Exhibit 10.1
Execution Copy
10,727,500 Shares
ENTREMED, INC.
Common Stock
PLACEMENT AGENCY AGREEMENT
December 12, 2006
THINKEQUITY PARTNERS LLC
RODMAN & RENSHAW, LLC
     c/o ThinkEquity Partners LLC
31 West 52nd Street
17th Floor
New York, NY 10019
Ladies and Gentlemen:
     EntreMed, Inc., a Delaware corporation (the “Company”), proposes, subject
to the terms and conditions stated herein, to issue and sell up to an aggregate
of 10,727,500 shares (the “Shares”) of the Company’s common stock, $0.01 par
value per share (the “Common Stock”) to certain investors (each an “Investor”
and, collectively, the “Investors”). The Company desires to engage ThinkEquity
Partners LLC (“ThinkEquity”) as lead placement agent, and Rodman & Renshaw, LLC
(“Rodman” and together with ThinkEquity, the “Placement Agents”) as co-placement
agent, as set forth herein in connection with such issuance and sale.
ThinkEquity is acting as representative of the Placement Agents (the
“Representative”). The Shares are more fully described in the Registration
Statement (as hereinafter defined).
     1. Agreement to Act as Placement Agents; Delivery and Payment. On the basis
of the representations, warranties and agreements of the Company herein
contained, and subject to the terms and conditions set forth in this Agreement:
          (a) The Company hereby engages the Placement Agents to act as its
exclusive placement agents in connection with the issuance and sale by the
Company of Shares to the Investors and the Placement Agents hereby agree, as
agents of the Company, to use their best efforts to solicit offers to purchase
the Shares from the Company upon the terms and conditions set forth in the
Prospectus (as hereinafter defined). Upon the occurrence of the Closing (as
hereinafter defined), the Company shall pay to the Placement Agents, by wire
transfer of immediately available funds payable to the order of the Placement
Agents, to an account designated by the Representative, an aggregate of six
percent (6.0%) of the gross proceeds received by the Company from its sale of
the Shares (the “Placement Fee”). Prior to the earlier of (i) the date on which
this Agreement is terminated and (ii) the Closing Date (as hereinafter defined),
the Company shall not, without the prior written consent of the Representative,
solicit or accept offers to purchase Shares of the Company (other than pursuant
to the exercise of options, warrants or other convertible securities to purchase
shares of Common Stock that are outstanding at the date hereof) otherwise than
through the Placement Agents in accordance herewith.

 

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

 

          (b) The Company expressly acknowledges and agrees that the Placement
Agents’ obligations hereunder are on a best efforts basis and this Agreement
shall not give rise to a commitment by the Placement Agents or any of their
affiliates to underwrite or purchase any of the Shares or otherwise provide any
financing, and the Placement Agents shall have no authority to (and agree not to
purport to) bind the Company in respect of the sale of any Shares. The sale of
the Shares shall be made pursuant to the subscription terms providing pricing
and other information as set forth on Exhibit A hereto (the “Subscription
Terms”). The Company shall have the sole right to accept offers to purchase the
Shares and may reject any such offer in whole or in part. Notwithstanding the
foregoing, it is understood and agreed that the Placement Agents or any of their
affiliates may, solely at their discretion and without any obligation to do so,
purchase Shares as principals; provided, however, that any such purchases by the
Placement Agents (or their affiliates) shall be fully disclosed to the Company
and approved by the Company in accordance with the previous sentence.
          (c) The Company, the Placement Agents and JP Morgan Chase Bank, N.A.
(the “Escrow Agent”) have entered into an Escrow Agreement dated as of
December 12, 2006 (the “Escrow Agreement”). Subject to the terms and conditions
hereof and of the Escrow Agreement, payment of the purchase price for the Shares
shall be made to the Company in the manner set forth below by Federal Funds wire
transfer, against delivery of certificates for the Shares to such persons, and
shall be registered in such name or names and shall be in such denominations, as
the Placement Agents may request at least one business day before the Closing
Date. Payment of the purchase price for the Shares to be purchased by Investors
shall be made by such Investors directly to the Escrow Agent and the Escrow
Agent agrees to hold such purchase price in escrow in accordance herewith.
Subject to the terms and conditions hereof and of the Subscription Terms and the
Escrow Agreement, the Escrow Agent shall, on the Closing Date, deliver to the
Company, by Federal Funds wire transfer, the aggregate purchase price so held by
such person in escrow, reduced by an amount equal to the sum of the aggregate
Placement Fee payable to the Placement Agents and the Placement Agents’ bona
fide estimate of the amount, if any, of expenses for which the Placement Agents
are entitled to reimbursement pursuant hereto. Thereafter, the Escrow Agent’s
obligations with respect to the escrow of the purchase price so held by it shall
cease. The Company and the Placement Agents hereby agree to deliver to the
Escrow Agent a Closing Notice in the form attached as Exhibit C to the Escrow
Agreement at least one day prior to the Closing Date. Electronic transfer of the
Shares through the facilities of The Depository Trust Company’s DWAC system
shall be made on the Closing Date in such names and in such denominations as the
Placement Agents shall specify.
          (d) Payment of the purchase price for, and delivery of, the Shares
shall be made at a closing (the “Closing”) at the offices of Arnold & Porter
LLP, counsel for the Company, located at 555 Twelfth Street, N.W., Washington,
D.C. 20004, at 10:00 a.m., Eastern Standard Time, on the third or fourth
business day (as permitted under Rule 15c6-1 under the Securities Exchange Act
of 1934, as amended (collectively with the rules and regulations promulgated
thereunder, the “Exchange Act”)) after the determination of the public offering
price of the Shares (such date of payment and delivery being herein called the
“Closing Date”). All such actions taken at the Closing shall be deemed to have
occurred simultaneously. No Shares which the Company has agreed to sell pursuant
to this Agreement and the Subscription Terms shall be deemed to have been
purchased and paid for, or sold by the Company, until such Shares shall have
been delivered to the Investor thereof against payment therefore by such
Investor. If the Company shall default in its obligations to deliver Shares to
an Investor whose offer it has accepted, the Company shall indemnify and hold
the Placement Agents harmless against any loss, claim or damage arising from or
as a result of such default by the Company.
          (e) The Shares shall be registered in such names and in such
denominations as the Placement Agents shall request by written notice to the
Company.

-2-

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

 

     2. Representations and Warranties of the Company. The Company represents
and warrants to the Placement Agents and the Investors as follows:
          (a) Registration Statement and Prospectus. The Company has prepared
and filed with the Securities and Exchange Commission (the “Commission”) a
registration statement on Form S-3 (File No. 333-129276) under the Securities
Act of 1933, as amended, and the rules and regulations (the “Rules and
Regulations”) of the Commission thereunder (collectively, the “Securities Act”),
and such amendments to such registration statement as may have been required to
the date of this Agreement. Such registration statement has been declared
effective by the Commission. Such registration statement, at any given time,
including amendments thereto at such time, the exhibits and any schedules
thereto at such time, the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the Securities Act at such time and the documents
and information otherwise deemed to be a part thereof or included therein by
Rule 430A, 430B or 430C under the Securities Act or otherwise pursuant to the
Securities Act at such time, is herein called the “Registration Statement.” Any
registration statement filed by the Company pursuant to Rule 462(b) under the
Securities Act is called the “Rule 462(b) Registration Statement” and, from and
after the date and time of filing of the Rule 462(b) Registration Statement, the
term “Registration Statement” shall include the Rule 462(b) Registration
Statement.
          The Company proposes to file with the Commission pursuant to Rule 424
under the Securities Act a final prospectus supplement relating to the Shares to
a form of prospectus included in the Registration Statement relating to the
Shares in the form heretofore delivered to the Placement Agents. Such prospectus
included in the Registration Statement at the time it was declared effective by
the Commission or in the form in which it has been most recently filed with the
Commission on or prior to the date of this Agreement is hereinafter called the
“Base Prospectus.” Such supplemental form of prospectus, in the form in which it
shall be filed with the Commission pursuant to Rule 424(b)(including the Base
Prospectus as so supplemented) is hereinafter called the “Prospectus.” Any
preliminary form of Prospectus which is filed or used prior to filing of the
Prospectus is hereinafter called a “Preliminary Prospectus.” Any reference
herein to the Base Prospectus, any Preliminary Prospectus or the Prospectus or
to any amendment or supplement to any of the foregoing shall be deemed to refer
to and include any documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Securities Act as of the date of such prospectus,
and, in the case of any reference herein to the Prospectus, also shall be deemed
to include any documents incorporated by reference therein, and any supplements
or amendments thereto, filed with the Commission after the date of filing of the
Prospectus under Rule 424(b) under the Securities Act, and prior to the
termination of the offering of the Shares by the Placement Agents.
          For purposes of this Agreement, all references to the Registration
Statement, the Rule 462(b) Registration Statement, the Base Prospectus, any
Preliminary Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval System
(“EDGAR”). Any reference to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein pursuant to Form S-3 under the Securities Act as of the date of such
Preliminary Prospectus or the Prospectus, as applicable. Any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any document filed under the Exchange Act, after
the date of such Preliminary Prospectus or the Prospectus, as applicable, and
before the date of such amendment or supplement and incorporated by reference in
such Preliminary Prospectus or the Prospectus, as applicable; and any reference
to any amendment to the Registration Statement shall be deemed to include any
annual report of the Company on Form 10-K filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective Date and before
the date of such amendment that is incorporated by reference in the Registration
Statement.

-3-

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

 

          The Company and the transactions contemplated by this Agreement meet
the requirements and comply with the conditions for the use of Form S-3 under
the Securities Act. The offering of the Shares by the Company complies with the
applicable requirements of Rule 415 under the Securities Act. The Company has
complied with all requests of the Commission for additional or supplemental
information. The Registration Statement has become effective under the
Securities Act. No stop order preventing or suspending use of the Registration
Statement, any Preliminary Prospectus or the Prospectus or the effectiveness of
the Registration Statement, has been issued by the Commission, and no
proceedings for such purpose have been instituted or are pending or, to the
Company’s knowledge, are contemplated or threatened by the Commission.
          (b) Compliance with Registration Requirements. Each part of the
Registration Statement and any post-effective amendment thereto, at the time
such part became effective (including each deemed effective date with respect to
the Placement Agents pursuant to Rule 430B under the Securities Act) and as of
the Closing Date, complied and will comply as to form, in all material respects,
with the requirements of the Securities Act, the Rules and Regulations and the
Exchange Act and did not and will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein not misleading. The Prospectus (or any amendment
or supplement to the Prospectus), at the time of filing or the time of first use
within the meaning of the Rules and Regulations and as of the Closing Date,
complied and will comply as to form, in all material respects, with the
requirements of the Securities Act, the Rules and Regulations and the Exchange
Act and did not and will not contain an untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, that the Company makes no representations or warranty in this
paragraph with respect to any Placement Agents Information (as defined in
Section 7).
          (c) Disclosure Package. As of the Time of Sale (as hereinafter
defined) and as of the Closing Date, neither (A) any Issuer General Free Writing
Prospectus(es) (as defined below) issued at or prior to the Time of Sale, the
Statutory Prospectus (as hereinafter defined) and the information included on
Exhibit G hereto (which information the Placement Agents hereby agree to convey
orally to prospective purchasers at or prior to confirming sales of the shares
in the offering), all considered together (collectively, the “Disclosure
Package”), nor (B) any individual Issuer Limited-Use Free Writing Prospectus (as
hereinafter defined), when considered together with the Disclosure Package,
included or will include any untrue statement of a material fact or omitted or
will omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, that the Company makes no representations or warranty in
this paragraph with respect to any Placement Agents Information. No statement of
material fact included in the Prospectus has been omitted from the Disclosure
Package and no statement of material fact included in the Disclosure Package
that is required to be included in the Prospectus has been omitted therefrom. As
used in this paragraph and elsewhere in this Agreement:
     (1) “Time of Sale” with respect to any Investor, means 5:00 p.m. Eastern
Standard Time on the date of this Agreement.
     (2) “Statutory Prospectus” as of any time means the prospectus (including
any preliminary prospectus) that is included in the Registration Statement
immediately prior to the Time of Sale, including any document incorporated by
reference therein.
     (3) “Issuer Free Writing Prospectus” means any “issuer free writing
prospectus,” as defined in Rule 433 under the Securities Act (“Rule 433”),
relating to the Shares in the form filed or required to be filed with the
Commission or, if not required to be

-4-

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

 

filed, in the form retained in the Company’s records pursuant to Rule 433(g)
under the Securities Act.
     (4) “Issuer General Free Writing Prospectus” means any Issuer Free Writing
Prospectus that is intended for general distribution to prospective investors as
identified on Schedule I hereto, and does not include a “bona fide electronic
road show” as defined in Rule 433.
     (5) “Issuer Limited-Use Free Writing Prospectus” means any Issuer Free
Writing Prospectus that is not an Issuer General Free Writing Prospectus,
including any “bona fide electronic road show” as defined in Rule 433, that is
made available without restriction pursuant to Rule 433(d)(8)(ii), even though
not required to be filed with the Commission.
          (d) Conflict with Registration Statement. Each Issuer Free Writing
Prospectus, as of its issue date and at all subsequent times through the
completion of the offering and sale of the Shares or until any earlier date that
the Company notified or notifies the Placement Agents, did not, does not and
will not include any information that conflicted, conflicts or will conflict in
any material respect with the information contained in the Registration
Statement, any Statutory Prospectus or the Prospectus including any document
incorporated by reference therein and any prospectus supplement deemed to be a
part thereof that has not been superseded or modified; provided, that the
Company makes no representations or warranty in this paragraph with respect to
any Placement Agents Information.
          (e) Distributed Materials. The Company has not, directly or
indirectly, distributed and will not distribute any prospectus or other offering
material in connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Disclosure Package or the Prospectus, and other
materials, if any, permitted under the Securities Act to be distributed and
consistent with Section 4(d) below. The Company will file with the Commission
all Issuer Free Writing Prospectuses required to be filed in the time required
under Rule 433(d) under the Securities Act. The Company has satisfied or will
satisfy the conditions in Rule 433 under the Securities Act to avoid a
requirement to file with the Commission any electronic road show. The parties
hereto agree and understand that the content of any and all “road shows” related
to the offering of the Shares contemplated hereby is solely the property of the
Company.
          (f) Not an Ineligible Issuer. (1) At the earliest time after the
filing of the Registration Statement that the Company or another offering
participant made a bona fide offer (within the meaning of Rule 164(h)(2) under
the Securities Act) of the Shares and (2) at the date hereof, the Company was
not and is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act, without taking account of any determination by the Commission
pursuant to Rule 405 that it is not necessary that the Company be considered an
ineligible issuer, including, without limitation, for purposes of Rules 164 and
433 under the Securities Act with respect to the offering of the Shares as
contemplated by the Registration Statement.
          (g) Incorporated Documents. The documents incorporated by reference in
the Disclosure Package and in the Prospectus, when they became effective or were
filed with the Commission, as the case may be, complied as to form in all
material respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and were filed on a timely basis with the Commission and none of
such documents contained an untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.

