-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TqwqBmECFQxVi+/y6N7ZVQG8OeZC1o8DFYEn1esl7t9iGE8SSDjgmKW8LgwWMNsd AijiM/rJ7BnRxUW1+XVCQg== 0001144204-06-026568.txt : 20060628 0001144204-06-026568.hdr.sgml : 20060628 20060628165700 ACCESSION NUMBER: 0001144204-06-026568 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060627 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060628 DATE AS OF CHANGE: 20060628 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NANOSENSORS INC CENTRAL INDEX KEY: 0001286648 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-51007 FILM NUMBER: 06930580 BUSINESS ADDRESS: STREET 1: 1800 WYATT DR STREET 2: SUITE 2 CITY: SANTA CLARA STATE: CA ZIP: 95054 BUSINESS PHONE: 408-855-0051 8-K 1 v046408-8k.htm

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): June 27, 2006

NANOSENSORS, INC.

(Exact name of registrant as specified in its charter)

COMMISSION FILE NUMBER: 000-51007

NEVADA	20-0452700
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1800 Wyatt Drive, Suite #2

Santa Clara, CA 95054

(Address and zip code of principal executive offices)

(408) 855-0051

(Registrant's telephone number, including area code

CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING PROVISIONS:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01	Entry into a Material Definitive Agreement.

	The information required to be disclosed in this Item 1.01 is incorporated herein by reference from Item 3.02.

Item 3.02	Unregistered Sales of Equity Securities.

	On June 27, 2006, NanoSensors, Inc. consummated the third and final closing of its previously reported private placement of securities (the “Offering”) pursuant to which it offered up to $1,750,000 of units of its securities, including oversubscriptions. Each $50,000 of units consists of 5,000,000 shares of common stock and 5,000,000 common stock purchase warrants (“Warrants”). In the Offering, we sold a total number of units consisting of 172,950,000 shares of common stock and warrants to purchase 172,950,000 shares of common stock for gross proceeds of $1,729,500. Of this amount, however, $915,000 is being retained in escrow until we satisfy certain post-closing covenants, as described below. Accordingly, the aggregate Offering proceeds released to NanoSensors was $814,500, and the net proceeds to NanoSensors, after payment of expenses and commissions, was approximately $644,000. We intend to use the Offering proceeds for working capital and payment of accrued compensation. At the third closing of the Offering, out of gross proceeds of $284,500, we received $236,500 and issued units of our securities consisting of an aggregate of 23,650,000 shares of common stock and 23,650,000 Warrants. The Warrants issued to the investors are immediately exercisable at $0.04 per share for a period of five years from the date of issuance. After payment of commissions and expenses associated with this closing, we received net proceeds of $204,788. We also issued an aggregate of 4,730,000 unit purchase warrants to the selling agents at this closing, which agent warrants are exercisable into units consisting of one share of common stock and one warrant, at a price of $.01 per unit for a period of five years. The investors also became parties to a Registration Rights Agreement, pursuant to which we agreed to file, within 40 days after closing, a registration statement covering the resale of the shares of common stock sold in the Offering and the shares that we may issue upon exercise of the Warrants issued to the investors and the placement agent. Pursuant to the Securities Purchase Agreement, we agreed that 60% of the gross proceeds will remain in escrow until the registration statement contemplated by the Registration Rights Agreement is declared effective by the Securities and Exchange Commission and we obtain shareholder approval to increase our authorized capital. However, investors purchasing $204,500 of units in the third closing waived this escrow requirement and authorized the release of their entire investment to us. These investors also agreed to a “lock-up” provision restricting the resale of the securities purchased in the Offering for a period commencing on the closing date and ending six months after the first to occur of either the date that the registration statement contemplated by the Registration Rights Agreement is declared effective by the Securities and Exchange Commission or the date that such securities may first be sold pursuant to Rule 144. The securities sold in the Offering have not been registered under the Securities Act of 1933, as amended, and were offered and sold in reliance upon the exemption from registration set forth in Section 4(2) thereof and Regulation D, promulgated under the Securities Act. We believe that the investors and the selling agent are “accredited investors”, as such term is defined in Rule 501(a) promulgated under the Securities Act. This disclosure does not constitute an offer to sell or the solicitation of an offer to buy any of our securities, nor will there be any sale of these securities by us in any state or jurisdiction in which the offer, solicitation or sale would be unlawful. The disclosure is being issued pursuant to and in accordance with Rule 135c of the Act. On June 28, 2006, we issued a press release announcing the completion of our private offering, a copy of which is filed as Exhibit 99.1 to this Report on Form 8-K.

Item 9.01	Financial Statements and Exhibits.

(c)	Exhibits.

	The following exhibits are filed or furnished herewith:

Exhibit No.			Description of Document

4.1			Form of Investor Warrant issued in connection with the sale of the Units

4.2			Form of Agent Warrant issued in connection with the sale of the Units

10.1			Form of Securities Purchase Agreement between NanoSensors, Inc. and Investors

10.2			Form of Registration Rights Agreement between NanoSensors, Inc. and Investors

99.1			Press Release dated June 28, 2006

SIGNATURE

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


	NANOSENSORS, INC.

	By:	/s/ Joshua Moser
		Name: Joshua Moser
		Title: Secretary Date: June 28, 2006

EXHIBIT INDEX

Exhibit No.		Description of Document

4.1		Form of Investor Warrant issued in connection with the sale of the Units

4.2		Form of Agent Warrant issued in connection with the sale of the Units

10.1		Form of Securities Purchase Agreement between NanoSensors, Inc. and Investors

10.2		Form of Registration Rights Agreement between NanoSensors, Inc. and Investors

99.1		Press Release dated June 28, 2006

EX-4.1 2 v046408_ex4-1.htm

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

THE TRANSFERABILITY OF THIS WARRANT IS

RESTRICTED AS PROVIDED IN SECTION 3

No. 2006 - _

_________, 2006

NANOSENSORS, INC.

COMMON STOCK PURCHASE WARRANT

For good and valuable consideration, the receipt of which is hereby acknowledged by NANOSENSORS, INC., a Nevada corporation (the “Company”), _____________________ (the “Holder”), is hereby granted the right to purchase, at any time from the date that this Warrant is issued under the Subscription Agreement (as such terms are defined below) until 5:00 P.M., New York City time, on ________, 2011 (the “Warrant Exercise Term”), up to ______________ (____________) fully-paid and non-assessable shares of the Company's Common Stock, $.001 par value per share (“Common Stock”).

This Warrant is one of a duly authorized issue of Warrants, issued by the Company in connection with a certain private offering of its securities (the “Offering”) and pursuant to a certain Securities Purchase Agreement between the Company and the Holder (the “Purchase Agreement”), the terms of which are incorporated herein by reference. The Warrants are similar in terms except for dates, amounts and named holders. By its acceptance of this Warrant, each Holder agrees to be bound by the terms of the Purchase Agreement. All capitalized terms not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.

l. Exercise of Warrant

1.1 This Warrant is exercisable at a per share price of $0.04 (the “Exercise Price”), subject to adjustment as provided in Section 2 hereof, payable in cash or by certified or official bank check in New York Clearing House funds. Upon surrender of this warrant certificate with the annexed Warrant Exercise Form duly executed, together with payment of the Exercise Price for the shares of Common Stock purchased at the Company’s principal executive offices, the registered Holder of the Warrant shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased (the “Warrant Shares”). The purchase rights represented by this Warrant are exercisable at the option of the Holder hereof, in whole or in part (but not as to fractional shares of the Common Stock) during any period in which this Warrant may be exercised as set forth above. In the case of the purchase of less than all the shares of Common Stock purchasable under this Warrant, the Company shall cancel this Warrant upon the surrender thereof and, upon the written request of the Holder, the Company shall execute and deliver a new Warrant of like tenor for the balance of the shares of Common Stock purchasable hereunder.

1.2 The issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall be issued in the name of, or in such names as may be directed by, the Holder hereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of such certificate in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

1.3 Cashless Exercise. If commencing on the date that is 180 calendar days following the final Closing of the Offering, an effective Registration Statement is not available for the resale of all of the Warrant Shares issuable hereunder at the time an Exercise Notice is delivered to the Company (either due to the inability of the Company to have the Commission declare such Registration Statement effective on or prior to such date or to maintain the effectiveness of such Registration Statement for the duration of the period prescribed in the Registration Statement), the Holder may pay the Exercise Price through a cashless exercise (a “Cashless Exercise”), as hereinafter provided. The Holder may effect a Cashless Exercise by surrendering this Warrant to the Company and noting on the Exercise Notice that the Holder wishes to effect a Cashless Exercise, upon which the Company shall issue to the Holder the number of Warrant Shares determined as follows:

X = Y x (A-B)/A

where:

X = the number of Warrant Shares to be issued to the Holder;

Y = the number of Warrant Shares with respect to which this Warrant is being exercised;

A = the Market Price (as defined in Section 2.3 below) as of the Exercise Date; and

B = the Exercise Price.

For purposes of Rule 144, it is intended and acknowledged that the Warrant Shares issued in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares required by Rule 144 shall be deemed to have been commenced, on the date this Warrant was originally issued by the Company.

1.4 Subject to its requirement under the Purchase Agreement to amend its Certificate of Incorporation so as to increase its number of authorized shares of Common Stock, the Company covenants that it will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon exercise of this Warrant as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. The Company covenants that all shares of Common Stock which shall be so issuable shall be duly and validly issued and fully-paid and non-assessable.

2. Adjustments to Exercise Price

2.1 Stock Dividends, Subdivisions, Reclassifications or Combinations. If the Corporation shall (A) declare a dividend or make a distribution on its Common Stock in shares of its Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, or (C) combine or reclassify the outstanding Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted and the Holder, after such date, shall be entitled to receive the number of shares of Common Stock which he would have owned or been entitled to receive had this Warrant been exercised immediately prior to such date. Any adjustment made herein that results in a decrease in the Exercise Price shall also effect a proportional increase in the number of shares of Common Stock into which this Warrant is exercisable. Successive adjustments in the Exercise Price shall be made whenever any event specified above shall occur.

2.2 Consolidation, Merger, Sale or Conveyance. In case of any consolidation or merger of the Company with any other corporation (other than a wholly owned subsidiary), or in case of sale or transfer of all or substantially all of the assets of the Company, or in the case of any share exchange whereby the Common Stock is converted into other securities or property, the Company will be required to make appropriate provision so that the Holder will have the right thereafter to exercise this Warrant into the kind and amount of shares of stock and other securities and property receivable upon such consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock for which this Warrant was exercisable immediately prior to such consolidation, merger, sale, transfer or share exchange. Any adjustment made herein that results in a decrease in the Exercise Price shall also effect a proportional increase in the number of shares of Common Stock into which this Warrant is exercisable.

2.3 Adjustments upon Dilutive Issuances.

(a) Adjustment upon Dilutive Issuance. If at any time during the Warrant Exercise Term the Company issues or sells any shares of Common Stock or any equity or equity equivalent securities (including any equity, debt or other instrument that is at any time over the life thereof convertible into or exchangeable for Common Stock or other securities which are so convertible or exchangeable) (collectively, “Common Stock Equivalents”) for per share consideration less than the Exercise Price on the date of such issuance or sale, (a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at a price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price) then the Exercise Price shall be adjusted so as to equal the consideration received or receivable by the Company (on a per share basis) for the additional shares of Common Stock or Common Stock Equivalents so issued, sold or deemed issued or sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale, shall be calculated in accordance with subparagraph (b) below). Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.

(b) Effect On Exercise Price Of Certain Events. For purposes of determining the adjusted Exercise Price under subparagraph (a) of this Section 2.3, the following will be applicable:

(A) Issuance of Common Stock Equivalents. If the Company issues or sells any Common Stock Equivalents, whether or not immediately convertible, exercisable or exchangeable, and the price per share for which Common Stock is issuable upon such conversion, exercise or exchange is less than the Exercise Price in effect on the date of issuance or sale of such Common Stock Equivalents, then the maximum total number of shares of Common Stock issuable upon the conversion, exercise or exchange of all such Common Stock Equivalents shall, as of the date of the issuance or sale of such Common Stock Equivalents, be deemed to be outstanding and to have been issued and sold by the Company for such price per share.

(B) Change in Conversion Rate. If, following an adjustment to the Exercise Price upon the issuance of Common Stock Equivalents pursuant to a Dilutive Issuance, there is a change at any time in (y) the amount of additional consideration, if any, payable to the Company upon the conversion, exercise or exchange of any Common Stock Equivalents; or (z) the rate at which any Common Stock Equivalents are convertible into or exercisable or exchangeable for Common Stock (in each such case, other than under or by reason of provisions designed to protect against dilution), then in any such case, the Exercise Price in effect at the time of such change shall be readjusted to the Exercise Price which would have been in effect at such time had such Common Stock Equivalents still outstanding provided for such changed additional consideration or changed conversion, exercise or exchange rate, as the case may be, at the time initially issued or sold.

(C) Calculation of Consideration Received. If any Common Stock or Common Stock Equivalents are issued or sold for cash, the consideration received therefor will be the amount received by the Company therefor. In case any Common Stock or Common Stock Equivalents are issued or sold for a consideration part or all of which shall be other than cash, including in the case of a strategic or similar arrangement in which the other entity will provide services to the Company, purchase services from the Company or otherwise provide intangible consideration to the Company, the amount of the consideration other than cash received by the Company (including the net present value of the consideration other than cash expected by the Company for the provided or purchased services) shall be the fair market value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the Market Price thereof on the date of receipt. The term “Market Price” means, as of a particular date, the average of the (i) high and low price of the Common Stock (if the Common Stock is not at that time listed for trading on a securities exchange) or (ii) closing price (if the Common Stock is traded on a securities exchange) for the ten (10) consecutive Trading Days occurring immediately prior to (but not including) any given date, as reported in the principal market on which the Company’s Common Stock is traded. In case any Common Stock or Common Stock Equivalents are issued in connection with any merger or consolidation in which the Company is the surviving corporation, the amount of consideration therefor will be deemed to be the fair market value of such portion of the net assets and business of the non-surviving corporation as is attributable to such Common Stock or Common Stock Equivalents. The independent members of the Company’s Board of Directors shall calculate reasonably and in good faith, using standard commercial valuation methods appropriate for valuing such assets, the fair market value of any consideration other than cash or securities.

