EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of June 2,
2016 by and among Pieris Pharmaceuticals, Inc., a Nevada corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).

RECITALS

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

B. Each Purchaser, severally and not jointly, wishes to purchase, and the
Company wishes to sell, upon the terms and conditions stated in this Agreement,
(i) that aggregate number of shares of common stock, par value $0.001 per share
(the “Common Stock”), of the Company, set forth below such Purchaser’s name on
the signature page of this Agreement (which aggregate amount for all Purchasers
together shall be three million two hundred twenty five thousand eight hundred
four (3,225,804) shares of Common Stock (the “Common Shares”)), (ii) that
aggregate number of shares of Series A Convertible Preferred Stock, par value
$0.001 per share (the “Preferred Stock”), of the Company, if any, set forth
below such Purchaser’s name on the signature page of this Agreement (which
aggregate amount for all Purchasers together shall be four thousand nine hundred
sixty three (4,963) shares of Preferred Stock (the “Preferred Shares” and,
together with the Common Shares shall be collectively referred to herein as the
“Shares”)) (the shares of Common Stock issuable upon conversion of the Preferred
Stock collectively are referred to herein as the “Underlying Shares”) and
(iii) warrants, in substantially the form attached hereto as Exhibit A (the
“Warrants”), to acquire up to that number of additional shares of Common Stock
equal to 60% of the number of Shares purchased by such Purchaser (for such
purpose, counting the Preferred Shares with reference to the number of
Underlying Shares), rounded up to the nearest whole share (the shares of Common
Stock issuable upon exercise of or otherwise pursuant to the Warrants
collectively are referred to herein as the “Warrant Shares”).

C. The Shares, the Underlying Shares, the Warrants and the Warrant Shares
collectively are referred to herein as the “Securities”.

D. The Company has engaged Cowen and Company, LLC to act as lead placement agent
(the “Placement Agent”) and Oppenheimer & Co. Inc., and Trout Capital LLC as
co-placement agents (the “Co-Placement Agents”) for the offering of the Shares
and Warrants on a “best efforts” basis.

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

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

ARTICLE I

DEFINITIONS

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

“Accredited Investor Questionnaire” means the Accredited Investor Questionnaire
set forth as Exhibit C-1 hereto.

“Action” means any action, suit, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation pending
or, to the Company’s Knowledge, threatened against the Company or any of their
respective properties or any officer, director or employee of the Company acting
in his or her capacity as an officer, director or employee before or by any
federal, state, county, local or foreign court, arbitrator, governmental or
administrative agency, regulatory authority, stock market, stock exchange or
trading facility.

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act. With respect to a Purchaser,
any investment fund or managed account that is managed on a discretionary basis
by the same investment manager as such Purchaser will be deemed to be an
Affiliate of such Purchaser.

“Agreement” has the meaning set forth in the Preamble.

“Board of Directors” means the board of directors of the Company.

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

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

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

“Certificate of Designation” means the Certificate of Designation to be filed
prior to the Closing by the Company with the Nevada Secretary of State, in the
form of Exhibit H attached hereto.

 

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“Closing” means the closing of the purchase and sale of the Shares and the
Warrants on the Closing Date pursuant to Section 2.1.

“Closing Bid Price” means, for any security as of any date, (a) the last
reported closing bid price per share for such security on the Principal Trading
Market, as reported by Bloomberg Financial Markets, or, (b) if the Principal
Trading Market begins to operate on an extended hours basis and does not
designate the closing bid price then the last bid price of such security prior
to 4:00 p.m., New York City time, as reported by Bloomberg Financial Markets, or
(c) if the foregoing do not apply, the last closing price of such security in
the over-the-counter market on the electronic bulletin board for such security
as reported by Bloomberg Financial Markets, or, (d) if no closing bid price is
reported for such security by Bloomberg Financial Markets, the average of the
bid prices of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC. If the Closing Bid Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the holder of such security. If the Company and
such holder are unable to agree upon the fair market value of such security,
then the Board of Directors shall use its good faith judgment to determine the
fair market value. The Board of Directors’ determination shall be binding on all
parties absent demonstrable error. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.

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

“Commission” has the meaning set forth in the Recitals.

“Common Shares” has the meaning set forth in the Recitals.

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

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

“Company” has the meaning set forth in the Preamble.

“Company Counsel” means Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
with offices located at One Financial Center, Boston, Massachusetts 02111.

 

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“Company Covered Person” means, with respect to the Company as an “issuer” for
purposes of Rule 506 promulgated under the Securities Act, any Person listed in
the first paragraph of Rule 506(d)(1).

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

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

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

“Co-Placement Agent” has the meaning set forth in the Recitals.

“Deadline Date” has the meaning set forth in Section 4.1(f).

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

“Disclosure Schedules” has the meaning set forth in Section 3.1.

“DTC” has the meaning set forth in Section 4.1(c).

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

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

“Evaluation Date” has the meaning set forth in Section 3.1(t).

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

“FDA” has the meaning set forth in Section 3.1(ll).

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

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

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

“Lead Investor” has the meaning set forth in Section 4.15.

 

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

“Material Adverse Effect” means a material adverse effect on the results of
operations, assets, prospects, business or financial condition of the Company,
except that any of the following, either alone or in combination, shall not be
deemed a Material Adverse Effect: (i) effects caused by changes or circumstances
affecting general market conditions in the U.S. or applicable foreign economy or
which are generally applicable to the industry in which the Company operates,
provided that such effects are not borne disproportionately by the Company, or
(ii) effects caused by earthquakes, hostilities, acts of war, sabotage or
terrorism or military actions or any escalation or material worsening of any
such hostilities, acts of war, sabotage or terrorism or military actions
existing as of the date hereof.

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

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

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

“Nevada Counsel” means Brownstein Hyatt Farber Schreck, LLP, with offices
located at 100 North City Parkway, Suite 1600, Las Vegas, Nevada 89106.

“OFAC” has the meaning set forth in Section 3.1(kk).

“Outside Date” means the tenth (10th) Business Day following the date of this
Agreement.

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

“Placement Agent” has the meaning set forth in the Recitals.

“Pre-Notice” has the meaning set forth in Section 4.15.

“Preferred Shares” has the meaning set forth in the Recitals.

“Preferred Stock” has the meaning set forth in the Recitals.

“Press Release” has the meaning set forth in Section 4.6.

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the Nasdaq Capital Market.

 

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“Pro Rata Portion” means, with respect to any Purchaser, the ratio of (i) such
Purchaser’s Subscription Amount and (ii) the aggregate sum of the Subscription
Amounts for all of the Purchasers.

“Proceeding” means an Action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

“Purchase Price” means $2.015 per unit, with $1.94 of each unit attributable to
the share of Common Stock or Preferred Stock (for such purpose, counting the
Preferred Shares with reference to the number of Underlying Shares), as
applicable, included therein and $0.075 of each unit attributable to the
Warrants included therein to purchase 0.60 Warrant Shares.

“Purchaser” or “Purchasers” has the meaning set forth in the Recitals.

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

“Purchaser Party” has the meaning set forth in Section 4.10.

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

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

“Regulation D” has the meaning set forth in the Recitals.

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

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

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

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

“Securities” has the meaning set forth in the Recitals.

“Securities Act” has the meaning set forth in the Recitals.

“Shares” has the meaning set forth in the Recitals.

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

 

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“Stock Certificates” has the meaning set forth in Section 2.2(a)(ii).

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

“Subsequent Financing” has the meaning set forth in Section 4.15.

“Subsequent Financing Notice” has the meaning set forth in Section 4.15.

“Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a), and shall, where applicable, include any subsidiary of the Company
formed or acquired after the date hereof.

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

“Trading Day” means (i) a day on which the Common Stock is listed or quoted and
traded on its Principal Trading Market (other than the OTCMarkets), or (ii) if
the Common Stock is not listed on a Trading Market (other than the OTCMarkets),
a day on which the Common Stock is traded in the over-the-counter market, as
reported by the OTCMarkets, or (iii) if the Common Stock is not quoted on any
Trading Market, a day on which the Common Stock is quoted in the
over-the-counter market as reported in the “pink sheets” by 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 NYSE Mkt,
the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market or the OTCMarkets on which the Common Stock is listed or quoted for
trading on the date in question.

“Tranche A Warrant” has the meaning set forth in Section 2.1(a).

“Tranche B Warrant” has the meaning set forth in Section 2.1(a).

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

“Transfer Agent” means Computershare Trust Company, N.A., the current transfer
agent of the Company, with a mailing address of P.O. Box 30170, College Station,
TX 77842-3170, and a telephone number of (877) 373-6374 from the United States,
Canada and Puerto Rico and (781) 575-3100 from all other locations, or any
successor transfer agent for the Company.

 

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“Warrant Shares” has the meaning set forth in the Recitals.

“Warrants” has the meaning set forth in the Recitals.

ARTICLE II

PURCHASE AND SALE

2.1 Closing.

(a) Amount. Subject to the terms and conditions set forth in this Agreement, at
the Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, such
number of units equal to the quotient resulting from dividing (i) the
Subscription Amount for such Purchaser as indicated below such Purchaser’s name
on its signature page to this Agreement by (ii) the Purchase Price, rounded down
to the nearest whole Share. A “unit” shall consist of (x) one share of Common
Stock or 0.001 shares of Preferred Stock, as applicable, (y) a Warrant to
purchase 0.40 Warrant Shares at an exercise price of $2.00 per share (a “Tranche
A Warrant”) and (z) a Warrant to purchase 0.20 Warrant Shares at an exercise
price of $3.00 per share (a “Tranche B Warrant”), subject to adjustment as
provided in such Warrants.

(b) Closing. The Closing of the purchase and sale of the Shares and Warrants
shall take place at the offices of Goodwin Procter LLP, The New York Times
Building, 620 Eighth Avenue, New York, New York 10018 on the Closing Date or at
such other location(s) or remotely by facsimile transmission or other electronic
means as the parties may mutually agree.

(c) Form of Payment. Except as may otherwise be agreed to among the Company and
one or more of the Purchasers, on or prior to the Business Day immediately prior
to the Closing Date, each Purchaser shall wire its Subscription Amount, in
United States dollars and in immediately available funds, to a bank account
designated by the Company.

(d) On the Closing Date, upon receipt of the aggregate Purchase Price: (i) the
Company shall irrevocably instruct the Transfer Agent to deliver to each
Purchaser (within three Trading Days after the Closing) one or more stock
certificates, free and clear of all restrictive and other legends (except as
expressly provided in Section 4.1(b) hereof), evidencing the number of Shares
such Purchaser is purchasing as is set forth on such Purchaser’s signature page
to this Agreement next to the heading “Number and Type of Shares to be
Acquired,” , and (ii) the Company shall on the Business Day following the
Closing Date send for overnight delivery to each Purchaser one or more Tranche A
Warrants and one or more Tranche B Warrants, free and clear of all restrictive
and other legends (except as expressly provided in Section 4.1(b) hereof),
evidencing the number of Warrant Shares such Purchaser is entitled to purchase
as is set forth on such Purchaser’s signature page to this Agreement next to the
heading “Warrant Shares Subject to Warrant.”

 

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2.2 Closing Deliveries.