-5-

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

 

          (h) Due Incorporation. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with the corporate power and authority to own its
properties and to conduct its business as currently being carried on and as
described in the Registration Statement, the Disclosure Package and the
Prospectus and is duly qualified to transact business as a foreign corporation
in good standing under the laws of each other jurisdiction in which its
ownership or leasing of property or the conduct of its business requires such
qualification, except where the failure to be so qualified and in good standing
would not, individually or in the aggregate, result in any material adverse
effect upon, or change in, the general affairs, business, operations, prospects,
properties, financial condition, or results of operations of the Company taken
as a whole (a “Material Adverse Effect”).
          (i) Capitalization. All of the issued and outstanding shares of
capital stock of the Company, including the outstanding shares of Common Stock,
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws, were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase or acquire any securities of
the Company that have not been waived in writing or otherwise complied with; and
the holders thereof are not subject to personal liability by reason of being
such holders.
          (j) The Shares. The Shares have been duly and validly authorized by
the Company and, when issued, delivered and paid for in accordance with the
terms of this Agreement and the Subscription Terms, will have been validly
issued and will be fully paid and nonassessable and will not be subject to any
statutory or contractual preemptive rights or other rights to subscribe for or
purchase or acquire any shares of Common Stock of the Company, which have not
been waived or complied with.
          (k) Description of Capital Stock. The capital stock of the Company,
including the Common Stock, conforms as to legal matters to the description
thereof, if any, contained in the Registration Statement, the Statutory
Prospectus and the Prospectus, and as of the date thereof, the Company had
authorized capital stock as set forth therein.
          (l) No Registration Rights. Except as otherwise described in the
Registration Statement, the Disclosure Package or the Prospectus, there are no
preemptive rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any shares of Common Stock pursuant
to the Company’s charter, by-laws or any agreement or other instrument to which
the Company is a party or by which the Company is bound (other than rights which
have been waived in writing in connection with the transactions contemplated by
this Agreement or that have been otherwise satisfied within the time or times
required under the terms and conditions of any such right). Except as otherwise
described in the Registration Statement, the Disclosure Package or the
Prospectus, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act
(other than rights which have been waived in writing in connection with the
transactions contemplated by this Agreement or otherwise satisfied).
          (m) Subsidiaries. The Company has no significant subsidiaries (as such
term is defined in Rule 1-02(w) of Regulation S-X promulgated by the Commission)
other than those sect forth on Schedule III hereto.

-6-

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

 

          (n) Due Authorization and Enforceability. Each of this Agreement and
the Subscription Terms has been duly authorized, executed and delivered by the
Company, and constitutes a valid, legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.
          (o) No Conflict. The execution, delivery and performance by the
Company of this Agreement and the Subscription Terms and the consummation of the
transactions herein contemplated, including the issuance and sale by the Company
of the Shares, will not conflict with or result in a breach or violation of, or
constitute a default under (nor constitute any event which with notice, lapse of
time or both would result in any breach or violation of or constitute a default
under) (i) the provisions of the charter or by-laws of the Company, (ii) any
material indenture, mortgage, deed of trust, bank loan or credit agreement or
other evidence of indebtedness, or any license, lease, contract or other
agreement or instrument to which the Company is a party or by which it or any of
its properties may be bound or affected, or (iii) any federal, state, local or
foreign law, regulation or rule or any decree, judgment or order applicable to
the Company.
          (p) No Consents Required. No approval, authorization, consent or order
of or filing with any federal, state, local or foreign governmental or
regulatory commission, board, body, authority or agency, or of or with any
self-regulatory organization or other non-governmental regulatory authority or
approval of the stockholders of the Company, is required in connection with the
issuance and sale of the Shares or the consummation by the Company of the
transactions contemplated hereby other than (i) as may be required under the
Securities Act, (ii) any necessary qualification of the Shares under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Placement Agents and (iii) under the listing standards,
policies and requirements of The NASDAQ Global Market (“NASDAQ”), (iv) under the
rules and regulations of the National Association of Securities Dealers, Inc.
(“NASD”). The Company has full power and authority to enter into this Agreement
and the Subscription Terms and to authorize, issue and sell the Shares as
contemplated by this Agreement and the Subscription Terms.
          (q) No Violation. The Company is not in breach or violation of or in
default (nor has any event occurred which with notice, lapse of time or both
would result in any breach or violation of, or constitute a default) (i) under
the provisions of its charter or bylaws or (ii) in the performance or observance
of any term, covenant, obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company is a party or by which it or any of its
properties may be bound or affected, or (iii) in the performance or observance
of any statute, law, rule, regulation, ordinance, judgment, order or decree of
any court, regulatory body, administrative agency, governmental body, arbitrator
or other authority having jurisdiction over the Company or any of its
properties, as applicable (including, without limitation, those administered by
the Food and Drug Administration of the U.S. Department of Health and Human
Services (the “FDA”) or by any foreign, federal, state or local governmental or
regulatory authority performing functions similar to those performed by the
FDA), except, with respect to clauses (ii) and (iii) above, to the extent any
such contravention has been waived or would not result in a Material Adverse
Effect.
          (r) Absence of Material Changes. Subsequent to the respective dates as
of which information is given in the Disclosure Package (and taking into account
any update included within the Disclosure Package), (i) the Company has not
sustained any loss or interference with its business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, (ii) the Company has
not incurred any material liability or

-7-

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

 

obligation, direct or contingent, or entered into any material transaction not
in the ordinary course of business; (iii) the Company has not purchased any of
the Company’s outstanding capital stock, or declared, paid or otherwise made any
dividend or distribution of any kind on the Company’s capital stock; and
(iv) there has not been any change in the capital stock (other than a change in
the number of outstanding shares of Common Stock due to the issuance of shares
upon the exercise of outstanding options or warrants or the conversion of
convertible securities or indebtedness), or material change in the short-term
debt or long-term debt of the Company (other than upon conversion of convertible
indebtedness) or any issue of options, warrants, convertible securities or other
rights to purchase the capital stock (other than grants of stock options under
the Company’s stock option plans existing on the date hereof) of the Company, or
any Material Adverse Effect.
          (s) Permits. The Company possesses, and is operating in compliance in
all respects with, all necessary franchises, licenses, grants, permits,
easements, authorizations, consents, certificates and orders of any governmental
or self-regulatory body required for the conduct of its business and all such
franchises, licenses, grants, permits, easements, authorizations, consents,
certificates and orders are valid and in full force and effect, except where
such noncompliance, violation or default would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has made all necessary
filings required under any federal, state, local or foreign law, regulation or
rule (including, without limitation, those from the FDA, and any other foreign,
federal, state or local government or regulatory authorities performing
functions similar to those performed by the FDA), in order to conduct its
business, except where such the failure to make such filing would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
has not received notice of any proceedings relating to revocation or
modification of, any such franchise, license, grant, permit, easement,
authorization, consent, certificate and order except where such violation,
default or proceeding would not, individually or in the aggregate, have a
Material Adverse Effect.
          (t) Legal Proceedings. There are no legal or governmental proceedings
pending or, to the Company’s knowledge, threatened or contemplated to which the
Company is or would be a party or of which any of its properties is or would be
subject at law or in equity, before or by any federal, state, local or foreign
governmental or regulatory commission, board, body, authority or agency, or
before or by any self-regulatory organization or other non-governmental
regulatory authority (including, without limitation, NASDAQ), except (i) as
described in the Registration Statement, the Prospectus or the Disclosure
Package, (ii) any such proceeding, which if resolved adversely to the Company,
would not result in a judgment, decree or order having, individually or in the
aggregate, a Material Adverse Effect or (iii) any such proceeding that would not
prevent or materially and adversely affect the ability of the Company to
consummate the transactions contemplated hereby. The Disclosure Package contains
in all material respects the same description of the foregoing matters contained
in the Prospectus.
          (u) Material Contracts. There are no material contracts or other
documents of the Company which are required to be described in the Registration
Statement, the Disclosure Package or the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been so described or filed.
          (v) Good Title to Property. The Company has good and valid title to
all property (whether real or personal) described in the Registration Statement,
the Disclosure Package and the Prospectus as being owned by it, in each case
free and clear of all liens, claims, security interests, other encumbrances or
defects except such as are described in the Registration Statement, the
Disclosure Package or the Prospectus and those that would not, individually or
in the aggregate materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company. All of the property described in the Registration Statement, the
Disclosure Package and the Prospectus as being held under lease by the Company
is held thereby under valid,

-8-

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

 

subsisting and enforceable leases, without any liens, restrictions, encumbrances
or claims, except those that, individually or in the aggregate, are not material
and do not materially interfere with the use made and proposed to be made of
such property by the Company.
          (w) Intellectual Property Rights. The Company owns, or has obtained
valid and enforceable licenses for, or other rights to use, the inventions,
patent applications, patents, trademarks (both registered and unregistered),
tradenames, copyrights, trade secrets and other proprietary information
described in the Registration Statement, the Disclosure Package and the
Prospectus as being owned or licensed by it or which are necessary for the
conduct of its business, except where the failure to own, license or have such
rights would not, individually or in the aggregate, result in a Material Adverse
Effect (collectively, “Intellectual Property”); except as described in the
Registration Statement, the Disclosure Package and the Prospectus (i) there are
no third parties who have or, to the Company’s knowledge, will be able to
establish rights to any Intellectual Property, except for the ownership rights
of the owners of the Intellectual Property which is licensed to the Company;
(ii) to the Company’s knowledge, there is no infringement by third parties of
any Intellectual Property; (iii) there is no pending or, to the Company’s
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company’s rights in or to, or the validity, enforceability, or scope of, any
Intellectual Property owned by or licensed to the Company, and the Company is
unaware of any facts which could form a reasonable basis for any such claim;
(iv) there is no pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes or otherwise
violates any patent, trademark, copyright, trade secret or other proprietary
rights of others, and the Company is unaware of any facts which could form a
reasonable basis for any such claim; (v) to the Company’s knowledge, there is no
patent or patent application that contains claims that interfere with the issued
or pending claims of any of the Intellectual Property; and (vi) to the Company’s
knowledge, there is no prior art that may render any patent owned by the Company
invalid, nor is there any prior art known to the Company that may render any
patent application owned by the Company unpatentable.
          (x) Financial Statements. The financial statements of the Company,
together with the related schedules and notes thereto, set forth or incorporated
by reference in the Registration Statement, the Disclosure Package and the
Prospectus comply in all material respects with the applicable requirements of
the Securities Act and the Exchange Act, as applicable, and present fairly in
all material respects (i) the financial condition of the Company, taken as a
whole, as of the dates indicated and (ii) the consolidated results of
operations, shareholders’ equity and changes in cash flows of the Company, taken
as a whole, for the periods therein specified; and such financial statements and
related schedules and notes thereto have been prepared in conformity with United
States generally accepted accounting principles, consistently applied throughout
the periods involved (except as otherwise stated therein and subject, in the
case of unaudited financial statements, to the absence of footnotes and normal
year-end adjustments). There are no other financial statements (historical or
pro forma) that are required to be included in the Registration Statement, the
Disclosure Package and the Prospectus; and the Company does not have any
material liabilities or obligations, direct or contingent (including any
off-balance sheet obligations), not disclosed in the Registration Statement, the
Disclosure Package and the Prospectus; and all disclosures contained in the
Registration Statement, the Disclosure Package and the Prospectus regarding
“non-GAAP financial measures” (as such term is defined by the rules and
regulations of the Commission) comply with Regulation G of the Exchange Act and
Item 10(e) of Regulation S-K of the Commission, to the extent applicable, and
present fairly the information shown therein and the Company’s basis for using
such measures.
          (y) Independent Accountants. To the Company’s knowledge, Ernst & Young
LLP, who have certified certain of the financial statements of the Company, is
(i) an independent public accounting firm within the meaning of the Securities
Act and the Rules and Regulations, (ii) a registered public accounting firm (as
defined in Section 2(a)(12) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-

-9-

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

 

Oxley Act”)), and (iii) not in violation of the auditor independence
requirements of the Sarbanes-Oxley Act with respect to its representation of the
Company.
          (z) Taxes. The Company has timely filed all federal, state, local and
foreign income and franchise tax returns (or timely filed applicable extensions
therefore) that have been required to be filed and is not in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company is contesting
in good faith and for which adequate reserves have been provided and reflected
in the Company’s financial statements included in the Registration Statement,
the Disclosure Package and the Prospectus. The Company does not have any tax
deficiency that has been or, to the knowledge of the Company, might be asserted
or threatened against it that would result in a Material Adverse Effect.
          (aa) NASDAQ; Exchange Act Registration. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and is accepted for
trading on NASDAQ, and the Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from NASDAQ, nor has the Company
received any notification that the Commission or the NASD is contemplating
terminating such registration or listing. The Company has complied in all
material respects with the applicable requirements of NASDAQ for maintenance of
inclusion of the Common Stock thereon. The Company has filed an application to
include the Shares on NASDAQ.
          (bb) Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as described in the Registration Statement, the Disclosure
Package or the Prospectus, since the most recent audit of the effectiveness of
the Company’s internal control over financial reporting, there has been (i) no
material weakness in the Company’s internal control over financial reporting
(whether or not remediated) and (ii) no change in the Company’s internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.
          (cc) Disclosure Controls. The Company has established, maintains and
evaluates “disclosure controls and procedures” (as such term is defined in
Rule 13a-15(e) and 15d-15(e) under the Exchange Act), which (i) are designed to
ensure that material information relating to the Company is made known to the
Company’s principal executive officer and its principal financial officer by
others within the Company, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared, (ii) have been
evaluated for effectiveness as of the end of the last fiscal period covered by
the Registration Statement; and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were established. There
are no significant deficiencies and material weaknesses in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data to management
and the Board of Directors. The Company is not aware of any fraud, whether or
not material, that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.