(D) Issuances Without Consideration Pursuant to Existing Securities. If the Company issues (or becomes obligated to issue) shares of Common Stock pursuant to any anti-dilution or similar adjustments (other than as a result of stock splits, stock dividends and the like) contained in any Common Stock Equivalents outstanding as of the date hereof, then all shares of Common Stock so issued shall be deemed to have been issued for no consideration.

(c) Exceptions To Adjustment Of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this Section 2.3 upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (A) securities purchased under the Purchase Agreement; (B) securities issued upon exercise of the Warrants or upon the warrants issued to Selling Agents as provided for in the Purchase Agreement; (C) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, pursuant to one or more stock option plans or stock purchase plans adopted by the Company, or (y) to consultants or vendors, either directly or pursuant to warrants or other convertible securities to acquire shares of Common Stock that are outstanding on the date hereof or issued hereafter; (D) shares of Common Stock issued in connection with any Common Stock Equivalents outstanding on the date hereof; (E) shares of Common Stock or Common Stock Equivalents issued to third parties in connection with a joint venture, strategic alliance or other commercial relationship with such third party relating to the operation of the Company’s business, the primary purpose of which is not to raise equity capital; (F) the reduction in the exercise price of the common stock purchase warrants issued and outstanding prior to the commencement of the Offering as contemplated in Section 5.7 of the Purchase Agreement; and (F) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company.

(d) Adjustments; Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 2.3, each Holder shall, upon conversion of such Holder’s Warrants, become entitled to receive securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 2.3.

2.4 Notices of Change. Upon any determination or adjustment in the number or class of shares subject to this Warrant and of the Exercise Price, the Company shall give written notice thereof to the Holder, setting forth in reasonable detail and certifying the calculation of such determination or adjustment. The Company shall give written notice to the Holder at least 20 business days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions or in the event of a merger, acquisition, consolidation, sale of all or substantially all of its assets or similar such event.

3. Restrictions on Transfer

The Holder acknowledges that he has been advised by the Company that this Warrant and the shares of Common Stock (the “Warrant Shares”) issuable upon exercise thereof (collectively the “Securities”) have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), that the Warrant is being issued, and the shares issuable upon exercise of the Warrant will be issued, on the basis of the statutory exemption provided by section 4(2) of the Securities Act relating to transactions by an issuer not involving any public offering, and that the Company’s reliance upon this statutory exemption is based in part upon the representations made by the Holder contained herein. The Holder acknowledges that he has been informed by the Company of, or is otherwise familiar with, the nature of the limitations imposed by the Securities Act and the rules and regulations thereunder on the transfer of securities. In particular, the Holder agrees that no sale, assignment or transfer of the Securities shall be valid or effective, and the Company shall not be required to give any effect to any such sale, assignment or transfer, unless (i) the sale, assignment or transfer of the Securities is registered under the Securities Act, and the Company has no obligations or intention to so register the Securities except as may otherwise be provided herein, or (ii) the Securities are sold, assigned or transferred in accordance with all the requirements and limitations of Rule 144 under the Securities Act or such sale, assignment, or transfer is otherwise exempt from registration under the Securities Act. The Holder represents and warrants that he has acquired this Warrant and will acquire the Securities for his own account for investment and not with a view to the sale or distribution thereof or the granting of any participation therein, and that he has no present intention of distributing or selling to others any of such interest or granting any participation therein. The Holder acknowledges that the securities shall bear the following legend:

“These securities have not been registered under the Securities Act of l933. Such securities may not be sold or offered for sale, transferred, hypothecated or otherwise assigned in the absence of an effective registration statement with respect thereto under such Act or an opinion of counsel to the Company that an exemption from registration for such sale, offer, transfer, hypothecation or other assignment is available under such Act.”

4. Registration Rights. The Holder shall be entitled to all of the rights and subject to all of the obligations regarding registration of the Warrant Shares, as described in the Registration Rights Agreement between the Company and the original holder hereof.

5. Exercise Limitation. In no event shall a Holder be permitted to exercise this Warrant, or part hereof, if, upon such exercise, the number of shares of Common Stock beneficially owned by the Holder (other than shares which would otherwise be deemed beneficially owned except for being subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 5), would exceed 4.99% of the number of shares of Common Stock then issued and outstanding. As used herein, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder. To the extent that the limitation contained in this Section 5 applies, the submission of an Exercise Notice by the Holder shall be deemed to be the Holder’s representation that this Warrant is exercisable pursuant to the terms hereof and the Company shall be entitled to rely on such representation without making any further inquiry as to whether this Section 5 applies. Nothing contained herein shall be deemed to restrict the right of a Holder to exercise this Warrant, or part thereof, at such time as such exercise will not violate the provisions of this Section 5. The limitations contained in this Section 5 shall cease to apply (x) upon sixty (60) days’ prior written notice from the Holder to the Company, or (y) immediately upon written notice from the Holder to the Company at any time after the public announcement or other disclosure of the (i) sale, conveyance or disposition of all or substantially all of the assets of the Company; (ii) effectuation of a transaction or series of transactions in which more than 50% of the voting power of the Company is disposed of (other than as a direct result of normal, uncoordinated trading activities in the Common Stock generally); (iii) the consolidation, merger or other business combination of the Company with or into any other entity, immediately following which the prior stockholders of the Company fail to own, directly or indirectly, at least 50% of the voting equity of the surviving entity; or (d) a transaction or series of transactions in which any person or entity Person or “group” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) acquires more than 50% of the voting equity of the Company (any of the foregoing transactions in this Section 5(y) (i) - (iv), a “Change of Control”).

6. Redemption. This Warrant may be redeemed at the option of the Company, at a redemption price of $0.01 per Warrant (the “Redemption Price”), at any time commencing twelve months after the effective date of the Registration Statement and the Expiration Date upon not less than 30 days (and not more than 60 days) written notice delivered to the Holder, provided: (a) the closing bid price of the Common Stock is been at least 300% of the Exercise Price for twenty (20) consecutive trading days prior to the date of the notice of redemption and (b) there is an effective registration statement with a current prospectus available covering the shares of Common Stock issuable upon exercise of this Warrant. On and after the date fixed for redemption, the Holder shall have no rights with respect to this Warrant except to receive the Redemption Price per Warrant upon surrender of this Certificate. The Company covenants and agrees that it will honor all Exercise Notices tendered through the 5:00 Easter Time on the Business Day immediately preceding the Redemption Date. The redemption payment shall be made in cash on the date fixed for redemption in the Company’s notice of redemption, as described below (the “Redemption Date”). The notice of redemption shall specify: (i) the Redemption Price; (ii) the Redemption Date; (iii) the place where Warrant Certificates shall be delivered and the redemption price paid; and (iv) that the right to exercise the Warrants shall terminate at 5:00 p.m. EST on the Business Day immediately preceding the Redemption Date. An affidavit of the Secretary or an Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be conclusive evidence of the facts stated therein.

From and after the Redemption Date, the Company shall, at the place specified in the notice of redemption, upon presentation and surrender to the Company by or on behalf of the Holder thereof of this Warrant, deliver or cause to be delivered to or upon the written order of such holder a sum of cash equal to the Redemption Price of each such Warrant. From and after the Redemption Date and upon the deposit or setting aside by the Company of a sum sufficient to redeem all the Warrants called for redemption, such Warrants shall expire and become void and all rights hereunder and shall cease, except the right, if any, to receive payment of the Redemption Price.

7. Exchange and Replacement of Warrant Certificates.

This Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Shares in such denominations as shall be designated by the Holder thereof at the time of such surrender.

Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu thereof and any such lost, stolen, destroyed or mutilated warrant shall thereupon become void.

8. Elimination of Fractional Interests.

The Company shall not be required to issue certificates representing fractions of the shares of Common Stock and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down to the nearest whole number of shares of Common Stock.

9. Rights of Warrant Holders.

Nothing contained in this Agreement shall be construed as conferring upon the Holder any rights whatsoever as a stockholder of the Company, either at law or in equity, including without limitation, or Holders the right to vote or to consent or to receive notice as a stockholder in respect of any meetings of stockholders for the election of directors the right to receive dividends or any other matter.

10. Miscellaneous.

10 .1 This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets. All of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof. This Warrant shall be for the sole and exclusive benefit of the Holder and nothing in this Warrant shall be construed to confer upon any person other than the Holder any legal or equitable right, remedy or claim hereunder.

10.2 No recourse shall be had for any claim based hereon or otherwise in any manner in respect hereof, against any incorporator, stockholder, officer or director, past, present or future, of the Company or of any predecessor corporation, whether by virtue of any constitutional provision or statute or rule of law, or by the enforcement of any assessment or penalty or in any other manner, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof.

10.3 No course of dealing between the Company and the Holder hereof shall operate as a waiver of any right of any Holder hereof, and no delay on the part of the Holder in exercising any right hereunder shall so operate.

10.4 This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by (a) the party against which enforcement of the same is sought or (b) the Company and the holders of at least a majority of the number of shares into which the Warrants are exercisable (without regard to any limitation contained herein on such exercise), it being understood that upon the satisfaction of the conditions described in (a) and (b) above, each Warrant (including any Warrant held by the Holder who did not execute the agreement specified in (b) above) shall be deemed to incorporate any amendment, modification, change or waiver effected thereby as of the effective date thereof. Notwithstanding the foregoing, no modification to this Section 9.4 will be effective against any Holder without his consent. Any amendment shall be endorsed upon this Warrant, and all future Holders shall be bound thereby.

10.5 All communications provided for herein shall be sent, except as may be otherwise specifically provided, by registered or certified mail: if to the Holder of this Warrant, to the address shown on the books of the Company; and if to the Company, to 1800 Wyatt Drive, Suite #2, Santa Clara, CA 95054, attention: Office of the President, or to such other address as the Company may advise the Holder of this Warrant in writing. Notices shall be deemed given when mailed.

10.6 The provisions of this Warrant shall in all respects be constructed according to, and the rights and liabilities of the parties hereto shall in all respects be governed by, the laws of the State of New York. This Warrant shall be deemed a contract made under the laws of the State of New York and the validity of this Warrant and all rights and liabilities hereunder shall be determined under the laws of said State.

10.7 The headings of the Sections of this Warrant are inserted for convenience only and shall not be deemed to constitute a part of this Warrant.

IN WITNESS WHEREOF, NANSOSENSORS, INC. has caused this Warrant to be executed in its corporate name by its officer, and its seal to be affixed hereto.

Dated: ___________ __, 2006
Santa Clara, California

	NANOSENORS, INC.


	By:_____________________________
	Ted Wong,
	Chief Executive Officer

WARRANT EXERCISE FORM

TO: Nanosensors, Inc.

Attention: President

1800 Wyatt Drive, Suite #2

Santa Clara, CA 95054

The undersigned Holder hereby irrevocably elects to exercise the right to purchase shares of Common Stock covered by this Warrant according to the conditions hereof and herewith makes full payment of the Exercise Price of such shares.

The undersigned, by marking the box following this sentence, indicates his or her intention to exercise this Warrant on a cashless basis in accordance with the terms of this Warrant:

Kindly deliver to the undersigned a certificate representing the Shares.

INSTRUCTIONS FOR DELIVERY

Name: ___________________________________________________________

(please typewrite or print in block letters)

Address: _________________________________________________________

Tax I.D. No. or Social Security No.: ______________________________________

Dated: _________________________

Signature ________________________________

STATE OF ___________)

COUNTY OF _________) ss:

On this __ day of ___________, before me personally came ________, to me known, who being by me duly sworn, did depose and say that he resides at __________________, that he is the holder of the foregoing instrument and that he executed such instrument and duly acknowledged to me that he executed the same.

_____________________________

Notary Public

[FORM OF ASSIGNMENT]

(To be executed by the registered holder if such holder

desires to transfer the Warrant Certificate.)

FOR VALUE RECEIVED _________________________________ hereby sells, assigns and transfers unto _________________________________________________________________________________________________________

_________________________________________________________________________________________________________

(Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ______________, Attorney, to transfer the within Warrant Certificate on the books of NANOSENSORS, INC., with full power of substitution.

Dated: ____________________________________ Signature:

___________________________

______________________________

(Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate)

__________________________

(Insert Social Security or Other

Identifying Number of Assignee)

STATE OF __________)

COUNTY OF ________) ss:

_____________________________

Notary Public

EX-4.2 3 v046408_ex4-2.htm

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.

EXERCISABLE UNTIL ON OR BEFORE

5:00 P.M., NEW YORK TIME, _________, 2011

No. ___

____________ Warrants

NANOSENSORS, INC.

UNIT PURCHASE WARRANT

This warrant certificate (the “Warrant Certificate”) certifies that _______________ or registered assigns, is the registered holder of warrants to purchase from NANOSENSORS, INC., a Nevada corporation (the “Company”) at any time from the date hereof until 5:00 P.M. New York time on ___________, 2011 (the “Warrant Exercise Term”), up to _______________________________ (_______) Units of the Company’s securities at the exercise price set forth in Section 4 below. Each Unit consists of one share of common stock, par value $.001 (the “Warrant Shares”) and one five-year warrant to purchase one share of Common Stock at an exercise price of $.01per share (the “Unit Warrant”). Upon exercise of this Warrant, each Warrant Share will be fully-paid and non-assessable.

This Warrant shall be exercisable for Warrant Shares and Unit Warrants at any time, or from time-to-time, during the Warrant Exercise Term upon the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with a form of subscription in substantially the form attached hereto duly filled in and signed and, if applicable, upon payment of the aggregate Exercise Price for the number of Warrant Shares and Unit Warrant for which this Warrant is being exercised determined in accordance with the provisions hereof. Payment of the aggregate Exercise Price may be made as elected by Holder in accordance with Section 1 hereof.

