8-K

                                  UNITED STATES
                       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): March 26, 2004

                                 CYTOMEDIX, INC.
             (Exact name of registrant as it appears in its charter)

         Delaware                     0-28443                 23-3011702
(State or other jurisdiction  (Commission File Number)       (IRS Employer
     of incorporation)                                     Indentification No.)

                        1523 South Bowman Rd., Suite A,
                          Little Rock, Arkansas 72211
             (Address of principal executive offices and zip code)


                                 (501) 219-2111
                        (Registrant's telephone number,
                              including area code)







ITEM 5.  OTHER EVENTS

      On March 26, 2004, Cytomedix, Inc. (the "Company") entered into a Series C
Convertible Preferred Stock Purchase Agreement dated as of March 25, 2004
("Purchase Agreement"), with several accredited investors providing for the sale
and issuance of $2.8 million of Series C Convertible Preferred Stock. The
purchase price of the Series C Convertible Preferred Stock was $10,000 per share
and each share of Series C Convertible Preferred Stock is convertible, subject
to certain adjustments, into 10,000 shares of the Company's common stock. The
Company also issued Series C-1 and Series C-2 Warrants to purchase an aggregate
of approximately 2.8 million shares of common stock at an exercise price of
$1.50. In connection with the Purchase Agreement, the Company entered into a
Registration Rights Agreement dated as of March 25, 2004, whereby the Company
agrees to register the resale of the common stock issuable upon conversion of
the Series C Convertible Preferred Stock and the common stock issuable upon
exercise of the Series C-1 Warrants and the Series C-2 Warrants.

      Burnham Hill Partners, a division of Pali Capital Inc. ("BHP") acted as
the exclusive placement agent in connection with the financing. As compensation
for its services, BHP received cash in the amount of 10% of the gross proceeds
and placement agent warrants to purchase 280,000 shares of the Company's common
stock at an exercise price of $1.00 and a term of five years. With regard to the
Company's future financing and marketing efforts, BHP has agreed to act as a
consultant to the Company for six months. In consideration of this consulting
arrangement, the Company will pay BHP $5,000 per month and issue consulting
warrants to purchase 100,000 shares of the Company's common stock at an exercise
price of $1.00.

      Forms of the Purchase Agreement, the Registration Rights Agreement, Series
C-1 Warrant, the Series C-2 Warrant, and the Certificate of Designation of the
Relative Rights and Preferences of the Series C Convertible Preferred Stock as
filed with the Delaware Secretary of State on March 25, 2004, are attached as
Exhibits to this Current Report on Form 8-K and are incorporated herein by
reference. The Company issued a press release on March 29, 2004, announcing the
transaction referred to above. The press release is also attached as an Exhibit
to this Current Report on Form 8-K and is incorporated herein by reference.



ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

(c) Exhibits. The following Exhibits are filed with this Current Report on Form
8-K:

Exhibit 4.1       Certificate of Designation of the Relative Rights and
                  Preferences of the Series C Convertible Stock of Cytomedix,
                  Inc., as filed with the Delaware Secretary of State on March
                  25, 2004.

Exhibit 4.2       Form of Registration Rights Agreement, dated as of March 25,
                  2004, between Cytomedix, Inc., and the purchasers named
                  therein.

Exhibit 4.3       Form of Series C-1 Warrant to Purchase Shares of Common Stock
                  of Cytomedix, Inc.

Exhibit 4.4       Form of Series C-2 Warrant to Purchase Shares of Common Stock
                  of Cytomedix, Inc.

Exhibit 10.1      Form of Series C Convertible Stock Purchase Agreement, dated
                  as of March 25, 2004, between Cytomedix, Inc., and the
                  purchasers named therein.

Exhibit 99.1      Press Release of Cytomedix, Inc., dated March 29, 2004.



                                   SIGNATURES

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

                                                 CYTOMEDIX, INC.

                                                 By: /s/  Mark E. Cline
                                                   -----------------------
                                                          Mark E. Cline
                                                          President


Date:  March 29, 2004

EX-4.1

        CERTIFICATE OF DESIGNATION OF THE RELATIVE RIGHTS AND PREFERENCES
                                     OF THE
                      SERIES C CONVERTIBLE PREFERRED STOCK
                                       OF
                                 CYTOMEDIX, INC.

      Cytomedix, Inc., a Delaware corporation (the "Company"), in accordance
with Section 151 of the Delaware General Corporation Law, does hereby certify
that, pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the Company, the following resolution
creating a series of Series C Convertible Preferred Stock, was duly adopted on
March 25, 2004:

      RESOLVED, that pursuant to the authority expressly granted to and vested
in the Board of Directors of the Company by provisions of the Restated
Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), there hereby is created out of the shares of Preferred Stock,
par value $.0001 per share, of the Company authorized in Article IV of the
Certificate of Incorporation (the "Preferred Stock"), a series of Preferred
Stock of the Company, to be named "Series C Convertible Preferred Stock,"
consisting of one million (1,000,000) shares, which series shall have the
following designations, powers, preferences and relative and other special
rights and the following qualifications, limitations and restrictions:

      1. Designation and Rank. The designation of such series of the Preferred
Stock shall be the Series C Convertible Preferred Stock, par value $.0001 per
share (the "Series C Preferred Stock"). The maximum number of shares of Series C
Preferred Stock shall be one million (1,000,000) shares. The Series C Preferred
Stock shall rank pari passu with shares of the Company's Series A Convertible
Preferred Stock (the "Series A Preferred Stock") and Series B Convertible
Preferred Stock (the "Series B Preferred Stock") with respect to the payment of
dividends. The Series C Preferred Stock shall rank junior to the Series A
Preferred Stock with respect to distributions upon liquidation, dissolution or
winding up of the affairs of the Company. The Series C Preferred Stock shall
rank pari passu with the Series B Preferred Stock with respect to distributions
upon liquidation, dissolution or winding up of the affairs of the Company;
provided, however, that the Series C Preferred Stock is junior to the Series B
Preferred Stock solely with respect to the priority security interest held by
the Series B Preferred Stock holders in the Company's Intellectual Property. The
Series C Preferred Stock shall rank senior to the common stock, par value $.0001
per share (the "Common Stock"), and to all other classes and series of equity
securities of the Company which by their terms do not rank senior to the Series
C Preferred Stock ("Junior Stock"). The Series C Preferred Stock shall be
subordinate to and rank junior to all indebtedness of the Company now or
hereafter outstanding.

      2. Dividends.

            (a) Payment of Dividends. Subject to Section 5(c)(ii) hereof, the
holders of record of shares of Series C Preferred Stock shall be entitled to
receive, out of any assets at the time legally available therefor and as
declared by the Board of Directors, dividends at the rate of six percent (6%) of
the stated Liquidation Preference Amount (as defined in Section 4 hereof) per
share per annum commencing on the date of issuance (the "Issuance Date") of the



Series C Preferred Stock and increasing to eight percent (8%) of the stated
Liquidation Preference Amount per share per annum commencing on September 25,
2005 (the "Dividend Payment"), and no more, payable annually at the option of
the Company in cash or in shares of Common Stock. If the Company elects to pay
any dividend in shares of Common Stock, the number of shares of Common Stock to
be issued to the holder shall be an amount equal to the quotient of (i) the
Dividend Payment divided by (ii) the Conversion Price (as defined in Section
5(d) hereof). If the Company elects to pay any dividend in Common Stock, the
Company will give the holders of record of shares of the Series C Preferred
Stock ten (10) trading days notice prior to the date of the applicable Dividend
Payment. In the case of shares of Series C Preferred Stock outstanding for less
than a full year, dividends shall be pro rated based on the portion of each year
during which such shares are outstanding. Dividends on the Series C Preferred
Stock shall be cumulative, shall accrue and be payable annually. Dividends on
the Series C Preferred Stock are prior and in preference to any declaration or
payment of any distribution (as defined below) on any outstanding shares of
Junior Stock. Such dividends shall accrue on each share of Series C Preferred
Stock from day to day whether or not earned or declared so that if such
dividends with respect to any previous dividend period at the rate provided for
herein have not been paid on, or declared and set apart for, all shares of
Series C Preferred Stock at the time outstanding, the deficiency shall be fully
paid on, or declared and set apart for, such shares on a pro rata basis with all
other equity securities of the Company ranking on a parity with the Series C
Preferred Stock as to the payment of dividends before any distribution shall be
paid on, or declared and set apart for Junior Stock.

            (b) So long as any shares of Series C Preferred Stock are
outstanding, the Company shall not declare, pay or set apart for payment any
dividend or make any distribution on any Junior Stock (other than dividends or
distributions payable in additional shares of Junior Stock), unless at the time
of such dividend or distribution the Company shall have paid all accrued and
unpaid dividends on the outstanding shares of Series C Preferred Stock.

            (c) In the event of a dissolution, liquidation or winding up of the
Company pursuant to Section 4, all accrued and unpaid dividends on the Series C
Preferred Stock shall be payable on the day immediately preceding the date of
payment of the preferential amount to the holders of Series C Preferred Stock.
In the event of (i) a mandatory redemption pursuant to Section 9 or (ii) a
redemption upon the occurrence of a Major Transaction (as defined in Section
8(c)) or a Triggering Event (as defined in Section 8(d)), all accrued and unpaid
dividends on the Series C Preferred Stock shall be payable on the day
immediately preceding the date of such redemption. In the event of a voluntary
conversion pursuant to Section 5(a), all accrued and unpaid dividends on the
Series C Preferred Stock being converted shall be payable on the day immediately
preceding the Voluntary Conversion Date (as defined in Section 5(b)(i)).

            (d) For purposes hereof, unless the context otherwise requires,
"distribution" shall mean the transfer of cash or property without
consideration, whether by way of dividend or otherwise, payable other than in
shares of Common Stock or other equity securities of the Company, or the
purchase or redemption of shares of the Company (other than redemptions set
forth in Section 8 below or repurchases of Common Stock held by employees or


                                       2


consultants of the Company upon termination of their employment or services
pursuant to agreements providing for such repurchase or upon the cashless
exercise of options held by employees or consultants) for cash or property.

      3. Voting Rights.

            (a) Class Voting Rights. The Series C Preferred Stock shall have the
following class voting rights (in addition to the voting rights set forth in
Section 3(b) hereof). So long as any shares of the Series C Preferred Stock
remain outstanding, the Company shall not, without the affirmative vote or
consent of the holders of at least two-thirds (2/3) of the shares of the Series
C Preferred Stock outstanding at the time, given in person or by proxy, either
in writing or at a meeting, in which the holders of the Series C Preferred Stock
vote separately as a class: (i) amend, alter or repeal the provisions of the
Series C Preferred Stock, whether by merger, consolidation or otherwise, so as
to adversely affect any right, preference, privilege or voting power of the
Series C Preferred Stock; provided, however, that any creation and issuance of
another series of Junior Stock shall not be deemed to adversely affect such
rights, preferences, privileges or voting powers; (ii) repurchase, redeem or pay
dividends on, shares of Common Stock or any other shares of the Company's Junior
Stock (other than de minimus repurchases from employees of the Company in
certain circumstances) if dividends on the Series C Preferred Stock are due and
remain unpaid; (iii) amend the Certificate of Incorporation or By-Laws of the
Company so as to affect materially and adversely any right, preference,
privilege or voting power of the Series C Preferred Stock; provided, however,
that any creation and issuance of another series of Junior Stock shall not be
deemed to adversely affect such rights, preferences, privileges or voting
powers; (iv) effect any distribution with respect to Junior Stock; (v)
reclassify the Company's outstanding securities except for the Series A
Preferred Stock and Series B Preferred Stock, provided, however, in the case of
any reclassification of the Series A Preferred Stock and Series B Preferred
Stock so long as such reclassification does not adversely affect the rights,
preferences, privileges or voting powers of the Series C Preferred Stock; (vi)
voluntarily file for bankruptcy, liquidate the Company's assets or make an
assignment for the benefit of the Company's creditors; (vii) incur any
indebtedness in excess of $500,000 or permit the creation of any lien on the
Company's assets (except for liens incurred in the ordinary course of the
Company's business); or (viii) change the nature of the Company's business.
Notwithstanding the foregoing to the contrary, so long as at least two hundred
(200) shares of Series C Preferred Stock are outstanding, the Company shall not
authorize, create, issue or increase the authorized or issued amount of any
class or series of stock ranking senior to the Series C Preferred Stock (except
for the issuance of shares of Series A Preferred Stock or Series B Preferred
Stock solely with respect to the payment of dividends on such shares of Series A
Preferred Stock or Series B Preferred Stock), with respect to the distribution
of assets on liquidation, dissolution or winding up without the affirmative vote
or consent of the holders of at least two-thirds (2/3) of the shares of the
Series C Preferred Stock outstanding at the time.

            (b) General Voting Rights. Except with respect to transactions upon
which the Series C Preferred Stock shall be entitled to vote separately as a
class pursuant to Section 3(a) above and except as otherwise required by
Delaware law, the Series C Preferred Stock shall have no voting rights. The
Common Stock into which the Series C Preferred Stock is convertible shall, upon
issuance, have all of the same voting rights as other issued and outstanding
Common Stock of the Company.




                                       3


      4. Liquidation Preference.

            (a) In the event of the liquidation, dissolution or winding up of
the affairs of the Company, whether voluntary or involuntary, the holders of
shares of the Series C Preferred Stock then outstanding shall be entitled to
receive, out of the assets of the Company available for distribution to its
stockholders, an amount equal to $10,000 per share (the "Liquidation Preference
Amount") of the Series C Preferred Stock plus any accrued and unpaid dividends
before any payment shall be made or any assets distributed to the holders of the
Common Stock or any other Junior Stock. If the assets of the Company are not
sufficient to pay in full the Liquidation Preference Amount plus any accrued and
unpaid dividends payable to the holders of outstanding shares of the Series C
Preferred Stock and any series of preferred stock or any other class of stock on
a parity, as to rights on liquidation, dissolution or winding up, with the
Series C Preferred Stock, then all of said assets will be distributed among the
holders of the Series C Preferred Stock and the other classes of stock on a
parity with the Series C Preferred Stock, if any, ratably in accordance with the
respective amounts that would be payable on such shares if all amounts payable
thereon were paid in full. This provision in no way affects the priority
security interest in the Company's Intellectual Property held by the holders of
the Company's Series A and Series B Preferred Stock. The liquidation payment
with respect to each outstanding fractional share of Series C Preferred Stock
shall be equal to a ratably proportionate amount of the liquidation payment with
respect to each outstanding share of Series C Preferred Stock. All payments for
which this Section 4(a) provides shall be in cash, property (valued at its fair
market value as determined by an independent appraiser reasonably acceptable to
the holders of a majority of the Series C Preferred Stock) or a combination
thereof; provided, however, that no cash shall be paid to holders of Junior
Stock unless each holder of the outstanding shares of Series C Preferred Stock
has been paid in cash the full Liquidation Preference Amount plus any accrued
and unpaid dividends to which such holder is entitled as provided herein. After
payment of the full Liquidation Preference Amount plus any accrued and unpaid
dividends to which each holder is entitled, such holders of shares of Series C
Preferred Stock will not be entitled to any further participation as such in any
distribution of the assets of the Company.

            (b) A consolidation or merger of the Company with or into any other
corporation or corporations, or a sale of all or substantially all of the assets
of the Company, or the effectuation by the Company of a transaction or series of
related transactions in which more than 50% of the voting shares of the Company
is disposed of or conveyed, shall not be deemed to be a liquidation,
dissolution, or winding up within the meaning of this Section 4. In the event of
the merger or consolidation of the Company with or into another corporation, the
Series C Preferred Stock shall maintain its relative powers, designations and
preferences provided for herein and no merger shall result inconsistent
therewith.

            (c) Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Company, stating a payment date
and the place where the distributable amounts shall be payable, shall be given
by mail, postage prepaid, no less than forty-five (45) days prior to the payment
date stated therein, to the holders of record of the Series C Preferred Stock at
their respective addresses as the same shall appear on the books of the Company.



                                       4


      5. Conversion. The holder of Series C Preferred Stock shall have the
following conversion rights (the "Conversion Rights"):

            (a) Right to Convert. At any time on or after the Issuance Date, the
holder of any such shares of Series C Preferred Stock may, at such holder's
option, subject to the limitations set forth in Section 7 herein, elect to
convert (a "Voluntary Conversion") all or any portion of the shares of Series C
Preferred Stock held by such person into a number of fully paid and
nonassessable shares of Common Stock equal to the quotient of (i) the
Liquidation Preference Amount of the shares of Series C Preferred Stock being
converted divided by (ii) the Conversion Price (as defined in Section 5(d)
below) then in effect as of the date of the delivery by such holder of its
notice of election to convert. In the event of a notice of redemption of any
shares of Series C Preferred Stock pursuant to Section 8 hereof, the Conversion
Rights of the shares designated for redemption shall terminate at the close of
business on the last full day preceding the date fixed for redemption, unless
the redemption price is not paid on such redemption date, in which case the
Conversion Rights for such shares shall continue until such price is paid in
full. In the event of a liquidation, dissolution or winding up of the Company,
the Conversion Rights shall terminate at the close of business on the last full
day preceding the date fixed for the payment of any such amounts distributable
on such event to the holders of Series C Preferred Stock. In the event of such a
redemption or liquidation, dissolution or winding up, the Company shall provide
to each holder of shares of Series C Preferred Stock notice of such redemption
or liquidation, dissolution or winding up, which notice shall (i) be sent at
least fifteen (15) days prior to the termination of the Conversion Rights and
(ii) state the amount per share of Series C Preferred Stock that will be paid or
distributed on such redemption or liquidation, dissolution or winding up, as the
case may be.

            (b) Mechanics of Voluntary Conversion. The Voluntary Conversion of
Series C Preferred Stock shall be conducted in the following manner:

                  (i) Holder's Delivery Requirements. To convert Series C
Preferred Stock into full shares of Common Stock on any date (the "Voluntary
Conversion Date"), the holder thereof shall (A) transmit by facsimile (or
otherwise deliver), for receipt on or prior to 5:00 p.m., New York time on such
date, a copy of a fully executed notice of conversion in the form attached
hereto as Exhibit I (the "Conversion Notice"), to the Company, and (B) surrender
to a common carrier for delivery to the Company as soon as practicable following
such Voluntary Conversion Date but in no event later than three (3) business
days after such date the original certificates representing the shares of Series
C Preferred Stock being converted (or an indemnification undertaking with
respect to such shares in the case of their loss, theft or destruction) (the
"Preferred Stock Certificates") and the originally executed Conversion Notice.

                  (ii) Company's Response. Upon receipt by the Company of a
facsimile copy of a Conversion Notice, the Company shall immediately send, via
facsimile, a confirmation of receipt of such Conversion Notice to such holder.
Upon receipt by the Company of a copy of the fully executed Conversion Notice,
the Company or its designated transfer agent (the "Transfer Agent"), as
applicable, shall, within three (3) business days following the date of receipt
by the Company of the fully executed Conversion Notice (so long as the


                                       5


applicable Preferred Stock Certificates and original Conversion Notice are
received by the Company on or before such third business day), issue and deliver
to the holder, its designee or the Depository Trust Company ("DTC") account on
the holder's behalf via the Deposit Withdrawal Agent Commission System ("DWAC")
(provided that the Company's Transfer Agent is participating in the DTC Fast
Automated Securities Transfer program) as specified in the Conversion Notice,
registered in the name of the holder or its designee, for the number of shares
of Common Stock to which the holder shall be entitled. If the number of shares
of Preferred Stock represented by the Preferred Stock Certificate(s) submitted
for conversion is greater than the number of shares of Series C Preferred Stock
being converted, then the Company shall, as soon as practicable and in no event
later than three (3) business days after receipt of the Preferred Stock
Certificate(s) and at the Company's expense, issue and deliver to the holder a
new Preferred Stock Certificate representing the number of shares of Series C
Preferred Stock not converted.

                  (iii) Dispute Resolution. In the case of a dispute as to the
arithmetic calculation of the number of shares of Common Stock to be issued upon
conversion, the Company shall cause its Transfer Agent to promptly issue to the
holder the number of shares of Common Stock that is not disputed and shall
submit the arithmetic calculations to the holder via facsimile as soon as
possible, but in no event later than two (2) business days after receipt of such
holder's Conversion Notice. If such holder and the Company are unable to agree
upon the arithmetic calculation of the number of shares of Common Stock to be
issued upon such conversion within one (1) business day of such disputed
arithmetic calculation being submitted to the holder, then the Company shall
within one (1) business day submit via facsimile the disputed arithmetic
calculation of the number of shares of Common Stock to be issued upon such
conversion to the Company's independent, outside accountant. The Company shall
use its best efforts to cause the accountant to perform the calculations and
notify the Company and the holder of the results no later than five (5) business
days from the time it receives the disputed calculation. Such accountant's
calculation shall be binding upon all parties absent manifest error. The
reasonable expenses of such accountant in making such determination shall be
paid by the Company, in the event the holder's calculation was correct, or by
the holder, in the event the Company's calculation was correct, or equally by
the Company and the holder in the event that neither the Company's or the
holder's calculation was correct. The period of time in which the Company is
required to effect conversions or redemptions under this Certificate of
Designation shall be tolled with respect to the subject conversion or redemption
pending resolution of any dispute by the Company made in good faith and in
accordance with this Section 5(b)(iii).

                  (iv) Record Holder. The person or persons entitled to receive
the shares of Common Stock issuable upon a conversion of the Series C Preferred
Stock shall be treated for all purposes as the record holder or holders of such
shares of Common Stock on the Conversion Date.

                  (v) Company's Failure to Timely Convert. If within three (3)
business days of the Company's receipt of an executed copy of the Conversion
Notice (so long as the applicable Preferred Stock Certificates and original
Conversion Notice are received by the Company on or before such third business
day) (the "Share Delivery Period"), the Transfer Agent shall fail to issue and
deliver to a holder the number of shares of Common Stock to which such holder is
entitled upon such holder's conversion of the Series C Preferred Stock or to
issue a new Preferred Stock Certificate representing the number of shares of


                                       6


Series C Preferred Stock to which such holder is entitled pursuant to Section
5(b)(ii) (a "Conversion Failure"), in addition to all other available remedies
which such holder may pursue hereunder and under the Series C Convertible
Preferred Stock Purchase Agreement (the "Purchase Agreement") among the Company
and the initial holders of the Series C Preferred Stock (including
indemnification pursuant to Section 6 thereof), the Company shall pay additional
damages to such holder on each business day after such third (3rd) business day
that such conversion is not timely effected in an amount equal 0.5% of the
product of (A) the sum of the number of shares of Common Stock not issued to the
holder on a timely basis pursuant to Section 5(b)(ii) and to which such holder
is entitled and, in the event the Company has failed to deliver a Preferred
Stock Certificate to the holder on a timely basis pursuant to Section 5(b)(ii),
the number of shares of Common Stock issuable upon conversion of the shares of
Series C Preferred Stock represented by such Preferred Stock Certificate, as of
the last possible date which the Company could have issued such Preferred Stock
Certificate to such holder without violating Section 5(b)(ii) and (B) the
Closing Bid Price (as defined in Section 5(c)(iii) below) of the Common Stock on
the last possible date which the Company could have issued such Common Stock and
such Preferred Stock Certificate, as the case may be, to such holder without
violating Section 5(b)(ii). If the Company fails to pay the additional damages
set forth in this Section 5(b)(v) within five (5) business days of the date
incurred, then such payment shall bear interest at the rate of 2.0% per month
(pro rated for partial months) until such payments are made.

            (c) Mandatory Conversion.

                  (i) The number of outstanding shares of Series C Preferred
Stock referred to below in Section 5(c)(ii) on the applicable Mandatory
Conversion Date shall, automatically and without any action on the part of the
holder thereof, convert into a number of fully paid and nonassessable shares of
Common Stock equal to the quotient of (i) the Liquidation Preference Amount of
the number of shares of Series C Preferred Stock being converted on such
Mandatory Conversion Date divided by (ii) the Conversion Price in effect on such
Mandatory Conversion Date.

                  (ii) As used herein, "Mandatory Conversion Date" shall mean
(A) subject to the provisions of Section 7(b) hereof and with respect to only
fifty percent (50%) of the number of shares of Series C Preferred Stock
outstanding on such Mandatory Conversion Date, the date which is two (2)
business days following the effective date (the "Effectiveness Date") of the
registration statement providing for the resale of the shares of Common Stock
issuable upon conversion of the Series C Preferred Stock (the "Registration
Statement"), and (B) commencing one year following the Effectiveness Date, with
respect to all outstanding shares of Series C Preferred Stock outstanding on
such Mandatory Conversion Date, the date that the Closing Bid Price (as defined
below) of the Common Stock is equal to or exceeds $3.00 for a period of ten (10)
consecutive trading days; provided, that, (1) on each Mandatory Conversion Date,
the Registration Statement is effective, and (2) with respect to the Mandatory
Conversion Date referred to in subclause (B) above, has been effective, without
lapse or suspension of any kind, for a period 60 consecutive calendar days.


                                       7


Notwithstanding the foregoing, each Mandatory Conversion Date shall be extended
for as long as (i) a Triggering Event (as defined in Section 8(d) hereof) shall
have occurred and be continuing, or (ii) any event shall have occurred and be
continuing which with the passage of time and the failure to cure would result
in a Triggering Event. Each Mandatory Conversion Date and the Voluntary
Conversion Date collectively are referred to in this Certificate of Designation
as the "Conversion Date."

                  (iii) The term "Closing Bid Price" shall mean, for any
security as of any date, the last closing bid price of such security on any
stock exchange or market on which the security is then listed or admitted for
trading or quotation, as applicable, the OTC Bulletin Board for such security as
reported by Bloomberg, or, if no closing bid price is reported for such security
by Bloomberg, the last closing trade price of such security as reported by
Bloomberg, or, if no last closing trade price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such security
as reported in the "pink sheets" by the National Quotation Bureau, Inc. If the
Closing Bid Price cannot be calculated for such security on such date on any of
the foregoing bases, the Closing Bid Price of such security on such date shall
be the fair market value as mutually determined by the Company and the holders
of a majority of the outstanding shares of Series C Preferred Stock.

                  (iv) On each Mandatory Conversion Date, the applicable number
of outstanding shares of Series C Preferred Stock shall be converted
automatically on a pro rata basis as to each holder of the Series C Preferred
Stock without any further action by the holders of such shares and whether or
not the certificates representing such shares are surrendered to the Company or
its Transfer Agent; provided, however, that the Company shall not be obligated
to issue the shares of Common Stock issuable upon conversion of any shares of
Series C Preferred Stock unless certificates evidencing such shares of Series C
Preferred Stock are either delivered to the Company or the holder notifies the
Company that such certificates have been lost, stolen, or destroyed, and
executes an agreement satisfactory to the Company to indemnify the Company from
any loss incurred by it in connection therewith. Upon the occurrence of any
automatic conversion of the Series C Preferred Stock pursuant to this Section 5,
the holders of the Series C Preferred Stock shall surrender the certificates
representing the Series C Preferred Stock for which such Mandatory Conversion
Date has occurred to the Company and the Company shall cause its Transfer Agent
to deliver the shares of Common Stock issuable upon such conversion (in the same
manner set forth in Section 5(b)(ii)) to the holder within three (3) business
days of the holder's delivery of the applicable Preferred Stock Certificates.


            (d) Conversion Price.

                  (i) The term "Conversion Price" shall mean $1.00 per share,
subject to adjustment under Section 5(e) hereof. Notwithstanding any adjustment
hereunder, at no time shall the Conversion Price be greater than $1.00 per
share; provided, however that the Conversion Price may be greater than $1.00 per
share if it is adjusted pursuant to Section 5(e)(i).

                  (ii) Notwithstanding the foregoing to the contrary, if during
any period (a "Black-out Period"), a holder of Series C Preferred Stock is
unable to trade any Common Stock issued or issuable upon conversion of the
Series C Preferred Stock immediately due to the postponement of filing or delay
or suspension of effectiveness of the Registration Statement or because the
Company has otherwise informed such holder of Series C Preferred Stock that an
existing prospectus cannot be used at that time in the sale or transfer of such


                                       8


Common Stock (provided that such postponement, delay, suspension or fact that
the prospectus cannot be used is not due to factors solely within the control of
the holder of Series C Preferred Stock or due to the Company exercising its
rights under Section 3(n) of the Registration Rights Agreement (as defined in
the Purchase Agreement)), such holder of Series C Preferred Stock shall have the
option but not the obligation on any Conversion Date within ten (10) trading
days following the expiration of the Black-out Period of using the Conversion
Price applicable on such Conversion Date or any Conversion Price selected by
such holder of Series C Preferred Stock that would have been applicable had such
Conversion Date been at any earlier time during the Black-out Period or within
the ten (10) trading days thereafter.

            (e) Adjustments of Conversion Price.

                  (i) Adjustments for Stock Splits and Combinations. If the
Company shall at any time or from time to time after the Issuance Date, effect a
stock split of the outstanding Common Stock, the Conversion Price shall be
proportionately decreased. If the Company shall at any time or from time to time
after the Issuance Date, combine the outstanding shares of Common Stock, the
Conversion Price shall be proportionately increased. Any adjustments under this
Section 5(e)(i) shall be effective at the close of business on the date the
stock split or combination becomes effective.

                  (ii) Adjustments for Certain Dividends and Distributions. If
the Company shall at any time or from time to time after the Issuance Date, make
or issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in shares of Common
Stock, then, and in each event, the Conversion Price shall be decreased as of
the time of such issuance or, in the event such record date shall have been
fixed, as of the close of business on such record date, by multiplying the
Conversion Price then in effect by a fraction:

                        (1) the numerator of which shall be the total number of
shares of Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date; and

                        (2) the denominator of which shall be the total number
of shares of Common Stock issued and outstanding immediately prior to the time
of such issuance or the close of business on such record date plus the number of
shares of Common Stock issuable in payment of such dividend or distribution.

                  (iii) Adjustment for Other Dividends and Distributions. If the
Company shall at any time or from time to time after the Issuance Date, make or
issue or set a record date for the determination of holders of Common Stock
entitled to receive a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then, and in each event, an
appropriate revision to the applicable Conversion Price shall be made and
provision shall be made (by adjustments of the Conversion Price or otherwise) so
that the holders of Series C Preferred Stock shall receive upon conversions
thereof, in addition to the number of shares of Common Stock receivable thereon,
the number of securities of the Company which they would have received had their
Series C Preferred Stock been converted into Common Stock on the date of such


                                       9


event and had thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together with any
distributions payable thereon during such period), giving application to all
adjustments called for during such period under this Section 5(e)(iii) with
respect to the rights of the holders of the Series C Preferred Stock; provided,
however, that if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed therefor,
the Conversion Price shall be adjusted pursuant to this paragraph as of the time
of actual payment of such dividends or distributions; and provided further,
however, that no such adjustment shall be made if the holders of Series C
Preferred Stock simultaneously receive (i) a dividend or other distribution of
shares of Common Stock in a number equal to the number of shares of Common Stock
as they would have received if all outstanding shares of Series C Preferred
Stock had been converted into Common Stock on the date of such event or (ii) a
dividend or other distribution of shares of Series C Preferred Stock which are
convertible, as of the date of such event, into such number of shares of Common
Stock as is equal to the number of additional shares of Common Stock being
issued with respect to each share of Common Stock in such dividend or
distribution.

                  (iv) Adjustments for Reclassification, Exchange or
Substitution. If the Common Stock issuable upon conversion of the Series C
Preferred Stock at any time or from time to time after the Issuance Date shall
be changed to the same or different number of shares of any class or classes of
stock, whether by reclassification, exchange, substitution or otherwise (other
than by way of a stock split or combination of shares or stock dividends
provided for in Sections 5(e)(i), (ii) and (iii), or a reorganization, merger,
consolidation, or sale of assets provided for in Section 5(e)(v)), then, and in
each event, an appropriate revision to the Conversion Price shall be made and
provisions shall be made (by adjustments of the Conversion Price or otherwise)
so that the holder of each share of Series C Preferred Stock shall have the
right thereafter to convert such share of Series C Preferred Stock into the kind
and amount of shares of stock and other securities receivable upon
reclassification, exchange, substitution or other change, by holders of the
number of shares of Common Stock into which such share of Series C Preferred
Stock might have been converted immediately prior to such reclassification,
exchange, substitution or other change, all subject to further adjustment as
provided herein.

                  (v) Adjustments for Reorganization, Merger, Consolidation or
Sales of Assets. If at any time or from time to time after the Issuance Date
there shall be a capital reorganization of the Company (other than by way of a
stock split or combination of shares or stock dividends or distributions
provided for in Section 5(e)(i), (ii) and (iii), or a reclassification, exchange
or substitution of shares provided for in Section 5(e)(iv)), or a merger or
consolidation of the Company with or into another corporation where the holders
of outstanding voting securities prior to such merger or consolidation do not
own over 50% of the outstanding voting securities of the merged or consolidated
entity, immediately after such merger or consolidation, or the sale of all or
substantially all of the Company's properties or assets to any other person (an
"Organic Change"), then as a part of such Organic Change an appropriate revision
to the Conversion Price shall be made if necessary and provision shall be made
if necessary (by adjustments of the Conversion Price or otherwise) so that the
holder of each share of Series C Preferred Stock shall have the right thereafter
to convert such share of Series C Preferred Stock into the kind and amount of


                                       10


shares of stock and other securities or property of the Company or any successor
corporation resulting from Organic Change. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section
5(e)(v) with respect to the rights of the holders of the Series C Preferred
Stock after the Organic Change to the end that the provisions of this Section
5(e)(v) (including any adjustment in the Conversion Price then in effect and the
number of shares of stock or other securities deliverable upon conversion of the
Series C Preferred Stock) shall be applied after that event in as nearly an
equivalent manner as may be practicable.

                  (vi) Adjustments for Issuance of Additional Shares of Common
Stock.

                  (A) In the event the Company, shall, at any time, from time to
time, issue or sell any additional shares of Common Stock (otherwise than as
provided in the foregoing subsections (i) through (v) of this Section 5(e) or
pursuant to Common Stock Equivalents (hereafter defined) granted or issued prior
to the Issuance Date) (the "Additional Shares of Common Stock"), at a price per
share less than the Conversion Price, or without consideration, the Conversion
Price then in effect upon each such issuance shall be adjusted to that price
(rounded to the nearest cent) determined by multiplying the Conversion Price by
a fraction:

                  (1) the numerator of which shall be equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to the
issuance of such Additional Shares of Common Stock plus (B) the number of shares
of Common Stock (rounded to the nearest whole share) which the aggregate
consideration for the total number of such Additional Shares of Common Stock so
issued would purchase at a price per share equal to the then Conversion Price,
and

                  (2) the denominator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of such
Additional Shares of Common Stock.

No adjustment of the number of shares of Common Stock shall be made under
paragraph (A) of Section 5(e)(vi) upon the issuance of any Additional Shares of
Common Stock which are issued pursuant to the exercise of any warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Common Stock Equivalents (as defined below), if any such
adjustment shall previously have been made upon the issuance of such warrants or
other rights or upon the issuance of such Common Stock Equivalents (or upon the
issuance of any warrant or other rights therefore) pursuant to Section
5(e)(vii).

                  (vii) Issuance of Common Stock Equivalents. If the Company, at
any time after the Issuance Date, shall issue any securities convertible into or
exchangeable for, directly or indirectly, Common Stock ("Convertible
Securities"), other than the Series C Preferred Stock, or any rights or warrants
or options to purchase any such Common Stock or Convertible Securities, shall be
issued or sold (collectively, the "Common Stock Equivalents") and the aggregate
of the price per share for which Additional Shares of Common Stock may be
issuable thereafter pursuant to such Common Stock Equivalent, plus the
consideration received by the Company for issuance of such Common Stock
Equivalent divided by the number of shares of Common Stock issuable pursuant to


                                       11


such Common Stock Equivalent (the "Aggregate Per Common Share Price") shall be
less than the Conversion Price, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so amended or
adjusted shall make the Aggregate Per Common Share Price be less than Conversion
Price in effect at the time of such amendment or adjustment, then the Conversion
Price then in effect shall be adjusted pursuant to Section (5)(e)(vi) above
assuming that all Additional Shares of Common Stock have been issued pursuant to
the Convertible Securities or Common Stock Equivalents for a purchase price
equal to the Aggregate Per Common Share Price. No adjustment of the Conversion
Price shall be made under this subsection (vii) upon the issuance of any
Convertible Security which is issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefore, if any adjustment shall
previously have been made to the exercise price of such warrants then in effect
upon the issuance of such warrants or other rights pursuant to this subsection
(vii). No adjustment shall be made to the Conversion Price upon the issuance of
Common Stock pursuant to the exercise, conversion or exchange of any Convertible
Security or Common Stock Equivalent where an adjustment to the Conversion Price
was made as a result of the issuance or purchase of any Convertible Security or
Common Stock Equivalent.

                  (viii) Consideration for Stock. In case any shares of Common
Stock or Convertible Securities other than the Series C Preferred Stock, or any
rights or warrants or options to purchase any such Common Stock or Convertible
Securities, shall be issued or sold:

                           (1) in connection with any merger or consolidation in
which the Company is the surviving corporation (other than any consolidation or
merger in which the previously outstanding shares of Common Stock of the Company
shall be changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board of Directors
of the Company, of such portion of the assets and business of the nonsurviving
corporation as such Board may determine to be attributable to such shares of
Common Stock, Convertible Securities, rights or warrants or options, as the case
may be; or

                           (2) in the event of any consolidation or merger of
the Company in which the Company is not the surviving corporation or in which
the previously outstanding shares of Common Stock of the Company shall be
changed into or exchanged for the stock or other securities of another
corporation, or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any corporation, the
Company shall be deemed to have issued a number of shares of its Common Stock
for stock or securities or other property of the other corporation computed on
the basis of the actual exchange ratio on which the transaction was predicated,
and for a consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of the other
corporation. If any such calculation results in adjustment of the applicable
Conversion Price, or the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock, the determination of the applicable
Conversion Price or the number of shares of Common Stock issuable upon
conversion of the Series C Preferred Stock immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such adjustment of
the number of shares of Common Stock issuable upon conversion of the Series C


                                       12


Preferred Stock. In the event any consideration received by the Company for any
securities consists of property other than cash, the fair market value thereof
at the time of issuance or as otherwise applicable shall be as determined in
good faith by the Board of Directors of the Company. In the event Common Stock
is issued with other shares or securities or other assets of the Company for
consideration which covers both, the consideration computed as provided in this
Section (5)(e)(viii) shall be allocated among such securities and assets as
determined in good faith by the Board of Directors of the Company.