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

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

(ii) facsimile copies of one or more stock certificates, free and clear of all
restrictive and other legends (except as provided in Section 4.1(b) hereof),
evidencing the Shares subscribed for by such Purchaser hereunder, registered in
the name of such Purchaser as set forth on the Stock Certificate Questionnaire
included as Exhibit C-2 hereto (the “Stock Certificates”), with the original
Stock Certificates delivered by the Transfer Agent within three Trading Days of
Closing;

(iii) facsimile copies of one or more Warrants, executed by the Company and
registered in the name of such Purchaser as set forth on the Stock Certificate
Questionnaire included as Exhibit C-2 hereto, pursuant to which such Purchaser
shall have the right to acquire such number of Warrant Shares equal to 60% of
the number of Shares (for such purpose, counting the Preferred Shares with
reference to the number of Underlying Shares) issuable to such Purchaser
pursuant to Section 2.2(a)(ii), rounded up to the nearest whole share (provided,
however, that in the event any Purchasers are Affiliates of each other, all
Shares purchased by such Purchasers shall be aggregated together for the purpose
of determining the aggregate number of Warrant Shares subject to all Warrants
purchased by such Purchasers), on the terms set forth therein, with the original
Warrants to be sent on the Business Day following the Closing Date for overnight
delivery to the Purchasers;

(iv) a legal opinion of (A) Company Counsel, dated as of the Closing Date and in
substantially the form attached hereto as Exhibit D-1, executed by such counsel
and addressed to the Purchasers, the Placement Agent and the Co-Placement
Agents, and (B) Nevada Counsel, dated as of the Closing Date and in
substantially the form attached hereto as Exhibit D-2, executed by such counsel
and addressed to the Purchasers, the Placement Agent and the Co-Placement
Agents;

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

(vi) duly executed Irrevocable Transfer Agent Instructions acknowledged in
writing by the Transfer Agent instructing the Transfer Agent to deliver, on an
expedited basis, a certificate evidencing a number of Shares equal to such
Purchaser’s Subscription Amount divided by the Purchase Price, registered in the
name of such Purchaser;

(vii) a certificate of the Secretary of the Company (the “Secretary’s
Certificate”), dated as of the Closing Date and in substantially the form
attached hereto as Exhibit F;

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

(ix) a certificate evidencing the formation and good standing of the Company
issued by the Nevada Secretary of State as of a date within five days of the
Closing Date;

 

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(x) a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of the Commonwealth of the
Commonwealth of Massachusetts as of a date within five days of the Closing Date;
and

(xi) a certified copy of the articles of incorporation of the Company (which
shall include the Certificate of Designation), as certified by the Nevada
Secretary of State, as of a date within 10 days of the Closing Date;

(b) On or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company (or the Placement Agent in the case of clause
(ii) below) the following, with respect to such Purchaser (the “Purchaser
Deliverables”):

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

(ii) subject to the completion of Section 2.2(a)(ii) and (iii), its Subscription
Amount, in United States dollars and in immediately available funds, in the
amount set forth as the “Purchase Price” indicated below such Purchaser’s name
on the applicable signature page hereto under the heading “Aggregate Purchase
Price (Subscription Amount)” by wire transfer to a bank account designated by
the Company;

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

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

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

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as (i) set forth in
the schedules delivered herewith (the “Disclosure Schedules”), which Disclosure
Schedules shall be deemed a part hereof and shall qualify any representation
made herein to the extent of the disclosure contained in the corresponding
section of the Disclosure Schedules, or (ii) disclosed in the SEC Reports, the
Company hereby represents and warrants as of the date hereof and the Closing
Date (except for the representations and warranties that speak as of a specific
date, which shall be made as of such date), to each of the Purchasers, the
Placement Agent and the Co-Placement Agents:

(a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than
those listed in Schedule 3.1(a) hereto. Except as disclosed in Schedule 3.1(a)
hereto, the Company owns, directly or indirectly, all of the capital stock or
comparable equity interests of each Subsidiary free and clear of any and all
Liens, and all the issued and outstanding shares of capital stock or comparable
equity interest of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights to subscribe for or
purchase securities.

 

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(b) Organization and Qualification. The Company and each of its Subsidiaries is
an entity duly incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or organization
(as applicable), with the requisite corporate power and authority to own or
lease and use its properties and assets and to carry on its business as
currently conducted. Neither the Company nor any Subsidiary is in violation or
default of any of the provisions of its articles of incorporation or bylaws or
other organizational documents. The Company and each of its Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary, except
where the failure to be so qualified or in good standing, as the case may be,
would not have or reasonably be expected to result in a Material Adverse Effect,
and no Proceeding has been instituted, is pending, or, to the Company’s
Knowledge, has been threatened in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or
qualification.

(c) Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder. The Company’s
execution and delivery of each of the Transaction Documents to which it is a
party and the consummation by it of the transactions contemplated hereby and
thereby (including, but not limited to, the sale and delivery of the Shares and
the Warrants and the reservation for issuance and the subsequent issuance of the
Warrant Shares upon exercise of the Warrants) have been duly authorized by all
necessary corporate action on the part of the Company, and no further corporate
action is required by the Company, its Board of Directors or its stockholders in
connection therewith other than in connection with the Required Approvals. Each
of the Transaction Documents to which it is a party has been (or upon delivery
will have been) duly executed by the Company and is, or when delivered in
accordance with the terms hereof, will constitute the legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

(d) No Conflicts. The execution, delivery and performance by the Company of the
Transaction Documents to which it is a party and the consummation by the Company
of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares and Warrants and the reservation for
issuance and issuance of the Warrant Shares) do not and will not (i) conflict
with or violate any provisions of the Company’s or any Subsidiary’s articles of
incorporation or bylaws or other similar organizational documents of any
Subsidiary, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would result in a default) under, result in the
creation of any Lien upon any of the properties or

 

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assets of the Company or any Subsidiary or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any Material Contract, or (iii) subject to the
Required Approvals, conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations and the rules and
regulations, assuming the correctness of the representations and warranties made
by the Purchasers herein, of any self-regulatory organization to which the
Company or its securities are subject, including all applicable Trading
Markets), or by which any property or asset of the Company is bound or affected,
except in the case of clauses (ii) and (iii) such as would not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect or a material adverse effect on the legality, validity or enforceability
of any Transaction Document or the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document.

(e) Filings, Consents and Approvals. Neither the Company nor any of its
Subsidiaries is required to obtain any consent, waiver, approval, authorization
or order of, give any notice to, or make any filing or registration with, any
court or other federal, state, local or other governmental authority, holder of
outstanding securities of the Company or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents
(including the issuance of the Securities), other than (i) the filing with the
Commission of one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, (ii) filings required by
applicable state securities laws, (iii) the filing of a Notice of Sale of
Securities on Form D with the Commission under Regulation D of the Securities
Act, (iv) the filing of any requisite notices and/or application(s) to the
Principal Trading Market for the issuance and sale of the Securities and the
listing of the Shares and Warrant Shares for trading or quotation, as the case
may be, thereon in the time and manner required thereby, (v) the filings
required in accordance with Section 4.6 of this Agreement and (vi) those that
have been made or obtained prior to the date of this Agreement (collectively,
the “Required Approvals”).

(f) Issuance of the Securities. The Shares have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents,
will be duly and validly issued, fully paid and nonassessable and free and clear
of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject to preemptive or similar rights of stockholders. The Warrants have been
duly authorized and, when issued and paid for in accordance with the terms of
the Transaction Documents, will be duly and validly issued, free and clear of
all Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of stockholders. The Warrant Shares issuable upon
exercise of the Warrants have been duly authorized and, when issued and paid for
in accordance with the terms of the Transaction Documents and the Warrants, will
be duly and validly issued, fully paid and nonassessable, free and clear of all
Liens, other than restrictions on transfer provided for in the Transaction
Documents or imposed by applicable securities laws, and shall not be subject to
preemptive or similar rights of stockholders. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the
Securities will be issued in compliance with all applicable federal and state

 

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securities laws. As of the Closing Date, the Company shall have reserved from
its duly authorized capital stock the number of shares of Common Stock issuable
upon exercise of the Warrants (without taking into account any limitations on
the exercise of the Warrants set forth in the Warrants). The Company shall, so
long as any of the Warrants are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued capital stock,
solely for the purpose of effecting the exercise of the Warrants, the number of
shares of Common Stock issuable upon exercise of the Warrants (without taking
into account any limitations on the exercise of the Warrants set forth in the
Warrants). No “bad actor” disqualifying event described in Rule
506(d)(1)(i)-(viii) of the Securities Act (a “Disqualification Event”) is
applicable to the Company or, to the Company’s knowledge, any Company Covered
Person, except for a Disqualification Event as to which Rule 506(d)(2)(ii–iv) or
(d)(3), is applicable.

(g) Capitalization. The capitalization of the Company is as described in its
most recently filed SEC Report on Form 10-K, except for issuances pursuant to
this Agreement, stock option exercises, issuances pursuant to equity incentive
plans or exercises of warrants. The Company has not issued any capital stock
since the date of its most recently filed SEC Report other than to reflect stock
option and warrant exercises that do not, individually or in the aggregate, have
a material affect on the issued and outstanding capital stock, options and other
securities of the Company. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents that have not been
effectively waived as of the Closing Date. Except as set forth on
Schedule 3.1(g) or a result of the purchase and sale of the Shares and Warrants,
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents. Except as set forth on Schedule 3.1(g), the
issuance and sale of the Shares and Warrants will not obligate the Company to
issue shares of Common Stock or other securities to any Person (other than the
Purchasers) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such
securities. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance in
all material respects with all applicable federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities which violation would
have or would reasonably be expected to result in a Material Adverse Effect.
There are no stockholders agreements, voting agreements or other similar
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the Company’s Knowledge, between or among any of the Company’s
stockholders.

(h) SEC Reports; Disclosure Materials. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it
under the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the 12 months preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”,
and the SEC Reports, together with the Disclosure Schedules, being collectively
referred to as the “Disclosure

 

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Materials”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension, except where the failure to file on a timely basis would not have or
reasonably be expected to result in a Material Adverse Effect and would not have
or reasonably be expected to result in any limitation or prohibition on the
Company’s ability to register the Shares and Warrant Shares for resale on Form
S-1 or any Purchaser’s ability to use Rule 144 to resell any Securities. As of
their respective filing dates, or to the extent corrected by a subsequent
amendment, the SEC Reports complied in all material respects with the
requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Commission promulgated thereunder, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. Each of the Material Contracts to which the
Company or any Subsidiary is a party or to which the property or assets of the
Company or any of its Subsidiaries are subject has been filed (or incorporated
by reference) as an exhibit to the SEC Reports.

(i) Financial Statements. The consolidated financial statements of the Company
included in the SEC Reports comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing (or to the extent corrected
by a subsequent amendment). Such consolidated financial statements have been
prepared in accordance with GAAP applied on a consistent basis during the
periods involved, except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated
Subsidiaries taken as a whole as of and for the dates thereof and the results of
operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial year-end audit adjustments.

(j) Material Changes. Since the date of the latest financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC
Report filed prior to the date hereof and except as disclosed in Schedule
3.1(j), (i) there have been no events, occurrences or developments that have had
or would reasonably be expected to have, either individually or in the
aggregate, a Material Adverse Effect, (ii) the Company has not incurred any
material liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, (iii) the Company has not altered materially its
method of accounting or the manner in which it keeps its accounting books and
records, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock (other than in
connection with repurchases of unvested stock issued to employees of the
Company) and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except Common Stock issued in the ordinary
course as dividends on outstanding preferred stock or issued pursuant to
existing Company stock option or stock purchase plans or executive and director
compensation arrangements disclosed in the SEC Reports. Except as disclosed in
Schedule 3.1(j) and except for the issuance of the Shares and Warrants
contemplated by this Agreement, no event, liability or development has

 

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occurred or exists with respect to the Company or its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at
the time this representation is made that has not been publicly disclosed at
least one Trading Day prior to the date that this representation is made.

(k) Litigation. There is no Action which (i) adversely affects or challenges the
legality, validity or enforceability of any of the Transaction Documents or the
Securities or (ii) except as disclosed in Schedule 3.1(k), would, if there were
an unfavorable decision, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect. During the past five years,
neither the Company nor any Subsidiary, nor to the Company’s Knowledge any
director or officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state securities laws or a
claim of breach of fiduciary duty. There has not been, and to the Company’s
Knowledge there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company. During the past five years, the Commission has not issued any stop
order or other order suspending the effectiveness of any registration statement
filed by the Company under the Exchange Act or the Securities Act.

(l) Employment Matters. No material labor dispute exists or, to the Company’s
Knowledge, is imminent with respect to any of the employees of the Company which
would have or would reasonably be expected to result in a Material Adverse
Effect. None of the Company’s or any Subsidiary’s employees is a member of a
labor union that relates to such employee’s relationship with the Company, and
neither the Company nor any of its Subsidiaries is a party to a collective
bargaining agreement. Except as disclosed in Schedule 3.1(l), no executive
officer of the Company (as defined in Rule 501(f) of the Securities Act) has
notified the Company or any of its Subsidiaries that such officer intends to
leave the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. To the Company’s Knowledge,
no executive officer or key employee, is, or is now expected to be, in violation
of any material term of any employment contract, confidentiality, disclosure or
proprietary information agreement or non-competition agreement, or any other
contract or agreement or any restrictive covenant in favor of any third party,
and to the Company’s Knowledge, the continued employment of each such executive
officer or key employee does not subject the Company or any Subsidiary to any
liability with respect to any of the foregoing matters, except, in each case,
matters that, individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect. The Company is in compliance with all
U.S. federal, state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of employment and
wages and hours, except where the failure to be in compliance would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(m) Compliance. Neither the Company nor any of its Subsidiaries (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any Material Contract (whether or not such default
or violation has been waived), (ii) is in violation of any order of any court,
arbitrator

 

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or governmental body having jurisdiction over the Company or any of its
Subsidiaries or their properties or assets, or (iii) is in violation of, or in
receipt of written notice that it is in violation of, any statute, rule or
regulation of any governmental authority applicable to the Company or any of its
Subsidiaries, except in each case as would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.