1. Exercise of Warrants.

1.1 Exercise Procedure. Each Warrant is initially exercisable to purchase one Warrant Share and one Unit Warrant at an initial exercise price of $0.01 per Warrant Share and Unit Warrant, subject to adjustment as set forth in Article 5 hereof, payable in cash or by check to the order of the Company, or any combination of cash or check. Upon surrender of this Warrant Certificate with the annexed Form of Election to Purchase duly executed, together with payment of the Exercise Price (as hereinafter defined) for the Warrant Shares and Unit Warrants purchased, at the Company’s principal offices (presently located at 1800 Wyatt Drive, Santa Clara, California 95054), the registered holder of the Warrant Certificate (“Holder” or “Holders”) shall be entitled to receive a certificate or certificates for the Warrant Shares and Unit Warrants so purchased.

1.2 Cashless Exercise. At any time during the Warrant Exercise Term, the Holder may, at its option, exchange the Warrants represented by such Holder's Warrant Certificate, in whole or in part (a “Cashless Exercise”), into the number of fully paid and non-assessable Warrant Shares and Unit Warrants determined in accordance with this Section 1.2, by surrendering such Warrant Certificate at the principal office of the Company or at the office of its transfer agent, accompanied by a notice stating such Holder's intent to effect such exchange, the number of Warrants (the “Total Share Number”) to be exchanged and the date on which the Holder requests that such Cashless Exercise occur (the “Notice of Exchange”). The Cashless Exercise shall take place on the date specified in the Notice of Exchange, or, if later, the date the Notice of Exchange is received by the Company (the “Exchange Date”). Certificates for the Warrant Shares issuable upon such Cashless Exercise and, if applicable, a new Warrant Certificate of like tenor evidencing the balance of the Warrant Shares remaining subject to the Holder's Warrant certificate, shall be issued as of the Exchange Date and delivered to the Holder within three (3) days following the Exchange Date. For purposes of Rule 144, it is intended and acknowledged that the Warrant Shares issued in a Cashless Exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares required by Rule 144 shall be deemed to have been commenced, on the Issue Date.

The Holder may effect a Cashless Exercise by surrendering this Warrant to the Company and noting on the Exercise Notice that the Holder wishes to effect a Cashless Exercise, upon which the Company shall issue to the Holder the number of Warrant Shares determined as follows:

X = Y x (A-B)/A

where:

X = the number of Warrant Shares to be issued to the Holder;

Y = the number of Warrant Shares with respect to which this Warrant is being exercised;

A = the Market Price (as defined below) as of the Exercise Date; and

B = the Exercise Price.

As used herein, the phrase “Market Price” at any date shall be deemed to be the last reported sale price, or, in case no such reported sale takes place on such day, the average of the last reported sale prices for the preceding three trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is listed or admitted to trading or as reported in the Nasdaq National Market System, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on the Nasdaq National Market System, the last reported sale price as furnished by the National Association of Securities Dealers, Inc. through Nasdaq or similar organization if Nasdaq is no longer reporting such information, or if the Common Stock is not quoted on Nasdaq, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it for the two days immediately preceding the Exchange Date.

1.3. Vesting Period. The purchase rights represented by this Warrant Certificate are exercisable at the option of the Holder hereof, in whole or in part at anytime.

1.4. Partial Exercise; New Warrant. In the case of the purchase of less than all the Warrant Shares and Unit Warrants purchasable under this Warrant Certificate, the Company shall cancel this Warrant Certificate upon the surrender thereof and shall execute and deliver a new Warrant Certificate of like tenor for the balance of the Warrant Shares and Unit Warrants purchasable hereunder.

2. Issuance of Certificates. Upon the exercise of the Warrants, the issuance of certificates for the Warrant Shares and Unit Warrants purchased pursuant to such exercise shall be made forthwith without charge to the Holder thereof including, without limitation, any tax which may be payable in respect of the issuance thereof, and such certificates shall (subject to the provisions of Article 3 hereof) be issued in the name of, or in such names as may be directed by, the Holder thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any such certificates in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

The Warrant Certificates and, upon exercise of the Warrants, the certificates representing the Warrant Shares and Unit Warrants shall be executed on behalf of the Company by the manual or facsimile signature of those officers required to sign such certificates under applicable law.

3. Restricted Shares; Registration Rights.

3.1 Restricted Shares upon Exercise. This Warrant Certificate and, upon exercise of the Warrants, in part or in whole, certificates representing the Warrant Shares and Unit Warrants shall bear a legend substantially similar to the following:

“The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (“Act”), and may not be offered or sold or otherwise transferred except (i) pursuant to an effective registration statement under the Act, (ii) to the extent applicable, pursuant to Rule 144 under the Act (or any similar rule under such Act relating to the disposition of securities), or (iii) upon the delivery by the holder to the Company of an opinion of counsel, reasonably satisfactory to counsel to the issuer, stating that an exemption from registration under such Act is available.”

3.2 Restriction on Transfer of Warrants. The Holder of this Warrant Certificate, by its acceptance thereof, covenants and agrees that the Warrants and the Warrant Shares and Unit Warrants issuable upon exercise of the Warrants are being acquired as an investment and not with a view to the distribution thereof and that the Warrants and the Warrant Shares and Unit Warrants may not be transferred unless such securities are either registered under the Act and any applicable state securities law or an exemption from such registration is available. The Holder of this Warrant Certificate acknowledges that the Holder has been provided with an opportunity to ask questions of representatives of the Company concerning the Company and that all such questions were answered to the satisfaction of the Holder. In connection with any purchase of Warrant Shares and Unit Warrants the Holder agrees to execute any documents which may be reasonably required by counsel to the Company to comply with the provisions of the Act and applicable state securities laws.

3.3. Registration Rights.

(a) The Company and Holder agree that the Holder shall be entitled to registration rights equivalent to the rights granted to the purchasers of the securities of the Company contemplated by that certain Selling Agent Agreement between the Company and the Holder dated May 10, 2006, as amended (the “Agency Agreement”). The registration rights granted by the Company to the purchasers of the securities contemplated by the Agency Agreement is set forth in that certain Registration Rights Agreement dated as of the date of this Warrant (the “Registration Rights Agreement”) between the Holder and the Company. Accordingly, the Company shall include the Warrant Shares and shares of Common Stock issuable upon exercise of the Unit Warrants in any registration statement that if files pursuant to the Registration Rights Agreement, in accordance with the terms and conditions thereof, to allow for the resale of such shares by the Holder, regardless of whether such registration statement is filed pursuant to the demand of the parties to the Registration Rights Agreement or otherwise.

(b) In addition to the rights granted to the Holder in Section 3.3(a) of this Warrant, the Company agrees to include, on a one time basis, in any registration statement filed by the Company after the date hereof (excluding registration statements on Form S-4 or S-8 in connection with any merger or acquisition or employee option plans, respectively) the Warrant Shares and the shares of common stock underlying the Unit Warrants to allow the resale of such shares by the Holder under the federal securities laws. Any such registration statement shall be at the cost and expense of the Company, except for fees of counsel to the Holder and any underwriting or sales commissions with respect to Holder’s shares. The Company shall provide the Holder with at least 15 days written notice of its intent to file a registration statement with the Securities and Exchange Commission. The Company agrees to use its best efforts to have the registration statement declared effective as soon as possible, but the Company shall have the right, in its sole discretion, to terminate the filing at any time prior to its effectiveness. The Company further agrees to use its best efforts to maintain the effectiveness of such registration statement for at least nine months from the effective date. The Company shall provide the holder with such numbers of prospectuses as the holder may reasonably request in connection with the sale of any shares pursuant to the registration statement.

(c) The Holder agrees by its acceptance of this Warrant that it shall provide any such information as may be reasonably required by the Company in connection with the registration statement regarding the Holder, including information regarding the Holder’s intended method of resale, amount and nature of shares held and other relevant information. The Holder hereby agrees to indemnify and hold harmless the Company, its officers, directors, accountants, agents and employees and any person who controls the Company within the meaning of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities and Exchange Act of 1934, and any underwriter of the shares being sold by the Holder against all damages, claims, losses, causes of action, investigations (and expenses incurred with the foregoing) arising from any written information provided by the Holder to the Company for specific inclusion in the registration statement.

(d) The Company further agrees that all of the Company’s obligations as described in the Registration Rights Agreement shall further extend to the Holder of this Warrant, including the obligations of the Company to provide such information and notices in accordance with the Registration Rights Agreement and the indemnification obligations described in the Registration Rights Agreement.

4. Price

4.1 Initial and Adjusted Exercise Price. The initial exercise price of each Warrant shall be $0.01 per share. The adjusted exercise price shall be the price which shall result from time to time from any and all adjustments of the initial exercise price in accordance with the provisions of Article 5 hereof.

4.2 Exercise Price. The term “Exercise Price” herein shall mean the initial exercise price or the adjusted exercise price, depending upon the context.

5. Adjustments of Exercise Price and Number of Warrant Shares and Unit Warrants.

5.1 Stock Dividends, Subdivisions, Reclassifications or Combinations. If the Company shall (A) declare a dividend or make a distribution on its Common Stock in shares of its Common Stock, (B) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, or (C) combine or reclassify the outstanding Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted and the Holder, after such date, shall be entitled to receive the number of shares of Common Stock which he would have owned or been entitled to receive had this Warrant been exercised immediately prior to such date. Any adjustment made pursuant to this Section 5.1 that results in a decrease (or increase) in the Exercise Price shall also effect a proportional increase (or decrease) in the number of Warrant Shares and Unit Warrants into which this Warrant is exercisable. Successive adjustments in the Exercise Price shall be made whenever any event specified above shall occur.

5.2 Consolidation, Merger, Sale or Conveyance. In case of any consolidation or merger of the Company with any other corporation (other than a wholly owned subsidiary), or in case of sale or transfer of all or substantially all of the assets of the Company, or in the case of any share exchange whereby the Common Stock is converted into other securities or property, the Company will be required to make appropriate provision so that the Holder will have the right thereafter to exercise this Warrant into the kind and amount of shares of stock and other securities and property receivable upon such consolidation, merger, sale, transfer or share exchange by a holder of the number of shares of Common Stock for which this Warrant was exercisable immediately prior to such consolidation, merger, sale, transfer or share exchange. Any adjustment made herein that results in a decrease (or increase) in the Exercise Price shall also effect a proportional increase or (decrease) in the number of Warrant Shares and Unit Warrants into which this Warrant is exercisable.

5.3 Dilutive Issuances.

(i) Adjustment Upon Dilutive Issuance. If, at any time commencing on the Issue Date and prior to the Expiration Date, the Company issues or sells any shares of Common Stock or any equity or equity equivalent securities (including any equity, debt or other instrument that is at any time over the life thereof convertible into or exchangeable for Common Stock or other securities which are so convertible or exchangeable) (collectively, “Common Stock Equivalents”) for per share consideration less than the Exercise Price on the date of such issuance or sale, (a “Dilutive Issuance”) (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which is issued in connection with such issuance, be entitled to receive shares of Common Stock at a price per share which is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price) then the Exercise Price shall be adjusted so as to equal the consideration received or receivable by the Company (on a per share basis) for the additional shares of Common Stock or Common Stock Equivalents so issued, sold or deemed issued or sold in such Dilutive Issuance (which, in the case of a deemed issuance or sale, shall be calculated in accordance with subparagraph (ii) below). Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued.

(ii) Effect On Exercise Price Of Certain Events. For purposes of determining the adjusted Exercise Price under subparagraph (i) of this paragraph 5.3, the following will be applicable:

(C) Calculation of Consideration Received. If any Common Stock or Common Stock Equivalents are issued or sold for cash, the consideration received therefor will be the amount received by the Company therefor. In case any Common Stock or Common Stock Equivalents are issued or sold for a consideration part or all of which shall be other than cash, including in the case of a strategic or similar arrangement in which the other entity will provide services to the Company, purchase services from the Company or otherwise provide intangible consideration to the Company, the amount of the consideration other than cash received by the Company (including the net present value of the consideration other than cash expected by the Company for the provided or purchased services) shall be the fair market value of such consideration, except where such consideration consists of publicly traded securities, in which case the amount of consideration received by the Company will be the Market Price thereof on the date of receipt. The term “Market Price” means, as of a particular date, the average of the high and low price of the Common Stock for the ten (10) consecutive Trading Days occurring immediately prior to (but not including) any given date, as reported in the Principal Market. In case any Common Stock or Common Stock Equivalents are issued in connection with any merger or consolidation in which the Company is the surviving corporation, the amount of consideration therefor will be deemed to be the fair market value of such portion of the net assets and business of the non-surviving corporation as is attributable to such Common Stock or Common Stock Equivalents. The independent members of the Company’s Board of Directors shall calculate reasonably and in good faith, using standard commercial valuation methods appropriate for valuing such assets, the fair market value of any consideration other than cash or securities.

(iii) Exceptions To Adjustment Of Exercise Price. Notwithstanding the foregoing, no adjustment to the Exercise Price shall be made pursuant to this Section 5.3 upon the issuance of any Excluded Securities. For purposes hereof, “Excluded Securities” means (A) securities contemplated by the Agency Agreement, including any securities purchased in the financing contemplated thereby; (B) securities issued upon exercise of the Warrants issued in the financing contemplated by the Agency Agreement or upon the exercise of the warrants issued to Selling Agents as provided for in the Agency Agreement; (C) shares of Common Stock issuable or issued to (x) employees or directors from time to time either directly or upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors, pursuant to one or more stock option plans or stock purchase plans adopted by the Company, or (y) to consultants or vendors, either directly or pursuant to warrants or other convertible securities to acquire shares of Common Stock that are outstanding on the date hereof or issued hereafter; (D) shares of Common Stock issued in connection with any Common Stock Equivalents outstanding on the date hereof; (E) shares of Common Stock or Common Stock Equivalents issued to third parties in connection with a joint venture, strategic alliance or other commercial relationship with such third party relating to the operation of the Company’s business, the primary purpose of which is not to raise equity capital; (F) the reduction in the exercise price of the common stock purchase warrants issued and outstanding prior to the commencement of the Offering as contemplated in financing described in the Agency Agreement; and (G) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company.