                  (ix) Record Date. In case the Company shall take record of the
holders of its Common Stock or any other Preferred Stock for the purpose of
entitling them to subscribe for or purchase Common Stock or Convertible
Securities, then the date of the issue or sale of the shares of Common Stock
shall be deemed to be such record date.

                  (x) Certain Issues Excepted. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any adjustment to the
Conversion Price upon (i) the Company's issuance of any Additional Shares of
Common Stock and warrants therefore in connection with a merger and/or
acquisition, consolidation, sale or disposition of all or substantially all of
the Company's assets, (ii) the Company's issuance of Additional Shares of Common
Stock pursuant to a bona fide firm underwritten public offering of the Company's
securities, (iii) the Company's issuance of Additional Shares of Common Stock or
warrants therefore in connection with strategic license agreements or other
financing transactions so long as such issuances are not for the purpose of
raising capital, (iv) the Company's issuance of Common Stock or the issuance or
grants of Common Stock Equivalents pursuant to the Company's existing
compensation and benefit plans or any other plan, agreement, or arrangement
approved by the Board for the primary purpose of soliciting or retaining the
services of employees, directors or consultants, (v) any issuances of warrants
issued pursuant to the Purchase Agreement, (vi) securities issued pursuant to
the conversion or exercise of convertible or exercisable securities issued or
outstanding on or prior to the date hereof or issued pursuant to the Purchase
Agreement, (vii) any warrants issued to the placement agent for the transactions
contemplated by the Purchase Agreement and any warrants issued to the placement
agent for the transactions contemplated by the Unit Offering (as defined below),
(viii) the payment of any dividends on the Series A Preferred Stock, the Series
B Preferred Stock or the Series C Preferred Stock, (ix) the Company's issuance
of shares of Series C Preferred Stock and warrants to purchase shares of Common
Stock in exchange for the Company's Series A Preferred Stock and Series B
Preferred Stock to be consummated by the Company and any shares of Common Stock
issuable upon conversion or exercise of such securities, and (x) the Company's
issuance of shares of Common Stock in connection with a unit offering of up to
$4,500,000 of Common Stock at a purchase price of $1.00 per share and warrants
to purchase shares of Common Stock at an exercise price of $1.50 per share (the
"Unit Offering') to be consummated within forty-five (45) days of the Issuance
Date and any shares of Common Stock issuable upon exercise of such warrants,
provided, however, that at least $1,500,000 of the purchase price shall be paid
in cash, a maximum of $1,000,000 of the purchase price may be paid with
promissory notes maturing 90 days from the consummation of the Unit Offering, a
maximum of $1,000,000 of the purchase price may be paid with promissory notes


                                       13


maturing 180 days from the consummation of the Unit Offering and a maximum of
$1,000,000 of the purchase price may be paid with promissory notes maturing 270
days from the consummation of the Unit Offering, provided, further, that if the
Company issues shares of Common Stock at a price per share less than $1.00
pursuant to the Unit Offering, the Conversion Price shall automatically be
reduced to the price per share of Common Stock issued by the Company pursuant to
the Unit Offering.

            (f) No Impairment. The Company shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith, assist in the carrying out of all the provisions of this
Section 5 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series C Preferred Stock against impairment. In the event a holder shall elect
to convert any shares of Series C Preferred Stock as provided herein, the
Company cannot refuse conversion based on any claim that such holder or any one
associated or affiliated with such holder has been engaged in any violation of
law, unless, an injunction from a court, on notice, restraining and/or adjoining
conversion of all or of said shares of Series C Preferred Stock shall have been
issued and the Company posts a surety bond for the benefit of such holder in an
amount equal to 130% of the Liquidation Preference Amount of the Series C
Preferred Stock such holder has elected to convert, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such holder in the event it obtains
judgment.

            (g) Certificates as to Adjustments. Upon occurrence of each
adjustment or readjustment of the Conversion Price or number of shares of Common
Stock issuable upon conversion of the Series C Preferred Stock pursuant to this
Section 5, the Company at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
such Series C Preferred Stock a certificate setting forth such adjustment and
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of the holder of
such affected Series C Preferred Stock, at any time, furnish or cause to be
furnished to such holder a like certificate setting forth such adjustments and
readjustments, the Conversion Price in effect at the time, and the number of
shares of Common Stock and the amount, if any, of other securities or property
which at the time would be received upon the conversion of a share of such
Series C Preferred Stock. Notwithstanding the foregoing, the Company shall not
be obligated to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted amount.

            (h) Issue Taxes. The Company shall pay any and all issue and other
taxes, excluding federal, state or local income taxes, that may be payable in
respect of any issue or delivery of shares of Common Stock on conversion of
shares of Series C Preferred Stock pursuant thereto; provided, however, that the
Company shall not be obligated to pay any transfer taxes resulting from any
transfer requested by any holder in connection with any such conversion.

            (i) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by facsimile or
three (3) business days following being mailed by certified or registered mail,
postage prepaid, return-receipt requested, addressed to the holder of record at
its address appearing on the books of the Company. The Company will give written


                                       14


notice to each holder of Series C Preferred Stock at least twenty (20) days
prior to the date on which the Company closes its books or takes a record (I)
with respect to any dividend or distribution upon the Common Stock, (II) with
respect to any pro rata subscription offer to holders of Common Stock or (III)
for determining rights to vote with respect to any Organic Change, dissolution,
liquidation or winding-up and in no event shall such notice be provided to such
holder prior to such information being made known to the public. The Company
will also give written notice to each holder of Series C Preferred Stock at
least twenty (20) days prior to the date on which any Organic Change,
dissolution, liquidation or winding-up will take place and in no event shall
such notice be provided to such holder prior to such information being made
known to the public.

            (j) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series C Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the Company
shall pay cash equal to the product of such fraction multiplied by the average
of the Closing Bid Prices of the Common Stock for the five (5) consecutive
trading immediately preceding the Voluntary Conversion Date or any Mandatory
Conversion Date, as applicable.

            (k) Reservation of Common Stock. The Company shall, so long as any
shares of Series C Preferred Stock are outstanding, reserve and keep available
out of its authorized and unissued Common Stock, solely for the purpose of
effecting the conversion of the Series C Preferred Stock, such number of shares
of Common Stock as shall from time to time be sufficient to effect the
conversion of all of the Series C Preferred Stock then outstanding; provided
that the number of shares of Common Stock so reserved shall at no time be less
than 120% of the number of shares of Common Stock for which the shares of Series
C Preferred Stock are at any time convertible. The initial number of shares of
Common Stock reserved for conversions of the Series C Preferred Stock and each
increase in the number of shares so reserved shall be allocated pro rata among
the holders of the Series C Preferred Stock based on the number of shares of
Series C Preferred Stock held by each holder of record at the time of issuance
of the Series C Preferred Stock or increase in the number of reserved shares, as
the case may be. In the event a holder shall sell or otherwise transfer any of
such holder's shares of Series C Preferred Stock, each transferee shall be
allocated a pro rata portion of the number of reserved shares of Common Stock
reserved for such transferor. Any shares of Common Stock reserved and which
remain allocated to any person or entity which does not hold any shares of
Series C Preferred Stock shall be allocated to the remaining holders of Series C
Preferred Stock, pro rata based on the number of shares of Series C Preferred
Stock then held by such holder.

            (l) Retirement of Series C Preferred Stock. Conversion of Series C
Preferred Stock shall be deemed to have been effected on the applicable
Voluntary Conversion Date or applicable Mandatory Conversion Date, and such date
is referred to herein as the "Conversion Date". Upon conversion of only a
portion of the number of shares of Series C Preferred Stock represented by a
certificate surrendered for conversion, the Company shall issue and deliver to
such holder at the expense of the Company, a new certificate covering the number
of shares of Series C Preferred Stock representing the unconverted portion of
the certificate so surrendered as required by Section 5(b)(ii).



                                       15


            (m) Regulatory Compliance. If any shares of Common Stock to be
reserved for the purpose of conversion of Series C Preferred Stock require
registration or listing with or approval of any governmental authority, stock
exchange or other regulatory body under any federal or state law or regulation
or otherwise before such shares may be validly issued or delivered upon
conversion, the Company shall, at its sole cost and expense, in good faith and
as expeditiously as possible, endeavor to secure such registration, listing or
approval, as the case may be.

      6. No Preemptive Rights. Except as provided in Section 5 hereof and in the
Purchase Agreement, no holder of the Series C Preferred Stock shall be entitled
to rights to subscribe for, purchase or receive any part of any new or
additional shares of any class, whether now or hereinafter authorized, or of
bonds or debentures, or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or additional shares of
any class, or any bond, debentures or other evidences of indebtedness
convertible into or exchangeable for shares, may be issued and disposed of by
the Board of Directors on such terms and for such consideration (to the extent
permitted by law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.

      7. Conversion Restriction. Notwithstanding anything to the contrary set
forth in Section 5 of this Certificate of Designation, at no time may a holder
of shares of Series C Preferred Stock convert shares of the Series C Preferred
Stock if the number of shares of Common Stock to be issued pursuant to such
conversion would exceed, when aggregated with all other shares of Common Stock
owned by such holder at such time, would result in such holder beneficially
owning (as determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended, and the rules thereunder) in excess of 9.999%
of the then issued and outstanding shares of Common Stock outstanding at such
time.

      8. Redemption.

            (a) Redemption Option Upon Major Transaction. In addition to all
other rights of the holders of Series C Preferred Stock contained herein,
simultaneous with the occurrence of a Major Transaction (as defined below), each
holder of Series C Preferred Stock shall have the right, at such holder's
option, to require the Company to redeem all or a portion of such holder's
shares of Series C Preferred Stock at a price per share of Series C Preferred
Stock equal to 125% of the Liquidation Preference Amount, plus any accrued but
unpaid dividends and liquidated damages (the "Major Transaction Redemption
Price"); provided that the Company shall have the sole option to pay the Major
Transaction Redemption Price in cash or shares of Common Stock. If the Company
elects to pay the Major Transaction Redemption Price in shares of Common Stock,
the price per share shall be based upon the Conversion Price then in effect on
the day preceding the date of delivery of the Notice of Redemption at Option of
Buyer Upon Major Transaction (as hereafter defined) and the holder of such
shares of Common Stock shall have demand registration rights with respect to
such shares.

            (b) Redemption Option Upon Triggering Event. In addition to all
other rights of the holders of Series C Preferred Stock contained herein, after
a Triggering Event (as defined below), each holder of Series C Preferred Stock
shall have the right, at such holder's option, to require the Company to redeem
all or a portion of such holder's shares of Series C Preferred Stock at a price


                                       16


per share of Series C Preferred Stock equal to 125% of the Liquidation
Preference Amount, plus any accrued but unpaid dividends and liquidated damages
the "Triggering Event Redemption Price" and, collectively with the "Major
Transaction Redemption Price," the "Redemption Price"); provided that with
respect to the Triggering Events described in clauses (i), (ii), (iii) and (v)
of Section 8(d), the Company shall have the sole option to pay the Triggering
Event Redemption Price in cash or shares of Common Stock; and provided, further,
that with respect to the Triggering Event described in clause (iv) of Section
8(d), the Company shall pay the Triggering Event Redemption Price in cash. If
the Company elects to pay the Triggering Event Redemption Price in shares of
Common Stock in accordance with this Section 8(b), the price per share shall be
based upon the Conversion Price then in effect on the day preceding the date of
delivery of the Notice of Redemption at Option of Buyer Upon Triggering Event
and the holder of such shares of Common Stock shall have demand registration
rights with respect to such shares.

            (c) "Major Transaction". A "Major Transaction" shall be deemed to
have occurred at such time as any of the following events:

                  (i) the consolidation, merger or other business combination of
the Company with or into another Person (other than (A) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company or (B) a consolidation, merger or other business
combination in which holders of the Company's voting power immediately prior to
the transaction continue after the transaction to hold, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities).

                  (ii) the sale or transfer of more than 50% of the Company's
assets other than inventory in the ordinary course of business in one or a
related series of transactions; or

                  (iii) closing of a purchase, tender or exchange offer
resulting in the transfer of more than 50% of the outstanding shares of Common
Stock.

            (d) "Triggering Event". A "Triggering Event" shall be deemed to have
occurred at such time as any of the following events:

                  (i) so long as any shares of Series C Preferred Stock are
outstanding, the effectiveness of the Registration Statement, after it becomes
effective, (i) lapses for any reason (including, without limitation, the
issuance of a stop order) or (ii) is unavailable to the holder of the Series C
Preferred Stock for sale of the shares of Common Stock, and such lapse or
unavailability continues for a period of twenty (20) consecutive trading days,
and the shares of Common Stock into which such holder's Series C Preferred Stock


                                       17


can be converted cannot be sold in the public securities market pursuant to Rule
144(k) ("Rule 144(k)") under the Securities Act of 1933, as amended, provided
that the cause of such lapse or unavailability is not due to factors solely
within the control of such holder of Series C Preferred Stock.

                  (ii) the suspension from listing, without subsequent listing
on any one of, or the failure of the Common Stock to be listed on at least one
of the OTC Bulletin Board, the Nasdaq National Market, the Nasdaq SmallCap
Market, the New York Stock Exchange, Inc. or the American Stock Exchange, Inc.,
for a period of five (5) consecutive trading days;

                  (iii) the Company's notice to any holder of Series C Preferred
Stock, including by way of public announcement, at any time, of its inability to
comply (including for any of the reasons described in Section 9) or its
intention not to comply with proper requests for conversion of any Series C
Preferred Stock into shares of Common Stock; or

                  (iv) the Company's failure to comply with a Conversion Notice
tendered in accordance with the provisions of this Certificate of Designation
within ten (10) business days after the receipt by the Company of the Conversion
Notice and the Preferred Stock Certificates; or

                  (v) the Company breaches any representation, warranty,
covenant or other term or condition of the Purchase Agreement which survives the
Closing (as defined in the Purchase Agreement) thereunder, this Certificate of
Designation or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated thereby or hereby,
except to the extent that such breach would not have a Material Adverse Effect
(as defined in the Purchase Agreement) and except, in the case of a breach of a
covenant which is curable, only if such breach continues for a period of a least
ten (10) days.

            (e) Mechanics of Redemption at Option of Buyer Upon Major
Transaction. No sooner than fifteen (15) days nor later than ten (10) days prior
to the consummation of a Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver written notice
thereof via facsimile and overnight courier ("Notice of Major Transaction") to
each holder of Series C Preferred Stock. At any time after receipt of a Notice
of Major Transaction (or, in the event a Notice of Major Transaction is not
delivered at least ten (10) days prior to a Major Transaction, at any time
within ten (10) days prior to a Major Transaction), any holder of Series C
Preferred Stock then outstanding may require the Company to redeem, effective
immediately prior to the consummation of such Major Transaction, all of the
holder's Series C Preferred Stock then outstanding by delivering written notice
thereof via facsimile and overnight courier ("Notice of Redemption at Option of
Buyer Upon Major Transaction") to the Company, which Notice of Redemption at
Option of Buyer Upon Major Transaction shall indicate (i) the number of shares
of Series C Preferred Stock that such holder is electing to redeem and (ii) the
applicable Major Transaction Redemption Price, as calculated pursuant to Section
8(a) above.

            (f) Mechanics of Redemption at Option of Buyer Upon Triggering
Event. Within two (2) business days after the occurrence of a Triggering Event,
the Company shall deliver written notice thereof via facsimile and overnight
courier ("Notice of Triggering Event") to each holder of Series C Preferred
Stock. At any time after the earlier of a holder's receipt of a Notice of
Triggering Event and such holder becoming aware of a Triggering Event, any


                                       18


holder of Series C Preferred Stock then outstanding may require the Company to
redeem all of the Series C Preferred Stock by delivering written notice thereof
via facsimile and overnight courier ("Notice of Redemption at Option of Buyer
Upon Triggering Event") to the Company, which Notice of Redemption at Option of
Buyer Upon Triggering Event shall indicate (i) the number of shares of Series C
Preferred Stock that such holder is electing to redeem and (ii) the applicable
Triggering Event Redemption Price, as calculated pursuant to Section 8(b) above.

            (g) Payment of Redemption Price. Upon the Company's receipt of a
Notice(s) of Redemption at Option of Buyer Upon Triggering Event or a Notice(s)
of Redemption at Option of Buyer Upon Major Transaction from any holder of
Series C Preferred Stock, the Company shall immediately notify each holder of
Series C Preferred Stock by facsimile of the Company's receipt of such Notice(s)
of Redemption at Option of Buyer Upon Triggering Event or Notice(s) of
Redemption at Option of Buyer Upon Major Transaction and each holder which has
sent such a notice shall promptly submit to the Company such holder's Preferred
Stock Certificates which such holder has elected to have redeemed. Other than
with respect to the Triggering Event described in clause (iv) of Section 8(d),
the Company shall have the sole option to pay the Redemption Price in cash or
shares of Common Stock in accordance with Sections 8(a) and (b) and Section 9 of
this Certificate of Designation. The Company shall deliver the applicable Major
Transaction Redemption Price immediately prior to the consummation of the Major
Transaction; provided that a holder's Preferred Stock Certificates shall have
been so delivered to the Company; provided further that if the Company is unable
to redeem all of the Series C Preferred Stock to be redeemed, the Company shall
redeem an amount from each holder of Series C Preferred Stock being redeemed
equal to such holder's pro-rata amount (based on the number of shares of Series
C Preferred Stock held by such holder relative to the number of shares of Series
C Preferred Stock outstanding) of all Series C Preferred Stock being redeemed.
If the Company shall fail to redeem all of the Series C Preferred Stock
submitted for redemption (other than pursuant to a dispute as to the arithmetic
calculation of the Redemption Price), in addition to any remedy such holder of
Series C Preferred Stock may have under this Certificate of Designation and the
Purchase Agreement, the applicable Redemption Price payable in respect of such
unredeemed Series C Preferred Stock shall bear interest at the rate of 1.0% per
month (prorated for partial months) until paid in full. Until the Company pays
such unpaid applicable Redemption Price in full to a holder of shares of Series
C Preferred Stock submitted for redemption, such holder shall have the option
(the "Void Optional Redemption Option") to, in lieu of redemption, require the
Company to promptly return to such holder(s) all of the shares of Series C
Preferred Stock that were submitted for redemption by such holder(s) under this
Section 8 and for which the applicable Redemption Price has not been paid, by
sending written notice thereof to the Company via facsimile (the "Void Optional
Redemption Notice"). Upon the Company's receipt of such Void Optional Redemption
Notice(s) and prior to payment of the full applicable Redemption Price to such
holder, (i) the Notice(s) of Redemption at Option of Buyer Upon Major
Transaction shall be null and void with respect to those shares of Series C
Preferred Stock submitted for redemption and for which the applicable Redemption
Price has not been paid and (ii) the Company shall immediately return any Series
C Preferred Stock submitted to the Company by each holder for redemption under
this Section 8(d) and for which the applicable Redemption Price has not been


                                       19


paid and (iii) the Conversion Price of such returned shares of Series C
Preferred Stock shall be adjusted to the lesser of (A) the Conversion Price and
(B) the lowest Closing Bid Price during the period beginning on the date on
which the Notice(s) of Redemption of Option of Buyer Upon Major Transaction is
delivered to the Company and ending on the date on which the Void Optional
Redemption Notice(s) is delivered to the Company; provided that no adjustment
shall be made if such adjustment would result in an increase of the Conversion
Price then in effect. A holder's delivery of a Void Optional Redemption Notice
and exercise of its rights following such notice shall not effect the Company's
obligations to make any payments which have accrued prior to the date of such
notice other than interest payments. Payments provided for in this Section 8
shall have priority to payments to other stockholders in connection with a Major
Transaction.

            (h) Demand Registration Rights. If the Redemption Price upon the
occurrence of a Major Transaction or a Triggering Event is paid in shares of
Common Stock and such shares have not been previously registered on a
registration statement under the Securities Act, holders of representing at
least twenty-five percent (25%) of the outstanding shares of Series C Preferred
Stock may make a written request for registration under the Securities Act
pursuant to this Section 8(h) of all of its shares of Common Stock issued upon
such Major Transaction or Triggering Event. The Company shall use its reasonable
best efforts to cause to be filed and declared effective as soon as reasonably
practicable (but in no event later than the ninetieth (90th) day after such
holder's request is made) a registration statement under the Securities Act,
providing for the sale of all of the shares of Common Stock issued upon such
Major Transaction or Triggering Event by such holder. The Company agrees to use
its reasonable best efforts to keep any such registration statement continuously
effective for resale of the Common Stock for so long as such holder shall
request, but in no event later than the date that the shares of Common Stock
issued upon such Major Transaction or Triggering Event may be offered for resale
to the public pursuant to Rule 144(k).

      9. Inability to Fully Convert.

            (a) Holder's Option if Company Cannot Fully Convert. If, upon the
Company's receipt of a Conversion Notice or on a Mandatory Conversion Date, the
Company cannot issue shares of Common Stock for any reason, including, without
limitation, because the Company (w) does not have a sufficient number of shares
of Common Stock authorized and available, (x) is otherwise prohibited by
applicable law or by the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over
the Company or its securities from issuing all of the Common Stock which is to
be issued to a holder of Series C Preferred Stock pursuant to a Conversion
Notice or (y) subsequent to the Effectiveness Date, fails to have a sufficient
number of shares of Common Stock registered for resale under the Registration
Statement, then the Company shall issue as many shares of Common Stock as it is
able to issue in accordance with such holder's Conversion Notice and pursuant to
Section 5(b)(ii) above and, with respect to the unconverted Series C Preferred
Stock, the holder, solely at such holder's option, can elect, within five (5)
business days after receipt of notice from the Company thereof to:

                  (i) require the Company to redeem from such holder those
Series C Preferred Stock for which the Company is unable to issue Common Stock
in accordance with such holder's Conversion Notice ("Mandatory Redemption") at a
price per share equal to the Major Transaction Redemption Price as of such


                                       20


Conversion Date (the "Mandatory Redemption Price"); provided that the Company
shall have the sole option to pay the Mandatory Redemption Price in cash or
shares of Common Stock;

                  (ii) if the Company's inability to fully convert Series C
Preferred Stock is pursuant to Section 9(a)(y) above, require the Company to
issue restricted shares of Common Stock in accordance with such holder's
Conversion Notice and pursuant to Section 5(b)(ii) above;

                  (iii) void its Conversion Notice and retain or have returned,
as the case may be, the shares of Series C Preferred Stock that were to be
converted pursuant to such holder's Conversion Notice (provided that a holder's
voiding its Conversion Notice shall not effect the Company's obligations to make
any payments which have accrued prior to the date of such notice).

            (b) Mechanics of Fulfilling Holder's Election. The Company shall
immediately send via facsimile to a holder of Series C Preferred Stock, upon
receipt of a facsimile copy of a Conversion Notice from such holder which cannot
be fully satisfied as described in Section 9(a) above, a notice of the Company's
inability to fully satisfy such holder's Conversion Notice (the "Inability to
Fully Convert Notice"). Such Inability to Fully Convert Notice shall indicate
(i) the reason why the Company is unable to fully satisfy such holder's
Conversion Notice, (ii) the number of Series C Preferred Stock which cannot be
converted and (iii) the applicable Mandatory Redemption Price. Such holder shall
notify the Company of its election pursuant to Section 9(a) above by delivering
written notice via facsimile to the Company ("Notice in Response to Inability to
Convert").

            (c) Payment of Redemption Price. If such holder shall elect to have
its shares redeemed pursuant to Section 9(a)(i) above, the Company shall pay the
Mandatory Redemption Price to such holder within thirty (30) days of the
Company's receipt of the holder's Notice in Response to Inability to Convert,
provided that prior to the Company's receipt of the holder's Notice in Response
to Inability to Convert the Company has not delivered a notice to such holder
stating, to the satisfaction of the holder, that the event or condition
resulting in the Mandatory Redemption has been cured and all Conversion Shares
issuable to such holder can and will be delivered to the holder in accordance
with the terms of Section 2(g). If the Company shall fail to pay the applicable
Mandatory Redemption Price to such holder on a timely basis as described in this
Section 9(c) (other than pursuant to a dispute as to the determination of the
arithmetic calculation of the Redemption Price), in addition to any remedy such
holder of Series C Preferred Stock may have under this Certificate of
Designation and the Purchase Agreement, such unpaid amount shall bear interest
at the rate of 2.0% per month (prorated for partial months) until paid in full.
Until the full Mandatory Redemption Price is paid in full to such holder, such
holder may (i) void the Mandatory Redemption with respect to those Series C
Preferred Stock for which the full Mandatory Redemption Price has not been paid,
(ii) receive back such Series C Preferred Stock, and (iii) require that the
Conversion Price of such returned Series C Preferred Stock be adjusted to the
lesser of (A) the Conversion Price and (B) the lowest Closing Bid Price during
the period beginning on the Conversion Date and ending on the date the holder
voided the Mandatory Redemption.



                                       21


            (d) Pro-rata Conversion and Redemption. In the event the Company
receives a Conversion Notice from more than one holder of Series C Preferred
Stock on the same day and the Company can convert and redeem some, but not all,
of the Series C Preferred Stock pursuant to this Section 9, the Company shall
convert and redeem from each holder of Series C Preferred Stock electing to have
Series C Preferred Stock converted and redeemed at such time an amount equal to
such holder's pro-rata amount (based on the number shares of Series C Preferred
Stock held by such holder relative to the number shares of Series C Preferred
Stock outstanding) of all shares of Series C Preferred Stock being converted and
redeemed at such time.

      10. Vote to Change the Terms of or Issue Preferred Stock. The affirmative
vote at a meeting duly called for such purpose or the written consent without a
meeting, of the holders of not less than two-thirds (2/3) of the then
outstanding shares of Series C Preferred Stock, shall be required (a) for any
change to this Certificate of Designation or the Company's Certificate of
Incorporation which would amend, alter, change or repeal any of the powers,
designations, preferences and rights of the Series C Preferred Stock or (b) for
the issuance of shares of Series C Preferred Stock other than pursuant to the
Purchase Agreement or in exchange for shares of the Company's Series A Preferred
Stock or Series B Preferred Stock.

      11. Lost or Stolen Certificates. Upon receipt by the Company of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Preferred Stock Certificates representing the shares of Series C Preferred
Stock, and, in the case of loss, theft or destruction, of any indemnification
undertaking by the holder to the Company and, in the case of mutilation, upon
surrender and cancellation of the Preferred Stock Certificate(s), the Company
shall execute and deliver new preferred stock certificate(s) of like tenor and
date; provided, however, the Company shall not be obligated to re-issue
Preferred Stock Certificates if the holder contemporaneously requests the
Company to convert such shares of Series C Preferred Stock into Common Stock.

      12. Remedies, Characterizations, Other Obligations, Breaches and
Injunctive Relief. The remedies provided in this Certificate of Designation
shall be cumulative and in addition to all other remedies available under this
Certificate of Designation, at law or in equity (including a decree of specific
performance and/or other injunctive relief), no remedy contained herein shall be
deemed a waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit a holder's right to pursue actual damages for any
failure by the Company to comply with the terms of this Certificate of
Designation. Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by the holder thereof and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the holders of the Series C Preferred
Stock and that the remedy at law for any such breach may be inadequate. The
Company therefore agrees that, in the event of any such breach or threatened
breach, the holders of the Series C Preferred Stock shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.



                                       22


      13. Specific Shall Not Limit General; Construction. No specific provision
contained in this Certificate of Designation shall limit or modify any more
general provision contained herein. This Certificate of Designation shall be
deemed to be jointly drafted by the Company and all initial purchasers of the
Series C Preferred Stock and shall not be construed against any person as the
drafter hereof.

      14. Failure or Indulgence Not Waiver. No failure or delay on the part of a
holder of Series C Preferred Stock in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.




                                       23



      IN WITNESS WHEREOF, the undersigned has executed and subscribed this
Certificate and does affirm the foregoing as true this 25th day of March, 2004.


                                                 CYTOMEDIX, INC.


                                                 By: Mark E. Cline
                                                     ---------------------
                                                     Name: Mark E. Cline
                                                     Title: President




                                       24


                                                                       EXHIBIT I

                                 CYTOMEDIX, INC.
                                CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series C Preferred Stock of Cytomedix, Inc. (the "Certificate
of Designation"). In accordance with and pursuant to the Certificate of
Designation, the undersigned hereby elects to convert the number of shares of
Series C Preferred Stock, par value $.0001 per share (the "Preferred Shares"),
of Cytomedix, Inc., a Delaware corporation (the "Company"), indicated below into
shares of Common Stock, par value $.0001 per share (the "Common Stock"), of the
Company, by tendering the stock certificate(s) representing the share(s) of
Preferred Shares specified below as of the date specified below.

      Date of Conversion:

      Number of Preferred Shares to be converted:

      Stock certificate no(s). of Preferred Shares to be converted:

      The Common Stock have been sold pursuant to the Registration Statement (as
defined in the Purchase Agreement): YES ____ NO____

Please confirm the following information:

      Conversion Price:

      Number of shares of Common Stock to be issued:

      Number of shares of Common Stock beneficially owned or deemed beneficially
owned by the Holder on the Date of Conversion: _________________________

Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

      Issue to:


      Facsimile Number:

         Authorization:

                                                   By:_________________________
                                                   Title:______________________

         Dated:


                                       25

EX-4.2

                         REGISTRATION RIGHTS AGREEMENT

            This  Registration  Rights Agreement (this  "Agreement") is made and
entered  into as of March 25,  2004,  by and among  Cytomedix,  Inc., a Delaware
corporation (the "Company"), and the purchasers listed on Schedule I hereto (the
"Purchasers").

            This  Agreement  is being  entered  into  pursuant  to the  Series C
Convertible Preferred Stock Purchase Agreement dated as of the date hereof among
the Company and the Purchasers (the "Purchase Agreement").

            The Company and the Purchasers hereby agree as follows:

      1.    Definitions.

            Capitalized  terms used and not otherwise  defined herein shall have
the  meanings  given  such  terms  in the  Purchase  Agreement.  As used in this
Agreement, the following terms shall have the following meanings:

            "Advice" shall have meaning set forth in Section 3(m).

            "Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person.  For the  purposes of this  definition,  "control,"  when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the  direction  of the  management  and policies of such Person,
whether  through the ownership of voting  securities,  by contract or otherwise;
and the terms of  "affiliated,"  "controlling"  and  "controlled"  have meanings
correlative to the foregoing.

            "Board" shall have meaning set forth in Section 3(n).

            "Business  Day"  means any day except  Saturday,  Sunday and any day
which shall be a legal  holiday or a day on which  banking  institutions  in the
state  of New  York  generally  are  authorized  or  required  by  law or  other
government actions to close.

            "Closing  Date" means the date of the final  closing of the purchase
and sale of the Preferred Stock and Warrants pursuant to the Purchase Agreement.

            "Commission" means the Securities and Exchange Commission.

            "Common  Stock" means the Company's  Common Stock,  par value $.0001
per share.

            "Effectiveness   Date"  means  with  respect  to  the   Registration
Statement the earlier of the ninetieth  (90th) day following the Closing Date or
the  date  which  is  within  five (5)  Business  Days of the date on which  the
Commission  informs  the  Company  that the  Commission  (i) will not review the
Registration  Statement or (ii) that the Company may request the acceleration of



the  effectiveness  of the  Registration  Statement  and the Company  makes such
request.

            "Effectiveness  Period"  shall have the meaning set forth in Section
2.

            "Event" shall have the meaning set forth in Section 7(e).

            "Event Date" shall have the meaning set forth in Section 7(e).

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
amended.

            "Filing Date" means the forty-fifth (45th) day following the Closing
Date.

            "Holder" or "Holders"  means the holder or holders,  as the case may
be, from time to time of Registrable Securities, including the Purchasers.

            "Indemnified  Party"  shall  have the  meaning  set forth in Section
5(c).

            "Indemnifying  Party"  shall have the  meaning  set forth in Section
5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

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

            "Preferred  Stock" means the Series C Convertible  Preferred  Stock,
par value  $.0001 per share and stated value  $10,000 per share,  of the Company
issued to the Purchasers pursuant to the Purchase Agreement.

            "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.

            "Prospectus"  means  the  prospectus  included  in the  Registration
Statement  (including,  without  limitation,  a  prospectus  that  includes  any
information  previously  omitted from a prospectus filed as part of an effective
registration  statement  in  reliance  upon  Rule  430A  promulgated  under  the
Securities Act), as amended or supplemented by any prospectus  supplement,  with
respect  to  the  terms  of  the  offering  of any  portion  of the  Registrable
Securities covered by the Registration  Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material incorporated by reference in such Prospectus.

            "Registrable  Securities  means the shares of Common Stock  issuable
upon  conversion of the Preferred  Stock and the shares of Common Stock issuable
upon exercise of the Warrants;  provided,  however, that Registrable  Securities
shall  include  (but not be limited to) a number of shares of Common Stock equal

                                      -2-


to no less than 120% of the maximum number of shares of Common Stock which would
be issuable  upon  conversion  of the  Preferred  Stock and upon exercise of the
Warrants,  assuming such conversion and exercise occurred on the Closing Date or
the  Filing  Date,  whichever  date  would  result  in  the  greater  number  of
Registrable  Securities.  Such  registered  shares  of  Common  Stock  shall  be
allocated  among the Holders pro rata based on the total  number of  Registrable
Securities issued or issuable as of each date that a Registration  Statement, as
amended,  relating  to the  resale of the  Registrable  Securities  is  declared
effective by the Commission.  Notwithstanding  anything herein  contained to the
contrary,  if the  actual  number  of  shares  of  Common  Stock  issuable  upon
conversion of the Preferred Stock and upon exercise of the Warrants exceeds 120%
of the  number of  shares  of  Common  Stock  issuable  upon  conversion  of the
Preferred Stock and upon exercise of the Warrants based upon a computation as at
the Closing Date or the Filing Date, the term "Registrable  Securities" shall be
deemed to include such additional shares of Common Stock.

            "Registration  Statement" means the registration  statements and any
additional registration statements contemplated by Section 2, including (in each
case) the Prospectus,  amendments and supplements to such registration statement
or  Prospectus,  including  pre- and  post-effective  amendments,  all  exhibits
thereto,  and all  material  incorporated  by  reference  in  such  registration
statement.

            "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 158" means Rule 158 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 415" means Rule 415 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.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Special  Counsel" means Jenkens & Gilchrist  Parker Chapin LLP, for
which the Holders will be reimbursed by the Company pursuant to Section 4.

            "Warrants" means the Series C-1 Warrants and the Series C-2 Warrants
to  purchase  shares of the  Company's  Common  Stock  issued to the  Purchasers
pursuant to the Purchase Agreement.



      2.    Resale Registration.

                                      -3-


            On or prior to the Filing  Date the Company  shall  prepare and file
with the Commission a "resale"  Registration  Statement covering all Registrable
Securities  for an offering to be made on a  continuous  basis  pursuant to Rule
415. The Registration  Statement shall be on Form SB-2 (except if the Company is
not then  eligible to register  for resale the  Registrable  Securities  on Form
SB-2, in which case such  registration  shall be on another  appropriate form in
accordance herewith). The Company shall (i) not permit any securities other than
the Registrable Securities and the securities listed on Schedule II hereto to be
included in the  Registration  Statement  and (ii) use its best efforts to cause
the Registration  Statement to be declared effective under the Securities Act as
promptly as  possible  after the filing  thereof,  but in any event prior to the
Effectiveness  Date,  and  to  keep  such  Registration  Statement  continuously
effective  under the Securities Act until such date as is the earlier of (x) the
date when all Registrable Securities covered by such Registration Statement have
been  sold or (y) the  date on  which  the  Registrable  Securities  may be sold
without any restriction pursuant to Rule 144 as determined by the counsel to the
Company  pursuant  to a  written  opinion  letter,  addressed  to the  Company's
transfer agent to such effect (the "Effectiveness  Period").  If at any time and
for any reason,  an  additional  Registration  Statement is required to be filed
because at such time the actual  number of shares of Common Stock into which the
Preferred  Stock is  convertible  and the Warrants are  exercisable  exceeds the
number of shares of  Registrable  Securities  remaining  under the  Registration
Statement,  the  Company  shall  have  twenty  (20)  Business  Days to file such
additional Registration Statement, and the Company shall use its best efforts to
cause such  additional  Registration  Statement to be declared  effective by the
Commission as soon as possible, but in no event later than sixty (60) days after
filing.

      3.    Registration Procedures.

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Prepare and file with the Commission,  on or prior to the Filing
Date,  a  Registration  Statement  on Form SB-2 (or if the  Company  is not then
eligible to register  for resale the  Registrable  Securities  on Form SB-2 such
registration  shall be on another  appropriate  form in accordance  herewith) in
accordance  with the method or methods of  distribution  thereof as specified by
the Holders (except if otherwise directed by the Holders) and in accordance with
applicable  law, and cause the  Registration  Statement to become  effective and
remain effective as provided herein; provided, however, that not less than three
(3)  Business  Days prior to the  filing of the  Registration  Statement  or any
related Prospectus or any amendment or supplement thereto, the Company shall (i)
furnish to the  Holders and any Special  Counsel,  copies of all such  documents
proposed  to be filed,  which  documents  will be  subject to the review of such
Holders and such Special  Counsel,  and (ii) cause its  officers and  directors,
counsel  and  independent  certified  public  accountants  to  respond  to  such
inquiries as shall be necessary,  in the reasonable  opinion of Special Counsel,
to conduct a reasonable review of such documents. The Company shall not file the
Registration  Statement or any such  Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable  Securities or any
Special  Counsel shall  reasonably  object in writing  within three (3) Business
Days of their receipt thereof.

