Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of
December 15, 2006, by and among RegeneRx Biopharmaceuticals, Inc, a Delaware
corporation (the “Company”), and each purchaser identified on the signature
pages hereto (each, including its successors and assigns, a “Purchaser” and
collectively, the “Purchasers”).

RECITALS

A. The Company and each Purchaser is executing and delivering this agreement in
reliance upon the exemption from securities registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”),
and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United
States Securities and Exchange Commission under the Securities Act.

B. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
(i) that aggregate number of shares of the Common Stock, par value $0.001 per
share (the “Common Stock”), of the Company, set forth below such Purchaser’s
name on the signature page of this Agreement (which aggregate amount for all
Purchasers together shall be                     shares of Common Stock and
shall be collectively referred to herein as the “Shares”) and (ii) warrants, in
substantially the form attached hereto as Exhibit A (the “Warrants”), to acquire
up to that number of additional shares of Common Stock equal to 40% of the
number of Shares purchased by such Purchaser (the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants, collectively,
the “Warrant Shares”).

C. The Shares, the Warrants and the Warrant Shares issued pursuant to this
Agreement are collectively referred to herein as the “Securities”.

D. The Company has engaged Piper Jaffray & Co. as its placement agent (the
“Placement Agent”) for the offering of the Securities on a “best efforts” basis.

E. Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as Exhibit B (the “Registration Rights Agreement”),
pursuant to which, among other things, the Company will agree to provide certain
registration rights with respect to the Shares and the Warrant Shares under the
Securities Act and applicable state securities laws.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers hereby
agree as follows:

ARTICLE I.

.DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement,
for all purposes of this Agreement, the following terms shall have the meanings
indicated in this Section 1.1:

“Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or, to the Company’s Knowledge, threatened in writing against or affecting the
Company or any of their respective properties before or by any

 

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court, arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility.

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 144. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.

“Business Day” means a day, other than a Saturday or Sunday, on which banks in
New York City are open for the general transaction of business.

“Buy-In” has the meaning set forth in Section 4.1(f).

“Buy-In Price” has the meaning set forth in Section 4.1(f).

“Cash Placement Agent Fee” means the cash fee to be paid to the Placement Agent
for services rendered to the Company in connection with the offering of the
Securities.

“Closing” means the closing of the purchase and sale of the Shares and the
Warrants pursuant to this Agreement.

“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied, or
such other date as the parties may agree.

“Commission” means the United States Securities and Exchange Commission.

“Common Stock” has the meaning set forth in the Recitals, and also includes any
securities into which the Common Stock may hereafter be reclassified or changed.

“Common Stock Equivalents” means any securities of the Company which would
entitle the holder thereof to acquire at any time Common Stock, including,
without limitation, any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.

“Company Counsel” means Patton Boggs LLP

“Company Deliverables” has the meaning set forth in Section 2.2(a).

“Company’s Knowledge” means with respect to any statement made to the knowledge
of a party, that the statement is based upon the actual knowledge of the
officers of such party having responsibility for the matter or matters that are
the subject of the statement.

“Control” (including the terms “controlling”, “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

“Disclosure Materials” has the meaning set forth in Section 3.1(h).

 

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“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

“Effectiveness Deadline” means the date on which the initial Registration
Statement is required to be declared effective by the Commission under the terms
of the Registration Rights Agreement.

“Environmental Laws” has the meaning set forth in Section 3.1(l).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company.

“Indemnified Person” has the meaning set forth in Section 4.9(b).

“Intellectual Property” has the meaning set forth in Section 3.1(r).

“Irrevocable Transfer Agent Instructions” means, with respect to the Company,
the Irrevocable Transfer Agent Instructions, in the form of Exhibit E, executed
by the Company and delivered to and acknowledged in writing by the Transfer
Agent.

“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restrictions of any kind.

“Losses” has the meaning set forth in Section 4.9(a).

“Material Adverse Effect” means any of (i) a material and adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material and adverse effect on the results of operations, assets, prospects,
business or financial condition of the Company, or (iii) any material adverse
impairment to the Company’s ability to perform in any material respect on a
timely basis its obligations under any Transaction Document.

“Material Contract” means any contract of the Company that was filed as an
exhibit to the SEC Reports pursuant to Item 601(b)(4) or Item 601(b)(10) of
Regulation S-K.

“Material Permits” has the meaning set forth in Section 3.1(p).

“New York Courts” means the state and federal courts sitting in the City of New
York, Borough of Manhattan.

“Outside Date” means December 29, 2006

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the Closing Date, shall
be the American Stock Exchange.

“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.

 

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“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).

“Purchaser Party” has the meaning set forth in Section 4.9(a).

“Registration Rights Agreement” has the meaning set forth in the Recitals.

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).

“Required Approvals” has the meaning set forth in Section 3.1(e).

“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.

“SEC Reports” has the meaning set forth in Section 3.1(h).

“Secretary’s Certificate” has the meaning set forth in Section 2.2(a)(vii).

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

“Short Sales” include, without limitation, all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated brokers.

“Subscription Amount” means with respect to each Purchaser, the aggregate amount
to be paid for the Shares and the related Warrants purchased hereunder as
indicated on such Purchaser’s signature page to this Agreement next to the
heading “Aggregate Purchase Price (Subscription Amount)”.

“Trading Affiliate” has the meaning set forth in Section 3.2(g).

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its primary Trading Market (other than the OTC Bulletin Board), or
(ii) if the Common Stock is not listed on a Trading Market (other than the OTC
Bulletin Board), a day on which the Common Stock is traded in the
over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which the Common
Stock is quoted in the over-the-counter market as reported by the National
Quotation Bureau Incorporated (or any similar organization or agency succeeding
to its functions of reporting prices); provided, that in the event that the
Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then Trading Day shall mean a Business Day.

“Trading Market” means whichever of the New York Stock Exchange, the American
Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global Market, the
NASDAQ Capital Market or the OTC Bulletin Board on which the Common Stock is
listed or quoted for trading on the date in question.

“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Warrants, the Registration Rights Agreement, the
Irrevocable Transfer Agent Instructions and any other documents or agreements
executed in connection with the transactions contemplated hereunder.

 

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“Transfer Agent” means American Stock Transfer & Trust Company or any successor
transfer agent for the Company.