(n) Regulatory Permits. The Company and each of its Subsidiaries possesses all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its business
as currently conducted, except as set forth in the SEC Reports, or such that
where the failure to possess such permits, individually or in the aggregate, has
not and would not have or would not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any of
its Subsidiaries has received any notice of Proceedings relating to the
revocation or modification of any such Material Permits.

(o) Title to Assets. The Company and each of its Subsidiaries has good and
marketable title to all tangible personal property owned by it that is material
to its business, in each case free and clear of all Liens except such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company. Any real property
and facilities held under lease by the Company and any of its Subsidiaries are
held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its Subsidiaries.

(p) Patents and Trademarks. Except as disclosed in Schedule 3.1(p), to the
Company’s Knowledge, the Company and each of its Subsidiaries owns, possesses,
licenses or has other rights to use, all patents, patent applications, trade and
service marks, trade and service mark applications and registrations, trade
names, trade secrets, inventions, copyrights, licenses, technology, know-how and
other intellectual property rights and similar rights necessary or material for
use in connection with its businesses as described in the SEC Reports and which
the failure to so would have or reasonably be expected to result in a Material
Adverse Effect (collectively, the “Intellectual Property Rights”). Except as
disclosed in Schedule 3.1(p), to the Company’s Knowledge, none of the
Intellectual Property Rights used by the Company or any Subsidiary violates or
infringes upon the patent, trademark, copyright, trade secret or other
proprietary rights of any Person. There is no pending or, to the Company’s
Knowledge, threatened Proceeding or claim by any Person that the Company’s or
any Subsidiary’s business as now conducted infringes or otherwise violates any
patent, trademark, copyright, trade secret or other proprietary rights of
another. To the Company’s Knowledge, there is no existing infringement by
another Person of any of the Intellectual Property Rights that would have or
would reasonably be expected to result in a Material Adverse Effect. There is no
pending or, to the Company’s Knowledge, threatened Proceeding or claim by
another Person challenging the Company’s or any Subsidiary’s rights in or to any
material Intellectual Property Rights, or challenging inventorship, validity or
scope of any such Intellectual Property Rights. The Company has taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
its and its Subsidiaries’ Intellectual Property Rights, except where failure to
do so would not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Effect. None of the technology employed by the
Company or any of its Subsidiaries has

 

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been obtained or is being used by the Company or any Subsidiary in violation of
any contractual obligation binding on the Company or any Subsidiary or, to the
Company’s Knowledge, any of its or its Subsidiaries’ officers, directors or
employees or otherwise in violation of the rights of any Person, which
violations would have or would reasonably be expected to have a Material Adverse
Effect.

(q) Insurance. The Company and each of its Subsidiaries is insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as the Company believes to be prudent and customary in the businesses
and locations in which the Company and the Subsidiaries are engaged. None of the
Company or any of its Subsidiaries has received any written notice of
cancellation of any such insurance, nor, to the Company’s Knowledge, will it or
any Subsidiary be unable to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a material increase in cost.

(r) Transactions With Affiliates and Employees. Except as set forth in the SEC
Reports, none of the executive officers or directors of the Company and, to the
Company’s Knowledge, none of the employees of the Company is presently a party
to any transaction with the Company (other than for services as employees,
officers and directors) that would be required to be disclosed pursuant to
Item 404 of Regulation S-K promulgated under the Securities Act.

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

(t) Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all
material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it. The Company has established disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) and 15d-15(e) under the
Exchange Act) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in
the reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the Company’s most recently filed periodic report under
the Exchange Act (such date, the “Evaluation Date”). The Company presented in
its most recently filed periodic report under the Exchange Act the conclusions
of the certifying officers about the effectiveness of the disclosure controls
and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the Company’s internal control
over financial reporting (as such term is defined in the Exchange Act) that have
materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting.

 

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(u) Certain Fees. Except as disclosed in Schedule 3.1(u), no Person will have,
as a result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or a Purchaser for any commission,
fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than the
Placement Agent and the Co-Placement Agents with respect to the offer and sale
of the Shares and Warrants (which fees are being paid by the Company). The
Purchasers shall have no obligation with respect to any fees or with respect to
any claim made by or on behalf of other Persons for fees of a type contemplated
in this paragraph (u) pursuant to any agreement to which the Company is a party
that may be due in connection with the transactions contemplated by the
Transaction Documents. The Company shall indemnify, pay, and hold each Purchaser
harmless against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out-of-pocket expenses) arising in connection with any such
right, interest or claim.

(v) Private Placement. Assuming the accuracy of the Purchasers’ representations
and warranties set forth in Section 3.2 of this Agreement and the accuracy of
the information disclosed in the Accredited Investor Questionnaires provided by
the Purchasers, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers under the
Transaction Documents. The issuance and sale of the Securities hereunder does
not contravene the rules and regulations of the Principal Trading Market.

(w) Investment Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares and Warrants, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.

(x) Registration Rights. Other than each of the Purchasers pursuant to the
Registration Rights Agreement or as disclosed in Schedule 3.1(x), no Person has
any right to cause the Company to effect the registration under the Securities
Act of any securities of the Company.

(y) Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to terminate the registration of the Common
Stock under the Exchange Act, nor has the Company received any notification that
the Commission is contemplating terminating such registration. The Company has
not, in the 12 months preceding the date hereof, received written notice from
any Trading Market on which the Common Stock is listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is in compliance with all
listing and maintenance requirements of the Principal Trading Market on the date
hereof and the issuance of the Securities will not violate any such listing or
maintenance requirements.

(z) Application of Takeover Protections; Rights Agreements. The Company and the
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under

 

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a rights agreement) or other similar anti-takeover provision under the Company’s
charter documents or the laws of its state of incorporation that is or could
reasonably be expected to become applicable to any of the Purchasers as a result
of the Purchasers and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without limitation, the
Company’s issuance of the Securities and the Purchasers’ ownership of the
Securities.

(aa) Disclosure. The Company confirms that it has not provided, and to the
Company’s Knowledge, none of its officers or directors nor any other Person
acting on its or their behalf has provided, and it has not authorized the
Placement Agent or the Co-Placement Agents to provide, any Purchaser or its
respective agents or counsel with any information that it believes constitutes
material, non-public information except insofar as the existence, provisions and
terms of the Transaction Documents and the proposed transactions hereunder may
constitute such information, all of which will be disclosed by the Company in
the Press Release as contemplated by Section 4.6 hereof. The Company understands
and confirms that the Purchasers will rely on the foregoing representations in
effecting transactions in securities of the Company.

(bb) No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company
nor, to the Company’s Knowledge, any Person acting on its behalf has, directly
or indirectly, at any time within the past six months, made any offers or sales
of any Company security or solicited any offers to buy any security under
circumstances that would (i) eliminate the availability of the exemption from
registration under Regulation D under the Securities Act in connection with the
offer and sale by the Company of the Securities as contemplated hereby or
(ii) cause the offering of the Securities pursuant to the Transaction Documents
to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of any Trading Market on
which any of the securities of the Company are listed or designated unless such
integration would not have or reasonably be expected to result in a Material
Adverse Effect.

(cc) Tax Matters. The Company and each of its Subsidiaries (i) has accurately
and timely prepared and filed (or requested valid extensions thereof) all
foreign, federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject, (ii) has paid
all taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith, with respect to which adequate
reserves have been set aside on the books of the Company and (iii) has set aside
on its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply, except, in the case of clauses (i) and (ii) above, where the failure to
so pay or file any such tax, assessment, charge or return would not have or
reasonably be expected to result in a Material Adverse Effect. The Company has
not received notice of any unpaid taxes in any material amount claimed to be due
by the Company or any Subsidiary by the taxing authority of any jurisdiction.

(dd) Environmental Matters. To the Company’s Knowledge, none of the Company or
any of its Subsidiaries (i) is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use,

 

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disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any
real property contaminated with any substance that is in violation of any
Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or (iv) is subject to any claim relating to
any Environmental Laws; which violation, contamination, liability or claim has
had or would have, individually or in the aggregate, a Material Adverse Effect;
and there is no pending investigation or, to the Company’s Knowledge,
investigation threatened in writing that might lead to such a claim.

(ee) No General Solicitation. Neither the Company nor, to the Company’s
Knowledge, any Person acting on behalf of the Company has offered or sold any of
the Securities by any form of general solicitation or general advertising.

(ff) Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company, any Subsidiary and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in the SEC Reports and is not so disclosed and would have or reasonably be
expected to result in a Material Adverse Effect.

(gg) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries,
nor to the Company’s Knowledge, any agent or other Person acting on behalf of
the Company or any of its Subsidiaries, has (i) directly or indirectly, used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to
any foreign or domestic political parties or campaigns from corporate funds,
(iii) failed to disclose fully any contribution made by the Company or any
Subsidiary (or made by any Person acting on its behalf of which the Company is
aware) which is in violation of law, or (iv) violated in any material respect
any provision of the Foreign Corrupt Practices Act of 1977, as amended.

(hh) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company
acknowledges and agrees that each of the Purchasers is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby. The Company further
acknowledges that no Purchaser is acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated thereby and any advice given by any
Purchaser or any of their respective representatives or agents in connection
with the Transaction Documents and the transactions contemplated thereby is
merely incidental to the Purchasers’ purchase of the Securities. The Company
further represents to each Purchaser that the Company’s decision to enter into
this Agreement and the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.

(ii) Regulation M Compliance. The Company has not, and to the Company’s
Knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation
of the price of any security of the

 

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Company to facilitate the sale or resale of any of the Securities, (ii) sold,
bid for, purchased, or, paid any compensation for soliciting purchases of, any
of the Securities in violation of Regulation M under the Exchange Act, or
(iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company, other than, in the case
of clauses (ii) and (iii), compensation paid to the Placement Agent and the
Co-Placement Agents in connection with the placement of the Shares and Warrants.

(jj) PFIC Status. Neither the Company nor any of its Subsidiaries is or intends
to become a “passive foreign investment company” within the meaning of
Section 1297 of the U.S. Internal Revenue Code of 1986, as amended.

(kk) OFAC Status. Neither the Company nor any of its Subsidiaries is and, to the
Company’s Knowledge, no director, officer, agent, employee, Affiliate or Person
acting on behalf of the Company or any Subsidiary is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”); and the Company will not directly or indirectly
use the proceeds of the sale of the Securities, or lend, contribute or otherwise
make available such proceeds to any joint venture partner or other Person or
entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or
any other country sanctioned by OFAC or for the purpose of financing the
activities of any Person currently subject to any U.S. sanctions administered by
OFAC.

(ll) FDA. There is no legal or governmental proceeding to which the Company or
any Subsidiary is a party or of which any property or assets of the Company or
any Subsidiary is the subject, including any proceeding before the United States
Food and Drug Administration of the U.S. Department of Health and Human Services
(“FDA”) or comparable federal, state, local or non-U.S. governmental bodies (it
being understood that the interaction between the Company and the FDA and such
comparable governmental bodies relating to the clinical development and product
approval process shall not be deemed proceedings for purposes of this
representation), which, singularly or in the aggregate, if determined adversely
to the Company or any Subsidiary, would have or would reasonably be expected to
have a Material Adverse Effect; and to the Company’s Knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others. The Company and each Subsidiary is in compliance with all
applicable federal, state, local and non-U.S. laws, regulations, orders and
decrees governing its business as prescribed by the FDA, or any other federal,
state or non-U.S. agencies or bodies engaged in the regulation of
pharmaceuticals, except where noncompliance would not, singularly or in the
aggregate, be reasonably likely to have a Material Adverse Effect. All
preclinical studies and clinical trials conducted by or on behalf of the Company
and any subsidiary, including those necessary to support approval for
commercialization of the Company’s or any Subsidiary’s products or product
candidates, have been conducted by the Company or any Subsidiary, as applicable,
or to the Company’s Knowledge by third parties, in material compliance with all
applicable federal, state or non-U.S. laws, rules, orders and regulations.