                                      -4-


            (b) (i)  Prepare  and file  with  the  Commission  such  amendments,
including  post-effective  amendments,  to the Registration  Statement as may be
necessary to keep the Registration  Statement  continuously  effective as to the
applicable  Registrable  Securities for the Effectiveness Period and prepare and
file with the Commission  such  additional  Registration  Statements in order to
register for resale under the Securities Act all of the Registrable  Securities;
(ii) cause the related  Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule  424 (or any  similar  provisions  then in  force)  promulgated  under  the
Securities  Act;  (iii)  respond as promptly as possible,  but in no event later
than ten (10) Business Days, to any comments  received from the Commission  with
respect to the Registration  Statement or any amendment  thereto and as promptly
as possible  provide the Holders true and complete copies of all  correspondence
from and to the  Commission  relating to the  Registration  Statement;  and (iv)
comply in all material  respects with the  provisions of the  Securities Act and
the Exchange Act with respect to the disposition of all  Registrable  Securities
covered  by the  Registration  Statement  during  the  Effectiveness  Period  in
accordance  with the intended  methods of disposition by the Holders thereof set
forth in the  Registration  Statement as so amended or in such  Prospectus as so
supplemented.

            (c) Notify the  Holders of  Registrable  Securities  and any Special
Counsel as promptly as possible (and, in the case of (i)(A) below, not less than
three (3) days  prior to such  filing)  and (if  requested  by any such  Person)
confirm such notice in writing no later than two (2) Business Days following the
day (i)(A) when a Prospectus  or any  Prospectus  supplement  or  post-effective
amendment  to the  Registration  Statement  is  filed;  (B) when the  Commission
notifies  the  Company  whether  there will be a "review"  of such  Registration
Statement and whenever the Commission  comments in writing on such  Registration
Statement   and  (C)  with  respect  to  the   Registration   Statement  or  any
post-effective  amendment,  when  the  same has  become  effective;  (ii) 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;  (iii) of the  issuance by the  Commission  of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the  Registrable  Securities  or the  initiation  or  threatening  of any
Proceedings for that purpose; (iv) if at any time any of the representations and
warranties of the Company contained in any agreement  contemplated hereby ceases
to be true and  correct  in all  material  respects;  (v) of the  receipt by the
Company of any notification  with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation of any Proceeding for such purpose; and (vi)
of the occurrence of any event that makes any statement made in the Registration
Statement  or  Prospectus  or  any  document   incorporated   or  deemed  to  be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires  any  revisions  to the  Registration  Statement,  Prospectus  or other
documents so that, in the case of the Registration  Statement or the Prospectus,
as the case may be, it will not contain any untrue  statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements  therein, in the light of the circumstances under which they
were made, not misleading.

            (d) Use its best  efforts to avoid the  issuance  of, or, if issued,
obtain the withdrawal of, as promptly as possible,  (i) any order suspending the
effectiveness  of the  Registration  Statement  or (ii)  any  suspension  of the

                                      -5-


qualification  (or  exemption  from  qualification)  of any  of the  Registrable
Securities for sale in any jurisdiction.

            (e) If  requested  by the  Holders of a majority  in interest of the
Registrable  Securities,  (i) promptly incorporate in a Prospectus supplement or
post-effective  amendment to the Registration  Statement such information as the
Company  reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus  supplement or such post-effective  amendment as soon
as practicable after the Company has received  notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.

            (f) If  requested  by any  Holder,  furnish  to such  Holder and any
Special  Counsel,   without  charge,   at  least  one  conformed  copy  of  each
Registration   Statement  and  each  amendment  thereto,   including   financial
statements  and  schedules,   all  documents   incorporated   or  deemed  to  be
incorporated  therein by reference,  and all exhibits to the extent requested by
such Person (including those previously  furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.

            (g) Promptly deliver to each Holder and any Special Counsel, without
charge, as many copies of the Prospectus or Prospectuses (including each form of
prospectus)  and each  amendment  or  supplement  thereto  as such  Persons  may
reasonably request; and subject to the provisions of Sections 3(m) and 3(n), the
Company  hereby  consents to the use of such  Prospectus  and each  amendment or
supplement  thereto  by each of the  selling  Holders  in  connection  with  the
offering and sale of the Registrable  Securities  covered by such Prospectus and
any amendment or supplement thereto.

            (h) Prior to any public offering of Registrable Securities,  use its
best  efforts to register or qualify or cooperate  with the selling  Holders and
any Special Counsel in connection with the  registration  or  qualification  (or
exemption  from  such   registration  or   qualification)  of  such  Registrable
Securities  for offer and sale  under  the  securities  or Blue Sky laws of such
jurisdictions  within the United  States as any Holder  requests in writing,  to
keep each such registration or qualification (or exemption  therefrom) effective
during  the  Effectiveness  Period  and to do any and all  other  acts or things
necessary or advisable to enable the  disposition in such  jurisdictions  of the
Registrable Securities covered by a Registration Statement;  provided,  however,
that the Company  shall not be required to qualify  generally  to do business in
any  jurisdiction  where it is not then so  qualified or to take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or subject  the Company to any  material  tax in any such
jurisdiction where it is not then so subject.

            (i) Cooperate with the Holders to facilitate the timely  preparation
and delivery of  certificates  representing  Registrable  Securities  to be sold
pursuant  to  a  Registration  Statement,  which  certificates,  to  the  extent
permitted by the Purchase  Agreement and applicable federal and state securities
laws, shall be free of all restrictive  legends,  and to enable such Registrable
Securities  to be in such  denominations  and  registered  in such  names as any
Holder may request in connection with any sale of Registrable Securities.

                                      -6-


            (j)  Upon  the  occurrence  of any  event  contemplated  by  Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment,  including
a post-effective amendment, to the Registration Statement or a supplement to the
related  Prospectus or any document  incorporated  or deemed to be  incorporated
therein  by  reference,  and file  any  other  required  document  so  that,  as
thereafter  delivered,  neither the  Registration  Statement nor such Prospectus
will contain an untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the circumstances under which they were made, not misleading.

            (k) Use  its  best  efforts  to  cause  all  Registrable  Securities
relating to the Registration Statement to be listed on the OTC Bulletin Board or
any other  securities  exchange,  quotation  system or market,  if any, on which
similar  securities  issued by the Company are then listed as and when  required
pursuant to the Purchase Agreement.

            (l) Comply in all material  respects with all  applicable  rules and
regulations  of the  Commission  and make  generally  available  to its security
holders all documents filed or required to be filed with the Commission.

            (m) The Company may require  each  selling  Holder to furnish to the
Company  information   regarding  such  Holder  and  the  distribution  of  such
Registrable Securities as is required by law to be disclosed in the Registration
Statement,  Prospectus,  or any amendment or supplement thereto, and the Company
may exclude from such registration the Registrable Securities of any such Holder
who unreasonably fails to furnish such information within ten (10) Business Days
after receiving such request.

            Each  Holder  covenants  and  agrees  that  (i) it will not sell any
Registrable  Securities under the  Registration  Statement until it has received
copies of the  Prospectus as then amended or  supplemented  as  contemplated  in
Section 3(g) and notice from the Company that such  Registration  Statement  and
any  post-effective  amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply  with the  prospectus  delivery  requirements  of the  Securities  Act as
applicable to them in connection with sales of Registrable  Securities  pursuant
to the Registration Statement.

            Each Holder agrees by its acquisition of such Registrable Securities
that,  upon receipt of a notice from the Company of the  occurrence of any event
of the  kind  described  in  Section  3(c)(ii),  3(c)(iii),  3(c)(iv),  3(c)(v),
3(c)(vi) or 3(n),  such Holder will  forthwith  discontinue  disposition of such
Registrable  Securities  under the  Registration  Statement  until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement  contemplated  by Section 3(j), or until it is advised in writing (the
"Advice")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement;  provided, however, that
the Company may not postpone or suspend its  obligation  under this Section 3(m)
for more than 60 days in the  aggregate  during any 12 month  period;  provided,
further,  that no  such  postponement  or  suspension  shall  be  permitted  for
consecutive 20 day periods, arising out of the same set of facts,  circumstances
or transactions.

                                      -7-


            (n) If (i) there is material  non-public  information  regarding the
Company  which  the  Company's  Board  of  Directors  (the  "Board")  reasonably
determines  not to be in the  Company's  best interest to disclose and which the
Company is not  otherwise  required to disclose,  or (ii) there is a significant
business  opportunity  (including,  but  not  limited  to,  the  acquisition  or
disposition  of assets  (other than in the  ordinary  course of business) or any
merger,  consolidation,  tender offer or other similar transaction) available to
the Company  which the Board  reasonably  determines  not to be in the Company's
best  interest to disclose,  then the Company may postpone or suspend  filing or
effectiveness  of a  registration  statement  for a  period  not  to  exceed  20
consecutive  days,  provided  that the Company  may not  postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 12 month period; provided,  however, that no such postponement or suspension
shall be permitted for  consecutive 20 day periods,  arising out of the same set
of facts, circumstances or transactions.

      4.    Registration Expenses.

            All fees and expenses  incident to the  performance of or compliance
with this  Agreement  by the Company,  except as and to the extent  specified in
Section  4,  shall be  borne  by the  Company  whether  or not the  Registration
Statement  is filed or becomes  effective  and  whether  or not any  Registrable
Securities  are  sold  pursuant  to the  Registration  Statement.  The  fees and
expenses  referred  to  in  the  foregoing   sentence  shall  include,   without
limitation, (i) all registration and filing fees (including, without limitation,
fees and  expenses  (A) with  respect to filings  required  to be made with each
securities  exchange  or market on which  Registrable  Securities  are  required
hereunder to be listed,  (B) with respect to filing fees  required to be paid by
the Company to the National Association of Securities Dealers, Inc. and the NASD
Regulation,  Inc. and (C) in compliance  with state  securities or Blue Sky laws
(including,  without  limitation,  fees and  disbursements  of  counsel  for the
Holders in connection with Blue Sky qualifications of the Registrable Securities
and  determination  of  the  eligibility  of  the  Registrable   Securities  for
investment under the laws of such  jurisdictions as the Holders of a majority of
Registrable  Securities  may  designate)),  (ii) printing  expenses  (including,
without limitation, expenses of printing certificates for Registrable Securities
and of printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement),  (iii) fees and disbursements of counsel for the Company and Special
Counsel for the Holders, in the case of the Special Counsel, to a maximum amount
of $5,000,  (iv) Securities Act liability  insurance,  if the Company so desires
such insurance,  and (v) fees and expenses of all other Persons  retained by the
Company in connection with the consummation of the transactions  contemplated by
this Agreement,  including, without limitation, the Company's independent public
accountants  (including the expenses of any comfort letters or costs  associated
with the  delivery by  independent  public  accountants  of a comfort  letter or
comfort letters).  In addition,  the Company shall be responsible for all of its
internal   expenses   incurred  in  connection  with  the  consummation  of  the
transactions contemplated by this Agreement (including,  without limitation, all
salaries  and  expenses  of its  officers  and  employees  performing  legal  or
accounting  duties),  the  expense of any annual  audit,  the fees and  expenses
incurred in  connection  with the listing of the  Registrable  Securities on any
securities exchange as required  hereunder.  The Company shall not be liable for
the fees or expenses, if any, of counsel or other advisors to the Holders (other

                                      -8-


than Special Counsel as provided above) or for underwriting discounts, brokerage
fees or commissions incurred by any Holder.

      5.    Indemnification.

            (a)   Indemnification   by   the   Company.   The   Company   shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Holder,  the officers,  directors,  agents,  brokers (including brokers who
offer and sell  Registrable  Securities  as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them,  each Person who controls any such Holder (within
the meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange
Act) and the officers,  directors, agents and employees of each such controlling
Person,  to the fullest extent permitted by applicable law, from and against any
and  all  losses,  claims,  damages,  liabilities,   costs  (including,  without
limitation,   costs  of   preparation   and   attorneys'   fees)  and   expenses
(collectively,  "Losses"), as incurred,  arising out of or based upon any untrue
or alleged  untrue  statement of a material fact  contained in the  Registration
Statement,  any  Prospectus  or any form of  prospectus  or in any  amendment or
supplement thereto or in any preliminary prospectus,  or arising out of or based
upon any omission or alleged  omission of a material  fact required to be stated
therein  or  necessary  to make  the  statements  therein  (in  the  case of any
Prospectus or form of prospectus  or  supplement  thereto),  in the light of the
circumstances under which they were made, not misleading,  except to the extent,
but only to the extent, that such untrue statements or omissions arise out of or
are based upon information regarding the Holders or such other Indemnified Party
furnished  in writing to the  Company by a Holder,  Special  Counsel or Holder's
counsel expressly for use therein, which information was reasonably relied on by
the Company for use therein or to the extent that such information  relates to a
Holder  or  such  Holder's   proposed  method  of  distribution  of  Registrable
Securities and was provided in writing by a Holder,  Special Counsel or Holder's
counsel expressly for use in the Registration Statement, such Prospectus or such
form of Prospectus or in any amendment or supplement thereto.  The Company shall
notify the  Holders  promptly of the  institution,  threat or  assertion  of any
Proceeding  of which the Company is aware in  connection  with the  transactions
contemplated by this Agreement.

            (b) Indemnification by Holders. Each Holder shall, severally and not
jointly,  indemnify  and hold  harmless the Company,  its  directors,  officers,
agents,  consultants and employees, each Person who controls the Company (within
the meaning of Section 15 of the  Securities  Act and Section 20 of the Exchange
Act),  and the  directors,  officers,  agents or employees  of such  controlling
Persons, to the fullest extent permitted by applicable law, from and against all
Losses,  as incurred,  arising out of or based upon any untrue or alleged untrue
statement  of a material  fact  contained  in the  Registration  Statement,  any
Prospectus, or any form of prospectus, or in any amendment or supplement thereto
or in any preliminary  prospectus,  or arising out of or based upon any omission
or  alleged  omission  of a  material  fact  required  to be stated  therein  or
necessary to make the statements  therein (in the case of any Prospectus or form
of prospectus or supplement  thereto),  in the light of the circumstances  under
which they were made,  not  misleading,  to the extent,  but only to the extent,
that such untrue  statement  or  omission is  contained  in any  information  so
furnished in writing by such Holder, Special Counsel,  Holder's counsel or other
Indemnified  Party to the  Company  expressly  for use  therein  and  that  such

                                      -9-


information was reasonably relied upon by the Company for use therein, or to the
extent that such  information  relates to such Holder or such Holder's  proposed
method of distribution of Registrable  Securities and was provided in writing by
such  Holder,  Special  Counsel or  Holder's  counsel  expressly  for use in the
Registration  Statement,  such  Prospectus  or such  form of  Prospectus  or any
amendment  or  supplement  thereto.  Notwithstanding  anything  to the  contrary
contained  herein,  the Holders shall be liable under this Section 5(b) for only
that  amount as does not exceed the net  proceeds  to such Holder as a result of
the sale of Registrable Securities pursuant to such Registration Statement.

            (c) Conduct of Indemnification  Proceedings. If any Proceeding shall
be brought or asserted  against any Person  entitled to indemnity  hereunder (an
"Indemnified  Party"),  such Indemnified  Party promptly shall notify the Person
from whom  indemnity  is sought (the  "Indemnifying  Party) in writing,  and the
Indemnifying  Party shall be entitled to assume the defense  thereof,  including
the employment of counsel  reasonably  satisfactory to the Indemnified Party and
the  payment  of all fees and  expenses  incurred  in  connection  with  defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve  the  Indemnifying  Party of its  obligations  or  liabilities
pursuant  to this  Agreement,  except  (and only) to the extent that it shall be
finally determined by a court of competent  jurisdiction (which determination is
not  subject  to  appeal  or  further  review)  that  such  failure  shall  have
proximately and materially adversely prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense  thereof,  but the fees
and expenses of such counsel shall be at the expense of such  Indemnified  Party
or Parties unless:  (1) the Indemnifying Party has agreed in writing to pay such
fees and expenses;  or (2) the Indemnifying  Party shall have failed promptly to
assume  the  defense  of  such  Proceeding  and  to  employ  counsel  reasonably
satisfactory to such Indemnified Party in any such Proceeding;  or (3) the named
parties to any such Proceeding  (including any impleaded  parties)  include both
such Indemnified  Party and the Indemnifying  Party, and such parties shall have
been  advised by counsel  that a conflict  of interest is likely to exist if the
same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such  Indemnified  Party notifies the  Indemnifying  Party in
writing  that it  elects  to  employ  separate  counsel  at the  expense  of the
Indemnifying  Party, the  Indemnifying  Party shall not have the right to assume
the defense thereof and such counsel shall be at the expense of the Indemnifying
Party).  The  Indemnifying  Party shall not be liable for any  settlement of any
such Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified  Party,  effect any settlement of any pending
or threatened  Proceeding in respect of which any  Indemnified  Party is a party
and  indemnity has been sought  hereunder,  unless such  settlement  includes an
unconditional  release of such  Indemnified  Party from all  liability on claims
that are the subject matter of such Proceeding.

            All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent  incurred in connection  with  investigating  or
preparing  to defend  such  Proceeding  in a manner not  inconsistent  with this
Section) shall be paid to the Indemnified  Party,  as incurred,  within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to

                                      -10-


indemnification hereunder;  provided, that the Indemnified Party shall reimburse
all such fees and  expenses  to the extent it is finally  judicially  determined
that such Indemnified Party is not entitled to indemnification hereunder).

            (d) Contribution.  If a claim for indemnification under Section 5(a)
or 5(b) is due but  unavailable to an Indemnified  Party because of a failure or
refusal  of  a  governmental   authority  to  enforce  such  indemnification  in
accordance  with its terms (by reason of public policy or otherwise),  then each
Indemnifying  Party,  in lieu of  indemnifying  such  Indemnified  Party,  shall
contribute to the amount paid or payable by such  Indemnified  Party as a result
of such Losses,  in such  proportion as is  appropriate  to reflect the relative
fault of the  Indemnifying  Party and  Indemnified  Party in connection with the
actions,  statements  or omissions  that  resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and  Indemnified  Party shall be  determined  by reference to, among other
things,  whether any action in question,  including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been  taken  or made  by,  or  relates  to  information  supplied  by,  such
Indemnifying,  Party or Indemnified  Party,  and the parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include,  subject to the  limitations set forth
in Section 5(c), any reasonable  attorneys' or other reasonable fees or expenses
incurred  by such party in  connection  with any  Proceeding  to the extent such
party   would  have  been   indemnified   for  such  fees  or  expenses  if  the
indemnification  provided  for in this  Section was  available  to such party in
accordance with its terms.

            The parties  hereto agree that it would not be just and equitable if
contribution  pursuant  to  this  Section  5(d)  were  determined  by  pro  rata
allocation or by any other method of allocation  that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent  misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to  contribution  from any Person
who was not guilty of such fraudulent misrepresentation.

            The indemnity and contribution  agreements contained in this Section
are in addition to any liability that the  Indemnifying  Parties may have to the
Indemnified Parties pursuant to the law.

      6.    Rule 144.

            As long as any Holder owns Shares,  Conversion  Shares,  Warrants or
Warrant Shares,  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 Section
13(a)  or  15(d)  of the  Exchange  Act.  As long  as any  Holder  owns  Shares,
Conversion Shares, Warrants or Warrant Shares, if the Company is not required to
file reports  pursuant to Section  13(a) or 15(d) of the  Exchange  Act, it will
prepare and furnish to the Holders and make  publicly  available  in  accordance
with Rule  144(c)  promulgated  under the  Securities  Act annual and  quarterly
financial statements,  together with a discussion and analysis of such financial
statements  in form and  substance  substantially  similar  to those  that would
otherwise  be required to be  included in reports  required by Section  13(a) or

                                      -11-


15(d) of the Exchange Act, as well as any other information required thereby, in
the time period  that such  filings  would have been  required to have been made
under the Exchange  Act. The Company  further  covenants  that it will take such
further action as any Holder may reasonably request,  all to the extent required
from time to time to enable  such Person to sell  Conversion  Shares and Warrant
Shares  without  registration  under the Securities Act within the limitation of
the  exemptions  provided  by Rule 144  promulgated  under the  Securities  Act,
including  providing any legal  opinions  relating to such sale pursuant to Rule
144. Upon the request of any Holder,  the Company shall deliver to such Holder a
written certification of a duly authorized officer as to whether it has complied
with such requirements.

      7.    Miscellaneous.

            (a)  Remedies.  In the  event of a  breach  by the  Company  or by a
Holder,  of any of their  obligations  under this Agreement,  such Holder or the
Company,  as the case may be, in  addition to being  entitled  to  exercise  all
rights granted by law and under this Agreement,  including  recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary  damages would not provide  adequate
compensation  for any losses  incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific  performance  in respect of such breach,  it shall waive the
defense that a remedy at law would be adequate.

            (b) No Inconsistent  Agreements.  Neither the Company nor any of its
subsidiaries  has, as of the date hereof  entered into and  currently in effect,
nor shall the Company or any of its  subsidiaries,  on or after the date of this
Agreement,  enter into any  agreement  with  respect to its  securities  that is
inconsistent  with the  rights  granted  to the  Holders  in this  Agreement  or
otherwise conflicts with the provisions hereof.  Except as disclosed in Schedule
2.1(c) of the Purchase  Agreement or on Schedule II hereto,  neither the Company
nor any of its subsidiaries has previously entered into any agreement  currently
in effect granting any registration rights with respect to any of its securities
to any Person.  Without  limiting the generality of the  foregoing,  without the
written consent of the Holders of a majority of the then outstanding Registrable
Securities,  the Company  shall not grant to any Person the right to request the
Company to register  any  securities  of the Company  under the  Securities  Act
unless the rights so granted are subject in all  respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

            (c) No  Piggyback on  Registrations.  Neither the Company nor any of
its security holders (other than the Holders in such capacity pursuant hereto or
as disclosed in Schedule 2.1(c) of the Purchase Agreement or Schedule II hereto)
may include  securities of the Company in the  Registration  Statement,  and the
Company shall not after the date hereof enter into any agreement  providing such
right to any of its  securityholders,  unless the right so granted is subject in
all respects to the prior rights in full of the Holders set forth herein, and is
not otherwise in conflict with the provisions of this Agreement.

                                      -12-


            (d)  Piggy-Back  Registrations.  If at any time when there is not an
effective  Registration Statement covering (i) Conversion Shares or (ii) Warrant
Shares,  the Company shall  determine to prepare and file with the  Commission a
registration  statement  relating  to an  offering  for its own  account  or the
account of others  under the  Securities  Act of any of its  equity  securities,
other  than on Form S-4 or Form S-8 (each as  promulgated  under the  Securities
Act) or their then equivalents relating to equity securities to be issued solely
in  connection  with  any  acquisition  of any  entity  or  business  or  equity
securities  issuable in connection  with stock option or other employee  benefit
plans, the Company shall send to each holder of Registrable  Securities  written
notice of such  determination  and, if within  thirty (30) days after receipt of
such notice,  or within such  shorter  period of time as may be specified by the
Company in such  written  notice as may be  necessary  for the Company to comply
with  its  obligations  with  respect  to the  timing  of  the  filing  of  such
registration  statement,  any such holder  shall so request in  writing,  (which
request shall specify the Registrable  Securities  intended to be disposed of by
the Purchasers),  the Company will cause the  registration  under the Securities
Act of all  Registrable  Securities  which the Company has been so  requested to
register by the holder, to the extent requisite to permit the disposition of the
Registrable  Securities so to be registered,  provided that if at any time after
giving  written  notice of its intention to register any securities and prior to
the effective date of the  registration  statement filed in connection with such
registration,  the Company shall  determine for any reason not to register or to
delay  registration of such securities,  the Company may, at its election,  give
written notice of such determination to such holder and,  thereupon,  (i) in the
case of a determination not to register,  shall be relieved of its obligation to
register any Registrable  Securities in connection with such  registration  (but
not from its  obligation to pay expenses in  accordance  with Section 4 hereof),
and (ii) in the case of a determination to delay registering, shall be permitted
to delay  registering any Registrable  Securities being  registered  pursuant to
this  Section  7(d) for the same period as the delay in  registering  such other
securities.  The Company shall include in such registration statement all or any
part of such  Registrable  Securities  such holder  requests  to be  registered;
provided,  however,  that the Company  shall not be  required  to  register  any
Registrable  Securities pursuant to this Section 7(d) that are eligible for sale
pursuant to Rule 144(k) of the  Securities  Act. In the case of an  underwritten
public  offering,  if  the  managing  underwriter(s)  or  underwriter(s)  should
reasonably  object  to the  inclusion  of the  Registrable  Securities  in  such
registration statement, then if the Company after consultation with the managing
underwriter  should reasonably  determine that the inclusion of such Registrable
Securities would materially  adversely affect the offering  contemplated in such
registration statement,  and based on such determination recommends inclusion in
such  registration  statement of fewer or none of the Registrable  Securities of
the  Holders,  then (x) the  number of  Registrable  Securities  of the  Holders
included in such  registration  statement  shall be reduced  pro-rata among such
Holders  (based  upon the  number  of  Registrable  Securities  requested  to be
included  in the  registration),  if the  Company  after  consultation  with the
underwriter(s)  recommends the inclusion of fewer Registrable Securities, or (y)
none of the  Registrable  Securities  of the  Holders  shall be included in such
registration   statement,   if  the   Company   after   consultation   with  the
underwriter(s)  recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable  securities intended to be offered
by the Holders  than the  fraction of similar  reductions  imposed on such other
persons or entities (other than the Company).

                                      -13-


            (e) Failure to File  Registration  Statement and Other  Events.  The
Company and the  Purchasers  agree that the Holders  will suffer  damages if the
Registration  Statement  is not  filed on or prior  to the  Filing  Date and not
declared  effective by the Commission on or prior to the Effectiveness  Date and
maintained in the manner contemplated herein during the Effectiveness  Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain  the extent of such  damages with  precision.
Accordingly,  if,  except as set forth in  Section  3(n),  (A) the  Registration
Statement is not filed on or prior to the Filing Date,  or (B) the  Registration
Statement is not declared  effective by the  Commission on or prior to the 120th
day after the Closing Date (or in the event an additional Registration Statement
is filed  because  the  actual  number of shares of Common  Stock into which the
Preferred  Stock is  convertible  and the Warrants are  exercisable  exceeds the
number of shares of Common Stock initially  registered is not filed and declared
effective  with the time  periods  set forth in Section  2), or (C) the  Company
fails to file with the Commission a request for  acceleration in accordance with
Rule 461  promulgated  under the Securities Act within five (5) Business Days of
the date that the  Company is  notified  (orally  or in  writing,  whichever  is
earlier) by the Commission that a Registration Statement will not be "reviewed,"
or is not subject to further review, or (D) the Registration  Statement is filed
with and  declared  effective  by the  Commission  but  thereafter  ceases to be
effective as to all  Registrable  Securities at any time prior to the expiration
of  the   Effectiveness   Period,   without  being  succeeded  by  a  subsequent
Registration  Statement  filed with and declared  effective by the Commission in
accordance  with Section 2 hereof or (E) the Company has breached  Sections 3(m)
or 3(n),  or (F) trading in the Common Stock shall be suspended or if the Common
Stock is delisted from the OTC Bulletin  Board for any reason for more than five
(5) Business Days in the aggregate (any such failure or breach being referred to
as an  "Event,"  and for  purposes of clauses (A) and (B) the date on which such
Event occurs, or for purposes of clause (C) the date on which such five Business
Day period is  exceeded,  or for  purposes  of clause (D) after more than twenty
Business  Days,  or for  purposes  of  clause  (F) the date on which  such  five
Business Day period is exceeded, being referred to as "Event Date"), the Company
shall pay an amount as liquidated  damages  payable at the  Company's  option in
cash or  shares  of  Common  Stock to each  Holder  equal to 2.0% for the  first
calendar  month or portion  thereof and 1.0% per calendar  month  thereafter  or
portion thereof of the Holder's  initial  investment in the Preferred Stock from
the Event Date  (provided  that,  with respect to the Event  described in clause
(B),  the "first  calendar  month"  shall be deemed to  commence on the 30th day
prior to the applicable Event Date), less any amount of Preferred Stock that has
been converted by such Holder,  until the applicable  Event is cured,  provided,
that,  with respect to the Event  described in clause (B), the Company shall not
be obligated to pay liquidated damages following the one year anniversary of the
Closing Date. Notwithstanding anything to the contrary in this paragraph (e), if
(I) any of the Events  described in clauses (A), (B) or (C) shall have occurred,
(II) on or prior to the applicable  Event Date, the Company shall have exercised
its rights  under  Sections  3(m) or 3(n) hereof and (III) the  postponement  or
suspension  permitted  pursuant  to such  Sections  3(m) and 3(n)  shall  remain
effective as of such applicable Event Date, then the applicable Event Date shall
be deemed instead to occur on the second  Business Day following the termination
of such  postponement  or  suspension.  If the Company  elects to pay liquidated
damages in shares of Common Stock,  the number of such shares of Common Stock to
be issued to the Holders  pursuant to this  paragraph  (e) shall be based on the
liquidated  damage amount divided by the average closing bid price of the Common
Stock for the five  trading  days prior to such Event Date and shall be issuable

                                      -14-


promptly  upon receipt by the Company of a written  demand from a Holder made on
or after the Event Date.

            (f)  Amendments  and  Waivers.  The  provisions  of this  Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof
may not be given,  unless the same shall be in writing and signed by the Company
and the Holders of two-thirds (2/3) of the Registrable Securities outstanding.

            (g)  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  earlier  of (i) the date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number  specified for notice prior to 5:00 p.m.,  New York
City  time,  on a  Business  Day,  (ii)  the  Business  Day  after  the  date of
transmission,  if such notice or communication is delivered via facsimile at the
facsimile  telephone  number specified for notice later than 5:00 p.m., New York
City time, on any date and earlier than 11:59 p.m.,  New York City time, on such
date, (iii) the Business Day following the date of mailing, if sent by overnight
delivery  by  nationally  recognized  overnight  courier  service or (iv) actual
receipt by the party to whom such notice is required to be given.  The addresses
for such communications  shall be with respect to each Holder at its address set
forth  under its name on  Schedule I  attached  hereto,  or with  respect to the
Company, addressed to:

                        Cytomedix, Inc.
                        1523 Bowman Road, Suite A
                        Little Rock, Arkansas 72211
                        Attention: Chief Financial Officer
                        Tel. No.: (501) 219-2111
                        Fax No.:  (501) 219-2114

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have  designated in writing to the other parties  hereto
by such  notice.  Copies of notices to the  Company  shall be sent to Williams &
Anderson, PLC, 111 Center Street, 22nd Floor, Little Rock, Arkansas, 72201, Tel.
No.: (501) 372-0800, Fax No.: (501) 372-6453.

            (h) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their  successors and permitted  assigns
and shall inure to the benefit of each Holder and its  successors  and  assigns.
The Company may not assign this  Agreement  or any of its rights or  obligations
hereunder  without the prior written consent of each Holder.  Each Purchaser may
assign its rights  hereunder in the manner and to the Persons as permitted under
the Purchase Agreement.

            (i)  Assignment of  Registration  Rights.  The rights of each Holder
hereunder,  including  the  right  to  have  the  Company  register  for  resale
Registrable Securities in accordance with the terms of this Agreement,  shall be
automatically  assignable  by each Holder to any Affiliate of such Holder or any
other  Holder  or  Affiliate  of any other  Holder  of all or a  portion  of the
Preferred  Stock or the  Registrable  Securities  if: (i) the  Holder  agrees in
writing with the  transferee  or assignee to assign such  rights,  and a copy of

                                      -15-


such agreement is furnished to the Company  within a reasonable  time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment,  furnished  with written  notice of (a) the name and address of such
transferee  or  assignee,  and (b) the  securities  with  respect  to which such
registration  rights are being  transferred  or assigned,  (iii)  following such
transfer  or  assignment  the  further  disposition  of such  securities  by the
transferee or assignees is restricted  under the  Securities  Act and applicable
state  securities  laws,  (iv) at or before the time the  Company  receives  the
written notice  contemplated  by clause (ii) of this Section,  the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable  requirements of the Purchase Agreement. In addition, each Holder
shall have the right to assign its rights hereunder to any other Person with the
prior written  consent of the Company,  which consent shall not be  unreasonably
withheld.  The  rights  to  assignment  shall  apply  to  the  Holders  (and  to
subsequent) successors and assigns.

            (j)  Counterparts.  This  Agreement may be executed in any number of
counterparts,  each of which when so executed  shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement. In
the event that any  signature  is  delivered  by  facsimile  transmission,  such
signature shall create a valid binding  obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and effect
as if such facsimile signature were the original thereof.

            (k) Governing Law. This Agreement shall be governed by and construed
in  accordance  with  the laws of the  State  of New  York,  without  regard  to
principles of conflicts of law thereof.

            (l) Cumulative Remedies. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.

            (m) Severability. If any term, provision, covenant or restriction of
this  Agreement is held to be invalid,  illegal,  void or  unenforceable  in any
respect, 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
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.

            (n) 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.

            (o) Shares  Held by the  Company and its  Affiliates.  Whenever  the
consent  or  approval  of  Holders  of a  specified  percentage  of  Registrable
Securities is required hereunder,  Registrable Securities held by the Company or
its  Affiliates  (other than any Holder or  transferees or successors or assigns
thereof  if such  Holder is deemed  to be an  Affiliate  solely by reason of its

                                      -16-


holdings of such  Registrable  Securities)  shall not be counted in  determining
whether  such  consent or  approval  was given by the  Holders of such  required
percentage.

            (p) Independent Nature of Purchasers.  The Company acknowledges that
the obligations of each Purchaser  under the  Transaction  Documents are several
and not joint with the  obligations  of any other  Purchaser,  and no  Purchaser
shall be  responsible in any way for the  performance of the  obligations of any
other Purchaser under the Transaction  Documents.  The Company acknowledges that
the decision of each Purchaser to purchase  securities  pursuant to the Purchase
Agreement has been made by such  Purchaser  independently  of any other purchase
and  independently of any information,  materials,  statements or opinions as to
the business, affairs, operations, assets, properties,  liabilities,  results of
operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries  which may have been made or given by any other Purchaser or by
any agent or employee of any other  Purchaser,  and no  Purchaser  or any of its
agents or  employees  shall have any  liability to any  Purchaser  (or any other
person) relating to or arising from any such information,  materials, statements
or opinions.  The Company  acknowledges that nothing contained herein, or in any
Transaction  Document,  and no action taken by any Purchaser  pursuant hereto or
thereto (including,  but not limited to, the (i) inclusion of a Purchaser in the
Registration  Statement  and (ii) review by, and  consent to, such  Registration
Statement by a Purchaser)  shall be deemed to  constitute  the  Purchasers  as a
partnership,  an  association,  a joint venture or any other kind of entity,  or
create a presumption  that the Purchasers are in any way acting in concert or as
a group with respect to such obligations or the transactions contemplated by the
Transaction  Documents.  The Company  acknowledges  that each Purchaser shall be
entitled to  independently  protect and  enforce its rights,  including  without
limitation,  the  rights  arising  out of  this  Agreement  or out of the  other
Transaction Documents,  and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company
acknowledges   that  for  reasons  of   administrative   convenience  only,  the
Transaction  Documents  have been prepared by counsel for one of the  Purchasers
and such  counsel  does  not  represent  all of the  Purchasers  but  only  such
Purchaser and the other  Purchasers  have retained their own individual  counsel
with respect to the transactions  contemplated  hereby. The Company acknowledges
that  it has  elected  to  provide  all  Purchasers  with  the  same  terms  and
Transaction  Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers.  The Company acknowledges that
such  procedure  with respect to the  Transaction  Documents in no way creates a
presumption  that the  Purchasers are in any way acting in concert or as a group
with  respect to the  Transaction  Documents  or the  transactions  contemplated
hereby or thereby.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -17-


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

                                    CYTOMEDIX, INC.


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


                                    PURCHASER:


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

                                      -18-


                                   Schedule I
                                   Purchasers

                                      -19-


                                  Schedule II
         Other Securities to be Included on the Registration Statement

                                      -20-

EX-4.3

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR CYTOMEDIX, INC. SHALL HAVE RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO CYTOMEDIX, INC. THAT REGISTRATION
OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                         SERIES C-1 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                                 CYTOMEDIX, INC.

                             Expires March 25, 2009


No.: W-C-1-04-__                                  Number of Shares: ___________
Date of Issuance: March 25, 2004


      FOR VALUE RECEIVED, subject to the provisions hereinafter set forth, the
undersigned, Cytomedix, Inc., a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that
_______________________________ or its registered assigns is entitled to
subscribe for and purchase, during the Term (as hereinafter defined), up to
____________________________________ (_____________) shares (subject to
adjustment as hereinafter provided) of the duly authorized, validly issued,
fully paid and non-assessable Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect, subject, however, to the
provisions and upon the terms and conditions hereinafter set forth. Capitalized
terms used in this Warrant and not otherwise defined herein shall have the
respective meanings specified in Section 9 hereof.

      1. Term. The term of this Warrant shall commence on March 25, 2004 and
shall expire at 5:00 p.m., eastern time, on March 25, 2009 (such period being
the "Term").

