trading  Cushion has elapsed  since the end of the  previous  Draw Down
     Pricing  Period.  The  number of shares of Common  Stock  purchased  by the
     Purchaser  with respect to each Draw Down shall be  determined as set forth
     in Section 6.1(d) herein and settled on the second Trading Day  immediately
     following  the end of the  applicable  Draw Down Pricing  period (each such
     settlement   period  and  each  such  settlement  date  referred  to  as  a
     "Settlement Period" and a "Settlement Date", respectively).

                                       23
(c) The maximum  Investment Amount as to each Draw Down shall be equal
     to A  multiplied  by B,  where A equals a number of shares of Common  Stock
     equal  to 10% of the  total  trading  volume  during  the 10  Trading  Days
     immediately  prior to the applicable  Draw Down Pricing Period and B equals
     the average of each of the VWAPs  during such 10 Trading Day period,  or an
     amount mutually agreed upon in writing by the Company and the Purchaser.

          (d) The  number  of  Shares  of  Common  Stock  to be  issued  on each
     Settlement  Date  shall  be a  number  of  shares  equal  to the sum of the
     quotients (for each Trading Day within the Settlement Period) of (x) 10% of
     the Investment Amount divided by (y) the Purchase Price on each Trading Day
     within the Settlement Period, subject to the following adjustments:

               (i) if the Purchase Price on a given Trading Day is less than the
          applicable  Threshold Price,  then such Trading Day shall be withdrawn
          from the Draw Down Pricing Period; and

               (ii) if during  any  Trading  Day  during  the Draw Down  Pricing
          Period  trading of the Common Stock on the Trading Market is suspended
          for more than 3 hours, in the aggregate,  or if any Trading Day during
          the Draw Down Pricing Period is shortened because of a public holiday,
          then such  Trading Day shall be  withdrawn  from the Draw Down Pricing
          Period; and

               (iii) if during any  Trading  Day  during  the Draw Down  Pricing
          Period  sales  of  Draw  Down  Shares  pursuant  to  the  Registration
          Statement  are suspended by the Company for more than three (3) hours,
          in the  aggregate,  then such Trading Day shall be withdrawn  from the
          Draw Down Pricing Period.

          (e) The Company must inform the  Purchaser  by  delivering a draw down
     notice,  in the form of  Exhibit D hereto  (the "Draw  Down  Notice"),  via
     facsimile  transmission in accordance with Section 8.3, as to the amount of
     the Draw Down (the "Investment Amount") the Company wishes to exercise. The
     Draw Down Notice  shall also inform the  Purchaser  of the first day of the
     Draw Down Pricing Period,  which,  unless otherwise agreed to in writing by
     the parties,  shall be the first  Trading Day  following the date such Draw
     Down Notice is received  (the  "Commencement  Date").  At no time shall the
     Purchaser be required to purchase more than the maximum  Investment  Amount
     for a given Draw Down Pricing  Period.  The Company shall have the right to
     notify the Purchaser that Draw Downs shall be continuous pursuant to a Draw
     Down Notice  until such time that the Company  elects to suspend  such Draw
     Down  Notice.  In the event of a continuous  Draw Down Notice,  the Company
     must give at least 2 Trading  Days'  written  notice of  suspension  to the
     Purchaser  and in no event shall a suspension of a Draw Down occur prior to
     the end of any pending Draw Down Pricing Periods.  On or before any Trading
     Day that a Draw Down Notice is  delivered or notice of  suspension  of Draw
     Downs is  delivered,  the Company  shall have filed with the  Commission  a
     prospectus supplement pursuant to Rule 424 under the Securities Act setting
     forth the terms of the Draw Down Notice or suspension notice.

