UNIT PURCHASE AGREEMENT

 

This unit purchase agreement is dated the date stated on the signature page and
is between Sheffield Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and the subscriber identified on the signature page (the
“Subscriber”).

 

The Company has retained Accredited Equities, Inc. (the “Placement Agent”) to
act as placement agent, on a “best efforts” basis, in a private offering of
units (the “Offering”), each unit (a “Unit”) consisting of 148,525 shares of
common stock, par value $0.001 per share, of the Company (“Common Stock”) and a
warrant to purchase 74,263 shares of common stock.

 

The Subscriber desires to purchase one or more Units.

 

On October 31, 2006, Pipex Therapeutics Inc. consummated a merger with a
wholly-owed subsidiary of the Company (“Pipex” that merger, the “Merger”).

 

The parties therefore agree as follows:

 

I

SUBSCRIPTION FOR UNIT BY SUBSCRIBER

 

1.1        Subject to the terms of this agreement, the Subscriber hereby
purchases from the Company, and the Company hereby sells to the Subscriber,
Units consisting in the aggregate of the number of shares of Common Stock stated
on the signature page of this agreement (the “Shares”) and a warrant exercisable
for the number of shares of Common Stock stated on the signature page of this
agreement (the “Warrant” any shares issuable on exercise of the Warrant, the
“Warrant Shares”). The purchase price of the Units is payable by personal or
business check, wire transfer of immediately available funds, or money order, in
each case payable to “Pipex Therapeutics, Inc.” contemporaneously with the
execution and delivery of this agreement by the Subscriber. The Company shall
deliver to the Subscriber the Shares and the warrant certificate in the form of
Exhibit 1 representing the Warrant no later than ten business days after
effectiveness of the Merger. The Subscriber acknowledges that there is no
minimum offering amount, so the Company may accept subscriptions and conduct
closings on any amount.

 

I.

REPRESENTATIONS BY THE SUBSCRIBER

 

The Subscriber represents to the Company as follows:

 

1.2        The Subscriber recognizes that purchase of one or more Units involves
a high degree of risk. The risks involved are described in detail in the
Company’s filings on Form 8K, 10QSB, and 10KSB (the “Filings”).

 

1.3        The Subscriber is an “accredited investor,” as that term is defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended (the “Securities Act”), as indicated by the Subscriber’s responses to
the questions contained in Article VII hereof, and that the Subscriber is able
to bear the economic risk of an investment in one or more Units.

 

1.4        The Subscriber has prior investment experience, including investment
in securities that are non-listed, unregistered and/or not traded on a national
securities exchange nor on the National Association of Securities Dealers’ (the
“NASD”) automated quotation system. The Subscriber recognizes the highly
speculative nature of this investment. The Subscriber is able to bear the
economic risk of complete loss of the Subscriber’s investment in a Unit.

 

 

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1.5        The Subscriber has received and carefully reviewed the Filings, and
any other publicly available documents, including without limitation the section
entitled “Risk Factors,” and this agreement, and the Subscriber has been
furnished by the Company during the course of this transaction with all
information regarding the Company that the Subscriber has requested or desired
to know and has been afforded the opportunity to ask questions of and receive
answers from duly authorized officers or other representatives of the Company
concerning the terms and conditions of the Offering.

 

1.6        (a)        The Subscriber has relied solely upon the information
provided by the Company in the Filings and in this agreement in making the
decision to invest in one or more Units. To the extent necessary, the Subscriber
has retained, at its own expense, and relied on professional advice regarding
the investment, tax and legal merits and consequences of this agreement and its
purchase of one or more Units. The Subscriber acknowledges that (i) the Company
has prepared the Filings and that no other person, including without limitation
the Placement Agent, has supplied any information for inclusion in the Filings
other than information furnished in writing to the Company by the Placement
Agent specifically for inclusion in the Filings relating to the Placement Agent,
(ii) the Placement Agent has no responsibility for the accuracy or completeness
of the Filings and (iii) the Subscriber has not relied upon the independent
investigation or verification, if any, that may have been undertaken by the
Placement Agent.

 

(b)        The Subscriber was contacted regarding the sale of one or more Units
by the Placement Agent (or an authorized agent or representative thereof) with
whom the Subscriber had a prior substantial pre-existing relationship, and the
one or more Units were not offered or sold to it by means of any form of general
solicitation or general advertising, and in connection therewith the Subscriber
did not (A) receive or review any advertisement, article, notice or other
communication published in a newspaper or magazine or similar media or broadcast
over television or radio, whether closed circuit, or generally available; or (B)
attend any seminar meeting or industry investor conference whose attendees were
invited by any general solicitation or general advertising.

 

1.7        The Subscriber, either by reason of the Subscriber’s business or
financial experience or the business or financial experience of the Subscriber’s
professional advisors (who are unaffiliated with and who are not compensated by
the Company or any affiliate or selling agent of the Company, including the
Placement Agent, directly or indirectly), has the capacity to protect the
Subscriber’s own interests in connection with the transaction contemplated
hereby.

 

1.8        The Subscriber acknowledges that the Offering has not been reviewed
by the United States Securities and Exchange Commission (the “SEC”) nor any
state regulatory authority, and that issuance of the Securities is intended to
be exempt from the registration requirements of the Securities Act in accordance
with Regulation D promulgated under the Securities Act.