      2. Method of Exercise Payment; Issuance of New Warrant; Transfer and
Exchange.

      (a) Time of Exercise. The purchase rights represented by this Warrant may
be exercised in whole or in part during the Term commencing on March 25, 2004
and expiring on March 25, 2009.



                                       2


      (b) Method of Exercise. The Holder hereof may exercise this Warrant, in
whole or in part, by the surrender of this Warrant (with the exercise form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment to the Issuer of an amount of consideration therefor equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of Warrant Stock with respect to which this Warrant is then being
exercised, payable at such Holder's election (i) by certified or official bank
check or by wire transfer to an account designated by the Issuer, (ii) by
"cashless exercise" in accordance with the provisions of subsection (c) of this
Section 2, but only when a registration statement under the Securities Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

      (c) Cashless Exercise. Notwithstanding any provisions herein to the
contrary and commencing one (1) year following the Original Issue Date, if (i)
the Per Share Market Value of one share of Common Stock is greater than the
Warrant Price (at the date of calculation as set forth below) and (ii) a
registration statement under the Securities Act providing for the resale of the
Warrant Stock is not then in effect, in lieu of exercising this Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless exercise and
shall receive the number of shares of Common Stock equal to an amount (as
determined below) by surrender of this Warrant at the principal office of the
Issuer together with the properly endorsed Notice of Exercise in which event the
Issuer shall issue to the Holder a number of shares of Common Stock computed
using the following formula:



               
            X = Y - (A)(Y)
                           B

Where       X =      the number of shares of Common Stock to be issued to the Holder.

            Y        = the number of shares of Common Stock purchasable
                     upon exercise of all of the Warrant or, if only a
                     portion of the Warrant is being exercised, the
                     portion of the Warrant being exercised.

            A =      the Warrant Price.

            B = the Per Share Market Value of one share of Common Stock.


      (d) Issuance of Stock Certificates. In the event of any exercise of the
rights represented by this Warrant in accordance with and subject to the terms
and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three (3) Trading Days after such
exercise or, at the request of the Holder (provided that a registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect and the Company's transfer agent is participating in the DTC
Fast Automated Securities Transfer Program), issued and delivered to the
Depository Trust Company account on the Holder's behalf via the Deposit
Withdrawal Agent Commission System ("DWAC") within a reasonable time, not
exceeding three (3) Trading Days after such exercise, and the Holder hereof
shall be deemed for all purposes to be the holder of the shares of Warrant Stock


                                       2


so purchased as of the date of such exercise and (ii) unless this Warrant has
expired, a new Warrant representing the number of shares of Warrant Stock, if
any, with respect to which this Warrant shall not then have been exercised (less
any amount thereof which shall have been canceled in payment or partial payment
of the Warrant Price as hereinabove provided) shall also be issued to the Holder
hereof at the Issuer's expense within a reasonable time, not exceeding seven (7)
Trading Days after such exercise.

      (e) Transferability of Warrant. Subject to Section 2(g), this Warrant may
be transferred by a Holder without the consent of the Issuer. If transferred
pursuant to this paragraph and subject to the provisions of subsection (g) of
this Section 2, this Warrant may be transferred on the books of the Issuer by
the Holder hereof in person or by duly authorized attorney, upon surrender of
this Warrant at the principal office of the Issuer, properly endorsed (by the
Holder executing an assignment in the form attached hereto) and upon payment of
any necessary transfer tax or other governmental charge imposed upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants for the purchase of the same aggregate number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of Warrant Stock as the Holder hereof shall designate at the time of such
exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant thereto.

      (f) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge in writing the extent, if any, of its continuing obligation to
afford to such Holder all rights to which such Holder shall continue to be
entitled after such exercise in accordance with the terms of this Warrant,
provided that if any such Holder shall fail to make any such request, the
failure shall not affect the continuing obligation of the Issuer to afford such
rights to such Holder.

      (g) Compliance with Securities Laws.

            (i) The Holder of this Warrant, by acceptance hereof, acknowledges
      that this Warrant or the shares of Warrant Stock to be issued upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other party, and for investment, and that the
      Holder will not offer, sell or otherwise dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph (iii) below, this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted with a legend in substantially the
      following form:

      THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
      TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
      SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR CYTOMEDIX,


                                       3


      INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO
      CYTOMEDIX, INC. THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
      ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
      REQUIRED.

            (iii) The Issuer agrees to reissue this Warrant or certificates
      representing any of the Warrant Stock, without the legend set forth above
      if at such time, prior to making any transfer of any such securities, the
      Holder shall give written notice to the Issuer describing the manner and
      terms of such transfer and removal as the Issuer may reasonably request.
      Such proposed transfer and removal will not be effected until: (a) either
      (i) the Issuer has received an opinion of counsel reasonably satisfactory
      to the Issuer, to the effect that the registration of such securities
      under the Securities Act is not required in connection with such proposed
      transfer, (ii) a registration statement under the Securities Act covering
      such proposed disposition has been filed by the Issuer with the Securities
      and Exchange Commission and has become effective under the Securities Act
      and the holder has complied with any prospectus delivery requirements,
      (iii) the Issuer has received other evidence reasonably satisfactory to
      the Issuer that such registration and qualification under the Securities
      Act and state securities laws are not required, or (iv) the Holder
      provides the Issuer with reasonable assurances that such security can be
      sold pursuant to Rule 144 under the Securities Act; and (b) either (i) the
      Issuer has received an opinion of counsel reasonably satisfactory to the
      Issuer, to the effect that registration or qualification under the
      securities or "blue sky" laws of any state is not required in connection
      with such proposed disposition, or (ii) compliance with applicable state
      securities or "blue sky" laws has been effected or a valid exemption
      exists with respect thereto. The Issuer will respond to any such notice
      from a holder within five (5) business days. In the case of any proposed
      transfer under this Section 2(g), the Issuer will use reasonable efforts
      to comply with any such applicable state securities or "blue sky" laws,
      but shall in no event be required, (x) to qualify to do business in any
      state where it is not then qualified, (y) to take any action that would
      subject it to tax or to the general service of process in any state where
      it is not then subject, or (z) to comply with state securities or "blue
      sky" laws of any state for which registration by coordination is
      unavailable to the Issuer. The restrictions on transfer contained in this
      Section 2(g) shall be in addition to, and not by way of limitation of, any
      other restrictions on transfer contained in any other section of this
      Warrant. Whenever a certificate representing the Warrant Stock is required
      to be issued to a the Holder without a legend, in lieu of delivering
      physical certificates representing the Warrant Stock, provided the
      Issuer's transfer agent is participating in the Depository Trust Company
      ("DTC") Fast Automated Securities Transfer program, the Issuer shall use
      its reasonable best efforts to cause its transfer agent to electronically
      transmit the Warrant Stock to the Holder by crediting the account of the
      Holder's Prime Broker with DTC through its Deposit Withdrawal Agent
      Commission ("DWAC") system (to the extent not inconsistent with any
      provisions of this Warrant or the Purchase Agreement).



                                       4


      (h) In no event may the Holder exercise this Warrant in whole or in part
unless the Holder is an "accredited investor" as defined in Regulation D under
the Securities Act.

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully Paid. The Issuer represents, warrants, covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise hereunder will, when issued in accordance with the
terms of this Warrant, be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, liens and charges created by or through
the Issuer. The Issuer further covenants and agrees that during the period
within which this Warrant may be exercised, the Issuer will at all times have
authorized and reserved for the purpose of the issue upon exercise of this
Warrant a sufficient number of shares of Common Stock to provide for the
exercise of this Warrant.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance upon exercise of this Warrant or as otherwise provided hereunder
require registration or qualification with any governmental authority under any
federal or state law before such shares may be so issued, the Issuer will in
good faith use its reasonable best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
will, at its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder (provided that such Warrant
Stock has been registered pursuant to a registration statement under the
Securities Act then in effect), and, to the extent permissible under the
applicable securities exchange rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder, so long as any shares of Common Stock shall
be so listed. The Issuer will also so list on each securities exchange or
market, and will maintain such listing of, any other securities which the Holder
of this Warrant shall be entitled to receive upon the exercise of this Warrant
if at the time any securities of the same class shall be listed on such
securities exchange or market by the Issuer.

      (c) Covenants. The Issuer shall not by any action including, without
limitation, amending the Certificate of Incorporation or the by-laws of the
Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect the rights of the Holders of
the Warrants in their capacity as Holders of the Warrants, (iii) take all such
action as may be reasonably necessary in order that the Issuer may validly and


                                       5


legally issue fully paid and nonassessable shares of Common Stock, free and
clear of any liens, claims, encumbrances and restrictions (other than as
provided herein) upon the exercise of this Warrant, and (iv) use its reasonable
best efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

      (d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      4. Adjustment of Warrant Price and Warrant Share Number. The number of
shares of Common Stock for which this Warrant is exercisable, and the price at
which such shares may be purchased upon exercise of this Warrant, shall be
subject to adjustment from time to time as set forth in this Section 4. The
Issuer shall give the Holder notice of any event described below which requires
an adjustment pursuant to this Section 4 in accordance with Section 5.

      (a) Recapitalization, Reorganization, Reclassification, Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering Event"): (a) consolidate or merge with
      or into another corporation where the holders of outstanding Voting Stock
      prior to such merger or consolidation do not own over 50% of the
      outstanding Voting Stock of the merged or consolidated entity immediately
      after such merger or consolidation, or (b) sell all or substantially all
      of its properties or assets to any other Person, or (c) change the Common
      Stock to the same or different number of shares of any class or classes of
      stock, whether by reclassification, exchange, substitution or otherwise
      (other than by way of a stock split or combination of shares or stock
      dividends or distributions provided for in Section 4(b) or Section 4(c)),
      or (d) effect a capital reorganization (other than by way of a stock split
      or combination of shares or stock dividends or distributions provided for
      in Section 4(b) or Section 4(c)), then, and in the case of each such
      Triggering Event, proper provision shall be made so that, upon the basis
      and the terms and in the manner provided in this Warrant, the Holder of
      this Warrant shall be entitled upon the exercise hereof at any time after
      the consummation of such Triggering Event, to the extent this Warrant is
      not exercised prior to such Triggering Event, to receive at the Warrant
      Price in effect at the time immediately prior to the consummation of such
      Triggering Event in lieu of the Common Stock issuable upon such exercise
      of this Warrant prior to such Triggering Event, the securities, cash and
      property to which such Holder would have been entitled upon the
      consummation of such Triggering Event if such Holder had exercised the
      rights represented by this Warrant immediately prior thereto, subject to
      adjustments (subsequent to such corporate action) as nearly equivalent as
      possible to the adjustments provided for elsewhere in this Section 4.

            (ii) Notwithstanding anything contained in this Warrant to the
      contrary, a Triggering Event shall not be deemed to have occurred if,
      prior to the consummation thereof, each Person (other than the Issuer)
      which may be required to deliver any securities, cash or property upon the
      exercise of this Warrant as provided herein shall assume, by written


                                       6


      instrument delivered to, and reasonably satisfactory to, the Holder of
      this Warrant, (A) the obligations of the Issuer under this Warrant (and if
      the Issuer shall survive the consummation of such Triggering Event, such
      assumption shall be in addition to, and shall not release the Issuer from,
      any continuing obligations of the Issuer under this Warrant) and (B) the
      obligation to deliver to such Holder such shares of securities, cash or
      property as, in accordance with the foregoing provisions of this
      subsection (a), such Holder shall be entitled to receive, and such Person
      shall have similarly delivered to such Holder a written acknowledgement
      executed by the President or Chief Financial Officer of the Company,
      stating that this Warrant shall thereafter continue in full force and
      effect and the terms hereof (including, without limitation, all of the
      provisions of this subsection (a)) shall be applicable to the securities,
      cash or property which such Person may be required to deliver upon any
      exercise of this Warrant or the exercise of any rights pursuant hereto.

      (b) Stock Dividends, Subdivisions and Combinations. If at any time the
Issuer shall:

            (i) make or issue or set a record date for the holders of its Common
      Stock for the purpose of entitling them to receive a dividend payable in,
      or other distribution of, shares of Common Stock,

            (ii) subdivide its outstanding shares of Common Stock into a larger
      number of shares of Common Stock, or

            (iii) combine its outstanding shares of Common Stock into a smaller
      number of shares of Common Stock,

then (1) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (2) the Warrant Price then in
effect shall be adjusted to equal (A) the Warrant Price then in effect
multiplied by the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to the adjustment divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable immediately after
such adjustment.

Notwithstanding the foregoing, if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Warrant Price shall be adjusted pursuant to this
paragraph as of the time of actual payment of such dividends or distributions.

      (c) Certain Other Distributions. If at any time the Issuer shall make or
issue or set a record date for the determination of the holders of its Common
Stock for the purpose of entitling them to receive any dividend or other
distribution of:

            (i) cash (other than a cash dividend payable out of earnings or


                                       7


      earned surplus legally available for the payment of dividends under the
      laws of the jurisdiction of incorporation of the Issuer),

            (ii) any evidences of its indebtedness, any shares of stock of any
      class or any other securities or property of any nature whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),
      or

            (iii) any warrants or other rights to subscribe for or purchase any
      evidences of its indebtedness, any shares of stock of any class or any
      other securities or property of any nature whatsoever (other than cash,
      Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product of the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator of which shall be such Per Share Market Value minus the amount
allocable to one share of Common Stock of any such cash so distributable and of
the fair value (as determined in good faith by the Board of Directors of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (2) the Warrant Price then in effect shall be adjusted to equal (A) the
Warrant Price then in effect multiplied by the number of shares of Common Stock
for which this Warrant is exercisable immediately prior to the adjustment
divided by (B) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment. A reclassification of the Common
Stock (other than a change in par value, or from par value to no par value or
from no par value to par value) into shares of Common Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its Common Stock of such shares of such other class of stock within the
meaning of this Section 4(c) and, if the outstanding shares of Common Stock
shall be changed into a larger or smaller number of shares of Common Stock as a
part of such reclassification, such change shall be deemed a subdivision or
combination, as the case may be, of the outstanding shares of Common Stock
within the meaning of Section 4(b).

Notwithstanding the foregoing, if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully made on the
date fixed therefor, the Warrant Price shall be adjusted pursuant to this
Section 4(c) as of the time of actual payment of such dividends or
distributions.

      (d) Issuance of Additional Shares of Common Stock.

            (i) In the event the Issuer shall at any time following the Original
Issue Date issue any Additional Shares of Common Stock (otherwise than as
provided in the foregoing subsections (a) through (c) of this Section 4), at a
price per share less than the Warrant Price then in effect or without
consideration, then the Warrant Price upon each such issuance shall be adjusted
to that price determined by multiplying the Warrant Price then in effect by a
fraction:



                                       8


            (A) the numerator of which shall be equal to the sum of (x) the
      number of shares of Outstanding Common Stock immediately prior to the
      issuance of such Additional Shares of Common Stock plus (y) the number of
      shares of Common Stock (rounded to the nearest whole share) which the
      aggregate consideration for the total number of such Additional Shares of
      Common Stock so issued would purchase at a price per share equal to the
      Warrant Price then in effect, and

            (B) the denominator of which shall be equal to the number of shares
      of Outstanding Common Stock immediately after the issuance of such
      Additional Shares of Common Stock.

            (ii) No adjustment of the number of shares of Common Stock for which
this Warrant shall be exercisable shall be made under paragraph (i) of Section
4(d) upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any Common Stock Equivalents, if any such adjustment
shall previously have been made upon the issuance of such Common Stock
Equivalents (or upon the issuance of any warrant or other rights therefor)
pursuant to Section 4(e).

      (e) Issuance of Warrants or Other Rights. If at any time the Issuer shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a distribution of, or shall in any manner (whether directly or
by assumption in a merger in which the Issuer is the surviving corporation)
issue or sell, any Common Stock Equivalents (or issue any warrant or other
rights therefor), whether or not the rights to exchange or convert thereunder
are immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Common Stock Equivalents (or any warrant or
other rights therefor) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the number of shares
for which this Warrant is exercisable and the Warrant Price then in effect shall
be adjusted as provided in Section 4(d) on the basis that the maximum number of
Additional Shares of Common Stock issuable pursuant to all such Common Stock
Equivalents (or upon the issuance of any warrant or other rights therefor) shall
be deemed to have been issued and outstanding and the Issuer shall have received
all of the consideration payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights. No adjustments of the Warrant Price
then in effect or the number of Warrant Shares for which this Warrant is
exercisable shall be made upon the actual issue of such Common Stock or of such
Common Stock Equivalents upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such conversion or exchange of such
Common Stock Equivalents.

      (f) Issuance of Common Stock Equivalents. If at any time the Issuer shall
issue or sell any Common Stock Equivalents, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the aggregate
price per share for which Common Stock is issuable upon such conversion or
exchange plus the consideration received by the Issuer for issuance of such
Common Stock Equivalent divided by the number of shares of Common Stock issuable
pursuant to such Common Stock Equivalent shall be less than the Warrant Price in
effect immediately prior to the time of such issue or sale, then the number of
shares of Common Stock for which this Warrant is exercisable and the Warrant
Price then in effect shall be adjusted as provided in Section 4(d) on the basis
that the maximum number of Additional Shares of Common Stock necessary to effect


                                       9


the conversion or exchange of all such Common Stock Equivalents shall be deemed
to have been issued and outstanding and the Issuer shall have received all of
the consideration payable therefor, if any, as of the date of actual issuance of
such Common Stock Equivalents. No further adjustment of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect shall be made under this Section 4(e) upon the issuance of any Common
Stock Equivalents which are issued pursuant to the exercise of any warrants or
other subscription or purchase rights therefor, if any such adjustment shall
previously have been made upon the issuance of such warrants or other rights
pursuant to this Section 4(e). No further adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect shall be made upon the actual issue of such Common Stock upon conversion
or exchange of such Common Stock Equivalents.

      (g) Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect shall have been made pursuant to Section 4(e) as
the result of any issuance of Common Stock Equivalents, and (i) such Common
Stock Equivalents, or the right of conversion or exchange in such Common Stock
Equivalents, shall expire, and all or a portion of such or the right of
conversion or exchange with respect to all or a portion of such Common Stock
Equivalents, as the case may be, shall not have been exercised, or (ii) the
consideration per share for which shares of Common Stock are issuable pursuant
to such Common Stock Equivalents shall be increased, then such previous
adjustment shall be rescinded and annulled and the Additional Shares of Common
Stock which were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall no longer be
deemed to have been issued by virtue of such computation. Upon the occurrence of
an event set forth in this Section 4(g) above, there shall be a recomputation
made of the effect of such Common Stock Equivalents on the basis of: (i)
treating the number of Additional Shares of Common Stock theretofore actually
issued or issuable pursuant to the previous exercise of Common Stock Equivalents
or any such right of conversion or exchange, as having been issued on the date
or dates of any such exercise and for the consideration actually received and
receivable therefor, and (ii) treating any such Common Stock Equivalents which
then remain outstanding as having been granted or issued immediately after the
time of such increase of the consideration per share for which Additional Shares
of Common Stock are issuable under such Common Stock Equivalents; whereupon a
new adjustment of the number of shares of Common Stock for which this Warrant is
exercisable and the Warrant Price then in effect shall be made, which new
adjustment shall supersede the previous adjustment so rescinded and annulled.

      (h) Purchase of Common Stock by the Issuer. If the Issuer at any time
while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value, then
the Warrant Price upon each such purchase, redemption or acquisition shall be
adjusted to that price determined by multiplying such Warrant Price by a
fraction (i) the numerator of which shall be the number of shares of Outstanding
Common Stock immediately prior to such purchase, redemption or acquisition minus
the number of shares of Common Stock which the aggregate consideration for the
total number of such shares of Common Stock so purchased, redeemed or acquired
would purchase at the Per Share Market Value; and (ii) the denominator of which
shall be the number of shares of Outstanding Common Stock immediately after such
purchase, redemption or acquisition. For the purposes of this subsection (h),


                                       10


the date as of which the Per Share Market Price shall be computed shall be the
earlier of (x) the date on which the Issuer shall enter into a firm contract for
the purchase, redemption or acquisition of such Common Stock, or (y) the date of
actual purchase, redemption or acquisition of such Common Stock. For the
purposes of this subsection (h), a purchase, redemption or acquisition of a
Common Stock Equivalent shall be deemed to be a purchase of the underlying
Common Stock, and the computation herein required shall be made on the basis of
the full exercise, conversion or exchange of such Common Stock Equivalent on the
date as of which such computation is required hereby to be made, whether or not
such Common Stock Equivalent is actually exercisable, convertible or
exchangeable on such date.

      (i) Other Provisions applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Warrant Price then in effect provided for in this Section 4:

            (i) Computation of Consideration. To the extent that any Additional
Shares of Common Stock or any Common Stock Equivalents (or any warrants or other
rights therefor) shall be issued for cash consideration, the consideration
received by the Issuer therefor shall be the amount of the cash received by the
Issuer therefor, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription, the subscription price,
or, if such Additional Shares of Common Stock or Common Stock Equivalents are
sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price (in any such case subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation, discounts or expenses paid or incurred by
the Issuer for and in the underwriting of, or otherwise in connection with, the
issuance thereof). In connection with any merger or consolidation in which the
Issuer is the surviving corporation (other than any consolidation or merger in
which the previously outstanding shares of Common Stock of the Issuer shall be
changed to or exchanged for the stock or other securities of another
corporation), the amount of consideration therefore shall be, deemed to be the
fair value, as determined reasonably and in good faith by the Board, of such
portion of the assets and business of the nonsurviving corporation as the Board
may determine to be attributable to such shares of Common Stock or Common Stock
Equivalents, as the case may be. The consideration for any Additional Shares of
Common Stock issuable pursuant to any warrants or other rights to subscribe for
or purchase the same shall be the consideration received by the Issuer for
issuing such warrants or other rights plus the additional consideration payable
to the Issuer upon exercise of such warrants or other rights. The consideration
for any Additional Shares of Common Stock issuable pursuant to the terms of any
Common Stock Equivalents shall be the consideration received by the Issuer for
issuing warrants or other rights to subscribe for or purchase such Common Stock
Equivalents, plus the consideration paid or payable to the Issuer in respect of
the subscription for or purchase of such Common Stock Equivalents, plus the
additional consideration, if any, payable to the Issuer upon the exercise of the
right of conversion or exchange in such Common Stock Equivalents. In the event
of any consolidation or merger of the Issuer in which the Issuer is not the
surviving corporation or in which the previously outstanding shares of Common
Stock of the Issuer shall be changed into or exchanged for the stock or other


                                       11


securities of another corporation, or in the event of any sale of all or
substantially all of the assets of the Issuer for stock or other securities of
any corporation, the Issuer shall be deemed to have issued a number of shares of
its Common Stock for stock or securities or other property of the other
corporation computed on the basis of the actual exchange ratio on which the
transaction was predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or securities or other
property of the other corporation. In the event any consideration received by
the Issuer for any securities consists of property other than cash, the fair
market value thereof at the time of issuance or as otherwise applicable shall be
as determined in good faith by the Board. In the event Common Stock is issued
with other shares or securities or other assets of the Issuer for consideration
which covers both, the consideration computed as provided in this Section
4(i)(i) shall be allocated among such securities and assets as determined in
good faith by the Board.

            (ii) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common Stock for which this Warrant is exercisable that would otherwise be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common Stock, as provided for in Section 4(b)) up to, but not
beyond the date of exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than one percent (1%) of
the shares of Common Stock for which this Warrant is exercisable immediately
prior to the making of such adjustment. Any adjustment representing a change of
less than such minimum amount (except as aforesaid) which is postponed shall be
carried forward and made as soon as such adjustment, together with other
adjustments required by this Section 4 and not previously made, would result in
a minimum adjustment or on the date of exercise. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

            (iii) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into account to
the nearest one one-hundredth (1/100th) of a share.

            (iv) When Adjustment Not Required. If the Issuer shall take a record
of the holders of its Common Stock for the purpose of entitling them to receive
a dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders thereof, legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights, then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment previously made in respect thereof shall
be rescinded and annulled.

      (j) Form of Warrant after Adjustments. The form of this Warrant need not
be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

      (k) Escrow of Warrant Stock. If after any property becomes distributable
pursuant to this Section 4 by reason of the taking of any record of the holders
of Common Stock, but prior to the occurrence of the event for which such record
is taken, and the Holder exercises this Warrant, any shares of Common Stock
issuable upon exercise by reason of such adjustment shall be deemed the last
shares of Common Stock for which this Warrant is exercised (notwithstanding any


                                       12


other provision to the contrary herein) and such shares or other property shall
be held in escrow for the Holder by the Issuer to be issued to the Holder upon
and to the extent that the event actually takes place, upon payment of the
current Warrant Price. Notwithstanding any other provision to the contrary
herein, if the event for which such record was taken fails to occur or is
rescinded, then such escrowed shares shall be cancelled by the Issuer and
escrowed property returned.

      5. Notice of Adjustments. Whenever the Warrant Price or Warrant Share
Number shall be adjusted pursuant to Section 4 hereof (for purposes of this
Section 5, each an "adjustment"), the Issuer shall cause its Chief Financial
Officer to prepare and execute a certificate setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis on which the Board made any determination hereunder), and the Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such certificate to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with respect to the matters set forth in such certificate may at
the option of the Holder of this Warrant be submitted to the Issuer's
independent, outside accountant. The Issuer shall use its best efforts to cause
the accountant to perform the calculations and notify the Issuer and the Holder
of the results no later than five (5) business days from the time it receives
the disputed calculation. Such accountant's calculation shall be binding upon
all parties absent manifest error. The reasonable expenses of such accountant in
making such determination shall be paid by the Issuer, in the event the Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was correct, or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof, but in lieu of such fractional shares,
the Issuer shall make a cash payment therefor equal in amount to the product of
the applicable fraction multiplied by the Per Share Market Value then in effect.

      7. Ownership Cap and Certain Exercise Restriction. The Holder may not
exercise the Warrant hereunder to the extent such exercise would result in the
Holder beneficially owning (as determined in accordance with Section 13(d) of
the Exchange Act and the rules thereunder) in excess of 9.999% of the then
issued and outstanding shares of Common Stock, including shares issuable upon
exercise of the Warrant held by the Holder after application of this Section.

      8. Call. Notwithstanding anything herein to the contrary, commencing
twelve (12) months following the effective date of a registration statement
under the Securities Act providing for the resale of the Warrant Stock and the
shares of Common Stock issuable upon conversion of the Issuer's Series C
Preferred Stock issued pursuant to the Purchase Agreement (the "Registration
Statement"), the Issuer, at its option, may call up to one hundred percent
(100%) of this Warrant if the Per Share Market Value of the Common Stock has
been greater than $3.00 (as may be adjusted for any stock splits or combinations
of the Common Stock) for a period of ten (10) consecutive Trading Days
immediately prior to the date of delivery of the Call Notice (a "Call Notice
Period") by providing the Holder of this Warrant written notice pursuant to
Section 13 (the "Call Notice"); provided, that (a) the Registration Statement is
then in effect and has been effective, without lapse or suspension of any kind,
for a period of 60 consecutive calendar days, (b) trading in the Common Stock
shall not have been suspended by the Securities and Exchange Commission or the


                                       13


OTC Bulletin Board and (c) the Issuer is in material compliance with the terms
and conditions of this Warrant and the other Transaction Documents (as defined
in the Purchase Agreement); provided, further, that the Registration Statement
is in effect from the date of delivery of the Call Notice until the date which
is the later of (i) the date the Holder exercises the Warrant pursuant to the
Call Notice and (ii) the 20th day after the Holder receives the Call Notice (the
"Early Termination Date"). The rights and privileges granted pursuant to this
Warrant with respect to the shares of Warrant Stock subject to the Call Notice
(the "Called Warrant Shares") shall expire on the Early Termination Date if this
Warrant is not exercised with respect to such Called Warrant Shares prior to
such Early Termination Date. In the event this Warrant is not exercised with
respect to the Called Warrant Shares, the Issuer shall remit to the Holder of
this Warrant (A) $.01 per Called Warrant Share and (B) a new Warrant
representing the number of shares of Warrant Stock, if any, which shall not have
been subject to the Call Notice upon the Holder tendering to the Issuer the
applicable Warrant certificate. Notwithstanding anything in the foregoing to the
contrary, if the Holder may not exercise this Warrant as a result of the
restriction contained in Section 7 hereof, the Call Notice shall be deemed null
and void and shall not be deemed effective until the date that the Holder may
exercise this Warrant in accordance with Section 7 hereof.

      9. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer after the Original Issue Date, and all shares of
      Other Common, if any, issued by the Issuer after the Original Issue Date,
      except: (i) securities issued pursuant to a bona fide firm underwritten
      public offering of the Issuer's securities, (ii) securities issued
      pursuant to the conversion or exercise of convertible or excercisable
      securities issued or outstanding on or prior to the date hereof or issued
      pursuant to the Purchase Agreement, (iii) the Warrant Stock, (iv)
      securities issued in connection with strategic license agreements or other
      financing transactions so long as such issuances are not for the purpose
      of raising capital, (v) the issuance of Common Stock or the issuance or
      grants of Common Stock Equivalents pursuant to the Issuer's existing
      compensation and benefit plans or any other plan, agreement, or
      arrangement approved by the Board for the primary purpose of soliciting or
      retaining the services of employees, directors or consultants, (vi)
      securities issued (other than for cash) in connection with a merger and/or
      acquisition, consolidation, sale or disposition of all or substantially
      all of the Issuer's assets, (vii) any warrants issued to the placement
      agent for the transactions contemplated by the Purchase Agreement and any
      warrants issued to the placement agent for the transactions contemplated
      by the Unit Offering (as defined below), (viii) the payment of any
      dividends on the Series A Preferred Stock, Series B Preferred Stock or
      Series C Preferred Stock of the Issuer, (ix) the issuance of any shares of
      Series C Preferred Stock and warrants to purchase shares of Common Stock


                                       14


      in exchange for the Issuer's Series A and Series B Preferred Stock to be
      consummated by the Issuer and any shares of Common Stock issuable upon
      conversion or exercise of such securities, and (x) the issuance of shares
      of Common Stock in connection with a unit offering of up to $4,500,000 of
      Common Stock at a purchase price of $1.00 per share and warrants to
      purchase shares of Common Stock at an exercise price of $1.50 per share
      (the "Unit Offering') to be consummated within forty-five (45) days of the
      Original Issue Date and any shares of Common Stock issuable upon exercise
      of such warrants, provided, however, that at least $1,500,000 of the
      purchase price shall be paid in cash, a maximum of $1,000,000 of the
      purchase price may be paid with promissory notes maturing 90 days from the
      consummation of the Unit Offering, a maximum of $1,000,000 of the purchase
      price may be paid with promissory notes maturing 180 days from the
      consummation of the Unit Offering and a maximum of $1,000,000 of the
      purchase price may be paid with promissory notes maturing 270 days from
      the consummation of the Unit Offering, provided, further, that if the
      Issuer issues warrants pursuant to the Unit Offering at an exercise price
      of less than $1.50 per share, the Warrant Price shall automatically be
      reduced to the exercise price per share of the warrants issued by the
      Issuer pursuant to the Unit Offering.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital Stock" means and includes (i) any and all shares,
      interests, participations or other equivalents of or interests in (however
      designated) corporate stock, including, without limitation, shares of
      preferred or preference stock, (ii) all partnership interests (whether
      general or limited) in any Person which is a partnership, (iii) all
      membership interests or limited liability company interests in any limited
      liability company, and (iv) all equity or ownership interests in any
      Person of any other type.

            "Certificate of Incorporation" means the Certificate of
      Incorporation of the Issuer as in effect on the Original Issue Date, and
      as hereafter from time to time amended, modified, supplemented or restated
      in accordance with the terms hereof and thereof and pursuant to applicable
      law.

            "Common Stock" means the Common Stock, par value $.0001 per share,
      of the Issuer and any other Capital Stock into which such stock may
      hereafter be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any Additional Shares
      of Common Stock or any Convertible Security.

            "Convertible Securities" means evidences of Indebtedness, shares of
      Capital Stock or other Securities which are or may be at any time
      convertible into or exchangeable for Additional Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental Authority" means any governmental, regulatory or
      self-regulatory entity, department, body, official, authority, commission,
      board, agency or instrumentality, whether federal, state or local, and
      whether domestic or foreign.

            "Holders" mean the Persons who shall from time to time own any
      Warrant. The term "Holder" means one of the Holders.



                                       15


            "Independent Appraiser" means a nationally recognized or major
      regional investment banking firm or firm of independent certified public
      accountants of recognized standing (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of corporations
      or other entities as going concerns, and which is not affiliated with
      either the Issuer or the Holder of any Warrant.

            "Issuer" means Cytomedix, Inc., a Delaware corporation, and its
      successors.

            "Majority Holders" means at any time the Holders of Warrants
      exercisable for a majority of the shares of Warrant Stock issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means March 25, 2004.

            "OTC Bulletin Board" means the over-the-counter electronic bulletin
      board.

            "Other Common" means any other Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the distribution of earnings and assets of the Issuer without limitation
      as to amount.

            "Outstanding Common Stock" means, at any given time, the aggregate
      amount of outstanding shares of Common Stock, assuming full exercise,
      conversion or exchange (as applicable) of all options, warrants and other
      Securities which are convertible into or exercisable or exchangeable for,
      and any right to subscribe for, shares of Common Stock that are
      outstanding at such time.

            "Person" means an individual, corporation, limited liability
      company, partnership, joint stock company, trust, unincorporated
      organization, joint venture, Governmental Authority or other entity of
      whatever nature.

            "Per Share Market Value" means on any particular date (a) the
      closing bid price for a share of Common Stock in the over-the-counter
      market, as reported by the OTC Bulletin Board or in the National Quotation
      Bureau Incorporated or similar organization or agency succeeding to its
      functions of reporting prices) at the close of business on such date, or
      (b) if the Common Stock is not then reported by the OTC Bulletin Board or
      the National Quotation Bureau Incorporated (or similar organization or
      agency succeeding to its functions of reporting prices), then the average
      of the "Pink Sheet" quotes for the relevant conversion period, as
      determined in good faith by the holder, or (c) if the Common Stock is not
      then publicly traded the fair market value of a share of Common Stock as
      determined by the Board in good faith; provided, however, that the
      Majority Holders, after receipt of the determination by the Board, shall


                                       16


      have the right to select, jointly with the Issuer, an Independent
      Appraiser, in which case, the fair market value shall be the determination
      by such Independent Appraiser; and provided, further that all
      determinations of the Per Share Market Value shall be appropriately
      adjusted for any stock dividends, stock splits or other similar
      transactions during such period. The determination of fair market value
      shall be based upon the fair market value of the Issuer determined on a
      going concern basis as between a willing buyer and a willing seller and
      taking into account all relevant factors determinative of value, and shall
      be final and binding on all parties. In determining the fair market value
      of any shares of Common Stock, no consideration shall be given to any
      restrictions on transfer of the Common Stock imposed by agreement or by
      federal or state securities laws, or to the existence or absence of, or
      any limitations on, voting rights.

            "Purchase Agreement" means the Series C Convertible Preferred Stock
      Purchase Agreement dated as of March 25, 2004, among the Issuer and the
      investors a party thereto.

            "Securities" means any debt or equity securities of the Issuer,
      whether now or hereafter authorized, any instrument convertible into or
      exchangeable for Securities or a Security, and any option, warrant or
      other right to purchase or acquire any Security. "Security" means one of
      the Securities.

            "Securities Act" means the Securities Act of 1933, as amended, or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting Stock shall at the time be owned directly or indirectly by the
      Issuer or by one or more of its Subsidiaries, or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.

            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC Bulletin Board, or (b) if the Common Stock is not traded on the
      OTC Bulletin Board, a day on which the Common Stock is quoted in the
      over-the-counter market as reported by the National Quotation Bureau
      Incorporated (or any similar organization or agency succeeding its
      functions of reporting prices); provided, however, that in the event that
      the Common Stock is not listed or quoted as set forth in (a) or (b)
      hereof, then Trading Day shall mean any day except Saturday, Sunday and
      any day which shall be a legal holiday or a day on which banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting Stock" means, as applied to the Capital Stock of any
      corporation, Capital Stock of any class or classes (however designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing body) of such corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants" means the Warrants issued and sold pursuant to the
      Purchase Agreement, including, without limitation, this Warrant, and any
      other warrants of like tenor issued in substitution or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.



                                       17


            "Warrant Price" initially means U.S. $1.50, as such Warrant Price
      may be adjusted from time to time as shall result from the adjustments
      specified in this Warrant, including Section 4 hereto.

            "Warrant Share Number" means at any time the aggregate number of
      shares of Warrant Stock which may at such time be purchased upon exercise
      of this Warrant, after giving effect to all prior adjustments and
      increases to such number made or required to be made under the terms
      hereof.

            "Warrant Stock" means Common Stock issuable upon exercise of any
      Warrant or Warrants or otherwise issuable pursuant to any Warrant or
      Warrants.

      10. Other Notices. In case at any time:

                        (A)   the Issuer shall make any distributions to the
                              holders of Common Stock; or

                        (B)   the Issuer shall authorize the granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital reorganization by the
                              Issuer; or

                        (E)   there shall be any (i) consolidation or merger
                              involving the Issuer or (ii) sale, transfer or
                              other disposition of all or substantially all of
                              the Issuer's property, assets or business (except
                              a merger or other reorganization in which the
                              Issuer shall be the surviving corporation and its
                              shares of Capital Stock shall continue to be
                              outstanding and unchanged and except a
                              consolidation, merger, sale, transfer or other
                              disposition involving a wholly-owned Subsidiary);
                              or

                        (F)   there shall be a voluntary or involuntary
                              dissolution, liquidation or winding-up of the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for


                                       18


securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
(20) days prior to the record date or effective date for the event specified in
such notice.

      11. Amendment and Waiver. Any term, covenant, agreement or condition in
this Warrant may be amended, or compliance therewith may be waived (either
generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 11 without the consent of the Holder of this Warrant.