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

 

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

(a) Organization; Authority. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization with the requisite corporate, limited liability company or
partnership power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out
its obligations hereunder and thereunder. The execution and delivery of this
Agreement by such Purchaser and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate or, if such Purchaser is not a corporation, such
partnership, limited liability company or other applicable like action, on the
part of such Purchaser. Each Transaction Document to which it is a party has
been duly executed by such Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application.

(b) No Conflicts. The execution, delivery and performance by such Purchaser of
this Agreement and the Registration Rights Agreement and the consummation by
such Purchaser of the transactions contemplated hereby and thereby will not
(i) result in a violation of the organizational documents of such Purchaser,
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which such Purchaser is a party, or
(iii) result in a violation of any law, rule, regulation, order, judgment or
decree (including federal and state securities laws) applicable to such
Purchaser, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to perform its obligations hereunder.

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

 

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any securities which are derivatives thereof) to or through any Person; such
Purchaser is not a registered broker-dealer under Section 15 of the Exchange Act
or an entity engaged in a business that would require it to be so registered as
a broker-dealer.

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

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

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

(g) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the offering of the Securities. Neither such inquiries nor any other
investigation conducted by or on behalf of such Purchaser or its representatives
or counsel shall modify, amend or affect such Purchaser’s right to rely on the
truth, accuracy and completeness of the Company’s representations and warranties
contained in the Transaction Documents.

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

(i) Independent Investment Decision. Such Purchaser has independently evaluated
the merits of its decision to purchase Securities pursuant to the Transaction
Documents, and such Purchaser confirms that it has not relied on the advice of
any other Purchaser’s business and/or legal counsel in making such decision.
Such Purchaser understands that nothing in this Agreement or any other materials
presented by or on behalf of the Company to the Purchaser in connection with the
purchase of the Securities constitutes legal, tax or investment advice. Such
Purchaser has consulted such legal, tax and investment advisors as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities. Such Purchaser understands that the Placement Agent
and the Co-Placement Agents has acted solely as the agents of the Company in
this placement of the Shares and Warrants and such Purchaser has not relied on
the business or legal advice of the Placement Agent or the Co-Placement Agents
or any of their respective agents, counsel or Affiliates in making its
investment decision hereunder, and confirms that none of such Persons has made
any representations or warranties to such Purchaser in connection with the
transactions contemplated by the Transaction Documents.

 

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

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

(l) Residency. Such Purchaser’s residence (if an individual) or offices in which
its investment decision with respect to the Securities was made (if an entity)
are located at the address immediately below such Purchaser’s name on its
signature page hereto.

(m) Accuracy of Accredited Investor Questionnaire. The Accredited Investor
Questionnaire delivered by such Purchaser in connection with this Agreement is
complete and accurate in all respects as of the date of this Agreement and will
be correct as of the Closing Date.

The Company and each of the Purchasers acknowledge and agree that no party to
this Agreement has made or makes any representations or warranties with respect
to the transactions contemplated hereby other than those specifically set forth
in this Article III and the Transaction Documents.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) Compliance with Laws. Notwithstanding any other provision of this Article
IV, each Purchaser, severally but not jointly, covenants that the Securities may
be disposed of only pursuant to an effective registration statement under, and
in compliance with the requirements of, the Securities Act, or pursuant to an
available exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act, and in compliance with any applicable state
and federal securities laws. In connection with any transfer of the Securities
other than (i) pursuant to an effective registration statement, (ii) to the
Company, (iii) pursuant to Rule 144 (provided that such Purchaser provides the
Company with reasonable assurances (in the form of seller and, if applicable,
broker representation letters) that the securities may be sold pursuant to such
rule) or (iv) in connection with a bona fide pledge as contemplated in
Section 4.1(b), the Company may require the transferor thereof to provide to the
Company an opinion of counsel selected by the transferor and reasonably
acceptable to the

 

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Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a
condition of transfer, any such transferee shall agree in writing to be bound by
the terms of this Agreement and the Registration Rights Agreement and shall have
the rights of a Purchaser under this Agreement and the Registration Rights
Agreement with respect to such transferred Securities.

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

[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

The Company acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the legended
Securities in connection with applicable securities laws, pursuant to a bona
fide margin agreement in compliance with a bona fide margin loan. Such a pledge
would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by such
Purchaser transferee of the pledge. No notice shall be required of such pledge,
but such Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure of such legended Securities. Each Purchaser
acknowledges that the Company shall not be responsible for any pledges relating
to, or the grant of any security interest in, any of the Securities or for any
agreement, understanding or arrangement between any Purchaser and its pledgee or
secured party. At the appropriate Purchaser’s expense, the Company will execute
and deliver such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or transfer of the
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

 

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Securities Act to appropriately amend the list of selling stockholders
thereunder. Each Purchaser acknowledges and agrees that, except as otherwise
provided in Section 4.1(c), any Securities subject to a pledge or security
interest as contemplated by this Section 4.1(b) shall continue to bear the
legend set forth in this Section 4.1(b) and be subject to the restrictions on
transfer set forth in Section 4.1(a).

(c) Removal of Legends. The legend set forth in Section 4.1(b) above shall be
removed and the Company shall issue a certificate or book-entry statement
without such legend or any other legend to the holder of the applicable
Securities upon which it is stamped or issue to such holder by electronic
delivery at the applicable balance account at the Depository Trust Company
(“DTC”), if (i) such Securities are registered for resale under the Securities
Act (provided that, if a Purchaser is selling pursuant to the Registration
Statement, such Purchaser agrees to only sell such Securities during such time
that the Registration Statement is effective and not withdrawn or suspended, and
only as permitted by the Registration Statement), (ii) such Securities are sold
or transferred pursuant to Rule 144 (if the transferor is not an Affiliate of
the Company), or (iii) such Securities are eligible for sale under Rule 144,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities and without
volume or manner-of-sale restrictions. Following the earlier of (i) the
Effective Date or (ii) Rule 144 becoming available for the resale of Securities,
without the requirement for the Company to be in compliance with the current
public information required under Rule 144 as to such securities and without
volume or manner-of-sale restrictions, the Company shall deliver to the Transfer
Agent irrevocable instructions that the Transfer Agent shall reissue a
certificate representing the applicable Shares or issue a certificate
representing the applicable Warrant Shares without legend upon receipt by the
Transfer Agent of the legended certificates for such Shares. Any fees (with
respect to the Transfer Agent or otherwise) associated with the removal of such
legend shall be borne by the Company. Following the Effective Date, or at such
earlier time as a legend is no longer required for certain Securities (in which
case a Purchaser shall also be required to provide reasonable assurances, in the
form of seller and, if applicable, broker representation letters), the Company
will no later than three Trading Days following the delivery by a Purchaser to
the Company or the Transfer Agent (with notice to the Company) of (i) a legended
certificate representing Shares or Warrant Shares (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer) or (ii) an Exercise Notice and payment of the
applicable exercise price in the manner stated in the Warrants to effect the
exercise of such Warrant in accordance with its terms, and an opinion of counsel
to the extent required by Section 4.1(a), deliver or cause to be delivered to
the transferee of such Purchaser or such Purchaser, as applicable, a certificate
representing such Securities that is free from all restrictive and other
legends. The Company may not make any notation on its records or give
instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section 4.1(c) other than to comply with applicable law.
Certificates or book entry statements for Shares or Warrant Shares subject to
legend removal hereunder may be transmitted by the Transfer Agent to a Purchaser
by crediting the account of such Purchaser’s prime broker with DTC as directed
by such Purchaser.

(d) Irrevocable Transfer Agent Instructions. The Company shall issue irrevocable
instructions to the Transfer Agent, and any subsequent transfer agent, in
substantially the form of Exhibit E attached hereto (the “Irrevocable Transfer
Agent Instructions”). The

 

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Company represents and warrants that no instruction other than the Irrevocable
Transfer Agent Instructions referred to in this Section 4.1(d) (or instructions
that are consistent therewith) will be given by the Company to the Transfer
Agent in connection with this Agreement, and that the Securities shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement and the other Transaction Documents and
applicable law. The Company acknowledges that a breach by it of its obligations
under this Section 4.1(d) will cause irreparable harm to a Purchaser.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 4.1(d) will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of the provisions of this
Section 4.1(d), that a Purchaser shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and
requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.

(e) Acknowledgement. Each Purchaser, severally but not jointly, acknowledges its
primary responsibilities under the Securities Act and accordingly will not sell
or otherwise transfer the Securities or any interest therein without complying
with the requirements of the Securities Act and applicable law. While the
Registration Statement remains effective, each Purchaser hereunder may sell the
Shares and Warrant Shares in accordance with the plan of distribution contained
in the Registration Statement and if it does so it will comply therewith and
with the related prospectus delivery requirements unless an exemption therefrom
is available. Each Purchaser, severally and not jointly with the other
Purchasers, agrees that if it is notified by the Company in writing at any time
that the Registration Statement registering the resale of the Shares or the
Warrant Shares is not effective or that the prospectus included in such
Registration Statement no longer complies with the requirements of Section 10 of
the Securities Act, such Purchaser will refrain from selling such Shares and
Warrant Shares until such time as the Purchaser is notified by the Company that
such Registration Statement is effective or such prospectus is compliant with
Section 10 of the Securities Act, unless such Purchaser is able to, and does,
sell such Shares or Warrant Shares pursuant to an available exemption from the
registration requirements of Section 5 of the Securities Act. Both the Company
and its Transfer Agent, and their respective directors, officers, employees and
agents, may rely on this Section 4.1(e) and each Purchaser, severally but not
jointly, with the other Purchasers will indemnify and hold harmless each of such
persons from any breaches or violations of this Section 4.1(e).

(f) Buy-In. If the Company shall fail for any reason or for no reason to issue
to a Purchaser unlegended certificates or book-entry statements within three
Trading Days after receipt of all documents necessary for the removal of the
legend set forth above (the “Deadline Date”), then, in addition to all other
remedies available to such Purchaser, if on or after the Trading Day immediately
following such three Trading Day period, such Purchaser is required to purchase
(in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the holder of shares of Common Stock that such
Purchaser anticipated receiving from the Company without any restrictive legend
(a “Buy-In”), then the Company shall, within three Trading Days after such
Purchaser’s request and in the Company’s sole discretion, either (i) pay cash to
such Purchaser in an amount equal to such Purchaser’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased (the “Buy-In Price”), at which point the shares of Common Stock held
by such Purchaser equal to the number of shares of Common Stock so purchased
shall be forfeited to the

 

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Company and the Company’s obligation to deliver such certificate or book-entry
statement (and to issue such shares of Common Stock) shall terminate, or
(ii) promptly honor its obligation to deliver to such Purchaser a certificate or
certificates or book-entry statements representing such shares of Common Stock
and pay cash to the Purchaser in an amount equal to the excess (if any) of the
Buy-In Price over the product of (a) such number of shares of Common Stock,
multiplied by (b) the Closing Bid Price on the Deadline Date. A Purchaser shall
provide the Company written notice indicating the amounts payable to such
Purchaser in respect of the Buy-In, together with applicable confirmations and
other evidence reasonably requested by the Company.

4.2 Reservation of Common Stock.

(a) The Company shall take all action necessary to at all times during the
period the Warrants are outstanding have authorized, and reserved for the
purpose of issuance from and after the Closing Date, the number of shares of
Common Stock issuable upon exercise of the Warrants issued at the Closing
(without taking into account any limitations on exercise of the Warrants set
forth in the Warrants).

(b) The Company shall reserve and keep available at all times during which the
Preferred Shares remain outstanding, free of preemptive rights, a sufficient
number of shares of Common Stock for the purpose of enabling the Company to
issue the Underlying Shares upon conversion of the Preferred Shares pursuant to
the Certificate of Designation. The form of Notice of Conversion included in the
Certificate of Designation sets forth the totality of the procedures required of
the Purchasers in order to convert the Preferred Shares. No additional legal
opinion, other information or instructions shall be required of the Purchasers
to convert their Preferred Shares. The Company shall honor conversions of the
Preferred Shares and shall deliver Underlying Shares in accordance with the
terms, conditions and time periods set forth in the Transaction Documents.