“Warrants” has the meaning set forth in the Preamble to this Agreement. The
Placement Agent and/or its designees are also receiving placement agent warrants
as compensation for services rendered in connection with the transactions set
forth herein, which warrants shall also constitute “Warrants” for all purposes
hereunder.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, such
number of shares of Common Stock and a Warrant to purchase a number of Warrant
Shares, each as indicated below such Purchaser’s name on the signature page of
this Agreement, for an aggregate purchase price for such Purchaser as indicated
below such Purchaser’s name on the signature page of this Agreement Upon
confirmation that the other conditions to closing specified herein have been
satisfied or duly waived by the Purchasers, the Company shall deliver to
Lowenstein Sandler PC (“Placement Agent Counsel”), in trust, a certificate or
certificates, registered in such name or names as the Purchasers may designate,
representing the Shares and Warrants, with instructions that such certificates
are to be held for release to the Purchasers only upon payment in full of the
Subscription Amount to the Company by all the Purchasers. Unless otherwise
agreed to by the Company and any Purchaser, upon such receipt by Placement Agent
Counsel of the certificates, each Purchaser shall promptly, but no more than one
Business Day thereafter, cause a wire transfer in same day funds to be sent to
the account of the Company as instructed in writing by the Company, in an amount
representing the purchase price for such Purchaser as indicated below such
Purchaser’s name on the signature page of this Agreement. On the Closing Date
the certificates evidencing the Shares and Warrants shall be released to the
Purchasers. The Closing of the purchase and sale of the Shares and Warrants
shall take place at the offices of Lowenstein Sandler PC, 1251 Avenue of the
Americas, New York, New York on the Closing Date or at such other locations or
remotely by facsimile transmission or other electronic means as the parties may
mutually agree.

2.2 Closing Deliveries. (a) On or prior to the Closing, the Company shall issue,
deliver or cause to be delivered to each Purchaser the following (the “Company
Deliverables”):

(i) This Agreement, duly executed by the Company;

(ii) One or more stock certificates, free and clear of all restrictive and other
legends (except as provided in Section 4.1(b) hereof), evidencing a number of
Shares indicated below such Purchaser’s name on the signature page of this
Agreement, registered in the name of such Purchaser;

(iii) a Warrant, executed by the Company and registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire such
number of Warrant Shares equal to             % of the number of Shares issuable
to such Purchaser pursuant to Section 2.2(a)(ii) on the terms set forth therein;

(iv) a legal opinion of Company Counsel, in the form attached hereto as Exhibit
D, executed by such counsel and addressed to the Purchasers and the Placement
Agent;

(v) the Registration Rights Agreement, duly executed by the Company; and

 

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(vi) duly executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent;

(vii) a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date, (a) certifying the resolutions
adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents and the
issuance of the Securities, (b) certifying the current versions of the
certificate of incorporation, as amended and by-laws of the Company and
(c) certifying as to the signatures and authority of persons signing the
Transaction Documents and related documents on behalf of the Company; and

(viii) the Compliance Certificate referred to in Section 5.1(h).

(ix) a certificate evidencing the formation and good standing of the Company in
the State of Delaware issued by the Secretary of State (or comparable office),
as of a date within 10 days of the Closing Date.

(x) a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State (or comparable
office) of the State of Maryland, as of a date within 10 days of the Closing
Date.

(xi) a certified copy of the Certificate of Incorporation as certified by the
Secretary of State of the State of Delaware within ten (10) days of the Closing
Date.

(b) On or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following (the “Purchaser Deliverables”):

(i) This Agreement, duly executed by such Purchaser;

(ii) Its Subscription Amount, in United States dollars and in immediately
available funds, in the amount set forth as the “Purchase Price” indicated below
such Purchaser’s name on the applicable signature page hereto by wire transfer
to an account designated in writing by the Company for such purpose, as set
forth on Exhibit F attached hereto;

(iii) the Registration Rights Agreement, duly executed by such Purchaser;

(iv) a fully completed and duly executed Selling Stockholder Questionnaire in
the form attached as Annex B to the Registration Rights Agreement; and

(v) a fully completed and duly executed Accredited Investor Questionnaire and
Stock Certificate Questionnaire in the forms attached hereto as Exhibits C-1 and
C-2, respectively.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents
and warrants to the Purchasers and to the Placement Agent that, except as set
forth in the Schedules delivered herewith:

(a) Subsidiaries. The Company has no direct or indirect subsidiaries.

(b) Organization and Qualification. The Company is an entity duly incorporated
or otherwise organized, validly existing and in good standing under the laws of
the jurisdiction of its

 

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incorporation or organization (as applicable), with the requisite power and
authority to own or lease and use its properties and assets and to carry on its
business as currently conducted. 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 conduct business and is
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to, have
individually or in the aggregate, resulted in a Material Adverse Effect, and no
Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

(c) Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of each of the Transaction Documents to which it is a party by the
Company and the consummation by it of the transactions contemplated hereby and
thereby (including, but not limited to, the sale and delivery of the Shares and
the Warrants and the subsequent issuance of the Warrant Shares upon exercise of
the Warrants) have been duly authorized by all necessary corporate action on the
part of the Company, and no further corporate action is required by the Company,
its Board of Directors or its shareholders in connection therewith other than in
connection with the Required Approvals. Each of the Transaction Documents to
which it is a party has been (or upon delivery will have been) duly executed by
the Company and is, or when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors’ rights and remedies or by other equitable principles of general
application. Except as set forth on Schedule 3.1(c) hereto, there are no
shareholder agreements, voting agreements, or other similar arrangements with
respect to the Company’s capital stock to which the Company is a party or, to
the Company’s Knowledge, between or among any of the Company’s shareholders.

(d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares and the reservation for issuance and
issuance of the Warrant Shares) do not and will not (i) conflict with or violate
any provision of the Company’s certificate of incorporation, bylaws or other
organizational or charter documents, (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, result in the creation of any Lien upon any of the properties or assets
of the Company 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) subject to the Required Approvals, conflict with or 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 and the
rules and regulations, assuming the correctness of the representations and
warranties made by the Purchasers herein, of any self-regulatory organization to
which the Company or its securities are subject, including all applicable
Trading Markets), or by which any property or asset of the Company is bound or
affected, except in the case of clauses (ii) and (iii) such as would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.

(e) Filings, Consents and Approvals. 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

 

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court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company
of the Transaction Documents (including the issuance of the Securities), other
than (i) the filing with the Commission of one or more Registration Statements
in accordance with the requirements of the Registration Rights Agreement,
(ii) filings required by applicable state securities laws, (iii) the filing of a
Notice of Sale of Securities on Form D with the Commission under Regulation D of
the Securities Act, (iv) the filing of any requisite notices and/or
application(s) to the Principal Trading Market for the issuance and sale of the
Common Stock and the Warrants and the listing of the Common Stock for trading or
quotation, as the case may be, thereon in the time and manner required thereby,
(v) the filings required in accordance with Section 4.8 of this Agreement and
(vi) those that have been made or obtained prior to the date of this Agreement
(collectively, the “Required Approvals”).