                                       24
(f) On the  Trading  Day  immediately  following  the  last day of the
     Settlement  Period,  the  Company  shall  deliver and the  Purchaser  shall
     acknowledge a settlement  statement (the  "Settlement  Statement")  setting
     forth the number of Draw Down Shares  issuable and the  aggregate  Purchase
     Price as to such Settlement  Period. On the Settlement Date as to such Draw
     Down, the Draw Down Shares purchased pursuant to such Settlement  Statement
     shall be delivered to the Depository  Trust Company  ("DTC") account of the
     Purchaser,  or  its  designees,  as  designated  by  the  Purchaser  in the
     Settlement Statement,  via DTC's Deposit Withdrawal Agent Commission system
     ("DWAC"). Upon the Company electronically  delivering such Draw Down Shares
     to the DTC account of the  Purchaser,  or its  designees,  via DWAC by 1:00
     p.m. ET, the Purchaser  shall, on the same day (or the next Business Day if
     such day is not a Business Day) wire transfer  immediately  available funds
     to  the  Company's  bank  account,  as  designated  by the  Company  in the
     Settlement  Statement,  for the amount of the aggregate  Purchase  Price of
     such Draw Down Shares. Upon the Company electronically  delivering the Draw
     Down Shares to the Purchaser or its  designee's  DTC account via DWAC after
     1:00 p.m. ET, the Purchaser shall wire transfer next day available funds to
     the Company's  designated  account on such day. At the sole election of the
     Purchaser,  the Purchaser may elect to pay any broker fees disclosed in the
     schedules  attached to this Agreement  directly to the brokers  pursuant to
     written instructions from any such broker broker.

          (g) The Company understands that a delay in the delivery of the Shares
     to the Purchaser  beyond the Settlement  Date could result in economic loss
     to the Purchaser.  In addition to the Purchaser's other available remedies,
     the Company  shall pay to the  Purchaser,  in cash,  as partial  liquidated
     damages  and not as a  penalty,  for each  $1,000 of  Shares  (based on the
     Closing  Price of the  Common  Stock  on the  applicable  Settlement  Date)
     required  to be  delivered  on the  Settlement  Date,  $10 per  Trading Day
     (increasing to $20 per Trading Day five (5) Trading Days after such damages
     have begun to accrue) for each Trading Day after the Settlement  Date until
     such Shares are delivered pursuant to this Article VI. Nothing herein shall
     limit the  Purchaser's  right to pursue  actual  damages for the  Company's
     failure to deliver certificates  representing any Securities as required by
     the Transaction Documents, and the Purchaser shall have the right to pursue
     all  remedies  available  to it at  law  or in  equity  including,  without
     limitation, a decree of specific performance and/or injunctive relief.

                                  ARTICLE VII.
                                   TERMINATION

     7.1 Term.  The term of this  Agreement  shall  begin on the date hereof and
shall end 24 months  from the date hereof or as  otherwise  set forth in Section
7.2.

     7.2 Other Termination.

          (a)  This  Agreement  shall  terminate  if (i)  the  Common  Stock  is
     de-listed from the Trading  Market unless such  de-listing is in connection
     with a subsequent listing on another Trading Market, (ii) the Company files
     for protection from creditors under any applicable law or (iii) the Company
     withdraws the Registration Statement.

                                       25
(b) The Company may  terminate  this  Agreement  upon 5 Trading  Day's
     notice if the  Purchaser  shall fail to fund a properly  noticed  Draw Down
     within 5 Trading Days of the end of the applicable Settlement Period.

          (c) The Company may terminate  this  Agreement  upon one Trading Day's
     written notice to the Purchaser if this Agreement violates or may result in
     a breach of any other  agreement  to which the Company is party;  provided,
     however,  that no such termination  shall be effective until after the full
     completion and settlement of any pending Draw Down Pricing Periods pursuant
     to the terms of this Agreement.

     7.3 Effect of  Termination.  In the event of  termination of this Agreement
pursuant to Section 7.2 herein,  written notice thereof shall forthwith be given
to the other party and the transactions  contemplated by this Agreement shall be
terminated  without  further  action  by  either  party.  If this  Agreement  is
terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become
void and of no further  force and  effect,  except for Section 4.7 and Article 8
herein,  which shall survive the termination of this Agreement.  Nothing in this
Section  7.3 shall be deemed to release the  Company or the  Purchaser  from any
liability  for any breach under this  Agreement,  or to impair the rights of the
Company or the Purchaser to compel  specific  performance  by the other party of
its obligations under this Agreement.

                                 ARTICLE VIII.
                                  MISCELLANEOUS

     8.1 Fees and Expenses.  At the Initial  Closing,  the Company has agreed to
reimburse the Purchaser the non-accountable  sum of $20,000,  for its legal fees
and  expenses,  $10,000  which has been  paid  prior to the  Closing.  Except as
expressly set forth in the  Transaction  Documents to the  contrary,  each party
shall pay the fees and expenses of its advisers, counsel,  accountants and other
experts,  if any, and all other expenses  incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer  agent fees,  stamp taxes and other taxes and
duties  levied  in  connection  with  the  delivery  of  any  Securities  to the
Purchaser.