(iv) Adjustments; Additional Shares, Securities or Assets. In the event that at any time, as a result of an adjustment made pursuant to this Section 5.3, each Holder shall, upon conversion of such Holder’s Warrants, become entitled to receive securities or assets (other than Common Stock) then, wherever appropriate, all references herein to shares of Common Stock shall be deemed to refer to and include such shares and/or other securities or assets; and thereafter the number of such shares and/or other securities or assets shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions of this Section 5.3.

6. Exchange and Replacement of Warrant Certificates. This Warrant Certificate is exchangeable without expense, upon the surrender hereof by the registered Holder at the principal executive office of the Company, for a new Warrant Certificate of like tenor and date representing in the aggregate the right to purchase the same number of Warrant Shares and Unit Warrants in such denominations as shall be designated by the Holder thereof at the time of such surrender. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of the Warrants, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu thereof.

7. Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Warrant Shares and Unit Warrants and shall not be required to issue scrip or pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up to the nearest whole number of Warrant Shares and Unit Warrants.

8. Reservation of Shares. Subject to its requirement to amend its Certificate of Incorporation so as to increase its number of authorized shares of Common Stock, the Company covenants that it will at all times reserve and keep available out of its authorized Common Stock, solely for the purpose of issuance upon exercise of this Warrant as herein provided, such number of shares of Common Stock as shall then be issuable upon the exercise of this Warrant. The Company covenants that all shares of Common Stock which shall be so issuable shall be duly and validly issued and fully-paid and non-assessable.

9. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered, or mailed by registered or certified mail, return receipt requested:

(a) If to a registered Holder of the Warrants, to the address of such Holder as shown on the books of the Company; or

(b) If to the Company, to the address set forth in Article 1 of this Agreement or to such other address as the Company may designate by notice to the Holders.

10. Binding Effect; Successors. This Warrant shall be binding upon any entity succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets. All of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All the covenants and provisions of this Agreement by or for the benefit of the Company and the Holders inure to the benefit of their respective successors and assigns hereunder.

11. Survival. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of shares of Common Stock issued upon exercise of this Warrant, shall survive the exercise of this Warrant.

12. Governing Law

12.1 Choice of Law. This Agreement shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York.

12.2 Jurisdiction and Service of Process. The Company and the Holder each (a) agrees that any legal suit, action or proceeding arising out of or relating to this Warrant Certificate, or any other agreement entered into between the Company and the Holder pursuant to the Offering shall be instituted exclusively in the appropriate state court of the State of New York, County of New York, or in the United States District Court for the Southern District of New York, (b) waives any objection which the Company or such Holder may have now or hereafter to the venue of any such suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of the applicable state court of the State of New York, County of New York and the United States District Court for the Southern District of New York in any such suit, action or proceeding. The Company and the Holder each further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the applicable state court of the State of New York, County of New York and the United States District Court for the Southern District of New York and agrees that service of process upon the Company or the Holder mailed by certified mail to their respective addresses shall be deemed in every respect effective service of process upon the Company or the Holder, as the case may be, in any suit, action or proceeding.

13. No Voting or Dividend Rights. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant, the interest represented hereby, or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised.

14. Representations and Covenants of the Holder. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder:

A. Investment Purpose; Restricted Security. This Warrant and the Warrant Shares and Unit Warrants issuable upon exercise of this Warrant will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption. The Holder understands (i) that this Warrant and the Warrant Shares and Unit Warrants issuable upon exercise of this Warrant are not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section. The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

B. Risk of No Registration. The Holder understands that if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell the Warrant Shares issuable upon exercise of the Warrant, it may be required to hold such securities for an indefinite period. The Holder also understands that any sale of the Warrant Shares issuable upon exercise of the Warrant which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

15. Redemption. This Warrant may be redeemed at the option of the Company, at a redemption price of $0.01 per Warrant (the “Redemption Price”), at any time commencing twelve months after the effective date of the Registration Statement and the Expiration Date upon not less than 30 days (and not more than 60 days) written notice delivered to the Holder, provided: (a) the closing bid price of the Common Stock is been at least 300% of the Exercise Price for twenty (20) consecutive trading days prior to the date of the notice of redemption and (b) there is an effective registration statement with a current prospectus available covering the shares of Common Stock issuable upon exercise of this Warrant. On and after the date fixed for redemption, the Holder shall have no rights with respect to this Warrant except to receive the Redemption Price per Warrant upon surrender of this Certificate. The Company covenants and agrees that it will honor all Exercise Notices tendered through the 5:00 Easter Time on the Business Day immediately preceding the Redemption Date. The redemption payment shall be made in cash on the date fixed for redemption in the Company’s notice of redemption, as described below (the “Redemption Date”). The notice of redemption shall specify: (i) the Redemption Price; (ii) the Redemption Date; (iii) the place where Warrant Certificates shall be delivered and the redemption price paid; and (iv) that the right to exercise the Warrants shall terminate at 5:00 p.m. EST on the Business Day immediately preceding the Redemption Date. An affidavit of the Secretary or an Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be conclusive evidence of the facts stated therein.

16. Miscellaneous. No recourse shall be had for any claim based hereon or otherwise in any manner in respect hereof, against any incorporator, stockholder, officer or director, past, present or future, of the Company or of any predecessor corporation, whether by virtue of any constitutional provision or statute or rule of law, or by the enforcement of any assessment or penalty or in any other manner, all such liability being expressly waived and released by the acceptance hereof and as part of the consideration for the issue hereof. No course of dealing between the Company and the Holder hereof shall operate as a waiver of any right of any Holder hereof, and no delay on the part of the Holder in exercising any right hereunder shall so operate. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by (a) the party against which enforcement of the same is sought or (b) the Company and the holders of at least a majority of the number of shares into which the Warrants are exercisable (without regard to any limitation contained herein on such exercise), it being understood that upon the satisfaction of the conditions described in (a) and (b) above, each Warrant (including any Warrant held by the Holder who did not execute the agreement specified in (b) above) shall be deemed to incorporate any amendment, modification, change or waiver effected thereby as of the effective date thereof. Notwithstanding the foregoing, no modification to this amendment provision will be effective against any Holder without his consent. Any amendment shall be endorsed upon this Warrant, and all future Holders shall be bound thereby.

[REMAINDER OF PAGE INTENTIONALLY LET BLANK]

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this __ day of May, 2006.

NANOSENSORS, INC.

		By: __________________________
		Name: Ted Wong
		Title: President

WARRANT EXERCISE FORM

TO: Nanosensors, Inc.

Attention: President

1800 Wyatt Drive, Suite #2

Santa Clara, CA 95054

The undersigned Holder hereby irrevocably elects to exercise the right to purchase ________ shares of Common Stock covered by this Warrant according to the conditions hereof and herewith makes full payment of the Exercise Price of such shares.

The undersigned, by marking the box following this sentence, indicates his or her intention to exercise this Warrant on a cashless basis in accordance with the terms of this Warrant:

Kindly deliver to the undersigned a certificate representing the Shares.

INSTRUCTIONS FOR DELIVERY

Name: ___________________________________________________________

(please typewrite or print in block letters)

Address: _________________________________________________________

Tax I.D. No. or Social Security No.: ______________________________________

Dated: _________________________

Signature ________________________________

STATE OF ___________)

COUNTY OF _________) ss:

_____________________________

Notary Public

[FORM OF ASSIGNMENT]

(To be executed by the registered holder if such holder

desires to transfer the Warrant Certificate.)

FOR VALUE RECEIVED _________________________________________ hereby sells, assigns and transfers unto __________________________________________________________________________________________________________

__________________________________________________________________________________________________________

(Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint , Attorney, to transfer the within Warrant Certificate on the books of NANOSENSORS, INC., with full power of substitution.

Dated: ____________________________________ Signature:

___________________________

______________________________

(Signature must conform in all respects to name of holder as specified on the face of the Warrant Certificate)

__________________________

(Insert Social Security or Other

Identifying Number of Assignee)

STATE OF ___________)

COUNTY OF _________) ss:

_____________________________

Notary Public

EX-10.1 4 v046408_ex10-1.htm

____________________		____________________
Name of Purchaser		Agreement No.

SECURITIES PURCHASE AGREEMENT

NANOSENSORS, INC.

Up to $1,500,000 of Units

Each Unit consisting of one share of Common Stock and one Common Stock

Purchase Warrant, each entitling the holder to purchase one share of Common Stock.

Maximum of 150,000,000 shares of Common Stock and 150,000,000 Warrants

Offering Price - $0.01 per Unit, Minimum Investment $50,000

(Common Stock, Par Value $.001 per share)

In the event you decide not to participate in this offering please return this Securities Purchase Agreement to the principal office of the Company as set forth below.

NANOSENSORS, INC.

1800 Wyatt Drive, Suite #2

Santa Clara, CA 95054

Telephone: (408) 855-0051

Dated: May 11, 2006

CONFIDENTIAL SECURITIES PURCHASE AGREEMENT

INSTRUCTIONS:

Items to be delivered by all Purchasers:

One (1) completed and executed Securities Purchase Agreement, including the Investor Questionnaire.

One (1) completed and executed Registration Rights Agreement, including the Selling Security Holder Questionnaire annexed thereto.

Payment in the amount of subscription, by wire transfer of funds or check. All checks should be made payable to “Signature Bank as Escrow Agent For NanoSensors, Inc.” in the total amount of the Units subscribed for.

Wired funds should be made according to directions from the Company or the Selling Agents.

THE PURCHASER IS RESPONSIBLE FOR ALL WIRE TRANSFER FEES IMPOSED BY THE PURCHASER’S BANK.

The following exhibits constitute a part of this Agreement:

EXHIBIT A: INVESTOR QUESTIONNAIRE

EXHIBIT B: FORM OF WARRANT

EXHIBIT C: REGISTRATION RIGHTS AGREEMENT

EXHIBIT D: ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2005

EXHIBIT E: QUARTERLY REPORT ON FORM 10-QSB FOR THE FISCAL QUARTER ENDED FEBRUARY 28, 2006

EXHIBIT F: CURRENT REPORT ON FORM 8-K DATED MAY 8, 2006

ALL DOCUMENTS SHOULD BE RETURNED TO THE SELLING AGENT FROM WHOM THE PURCHASER INITIALLY RECEIVED SUCH DOCUMENTS

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”), is made by and among those purchasers indicated on the signature page to this Agreement (referred to collectively as the “Purchasers”), and NANOSENSORS, INC., a Nevada corporation (the “Company”). For each Purchaser, this Agreement shall be deemed made as of the later of the date that it is executed by such Purchaser and the Company.

Article I

SALE OF UNITS

1.1 Sale of Units. The Company has authorized the sale of the up to an aggregate of $1,000,000 of Units of the Company’s securities and an additional $500,000 of Units as an oversubscription amount for a per Unit purchase price of $50,000 (the “Purchase Price”). Each $50,000 Unit consists of 5,000,000 shares of the Company’s Common Stock (the “Shares”) and warrants to purchase an additional 5,000,000 shares of the Company’s Common Stock (the “Warrants” and the shares of Common Stock issuable upon exercise of the Warrants are the “Warrant Shares”).

1.2 Purchase Price. Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Company hereby agrees to issue and sell to each Purchaser, and each Purchaser agrees to purchase from the Company, upon the Closing (as defined in Section 1.4 hereof), the number of Units as described herein for the applicable Purchase Price as set forth on the signature page of this Agreement executed by such Purchaser. The number of Units purchased hereunder by a Purchaser (and the corresponding Purchase Price payable by such Purchaser for the Units being purchased by it) shall be as specified on the signature page of this Agreement executed by such Purchaser. The Company may reject any subscription in whole or in part and the Company may agree to issue fractional Units hereunder. This offer is only being made to “accredited investors” (as defined in Rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) in reliance upon an exemption from registration under Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder, and on similar exemptions under applicable state laws. The Company and Selling Agents (defined below) may accept subscriptions for less than a whole Unit in their sole discretion.

1.3 Offering Period. The Units are being offering (the “Offering”) during the offering period commencing on May 11, 2006 and terminating on the earlier of (a) June 11, 2006 or (b) the date on which all Units authorized for sale (including the oversubscription amount) have been sold, unless extended by the Company and the selling agents for up to an additional 30 days (the “Offering Period”).

1.4 No Minimum; Multiple Closings. The Purchaser acknowledges and agrees that all subscription amounts will be deposited in an escrow account maintained by the Company and that there is no minimum Offering amount necessary for the funds to be released to the Company. Subject to the escrow conditions discussed below, funds may be released to the Company and closings held, from time to time, as determined by the Company at any time during the Offering Period. The final Closing shall be either the date of which this Offering is fully subscribed or the last date during the Offering Period on which the Company accepts a subscription, whichever is latest. Each closing of the transactions contemplated hereunder (the “Closing”) shall be deemed to occur at the offices of Goldstein & DiGioia, LLP, 45 Broadway, 11^th Floor, New York, New York 10006, or at such other place as shall be mutually agreeable to the parties, at 11:00 a.m., New York Time, on such other date as be mutually agreeable to the parties.

1.5 Closing Matters. At each Closing the following actions shall be taken:

(a) Each Purchaser shall deliver its Purchase Price in immediately available United States funds to the escrow account established for the Offering; and

(b) Subject to the provisions of Section 1.7 hereof, the Company shall deliver certificates representing the Shares and Warrants comprising the amount of Units subscribed for to each Purchaser.

(c) The Company intends to use the proceeds derived from this sale to satisfy its working capital requirements, however an amount of up to $90,000 may be used for payments of accrued compensation. Management reserves the right to utilize the net proceeds of the sale in a manner in the best interests of the Company. The amount of the net proceeds that will be invested in particular areas of the Company’s business will depend upon future economic conditions and business opportunities. To the extent that the Company continues to incur losses from operations, such losses will be funded from its general funds, including the net proceeds of this sale.

1.6 Description of Warrants. The following discussion is subject to the terms and conditions of the Warrants, a copy of which is annexed hereto as Exhibit B, and Purchasers are referred to the form of the Warrant for more detailed information.