 

1.9        The Subscriber understands that the Securities have not been
registered under the Securities Act by reason of a claimed exemption under the
provisions of the Securities Act that depends, in part, upon the Subscriber’s
investment intention. In this connection, the Subscriber is purchasing one or
more Units for the Subscriber’s own account for investment and not with a view
toward the resale or distribution to others. The Subscriber, if an entity, was
not formed for the purpose of purchasing one or more Units.

 

 

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1.10      The Subscriber understands that there is no public market for the
Securities and that no market may develop for the Securities. The Subscriber
understands that even if a public market develops for the Securities, Rule 144
promulgated under the Securities Act requires for non-affiliates, among other
conditions, a one-year holding period prior to the resale (in limited amounts)
of securities acquired in a non-public offering without having to satisfy the
registration requirements under the Securities Act. The Subscriber acknowledges
that the Company is under no obligation to register any Securities under the
Securities Act or any state securities or “blue sky” laws other than as set
forth in Article V.

 

1.11      The Subscriber consents to the placement of a legend on any
certificate or other document evidencing any of the Securities that those
Securities have not been registered under the Securities Act or any state
securities or “blue sky” laws and setting forth or referring to the restrictions
on transferability and sale thereof contained in this agreement. The Subscriber
is aware that the Company will make a notation in its appropriate records with
respect to the restrictions on the transferability of the Securities.

 

1.12      The Subscriber understands that the Company will review this agreement
and is hereby given authority by the Subscriber to call the Subscriber’s bank or
place of employment or otherwise review the financial standing of the
Subscriber; and it is further agreed that the Company (with the consent of the
Placement Agent) and the Placement Agent, at its sole discretion, reserves the
unrestricted right, without further documentation or agreement on the part of
the Subscriber, to reject or limit any subscription and to close the Offering to
the Subscriber at any time.

 

1.13      The address of the Subscriber furnished by Subscriber on the signature
page hereof is the Subscriber’s principal residence (if Subscriber is an
individual) or its principal business address (if it is a corporation or other
entity).

 

1.14      The Subscriber has legal capacity (if an individual) or full power and
authority (if a corporation or other entity) to execute and deliver this
agreement and to purchase one or more Units. This agreement constitutes the
legal, valid and binding obligation of the Subscriber, enforceable against the
Subscriber in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy.

 

1.15      If the Subscriber is a corporation, partnership, limited liability
company, trust, employee benefit plan, individual retirement account, Keogh
Plan, or other tax-exempt entity, it is qualified to become an investor in the
Company and the person signing this agreement on behalf of that entity has been
duly authorized by such entity to do so.

 

1.16      The Subscriber acknowledges that if the Subscriber is a Registered
Representative of an NASD member firm, the Subscriber must give that firm the
notice required by the NASD’s Rules of Fair Practice, receipt of which must be
acknowledged by that firm in Section 7.4 below.

 

1.17      The Subscriber acknowledges that at such time, if ever, as any
Securities are registered, sales of those Securities will be subject to state
securities laws, including those of the State of New Jersey, which require any
securities sold in New Jersey to be sold through a registered broker-dealer or
in reliance upon an exemption from registration.

 

1.19      The Subscriber acknowledges that the Placement Agent is an affiliate
of the Company; that the Company and the Placement Agent have entered into a
Placement Agent Agreement under which the Placement Agent will introduce to the
Company accredited investors; that in consideration for such services, the
Company will pay the Placement Agent a placement fee equal to 7.5% of the gross
proceeds of Units sold to investors in the Offering and will issue to the
Placement Agent a warrant to purchase a number of shares of Common Stock equal
to 10% of the number of Units issued in the Offering; that we will reimburse for
reasonable expenses; that Steve H. Kanzer, the Company’s Chairman and Chief
Executive Officer is the sole stockholder and Chairman and CEO of the Placement
Agent; that Nicholas

 

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Stergis, the Company’s interim Chief Operating Officer and director, is a
managing director of the Placement Agent; and that Dr. A. Joseph Rudick, the
Company’s Chief Medical Officer and a director of the Company, is a registered
representative of Placement Agent.

 

II.

REPRESENTATIONS BY AND COVENANTS OF THE COMPANY

 

The Company represents to the Subscriber as follows:

 

2.1        Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business as described in the Filings.

 

2.2        Capitalization and Voting Rights. The Company is currently authorized
to issue 100,000,000 shares of Common Stock and 10,000,000 shares of preferred
stock, par value $0.001 per share, all of which shares of preferred stock have
been not been designated. There are currently issued and outstanding 37,737,717
shares of Common Stock. All issued and outstanding shares of the Company are
validly issued, fully paid and nonassessable. There are 4,915,332 options to
purchase common stock outstanding and 6,893,737 warrants to purchase common
stock outstanding. The Warrant Shares, when issued in accordance with the
Warrant, will be validly issued, fully paid and nonassessable. The Company shall
at all times have authorized and reserved for issuance a sufficient number of
shares of Common Stock to issue upon exercise of the Warrant. Except as set
forth in the Filings, there are no agreements to issue, or outstanding
securities convertible into or exercisable for, shares of capital stock of the
Company, and no person or entity is entitled to preemptive rights or other
rights to subscribe for or to purchase any shares of capital stock of the
Company. Except as set forth in the Filings, in this agreement and as otherwise
required by law, there are no restrictions upon the voting or transfer of any of
the shares of capital stock of the Company pursuant to the Company’s certificate
of incorporation, as amended (the “Certificate of Incorporation”) or bylaws or
any agreement or other instruments to which the Company is a party or by which
the Company is bound.