-10-

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

 

          (dd) Sarbanes-Oxley Act. The Company is in compliance in all material
respects with all effective provisions of the Sarbanes-Oxley Act and any related
rules and regulations promulgated by the Commission applicable to the business
of the Company.
          (ee) Not an Investment Company. The Company is not, nor after giving
effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will be, (i) required to
register as an “investment company” as defined in the Investment Company Act of
1940, as amended (the “ Investment Company Act ”), and the rules and regulations
of the Commission thereunder or (ii) a “business development company” (as
defined in Section 2(a)(48) of the Investment Company Act).
          (ff) Insurance. The Company maintains insurance in such amounts and
covering such risks as is reasonably considered to be adequate for the conduct
of its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries. All such
insurance is fully in force on the date hereof and will be fully in force as of
the Closing Date. The Company has no reason to believe that it will not be able
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 at a cost that would not have a Material Adverse Effect.
          (gg) Brokers Fees. The Company is not a party to any contract,
agreement or understanding with any person that would give rise to a valid claim
against the Company or the Placement Agents for a brokerage commission, finder’s
fee or other like payment in connection with the offering and sale of the
Shares, other than this Agreement.
          (hh) Integration. The Company has not sold or issued any securities
that would be integrated with the offering of the Shares contemplated by this
Agreement pursuant to the Securities Act, the Rules and Regulations or the
interpretations thereof by the Commission.
          (ii) Corrupt Practices. Neither the Company nor, to the Company’s
knowledge, any other person associated with or acting on behalf of the Company,
including without limitation any director, officer, agent or employee of the
Company has, directly or indirectly, while acting on behalf of the Company
(i) used any corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to foreign
or domestic political parties or campaigns from corporate funds, (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended or
(iv) made any other unlawful payment.
          (jj) No Price Stabilization. Neither the Company nor, to the Company’s
knowledge, any of its officers, directors, affiliates or controlling persons has
taken or will take, directly or indirectly, any action designed to cause or
result in, or which has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale of the Shares.
          (kk) No Undisclosed Relationships. No material relationship, direct or
indirect, exists between or among the Company on the one hand and the directors,
officers, or more than five percent stockholders of the Company on the other
hand which is required to be described in the Registration Statement, the
Disclosure Package and the Prospectus which has not been so described.
          (ll) Exchange Act Requirements. The Company has filed in a timely
manner all reports required to be filed pursuant to Sections 13(a), 13(e), 14
and 15(d) of the Exchange Act during the preceding 12 months (except to the
extent that Section 15(d) requires reports to be filed pursuant to Sections
13(d) and 13(g) of the Exchange Act, which shall be governed by the next clause
of this sentence); and the Company has filed in a timely manner all reports
required to be filed pursuant to

-11-

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

 

Sections 13(d) and 13(g) of the Exchange Act since January 1, 2005, except where
the failure to timely file could not reasonably be expected individually or in
the aggregate to have a Material Adverse Effect.
          (mm) NASD Affiliations. To the Company’s knowledge, there are no
affiliations or associations between (i) any member of the NASD and (ii) the
Company or any of the Company’s officers or directors, except as set forth in
the Registration Statement, the Disclosure Package and the Prospectus.
          (nn) Compliance with Environmental Laws. The Company (i) is in
compliance with any and all applicable foreign, federal, state and local laws,
orders, rules, regulations, directives, decrees and judgments relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (“Environmental Laws”),
(ii) has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, individually or in
the aggregate, result in a Material Adverse Effect. There are no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, individually or in the aggregate,
result in a Material Adverse Effect.
          (oo) No Labor Disputes. The Company is not engaged in any unfair labor
practice; except for matters that would not, individually or in the aggregate,
result in a Material Adverse Effect (i) there is (A) no unfair labor practice
complaint pending or, to the Company’s knowledge after due inquiry, threatened
against the Company before the National Labor Relations Board, and no grievance
or arbitration proceeding arising out of or under collective bargaining
agreements is pending or threatened, (B) no strike, labor dispute, slowdown or
stoppage pending or, to the Company’s knowledge after due inquiry, threatened
against the Company and (C) no union representation dispute currently existing
concerning the employees of the Company, and (ii) to the Company’s knowledge (A)
no union organizing activities are currently taking place concerning the
employees of the Company and (B) there has been no violation of any federal,
state, local or foreign law relating to discrimination in the hiring, promotion
or pay of employees or any applicable wage or hour laws concerning the employees
of the Company.
          (pp) Statistical or Market-Related Data. Any statistical,
industry-related and market-related data included or incorporated by reference
in the Registration Statement, the Disclosure Package and the Prospectus, are
based on or derived from sources that the Company reasonably and in good faith
believes to be reliable and accurate, and such data agree with the sources from
which they are derived.
          (qq) NASD Review. To enable the Placement Agents to rely on
Rule 2710(b)(7)(C)(i) of the NASD, the Company represents that the Company
(i) has a non-affiliate, public common equity float of at least $150 million or
a non-affiliate, public common equity float of at least $100 million and annual
trading volume of at least three million shares and (ii) has been subject to the
Exchange Act reporting requirements for a period of at least 36 months.
          (rr) Clinical Studies. The clinical, pre-clinical and other studies
and tests conducted by or on behalf of or sponsored by the Company or in which
the Company or products or product candidates have participated that are
described in the Registration Statement, the Disclosure Package and the
Prospectus were and, if still pending, are, to the Company’s knowledge, being
conducted in

-12-

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

 

accordance in all material respects with all statutes, laws, rules and
regulations, as applicable (including, without limitation, those administered by
the FDA or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) and with
standard medical and scientific research procedures. The descriptions in the
Registration Statement, the Disclosure Package and the Prospectus of the results
of such studies and tests are accurate and complete in all material respects and
fairly present the published data derived from such studies and tests. The
Company has not received any notices or other correspondence from the FDA or any
other foreign, federal, state or local governmental or regulatory authority
performing functions similar to those performed by the FDA with respect to any
ongoing clinical or pre-clinical studies or tests requiring the termination,
suspension or material modification of such studies or tests, which such
termination, suspension or material modification would reasonably be expected to
result in a Material Adverse Effect. The Company is in compliance with all
applicable federal, state, local and foreign laws, regulations, orders and
decrees governing its business as prescribed by the FDA, or any other federal,
state or foreign agencies or bodies, including those bodies and agencies engaged
in the regulation of pharmaceuticals or biohazardous substances or materials,
except where noncompliance would not, singly or in the aggregate, result in a
Material Adverse Effect.
     Any certificate signed by any officer of the Company and delivered to the
Placement Agents or to counsel for the Placement Agents in connection with the
offering of the Shares shall be deemed a representation and warranty by the
Company to the Placement Agents and the Investors as to the matters covered
thereby.
     3. Covenants. The Company covenants and agrees with the Placement Agents as
follows:
          (a) Reporting Obligations; Exchange Act Compliance. The Company will
(i) file any Preliminary Prospectus and the Prospectus with the Commission
within the time periods specified by Rule 424(b) and Rules 430A and 430B, as
applicable under the Securities Act, (ii) file any Issuer Free Writing
Prospectus to the extent required by Rule 433 under the Securities Act, if
applicable, (iii) file timely all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to
the date of the Prospectus and during such period as the Prospectus would be
required by law to be delivered (whether physically or through compliance with
Rule 172 under the Securities Act or any similar rule) (the “Prospectus Delivery
Period”), and (iv) furnish copies of each Issuer Free Writing Prospectus, if
any, (to the extent not previously delivered) to the Placement Agents prior to
10:00 a.m., Eastern Standard Time, on the second business day next succeeding
the date of this Agreement in such quantities as the Placement Agents shall
reasonably request.
          (b) Abbreviated Registration Statement. If the Company elects to rely
upon Rule 462(b) under the Securities Act, the Company shall file a registration
statement under Rule 462(b) with the Commission in compliance with Rule 462(b)
by 8:00 a.m., Eastern Standard Time, on the business day next succeeding the
date of this Agreement, and the Company shall at the time of filing either pay
to the Commission the filing fee for such Rule 462(b) registration statement or
give irrevocable instructions for the payment of such fee pursuant to the Rules
and Regulations.
          (c) Amendments or Supplements. The Company will not, during the
Prospectus Delivery Period, file any amendment or supplement to the Registration
Statement or the Prospectus unless a copy thereof shall first have been
submitted to the Placement Agents within a reasonable period of time prior to
the filing thereof and the Representative shall not have reasonably objected
thereto in good faith.

-13-

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

 

          (d) Issuer Free Writing Prospectuses. The Company will (i) not make
any offer relating to the Shares that would constitute an “issuer free writing
prospectus” (as defined in Rule 433) or that would otherwise constitute a “free
writing prospectus” (as defined in Rule 405 under the Securities Act) required
to be filed by the Company with the Commission under Rule 433 under the
Securities Act unless the Representative approves its use in writing prior to
first use (each, a “Permitted Free Writing Prospectus”); provided that the prior
written consent of the Representative hereto shall be deemed to have been given
in respect of the Issuer Free Writing Prospectus(es) included in Schedule II
hereto, (ii) treat each Permitted Free Writing Prospectus as an Issuer Free
Writing Prospectus, (iii) comply with the requirements of Rules 164 and 433
under the Securities Act applicable to any Issuer Free Writing Prospectus,
including the requirements relating to timely filing with the Commission,
legending and record keeping and (iv) not take any action that would result in a
Placement Agent or the Company being required to file with the Commission
pursuant to Rule 433(d) under the Securities Act a free writing prospectus
prepared by or on behalf of such Placement Agents that such Placement Agents
otherwise would not have been required to file thereunder. The Company will
satisfy the conditions in Rule 433 under the Securities Act to avoid a
requirement to file with the Commission any electronic road show.
          (e) Notice to Placement Agents. The Company will notify the Placement
Agents promptly, and will, if requested, confirm such notification in writing:
(i) of the receipt of any comments of, or requests for additional or
supplemental information from, the Commission; (ii) of the time and date of any
filing of any post-effective amendment to the Registration Statement or any
amendment or supplement to the Disclosure Package or the Prospectus; (iii) the
time and date when any post-effective amendment to the Registration Statement
becomes effective, but only during the Prospectus Delivery Period; (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement, or any post-effective amendment thereto or any order
preventing or suspending the use of the Disclosure Package, the Prospectus or
any Issuer Free Writing Prospectus, or the initiation of any proceedings for
that purpose or the threat thereof, but only during the Prospectus Delivery
Period; (v) of receipt by the Company of any notification with respect to any
suspension or the approval of the Shares from any securities exchange upon which
it is listed for trading or included or designated for quotation, or the
initiation or threatening of any proceeding for such purpose. The Company will
use its reasonable best efforts to prevent the issuance or invocation of any
such stop order or suspension by the Commission and, if any such stop order or
suspension is so issued or invoked, to obtain as soon as possible the withdrawal
or removal thereof.
          (f) Filing of Amendments or Supplements. If, during the Prospectus
Delivery Period, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Prospectus (or, if the Prospectus is
not yet available to prospective purchasers, the Disclosure Package) in order to
make the statements therein, in the light of the circumstances when the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) is delivered to an Investor, not misleading,
or if, in the opinion of counsel for the Placement Agents, it is necessary to
amend or supplement the Prospectus (or, if the Prospectus is not yet available
to prospective purchasers, the Disclosure Package) to comply with applicable
law, forthwith to prepare, file with the Commission and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to the
Prospectus (or, if the Prospectus is not yet available to prospective
purchasers, the Disclosure Package) so that the statements in the Prospectus
(or, if the Prospectus is not yet available to prospective purchasers, the
Disclosure Package) as so amended or supplemented will not, in the light of the
circumstances when the Prospectus (or, if the Prospectus is not yet available to
prospective purchasers, the Disclosure Package) is delivered to an Investor, be
misleading or so that the Prospectus (or, if the Prospectus is not yet available
to prospective purchasers, the Disclosure Package), as amended or supplemented,
will comply with law.