(a) Each Warrant will entitle the holder to purchase one share of Common Stock (“Warrant Shares”) at an initial exercise price of $0.04 per share, subject to adjustments in the event we (A) declare a dividend or make a distribution on our common stock in shares of our common stock, (B) subdivide or reclassify the outstanding shares of common stock into a greater number of shares, (C) combine or reclassify the outstanding common stock into a smaller number of shares or (D) issue shares of Common Stock or other securities at a price below the per share Purchase Price. The Warrants may be exercised in whole or in part at any time during the five year period commencing on the date of issuance. The Warrants may be exercised on a cashless basis in the event the registration statement contemplated by the Registration Rights Agreement (defined below) is not declared effective within six months of the final Closing, or such registration statement is not maintained effective for the period specified in the Registration Rights Agreement.

(b) Commencing twelve months after the effective date of the registration statement contemplated by the Registration Rights Agreement (attached hereto as Exhibit C and referred to herein as the “Registration Rights Agreement”), the Company, at its option, may redeem some or all of the Warrants upon not less than thirty (30) days nor more than sixty (60) days prior written notice to the Warrant Holder at a redemption price of $0.01 per Warrant only in the event that the closing bid price of our Common Stock is at least 300% of the exercise price for twenty (20) consecutive trading days prior to the date of the notice of redemption and the Warrant Shares are covered by a registration statement declared effective by the Securities and Exchange Commission. A Warrant holder may exercise the Warrants during the period from the date of notice of redemption until 5:00 Eastern Time on the business day immediately preceding the redemption date.

1.7 Escrow of Funds; Holdback; Appointment. (a) All proceeds received by from Purchasers as consideration for the purchase of the Units will be deposited in an escrow account. Closings will be held from time to time as agreed upon by the Company and the Selling Agents. An amount equal to 60% of the aggregate Purchase Price paid shall be retained in the escrow account (the “Escrowed Funds”) until the occurrence of (i) the registration statement contemplated by the Registration Rights Agreement entered into among the Company and the Purchasers is declared effective by the U.S. Securities and Exchange Commission and (ii) the Company has (A) obtained the approval of the requisite number of its stockholders necessary to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock to 950,000,000 shares of Common Stock, (B) complied with its obligations under the rules and regulations established by the U.S. Securities and Exchange Commission for obtaining such shareholder approval; and (C) filed an Amendment to its Certificate of Incorporation and such certificate shall have been accepted for filing by the Secretary of State for the State of Nevada.

(b) Until such time as the Company has satisfied its obligations as described in Section 1.7(a), the Company shall not be required to issue certificates representing the number of Shares and Warrants allocable to the Escrowed Funds until such time as the funds are released to the Company from escrow. The Shares and Warrants representing the Escrowed Funds may be referred to as the “Holdback Securities”.

(c) Upon the Company’s satisfaction of these conditions, the Company shall be authorized to execute and deliver instructions to the escrow agent for the release to the Company of such Escrowed Funds; provided, however, that Meyers Associates, L.P., as the agent for the Purchasers, countersigns such instructions. Each Purchaser hereby designates Meyers Associates, L.P., a Selling Agent, as its representative and agent for the purpose of verifying the Company’s compliance with its obligations under this Section 1.7 and countersigning such escrow release instructions. Immediately following the Company’s delivery of countersigned escrow release instructions to the escrow agent pursuant to this Section 1.7(c), the Company shall cause the Holdback Securities to be delivered to the Purchasers.

(d) In the event the Company is unable to (i) have the U.S. Securities and Exchange Commission declare the registration statement contemplated by the Registration Rights Agreement effective within six months of the final Closing Date, or (ii) rightfully cause its Certificate of Incorporation to be amended to increase the number of shares of authorized Common Stock to 950,000,000 shares, then each Purchaser shall have the right to demand the Company to instruct the escrow agent to return the Escrowed Funds to each Purchaser. In the event a Purchaser delivers such a demand to the Company, the Company shall promptly instruct the escrow agent to release and return the Escrowed Funds allocable to such Purchaser. Upon the return of such Purchaser’s Escrowed Funds, such Purchaser’s subscription for Units shall be deemed modified in order to cancel its subscription for the amount of Escrowed Funds returned. Upon the Company’s authorization to the escrow agent to return such Escrowed Funds, the Company shall have no further liability to issue and deliver the Holdback Securities, which securities shall be deemed cancelled.

(e) Notwithstanding the foregoing, a particular Purchaser may consent to the release of some or all of its Purchase Price that has been designated as Escrowed Funds to the Company regardless of the Company’s satisfaction of its obligations as described in this Section 1.7 by furnishing the Company and Meyers Associates with written notice of such election. Upon its receipt of such an election, the Company shall be entitled to submit a release instruction to the escrow agent for such Escrowed Funds, which such instruction must be countersigned by Meyers Associates, and upon its delivery to the escrow agent of such a duly executed instruction letter, the Company shall cause the certificates representing the Holdback Securities to be delivered to such Purchaser.

1.8 Certain Reports Filed Under the Securities Exchange Act of 1934. Annexed to this Agreement are the Company’s (i) Annual Report on Form 10-KSB for the fiscal year ended November 30, 2005 (the “Annual Report”), (ii) Quarterly Report on Form 10-QSB for the fiscal quarter ended February 28, 2006 (the “Quarterly Report”) and (iii) Current Report on Form 8-K dated May 8, 2006 concerning the Company’s intention to undertake this Offering (the “Current Report”). The foregoing reports comprise an integral part of this Agreement and each Purchaser is urged to read each such report in its entirety. The Annual Report, Quarterly Report and Current Report may be collectively referred to herein as the “SEC Reports”.

Article II

REPRESENTATIONS AND WARRANTIES OF COMPANY

The Company hereby represents and warrants to the Purchasers as of the date of this Agreement as follows:

(A) The Company is duly organized, validly existing and in good standing under the laws of its state of incorporation, with all requisite power and authority to own, lease, license, and use its properties and assets and to carry out the business in which it is engaged, except where the failure to have or be any of the foregoing may not be expected to have a material adverse effect on the Company’s presently conducted businesses. The Company is not in violation of any of the provisions of its certificate of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to transact the business in which it is engaged and is in good standing as a foreign corporation in every jurisdiction in which its ownership, leasing, licensing or use of property or assets or the conduct of its business make such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, have or reasonably be expected to result in (i) a material and adverse effect on the legality, validity or enforceability of this Agreement, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations hereunder (any of (i), (ii) or (iii), a “Material Adverse Effect”).

(B) The Company is authorized to issue 500,000,000 shares of Common Stock, $.001 par value per share and 20,000,000 shares of Preferred Stock, $.001 par value per share. No securities of the Company are entitled to preemptive or similar rights, and no entity or person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement unless any such rights have been waived. Except as (i) a result of the purchase and sale of the Units, (ii) as disclosed in the Company’s SEC Reports and (iii) as described in Section II(J) below, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any entity or person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Units will not (except pursuant to their terms thereunder), immediately or with the passage of time, obligate the Company to issue shares of Common Stock or other securities to any entity or person and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

(C) The Company has the requisite corporate power and authority to enter into, deliver and consummate the transactions contemplated by this Agreement, to issue and sell the Units and deliver the Shares and Warrants, and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation by it of the transactions contemplated thereby have been duly authorized by the Company and no further action is required by the Company in connection therewith, other than the Company’s obligations in connection with increasing its authorized capital stock, as described in Section 5.6(d) below. When executed and delivered by the Company, this Agreement will constitute the legal, valid and binding obligation of the Company, enforceable as to the Company in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance or transfer, moratorium or other laws or court decisions, now or hereinafter in effect, relating to or affecting the rights of creditors generally and as may be limited by general principles of equity and the discretion of the court having jurisdiction in an enforcement action (regardless of whether such enforceability is considered in a proceeding in equity or at law).

(D) Other than the Company’s obligations in connection with increasing its authorized capital stock, as described in Section 5.6(d) below, no consent, authorization, approval, order, license, certificate or permit of or from, or declaration or filing with, any federal, state, local or other governmental authority or any court or any other tribunal is required by the Company for the execution, delivery or performance by the Company of this Agreement or the execution, issuance, sale or delivery of the Units.

(E) The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person or entity in connection with the execution, delivery and performance by the Company of this Agreement or the issuance, sale or delivery of the Units other than (i) any filings required by state securities laws, (ii) the filing of a Notice of a Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iii) those that have been made or obtained prior to or contemporaneously with the date of this Agreement and (iv) the approval of the Company’s stockholders for the Company to amend its Certificate of Incorporation in order to increase its authorized capital stock.

(F) Other than the Company’s obligations in connection with increasing its authorized capital stock, as described in Section 5.6(d) below, the execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) violate, conflict with, or constitute a default or breach (or an event that 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 (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

(G) The Shares and Warrants comprising the Units have been duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, will not be issued in violation of any preemptive or other rights of stockholders, and will be issued free and clear of all liens and encumbrances, other than restrictions on transfer under applicable securities laws. Effective upon the Company’s amendment of its Certificate of Incorporation to increase the amount of its authorized capital stock, the Company will reserve all of the Shares and Warrant Shares from its duly authorized capital stock.

(H) Since December 30, 2005, the Company has filed all reports required to be filed by it under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the period from December 30, 2005 and ending as of the date hereof (or such shorter period as the Company was required by law to file such reports) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles in the United States applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(I) Litigation. Except as disclosed in the SEC Reports, there is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates that would affect the execution by the Company or the performance by the Company of its obligations under this Agreement, and all other agreements entered into by the Company relating hereto. Except as disclosed in the SEC Reports, there is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its affiliates which litigation if adversely determined could have a material adverse effect on the Company.

(J) No Undisclosed Liabilities. Except for the Company’s obligation to issue warrants to an investor arising out of the Company’s failure to file a registration statement pursuant to a certain Subscription Agreement entered into as of November 10, 2005, the Company has no liabilities or obligations which are material, individually or in the aggregate, which are not disclosed in the SEC Reports, other than those incurred in the ordinary course of the Company’s businesses since April 19, 2006 and which, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on the Company’s financial condition.

(K) No Undisclosed Events or Circumstances. Since April 19, 2006, no event or circumstance has occurred or exists with respect to the Company or its businesses, properties, operations or financial condition, that, under applicable law, rule or regulation, requires public disclosure or announcement prior to the date hereof by the Company but which has not been so publicly announced or disclosed in the SEC Reports.

(L) Dilution. The Company’s executive officers and directors have studied and fully understand the nature of the Units being sold hereby and recognize that they have a potential dilutive effect on the interests of other holders of the Company’s securities. The board of directors of the Company has concluded, in its good faith business judgment, that such issuance is in the best interests of the Company.

Article III

REPRESENTATIONS AND WARRANTIES OF PURCHASERS

By signing this Agreement, each undersigned Purchaser hereby represents and warrants to the Company as follows as an inducement to the Company to accept the subscription of the Purchaser:

(A) The Purchaser acknowledges and agrees that (i) the offering and sale of the Units are intended to be exempt from registration under the Securities Act by virtue of Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder, (ii) the Units have not been registered under the Securities Act and (iii) that the Company has represented to the Purchaser (assuming the veracity of the representations of the Purchaser made herein and in the Questionnaire annexed hereto at Exhibit A) that the Units, Shares, Warrants and Warrant Shares (collectively, the “Securities”) have been offered and sold by the Company in reliance upon an exemption from registration provided in Section 4(2) of the Securities Act and Regulation D thereunder. In accordance therewith and in furtherance thereof, the Purchaser represents and warrants to and agrees with the Company that it is an accredited investor (as defined in Rule 501 promulgated under the Securities Act) because the purchaser is [Please check statements applicable to the Purchaser]:

a bank as defined in Section 3(a)(2) of the Securities Act;

a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act;

a broker or dealer registered pursuant to Section 15 of the Exchange Act;

an insurance company as defined in Section 2(13) of the Securities Act;

an investment company registered under the Investment Company Act of 1940, as amended or a business development company as defined in Section 2(a)(48) of such act;

a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;

an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, as amended, if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;

a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended;

an organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

a natural person whose individual net worth or joint net worth with that person's spouse, at the time of his purchase exceeds $l,000,000;

a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;

a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Exchange Act; or

an entity in which all of the equity owners are accredited investors. (If this alternative is checked, the Purchaser must identify each equity owner and provide statements signed by each demonstrating how each qualifies as an accredited investor.)

a plan established and maintained by a state, its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, if such plan has total assets in excess of $5,000,000

a director or officer of the Company.

(B) The Purchaser hereby represents and warrants that the Purchaser is acquiring the Units hereunder for its own account for investment and not with a view to distribution, and with no present intention of distributing the Units or selling the Units for distribution. The Purchaser understands that the Units are being sold to the Purchaser in a transaction which is exempt from the registration requirements of the Securities Act. Accordingly, the Purchaser acknowledges that it has been advised that the Units have not been registered under the Securities Act and are being sold by the Company in reliance upon the veracity of the Purchaser’s representations contained herein and upon the exemption from the registration requirements provided by the Securities Act and the securities laws of all applicable states. The Purchaser's acquisition of the Units shall constitute a confirmation of the foregoing representation and warranty and understanding thereof.

(C) The Purchaser (or its “Purchaser Representative” if any) has such knowledge and experience in financial and business matters as is required for evaluating the merits and risks of making this investment, and the Purchaser or its Purchaser Representative(s) has received such information requested by the Purchaser concerning the business, management and financial affairs of the Company in order to evaluate the merits and risks of making this investment. Further, the Purchaser acknowledges that the Purchaser has had the opportunity to ask questions of, and receive answers from, the officers of the Company concerning the terms and conditions of this investment and to obtain information relating to the organization, operation and business of the Company and of the Company's contracts, agreements and obligations or needed to verify the accuracy of any information contained herein or any other information about the Company. Except as set forth in this Agreement, no representation or warranty is made by the Company to induce the Purchaser to make this investment, and any representation or warranty not made herein or therein is specifically disclaimed and no information furnished to the Purchaser or the Purchaser's advisor(s) in connection with the sale were in any way inconsistent with the information stated herein. The Purchaser further understands and acknowledges that no person has been authorized by the Company to make any representations or warranties concerning the Company, including as to the accuracy or completeness of the information contained in this Agreement.