      12. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.

      13. 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 earlier of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified for notice prior to 5:00 p.m., eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date of mailing, if sent by overnight delivery by nationally recognized
overnight courier service or (iv) actual receipt by the party to whom such
notice is required to be given. The addresses for such communications shall be
with respect to the Holder of this Warrant or of Warrant Stock issued pursuant
hereto, addressed to such Holder at its last known address or facsimile number
appearing on the books of the Issuer maintained for such purposes, or with
respect to the Issuer, addressed to:

                        Cytomedix, Inc.
                        1523 Bowman Road, Suite A
                        Little Rock, Arkansas 72211
                        Attention: Chief Financial Officer
                        Tel. No.: (501) 219-2111
                        Fax No.:  (501) 219-2114

Copies of notices to the Issuer shall be sent to Williams & Anderson, PLC, 111
Center Street, 22nd Floor, Little Rock, Arkansas, 72201, Attention: Peter G.
Kumpe, Telephone No.: (501) 372-0800, Facsimile No.: (501) 372-6453. Copies of
notices to the Holder shall be sent to Jenkens & Gilchrist Parker Chapin LLP,
405 Lexington Avenue, New York, New York 10174, Attention: Christopher S.
Auguste, Telephone No.: (212) 704-6000, Facsimile No.: (212) 704-6288. Any party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party hereto.

      14. Warrant Agent. The Issuer may, by written notice to each Holder of
this Warrant, appoint an agent having an office in New York, New York for the
purpose of issuing shares of Warrant Stock on the exercise of this Warrant


                                       19


pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to subsection (d) of Section 2 hereof or replacing this Warrant pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing, and thereafter any
such issuance, exchange or replacement, as the case may be, shall be made at
such office by such agent.

      15. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Issuer
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest extent permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      16. Successors and Assigns. This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant Stock issued pursuant hereto, and shall be enforceable by any such
Holder or Holder of Warrant Stock.

      17. Modification and Severability. If, in any action before any court or
agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.

      18. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.


                                       20


      IN WITNESS WHEREOF, the Issuer has executed this Series C-1 Warrant as of
the day and year first above written.


                                      CYTOMEDIX, INC.


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




                                       21


                                  EXERCISE FORM
                               SERIES C-1 WARRANT
                                 CYTOMEDIX, INC.

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Cytomedix,
Inc. covered by the within Warrant.

Dated: _________________                    Signature   _____________________

                                            Address     _____________________
                                                        _____________________


Number of shares of Common Stock beneficially owned or deemed beneficially owned
by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________                    Signature   _____________________

                                            Address     _____________________
                                                        _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________                    Signature   _____________________

                                            Address     _____________________
                                                        _____________________

                           FOR USE BY THE ISSUER ONLY:



                                       22


This Warrant No. W-___ canceled (or transferred or exchanged) this _____ day of
___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.



















                                       23

EX-4.4

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE  STATE  SECURITIES  LAWS OR  CYTOMEDIX,  INC.  SHALL HAVE RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO CYTOMEDIX,  INC. THAT REGISTRATION
OF SUCH  SECURITIES  UNDER  THE  SECURITIES  ACT AND  UNDER  THE  PROVISIONS  OF
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

                         SERIES C-2 WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                                CYTOMEDIX, INC.

                             Expires March 25, 2009


No.: W-C-2-04-__                                 Number of Shares: ___________
Date of Issuance: March 25, 2004


      FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth, the
undersigned,   Cytomedix,  Inc.,  a  Delaware  corporation  (together  with  its
successors    and   assigns,    the    "Issuer"),    hereby    certifies    that
_______________________________   or  its  registered  assigns  is  entitled  to
subscribe  for and purchase,  during the Term (as  hereinafter  defined),  up to
____________________________________    (_____________)   shares   (subject   to
adjustment as  hereinafter  provided) of the duly  authorized,  validly  issued,
fully paid and  non-assessable  Common Stock of the Issuer, at an exercise price
per share equal to the Warrant Price then in effect,  subject,  however,  to the
provisions and upon the terms and conditions hereinafter set forth.  Capitalized
terms used in this  Warrant  and not  otherwise  defined  herein  shall have the
respective meanings specified in Section 9 hereof.

      1. Term.  The term of this  Warrant  shall  commence on March 25, 2004 and
shall expire at 5:00 p.m.,  eastern  time,  on March 25, 2009 (such period being
the "Term").

      2.  Method of Exercise  Payment;  Issuance of New  Warrant;  Transfer  and
Exchange.

      (a) Time of Exercise.  The purchase rights represented by this Warrant may
be  exercised in whole or in part during the Term  commencing  on March 25, 2004
and expiring on March 25, 2009.



      (b) Method of Exercise.  The Holder hereof may exercise  this Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment  to the  Issuer  of an  amount of  consideration  therefor  equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of  Warrant  Stock  with  respect  to which  this  Warrant  is then being
exercised,  payable at such Holder's  election (i) by certified or official bank
check or by wire  transfer  to an  account  designated  by the  Issuer,  (ii) by
"cashless  exercise" in accordance with the provisions of subsection (c) of this
Section  2, but only when a  registration  statement  under the  Securities  Act
providing for the resale of the Warrant Stock is not then in effect, or (iii) by
a combination of the foregoing methods of payment selected by the Holder of this
Warrant.

      (c)  Cashless  Exercise.  Notwithstanding  any  provisions  herein  to the
contrary and  commencing  one (1) year following the Original Issue Date, if (i)
the Per Share  Market  Value of one share of Common  Stock is  greater  than the
Warrant  Price  (at the  date of  calculation  as set  forth  below)  and (ii) a
registration  statement under the Securities Act providing for the resale of the
Warrant  Stock is not then in  effect,  in lieu of  exercising  this  Warrant by
payment of cash, the Holder may exercise this Warrant by a cashless exercise and
shall  receive  the  number of shares of  Common  Stock  equal to an amount  (as
determined  below) by surrender of this Warrant at the  principal  office of the
Issuer together with the properly endorsed Notice of Exercise in which event the
Issuer  shall  issue to the Holder a number of shares of Common  Stock  computed
using the following formula:

            X =    Y - (A)(Y)
                       ------
                          B

Where       X =   the number of shares of Common Stock to be issued to the
                  Holder.

            Y =   the  number  of   shares of  Common  Stock   purchasable  upon
                  exercise  of all of the  Warrant  or, if only a portion of the
                  Warrant is being  exercised,  the portion of the Warrant being
                  exercised.

            A =   the Warrant Price.

            B =   the Per Share Market Value of one share of Common Stock.

      (d)  Issuance of Stock  Certificates.  In the event of any exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and  conditions  hereof,  (i)  certificates  for the shares of Warrant  Stock so
purchased  shall be dated the date of such  exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three (3) Trading Days after such
exercise  or,  at  the  request  of the  Holder  (provided  that a  registration
statement under the Securities Act providing for the resale of the Warrant Stock
is then in effect and the Company's  transfer agent is  participating in the DTC
Fast  Automated  Securities  Transfer  Program),  issued  and  delivered  to the
Depository  Trust  Company  account  on the  Holder's  behalf  via  the  Deposit
Withdrawal  Agent  Commission  System  ("DWAC")  within a reasonable  time,  not
exceeding  three (3) Trading  Days after such  exercise,  and the Holder  hereof
shall be deemed for all purposes to be the holder of the shares of Warrant Stock
so  purchased  as of the date of such  exercise and (ii) unless this Warrant has
expired,  a new Warrant  representing  the number of shares of Warrant Stock, if

                                       2


any, with respect to which this Warrant shall not then have been exercised (less
any amount thereof which shall have been canceled in payment or partial  payment
of the Warrant Price as hereinabove provided) shall also be issued to the Holder
hereof at the Issuer's expense within a reasonable time, not exceeding seven (7)
Trading Days after such exercise.

      (e) Transferability of Warrant.  Subject to Section 2(g), this Warrant may
be  transferred  by a Holder  without the consent of the Issuer.  If transferred
pursuant to this  paragraph and subject to the  provisions of subsection  (g) of
this  Section 2, this Warrant may be  transferred  on the books of the Issuer by
the Holder hereof in person or by duly  authorized  attorney,  upon surrender of
this Warrant at the principal  office of the Issuer,  properly  endorsed (by the
Holder  executing an assignment in the form attached hereto) and upon payment of
any  necessary  transfer  tax or other  governmental  charge  imposed  upon such
transfer. This Warrant is exchangeable at the principal office of the Issuer for
Warrants  for the  purchase  of the same  aggregate  number of shares of Warrant
Stock, each new Warrant to represent the right to purchase such number of shares
of  Warrant  Stock as the  Holder  hereof  shall  designate  at the time of such
exchange.  All Warrants  issued on  transfers  or  exchanges  shall be dated the
Original  Issue Date and shall be identical  with this Warrant  except as to the
number of shares of Warrant Stock issuable pursuant thereto.

      (f) Continuing Rights of Holder. The Issuer will, at the time of or at any
time after each exercise of this Warrant, upon the request of the Holder hereof,
acknowledge  in writing the  extent,  if any, of its  continuing  obligation  to
afford to such  Holder all  rights to which such  Holder  shall  continue  to be
entitled  after such  exercise  in  accordance  with the terms of this  Warrant,
provided  that if any such  Holder  shall  fail to make any  such  request,  the
failure shall not affect the continuing  obligation of the Issuer to afford such
rights to such Holder.

      (g) Compliance with Securities Laws.

            (i) The Holder of this Warrant,  by acceptance hereof,  acknowledges
      that this  Warrant  or the  shares  of  Warrant  Stock to be  issued  upon
      exercise hereof are being acquired solely for the Holder's own account and
      not as a nominee for any other  party,  and for  investment,  and that the
      Holder will not offer,  sell or  otherwise  dispose of this Warrant or any
      shares of Warrant Stock to be issued upon exercise  hereof except pursuant
      to an effective registration statement, or an exemption from registration,
      under the Securities Act and any applicable state securities laws.

            (ii) Except as provided in paragraph  (iii) below,  this Warrant and
      all certificates representing shares of Warrant Stock issued upon exercise
      hereof shall be stamped or imprinted  with a legend in  substantially  the
      following form:

            THIS  WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE  UPON
            EXERCISE   HEREOF  HAVE  NOT  BEEN   REGISTERED   UNDER  THE
            SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR
            ANY STATE  SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED
            OR  OTHERWISE   DISPOSED  OF  UNLESS  REGISTERED  UNDER  THE

                                       3


            SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
            CYTOMEDIX,  INC.  SHALL HAVE  RECEIVED AN OPINION OF COUNSEL
            REASONABLY SATISFACTORY TO CYTOMEDIX, INC. THAT REGISTRATION
            OF SUCH  SECURITIES  UNDER THE  SECURITIES ACT AND UNDER THE
            PROVISIONS  OF  APPLICABLE  STATE  SECURITIES  LAWS  IS  NOT
            REQUIRED.

            (iii) The Issuer  agrees to  reissue  this  Warrant or  certificates
       representing any of the Warrant Stock, without the legend set forth above
       if at such time, prior to making any transfer of any such securities, the
       Holder shall give written notice to the Issuer  describing the manner and
       terms of such transfer and removal as the Issuer may reasonably  request.
       Such proposed transfer and removal will not be effected until: (a) either
       (i) the Issuer has received an opinion of counsel reasonably satisfactory
       to the Issuer,  to the effect that the  registration  of such  securities
       under the Securities Act is not required in connection with such proposed
       transfer, (ii) a registration statement under the Securities Act covering
       such  proposed  disposition  has  been  filed  by  the  Issuer  with  the
       Securities  and Exchange  Commission and has become  effective  under the
       Securities Act and the holder has complied with any  prospectus  delivery
       requirements,  (iii) the Issuer has received  other  evidence  reasonably
       satisfactory to the Issuer that such registration and qualification under
       the Securities Act and state  securities  laws are not required,  or (iv)
       the Holder  provides  the Issuer  with  reasonable  assurances  that such
       security can be sold pursuant to Rule 144 under the  Securities  Act; and
       (b) either (i) the Issuer has  received an opinion of counsel  reasonably
       satisfactory  to  the  Issuer,   to  the  effect  that   registration  or
       qualification under the securities or "blue sky" laws of any state is not
       required in connection with such proposed disposition, or (ii) compliance
       with applicable  state securities or "blue sky" laws has been effected or
       a valid exemption exists with respect thereto. The Issuer will respond to
       any such notice from a holder within five (5) business  days. In the case
       of any proposed  transfer  under this Section  2(g),  the Issuer will use
       reasonable efforts to comply with any such applicable state securities or
       "blue sky" laws, but shall in no event be required,  (x) to qualify to do
       business  in any state  where it is not then  qualified,  (y) to take any
       action that would subject it to tax or to the general  service of process
       in any state  where it is not then  subject,  or (z) to comply with state
       securities  or "blue  sky" laws of any state  for which  registration  by
       coordination is unavailable to the Issuer.  The  restrictions on transfer
       contained in this Section 2(g) shall be in addition to, and not by way of
       limitation of, any other  restrictions on transfer contained in any other
       section of this Warrant.  Whenever a certificate representing the Warrant
       Stock is required to be issued to a the Holder without a legend,  in lieu
       of  delivering  physical  certificates  representing  the Warrant  Stock,
       provided the Issuer's  transfer agent is  participating in the Depository
       Trust Company ("DTC") Fast Automated  Securities  Transfer  program,  the
       Issuer shall use its reasonable  best efforts to cause its transfer agent
       to  electronically  transmit the Warrant Stock to the Holder by crediting
       the  account of the  Holder's  Prime  Broker with DTC through its Deposit
       Withdrawal   Agent   Commission   ("DWAC")  system  (to  the  extent  not
       inconsistent  with  any  provisions  of  this  Warrant  or  the  Purchase
       Agreement).

                                       4


      (h) In no event may the Holder  exercise  this Warrant in whole or in part
unless the Holder is an  "accredited  investor" as defined in Regulation D under
the Securities Act.

      3. Stock Fully Paid; Reservation and Listing of Shares; Covenants.

      (a) Stock Fully  Paid.  The Issuer  represents,  warrants,  covenants  and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will,  when issued in accordance  with the
terms of this  Warrant,  be duly  authorized,  validly  issued,  fully  paid and
non-assessable  and free from all taxes, liens and charges created by or through
the  Issuer.  The Issuer  further  covenants  and agrees  that during the period
within  which this Warrant may be  exercised,  the Issuer will at all times have
authorized  and  reserved  for the  purpose of the issue upon  exercise  of this
Warrant  a  sufficient  number of shares  of  Common  Stock to  provide  for the
exercise of this Warrant.

      (b) Reservation. If any shares of Common Stock required to be reserved for
issuance  upon  exercise  of this  Warrant or as  otherwise  provided  hereunder
require registration or qualification with any governmental  authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its reasonable best efforts as  expeditiously  as possible at its
expense to cause such shares to be duly  registered or qualified.  If the Issuer
shall list any shares of Common  Stock on any  securities  exchange or market it
will, at its expense,  list thereon,  maintain and increase when  necessary such
listing,  of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided  hereunder  (provided that such Warrant
Stock  has been  registered  pursuant  to a  registration  statement  under  the
Securities  Act then in  effect),  and,  to the  extent  permissible  under  the
applicable securities exchange rules, all unissued shares of Warrant Stock which
are at any time issuable hereunder,  so long as any shares of Common Stock shall
be so  listed.  The  Issuer  will also so list on each  securities  exchange  or
market, and will maintain such listing of, any other securities which the Holder
of this  Warrant  shall be entitled to receive upon the exercise of this Warrant
if at the time  any  securities  of the  same  class  shall  be  listed  on such
securities exchange or market by the Issuer.

      (c)  Covenants.  The  Issuer  shall not by any action  including,  without
limitation,  amending the  Certificate  of  Incorporation  or the by-laws of the
Issuer,  or through  any  reorganization,  transfer  of  assets,  consolidation,
merger,  dissolution,  issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such  actions as may be  necessary  or  appropriate  to
protect  the  rights  of the  Holder  hereof  against  dilution  (to the  extent
specifically provided herein) or impairment.  Without limiting the generality of
the  foregoing,  the Issuer  will (i) not permit the par value,  if any,  of its
Common  Stock to exceed  the then  effective  Warrant  Price,  (ii) not amend or
modify any  provision  of the  Certificate  of  Incorporation  or by-laws of the
Issuer in any manner  that would  adversely  affect the rights of the Holders of
the Warrants in their  capacity as Holders of the Warrants,  (iii) take all such
action as may be  reasonably  necessary in order that the Issuer may validly and
legally  issue fully paid and  nonassessable  shares of Common  Stock,  free and
clear  of any  liens,  claims,  encumbrances  and  restrictions  (other  than as
provided herein) upon the exercise of this Warrant,  and (iv) use its reasonable
best efforts to obtain all such authorizations,  exemptions or consents from any

                                       5


public  regulatory  body  having  jurisdiction  thereof  as  may  be  reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.

      (d) Loss,  Theft,  Destruction  of  Warrants.  Upon  receipt  of  evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

      4.  Adjustment of Warrant  Price and Warrant  Share Number.  The number of
shares of Common Stock for which this Warrant is  exercisable,  and the price at
which such  shares may be  purchased  upon  exercise of this  Warrant,  shall be
subject  to  adjustment  from time to time as set forth in this  Section  4. The
Issuer shall give the Holder notice of any event  described below which requires
an adjustment pursuant to this Section 4 in accordance with Section 5.

      (a)  Recapitalization,  Reorganization,  Reclassification,  Consolidation,
Merger or Sale.

            (i) In case the Issuer after the Original Issue Date shall do any of
      the following (each, a "Triggering  Event"): (a) consolidate or merge with
      or into another  corporation where the holders of outstanding Voting Stock
      prior  to  such  merger  or  consolidation  do  not  own  over  50% of the
      outstanding Voting Stock of the merged or consolidated  entity immediately
      after such merger or  consolidation,  or (b) sell all or substantially all
      of its properties or assets to any other Person,  or (c) change the Common
      Stock to the same or different number of shares of any class or classes of
      stock,  whether by reclassification,  exchange,  substitution or otherwise
      (other  than by way of a stock  split or  combination  of  shares or stock
      dividends or distributions  provided for in Section 4(b) or Section 4(c)),
      or (d) effect a capital reorganization (other than by way of a stock split
      or combination of shares or stock dividends or distributions  provided for
      in  Section  4(b) or  Section  4(c)),  then,  and in the case of each such
      Triggering  Event,  proper provision shall be made so that, upon the basis
      and the terms and in the manner  provided in this  Warrant,  the Holder of
      this Warrant shall be entitled upon the exercise  hereof at any time after
      the  consummation of such Triggering  Event, to the extent this Warrant is
      not exercised  prior to such  Triggering  Event, to receive at the Warrant
      Price in effect at the time immediately  prior to the consummation of such
      Triggering  Event in lieu of the Common Stock  issuable upon such exercise
      of this Warrant prior to such Triggering  Event, the securities,  cash and
      property  to  which  such  Holder  would  have  been   entitled  upon  the
      consummation  of such  Triggering  Event if such Holder had  exercised the
      rights represented by this Warrant  immediately prior thereto,  subject to
      adjustments  (subsequent to such corporate action) as nearly equivalent as
      possible to the adjustments provided for elsewhere in this Section 4.

            (ii)  Notwithstanding  anything  contained  in this  Warrant  to the
      contrary,  a  Triggering  Event shall not be deemed to have  occurred  if,
      prior to the  consummation  thereof,  each Person  (other than the Issuer)
      which may be required to deliver any securities, cash or property upon the
      exercise  of this  Warrant as provided  herein  shall  assume,  by written

                                       6


      instrument  delivered to, and  reasonably  satisfactory  to, the Holder of
      this Warrant, (A) the obligations of the Issuer under this Warrant (and if
      the Issuer shall survive the consummation of such Triggering  Event,  such
      assumption shall be in addition to, and shall not release the Issuer from,
      any  continuing  obligations of the Issuer under this Warrant) and (B) the
      obligation  to deliver to such Holder such shares of  securities,  cash or
      property  as,  in  accordance  with  the  foregoing   provisions  of  this
      subsection (a), such Holder shall be entitled to receive,  and such Person
      shall have  similarly  delivered to such Holder a written  acknowledgement
      executed  by the  President  or Chief  Financial  Officer of the  Company,
      stating  that this  Warrant  shall  thereafter  continue in full force and
      effect and the terms hereof  (including,  without  limitation,  all of the
      provisions of this  subsection (a)) shall be applicable to the securities,
      cash or property  which such  Person may be  required to deliver  upon any
      exercise of this Warrant or the exercise of any rights pursuant hereto.

            (b) Stock Dividends,  Subdivisions and Combinations.  If at any time
the Issuer shall:

                  (i) make or issue or set a record  date for the holders of its
      Common  Stock for the  purpose  of  entitling  them to  receive a dividend
      payable in, or other distribution of, shares of Common Stock,

                  (ii) effect a stock split of its outstanding  shares of Common
      Stock into a larger number of shares of Common Stock, or

                  (iii)  combine its  outstanding  shares of Common Stock into a
      smaller number of shares of Common Stock,

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record  holder of the same
number of  shares  of  Common  Stock  for  which  this  Warrant  is  exercisable
immediately  prior to the  occurrence  of such event would own or be entitled to
receive  after the  happening of such event,  and (2) the Warrant  Price then in
effect  shall  be  adjusted  to  equal  (A) the  Warrant  Price  then in  effect
multiplied  by the number of shares of Common  Stock for which  this  Warrant is
exercisable  immediately  prior to the  adjustment  divided by (B) the number of
shares of Common Stock for which this Warrant is exercisable  immediately  after
such adjustment.

Notwithstanding  the  foregoing,  if such  record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully made on the
date fixed  therefor,  the  Warrant  Price  shall be  adjusted  pursuant to this
paragraph as of the time of actual payment of such dividends or distributions.

      (c) Certain Other  Distributions.  If at any time the Issuer shall make or
issue or set a record  date for the  determination  of the holders of its Common
Stock for the  purpose  of  entitling  them to  receive  any  dividend  or other
distribution of:

                  (i) cash (other than a cash  dividend  payable out of earnings
      or earned surplus legally available for the payment of dividends under the

                                       7


      laws of the jurisdiction of incorporation of the Issuer),

                  (ii) any evidences of its indebtedness, any shares of stock of
      any class or any other  securities  or property  of any nature  whatsoever
      (other than cash,  Common Stock Equivalents or Additional Shares of Common
      Stock), or

                  (iii)  any  warrants  or  other  rights  to  subscribe  for or
      purchase  any  evidences of its  indebtedness,  any shares of stock of any
      class or any other securities or property of any nature  whatsoever (other
      than cash, Common Stock Equivalents or Additional Shares of Common Stock),

then (1) the  number  of  shares of Common  Stock  for  which  this  Warrant  is
exercisable  shall be  adjusted  to equal the product of the number of shares of
Common Stock for which this  Warrant is  exercisable  immediately  prior to such
adjustment  multiplied by a fraction (A) the numerator of which shall be the Per
Share Market Value of Common Stock at the date of taking such record and (B) the
denominator  of which  shall be such Per Share  Market  Value  minus the  amount
allocable to one share of Common Stock of any such cash so distributable  and of
the fair value (as  determined  in good faith by the Board of  Directors  of the
Issuer and supported by an opinion from an investment banking firm of recognized
national standing acceptable to (but not affiliated with) the Holder) of any and
all such  evidences  of  indebtedness,  shares of  stock,  other  securities  or
property or warrants or other  subscription or purchase rights so distributable,
and (2) the  Warrant  Price then in effect  shall be  adjusted  to equal (A) the
Warrant Price then in effect  multiplied by the number of shares of Common Stock
for which  this  Warrant  is  exercisable  immediately  prior to the  adjustment
divided  by (B) the number of shares of Common  Stock for which this  Warrant is
exercisable immediately after such adjustment.  A reclassification of the Common
Stock  (other  than a change in par value,  or from par value to no par value or
from no par value to par value)  into  shares of Common  Stock and shares of any
other class of stock shall be deemed a distribution by the Issuer to the holders
of its  Common  Stock of such  shares of such  other  class of stock  within the
meaning of this  Section  4(c) and, if the  outstanding  shares of Common  Stock
shall be changed into a larger or smaller  number of shares of Common Stock as a
part of such  reclassification,  such change  shall be deemed a  subdivision  or
combination,  as the case may be, of the  outstanding  shares  of  Common  Stock
within the meaning of Section 4(b).

Notwithstanding  the  foregoing,  if such  record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully made on the
date fixed  therefor,  the  Warrant  Price  shall be  adjusted  pursuant to this
Section  4(c)  as  of  the  time  of  actual   payment  of  such   dividends  or
distributions.

      (d) Issuance of Additional Shares of Common Stock.

            (i) In the event the Issuer shall at any time following the Original
Issue  Date  issue any  Additional  Shares of Common  Stock  (otherwise  than as
provided in the foregoing  subsections  (a) through (c) of this Section 4), at a
price  per  share  less  than  the  Warrant  Price  then in  effect  or  without
consideration,  then the Warrant Price upon each such issuance shall be adjusted
to that price  determined by  multiplying  the Warrant Price then in effect by a
fraction:

                                       8


                  (A) the  numerator  of which  shall be equal to the sum of (x)
            the number of shares of Outstanding  Common Stock  immediately prior
            to the issuance of such  Additional  Shares of Common Stock plus (y)
            the number of shares of Common Stock  (rounded to the nearest  whole
            share)  which the  aggregate  consideration  for the total number of
            such Additional Shares of Common Stock so issued would purchase at a
            price per share equal to the Warrant Price then in effect, and

                  (B) the  denominator  of which shall be equal to the number of
            shares of Outstanding Common Stock immediately after the issuance of
            such Additional Shares of Common Stock.

            (ii) No adjustment of the number of shares of Common Stock for which
this Warrant shall be exercisable  shall be made under  paragraph (i) of Section
4(d) upon the issuance of any Additional Shares of Common Stock which are issued
pursuant to the exercise of any Common Stock Equivalents, if any such adjustment
shall  previously  have  been  made  upon  the  issuance  of such  Common  Stock
Equivalents  (or upon the  issuance  of any  warrant or other  rights  therefor)
pursuant to Section 4(e).

      (e) Issuance of Warrants or Other Rights.  If at any time the Issuer shall
take a record of the holders of its Common  Stock for the  purpose of  entitling
them to receive a distribution  of, or shall in any manner (whether  directly or
by  assumption  in a merger in which the  Issuer is the  surviving  corporation)
issue or sell,  any  Common  Stock  Equivalents  (or issue any  warrant or other
rights  therefor),  whether or not the rights to exchange or convert  thereunder
are immediately  exercisable,  and the price per share for which Common Stock is
issuable upon the exercise of such Common Stock  Equivalents  (or any warrant or
other  rights  therefor)  shall  be  less  than  the  Warrant  Price  in  effect
immediately  prior to the time of such issue or sale,  then the number of shares
for which this Warrant is exercisable and the Warrant Price then in effect shall
be adjusted as provided in Section 4(d) on the basis that the maximum  number of
Additional  Shares of Common  Stock  issuable  pursuant to all such Common Stock
Equivalents (or upon the issuance of any warrant or other rights therefor) shall
be deemed to have been issued and outstanding and the Issuer shall have received
all of the consideration  payable therefor, if any, as of the date of the actual
issuance of such warrants or other rights.  No  adjustments of the Warrant Price
then in effect or the  number of  Warrant  Shares  for  which  this  Warrant  is
exercisable  shall be made upon the actual issue of such Common Stock or of such
Common Stock  Equivalents upon exercise of such warrants or other rights or upon
the actual issue of such Common Stock upon such  conversion  or exchange of such
Common Stock Equivalents.

      (f) Issuance of Common Stock Equivalents.  If at any time the Issuer shall
issue or sell  any  Common  Stock  Equivalents,  whether  or not the  rights  to
exchange or convert  thereunder are immediately  exercisable,  and the aggregate
price per share for which  Common  Stock is  issuable  upon such  conversion  or
exchange  plus the  consideration  received  by the Issuer for  issuance of such
Common Stock Equivalent divided by the number of shares of Common Stock issuable
pursuant to such Common Stock Equivalent shall be less than the Warrant Price in
effect  immediately  prior to the time of such issue or sale, then the number of
shares of Common  Stock for which this  Warrant is  exercisable  and the Warrant
Price then in effect  shall be adjusted as provided in Section 4(d) on the basis
that the maximum number of Additional Shares of Common Stock necessary to effect

                                       9


the conversion or exchange of all such Common Stock  Equivalents shall be deemed
to have been issued and  outstanding  and the Issuer shall have  received all of
the consideration payable therefor, if any, as of the date of actual issuance of
such Common Stock Equivalents.  No further adjustment of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect  shall be made under this  Section  4(e) upon the  issuance of any Common
Stock  Equivalents  which are issued pursuant to the exercise of any warrants or
other  subscription or purchase rights  therefor,  if any such adjustment  shall
previously  have been made upon the  issuance of such  warrants or other  rights
pursuant to this Section 4(e). No further adjustments of the number of shares of
Common Stock for which this Warrant is exercisable and the Warrant Price then in
effect shall be made upon the actual issue of such Common Stock upon  conversion
or exchange of such Common Stock Equivalents.

      (g)  Superseding  Adjustment.  If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant  Price then in effect  shall have been made  pursuant to Section 4(e) as
the result of any  issuance  of Common  Stock  Equivalents,  and (i) such Common
Stock  Equivalents,  or the right of conversion or exchange in such Common Stock
Equivalents,  shall  expire,  and  all or a  portion  of such  or the  right  of
conversion  or exchange  with  respect to all or a portion of such Common  Stock
Equivalents,  as the case may be,  shall  not have been  exercised,  or (ii) the
consideration  per share for which shares of Common Stock are issuable  pursuant
to such  Common  Stock  Equivalents  shall  be  increased,  then  such  previous
adjustment  shall be rescinded and annulled and the Additional  Shares of Common
Stock which were deemed to have been issued by virtue of the computation made in
connection  with the  adjustment  so rescinded  and annulled  shall no longer be
deemed to have been issued by virtue of such computation. Upon the occurrence of
an event set forth in this  Section 4(g) above,  there shall be a  recomputation
made of the  effect of such  Common  Stock  Equivalents  on the  basis  of:  (i)
treating the number of Additional  Shares of Common Stock  theretofore  actually
issued or issuable pursuant to the previous exercise of Common Stock Equivalents
or any such right of conversion  or exchange,  as having been issued on the date
or dates of any such exercise and for the  consideration  actually  received and
receivable  therefor,  and (ii) treating any such Common Stock Equivalents which
then remain  outstanding as having been granted or issued  immediately after the
time of such increase of the consideration per share for which Additional Shares
of Common Stock are issuable  under such Common Stock  Equivalents;  whereupon a
new adjustment of the number of shares of Common Stock for which this Warrant is
exercisable  and the  Warrant  Price  then in  effect  shall be made,  which new
adjustment shall supersede the previous adjustment so rescinded and annulled.

      (h)  Purchase  of Common  Stock by the  Issuer.  If the Issuer at any time
while this  Warrant is  outstanding  shall,  directly  or  indirectly  through a
Subsidiary or  otherwise,  purchase,  redeem or otherwise  acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value,  then
the Warrant Price upon each such purchase,  redemption or  acquisition  shall be
adjusted  to that  price  determined  by  multiplying  such  Warrant  Price by a
fraction (i) the numerator of which shall be the number of shares of Outstanding
Common Stock immediately prior to such purchase, redemption or acquisition minus
the number of shares of Common Stock which the aggregate  consideration  for the
total number of such shares of Common Stock so  purchased,  redeemed or acquired
would purchase at the Per Share Market Value;  and (ii) the denominator of which
shall be the number of shares of Outstanding Common Stock immediately after such

                                       10


purchase,  redemption or  acquisition.  For the purposes of this subsection (h),
the date as of which the Per Share Market  Price shall be computed  shall be the
earlier of (x) the date on which the Issuer shall enter into a firm contract for
the purchase, redemption or acquisition of such Common Stock, or (y) the date of
actual  purchase,  redemption  or  acquisition  of such  Common  Stock.  For the
purposes of this  subsection  (h), a purchase,  redemption or  acquisition  of a
Common  Stock  Equivalent  shall be deemed to be a  purchase  of the  underlying
Common Stock, and the computation  herein required shall be made on the basis of
the full exercise, conversion or exchange of such Common Stock Equivalent on the
date as of which such computation is required hereby to be made,  whether or not
such  Common  Stock   Equivalent  is  actually   exercisable,   convertible   or
exchangeable on such date.

      (i) Other  Provisions  applicable to Adjustments  under this Section.  The
following  provisions  shall be applicable to the making of  adjustments  of the
number of shares of Common Stock for which this Warrant is  exercisable  and the
Warrant Price then in effect provided for in this Section 4:

            (i) Computation of Consideration.  To the extent that any Additional
Shares of Common Stock or any Common Stock Equivalents (or any warrants or other
rights  therefor)  shall be issued  for cash  consideration,  the  consideration
received by the Issuer  therefor shall be the amount of the cash received by the
Issuer therefor,  or, if such Additional  Shares of Common Stock or Common Stock
Equivalents are offered by the Issuer for subscription,  the subscription price,
or, if such  Additional  Shares of Common Stock or Common Stock  Equivalents are
sold to  underwriters  or dealers  for public  offering  without a  subscription
offering,  the initial public  offering price (in any such case  subtracting any
amounts paid or receivable for accrued interest or accrued dividends and without
taking into account any compensation,  discounts or expenses paid or incurred by
the Issuer for and in the  underwriting of, or otherwise in connection with, the
issuance  thereof).  In connection with any merger or consolidation in which the
Issuer is the surviving  corporation  (other than any consolidation or merger in
which the previously  outstanding  shares of Common Stock of the Issuer shall be
changed  to  or  exchanged  for  the  stock  or  other   securities  of  another
corporation),  the amount of consideration  therefore shall be, deemed to be the
fair value,  as determined  reasonably  and in good faith by the Board,  of such
portion of the assets and business of the nonsurviving  corporation as the Board
may determine to be  attributable to such shares of Common Stock or Common Stock
Equivalents,  as the case may be. The consideration for any Additional Shares of
Common Stock issuable  pursuant to any warrants or other rights to subscribe for
or  purchase  the same  shall be the  consideration  received  by the Issuer for
issuing such warrants or other rights plus the additional  consideration payable
to the Issuer upon exercise of such warrants or other rights.  The consideration
for any Additional  Shares of Common Stock issuable pursuant to the terms of any
Common Stock Equivalents  shall be the consideration  received by the Issuer for
issuing  warrants or other rights to subscribe for or purchase such Common Stock
Equivalents,  plus the consideration paid or payable to the Issuer in respect of
the  subscription  for or purchase of such Common  Stock  Equivalents,  plus the
additional consideration, if any, payable to the Issuer upon the exercise of the
right of conversion or exchange in such Common Stock  Equivalents.  In the event
of any  consolidation  or  merger of the  Issuer in which the  Issuer is not the
surviving  corporation or in which the previously  outstanding  shares of Common
Stock of the Issuer shall be changed  into or  exchanged  for the stock or other
securities  of  another  corporation,  or in the  event  of any  sale  of all or
substantially  all of the assets of the Issuer for stock or other  securities of
any corporation, the Issuer shall be deemed to have issued a number of shares of

                                       11


its  Common  Stock  for  stock or  securities  or other  property  of the  other
corporation  computed  on the basis of the  actual  exchange  ratio on which the
transaction  was predicated,  and for a  consideration  equal to the fair market
value on the date of such  transaction  of all such stock or securities or other
property of the other  corporation.  In the event any consideration  received by
the Issuer for any  securities  consists of property  other than cash,  the fair
market value thereof at the time of issuance or as otherwise applicable shall be
as  determined  in good faith by the Board.  In the event Common Stock is issued
with other shares or securities or other assets of the Issuer for  consideration
which  covers  both,  the  consideration  computed as  provided in this  Section
4(i)(i)  shall be allocated  among such  securities  and assets as determined in
good faith by the Board.

            (ii) When  Adjustments to Be Made. The adjustments  required by this
Section 4 shall be made whenever and as often as any specified  event  requiring
an adjustment shall occur, except that any adjustment of the number of shares of
Common  Stock for which this  Warrant is  exercisable  that would  otherwise  be
required may be postponed (except in the case of a subdivision or combination of
shares of the Common  Stock,  as  provided  for in Section  4(b)) up to, but not
beyond the date of  exercise if such  adjustment  either by itself or with other
adjustments  not previously made adds or subtracts less than one percent (1%) of
the shares of Common  Stock for which this  Warrant is  exercisable  immediately
prior to the making of such adjustment.  Any adjustment representing a change of
less than such minimum amount (except as aforesaid)  which is postponed shall be
carried  forward  and  made  as soon as such  adjustment,  together  with  other
adjustments  required by this Section 4 and not previously made, would result in
a  minimum  adjustment  or on the  date  of  exercise.  For the  purpose  of any
adjustment, any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.

            (iii)  Fractional  Interests.  In computing  adjustments  under this
Section 4,  fractional  interests in Common Stock shall be taken into account to
the nearest one one-hundredth (1/100th) of a share.

            (iv) When Adjustment Not Required. If the Issuer shall take a record
of the holders of its Common Stock for the purpose of entitling  them to receive
a  dividend  or  distribution  or  subscription  or  purchase  rights and shall,
thereafter and before the distribution to stockholders thereof,  legally abandon
its plan to pay or deliver such dividend, distribution, subscription or purchase
rights,  then thereafter no adjustment shall be required by reason of the taking
of such record and any such adjustment  previously made in respect thereof shall
be rescinded and annulled.