4.3 Acknowledgment of Dilution. The Company acknowledges that the issuance of
the Shares may result in dilution of the outstanding shares of Common Stock,
which dilution may be substantial under certain market conditions. The Company
further acknowledges that its obligations under the Transaction Documents,
including without limitation its obligation to issue the Shares pursuant to the
Transaction Documents, are unconditional and absolute and not subject to any
right of set off, counterclaim, delay or reduction, regardless of the effect of
any such dilution or any claim the Company may have against any Purchaser and
regardless of the dilutive effect that such issuance may have on the ownership
of the other stockholders of the Company.

4.4 Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144, until the earlier of (i) the date that the Securities
cease to be Registrable Securities (as defined in the Registration Rights
Agreement) (and for no less than 12 months from the Closing), (ii) the date that
is 24 months from the Closing or (iii) a Fundamental Transaction (as defined in
the Warrant) pursuant to which the Company is no longer a reporting company
under the Exchange Act, the Company shall use its commercially reasonable
efforts to timely file (or obtain extensions in respect thereof and file within
the applicable grace period) all reports required to be filed by the Company
after the date hereof pursuant to the Exchange Act.

 

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Except as set forth in clause (iii) above, during such period, if the Company is
not required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c) such information as is required for the Purchasers to sell the Securities
under Rule 144.

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

4.6 Securities Laws Disclosure; Publicity. On or before 9:00 a.m., New York City
time, on the Business Day immediately following the date hereof, the Company
shall issue a press release (the “Press Release”) reasonably acceptable to the
Placement Agent disclosing all material terms of the transactions contemplated
hereby. On or before 5:30 p.m., New York City time, on the fourth Trading Day
immediately following the execution of this Agreement, the Company will file a
Current Report on Form 8-K with the Commission describing the terms of the
Transaction Documents (and including as exhibits to such Current Report on Form
8-K the material Transaction Documents (including, without limitation, this
Agreement, the form of Warrant and the Registration Rights Agreement)).
Notwithstanding the foregoing, the Company shall not publicly disclose the name
of any Purchaser or an Affiliate of any Purchaser, or include the name of any
Purchaser or an Affiliate of any Purchaser in any press release or filing with
the Commission (other than the Registration Statement) or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement and
(B) the filing of final Transaction Documents (including signature pages
thereto) with the Commission and (ii) to the extent such disclosure is required
by law, request of the Staff of the Commission or Trading Market regulations, in
which case the Company shall provide the Purchasers with prior written notice of
such disclosure permitted under this subclause (ii). From and after the issuance
of the Press Release, no Purchaser shall be in possession of any material,
non-public information received from the Company or any of its officers,
directors, employees or agents, that is not disclosed in the Press Release
unless a Purchaser shall have executed a written agreement regarding
confidentiality and use of such information. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that it will comply with the
provisions of any confidentiality or nondisclosure agreement executed by it and,
in addition, until such time as the transactions contemplated by this Agreement
are required to be publicly disclosed by the Company as described in this
Section 4.6, such Purchaser will maintain the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and
terms of this transaction).

4.7 Shareholder Rights Plan. No claim will be made or enforced by the Company
or, with the consent of the Company, any other Person, that any Purchaser is an
“Acquiring Person” under any control share acquisition, business combination,
poison pill (including any distribution

 

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under a rights agreement) or similar anti-takeover plan or arrangement in effect
or hereafter adopted by the Company, or that any Purchaser could be deemed to
trigger the provisions of any such plan or arrangement, in either case solely by
virtue of receiving Securities under the Transaction Documents or under any
other written agreement between the Company and the Purchasers.

4.8 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents,
including this Agreement, or as expressly required by any applicable securities
law, the Company covenants and agrees that neither it, nor any other Person
acting on its behalf, will provide any Purchaser or its agents or counsel with
any information regarding the Company that the Company believes constitutes
material non-public information without the express written consent of such
Purchaser, unless prior thereto such Purchaser shall have executed a written
agreement regarding the confidentiality and use of such information. The Company
understands and confirms that each Purchaser shall be relying on the foregoing
covenant in effecting transactions in securities of the Company.

4.9 Use of Proceeds. The Company shall use the net proceeds from the sale of the
Shares and Warrants hereunder for working capital and general corporate
purposes.

4.10 Indemnification of Purchasers. Subject to the provisions of this
Section 4.10, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (ii) any Action instituted against a
Purchaser in any capacity, or any Purchaser Party, by any stockholder of the
Company who is not an Affiliate of such Purchaser seeking indemnification, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such Action is based upon a breach of such Purchaser’s representations,
warranties or covenants under the Transaction Documents or any other agreement
with the Company, or any agreements or understandings such Purchaser may have
with any such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). Promptly after receipt by any
such Person (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any Proceeding or investigation in respect of which indemnity may be sought
pursuant to this Section 4.10, such Indemnified Person shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person,
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expenses relating to such Proceeding or investigation; provided, however, that
the failure of any Indemnified Person so to notify the Company shall not relieve
the Company of its obligations hereunder except to the extent that the Company
is actually and materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless: (i) the Company and the Indemnified Person shall
have mutually agreed to the retention of such counsel; (ii) the Company shall
have failed promptly to assume the defense of such proceeding and to employ
counsel reasonably satisfactory to such Indemnified Person in such proceeding;
or (iii) in the reasonable judgment of counsel to such Indemnified Person,
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. The Company shall not be
liable for any settlement of any proceeding effected without its prior written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned or to the extent fees or costs incurred pursuant to this
Section 4.10 are attributable to the Indemnified Person’s breach of any of the
representations, warranties, covenants or agreements made by the Purchasers in
this Agreement or the other Transaction Documents. Without the prior written
consent of the Indemnified Person, which consent shall not be unreasonably
withheld, delayed or conditioned, the Company shall not effect any settlement of
any pending or threatened proceeding in respect of which any Indemnified Person
is or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability arising out of such
proceeding.

4.11 Listing of Securities. In the time and manner required by the Principal
Trading Market, the Company shall prepare and file with such Principal Trading
Market an additional shares listing application covering all of the Shares and
Warrant Shares and shall use its reasonable best efforts to take all steps
necessary to cause all of the Shares and Warrant Shares to be approved for
listing on the Principal Trading Market as promptly as possible thereafter.

4.12 Form D; Blue Sky. The Company agrees to timely file a Form D with respect
to the Securities as required under Regulation D and to provide a copy thereof,
promptly upon the written request of any Purchaser. The Company, on or before
the Closing Date, shall take such action as the Company shall reasonably
determine is necessary in order to obtain an exemption for or to qualify the
Securities for sale to the Purchasers at the Closing pursuant to this Agreement
under applicable securities or “Blue Sky” laws of the states of the United
States (or to obtain an exemption from such qualification) and shall provide
evidence of such actions promptly upon the written request of any Purchaser.

4.13 Short Sales and Confidentiality After The Date Hereof. Such Purchaser shall
not, and shall cause its Trading Affiliates not to, engage, directly or
indirectly, in any transactions in the Company’s securities (including, without
limitation, any Short Sales involving the Company’s securities) during the
period from the date hereof until the earlier of such time as (i) the
transactions contemplated by this Agreement are first publicly announced as
required by and described in Section 4.6 or (ii) this Agreement is terminated in
full pursuant to Section 6.18. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in Section 4.5, such Purchaser will maintain the confidentiality of
the existence and terms of this transaction and the information included in the
Transaction Documents and

 

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Disclosure Schedules. Notwithstanding the foregoing, no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in Short
Sales in the securities of the Company after the time that the transactions
contemplated by this Agreement are first publicly announced as described in
Section 4.5; provided, however, each Purchaser agrees, severally and not jointly
with any Purchasers, that they will not enter into any Net Short Sales (as
hereinafter defined) from the period commencing on the Closing Date and ending
on the earliest of (x) the Effective Date of the initial Registration Statement,
(y) the second anniversary of the Closing Date or (z) the date that such
Purchaser no longer holds any Securities. For purposes of this Section 4.13, a
“Net Short Sale” by any Purchaser shall mean a sale of Common Stock by such
Purchaser that is marked as a non-exempt short sale and that is made at a time
when there is no equivalent offsetting long position in Common Stock held by
such Purchaser. For purposes of determining whether there is an equivalent
offsetting position in Common Stock held by the Purchaser, Warrant Shares that
have not yet been issued pursuant to the exercise of Warrants shall be deemed to
be held long by the Purchaser, and the amount of shares of Common Stock held in
a long position shall be all Shares and unexercised Warrant Shares (ignoring any
exercise limitations included therein) issuable to such Purchaser on such date,
plus any shares of Common Stock or Common Stock Equivalents otherwise then held
by such Purchaser. Notwithstanding the foregoing, in the event that a Purchaser
is a multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth
above shall apply only with respect to the portion of assets managed by the
portfolio manager that have knowledge about the financing transaction
contemplated by this Agreement. Moreover, notwithstanding the foregoing, in the
event that a Purchaser has sold Securities pursuant to Rule 144 prior to the
Effective Date of the initial Registration Statement and the Company has failed
to deliver certificates book-entry statements without legends prior to the
settlement date for such sale (assuming that such certificates or book-entry
statements meet the requirements set forth in Section 4.1(c) for the removal of
legends), the provisions of this Section 4.13 shall not prohibit the Purchaser
from entering into Net Short Sales for the purpose of delivering shares of
Common Stock in settlement of such sale.

4.14 Delivery of Shares and Warrants After Closing. The Company shall deliver,
or cause to be delivered, the respective Shares and Warrants purchased by each
Purchaser to such Purchaser within three Trading Days of the Closing Date.

4.15 Participation Rights. From the date hereof until the date that is 24 months
after the Closing Date (the “Participation Period”), the Purchaser listed on
Schedule 4.15 (the “Lead Investor”) shall have the right to participate any
unregistered private offerings (in reliance upon the exemption from securities
registration afforded by Section 4(a)(2) of the Act) undertaken by the Company
of its Common Stock or Common Stock Equivalents in a financing transaction (a
“Subsequent Financing”) following the Closing Date in an amount up to its Pro
Rata Portion, up to a cap of $50 million. At least five Business Days prior to
the execution of definitive documentation for a Subsequent Financing, the
Company shall deliver to the Lead Investor a written notice (“Pre-Notice”),
which Pre-Notice shall notify the Lead Investor that the Company would like to
share with the Lead Investor certain information which may constitute material
non-public information with regard to the Company and which shall ask the Lead
Investor if it wants to review such information. The Lead Investor shall have
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Business Days after its receipt of the Pre-Notice, to notify the Company whether
it wishes to review such information. Upon the written request of the Lead
Investor, and only upon a request by such Lead Investor, the Company shall
promptly, but no later than one Business Day after receipt of such request,
deliver a subsequent notice to the Lead Investor (a “Subsequent Financing
Notice”), which Subsequent Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing. The Lead Investor shall notify
the Company by 6:30 p.m. (New York City time) on the second Business Day after
its receipt of the Subsequent Financing Notice of its willingness to participate
in the Subsequent Financing on the terms described in the Subsequent Financing
Notice. If the Lead Investor fails to timely notify the Company of its
willingness to participate in the Subsequent Financing, the Company may effect
such Subsequent Financing without the participation of the Lead Investor on
substantially the terms set forth in the Subsequent Financing Notice; provided
that the Company must provide the Lead Investor with a second Subsequent
Financing Notice, and the Lead Investor will again have the participation right
set forth above in this Section 4.15, if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on
substantially the terms set forth in such Subsequent Financing Notice within 60
Business Days after the date of the initial Subsequent Financing Notice;
provided further, that if the only material change in terms on such second
Subsequent Financing Notice relates to the number of shares to be sold or the
price at which such shares are to be sold, then the Lead Investor shall notify
the Company by 6:30 p.m. (New York City time) on the first Business Day after
its receipt of such second Subsequent Financing Notice of its willingness to
participate in the Subsequent Financing on the revised terms described in such
Subsequent Financing Notice. Notwithstanding the foregoing, this Section 4.15
shall not apply in respect of the issuance of (a) shares of Common Stock or
options to employees, consultants, officers or directors of the Company pursuant
to any stock or option plan (or a bona fide inducement grant to new employees
outside of any such plan) duly adopted by a majority of the non-employee members
of the Board of Directors of the Company or a majority of the members of a
committee of non-employee directors established for such purpose, (b) securities
upon the exercise of or conversion of any convertible securities or warrants
issued and outstanding on or after the date of or pursuant to this Agreement or
any options held by current or former employees or consultants of the Company,
(c) shares of Common Stock or securities convertible into Common Stock issued in
connection with acquisitions, asset purchases, licenses, joint ventures,
technology license agreements, collaborations or strategic transactions
involving the Company and other entities approved by the Board of Directors, or
(d) securities issued to financial institutions or lessors in connection with
credit or lending arrangements, equipment financings or lease arrangements.
Notwithstanding anything to the contrary herein, this Section 4.15 shall not
require the Company to take any action that would require shareholder approval
under applicable stock exchange rules or result in a violation of law or stock
exchange rule or regulation.

4.16 Consent to Registered Offerings. Until the expiration of the Participation
Period, the Company covenants that it shall not consummate a primary offering by
the Company of securities issued in an offering registered under the Securities
Act without the prior written consent of the Lead Investor; provided that such
consent shall be deemed to have been granted if: (i) the Company or its
underwriter, placement agent or financial advisor in good faith attempts to
inform the Lead Investor of such offering on a confidential basis pursuant to a
customary “wall crossing” procedure and the Lead Investor declines to speak with
the Company or its underwriter, placement agent or financial advisor regarding
the offering (i.e., it does not come

 

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“over the wall”) (it being understood that the Lead Investor will be deemed to
have “declined to speak” to the Company or its underwriter, placement agent or
financial advisor, and thus have given consent to such offering, if it could not
be reached or does not provide a response within 48 hours after such good faith
attempt to inform the Lead Investor of such offering); or (ii) the Company or
its underwriter, placement agent or financial advisor contacts the Lead Investor
following the first public announcement of the public offering and the Lead
Investor is offered an allocation of or is allocated in such offering the lesser
of: (A) its requested allocation in such public offering or (B) its Pro Rata
Portion, up to a cap of $50 million; or (iii) if the Lead Investor cannot be
found or is not responsive during the period between the first public
announcement of the public offering and the pricing of such public offering
(which may be the same day as the announcement in the case of a confidentially
marketed public offering). Notwithstanding anything to the contrary herein, this
Section 4.16 shall not (1) apply to any offering or sale of securities on Form
S-8 or Form S-4, or any similar or successor forms, (2) apply to the filing or
effectiveness of any shelf registration statement, whether covering potential
sales of Company securities by the Company or resales of Company securities by
selling security holders, (3) apply to offers or sales under any resale
registration statement by security holders of the Company, (4) apply to any
offering or sale pursuant to an “at the market” offering by the Company or
(5) require the Company to take any action that would require shareholder
approval under applicable stock exchange rules or result in a violation of law
or stock exchange rule or regulation.

ARTICLE V

CONDITIONS PRECEDENT TO CLOSING

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

(a) Representations and Warranties. The representations and warranties of the
Company contained herein shall be true and correct in all material respects
(except for those representations and warranties which are qualified as to
materiality, in which case such representations and warranties shall be true and
correct in all respects) as of the date when made and as of the Closing Date, as
though made on and as of such date, except for such representations and
warranties that speak as of a specific date.

(b) Performance. The Company shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or
prior to the Closing.

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

(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary for
consummation of the purchase and sale of the Securities at the Closing
(including all Required Approvals), all of which shall be and remain so long as
necessary in full force and effect.

 

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(e) Adverse Change. Since the date of execution of this Agreement, no event or
series of events shall have occurred that has had or would reasonably be
expected to have a Material Adverse Effect.

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

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

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

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

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

(a) Representations and Warranties. The representations and warranties made by
the Purchasers in Section 3.2 hereof shall be true and correct in all material
respects (except for those representations and warranties which are qualified as
to materiality, in which case such representations and warranties shall be true
and correct in all respects) as of the date when made, and as of the Closing
Date as though made on and as of such date, except for representations and
warranties that speak as of a specific date.

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

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

 

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(d) Consents. The Company shall have obtained in a timely fashion any and all
consents, permits, approvals, registrations and waivers necessary for
consummation of the purchase and sale of the Securities at the Closing
(including all Required Approvals), all of which shall be and remain so long as
necessary in full force and effect.

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

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

ARTICLE VI

MISCELLANEOUS

6.1 Fees and Expenses. Except as otherwise expressly set forth in the Company’s
engagement letter with the Placement Agent, the Company and each Purchaser,
severally and not jointly with any other Purchaser, shall pay the fees and
expenses of their respective advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party in connection with the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and
duties levied in connection with the sale and issuance of the Securities to the
Purchasers. Each Purchaser, severally and not jointly with any other Purchaser,
shall be responsible for all other tax liability that may arise as a result of
holding or transferring the Securities by it. Notwithstanding the foregoing, the
Company shall reimburse the Lead Investor for its fees and expenses incurred in
connection with the purchase of the Securities and the registration of such
Securities under the Registration Rights Agreement, such fees not to exceed
$25,000 in the aggregate.

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

6.3 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of (a) the date of transmission, if such
notice or communication is delivered via facsimile (provided the sender receives
a machine-generated confirmation of successful transmission) at the facsimile
number specified in this Section 6.3 prior to 5:00 p.m., New York City time, on
a Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section 6.3 on a day that is not a Trading Day or later than
5:00 p.m., New York City time, on any Trading Day, (c) the Trading Day following
the date of mailing, if sent by U.S. nationally recognized overnight courier
service with next day delivery specified, or (d) upon actual receipt

 

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by the party to whom such notice is required to be given. The address for such
notices and communications shall be as follows:

 

If to the Company:    Pieris Pharmaceuticals, Inc.    255 State Street   
Boston, MA 02109    Telephone No.: (857) 246-8998    Facsimile No.: (857)
250-0363    Attention: Chief Financial Officer With a copy to (which shall not
constitute notice):    Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.   
One Financial Center    Boston, MA 02111    Telephone No.: (617) 542-6000   
Facsimile No.: (617) 542-2241    Attention:    William C. Hicks, Esq.       Marc
D. Mantell, Esq. If to a Purchaser:    To the address set forth under such
Purchaser’s name on the signature page hereof;

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

6.4 Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers holding or having the right to acquire a majority of the Shares and
the Warrant Shares on a fully-diluted basis at the time of such amendment (which
amendment shall be binding on all Purchasers or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought). No waiver of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right. No
consideration shall be offered or paid to any Purchaser to amend or consent to a
waiver or modification of any provision of any Transaction Document that, by its
terms, applies to all Purchasers, unless the same consideration is also offered
to all Purchasers who then hold Securities.

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

 

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6.6 Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of and be binding upon the parties and their successors and permitted
assigns. This Agreement, or any rights or obligations hereunder, may not be
assigned by the Company without the written consent of Purchasers holding or
having the right to acquire a majority of the Shares and the Warrant Shares on a
fully-diluted basis at the time of such consent except to a successor in the
event of a Fundamental Transaction. Any Purchaser may assign its rights
hereunder in whole or in part to any Person to whom such Purchaser assigns or
transfers any Securities in compliance with the Transaction Documents and
applicable law, provided that such transferee shall agree in writing to be
bound, with respect to the transferred Securities, by the terms and conditions
of this Agreement that apply to the “Purchasers”.

6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person, except (i) the Placement Agent and the Co-Placement Agents are intended
third party beneficiaries of Article III hereof and (ii) each Purchaser Party is
an intended third party beneficiary of Section 4.10.

6.8 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

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

6.10 Execution. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same agreement and
shall become

 

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

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

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

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

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

 

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

6.16 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance of the obligations of any other Purchaser under any
Transaction Document. The decision of each Purchaser to purchase Securities
pursuant to the Transaction Documents has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or any Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statement or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no Purchaser will be acting as agent of such Purchaser in
connection with monitoring its investment in the Securities or enforcing its
rights under the Transaction Documents. Each Purchaser shall be entitled to
independently protect and enforce its rights, including without limitation the
rights arising out of this Agreement or out of the other Transaction Documents,
and it shall not be necessary for any other Purchaser to be joined as an
additional party in any proceeding for such purpose. Each Purchaser has been
represented by its own separate legal counsel in its review and negotiation of
the Transaction Documents. For reasons of administrative convenience only,
Purchasers and their respective counsels have chosen to communicate with the
Company through Goodwin Procter LLP, counsel to the Placement Agent. Each
Purchaser acknowledges that Goodwin Procter LLP has rendered legal advice to the
Placement Agent and not to such Purchaser in connection with the transactions
contemplated hereby, and that each such Purchaser has relied for such matters on
the advice of its own respective counsel. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by any
Purchaser.

6.17 Waiver of Conflicts. Each Purchaser acknowledges that Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo, P.C., outside general counsel to the Company, has in
the past performed and is or may now or in the future represent one or more
Purchasers or their Affiliates in matters unrelated to the transactions
contemplated by the this Agreement, including representation of such Purchasers
or their Affiliates in matters of a similar nature to the transactions
contemplated by this Agreement. The applicable rules of professional conduct

 

40

--------------------------------------------------------------------------------

require that Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. inform the
Purchasers hereunder of this representation and obtain their consent. Mintz,
Levin, Cohn, Ferris, Glovsky and Popeo, P.C. has served as outside general
counsel to the Company and has negotiated the terms of this Agreement solely on
behalf of the Company. Each Purchaser hereby (a) acknowledges that they have had
an opportunity to ask for and have obtained information relevant to such
representation; (b) acknowledges that with respect to the transactions
contemplated by this Agreement, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C. has represented solely the Company, and not any Purchaser or any
stockholder, director or employee of the Company or any Purchaser; and (c) gives
its informed consent to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.’s
representation of the Company in the transactions contemplated by this
Agreement.

6.18 Termination. This Agreement may be terminated and the sale and purchase of
the Shares and the Warrants abandoned at any time prior to the Closing by either
the Company or any Purchaser (with respect to itself only) upon written notice
to the other, if the Closing has not been consummated on or prior to 5:00 p.m.,
New York City time, on the Outside Date; provided, however, that the right to
terminate this Agreement under this Section 6.18 shall not be available to any
Person whose failure to comply with its obligations under this Agreement has
been the cause of or resulted in the failure of the Closing to occur on or
before such time. Nothing in this Section 6.18 shall be deemed to release any
party from any liability for any breach by such party of the terms and
provisions of this Agreement or the other Transaction Documents or to impair the
right of any party to compel specific performance by any other party of its
obligations under this Agreement or the other Transaction Documents. In the
event of a termination pursuant to this Section 6.18, the Company shall promptly
notify all non-terminating Purchasers. Upon a termination in accordance with
this Section 6.18, the Company and the terminating Purchaser(s) shall not have
any further obligation or liability (including arising from such termination) to
the other, and no Purchaser will have any liability to any other Purchaser under
the Transaction Documents as a result therefrom. The Company and any
Purchaser(s) may extend the term of this Agreement in accordance with the
amendment provisions of Section 6.4 herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

41

--------------------------------------------------------------------------------

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

 

PIERIS PHARMACEUTICALS, INC. By:  

/s/ Stephen S. Yoder

Name:   Stephen S. Yoder Title:   President and Chief Executive Officer

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

[SIGNATURE PAGES FOR PURCHASERS FOLLOW]

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

Biotechnology Value Fund, L.P.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $4,306,055.00     Number and
Type of Shares to be Acquired:

        Common Stock:

 

 

        Preferred Stock:

 

2,137

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

854,800

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

427,400

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

Biotechnology Value Fund II, L.P.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $2,823,015.00     Number and
Type of Shares to be Acquired:

        Common Stock:

 

 

        Preferred Stock:

 

1,401

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

560,400

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

280,200

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

Biotechnology Value Trading Fund OS, L.P.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $844,285.00     Number and Type
of Shares to be Acquired:

        Common Stock:

 

 

        Preferred Stock:

 

419

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

167,600

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

83,800

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

Investment 10, L.L.C.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $695,175.00     Number and Type
of Shares to be Acquired:

        Common Stock:

 

 

        Preferred Stock:

 

345

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

138,000

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

69,000

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

MSI BVF SPV, L.L.C.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $1,331,915.00     Number and
Type of Shares to be Acquired:

        Common Stock:

 

 

        Preferred Stock:

 

661

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

264,400

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

132,200

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

DAFNA Lifescience LP

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $269,999.93     Number and Type
of Shares to be Acquired:

        Common Stock:

 

133,995

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

53,598

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

26,799

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

DAFNA Lifescience Select LP

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $179,999.95     Number and Type
of Shares to be Acquired:

        Common Stock:

 

89,330

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

35,732

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

17,866

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

CVI Investments, Inc. by Heights Capital Management, Inc., its Authorized Agent

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $999,998.155     Number and Type
of Shares to be Acquired:

        Common Stock:

 

496,277

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

198,510

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

99,255

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

LINCOLN PARK CAPITAL FUND, LLC

By: Lincoln Park Capital LLC

By: Rockledge Capital Corporation

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $449,999.88     Number and Type
of Shares to be Acquired:

        Common Stock:

 

223,325

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

89,330

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

44,665

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

1798 FUNDAMENTAL EQUITIES MASTER FUND LTD.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $999,998.16     Number and Type
of Shares to be Acquired:

        Common Stock:

 

496,277

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

198,510

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

99,255

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

SABBY HEALTHCARE MASTER FUND, LTD.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $1,999,998.32     Number and
Type of Shares to be Acquired:

        Common Stock:

 

992,555

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

397,022

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

198,511

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

SABBY VOLATILITY WARRANT MASTER FUND, LTD.

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $1,000,000.17     Number and
Type of Shares to be Acquired:

        Common Stock:

 

496,278

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

198,511

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

99,256

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

TEKLA LIFE SCIENCES INVESTORS

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $1,999,999.30     Number and
Type of Shares to be Acquired:

        Common Stock:

 

59,553

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

23,821

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

11,911

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

TEKLA HEALTHCARE INVESTORS

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $276,000.60     Number and Type
of Shares to be Acquired:

        Common Stock:

 

136,973

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

54,790

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

27,394

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

NAME OF PURCHASER:  

TEKLA HEALTHCARE OPPORTUNITIES FUND

By:  

 

Name:   Title:  

Aggregate Purchase Price (Subscription Amount): $204,000.62     Number and Type
of Shares to be Acquired:

        Common Stock:

 

101,241

        Preferred Stock:

 

 

Warrant Shares Subject to:

                  Tranche A  Warrant:

 

40,496

        (40% of the number of Shares to be acquired)

                  Tranche B  Warrant:

 

20,248

        (20% of the number of Shares to be acquired)

                             Tax ID No.:

 

 

Address for Notice/Residency of Purchaser:

 

 

 

Telephone No.:  

 

Facsimile No.:  

 

E-mail Address:  

 

Attention:  

 

 

Delivery Instructions: (if different than above) c/o  

 

Street:  

 

City/State/Zip:  

 

Attention:  

 

Telephone No.:  

 

--------------------------------------------------------------------------------

EXHIBITS:

 

A: Form of Warrant

B: Form of Registration Rights Agreement

C-1: Accredited Investor Questionnaire

C-2: Stock Certificate Questionnaire

D: Form of Opinion of Company Counsel

E: Form of Irrevocable Transfer Agent Instructions

F: Form of Secretary’s Certificate

G: Form of Officer’s Certificate

H: Form of Certificate of Designation

--------------------------------------------------------------------------------

EXHIBIT A

Form of Warrant

--------------------------------------------------------------------------------

EXHIBIT B

Form of Registration Rights Agreement

--------------------------------------------------------------------------------

Instruction Sheet

(to be read in conjunction with the entire Securities Purchase Agreement

and Registration Rights Agreement)

 

A. Complete the following items in the Securities Purchase Agreement and/or
Registration Rights Agreement:

 

  1. Provide the information regarding the Purchaser requested on the signature
page. The Securities Purchase Agreement and the Registration Rights Agreement
must be executed by an individual authorized to bind the Purchaser.

 

  2. Exhibit C-1 – Accredited Investor Questionnaire:

Provide the information requested by the Accredited Investor Questionnaire

 

  3. Exhibit C-2 Stock Certificate Questionnaire:

Provide the information requested by the Stock Certificate Questionnaire

 

  4. Annex B to the Registration Rights Agreement — Selling Securityholder
Notice and Questionnaire

Provide the information requested by the Selling Securityholder Notice and
Questionnaire

 

  5. Return the signed Securities Purchase Agreement and Registration Rights
Agreement to:

Mariel Healy

Cowen and Company, LLC

599 Lexington Avenue, 27th Floor

New York, NY 10022

Tel: (646) 562-1155

Fax: (646) 562-1124

Email: mariel.healy@cowen.com

 

B. Instructions regarding the transfer of funds for the purchase of Securities
is set forth below.

 

Account Name:

   Pieris Pharmaceuticals Inc.

Name of Bank:

  

City/State of Bank:

  

ACH Routing Number:

  

Wire Routing Number:

  

Swift:

  

Name of Account:

  

Account Number:

  

--------------------------------------------------------------------------------

EXHIBIT C-1

ACCREDITED INVESTOR QUESTIONNAIRE

(ALL INFORMATION WILL BE TREATED CONFIDENTIALLY)

 

To: Pieris Pharmaceuticals, Inc.

This Investor Questionnaire (“Questionnaire”) must be completed by each
potential investor in connection with the offer and sale of the shares of the
common stock, par value $0.001 per share, certain warrants and shares of common
stock that may be issued upon exercise of such warrants (collectively, the
“Securities”), of Pieris Pharmaceuticals, Inc., a Nevada corporation (the
“Corporation”). The Securities are being offered and sold by the Corporation
without registration under the Securities Act of 1933, as amended (the “Act”),
and the securities laws of certain states, in reliance on the exemptions
contained in Section 4(2) of the Act and on Regulation D promulgated thereunder
and in reliance on similar exemptions under applicable state laws. The
Corporation must determine that a potential investor meets certain suitability
requirements before offering or selling Securities to such investor. The purpose
of this Questionnaire is to assure the Corporation that each investor will meet
the applicable suitability requirements. The information supplied by you will be
used in determining whether you meet such criteria, and reliance upon the
private offering exemptions from registration is based in part on the
information herein supplied.

This Questionnaire does not constitute an offer to sell or a solicitation of an
offer to buy any security. Your answers will be kept strictly confidential.
However, by signing this Questionnaire, you will be authorizing the Corporation
to provide a completed copy of this Questionnaire to such parties as the
Corporation deems appropriate in order to ensure that the offer and sale of the
Securities will not result in a violation of the Act or the securities laws of
any state and that you otherwise satisfy the suitability standards applicable to
purchasers of the Securities. All potential investors must answer all applicable
questions and complete, date and sign this Questionnaire. Please print or type
your responses and attach additional sheets of paper if necessary to complete
your answers to any item.

 

PART  A. BACKGROUND INFORMATION

 

Name of Beneficial Owner of the Securities:      
                                         
                                         
                                                          

Business Address:                                                         
                                         
                                         
                                                  

(Number and Street)

 

(City)

  (State)       (Zip Code)

Telephone Number: (                     )

                                                                             
                                         
                                         

If a corporation, partnership, limited liability company, trust or other entity:

 

Type of entity: State of formation:  

 

  Approximate Date of formation:  

 

--------------------------------------------------------------------------------

Were you formed for the purpose of investing in the securities being offered?

Yes   ¨                    No  ¨

If an individual:

Residence Address:

                                                             (Number and Street)

(City)                                                    (State)              
                                  (Zip Code)

Telephone Number: (                    )

Age:                      Citizenship:                      Where registered to
vote:                         

Set forth in the space provided below the state(s), if any, in the United States
in which you maintained your residence during the past two years and the dates
during which you resided in each state:

Are you a director or executive officer of the Corporation?

Yes   ¨                      No  ¨

Social Security or Taxpayer Identification No.

 

PART B. ACCREDITED INVESTOR QUESTIONNAIRE

In order for the Company to offer and sell the Securities in conformance with
state and federal securities laws, the following information must be obtained
regarding your investor status. Please initial each category applicable to you
as a Purchaser of Securities of the Company.

 

  ¨  (1) A bank as defined in Section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity;

 

  ¨  (2) A broker or dealer registered pursuant to Section 15 of the Securities
Exchange Act of 1934;

 

  ¨  (3) An insurance company as defined in Section 2(13) of the Securities Act;

 

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

--------------------------------------------------------------------------------

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

 

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

 

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

 

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

 

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

 

  ¨  (10) A trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Securities, whose purchase is directed by a
sophisticated person who has such knowledge and experience in financial and
business matters that such person is capable of evaluating the merits and risks
of investing in the Company;

 

  ¨  (11) A natural person whose individual net worth, or joint net worth with
that person’s spouse, at the time of his purchase exceeds $1,000,000 (excluding
the value of such persons’ primary residence);

 

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

 

  ¨  (13) An executive officer or director of the Company;

 

  ¨  (14) An entity in which all of the equity owners qualify under any of the
above subparagraphs. If the undersigned belongs to this investor category only,
list the equity owners of the undersigned, and the investor category which each
such equity owner satisfies.

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A.     FOR EXECUTION BY AN INDIVIDUAL:

 

 

Date                    

    By  

 

    Print Name:  

 

B.     FOR EXECUTION BY AN ENTITY:

          Entity Name:  

 

Date                    

    By  

 

    Print Name:  

 

    Title:  

 

C.     ADDITIONAL SIGNATURES (if required by partnership, corporation or trust
document):

    Entity Name:  

 

Date                    

    By  

 

    Print Name:  

 

    Title:  

 

    Entity Name:  

 

Date                    

    By  

 

    Print Name:  

 

    Title:  

 

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EXHIBIT C-2

Stock Certificate Questionnaire

Pursuant to Section 2.2(b) of the Agreement, please provide us with the
following information:

1. The exact name that the Securities are to be registered in (this is the name
that will appear on the stock certificate(s)). You may use a nominee name if
appropriate:

2. The relationship between the Purchaser of the Securities and the Registered
Holder listed in response to Item 1 above:

3. The mailing address, telephone and telecopy number of the Registered Holder
listed in response to Item 1 above:

4. The Tax Identification Number (or, if an individual, the Social Security
Number) of the Registered Holder listed in response to Item 1 above:

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EXHIBIT D-1

Form of Opinion of Company Counsel

1. The Company is qualified to conduct business as a foreign corporation in the
Commonwealth of Massachusetts.

2. Each of the Transaction Documents constitutes the valid and binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, arrangement, moratorium or other similar
laws affecting creditors’ rights generally, and subject to general equity
principles and to limitations on availability of equitable relief, including
specific performance.

3. The execution, delivery and performance of the Transaction Documents by the
Company, the compliance with the terms and provisions thereof by the Company and
the issuance and sale of the Securities by the Company will not (a) violate or
conflict with any law, rule or regulation of the United States of America, the
Commonwealth of Massachusetts or the State of New York that in our experience is
normally applicable to transactions of the type contemplated by the Transaction
Documents or (b) violate any agreement to which the Company is a party or bound
(this opinion being limited (i) to those agreements identified on Exhibit A
attached hereto (the “Material Contracts”) and (ii) in that we express no
opinion with respect to any violation or default (A) arising under or based upon
any cross- default provision insofar as it relates to a violation or default
under an agreement not identified on Exhibit A attached hereto, (B) arising as a
result of any violation or default under any agreement or covenant by failure to
comply with any financial or numerical requirement requiring computation or
(C) under any provisions therein relating to the occurrence of a “material
adverse event” or words of similar import).

4. No consent, approval, authorization or order of, or filing with, any
governmental agency or body or any court is required in connection with the
execution, delivery or performance of the Transaction Documents by the Company,
or in connection with the issuance or sale of the Securities by the Company to
the Purchasers, except (i) the filing with the Securities and Exchange
Commission of one or more Registration Statements in accordance with the
requirements of the Registration Rights Agreement, (ii) filings required by
applicable state securities laws, (iii) the filing of a Notice of Sale of
Securities on Form D with the Securities and Exchange Commission under
Regulation D of the Securities Act of 1933, as amended, (iv) the filing of any
requisite notices and/or application(s) to the Nasdaq Capital Market for the
issuance and sale of the Securities and the listing of the Shares and Warrant
Shares for trading or quotation, as the case may be, thereon in the time and
manner required thereby, (v) the filings required in accordance with Section 4.6
of the Purchase Agreement and (vi) those that have been made or obtained prior
to the date hereof.

5. It is not necessary in connection with the offer and sale of the Securities
to the Purchasers under the Purchase Agreement to register the Securities under
the Securities Act of 1933, as amended, assuming the accuracy of the
representations and warranties of the Purchasers in the Purchase Agreement.

--------------------------------------------------------------------------------

6. To our actual knowledge, there is no litigation or any governmental
proceeding involving the Company, pending or threatened, that challenges the
validity or enforceability of the Purchase Agreement or the Registration Rights
Agreement, or seeks to enjoin the performance of the Purchase Agreement or the
Registration Rights Agreement by the Company.

7. The Company is not required to register as an “investment company,” as such
term is defined in the Investment Company Act of 1940, as amended.

--------------------------------------------------------------------------------

EXHIBIT D-2

Form of Opinion of Nevada Counsel

1. The Company is validly existing as a corporation and in good standing under
the laws of the State of Nevada, with the corporate power and authority to
(a) execute and deliver the Transaction Documents and perform its obligations
thereunder and (b) to conduct its business and own or lease its properties as
described in the Company’s Annual Report on Form 10-K for the year ending
December 31, 2015, as filed with the Securities and Exchange Commission on
March 23, 2016 (but not any document incorporated by reference therein).

2. The execution and delivery by the Company of the Transaction Documents, the
performance by the Company of its obligations thereunder and the consummation of
the Transactions have been duly authorized by the Company.

3. The Company has duly executed and delivered each of the Transaction
Documents.

4. The execution and delivery by the Company of the Transaction Documents and
the consummation of the Transactions (including the issuance and sale by the
Company of the Securities pursuant to and in accordance with the Transaction
Documents) do not violate the Governing Documents or any Applicable Nevada Law.

5. As of the date hereof, the authorized capital stock of the Company consists
of 300,000,000 shares of common stock, par value $0.001 per share, and
10,000,000 shares of preferred stock, par value $0.001 per share.

6. The Common Shares have been duly authorized by the Company and, when and to
the extent issued and sold in accordance with the terms of, and in the manner
contemplated by, the Purchase Agreement, including payment in full to the
Company of all consideration required therefor, the Common Shares will be
validly issued, fully paid and non-assessable.

7. The Conversion Shares have been duly authorized by the Company and, if, when
and to the extent issued in accordance with the terms of, and in the manner
contemplated by, the Purchase Agreement and the certificate of designation for
the Preferred Stock, including the due and proper conversion of the relevant
Preferred Shares and payment in full to the Company of any consideration for the
Conversion Shares as required therefor, the Conversion Shares will be validly
issued, fully paid and non-assessable.

8. The Warrant Shares have been duly authorized by the Company and, if, when and
to the extent issued in accordance with the terms of, and in the manner
contemplated by, the Purchase Agreement and the Warrants, including the due and
proper exercise of the Warrants and payment in full to the Company of the
exercise price and any other consideration for the Warrant Shares as required
therefor, the Warrant Shares will be validly issued, fully paid and
non-assessable.

9. As of the date hereof, the holders of shares of Common Stock are not entitled
to preemptive rights arising solely by operation of (a) the NRS or (b) the
Governing Documents.

--------------------------------------------------------------------------------

10. No consent, approval, authorization, order, registration or qualification
of, from or with any Nevada Governmental Authority is required to be obtained by
the Company under Applicable Nevada Law for the execution and delivery by the
Company of the Transaction Documents or the consummation of the Transactions,
except (a) those obtained or made prior to the date hereof and that are in full
force and effect, and (b) such as are permitted by the Transaction Documents to
be obtained or made after the closing of the Transactions.

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EXHIBIT E

Irrevocable Transfer Agent Instructions

As of June 8, 2016

Computershare Trust Company, N.A.

P.O. Box 30170

College Station, TX 77842-3170

Attn:                                          

Ladies and Gentlemen:

Reference is made to that certain Securities Purchase Agreement, dated as of
June 2, 2016 (the “Agreement”), by and among Pieris Pharmaceuticals, Inc., a
Nevada corporation (the “Company”), and the purchasers named on the signature
pages thereto (collectively, and including permitted transferees, the
“Holders”), pursuant to which the Company is issuing to the Holders shares (the
“Shares”) of Common Stock of the Company, par value $0.001 per share (the
“Common Stock”), and warrants (the “Warrants”), which are exercisable into
shares of Common Stock (the “Warrant Shares”).

This letter shall serve as our irrevocable authorization and direction to you
(provided that you are the transfer agent of the Company at such time and the
conditions set forth in this letter are satisfied), subject to any stop transfer
instructions that we may issue to you from time to time, if any, to issue
certificates representing shares of Common Stock upon transfer or resale of the
Shares or Warrant Shares.

You acknowledge and agree that so long as you have received written confirmation
from the Company’s legal counsel that a registration statement covering resales
of the Shares and the Warrant Shares has been declared effective by the
Securities and Exchange Commission (the “Commission”) under the Securities Act
of 1933, as amended (the “Securities Act”), and a copy of such registration
statement, then, unless otherwise required by law, you shall use your
commercially reasonable efforts to issue the certificates representing the
Shares or Warrant Shares registered in the names of such Holders or transferees,
as the case may be, within three Business Days of your receipt of a notice of
transfer of Shares or Warrant Shares, and such certificates shall not bear any
legend restricting transfer of the Shares or Warrant Shares thereby and should
not be subject to any stop-transfer restriction.

A form of written confirmation from the Company’s outside legal counsel that a
registration statement covering resales of the Shares and the Warrant Shares has
been declared effective by the Commission under the Securities Act (which
confirmation shall be delivered to you upon effectiveness of the registration
statement) is attached hereto as Annex I.

--------------------------------------------------------------------------------

Please be advised that the Holders are relying upon this letter as an inducement
to enter into the Agreement and, accordingly, each Holder is a third party
beneficiary to these instructions.

Please execute this letter in the space indicated to acknowledge your agreement
to act in accordance with these instructions.

[Signature page follows]

 

Very truly yours, PIERIS PHARMACEUTICALS, INC. By:  

 

Name:  

 

Title :  

 

 

Acknowledged and Agreed: COMPUTERSHARE TRUST COMPANY, N.A. By:  

 

Name:  

 

Title:  

 

Date:              , 2016

--------------------------------------------------------------------------------

Annex I

FORM OF NOTICE OF EFFECTIVENESS OF REGISTRATION STATEMENT

Computershare Trust Company, N.A.

P.O. Box 30170

College Station, TX 77842-3170

Attn:                                          

Re: Pieris Pharmaceuticals, Inc.

Ladies and Gentlemen:

Pieris Pharmaceuticals, Inc., a Nevada corporation (the “Company”), has entered
into a Securities Purchase Agreement, dated as of June 2, 2016, with the buyers
named therein (collectively, the “Purchasers”) pursuant to which the Company
issued to the Purchasers shares of the Company’s common stock, $0.001 par value
per share (the “Common Stock”), and warrants exercisable for shares of Common
Stock (the “Warrants”). Pursuant to that certain Registration Rights Agreement
of even date, the Company agreed to register the resale of the Common Stock,
including the shares of Common Stock issuable upon exercise of the Warrants
(collectively, the “Registrable Securities”), under the Securities Act of 1933,
as amended (the “Securities Act”). In connection with the Company’s obligations
under the Registration Rights Agreement, on              ,         , the Company
filed a Registration Statement on Form S-1 (File No. 333-            ) (the
“Registration Statement”) with the Securities and Exchange Commission (the
“Commission”) relating to the Registrable Securities which names each of the
Purchasers as a selling stockholder thereunder and set forth as Exhibit A
hereto.

In connection with the foregoing, we advise you that a member of the
Commission’s staff has advised us by telephone that the Commission has entered
an order declaring the Registration Statement effective under the Securities Act
at          [a.m.][p.m.] on             ,         , and we have no knowledge,
after telephonic inquiry of a member of the staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the Commission and the Registrable
Securities are available for resale under the Securities Act pursuant to the
Registration Statement. Based upon the foregoing, we are of the opinion that as
of the date of this opinion, the Registrable Securities have been duly
authorized and, when issued by you, will be validly issued, fully paid and
non-assessable, and are registered for resale under the Securities Act under the
effective Registration Statement and may be issued without a restrictive legend.

This letter shall serve as our standing notice to you that the Common Stock may
be freely transferred by the Purchasers pursuant to the Registration Statement.
You need not require further letters from us to effect any future legend-free
issuance or reissuance of shares of Common Stock to the Purchasers or the
transferees of the Purchasers, as the case may be, as contemplated by the
Company’s Irrevocable Transfer Agent Instructions dated June 8, 2016, provided
at the time of such reissuance, the Company has not otherwise notified you that
the Registration Statement is unavailable for the resale of the Registrable
Securities. This letter shall serve as our standing instructions with regard to
this matter.

--------------------------------------------------------------------------------

[Signature page follows]

 

Very truly yours, By:  

 

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT F

Form of Secretary’s Certificate

The undersigned hereby certifies that he is the duly elected, qualified and
acting Secretary of Pieris Pharmaceuticals, Inc., a Nevada corporation (the
“Company”), and that as such he is authorized to execute and deliver this
certificate in the name and on behalf of the Company and in connection with the
Securities Purchase Agreement, dated as of June 2, 2016, by and among the
Company and the investors party thereto (the “Securities Purchase Agreement”),
and further certifies in his official capacity, in the name and on behalf of the
Company, the items set forth below. Capitalized terms used but not otherwise
defined herein shall have the meaning set forth in the Securities Purchase
Agreement.

(a) Attached hereto as Exhibit A is a true, correct and complete copy of the
resolutions duly adopted by the Board of Directors of the Company (the “Board”)
by unanimous written consent on [            ,         ] approving the
transactions contemplated by the Securities Purchase Agreement and the other
Transaction Documents and the issuance of the Securities. Such resolutions have
not in any way been amended, modified, revoked or rescinded, have been in full
force and effect since their adoption to and including the date hereof and are
now in full force and effect.

(b) Attached hereto as Exhibit B is a true, correct and complete copy of the
Articles of Incorporation of the Company, together with any and all amendments
thereto currently in effect, and no action has been taken to further amend,
modify or repeal such Articles of Incorporation, the same being in full force
and effect in the attached form as of the date hereof.

(c) Attached hereto as Exhibit C is a true, correct and complete copy of the
Bylaws of the Company and any and all amendments thereto currently in effect,
and no action has been taken to further amend, modify or repeal such Bylaws, the
same being in full force and effect in the attached form as of the date hereof.

(d) Each person listed below has been duly elected or appointed to the
position(s) indicated opposite his name and is duly authorized to sign the
Securities Purchase Agreement and each of the Transaction Documents on behalf of
the Company, and the signature appearing opposite such person’s name below is
such person’s genuine signature.

 

Name

  

Position

 

Signature

   [                    ]   Chief Executive Officer     

 

   [                    ]   Chief Financial Officer     

 

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the undersigned has hereunto set his hand as of this     
day of June, 2016.

 

[Name] Secretary

I, [Name], Chief Financial Officer, hereby certify that [Name] is the duly
elected, qualified and acting Secretary of the Company and that the signature
set forth above is his true signature.

 

 

[Name] Chief Financial Officer

EXHIBIT A

Resolutions

EXHIBIT B

Articles of Incorporation

EXHIBIT C

Bylaws

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EXHIBIT G

Form of Officer’s Certificate

The undersigned, the Chief Executive Officer of Pieris Pharmaceuticals, Inc., a
Nevada corporation (the “Company”), pursuant to Section 5.1(h) of the Securities
Purchase Agreement, dated as of June 2, 2016, by and among the Company and the
investors signatory thereto (the “Securities Purchase Agreement”), hereby
represents, warrants and certifies as follows (capitalized terms used but not
otherwise defined herein shall have the meaning set forth in the Securities
Purchase Agreement):

 

  1. The representations and warranties of the Company contained in the
Securities Purchase Agreement are true and correct in all material respects
(except for those representations and warranties which are qualified as to
materiality, in which case, such representations and warranties shall be true
and correct in all respects) as of the date when made and as of the date hereof,
as though made on and as of such date, except for such representations and
warranties that speak as of a specific date.

 

  2. The Company has performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to the
date hereof.

IN WITNESS WHEREOF, the undersigned has executed this certificate this      day
of June, 2016

 

 

Steven S. Yoder Chief Executive Officer

--------------------------------------------------------------------------------

EXHIBIT H

Form of Certificate of Designation

--------------------------------------------------------------------------------

Schedule 4.15

Lead Investor

 

Biotechnology Value Fund, L.P.

Biotechnology Value Fund II, L.P.

Biotechnology Value Trading Fund OS, L.P.

Investment 10, L.L.C.

MSA BVF SPV, L.L.C.