     8.2 Entire Agreement. The Transaction Documents, together with the exhibits
and  schedules  thereto,  contain the entire  understanding  of the parties with
respect to the subject  matter  hereof and supersede  all prior  agreements  and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

     8.3  Notices.  Any and all notices or other  communications  or  deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of  transmission,  if
such notice or  communication is delivered via facsimile at the facsimile number
set forth on the signature  pages  attached  hereto prior to 5:30 p.m. (New York
City  time)  on a  Trading  Day,  (b) the next  Trading  Day  after  the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day,  (c) the 2nd Trading  Day  following  the date of mailing,  if sent by U.S.

                                       26
nationally  recognized  overnight courier service, or (d) upon actual receipt by
the party to whom such  notice is  required  to be given.  The  address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

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

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

     8.6 Successors and Assigns.  This Agreement shall be binding upon and inure
to the  benefit of the parties and their  successors.  Neither  party may assign
this Agreement or any rights or obligations hereunder (other than by merger).

     8.7 No  Third-Party  Beneficiaries.  This  Agreement  is  intended  for the
benefit of the parties  hereto and their  respective  successors  and  permitted
assigns and is not for the benefit of, nor may any provision  hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.7.

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

                                       27
prevailing  party in such action or proceeding  shall be reimbursed by the other
party for its reasonable  attorneys' fees and other costs and expenses  incurred
with  the   investigation,   preparation  and  prosecution  of  such  action  or
proceeding.

     8.9 Survival.  The  representations  and warranties  contained herein shall
survive the Closing and the delivery of the Securities.

     8.10 Execution. This Agreement may be executed in two or more counterparts,
all of which when taken  together shall be considered one and the same agreement
and shall become effective when  counterparts have been signed by each party and
delivered to the other  party,  it being  understood  that both parties need not
sign the same  counterpart.  In the event that any  signature  is  delivered  by
facsimile  transmission or by e-mail delivery of a ".pdf" format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or ".pdf" signature page were an original thereof.

     8.11 Severability.  If any term, provision, covenant or restriction of this
Agreement is held by a court of competent  jurisdiction to be invalid,  illegal,
void or  unenforceable,  the remainder of the terms,  provisions,  covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected,  impaired or  invalidated,  and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

     8.12 Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated,  lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange  and  substitution  for and upon  cancellation
thereof (in the case of mutilation),  or in lieu of and substitution therefor, a
new  certificate  or  instrument,  but only upon receipt of evidence  reasonably
satisfactory to the Company of such loss,  theft or  destruction.  The applicant
for a new certificate or instrument under such circumstances  shall also pay any
reasonable third-party costs (including customary indemnity) associated with the
issuance of such replacement Securities.

     8.13  Remedies.  In  addition  to being  entitled  to  exercise  all rights
provided herein or granted by law,  including  recovery of damages,  each of the
Purchaser  and the Company  will be entitled to specific  performance  under the
Transaction  Documents.  The  parties  agree that  monetary  damages  may not be
adequate  compensation  for  any  loss  incurred  by  reason  of any  breach  of
obligations  contained in the  Transaction  Documents and hereby agrees to waive
and not to assert in any action for specific  performance of any such obligation
the defense that a remedy at law would be adequate.

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

                                       28
damages or other amounts are due and payable shall have been canceled.

     8.15  Construction.  The  parties  agree  that  each of them  and/or  their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved  against the drafting party shall not be employed
in the interpretation of the Transaction  Documents or any amendments hereto. In
addition, each and every reference to share prices and shares of Common Stock in
any Transaction  Document shall be subject to adjustment for reverse and forward
stock splits, stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement.

                            (Signature Pages Follow)

                                       29
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

CEL-SCI CORP.                                     Address for Notice:
                                                  ------------------

By: /s/ Patricia B. Prichep                       8229 Boone Blvd. #802
     Name: Patricia B. Prichep                    Vienna, VA 22182
     Title: Senior Vice President of Operations

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

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                    SIGNATURE PAGE FOR PURCHASER FOLLOWS]

                                       30
[PURCHASER SIGNATURE PAGES TO CVM SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: Ascendiant Capital Group, LLC
                   ---------------------------------------------------------
Signature of Authorized Signatory of Purchaser:   /s/ Mark Bergendahl
                                                ----------------------------
Name of Authorized Signatory:  Mark Bergendahl
                               ---------------------------------------------
Title of Authorized Signatory: Managing Director
                               ---------------------------------------------
Email Address of Purchaser:
                            ------------------------------------------------
Fax Number of Purchaser:
                            ------------------------------------------------

Address for Notice of Purchaser:

18881 Von Karman
Suite 1600
Irvine, CA 92612

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

Commitment Amount:
Shares:
EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       31
CEL-SCI CORPORATION

Schedule 3.1(a):    Viral Technologies  Inc.  -  wholly  owned  subsidiary  of
                    CEL-SCI Corporation

Schedule 3.1(g):

Common Stock
------------

     Between July 1, 2008 and December 30, 2008 CEL-SCI issued  5,745,595 shares
of its common stock to various  persons for  $500,000 in cash,  payment of rent,
payment of principal  and interest on  outstanding  convertible  notes,  and for
services provided to CEL-SCI.

                                                     Number of
                                                       Shares
                                                     ---------
   Shares of common stock outstanding as of
   December 30, 2008                                123,578,969

      The following lists additional shares of CEL-SCI's common stock which may
be issued:

                                                          Number of      Note
                                                            Shares    Reference

   Shares issuable upon exercise of Series L
    and M warrants                                        20,043,335        A

   Shares issuable as payment of interest on
      the Series K notes between now and due date            519,102        B

   Shares issuable as payment of principal on
      the Series K notes                                   2,500,955        B

   Shares issuable upon the exercise of the
     Series K warrants                                     6,601,394        B

   Shares issuable upon the exercise of the Series N
      warrants                                             2,075,084        C

   Shares issuable upon the exercise of warrants
     held by private investors                             8,764,272        D

   Shares issuable upon exercise of options granted
     to CEL-SCI's officers,  directors, employees,
     consultants, and third parties                       13,149,831        E

                                       32
A. In April 2007, CEL-SCI sold 20,000,000 Units to Korral Partners, an
institutional investor, for $15,000,000. Each Unit was priced at $0.75 and
consisted of one share of CEL-SCI's common stock, one-half of a Series L warrant
and one-half of a Series M warrant. Immediately after this sale Korral Partners
sold the 20,000,000 shares of CEL-SCI's common stock and the 10,000,000 Series M
warrants to 19 foreign investors. Korral Partners retained the 10,000,000 Series
L warrants.

      Pursuant to a previously granted right of participation two investors in
CEL-SCI's August 2006 financing purchased 43,333 Units, which were identical to
the Units sold to Korral Partners, at a price of $0.75 per Unit.

      Each Series L warrant allows the holder to purchase one share of CEL-SCI's
common stock for $0.75. Each Series M warrant allows the holder to purchase one
share of CEL-SCI's common stock for $2.00. The Series L and M warrants expire on
April 17, 2012.

      In September 2008, 2,250,000 of the Series L warrants were repriced to
$0.56 and their expiration date was extended one year to April 17, 2013.

B. In August 2006, CEL-SCI sold Series K convertible notes, plus Series K
warrants, to independent private investors for $8,300,000. The notes bear
interest annually at the greater of 8% or 6 month LIBOR plus 3% per year. The
Notes are due and payable on August 4, 2011 and are secured by substantially all
of CEL-SCI's assets.

      At the holder's option, the Series K notes are convertible into shares of
CEL-SCI's common stock at a Conversion Price of $0.75. The Series K warrants
allow the holders to purchase up to 6,601,394 shares of CEL-SCI's common stock
at a price of $0.75 per share at any time prior to February 4, 2012.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable Conversion
Price, the Conversion Price will be lowered to the price at which the shares
were sold or the lowest price at which the securities are convertible, as the
case may be. If CEL-SCI sells any additional shares of common stock, or any
securities convertible into common stock at a price above the Conversion Price,
but below the average closing price of CEL-SCI's common stock over the five
trading days prior to the sale of the shares, the Conversion Price will be
lowered to a price determined by a formula contained in the Notes. The
Conversion Price will also be proportionately adjusted in the event of any stock
splits.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series K warrants, the warrant exercise price will be lowered to
the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be.