      (j) Form of Warrant after  Adjustments.  The form of this Warrant need not
be changed  because of any  adjustments  in the Warrant  Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

      (k) Escrow of Warrant Stock. If after any property  becomes  distributable
pursuant to this  Section 4 by reason of the taking of any record of the holders
of Common Stock,  but prior to the occurrence of the event for which such record
is taken,  and the Holder  exercises  this  Warrant,  any shares of Common Stock
issuable  upon  exercise by reason of such  adjustment  shall be deemed the last
shares of Common Stock for which this Warrant is exercised  (notwithstanding any

                                       12


other provision to the contrary  herein) and such shares or other property shall
be held in escrow for the  Holder by the Issuer to be issued to the Holder  upon
and to the extent  that the event  actually  takes  place,  upon  payment of the
current  Warrant  Price.  Notwithstanding  any other  provision  to the contrary
herein,  if the event  for  which  such  record  was taken  fails to occur or is
rescinded,  then such  escrowed  shares  shall be  cancelled  by the  Issuer and
escrowed property returned.

      5. Notice of  Adjustments.  Whenever  the Warrant  Price or Warrant  Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section 5, each an  "adjustment"),  the Issuer  shall cause its Chief  Financial
Officer to prepare  and  execute a  certificate  setting  forth,  in  reasonable
detail,  the event requiring the adjustment,  the amount of the adjustment,  the
method by which such  adjustment was calculated  (including a description of the
basis on which the Board  made any  determination  hereunder),  and the  Warrant
Price and Warrant Share Number after giving effect to such adjustment, and shall
cause copies of such  certificate  to be delivered to the Holder of this Warrant
promptly after each adjustment. Any dispute between the Issuer and the Holder of
this Warrant with  respect to the matters set forth in such  certificate  may at
the  option  of the  Holder  of  this  Warrant  be  submitted  to  the  Issuer's
independent,  outside accountant. The Issuer shall use its best efforts to cause
the accountant to perform the  calculations and notify the Issuer and the Holder
of the  results no later than five (5)  business  days from the time it receives
the disputed  calculation.  Such accountant's  calculation shall be binding upon
all parties absent manifest error. The reasonable expenses of such accountant in
making such determination shall be paid by the Issuer, in the event the Holder's
calculation was correct, or by the Holder, in the event the Issuer's calculation
was  correct,  or equally by the Issuer and the Holder in the event that neither
the Issuer's or the Holder's calculation was correct.

      6. Fractional Shares. No fractional shares of Warrant Stock will be issued
in connection with any exercise hereof,  but in lieu of such fractional  shares,
the Issuer shall make a cash payment  therefor equal in amount to the product of
the applicable fraction multiplied by the Per Share Market Value then in effect.

      7.  Ownership  Cap and Certain  Exercise  Restriction.  The Holder may not
exercise the Warrant  hereunder to the extent such exercise  would result in the
Holder  beneficially  owning (as determined in accordance  with Section 13(d) of
the  Exchange  Act and the  rules  thereunder)  in  excess of 9.999% of the then
issued and outstanding  shares of Common Stock,  including  shares issuable upon
exercise of the Warrant held by the Holder after application of this Section.

      8.  Call.  Notwithstanding  anything  herein to the  contrary,  commencing
thirty-six (36) months following the effective date of a registration  statement
under the  Securities  Act providing for the resale of the Warrant Stock and the
shares of  Common  Stock  issuable  upon  conversion  of the  Issuer's  Series C
Preferred  Stock issued  pursuant to the Purchase  Agreement (the  "Registration
Statement"),  the  Issuer,  at its option,  may call up to one  hundred  percent
(100%) of this  Warrant if the Per Share  Market  Value of the Common  Stock has
been greater than $3.00 (as may be adjusted for any stock splits or combinations
of  the  Common  Stock)  for a  period  of ten  (10)  consecutive  Trading  Days
immediately  prior to the date of delivery  of the Call  Notice (a "Call  Notice
Period") by providing  the Holder of this  Warrant  written  notice  pursuant to
Section 13 (the "Call Notice"); provided, that (a) the Registration Statement is
then in effect and has been effective,  without lapse or suspension of any kind,

                                       13


for a period of 60  consecutive  calendar  days, (b) trading in the Common Stock
shall not have been suspended by the  Securities and Exchange  Commission or the
OTC Bulletin Board and (c) the Issuer is in material  compliance  with the terms
and conditions of this Warrant and the other  Transaction  Documents (as defined
in the Purchase Agreement);  provided,  further, that the Registration Statement
is in effect from the date of  delivery of the Call Notice  until the date which
is the later of (i) the date the Holder  exercises  the Warrant  pursuant to the
Call Notice and (ii) the 20th day after the Holder receives the Call Notice (the
"Early  Termination  Date").  The rights and privileges granted pursuant to this
Warrant with respect to the shares of Warrant  Stock  subject to the Call Notice
(the "Called Warrant Shares") shall expire on the Early Termination Date if this
Warrant is not  exercised  with respect to such Called  Warrant  Shares prior to
such Early  Termination  Date. In the event this Warrant is not  exercised  with
respect to the Called  Warrant  Shares,  the Issuer shall remit to the Holder of
this  Warrant  (A)  $.01  per  Called  Warrant  Share  and  (B)  a  new  Warrant
representing the number of shares of Warrant Stock, if any, which shall not have
been  subject to the Call  Notice  upon the Holder  tendering  to the Issuer the
applicable Warrant certificate. Notwithstanding anything in the foregoing to the
contrary,  if the  Holder  may not  exercise  this  Warrant  as a result  of the
restriction  contained in Section 7 hereof, the Call Notice shall be deemed null
and void and shall not be deemed  effective  until the date that the  Holder may
exercise this Warrant in accordance with Section 7 hereof.

      9. Definitions. For the purposes of this Warrant, the following terms have
the following meanings:

            "Additional Shares of Common Stock" means all shares of Common Stock
      issued by the Issuer  after the  Original  Issue  Date,  and all shares of
      Other Common,  if any, issued by the Issuer after the Original Issue Date,
      except:  (i) securities  issued pursuant to a bona fide firm  underwritten
      public  offering  of  the  Issuer's  securities,  (ii)  securities  issued
      pursuant to the  conversion  or exercise of  convertible  or  excercisable
      securities  issued or outstanding on or prior to the date hereof or issued
      pursuant  to  the  Purchase  Agreement,  (iii)  the  Warrant  Stock,  (iv)
      securities issued in connection with strategic license agreements or other
      financing  transactions  so long as such issuances are not for the purpose
      of raising  capital,  (v) the  issuance of Common Stock or the issuance or
      grants of Common  Stock  Equivalents  pursuant  to the  Issuer's  existing
      compensation  and  benefit  plans  or  any  other  plan,   agreement,   or
      arrangement approved by the Board for the primary purpose of soliciting or
      retaining  the  services of  employees,  directors  or  consultants,  (vi)
      securities issued (other than for cash) in connection with a merger and/or
      acquisition,  consolidation,  sale or disposition of all or  substantially
      all of the Issuer's  assets,  (vii) any warrants  issued to the  placement
      agent for the transactions  contemplated by the Purchase Agreement and any
      warrants issued to the placement agent for the  transactions  contemplated
      by the Unit  Offering  (as  defined  below),  (viii)  the  payment  of any
      dividends  on the Series A Preferred  Stock,  Series B Preferred  Stock or
      Series C Preferred Stock of the Issuer, (ix) the issuance of any shares of
      Series C Preferred  Stock and warrants to purchase  shares of Common Stock
      in exchange for the Issuer's  Series A and Series B Preferred  Stock to be
      consummated  by the Issuer and any shares of Common  Stock  issuable  upon
      conversion or exercise of such securities,  and (x) the issuance of shares
      of Common Stock in connection  with a unit offering of up to $4,500,000 of
      Common  Stock at a  purchase  price of $1.00  per share  and  warrants  to

                                       14


      purchase  shares of Common  Stock at an exercise  price of $1.50 per share
      (the "Unit Offering') to be consummated within forty-five (45) days of the
      Original  Issue Date and any shares of Common Stock issuable upon exercise
      of such  warrants,  provided,  however,  that at least  $1,500,000  of the
      purchase  price  shall be paid in cash,  a maximum  of  $1,000,000  of the
      purchase price may be paid with promissory notes maturing 90 days from the
      consummation of the Unit Offering, a maximum of $1,000,000 of the purchase
      price  may be paid  with  promissory  notes  maturing  180  days  from the
      consummation  of the Unit  Offering  and a maximum  of  $1,000,000  of the
      purchase  price may be paid with  promissory  notes maturing 270 days from
      the  consummation  of the Unit Offering,  provided,  further,  that if the
      Issuer issues warrants  pursuant to the Unit Offering at an exercise price
      of less than $1.50 per share,  the Warrant  Price shall  automatically  be
      reduced  to the  exercise  price per share of the  warrants  issued by the
      Issuer pursuant to the Unit Offering.

            "Board" shall mean the Board of Directors of the Issuer.

            "Capital   Stock"  means  and  includes  (i)  any  and  all  shares,
      interests, participations or other equivalents of or interests in (however
      designated)  corporate stock,  including,  without  limitation,  shares of
      preferred or preference  stock,  (ii) all partnership  interests  (whether
      general  or  limited)  in any  Person  which is a  partnership,  (iii) all
      membership interests or limited liability company interests in any limited
      liability  company,  and (iv) all  equity or  ownership  interests  in any
      Person of any other type.

            "Certificate   of   Incorporation"    means   the   Certificate   of
      Incorporation  of the Issuer as in effect on the Original  Issue Date, and
      as hereafter from time to time amended, modified, supplemented or restated
      in accordance with the terms hereof and thereof and pursuant to applicable
      law.

            "Common  Stock" means the Common Stock,  par value $.0001 per share,
      of the  Issuer  and any other  Capital  Stock  into  which  such stock may
      hereafter be changed.

            "Common Stock Equivalent" means any Convertible Security or warrant,
      option or other right to subscribe for or purchase any  Additional  Shares
      of Common Stock or any Convertible Security.

            "Convertible Securities" means evidences of Indebtedness,  shares of
      Capital  Stock  or  other  Securities  which  are or  may  be at any  time
      convertible  into or exchangeable  for Additional  Shares of Common Stock.
      The term "Convertible Security" means one of the Convertible Securities.

            "Governmental  Authority"  means  any  governmental,  regulatory  or
      self-regulatory entity, department, body, official, authority, commission,
      board,  agency or  instrumentality,  whether federal,  state or local, and
      whether domestic or foreign.

            "Holders"  mean the  Persons  who  shall  from  time to time own any
      Warrant. The term "Holder" means one of the Holders.

                                       15


            "Independent  Appraiser"  means a  nationally  recognized  or  major
      regional  investment banking firm or firm of independent  certified public
      accountants of recognized  standing  (which may be the firm that regularly
      examines the financial statements of the Issuer) that is regularly engaged
      in the business of appraising the Capital Stock or assets of  corporations
      or other  entities as going  concerns,  and which is not  affiliated  with
      either the Issuer or the Holder of any Warrant.

            "Issuer" means Cytomedix,  Inc., a Delaware  corporation,  and its
      successors.

            "Majority  Holders"  means  at any  time  the  Holders  of  Warrants
      exercisable  for a majority of the shares of Warrant Stock  issuable under
      the Warrants at the time outstanding.

            "Original Issue Date" means March 25, 2004.

            "OTC Bulletin Board" means the over-the-counter  electronic bulletin
      board.

            "Other  Common"  means any other  Capital Stock of the Issuer of any
      class which shall be authorized at any time after the date of this Warrant
      (other than Common Stock) and which shall have the right to participate in
      the  distribution of earnings and assets of the Issuer without  limitation
      as to amount.

            "Outstanding  Common Stock" means,  at any given time, the aggregate
      amount of  outstanding  shares of Common Stock,  assuming  full  exercise,
      conversion or exchange (as applicable) of all options,  warrants and other
      Securities which are convertible into or exercisable or exchangeable  for,
      and  any  right  to  subscribe  for,  shares  of  Common  Stock  that  are
      outstanding at such time.

            "Person"  means  an  individual,   corporation,   limited  liability
      company,   partnership,   joint  stock  company,   trust,   unincorporated
      organization,  joint  venture,  Governmental  Authority or other entity of
      whatever nature.

            "Per  Share  Market  Value"  means  on any  particular  date (a) the
      closing  bid  price for a share of  Common  Stock in the  over-the-counter
      market, as reported by the OTC Bulletin Board or in the National Quotation
      Bureau  Incorporated or similar  organization or agency  succeeding to its
      functions of reporting  prices) at the close of business on such date,  or
      (b) if the Common Stock is not then reported by the OTC Bulletin  Board or
      the National  Quotation Bureau  Incorporated  (or similar  organization or
      agency succeeding to its functions of reporting prices),  then the average
      of the  "Pink  Sheet"  quotes  for  the  relevant  conversion  period,  as
      determined in good faith by the holder,  or (c) if the Common Stock is not
      then  publicly  traded the fair market value of a share of Common Stock as
      determined  by the  Board  in good  faith;  provided,  however,  that  the
      Majority Holders,  after receipt of the determination by the Board,  shall
      have  the  right  to  select,  jointly  with the  Issuer,  an  Independent
      Appraiser, in which case, the fair market value shall be the determination
      by  such   Independent   Appraiser;   and   provided,   further  that  all
      determinations  of the Per  Share  Market  Value  shall  be  appropriately
      adjusted  for  any  stock   dividends,   stock  splits  or  other  similar
      transactions  during such period.  The  determination of fair market value
      shall be based upon the fair market  value of the Issuer  determined  on a

                                       16


      going concern  basis as between a willing  buyer and a willing  seller and
      taking into account all relevant factors determinative of value, and shall
      be final and binding on all parties.  In determining the fair market value
      of any  shares of Common  Stock,  no  consideration  shall be given to any
      restrictions  on transfer of the Common  Stock  imposed by agreement or by
      federal or state  securities  laws,  or to the existence or absence of, or
      any limitations on, voting rights.

            "Purchase Agreement" means the Series C Convertible  Preferred Stock
      Purchase  Agreement  dated as of March 25, 2004,  among the Issuer and the
      investors a party thereto.

            "Securities"  means any debt or  equity  securities  of the  Issuer,
      whether now or hereafter  authorized,  any instrument  convertible into or
      exchangeable  for  Securities  or a Security,  and any option,  warrant or
      other right to purchase or acquire any Security.  "Security"  means one of
      the Securities.

            "Securities  Act" means the Securities  Act of 1933, as amended,  or
      any similar federal statute then in effect.

            "Subsidiary" means any corporation at least 50% of whose outstanding
      Voting  Stock  shall at the time be owned  directly or  indirectly  by the
      Issuer or by one or more of its Subsidiaries,  or by the Issuer and one or
      more of its Subsidiaries.

            "Term" has the meaning specified in Section 1 hereof.

            "Trading Day" means (a) a day on which the Common Stock is traded on
      the OTC  Bulletin  Board,  or (b) if the Common Stock is not traded on the
      OTC  Bulletin  Board,  a day on which  the  Common  Stock is quoted in the
      over-the-counter  market as  reported  by the  National  Quotation  Bureau
      Incorporated  (or  any  similar  organization  or  agency  succeeding  its
      functions of reporting prices); provided,  however, that in the event that
      the  Common  Stock is not  listed  or  quoted  as set  forth in (a) or (b)
      hereof,  then Trading Day shall mean any day except  Saturday,  Sunday and
      any  day  which  shall  be a  legal  holiday  or a day  on  which  banking
      institutions in the State of New York are authorized or required by law or
      other government action to close.

            "Voting  Stock"  means,  as  applied  to the  Capital  Stock  of any
      corporation,  Capital Stock of any class or classes  (however  designated)
      having ordinary voting power for the election of a majority of the members
      of the Board of Directors (or other governing  body) of such  corporation,
      other than Capital Stock having such power only by reason of the happening
      of a contingency.

            "Warrants"  means  the  Warrants  issued  and sold  pursuant  to the
      Purchase Agreement,  including,  without limitation, this Warrant, and any
      other  warrants of like tenor issued in  substitution  or exchange for any
      thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e) hereof or
      of any of such other Warrants.

                                       17


            "Warrant  Price"  initially  means U.S. $1.50, as such Warrant Price
      may be adjusted  from time to time as shall  result  from the  adjustments
      specified in this Warrant, including Section 4 hereto.

            "Warrant  Share Number"  means at any time the  aggregate  number of
      shares of Warrant Stock which may at such time be purchased  upon exercise
      of  this  Warrant,  after  giving  effect  to all  prior  adjustments  and
      increases  to such  number  made or  required  to be made  under the terms
      hereof.

            "Warrant  Stock" means Common Stock  issuable  upon  exercise of any
      Warrant or  Warrants  or  otherwise  issuable  pursuant  to any Warrant or
      Warrants.

      10. Other Notices. In case at any time:

                        (A)   the  Issuer  shall make any  distributions  to the
                              holders of Common Stock; or

                        (B)   the Issuer  shall  authorize  the  granting to all
                              holders of its Common Stock of rights to subscribe
                              for or purchase any shares of Capital Stock of any
                              class or other rights; or

                        (C)   there shall be any reclassification of the Capital
                              Stock of the Issuer; or

                        (D)   there shall be any capital  reorganization  by the
                              Issuer; or

                        (E)   there  shall be any (i)  consolidation  or  merger
                              involving  the  Issuer or (ii) sale,  transfer  or
                              other  disposition of all or substantially  all of
                              the Issuer's property,  assets or business (except
                              a merger  or  other  reorganization  in which  the
                              Issuer shall be the surviving  corporation and its
                              shares  of  Capital  Stock  shall  continue  to be
                              outstanding    and    unchanged   and   except   a
                              consolidation,  merger,  sale,  transfer  or other
                              disposition involving a wholly-owned  Subsidiary);
                              or

                        (F)   there   shall  be  a  voluntary   or   involuntary
                              dissolution,  liquidation  or  winding-up  of  the
                              Issuer or any partial liquidation of the Issuer or
                              distribution to holders of Common Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,

                                       18


reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
(20) days prior to the record date or effective date for the event  specified in
such notice.

      11. Amendment and Waiver.  Any term,  covenant,  agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Majority Holders;  provided,  however,  that no such amendment or
waiver  shall  reduce the Warrant  Share  Number,  increase  the Warrant  Price,
shorten the period  during  which this  Warrant may be  exercised  or modify any
provision of this Section 11 without the consent of the Holder of this Warrant.

      12.  Governing  Law.  THIS WARRANT  SHALL BE GOVERNED BY AND  CONSTRUED IN
ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW  YORK,  WITHOUT  GIVING  EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.

      13.  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 earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone  number  specified  for notice prior to 5:00 p.m.,  eastern time, on a
Trading Day, (ii) the Trading Day after the date of transmission, if such notice
or  communication  is delivered via facsimile at the facsimile  telephone number
specified for notice later than 5:00 p.m., eastern time, on any date and earlier
than 11:59 p.m., eastern time, on such date, (iii) the Trading Day following the
date  of  mailing,  if sent  by  overnight  delivery  by  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                        Cytomedix, Inc.
                        1523 Bowman Road, Suite A
                        Little Rock, Arkansas 72211
                        Attention: Chief Financial Officer
                        Tel. No.: (501) 219-2111
                        Fax No.:  (501) 219-2114

Copies of notices to the Issuer  shall be sent to Williams & Anderson,  PLC, 111
Center Street, 22nd Floor, Little Rock,  Arkansas,  72201,  Attention:  Peter G.
Kumpe, Telephone No.: (501) 372-0800,  Facsimile No.: (501) 372-6453.  Copies of
notices to the Holder  shall be sent to Jenkens & Gilchrist  Parker  Chapin LLP,
405  Lexington  Avenue,  New York,  New York 10174,  Attention:  Christopher  S.
Auguste, Telephone No.: (212) 704-6000, Facsimile No.: (212) 704-6288. Any party
hereto may from time to time  change its  address for notices by giving at least
ten (10) days written notice of such changed address to the other party hereto.

      14.  Warrant  Agent.  The Issuer may, by written  notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant

                                       19


pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

      15. Remedies. The Issuer stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened  default by the Issuer
in the  performance  of or compliance  with any of the terms of this Warrant are
not and will not be adequate and that, to the fullest  extent  permitted by law,
such terms may be specifically enforced by a decree for the specific performance
of any agreement contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.

      16.  Successors and Assigns.  This Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the  successors and assigns of
the Issuer, the Holder hereof and (to the extent provided herein) the Holders of
Warrant  Stock issued  pursuant  hereto,  and shall be  enforceable  by any such
Holder or Holder of Warrant Stock.

      17.  Modification and Severability.  If, in any action before any court or
agency  legally  empowered  to  enforce  any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

      18.  Headings.  The  headings  of the  Sections  of this  Warrant  are for
convenience of reference  only and shall not, for any purpose,  be deemed a part
of this Warrant.

                                       20


      IN WITNESS WHEREOF,  the Issuer has executed this Series C-2 Warrant as of
the day and year first above written.


                                    CYTOMEDIX, INC.


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

                                       21


                                 EXERCISE FORM
                               SERIES C-2 WARRANT
                                CYTOMEDIX, INC.

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,  hereby  elects to purchase  _____ shares of Common Stock of Cytomedix,
Inc. covered by the within Warrant.

Dated: _________________      Signature   ___________________________

                              Address     _____________________
                                          _____________________

Number of shares of Common  Stock  beneficially  owned or deemed  beneficially
owned by the Holder on the date of Exercise: _________________________

                                   ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.

Dated: _________________      Signature   ___________________________

                              Address     _____________________
                                          _____________________

                               PARTIAL ASSIGNMENT

FOR VALUE RECEIVED,  _________________  hereby sells, assigns and transfers unto
__________________  the right to  purchase  _________  shares of  Warrant  Stock
evidenced  by the within  Warrant  together  with all rights  therein,  and does
irrevocably  constitute and appoint  ___________________,  attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated: _________________      Signature   ___________________________

                              Address     _____________________
                                          _____________________

                          FOR USE BY THE ISSUER ONLY:

                                       22


This Warrant No. W-___ canceled (or  transferred or exchanged)  this _____ day
of ___________,  _____,  shares of Common Stock issued therefor in the name of
_______________,  Warrant No.  W-_____  issued for ____ shares of Common Stock
in the name of _______________.

                                       23

EX-10.1

                  SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE

                                    AGREEMENT




                           DATED AS OF MARCH 25, 2004




                                      AMONG



                                 CYTOMEDIX, INC.




                                       AND





                       THE PURCHASERS LISTED ON EXHIBIT A








                                                 TABLE OF CONTENTS



                                                                                                               PAGE
                                                                                                         
ARTICLE I Purchase and Sale of Preferred Stock....................................................................1

         Section 1.1       Purchase and Sale of Stock.............................................................1
         Section 1.2       The Conversion Shares..................................................................1
         Section 1.3       Purchase Price and Closing.............................................................2

ARTICLE II Representations and Warranties.........................................................................2

         Section 2.1       Representations and Warranties of the Company..........................................2
         Section 2.2       Representations and Warranties of the Purchasers......................................13

ARTICLE III Covenants............................................................................................16

         Section 3.1       Securities Compliance.................................................................16
         Section 3.2       Registration and Listing..............................................................16
         Section 3.3       Inspection Rights.....................................................................16
         Section 3.4       Compliance with Laws..................................................................16
         Section 3.5       Keeping of Records and Books of Account...............................................16
         Section 3.6       Reporting Requirements................................................................17
         Section 3.7       Status of Dividends...................................................................17
         Section 3.7       Amendments............................................................................17
         Section 3.8       Distributions.........................................................................18
         Section 3.9       Status of Dividends...................................................................19
         Section 3.10      Intentionally Omitted.................................................................21
         Section 3.11      Future Financings; Right of First Offer and Refusal...................................20
         Section 3.12      Reservation of Shares.................................................................20
         Section 3.13      Transfer Agent Instructions...........................................................21
         Section 3.14      Disposition of Assets.................................................................21
         Section 3.15      Reporting Status......................................................................21
         Section 3.16      Disclosure of Transaction ............................................................21
         Section 3.17      Disclosure of Material Information....................................................21
         Section 3.18      Pledge of Securities..................................................................21
         Section 3.19      Unit Offering.........................................................................21

ARTICLE IV Conditions............................................................................................22

         Section 4.1       Conditions Precedent to the Obligation of the Company to Sell the Shares..............22
         Section 4.2       Conditions Precedent to the Obligation of the Purchasers to Purchase the Shares.......23





ARTICLE V Intentionally Omitted..................................................................................25


ARTICLE VI Stock Certificate Legend..............................................................................25

         Section 6.1       Legend................................................................................25

ARTICLE VII Intentionally Omitted................................................................................27


ARTICLE VIII Indemnification.....................................................................................27

         Section 8.1       General Indemnity.....................................................................27
         Section 8.2       Indemnification Procedure.............................................................27

ARTICLE IX Miscellaneous 28

         Section 9.1       Fees and Expenses.....................................................................28
         Section 9.2       Specific Enforcement, Consent to Jurisdiction.........................................28
         Section 9.3       Entire Agreement; Amendment...........................................................29
         Section 9.4       Notices...............................................................................29
         Section 9.5       Waivers...............................................................................30
         Section 9.6       Headings..............................................................................30
         Section 9.7       Successors and Assigns................................................................30
         Section 9.8       No Third Party Beneficiaries..........................................................30
         Section 9.9       Governing Law.........................................................................31
         Section 9.10      Survival..............................................................................31
         Section 9.11      Counterparts..........................................................................31
         Section 9.12      Publicity.............................................................................31
         Section 9.13      Severability..........................................................................31
         Section 9.14      Further Assurances....................................................................31



                                       ii


             SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT

      This SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (the
"Agreement") is dated as of March 25, 2004 by and among Cytomedix, Inc., a
Delaware corporation (the "Company"), and each of the Purchasers of shares of
Series C Convertible Preferred Stock of the Company whose names are set forth on
Exhibit A hereto (individually, a "Purchaser" and collectively, the
"Purchasers").


      The parties hereto agree as follows:

                                   ARTICLE I

                      PURCHASE AND SALE OF PREFERRED STOCK

      Section 1.1 Purchase and Sale of Stock. Upon the following terms and
conditions, the Company shall issue and sell to the Purchasers and each of the
Purchasers shall purchase from the Company, the number of shares of the
Company's Series C Convertible Preferred Stock, par value $.0001 per share (the
"Preferred Shares"), at a purchase price of $10,000 per share, set forth
opposite such Purchaser's name on Exhibit A hereto. Upon the following terms and
conditions, each of the Purchasers shall be issued Series C-1 Warrants, in
substantially the form attached hereto as Exhibit B (the "Series C-1 Warrants"),
and Series C-2 Warrants, in substantially the form attached hereto as Exhibit C
(the "Series C-2 Warrants" and, together with the Series C-1 Warrants, the
"Warrants"), to purchase the number of shares of the Company's Common Stock, par
value $.0001 per share (the "Common Stock") set forth opposite such Purchaser's
name on Exhibit A hereto. The aggregate purchase price for the Preferred Shares
and the Warrants shall be up to $2,800,000. The designation, rights, preferences
and other terms and provisions of the Series C Convertible Preferred Stock are
set forth in the Certificate of Designation of the Relative Rights and
Preferences of the Series C Convertible Preferred Stock attached hereto as
Exhibit D (the "Certificate of Designation"). The Company and the Purchasers are
executing and delivering this Agreement in accordance with and in reliance upon
the exemption from securities registration afforded by Rule 506 of Regulation D
("Regulation D") as promulgated by the United States Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act") and Section 4(2) of the Securities Act.

      Section 1.2 The Conversion Shares. The Company has authorized and has
reserved and covenants to continue to reserve, free of preemptive rights and
other similar contractual rights of stockholders, such number of shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all of the Preferred Shares and exercise of the Warrants then outstanding;
provided that the number of shares of Common Stock so reserved shall at no time
be less than 120% of the authorized but unissued shares of the Common Stock
necessary to effect the conversion of the Preferred Shares and exercise of the
Warrants. Any shares of Common Stock issuable upon conversion of the Preferred
Shares and exercise of the Warrants (and such shares when issued) are herein



referred to as the "Conversion Shares" and the "Warrant Shares", respectively.
The Preferred Shares, the Conversion Shares and the Warrant Shares are sometimes
collectively referred to as the "Shares".

      Section 1.3 Purchase Price and Closing. The Company agrees to issue and
sell to the Purchasers and, in consideration of and in express reliance upon the
representations, warranties, covenants, terms and conditions of this Agreement,
the Purchasers, severally but not jointly, agree to purchase that number of the
Preferred Shares and Warrants set forth opposite their respective names on
Exhibit A. The aggregate purchase price of the Preferred Shares and Warrants
being acquired by each Purchaser is set forth opposite such Purchaser's name on
Exhibit A (for each such Purchaser, the "Purchase Price" and collectively
referred to as the "Purchase Prices"). The closing of the purchase and sale of
the Preferred Shares and Warrants shall take place at the offices of Jenkens &
Gilchrist Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue, New
York, New York 10174 (the "Closing") at 1:00 p.m. (eastern time) (i) on or
before March 26, 2004, provided, that all of the conditions set forth in Article
IV hereof and applicable to the Closing shall have been fulfilled or waived in
accordance herewith, or (ii) at such other time and place or on such date as the
Purchasers and the Company may agree upon (the "Closing Date"). Funding with
respect to the Closing shall take place by wire transfer of immediately
available funds on or prior to the Closing Date.

      Section 1.4 Warrants. The Company agrees to issue to each of the
Purchasers Series C-1 Warrants to purchase 5,000 shares of Common Stock for each
Preferred Share purchased and Series C-2 Warrants to purchase 5,000 shares of
Common Stock for each Preferred Share purchased. The number of Warrants each
Purchaser shall be issued pursuant to this Agreement is set forth opposite such
Purchaser's name on Exhibit A hereto. The Warrants shall expire five (5) years
from the Closing Date and shall have an exercise price per share equal to $1.50.


                                   ARTICLE II

                         REPRESENTATIONS AND WARRANTIES

      Section 2.1 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties as of the date hereof
to the Purchasers, except as set forth in the Company's disclosure schedule
delivered with this Agreement as follows:

      (a) Organization, Good Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power to own, lease and
operate its properties and assets and to conduct its business as it is now being
conducted. The Company does not have any subsidiaries except as set forth in the
Company's Form 10-KSB for the year ended December 31, 2002, including the
accompanying financial statements (the "Form 10-KSB"), or in the Company's Form
10-QSB for the fiscal quarters ended September 30, 2003, June 30, 2003 or March
31, 2003 (collectively, the "Form 10-QSB"), or on Schedule 2.1(a) hereto. The
Company and each such subsidiary is duly qualified as a foreign corporation to


                                       2


do business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary except for any jurisdiction(s) (alone or in the aggregate) in which
the failure to be so qualified will not have a Material Adverse Effect (as
defined in Section 2.1(c) hereof) on the Company's financial condition.

      (b) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and perform this Agreement, the Registration
Rights Agreement attached hereto as Exhibit E (the "Registration Rights
Agreement"), the Irrevocable Transfer Agent Instructions (as defined in Section
3.13), the Certificate of Designation, and the Warrants (collectively, the
"Transaction Documents") and to issue and sell the Shares and the Warrants in
accordance with the terms hereof. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company or its Board of Directors or stockholders is
required. This Agreement has been duly executed and delivered by the Company.
The other Transaction Documents will have been duly executed and delivered by
the Company at the Closing. Each of the Transaction Documents constitutes, or
shall constitute when executed and delivered, a valid and binding obligation of
the Company enforceable against the Company in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies or by other equitable principles of general application.

      (c) Capitalization. The authorized capital stock of the Company and the
shares thereof currently issued and outstanding as of March 25, 2004 are set
forth on Schedule 2.1(c) hereto. All of the outstanding shares of the Company's
Common Stock and Series C Convertible Preferred Stock have been duly and validly
authorized. Except as set forth in this Agreement and the Registration Rights
Agreement and as set forth on Schedule 2.1(c) hereto, no shares of Common Stock
are entitled to preemptive rights or registration rights and there are no
outstanding options, warrants, scrip, rights to subscribe to, call or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company. Furthermore,
except as set forth in this Agreement and the Registration Rights Agreement or
on Schedule 2.1(c), there are no contracts, commitments, understandings, or
arrangements by which the Company is or may become bound to issue additional
shares of the capital stock of the Company or options, securities or rights
convertible into shares of capital stock of the Company. Except for customary
transfer restrictions contained in agreements entered into by the Company in
order to sell restricted securities or as set forth on Schedule 2.1(c) hereto,
the Company is not a party to any agreement granting registration or
anti-dilution rights to any person with respect to any of its equity or debt
securities. The Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. Except as set forth on Schedule 2.1(c) hereto, the offer and
sale of all capital stock, convertible securities, rights, warrants, or options
of the Company issued prior to the Closing complied in all material respects
with all applicable Federal and state securities laws, and no stockholder has a
right of rescission or claim for damages with respect thereto which would have a
Material Adverse Effect (as defined below) on the Company's financial condition
or operating results. The Company has furnished or made available to the
Purchasers true and correct copies of the Company's Certificate of Incorporation


                                       3


as in effect on the date hereof (the "Certificate"), and the Company's Bylaws as
in effect on the date hereof (the "Bylaws"). For the purposes of this Agreement,
"Material Adverse Effect" means any material adverse effect on the business,
operations, properties, prospects, or financial condition of the Company and its
subsidiaries and/or any condition, circumstance, or situation that would
prohibit or otherwise materially interfere with the ability of the Company to
perform any of its obligations under this Agreement in any material respect.

      (d) Issuance of Shares. The Preferred Shares and the Warrants to be issued
at the Closing have been duly authorized by all necessary corporate action and
the Preferred Shares, when paid for or issued in accordance with the terms
hereof, shall be validly issued and outstanding, fully paid and nonassessable
and entitled to the rights and preferences set forth in the Certificate of
Designation. When the Conversion Shares and the Warrant Shares are issued in
accordance with the terms of the Certificate of Designation and the Warrants,
respectively, such shares will be duly authorized by all necessary corporate
action and validly issued and outstanding, fully paid and nonassessable, and the
holders shall be entitled to all rights accorded to a holder of Common Stock.

      (e) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the performance by the Company of its
obligations under the Certificate of Designation and the consummation by the
Company of the transactions contemplated herein and therein do not and will not
(i) violate any provision of the Company's Certificate or Bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or
both would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company is a party or by which it or its properties or assets are
bound, (iii) create or impose a lien, mortgage, security interest, charge or
encumbrance of any nature on any property of the Company under any agreement or
any commitment to which the Company is a party or by which the Company is bound
or by which any of its respective properties or assets are bound, or (iv) result
in a violation of any federal, state, local or foreign statute, rule,
regulation, order, judgment or decree (including Federal and state securities
laws and regulations) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries are bound
or affected, except, in all cases other than violations pursuant to clauses (i)
and (iv) above, for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted in violation of any laws, ordinances or
regulations of any governmental entity, except for possible violations which
singularly or in the aggregate do not and will not have a Material Adverse
Effect. The Company is not required under Federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under the Transaction
Documents, or issue and sell the Preferred Shares, the Warrants, the Conversion
Shares and the Warrant Shares in accordance with the terms hereof or thereof
(other than any filings which may be required to be made by the Company with the
Commission or state securities administrators, any registration statement which
may be filed pursuant hereto, and the Certificate of Designation); provided
that, for purposes of the representation made in this sentence, the Company is
assuming and relying upon the accuracy of the relevant representations and
agreements of the Purchasers herein.



                                       4


      (f) Commission Documents, Financial Statements. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, since December 31, 2002, the Company
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d) of the Exchange Act (all of the foregoing including filings
incorporated by reference therein being referred to herein as the "Commission
Documents"). The Company has delivered or made available to each of the
Purchasers true and complete copies of the Commission Documents filed with the
Commission since December 31, 2002. The Company has not provided to the
Purchasers any material non-public information or other information which,
according to applicable law, rule or regulation, was required to have been
disclosed publicly by the Company but which has not been so disclosed, other
than with respect to the transactions contemplated by this Agreement. At the
times of their respective filings, the Form 10-KSB and the Form 10-QSB complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder and other federal,
state and local laws, rules and regulations applicable to such documents, and,
as of their respective dates, none of the Form 10-KSB and the Form 10-QSB
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 light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Commission
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the Commission or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes or may be condensed or summary
statements), and fairly present in all material respects the financial position
of the Company and its subsidiaries as of 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 year-end audit adjustments).

      (g) Subsidiaries. Schedule 2.1(g) hereto sets forth each subsidiary of the
Company, showing the jurisdiction of its incorporation or organization and
showing the percentage of each person's ownership. For the purposes of this
Agreement, "subsidiary" shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries. All of the
outstanding shares of capital stock of each subsidiary have been duly authorized
and validly issued, and are fully paid and nonassessable. There are no
outstanding preemptive, conversion or other rights, options, warrants or
agreements granted or issued by or binding upon any subsidiary for the purchase
or acquisition of any shares of capital stock of any subsidiary or any other
securities convertible into, exchangeable for or evidencing the rights to
subscribe for any shares of such capital stock. Neither the Company nor any


                                       5


subsidiary is subject to any obligation (contingent or otherwise) to repurchase
or otherwise acquire or retire any shares of the capital stock of any subsidiary
or any convertible securities, rights, warrants or options of the type described
in the preceding sentence. Neither the Company nor any subsidiary is party to,
nor has any knowledge of, any agreement restricting the voting or transfer of
any shares of the capital stock of any subsidiary.

      (h) No Material Adverse Change. Since December 31, 2002, the Company has
not experienced or suffered any Material Adverse Effect, except as disclosed in
the Form 10-KSB, the Form 10-QSB, the Commission Documents or on Schedule 2.1(h)
hereto.