(D) The Purchaser is making the foregoing representations and warranties with the intent that they may be relied upon by the Company in determining the suitability of the sale of the Units to the Purchaser for purposes of federal and state securities laws. Accordingly, each Purchaser represents and warrants that the information stated herein is true, accurate and complete, and agrees to notify and supply corrective information promptly to the Company as provided above if any of such information becomes inaccurate or incomplete. The Purchaser has completed this Agreement and Questionnaire, has delivered it herewith and represents and warrants that it is accurate and true in all respects and that it accurately and completely sets forth the financial condition of the Purchaser on the date hereof. The Purchaser has no reason to expect there will be any material adverse change in its financial condition and will advise the Company of any such changes occurring prior to the closing or termination of the Offering.

(E) The Purchaser is not subscribing for any of the Units as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, any seminar or meeting, or any solicitation of a subscription by a person not previously known to the Purchaser in connection with investments in Units generally.

(F) The Purchaser has received certain information regarding the Company, including this Agreement, and other accompanying documents of the Company receipt of which is hereby acknowledged. The Purchaser has carefully reviewed all information provided to it and has carefully evaluated and understands the risks described therein related to the Company and an investment in the Company, and understands and has relied only on the information provided to it in writing by the Company relating to this investment. No agent prepared any of the information to be delivered to prospective investors in connection with this transaction. Prospective investors are advised to conduct their own review of the business, properties and affairs of the Company before subscribing to purchase the Units.

(G) The Purchaser also understands and agrees that, although the Company will use its best efforts to keep the information provided in this Agreement strictly confidential, the Company or its counsel may present this Agreement and the information provided in answer to it to such parties as they may deem advisable if called upon to establish the availability under any federal or state securities laws of an exemption from registration of the private placement or if the contents thereof are relevant to any issue in any action, suit or proceeding to which the Company or its affiliates is a party, or by which they are or may be bound or as otherwise required by law or regulatory authority.

(H) The individual signing below on behalf of any entity hereby warrants and represents that he/she is authorized to execute this Agreement on behalf of such entity. If an individual, the Purchaser has reached the age of majority in the state in which the Purchaser resides. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite action, if any, in respect thereof on the part of Purchasers and no other proceedings on the part of Purchasers are necessary to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchasers and constitutes a valid and binding obligation of Purchasers, enforceable against Purchasers in accordance with its terms (subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and subject, as to enforceability, to general principles of equity (whether applied in a proceeding in equity or at law)).

(I) The Purchaser is aware that the offering of the Units involves securities for which only a limited trading market exists, thereby requiring any investment to be maintained for an indefinite period of time. The purchase of the Units involves risks which the Purchaser has evaluated, and the Purchaser is able to bear the economic risk of the purchase of such Units and the loss of its entire investment. The undersigned is able to bear the substantial economic risk of the investment for an indefinite period of time, has no need for liquidity in such investment and can afford a complete loss of such investment. The Purchaser's overall commitment to investments that are not readily marketable is not, and his acquisition of the Units will not cause such overall commitment to become, disproportionate to his net worth and the Purchaser has adequate means of providing for its current needs and contingencies.

(J) The Purchaser acknowledges and agrees that there is no “minimum” offering amount for the Units and that subject to the terms of the escrow arrangement discussed above, funds may be immediately released to the Company.

(K) In entering into this Agreement and in purchasing the Units, the Purchaser further acknowledges that:

(i) The Company has informed the Purchaser that the Units have not been offered for sale by means of general advertising or solicitation and the Purchaser acknowledges that it has either a pre-existing personal or business relationship with either the Company or any of its officers, directors or controlling person, of a nature and duration such as would enable a reasonable prudent investor to be aware of the character, business acumen, and general business and financial circumstances of the Company and an investment in the Units.

(ii) Neither the Units nor any interest therein may be resold by the Purchaser in the absence of a registration under the Securities Act or an exemption from registration. In particular, the Purchaser is aware that all of the foregoing described Units will be “restricted securities”, as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144, unless the conditions thereof are met. Other than set forth in this Agreement, the Company has no obligation to register any securities purchased or issuable hereunder.

(iii) The following legends (or similar language) shall be placed on the certificate(s) or other instruments evidencing the Shares, Warrants and Warrant Shares:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH NOTES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH NOTES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH NOTES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

(iv) The Company may at any time place a stop transfer order on its transfer books against the Units. Such stop order will be removed, and further transfer of the Units will be permitted, upon an effective registration of the respective Units, or the receipt by the Company of an opinion of counsel satisfactory to the Company that such further transfer may be effected pursuant to an applicable exemption from registration.

(L) The Company has employed its own legal counsel in connection with the Offering. The Purchasers have not been represented by independent counsel in connection with the preparation of this Agreement or the terms of this Offering and no investigation of the merits or fairness of the Offering has been conducted on behalf of the Purchasers. Prospective Purchasers should consult with their own legal, tax and financial advisors with respect to the Offering made pursuant to this Agreement.

(M) ______________ (insert name of Purchaser Representative: if none leave blank) has acted as the Purchaser’s Purchaser Representative for purposes of the private placement exemption under the Act. If the Purchaser has appointed a Purchaser Representative (which term is used herein with the same meaning as given in Rule 501(h) of Regulation D), the Purchaser has been advised by his Purchaser Representative as to the merits and risks of an investment in the Company in general and the suitability of an investment in the Units for the Purchaser in particular.

(N) The undersigned hereby acknowledges that officers, affiliates, employees and directors of the Company and/or the Selling Agents may purchase Units in the Offering.

(O) It never has been represented, guaranteed or warranted by any Selling Agent, the Company, any of the officers, directors, stockholders, partners, employees or agents of the Company, or any other persons, whether expressly or by implication, that: (i) the Company or the Purchasers will realize any given percentage of profits and/or amount or type of consideration, profit or loss as a result of the Company’s activities or the Purchaser’s investment in the Company; or (ii) the past performance or experience of the management of the Company, or of any other person, will in any way indicate the predictable results of the ownership of the Units or of the Company's activities.

(P) The Purchaser acknowledges that any delivery to it of this Agreement relating to the Units prior to the determination by the Company of its suitability as a Purchaser shall not constitute an offer of the Units until such determination of suitability shall be made, and the Purchaser hereby agrees that it shall promptly return this Agreement and the other Offering documents to the Company upon request. The Purchaser understands that the Company shall have the right to accept or reject this subscription in whole or in part. Unless this subscription is accepted in whole or in part by the Company, this subscription shall be deemed rejected in whole.

Article IV

INDEMNIFICATION

4.1 Indemnification by the Company. The Company agrees to defend, indemnify and hold harmless the Purchasers and shall reimburse Purchasers for, from and against each claim, loss, liability, cost and expense (including without limitation, interest, penalties, costs of preparation and investigation, and the reasonable fees, disbursements and expenses of attorneys, accountants and other professional advisors) (collectively, “Losses”) directly or indirectly relating to, resulting from or arising out of any untrue representation, misrepresentation, breach of warranty or non-fulfillment of any covenant, agreement or other obligation by or of the Company contained herein or in any certificate, document, or instrument delivered to Purchasers pursuant hereto.

4.2 Indemnification by Purchasers. Purchasers agrees to defend, indemnify and hold harmless the Company and shall reimburse The Company for, from and against all Losses directly or indirectly relating to, resulting from or arising out of any untrue representation, misrepresentation, breach of warranty or non-fulfillment of any covenant, agreement or other obligation of the Purchasers contained herein or in any certificate, document or instrument delivered to the Company pursuant hereto.

ARTICLE V

OTHER AGREEMENTS

5.1 Selling Agent Compensation. The Company intends to engage registered broker-dealers to serve as selling agents (the “Selling Agents”), for the sale of the Units and pay commissions and other compensation to the Selling Agents who procure purchasers of the Units. We will pay and issue to each Selling Agent (i) a fee of 10% of the gross proceeds of the sale of the Units to Purchasers procured by such Selling Agent; (ii) a non-accountable expense allowance equal to 3% of the gross proceeds of the sale of Units to such Purchasers; and (iii) a warrant (the “Agent Warrants”) to purchase such number of Shares and Warrants as equals 20% of the total number of Units sold in the Offering to Purchasers procured by each Selling Agent. Each Selling Agent shall also receive a warrant solicitation fee of 10% of the cash proceeds from the exercise of the Warrants by those purchasers procured by such Selling Agent in this Offering that exercised such Warrants and for whom such Selling Agent was properly designated as the soliciting broker. Agent Warrants shall be exercisable at the per share Purchase Price for a period of five years from the date of issuance. Each Selling Agent has also been granted the right, on a pro-rata basis, of first refusal for a period of 24 months from the final Closing Date to serve as the Company’s agent on any subsequent financing transaction, including public or private offerings of equity or debt securities, excluding commercial bank financing arrangements and grants from federal, state or local government entities.

5.2 Anti-Dilution Protection. (a) If during the period commencing on the final Closing and ending upon the date which is 180 days from the effective date of the registration statement required to be filed by the Company pursuant to the Registration Rights Agreement, the Company sells additional shares of Common Stock in a capital raising transaction, or securities convertible into or exercisable for shares of common stock (or agrees to modify any such securities which are outstanding prior to Closing) (collectively, the “New Shares”) for a purchase price or conversion or exercise price that is less than the Purchase Price without the consent of the Purchasers, then the Company shall issue, for each such occasion, subject to the exceptions set forth below, such number of additional shares of Common Stock so that per share Purchase Price of the Shares issued hereunder to a Purchaser (of only the Shares, Warrants or Warrant Shares still owned by the Purchaser) is equal to such other lower price per share. In addition, in such an event, the terms of the Warrants shall be similarly adjusted in accordance with the terms and conditions thereof. The number of additional Shares issued to each Purchaser pursuant to this anti-dilution protection will be rounded down to the nearest whole share and no fractional shares will be issued.

(b) Notwithstanding the foregoing, the following issuances and transactions by the Company shall not result in any issuance of additional shares of Common Stock (or in any adjustment to the Warrants) to Purchasers in the Offering: (i) upon the exercise or conversion of any warrants, options or convertible securities issued and outstanding as of the date hereof or issued hereafter under the Company’s Employee Stock Option Plan (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like, and net of any repurchases of such Units or cancellations or exemptions of such options, warrants or other rights); (ii) shares of Common Stock issued hereunder or issuable upon exercise of warrants issued in connection with the Offering to either a Purchaser or to Selling Agents; (iii) shares of Common Stock (or securities convertible into or exercisable for shares of Common Stock) which may be issued to consultants, vendors, or distributors to the Company as consideration for services provided to the Company or to third parties in connection with a joint venture, strategic alliance or other commercial relationship with such third party relating to the operation of the Company’s business, the primary purpose of which is not to raise equity capital; (iv) the reduction in the exercise price of the common stock purchase warrants issued and outstanding prior to the commencement of the Offering as contemplated in Section 5.7 of this Agreement; and (v) shares of Common Stock or other securities issued in connection with any stock split, stock dividend or recapitalization of the Company.

(c) Within 15 days following any transaction by the Company which would result in the Purchasers in the Offering being entitled to additional shares of Common Stock hereunder, the Company shall provide written notice of such transaction to each Purchaser of the terms of such transaction and shall, within 30 days of consummation of such transaction, deliver share certificates to the Purchasers representing any additional Shares. Any such additional Shares shall be included in the term “Registrable Securities” as defined in the Registration Rights Agreement between the Company and the Purchaser.

5.3 Conditions Precedent to the Obligations of the Purchasers to Purchase Units. The obligation of each Purchaser to acquire Units at the Closing is subject to the satisfaction or waiver by such Purchaser, at or before the Closing, of each of the following conditions:

(a) the representations and warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date;

(b) the Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement, the Registration Rights Agreement and any other agreement or instrument executed in connection with the Offering (collectively, the “Transaction Documents”) to be performed, satisfied or complied with by it at or prior to the Closing;

(c) 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 that prohibits the consummation of any of the transactions contemplated by any Transaction Document;

(d) since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would be expected to have or result in a (i) an adverse effect on the legality, validity or enforceability of any Transaction Document, or (ii) a material and adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company;

(e) the Company and the Purchasers shall execute and deliver a Registration Rights Agreement substantially in the form of Exhibit C; and

(f) the Company shall have obtained such agreements and documents as are reasonably required to lock-up the Shares and Warrants issued to those Purchasers that were referred to a Selling Agent by the Company’s management for a period of time commencing on the Closing Date and until six months from the date that such Shares or Warrant Shares may be sold publicly pursuant to the registration statement contemplated by the Registration Rights Agreement or under Rule 144, promulgated by the Securities and Exchange Commission.

5.4 Conditions Precedent to the Obligations of the Company to sell Units. The obligation of the Company to sell Units at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a) the representations and warranties of each Purchaser contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date;

(b) each Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;

(c) 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 that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;

(d) the Company and the Purchasers shall execute and deliver a Registration Rights Agreement substantially in the form of Exhibit C; and

(e) the Company shall have obtained such agreements and documents as are reasonably required to lock-up the Shares and Warrants issued to those Purchasers that were referred to a Selling Agent by the Company’s management for a period of time commencing on the Closing Date and until six months from the date that such Shares or Warrant Shares may be sold publicly pursuant to the registration statement contemplated by the Registration Rights Agreement or under Rule 144, promulgated by the Securities and Exchange Commission.

5.5 Right of Participation.

(a) Offered Securities. For a period of twelve (12) months from the Effective Date of the Registration Statement, the Company will not, directly or indirectly, effect a subsequent financing of its securities (whether structured as debt or equity), unless in each such case the Company shall have first offered to sell to the Purchasers in this Offering an amount of the securities offered in such subsequent financing equal to either (a) 100% of the securities offered in such subsequent financing if the subsequent financing is for an amount no greater than the total amount of Units sold in this Offering or (b) 50% of the securities offered in such subsequent financing if the subsequent financing is for an amount in excess of the total amount of Units sold in this Offering (the securities to be offered to Purchasers pursuant to this Section being referred to herein in the “Offered Securities”). The Company shall offer to sell to each Purchaser (A) such Purchaser’s pro rata share of the Offered Securities (the “Basic Amount”), and (B) such additional portion of the Offered Securities as such Purchaser shall indicate it will purchase should the other Purchasers subscribe for less than their Basic Amounts (the “Undersubscription Amount”), at a price and on such other terms as shall have been specified by the Company in writing delivered to such Purchaser (the “Offer”), which Offer by its terms shall remain open and irrevocable for a period of not less than five (5) business days from such Purchaser’s receipt of the terms of the Offer in writing (the “Offer Period”).

