The Bridge Notes are unsecured obligations of the Company and are subordinate in all respects to the Company's senior secured indebtedness. Interest accrues at a rate of 12% per year and is payable quarterly in arrears on October 1, January 1, April 1 and July 1. The Bridge Notes mature fifteen months following the date of issuance but the Company can prepay, in whole or in part, at any time without penalty. Upon the occurrence of an event of default, the Investor has the right to accelerate the maturity date. Events of default are: (i) cessation of the Company's business; (ii) bankruptcy, appointment of a receiver, assignment for the benefit of creditors, or the Company's written admission that it is unable to pay its debts as they become due; (iii) the failure to pay the interest due on the Bridge Note within three business days of when due; and (iv) a payment default on any Bridge Note held by another Investor. The foregoing description of the Bridge Notes is qualified by reference to the complete terms of such Bridge Notes, the form of which is included herewith as Exhibit 10.2 and incorporated herein by reference.

Each Investor received an Investor Warrant entitling the Investor to purchase shares of the Company's common stock equal in number to 60% of the principal amount of such Investor's Bridge Note divided by the closing price of the Company's common stock on July 19, 2012. In addition, each Investor that surrendered a Cancelled Convertible Note received an additional 20% warrant coverage in consideration for such Investor's surrender of the warrant that was issued to such Investor when the Cancelled Convertible Note was originally purchased (the "Prior Warrants"). Each Investor Warrant entitles the Investor to purchase one share of the Company's common stock at a price of $0.89 per share. Each Prior Warrant entitled the holder to purchase one share of the Company's common stock at a price of $2.64 per share. In total, the Company issued 1,726,946 Investor Warrants, of which 348,877 were issued in exchange for the surrender and cancellation of 574,162 Prior Warrants. The Investor Warrants cannot be exercised for a period of six months from the date of issuance, have a term of five years, contain customary anti-dilution provisions and permit cashless exercise if at the time of exercise there is not an effective registration statement covering the shares underlying the Investor Warrants. The foregoing description of the Investor Warrants is qualified by reference to the complete terms of such Investor Warrant, the form of which is included herewith as Exhibit 10.3 and incorporated herein by reference.

The Company paid its placement agent a cash fee equal to $147,750 for services rendered in connection with the Private Placement.