      (i) No Undisclosed Liabilities. Except as set forth in the Form 10-KSB,
the Form 10-QSB, the Commission Documents or on Schedule 2.1(i) hereto, neither
the Company nor any of its subsidiaries has any liabilities, obligations, claims
or losses (whether liquidated or unliquidated, secured or unsecured, absolute,
accrued, contingent or otherwise) other than those incurred in the ordinary
course of the Company's or its subsidiaries respective businesses since December
31, 2002 and which, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company or its subsidiaries.

      (j) No Undisclosed Events or Circumstances. Except as set forth in the
Form 10-KSB, the Form 10-QSB, the Commission Documents or on Schedule 2.1(j)
hereto, no event or circumstance has occurred or exists with respect to the
Company or its subsidiaries or their respective businesses, properties,
prospects, operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the Company but
which has not been so publicly announced or disclosed.

      (k) Indebtedness. The Form 10-KSB, Form 10-QSB or Schedule 2.1(k) hereto
sets forth as of a recent date 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
$100,000 (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 $25,000 due under leases required to be
capitalized in accordance with GAAP. Except as set forth on Schedule 2.1(k),
neither the Company nor any subsidiary is in default with respect to any
Indebtedness.

      (l) Title to Assets. Each of the Company and the subsidiaries has good and
marketable title to all of its real and personal property reflected in the Form
10-KSB and Form 10-QSB, free and clear of any mortgages, pledges, charges,
liens, security interests or other encumbrances, except for those disclosed in
the Form 10-KSB, Form 10-QSB, the Commission Documents or on Schedule 2.1(l)
hereto or such that, individually or in the aggregate, do not cause a Material
Adverse Effect on the Company's financial condition or operating results. All
said leases of the Company and each of its subsidiaries are valid and subsisting
and in full force and effect.

      (m) Actions Pending. There is no action, suit, claim, investigation,
arbitration, alternate dispute resolution proceeding or any other proceeding
pending or, to the knowledge of the Company, threatened against the Company or
any subsidiary which questions the validity of this Agreement or any of the


                                       6


other Transaction Documents or the transactions contemplated hereby or thereby
or any action taken or to be taken pursuant hereto or thereto. Except as set
forth in the Form 10-KSB, Form 10-QSB, the Commission Documents or on Schedule
2.1(m) hereto, there is no action, suit, claim, investigation, arbitration,
alternate dispute resolution proceeding or any other proceeding pending or, to
the knowledge of the Company, threatened, against or involving the Company, any
subsidiary or any of their respective properties or assets. Except as set forth
in the Form 10-KSB, Form 10-QSB, the Commission Documents or Schedule 2.1(m)
hereto, there are no outstanding orders, judgments, injunctions, awards or
decrees of any court, arbitrator or governmental or regulatory body against the
Company or any subsidiary or any officers or directors of the Company or
subsidiary in their capacities as such.

      (n) Compliance with Law. The business of the Company and the subsidiaries
has been and is presently being conducted in accordance with all applicable
federal, state and local governmental laws, rules, regulations and ordinances,
except as set forth in the Form 10-KSB, Form 10-QSB, the Commission Documents,
Schedule 2.1(n) hereto or such that, individually or in the aggregate, do not
cause a Material Adverse Effect. The Company and each of its subsidiaries have
all franchises, permits, licenses, consents and other governmental or regulatory
authorizations and approvals necessary for the conduct of its business as now
being conducted by it unless the failure to possess such franchises, permits,
licenses, consents and other governmental or regulatory authorizations and
approvals, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.

      (o) Taxes. To the best of the Company's knowledge and except as set forth
in the Form 10-KSB, the Form 10-QSB or the Commission Documents, the Company and
each of the subsidiaries has accurately prepared and filed all federal, state
and other tax returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of the Company and the subsidiaries for all current taxes
and other charges to which the Company or any subsidiary is subject and which
are not currently due and payable. None of the federal income tax returns of the
Company or any subsidiary have been audited by the Internal Revenue Service. The
Company has no knowledge of any additional assessments, adjustments or
contingent tax liability (whether federal or state) of any nature whatsoever,
whether pending or threatened against the Company or any subsidiary for any
period, nor of any basis for any such assessment, adjustment or contingency.

      (p) Certain Fees. Except as set forth in this Agreement or on Schedule
2.1(p) hereto, no brokers, finders or financial advisory fees or commissions
will be payable by the Company or any subsidiary or any Purchaser as a result of
the transactions contemplated by this Agreement.

      (q) Disclosure. To the best of the Company's knowledge, neither this
Agreement or the Schedules hereto nor any other documents, certificates or
instruments furnished to the Purchasers by or on behalf of the Company or any
subsidiary in connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made herein or therein, in the light
of the circumstances under which they were made herein or therein, not
misleading.



                                       7


      (r) Operation of Business. The Company and each of the subsidiaries owns
or possesses all patents, trademarks, domain names (whether or not registered)
and any patentable improvements or copyrightable derivative works thereof,
websites and intellectual property rights relating thereto, service marks, trade
names, copyrights, licenses and authorizations as set forth in the Form 10-KSB,
Form 10-QSB and on Schedule 2.1(r) hereto, and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now conducted,
and to the best of the Company's knowledge, without any conflict with the rights
of others.

      (s) Environmental Compliance. To the best of the Company's knowledge, the
Company and each of its subsidiaries have obtained all material approvals,
authorization, certificates, consents, licenses, orders and permits or other
similar authorizations of all governmental authorities, or from any other
person, that are required under any Environmental Laws. "Environmental Laws"
shall mean all applicable laws relating to the protection of the environment
including, without limitation, all requirements pertaining to reporting,
licensing, permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances, chemical
substances, pollutants, contaminants or toxic substances, materials or wastes,
whether solid, liquid or gaseous in nature, into the air, surface water,
groundwater or land, or relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic substances,
material or wastes, whether solid, liquid or gaseous in nature. To the best of
the Company's knowledge, the Company has all necessary governmental approvals
required under all Environmental Laws as necessary for the Company's business or
the business of any of its subsidiaries. To the best of the Company's knowledge,
the Company and each of its subsidiaries are also in compliance with all other
limitations, restrictions, conditions, standards, requirements, schedules and
timetables required or imposed under all Environmental Laws. Except for such
instances as would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the Company
or its subsidiaries that violate or may violate any Environmental Law after the
Closing Date or that may give rise to any environmental liability, or otherwise
form the basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the manufacture, processing, distribution, use, treatment, storage (including
without limitation underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any hazardous
substance.

      (t) Books and Record Internal Accounting Controls. The books and records
of the Company and its subsidiaries accurately reflect in all material respects
the information relating to the business of the Company and the subsidiaries,
the location and collection of their assets, and the nature of all transactions
(as required pursuant to GAAP) giving rise to the obligations or accounts
receivable of the Company or any subsidiary. The Company and each of its
subsidiaries maintain a system of internal accounting controls sufficient, in
the judgment of the Company, to provide reasonable assurance that (i)


                                       8


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 actions is taken with respect to any differences.

      (u) Material Agreements. Except as set forth in the Form 10-KSB, Form
10-QSB, the Commission Documents or on Schedule 2.1(u) hereto, neither the
Company nor any subsidiary is a party to any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, a copy of
which would be required to be filed with the Commission as an exhibit to a
registration statement on Form S-3 or applicable form (collectively, "Material
Agreements") if the Company or any subsidiary were registering securities under
the Securities Act. Except as disclosed in the Form 10-KSB, Form 10-QSB, the
Commission Documents or on Schedule 2.1(u) hereto, the Company and each of its
subsidiaries has in all material respects performed all the obligations required
to be performed by them to date under the foregoing agreements, have received no
notice of default and, to the best of the Company's knowledge are not in default
under any Material Agreement now in effect, the result of which could cause a
Material Adverse Effect. Except as disclosed in the Form 10-KSB, Form 10-QSB,
the Commission Documents or on Schedule 2.1(u) hereto, no written or oral
contract, instrument, agreement, commitment, obligation, plan or arrangement of
the Company or of any subsidiary limits or shall limit the payment of dividends
on the Company's Preferred Shares, other Preferred Stock, if any, or its Common
Stock.

      (v) Transactions with Affiliates. Except as set forth in the Form 10-KSB,
Form 10-QSB, the Commission Documents or on Schedule 2.1(v) hereto, there are no
loans, leases, agreements, contracts, royalty agreements, management contracts
or arrangements or other continuing transactions between (a) the Company or any
subsidiary on the one hand, and (b) on the other hand, any officer, employee,
consultant or director of the Company, or any of its subsidiaries, or any person
owning more than ten percent (10%) or more of the capital stock of the Company
or any subsidiary or any member of the immediate family of such officer,
employee, consultant, director or ten percent (10%) stockholder or any
corporation or other entity controlled by such officer, employee, consultant,
director or ten percent (10%) stockholder, or a member of the immediate family
of such officer, employee, consultant, director or ten percent (10%)
stockholder.

      (w) Securities Act of 1933. Based in material part upon the
representations herein of the Purchasers, the Company has complied and will
comply with all applicable federal and state securities laws in connection with
the offer, issuance and sale of the Shares and the Warrants hereunder. Neither
the Company nor anyone acting on its behalf, directly or indirectly, has or will
sell, offer to sell or solicit offers to buy any of the Shares, the Warrants or
similar securities to, or solicit offers with respect thereto from, or enter
into any preliminary conversations or negotiations relating thereto with, any
person, or has taken or will take any action so as to bring the issuance and
sale of any of the Shares and the Warrants under the registration provisions of
the Securities Act and applicable state securities laws, and neither the Company


                                       9


nor any of its affiliates, nor any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of any of the Shares and the Warrants.

      (x) Governmental Approvals. Except as set forth in the Form 10-KSB, Form
10-QSB or the Commission Documents, and except for the filing of any notice or
other document that may be required under applicable state and/or Federal
securities laws (which if required, shall be filed on a timely basis), including
the filing of a Form D and a registration statement or statements pursuant to
the Registration Rights Agreement, and the filing of the Certificate of
Designation with the Secretary of State for the State of Delaware, no
authorization, consent, approval, license, exemption of, filing or registration
with any court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, is or will be necessary for, or in
connection with, the execution or delivery of the Preferred Shares and the
Warrants, or for the performance by the Company of its obligations under the
Transaction Documents.

      (y) Employees. Neither the Company nor any subsidiary has any collective
bargaining arrangements or agreements covering any of its employees, except as
set forth in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(y) hereto. Except
as set forth in the Form 10-KSB, Form 10-QSB or on Schedule 2.1(y) hereto,
neither the Company nor any subsidiary has any employment contract, agreement
regarding proprietary information, non-competition agreement, non-solicitation
agreement, confidentiality agreement, or any other similar contract or
restrictive covenant, relating to the right of any officer, employee or
consultant to be employed or engaged by the Company or such subsidiary. Since
September 30, 2003, no officer, consultant or key employee of the Company or any
subsidiary whose termination, either individually or in the aggregate, could
have a Material Adverse Effect, has terminated or, to the knowledge of the
Company, has any present intention of terminating his or her employment or
engagement with the Company or any subsidiary.

      (z) Absence of Certain Developments. Except as disclosed in the Form
10-KSB, Form 10-QSB, the Commission Documents or on Schedule 2.1(z) hereto,
since September 30, 2003, neither the Company nor any subsidiary has:

                  (i) issued any stock, bonds or other corporate securities or
any rights, options or warrants with respect thereto;

                  (ii) borrowed any amount or incurred or become subject to any
liabilities (absolute or contingent) in the amount of $25,000 individually or
$50,000 in the aggregate except current liabilities incurred in the ordinary
course of business which are comparable in nature and amount to the current
liabilities incurred in the ordinary course of business during the comparable
portion of its prior fiscal year, as adjusted to reflect the current nature and
volume of the Company's or such subsidiary's business;

                  (iii) discharged or satisfied any lien or encumbrance or paid
any obligation or liability (absolute or contingent), other than current
liabilities paid in the ordinary course of business;



                                       10


                  (iv) declared or made any payment or distribution of cash or
other property to stockholders with respect to its stock, or purchased or
redeemed, or made any agreements so to purchase or redeem, any shares of its
capital stock;

                  (v) sold, assigned or transferred any other tangible assets,
or canceled any debts or claims, except in the ordinary course of business;

                  (vi) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or other intangible assets or
intellectual property rights, or disclosed any proprietary confidential
information to any person except to customers in the ordinary course of business
or to the Purchasers or their representatives;

                  (vii) suffered any substantial losses or waived any rights of
material value, whether or not in the ordinary course of business, or suffered
the loss of any material amount of prospective business;

                  (viii) made any changes in employee compensation except in the
ordinary course of business and consistent with past practices;

                  (ix) made capital expenditures or commitments therefor that
aggregate in excess of $100,000;

                  (x) entered into any other material transaction, whether or
not in the ordinary course of business;

                  (xi) made charitable contributions or pledges in excess of
$25,000;

                  (xii) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance;

                  (xiii) experienced any material problems with labor or
management in connection with the terms and conditions of their employment;

                  (xiv) effected any two or more events of the foregoing kind
which in the aggregate would be material to the Company or its subsidiaries; or

                  (xv) entered into an agreement, written or otherwise, to take
any of the foregoing actions.

            (aa) Public Utility Holding Company Act and Investment Company Act
Status. The Company is not a "holding company" or a "public utility company" as
such terms are defined in the Public Utility Holding Company Act of 1935, as
amended. The Company is not, and as a result of and immediately upon the Closing
will not be, an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.



                                       11


            (bb) ERISA. To the best of the Company's knowledge, no liability to
the Pension Benefit Guaranty Corporation has been incurred with respect to any
Plan by the Company or any of its subsidiaries which is or would be materially
adverse to the Company and its subsidiaries. The execution and delivery of this
Agreement and the issuance and sale of the Preferred Shares will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA or in
connection with which a tax could be imposed pursuant to Section 4975 of the
Internal Revenue Code of 1986, as amended, provided that, if any of the
Purchasers, or any person or entity that owns a beneficial interest in any of
the Purchasers, is an "employee pension benefit plan" (within the meaning of
Section 3(2) of ERISA) with respect to which the Company is a "party in
interest" (within the meaning of Section 3(14) of ERISA), the requirements of
Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this
Section 2.1(ac), the term "Plan" shall mean an "employee pension benefit plan"
(as defined in Section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company or
any subsidiary or by any trade or business, whether or not incorporated, which,
together with the Company or any subsidiary, is under common control, as
described in Section 414(b) or (c) of the Code.

            (cc) Dilutive Effect. The Company understands and acknowledges that
the number of Conversion Shares issuable upon conversion of the Preferred Shares
and the Warrant Shares issuable upon exercise of the Warrants may increase in
certain circumstances. The Company further acknowledges that its obligation to
issue Conversion Shares upon conversion of the Preferred Shares in accordance
with this Agreement and the Certificate of Designation and its obligations to
issue the Warrant Shares upon the exercise of the Warrants in accordance with
this Agreement and the Warrants, is, in each case, absolute and unconditional
regardless of the dilutive effect that such issuance may have on the ownership
interest of other stockholders of the Company.

            (dd) Independent Nature of Purchasers. The Company acknowledges that
the obligations of each Purchaser under the Transaction Documents are several
and not joint with the obligations of any other Purchaser, and no Purchaser
shall be responsible in any way for the performance of the obligations of any
other Purchaser under the Transaction Documents. The Company acknowledges that
the decision of each Purchaser to purchase Securities pursuant to this Agreement
has been made by such Purchaser independently of any other purchase and
independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of
operations, condition (financial or otherwise) or prospects of the Company or of
its Subsidiaries which may have made or given by any other Purchaser or by any
agent or employee of any other Purchaser, and no Purchaser or any of its agents
or employees shall have any liability to any Purchaser (or any other person)
relating to or arising from any such information, materials, statements or
opinions. The Company acknowledges that nothing contained herein, or in any
Transaction Document, and no action taken by any Purchaser pursuant hereto or
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. The Company acknowledges that each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. The Company


                                       12


acknowledges that for reasons of administrative convenience only, the
Transaction Documents have been prepared by counsel for one of the Purchasers
and such counsel does not represent all of the Purchasers but only such
Purchaser and the other Purchasers have retained their own individual counsel
with respect to the transactions contemplated hereby. The Company acknowledges
that it has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by the Purchasers. The Company acknowledges that
such procedure with respect to the Transaction Documents in no way creates a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to the Transaction Documents or the transactions contemplated
hereby or thereby.

            (ee) 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 could cause the offering of the
Preferred Shares and Warrants pursuant to this Agreement to be integrated with
prior offerings by the Company for purposes of the Securities Act which would
prevent the Company from selling the Shares pursuant to Rule 506 under the
Securities Act, or any applicable exchange-related stockholder approval
provisions, nor will the Company or any of its affiliates or subsidiaries take
any action or steps that would cause the offering of the Preferred Shares and
Warrants to be integrated with other offerings if such other offering, if
integrated, would cause the offer and sale of the Preferred Shares and the
Warrants not to be exempt from registration pursuant to Regulation D and Rule
506 thereof under the Securities Act. The Company does not have any registration
statement pending before the Commission or currently under the Commission's
review.

            (ff) Sarbanes-Oxley Act(gg) . The Company is in substantial
compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act"), and the rules and regulations promulgated thereunder,
that are effective and intends to comply substantially with other applicable
provisions of the Sarbanes-Oxley Act, and the rules and regulations promulgated
thereunder, upon the effectiveness of such provisions.

            Section 2.2 Representations and Warranties of the Purchasers. Each
of the Purchasers hereby makes the following representations and warranties to
the Company with respect solely to itself and not with respect to any other
Purchaser:

            (a) Organization and Standing of the Purchasers. If the Purchaser is
an entity, such Purchaser is a corporation or partnership duly incorporated or
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization.

            (b) Authorization and Power. Each Purchaser has the requisite power
and authority to enter into and perform this Agreement and to purchase the
Preferred Shares and Warrants being sold to it hereunder. The execution,
delivery and performance of this Agreement and the Registration Rights Agreement
by such Purchaser and the consummation by it of the transactions contemplated
hereby and thereby have been duly authorized by all necessary corporate or
partnership action, and no further consent or authorization of such Purchaser or


                                       13


its Board of Directors, stockholders, or partners, as the case may be, is
required. Each of this Agreement and the Registration Rights Agreement has been
duly authorized, executed and delivered by such Purchaser and constitutes, or
shall constitute when executed and delivered, a valid and binding obligation of
the Purchaser enforceable against the Purchaser in accordance with the terms
thereof.

            (c) No Conflicts. The execution, delivery and performance of this
Agreement and the Registration Rights Agreement and the consummation by such
Purchaser of the transactions contemplated hereby and thereby or relating hereto
do not and will not (i) result in a violation of such Purchaser's charter
documents or bylaws or other organizational documents or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of any agreement, indenture or
instrument or obligation to which such Purchaser is a party or by which its
properties or assets are bound, or result in a violation of any law, rule, or
regulation, or any order, judgment or decree of any court or governmental agency
applicable to such Purchaser or its properties (except for such conflicts,
defaults and violations as would not, individually or in the aggregate, have a
material adverse effect on such Purchaser). Such Purchaser is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement or the
Registration Rights Agreement or to purchase the Preferred Shares or acquire the
Warrants in accordance with the terms hereof, provided that for purposes of the
representation made in this sentence, such Purchaser is assuming and relying
upon the accuracy of the relevant representations and agreements of the Company
herein.

            (d) Acquisition for Investment. Each Purchaser is acquiring the
Preferred Shares and the Warrants solely for its own account for the purpose of
investment and not with a view to or for sale in connection with distribution.
Each Purchaser does not have a present intention to sell the Preferred Shares or
the Warrants, nor a present arrangement (whether or not legally binding) or
intention to effect any distribution of the Preferred Shares or the Warrants to
or through any person or entity; provided, however, that by making the
representations herein and subject to Section 2.2(f) below, such Purchaser does
not agree to hold the Shares or the Warrants for any minimum or other specific
term and reserves the right to dispose of the Shares or the Warrants at any time
in accordance with Federal and state securities laws applicable to such
disposition. Each Purchaser acknowledges that an investment in the Shares and
the Warrants involves substantial risk and that it is able to bear the financial
risks associated with an investment in the Preferred Shares and the Warrants and
that it has been given full access to such records of the Company and the
subsidiaries and to the officers of the Company and the subsidiaries and
received such information as it has deemed necessary or appropriate to conduct
its due diligence investigation and has sufficient knowledge and experience in
investing in companies similar to the Company in terms of the Company's stage of
development so as to be able to evaluate the risks and merits of its investment
in the Company.

            (e) Status of Purchasers. Such Purchaser is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act. Such Purchaser
is not required to be registered as a broker-dealer under Section 15 of the
Exchange Act and such Purchaser is not a broker-dealer.



                                       14


            (f) Opportunities for Additional Information. Each Purchaser
acknowledges that such Purchaser has had the opportunity to ask questions of and
receive answers from, or obtain additional information from, the executive
officers of the Company concerning the financial and other affairs of the
Company, and to the extent deemed necessary in light of such Purchaser's
personal knowledge of the Company's affairs, such Purchaser has asked such
questions and received answers to the full satisfaction of such Purchaser, and
such Purchaser desires to invest in the Company.

            (g) No General Solicitation. Each Purchaser acknowledges that the
Preferred Shares and the Warrants were not offered to such Purchaser by means of
any form of general or public solicitation or general advertising, or publicly
disseminated advertisements or sales literature, including (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media, or broadcast over television or radio, or
(ii) any seminar or meeting to which such Purchaser was invited by any of the
foregoing means of communications.

            (h) Rule 144. The Purchaser understands that the Shares and the
Warrants are characterized as "restricted securities" under the Securities Act
and may be resold without registration under the Securities Act only in certain
limited circumstances. Such Purchaser understands that the Shares must be held
indefinitely unless such Shares are registered under the Securities Act or an
exemption from registration is available. Such Purchaser acknowledges that such
Purchaser is familiar with Rule 144 of the rules and regulations of the
Commission, as amended, promulgated pursuant to the Securities Act ("Rule 144"),
and that such person has been advised that Rule 144 permits resales only under
certain circumstances. Such Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any Shares without
either registration under the Securities Act or the existence of another
exemption from such registration requirement.

            (i) General. Such Purchaser understands that the Shares are being
offered and sold in reliance on a transactional exemption from the registration
requirement of Federal and state securities laws and the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of such Purchaser set forth herein in order
to determine the applicability of such exemptions and the suitability of such
Purchaser to acquire the Shares.

            (j) Independent Investment. No Purchaser has agreed to act with any
other Purchaser for the purpose of acquiring, holding, voting or disposing of
the Shares purchased hereunder for purposes of Section 13(d) under the Exchange
Act, and each Purchaser is acting independently with respect to its investment
in the Shares.

            (k) Confidentiality. The Purchasers will hold in confidence all
information concerning this Agreement and the placement of the Shares hereunder
until the earlier of such time as the Company has made a public announcement
concerning the Agreement and the placement of the Shares hereunder.



                                       15


                                  ARTICLE III

                                    COVENANTS

      The Company covenants with each of the Purchasers as follows, which
covenants are for the benefit of the Purchasers and their permitted assignees
(as defined herein).

            Section 3.1 Securities Compliance. The Company shall notify the
Commission in accordance with their rules and regulations, of the transactions
contemplated by any of the Transaction Documents, including filing a Form D with
respect to the Preferred Shares, Warrants, Conversion Shares and Warrant Shares
as required under Regulation D, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation, for the legal and valid issuance of the Preferred Shares, the
Warrants, the Conversion Shares and the Warrant Shares to the Purchasers or
subsequent holders.

            Section 3.2 Registration and Listing. The Company will cause its
Common Stock to continue to be registered under Sections 12(b) or 12(g) of the
Exchange Act, will comply in all respects with its reporting and filing
obligations under the Exchange Act, will comply with all requirements related to
any registration statement filed pursuant to this Agreement or the Registration
Rights Agreement, and will not take any action or file any document (whether or
not permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act, except as
permitted herein. The Company will take all action necessary to continue the
listing or trading of its Common Stock on the OTC Bulletin Board or other
exchange or market.

            Section 3.3 Inspection Rights. Subject to the execution of a
confidentiality agreement as deemed necessary by the Company, the Company shall
permit, during normal business hours and upon reasonable request and reasonable
notice, each Purchaser or any employees, agents or representatives thereof, so
long as such Purchaser shall be obligated hereunder to purchase the Preferred
Shares or shall beneficially own any Preferred Shares, or shall own Conversion
Shares which, in the aggregate, represent more than 2% of the total combined
voting power of all voting securities then outstanding, for purposes reasonably
related to such Purchaser's interests as a stockholder to examine and make
reasonable copies of and extracts from the records and books of account of, and
visit and inspect the properties, assets, operations and business of the Company
and any subsidiary, and to discuss the affairs, finances and accounts of the
Company and any subsidiary with any of its officers, consultants, directors, and
key employees.

            Section 3.4 Compliance with Laws. The Company shall comply, and
cause each subsidiary to comply, with all applicable laws, rules, regulations
and orders, noncompliance with which could have a Material Adverse Effect.

            Section 3.5 Keeping of Records and Books of Account. The Company
shall keep and cause each subsidiary to keep adequate records and books of
account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions of the Company and


                                       16


its subsidiaries, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

            Section 3.6 Reporting Requirements. If the Commission ceases making
periodic reports filed under Section 13 of the Exchange Act available via its
Election Data Gathering Retrieval and Analysis System, then at a Purchaser's
request the Company shall furnish the following to such Purchaser so long as
such Purchaser shall be obligated hereunder to purchase the Preferred Shares or
shall beneficially own any Preferred Shares, or shall own Conversion Shares
which, in the aggregate, represent more than 2% of the total combined voting
power of all voting securities then outstanding:

            (a) Quarterly Reports filed with the Commission on Form 10-QSB as
soon as practical after the document is filed with the Commission, and in any
event within five (5) business days after the document is filed with the
Commission;

            (b) Annual Reports filed with the Commission on Form 10-KSB as soon
as practical after the document is filed with the Commission, and in any event
within five (5) business days after the document is filed with the Commission;
and

            (c) Copies of all notices and information, including without
limitation notices and proxy statements in connection with any meetings, that
are provided to holders of shares of Common Stock, contemporaneously with the
delivery of such notices or information to such holders of Common Stock.

            Section 3.7 Amendments. Except as permitted in the Certificate of
Designation, the Company shall not amend or waive any provision of the
Certificate or Bylaws of the Company in any way that would adversely affect the
liquidation preferences, dividends rights, conversion rights, voting rights or
redemption rights of the Preferred Shares; provided, however, that any creation
and issuance of another series of Junior Stock (as defined in the Certificate of
Designation) or any other class or series of equity securities which by its
terms shall rank on parity with the Preferred Shares shall not be deemed to
materially and adversely affect such rights, preferences or privileges.

            Section 3.8 Distributions. So long as any Preferred Shares or
Warrants remain outstanding, the Company agrees that it shall not (i) declare or
pay any dividends or make any distributions to any holder(s) of Common Stock
unless there are no dividends overdue and owing with respect to the Preferred
Shares or (ii) purchase or otherwise acquire for value, directly or indirectly,
any Common Stock or other equity security of the Company other than in
connection with an exchange of equity securities of the Company for such Common
Stock or other equity security.

            Section 3.9 Status of Dividends. The Company covenants and agrees
that (i) no Federal income tax return or claim for refund of Federal income tax
or other submission to the Internal Revenue Service will adversely affect the
Preferred Shares, any other series of its Preferred Stock, or the Common Stock,
and any deduction shall not operate to jeopardize the availability to Purchasers
of the dividends received deduction provided by Section 243(a)(1) of the Code or
any successor provision, (ii) in no report to shareholders or to any
governmental body having jurisdiction over the Company or otherwise will it
treat the Preferred Shares other than as equity capital or the dividends paid
thereon other than as dividends paid on equity capital unless required to do so
by a governmental body having jurisdiction over the accounts of the Company or
by a change in generally accepted accounting principles required as a result of


                                       17


action by an authoritative accounting standards setting body, and (iii) other
than pursuant to this Agreement or the Certificate of Designation, it will take
no action which would result in the dividends paid by the Company on the
Preferred Shares out of the Company's current or accumulated earnings and
profits being ineligible for the dividends received deduction provided by
Section 243(a)(1) of the Code. The preceding sentence shall not be deemed to
prevent the Company from designating the Preferred Stock as "Convertible
Preferred Stock" in its annual and quarterly financial statements in accordance
with its prior practice concerning other series of preferred stock of the
Company. Notwithstanding the foregoing, the Company shall not be required to
restate or modify its tax returns for periods prior to the Closing Date. In the
event that the Purchasers have reasonable cause to believe that dividends paid
by the Company on the Preferred Shares out of the Company's current or
accumulated earnings and profits will not be treated as eligible for the
dividends received deduction provided by Section 243(a)(1) of the Code, or any
successor provision, the Company will, at the reasonable request of the
Purchasers of 51% of the outstanding Preferred Shares, join with the Purchasers
in the submission to the Service of a request for a ruling that dividends paid
on the Shares will be so eligible for Federal income tax purposes, at the
Purchasers expense. In addition, the Company will reasonably cooperate with the
Purchasers (at Purchasers' expense) in any litigation, appeal or other
proceeding challenging or contesting any ruling, technical advice, finding or
determination that earnings and profits are not eligible for the dividends
received deduction provided by Section 243(a)(1) of the Code, or any successor
provision to the extent that the position to be taken in any such litigation,
appeal, or other proceeding is not contrary to any provision of the Code or
incurred in connection with any such submission, litigation, appeal or other
proceeding. Notwithstanding the foregoing, nothing herein contained shall be
deemed to preclude the Company from claiming a deduction with respect to such
dividends if (i) the Code shall hereafter be amended, or final Treasury
regulations thereunder are issued or modified, to provide that dividends on the
Preferred Shares or Conversion Shares should not be treated as dividends for
Federal income tax purposes or that a deduction with respect to all or a portion
of the dividends on the Shares is allowable for Federal income tax purposes, or
(ii) in the absence of such an amendment, issuance or modification and after a
submission of a request for ruling or technical advice, the service shall rule
or advise that dividends on the shares should not be treated as dividends for
Federal income tax purposes. If the Service determines that the Preferred Shares
or Conversion Shares constitute debt, the Company may file protective claims for
refund.

            Section 3.10 Use of Proceeds. The proceeds from the sale of the
Preferred Shares will be used by the Company to fund clinical trials of the
AutoGel(TM) System, as approved by the United States Food and Drug
Administration, and the balance of the proceeds will be used by the Company for
working capital and general corporate purposes, excluding acquisitions. A
portion of the proceeds from the sale of the Preferred Shares may be used by the


                                       18


Company to redeem those shares of Series A and Series B Preferred Stock
outstanding subsequent to the close of an exchange offer pursuant to which
holders of the Company's shares of Series A and Series B Preferred Stock may
exchange such shares for shares of Series C Preferred Stock and warrants to
purchase shares of Common Stock.

            Section 3.11 Future Financings; Right of First Offer and Refusal.
(a) For purposes of this Agreement, a "Subsequent Financing" shall be defined as
any subsequent offer or sale to, or exchange with (or other type of distribution
to), any third party of Common Stock or any securities convertible, exercisable
or exchangeable into Common Stock, including debt securities so convertible, in
a private transaction (collectively, the "Financing Securities") other than a
Permitted Financing. For purposes of this Agreement, "Permitted Financing" shall
mean any transaction involving (i) the Company's issuance of any Financing
Securities (other than for cash) in connection with a merger and/or acquisition,
consolidation, sale or disposition of all or substantially all of the Company's
assets, (ii) the Company's issuance of Financing Securities in connection with
strategic license agreements or other financing transactions so long as such
issuances are not for the purpose of raising capital, (iii) the Company's
issuance of Financing Securities in connection with bona fide firm underwritten
public offerings of its securities, (iv) Company's issuance of Common Stock or
the issuance or grants of options to purchase Common Stock pursuant to the
Company's existing compensation and benefit plans or any other plan, agreement,
or arrangement approved by the Board of Directors for the primary purpose of
soliciting or retaining the services of employees, directors or consultants, (v)
as a result of the exercise of options or warrants or conversion of convertible
notes or preferred stock which are granted or issued as of the date of this
Agreement, (vi) any Warrants issued to the Purchasers and any warrants issued to
the placement agent for the transactions contemplated by this Agreement and any
warrants issued to the placement agent for the transactions contemplated by the
Unit Offering (as defined below), (vii) the payment of any dividend on the
Company's capital stock, (viii) the Company's issuance of shares of Series C
Preferred Stock and warrants to purchase shares of Common Stock in exchange for
the Company's Series A and Series B Preferred Stock to be consummated by the
Company and any shares of Common Stock issuable upon conversion or exercise of
such securities, and (ix) the Company's issuance of shares of Common Stock in
connection with a unit offering of up to $4,500,000 of Common Stock at a
purchase price of $1.00 per share and warrants to purchase shares of Common
Stock at an exercise price of $1.50 per share (the "Unit Offering') to be
consummated within forty-five (45) days of the Closing Date and any shares of
Common Stock issuable upon exercise of such warrants, provided, however, that at
least $1,500,000 of the purchase price shall be paid in cash, a maximum of
$1,000,000 of the purchase price may be paid with promissory notes maturing 90
days from the consummation of the Unit Offering, a maximum of $1,000,000 of the
purchase price may be paid with promissory notes maturing 180 days from the
consummation of the Unit Offering and a maximum of $1,000,000 of the purchase
price may be paid with promissory notes maturing 270 days from the consummation
of the Unit Offering, provided, further, that if the Company issues shares of
Common Stock at a price per share less than $1.00 and warrants at an exercise
price of less than $1.50 per share, the Conversion Price (as defined in the
Certificate of Designation) shall automatically be reduced to the price per
share of Common Stock issued by the Company pursuant to the Unit Offering and
the Warrant Price (as defined in the applicable Warrant) of each series of
Warrant shall automatically be reduced to the exercise price per share of the
warrants issued by the Company pursuant to the Unit Offering.

            (b) During the period commencing on the Closing Date and ending on
the date that is twelve (12) months following the Closing Date, the Company


                                       19


covenants and agrees to promptly notify (in no event later than five (5)
business days after making or receiving an applicable offer) in writing (a
"Rights Notice") each Purchaser of the terms and conditions of any proposed
Subsequent Financing. The Rights Notice shall describe, in reasonable detail,
the proposed Subsequent Financing, the proposed closing date of the Subsequent
Financing, which shall be within thirty (30) calendar days from the date of the
Rights Notice, including, without limitation, all of the terms and conditions
thereof and proposed definitive documentation to be entered into in connection
therewith. The Rights Notice shall provide each Purchaser an option (the "Rights
Option") during the five (5) Trading Days following delivery of the Rights
Notice (the "Option Period") to inform the Company whether such Purchaser will
purchase up to fifty percent (50%) of its Purchase Price for the securities
being offered in such Subsequent Financing on the same, absolute terms and
conditions as contemplated by such Subsequent Financing (the "First Refusal
Rights") and on a pro rata basis as to all other Purchasers electing to purchase
securities offered in the Subsequent Financing. "Trading Day" means any day
during which the OTC Bulletin Board (or other principal exchange on which the
Common Stock is traded) shall be open for trading. If any Purchaser elects not
to participate in such Subsequent Financing, the other Purchasers may
participate on a pro-rata basis so long as such participation in the aggregate
does not exceed fifty percent (50%) of the total Purchase Price hereunder. For
purposes of this Section, all references to "pro rata" means, for any Purchaser
electing to participate in such Subsequent Financing, the percentage obtained by
dividing (x) the total number of Preferred Shares purchased by such Purchaser at
the Closing by (y) the total number of Preferred Shares purchased by all of the
participating Purchasers at the Closing. Delivery of any Rights Notice
constitutes a representation and warranty by the Company that there are no other
material terms and conditions, arrangements, agreements or otherwise except for
those disclosed in the Rights Notice, to provide additional compensation to any
party participating in any proposed Subsequent Financing, including, but not
limited to, additional compensation based on changes in the Purchase Price or
any type of reset or adjustment of a purchase or conversion price or to issue
additional securities at any time after the closing date of a Subsequent
Financing. If the Company does not receive notice of exercise of the Rights
Option from the Purchasers within the Option Period, the Company shall have the
right to close the Subsequent Financing on the scheduled closing date or within
ten (10) business days thereafter with a third party; provided that all of the
material terms and conditions of the closing are the same as those provided to
the Purchasers in the Rights Notice. If the closing of the proposed Subsequent
Financing does not occur on that date, any closing of the contemplated
Subsequent Financing or any other Subsequent Financing shall be subject to all
of the provisions of this Section 3.11, including, without limitation, the
delivery of a new Rights Notice. The provisions of this Section 3.11(b) shall
not apply to issuances of Financing Securities in a Permitted Financing.

            (c) If the Company enters into any Subsequent Financing (other than
issuances of Common Stock) on terms more favorable than the terms governing the
Preferred Shares, then the Purchasers in their sole discretion may exchange the
Preferred Shares, valued at their stated value, together with accrued but unpaid
dividends (which dividends shall be payable, at the sole option of the
Purchasers, in cash or in the form of the new securities to be issued in the
Subsequent Financing) for the securities issued or to be issued in the
Subsequent Financing. The Company covenants and agrees to promptly notify in
writing the Purchasers of the terms and conditions of any such proposed
Subsequent Financing.



                                       20


            Section 3.12 Reservation of Shares. So long as any of the Preferred
Shares or Warrants remain outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 120% of the aggregate number of shares of Common Stock
needed to provide for the issuance of the Conversion Shares and the Warrant
Shares.