 

2.3        Authorization; Enforceability. The Company has all corporate power
and authority to enter into this agreement and to consummate the transactions
contemplated hereby. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution, and
delivery of this agreement by the Company and performance by the Company of its
obligations thereunder and the authorization, sale, issuance and delivery of one
or more Units has been taken. This agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies, and to limitations of public
policy. Upon the issuance and delivery of one or more Units as contemplated by
this agreement, those Units will be validly issued, fully paid and
nonassessable. Upon the issuance and delivery of the Warrant Shares in
accordance with the terms of the Warrant, the Warrant Shares will be validly
issued, fully paid and nonassessable.

 

2.4        Terms of Common Stock. The Common Stock has the rights as set forth
in the Certificate of Incorporation.

 

 

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2.5

No Conflict; Governmental Consents.

 

(a)        The execution and delivery by the Company of this agreement and the
consummation of the transactions contemplated hereby will not result in the
violation of any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority to or by which the

 

Company is bound, or of any provision of the Certificate of Incorporation or the
bylaws of the Company, and will not conflict with, or result in a breach or
violation of, any of the terms or provisions of, or constitute (with due notice
or lapse of time or both) a default under, any lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Company is a party or by which it is bound or to which any of its properties
or assets is subject, nor result in the creation or imposition of any lien upon
any of the properties or assets of the Company.

 

(b)        No consent, approval, authorization or other order of any
governmental authority is required to be obtained by the Company in connection
with the authorization, execution and delivery of this agreement or with the
authorization, issue and sale of one or more Units, except such filings as may
be required to be made with the State of Delaware, the SEC, the NASD and the
NASDAQ and with any state or foreign blue sky or securities regulatory
authority.

 

2.6        Licenses. Except as otherwise set forth in the Filings, to the
Company’s knowledge, the Company has sufficient licenses, permits and other
governmental authorizations currently required for the conduct of its business
or ownership of properties and is in all material respects complying therewith.

 

2.7        Litigation. Except as set forth in the Filings, the Company knows of
no pending or threatened legal or governmental proceedings against the Company
that could materially adversely affect the business, property, financial
condition or operations of the Company.

 

2.8        Filings; Disclosure. To the Company’s knowledge, the information set
forth in the Filings contains no untrue statement of a material fact nor omits
to state a material fact necessary in order to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading.

 

2.9        Investment Company. The Company is not an “investment company” within
the meaning of such term under the Investment Company Act of 1940, as amended,
and the rules and regulations of the SEC thereunder.

 

III.

TERMS OF SUBSCRIPTION

3.1        The Units are being offered on a “best efforts” basis. There is no
minimum offering amount and there is a maximum offering amount of up to
$8,000,000 of Units. The Offering will terminate at 11:59 p.m. New York City
time on November 25, 2006, or unless the Company terminates the Offering
earlier.

 

3.2        The Subscriber hereby authorizes and directs the Company to deliver
one or more Units to be issued to the Subscriber pursuant to this agreement
directly to the Subscriber’s account, if any, maintained by the Placement Agent
or, if no such account exists, to the residential or business address indicated
on the signature page hereto.

 

3.4        The Subscriber hereby authorizes and directs the Company to return
any funds for unaccepted subscriptions to the same account from which the funds
were drawn, including any customer account maintained with the Placement Agent.

 

3.5        Common Stock Anti-Dilution Rights.    The Subscriber shall have the
following rights with respect to any sales or other issuances of any securities
of the Company on or after the date of this Agreement (hereinafter referred to
as “New Issue Securities”).

 

 

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(a) Adjustment of Subscribers Price.        If the Company issues or sells any
New Issue Securities for a consideration per share of less than sixty-six cents
($0.66), then and in each case the price per share of Common Stock received by
the Subscriber in respect of each Unit purchased hereunder (hereinafter referred
to as the “Per Unit Purchase Price”) shall be reduced, as of the close of
business on the date of such issue or sale, to the price per share paid for such
New Issue Securities.

 

(b) Notices.         Immediately upon any adjustment of the Per Unit Purchase
Price, the Company shall give written notice thereof to the Subscribers (i)
setting forth in reasonable detail and certifying the calculation of such
adjustment and (ii) fixing a date for the delivery (the “Delivery Date”) to the
Subscribers of the number of additional shares of Common Stock calculated in
accordance with Section 3.5(c) below (the “Additional Shares”).

 

(c) Delivery of Shares.

 

(i) Calculation of Number of Additional Shares.   In the event of an adjustment
to the applicable Per Unit Purchase Price, the Company shall issue to each
Subscribers on the Delivery Date, that number of Additional Shares equal to (i)
the number of Shares then held by such Subscriber multiplied by a fraction, the
numerator of which is the Per Unit Purchase Price immediately preceding the
issuance of New Issue Securities and the denominator of which is the Per Unit
Purchase Price of the New Issue Securities, minus (ii) the number of Shares held
by the Investor immediately preceding the issuance of the New Issue Securities.