(f) Issuance of the Securities. The Shares have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable, free and clear of
all Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of shareholders. The Warrants have been duly
authorized and, when issued and paid for in accordance with the terms of the
Transaction Documents, will be duly and validly issued, free and clear of all
Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of shareholders. The Warrant Shares issuable upon
exercise of the Warrants have been duly authorized and, when issued and paid for
in accordance with the terms of the Transaction Documents and the Warrants, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of shareholders. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the Shares
and the Warrant Shares will be issued in compliance with all applicable federal
and state securities laws. The Company shall, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued capital stock, solely for the purpose of effecting the
exercise of the Warrants, 100% of the number of shares of Common Stock issuable
upon exercise of the Warrants.

(g) Capitalization. The number of shares and type of all authorized, issued and
outstanding capital stock, options and other securities of the Company (whether
or not presently convertible into or exercisable or exchangeable for shares of
capital stock of the Company) is set forth in the SEC Reports. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and non-assessable, have been issued in compliance in all
material respects with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase any capital stock of the Company.
Except as specified in the SEC Reports: (i) no shares of the Company’s capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company, or contracts, commitments, understandings or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into, or exercisable or exchangeable for, any shares of
capital stock of the Company; (iii) there are no outstanding debt securities,
notes, credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Company or by which the Company is or
may become bound; (iv) there are no financing statements securing obligations in
any material amounts, either singly or in the aggregate, filed in connection
with the Company; (v) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under the
Securities Act (except the Registration Rights Agreement); (vi) there are no
outstanding securities or instruments of the Company or

 

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which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to redeem a security of the Company; (vii) there are no securities
or instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Securities; (viii) the Company does not have
any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (ix) the Company have no liabilities or
obligations required to be disclosed in the SEC Reports (as defined herein) but
not so disclosed in the SEC Reports, other than those incurred in the ordinary
course of the Company’s businesses and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect.

(h) SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date
hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports” and together with this Agreement and the Schedules
to this Agreement (if any), the “Disclosure Materials”), on a timely basis or
has received 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 the date hereof,
the Company is not aware of any event occurring on or prior to the Closing Date
(other than the transactions contemplated by the Transaction Documents) that
requires the filing of a Form 8-K after the Closing. As of their respective
dates, or to the extent corrected by a subsequent restatement, 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.

(i) Financial Statements. 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 (or to the extent corrected by a
subsequent restatement). Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial statements may not contain all
footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company 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, year-end audit adjustments. All material
agreements to which the Company is a party or to which the property or assets of
the Company are subject are included as part of or specifically identified in
the SEC Reports.

(j) Tax Matters The Company (i) has accurately and timely prepared and filed all
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith, with respect to which adequate
reserves have been set aside on the books of the Company and (iii) has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply, except, in the case of clauses (i) and (ii) above, where the failure to
so pay or file any such tax, assessment, charge or return would not result in a
Material Adverse Effect. There are no unpaid taxes in any material amount
claimed to be due by the Company by the taxing authority of any jurisdiction.

(k) Material Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as specifically disclosed in the SEC
Reports or as set forth in Schedule 3.1(k) hereto, (i) there have been no
events, occurrences or developments that have had or that could reasonably be

 

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expected to result, either individually or in the aggregate, in a Material
Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables, accrued expenses and other liabilities
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting or the
manner in which it keeps its accounting books and records, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its shareholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock (other than in connection with
repurchases of unvested stock issued to employees of the Company) and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except Common Stock issued in the ordinary course as dividends on
outstanding preferred stock or pursuant to existing Company stock option or
stock purchase plans or executive and director corporate arrangements disclosed
in the SEC Reports and (vi) there has not been any material change or amendment
to, or any waiver of any material right under, any contract under which the
Company or any of their assets is bound or subject. Except for the issuance of
the Securities contemplated by this Agreement or as set forth in Schedule 3.1(k)
hereto, no event, liability or development has occurred or exists with respect
to the Company or its business, properties, operations or financial condition
that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made that has not been
publicly disclosed at least one Trading Day prior to the date that this
representation is made.

(l) Environmental Matters. To the Company’s Knowledge, the Company (i) is not in
violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), (ii) does not own or
operate any real property contaminated with any substance that is in violation
of any Environmental Laws, (iii) is not liable for any off-site disposal or
contamination pursuant to any Environmental Laws, and (iv) is not subject to any
claim relating to any Environmental Laws; which violation, contamination,
liability or claim has had or could reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate; and there is no pending or, to
the Company’s Knowledge, threatened investigation that might lead to such a
claim.

(m) Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) except as specifically disclosed in the SEC Reports, would,
if there were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The Company, nor,
to the Company’s Knowledge, any current director or officer thereof (in his or
her capacity thereof), is or has been during the five-year period prior to the
Closing Date the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been and, to the Company’s Knowledge, there is not
pending or contemplated, any investigation by the Commission involving the
Company or, to the Company’s Knowledge, any current or former director or
officer of the Company (in his or her capacity as such). The Commission has not
issued any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act or the
Securities Act.

(n) Employment Matters. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees of the Company
which could reasonably be expected to result in a Material Adverse Effect. None
of the Company’s employees is a member of a union that relates to such
employee’s relationship with the Company, and the Company is not a party to a
collective bargaining agreement, and the Company believes that their
relationships with their employees are good. No executive officer, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-

 

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competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not
subject the Company to any liability with respect to any of the foregoing
matters. The Company is in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure
to be in compliance could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

(o) Compliance. The Company is not (i) in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company), nor has the Company
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) in
violation of any order of any court, arbitrator or governmental body having
jurisdiction over the Company or its properties or assets, or (iii) in violation
of, or in receipt of notice that it is in violation of, any statute, rule or
regulation of any governmental authority applicable to the Company, except in
each case as could not, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect.

(p) Regulatory Permits. The Company possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits, individually or
in the aggregate, has not and could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and the Company has not received
any notice of proceedings relating to the revocation or modification of any such
Material Permits.

(q) Title to Assets. Except as set forth on Schedule 3.1(q) and for property
that is specifically the subject of, and covered by, other representations and
warranties as to ownership or title contained herein, the Company has good and
marketable title in fee simple to all real property owned by it that is material
to their respective businesses and good and marketable title in all personal
property owned by it that is material to their respective businesses, in each
case free and clear of all Liens, except for Liens as do not materially affect
the value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company and Liens for the payment of
federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties. Any real property and facilities held under lease by the
Company are held by it under valid, subsisting and enforceable leases of which
the Company is in material compliance.