            Section 3.13 Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent in substantially the form of
Exhibit F attached hereto (the "Irrevocable Transfer Agent Instructions"), and
any subsequent transfer agent, to issue certificates, registered in the name of
each Purchaser or its respective nominee(s), for the Conversion Shares and the
Warrant Shares upon conversion of the Preferred Shares or valid exercise of the
Warrants and receipt of consideration by the Company. Prior to the registration
for resale of the Conversion Shares and the Warrant Shares under the Securities
Act, all such certificates shall bear the restrictive legend specified in
Section 6.1 of this Agreement. Nothing in this Section 3.13 shall affect in any
way each Purchaser's obligations and agreements set forth in Section 6.1 to
comply with all applicable prospectus delivery requirements, if any, upon resale
of the Shares. If a Purchaser provides the Company with an opinion of counsel,
in a generally acceptable form, to the effect that a Purchaser's public resale,
assignment or transfer of the Shares may be made without registration under the
Securities Act or the Purchaser provides the Company with reasonable assurances
that the Purchaser may resell the Shares pursuant to Rule 144 without any
restriction as to the number of securities acquired as of a particular date that
can then be immediately sold, the Company shall permit the transfer, and, in the
case of the Conversion Shares and the Warrant Shares, promptly instruct its
transfer agent to issue one or more certificates in such name and in such
denominations as specified by such Purchaser and without any restrictive legend.
The Company is entitled to rely on such opinion or assurances of Purchaser with
no independent investigation, and shall assume no liability for any Purchaser's
failure to comply with any Federal or state securities laws applicable to such
Purchaser's resale of the Shares. The Company acknowledges that a breach by it
of its obligations under this Section 3.13 will cause irreparable harm to the
Purchasers by vitiating the intent and purpose of the transaction contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for a
breach of its obligations under this Section 3.13 will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions
of this Section 3.13, that the Purchasers shall be entitled, in addition to all
other available remedies, to an order and/or injunction restraining any breach
and requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

            Section 3.14 Disposition of Assets. So long as the Preferred Shares
remain outstanding, neither the Company nor any Subsidiary shall sell, transfer
or otherwise dispose of any of its properties, assets and rights including,
without limitation, its software and intellectual property, to any person except
for sales to customers in the ordinary course of business or office equipment
that is obsolete or no longer being used without the prior written consent of
the holders of a majority of the Preferred Shares then outstanding.

            Section 3.15 Reporting Status. So long as a Purchaser beneficially
owns any of the Securities, the Company shall timely file all reports required
to be filed with the Commission pursuant to the Exchange Act, and the Company
shall not terminate its status as an issuer required to file reports under the


                                       21


Exchange Act even if the Exchange Act or the rules and regulations thereunder
would permit such termination.

            Section 3.16 Disclosure of Transaction. The Company shall issue a
press release describing the material terms of the transactions contemplated
hereby (the "Press Release") as soon as practicable after the Closing; provided,
however, that if Closing occurs after 4:00 P.M. Eastern Time on any Trading Day
but in no event later than one hour after the Closing, the Company shall issue
the Press Release no later than 9:00 A.M. Eastern Time on the first Trading Day
following the Closing Date. The Company shall also file with the Commission a
Current Report on Form 8-K (the "Form 8-K") describing the material terms of the
transactions contemplated hereby (and attaching as exhibits thereto this
Agreement, the Registration Rights Agreement and the form of Warrant) as soon as
practicable following the date of execution of this Agreement but in no event
more than two (2) Trading Days following the date of execution of this
Agreement, which Press Release and Form 8-K shall be subject to prior review and
comment by the Purchasers.

            Section 3.17 Disclosure of Material Information. The Company
covenants and agrees that neither it, nor to its knowledge, any other person
acting on its behalf has provided or will provide any Purchaser or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Purchaser shall have executed
a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the
foregoing representations in effecting transactions in securities of the
Company.

            Section 3.18 Pledge of Securities. The Company acknowledges and
agrees that the Securities may be pledged by a Purchaser in connection with a
bona fide margin agreement or other loan or financing arrangement that is
secured by the Common Stock. The pledge of Common Stock shall not be deemed to
be a transfer, sale or assignment of the Common Stock hereunder, and no
Purchaser effecting a pledge of Common Stock shall be required to provide the
Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document; provided that a
Purchaser and its pledgee shall be required to comply with the provisions of
Article V hereof in order to effect a sale, transfer or assignment of Common
Stock to such pledgee. At the Purchasers' expense, the Company hereby agrees to
execute and deliver such documentation as a pledgee of the Common Stock may
reasonably request in connection with a pledge of the Common Stock to such
pledgee by a Purchaser.

            Section 3.19 Unit Offering Documents. The Company shall provide the
Purchasers with draft and final execution copies of the transaction documents
relating to the Unit Offering.

                                   ARTICLE IV

                                   CONDITIONS

            Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Shares. The obligation hereunder of the Company to issue and sell the
Preferred Shares and the Warrants to the Purchasers is subject to the


                                       22


satisfaction or waiver, at or before the Closing, of each of the conditions set
forth below. These conditions are for the Company's sole benefit and may be
waived by the Company at any time in its sole discretion.

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

            (b) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by such Purchaser at or prior to the 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) Delivery of Purchase Price. The Purchase Price for the Preferred
Shares and Warrants has been delivered to the Company at the Closing Date.

            (e) Delivery of Transaction Documents. The Transaction Documents
have been duly executed and delivered by the Purchasers to the Company.

            Section 4.2 Conditions Precedent to the Obligation of the Purchasers
to Purchase the Shares. The obligation hereunder of each Purchaser to acquire
and pay for the Preferred Shares and the Warrants is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth below.
These conditions are for each Purchaser's sole benefit and may be waived by such
Purchaser 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 in this Agreement and the
Registration Rights Agreement shall be true and correct in all material respects
as of the date when made and as of the Closing Date as though made at that time
(except for representations and warranties that are expressly made 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 respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company at or prior to the Closing.

            (c) No Suspension, Etc. Trading in the Company's Common Stock shall
not have been suspended by the Commission or the OTC Bulletin Board (except for
any suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the applicable Closing), and, at any


                                       23


time prior to the Closing Date, trading in securities generally as reported by
Bloomberg Financial Markets ("Bloomberg") shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by Bloomberg, or on the New York Stock Exchange, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities, nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity or crisis
of such magnitude in its effect on, or any material adverse change in any
financial market which, in each case, in the judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Preferred Shares.

            (d) 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.

            (e) No Proceedings or Litigation. No action, suit or proceeding
before any arbitrator or any governmental authority shall have been commenced,
and no investigation by any governmental authority shall have been threatened,
against 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.

            (f) Certificate of Designation of Rights and Preferences. Prior to
the Closing, the Certificate of Designation in the form of Exhibit D attached
hereto shall have been filed with the Secretary of State of Delaware.

            (g) Opinion of Counsel, Etc. At the Closing, the Purchasers shall
have received an opinion of counsel to the Company, dated the date of the
Closing, covering the matters addressed in the form of Exhibit G hereto with
usual and customary assumptions, qualifications and exclusions, and such other
certificates and documents as the Purchasers or its counsel shall reasonably
require incident to the Closing.

            (h) Registration Rights Agreement. At the Closing, the Company shall
have executed and delivered the Registration Rights Agreement to each Purchaser.

            (i) Certificates. The Company shall have executed and delivered to
the Purchasers the certificates (in such denominations as such Purchaser shall
request) for the Preferred Shares and Warrants being acquired by such Purchaser
at the Closing.

            (j) Resolutions. The Board of Directors of the Company shall have
adopted resolutions consistent with Section 2.1(b) hereof in a form reasonably
acceptable to such Purchaser (the "Resolutions").



                                       24


            (k) Reservation of Shares. As of the Closing Date, the Company shall
have reserved out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of the Preferred Shares and the exercise of
the Warrants, a number of shares of Common Stock equal to at least 120% of the
aggregate number of Conversion Shares issuable upon conversion of the Preferred
Shares outstanding on the Closing Date and the number of Warrant Shares issuable
upon exercise of the number of Warrants assuming such Warrants were granted on
the Closing Date (after giving effect to the Preferred Shares and the Warrants
to be issued on the Closing Date and assuming all such Preferred Shares and
Warrants were fully convertible or exercisable on such date regardless of any
limitation on the timing or amount of such conversions or exercises).

            (l) Transfer Agent Instructions. The Irrevocable Transfer Agent
Instructions, in the form of Exhibit F attached hereto, shall have been
delivered to the Company's transfer agent.

            (m) Secretary's Certificate. The Company shall have delivered to
such Purchaser a secretary's certificate, dated as of the Closing Date, as to
(i) the Resolutions, (ii) the Certificate, (iii) the Bylaws, (iv) the
Certificate of Designation, each as in effect at the Closing, and (iv) the
authority and incumbency of the officers of the Company executing the
Transaction Documents and any other documents required to be executed or
delivered in connection therewith.

            (n) Officer's Certificate. The Company shall have delivered to the
Purchasers a certificate of an executive officer of the Company, dated as of the
Closing Date, confirming the accuracy of the Company's representations,
warranties and covenants as of such Closing Date and confirming the compliance
by the Company with the conditions precedent set forth in this Section 4.2 as of
the Closing Date.

            (o) Material Adverse Effect. No Material Adverse Effect shall have
occurred at or before the Closing Date.

                                   ARTICLE V

                              INTENTIONALLY OMITTED

                                   ARTICLE VI

                            STOCK CERTIFICATE LEGEND

            Section 6.1 Legend. Each certificate representing the Preferred
Shares and the Warrants, and, if appropriate, securities issued upon conversion
thereof, shall be stamped or otherwise imprinted with a legend substantially in
the following form (in addition to any legend required by applicable state
securities or "blue sky" laws):

      THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE


                                       25


      "SECURITIES ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
      TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE
      SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR CYTOMEDIX,
      INC. SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH
      SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE
      STATE SECURITIES LAWS IS NOT REQUIRED.

      The Company agrees to reissue certificates representing any of the
Conversion Shares and the Warrant Shares, without the legend set forth above if
at such time, prior to making any transfer of any such securities, such holder
thereof shall give written notice to the Company describing the manner and terms
of such transfer and removal as the Company may reasonably request. Such
proposed transfer and removal will not be effected until: (a) either (i) the
Company has received an opinion of counsel reasonably satisfactory to the
Company, to the effect that the registration of the Conversion Shares or the
Warrant Shares under the Securities Act is not required in connection with such
proposed transfer, (ii) a registration statement under the Securities Act
covering such proposed disposition has been filed by the Company with the
Commission and has become effective under the Securities Act and the holder has
complied with any applicable prospectus delivery requirements, (iii) the Company
has received other evidence reasonably satisfactory to the Company that such
registration and qualification under the Securities Act and state securities
laws are not required, or (iv) the holder provides the Company with reasonable
assurances that such security can be sold pursuant to Rule 144 under the
Securities Act; and (b) either (i) the Company has received an opinion of
counsel reasonably satisfactory to the Company, to the effect that registration
or qualification under the securities or "blue sky" laws of any state is not
required in connection with such proposed disposition, or (ii) compliance with
applicable state securities or "blue sky" laws has been effected or a valid
exemption exists with respect thereto. The Company will respond to any such
notice from a holder within five (5) business days. In the case of any proposed
transfer under this Section 6.1, the Company will use reasonable efforts to
comply with any such applicable state securities or "blue sky" laws, but shall
in no event be required, (x) to qualify to do business in any state where it is
not then qualified, (y) to take any action that would subject it to tax or to
the general service of process in any state where it is not then subject, or (z)
to comply with state securities or "blue sky" laws of any state for which
registration by coordination is unavailable to the Company. The restrictions on
transfer contained in this Section 6.1 shall be in addition to, and not by way
of limitation of, any other restrictions on transfer contained in any other
section of this Agreement. Whenever a certificate representing the Conversion
Shares or Warrant Shares is required to be issued to a Purchaser without a
legend, in lieu of delivering physical certificates representing the Conversion
Shares or Warrant Shares, provided the Company's transfer agent is participating
in the Depository Trust Company ("DTC") Fast Automated Securities Transfer
program, the Company shall use its reasonable best efforts to cause its transfer
agent to electronically transmit the Conversion Shares or Warrant Shares to a
Purchaser by crediting the account of such Purchaser's Prime Broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system (to the extent
not inconsistent with any provisions of this Agreement).



                                       26


                                  ARTICLE VII

                             INTENTIONALLY OMITTED.

                                  ARTICLE VIII

                                 INDEMNIFICATION

      Section 8.1 General Indemnity. The Company agrees to indemnify and hold
harmless the Purchasers (and their respective directors, officers, affiliates,
agents, successors and assigns) from and against any and all losses,
liabilities, deficiencies, costs, damages and expenses (including, without
limitation, reasonable attorneys' fees, charges and disbursements) incurred by
the Purchasers as a result of any inaccuracy in or breach of the
representations, warranties or covenants made by the Company herein. Each
Purchaser severally but not jointly agrees to indemnify and hold harmless the
Company and its directors, officers, affiliates, agents, successors and assigns
from and against any and all losses, liabilities, deficiencies, costs, damages
and expenses (including, without limitation, reasonable attorneys' fees, charges
and disbursements) incurred by the Company as result of any inaccuracy in or
breach of the representations, warranties or covenants made by such Purchaser
herein. The maximum aggregate liability of each Purchaser pursuant to its
indemnification obligations under this Article 8 shall not exceed the portion of
the Purchase Price paid by such Purchaser hereunder.

      Section 8.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VIII (an "indemnified party") will give
written notice to the indemnifying party of any matters giving rise to a claim
for indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VIII except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to participate in and, unless in the
reasonable judgment of the indemnified party a conflict of interest between it
and the indemnifying party may exist with respect of such action, proceeding or
claim, to assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party advises an
indemnified party that it will contest such a claim for indemnification
hereunder, or fails, within thirty (30) days of receipt of any indemnification
notice to notify, in writing, such person of its election to defend, settle or
compromise, at its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such defense), then the
indemnified party may, at its option, defend, settle or otherwise compromise or
pay such action or claim. In any event, unless and until the indemnifying party
elects in writing to assume and does so assume the defense of any such claim,
proceeding or action, the indemnified party's costs and expenses arising out of
the defense, settlement or compromise of any such action, claim or proceeding
shall be losses subject to indemnification hereunder. The indemnified party
shall cooperate fully with the indemnifying party in connection with any


                                       27


negotiation or defense of any such action or claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the indemnified party which relates to such action or claim. The indemnifying
party shall keep the indemnified party fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent. Notwithstanding anything in this Article VIII to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent to entry of any
judgment in respect thereof which imposes any future obligation on the
indemnified party or which does not include, as an unconditional term thereof,
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such claim. The indemnification
required by this Article VIII shall be made by periodic payments of the amount
thereof during the course of investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred, so long as the
indemnified party irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party was not entitled
to indemnification. The indemnity agreements contained herein shall be in
addition to (a) any cause of action or similar rights of the indemnified party
against the indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.

                                   ARTICLE IX

                                  MISCELLANEOUS

            Section 9.1 Fees and Expenses. Except as otherwise set forth in this
Agreement, the Registration Rights Agreement or the Certificate of Designation,
each party shall pay the fees and expenses of its advisors, 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, provided that the Company shall pay all actual attorneys' fees
and expenses (including disbursements and out-of-pocket expenses) for one
counsel to the Purchasers incurred by the Purchasers in connection with (i) the
preparation, negotiation, execution and delivery of this Agreement, the
Registration Rights Agreement and the transactions contemplated thereunder,
which payment shall be made at Closing in the amount of $38,511.80, (ii) the
filing and declaration of effectiveness by the Commission of the Registration
Statement (as defined in the Registration Rights Agreement) and (iii) any
amendments, modifications or waivers of this Agreement or any of the other
Transaction Documents. In addition, the Company shall pay all reasonable fees
and expenses incurred by the Purchasers in connection with the enforcement of
this Agreement or any of the other Transaction Documents, including, without
limitation, all reasonable attorneys' fees and expenses. The Company shall pay
all stamp or other similar taxes and duties levied in connection with issuance
of the Preferred Shares pursuant hereto.

            Section 9.2 Specific Enforcement, Consent to Jurisdiction.

            (a) The Company and the Purchasers acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement, the Certificate of Designation or the Registration Rights Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an


                                       28


injunction or injunctions to prevent or cure breaches of the provisions of this
Agreement or the Registration Rights Agreement and to enforce specifically the
terms and provisions hereof or thereof, this being in addition to any other
remedy to which any of them may be entitled by law or equity.

            (b) Each of the Company and the Purchasers (i) hereby irrevocably
submits to the jurisdiction of the United States District Court sitting in the
Southern District of New York and the courts of the State of New York located in
New York county for the purposes of any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents or
the transactions contemplated hereby or thereby and (ii) hereby waives, and
agrees not to assert in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. Each of the Company and the
Purchasers consents to process being served in any such suit, action or
proceeding by mailing a copy thereof 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 in this
Section 9.2 shall affect or limit any right to serve process in any other manner
permitted by law.

            Section 9.3 Entire Agreement; Amendment. This Agreement and the
Transaction Documents contains the entire understanding and agreement of the
parties with respect to the matters covered hereby and, except as specifically
set forth herein or in the Transaction Documents or the Certificate of
Designation, neither the Company nor any of the Purchasers makes any
representations, warranty, covenant or undertaking with respect to such matters
and they supersede all prior understandings and agreements with respect to said
subject matter, all of which are merged herein. No provision of this Agreement
may be waived or amended other than by a written instrument signed by the
Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by an a
written instrument signed by the party against whom enforcement of any such
amendment or waiver is sought. No such amendment shall be effective to the
extent that it applies to less than all of the holders of the Preferred Shares
then outstanding. No consideration shall be offered or paid to any person to
amend or consent to a waiver or modification of any provision of any of the
Transaction Documents or the Certificate of Designation unless the same
consideration is also offered to all of the parties to the Transaction Documents
or holders of Preferred Shares, as the case may be.

            Section 9.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received), telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:



                                       29


      If to the Company:             Cytomedix, Inc.
                                     1523 Bowman Road, Suite A
                                     Little Rock, Arkansas 72211
                                     Attention: Chief Financial Officer
                                     Tel. No.: (501) 219-2111
                                     Fax No.:  (501) 219-2114
      with copies to:                Williams & Anderson PLC


                                     111 Center Street, 22nd Floor
                                     Little Rock, Arkansas 72201
                                     Attention: Peter G. Kumpe
                                     Tel. No.: (501) 372-0800
                                     Fax No.:  (501) 372-6453

      If to any Purchaser:           At the address of such Purchaser
                                     set forth on Exhibit A to this
                                     Agreement, with copies to
                                     Purchaser's counsel as set forth on
                                     Exhibit A or as specified in
                                     writing by such Purchaser with
                                     copies to:


                                     Jenkens & Gilchrist Parker Chapin LLP
                                     The Chrysler Building
                                     405 Lexington Avenue
                                     New York, NY 10174
                                     Attention: Christopher S. Auguste, Esq.
                                     Tel No.: (212) 704-6000
                                     Fax No.: (212) 704-6288

      Any party hereto may from time to time change its address for notices by
giving at least ten (10) days written notice of such changed address to the
other party hereto.

            Section 9.5 Waivers. No waiver by either party 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 other
provisions, 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 accruing to it thereafter.

            Section 9.6 Headings. The article, section and subsection headings
in this Agreement are for convenience only and shall not constitute a part of
this Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.

            Section 9.7 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties and their successors and assigns.

            Section 9.8 No Third Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.



                                       30


            Section 9.9 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions. This Agreement shall not
interpreted or construed with any presumption against the party causing this
Agreement to be drafted.

            Section 9.10 Survival. The representations and warranties of the
Company and the Purchasers contained in Section 2.1(o) should survive until
thirty (30) days after the passage of the applicable statute of limitations and
those contained in Article II, with the exception of Section 2.1(o), shall
survive the execution and delivery hereof and the Closing until the date two (2)
years from the Closing Date, and the agreements and covenants set forth in
Articles I, III, VIII and IX of this Agreement shall survive the execution and
delivery hereof and the Closing hereunder until the Purchasers in the aggregate
beneficially own (determined in accordance with Rule 13d-3 under the Exchange
Act) less than 10% of the total combined voting power of all voting securities
then outstanding, provided, that Sections 3.1, 3.2, 3.4, 3.5, 3.6, 3.7, 3.8,
3.9, 3.10, 3.12, 3.13, 3.14, 3.15, 3.17 and 3.18 shall not expire until the
Registration Statement required by Section 2 of the Registration Rights
Agreement is no longer required to be effective under the terms and conditions
of Registration Rights Agreement.

            Section 9.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means of delivery
shall cause four additional executed signature pages to be physically delivered
to the other parties within five days of the execution and delivery hereof.

            Section 9.12 Publicity. The Company agrees that it will not
disclose, and will not include in any public announcement, the name of the
Purchasers without the consent of the Purchasers unless and until such
disclosure is required by law or applicable regulation, and then only to the
extent of such requirement.

            Section 9.13 Severability. The provisions of this Agreement, the
Certificate of Designation and the Registration Rights Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement, the Certificate of Designation or the Registration Rights Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision or part of a provision of this Agreement, the Certificate of
Designation or the Registration Rights Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.

            Section 9.14 Further Assurances. From and after the date of this
Agreement, upon the request of any Purchaser or the Company, each of the Company
and the Purchasers shall execute and deliver such instrument, documents and
other writings as may be reasonably necessary or desirable to confirm and carry


                                       31


out and to effectuate fully the intent and purposes of this Agreement, the
Preferred Shares, the Conversion Shares, the Warrants, the Warrant Shares, the
Certificate of Designation, and the Registration Rights Agreement.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




                                       32


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

                                         CYTOMEDIX, INC.





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







                                         PURCHASER

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


                                EXHIBIT A TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

NAMES AND ADDRESSES        NUMBER OF PREFERRED SHARES      DOLLAR AMOUNT OF
OF PURCHASERS              & WARRANTS PURCHASED            INVESTMENT
- -------------              --------------------            ----------





                                EXHIBIT B TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

                           FORM OF SERIES C-1 WARRANT






                                EXHIBIT C TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

                           FORM OF SERIES C-2 WARRANT






                                EXHIBIT D TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

                       FORM OF CERTIFICATE OF DESIGNATION






                                EXHIBIT E TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

                      FORM OF REGISTRATION RIGHTS AGREEMENT






                                EXHIBIT F TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

                 FORM OF IRREVOCABLE TRANSFER AGENT INSTRUCTIONS

                                 CYTOMEDIX, INC.

                                                            as of March 25, 2004


[Name and address of Transfer Agent]
Attn:  _____________

LADIES AND GENTLEMEN:

      Reference is made to that certain Series C Convertible Preferred Stock
Purchase Agreement (the "Purchase Agreement"), dated as of March 25, 2004, by
and among Cytomedix, Inc., a Delaware corporation (the "COMPANY"), and the
purchasers named therein (collectively, the "PURCHASERS") pursuant to which the
Company is issuing to the Purchasers shares of its Series C Convertible
Preferred Stock, par value $.0001 per share, (the "PREFERRED SHARES") and
warrants (the "WARRANTS") to purchase shares of the Company's common stock, par
value $.0001 per share (the "COMMON STOCK"). This letter shall serve as our
irrevocable authorization and direction to you (subject to Section 3.13 of the
Purchase Agreement and provided that you are the transfer agent of the Company
at such time) to issue shares of Common Stock upon conversion of the Preferred
Shares (the "CONVERSION SHARES") and exercise of the Warrants (the "WARRANT
SHARES") to or upon the order of a Purchaser from time to time upon (i)
surrender to you of a properly completed and duly executed Conversion Notice or
Exercise Notice, as the case may be, in the form attached hereto as Exhibit I
and Exhibit II, respectively, (ii) in the case of the conversion of Preferred
Shares, a copy of the certificates (with the original certificates delivered to
the Company) representing Preferred Shares being converted or, in the case of
Warrants being exercised, a copy of the Warrants (with the original Warrants
delivered to the Company) being exercised (or, in each case, an indemnification
undertaking with respect to such share certificates or the warrants in the case
of their loss, theft or destruction), and (iii) delivery of a treasury order or
other appropriate order duly executed by a duly authorized officer of the
Company. So long as you have previously received (x) written confirmation from
counsel to the Company that a registration statement covering resales of the
Conversion Shares or Warrant Shares, as applicable, has been declared effective
by the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "1933 ACT"), and no subsequent notice by the Company or
its counsel of the suspension or termination of its effectiveness and (y) a copy
of such registration statement, and if the Purchaser represents in writing that
the Conversion Shares or the Warrant Shares, as the case may be, were sold
pursuant to the Registration Statement and in accordance with any prospectus
delivery requirements or other applicable securities laws, then certificates
representing the Conversion Shares and the Warrant Shares, as the case may be,
shall not bear any legend restricting transfer of the Conversion Shares and the
Warrant Shares, as the case may be, thereby and should not be subject to any
stop-transfer restriction. Provided, however, that if you have not previously
received those items and representations listed above, then the certificates for
the Conversion Shares and the Warrant Shares shall bear the following legend:




            "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES
      ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
      OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OR
      APPLICABLE STATE SECURITIES LAWS, OR CYTOMEDIX, INC. SHALL HAVE RECEIVED
      AN OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
      SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES
      LAWS IS NOT REQUIRED."

and, provided further, that the Company may from time to time notify you to
place stop-transfer restrictions on the certificates for the Conversion Shares
and the Warrant Shares in the event a registration statement covering the
Conversion Shares and the Warrant Shares is subject to amendment for events then
current.

      A form of written confirmation from counsel to the Company that a
registration statement covering resales of the Conversion Shares and the Warrant
Shares has been declared effective by the SEC under the 1933 Act is attached
hereto as Exhibit III.

      Please be advised that the Purchasers are relying upon this letter as an
inducement to enter into the Securities Purchase Agreement and, accordingly,
each Purchaser is a third party beneficiary to these instructions.

      Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at ___________.

                                        Very truly yours,


                                                         CYTOMEDIX, INC.

                                        By:
                                           ------------------------------------


                                                Name:
                                                      -------------------------


                                                Title:
                                                        -----------------------


ACKNOWLEDGED AND AGREED:


[TRANSFER AGENT]

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






                                    EXHIBIT I

                                 CYTOMEDIX, INC.
                                CONVERSION NOTICE

Reference is made to the Certificate of Designation of the Relative Rights and
Preferences of the Series C Preferred Stock of Cytomedix, Inc. (the "Certificate
of Designation"). In accordance with and pursuant to the Certificate of
Designation, the undersigned hereby elects to convert the number of shares of
Series C Preferred Stock, par value $.0001 per share (the "Preferred Shares"),
of Cytomedix, Inc., a Delaware corporation (the "Company"), indicated below into
shares of Common Stock, par value $.0001 per share (the "Common Stock"), of the
Company, by tendering the stock certificate(s) representing the share(s) of
Preferred Shares specified below as of the date specified below.

        Date of Conversion:





        Number of Preferred Shares to be converted:

        Stock certificate no(s). of Preferred Shares to be converted:





The Common Stock have been sold pursuant to the Registration Statement (as
defined in the Registration Rights Agreement): YES ____ NO____


        Please confirm the following information:

        Conversion Price:


        Number of shares of Common Stock to be issued:



      Number of shares of Common Stock beneficially owned or deemed beneficially
owned by the Holder on the Date of Conversion: _________________________


Please issue the Common Stock into which the Preferred Shares are being
converted and, if applicable, any check drawn on an account of the Company in
the following name and to the following address:

        Issue to:



        Facsimile Number:



        Authorization:


                                 By:



                                 Title:






        Dated:





                                   EXHIBIT II

                             FORM OF EXERCISE NOTICE

                                  EXERCISE FORM

                                 CYTOMEDIX, INC.

The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of Cytomedix,
Inc. covered by the within Warrant.

Dated:                                  Signature





                                        Address



      Number of shares of Common Stock beneficially owned or deemed beneficially
owned by the Holder on the date of Exercise: _________________________





                                   ASSIGNMENT

      FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers
unto __________________ the within Warrant and all rights evidenced thereby and
does irrevocably constitute and appoint _____________, attorney, to transfer the
said Warrant on the books of the within named corporation.





Dated:                                   Signature





                                         Address







                                         PARTIAL ASSIGNMENT


FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.

Dated:                                   Signature





                                         Address



                           FOR USE BY THE ISSUER ONLY:





      This Warrant No. W-_____ canceled (or transferred or exchanged) this _____
day of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.







                                   EXHIBIT III

                         FORM OF NOTICE OF EFFECTIVENESS
                            OF REGISTRATION STATEMENT

[Name and address of Transfer Agent]


Attn:  _____________

                        Re:         CYTOMEDIX, INC.

Ladies and Gentlemen:

      We are counsel to Cytomedix, Inc., a Delaware corporation (the "COMPANY"),
and have represented the Company in connection with that certain Series C
Convertible Preferred Stock Purchase Agreement (the "PURCHASE AGREEMENT"), dated
as of March 25, 2004, by and among the Company and the purchasers named therein
(collectively, the "PURCHASERS") pursuant to which the Company issued to the
Purchasers shares of its Series C Convertible Preferred Stock, par value $.0001
per share, (the "PREFERRED SHARES") and warrants (the "WARRANTS") to purchase
shares of the Company's common stock, par value $.0001 per share (the "COMMON
STOCK"). Pursuant to the Purchase Agreement, the Company has also entered into a
Registration Rights Agreement with the Purchasers (the "REGISTRATION RIGHTS
AGREEMENT"), dated as of March 25, 2004, pursuant to which the Company agreed,
among other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon conversion of the Preferred Shares and exercise of the Warrants, under the
Securities Act of 1933, as amended (the "1933 ACT"). In connection with the
Company's obligations under the Registration Rights Agreement, on
________________, 2004, the Company filed a Registration Statement on Form SB-2
(File No. 333-________) (the "REGISTRATION STATEMENT") with the Securities and
Exchange Commission (the "SEC") relating to the resale of the Registrable
Securities which names each of the present Purchasers as a selling stockholder
thereunder.

      In connection with the foregoing, we advise you that a member of the SEC's
staff has advised us by telephone that the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and accordingly, the
Registrable Securities are available for resale under the 1933 Act pursuant to
the Registration Statement.

                                             Very truly yours,


                                             [COMPANY COUNSEL]

                                             By:
                                                -------------------------------



cc:         [LIST NAMES OF PURCHASERS]





                                EXHIBIT G TO THE
           SERIES C CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT FOR
                                 CYTOMEDIX, INC.

                           FORM OF OPINION OF COUNSEL

            1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of Delaware and has the
requisite corporate power to own, lease and operate its properties and assets,
and to carry on its business as presently conducted. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted or property
owned by it makes such qualification necessary.

            2. The Company has the requisite corporate power and authority to
enter into and perform its obligations under the Transaction Documents and to
issue the Preferred Stock, the Warrants and the Common Stock issuable upon
conversion of the Preferred Stock and exercise of the Warrants. The execution,
delivery and performance of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
and validly authorized by all necessary corporate action and no further consent
or authorization of the Company or its Board of Directors or stockholders is
required. Each of the Transaction Documents have been duly executed and
delivered, and the Preferred Stock and the Warrants have been duly executed,
issued and delivered by the Company and each of the Transaction Documents
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its respective terms. The Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants are
not subject to any preemptive rights under the Certificate of Incorporation or
the Bylaws.

            3. The Preferred Stock and the Warrants have been duly authorized
and, when delivered against payment in full as provided in the Purchase
Agreement, will be validly issued, fully paid and nonassessable. The shares of
Common Stock issuable upon conversion of the Preferred Stock and exercise of the
Warrants, have been duly authorized and reserved for issuance, and, when
delivered upon conversion or against payment in full as provided in the
Certificate of Designation and the Warrants, as applicable, will be validly
issued, fully paid and nonassessable.

            4. The execution, delivery and performance of and compliance with
the terms of the Transaction Documents and the issuance of the Preferred Stock,
the Warrants and the Common Stock issuable upon conversion of the Preferred
Stock and exercise of the Warrants do not (i) violate any provision of the
Certificate of Incorporation or Bylaws, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any material agreement, mortgage, deed of
trust, indenture, note, bond, license, lease agreement, instrument or obligation
to which the Company is a party, (iii) create or impose a lien, charge or
encumbrance on any property of the Company under any agreement or any commitment
to which the Company is a party or by which the Company is bound or by which any
of its respective properties or assets are bound, or (iv) result in a violation
of any federal, state, local or foreign statute, rule, regulation, order,
judgment, injunction or decree (including Federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected, except, in all cases other than violations
pursuant to clause (i) above, for such conflicts, default, terminations,
amendments, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.

            5. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required under Federal, state or local law, rule or regulation in connection



with the valid execution and delivery of the Transaction Documents, or the
offer, sale or issuance of the Preferred Stock, the Warrants or the Common Stock
issuable upon conversion of the Preferred Stock and exercise of the Warrants
other than the Certificate of Designation and the Registration Statement.

            6. There is no action, suit, claim, investigation or proceeding
pending or threatened against the Company which questions the validity of this
Agreement or the transactions contemplated hereby or any action taken or to be
taken pursuant hereto or thereto. There is no action, suit, claim, investigation
or proceeding pending, or to our knowledge, threatened, against or involving the
Company or any of its properties or assets and which, if adversely determined,
is reasonably likely to result in a Material Adverse Effect. There are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such.

            7. The offer, issuance and sale of the Preferred Stock and the
Warrants and the offer, issuance and sale of the shares of Common Stock issuable
upon conversion of the Preferred Stock and exercise of the Warrants pursuant to
the Purchase Agreement, the Certificate of Designation and the Warrants, as
applicable, are exempt from the registration requirements of the Securities Act.

            8. The Company is not, and as a result of and immediately upon
Closing will not be, an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.





                                       Very truly yours,

EX-99.1

[Letterhead of Maier & Company]

Maier & Company
Corporate Communications and Investor Relations                     NEWS RELEASE


CONTACT:
               Gary S. Maier
               Maier & Company, Inc.
               (310) 442-9852


            CYTOMEDIX, INC. COMPLETES $2.8 MILLION PRIVATE PLACEMENT

        --COMPANY ON SCHEDULE TO COMMENCE FDA APPROVED CLINICAL TRIALS -

      LITTLE ROCK, ARKANSAS - MARCH 29, 2004 - Cytomedix, Inc. (CYME:OTC.OB)
today announced it has completed a private placement of preferred stock and
warrants with a leading institutional investor and individual investors, raising
$2.8 million in gross proceeds.

      Under the terms of the financing, Cytomedix issued 280 shares of Series C
Convertible Preferred Stock with a face value of $10,000 per share. Each share
of Series C Convertible Preferred Stock is convertible into 10,000 shares of
common stock. The company also issued warrants to investors to purchase 2.8
million shares of common stock at an exercise price of $1.50, with a five-year
term. Additional information regarding this transaction will be available
through the company's 8-K filing with the Securities and Exchange Commission.

      An affiliate of Ritchie Capital Management, L.L.C. (Ritchie Long/Short
Trading, Ltd.) was the institutional investor in the transaction, with the
balance raised from accredited high-net worth individual investors. Burnham Hill
Partners acted as exclusive placement agent in connection with the transaction.

      "The completion of this round of financing greatly enhances the ability of
Cytomedix to commence clinical trials and demonstrate the safety and efficacy of
the company's AutoloGel(TM) System," said Mark Cline, president of Cytomedix.

      The commencement of the clinical trials is based upon the U.S. Food and
Drug Administration's recent approval of the company's investigational device
exemption (IDE) application related to the AutoloGel(TM) System. As previously
announced, a randomized, double-blinded controlled study against the standard of
care for the treatment of chronic wounds at up to 12 premier sites throughout
the United States, with enrollment of approximately 74 patients, is expected to
commence in mid-April.

      Cline noted last week's favorable ruling from United States District Court
Judge James B. Zagel of the Northern District of Illinois affirming Cytomedix's
position regarding the scope of its claims, which relates to the use of

                                     (more)


Cytomedix, Inc.
2-2-2

platelet-derived therapies for treating wounds and other damaged tissue. The
ruling was issued in connection with a pending patent infringement lawsuit
initiated by Cytomedix against Little Rock Foot Clinic.


ABOUT BURNHAM HILL PARTNERS

      Burnham Hill Partners, based in New York City, was formed in August 2003
and is a division of Pali Capital, Inc., a NASD registered broker dealer. The
professionals at Burnham Hill Partners have extensive experience in providing
comprehensive financing and financial advisory services to publicly traded
companies with market capitalizations of up to $250 million. Burnham Hill
Partners' sector expertise includes telecommunications, network security and
software as well as medical devices and life sciences. Additional information on
Burnham Hill Partners can be obtained by contacting the firm at: 212-980-2200.


ABOUT CYTOMEDIX

      Cytomedix, Inc. is a biotechnology company specializing in processes and
products derived from autologous platelet releasates. The current product
offering is AutoloGel(TM), an autologous platelet gel composed of multiple
growth factors and fibrin matrix, which is used to treat chronic wounds.
Cytomedix is working with healthcare providers to offer an advanced therapy at
the point-of-care in multiple settings. Additional information is available at:
www.cytomedix.com.

FORWARD LOOKING STATEMENTS

      Statements contained in this press release not relating to historical
facts are forward-looking statements that are intended to fall with the safe
harbor rule for such statements under the Private Securities Litigation Reform
Act of 1995. The information contained in the forward-looking statements is
inherently uncertain, and Cytomedix's actual results may differ materially due
to a number of factors, many of which are beyond Cytomedix's ability to predict
or control, including among others, governmental regulation, acceptance by the
medical community and competition. These forward-looking statements are subject
to known and unknown risks and uncertainties that could cause actual events to
differ from the forward-looking statements. More information about some of these
risks and uncertainties may be found in the reports filed with the Securities
and Exchange Commission by Cytomedix, Inc.

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