 

(ii) Delivery of Additional Shares.          On the Delivery Date, the Company
shall cause to be delivered to each Subscriber a certificate or certificates for
the appropriate number of Additional Shares. The Company, however, will not be
obligated to deliver Additional Shares to a Common Holder if (i) the Investor
elects not to take delivery of such Additional Shares or (ii) the total number
of shares of Common Stock then beneficially owned by such Investors and their
affiliates and any other persons whose beneficial ownership of Common Stock
would be aggregated with the Investor’s for purposes of Section 13(d) of the
Exchange Act, would exceed 9.999% of the total number of issued and outstanding
shares of Common Stock or (iii) at any time the Board shall determine in its
discretion (based on a written opinion of counsel (a copy of which must be
provided to the Investors)) that the issuance and sale of the Additional Shares
to the Investors would cause the Company to violate any provision of the
Securities Act, the securities laws of any state or any other law; provided,
however, that in each such case the Company will issue to each Investor Common
Stock purchase warrants to purchase the appropriate number of Additional Shares
at an exercise price of $0.01 per share for a period of five years from the date
of issuance.

 

(d)        Exclusion.         The provisions of Section 3.5 hereof shall not
apply (i) in connection with any employee benefit plan which has been approved
by the Board of Directors of the Company, pursuant to which the Company’s
securities may be issued to any employee, officer, director or consultant for
services provided to the Company or any of its subsidiaries, or pursuant to the
exercise of any securities of the Company issued thereunder; (iii) upon
conversion of any options, warrants or other rights to acquire shares of Common
Stock that are outstanding on the day immediately preceding the Closing,
provided, however, that the terms of such options, warrants or rights are not
amended, modified or changed on or after the Closing; or (iv) in connection with
shares of Common Stock issued as consideration for the acquisition of another
company, which acquisition has been approved by the Board of Directors of the
Company. In addition, each Subscribers’ rights under this Article 3.5 shall
terminate on the earlier to occur of (i) the two year anniversary of the Closing
and (ii) the Common Stock of the Company trades for any 20 out of 30 consecutive
trading days periods at or above 225% of the Offering

 

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Price while a registration statement has been declared effective, or (iii) the
date that the FDA approves the New Drug Application for COPREXATM.

 

IV.

REGISTRATION STATEMENT

 

4.1

[Intentionally omitted.]

 

V.

REGISTRATION RIGHTS

 

5.1

As used in this agreement, the following terms have the following meanings:

 

(a)        The term “Holder” means any person owning or having the right to
acquire Registrable Securities or any assignee thereof.

 

(b)        The terms “register”, “registered” and “registration” refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
order of effectiveness of such registration statement or document.

 

(c)        The term “Registrable Securities” means (i) the Shares, (ii) the
Warrant Shares, (iii) the shares of Common Stock issuable on exercise of the
Placement Warrants and (iv) any shares of Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security that is
issued as) a dividend or other distribution with respect to or in replacement of
the shares of Common Stock referenced in clauses (i), (ii), and (iii) of this
Section 5.1(c); provided, however, that securities shall only be treated as
Registrable Securities if and only for so long as they (A) have not been
disposed of pursuant to a registration statement declared effective by the SEC,
(B) have not been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale or (C) are held by a Holder or a permitted transferee
of a Holder pursuant to Section 5.10.

 

5.2        Filing of Registration Statement. Except as set forth in this
agreement, the Company shall, as soon as practicable but no later than December
14, 2006, prepare and file a registration statement under the Securities Act to
permit resale of the Registrable Securities and will use reasonable efforts to
have the registration statement declared effective and will maintain the
effectiveness of the registration statement until the second anniversary of
effectiveness of the Merger, subject to certain exceptions described herein. If
the Company is unable to obtain an effective registration statement within 150
days from filing of the registration statement, the Company shall pay the
Subscriber a monthly penalty equal to 2% of the subscription price for the
Subscriber’s Units.

 

5.3        Obligations of the Company. Whenever required under this Article V to
include Registrable Securities in a registration statement, the Company shall,
as expeditiously as reasonably possible:

 

(a)        Use reasonable efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of the Registrable
Securities registered thereunder, keep such registration statement effective for
a period of up to one hundred twenty (120) days or until the distribution
contemplated in the Registration Statement has been completed; provided,
however, that such 120-day period shall be extended for a period of time equal
to the period that the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities of the Company), and provided further that if applicable rules under
the Securities Act governing the obligation to file a post-effective amendment
permits, in lieu of filing a post-effective amendment that (i) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (ii)

 

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reflects facts or events representing a material or fundamental change in the
information set forth in the registration statement, the Company may incorporate
by reference information required to be included in (i) and (ii) above to the
extent such information is contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), in the registration statement.

 

(b)        Prepare and file with the SEC such amendments and supplements to such
registration statement, and the prospectus used in connection with such
registration statement, as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.

 

(c)        Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.