(r) Patents and Trademarks. The Company owns, possesses, licenses or has other
rights to use all foreign and domestic patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, Internet domain names, know-how
and other intellectual property (collectively, the “Intellectual Property”)
necessary for the conduct of its business as now conducted or as proposed to be
conducted. Except as set forth in the SEC Reports and except where such
violations or infringements would not reasonably be expected to result, either
individually or in the aggregate, in a Material Adverse Effect, (a) there are no
rights of third parties to any such Intellectual Property; (b) to the Company’s
Knowledge, there is no infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company’s Knowledge, threatened
action, suit, proceeding or claim by others challenging the Company’s rights in
or to any such Intellectual Property, and the Company is unaware of any facts
which would form a reasonable basis for any such claim; (d) there is no pending
or, to the Company’s Knowledge, threatened action, suit, proceeding or claim by
others challenging the validity or scope of any such Intellectual Property; and
(e) there is no pending or, to the Company’s Knowledge, threatened action, suit,
proceeding or claim by others that the Company infringe or otherwise violate any
patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would form a
reasonable basis for any such claim.

 

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(s) Insurance. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses and location in which the Company is engaged.
The Company does not have any knowledge that it will be unable to renew its
existing insurance coverage for the Company as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

(t) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports filed at least ten days prior to the date hereof and other than the
grant of stock options disclosed on Schedule 3(t), none of the officers,
directors or employees of the Company is presently a party to any transaction
with the Company (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
trustee or partner.

(u) Internal Accounting Controls. The Company maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(v) Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all
material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it as of the Closing Date. The Company maintains
disclosure controls and procedures (as such term is defined in Rule 13a-14 under
the Exchange Act) that are effective in ensuring that information required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Commission, including, without
limitation, controls and procedures designed in to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act is accumulated and communicated to the Company’s
management, including its principal executive officer or officers and its
principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure.

(w) Certain Fees. No person or entity will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or a Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Company, other than Piper Jaffray & Co. as placement agent with
respect to the offer and sale of the Securities (which placement agent fees are
being paid by the Company). The Company shall pay, and hold each Purchaser
harmless against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such
right, interest or claim.

(x) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers under the Transaction Documents.

 

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Other than each of the Purchasers or as set forth in Schedule 3.1(x) hereto, no
Person has any right to cause the Company to effect the registration under the
Securities Act of any securities of the Company other than those securities
which are currently registered on an effective registration statement on file
with the Commission.

(y) No Directed Selling Efforts or General Solicitation. Neither the Company,
nor any of its Affiliates, nor any Person acting on its or their behalf has
conducted any “general solicitation” or “general advertising” (as those terms
are used in Regulation D) in connection with the offer or sale of any of the
Securities.

(z) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company,
its Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, at any time within the past six months, made any offers or sales of
any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Securities as contemplated hereby or
(ii) cause the offering of the Securities pursuant to the Transaction Documents
to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or shareholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or designated.

(aa) Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act nor has the Company received any notification that the
Commission is contemplating terminating such registration. Except as specified
in the SEC Reports, the Company has not, in the two years preceding the date
hereof, received written notice from any Trading Market on which the Common
Stock is or has been listed or quoted to the effect that the Company is not in
compliance with the listing or maintenance requirements of such Trading Market.
The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance in all material respects with the listing
and maintenance requirements for continued trading of the Common Stock on the
Principal Trading Market.

(bb) Investment Company The Company is not required to be registered as, and is
not an Affiliate of, and immediately following the Closing will not be required
to register as, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

(cc) Questionable Payments. The Company, nor, to the Company’s Knowledge, any
directors, officers, employees, agents or other Persons acting on behalf of the
Company has, in the course of its actions for, or on behalf of, the Company:
(a) directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to foreign or domestic
political activity; (b) made any direct or indirect unlawful payments to any
foreign or domestic governmental officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds; (c) violated in
any material respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended, or (d) made any other unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic
government official or employee.

(dd) Application of Takeover Protections; Rights Agreements. The Company and its
board of directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s charter documents or the laws of its
state of incorporation that is or could reasonably be expected to become
applicable to any of the Purchasers as a

 

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result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including, without
limitation, the Company’s issuance of the Securities and the Purchasers’
ownership of the Securities. The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

(ee) Disclosure. The Company confirms that neither it nor any of its officers or
directors nor any other Person acting on its or their behalf has provided, and
it has not authorized the Placement Agent to provide, any Purchaser with any
information that it believes constitutes or could reasonably be expected to
constitute material, non-public information except insofar as the existence,
provisions and terms of the Transaction Documents and the proposed transactions
hereunder may constitute such information, all of which will be disclosed by the
Company in the Press Release as contemplated by Section 4.8 hereof. The Company
understands and confirms that the Purchasers will rely on the foregoing
representations in effecting transactions in securities of the Company. All
disclosure provided to the Purchasers regarding the Company, its business and
the transactions contemplated hereby furnished by the Company or authorized by
the Company and furnished by the Placement Agent on behalf of the Company
(including the Company’s representations and warranties set forth in this
Agreement) are true and correct in all material respects and do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. No event or circumstance has
occurred or information exists with respect to the Company or or its business,
properties, operations or financial conditions, which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed, except for the
announcement of this Agreement and related transactions.

(ff) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its
Exchange Act filings and is not so disclosed or that otherwise would be
reasonably likely to have a Material Adverse Effect.

(gg) Consultation with Auditors. The Company has consulted its independent
auditors concerning the accounting treatment of the transactions contemplated by
the Transaction Documents and in connection therewith has furnished such
auditors complete copies of the Transaction Documents. The Company intends to
account for the gross proceeds raised from the financing which is the subject of
this Agreement as equity in its financial statements.

(hh) No Additional Agreements. The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

(ii) Use of Form S-3. The Company meets the registration and transaction
requirements for use of Form S-3 for the registration of the Shares and the
Warrant Shares for resale by the Purchasers.

3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for
itself and for no other Purchaser, represents and warrants as of the date hereof
and as of the Closing Date to the Company and the Placement Agent as follows:

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate or partnership power and authority to
enter into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and

 

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thereunder. The execution, delivery and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like action, on the
part of such Purchaser. Each of this Agreement and the Registration Rights
Agreement has been duly executed by such Purchaser, and when delivered by such
Purchaser in accordance with terms hereof, will constitute the valid and legally
binding obligation of such Purchaser, enforceable against it in accordance with
its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application.

(b) Investment Intent. Such Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law and is acquiring the Securities and, upon
exercise of the Warrants, will acquire the Warrant Shares issuable upon exercise
thereof as principal for its own account and not with a view to, or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities laws, provided, however,
that by making the representations herein, such Purchaser does not agree to hold
any of the Securities for any minimum period of time and reserves the right,
subject to the provisions of this Agreement and the Registration Rights
Agreement, at all times to sell or otherwise dispose of all or any part of such
Securities or Warrant Shares pursuant to an effective registration statement
under the Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws. Such Purchaser is
acquiring the Securities hereunder in the ordinary course of its business. Such
Purchaser does not presently have any agreement, plan or understanding, directly
or indirectly, with any Person to distribute or effect any distribution of any
of the Securities (or any securities which are derivatives thereof) to or
through any person or entity. Such Purchaser is not a registered broker-dealer
under Section 15 of the Exchange Act or an entity engaged in a business that
would require it to be so registered as a broker-dealer.