(c) Permitted Sales of Refused Securities. In the event that Notices of Acceptance are not timely delivered by the Purchasers in respect of some or all of the Offered Securities, the Company shall have sixty (60) days from the expiration of the Offer Period to close the sale of all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by an Purchaser (the “Refused Securities”) to the persons or entities specified in the Offer, but only upon terms and conditions, including, without limitation, unit price and interest rates (if applicable), which are, in the aggregate, no more favorable to such other persons or entities or less favorable to the Company than those set forth in the Offer.

(d) Reduction in Amount of Offered Securities. In the event that the Company proposes to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in paragraph (c) above), then each Purchaser may, at its option and in its sole and absolute discretion, reduce the number or other units of the Offered Securities specified in its Notice of Acceptance to an amount which shall be not less than the amount of the Offered Securities which such Purchaser elected to purchase pursuant to paragraph (b) above multiplied by a fraction, (A) the numerator of which shall be the amount of Offered Securities which the Company actually proposes to sell, and (B) the denominator of which shall be the amount of all Offered Securities. In the event that any Purchaser so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not sell or otherwise dispose of more than the reduced amount of the Offered Securities until such securities have been offered to the Purchasers in accordance herewith.

(e) Closing. Upon each closing of the purchase and sale of Offered Securities, the Purchaser shall purchase from the Company, and the Company shall sell to the Purchaser the number of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to paragraph (d) above if the Purchasers have so elected, upon the terms and conditions specified in the Offer. The purchase by the Purchasers of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and the Purchasers of a purchase agreement relating to such Offered Securities on the same terms and conditions applicable to other persons or entities purchasing the Offered Securities.

(f) Further Sale. In each case, any Offered Securities not purchased by the Purchasers or other persons or entities in accordance herewith may not be sold or otherwise disposed of by the Company until they are again offered to the Purchasers under the procedures specified herein.

5.6 Post-Closing Covenants.

(a) Board of Directors. The Company shall agree to take all necessary action to increase the number of individuals serving on its board of directors such that the Company’s board of directors shall be comprised of a majority of independent directors, as the term “independence” is defined in the Marketplace Rules of the Nasdaq Stock Market. As soon as possible after the final Closing, the Company shall appoint to its board of directors at least one independent director nominated for election by the Purchasers of a majority of Units subscribed for. After such initial appointment, the Company shall seek to nominate such individual for reelection to the board for at least two subsequent years.

(b) Securities Laws Disclosure. By 4:30 p.m. (New York City time) on the trading day immediately following each Closing, the Company will issue a press release or Current Report on Form 8-K disclosing the execution of this Agreement, the material terms of the transactions contemplated hereby and the closing of the transactions contemplated hereby. In addition, the Company will make such other filings and notices in the manner and time required by the Commission.

(c) Reporting Requirements. The Company agrees that it will, during the period beginning on the initial Closing date and ending on the date on which the Shares and Warrant Shares may be publicly sold without limitation pursuant to Rule 144(k) of the Securities Act (i) cause its Common Stock to continue to be registered under Section 12(b) or 12(g) of the Exchange Act, (ii) comply in all respects with its reporting and filing obligations under the Exchange Act, and (iii) use commercially reasonable efforts to cause its quarterly reports to be filed under the Exchange Act without the need of filing a notice of extension for such filing.

(d) Increase of Authorized Capital. The Company shall, as soon as possible after Closing, but in any event prior to the effective date of the Registration Statement contemplated by the Registration Rights Agreement, (A) obtain the approval of the requisite number of its stockholders necessary to amend its Certificate of Incorporation to increase the number of authorized shares of Common Stock to 950,000,000 shares of Common Stock, (B) comply with its obligations under the rules and regulations established by the U.S. Securities and Exchange Commission for obtaining such shareholder approval; and (C) file an Amendment to its Certificate of Incorporation and have such certificate accepted for filing by the Secretary of State for the State of Nevada.

5.7 Other Transactions. The Company intends to offer to the holders of all of the Company’s currently outstanding Class A Common Stock Purchase Warrants, an opportunity to exercise such warrants at a reduced exercise price equal to $.01 per share, provided such warrant holders determine to exercise such warrants with the thirty-day period immediately following the Company’s making of such offer. At the conclusion of such thirty-day period, the exercise price of all unexercised Class A Warrants will be reset to its current price of $.03 per share and will continue to be exercisable in accordance with its terms for its stated duration.

ARTICLE VI

MISCELLANEOUS

6.1 Survival. The representations and warranties set forth in Articles II and III hereof shall survive the Closing. No investigation made by or on behalf of either party shall affect the representations and warranties made pursuant to this Agreement. No party makes any additional or implied representations other than those set forth herein.

6.2 Expenses. Each party hereto shall bear and pay all costs and expenses incurred by it in connection with the transactions contemplated hereby, including fees and expenses of its own brokers, finders, financial consultants, accountants and counsel.

6.3 Entire Agreement. This Agreement, including the Exhibits, contains the entire agreement and understanding of the parties with respect to its subject matter. This Agreement supersedes all prior arrangements and understandings between the parties, either written or oral, with respect to its subject matter.

6.4 Binding Effect of Subscription. The Purchaser hereby acknowledges and agrees, subject to any applicable state securities laws that the subscription and application hereunder are irrevocable, that the Purchaser is not entitled to cancel, terminate or revoke this Agreement and that this Agreement shall survive the death or disability of the Purchaser and shall be binding upon and inure to the benefit of the Purchaser and his heirs, executors, administrators, successors, legal representatives, and assigns. If the Purchaser is more than one person, the obligations of the Purchaser hereunder shall be joint and several, and the agreements, representations, warranties, and acknowledgments herein contained shall be deemed to be made by and be binding upon each such person and his heirs, executors, administrators, successors, legal representatives, and assigns.

6.5 Captions. The table of contents and captions contained in this Agreement are for reference purposes only and are not part of this Agreement.

6.6 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding a majority of the Units subscribed for in the Offering or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought (in the case of the Purchasers, such waiver shall be in writing and approved by a majority of the Purchasers). No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

6.7 Notices. Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder shall be sufficiently given if (a) deposited, postage prepaid, in a United States mail box, stamped, registered or certified mail, return receipt requested, addressed to such address as may be listed on the books of the Company, or, if to the Company, the Company’s executive office, or (b) delivered personally at such address.

6.8 Execution. This Agreement may be executed through the use of separate signature pages or in any number of counterparts, and each of such counterparts shall, or all purposes, constitute one agreement binding on all parties, notwithstanding that all parties are not signatories to the same counterpart.

6.9 Severability. Each provision of this Agreement is intended to be severable from every other provisions, and the invalidity or illegality of any portion hereof, shall not affect the validity or legality of the remainder hereof.

6.10 Non-Assignment. This Agreement is not transferable or assignable by the Purchaser except as may be provided herein.

6.11 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal

service of process and consents to process being served in any such proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a proceeding to enforce any provisions of this Agreement, then the prevailing party in such proceeding shall be reimbursed by the other party for its reasonable attorney’s fees and other reasonable costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

6.12 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, the Purchasers and their respective successors and permitted assigns.

Signature page to Securities Purchase Agreement Follows

SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT

IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed by their signature as natural persons or by individuals by their duly authorized officers as of the __ day of _______, 2006.

THE COMPANY:

NANOSENSORS, INC.:

_______________________

By: Ted Wong

Chief Executive Officer

EXECUTION BY AN INDIVIDUAL

(Not applicable to entities)

IF YOU ARE PURCHASING SECURITIES WITH YOUR SPOUSE, YOU MUST BOTH SIGN THIS SIGNATURE PAGE.

PLEASE INDICATE DESIRED TYPE OF OWNERSHIP OF SECURITIES:

[ ] Individual

[ ] Joint Tenants (rights of survivorship)

[ ] Tenants in Common (no rights of survivorship)

I represent that the foregoing information is true and correct.

IN WITNESS WHEREOF, the undersigned has duly executed this Securities Purchase Agreement and agrees to the terms hereof.

Dated: __________________ _____2006

Subscription Amount: $_____________

Number of Shares of Common Stock to be purchased: _______________

Number of Warrants to be purchased: ___________

_____________________________________________

(Name of Investor - Please Print)

_____________________________________________

(Signature)

_____________________________________________

(Name of co-Investor - Please Print)

_____________________________________________

(Signature of Co-Investor)

PARTNERSHIP SIGNATURE PAGE

The undersigned PARTNERSHIP hereby represents and warrants that the person signing this Securities Purchase Agreement on behalf of the PARTNERSHIP is a general partner of the PARTNERSHIP, has been duly authorized by the PARTNERSHIP to acquire the Units and sign this Securities Purchase Agreement on behalf of the PARTNERSHIP and, further, that the undersigned PARTNERSHIP has all requisite authority to purchase such Units and enter into the Securities Purchase Agreement.

IN WITNESS WHEREOF, the undersigned has duly executed this Securities Purchase Agreement and agrees to the terms hereof.

Dated: __________________ _____2006

Subscription Amount: $_____________

Number of Shares of Common Stock to be purchased: _______________

Number of Warrants to be purchased: ___________

	_____________________________________________
	Name of Partnership
	(Please Type or Print)

	By: ________________________________________________
	(Signature)

	Name: ______________________________________________
	(Please Type or Print)

	Title: ______________________________________________
	(Please Type or Print)

CORPORATION/LIMITED LIABILITY COMPANY SIGNATURE PAGE

The undersigned CORPORATION or LIMITED LIABILITY COMPANY hereby represents and warrants that the person signing this Securities Purchase Agreement on behalf of the CORPORATION or LIMITED LIABILITY COMPANY has been duly authorized by all requisite action on the part of the CORPORATION or LIMITED LIABILITY COMPANY to acquire the Units and sign this Securities Purchase Agreement on behalf of the CORPORATION or LIMITED LIABILITY COMPANY and, further, that the undersigned CORPORATION or LIMITED LIABILITY COMPANY has all requisite authority to purchase the Units and enter into this Securities Purchase Agreement.

IN WITNESS WHEREOF, the undersigned has duly executed this Securities Purchase Agreement and agrees to the terms hereof.

Dated: __________________ _____2006

Subscription Amount: $_____________

Number of Shares of Common Stock to be purchased: _______________

Number of Warrants to be purchased: ___________

	_____________________________________________
	Name of Corporation
	Or Limited Liability Company
	(Please Type or Print)

	By: ________________________________________________
	Signature

	Name: ______________________________________________
	(Please Type or Print)

	Title: _______________________________________________
	(Please Type or Print)

TRUST/RETIREMENT PLAN SIGNATURE PAGE

The undersigned TRUST or RETIREMENT PLAN hereby represents and warrants that the persons signing this Securities Purchase Agreement on behalf of the TRUST or RETIREMENT PLAN are duly authorized to acquire the Units and sign this Securities Purchase Agreement on behalf of the TRUST or RETIREMENT PLAN and, further, that the undersigned TRUST or RETIREMENT PLAN has all requisite authority to purchase such Units and enter into the Securities Purchase Agreement.

IN WITNESS WHEREOF, the undersigned has duly executed this Securities Purchase Agreement and agrees to the terms hereof.

Dated: __________________ _____2006

Subscription Amount: $_____________

Number of Shares of Common Stock to be purchased: _______________

Number of Warrants to be purchased: ___________

	_____________________________________________
	Title of Trust or Retirement Plan
	(Please Type or Print)

	By: ________________________________________________
	Signature of Trustee or
	Authorized Signatory

	Name of Trustee: ______________________________________
	(Please Type or Print)

	By: ________________________________________________
	Signature of Co-Trustee if applicable

	Name of Co-Trustee: ___________________________________
	(Please Type or Print)

EX-10.2 5 v046408_ex10-2.htm

EXHIBIT C

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of ___________, 2006, by and among Nanosensors, Inc., a Nevanda corporation (the “Company”), and the investors signatory hereto (each an “Investor” and collectively, the “Investors”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Investors (the “Purchase Agreement”).

The Company and the Investors hereby agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the respective meanings set forth in this Section 1:

“Effective Date” means the date that the Registration Statement filed pursuant to Section 2(a) is first declared effective by the Commission.

“Effectiveness Date” means: with respect to the Registration Statement required to be filed pursuant to Section 2(a) to cover the resale by the Holders of the Registrable Securities, the earlier of: (a)(i) the 100^th calendar day following the Filing Date; provided, that, if the Commission reviews and has written comments to the filed Registration Statement that would require the filing of a pre-effective amendment thereto with the Commission, then the Effectiveness Date under this clause (a)(i) shall be the 120^th calendar day following the Filing Date, and (ii) the fifth Trading Day following the date on which the Company is notified by the Commission that the initial Registration Statement will not be reviewed or is no longer subject to further review and comments.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Filing Date” means with respect to the Registration Statement required to be filed pursuant to Section 2(a) to cover the resale by the Holders of the Registrable Securities, the 40^th calendar day following the final Closing Date.

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

“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).

“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 a 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 such Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means (i) the shares of Common Stock issued to an Investor pursuant to the Purchase Agreement; (ii) the shares of Common Stock issuable upon exercise of the Warrants issued to a Investor pursuant to the Purchase Agreement; (iii) shares of Common Stock which may be issued from time to time by the Company to the Investors pursuant to the anti-dilution provisions of the of the Purchaser Agreement and the Warrants; and (iv) shares of Common Stock which may be issued from time to time by the Company (with any adjustments) in replacement of, in exchange for or otherwise in respect of the Shares or the Warrant Shares.