      At CEL-SCI's election, and under certain conditions, CEL-SCI may use
shares of its common stock to make interest or principal payments on the Series

                                       33
K notes. The actual number of shares which may be issued as payment of interest
or principal may increase if the price of CEL-SCI's common stock is below the
then applicable conversion price of the Series K notes.

      To the extent CEL-SCI uses its shares to make principal payments on the
notes, the number of shares which may be issued upon the conversion of the notes
may be less due to reduction in the outstanding principal balance of the notes.

      The actual number of shares which will ultimately be issued upon the
payment or conversion of the Series K notes (if any) will vary depending upon a
number of factors, including CEL-SCI's election to use shares of its common
stock to pay principal or interest on the Series K notes.

      Since August 2006 the principal balance of the notes have been reduced as
a result of conversions and payments by CEL-SCI. As of December 30, 2008 notes
in the principal amount of $1,875,716 were outstanding.

      So long as the Series K notes are outstanding, the holders of the Series K
notes have the right to participate in any subsequent financings involving
CEL-SCI.

C. On August 18, 2008, CEL-SCI sold 1,383,389 shares of common stock and
2,075,084 Series N warrants in a private financing for $1,037,500. The shares
were sold at a price of $0.75 per share. Each Series N warrant entitles the
holder to purchase one share of CEL-SCI's common stock at a price of $0.75 per
share at any time prior to August 18, 2014. The securities sold in August 2008
are restricted securities and do not have any registration rights.

      If CEL-SCI sells any additional shares of common stock, or any securities
convertible into common stock at a price below the then applicable exercise
price of the Series N warrants, the warrant exercise price will be lowered to
the price at which the shares were sold or the lowest price at which the
securities are convertible, as the case may be.

D. Between May 30, 2003 and August 18, 2008 CEL-SCI sold shares of its common
stock in private transactions. In some cases warrants were issued as part of
financings. As of December 30, 2008 warrants to purchase 8,764,272 shares of
CEL-SCI's common stock were outstanding. The warrants are exercisable at prices
ranging between $0.47 and $2.00 per share and expire at various dates between
April 2009 and February 2015.

E. The options are exercisable at prices ranging from $0.16 to $4.50 per share.
CEL-SCI may also grant options to purchase additional shares under its Incentive
Stock Option and Non-Qualified Stock Option Plans.

Schedule 3.1(i): Between July 1, 2008 and December 30, 2008 CEL-SCI issued
5,745,595 shares of its common stock to various persons for $500,000 in cash,
payment of rent, payment of principal and interest on outstanding convertible
notes, and for services provided to CEL-SCI. Of the shares issued since July 1,
2008, 334,448 shares were issued to Maximilian de Clara, the President and a
director of CEL-SCI, in payment of salary.

                                       34
In December 2008 CEL-SCI borrowed $100,000 from Maximilian de Clara,
CEL-SCI's President and a director. The loan bears interest at 15% per year and
is payable on March 27, 2009.

Schedule 3.1(q): In December 2008 CEL-SCI borrowed $100,000 from Maximilian de
Clara, CEL-SCI's president and a director. The loan bears interest at 15% per
year and is payable on March 27, 2009.

Schedule 3.1(s):  None

                                       35
HART & TRINEN, LLP                    EXHIBIT B
                                 ATTORNEYS AT LAW
                              1624 Washington Street
                                 Denver, CO 80203
William T. Hart, P.C.                ________         Email:  harttrinen@aol.com
Donald T. Trinen                                      Facsimile:  (303) 839-5414
                                 (303) 839-0061

                                December 30, 2008

Ascendiant Capital Group, LLC
18881 Von Karman
16th Floor
Irvine, CA  92612

      We have acted as counsel to CEL-SCI Corp., a Colorado corporation (the
"Company"), in connection with the execution and delivery by the Company of the
Securities Purchase Agreement dated as of December 30, 2008 (the "Agreement"),
by and among the Company and the purchasers identified on the signature pages
thereto (the "Purchasers"). This opinion is given to you pursuant to Article V
of the Agreement. (Capitalized terms not otherwise defined herein are defined as
set forth in the Agreement.)

      We have participated in the preparation and negotiation of the Agreement
and the Exhibits and Schedules thereto, and the other documents referred to
therein. We also have examined such certificates of public officials, corporate
documents and records and other certificates, opinions, agreements and
instruments and have made such other investigations as we have deemed necessary
in connection with the opinions hereinafter set forth.

      Based on the foregoing and upon such investigation as we have deemed
necessary, we give you our opinion as follows:

     1. The Company is a corporation  duly  organized,  validly  existing and in
good standing  under the laws of Colorado.  The Company has all requisite  power
and authority, and all material governmental licenses, authorizations,  consents
and  approvals,  required to own and operate  its  properties  and assets and to
carry on its business as now conducted  and as proposed to be conducted  (all as
described in the Company's SEC Reports filed in the last 12 months). The Company
is  duly  qualified  to  transact  business  and is in  good  standing  in  each
jurisdiction  in which the  failure  to qualify  could  have a Material  Adverse
Effect on the Company.

     2. Each of the following  subsidiaries of the Company (the  "Subsidiaries")
is a  corporation,  duly  organized and in good  standing  under the laws of the
state of organization, as noted: Viral Technologies Inc. - Delaware.

     3. The Company has all requisite  power and  authority to execute,  deliver
and perform the Transaction Documents, to issue, sell and deliver the Securities
pursuant  to the  Transaction  Documents  and  to  carry  out  and  perform  its
obligations  under,  and to consummate  the  transactions  contemplated  by, the
Transaction Documents.
4.  All  action  on  the  part  of  the  Company,  its  directors  and  its
stockholders  necessary  for the  authorization,  execution  and delivery by the
Company of the Transaction  Documents,  the  authorization,  issuance,  sale and
delivery of the Securities  pursuant to the Agreement,  and the  consummation by
the Company of the  transactions  contemplated by the Transaction  Documents has
been duly taken.  The Transaction  Documents have been duly and validly executed
and  delivered  by the  Company  and  constitute  the legal,  valid and  binding
obligation of the Company,  enforceable  against the Company in accordance  with
their terms,  except (a) that such  enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors'  rights
in general and (b) that the remedies of specific  performance and injunctive and
other forms of injunctive relief may be subject to equitable defenses.

     5. After giving effect to the  transactions  contemplated by the Agreement,
and immediately after the Closing,  the authorized  capital stock of the Company
will consist of: an aggregate of  300,000,000  shares of Common Stock,  of which
123,578,969  shares will be issued and outstanding and 38,984,058 shares will be
reserved  for  issuance  upon  conversion  of issued  and  outstanding  options,
warrants and other derivative securities, 12,594,831 shares will be reserved for
issuance to employees,  officers and directors under the Company's [Stock Option
Plans], of which 4,745,266 shares are subject to currently outstanding incentive
stock option  grants and 7,849,565  shares are subject to currently  outstanding
non-qualified  stock option grants.  All presently issued and outstanding shares
of Common Stock have been duly  authorized and validly issued and are fully paid
and  nonassessable  and free of any preemptive or similar rights,  and have been
issued in compliance with applicable securities laws and regulations. The shares
of Common  Stock  which are being  issued  on the date  hereof  pursuant  to the
Agreement  have been duly  authorized  and validly issued and are fully paid and
nonassessable and free of preemptive or similar rights,  and have been issued in
compliance  with  applicable  securities  laws,  rules and  regulations.  To our
knowledge,  except for rights  described  in Schedule  3.1(g) of the  Agreement,
there are no other  options,  warrants,  conversion  privileges  or other rights
presently  outstanding  to purchase or  otherwise  acquire  from the Company any
capital  stock or other  securities of the Company,  or any other  agreements to
issue any such securities or rights.  The rights,  privileges and preferences of
the Common Stock are as stated in the Company's Articles of Incorporation.

     6. To our knowledge,  the Company has filed all reports (the "SEC Reports")
required to be filed by it under Sections 13(a) and 15(d) of the Exchange Act of
1934, as amended (the "Exchange Act"). As of their respective  filing dates, the
SEC Reports  complied in all material  respects as to form with the requirements
of the  Exchange  Act and  the  rules  and  regulations  of the SEC  promulgated
thereunder.