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and at the date hereof it is, and on each date on which it exercises the
Warrants it will be, an “accredited investor” as defined in Rule 501(a) under
the Securities Act.

(d) General Solicitation. Such Purchaser is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement.

(e) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Purchaser is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

(f) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information (other than material non-public
information) about the Company and its financial condition, results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment; and (iii) the opportunity to obtain such
additional information that the Company possesses or can acquire without
unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf

 

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of such Purchaser or its representatives or counsel shall modify, amend or
affect such Purchaser’s right to rely on the truth, accuracy and completeness of
the Disclosure Materials and the Company’s representations and warranties
contained in the Transaction Documents.

(g) Certain Trading Activities. Other than with respect to the transactions
contemplated herein, since the earlier to occur of (1) the time that such
Purchaser was first contacted by the Company, the Placement Agent or any other
Person regarding the transactions contemplated hereby and (2) the tenth
(10th) day prior to the date of this Agreement, neither the Purchaser nor any
Affiliate of such Purchaser which (x) had knowledge of the transactions
contemplated hereby, (y) has or shares discretion relating to such Purchaser’s
investments or trading or information concerning such Purchaser’s investments,
including in respect of the Securities, and (z) is subject to such Purchaser’s
review or input concerning such Affiliate’s investments or trading
(collectively, “Trading Affiliates”) has directly or indirectly, nor has any
Person acting on behalf of or pursuant to any understanding with such Purchaser
or Trading Affiliate, effected or agreed to effect any transactions in the
securities of the Company (including, without limitation, any Short Sales
involving the Company’s securities). Notwithstanding the foregoing, in the case
of a Purchaser and/or Trading Affiliate that is, individually or collectively, a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s or Trading Affiliate’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s or Trading
Affiliate’s assets, the representation set forth above shall apply only with
respect to the portion of assets managed by the portfolio manager that have
knowledge about the financing transaction contemplated by this Agreement. Other
than to other Persons party to this Agreement, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, no Purchaser makes any representation, warranty
or covenant hereby that it will not engage in Short Sales in the securities of
the Company after the time that the transactions contemplated by this Agreement
are first publicly announced as described in Section 4.8.

(h) Brokers and Finders. No Person will have, as a result of the transactions
contemplated by this Agreement, any valid right, interest or claim against or
upon the Company or any Purchaser for any commission, fee or other compensation
pursuant to any agreement, arrangement or understanding entered into by or on
behalf of the Purchaser.

(i) Limited Ownership. The purchase by such Purchaser of the Securities issuable
to it at the Closing will not result in such Purchaser (individually or together
with other Person with whom such Purchaser has identified, or will have
identified, itself as part of a “group” in a public filing made with the
Commission involving the Company’s securities) acquiring, or obtaining the right
to acquire, in excess of 19.99% of the outstanding shares of Common Stock or the
voting power of the Company on a post transaction basis that assumes that the
Closing shall have occurred. Such Purchaser does not presently intend to, alone
or together with others, make a public filing with the Commission to disclose
that it has (or that it together with such other Persons have) acquired, or
obtained the right to acquire, as a result of the Closing (when added to any
other securities of the Company that it or they then own or have the right to
acquire), in excess of 19.99% of the outstanding shares of Common Stock or the
voting power of the Company on a post transaction basis that assumes that the
Closing shall have occurred.

(j) Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Securities constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities.

 

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Such Purchaser understands that the Placement Agent has acted solely as the
agent of the Company in this placement of the Securities and such Purchaser has
not relied on the business or legal advice of the Placement Agent or any of its
agents, counsel or Affiliates in making its investment decision hereunder, and
confirms that none of such Persons has made any representations or warranties to
such Purchaser in connection with the transactions contemplated by the
Transaction Documents.

(k) Reliance on Exemptions. Such Purchaser understands that the Securities being
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and such Purchaser’s
compliance with, the representations, warranties, agreements, acknowledgements
and understandings of such Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of such Purchaser to acquire
the Securities.

(l) No Governmental Review. Such Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

The Company acknowledges and agrees that no Purchaser has made or makes any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in this Section 3.2.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1(a) Compliance with Laws. Notwithstanding any other provision of this Article
IV, each Purchaser covenants that the securities may be disposed of only
pursuant to an effective registration statement under, and in compliance with
the requirements of, the Securities Act, or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state and federal
securities laws. In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the Company,
(iii) to an Affiliate of a Purchaser, (iv) pursuant to Rule 144 (provided that
the Purchaser provides the Company with reasonable assurances (in the form of
seller and broker representation letters) that the securities may be sold
pursuant to such rule) or Rule 144A, (v) pursuant to Rule 144(k) following the
applicable holding period or (vi) in connection with a bona fide pledge as
contemplated in Section 4.1(b), except as otherwise provided herein, the Company
may require the transferor thereof to provide to the Company an opinion of
counsel selected by the transferor and reasonably acceptable to the Company, the
form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such
transferred Securities under the Securities Act. As a condition of transfer, any
such transferee shall agree in writing to be bound by the terms of this
Agreement and shall have the rights of a Purchaser under this Agreement and the
Registration Rights Agreement.

(b) Legends. Certificates evidencing the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, until such time as they are not required under
Section 4.1(c):

[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
WITH THE SECURITIES AND

 

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EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY.

The Company acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the legended
Securities in connection with applicable securities laws, pursuant to a bona
fide margin agreement in compliance with a bona fide margin loan. Such a pledge
would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge. No notice shall be required of such pledge,
but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or for any agreement, understanding
or arrangement between any Purchaser and its pledgee or secured party. At the
appropriate Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule
423(b)(3) of the Securities Act or other applicable provision of the Securities
Act to appropriately amend the list of Selling Stockholders thereunder. Each
Purchaser acknowledges and agrees that, except as otherwise provided in
Section 4.1(c), any Shares subject to a pledge or security interest as
contemplated by this Section 4.1(b) shall continue to bear the legend set forth
in this Section 4.1(b) and be subject to the restrictions on transfer set forth
in Section 4.1(a).

(c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate without such legend to the
holder of the Securities upon which it is stamped or issue to such holder by
electronic delivery at the applicable balance account at The Depoitory Trust
Company (“DTC”), if (i) such Securities are registered for resale under the
Securities Act, (ii) such Securities are sold or transferred pursuant to Rule
144 (assuming the transferor is not an Affiliate of the Company) or Rule 144A,
or (iii) such Securities are eligible for sale under Rule 144(k). The Company
shall cause its counsel to issue the legal opinion referred to in the
Irrevocable Transfer Agent Instructions to the Company’s transfer agent on the
Effective Date. Any fees (with respect to the Transfer Agent, counsel to the
Company or otherwise) associated with the issuance of such opinion or the
removal of such legend shall be borne by the Company. If any portion of the
Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, or if such Warrant Shares may be sold
under Rule 144(k), then such Warrant Shares shall be issued free of all legends.
Following the Effective Date, or at such earlier time as a legend is no longer
required for certain Securities, the Company will no later than three
(3) Trading Days following the delivery by a Purchaser to the Company or the
Transfer Agent (with notice to the Company) of (i) a legended certificate
representing such Shares or Warrant Shares (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer or (ii) an Exercise Notice in the manner stated in
the Warrants to effect the exercise of such Warrant in accordance with its terms
and an opinion of counsel to the extent required by Section 4.1(a), deliver or
cause to be delivered to such Purchaser a certificate representing such
Securities that is free from all restrictive and other legends. The Company may
not make any notation on its records or give instructions to the Transfer Agent
that enlarge the restrictions on transfer set forth in this Section.

 

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(d) Irrevocable Transfer Agent Instructions. The Company shall issue irrevocable
instructions to its transfer agent, and any subsequent transfer agent, to issue
certificates or credit shares to the applicable balance accounts at DTC,
registered in the name of each Purchaser or its respective nominee(s), for the
Shares and the Warrant Shares in such amounts as specified from time to time by
each Purchaser to the Company in the form of Exhibit E attached hereto (the
“Irrevocable Transfer Agent Instructions”). The Company warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to
in this Section 4(d) will be given by the Company to its transfer agent in
connection with this Agreement, and that the Securities shall otherwise be
freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. The Company
acknowledges that a breach by it of its obligations under this Section 4(d) will
cause irreparable harm to a Purchaser. Accordingly, the Company acknowledges
that the remedy at law for a breach of its obligations under this Section 4(d)
will be inadequate and agrees, in the event of a breach of the provisions of
this Section 4(d), that a Purchaser shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

(e) Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell the
Shares, the Warrant Shares or any interest therein without complying with the
requirements of the Securities Act. While the above-referenced registration
statement remains effective, each Purchaser hereunder may sell the shares in
accordance with the plan of distribution contained in the registration statement
and if it does so it will comply therewith and with the related prospectus
delivery requirements unless an exemption therefrom is available. Each
Purchaser, severally and not jointly with the other Purchasers, agrees that if
it is notified by the Company at any time after the date any legend is removed
pursuant to Section 4.1(c) hereof that the registration statement registering
the resale of the Shares or the Warrant Shares is not effective or that the
prospectus included in such registration statement no longer complies with the
requirements of Section 10 of the Securities Act, the Purchaser will refrain
from selling such Shares and Warrant Shares until such time as the Purchaser is
notified by the Company that such registration statement is effective or such
prospectus is compliant with Section 10 of the Exchange Act, unless such
Purchaser is able to, and does, sell such Shares or Warrant Shares pursuant to
an available exemption from the registration requirements of Section 5 of the
Securities Act.

(f) Buy-In. If the Company shall fail for any reason or for no reason to issue
to such holder unlegended certificates within three (3) Trading Days of receipt
of documents necessary for the removal of the legends set forth above (the
“Deadline Date”), and if on or after the Trading Date immediately following such
three (3) Trading Day period, the Purchaser purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction of a
sale by the Purchaser of shares of Common Stock that the Purchaser anticipated
receiving from the Company without any restrictive legend (a “Buy-In”), then the
Company shall, within three (3) Trading Days after the Purchaser’s request and
in the Purchaser’s sole discretion, either (i) pay cash to the Purchaser in an
amount equal to the Purchaser’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such certificate
shall terminate and such shares shall be cancelled, or (ii) promptly honor its
obligation to deliver to the Purchaser a certificate or certificates
representing such number of shares of Common Stock that would have been issued
if the Company timely complied with its obligations hereunder and pay cash to
the Purchaser in an amount equal to the excess (if any) of the Buy-In Price over
the product of (a) such number of shares of Common Stock that the Company was
required to deliver to the Purchaser on the Deadline Date, times (b) the closing
bid price of the Common Stock on the Deadline Date.

 

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4.2 Reservation of Common Stock. The Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance from and
after the Closing Date, no less than 100% of the number of shares of Common
Stock issuable upon exercise of the Warrants issued at the Closing (without
taking into account any limitations on exercise of the Warrants set forth in the
Warrants).

4.3 Furnishing of Information. As long as any Purchaser owns the Securities, the
Company covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Shares and Warrant Shares under Rule
144. The Company further covenants that it will take such further action as any
holder of Securities may reasonably request, all to the extent required from
time to time to enable such Person to sell the Shares and Warrant Shares without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.

4.4 Reporting Status. Until the date on which the Purchasers shall have sold all
the Shares and Warrant Shares and none of the Warrants is outstanding (the
“Reporting Period”), the Company shall timely file all reports required to be
filed with the Commission pursuant to the Exchange Act, and the Company shall
not terminate its status as an issuer required to file reports under the
Exchange Act even if the Exchange Act or the rules and regulations thereunder
would otherwise permit such termination.

4.5 Form D and Blue Sky. The Company agrees to file a Form D with respect to the
Securities as required under Regulation D and to provide a copy thereof to each
Purchaser promptly after such filing. The Company, on or before the Closing
Date, shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for or to qualify the Securities for
sale to the Purchasers at the Closing pursuant to this Agreement under
applicable securities or “Blue Sky” laws of the states of the United States (or
to obtain an exemption from such qualification), and shall provide evidence of
any such action so taken to the Purchasers on or prior to the Closing Date. The
Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue Sky” laws of the states
of the United States following the Closing Date.

4.6 No Integration. The Company shall not, and shall use its best efforts to
ensure that no Affiliate of the Company shall, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that will be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers, or that will be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

4.7 Subsequent Registrations. Other than pursuant to the Registration Statement
or post effective amendments to existing registration statements, prior to the
date occurring sixty (60) days after the Effective Date, the Company shall not
file any registration statement (other than on Form S-8) or, in connection with
an acquisition, on Form S-4) with the Commission with respect to any securities
of the Company that are not the Securities.