 

(d)        Use its reasonable efforts to register and qualify the securities
covered by that registration statement under such other federal or state
securities laws of such jurisdictions as the Holders reasonably request;
provided, however, that the Company will not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act.

 

(e)        In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.

 

(f)         Notify each Holder of Registrable Securities covered by that
registration statement, at any time when a prospectus relating thereto is
required to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.

 

(g)        Cause all Registrable Securities registered hereunder to be listed on
each securities exchange or quotation service on which similar securities issued
by the Company are then listed or quoted.

 

(h)        Provide a transfer agent and registrar and CUSIP number for all
Registrable Securities registered hereunder, in each case not later than the
effective date of such registration.

 

5.4        Furnish Information.      It is a condition to the obligation of the
Company to take any action pursuant to this Article V with respect to the
Registrable Securities of any selling Holder that the Holder furnish to the
Company such information regarding the Holder, the Registrable Securities held
by the Holder, and the intended method of disposition of those securities the
Company reasonably requires to effect the registration of that Holder’s
Registrable Securities.

 

5.5        Expenses of Registration. The Company shall bear and pay all expenses
incurred in connection with any registration, filing or qualification of
Registrable Securities with respect to the registrations pursuant to Section 5.2
and Section 5.3 for each Holder, including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto,

 

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but excluding underwriting discounts and commissions relating to Registrable
Securities; provided, however, that the Company shall not bear the cost of any
professional fees or costs of accounting, financial or legal advisors to any of
the Holders, other than the cost of one special legal counsel to all of the
selling Holders in connection with each registration under Section 5.2. Such
special legal counsel shall be selected by the Holders of a majority of
Registrable Securities to be included in such registration, subject to the
consent of the Company, which shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, each Holder shall pay all registration expenses
that such Holder is required to pay under applicable law.

 

5.6        Underwriting Requirements. (a) In connection with any registration
under Section 5.2 involving an underwriting of shares of the Company’s capital
stock, the Company shall not be required under Section 5.2 to include any of the
Holders’ Registrable Securities in such underwriting unless they accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering by the
Company. If the total amount of Registrable Securities requested by stockholders
to be included in such registration under Section 5.2 exceeds the amount of
securities to be sold other than by the Company that the underwriters determine
in their sole discretion is compatible with the success of the offering, then
the Company shall be required to include in the offering only that number of
such securities, including Registrable Securities, which the underwriters
determine in their sole discretion will not jeopardize the success of the
offering (the securities so included to be apportioned pro rata among the
selling stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other proportions
as shall mutually be agreed to by such selling stockholders). For purposes of
the preceding parenthetical concerning apportionment, for any selling
stockholder who is a holder of Registrable Securities and is a partnership or
corporation, the partners, retired partners and stockholders of such holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single “selling stockholder”, and any pro-rata reduction with respect to such
“selling stockholder” shall be based upon the aggregate number of shares
carrying registration rights owned by all entities and individuals included in
such “selling stockholder”, as defined in this sentence.

 

5.7        Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Article V.

 

5.8        Indemnification. In the event that any Registrable Securities are
included in a registration statement under this Article V:

 

(a)        To the extent permitted by law, the Company shall indemnify each
Holder, any underwriter (as defined in the Securities Act) for that Holder and
each person, if any, who controls that Holder or underwriter (within the meaning
of the Securities Act or the Exchange Act) against any losses, claims, damages,
or liabilities (joint or several) to which they become subject under the
Securities Act, or the Exchange Act, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
“Violation”): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, or any rule or regulation
promulgated under the Securities Act, or the Exchange Act, and the Company shall
pay to each such Holder, underwriter or controlling person, as incurred, any
legal or other expenses reasonably

 

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incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.8(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.

 

(b)        To the extent permitted by law, each selling Holder shall indemnify
the Company, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Securities Act, or the Exchange Act, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Section 5.8(b), in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this Section 5.8(b) exceed the gross proceeds from the offering received
by such Holder.

 

(c)        Promptly after receipt by an indemnified party under this Section 5.8
of notice of the commencement of any action (including any governmental action),
such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 5.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly notified, to assume the defense thereof with counsel selected by the
indemnifying party and approved by the indemnified party (whose approval shall
not be unreasonably withheld); provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
5.8, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 5.8.

 

(d)        If the indemnification provided for in this Section 5.8 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other

 

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relevant equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

 

(e)        Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.

 

(f)         The obligations of the Company and Holders under this Section 5.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Article V, and otherwise.

 

5.9        Reports Under Securities Exchange Act of 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:

 

(a)        make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the registration statement filed in connection with
an IPO by the Company;

 

(b)        file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Exchange Act; and

 

(c)        furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (ii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.

 

5.10      The rights to cause the Company to register Registrable Securities
granted to the Holders by the Company under this Article V may be assigned in
full or in part by a Holder in connection with a transfer by such Holder of any
of its Registrable Securities if: (a) such Holder gives prior written notice to
the Company; and (b) such transferee agrees to comply with the terms and
provisions of this agreement, and such transfer is otherwise in compliance with
this agreement; provided, however, that such transfer may otherwise be effected
in accordance with applicable securities laws. Except as specifically permitted
by this Section 5.10, the rights of a Holder with respect to Registrable
Securities as set out herein shall not be transferable to any other Person, and
any attempted transfer shall cause all rights of such Holder therein to be
forfeited.

 

5.11      Termination of Registration Rights.        In addition, the right of
any Holder to request inclusion in any registration pursuant to Section 5.3
shall terminate if all shares of Registrable Securities held by such Holder may
immediately be sold under Rule 144(k); provided, however, that the provisions of
this Section 5.11 shall not apply to any Holder who owns more than three percent
(3%) of the Company’s outstanding stock until such time as such Holder owns less
than three percent (3%) of the outstanding stock of the Company.

 

 

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5.12      Merger. The Company has caused the Sheffield to assume the Company’s
obligations under this Article V.

 

VI.

MISCELLANEOUS

 

6.1        Every notice or other communication required or contemplated by this
agreement must be in writing and sent by one of the following methods:
(a) personal delivery, in which case delivery will be deemed to occur the day of
delivery; or (b) certified or registered mail, postage prepaid, return receipt
requested, in which case delivery will be deemed to occur the day it is
officially recorded by the U.S. Postal Service as delivered to, or rejected by,
the intended recipient. In each case, a notice or other communication sent to
the Company must be directed to Pipex Therapeutics, Inc. 3985 Research Park
Drive, Ann Arbor, MI 48108, Attn: Steve H. Kanzer, and to the Subscriber at the
Subscriber’s address indicated on the signature page of this agreement.

 

6.2        Except as otherwise provided herein, this agreement shall not be
changed, modified or amended except by a writing signed by the parties to be
charged, and this agreement may not be discharged except by performance in
accordance with its terms or by a writing signed by the party to be charged.

 

6.3        Subject to the provisions of Section 5.10 and 6.13, this agreement
shall be binding upon and inure to the benefit of the parties hereto and to
their respective heirs, legal representatives, successors and assigns. This
agreement sets forth the entire agreement and understanding between the parties
as to the subject matter hereof and merges and supersedes all prior discussions,
agreements (other than agreements, if any, which refer explicitly to this
Section 6.3 of this agreement) and understandings of any and every nature among
them.

 

6.4        Upon the execution and delivery of this agreement by the Subscriber,
this agreement shall become a binding obligation of the Subscriber with respect
to the purchase of Unit as herein provided, subject, however, to the right
hereby reserved by the Company to enter into the same agreements with other
subscribers and to add and/or delete other persons as subscribers.

 

6.5        The laws of the State of New York, without giving effect to
principles of conflict of laws, govern all matters arising under this agreement,
including without limitation all tort claims. In the event that a judicial
proceeding is necessary, the sole forum for resolving disputes arising out of or
relating to this agreement is the Supreme Court of the State of New York in and
for the County of New York or the federal courts therefor and all related
appellate courts, and the parties hereby irrevocably consent to the jurisdiction
of those courts and agree to that venue.

 

6.6        In order to discourage frivolous claims the parties agree that in the
event of any litigation between them relating to this agreement, the prevailing
party in such litigation shall be entitled to recover from the non-prevailing
party the prevailing party’s reasonable legal costs and expenses in connection
with such litigation, and the parties agree to request that the court in any
such litigation determine the prevailing party for such purpose.

 

6.7        The holding of any provision of this agreement to be invalid or
unenforceable by a court of competent jurisdiction shall not affect any other
provision of this agreement, which shall remain in full force and effect. If any
provision of this agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or portions thereof shall nevertheless remain in full
force and effect

 

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and enforceable to the extent they are valid, legal and enforceable, and no
provisions shall be deemed dependent upon any other covenant or provision unless
so expressed herein.

 

6.8        It is agreed that a waiver by either party of a breach of any
provision of this agreement shall not operate, or be construed, as a waiver of
any subsequent breach by that same party.

 

6.9        The parties agree to execute and deliver all such further documents,
agreements and instruments and take such other and further action as may be
necessary or appropriate to carry out the purposes and intent of this agreement.

 

6.10      This agreement may be executed in two or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.

 

6.11      The Company agrees not to disclose the names, addresses or any other
information about the Subscriber, except as required by law; provided, that the
Company may use the name (but not the address) of the Subscriber in any
registration statement filed pursuant to Article V in which the Subscriber’s
Warrant Shares are included.

 

6.12      Each Subscriber severally represents that it has not engaged,
consented to or authorized any broker, finder or intermediary to act on its
behalf, directly or indirectly, as a broker, finder or intermediary in
connection with the transactions contemplated by this agreement. The Subscriber
hereby agrees to indemnify and hold harmless the Company from and against all
fees, commissions or other payments owing to any such person or firm acting on
behalf of the Subscriber.

 

6.13      Nothing in this agreement shall create or be deemed to create any
rights in any person or entity not a party to this agreement, except (a) for the
holders of Registrable Securities and (b) for the Placement Agent pursuant to
Sections 1.6(a) and 6.12(b) hereof.

 

6.14      Privacy Policy: The following describes how the Company and the
Placement Agent will handle personal information contained in this agreement and
what steps we take to protect investors’ privacy. Neither the Placement Agent
nor the Company use investors’ personal information for marketing purposes.

 

(a)        Access to personal information is authorized for the Placement Agent
and the Company’s business purposes only. The Company and the Placement Agent
each require its employees who have access to customer information to protect it
and keep it confidential.

 

(b)        The Company and Placement Agent each collect any personal information
about investors to help them comply with their legal and regulatory obligations.

 

(c)        The Company and the Placement Agent each continue to assess new
technology to evaluate its ability to provide additional protection of
investors’ personal information. The Company and the Placement Agent safeguard
this information in accordance with federal standards and established security
standards and procedures. The measures we take in this regard include
implementation of physical, electronic and procedural safeguards.

 

(d)        In the course of conducting business, we may disclose some or all of
the previously described information about investors to our officers, directors
or affiliates of the Placement Agent and the Company as allowed by law, for the
following purposes: (i) providing customer service or account maintenance;
(ii) in response to a subpoena, to prevent fraud, or to comply with an inquiry
by a

 

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government agency or regulator, and (ii) to perform services for us or on our
behalf to develop or maintain software.

 

6.15      Any controversy between Subscriber and the Company arising out of this
agreement shall be submitted to arbitration conducted before the National
Association of Securities Dealers, Inc; and in accordance by service upon the
other party of written demand for arbitration or a written notice of intention
to arbitrate. No person shall bring punitive or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a punitive class action, until (1) the
class certification is denied; (2) the class action is decertified; or (3) the
customer is excluded from the action by the courts. Such forbearance to enforce
an agreement to arbitrate shall not constitute a waiver of any rights under this
agreement except to the extent stated herein. This agreement contains a
predispute arbitration clause. By signing an arbitration agreement the parties
agree as follows:

 

(A) All parties to this agreement are giving up the right to sue each other in
court, including the right to a trial by jury, except as provided by the rules
of the arbitration forum in which a claim is filed.

(B) Arbitration awards are generally final and binding; a party's ability to
have a court reverse or modify an arbitration award is very limited.

(C) The ability of the parties to obtain documents, witness statements and other
discovery is generally more limited in arbitration than in court proceedings.

(D) The arbitrators do not have to explain the reason(s) for their award.

(E) The panel of arbitrators will typically include a minority of arbitrators
who were or are affiliated with the securities industry.

(F) The rules of some arbitration forums may impose time limits for bringing a
claim in arbitration. In some cases, a claim that is ineligible for arbitration
may be brought in court.

 

(G) The rules of the arbitration forum in which the claim is filed, and any
amendments thereto, shall be incorporated into this agreement.

 

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VII

CONFIDENTIAL INVESTOR QUESTIONNAIRE

 

7.1        The Subscriber represents and warrants that he, she or it comes
within one category marked below, and that for any category marked, he, she or
it has truthfully set forth, where applicable, the factual basis or reason the
Subscriber comes within that category. ALL INFORMATION IN RESPONSE TO THIS
SECTION WILL BE KEPT STRICTLY CONFIDENTIAL. The undersigned agrees to furnish
any additional information which the Company deems necessary in order to verify
the answers set forth below.

 

Category A ___

The undersigned is an individual (not a partnership, corporation, etc.) whose
individual net worth, or joint net worth with his or her spouse, presently
exceeds $1,000,000.

 

 

 

Explanation. In calculating net worth you may include equity in personal
property and real estate, including your principal residence, cash, short-term
investments, stock and securities. Equity in personal property and real estate
should be based on the fair market value of such property less debt secured by
such property.

 

 

Category B ___

The undersigned is an individual (not a partnership, corporation, etc.) who had
an individual income in excess of $200,000 in each of the two most recent years,
or joint income with his or her spouse in excess of $300,000 in each of those
years (in each case including foreign income, tax exempt income and full amount
of capital gains and losses but excluding any income of other family members and
any unrealized capital appreciation) and has a reasonable expectation of
reaching the same income level in the current year.

 

 

Category C ___

The undersigned is a director or executive officer of the Company which is
issuing and selling the Units.

 

 

Category D ___

The undersigned is a bank; a savings and loan association; insurance company;
registered investment company; registered business development company; licensed
small business investment company (“SBIC”); or employee benefit plan within the
meaning of Title 1 of ERISA and (a) the investment decision is made by a plan
fiduciary which is either a bank, savings and loan association, insurance
company or registered investment advisor, or (b) the plan has total assets in
excess of $5,000,000 or is a self directed plan with investment decisions made
solely by persons that are accredited investors.

 

 

 

____________________________

______________________________

(describe entity)

 

 

Category E ___

The undersigned is a private business development company as defined in section
202(a)(22) of the Investment Advisers Act of 1940.

____________________________

____________________________

(describe entity)

 

 

 

 

 

 

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Category F ___

The undersigned is either a corporation, partnership, Massachusetts business
trust, or non-profit organization within the meaning of Section 501(c)(3) of the
Internal Revenue Code, in each case not formed for the specific purpose of
acquiring one or more Units and with total assets in excess of $5,000,000.

_____________________________

_____________________________

(describe entity)

 

 

Category G ___

The undersigned is a trust with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring one or more Units, where the purchase is
directed by a “sophisticated person” as defined in Regulation 506(b)(2)(ii)
under the Securities Act.

