AMENDMENT NO. 2 TO SECURITIES PURCHASE AGREEMENT, SENIOR SECURED CONVERTIBLE NOTES AND WARRANTS

1.

The Company and the Purchasers are parties to a Securities Purchase Agreement, dated as of March 20, 2006 (the "Purchase Agreement"), as amended by Amendment No. 1 to Senior Secured Convertible Notes, Warrants, Additional Investment Rights and Security Agreement dated as of September 6, 2006 ("Amendment No. 1") pursuant to which the Company issued and sold to the Purchasers an aggregate of $3,781,662 of Senior Secured Convertible Notes due January 1, 2008 (the "Notes") and certain Warrants and Additional Investment Rights (each as defined in the Purchase Agreement). Capitalized terms used and not defined in this Amendment shall have the respective meanings set forth in the Purchase Agreement or Notes, as the case may be.

2.

In connection with Amendment No. 1, the principal amount of the Notes consists of (i) $2,500,000 of Senior Secured Convertible Notes issued on March 20, 2006 (the "Original Notes"), (ii) $1,000,000 of Senior Secured Convertible Notes issued pursuant to Amendment No. 1, and (iii) $281,662 of accrued interest and liquidated damages.

3.

In connection with Amendment No. 1, the Warrants and Additional Investment Rights consist of (i) the original warrants and additional investment rights issued under the Purchase Agreement on March 20, 2006 (the "Original Warrants" and the "Original Additional Investment Rights", respectively), and (ii) the warrants and additional investment rights issued under Amendment No. 1.

4.

The Company and the Purchasers now wish to further modify certain terms of the Purchase Agreement, Notes and Warrants.

1.

Amendments and Agreements .

1.1.

The Company and each Purchaser agrees that Section 2(b) of the Notes shall be deleted and replaced in its entirety as follows:

1.2.

The Company hereby acknowledges, and shall cause its counsel to issue a legal opinion to the Purchasers, that (i) the Common Stock issuable upon conversion of the Notes up to the principal amount of the Original Notes and the Common Stock issuable upon a cashless exercise of the Original Warrants (to the extent permitted) shall be eligible to be sold under Rule 144 on March 20, 2007, and (ii) the Common Stock issuable upon conversion of all the Notes and the Common Stock issuable upon a cashless exercise of all the warrants (to the extent permitted) issued under Amendment No. 1 shall be eligible to be sold under Rule 144 on September 6, 2007.

1.3.

Following March 20, 2007, if the Company issues any Common Stock as a Monthly Installment that is not eligible for resale under Rule 144 and the Registration Statement is not effective (any such shares issued, the "Restricted Shares"), then (x) the number of shares of Common Stock that are issued to each Purchaser as principal shall be adjusted so that the number of shares of Common Stock such Purchaser receives is equal to the quotient obtained by dividing the total principal then payable to such Purchaser by the Issue Price, and (y) each Purchaser shall have the right to require the Company to repurchase (the "Repurchase Option") in cash all or any portion of such Restricted Shares, within 10 Trading Days following delivery by such Purchaser of a notice to the Company, at a price equal to 130% of the Issue Price. A Purchaser shall not be permitted to exercise its Repurchase Option if at the time of the delivery by such Purchaser of the notice to the Company the Restricted Shares can be sold under Rule 144 (and Company’s counsel has

provided the requisite legal opinion for the sale of such shares pursuant to Rule 144, at a cost born solely by the Company) or a Registration Statement is effective. For the purposes of this Amendment, the "Issue Price" shall mean the lowest of (i) the Conversion Price, (ii) $0.80, and (iii) the Market Price as of the applicable Principal Payment Date (as defined in the Notes), and rounding up to the nearest whole share.

1.4.

The Purchasers agree that any amounts due under Section 6.1(d) of the Purchase Agreement shall only apply to Events occurring on or after April 30, 2007, except as otherwise set forth in this Amendment.

2.

Additional Warrants .

2.1.

In connection with the transaction contemplated by this Amendment, the Company agrees to issue to each Purchaser a warrant in the form of Exhibit A hereto (the "Additional Warrant A"), registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire such number of Underlying Shares indicated on Schedule A hereto under the heading "Additional Warrant A Shares".

3.

Registration Rights . To ensure that the registration rights of the Purchasers are not adversely affected as a result of the transactions contemplated by this Amendment and to provide registration rights consistent with the existing registration rights in respect of the Common Stock issuable upon exercise of the Securities, the parties agree as follows with respect to registration rights.

3.1.

The Company and each Purchaser agrees that the first sentence of Section 6.1(a) of the Purchase Agreement shall be deleted and replaced in its entirety as follows:

3.2.

The parties hereby agree that the definition of "Registrable Securities" under the Purchase Agreement shall include (a) the shares of Common Stock issuable upon the conversion or exercise of the Notes, Warrants, Additional Warrants and Additional Investment Rights, and (b) any Common Stock (including Underlying Shares) issued or issuable pursuant to the Transaction Documents, Amendment No. 1 and this Amendment, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

3.3.

The Company will use commercially reasonable efforts to prepare and file the

Registration Statement to cover all shares of Common Stock issuable under this Amendment, Amendment No. 1 and the Transaction Documents, including the Registrable Securities.

3.4.

The Filing Date with respect to the initial Registration Statement shall be April 30, 2007 and the Required Effectiveness Date with respect to the initial Registration Statement shall be the earlier of (i) July 31, 2007 and (ii) the fifth Trading Day following the date on which the Company is notified by the Commission that the initial Registration Statement will not be reviewed or is no longer subject to further review and comments. Notwithstanding anything to the contrary herein, a breach of this Section 3.4 shall subject the Company to amounts due under Section 6.1(d) of the Purchase Agreement.

3.5.

In addition to any amounts due under Section 6.1(d) of the Purchase Agreement, if the Company fails to file the Registration Statement by April 30, 2007, then the Company agrees to issue to each Purchaser on May 1, 2007 an additional warrant in the form of Exhibit B hereto (the "Additional Warrant B" and together with the Additional Warrant A, the "Additional Warrants"), registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire such number of Underlying Shares indicated on Schedule A hereto under the heading "Additional Warrant B Shares".

3.6.

Charter Amendment .

(a)

The Company shall use its best efforts to obtain as soon as possible, but in no event later than June 30, 2007, shareholder approval of the Charter Amendment (the "Charter Amendment App