     7. The  execution,  delivery  and  performance  by the  Company of, and the
compliance by the Company with the terms of, the  Transaction  Documents and the
issuance,  sale and delivery of the Securities  pursuant to the Agreement do not
(a)  conflict  with or result in a violation of any  provision  of law,  rule or
regulation  having  applicability  to the Company or its  Subsidiaries or of the
certificate  of  incorporation  or  by-laws  or  other  similar   organizational
documents of the Company or its  Subsidiaries,  (b) conflict  with,  result in a
breach of or  constitute  a default  (or an event  which with notice or lapse of
time or both  would  become  a  default)  under,  or  result  in or  permit  the
termination or modification of, any agreement, instrument, order, writ, judgment
or decree known to us to which the Company of its  Subsidiaries is a party or is
subject  or (c)  result in the  creation  or  imposition  of any lien,  claim or
encumbrance on any of the Company's or its Subsidiaries' assets or properties.

     8.  To  our  knowledge,  there  is  no  claim,  action,  suit,  proceeding,
arbitration,  investigation or inquiry, pending or threatened,  before any court
or governmental or  administrative  body or agency,  or any private  arbitration
tribunal,  against  the  Company or its  Subsidiaries,  or any of its  officers,
directors  or employees  (in  connection  with the  discharge of their duties as
officers,  directors  and  employees),  or affecting  any of its  properties  or
assets.

     9. No consent,  license,  permit, waiver,  approval or authorization of, or
designation,  declaration,  registration or filing with, any court, governmental
or  regulatory  authority,  or  self-regulatory  organization,  is  required  in
connection with the valid execution,  delivery and performance by the Company of
the  Transaction  Documents,  or the offer,  sale,  issuance  or delivery of the
Securities or the consummation of the transactions contemplated thereby.

     10. The  Company is not an  Investment  Company  within the  meaning of the
Investment Company Act of 1940, as amended.

     11.  The  Registration   Statement  has  been  declared  effective  by  the
Commission  and no stop  order is in effect  with  respect  to the  Registration
Statement.  Assuming compliance by the Purchaser with the "Plan of Distribution"
caption of the  Registration  Statement  and timely  compliance by the Purchaser
with  all  prospectus  delivery   requirements,   the  shares  shall  be  freely
transferable by Purchaser.

     12.  Nothing has come to our  attention  that has caused us to believe that
the  Registration  Statement  and the  Prospectus  at the time the  Registration
Statement  became  effective  and as of the date of this  opinion  contained  or
contains an untrue  statement of a material  fact or omitted or omits to state a
material fact required to be stated  therein or necessary to make the statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading;  however,  we  express  no opinion  with  respect  to the  financial
statements  and the notes  thereto and the  schedules  and other  financial  and
statistical data derived therefrom included in the Registration Statement or the
Prospectus.]

                                          Very truly yours,

                                          HART & TRINEN, LLP

                                          By   /s/ William T. Hart
                                               -------------------------
                                                William T. Hart
EXHIBIT D

                   DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE

                                  CEL-SCI CORP.

      The undersigned hereby certifies, with respect to shares of Common Stock
of Cel-Sci Corp (the "Company") issuable in connection with this Draw Down
Notice and Compliance Certificate dated _____________ (the "Notice"), delivered
pursuant to the Securities Purchase Agreement dated as of ______, 2008 (the
"Agreement"), as follows:

            1. The undersigned is the duly appointed Chief Executive Officer or
      Chief Financial Officer of the Company.

            2. Except as set forth on the schedules attached hereto or in the
      SEC Documents (as defined in the Agreement), the representations and
      warranties of the Company set forth in the Agreement are true and correct
      in all material respects as though made on and as of the date hereof,
      except for representations and warranties are expressly made as of a
      particular date.

            3. The Company has performed in all material respects all covenants
      and agreements and conditions required under the Agreement to be performed
      by the Company on or prior to the date of this Draw Down Notice.

            4.    The Investment Amount is $___________.

            5. Draw Downs shall commence on ____________ and end after [check
      one]:

                  a. ______ the completion of ___ Draw Down Pricing Periods.

                  b. ______ until written notice to you that Draw Downs have
                  been suspended provided that no pending Draw Down may be
                  suspended.

            .6. The Threshold Price for purposes of this Draw Down is
                  $-------.

      The  undersigned  has  executed  this   Certificate  this  ____  day  of
__________, _____.

                                          CEL-SCI CORP.

                                          By:
                                               -------------------------------
                                               Name:
                                               Title: