Exhibit 10.1
SECOND AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE
PURCHASE AGREEMENT
     This SECOND AMENDED AND RESTATED CONVERTIBLE PROMISSORY NOTE PURCHASE
AGREEMENT, dated as of August 13, 2007 is made between the purchaser listed on
the signature pages hereto (the “Purchaser”), the Amended Note Purchasers (as
defined below), and ALSERES PHARMACEUTICALS, INC., a Delaware corporation (the
“Company”).
RECITALS
     WHEREAS, the Company entered into that certain Convertible Promissory Note
Purchase Agreement, dated as of March 22, 2007 (the “Original Agreement”) by and
among the Company and the purchasers listed therein (the “Original Convertible
Note Purchasers”) pursuant to which the Company issued to each of the Original
Convertible Note Purchasers a convertible promissory note (collectively, the
“Original Notes”), and the Company obtained the right to borrow up to
$15,000,000 (the “Original Advance Amount”) from the Original Convertible Note
Purchasers;
     WHEREAS, the Company entered into that certain Amended and Restated
Convertible Promissory Note Purchase Agreement, dated as of May 1, 2007 by and
among the Company and the purchasers listed therein (the “Amended Note
Purchasers”), pursuant to which the Original Convertible Note Purchasers agreed
not to request any additional Advances (as defined in the Original Agreement)
under the Original Agreement, and Highbridge International LLC (“Highbridge”)
was added as a Purchaser (as defined in the Original Agreement) and was issued a
convertible promissory note (the “Highbridge Note”);
     WHEREAS, as of the date hereof, the Company has borrowed $15,000,000 of the
Original Advance Amount;
     WHEREAS, the Company requires certain funds for the operation of its
business; and
     WHEREAS, the Purchaser is willing to provide the Company with such funds
through the increase of the Original Advance Amount and the purchase of the New
Note (defined below) on the terms and conditions hereafter provided, including
certain registration rights relating to the Common Stock issued and issuable
upon the conversion of the Convertible Notes (defined below);
     NOW, THEREFORE, in order to induce the Purchaser to purchase the New Note
and for other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, and intending to be legally bound, the Purchaser, the
Amended Note Purchasers and the Company hereby agree as follows:

 

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     1. DEFINED TERMS. When used in this Agreement the following terms shall
have the following meanings (such meanings being equally applicable to both the
singular and plural forms of the terms defined):
     “Affiliates” shall mean any corporation, company, partnership, joint
venture and/or firm that controls, is controlled by, or is under common control
with the Company. For purposes of this definition, “control” shall mean (a) in
the case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
     “Agreement” means this Second Amended and Restated Convertible Promissory
Note Purchase Agreement, as it may be amended or modified and in effect from
time to time.
     “Amended Note Purchasers” shall have the meaning set forth in the preamble.
     “Business Day” means any day other than a Saturday, Sunday, or other day on
which commercial banks in the Commonwealth of Massachusetts are authorized or
required to close.
     “Commitment Percentage” shall have the meaning set forth in Section 2.1
hereof.
     “Common Stock” means the common stock, $0.01 par value per share, of the
Company.
     “Convertible Notes” shall mean, collectively, the Original Notes, the
Highbridge Note and the New Note.
     “Cut Back Shares” has the meaning set forth in Section 9.1(d).
     “Effective Date” means the date that the Registration Statement is first
declared effective by the SEC.
     “Effectiveness Period” has the meaning set forth in Section 9.1(b).
     “Electing Purchaser” shall have the meaning set forth in Section 4.2
     “Event of Default” shall have the meaning assigned to such term in
Section 11 hereof.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “First Commercial Sale” shall mean, with respect to each Molecular Imaging
Product, the first commercial sale in a country as part of a nationwide
introduction by the Company, its Affiliates or its or its Affiliates’ licensees
or sublicensees.
     “Highbridge Note” shall have the meaning set forth in the preamble.
     “Highest Lawful Rate” means the maximum lawful interest rate, if any, that
at any time or from time to time may be contracted for, charged, or received
under the laws applicable to the Amended Note Purchasers or the Purchaser which
are presently in effect or, to the extent allowed

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by law, under such applicable laws which allow a higher maximum nonusurious
interest rate than applicable laws now allow.
     “Indemnified Party” has the meaning set forth in Section 9.4(c).
     “Indemnifying Party” has the meaning set forth in Section 9.4(c).
     “Loan Documents” means collectively, this Agreement and the Convertible
Notes.
     “Losses” means any and all losses, claims, damages, liabilities, settlement
costs and expenses, including, without limitation, reasonable attorneys’ fees.
     “Maturity Date” means the earliest to occur of (a) December 31, 2010 and
(b) the date on which an Amended Note Purchaser or the Purchaser declares a
Default (as defined in Section 11 below) to have occurred.
     “Molecular Imaging Products” shall mean products approved for sale by the
appropriate U.S. and/or foreign regulatory body containing as the active
ingredient the Company’s radio-labeled molecular imaging agents, currently in
development or developed by the Company in the future, including, without
limitation, the ALTROPANE® and FLUORATEC molecular imaging agents, for the
diagnosis and monitoring of Parkinson’s Disease and Attention Deficit
Hyperactivity Disorder using SPECT or PET camera imaging techniques.
     “Net Sales” shall mean the gross amount received by the Company, its
Affiliates and/or its or its Affiliates’ licensees or sublicensees on sales or
other dispositions of Molecular Imaging Products to Third Parties (other than
licensees or sublicensees) in bona fide, arm’s-length transactions, less the
following deductions:
     (a) Trade, cash and/or quantity discounts actually allowed and taken
directly with respect to such sales, as reflected in the amount invoiced;
     (b) Tariffs, duties, excises, sales taxes or other taxes imposed upon and
paid directly by the Company with respect to the production, sale, delivery or
use of the Molecular Imaging Product (excluding national, state or local taxes
based on income), as reflected in the amount invoiced;
     (c) Amounts repaid or credited by reason of rejections, defects, recalls or
returns, or because of chargebacks, refunds, rebates, retroactive price
reductions or delayed ship orders;
     (d) Amounts credited for uncollectible amounts on previously sold products;
     (e) Freight, insurance and other transportation charges incurred in
shipping a Molecular Imaging Product to Third Parties, as reflected in the
amount invoiced;
     (f) Deduction of one percent (1%) for distribution and warehousing
expenses; and

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     (g) Any other reduction or specifically identifiable amounts included in
the gross invoice that are creditable for reasons substantially equivalent to
those listed above.
     Notwithstanding anything in this Agreement to the contrary, “Net Sales”
shall exclude any sales or other disposition of Molecular Imaging Products for
test marketing, clinical trial purposes or compassionate or similar use.
     Net Sales amounts shall be determined from the books and records of the
Company, its Affiliates and/or its or its Affiliates’ licensees or sublicensees,
maintained in accordance with generally accepted accounting principles,
consistently applied.
     Sales between or among the Company, its Affiliates or their respective
licensees and sublicensees shall be disregarded for purposes of calculating Net
Sales. In the case of any sale or other disposal of a Molecular Imaging Product
between or among the Company and its Affiliates, licensees and sublicensees, for
resale, Net Sales shall be calculated as above only on the value charged or
invoiced on the first arm’s-length sale thereafter to a Third Party.
     In the case of any sale or other disposal for value, such as barter or
counter-trade, of any Molecular Imaging Product, or part thereof, other than in
an arm’s-length transaction exclusively for money, Net Sales shall be calculated
as above on the value of the non-cash consideration received or the fair market
price (if higher) of the Molecular Imaging Product in the country of sale or
disposal.
     In the event the Molecular Imaging Product is sold in a finished dosage
form in combination with one or more other active ingredients (a “Combination
Product”), the Net Sales of the Molecular Imaging Product, for the purposes of
determining royalty payments, shall be determined by multiplying the Net Sales
(as defined above) of the Combination Product by the fraction, ‘A/(A+B)’ where
‘A’ is the weighted (by sales volume) average sale price in the relevant country
of the Molecular Imaging Product when sold separately in finished form and ‘B’
is the weighted average sale price in that country of the other product(s) sold
separately in finished form. In the event that such average sale price cannot be
determined for both the Molecular Imaging Product and the other product(s) in
the Combination Product, Net Sales for purposes of determining royalty payments
shall be agreed by the Parties based on the relative value contributed by each
component, such agreement not to be unreasonably withheld.
     “New Note” shall have the meaning set forth in Section 2.1 hereof.
     “Obligations” means all unpaid principal of and accrued and unpaid interest
on the Convertible Notes, and all other obligations, interest, fees, charges and
expenses of the Company to the Amended Note Purchasers and the Purchaser arising
under the Loan Documents.
     “Original Advance Amount” shall have the meaning set forth in the preamble.
     “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, a
government or any department or agency thereof.

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     “Pre-Commercial Income” shall mean, with respect to each Molecular Imaging
Product, all license fees, milestone payments and other amounts received by the
Company and/or its Affiliates from Third Parties in connection with or related
to the licensing or sublicensing to such Third Parties of the Company’s and/or
its Affiliate’s rights under the intellectual property covering the Molecular
Imaging Product. Notwithstanding anything in the foregoing to the contrary,
“Pre-Commercial Income” shall exclude (a) any royalty payments or milestone
payments based upon commercial sales levels, (b) amounts received for research
and development activities undertaken for, or in collaboration with, such Third
Parties, (c) amounts received for debt or equity securities of the Company
and/or its Affiliates, provided that any amounts received in excess of the then
current fair market value of such debt or equity securities shall, to the extent
of such excess, be deemed to be Pre-Commercial Income, and (d) transfer pricing
amounts paid in respect of Molecular Imaging Products supplied to such Third
Parties.
     “Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, a partial proceeding, such as a deposition),
whether commenced or threatened in writing.
     “Prospectus” means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus including post-effective amendments, and all material incorporated by
reference or deemed to be incorporated by reference in such Prospectus.
     “Registrable Securities” means the shares of Common Stock issued or
issuable on the conversion of any Convertible Notes pursuant to Section 9.
     “Registration Statement” means each registration statement required to be
filed under Section 9, including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
     “Registration Statement Questionnaire” means a questionnaire in the form
attached hereto as Exhibit B.
     “Required Effectiveness Date” means (i) if a Registration Statement does
not become subject to review by the SEC, the date which is the earlier of
(a) ninety (90) days after the Required Filing Date or (b) five (5) Trading Days
after the Company receives notification from the SEC that such Registration
Statement will not become subject to review, or (ii) if a Registration Statement
becomes subject to review by the SEC, the date which is the earlier of (a) one
hundred and twenty (120) days after the Required Filing Date or (b) five
(5) Trading Days after the Company receives notification from the SEC that the
SEC has no further comment to such Registration Statement.

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     “Required Filing Date” has the meaning set forth in Section 9.1(a).
     “Restriction Termination Date” has the meaning set forth in Section 9.1(d).
     “Rule 144 Affiliate” means any Person that, directly or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 144
under the Securities Act.
     “SEC” means the United States Securities and Exchange Commission.
     “SEC Reports” means all documents required to be filed by the Company under
the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the
two years preceding the date hereof, together with any other materials filed or
furnished by the Company under the Exchange Act, whether or not any such
materials were required.
     “SEC Restrictions” has the meaning set forth in Section 9.1(d).
     “Securities Act” means the Securities Act of 1933, as amended.
     “Stockholder Approval” shall have the meaning set forth in Section 4.1(b).
     “Third Party” shall mean any person or entity other than the Company or any
of its Affiliates.
     “Total Converted Balance” shall have the meaning set forth in Section 4.2
     “Trading Day” means (i) a day on which the Common Stock is traded on a
Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock
is not listed or quoted 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 listed
or quoted on any Trading Market, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the Pink Sheets LLC (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.
     “Transfer Agent” means Continental Stock Transfer & Trust Company, or any
successor transfer agent for the Company.
     “Valid Claim” means a claim of any issued, unexpired United States or
foreign patent, which shall not be disclaimed, nor held invalid or unenforceable
by a court of competent jurisdiction in an unappealed or unappealable decision.

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     2. CONVERTIBLE NOTE FACILITY.
          2.1 Purchase and Sale of New Note. At each Closing (as defined below),
the Purchaser agrees on the terms of and subject to the conditions specified in
this Agreement, to purchase from the Company, according to the Purchaser’s pro
rata share (based upon the respective “Commitment Percentage” of the Purchaser
as set forth on Schedule 2.1 attached hereto), and the Company agrees to sell to
the Purchaser listed on Schedule 2.1, convertible promissory notes dated as of
the date of such Closing in the form attached to this Agreement as Exhibit A
(the “New Note”); provided, however, that in no event shall the Purchaser be
obligated hereunder to purchase, in the aggregate, more than a principal amount
of $10 million in New Notes.
          2.2 Closing. The closing of the issuance and sale of the New Note
issued hereunder shall be held at the offices of counsel to the Company at 5:00
p.m. on the date and place as the Company and the Purchaser mutually agree in
writing (each such date, a “Closing”).
          2.3 Payment of New Note Purchase Price. At each Closing, (i) the
Company shall deliver to the Purchaser a New Note at such Closing, and (ii) as
payment in full for the New Note being purchased by the Purchaser at such
Closing, the Purchaser shall pay its purchase amount to the Company by wire
transfer of immediately available funds to an account designated by the Company.
     2.4 Interest. Interest shall accrue on each Convertible Note from the date
of issuance until such Convertible Note is paid in full or otherwise converted
pursuant to Section 4 hereof. The Company promises to pay interest on the
outstanding principal amount of each Convertible Note (i) until the Maturity
Date, or if earlier, conversion pursuant to Section 4 hereof, at a per annum
interest rate equal to five percent (5%), (ii) from and after the Maturity Date,
or during the continuance of an Event of Default, at a per annum rate equal to
ten percent (10%) or (iii) if less than the rates applicable under both clauses
(i) and (ii), the Highest Lawful Rate. Interest shall be calculated on the basis
of a 360-day year for the actual number of days elapsed. Interest shall accrue
until paid in full and all unpaid interest shall be due and payable on the
Maturity Date, unless otherwise converted pursuant to Section 4 hereof.
     2.5 Method of Payment. All payments of principal, interest, and fees
hereunder shall be made on the date when due in immediately available funds in
United States Dollars to the Amended Note Purchasers or the Purchaser at the
Amended Note Purchaser’s or Purchaser’s address specified on the signature page
hereof, or at such other address as shall be directed by the applicable Amended
Note Purchaser or Purchaser in a writing received by the Company.
     2.6 Prepayments. The Company may not prepay any amounts under any
Convertible Notes whether principal or interest.
     2.7 Usury Savings Clause. Notwithstanding any other provision herein, the
aggregate interest rate charged with respect to any of the Obligations, shall
not exceed the Highest Lawful Rate. If the rate of interest (determined without
regard to the preceding sentence) under this Agreement at any time exceeds the
Highest Lawful Rate, the outstanding

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amount under the Convertible Notes issued hereunder shall bear interest at the
Highest Lawful Rate until the total amount of interest due hereunder equals the
amount of interest which would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect. In
addition, if when the Convertible Notes issued hereunder are repaid in full the
total interest due hereunder is less than the total amount of interest which
would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law,
the Company shall pay to the Amended Note Purchasers or the Purchaser, as the
case may be, an amount equal to the difference between the amount of interest
paid and the amount of interest which would have been paid if the Highest Lawful
Rate had at all times been in effect. Notwithstanding the foregoing, it is the
intention of the Amended Note Purchasers, the Purchaser and the Company to
conform strictly to any applicable usury laws. Accordingly, if the Amended Note
Purchasers or the Purchaser contract for, charge, or receive any consideration
which constitutes interest in excess of the Highest Lawful Rate, then any such
excess shall be cancelled automatically and, if previously paid, shall be
applied to the outstanding principal amount of the Convertible Notes issued
hereunder or be refunded to the Company.
     3. CONDITIONS PRECEDENT. The obligations of Purchaser to purchase the New
Note shall be subject to the following conditions precedent that on the date of
the Closing:
         3.1 Each of the representations and warranties of the Company contained
in this Agreement and the New Note shall be true and correct in all material
respects; and
         3.2 At the time of, and immediately after giving effect to, the
issuance of such New Note, no Event of Default shall have occurred and be
continuing.
     4. OPTIONAL CONVERSION.
         4.1 Conversion to Equity.
               (a) After December 31, 2007, at any time during which Convertible
Notes remain outstanding, up to all of the outstanding principal and accrued
interest under any particular Convertible Note then outstanding may be
converted, at the sole option of the holder thereof and by written notice to the
Company, into shares of Common Stock of the Company at a conversion price equal
to $2.50 per share.
               (b) Notwithstanding anything to the contrary contained herein,
each Amended Note Purchaser and the Purchaser shall be prohibited from effecting
a conversion pursuant to this Section 4.1 if at the time of such conversion
(i) the Common Stock issuable to an Amended Note Purchaser or the Purchaser
pursuant to such conversion or as a result of such conversion, when taken
together with all shares of Common Stock then held or otherwise beneficially
owned by an Amended Note Purchaser or the Purchaser exceeds 19.9% of the total
number of issued and outstanding shares of Common Stock of the Company
immediately prior to such conversion, (ii) the Common Stock issuable to an
Amended Note Purchaser or the Purchaser pursuant to such conversion or as a
result of such conversion, exceeds 19.9% of the total number of issued and
outstanding shares of Common Stock of the Company immediately prior to such
conversion, in each case unless the stockholders of the Company have approved

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the conversion of all of the shares of Common Stock issuable hereunder and the
transactions contemplated hereby pursuant to Nasdaq Marketplace
Rule 4350(i)(1)(D)(ii) and any other applicable rules and regulations
(“Stockholder Approval”). The foregoing provision however shall not restrict the
number of shares of Common Stock which the Amended Note Purchaser or the
Purchaser may receive or beneficially own in order to determine the amount of
securities or other consideration that an Amended Note Purchaser or the
Purchaser may receive in the event of a merger, sale or other business
combination involving the Company.
               (c) The Company hereby covenants and agrees that in the event an
Amended Note Purchaser or the Purchaser is prohibited from effecting a
conversion of Convertible Notes pursuant to this Section 4.1, then upon receipt
of written notice of such event from such Amended Note Purchaser or the
Purchaser, the Company shall use its best efforts to seek Stockholder Approval.
               (d) Notwithstanding anything to the contrary contained herein,
the Company shall not effect any conversion of the Highbridge Note or the New
Note, and neither Highbridge nor the Purchaser, nor any of their respective
affiliates shall have the right to effect any conversion pursuant to this
Section 4.1, to the extent that after giving effect to such conversion,
Highbridge (together with its affiliates and any other person or entity acting
as a group together with Highbridge) on the one hand, or the Purchaser (together
with its affiliates and any other person or entity acting as a group together
with the Purchaser) on the other hand, would beneficially own in excess of 9.99%
of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock issuable upon any such
conversion. For purposes of the foregoing sentence, the number of shares of
Common Stock beneficially owned by Highbridge or the Purchaser shall include the
number of shares of Common Stock issuable upon the conversion with respect to
which such determination is being made, but shall exclude the number of shares
of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of the Highbridge Note or the New Note beneficially owned
by Highbridge or the Purchaser or any of their respective affiliates and
(B) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any other
convertible notes or warrants) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by Highbridge or
the Purchaser or any of their respective affiliates. Except as set forth in the
preceding sentence, for purposes of this Section 4.1(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act and the
rules and regulations promulgated thereunder. For purposes of this Section 4(d),
in determining the number of outstanding shares of Common Stock, Highbridge and
the Purchaser may rely on the number of outstanding shares of Common Stock as
reflected in the later dated of (x) the Company’s most recent Form 10-K (y) a
more recent public announcement by the Company or (z) any other notice by the
Company or the Transfer Agent setting forth the number of shares of Common Stock
outstanding. Upon the written or oral request of Highbridge or the Purchaser,
the Company shall within two Trading Days confirm orally and in writing to
Highbridge the number of shares of Common Stock then outstanding. In any case,
the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company,
including the Highbridge Note or the New Note, since the date as of which such
number of outstanding shares of Common Stock was reported.

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          4.2 Conversion to Royalty Stream.
               (a) At any time all or any of the Amended Note Purchasers or the
Purchaser may elect (as such, collectively, the “Electing Purchasers”, and,
individually, an “Electing Purchaser”), at their sole option and by written
notice to the Company, to convert, in $1 million increments, up to the entire
amount of the principal and accrued interest then outstanding on all Convertible
Notes then held by such Electing Purchaser (the “Total Converted Balance”), into
the right to receive from the Company the following payments related to the
Company’s Molecular Imaging Products:
                         (i) For each One Million ($1,000,000) of Total
Converted Balance,
                         (A) 2% of Pre-Commercial Income; plus
                         (B) a royalty at a rate of one half of one percent
(0.5%) of Net Sales of Molecular Imaging Products.
                    By way of example only, if the Total Converted Balance being
converted by the Electing Purchaser is $3.5 million, the Company would be
required to pay 7% of Pre-Commercial Income (2% x 3.5) to such Electing
Purchaser plus a royalty of 1.75% on Net Sales of Molecular Imaging Products
(0.5% x 3.5).
                         (ii) The Company agrees to provide each Amended Note
Purchaser and the Purchaser with at least 30 days prior written notice of the
execution of a partnership agreement for the Molecular Imaging products to
enable them to make an election to convert under this Section 4.2. Upon receipt
of such notice, each Amended Note Purchaser and the Purchaser will have 30 days
to elect such conversion. For purposes of clarity, any amounts which may be owed
by the Company under Section 4.2(a)(i) above after proper notice is given and no
election is made, shall be owed on a going-forward basis and shall not apply
retroactively to any Pre-Commercial Income received by the Company and/or its
Affiliates or Net Sales of Molecular Imaging Products prior to the date of such
election to convert.
               (b) The Company shall make the payments set forth in
Section 4.2(a)(i) above on a calendar quarterly basis to each Electing
Purchaser.
               (c) The Company shall deliver to each Electing Purchaser within
sixty (60) days after the end of each calendar quarter following such Electing
Purchaser’s election to convert, reasonably detailed written accountings of
Pre-Commercial Income and Net Sales of Molecular Imaging Products that are
subject to payments due to such Electing Purchaser hereunder for such calendar
quarter. When the Company delivers such accountings to such Electing Purchaser,
the Company shall also deliver all payments due under Section 4.2(a)(i) for such
calendar quarter.
               (d) On a country-by-country and Molecular Imaging
Product-by-Molecular Imaging Product basis, the royalty obligation of the
Company hereunder shall cease at the expiration of the last-to-expire Valid
Claim covering a Molecular Imaging Product in said

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country or, in the case of countries where no Valid Claims covering a Molecular
Imaging Product have been granted, ten (10) years after the First Commercial
Sale of a Molecular Imaging Product in said country. In no event will the
Company’s royalty obligation hereunder cease so long as royalties in excess of
those owed hereunder are paid to the Company by its licensee of any or all of
the Molecular Imaging Products.
     5. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to
the Purchaser that on the date hereof:
          5.1 The Company is duly organized, validly existing, and in good
standing under the laws of its jurisdiction of incorporation and is duly
qualified and in good standing in every other jurisdiction where the nature of
its business or the location or ownership of its properties requires such
qualification and where the failure to be so qualified would reasonably be
expected to have a material adverse effect on the Company’s business,
operations, properties, assets or condition (financial or otherwise).
          5.2 The Company has the corporate power and authority to execute and
deliver this Agreement and the New Note and to perform all of the obligations
hereunder, and all necessary corporate action has been taken to execute and
deliver this Agreement and the New Note and to issue and sell the New Note
hereunder.
          5.3 This Agreement and the New Note constitute the legal, valid, and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization or similar laws generally affecting the enforcement
of the rights of creditors.
          5.4 The execution, delivery and performance by the Company of this
Agreement and the New Note does not (i) violate any provisions of the Company’s
Certificate of Incorporation, as amended, bylaws, as amended, or any material
contract, agreement, law, regulation, order, decree or writ to which the Company
or any of its properties are subject or (ii) require the consent or approval of
any person, entity or authority, including, without limitation, any regulatory
authority or governmental body of the United States of America or any state
thereof or any political subdivision of any of the foregoing.
     6. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser represents
and warrants, severally and not jointly, to the Company as follows:
          6.1 Investment Intent. The Purchaser understands that the New Note has
not been registered under the Securities Act or any applicable state securities
law and is acquiring the New Note as principal for its own account for
investment purposes only and not with a view to or for distributing or reselling
such New Note, has no present intention of distributing the New Note and has no
arrangement or understanding with any other persons regarding the distribution
of the New Note. The Purchaser is acquiring the New Note hereunder in the
ordinary course of its business. The Purchaser does not have any agreement or
understanding, directly or indirectly, with any person to distribute the New
Note.
          6.2 Purchaser Status. At the time the Purchaser was offered the New
Note, it was, and at the date hereof it is an “accredited investor” as defined
in Rule 501(a) under the

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Securities Act. The Purchaser (if not already a registered broker-dealer under
Section 15 of the Exchange Act) is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.
          6.3 Experience of Purchaser. The 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 New Note, and has so evaluated the
merits and risks of such investment. The Purchaser is able to bear the economic
risk of an investment in the New Note and, at the present time, is able to
afford a complete loss of such investment.
          6.4 General Solicitation. The Purchaser is not purchasing the New Note
as a result of any advertisement, article, notice or other communication
regarding the New Note published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
          6.5 Certain Fees. No brokerage or finder’s fees or commissions are or
will be payable by the Purchaser to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other person with respect to
the transactions contemplated by this Agreement. The Company shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other persons for fees of a type contemplated in this Section 6.5 that
may be due in connection with the transactions contemplated by this Agreement.
          6.6 Acquiring Person. The Purchaser, after giving effect to the
transactions contemplated hereby, will not, either individually or with a group
(as defined in Section 13(d)(3) of the Exchange Act), become the beneficial
owner of 20% or more of the Company’s outstanding Common Stock. For purposes of
this Section 6.6, beneficial ownership shall be determined pursuant to
Rule 13d-3 under the Exchange Act.
     7. AFFIRMATIVE COVENANTS. During the term of this Agreement and while the
Convertible Notes remain outstanding, unless each Amended Note Purchaser and the
Purchaser consents thereto in writing:
          7.1 The Company shall maintain its corporate existence, business and
assets, keep its business and assets adequately insured, maintain its chief
executive office at the location listed on the signature page hereof, and comply
in all material respects with all requirements of applicable law.
          7.2 The Company (a) shall provide each Amended Note Purchaser and the
Purchaser at least 10 days prior written notice of the Company’s intent to
change its name or its mailing address and (b) shall not change its type of
organization or jurisdiction of organization.
     8. NEGATIVE COVENANTS. So long as any principal and interest remains
outstanding under the Convertible Notes, the Company shall not:
          8.1 Create, incur, assume, guaranty, become liable with respect to
(contingently or otherwise), or permit to be outstanding any indebtedness for
money borrowed (including, without limitation, any indebtedness evidenced by any
notes, instruments or

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agreements or in connection with any capitalized lease), except for obligations
under this Agreement and the Convertible Notes;
          8.2 (i) Declare or pay any cash dividend, or make a distribution on,
repurchase, or redeem, any class of stock of the Company, other than pursuant to
repurchase obligations under existing employee stock purchase or option plans or
(ii) Sell, lease, transfer or otherwise dispose of any material assets or
property of the Company; or
          8.3 Dissolve or liquidate.
     9. REGISTRATION RIGHTS.
          9.1 Registration Statement.
               (a) Subject to the receipt of necessary information from the
Amended Note Purchasers and the Purchaser, including the information requested
in the Registration Statement Questionnaire, within 60 calendar days following
the date hereof (the “Required Filing Date”), the Company shall prepare and file
with the SEC a Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to
Rule 415. The Registration Statement shall be on Form S-3 (except if the Company
is not then eligible to register for resale the Registrable Securities on Form
S-3, in which case such registration shall be on another appropriate form in
accordance with the Securities Act and the Exchange Act).
               (b) The Company shall use reasonable best efforts to cause the
Registration Statement to be declared effective by the SEC as promptly as
possible after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act until the
earlier of the date that all Registrable Securities covered by such Registration
Statement have been sold or can be sold publicly under Rule 144(k) (the
“Effectiveness Period”); provided that, upon notification by the SEC that a
Registration Statement will not be reviewed or is no longer subject to further
review and comments, the Company shall request acceleration of such Registration
Statement within five (5) Trading Days after receipt of such notice and request
that it become effective on 4:00 p.m. New York City time on the Effective Date
and file a prospectus supplement for any Registration Statement, if required
under Rule 424 (or otherwise), by 9:00 a.m. New York City time the day after the
Effective Date.
               (c) Notwithstanding anything in this Agreement to the contrary,
after 60 consecutive Trading Days of continuous effectiveness of the initial
Registration Statement filed and declared effective pursuant to this Agreement,
the Company may, by written notice to the Amended Note Purchasers and the
Purchaser, suspend sales under a Registration Statement after the Effective Date
thereof and/or require that the Amended Note Purchasers and the Purchaser
immediately cease the sale of shares of Common Stock pursuant thereto and/or
defer the filing of any subsequent Registration Statement if (i) the Company is
engaged in a merger, acquisition or sale and the Board of Directors of the
Company determines in good faith, by appropriate resolutions, that, as a result
of such activity, (A) it would be materially detrimental to the Company (other
than as relating solely to the price of the Common Stock) to maintain a

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Registration Statement at such time or (B) it is in the best interests of the
Company to suspend sales under such registration at such time, (ii) requested by
the SEC or any other federal or state governmental authority during the
Effectiveness Period of the Registration Statement for amendments or supplements
to a Registration Statement or related Prospectus or for additional information;
(iii) the SEC or any other federal or state governmental authority issued any
stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose; (iv) the Company receives any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, (v) the Company elected to delay the disclosure of material non-public
information concerning the Company, the disclosure of which at the time is not,
in the good faith judgment of the Board of Directors of the Company, in the best
interest of the Company; or (vi) any event or circumstance which necessitates
the making of any changes in the Registration Statement or Prospectus, or any
document incorporated or deemed to be incorporated therein by reference, so
that, in the case of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
that in the case of the Prospectus, it will not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Upon receipt of such notice, each Amended Note Purchaser
and the Purchaser shall immediately discontinue any sales of Registrable
Securities pursuant to such registration until such Amended Note Purchaser or
the Purchaser is advised in writing by the Company that the current Prospectus
or amended Prospectus, as applicable, may be used. In no event, however, shall
this right be exercised to suspend sales beyond the period during which (in the
good faith determination of the Company’s Board of Directors) the failure to
require such suspension would be materially detrimental to the Company. The
Company’s rights under this Section 9.1(c) may be exercised for a period of no
more than 20 Trading Days at a time and not more than three times in any
twelve-month period. Immediately after the end of any suspension period under
this Section 9.1(c), the Company shall take all necessary actions (including
filing any required supplemental prospectus) to restore the effectiveness of the
applicable Registration Statement and the ability of the Amended Note Purchasers
and the Purchaser to publicly resell their Registrable Securities pursuant to
such effective Registration Statement.
               (d) Notwithstanding the other provisions of this Agreement, if at
any time the SEC takes the position that some or all of the Registrable
Securities may not be included in the Registration Statement because (i) the
inclusion of such Registrable Securities violates the provisions of Rule 415 as
a result of the number of shares included in such Registration Statement, and/or
(ii) the Registrable Securities cannot be sold as an “at the market offering,”
the Company shall (A) remove from the Registration Statement such portion of the
Registrable Securities (the “Cut Back Shares”) and/or (B) agree to such
restrictions and limitations on the registration and resale of the Registrable
Securities as the SEC may require to assure the Company’s compliance with the
requirements of Rule 415 (collectively, the “SEC Restrictions”). Any cut-back
imposed pursuant to this Section 9.1(d) shall be allocated among the Amended
Note Purchasers and the Purchaser on a pro rata basis. From and after such time
as the Company is able to effect the registration of the Cut Back Shares in
accordance with any SEC Restrictions (such date, the “Restriction Termination
Date”), all of the provisions of this

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Section 9.1 shall again be applicable to the Cut Back Shares; provided, however,
that for such purposes the Required Filing Date shall be deemed to be the
Restriction Termination Date.
          9.2 Registration Procedures. In connection with the Company’s
registration obligations hereunder, the Company shall:
               (a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto, furnish via email to those Amended Note Purchasers and the Purchaser
who have supplied the Company with email addresses copies of all such documents
proposed to be filed, which documents (other than any document that is
incorporated or deemed to be incorporated by reference therein) will be subject
to the review (but not approval) of such Amended Note Purchasers and the
Purchaser; provided that, the failure of any Amended Note Purchaser or Purchaser
or his, her or its counsel to respond to such proposed documents within two
Trading Days after the Amended Note Purchasers and the Purchaser have been so
furnished with copies of such documents shall be deemed approval of same; and
provided, further, that no such review and comment shall inhibit the Company
from filing the Registration Statement, any Prospectus or any such amendment or
supplement within five Business Days after such notice has been provided or
otherwise from complying with its obligations hereunder.
               (b) (i) Subject to Section 9.1(c), prepare and file with the SEC
such amendments, including post-effective amendments, to each Registration
Statement and the Prospectus used in connection therewith as may be necessary to
keep the Registration Statement continuously effective, as to the applicable
Registrable Securities for the Effectiveness Period and prepare and file with
the SEC such additional Registration Statements in order to register for resale
under the Securities Act all of the Registrable Securities; (ii) cause the
related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received from
the SEC with respect to the Registration Statement or any amendment thereto; and
(iv) comply in all material respects with the provisions of the Securities Act
and the Exchange Act with respect to the disposition of all Registrable
Securities covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Amended Note
Purchasers and the Purchaser thereof set forth in the Registration Statement as
so amended or in such Prospectus as so supplemented.
               (c) During the Effectiveness Period, notify the Amended Note
Purchasers and the Purchaser as promptly as reasonably possible, and if
requested by the Amended Note Purchasers or the Purchaser confirm such notice in
writing no later than two Trading Days thereafter, of any of the following
events: (i) the SEC notifies the Company whether there will be a “review” of any
Registration Statement; (ii) the SEC comments in writing on any Registration
Statement; (iii) any Registration Statement or any post-effective amendment is
declared effective; (iv) the SEC or any other federal or state governmental
authority requests any amendment or supplement to any Registration Statement or
Prospectus or requests additional information related thereto; (v) the SEC
issues any stop order suspending the effectiveness of any Registration Statement
or initiates any Proceedings for that purpose; (vi) the Company receives notice
of any suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or threat
of any

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Proceeding for such purpose; or (vii) the financial statements included in any
Registration Statement become ineligible for inclusion therein or any
Registration Statement or Prospectus or other document contains any untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
               (d) Use reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
any Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, as soon as possible.
               (e) Prior to any public offering of Registrable Securities, use
reasonable best efforts to register or qualify or cooperate with the selling
Amended Note Purchasers or the selling Purchaser in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Amended Note Purchaser or the Purchaser requests in writing, to keep each
such registration or qualification (or exemption therefrom) effective for so
long as required, but not to exceed the duration of the Effectiveness Period,
and to do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject or
provide any undertaking that causes the Company undue expense or burden.
               (f) Upon any sale of Registrable Securities pursuant to the
Registration Statement for the account of an Amended Note Purchaser or the
Purchaser, cooperate with the Amended Note Purchasers or the Purchaser to
facilitate the timely preparation and delivery of certificates representing such
Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent
permitted by this Agreement and under law, of all restrictive legends, and to
enable such certificates to be in such denominations and registered in such
names as any such Amended Note Purchasers or the Purchaser may reasonably
request; provided, that, the delivery of such certificates shall be subject to
the payment by the Amended Note Purchaser or the Purchaser of any transfer
taxes, if applicable.
               (g) The Company, as promptly as reasonably possible, shall
prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

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               (h) Comply in all material respects with all rules and
regulations of the SEC with respect to the Registration Statement and the
disposition of all Registrable Securities covered by the Registration Statement.
               (i) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of any particular Amended Note Purchaser or the
Purchaser that such Amended Note Purchaser or the Purchaser furnish to the
Company a completed Registration Statement Questionnaire and such other
information regarding itself, the Registrable Securities and other shares of
Common Stock held by it and the intended method of disposition of the
Registrable Securities held by it as shall be reasonably required to effect the
registration of such Registrable Securities and shall complete and execute such
documents in connection with such registration as the Company may reasonably
request. Upon the Company’s reasonable written request, an Amended Note
Purchaser or the Purchaser will promptly notify the Company of any changes in
the information set forth in the Registration Statement or the Registration
Statement Questionnaire regarding such Amended Note Purchaser or the Purchaser
or its plan of distribution or other information as the Company may reasonably
request in connection with any registration referred to in Section 9. The
Company shall not be required to include any Registrable Securities held by an
Amended Note Purchaser or the Purchaser in the Registration Statement if such
Amended Note Purchaser or the Purchaser fails to complete or update the
Registration Statement Questionnaire or provide the information requested in the
Registration Statement Questionnaire in accordance with this Section 9.2(i).
               (j) The Company shall use reasonable best efforts to comply with
all applicable rules and regulations of the SEC under the Securities Act and the
Exchange Act, including, without limitation, Rule 172 under the Securities Act,
file any final Prospectus, including any supplement or amendment thereof, with
the SEC pursuant to Rule 424 under the Securities Act, promptly inform the
Amended Note Purchasers and the Purchaser in writing if, at any time during the
Effectiveness Period, the Company does not satisfy the conditions specified in
Rule 172(c) and, as a result thereof, the Amended Note Purchasers or the
Purchaser are required to deliver a Prospectus in connection with any
disposition of Registrable Securities and take such other actions as may be
reasonably necessary to facilitate the registration of the Registrable
Securities hereunder.
          9.3 Registration Expenses. The Company shall pay all fees and expenses
incident to the performance of or compliance with Section 9 by the Company,
including without limitation (a) all registration and filing fees and expenses,
including without limitation those related to filings with the SEC, any Trading
Market and in connection with applicable state securities or Blue Sky laws,
(b) printing expenses (including without limitation expenses of printing
certificates for Registrable Securities), (c) messenger, telephone and delivery
expenses, (d) fees and disbursements of counsel for the Company, (e) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, and (f) all
listing fees to be paid by the Company to the Trading Market.
          9.4 Indemnification.

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          (a) Indemnification by the Company. The Company shall, notwithstanding
any termination of this Agreement, indemnify and hold harmless each Amended Note
Purchaser and the Purchaser, the officers, directors, partners, members, agents
and employees of each of them, each Person who controls any such Amended Note
Purchaser and the Purchaser (within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act) and the officers, directors, partners,
members, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising out of or relating to (i) any
misrepresentation or breach of any representation or warranty made by the
Company in the Loan Documents or any other certificate, instrument or document
contemplated hereby or thereby, (ii) any breach of any covenant, agreement or
obligation of the Company contained in the Loan Documents or any other
certificate, instrument or document contemplated hereby or thereby or (iii) any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus or any form of prospectus or in any
amendment or supplement thereto, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading; provided however that the Company will not
be liable in any such case to the extent that (A) such untrue statements,
alleged untrue statements, omissions or alleged omissions are based solely upon
information regarding such Amended Note Purchaser or the Purchaser furnished in
writing to the Company by such Amended Note Purchaser or the Purchaser for use
therein, or to the extent that such information relates to such Amended Note
Purchaser or the Purchaser or such Amended Note Purchaser’s or the Purchaser’s
proposed method of distribution of Registrable Securities and was reviewed and
expressly approved by such Amended Note Purchaser or the Purchaser in writing
expressly for use in the Registration Statement (including without limitation
the information set forth in the Registration Statement Questionnaire), (B) the
failure of the Amended Note Purchaser or the Purchaser to comply with the
covenants and agreements contained in Section 10.3 or 9.2(j) with respect to
resale of Registrable Securities, or (C) with respect to any prospectus used by
an Amended Note Purchaser or the Purchaser, an untrue statement or omission of
material fact contained in such prospectus that was corrected on a timely basis
in the prospectus, as then amended or supplemented, if such corrected prospectus
was timely made available by the Company to the Amended Note Purchaser or the
Purchaser, and the Amended Note Purchaser or the Purchaser seeking indemnity
hereunder was advised in writing not to use the incorrect prospectus prior to
the use giving rise to Losses.
          (b) Indemnification by the Amended Note Purchasers and the Purchaser.
Each of the Amended Note Purchasers and the Purchaser shall, severally and not
jointly, indemnify and hold harmless the Company and its directors and officers,
and each Person, if any, that controlled the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, to the
fullest extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising out of or relating to any untrue
statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising out of or relating to any omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances

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under which they were made) not misleading, but only to the extent that such
untrue statements, alleged untrue statements, omissions or alleged omissions are
based solely upon information regarding such Amended Note Purchaser or the
Purchaser furnished in writing to the Company by such Amended Note Purchaser or
the Purchaser for use therein. In no event shall the liability of any selling
Amended Note Purchaser or the selling Purchaser hereunder be greater in amount
than the dollar amount of the net proceeds received by such Amended Note
Purchaser or the Purchaser upon the sale of the Registrable Securities giving
rise to such indemnification obligation.
               (c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have proximately
and materially adversely prejudiced the Indemnifying Party.
               An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(iii) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and the reasonable fees and expenses of
separate counsel shall be at the expense of the Indemnifying Party). It shall be
understood, however, that the Indemnifying Party shall not, in connection with
any one such Proceeding (including separate Proceedings that have been or will
be consolidated before a single judge) be liable for the fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be appointed by a majority of the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

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               All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within 20 Trading Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
               (d) Contribution. If a claim for indemnification under
Section 9.4(a) or (b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 9.4(c), any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.
               The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 9.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 9.4(d), neither an Amended Note
Purchaser nor the Purchaser shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the net proceeds actually received
by an Amended Note Purchaser or the Purchaser from the sale of the Registrable
Securities subject to the Proceeding exceed the amount of any damages that an
Amended Note Purchaser or the Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
               The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
          9.5 Dispositions. Each of the Amended Note Purchasers and the
Purchaser agree that it will comply with the prospectus delivery requirements of
the Securities Act as applicable to it in connection with sales of Registrable
Securities pursuant to the Registration

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Statement and shall sell its Registrable Securities in accordance with the Plan
of Distribution set forth in the Prospectus. Each of the Amended Note Purchasers
and the Purchaser further agree that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Sections 9.2(c)(v),
(vi) or (vii), such Amended Note Purchaser and Purchaser will discontinue
disposition of such Registrable Securities under the Registration Statement
until such Amended Note Purchaser and such Purchaser are advised in writing by
the Company that the use of the Prospectus, or amended Prospectus, as
applicable, may be resumed. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph. Each of the Amended Note Purchasers
and the Purchaser, severally and not jointly with the other Amended Note
Purchasers, agree that the removal of the restrictive legend from certificates
representing Registrable Securities as set forth in Section 10.1 is predicated
upon the Company’s reliance that each Amended Note Purchaser and the Purchaser
will comply with the provisions of this subsection. Both the Company and the
Transfer Agent, and their respective directors, officers, employees and agents,
may rely on this Section.
          9.6 Registration of Other Securities. Notwithstanding anything
contained herein to the contrary and for the avoidance of doubt, the parties
hereto acknowledge that (a) the Company has granted registration rights to other
security holders, and (b) any Registration Statement prepared, filed and made
effective under this Section 9 may also cover the resale of securities held by
such security holders to the extent that the Company has an obligation to
register such securities under any of the agreements listed in the SEC Reports.
          9.7 Withdrawal of Registration Statement. After the termination of the
Effectiveness Period, the Company shall be entitled to withdraw the Registration
Statement, and the Amended Note Purchasers and the Purchaser shall have no
further right to offer or sell any of the Registrable Securities pursuant to the
Registration Statement.
     10. OTHER AGREEMENTS OF THE PARTIES
          10.1 Transfer Restrictions.
               (a) Each of the Amended Note Purchasers and the Purchaser,
severally but not jointly, covenant to the Company that the Registrable
Securities will only be disposed of pursuant to an effective registration
statement under, and in compliance with the requirements of, the Securities Act
or pursuant to an available exemption from the registration requirements of the
Securities Act, and in compliance with any applicable state securities laws. In
connection with any transfer of Registrable Securities other than pursuant to an
effective registration statement or to the Company, or pursuant to Rule 144(k),
the Company may require the transferor to provide to the Company an opinion of
counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration under the Securities Act. Notwithstanding
the foregoing, the Company hereby consents to and agrees to register on the
books of the Company and with its Transfer Agent, without any such legal
opinion, except to the extent that the Transfer Agent requests such legal
opinion, any transfer of Registrable Securities by an Amended Note Purchaser or
the Purchaser to a Rule 144 Affiliate of such Amended Note Purchaser or such
Purchaser, provided that the transferee certifies to the Company that it is an
“accredited investor” as defined in Rule 501(a) under the Securities Act and
provided that such Rule 144 Affiliate does

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not request any removal of any existing legends on any certificate evidencing
the Registrable Securities.
               (b) Each of the Amended Note Purchasers and the Purchaser,
severally but not jointly, agree to the imprinting, until no longer required by
this Section 10.1(b), of the following legend on any certificate evidencing any
of the Registrable Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND 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”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED 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 COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. THESE SECURITIES MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED
BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED
INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.
               Certificates evidencing the Registrable Securities shall not be
required to contain such legend or any other legend (i) while a registration
statement (including the Registration Statement) covering the Registrable
Securities is effective under the Securities Act and a prospectus meeting the
requirements of Section 10 of the Securities Act is available with respect to
such Registrable Securities, (ii) following any sale of such Registrable
Securities pursuant to Rule 144 if the holder provides the Company with a legal
opinion (and the documents upon which the legal opinion is based) reasonably
acceptable to the Company to the effect that the Registrable Securities can be
sold under Rule 144, (iii) if the Registrable Securities are eligible for sale
under Rule 144(k), or (iv) if the holder provides the Company with a legal
opinion (and the documents upon which the legal opinion is based) reasonably
acceptable to the Company to the effect that the legend is not required under
applicable requirements of the Securities Act (including controlling judicial
interpretations and pronouncements issued by the Staff of the SEC). Following
the Effective Date and provided the registration statement referred to in clause
(i) above is then in effect, or at such earlier time as a legend is no longer
required for certain Registrable Securities, the Company will no later than
three Trading Days following the delivery by an Amended Note Purchaser or the
Purchaser to the Company or the Transfer Agent (if delivery is made to the
Transfer Agent a copy shall be contemporaneously delivered to the Company) of
(i) a legended certificate representing such Registrable Securities (and, in the
case of a requested transfer, endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect transfer), and (ii) an
opinion of counsel to the extent required by Section 10.1(a), deliver or cause
to be delivered to such Amended Note Purchaser or the Purchaser a certificate
representing such Registrable Securities that is free from all restrictive

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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 10.1(b).
               (c) The Company will not object to and shall permit (except as
prohibited by law) an Amended Note Purchaser or the Purchaser to pledge or grant
a security interest in some or all of the Registrable Securities in connection
with a bona fide margin agreement with a registered broker-dealer or grant a
security interest in some or all of the Registrable Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement,
and if required under the terms of such arrangement, the Company will not object
to and shall permit (except as prohibited by law) such Amended Note Purchaser or
the Purchaser to transfer pledged or secured Registrable Securities to the
pledgees or secured parties. Except as required by law, such a pledge or
transfer would not be subject to approval of the Company, no legal opinion of
the pledgee, secured party or pledgor shall be required in connection therewith
(but such legal opinion shall be required in connection with a subsequent
transfer or foreclosure following default by the Amended Note Purchaser or the
Purchaser transferee of the pledge), and no notice shall be required of such
pledge. Each of the Amended Note Purchasers and the Purchaser acknowledge that
the Company shall not be responsible for any pledges relating to, or the grant
of any security interest in, any of the Registrable Securities or for any
agreement, understanding or arrangement between any Amended Note Purchaser and
the Purchaser and its pledgee or secured party. At the appropriate Amended Note
Purchaser’s or Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Registrable Securities
may reasonably request in connection with a pledge or transfer of the
Registrable Securities, including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
Selling Stockholders thereunder. Provided that the Company is in compliance with
the terms of this Section 10.1(c), the Company’s indemnification obligations
pursuant to Section 9.4 shall not extend to any Proceeding or Losses arising out
of or related to this Section 10.1(c).
          10.2 Registration Questionnaire. Each of the Amended Note Purchasers
and the Purchaser will complete or cause to be completed the Registration
Statement Questionnaire attached hereto as Exhibit B (or has otherwise provided
in a written form the information requested in such Registration Statement
Questionnaire) for use in preparation of the Registration Statement, and the
information contained in such completed Registration Statement Questionnaire (or
such other form provided by the Amended Note Purchaser or the Purchaser) will be
true and correct on the effective date of the Registration Statement. Each of
Amended Note Purchasers and the Purchaser covenant that, upon the Company’s
reasonable written request, it will promptly notify the Company of any changes
in such information or other information as the Company may reasonably request
in connection with any registration referred to in Section 9.
          10.3 No Sale of Registrable Securities. Each of the Amended Note
Purchasers and the Purchaser hereby, severally but not jointly, covenant with
the Company not to make any sale of the Registrable Securities without
(i) complying with the provisions of this Agreement and (ii) satisfying the
requirements of the Securities Act and the rules and regulations promulgated
thereunder, including, without limitation, causing the prospectus delivery

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requirement under the Securities Act to be satisfied if the Amended Note
Purchaser or the Purchaser is notified by the Company pursuant to Section 9.2(j)
hereof that the conditions specified in Rule 172(c) of the Securities Act were
not satisfied and, as a result thereof, the Amended Note Purchasers or Purchaser
are required to deliver a Prospectus in connection with any disposition of
Registrable Securities. Each of the Amended Note Purchasers and the Purchaser
acknowledge that there may occasionally be times when the Company determines
that, subject to the limitations of Section 9.1, it must suspend the use of the
prospectus forming a part of the Registration Statement until such time as an
amendment to the Registration Statement has been filed by the Company and
declared effective by the SEC, an appropriate report has been filed by the
Company with the SEC pursuant to the Exchange Act or until the Company has
amended or supplemented such prospectus. Each of the Amended Note Purchasers and
the Purchaser hereby, severally but not jointly, covenant that it will not sell
any Registrable Securities pursuant to the Registration Statement during the
period commencing at the time at which the Company gives each Amended Note
Purchaser and the Purchaser written notice of any suspension of the use of the
Registration Statement and ending at the time the Company gives each Amended
Note Purchaser and the Purchaser written notice that each Amended Note Purchaser
and the Purchaser may thereafter effect sales pursuant to the Registration
Statement.
     11. DEFAULTS. The occurrence of any one or more of the following events
shall constitute a “Default” or an “Event of Default”:
          11.1 The Company fails to pay any of the principal, interest or any
other amounts payable under this Agreement or any of the Convertible Notes when
and as the same becomes due and payable;
          11.2 The Company files any petition or action for relief under any
bankruptcy, reorganization, insolvency or moratorium law or any other law for
the relief of, or relating to, Company, now or hereafter in effect, or seeks the
appointment of a custodian, receiver, trustee (or other similar official) of the
Company or all or any substantial portion of the Company’s assets, or makes any
assignment for the benefit of creditors or takes any action in furtherance of
any of the foregoing, or fails to generally pay its debts as they become due;
          11.3 An involuntary petition is filed, or any proceeding or case is
commenced, against the Company (unless such proceeding or case is dismissed or
discharged within ninety (90) days of the filing or commencement thereof) under
any bankruptcy, reorganization, arrangement, insolvency, adjustment of debt,
liquidation or moratorium statute now or hereafter in effect, or a custodian,
receiver, trustee, assignee for the benefit of creditors (or other similar
official) is applied for, appointed for the Company or to take possession,
custody or control of any property of the Company, or an order for relief is
entered against the Company in any of the foregoing; or
          11.4 Any representation or warranty made by the Company under this
Agreement shall have been false or misleading in any material respect when made
or deemed made.

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     12. REMEDIES.
          12.1 Upon the occurrence and during the continuance of an Event of
Default hereunder, the Amended Note Purchasers and the Purchaser may, without
notice or demand upon the Company, do any or all of the following:
               (a) Declare all unpaid principal and accrued interest owing under
the Convertible Notes held by the Amended Note Purchaser or the Purchaser, and,
in the case of an Event of Default pursuant to Section 11.2 or 11.3 above,
automatically, to be immediately due, payable and collectible by the Amended
Note Purchaser or the Purchaser pursuant to applicable law;
               (b) Declare any and all unpaid principal and accrued interest due
under the Convertible Notes held by the Amended Note Purchaser or the Purchaser
to thereafter bear interest at the maximum rate set forth in Section 2.4 hereof;
               (c) Terminate any and all of such Amended Note Purchaser’s or
such Purchaser’s obligations to purchase any additional New Note hereunder; and
               (d) Exercise any and all rights and remedies it may have under
this Agreement, under the Convertible Notes held by any Amended Note Purchaser
or the Purchaser or under applicable law.
          12.2 All of the foregoing rights and remedies shall be cumulative and
not exclusive. The failure to exercise all or any rights, remedies, powers or
privileges hereunder, under the Convertible Notes or under applicable law, in
any instance shall not constitute a waiver thereof in that or any other
instance.
     13. WAIVERS, AMENDMENTS AND OTHER PROVISIONS.
          13.1 Entire Agreement; Amendments; Invalidity. This Agreement and the
Convertible Notes constitute the entire agreement and understanding of the
parties, and supercedes and replaces in their entirety any prior discussions or
agreements, all of which are merged herein and therein. None of the terms of
this Agreement or any Convertible Note may be amended or otherwise modified
except by an instrument executed by the Company and each Amended Note Purchaser
and the Purchaser. If any term of this Agreement or any Convertible Notes shall
be held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall in no way be affected thereby, and this Agreement and the
Convertible Notes shall be construed and be enforceable as if such invalid,
illegal or unenforceable term had not been included herein.
          13.2 Expenses. The Company agrees to and shall pay to the Amended Note
Purchasers or the Purchaser on demand, any and all expenses, including, without
limitation, reasonable attorney’s fees and disbursements, incurred or paid by
the Amended Note Purchasers or the Purchaser in connection with the collection
on or enforcement of amounts outstanding hereunder, for protecting, preserving
or enforcing the Amended Note Purchaser’s or the Purchaser’s rights or remedies
(including fees, costs and expenses relating to any proceedings

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with respect to the bankruptcy, reorganization, insolvency, readjustment of
debt, dissolution or liquidation of the Company).
          13.3 Nonliability of the Amended Note Purchasers and the Purchaser;
Several Obligation. The relationship between the Company, on the one hand, and
the Amended Note Purchasers and the Purchaser, on the other hand, shall be
solely that of Company and the Amended Note Purchasers and the Purchaser. The
Amended Note Purchasers and the Purchaser shall have no fiduciary
responsibilities to the Company as holders of Convertible Notes.
          13.4 Governing Law; Consent to Jurisdiction. THIS AGREEMENT AND THE
CONVERTIBLE NOTES ARE INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS (AND NOT THE LAWS OF
CONFLICT) OF THE COMMONWEALTH OF MASSACHUSETTS. THE COMPANY HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
AND THE UNITED STATES DISTRICT COURT FOR THE COMMONWEALTH OF MASSACHUSETTS FOR
THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND THE CONVERTIBLE NOTES AND THE COMPANY HEREBY IRREVOCABLY
AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR
HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN
ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE AMENDED NOTE PURCHASERS AND THE PURCHASER TO BRING
PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION. ANY
JUDICIAL PROCEEDING BY THE COMPANY AGAINST ANY AMENDED NOTE PURCHASER, THE
PURCHASER OR ANY AFFILIATE OF ANY AMENDED NOTE PURCHASER OR THE PURCHASER UNDER
OR INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR ANY CONVERTIBLE NOTE SHALL BE
BROUGHT ONLY IN A COURT IN THE COMMONWEALTH OF MASSACHUSETTS.
          13.5 Waiver of Jury Trial and Certain Damages. THE COMPANY, EACH
AMENDED NOTE PURCHASER AND THE PURCHASER WAIVES ITS RIGHT TO A JURY TRIAL WITH
RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH
THIS AGREEMENT OR ANY CONVERTIBLE NOTE, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS. Except as
prohibited by law, the Company waives any right which it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. The Company (i) certifies that neither the
Purchaser nor any representative, agent or attorney of the Purchaser has
represented, expressly or otherwise, that the Purchaser would not, in the event
of litigation, seek to enforce the foregoing waivers and (ii) acknowledges that,
in entering into this Agreement and the New

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Note, the Purchaser are relying upon, among other things, the foregoing waivers
and certifications.
          13.6 Successors and Assigns. This Agreement and the other Loan
Documents and all obligations of the Company hereunder and thereunder shall be
binding upon the successors and assigns of the Company, and shall, together with
the rights and remedies of the Amended Note Purchasers and Purchaser hereunder,
inure to the benefit of the Amended Note Purchasers and Purchaser, any future
holder of this Agreement or any other Loan Document and their respective
successors and assigns, provided, however, the Company may not transfer or
assign its rights or obligations hereunder or thereunder without the express
written consent of each Amended Note Purchaser and the Purchaser, and any
purported transfer or assignment by the Company without the approval of each
Amended Note Purchaser and the Purchaser shall be null and void. Each Amended
Note Purchaser and the Purchaser may assign, transfer, participate or endorse
its rights under this Agreement or any of the other Loan Documents without the
consent or approval of the Company, and all such rights shall inure to the
Amended Note Purchasers’ and the Purchasers’ successors and assigns; provided,
that such transferee agrees in writing to be bound by all of the terms of this
Agreement. No sales of participations, other sales, assignments, transfers,
endorsements or other dispositions of any rights hereunder or thereunder or any
portion hereof or thereof or interest herein or therein shall in any manner
affect the obligations of the Company under this Agreement or the other Loan
Documents. The Company agrees that in connection with any such assignment, to
execute and deliver such additional documents or agreements, including, without
limitation, new Convertible Notes, as may be reasonably requested.
          13.7 Counterparts. This Agreement may be executed in any number of
separate counterparts, all of which, when taken together, shall constitute one
and the same instrument, notwithstanding the fact that all parties did not sign
the same counterpart.
          13.8 No Reliance. Each of the Amended Note Purchasers and the
Purchaser hereby acknowledge (i) that Wilmer Cutler Pickering Hale and Dorr LLP
has served as counsel solely to the Company in connection with entering into
this Agreement and the Convertible Notes and the transactions contemplated
hereby and thereby and not as counsel to any of the Amended Note Purchasers or
the Purchaser, and (ii) that each Amended Note Purchaser and the Purchaser
(a) has sought the advice of his own legal counsel and has not relied upon
Wilmer Cutler Pickering Hale and Dorr LLP, (b) has had an opportunity to fully
discuss and review the terms of this Agreement and the Convertible Notes and the
transactions contemplated hereby and thereby with such Amended Note Purchaser’s
and the Purchaser’s counsel, and (c) understands the contents herein and freely
and voluntarily assents to all of the terms and conditions hereof and the
transactions contemplated hereby.
          13.9 Independent Nature of Amended Note Purchasers’ and Purchaser’s
Obligations and Rights. The obligations of each Amended Note Purchaser and the
Purchaser under this Agreement are several and not joint with the obligations of
any other Amended Note Purchaser or Purchaser, and no Amended Note Purchaser or
Purchaser shall be responsible in any way for the performance of the obligations
of any other Amended Note Purchaser or Purchaser under this Agreement. Nothing
contained herein, and no action taken by any Amended Note Purchaser or the
Purchaser pursuant hereto or thereto, shall be deemed to

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constitute the Amended Note Purchasers or the Purchaser as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Amended Note Purchasers and the Purchaser are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated hereby and the Company acknowledges that the Amended
Note Purchasers and the Purchaser are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by hereby. Each of
the Amended Note Purchasers and the Purchaser confirm that it has independently
participated in the negotiation of the transaction contemplated hereby with the
advice of its own counsel and advisors. Each of the Amended Note Purchasers and
the Purchaser shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement, and it
shall not be necessary for any other Amended Note Purchaser to be joined as an
additional party in any proceeding for such purpose.
[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, this Agreement has been duly executed as an instrument
under seal as of the date first set forth above.

                          COMPANY:       PURCHASER:    
 
                        ALSERES PHARMACEUTICALS, INC.       INGALLS & SNYDER
VALUE PARTNERS, L.P.    
 
                        By:   /s/ Kenneth L. Rice, Jr.       Signature:   /s/
Thomas O. Boucher Jr.                          
 
                        Printed Name: Kenneth L. Rice, Jr.       Address:   By
Thomas O. Boucher Jr.
General Partner
c/o Ingalls & Snyder LLC
    Title: EVP & CFO           61 Broadway, NY, NY 10006    
 
                        Address:   85 Main Street
Hopkinton, Massachusetts 01748                
 
                                        AMENDED NOTE PURCHASERS:    
 
                                        ROBERT GIPSON    
 
                       
 
              Signature:   /s/ Robert Gipson    
 
                       
 
                       
 
              Address:   c/o Ingalls & Snyder LLC
61 Broadway, NY, NY 10006    
 
                                        THOMAS GIPSON    
 
                       
 
              Signature:   /s/ Thomas O. Boucher Jr.    
 
                       
 
                       
 
              Address:   By Thomas O. Boucher Jr.
His Attorney In Fact
c/o Ingalls & Snyder LLC
61 Broadway, NY, NY 10006    
 
                                        ARTHUR KOENIG    
 
                       
 
              Signature:   /s/ Thomas O. Boucher Jr.    
 
                       
 
                       
 
              Address:   By Thomas O. Boucher Jr.
His Attorney In Fact
c/o Gipson Ingalls & Snyder LLC
61 Broadway, NY, NY 10006    

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                                          HIGHBRIDGE INTERNATIONAL LLC          
          By: Highbridge Capital Management, LLC    
 
                       
 
              By:   /s/ Adam J. Chill    
 
                       
 
                                        Printed Name: Adam J. Chill    
 
                                        Title: Managing Director    

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Schedule 2.1

      Purchaser Name   Commitment Percentage
Ingalls & Snyder Value Partners, L.P.,
  100%

 

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EXHIBIT A
THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION OF
THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”), NOR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE PLEDGED, SOLD,
ASSIGNED OR OTHERWISE TRANSFERRED UNTIL A (1) REGISTRATION STATEMENT UNDER THE
ACT AND ANY APPLICABLE STATE SECURITIES LAW HAS BECOME EFFECTIVE WITH RESPECT
THERETO, OR (2) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL TO THE COMPANY
TO THE EFFECT THAT REGISTRATION UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW
IS NOT REQUIRED IN CONNECTION WITH THE PROPOSED TRANSFER.
CONVERTIBLE PROMISSORY NOTE

$[                    ]   ___, 2007     Hopkinton, Massachusetts

     FOR VALUE RECEIVED, on the Maturity Date, Alseres Pharmaceuticals, Inc., a
Delaware corporation having a principal place of business at 85 Main Street,
Hopkinton, Massachusetts 01748 (the “Company”), hereby unconditionally promises
to pay to [Purchaser] (the “Purchaser”), or order, at [___], or such other place
as Purchasers or any holder hereof may from time to time designate, the
principal sum of [___] Dollars [($___)], in United States Dollars and in
immediately available funds as provided in the Convertible Promissory Note
Purchase Agreement of even date among the Company and the Purchasers (the
“Agreement”), together with interest on the unpaid principal amount hereof from
time to time outstanding at the rate and on the dates set forth in the
Agreement. This Convertible Promissory Note is one of a series of Convertible
Promissory Notes issued pursuant to the Agreement and each such Convertible
Promissory Note shall rank pari passu in right of repayment to such other
Convertible Promissory Note.
     This Convertible Promissory Note is issued pursuant to, and is entitled to
the benefits of, the Agreement, as it may be amended from time to time.
Reference is hereby made thereto for a statement of the terms and conditions
under which this Convertible Promissory Note may be converted, prepaid or its
maturity date accelerated. This Convertible Promissory Note is convertible at
the election of the Purchaser pursuant to Sections 4.1 and 4.2 of the Agreement.
Capitalized terms used herein and not otherwise defined herein are used with the
meanings attributed to them in the Agreement.
     No delay or omission on the part of the Purchaser in exercising any right
hereunder shall operate as a waiver of such right or of any other right of
Purchaser, nor shall any delay, omission or waiver on any one occasion be deemed
a bar to or waiver of the same or any other right on any future occasion. The
Company and every endorser or guarantor of this Convertible Promissory Note
regardless of the time, order or place of signing waives presentment, demand,
protest and notices of every kind and assents to any extension or postponement
of the time of

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payment or any other indulgence, and to the addition or release of any other
party or person primarily or secondarily liable.
     The terms and provisions of this Convertible Promissory Note may be
excluded, modified, or amended only as set forth in the Agreement. This
Convertible Promissory Note shall be binding upon the successors and assigns of
the Company and inure to the benefit of Purchaser and its successors, endorsees
and assigns as set forth in the Agreement. If any term or provision of this
Convertible Promissory Note shall be held to be invalid or unenforceable, in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall only effect such term or provision, and shall not effect such term or
provision in any other jurisdiction or any other term or provision of this
Convertible Promissory Note.
     The Company hereby waives its right to a jury trial with respect to any
action or claim arising out of any dispute in connection with this Convertible
Promissory Note or any of the other Loan Documents, any rights or obligations
hereunder or thereunder or the performance of such rights and obligations.
     All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts (without giving effect to principles of conflicts
or choice of laws) and this Convertible Promissory Note shall be deemed to be
made under seal.

                  Alseres Pharmaceuticals, Inc.    
 
           
 
  By        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

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EXHIBIT B
ALSERES PHARMACEUTICALS, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the Registration Statement, please provide us with the
following information regarding the Purchaser.

          1.   Please state your organization’s name exactly as it should appear
in the Registration
Statement:
 
             
 
            Except as set forth below, your organization does not hold any
equity securities of the Company on behalf of another person or entity.
 
            State any exceptions here:

 
             
 
            If the Purchaser is not a natural person, please identify the
natural person or persons who will have voting and investment control over the
Securities owned by the Purchaser:
 
             
 
       
2.
  Address of your organization:    
 
       
 
       
 
       
 
       
 
  Telephone:    
 
 
 
   
 
  Fax:    
 
 
 
   
 
  Contact Person:    
 
 
 
   
 
  Email:    
 
 
 
   
 
        3.   Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates? (Include any relationships involving you or any of your affiliates,
officers, directors, or principal equity holders (5% or more) that has held any
position or office or has had any other material relationship with the Company
(or its predecessors or affiliates) during the past three years.)

                     Yes                            No
If yes, please indicate the nature of any such relationship below:

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4.   Are you the beneficial or registered owner of any other securities of the
Company? (Include any equity securities that you beneficially own or have a
right to acquire within 60 days after the date hereof, and as to which you have
sole voting power, shared voting power, sole investment power or shared
investment power.)                            Yes                            No

    If yes, please describe the nature and amount of such ownership as of a
recent date.   5.   Except as set forth below, you wish that all the shares of
the Company’s common stock beneficially owned by you or that you have the right
to acquire from the Company be offered for your account in the Registration
Statement.       State any exceptions here:   6.   Do you intend to distribute
the Registrable Securities in accordance with the “Plan of Distribution” section
set forth in the Registration Statement?                            Yes      
                     No

    If yes, please describe the nature and amount of such arrangements.   7.  
NASD Matters   (a)   State below whether (i) you or any associate or affiliate
of yours are a member of the NASD, a controlling shareholder of an NASD member,
a person associated with a member, a direct or indirect affiliate of a member,
or an underwriter or related person with respect to the proposed offering;
(ii) you or any associate or affiliate of yours owns any stock or other
securities of any NASD member not purchased in the open market; or (iii) you or
any associate or affiliate of yours has made any outstanding subordinated loans
to any NASD member. If you are a general or limited partnership, a no answer
asserts that no such relationship exists for you as well as for each of your
general or limited partners.       Yes:                           No:
                    

If “yes,” please identify the NASD member and describe your relationship,
including, in the case of a general or limited partner, the name of the partner:

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If you answer “no” to Question 7(a), you need not respond to Question 7(b).
(b) State below whether you or any associate or affiliate of yours has been an
underwriter, or a controlling person or member of any investment banking or
brokerage firm which has been or might be an underwriter for securities of the
Corporation or any affiliate thereof including, but not limited to, the common
stock now being registered.
Yes:                           No:                     

    If “yes,” please identify the NASD member and describe your relationship,
including, in the case of a general or limited partner, the name of the partner.
  8.   Selling Stockholder Affiliations

(a) Is the Selling Stockholder a registered broker-dealer?
Yes:                           No:                     
(b) Is the Selling Stockholder an affiliate of a registered broker-dealer(s)?
Yes:                           No:                     
(c) If the answer to Item (8)(b) is yes, identify the registered
broker-dealer(s) and describe the nature of the affiliation(s):         
                                                
(d) If the answer to Item (6)(b) is yes, did the Selling Stockholder acquire the
Registrable Securities in the ordinary course of business (if not, please
explain)?
(e) If the answer to Item (8)(b) is yes, did the Selling Stockholder, at the
time of purchase of the Registrable Securities, have any agreements, plans or
understandings, directly or indirectly, with any person to distribute the
Registrable Securities (if yes, please explain)?

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ACKNOWLEDGEMENT
The undersigned hereby agrees to notify the Company promptly of any changes in
the foregoing information which should be made as a result of any developments,
including the passage of time. The undersigned also agrees to provide the
Company and the Company’s counsel any and all such further information regarding
the undersigned promptly upon request in connection with the preparation,
filing, amending, and supplementing of the Registration Statement (or any
prospectus contained therein). The undersigned hereby consents to the use of all
such information in the Registration Statement.
The undersigned understands and acknowledges that the Company will rely on the
information set forth herein for purposes of the preparation and filing of the
Registration Statement. The undersigned understands that the undersigned may be
subject to serious civil and criminal liabilities if the Registration Statement,
when it becomes effective, either contains an untrue statement of a material
fact or omits to state a material fact required to be stated in the Registration
Statement or necessary to make the statements in the Registration Statement not
misleading. The undersigned represents and warrants that all information it
provides to the Company and its counsel is currently accurate and complete and
will be accurate and complete at the time the Registration Statement becomes
effective and at all times subsequent thereto, and agrees during the
Effectiveness Period and any additional period in which the undersigned is
making sales of Shares under and pursuant to the Registration Statement, and
agrees during such periods to notify the Company immediately of any misstatement
of a material fact in the Registration Statement, and of the omission of any
material fact necessary to make the statements contained therein not misleading.
Dated:                                         
                                                                     
                                                                       
Name
                                                                     
                                                                       
Signature
                                                                     
                                                                       
Name and Title of Signatory

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