 

 

Category H ___

The undersigned is an entity (other than a trust) all the equity owners of which
are “accredited investors” within one or more of the above categories. If
relying upon this Category alone, each equity owner must complete a separate
copy of this agreement.

_____________________________

____________________________

(describe entity)

 

 

Category I ___

The undersigned is not within any of the categories above and is therefore not
an accredited investor.

 

 

The undersigned agrees that the undersigned will notify the Company at any time
on or prior to the Closing Date in the event that the representations and
warranties in this agreement shall cease to be true, accurate and complete.

 

7.2

SUITABILITY (please answer each question)

 

(a) For an individual Subscriber, please describe your current employment,
including the company by which you are employed and its principal business:

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

(b) For an individual Subscriber, please describe any college or graduate
degrees held by you:

_______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

(c) For all Subscribers, please list types of prior investments:

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

 

 

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(d) For all Subscribers, please state whether you have you participated in other
private placements before:

YES_______

NO_______

(e) If your answer to question (d) above was “YES”, please indicate frequency of
such prior participation in private placements of:

 

 

 

Public
Companies

Private

Companies

Public or Private

Biotechnology Companies

Frequently

___________

___________

___________

Occasionally

___________

___________

___________

Never

___________

___________

___________

 

(f) For individual Subscribers, do you expect your current level of income to
significantly decrease in the foreseeable future:

 

YES_______

NO_______

(g) For trust, corporate, partnership and other institutional Subscribers, do
you expect your total assets to significantly decrease in the foreseeable
future:

 

YES_______

NO_______

(h) For all Subscribers, do you have any other investments or contingent
liabilities which you reasonably anticipate could cause you to need sudden cash
requirements in excess of cash readily available to you:

YES_______

NO_______

(i) For all Subscribers, are you familiar with the risk aspects and the
non-liquidity of investments such as the securities for which you seek to
subscribe?

 

YES_______

NO_______

(j) For all Subscribers, do you understand that there is no guarantee of
financial return on this investment and that you run the risk of losing your
entire investment?

 

YES_______

NO_______

 

 

 

 

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7.3

MANNER IN WHICH TITLE IS TO BE HELD. (circle one)

 

(a)

Individual Ownership

 

(b)

Community Property

 

(c)

Joint Tenant with Right of Survivorship

(both parties must sign)

(d)

Partnership*

 

(e)

Tenants in Common

(f)

Company*

 

(g)

Trust*

 

(h)

Other

 

 

*If one or more Units are being subscribed for by an entity, the attached
Certificate of Signatory must also be completed.

 

7.4

NASD AFFILIATION.

 

Are you affiliated or associated with an NASD member firm (please check one):

 

Yes _________

No __________

If Yes, please describe:

_________________________________________________________

_________________________________________________________

_________________________________________________________

 

*If Subscriber is a Registered Representative with an NASD member firm, have the
following acknowledgment signed by the appropriate party:

 

The undersigned NASD member firm acknowledges receipt of the notice required by
Article 3, Sections 28(a) and (b) of the Rules of Fair Practice.

 

_________________________________

Name of NASD Member Firm

 

By: ______________________________

Authorized Officer

 

Date: ____________________________

 

7.5        The undersigned is informed of the significance to the Company of the
foregoing representations and answers contained in the Confidential Investor
Questionnaire contained in this Section 7 and such answers have been provided
under the assumption that the Company will rely on them.

 

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PRINCIPAL AMOUNT OF THE UNIT PURCHASED: __________.

 

 

________________________

________________________

 

Signature

Signature (if purchasing jointly)

 

________________________

________________________

Name Typed or Printed

Name Typed or Printed

 

 

________________________

________________________

Entity Name

Entity Name

 

 

________________________

________________________

Address

Address

 

 

________________________

________________________

City, State and Zip Code

City, State and Zip Code

 

 

________________________

________________________

Telephone-Business

Telephone--Business

 

 

________________________

________________________

Telephone-Residence

Telephone--Residence

 

 

________________________

________________________

Facsimile-Business

Facsimile--Business

 

 

________________________

________________________

Facsimile-Residence

Facsimile--Residence

 

 

________________________

________________________

Tax ID # or Social Security #

Tax ID # or Social Security #

 

 

 

Name in which securities should be
issued:          ________________________                                          
                              

(The one or more Units will be delivered to you at the address provided above.)

Dated:                                         , 2006

This agreement is agreed to and accepted as of _______________________, 2006.

 

SHEFFIELD PHARMACEUTICALS, INC.

 

 

 

By:                                                                

 

Steve H. Kanzer

 

Chairman and Chief Executive Officer

 

 

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CERTIFICATE OF SIGNATORY

(To be completed if Units are being subscribed for by an entity)

 

I, ______________________________, am the ___________________________ of

_______________________________________ (the “Entity”).

I certify that I am empowered and duly authorized by the Entity to execute the
unit purchase agreement on behalf of the Entity and that the Entity is empowered
and duly authorized to carry out the terms of the unit purchase agreement and to
purchase one or more Units, and certify further that the unit purchase agreement
has been duly and validly executed on behalf of the Entity and constitutes a
legal and binding obligation of the Entity subject to any qualifications set
forth in the unit purchase agreement.

 

This certificate is being signed on _________________, 2006.

__________________________________

(Signature)

 

 

 

 

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