“Registration Statement” means the initial registration statement required to be filed in accordance with Section 2(a) and any additional registration statement(s) required to be filed under Section 2(b), including (in each case) the Prospectus, amendments and supplements to such registration statements or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statements.

“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 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.

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

“Securities Act” means the Securities Act of 1933, as amended.

“Selling Holder Questionnaire” shall have the meaning set forth in Section 2(g).

“Shares” means the shares of Common Stock issued or issuable to the Investors pursuant to the Purchase Agreement.

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

“Warrants” means the Common Stock Purchase Warrants issued to the Investors pursuant to the Purchase Agreement.

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2. Registration.

(a) Required Registration. On or prior to the Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form SB-2 (or on another appropriate form for such purpose) and shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause the Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, no later than the Effectiveness Date, and shall use its best efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is the earlier of (i) two years after the Effective Date, (ii) at such time as all of the Registrable Securities have been publicly sold by the Holders, or (iii) at such time as all of the Registrable Securities may be sold pursuant to Rule 144(k) (the “Effectiveness Period”).

(b) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and 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, then the Company shall send to each Holder written notice of such determination and, if within fifteen days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights as described herein. If an offering in connection with which a Holder is entitled to registration under this Section 2(b) is an underwritten offering, then each Holder whose Registrable Securities are included in such Registration Statement shall, unless otherwise agreed to by the Company, offer and sell such Registrable Securities in an underwritten offering using the same underwriter or underwriters and, subject to the provisions of this Agreement, on the same terms and conditions as other shares of Common Stock included in such underwritten offering. If a registration pursuant to this Section 2(b) is to be an underwritten public offering and the managing underwriter(s) advise the Company in writing that, in their reasonable good faith opinion, marketing or other factors dictate that a limitation on the number of shares of Common Stock which may be included in the Registration Statement is necessary to facilitate and not adversely affect the proposed offering, then the Company shall include in such registration: (1) first, all securities the Company proposes to sell for its own account, (2) second, up to the full number of securities proposed to be registered for the account of the holders of securities entitled to inclusion of their securities in the Registration Statement by reason of demand registration rights, and (3) third, the securities requested to be registered by the Holders and other holders of securities entitled to participate in the registration, as of the date hereof, drawn from them pro rata based on the number each has requested to be included in such registration.

(c) If: (i) the Registration Statement required by Section 2(a) is not filed on or prior to its Filing Date, or (ii) the Registration Statement required by Section 2(a) is not declared effective by the Commission on or prior to its required Effectiveness Date, or (iii) after its Effective Date, without regard for the reason thereunder or efforts therefore, such Registration Statement ceases for any reason to be effective and available to the Holders as to all Registrable Securities to which it is required to cover at any time prior to the expiration of its Effectiveness Period for an aggregate of more than an aggregate of 20 Trading Days during any twelve month period (which need not be consecutive) (any such failure or breach being referred to as an “Event,” and for purposes of clauses (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which such 20 Trading Day-period is exceeded, being referred to as “Event Date”), then, in addition to any other rights available to the Holders under the Transaction Documents or under applicable law: within five (5) calendar days from the end of each month in which an Event occurs or continues, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 2% of purchase price paid by each Investor for each full month in which an Event occurred or continued and pro-rata for any partial month in which an Event occurred or continued, until the applicable Event is cured, but in no event for a period of time greater than six (6) consecutive months, for any Event. In the event the Registration Statement required to be filed pursuant to Section 2(a) is not declared effective by the Commission within 180 days from the final Closing, each Holder shall have the right to demand the return of its Escrowed Amount (as such term is defined in the Purchase Agreement) in accordance with the terms and conditions set forth in the Purchase Agreement and in such event the number of Registrable Securities held by a Holder demanding a return of funds shall be reduced in proportion to the amount of Escrowed Funds returned to such Holder.

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(d) At the option of the Company, the Company may, in lieu of making the cash payments referred to in the immediately preceding paragraph, issue to each Holder upon any Event and monthly anniversary thereof, an amount in shares common stock (an “Event Issuance”) equal to 2% of the purchase price paid by such Holder pursuant to the Purchase Agreement, subject to the limitations set forth in the immediately preceding paragraph, based on the five-day average of the closing bid price of the Company’s common stock as reported on the principal trading market for the Company’s Common Stock for the five Trading Days immediately preceding the date of the Event or applicable monthly anniversary thereof. In the event shares of Common Stock are issued to the Holders pursuant to this provision, such shares shall also be deemed Registrable Securities covered by the terms of this Registration Rights Agreement. Notwithstanding the foregoing, however, the Company shall be obliged to pay the liquidated damages amounts to the Holders in cash in the event that any one of the following events or conditions exists: (i) the payment to be made in Common Stock causes the number of shares of Common Stock beneficially owned by any Holder to exceed 4.99% of the total number of shares of Common Stock then outstanding; (ii) the Registration Statement shall have been declared effective and is subject to a stop order or such other suspension imposed by the Commission; and (iii) the Common Stock is not listed for trading on either of the OTC Bulletin Board, Nasdaq National Market, the Nasdaq SmallCap Market, the American Stock Exchange or the New York Stock Exchange or trading in the Common Stock on such market or exchange has been suspended.

(e) No Event shall be deemed to occur or continue in the event such Event is caused by delays which are solely attributable to (i) changes required by the Holders in the Registration Statement with respect to information relating to the Holders, (ii) the failure of the Holders to conduct their review of the Registration Statement, or (iii) the resolution of comments from the SEC pertaining to the Selling Agents or Holders.

(f) Each Holder acknowledges and agrees that the Company intends to include in any such Registration Statement filed pursuant to this Registration Statement, (i) the shares of Common Stock issuable to the Selling Agents upon the exercise of the Agent Warrants, as set forth in the Purchase Agreement; and (ii) the shares of Common Stock and Warrants which were previously registered by the Company on a registration statement on Form SB-2 which was initially declared effective on January 12, 2005 and which registration statement is no longer current; (iii) shares of Common Stock and shares issuable upon exercise of warrants issued and which may be issued by the Company in a private transaction in November 2005; and (iv) an additional 2,325,000 shares underlying other warrants issued by the Company.

(g) Each Holder agrees to furnish to the Company a completed Questionnaire in the form attached to this Agreement as Annex B (a “Selling Holder Questionnaire”). The Company shall not be required to include the Registrable Securities of a Holder in a Registration Statement and shall not be required to pay any liquidated or other damages hereunder to such Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least one Trading Day prior to the Filing Date (subject to the requirements set forth in Section 3(a)).

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3. Registration Procedures

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

(a) Not less than four Trading Days prior to the filing of a Registration Statement or any related Prospectus or any amendment or supplement thereto, the Company shall furnish to the Holders copies of the “Selling Stockholders” section of such document, the “Plan of Distribution” and any risk factor contained in such document that addresses specifically this transaction or the Selling Stockholders, as proposed to be filed which documents will be subject to the review of such Holders. Except as provided under Section 2(g), the Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto that does not contain the disclosure listing such Holder as a “Selling Stockholder” as provided to the Company by such Holder in accordance with Section 2(g).

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its 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; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that would not result in the disclosure to the Holders of material and non-public information concerning the Company; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition of all Registrable Securities covered by each Registration Statement.

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(d) Use commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(e) Furnish to each Holder, upon request, without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all exhibits to the extent requested by such Person (including those previously furnished) promptly after the filing of such documents with the Commission.

(f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. 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.

(g) The Company shall use commercially reasonable efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws of such jurisdictions in the United States as any Holder reasonably requests to enable such Holder to consummate the public sale or other disposition of the Registrable Securities in such jurisdictions, (ii) prepare and file in those jurisdictions such amendments (including post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(g), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The Company shall promptly notify each Holder who holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.

(h) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statements, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

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(i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the affected Registration Statements 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, no Registration Statement nor any 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 light of the circumstances under which they were made, not misleading.

4. Obligations of the Holders. In addition to its obligation to accurately and completely complete and return the Selling Securityholder Questionnaire in accordance with Section 2(g) of this Registration Rights Agreement, each Holder shall comply with the obligations described herein:

(a) Each Holder by such Holder’s acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of any Registration Statement hereunder, unless such Holder has notified the Company in writing of such Holder’s election to exclude all of such Holder’s Registrable Securities from such Registration Statement.

(b) Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(c)(iii)-(v), such Holder will immediately discontinue disposition of Registrable Securities pursuant to any Registration Statement(s) covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by such Section or such other notice from the Company that the Holders may continue disposing of Registrable Securities pursuant to the Registration Statement.

(c) Each Holder agrees not to take any action to cause such Holder to become a registered broker-dealer, as defined under the Exchange Act.

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, investment advisors, partners, members 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, reasonable costs of preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any 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 relating to 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 light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly 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 reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice (as defined in Section 6(d) below) or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. 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.

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(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents 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 solely out of or based solely upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly 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 reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected.

(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 shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall 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; (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 Indemnified Party 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. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

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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 Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to 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 unavailable to an Indemnified Party (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. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

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.

6. Miscellaneous

(a) Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including,

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without limitation, fees and expenses (A) with respect to filings required to be made with any trading market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. 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 and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

(b) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each 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.

(c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

(d) Discontinued Disposition. 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), 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 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. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.

(e) Amendments and Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the Investors holding a majority of the Registrable Securities. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

(f) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or communication is

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delivered via facsimile at the facsimile telephone number specified in this Agreement later than 5:30 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 Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:

	If to the Company:	Nanosensors, Inc.
		1800 Wyatt Drive, Suite #2
		Santa Clara, CA 95054
		Facsimile No.: (408) 855-0079
		Telephone: (408) 855-0051
		Attn: President

	With a copy to:	Goldstein & Digioia, LLP
		45 Broadway, 11th Floor
		New York, NY 10006
		Facsimile No.: (212) 557-0295
		Attn: Victor DiGioia, Esq.

	If to a Investor:	To the address set forth under such Investor's name on the signature pages hereto.

	If to any other Person who is then the registered Holder:

		To the address of such Holder as it appears in the stock transfer books of the Company

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

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

(h) Execution and 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.

(i) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed

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herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

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

(k) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their 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.

(l) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(m) Independent Nature of Investors' Obligations and Rights. The obligations of each Investor hereunder is several and not joint with the obligations of any other Investor hereunder, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor hereunder. The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made independently of any other Investor. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

NANOSENSORS, INC.

By:_________________________________

Name: Ted Wong

Title: Chief Executive Officer

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF INVESTOR TO FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

[INVESTOR]

By:_____________________________________

Name:

Title:

Address for Notice:

Facsimile No.:

Attn:

Telephone:

e-mail:

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Annex A

Plan of Distribution

The Selling Stockholders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·	an exchange distribution in accordance with the rules of the applicable exchange;

·	privately negotiated transactions;

·	to cover short sales made after the date that this Registration Statement is declared effective by the Securities and Exchange Commission;

·	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

·	a combination of any such methods of sale; and

·	any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer,

a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledge intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Stockholder and/or the purchasers.

Each Selling Stockholder has represented and warranted to the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. The Company has advised each Selling Stockholder that it may not use shares registered on this Registration Statement to cover short sales of Common Stock prior to the date on which this Registration Statement shall have been declared effective by the Securities and Exchange Commission. If a Selling Stockholder use this prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder promulgated, including without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement.

The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

EX-99.1 6 v046408_ex99-1.htm

NanoSensors Completes

Private Placement of Units

Santa Clara, CA—June 28, 2006 —NanoSensors, Inc. (OTCBB: NNSR.OB) announced today that it has completed its private placement of units of its securities to certain accredited investors. The total offering amount was for $1,750,000 of units, an increase from the initial offering amount of $1,500,000. Each $50,000 of units consists of 5,000,000 shares of common stock and warrants to purchase an additional 5,000,000 shares of common stock. Proceeds from the offering will be used for working capital and payment of certain accrued compensation.

Overall, NanoSensors sold an aggregate number of units consisting of a total of 172,950,000 shares of common stock and warrants to purchase 172,950,000 shares of common stock. Gross proceeds from the transactions are $1,729,500. Of this amount, however, $915,000 is being retained in escrow until NanoSensors satisfies certain post-closing covenants, including having a registration statement covering the resale of the shares of common stock issued in the offering declared effective by the Commission. Accordingly, the proceeds actually released to NanoSensors was $814,500, and the net proceeds to NanoSensors, after payment of offering expenses and commissions, was approximately $644,000. Due to this escrow arrangement, NanoSensors has only issued to investors the number of securities that are allocable to the funds actually released from escrow, consisting of 81,450,000 shares and 81,450,000 warrants. When the funds that remain in escrow are released to NanoSensors, it will issue the balance of the securities purchased to the investors and pay additional commissions to the selling agents in the offering. In addition, NanoSensors, issued unit purchase warrants to the selling agents equal to 20% of the number of units sold in the offering.

The private placement was made only to accredited investors in transactions exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The securities issued have not been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. NanoSensors has agreed to file a registration statement with the Securities and Exchange Commission covering the resale of the shares of common stock issued to the investors and which may be issued upon exercise of the warrants.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of the securities in any jurisdiction in which such offering would be unlawful.

About NanoSensors, Inc.

NanoSensors, Inc. is a Nevada corporation that was incorporated on December 23, 2003. The Company's principal business is the development, manufacture and marketing of sensors and instruments, along with the management of intellectual property derived therefrom that will enable Nanosensors to create nanoscale devices. The Company is in the development stage and has not started any significant operations.

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and section 21E of the Securities Act of 1934. When used in this release, the words “believe,” “anticipate,” “think,” “intend,” “plan,” “will be,” “expect,” and similar expressions identify such forward-looking statements. Such statements regarding future events and/or the future financial performance of the Company are subject to certain risks and uncertainties, which could cause actual events or the actual future results of the Company to differ materially from any forward-looking statement. Such risks and uncertainties include, among other things, the availability of any needed financing, the Company’s ability to implement its business plan for various applications of its technologies, the impact of competition, the management of growth, and the other risks and uncertainties that may be detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in the forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

###

Contact:

Dr. Ted Wong

(408) 855-0051

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