-14-

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

 

          (g) Conflicting Issuer Free Writing Prospectus. If at any time
following issuance of an Issuer Free Writing Prospectus there occurred or occurs
an event or development as a result of which such Issuer Free Writing Prospectus
conflicted or would conflict with the information contained in the Registration
Statement relating to the Shares or included or would include an untrue
statement of a material fact or omitted or would omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances prevailing at that subsequent time, not misleading, the Company
promptly will notify the Placement Agents and will promptly amend or supplement,
at its own expense, such Issuer Free Writing Prospectus to eliminate or correct
such conflict, untrue statement or omission.
          (h) Delivery of Copies. The Company will deliver promptly to the
Placement Agents and their counsel such number of the following documents as the
Placement Agents shall reasonably request: (i) conformed copies of the
Registration Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits), (ii) copies of any Issuer
Free Writing Prospectus, (iii) during the Prospectus Delivery Period, copies of
the Prospectus (or any amendments or supplements thereto); (iii) any document
incorporated by reference in the Prospectus (other than any such document that
is filed with the Commission electronically via EDGAR or any successor system)
and (iv) all correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Securities Act.
          (i) Blue Sky Laws. The Company will promptly take or cause to be
taken, from time to time, such actions as the Placement Agents may reasonably
request to qualify the Shares for offering and sale under the state securities,
or blue sky, laws of such states or other jurisdictions as the Placement Agents
may reasonably request and to maintain such qualifications in effect so long as
the Placement Agents may request for the distribution of the Shares, provided,
that in no event shall the Company be obligated to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified or to file a
general consent to service of process in any jurisdiction or subject itself to
taxation as doing business in any jurisdiction. The Company will advise the
Placement Agents promptly of the suspension of the qualification or registration
of (or any exemption relating to) the Shares for offering, sale or trading in
any jurisdiction or any initiation or threat of any proceeding for any such
purpose, and in the event of the issuance of any order suspending such
qualification, registration or exemption, the Company shall use its best efforts
to obtain the withdrawal thereof at the earliest possible moment.
          (j) Earnings Statement. As soon as practicable, but in any event not
later than 15 months after the end of the Company’s current fiscal quarter, the
Company will make generally available to holders of its securities and deliver
to the Placement Agents, an earnings statement of the Company (which need not be
audited) that will satisfy the provisions of Section 11(a) of the Securities Act
and Rule 158 of the Rules and Regulations.
          (k) Use of Proceeds. The Company will apply the net proceeds from the
sale of the Shares in the manner set forth in the Disclosure Package and the
Prospectus under the heading “Use of Proceeds.”
          (l) Lock-Up Period. Beginning on the date hereof and continuing for a
period of 90 days after the date of this Agreement (the “Lock-Up Period”), the
Company will not (i) offer to sell, hypothecate, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, or
establish or increase a put equivalent position or liquidate or decrease a call
equivalent position within the meaning of Section 16 of the Exchange Act, with
respect to, any shares of Common Stock, any securities convertible into or
exercisable or exchangeable for Common Stock; (ii) file or cause to become
effective a registration statement under the Securities Act relating to the
offer and sale of any shares of Common Stock or securities convertible into

-15-

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

 

or exercisable or exchangeable for Common Stock (other than on a registration
statement on Form S-8 or any successor form) or (iii) enter into any swap or
other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i), (ii) or (iii) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, without the prior
written consent of the Representative (which consent may be withheld in its sole
discretion), other than (A) the Shares to be sold hereunder, (B) the issuance of
stock options, shares of common stock and other awards pursuant to stock option
plans described in the Registration Statement (excluding the exhibits thereto),
the Disclosure Package and the Prospectus, (C) issuances of Common Stock upon
the exercise of options or warrants (either upon current terms thereof or upon
subsequently amended terms but excluding a general repricing) disclosed as
outstanding in the Registration Statement (excluding the exhibits thereto), the
Disclosure Package or the Prospectus or upon the conversion or exchange of
convertible or exchangeable securities outstanding as of the date of this
Agreement; (D) the issuance by the Company of any shares of Common Stock as
consideration for mergers, acquisitions, other business combinations, or
strategic alliances, occurring after the date of this Agreement; provided that
each recipient of shares pursuant to this clause (D) agrees that all such shares
remain subject to restrictions substantially similar to those contained in this
Section 3(l); or (E) the purchase or sale of the Company’s securities pursuant
to a plan, contract or instruction that satisfies all of the requirements of
Rule 10b5-1(c)(1)(i)(B) that was in effect prior to the date of this Agreement.
Notwithstanding the foregoing, for the purpose of allowing the Placement Agents
to comply with NASD Rule 2711(f)(4), if (1) during the last 17 days of the
Lock-Up Period, the Company releases earnings results or publicly announces
other material news or a material event relating to the Company occurs or
(2) prior to the expiration of the Lock-Up Period, the Company announces that it
will release earnings results during the 16 day period beginning on the last day
of the Lock-Up Period, then in each case the Lock-Up Period will be extended
until the expiration of the 18 day period beginning on the date of release of
the earnings results or the public announcement regarding the material news or
the occurrence of the material event, as applicable, unless the Representative
waives, in writing, such extension. The Company agrees not to accelerate the
vesting of any option or warrant or the lapse of any repurchase right prior to
the expiration of the Lock-Up Period other than pursuant to contractual
obligations in effect prior to the date of this Agreement. Notwithstanding the
foregoing, during the Lock-Up Period, the Company may issue shares of Common
Stock in connection with one or more acquisitions by the Company, provided in
each case that each recipient of such shares of Common Stock executes an
agreement reasonably satisfactory to the Representative to be subject to the
foregoing restrictions in respect of such shares of Common Stock for the
duration of the Lock-Up Period.
          (m) Lock-Up Agreements. The Company will cause each of its executive
officers and directors whose names are set forth on Exhibit C hereto to furnish
to the Placement Agents, on and effective as of the date of this Agreement, a
letter, substantially in the form of Exhibit B hereto (the “Lock-Up Agreement”).
The Company will use its reasonable best efforts to enforce the terms of each
Lock-Up Agreement and will issue stop transfer instructions to the transfer
agent for the Common Stock with respect to any transaction or contemplated
transaction that would constitute a breach or default under the applicable
Lock-Up Agreement.
          (n) Public Communications. Prior to the Closing Date, the Company will
not issue any press release or other communication directly or indirectly or
hold any press conference with respect to the Company, its condition, financial
or otherwise, or its earnings, business, operations or prospects, or the
offering of the Shares, without the prior written consent of the Representative,
unless in the reasonable judgment of the Company and its counsel, and after
notification to the Representative, such press release or communication is
required by law or by NASDAQ rules, in which case the Company shall use its
reasonable best efforts to allow the Representative reasonable time to comment
on such release or other communication in advance of such issuance.

-16-

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

 

          (o) Stabilization. The Company will not take, directly or indirectly,
any action designed, or that might reasonably be expected to cause or result in,
or that will constitute, stabilization or manipulation of the price of any
security of the Company to facilitate the sale of any of the Shares.
          (p) Transfer Agent. The Company shall engage and maintain, at its
expense, a transfer agent and, if necessary under the jurisdiction of
incorporation of the Company, a registrar for the Shares.
          (q) Listing. The Company shall use its commercially reasonable efforts
to cause the Shares to be listed for trading on NASDAQ and to maintain such
listing.
          (r) Investment Company Act. The Company shall not invest, or otherwise
use the proceeds received by the Company from its sale of the Shares in such a
manner as would require the Company to register as an investment company under
the Investment Company Act.
          (s) Sarbanes-Oxley Act. The Company will comply with all effective
applicable provisions of the Sarbanes Oxley Act.
          (t) Broker’s Fee. The Company will not incur any liability for any
finder’s or broker’s fee or agent’s commission in connection with the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby (other than as set forth in this Agreement).
     4. Costs and Expenses. The Company, whether or not the transactions
contemplated hereunder are consummated or this Agreement is terminated, will pay
or reimburse if paid by the Placement Agents all costs and expenses incident to
the performance of the obligations of the Company under this Agreement and
incurred in connection with the transactions contemplated hereby, including but
not limited to costs and expenses of or relating to (i) the preparation,
printing, filing, delivery and shipping of the Registration Statement, any
Issuer Free Writing Prospectus, the Disclosure Package and the Prospectus, and
any amendment or supplement to any of the foregoing and the printing and
furnishing of copies of each thereof to the Placement Agents and dealers
(including costs of mailing and shipment), (ii) the registration, issue, sale
and delivery of the Shares including any stock or transfer taxes and stamp or
similar duties payable upon the sale, issuance or delivery of the Shares and the
printing, delivery, and shipping of the certificates representing the Shares,
(iii) the registration or qualification of the Shares for offer and sale under
the securities or Blue Sky laws of such jurisdictions designated pursuant to
Section 3(i), (including the reasonable legal fees and filing fees, and other
disbursements of counsel to the Placement Agents in connection therewith), and,
if reasonably requested by the Placement Agents, the preparation and printing
and furnishing of copies of any blue sky surveys to the Placement Agents and to
dealers, (iv) the fees and expenses of any transfer agent or registrar for the
Shares, (v) any filings required to be made by the Placement Agents or the
Company with the NASD, and the reasonable fees, disbursements and other charges
of counsel for the Placement Agents in connection with the NASD’s review and
approval of the Placement Agents’ participation in the offering (including all
COBRADesk fees), (vi) fees, disbursements and other charges of counsel to the
Company (vii) listing fees, if any, for the listing of the Shares on NASDAQ,
(viii) fees and disbursements of the Company’s auditor incurred in delivering
the letter(s) described in Section 5(i) of this Agreement, (ix) fees,
disbursements and other charges of counsel to the Placement Agents (in addition
to (iii) and (v) above) in an amount not to exceed $50,000, and (x) the costs
and expenses of the Company and the Placement Agents in connection with the
marketing of the offering and the sale of the Shares to prospective investors
including, but not limited to, those related to any presentations or meetings
undertaken in connection therewith including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged with the written consent of the Company in
connection with the road show

-17-

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

 

presentations, travel, lodging and other expenses incurred by the officers of
the Company and any such consultants, and the cost of any aircraft or other
transportation chartered in connection with the road show. Notwithstanding the
foregoing, in no event shall the Company be obligated to reimburse the Placement
Agents for fees and expenses (other than the fees, disbursements and other
charges of counsel to the Placement Agents pursuant to (ix) above) in excess of
$15,000 in the aggregate. If this Agreement shall be terminated by the Placement
Agents pursuant to Section 8 hereof, the Company will, in addition to paying the
amounts described in this Section 4, but subject to reasonably acceptable
supporting documentation, reimburse the Placement Agents for all of their
reasonable out-of-pocket disbursements (including, but not limited to, the
reasonable fees and disbursements of their counsel) incurred by the Placement
Agents in connection with their investigation, preparing to market and marketing
of the Shares or in contemplation of performing their obligations hereunder.
     5. Conditions of Placement Agents’ Obligations. The obligations of the
Placement Agents hereunder are subject to the following conditions any of which
may be waived on behalf of the Placement Agents by the Representative:
          (a) Filings with the Commission. The Prospectus and any Issuer Free
Writing Prospectus required to be filed under the Securities Act or the Rules
and Regulations shall have been filed with the Commission pursuant to Rule
424(b) or Rule 164, as the case may be, in the manner and within the time period
so required.
          (b) Abbreviated Registration Statement. If the Company has elected to
rely upon Rule 462(b), the registration statement filed under Rule 462(b) shall
have become effective under the Securities Act by 8:00 a.m., Eastern Standard
Time, on the business day next succeeding the date of this Agreement.
          (c) No Stop Orders. Prior to the Closing: (i) no stop order suspending
the effectiveness of the Registration Statement or any part thereof, nor
suspending or preventing the use of the Disclosure Package, the Prospectus or
any Issuer Free Writing Prospectus shall have been issued under the Securities
Act and no proceedings initiated under Section 8(d) or 8(e) of the Securities
Act for that purpose shall be pending or threatened by the Commission, (ii) no
order suspending the qualification or registration of the Shares under the
securities or blue sky laws of any jurisdiction shall be in effect and (iii) any
request for additional information on the part of the Commission (to be included
in the Registration Statement, the Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus or otherwise) shall have been complied with to
the reasonable satisfaction of the Representative.
          (d) Action Preventing Issuance. No action shall have been taken and no
statute, rule, regulation or order shall have been enacted, adopted or issued by
any governmental agency or body which would, as of the Closing Date, prevent the
issuance or sale of the Shares; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale
of the Shares.
          (e) Objection of Placement Agents. No Prospectus or amendment or
supplement to the Registration Statement shall have been filed to which the
Representative shall have objected in writing, which objection shall not be
unreasonable. The Placement Agents shall not have advised the Company that the
Registration Statement, the Disclosure Package or the Prospectus, or any
amendment thereof or supplement thereto, or any Issuer Free Writing Prospectus
contains an untrue statement of fact which, in their opinion, is material, or
omits to state a fact which, in their opinion, is material and is required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.

-18-

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

 

          (f) No Material Adverse Change. Prior to the Closing, there shall not
have occurred any change, or any development involving a prospective change, in
the condition, financial or otherwise, or in the earnings, business, operations
or prospects of the Company, taken as a whole, from that set forth in the
Disclosure Package and the Prospectus that, in the Representative’s judgment, is
material and adverse and that makes it, in the Representative’s judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Disclosure Package.
          (g) Representations and Warranties. Each of 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 by materiality, in which case such representations and warranties
shall be true and correct in all respects) when made and on and as of the
Closing Date, as if made on such date (except that those representations and
warranties that address matters only as of a particular date shall remain true
and correct in all material respects (except for those representations and
warranties which are qualified by materiality, in which case such
representations and warranties shall be true and correct in all respects) as of
such date), and all covenants and agreements herein contained to be performed on
the part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date shall have been
duly performed, fulfilled or complied with in all material respects.
          (h) Opinion of Counsel to the Company. The Placement Agents shall have
received from (i) Arnold & Porter LLP, special counsel to the Company, and
(ii) King & Spalding LLP, special intellectual property counsel to the Company,
such counsel’s written opinion, addressed to the Placement Agents and dated the
Closing Date, in form and substance as is set forth on Exhibit D and Exhibit E,
respectively, attached hereto. Arnold & Porter LLP shall also have furnished to
the Placement Agents a written statement, addressed to the Placement Agents and
dated the Closing Date, in form and substance as set forth in Exhibit F attached
hereto.
          (i) Opinion of Counsel to the Placement Agents. The Placement Agents
shall have received from Lowenstein Sandler PC, such opinion or opinions, dated
the Closing Date and addressed to the Placement Agents, covering such matters as
are customarily covered in transactions of this type.
          (j) Accountant’s Comfort Letter. The Placement Agents shall have
received on the date of the Time of Sale, a letter dated the date hereof, (the
“Original Letter”), addressed to the Placement Agents and in form and substance
reasonably satisfactory to the Representative and its counsel, from Ernst &
Young LLP, which letter shall cover the various financial disclosures, if any,
contained in the Disclosure Package and shall contain statements and information
of the type customarily included in accountants’ “comfort letters” to
underwriters, delivered according to Statement of Auditing Standards No. 72,
with respect to the audited and unaudited financial statements and certain
financial information contained in or incorporated by reference into the
Registration Statement and the Prospectus. At the Closing Date, the Placement
Agents shall have received from Ernst & Young LLP a letter, dated the Closing
Date, which shall confirm, on the basis of a review in accordance with the
procedures set forth in the Original Letter, whether anything has come to their
attention during the period from the date of the Original Letter referred to in
the prior sentence to a date (specified in the letter) not more than three days
prior to the Closing Date which would require any change in the Original Letter
if it were required to be dated and delivered at the Closing Date.
          (k) Officer’s Certificate. The Placement Agents shall have received on
the Closing Date a certificate, addressed to the Placement Agents and dated the
Closing Date, of the chief executive or chief operating officer and the chief
financial officer or chief accounting officer of the Company to the effect that:

-19-

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

 

               (i) each of the representations, warranties and agreements of the
Company in this Agreement were true and correct in all material respects (except
for those representations and warranties which are qualified by materiality, in
which case such representations and warranties shall be true and correct in all
respects) when originally made and are true and correct in all material respects
(except for those representations and warranties which are qualified by
materiality, in which case such representations and warranties shall be true and
correct in all respects) as of the Time of Sale and the Closing Date; and the
Company has complied in all material respects with all agreements and satisfied
all the conditions on its part required under this Agreement to be performed or
satisfied at or prior to the Closing Date;
               (ii) subsequent to the respective dates as of which information
is given in the Disclosure Package (taking into account any updates included
within the Disclosure Package), there has not been (A) a material adverse change
or any development involving a prospective material adverse change in the
general affairs, business, prospects, properties, management, financial
condition or results of operations of the Company, taken as a whole, (B) any
transaction that is material to the Company, taken as a whole, except
transactions entered into in the ordinary course of business, (C) any
obligation, direct or contingent, that is material to the Company, taken as a
whole, incurred by the Company, except obligations incurred in the ordinary
course of business, (D) except as disclosed in the Disclosure Package and the
Prospectus, any change in the capital stock (other than a change in the number
of outstanding shares of Common Stock due to the issuance of shares upon the
exercise of outstanding options or warrants) or any material change in the short
term or long term indebtedness of the Company, taken as a whole, (E) any
dividend or distribution of any kind declared, paid or made on the capital stock
of the Company or (F) any loss or damage (whether or not insured) to the
property of the Company which has been sustained or will have been sustained
which has had or is reasonably likely to result in a Material Adverse Effect.
               (iii) no stop order suspending the effectiveness of the
Registration Statement or any part thereof or any amendment thereof or the
qualification of the Shares for offering or sale, nor suspending or preventing
the use of the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus shall have been issued, and no proceedings for that purpose shall be
pending or to their knowledge, threatened by the Commission or any state or
regulatory body; and
               (iv) the signers of said certificate have reviewed the
Registration Statement, the Disclosure Package and the Prospectus, and any
amendments thereof or supplements thereto (and any documents filed under the
Exchange Act and deemed to be incorporated by reference into the Disclosure
Package and the Prospectus), and (A) (i) each part of the Registration Statement
and any amendment thereof do not and did not contain when the Registration
Statement (or such amendment) became effective, any untrue statement of a
material fact or omit to state, and did not omit to state when the Registration
Statement (or such amendment) became effective, any material fact required to be
stated therein or necessary to make the statements therein not misleading,
(ii) as of the Time of Sale, neither the Disclosure Package nor any individual
Issuer Free Writing Prospectus, when considered together with the Disclosure
Package, contained any untrue statement of material fact or omits to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (iii) the
Prospectus, as amended or supplemented, does not and did not contain, as of its
issue date, any untrue statement of material fact or omit to state and did not
omit to state as of such date, a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (B) since the Time of Sale, there has occurred no event required
to be set forth in an amendment or supplement to the Registration Statement, the
Disclosure Package or the Prospectus which has not been so set forth and there
has been no document required to be filed under the Exchange Act that upon such
filing would be deemed to be incorporated by reference into the Disclosure
Package and into the Prospectus that has not been so filed.

-20-

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

 

          (l) Secretary’s Certificate. On the Closing Date, the Company shall
have furnished to the Placement Agents a Secretary’s Certificate of the Company.
          (m) NASDAQ. The Company shall have filed the proper notice for the
listing of additional shares on NASDAQ.
          (n) Other Filings with the Commission. The Company shall have prepared
a Current Report on Form 8-K with respect to the transactions contemplated
hereby, to be filed immediately after the Closing, including as an exhibit
thereto this Agreement and any other documents relating to this Agreement that
are required to be filed therewith.
          (o) Lock-Up Agreements. The Placement Agents shall have received
copies of the executed Lock-Up Agreements executed by each person listed on
Exhibit C hereto, and such Lock-Up Agreements shall be in full force and effect
on the Closing Date.
          (p) Additional Documents. Prior to the Closing Date, the Company shall
have furnished to the Placement Agents such further information, certificates or
documents as the Placement Agents shall have reasonably requested for the
purpose of enabling it to pass upon the issuance and sale of the Shares as
contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained (it being understood that the Placement Agents’
customary due diligence has been completed prior to the execution of this
Agreement).
All opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agents.
     6. Indemnification and Contribution.
          (a) Indemnification of the Placement Agents. The Company agrees to
indemnify, defend and hold harmless the Placement Agents, their directors and
officers, and each person, if any, who controls the Placement Agents within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act, and the successors and assigns of all of the foregoing persons, from and
against any loss, damage, claim or liability, which, jointly or severally, the
Placement Agents or any such person may become subject under the Securities Act,
the Exchange Act, or other federal or state statutory law or regulation, the
common law or otherwise, (including in settlement of any litigation, if such
settlement is effected with the written consent of the Company), insofar as such
loss, damage, claim or liability (or actions in respect thereof as contemplated
below) arises out of or is based upon: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; (ii) any
untrue statement or alleged untrue statement of a material fact contained in the
Disclosure Package, the Prospectus (or any amendment or supplement thereto
including any documents filed under the Exchange Act and deemed to be
incorporated by reference into the Prospectus), any Issuer Free Writing
Prospectus, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading; and,
in the case of (i) and (ii) above, to reimburse the Placement Agents and each
such controlling person for any and all reasonable expenses (including
reasonable fees and disbursements of counsel) as such expenses are incurred by
the Placement Agents or such controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action, or (iii) any untrue statement or alleged
untrue statement made by the Company in Section 2 hereof or the failure by the
Company to perform its

-21-

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

 

obligations hereunder or under law in connection with the transactions contained
herein; provided, however, that the foregoing indemnity shall not apply to any
loss, claim, damage, liability or expense to the extent, but only to the extent,
it arises out of or is based upon (x) any untrue statement or alleged untrue
statement of a material fact contained in or omitted from the Registration
Statement, the Disclosure Package, the Prospectus, or any such amendment or
supplement, or any Issuer Free Writing Prospectus, in reliance upon and in
conformity with information concerning the Placement Agents furnished in writing
by or on behalf of the Placement Agents to the Company expressly for use
therein, which information the parties hereto agree is limited to the Placement
Agents Information or (y) the failure by the Placement Agents to deliver
information furnished by the Company to correct a misstatement or omission in
the Registration Statement, the Disclosure Package, the Prospectus, or any such
amendment or supplement or any Issuer Free Writing Prospectus, provided that
such information would have corrected the misstatement or omission.
          (b) Indemnification of the Company. Each Placement Agent, severally
and not jointly, agrees to indemnify, defend and hold harmless the Company, its
directors and officers, and any person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and the successors and assigns of all of the foregoing persons,
from and against any loss, claim, damage, liability or expense, as incurred to
which, jointly or severally, the Company or any such person may become subject
under the Securities Act, the Exchange Act, or other federal or state statutory
law or regulation, the common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Representative), insofar as such loss, claim, damage, liability or expense (or
actions in respect thereof as contemplated below) arises out of or is based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, or the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Disclosure Package, the Prospectus
(or any amendment or supplement thereto) or any Issuer Free Writing Prospectus,
or the omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading, and in the case of
each of (i) and (ii) above, to the extent but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, the Disclosure Package or the Prospectus (or
any amendment or supplement thereto) or any Issuer Free Writing Prospectus in
reliance upon and in conformity with information concerning the Placement Agents
furnished in writing by or on behalf of the Placement Agents to the Company
expressly for use therein, and to reimburse the Company, or any such director,
officer or controlling person for any legal and other expense reasonably
incurred by the Company, or any such director, officer or controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, that the
parties hereto hereby agree that such written information provided by the
Placement Agents consists solely of the Placement Agents Information.
Notwithstanding the provisions of this Section 6(b), in no event shall any
indemnity by any Placement Agent under this Section 6(b) exceed the total
compensation received by such Placement Agent in accordance with Section 1(b).
          (c) Notice and Procedures. If any action, suit or proceeding (each, a
“Proceeding”) is brought against a person (an “indemnified party”) in respect of
which indemnity may be sought against the Company or the Placement Agents (as
applicable, the “indemnifying party”) pursuant to subsection (a) or (b),
respectively, of this Section 6, such indemnified party shall promptly notify
such indemnifying party in writing of the institution of such Proceeding and
such indemnifying party shall assume the defense of such Proceeding, including
the employment of counsel reasonably satisfactory to such indemnified party and
payment of all fees and expenses; provided, however, that the omission to so
notify such indemnifying party shall not relieve such indemnifying party from
any liability which such

-22-

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

 

indemnifying party may have to any indemnified party or otherwise, except to the
extent the indemnifying party does not otherwise learn of the Proceeding and
such failure results in the forfeiture by the indemnifying party of substantial
rights or defenses. The indemnified party or parties shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
(i) the employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such Proceeding, (ii) the
indemnifying party shall not have, within a reasonable period of time in light
of the circumstances, employed counsel to defend such Proceeding or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from, additional to or in
conflict with those available to such indemnifying party (in which case such
indemnifying party shall not have the right to direct the defense of such
Proceeding on behalf of the indemnified party or parties with respect to such
defenses), in any of which events such reasonable fees and expenses with respect
to such defenses shall be borne by such indemnifying party and paid as incurred
(it being understood, however, that such indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to any local
counsel) in any one Proceeding or series of related Proceedings in the same
jurisdiction representing the indemnified parties who are parties to such
Proceeding). An indemnifying party shall not be liable for any settlement of any
Proceeding effected without its written consent but, if settled with its written
consent or if there be a final judgment for the plaintiff, such indemnifying
party agrees to indemnify and hold harmless the indemnified party or parties
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second sentence of this
Section 6(c), then the indemnifying party agrees that it shall be liable for any
settlement of any Proceeding effected without its written consent if (i) such
settlement is entered into more than 60 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall not have
fully reimbursed the indemnified party in accordance with such request prior to
the date of such settlement all amounts with respect to which the indemnifying
party does not dispute in good faith and (iii) such indemnified party shall have
given the indemnifying party at least 30 days’ prior notice of its intention to
settle. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement, compromise or consent to the entry of
judgment in any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not include an admission
of fault or culpability or a failure to act by or on behalf of such indemnified
party.
          (d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under subsections (a) or (b) of
this Section 6 or insufficient to hold an indemnified party harmless in respect
of any losses, claims, damages, liabilities or expenses referred to therein,
then each applicable indemnifying party shall, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages, liabilities or
expenses referred to in subsection (a) or (b) above, (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Placement Agents on the other from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Placement Agents on the other hand shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the Shares (before deducting expenses) received by the Company
and the total placement agents commissions

-23-

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

 

received by the Placement Agents, in each case as set forth on the cover of the
Prospectus, bear to the aggregate public offering price of the Shares. The
relative fault of the Company on the one hand and the Placement Agents on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company, on the one hand, or by the Placement Agents, on the other hand, and the
parties’ relevant intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Placement Agents agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were to be determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this Section 6(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this
Section 6(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
against any action or claim which is the subject of this Section 6(d).
Notwithstanding the provisions of this Section 6(d), each Placement Agent shall
not be required to contribute any amount in excess of the total commissions
received by such Placement Agent in accordance with Section 1(b). No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Placement Agents’
obligations in this Section 6(d) to contribute are several in proportion to the
compensation received by each of the Placement Agents and not joint.
          (e) Representations and Agreements to Survive Delivery. The
obligations of the Company under this Section 6 shall be in addition to any
liability which the Company may otherwise have. The indemnity and contribution
agreements contained in this Section 6 and the covenants, warranties and
representations of the Company contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of the Placement Agents,
any person who controls the Placement Agents within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act or any
affiliate of the Placement Agents, or by or on behalf of the Company, its
directors or officers or any person who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
and (iii) the issuance and delivery of the Shares; provided, however, that the
Company’s indemnification obligations set forth in Section 6(a)(iii) shall
expire three years after the Closing Date. The Company and the Placement Agents
agree promptly to notify each other of the commencement of any Proceeding
against it and, in the case of the Company, against any of the Company’s
officers or directors in connection with the issuance and sale of the Shares, or
in connection with the Registration Statement, the Disclosure Package or the
Prospectus.
     7. Information Furnished by Placement Agents. The Company acknowledges that
the statements set forth in (a) the sixth paragraph and (b) the first sentence
of the seventh paragraph under the heading “Plan of Distribution” in the
Statutory Prospectus and the Prospectus (the “Placement Agents Information”)
constitute the only information relating to the Placement Agents furnished in
writing to the Company by the Placement Agents as such information is referred
to in Sections 2 and 6 hereof.
     8. Termination. The Representative shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the Closing Date, without liability on the part of the Placement Agents to the
Company, if (i) prior to delivery and payment for the Shares (A) trading in
securities generally shall have been suspended on or by the New York Stock
Exchange, the American Stock Exchange or NASDAQ, (each, a “Trading Market”),
(B) trading in the Common Stock of the Company shall have been suspended on any
exchange, in the over-the-counter market or by the Commission, (C) a general
moratorium on commercial banking activities shall have been declared by federal
or New York state authorities, (D) there shall have occurred any outbreak or
material escalation of hostilities or acts of terrorism involving the United
States or there shall have been a declaration by the

-24-

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

 

United States of a national emergency or war, (E) there shall have occurred any
other calamity or crisis or any material change in general economic, political
or financial conditions in the United States or elsewhere, if the effect of any
such event specified in clause (D) or (E), in the judgment of the
Representative, is material and adverse and makes it impractical or inadvisable
to proceed with the completion of the sale of and payment for the Shares on the
Closing Date on the terms and in the manner contemplated by this Agreement, the
Disclosure Package and the Prospectus, (ii) since the time of execution of this
Agreement or the earlier respective dates as of which information is given in
the Disclosure Package, there has been any Material Adverse Effect or the
Company shall have sustained a loss by strike, fire, flood, earthquake, accident
or other calamity of such character that in the judgment of the Representative
would, individually or in the aggregate, result in a Material Adverse Effect and
which would, in the judgment of the Representative, make it impracticable or
inadvisable to proceed with the offering or the delivery of the Shares on the
terms and in the manner contemplated in the Disclosure Package, (iii) the
Company shall have failed, refused or been unable to comply with the terms or
perform any agreement or obligation of this Agreement or any of the Subscription
Terms, other than by reason of a default by the Placement Agents, or (iv) any
condition of the Placement Agents’ obligations hereunder is not fulfilled. Any
such termination shall be without liability of any party to any other party
except that the provisions of Section 4, Section 6, and Section 11 hereof shall
at all times be effective notwithstanding such termination.
     9. Notices. All statements, requests, notices and agreements hereunder
shall be in writing or by facsimile, and:
(a) if to the Placement Agents, shall be delivered or sent by mail, telex or
facsimile transmission to the Representative as follows:
ThinkEquity Partners LLC
Rodman & Renshaw, LLC
     c/o ThinkEquity Partners LLC
31 West 52nd Street
17th Floor
New York, NY 10019
Attention: David J. Strupp, Jr.
Facsimile No.: 212-468-7044
with a copy (which shall not constitute notice) to:
Lowenstein Sandler PC
1251 Avenue of the Americas
New York, New York 10020
Attention: Michael D. Maline, Esq.
Facsimile No.: 973-422-6873
(b) if to the Company shall be delivered or sent by mail, telex or facsimile
transmission to: EntreMed, Inc., 9640 Medical Center Drive, Rockville, Maryland
20850, Attention: Cynthia Wong Hu, Vice-President, General Counsel and
Secretary, (Facsimile No.: 240-864-2601), with a copy (which shall not
constitute notice) to: Arnold & Porter LLP, 555 Twelfth Street, N.W.,
Washington, D.C. 20004, Attention: Richard E. Baltz, Esq., (Facsimile No.:
202-942-5999). Any such notice shall be effective only upon receipt. Any party
to this Agreement may change such address for notices by sending to the parties
to this Agreement written notice of a new address for such purpose.

-25-

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

 

     10. Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and shall be binding upon the Placement Agents, the Company and
their respective successors and assigns and the controlling persons, officers
and directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation, other than
the persons, firms or corporations mentioned in the preceding sentence, any
legal or equitable remedy or claim under or in respect of this Agreement, or any
provision herein contained. The term “successors and assigns” as herein used
shall not include any purchaser of the Shares by reason merely of such purchase.
     11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws provisions thereof.
     12. No Fiduciary Relationship. The Company hereby acknowledges that the
Placement Agents are acting solely as placement agents in connection with the
offering of the Company’s securities. The Company further acknowledges that the
Placement Agents are acting pursuant to a contractual relationship created
solely by this Agreement entered into on an arm’s length basis and in no event
do the parties intend that the Placement Agents act or be responsible as a
fiduciary to the Company, its management, stockholders, creditors or any other
person in connection with any activity that the Placement Agents may undertake
or have undertaken in furtherance of the offering of the Company’s securities,
either before or after the date hereof. The Placement Agents hereby expressly
disclaim any fiduciary or similar obligations to the Company, either in
connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions, and the Company hereby confirms its
understanding and agreement to that effect. The Company and the Placement Agents
agree that they are each responsible for making their own independent judgments
with respect to any such transactions. The Company hereby waives and releases,
to the fullest extent permitted by law, any claims that the Company may have
against the Placement Agents with respect to any breach or alleged breach of any
fiduciary or similar duty to the Company in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions.
     13. Headings. The Section headings in this Agreement have been inserted as
a matter of convenience of reference and are not a part of this Agreement.
     14. Entire Agreement; Amendments and Waivers. This Agreement constitutes
the entire agreement between the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements among the parties in connection
with the subject matter hereof except as set forth specifically herein or
contemplated hereby. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby.
The failure of a party to exercise any right or remedy shall not be deemed or
constitute a waiver of such right or remedy in the future. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provision hereof (regardless of whether similar), nor shall any such
waiver constitute a continuing waiver unless otherwise expressly provided.
     15. Submission to Jurisdiction. Except as set forth below, no Proceeding
may be commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which courts
shall have jurisdiction over the adjudication of such matters, and the Company
and the Placement Agents each hereby consents to the jurisdiction of such courts
and personal service with respect thereto. The Company hereby waives all right
to trial by jury in any Proceeding (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement. The Company
agrees that a final and no longer appealable judgment in any such Proceeding
brought in any such court

-26-

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

 

shall be conclusive and binding upon the Company and may be enforced in any
other courts in the jurisdiction of which the Company is or may be subject, by
suit upon such judgment.
     16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original and all such counterparts
shall together constitute one and the same instrument. Delivery of an executed
counterpart by facsimile or electronic mail shall be effective as delivery of a
manually executed counterpart thereof.
     17. Research Analyst Independence. The Company acknowledges that the
Placement Agents’ research analysts and research department are required to be
independent from their investment banking division and are subject to certain
regulations and internal policies, and that such Placement Agents’ research
analysts may hold views and make statements or investment recommendations and/or
publish research reports with respect to the Company and/or the offering that
differ from the views of their investment banking division. The Company hereby
waives and releases, to the fullest extent permitted by law, any claims that the
Company may have against the Placement Agents with respect to any conflict of
interest that may arise from the fact that the views expressed by their
independent research analysts and research department may be different from or
inconsistent with the views or advice communicated to the Company by such
Placement Agents’ investment banking division. The Company acknowledges that the
Placement Agents are full service securities firms and as such from time to
time, subject to applicable securities laws, rules and regulations, may effect
transactions for their own account or the account of their customers and hold
long or short positions in debt or equity securities of the Company; provided,
however, that nothing in this Section 17 shall relieve the Placement Agents of
any responsibility or liability they may otherwise bear in connection with
activities in violation of applicable securities laws, rules and regulations.
[Signature Page Follows]

-27-

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

 

     If the foregoing is in accordance with your understanding of the agreement
between the Company and the Placement Agents, kindly indicate your acceptance in
the space provided for that purpose below.

                      Very truly yours,    
 
                    ENTREMED, INC.    
 
                    By:   /s/ James S. Burns                  
 
      Name:   James S. Burns    
 
      Title:   President and Chief Executive Officer    

          Accepted as of
the date first above written:    
 
        THINKEQUITY PARTNERS LLC    
 
       
By:
  /s/ David J. Strupp, Jr.
 
Name: David J. Strupp, Jr.    
 
  Title: Partner    
 
        RODMAN & RENSHAW, LLC    
 
       
By:
  /s/ Thomas G. Pinou
 
Name: Thomas G. Pinou    
 
  Title: Chief Financial Officer    

 

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

 

Schedules and Exhibits

     
Schedule I:
  Issuer General Free Writing Prospectuses
 
   
Schedule II:
  Permitted Free Writing Prospectuses
 
   
Schedule III:
  Subsidiaries
 
   
Exhibit A:
  Subscription Terms
 
   
Exhibit B:
  Form of Lock-Up Agreement
 
   
Exhibit C:
  List of Directors and Executive Officers Executing Lock-Up Agreements
 
   
Exhibit D:
  Matters To Be Covered In The Opinion Of Corporate Counsel To The Company
 
   
Exhibit E:
  Matters To Be Covered In The Opinion Of IP Counsel To The Company
 
   
Exhibit F:
  Form of Written Statement of Corporate Counsel to the Company
 
   
Exhibit G:
  Pricing Information

 

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

 

Schedule I
Issuer General Free Writing Prospectuses
None

 

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

 

Schedule II
Permitted Free Writing Prospectuses
None

 

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

 

Schedule III
Subsidiaries
Miikana Therapeutics, Inc.

 

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

 

Exhibit A
Form of Subscription Terms
EntreMed, Inc.
9640 Medical Center Drive
Rockville, Maryland 20850
Ladies and Gentlemen:
The undersigned (the “Investor”) hereby confirms and agrees with you as follows:
1. The subscription terms set forth herein (this “Subscription”) are made as of
the date set forth below between EntreMed, Inc., a Delaware corporation (the
“Company”), and the Investor.
2. As of the Closing (as defined below) and subject to the terms and conditions
hereof, the Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor such number of
shares of common stock, par value $0.01 per share, of the Company (the “Common
Stock”) as is set forth on the signature page hereto (the “Signature Page”) for
a purchase price of $1.60 per share (the “Shares”). The Investor acknowledges
that the offering is not a firm commitment underwriting and that there is no
minimum offering amount.
3. The completion of the purchase and sale of the Shares shall occur at a
closing (the “Closing”) which, in accordance with Rule 15c6-1 promulgated under
the Securities Exchange Act of 1934, as amended, is expected to occur on or
about December 18, 2006. At the Closing, (a) the Company shall cause its
transfer agent to release to the Investor the number of Shares being purchased
by the Investor and (b) the aggregate purchase price for the Shares being
purchased by the Investor will be delivered by or on behalf of the Investor to
the Company. Settlement of the Shares shall be by electronic transfer through
the facilities of The Depository Trust Company’s DWAC system and shall be made
in accordance with the provisions set forth in Exhibit A hereto, which shall be
incorporated herein by reference as if set forth fully herein.

  a.   Delivery of Funds. No later than one (1) business day after the execution
of this Agreement by the Investor and the Company, the Investor shall remit by
wire transfer the amount of funds equal to the aggregate purchase price for the
shares being purchased by the Investor to the following account (the “Escrow
Account”) designated by the Company and the Placement Agents pursuant to the
terms of that certain Escrow Agreement (the “Escrow Agreement”) dated as of
December 12, 2006, by and among the Company, the Placement Agents and JP Morgan
Chase Bank, N.A. (the “Escrow Agent”):

JPMorgan Chase Bank, NA
ABA#: 021000021
Account Name: JPMC as EA for EntreMed/ThinkEquity
Account #: 304875848
Attn: James Fulton
Such funds shall be held in escrow in a non-interest bearing account until the
Closing and delivered by the Escrow Agent on behalf of the Investors to the
Company upon the satisfaction, in the sole judgment of the Placement Agents, of
the Company closing conditions set forth in the Placement Agreement. The
Placement Agents shall have no rights in or to any of the escrowed

 

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

 

      funds, unless the Placement Agents and the Escrow Agent are notified in
writing by the Company in connection with the Closing that a portion of the
escrowed funds shall be applied to the Placement Fee. The Company and the
Investor agree to indemnify and hold the Escrow Agent harmless from and against
any and all losses, costs, damages, expenses and claims (including, without
limitation, court costs and reasonable attorneys fees) (“Losses”) arising under
this Section 3 or otherwise with respect to the funds held in escrow pursuant
hereto or arising under the Escrow Agreement, unless it is finally determined
that such Losses resulted directly from the willful misconduct or gross
negligence of the Escrow Agent. Anything in this Subscription to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for any special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.     b.  
Delivery of Shares. No later than one (1) business day after the execution of
this Agreement by the Investor and the Company , the Investor shall direct the
broker-dealer at which the account or accounts to be credited with the Shares
being purchased by such Investor are maintained, which broker/dealer shall be a
DTC participant, to set up a Deposit/Withdrawal at Custodian (“DWAC”) on the
Closing Date instructing American Stock Transfer and Trust Company, the
Company’s transfer agent, to credit such account or accounts with the Shares by
means of an electronic book-entry delivery. Such DWAC shall indicate the
settlement date for the deposit of the Shares, which date shall be provided to
the Investor by the Placement Agents. Simultaneously with the delivery to the
Company by the Escrow Agent of the funds held in escrow pursuant to Section 3(a)
above, the Company shall direct its transfer agent to credit the Investor’s
account or accounts with the Shares pursuant to the information contained in the
DWAC.

4. The offering and sale of the Shares are being made pursuant to the
Registration Statement and the Prospectus (as such terms are defined below). The
Investor acknowledges that the Company intends to enter into subscriptions in
substantially the same form as this Subscription with certain other investors
and intends to offer and sell (the “Offering”) up to an aggregate of 10,727,500
shares of Common Stock pursuant to the Registration Statement and Prospectus.
The Company may accept or reject this Subscription or any one or more other
subscriptions with other investors in its sole discretion.
5. The Company has filed or shall file with the Securities and Exchange
Commission (the “Commission”) a prospectus (the “Base Prospectus”) and a final
prospectus supplement (collectively, the “Prospectus”) with respect to the
registration statement (File No. 333-129276) reflecting the Offering, including
all amendments thereto, the exhibits and any schedules thereto, the documents
otherwise deemed to be a part thereof or included therein by the rules and
regulations of the Commission (the “Rules and Regulations”), and any
registration statement relating to the Offering and filed pursuant to Rule
462(b) under the Rules and Regulations (collectively, the “Registration
Statement”), in conformity with the Securities Act of 1933, as amended (the
“Securities Act”), including Rule 424(b) thereunder. The Investor hereby
confirms that it has had full access to the Base Prospectus, the prospectus
supplement and the Company’s periodic reports and other information incorporated
by reference therein, and was able to read, review, download and print such
materials.
6. The Company has entered into a Placement Agency Agreement (the “Placement
Agreement”), dated December 12, 2006 with ThinkEquity Partners LLC and Rodman &
Renshaw, LLC (the “Placement Agents”), which will act as the Company’s placement
agents with respect to the Offering and receive a fee (the “Placement Fee”) in
connection with the sale of the Shares. The Placement Agreement contains certain
representations and warranties of the Company. The Company acknowledges and
agrees that the Investor may rely on the representations and warranties made by
it to the Placement Agents in Section 2 of the Placement Agreement to the same
extent as if such representations and warranties had

 

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

 

been incorporated in full herein and made directly to the Investor. Capitalized
terms used, but not otherwise defined, herein shall have the meanings ascribed
to such terms in the Placement Agreement.
7. The obligations of the Company and the Investor to complete the transactions
contemplated by this Subscription shall be subject to the following:

  a.   The Company’s obligation to issue and sell the Shares to the Investor
shall be subject to: (i) the acceptance by the Company of this Subscription (as
may be indicated by the Company’s execution of the Signature Page hereto),
(ii) the receipt by the Company of the purchase price for the Shares being
purchased hereunder as set forth on the Signature Page and (iii) the accuracy of
the representations and warranties made by the Investor and the fulfillment of
those undertakings of the Investor to be fulfilled prior to the Closing Date.  
  b.   The Investor’s obligation to purchase the Shares will be subject to the
condition that the Representative shall not have: (i) terminated the Placement
Agreement pursuant to the terms thereof or (ii) determined that the conditions
to closing in the Placement Agreement have not been satisfied.

8. The Company hereby makes the following representations, warranties and
covenants to the Investor:

  a.   The Company has the requisite corporate power and authority to enter into
and to consummate the transactions contemplated by this Subscription and
otherwise to carry out its obligations hereunder. The execution and delivery of
this Subscription by the Company and the consummation by it of the transactions
contemplated hereunder have been duly authorized by all necessary action on the
part of the Company. This Subscription has been duly executed by the Company
and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as may be limited by any bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other similar
laws affecting the enforcement of creditors’ rights generally or by general
principles of equity.     b.   The Company shall (i) before the opening of
trading on The NASDAQ Global Market on the next trading day after the date
hereof, issue a press release, disclosing all material aspects of the
transactions contemplated hereby and (ii) make such other filings and notices in
the manner and time required by the Commission with respect to the transactions
contemplated hereby. The Company shall not identify the Investor by name in any
press release or public filing, or otherwise publicly disclose the Investor’s
name, without the Investor’s prior written consent, unless required by law or
the rules and regulations of any self-regulatory organization which the Company
or its securities are subject.

9. The Investor hereby makes the following representations, warranties and
covenants to the Company:

  a.   The Investor represents that (i) it has had full access to the Base
Prospectus and the prospectus supplement, as well as the Company’s periodic
reports and other information incorporated by reference therein, prior to or in
connection with its receipt of this Subscription, (ii) it is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in securities representing an investment decision
like that involved in the purchase of the Shares, and (iii) it does not have any
agreement or understanding, directly or indirectly, with any person or entity to
distribute any of the Shares.

 

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

 

  b.   The Investor has the requisite power and authority to enter into this
Subscription and to consummate the transactions contemplated hereby. The
execution and delivery of this Subscription by the Investor and the consummation
by it of the transactions contemplated hereunder have been duly authorized by
all necessary action on the part of the Investor. This Subscription has been
executed by the Investor and, when delivered in accordance with the terms
hereof, will constitute a valid and binding obligation of the Investor
enforceable against the Investor in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).     c.   The Investor understands that
nothing in this Subscription or any other materials presented to the Investor in
connection with the purchase and sale of the Shares constitutes legal, tax or
investment advice. The Investor 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 Shares.     d.   Neither the Investor nor any
Person acting on behalf of, or pursuant to any understanding with or based upon
any information received from, the Investor has, directly or indirectly, engaged
in any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities) since the
earlier to occur of (i) the time that the Investor was first contacted by the
Placement Agents or the Company with respect to the transactions contemplated
hereby and (ii) the date that is the tenth (10th) trading day prior to the date
the Investor executes this Subscription. “Short Sales” include, without
limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), whether or not against the box, and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short
sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under the
Exchange Act) and similar arrangements (including on a total return basis), and
sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers. The Investor covenants that neither it, nor any Person acting
on behalf of, or pursuant to any understanding with or based upon any
information received from, the Investor will engage in any transactions in the
securities of the Company (including Short Sales) prior to the time that the
transactions contemplated by this Subscription are publicly disclosed.     e.  
The Investor represents that, except as set forth below, (i) it has had no
position, office or other material relationship within the past three years with
the Company or persons known to it to be affiliates of the Company, (ii) it is
not a, and it has no direct or indirect affiliation or association with any,
NASD member or an Associated Person (as such term is defined under the NASD
Membership and Registration Rules Section 1011) as of the date the Investor
executes this Subscription, and (iii) neither it nor any group of investors (as
identified in a public filing made with the Commission) of which it is a member,
acquired, or obtained the right to acquire, 20% or more of the Common Stock (or
securities convertible or exercisable for Common Stock) or the voting power of
the Company on a post-transaction basis. Exceptions:

(If no exceptions, write “none.” If left blank, response will be deemed to be
“none.”)

  f.   The Investor, if outside the United States, will comply with all
applicable laws and regulations in each foreign jurisdiction in which it
purchases, offers, sells or delivers Shares or has in its possession or
distributes any offering material, in all cases at its own expense.

 

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

 

10. Notwithstanding any investigation made by any party to this Subscription,
all covenants, agreements, representations and warranties made by the Company
and the Investor herein will survive the execution of this Subscription, the
delivery to the Investor of the Shares being purchased and the payment therefor.
11. This Subscription may not be modified or amended except pursuant to an
instrument in writing signed by the Company and the Investor.
12. In case any provision contained in this Subscription should be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any way
be affected or impaired thereby.
13. This Subscription will be governed by, and construed in accordance with, the
internal laws of the State of New York, without giving effect to the principles
of conflicts of law that would require the application of the laws of any other
jurisdiction.
14. This Subscription may be executed in one or more counterparts, each of which
will constitute an original, but all of which, when taken together, will
constitute but one instrument, and will become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties.
15. The Investor acknowledges and agrees that such Investor’s receipt of the
Company’s counterpart to this Subscription shall constitute written confirmation
of the Company’s sale of Shares to such Investor.
16. In the event that the Placement Agreement is terminated by the Placement
Agents pursuant to the terms thereof, this Subscription shall terminate without
any further action on the part of the parties hereto.

 

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

 

INVESTOR SIGNATURE PAGE
Number of Shares:                                                       
Purchase Price Per Share: $ 1.60                                 
Aggregate Purchase Price: $                                      
Please confirm that the foregoing correctly sets forth the agreement between us
by signing in the space provided below for that purpose.
Dated as of: December 12, 2006
 

     
 
INVESTOR
   

             
By:
 
       
Print Name:
 
       
Title:
 
       
 
 
 
        Name in which Shares are to be registered:        
 
     
 
   

         
Mailing Address:
       
 
 
 
   
 
       
 
 
 
   
 
       
 
 
 
   

         
Taxpayer Identification Number:
       
 
 
 
   

Manner of Settlement: DWAC (see Exhibit A for explanation and instructions)
Agreed and Accepted this 12th day of December 2006:
ENTREMED, INC.

         
By:
       
Title:
 
 
   
 
 
 
   

The sale of the Shares purchased hereunder was made pursuant to a registration
statement or in a transaction in which a final prospectus would have been
required to have been delivered in the absence of Rule 172 promulgated under the
Securities Act.

 

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

 

Exhibit A
TO BE COMPLETED BY INVESTOR
SETTLING VIA DWAC
Delivery by electronic book-entry at The Depository Trust Company (“DTC”),
registered in the Investor’s name and address as set forth on the Signature Page
of the Subscription to which this Exhibit A is attached, and released by
American Stock Transfer and Trust Company, the Company’s transfer agent (the
“Transfer Agent”), to the Investor at the Closing.

             
 
  Name of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained)        
 
     
 
   
 
           
 
  DTC Participant Number        
 
     
 
   
 
           
 
  Name of Account at DTC Participant being credited with the Shares        
 
     
 
   
 
           
 
  Account Number at DTC Participant being credited with the Shares        
 
     
 
   

NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THE SUBSCRIPTION TO
WHICH THIS EXHIBIT A IS ATTACHED BY THE INVESTOR AND THE COMPANY, THE INVESTOR
SHALL:

  (I)   DIRECT THE BROKER-DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED
WITH THE SHARES ARE MAINTAINED TO SET UP A DEPOSIT/WITHDRAWAL AT CUSTODIAN
(“DWAC”) ON THE CLOSING DATE INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH
ACCOUNT OR ACCOUNTS WITH THE SHARES, AND     (II)   REMIT BY WIRE TRANSFER THE
AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING
PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:

JPMorgan Chase Bank, NA
ABA#: 021000021
Account Name: JPMC as EA for EntreMed/ThinkEquity
Account #: 304875848
Attn: James Fulton

 

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

 

Exhibit B
Form of Lock-Up Agreement
                    , 2006
THINKEQUITY PARTNERS LLC
RODMAN & RENSHAW, LLC
     c/o ThinkEquity Partners LLC
31 West 52nd Street
17th Floor
New York, NY 10019
Ladies and Gentlemen:
     The undersigned understands that you, as Placement Agents, propose to enter
into the Placement Agency Agreement (the “Placement Agreement”) with EntreMed,
Inc., a Delaware corporation (the “Company”), providing for the offering (the
“Offering”) of shares (the “Shares”) of common stock, par value $0.01 per share
(the “Common Stock”), of the Company. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Placement Agreement.
     In consideration of the foregoing, and in order to induce you to
participate in the Offering, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the Representative’s prior written consent (which consent may be
withheld in the Representative’s sole discretion), the undersigned will not,
during the period (the “Lock-Up Period”) beginning on the date hereof and ending
on the date 90 days after the date of the final prospectus (including the final
prospectus supplement) to be used in confirming the sale of the Shares,
(1) offer, pledge, announce the intention to sell, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, or file (or participate in the filing of) a
registration statement (other than a registration statement on Form S-8 or any
successor form) with the Securities and Exchange Commission in respect of, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock (including without limitation, Common Stock which
may be deemed to be beneficially owned by the undersigned in accordance with the
rules and regulations of the Securities and Exchange Commission and securities
which may be issued upon exercise of a stock option or warrant), (2) enter into
any swap or other agreement that transfers, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or such other securities, in cash or otherwise, (3) make any demand
for or exercise any right with respect to, the registration of any shares of
Common Stock or any security convertible into or exercisable or exchangeable for
Common Stock, or (4) publicly announce an intention to effect any transaction
specific in clause (1), (2) or (3) above.
     Notwithstanding the foregoing, the restrictions set forth in clause (1) and
(2) above shall not apply to (a) transfers (i) as a bona fide gift or gifts,
provided that the donee or donees thereof agree to be bound in writing by the
restrictions set forth herein, (ii) to any trust for the direct or indirect
benefit of the undersigned or the immediate family of the undersigned, provided
that the trustee of the trust agrees to be bound in writing by the restrictions
set forth herein, and provided further that any such transfer shall not involve
a disposition for value, (iii) with the Representative’s prior written consent
or (iv) effected

 

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

 

pursuant to any exchange of “underwater” options with the Company, (b) the
acquisition or exercise of any stock option issued pursuant to the Company’s
existing stock option plan or employee stock purchase plan, including any
exercise effected by the delivery of Shares of the Company held by the
undersigned, or (c) the purchase or sale of the Company’s securities pursuant to
a plan, contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) that was in effect prior to the date hereof. For purposes of
this Lock-Up Agreement, “immediate family” shall mean any relationship by blood,
marriage or adoption, not more remote than first cousin. None of the
restrictions set forth in this Lock-Up Agreement shall apply to Common Stock
acquired in open market transactions.
     For the purpose of allowing you to comply with NASD Rule 2711(f)(4), if
(1) during the last 17 days of the Lock-Up Period, the Company releases earnings
results or publicly announces other material news or a material event relating
to the Company occurs or (2) prior to the expiration of the Lock-Up Period, the
Company announces that it will release earnings results during the 16 day period
beginning on the last day of the Lock-Up Period, then in each case the Lock-Up
Period will be extended until the expiration of the 18 day period beginning on
the date of release of the earnings results or the public announcement regarding
the material news or the occurrence of the material event, as applicable, unless
the Representative waives, in writing, such extension. The undersigned hereby
acknowledges that the Company has agreed not to accelerate the vesting of any
option or warrant or the lapse of any repurchase right prior to the expiration
of the Lock-Up Period. In furtherance of the foregoing, the Company, and any
duly appointed transfer agent for the registration or transfer of the securities
described herein, are hereby authorized to decline to make any transfer of
securities if such transfer would constitute a violation or breach of this
Lock-Up Agreement.
     The foregoing restrictions are expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a sale or disposition of the Common
Stock even if such Common Stock would be disposed of by someone other than the
undersigned. Such prohibited hedging or other transactions would include without
limitation any short sale or any purchase, sale or grant of any right (including
without limitation any put option or put equivalent position or call option or
call equivalent position) with respect to any of the Common Stock or with
respect to any security that includes, relates to, or derives any significant
part of its value from such Common Stock.
     The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Agreement. All authority
herein conferred or agreed to be conferred and any obligations of the
undersigned shall be binding upon the successors, assigns, heirs or personal
representatives of the undersigned.
     The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company’s transfer agent and registrar against the
transfer of the undersigned’s shares of Common Stock except in compliance with
the foregoing restrictions.
     The undersigned understands that, if the Placement Agreement does not
become effective, or if the Placement Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares to be sold thereunder, the undersigned
shall be released from all obligations under this Lock-Up Agreement.

 

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

 

     This Lock-Up Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of laws
principles thereof.

                  Very truly yours,    
 
           
 
  Print Name:        
 
     
 
   
 
           
 
  Print Title:        
 
     
 
   
 
           
 
  Signature:        
 
     
 
   

 

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

 

Exhibit C
List of Directors and Executive Officers
Executing Lock-Up Agreements
Michael Tarnow
James S. Burns
Donald S. Brooks
Dwight L. Bush, Sr.
Ronald Cape, PhD
Jennie Hunter-Cevera, PhD
Peter S. Knight
Mark C. M. Randall
Dane Saglio
Cynthia Wong, Esq.
Carolyn F. Sidor, MD
Marc Corrado

 

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

 

Exhibit D
Matters To Be Covered In The
Opinion Of Corporate Counsel To The Company
1. The Company is a corporation validly existing and in good standing under the
laws of the State of Delaware with the requisite corporate power and authority
necessary to own or lease, as the case may be and operate its properties, to
conduct its business as currently being carried on and as it is described in the
Registration Statement, the Disclosure Package and the Prospectus, to execute
and deliver the Placement Agency Agreement, and to issue, sell and deliver the
Shares as contemplated by the Placement Agency Agreement.
2. Each Subsidiary is an entity validly existing and in good standing under the
laws of the state of its organization with the requisite power and authority
necessary to own or lease, as the case may be and operate its properties, and to
conduct its business as currently being carried on and as it is described in the
Registration Statement, the Disclosure Package and the Prospectus.
3. The Company has the authorized capital stock as set forth in the Registration
Statement, the Disclosure Package and the Prospectus.
4. The Shares have been duly and validly authorized by the Company and, when
issued, sold and delivered by the Company to, and paid for by, the Investors in
accordance with the terms of the Placement Agency Agreement and the Subscription
Terms, will be validly issued, fully paid and nonassessable.
5. There are no statutory preemptive rights or similar rights to subscribe for
or to purchase any Shares pursuant to the Company’s charter, by-laws or under
any agreement, document or instrument filed by the Company as an exhibit to its
Annual Report on Form 10-K for the year ended December 31, 2005 (“Form 10-K”)..
6. To such counsel’s knowledge, neither the filing of the Registration Statement
nor the offering or sale of the Shares as contemplated by the Placement Agency
Agreement gives rise to any rights for or relating to the registration of any
shares of Common Stock or other securities of the Company under any agreement,
document or instrument filed by the Company as an exhibit to its Form 10-K.
7. The Registration Statement has become effective under the Securities Act, and
to such counsel’s knowledge, no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof has been issued
by the Commission and no proceeding for that purpose is pending before or, to
such counsel’s knowledge, is threatened by the Commission; and all filings
required by Rule 424(b) and Rule 430(A), 430(B) or 430(C), as the case may be,
promulgated under the Securities Act have been made in the manner and within the
time period required by Rule 424(b).
8. The Registration Statement, the Statutory Prospectus included in the
Disclosure Package and the Prospectus, and any amendment thereof or supplement
thereto (except as to the financial statements and schedules, and other
financial or statistical data derived therefrom, contained in the Registration
Statement, the Disclosure Package and the Prospectus, as to which such counsel
expresses no opinion) as of each as of their respective effective or filing
dates, complied as to form in all material respects with the applicable
requirements of the Securities Act and the Rules and Regulations.
9. To such counsel’s knowledge, the Company has filed all reports required to be
filed by it under Section 13(a) of the Exchange Act of 1934, as amended (the
“Exchange Act”), during the twelve month period ended December 12, 2006 (the
“SEC Documents”). As of their respective filing dates, the SEC

 

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

 

Documents complied in all material respects as to form with the requirements of
the Exchange Act and the rules and regulations of the Commission promulgated
thereunder. In rendering this opinion paragraph number 9, we have assumed that
the statements made and incorporated by reference therein are correct and
complete.
10. The Placement Agency Agreement and the Subscription Terms have been duly
authorized by all necessary corporate action on the part of the Company and have
been duly executed and delivered by the Company.
11. The execution and delivery of the Placement Agency Agreement and the
Subscription Terms by the Company and the issuance and sale by the Company of
the Shares and the consummation by the Company of the transactions contemplated
by the Placement Agency Agreement and the Subscription Terms to be consummated
by the Company do not and will not result in any breach or a default under (nor
constitute any event that with notice, lapse of time or both would result in any
breach or default under), or conflict with (i) any provisions of the certificate
of incorporation or by-laws of the Company, (ii) any provision of any material
license, permit, indenture, mortgage, deed of trust, note, bank loan or credit
agreement or other evidence of indebtedness, or any license, lease, contract or
other agreement or instrument filed as an exhibit to, or incorporated by
reference into, the Company’s Form 10-K or in any filing with the Commission
made thereafter, (iii) any U.S. federal, New York state law or Delaware General
Corporation Law, regulation or rule under any of the foregoing that, in such
counsel’s experience, is generally applicable to transactions of the nature of
those contemplated by the Placement Agency Agreement and the Subscription Terms
and is not applicable to the Company because of the nature of its business or
assets (other than the state securities or blue sky laws and the rules of the
NASD governing underwriter compensation, as to which such counsel expresses no
opinion), or (iv) any decree, judgment or order known to such counsel to be
applicable to the Company (other than the state securities or blue sky laws and
the rules of the NASD governing underwriter compensation, as to which such
counsel expresses no opinion).
12. The Company is not, and will not be after the giving effect to the offering
and sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, required to register as an “investment company” as defined in
the Investment Company Act of 1940, as amended.
13. No approval, authorization, consent or order or filing with any U.S. federal
or New York state court or governmental or regulatory agency or body in the
United States having jurisdiction over the Company, or approval of the
shareholders of the Company, is required to be obtained or made by the Company
for the consummation by the Company of the transactions contemplated by the
Placement Agency Agreement and the Subscription Terms, except for such as have
been duly obtained or made, including without limitation, registration of the
Shares under the Securities Act and of the Common Stock under the Exchange Act,
or such as may be required under (x) the state securities or blue sky laws of
the various states or (y) the bylaws or rules and regulations of the National
Association of Securities Dealers, Inc., as to which such counsel expresses no
opinion.

 

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

 

Exhibit E
Matters To Be Covered In The
Opinion Of IP Counsel To The Company
1. Such counsel is familiar with the technology used by the Company in its
business and the manner of its use thereof and has read the Registration
Statement, the Disclosure Package and the Prospectus, including particularly the
portions of the Registration Statement, the Disclosure Package and the
Prospectus referring to patents, trade secrets, trademarks, service marks or
other proprietary information or materials.
2. The statements in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2005, under the captions “Risk Factors — We Depend on
Patents and Other Proprietary Rights, Some of Which are Uncertain,” “Business —
Relationships — Corporate and Non-Profit,” and “Business — Patents, Licenses and
Proprietary Rights” (collectively, the “Intellectual Property Portion”), to such
counsel’s knowledge, insofar as such statements constitute a summary of the
Company’s patents and patent applications (including patents and patent
applications licensed to the Company) are in all material respects complete and
accurate summaries and fairly summarize in all material respects the legal
matters, documents and proceedings relating to the Company’s patents and the
Company’s patent applications (including patents and patent application license
to the Company).
3. The Company either has exclusively licensed, or is listed in the records of
the United States Patent and Trademark Office as the holder of record, of the
patents listed on Schedule I attached to this opinion which are all of the U.S.
patents (the “Patents”) and each of the applications listed on Schedule I
attached to this opinion are all of the U.S. patent applications (the
“Applications”) to which the Company has rights as owner or licensee as set
forth in Schedule I attached to this opinion. There are no claims of third
parties pending or, to the best knowledge of such counsel, threatened to any
ownership interest or lien with respect to any of the Patents or Applications.
To the best knowledge of such counsel, the Company owns as its sole property or
has exclusively licensed the Patents and pending Patent Applications.
4. Such counsel knows of no claims of third parties pending or, to the best
knowledge of such counsel, threatened to any ownership interest or lien with
respect to the Company’s foreign patents listed on Schedule II attached to this
opinion which are all of the Company’s foreign patents (the “Foreign Patents”),
or any of the Company’s foreign patent applications listed on Schedule II
attached to this opinion which are all of the Company’s foreign patent
applications (the “Foreign Applications”). To the best knowledge of such
counsel, the Company either owns as its sole property or has exclusively
licensed, the Foreign Patents and pending Foreign Applications.
5. To the best of its knowledge, such counsel is not aware of any material
defects of form in the preparation or filing of the Company’s Patents, Foreign
Patents, Applications or Foreign Applications. The Company’s Patents, Foreign
Patents, Applications or Foreign Applications are being diligently pursued by
the Company.
6. To the best of its knowledge, such counsel knows of no reason why the Patents
or Foreign Patents are not valid as issued. Such counsel has no knowledge of any
reason why any patent to be issued as a result of any Application or Foreign
Application would not be valid or would not afford the Company useful patent
protection with respect thereto.
7. Such counsel is not aware of any pending or, to the best of its knowledge,
threatened action, suit, proceeding or claim by others challenging the validity
or the scope of the Patents, Foreign Patents,

 

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

 

Applications, Foreign Applications or other proprietary information to which the
Company is a party or of which any property of the Company is subject.
8. Such counsel is not aware of any pending or, to the best of its knowledge,
threatened action, suit proceeding or claim by others that the Company is
infringing or otherwise violating any patent, trademarks or trade secrets of
others, nor, to the best of its knowledge, is such counsel aware of any rights
of third parties to any of the Company’s inventions described in the
Applications, issued, approved or licensed patents which could reasonably be
expected to materially affect the ability of the Company to conduct its business
as described in the Registration Statement, the Disclosure Package or the
Prospectus.
     In addition to the matters set forth above, to the best of counsel’s
knowledge, the portions of the Registration Statement, the Disclosure Package
and the Prospectus that relate to the Intellectual Property, fairly and
accurately describe the Company’s rights with respect to the Patents, Foreign
Patents, Applications, Foreign Applications and other intellectual property, and
that nothing has come to the attention of such counsel which leads it to believe
that (i) the Registration Statement or any amendment thereof (including any
information omitted from the Registration Statement at the time it became
effective but that is deemed to be part of and included in the Registration
Statement pursuant to rule 430A, 430B or 430C), at the time it (or such
amendment) became effective and at the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) the Disclosure Package, as of the Time of Sale or at the
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (iii) the Prospectus, or any supplement thereto, as of its issue
date and as of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel expresses no
opinion with respect to the financial statements and schedules, and other
financial data derived therefrom, included in any of the documents mentioned in
this paragraph).

 

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

 

Exhibit F
Form of Written Statement of
Corporate Counsel to the Company
In the course of the preparation by the Company of the Registration Statement
and the Prospectus, such counsel has participated in discussions with
representatives of the Placement Agents, counsel to the Placement Agents, the
Company’s independent public accountants and certain officers and other
representatives of the Company, in which the business and affairs of the Company
were discussed. Although such counsel has not undertaken (except to the extent
stated in paragraphs 3, 8, 9 and 11 of such counsel’s legal opinion of even date
herewith), to determine independently, and do not assume any responsibility for,
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, or any amendments or supplements
thereto, nothing has come to such counsel’s attention that have caused such
counsel to believe that (i) the Registration Statement or any amendment thereof
(including any information omitted from the Registration Statement at the time
it became effective but that is deemed to be part of and included in the
Registration Statement pursuant to rule 430A, 430B or 430C), at the time it (or
such amendment) became effective and at the Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Disclosure Package, as of the Time of Sale or at the
Closing Date, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (iii) the Prospectus, or any supplement thereto, as of its issue
date and as of the Closing Date, contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel expresses no
opinion with respect to the financial statements and schedules, and other
financial data derived therefrom, included in any of the documents mentioned in
this paragraph).

 

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

 

Exhibit G
Pricing Information
Number of Shares to be Sold: 10,727,500
Offering Price: $1.60 per Share
Aggregate Placement Agency Fees: $1,029,840
Estimated Net Proceeds to the Company (exclusive of estimated expenses of the
Company): $16,134,160