4.8 Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York City time) on
the Trading Day immediately following the execution of this Agreement, the
Company shall issue a press release (the “Press Release”) reasonably acceptable
to the Placement Agent disclosing all material terms of the transactions
contemplated hereby. On or before 9:00 a.m. (New York City time) on the Trading
Day

 

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following the Closing Date, the Company will file a Current Report on Form 8-K
with the Commission describing the terms of the Transaction Documents (and
including as exhibits to such Current Report on Form 8-K the material
Transaction Documents (including, without limitation, this Agreement, the form
of Warrant and the Registration Rights Agreement)). Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser or
an Affiliate of any Purchaser, or include the name of any Purchaser or an
Affiliate of any Purchaser in any press release or filing with the Commission
(other than the Registration Statement) or any regulatory agency or Trading
Market, without the prior written consent of such Purchaser, except to the
extent such disclosure is required by law, request of the Staff of the
Commission or Trading Market regulations. From and after the issuance of the
Press Release, no Purchaser shall be in possession of any material, non-public
information received from the Company or any of its officers, directors,
employees or agents, that is not disclosed in the Press Release. The Company
shall not, and shall cause each of its officers, directors, employees and
agents, not to, provide any Purchaser with any material, non-public information
regarding the Company from and after the filing of the Press Release without the
express written consent of such Purchaser. If a Purchasers has, or believes it
has, received any such material, non-public information regarding the Company,
it shall provide the Company with written notice thereof. The Company shall
within five (5) Trading Days of receipt of such notice, make public disclosure
of such material, non-public information. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.8, such Purchaser will maintain the
confidentiality of all disclosures made to it in connection with this
transaction (including the existence and terms of this transaction).

 

4.9 Indemnification.

(a) Indemnification of Purchasers. In addition to the indemnity provided in the
Registration Rights Agreement, the Company will indemnify and hold the
Purchasers and their Affiliates and their respective directors, officers,
shareholders, partners, members, managers, employees and agents (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”), that any such Purchaser Party
may suffer or incur as a result of or relating to any misrepresentation, breach
or inaccuracy of any representation, warranty, covenant or agreement made by the
Company in any Transaction Document. In addition to the indemnity contained
herein, the Company will reimburse each Purchaser Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation and
travel in connection therewith) incurred in connection therewith, as such
expenses are incurred.

(b) Conduct of Indemnification Proceedings. Promptly after receipt by any Person
(the “Indemnified Person”) of notice of any demand, claim or circumstances which
would or might give rise to a claim or the commencement of any action,
proceeding or investigation in respect of which indemnity may be sought pursuant
to Section 4.7(a), such Indemnified Person shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such Indemnified Person, and
shall assume the payment of all fees and expenses; provided, however, that the
failure of any Indemnified Person so to notify the Company shall not relieve the
Company of its obligations hereunder except to the extent that the Company is
actually and materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; or (ii) in the reasonable
judgment of counsel to such Indemnified Person, representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. The Company shall not be liable for any settlement of
any proceeding effected without its written consent, which consent shall not be
unreasonably withheld, delayed or conditioned. Without the prior written consent
of the

 

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Indemnified Person, which consent shall not be unreasonably withheld, delayed or
conditioned, the Company shall not effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Person from all liability arising out of such proceeding.

4.10 Listing of Securities. Promptly following the date hereof, the Company
shall take all necessary action to cause the Shares, the Warrant Shares and the
shares of Common Stock issuable upon exercise of the Placement Agent Warrants to
be listed upon the Principal Trading Market, if any, upon which shares of Common
Stock are then listed (subject to official notice of issuance) and shall
maintain, so long as any other shares of Common Stock shall be so listed, such
listing. Further, if the Company applies to have its Common Stock or other
securities listed on any other Trading Market, it shall include in such
application the Shares and the Warrant Shares (including the shares of Common
Stock issuable upon exercise of the warrant issued to the Placement Agent) and
will take such other action as is necessary to cause the Shares, and the Warrant
Shares (including the shares of Common Stock issuable upon exercise of the
warrants issued to the Placement Agent) to be listed on such other Trading
Market as promptly as practicable.

4.11 Use of Proceeds. The Company intends to use the net proceeds from the sale
of the Securities hereunder for working capital and general corporate purposes.

4.12 Short Sales and Confidentiality After The Date Hereof. Such Purchaser shall
not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in any transactions in the securities of the Company (including,
without limitation, any Short Sales) during the period from the date hereof
until such time as (i) the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.8 or (ii) this Agreement is
terminated in full pursuant to Section 6.18. Notwithstanding the foregoing, in
the case of a Purchaser that is a multi-managed investment vehicle whereby
separate portfolio managers manage separate portions of such Purchaser’s assets
and the portfolio managers have no direct knowledge of the investment decisions
made by the portfolio managers managing other portions of such Purchaser’s
assets, the representation set forth above shall apply only with respect to the
portion of assets managed by the portfolio manager that have knowledge about the
financing transaction contemplated by this Agreement. Each Purchaser understands
and acknowledges, severally and not jointly with any other Purchaser, that the
Commission currently takes the position that covering a short position
established prior to effectiveness of a resale registration statement with
shares included in such registration statement would be a violation of Section 5
of the Securities Act, as set forth in Item 65, Section 5 under Section A, of
the Manual of Publicly Available Telephone Interpretations, dated July 1997,
compiled by the Office of Chief Counsel, Division of Corporation Finance.

ARTICLE V.

CONDITIONS PRECEDENT TO CLOSING

5.1 Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities. The obligation of each Purchaser to acquire Securities at the
Closing is subject to the fulfillment to such Purchaser’s satisfaction, on or
prior to the Closing Date, of each of the following conditions, any of which may
be waived by such Purchaser (as to itself only):

(a) Representations and Warranties. 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 except for representations and warranties that speak as of a specific
date;

 

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(b) Performance. The Company 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 it at or
prior to the Closing;

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;

(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, including but not
limited to the approval of the American Stock Exchange to issue and list the
Shares and the Warrant Shares, all of which shall be and remain so long as
necessary in full force and effect;

(e) Adverse Changes. Since the date of execution of this Agreement, no event or
series of events shall have occurred that has resulted or reasonably could
result in a Material Adverse Effect;

(f) No Suspensions of Trading in Common Stock; Listing. The Common Stock
(i) shall be designated for quotation or listed on the Principal Market and
(ii) shall not have been suspended, as of the Closing Date, by the Commission or
the Principal Market from trading on the Principal Market nor shall suspension
by the Commission or the Principal Market have been threatened, as of the
Closing Date, either (A) in writing by the Commission or the Principal Market or
(B) by falling below the minimum listing maintenance requirements of the
Principal Market;

(g) Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a);

(h) Compliance Certificate. The Company shall have delivered to each Purchaser a
certificate, dated as of the Closing Date and signed by its Chief Executive
Officer or its Chief Financial Officer, dated as of the Closing Date, certifying
to the fulfillment of the conditions specified in Sections 5.1(a), (b), (c),
(d) and (f);

(i) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.18 herein.

5.2 Conditions Precedent to the Obligations of the Company to sell Securities.
The Company’s obligation to sell and issue the Securities at the Closing is
subject to the fulfillment to the satisfaction of the Company on or prior to the
Closing Date of the following conditions, any of which may be waived by the
Company:

(a) Representations and Warranties. The representations and warranties made by
the Purchasers in Section 3.2 hereof 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 (except for representations and warranties that speak as of
a specific date);

(b) Performance. The Purchasers 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 the
Purchasers at or prior to the Closing Date;

 

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(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling
or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents;

(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary or appropriate
for consummation of the purchase and sale of the Securities, including but not
limited to the approval of the American Stock Exchange to issue and list the
Shares and the Warrant Shares, all of which shall be and remain so long as
necessary in full force and effect;

(e) Purchasers Deliverables. Each Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b); and

(f) Termination. This Agreement shall not have been terminated as to such
Purchaser in accordance with Section 6.18 herein.

ARTICLE VI.

MISCELLANEOUS

6.1 Fees and Expenses. The Company shall reimburse the Placement Agent for the
reasonable fees and expenses in connection with the transactions contemplated by
this Agreement, which the Company agrees shall include the reasonable fees and
expenses of the Placement Agent Counsel (which fees shall include, without
limitation, the fees and expenses associated with the negotiation, preparation
and execution and delivery of this Agreement and the other Transaction Documents
and any amendments, modifications or waivers thereto), subject to the consent of
the Company for fees and expenses in excess of $50,000. The Company and the
Purchasers shall each pay the fees and expenses of their respective advisers,
counsel, accountants and other experts, if any, and all other expenses incurred
by such party in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
sale and issuance of the Securities to the Purchasers. Each party acknowledges
that Lowenstein Sandler PC has rendered legal advice to the Placement Agent and
not to such party in connection with the transactions contemplated hereby, and
that such party has relied for such matters on the advice of its own respective
counsel.

6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements, understandings,
discussions and representations, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Purchasers will execute and deliver to the other such further
documents as may be reasonably requested in order to give practical effect to
the intention of the parties under the Transaction Documents.

6.3 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 (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section prior to 5:00 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section on a day that is not a Trading Day or later than 5:00
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the
date of mailing, if sent by U.S. nationally recognized overnight

 

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courier service with next day delivery specified, or (d) 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:    RegeneRx Biopharmaceuticals, Inc.    3 Bethesda Metro
Center, Suite 630    Bethesda, Maryland 20814    Telephone No.: (301) 280-1992
   Facsimile No.: (301) 280-1996    Attention: J.J. Finkelstein With a copy to:
   Patton Boggs, LLP    2550 M Street, N.W.    Washington, DC 20037    Telephone
No.: (202) 457- 6142    Facsimile No.: (202) 457-6315    Attention: Philip
Feigen If to a Purchaser:    To the address set forth under such Purchaser’s
name on the signature page hereof;

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

6.4 Amendments; Waivers; No Additional Consideration. 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 each of the Purchasers or, in the case
of a waiver, by the party against whom enforcement of any such waiver is sought.
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. No consideration shall be offered or paid to any Purchaser to amend or
consent to a waiver or modification of any provision of any Transaction Document
unless the same consideration is also offered to all Purchasers who then hold
Securities.

6.5 Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents.

6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the prior written consent of the Purchasers. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers any Securities in compliance with this
agreement and applicable law, provided such transferee shall agree in writing to
be bound, with respect to the transferred Securities, by the terms and
conditions of this Agreement that apply to the “Purchasers”.

6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except (i) each Purchaser Party is an intended third party

 

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beneficiary of Section 4.9, and (ii) Placement Agent is an intended third party
beneficiary of Article III hereof, and each Purchaser Party or the Placement
Agent, as the case may be, may enforce the provisions of such Sections directly
against the parties with obligations thereunder.

6.8 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 and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in 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 (including with respect to the enforcement of any of the
Transaction Documents), 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 such 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 LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. If either party shall
commence a Proceeding to endorse any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its reasonable attorney’s fees and other costs and expenses uncured with the
investigation preparation and prosecution of such Proceeding.

6.9 Survival. Subject to applicable statute of limitations, the representations,
warranties, agreements and covenants contained herein shall survive the Closing
and the delivery of the Securities.

6.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile signature page were an original thereof.

6.11 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

6.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Purchaser exercises a right, election, demand or option
under a Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights.

 

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6.13 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is reasonably required by the
Transfer Agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities. If a replacement certificate or
instrument evidencing any Securities is requested due to a mutilation thereof,
the Company may require delivery of such mutilated certificate or instrument as
a condition precedent to any issuance of a replacement.

6.14 Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.

6.15 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

6.16 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or
other securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof, each
reference in any Transaction Document to a number of shares or a price per share
shall be amended to appropriately account for such event.

6.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Purchaser or by any agent or employee of any other Purchaser, and no
Purchaser and any of its agents or employees shall have any liability to any
other Purchaser (or any other Person) relating to or arising from any such
information, materials, statement or opinions. Nothing contained herein or in
any Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.

 

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Each Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights, including without limitation the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose. The Company acknowledges that each of the
Purchasers has been provided with the same Transaction Documents for the purpose
of closing a transaction with multiple Purchasers and not because it was
required or requested to do so by any Purchaser. The Company’s obligations to
each Purchaser under this Agreement are identical to its obligations to each
other Purchaser other than such differences resulting solely from the number of
Securities purchased by such Purchaser, but regardless of whether such
obligations are memorialized herein or in another agreement between the Company
and a Purchaser.

6.18 Termination. This Agreement may be terminated and the sale and purchase of
the Shares and the Warrants abandoned at any time prior to the Closing by either
the Company or any Purchaser (with respect to itself only) upon written notice
to the other, if the Closing has not been consummated on or prior to 5:00 p.m.
(New York City time) on the Outside Date; provided, however, that the right to
terminate this Agreement under this Section 6.18 shall not be available to any
Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 6.18 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section, the Company and the terminating Purchaser(s) shall not have any
further obligation or liability (including arising from such termination) to the
other, and no Purchaser will have any liability to any other Purchaser under the
Transaction Documents as a result therefrom.

 

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

 

REGENERX BIOPHARMACEUTICALS, INC.

By:

 

 

Name:

 

Title:

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

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NAME OF PURCHASER:                                              By:  

 

Name:   Title:   Purchase Price (Subscription Amount): $1.80
Number of Shares to be acquired:                                  Underlying
Shares subject to Warrant:                         (40% of the number of Shares
to be acquired) Tax ID No.:                                          Address for
Notice:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

Attention:  

 

Delivery Instructions:

(if different than above)

c/o                                                      

Street:                                                  

City/State/Zip:                                 

Attention:                                         

Telephone No.: