Exhibit 10.1

 

Execution Version

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of May 9,
2019, by and among MRI Interventions, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively, the
“Purchasers”).

 

RECITALS

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act (as defined below) and Rule 506 of Regulation D
(as defined below), the Company desires to issue and sell to the Purchasers, and
the Purchasers desires to purchase from the Company, up to 2,682,000 shares of
Common Stock, as more fully described in this Agreement.

 

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

 

Article I
DEFINITIONS

 

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

 

“8-K Filing” has the meaning set forth in Section 4.4.

 

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

 

“Advice” shall have the meaning set forth in Section 6.6(b).

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act.

 

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

 

“BHCA” has the meaning set forth in Section 3.1(tt).

 

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

 

“Board Materials” has the meaning set forth in Section 5.1(f).

 

“Board Rights Termination Date” has the meaning set forth in Section 5.1(b).

 

 

 

 

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

 

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

 

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

 

“Closing Date” means May 17, 2019, or such other Trading Day as the parties may
agree, not later than the fifth Trading Day thereafter, when all of the
Transaction Documents have been executed and delivered by the applicable parties
thereto, and all of the conditions set forth in Sections 2.1, 2.2, 7.1 and 7.2
hereof are satisfied or waived.

 

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

 

“Common Stock” means the common stock of the Company, par value $0.01 per share,
and any other class of securities into which such securities may hereafter be
reclassified or changed.

 

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

 

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

 

“Company Counsel” means Bass, Berry & Sims PLC, or such other legal counsel as
may be engaged by the Company.

 

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

 

“Confidential Information” means, as it relates to any Purchaser or the
Purchaser Director, any and all information or data concerning the Company or
its affiliates, whether in verbal, visual, written, electronic or other form,
which is disclosed to such Purchaser or, in the case of the Lead Purchaser, the
Purchaser Director by the Company or any director, officer, employee or agent of
the Company (including all Board Material that is non-public information),
together with all information discerned from, based on or relating to any of the
foregoing which may be prepared or created by such Purchaser or, in the case of
the Lead Purchaser, the Purchaser Director or any of its affiliates, or any of
its respective representatives, including directors, officers, employees, agents
or advisors; provided, however, that “Confidential Information” shall not
include information that:

 

(i)        is or becomes generally available to the public other than as a
result of disclosure of such information by such Purchaser, any of its
affiliates, any of its representatives, or, in the case of the Lead Purchaser,
the Purchaser Director;

 

(ii)       is independently developed by such Purchaser, any of its affiliates,
any of its representatives, or, in the case of the Lead Purchaser, the Purchaser
Director without use of Confidential Information provided by the Company or by
any director, officer, employee or agent thereof;

 

(iii)      becomes available to the recipient of such information at any time on
a non-confidential basis from a third party that is not, to the recipient’s
knowledge, prohibited from disclosing such information to such Purchaser or any
of its affiliates, any of its respective representatives, or, in the case of the
Lead Purchaser, the Purchaser Director by any contractual, legal or fiduciary
obligation to the Company; or

 

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(iv)       was known by such Purchaser, any of its affiliates, or, in the case
of the Lead Purchaser, the Purchaser Director prior to receipt from the Company
or from any director, officer, employee or agent thereof.

 

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

 

“Corporate Governance and Nominating Committee” has the meaning set forth in
Section 5.1(b).

 

“Demand Notice” has the meaning set forth in Section 6.1(a).

 

“Demand Registration Statement” has the meaning set forth in Section 6.1(a).

 

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

 

“Disqualification Event” has the meaning set forth in Section 3.1(xx).

 

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

 

“Effectiveness Date” means, with respect to a Demand Registration Statement
required to be filed hereunder, the 75th calendar day following receipt by the
Company of the Demand Notice, (or, in the event of a “full review” by the
Commission, the 100th calendar day following such date) and with respect to any
additional Registration Statements which may be required pursuant to Section
6.1(e), the 45th calendar day following the date on which an additional
Registration Statement is required to be filed hereunder (or, in the event of a
“full review” by the Commission, the 70th calendar day following the date such
additional Registration Statement is required to be filed hereunder); provided,
however, that in the event the Company is notified by the Commission that one or
more of the above Registration Statements will not be reviewed or is no longer
subject to further review and comments, the Effectiveness Date as to such
Registration Statement shall be the fifth Trading Day following the date on
which the Company is so notified if such date precedes the dates otherwise
required above, provided, further, if such Effectiveness Date falls on a day
that is not a Trading Day, then the Effectiveness Date shall be the next
succeeding Trading Day.

 

“Effectiveness Period” has the meaning set forth in Section 6.1(a).

 

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

 

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

 

“Event” has the meaning set forth in Section 6.1(h).

 

“Event Date” has the meaning set forth in Section 6.1(h).

 

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

 

 3

 

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of the Company pursuant to any stock or option
plan duly adopted for such purpose, by a majority of the non-employee members of
the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose for services rendered to the
Company, (b) securities exercisable or exchangeable for or convertible into
shares of Common Stock issued and outstanding on the date of this Agreement,
provided that such securities have not been amended since the date of this
Agreement to increase the number of such securities or to decrease the exercise
price, exchange price or conversion price of such securities (other than in
connection with stock splits or combinations) or to extend the term of such
securities, and (c) securities issued pursuant to acquisitions or strategic
transactions approved by a majority of the disinterested directors of the
Company, provided that any such issuance shall only be to a Person (or to the
equityholders of a Person) which is, itself or through its subsidiaries, an
operating company or an owner of an asset in a business synergistic with the
business of the Company and shall provide to the Company additional benefits in
addition to the investment of funds, but shall not include a transaction in
which the Company is issuing securities primarily for the purpose of raising
capital or to an entity whose primary business is investing in securities.

 

“FCPA” has the meaning set forth in Section 3.1(gg).

 

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

 

“FDCA” has the meaning set forth in Section 3.1(qq).

 

“Federal Reserve” has the meaning set forth in Section 3.1(tt).

 

“Filing Date” means, with respect to a Demand Registration Statement required
hereunder the 30th calendar day following the receipt by the Company of the
Demand Notice, provided that if such Filing Date falls on a day that is not a
Trading Day, then the Filing Date shall be the next succeeding Trading Day, and,
with respect to any additional Registration Statements which may be required
pursuant to Section 6.1(e), the earliest practical date on which the Company is
permitted by SEC Guidance to file such additional Registration Statement related
to the Registrable Securities.

 

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

 

“Holder” or “Holders” means the holder or holders, as the case may be, from time
to time of Registrable Securities.

 

“Indebtedness” means (i) any liabilities for borrowed money in excess of $50,000
(which, for the avoidance of doubt, does not include trade accounts payable),
(ii) all guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions made in the ordinary course of business, and (iii) the present
value of any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.

 

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

 

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

 

“Issuer Covered Person” has the meaning set forth in Section 3.1(xx).

 

“Lead Purchaser” means PTC Therapeutics, Inc.

 

 4

 

 

“Lead Purchaser Representative” means any individual designated from time to
time by the Lead Purchaser to represent the Company with respect to matters
relating to this Agreement.

 

“Legend Removal Date” has the meaning set forth in Section 4.1(c).

 

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

 

“Material Adverse Effect” means a material adverse effect on the results of
operations, assets, liabilities, business, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries, taken as a whole, except that
any of the following, either alone or in combination, shall not be deemed a
Material Adverse Effect: (i) effects caused by changes or circumstances
affecting general market or other conditions in the U.S. economy or which are
generally applicable to the industry in which the Company operates, provided,
that such effects are not borne to a materially disproportionate degree by the
Company compared to other companies operating in the same industry as the
Company; (ii) effects resulting from or relating to the announcement or
disclosure of the sale of the Shares or other transactions contemplated by this
Agreement or this offering; or (iii) effects caused by any event, occurrence or
condition resulting from or relating to the taking of any action in accordance
with this Agreement.

 

“Material Contract” means any contract of the Company that is required to be
filed as an exhibit to the SEC Reports.

 

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

 

“Money Laundering Laws” has the meaning set forth in Section 3.1(uu).

 

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

 

“Participation Maximum” has the meaning set forth in Section 4.13(a).

 

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

 

“Personal Information” has the meaning set forth in Section 3.1(vv).

 

“Pre-Notice” has the meaning set forth in Section 4.13(a).

 

“Press Release” has the meaning set forth in Section 4.4.

 

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and/or quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the OTCQB tiered marketplace organized
by OTC Markets Group Inc.

 

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

 

“Product” has the meaning set forth in Section 3.1(qq).

 

 5

 

 

“Prospectus” means the prospectus included in a Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated by the Commission pursuant to
the Securities Act), as amended or supplemented by any prospectus supplement,
with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.

 

“Public Information Failure” has the meaning set forth in Section 4.2.

 

“Public Information Failure Payments” has the meaning set forth in Section 4.2.

 

“Purchase Price” means $3.10 per Share.

 

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

 

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

 

“Purchaser Director” means a director designated for nomination by the Lead
Purchaser and elected or appointed pursuant to the provisions of Sections 5.1(a)
and 5.1(b).

 

“Purchaser Nominee” has the meaning set forth in Section 5.1(b).

 

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

 

“Registrable Amount” shall mean a number of shares of Common Stock equal to one
percent (1%) of the outstanding Common Stock.

 

“Registrable Securities” means, as of any date of determination, (a) the shares
of Common Stock issued or issuable to the Lead Purchaser in accordance with the
terms of this Agreement, (b) any securities issued or issuable to the Lead
Purchaser in accordance with a Subsequent Financing or otherwise after the date
hereof, or (c) any securities issued or then issuable to the Lead Purchaser upon
any stock split, dividend or other distribution, recapitalization or similar
event with respect to the foregoing; provided, however, that any such
Registrable Securities shall cease to be Registrable Securities (and the Company
shall not be required to maintain the effectiveness of any, or file another,
Registration Statement hereunder with respect thereto) if (x) a Registration
Statement with respect to the sale of such Registrable Securities is declared
effective by the Commission under the Securities Act and such Registrable
Securities have been disposed of by the Lead Purchaser in accordance with such
effective Registration Statement, (y) such Registrable Securities have been
previously sold in accordance with Rule 144, or (z) such securities become
eligible for resale without volume or manner-of-sale restrictions and without
current public information pursuant to Rule 144 as set forth in a written
opinion letter to such effect, addressed, delivered and acceptable to the
Transfer Agent and the Lead Purchaser (assuming that such securities and any
securities issuable upon exercise, conversion or exchange of which, or as a
dividend upon which, such securities were issued or are issuable, were at no
time held by any Affiliate of the Company), as reasonably determined by the
Company, upon the advice of counsel to the Company.

 

“Registration Statement” means any registration statement required to be filed
hereunder pursuant to Article VI, including (in each case) the Prospectus,
amendments and supplements to any such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
any such registration statement.

 

 6

 

 

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

 

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

 

“Required Delivery Date” has the meaning set forth in Section 4.1(c).

 

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

 

“Rule 172” means Rule 172 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

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

 

“SEC Guidance” means (i) any publicly-available written or oral guidance of the
Commission staff, or any comments, requirements or requests of the Commission
staff and (ii) the Securities Act.

 

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

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Shares” means the shares of Common Stock being acquired by the Purchasers
pursuant to this Agreement.

 

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

 

 7

 

 

“Subscription Amount” means, with respect to each Purchaser, the aggregate
amount paid by such Purchaser, and accepted by the Company, for the Shares
purchased hereunder as set forth on such Purchaser’s signature page hereto.

 

“Subsequent Financing” has the meaning set forth in Section 4.13(a).

 

“Subsequent Financing Notice” has the meaning set forth in Section 4.13(a).

 

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

 

“Trading Day” means a day on which the Principal Trading Market is open for
trading.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE
American, the Nasdaq Stock Market (any market tier) or the OTCQX or OTCQB tiered
marketplace organized by OTC Markets Group Inc., on which the Common Stock is
listed or quoted for trading on the date in question.

 

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

 

“Transfer Agent” means Continental Stock Transfer & Trust Co., the current
transfer agent of the Company, or any successor transfer agent for the Company.

 

“Transfer Agent Instructions” has the meaning set forth in Section 2.2(a)(iii).

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if the Common Stock is not then listed or quoted for trading on a
Trading Market and if prices for the Common Stock are then reported on the OTC
Pink published by OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per
share of the Common Stock so reported, or (c) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the applicable Purchaser reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

 

Article II
PURCHASE AND SALE

 

2.1       Closing.

 

(a)       Amount. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to each Purchaser,
and each Purchaser shall purchase from the Company, such number of Shares equal
to the quotient resulting from the dividing the Subscription Amount by the
Purchase Price, rounded down to the nearest whole share.

 

(b)       Closing. The Closing of the purchase and sale of the Shares pursuant
hereto shall take place at the offices of Bass, Berry & Sims PLC on the Closing
Date or at such other location or remotely by facsimile transmission or other
electronic means as determined by the Company and the Lead Purchaser.

 

 8

 

 

(c)       Form of Payment. Unless otherwise agreed by the Company, on or before
the Closing Date, each Purchaser shall wire its Subscription Amount, in United
States dollars and in immediately available funds, in accordance with the
written wire transfer instructions provided by the Company.

 

2.2       Closing Deliveries.

 

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

 

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

 

(ii)       facsimile copies of the issued and duly executed Shares being
purchased by such Purchasers at the Closing pursuant to this Agreement;

 

(iii)      a copy of the irrevocable Transfer Agent Instructions, which
instructions shall request and authorize the Transfer Agent to issue and
register the Shares in the names of the Purchasers and shall have been delivered
to and acknowledged in writing by the Transfer Agent (the “Transfer Agent
Instructions”);

 

(iv)      a certificate of the Secretary of the Company, dated as of the Closing
Date, (a) certifying the resolutions adopted by the Board of Directors or a duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the Shares,
(b) certifying the current versions of the certificate of incorporation and
bylaws of the Company and (c) certifying that each officer of the Company who
signed any Transaction Document was duly elected or appointed, qualified and
acting as an officer of the Company at the respective times of the signing and
delivery thereof and was duly authorized to sign such document on behalf of the
Company;

 

(v)       a certificate of an executive officer of the Company, dated as of the
Closing Date, to the effect that each of the conditions set forth in clauses
(a), (b) and (d) of Section 7.1 is satisfied;

 

(vi)      an opinion of Company Counsel, dated as of the Closing Date, in
substantially the form of Exhibit A hereto; and

 

(vii)     satisfactory evidence of the good standing of the Company from the
Secretary of State for the States of Delaware and California, respectively.

 

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

 

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

 

(ii)       its Subscription Amount, in United States dollars and in immediately
available funds, in the amount indicated below such Purchaser’s name on the
applicable signature page hereto under the heading “Aggregate Purchase Price
(Subscription Amount)” by wire transfer in accordance with the Company’s written
instructions; and

 

(iii)       a fully completed and duly executed Investor Questionnaire in the
form attached hereto as Exhibit B.

 

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Article III
REPRESENTATIONS AND WARRANTIES

 

3.1       Representations and Warranties of the Company. The Company hereby
represents and warrants as of the date hereof and as of the Closing Date (except
for the representations and warranties that speak as of a specific date, which
shall be made as of such date), to each Purchaser:

 

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

 

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

 

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

 

(d)       No Conflicts. The execution, delivery and performance by the Company
of the Transaction Documents to which it is a party and the consummation by the
Company of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares) do not and will not (i) conflict with or
violate any provisions of the Company’s certificate of incorporation or bylaws
or otherwise result in a violation of the organizational documents of the
Company, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would result in a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any Material Contract, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company is
subject (including federal and state securities laws, assuming the correctness
of the representations and warranties made by the Purchasers herein), or by
which any property or asset of the Company is bound or affected.

 

 10

 

 

(e)       Filings, Consents and Approvals. Neither the Company nor any of its
Subsidiaries is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or
other federal, state, local or other governmental authority, self-regulatory
organization (including the Principal Trading Market) or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including, without limitation, the issuance of the
Shares), other than (i) filings required by applicable state securities laws,
(ii) the filing of a Notice of Exempt Offering of Securities on Form D with the
Commission under Regulation D of the Securities Act and (iii) the filings
contemplated in Section 4.4 and Article VI of this Agreement (collectively, the
“Required Approvals”).

 

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

 

(g)       Capitalization. The number of shares and type of all authorized,
issued and outstanding capital stock, options and other securities of the
Company as of March 31, 2019 (whether then convertible into or exercisable or
exchangeable for shares of capital stock of the Company) is set forth in
Schedule 3.1(g) hereto. Except as set forth in Schedule 3.1(g), no Person has
any right of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by the Transaction
Documents that have not been effectively waived as of the Closing Date. Except
as set forth in Schedule 3.1(g), the issuance and sale of the Shares and the
transactions contemplated by this Agreement, including by Section 4.13 and
Article VI, will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. The Company
has not issued any capital stock since its most recently filed periodic report
under the Exchange Act, other than pursuant to the exercise of employee stock
options under the Company’s stock option plans and pursuant to the conversion
and/or exercise of Common Stock Equivalents outstanding as of the date of the
most recently filed periodic report under the Exchange Act. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all applicable
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. No further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance and sale of the
Shares.

 

(h)       SEC Reports; Disclosure Materials. The Company has filed with the
Commission all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports” or the “Disclosure
Materials,” as context requires), on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. As of their respective filing dates, or to the
extent corrected or updated by a subsequent amendment or restatement, the SEC
Reports complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each of the Material
Contracts to which the Company or any Subsidiary is a party or to which the
property or assets of the Company or any of its Subsidiaries are subject has
been filed (or incorporated by reference) as an exhibit to the SEC Reports.

 

 11

 

 

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

 

(j)       Material Changes. Since December 31, 2018, (i) there have been no
events, occurrences or developments that have had or would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (ii) except as disclosed in the SEC Reports, the Company has not
incurred any material liabilities (contingent or otherwise) other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to be reflected
in the Company’s financial statements pursuant to GAAP or disclosed in filings
made with the Commission, (iii) the Company has not altered its method of
accounting or the manner in which it keeps its accounting books and records
other than any alterations that are consistent with any changes in GAAP, (iv)
the Company has not declared or made any dividend or distribution of cash or
other property to its stockholders or purchased, redeemed or made any agreements
to purchase or redeem any shares of its capital stock, (v) except as disclosed
in the SEC Reports, there has not been any material change or amendment to, or
any waiver of any material right by the Company under, any Material Contract
under which the Company or any of its Subsidiaries is bound or subject. No
event, liability, fact, circumstance, occurrence or development has occurred or
exists, or is reasonably expected to occur or exist, with respect to the Company
or its Subsidiaries or their respective businesses, properties, operations,
assets or financial condition, that would be required to be disclosed by the
Company under applicable securities laws at the time this representation is made
or deemed made that has not been publicly disclosed at least one (1) Business
Day prior to the date that this representation is made or deemed to be made.

 

(k)       Litigation. There is no Action which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the issuance of the Shares and the other transactions contemplated
by this Agreement or (ii) except as disclosed in the SEC Reports, would, if
there were an unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. Neither the
Company nor any Subsidiary, nor any director or executive officer thereof, is or
has within the past ten years been the subject of any Action involving a claim
of violation of or liability under federal or state securities laws or a claim
of breach of fiduciary duty. To the knowledge of the Company, within the past
ten years there has not been, and there is not pending or contemplated, any
investigation by the Commission involving the Company or any current director or
executive officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

 12

 

 

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

 

(m)       Compliance. Neither the Company nor any of its Subsidiaries (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any Material Contract (whether or not such default
or violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body having jurisdiction over the Company, its
Subsidiaries or their respective properties or assets, or (iii) is or has been
in violation of, or in receipt of written notice that it is in violation of, any
statute, rule or regulation of any governmental authority or self-regulatory
organization (including the Principal Trading Market), including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, applicable to the Company, except in
each case as would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(n)       Regulatory Permits. The Company and each of its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its
respective business as currently conducted and as described in the SEC Reports,
except where the failure to possess such permits, individually or in the
aggregate, has not and would not have a Material Adverse Effect (“Material
Permits”). Neither the Company nor any of its Subsidiaries has received any
notice of Proceedings relating to the revocation or material adverse
modification of any such Material Permits or any notice of adverse finding,
warning letter, untitled letter or other correspondence or notice from any
federal, state, local or foreign regulatory authority alleging or asserting
non-compliance with any Material Permit.

 

(o)       Title to Assets. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property owned by them, if any. The
Company and its Subsidiaries have good and marketable title to all tangible
personal property owned by them that is material to the business of the Company
and its Subsidiaries, taken as whole, in each case free and clear of all Liens
except as disclosed in Schedule 3.1(o) or such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.

 

 13

 

 

(p)       Patents and Trademarks. The Company and its Subsidiaries own, possess,
license or have other rights to use, all patents, patent applications, trade and
service marks, trade and service mark applications and registrations, trade
names, trade secrets, inventions, copyrights, licenses, technology, know-how and
other intellectual property rights and similar rights necessary or material for
use in connection with their respective businesses (collectively, the
“Intellectual Property Rights”). There is no pending or, to the knowledge of the
Company, threatened Action or claim by any Person that the Company’s business as
now conducted infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of such Person. To the knowledge of the
Company, there is no existing infringement by another Person of any of the
Intellectual Property Rights that would have a Material Adverse Effect. The
Company and its Subsidiaries have taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their Intellectual Property
Rights. None of the technology employed by the Company or any Subsidiary has
been obtained or is being used by the Company or any Subsidiaries in material
violation of any contractual obligation binding on the Company or any
Subsidiaries or, to the knowledge of the Company, upon any of their officers,
consultants, directors or employees. Except as could not have or reasonably be
expected to not have a Material Adverse Effect, none of, and neither the Company
nor any Subsidiary has received a notice (written or otherwise) that any of, the
Intellectual Property Rights has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2) years from the
date of this Agreement.

 

(q)       Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes to be prudent and customary in the
businesses and locations in which the Company and the Subsidiaries are engaged.
Neither the Company nor any of its Subsidiaries has received any notice of
cancellation of any such insurance, nor, to the knowledge of the Company, will
it or any Subsidiary be unable to renew their respective 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.

 

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

 

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

 

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

 

 14

 

 

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

 

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

 

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

 

(x)       Registration Rights. Other than the Purchasers, as applicable, and
except as set forth on Schedule 3.1(x) hereto, no Person has any right to cause
the Company to effect the registration under the Securities Act of any
securities of the Company.

 

(y)       Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not,
in the twelve (12) months preceding the date hereof, received written notice
from the Principal Trading Market to the effect that the Company is not in
compliance with the listing or maintenance requirements of the Principal Trading
Market. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with all listing and
maintenance requirements of the Principal Trading Market on the date hereof. The
Common Stock is currently eligible for electronic transfer through the
Depository Trust Company or another established clearing corporation and the
Company is current in payment of the fees to the Depository Trust Company (or
such other established clearing corporation) in connection with such electronic
transfer.

 

(z)       Rights Agreements. The Company has not adopted any stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

 

 15

 

 

(aa)     Disclosure. The Company confirms that it has not provided, and to the
knowledge of the Company, none of its executive officers, directors, employees
nor any other Person acting on its or their behalf has provided, any Purchaser
or its respective agents or counsel with any information that it believes
constitutes material, non-public information (i) except insofar as the
existence, provisions and terms of the Transaction Documents and the proposed
transactions hereunder may constitute such information, all of which will be
disclosed by the Company in the manner contemplated by Section 4.4 hereof, or
(ii) unless such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that the Purchasers will rely on the foregoing representations in
effecting transactions in securities of the Company. The press releases
disseminated by the Company during the twelve (12) months preceding the date of
this Agreement taken as a whole do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made and when made, not misleading. The Company
acknowledges and agrees that no Purchaser makes or has made any representations
or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in Section 3.2 hereof.

 

(bb)    No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company nor
any of its Affiliates nor any Person acting on its or their behalf has, directly
or indirectly made any offers or sales of any Company security or solicited any
offers to buy any Company security under circumstances that would (i) eliminate
the availability of the exemption from registration under Regulation D in
connection with the offer and sale by the Company of the Shares as contemplated
hereby or (ii) cause this offering to be integrated with prior offerings by the
Company for purposes of any stockholder approval provisions, including, without
limitation, under the rules and regulations of any Trading Market on which any
of the securities of the Company are listed or quoted.

 

(cc)    Tax Matters. The Company and each of its Subsidiaries (i) has prepared
and filed (or has requested valid extensions for) all foreign, federal, state
and local income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, and (ii) has paid all taxes and other
governmental assessments and charges that are shown or determined to be due on
such returns, reports and declarations, except those being contested in good
faith, with respect to which adequate reserves have been set aside on the books
of the Company, except in either case where the failure to prepare, file or pay
would not have a Material Adverse Effect. There are no unpaid taxes in any
material amount claimed to be due by the Company or any of its Subsidiaries by
the taxing authority of any jurisdiction.

 

(dd)    Environmental Matters. Neither the Company nor any of its Subsidiaries
(i) is in violation of any statute, rule, regulation, decision or order of any
governmental agency or body or any court, domestic or foreign, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), (ii) owns or operates any
real property contaminated with any substance that is in violation of any
Environmental Laws, (iii) is liable for any off-site disposal or contamination
pursuant to any Environmental Laws, or (iv) is subject to any claim relating to
any Environmental Laws, which violation, contamination, liability or claim has
had or would have, individually or in the aggregate, a Material Adverse Effect;
and, to the knowledge of the Company, there is no pending investigation or
investigation threatened that could reasonably be expected to lead to such a
claim.

 

(ee)    No General Solicitation. Neither the Company nor any Person acting on
behalf of the Company has offered or sold any of the Shares by any form of
general solicitation or general advertising (within the meaning of Regulation
D).

 

(ff)     Accredited Investors Only. Upon Closing, and assuming the accuracy of
the Purchasers’ representations and warranties under this Agreement, the Company
has offered and sold the Shares only to “accredited investors” as such term is
defined pursuant to the Securities Act and Rule 501 under Regulation D.

 

 16

 

 

(gg)     Unlawful Payments. None of the Company, any of its Subsidiaries, nor
any directors, executive officers, employees, or, to the knowledge of the
Company, agents or other Persons acting at the direction of or on behalf of the
Company or any of its Subsidiaries, has, in the course of its actions for or on
behalf of the Company: (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to foreign or domestic
political activity; (ii) made any unlawful payments to any foreign or domestic
governmental officials or employees or to any foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended (“FCPA”) or any other
applicable anti-corruption laws; or (iv) made any other unlawful bribe, rebate,
payoff, influence payment, kickback or other material unlawful payment to any
foreign or domestic government official or employee. The Company and the
Subsidiaries have conducted their business in compliance with the FCPA and any
other applicable anti-corruption laws and have instituted and maintained and
will continue to maintain policies and procedures reasonably designed to promote
and achieve compliance with such laws.

 

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

 

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

 

(jj)      Regulation M Compliance. The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Shares, or (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Shares in violation of Regulation M under
the Exchange Act.

 

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

 

(ll)      OFAC. Neither the Company nor any of its Subsidiaries is, and, to the
knowledge of the Company, no director, executive officer, agent, employee,
Affiliate or other Person acting for or on behalf of the Company or any of its
Subsidiaries is, currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”) or
other relevant sanction authority. The Company will not directly or indirectly
use the proceeds from the sale of the Shares, or lend, contribute or otherwise
make available such proceeds to any Person (i) to fund or facilitate any
activities of or business with any person that, at the time of such funding or
facilitation, is the subject of sanctions administered by OFAC or any other
relevant sanctions authority (“Sanctions”), (ii) to fund or facilitate any
activities of or business in any country or territory that is the subject of
Sanctions or (iii) in any other manner that will result in a violation by any
Person (including the Purchasers) of Sanctions.

 

 17

 

 

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

 

(nn)       Accountants. The Company’s accounting firm is set forth in the SEC
Reports. To the knowledge and belief of the Company, such accounting firm is a
registered public accounting firm as required by the Exchange Act.

 

(oo)       Application of Takeover Protections. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not impose any restriction on any Purchaser, or create in any party (including
any current stockholder of the Company) any rights, under any share acquisition,
business combination, poison pill (including any distribution under a rights
agreement), or other similar anti-takeover provisions under the Company’s
charter documents or the laws of its state of incorporation.

 

(pp)       Solvency. Based on the financial condition of the Company as of the
Closing Date, immediately after giving effect to the receipt by the Company of
the proceeds from the sale of the Shares hereunder: (i) the fair saleable value
of the Company’s assets exceeds the amount that will be required to be paid on
or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature; and (ii) the Company’s assets do
not constitute unreasonably small capital to carry on its business as now
conducted and as proposed to be conducted including its capital needs taking
into account the particular capital requirements of the business conducted by
the Company, consolidated and projected capital requirements and capital
availability thereof. The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year
from the Closing Date. The SEC Reports set forth as of the date hereof all
outstanding secured and unsecured Indebtedness of the Company, or for which the
Company has commitments that are required to be disclosed in accordance with
GAAP. The Company is not in default with respect to any Indebtedness.

 

(qq)      FDA. As to each product subject to the jurisdiction of the U.S. Food
and Drug Administration (the “FDA”) under the Federal Food, Drug and Cosmetic
Act, as amended, and the regulations thereunder (the “FDCA”) or other applicable
law, rule or regulation, or other applicable governmental, administrative or
regulatory authority, including those outside the United States, that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company (each such product, a “Product”), such Product is being
manufactured, packaged, labeled, tested, distributed, sold and/or marketed by
the Company in compliance with all applicable requirements under the FDCA and
similar applicable laws, rules and regulations relating to registration,
investigational use, premarket clearance, licensure, or application approval,
good manufacturing practices, good laboratory practices, good clinical
practices, product listing, quotas, labeling, advertising, record keeping and
filing of reports, except where the failure to be in compliance would not have a
Material Adverse Effect. There is no pending, completed or, to the knowledge of
the Company, threatened, Action against the Company, and the Company has not
received any notice, warning letter or other communication from the FDA or any
other applicable governmental, administrative or regulatory authority, including
those outside the United States, which (i) contests the premarket clearance,
licensure, registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Product, (ii) withdraws its approval of, requests the recall,
suspension, or seizure of, or withdraws or orders the withdrawal of advertising
or sales promotional materials relating to, any Product, (iii) imposes a
clinical hold on any clinical investigation by the Company, (iv) enjoins
production at any facility of the Company, (v) enters or proposes to enter into
a consent decree of permanent injunction with the Company, or (vi) otherwise
alleges any violation of any such laws, rules or regulations by the Company, and
which, either individually or in the aggregate, would have a Material Adverse
Effect. The properties, business and operations of the Company have been and are
being conducted in all material respects in accordance with all applicable laws,
rules and regulations of the FDA and any other applicable governmental,
administrative or regulatory authority, including those outside the United
States. The Company has not been informed by the FDA or any other applicable
governmental, administrative or regulatory authority, including those outside
the United States, that it will prohibit the marketing, sale, license or use in
the United States or other applicable jurisdiction of any product proposed to be
developed, produced or marketed by the Company nor has the FDA or any other
applicable governmental, administrative or regulatory authority, including those
outside the United States, expressed any concern as to approving or clearing for
marketing any product being developed or proposed to be developed by the
Company.

 

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(rr)      Stock Option Plan. Each stock option granted by the Company under the
Company’s stock option plan was granted (i) in accordance with the terms of the
Company’s stock option plan and (ii) with an exercise price at least equal to
the fair market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.

 

(ss)     Real Property Holding Corporation. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so
certify upon any Purchaser’s reasonable request.

 

(tt)     Bank Holding Company Act. The Company is not subject to the Bank
Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the
Board of Governors of the Federal Reserve System (the “Federal Reserve”). The
Company does not own or control, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. The Company does
not exercise a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal
Reserve.

 

(uu)     Money Laundering Laws. The operations of the Company and the
Subsidiaries are and have been conducted in compliance in all material respects
with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes of all jurisdictions where the Company and the
Subsidiaries conduct their business, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no Action by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the
Money Laundering Laws is pending, or to the knowledge of the Company,
threatened.

 

(vv)     Data Privacy. In connection with its collection, storage, transfer
(including, without limitation, any transfer across national borders) and/or use
of any personally identifiable information from any individuals, including,
without limitation, any customers, prospective customers, employees and/or other
third parties (collectively “Personal Information”), the Company is and has been
in compliance in all material respects with all applicable laws in all relevant
jurisdictions, the Company’s privacy policies and the requirements of any
contract or codes of conduct to which the Company is a party. The Company has
commercially reasonable physical, technical, organizational and administrative
security measures and policies in place to protect all Personal Information
collected by it or on its behalf from and against unauthorized access, use
and/or disclosure. To the extent the Company maintains or transmits protected
health information, as defined under 45 C.F.R. § 160.103, the Company is in
compliance in all material respects with the applicable requirements of the
Health Insurance Portability and Accountability Act of 1996, as amended by the
Health Information Technology for Economic and Clinical Health Act, including
all rules and regulations promulgated thereunder. The Company is and has been in
compliance in all material respects with all laws relating to data loss, theft
and breach of security notification obligations.

 

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(ww)     Disclosure. The Company has made available to the Purchasers all the
information reasonably available to the Company that the Purchasers have
requested for deciding whether to acquire the Shares. No representation or
warranty of the Company contained in this Agreement, as qualified by the
schedules attached hereto, and no certificate furnished or to be furnished to
the Purchasers at the Closing contains any untrue statement of a material fact
or to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances under which they
were made.

 

(xx)       No Disqualification Events. With respect to the Shares to be offered
and sold hereunder in reliance on Rule 506 under the Securities Act, none of the
Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of twenty percent (20%) or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person” and, together, “Issuer Covered Persons”) is subject to any of
the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under
the Securities Act (a “Disqualification Event”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Company has complied, to the extent applicable, with
its disclosure obligations under Rule 506(e), and has furnished to the
Purchasers a copy of any disclosures provided thereunder.

 

(yy)     Other Covered Persons. The Company is not aware of any Person (other
than any Issuer Covered Person) that has been or will be paid (directly or
indirectly) remuneration for solicitation of purchasers in connection with the
sale of any Shares.

 

(zz)      Notice of Disqualification Events. The Company will notify the
Purchasers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with
the passage of time, become a Disqualification Event relating to any Issuer
Covered Person.

 

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

 

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

 

 20

 

 

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

 

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

 

(d)       Purchaser Status. At the time the Purchaser was offered the Shares, it
was, and at the date hereof it is, an “accredited investor” as defined in Rule
501(a) under the Securities Act. The Investor Questionnaire delivered by the
Purchaser in connection with this Agreement is complete and accurate in all
respects as of the date of this Agreement and the Closing Date; provided, that
the Purchaser shall be entitled to update such information by providing written
notice thereof to the Company.

 

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

 

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

 

 21

 

 

(g)       Access to Information. The Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of this offering and the merits and risks of investing in the Shares, (ii)
access to information about the Company and its Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment, and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of the Purchaser or its representatives shall modify, amend or affect
such Purchaser’s right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company’s representations and warranties contained
in the Transaction Documents. The Purchaser has sought such accounting, legal
and tax advice as it has considered necessary to make an informed decision with
respect to its acquisition of the Shares. The Purchaser has received no
representations or warranties from the Company, its employees, agents or
attorneys in making this investment decision other than as set forth in this
Agreement.

 

(h)       Certain Trading Activities. Other than consummating the transactions
contemplated hereunder, the Purchaser has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in any transactions in the securities of the Company
(including, without limitation, any Short Sales involving the Company’s
securities) since the time that such Purchaser was first contacted by the
Company or any other Person regarding the specific investment contemplated
hereby. Other than to other Persons party to this Agreement and its
representatives, including its legal counsel, such Purchaser has maintained the
confidentiality of all disclosures made to it in connection with this
transaction, including the existence and terms of this transaction.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Shares
covered by this Agreement.

 

(i)       Brokers and Finders. Such Purchaser has not entered into an agreement,
arrangement or understanding that purports to provide any Person with any right,
interest or claim against or upon the Company or any Purchaser for any
commission, fee or other compensation as a result of the consummation of the
transactions contemplated by this Agreement.

 

(j)       Independent Investment Decision. The Purchaser has independently
evaluated the merits of its decision to purchase the Shares pursuant to the
Transaction Documents, and such Purchaser confirms that it has not relied on the
advice of any other Purchaser’s business and/or legal counsel in making such
decision. The Purchaser understands that nothing in this Agreement or any other
materials presented by or on behalf of the Company to the Purchaser in
connection with the purchase of the Shares constitutes legal, tax or investment
advice. The Purchaser has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Shares. The Purchaser agrees that neither such
Purchaser nor the officers, directors or employees of such Purchaser shall be
liable to any other Purchaser for any action heretofore taken or omitted to be
taken by any of them in connection with the purchase of the Shares.

 

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

 

 22

 

 

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

 

(m)       Regulation M. The Purchaser is aware that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of Common Stock and
other activities with respect to the Common Stock by the Purchasers.

 

(n)       Residency. The Purchaser’s offices in which its investment decision
with respect to the Shares was made are located at the address immediately below
such Purchaser’s name on its signature page hereto.

 

Article IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1       Transfer Restrictions.

 

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

 

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

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OR (B) AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED
BY A LEGAL OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY AND ITS
TRANSFER AGENT OR (II) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES.

 

 23

 

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the legended Shares
in connection with applicable securities laws, pursuant to a bona fide margin
agreement in compliance with a bona fide margin loan. Such a pledge would not be
subject to approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but such legal opinion shall be required in connection with a
subsequent transfer or foreclosure following default by such Purchaser
transferee of the pledge. No notice shall be required of such pledge, but such
Purchaser’s transferee shall promptly notify the Company of any such subsequent
transfer or foreclosure. Each Purchaser acknowledges that the Company shall not
be responsible for any pledges relating to, or the grant of any security
interest in, any of the Shares or for any agreement, understanding or
arrangement between any Purchaser and its pledgee or secured party. At the
applicable Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Shares may reasonably
request in connection with a pledge or transfer of the Shares, including the
preparation and filing of any required prospectus supplement under Rule 424(b)
under the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of selling stockholders thereunder. Each Purchaser
acknowledges and agrees that, except as otherwise provided in Section 4.1(c),
any Shares subject to a pledge or security interest as contemplated by this
Section 4.1(b) shall continue to bear the legend set forth in this Section
4.1(b) and be subject to the restrictions on transfer set forth in Section
4.1(a).

 

(c)       Removal of Legends. The legend set forth in Section 4.1(b) above shall
be removed and the Company shall issue or cause to be issued a certificate
without such legend or any other legend to the holder of the applicable Shares
upon which it is stamped, if (i) such Shares are registered for resale under the
Securities Act (provided, that if a Purchaser is selling pursuant to a
registration statement, such Purchaser agrees to only sell such Shares during
such time that such registration statement is effective and not withdrawn or
suspended, and only as permitted by such registration statement), (ii) such
Shares are sold or transferred pursuant to Rule 144, (iii) if such Shares are
eligible to be sold, assigned or transferred under Rule 144 (provided, that a
Purchaser provides the Company with reasonable assurances that such Shares are
eligible for sale, assignment or transfer under Rule 144 which shall not include
an opinion of counsel), (iv) in connection with a sale, assignment or other
transfer (other than under Rule 144), provided, that such Purchaser provides the
Company with an opinion of counsel to such Purchaser, in a form reasonably
acceptable to the Company, to the effect that such sale, assignment or transfer
of the Shares may be made without registration under the applicable requirements
of the Securities Act or (v) if such legend is not required under applicable
requirements of the Securities Act (including, without limitation, controlling
judicial interpretations and pronouncements issued by the Commission). The
Company, at its expense, shall cause Company Counsel to issue any legal opinion
(including, without limitation, the opinion referred to in the Transfer Agent
Instructions) to the Transfer Agent in connection with any sale or transfer
pursuant to Rule 144 in compliance with this Section 4.1(c). Any fees (with
respect to the Transfer Agent, Company Counsel or otherwise) associated with the
removal of such legend shall be borne by the Company. At such time as a legend
is no longer required for certain Shares, the Company will no later than three
Trading Days following the delivery by a Purchaser to the Transfer Agent (with
notice to the Company) of a legended certificate representing Shares (in the
form and accompanied by the documentation necessary to affect the reissuance
and/or transfer) and any other documents required by Section 4.1(a) (the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser either: (A)
provided that the Transfer Agent is participating in The Depository Trust
Company (“DTC”) Fast Automated Securities Transfer Program, credit the aggregate
number of shares of Common Stock to which such Purchaser shall be entitled to
such Purchaser’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system or (B) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver (via reputable overnight courier) to such Purchaser, a certificate
representing such Shares that is free from all restrictive and other legends,
registered in the name of such Purchaser or its designee (the date by which such
credit is so required to be made to the balance account of such Purchaser’s or
such Purchaser’s nominee with DTC or such certificate is required to be
delivered to such Purchaser pursuant to the foregoing is referred to herein as
the “Required Delivery Date”). The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions
on transfer set forth in this Section 4.1. Notwithstanding any of the foregoing
to the contrary, certificates for Shares subject to legend removal hereunder
shall, upon the applicable Purchaser’s request, be transmitted by the Transfer
Agent to such Purchaser by crediting the applicable balance account at the
Depository Trust Company as directed by such Purchaser.

 

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(d)       In addition to the Purchasers’ other available remedies, the Company
shall pay to each Purchaser, in cash, the greater of (i) as partial liquidated
damages and not as a penalty, for each $1,000 of Shares (based on the VWAP of
the Common Stock on the date such Shares are submitted to the Transfer Agent)
delivered for removal of the restrictive legend and subject to Section 4.1(c),
$10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days
after such damages have begun to accrue) for each Trading Day after the Legend
Removal Date until the aggregate number of shares of Common Stock to which such
Purchaser shall be entitled to is credited to such Purchaser’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system or
such certificate is delivered without a legend, as applicable and (ii) if (1)
the Company fails to credit to such Purchaser’s or its designee’s balance
account with DTC through its Deposit/Withdrawal at Custodian system the
aggregate number of shares of Common Stock to which such Purchaser shall be
entitled to by the Required Delivery Date or issue and deliver (or cause to be
delivered) to such Purchaser by the Required Delivery Date a certificate
representing the Shares so delivered to the Company by such Purchaser that is
free from all restrictive and other legends and (2) after the Required Delivery
Date such Purchaser purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of
all or any portion of the number of shares of Common Stock, or a sale of a
number of shares of Common Stock equal to all or any portion of the number of
shares of Common Stock that such Purchaser anticipated receiving from the
Company without any restrictive legend, then, an amount equal to the excess of
such Purchaser’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including brokerage commissions and other out-of-pocket expenses, if any) (the
“Buy-In Price”) over the product of (A) such number of Shares that the Company
was required to deliver to such Purchaser by the Legend Removal Date multiplied
by (B) the lowest closing sale price of the Common Stock on any Trading Day
during the period commencing on the date of the delivery by such Purchaser to
the Company of the applicable Shares and ending on the date of such delivery and
payment under this clause (ii).

 

(e)       Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer the Shares or any interest therein without complying with the
requirements of the Securities Act. Each Purchaser agrees that if it is notified
by the Company in writing at any time that the registration statement
registering the resale of the Shares is not effective or that the prospectus
included in such registration statement no longer complies with the requirements
of Section 10 of the Securities Act, such Purchaser will refrain from selling
such Shares until such time as such Purchaser is notified by the Company that
such registration statement is effective or such prospectus is compliant with
Section 10 of the Securities Act, unless such Purchaser is able to, and does,
sell such Shares pursuant to an available exemption from the registration
requirements of Section 5 of the Securities Act. Both the Company and its
Transfer Agent, and their respective directors, officers, employees and agents,
may rely on this Section 4.1(d).

 

 25

 

 

4.2       Furnishing of Information. At any time during the period commencing
from the six (6) month anniversary of the date hereof and ending at such time
that all of the Shares may be sold without the requirement for the Company to be
in compliance with Rule 144(c)(1) and otherwise without restriction or
limitation pursuant to Rule 144, if the Company (i) shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) or (ii) has
ever been an issuer described in Rule 144(i)(1)(i) or becomes an issuer in the
future, and the Company shall fail to satisfy any condition set forth in Rule
144(i)(2) (a “Public Information Failure”) then, in addition to the Lead
Purchaser’s other available remedies, the Company shall pay to the Lead
Purchaser, in cash, as partial liquidated damages and not as a penalty, by
reason of any such delay in or reduction of its ability to sell the Shares, an
amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount
of the Lead Purchaser’s Shares on the day of a Public Information Failure and on
every thirtieth (30th) day (pro rated for periods totaling less than thirty
days) thereafter until the earlier of (a) the date such Public Information
Failure is cured and (b) such time that such public information is no longer
required for the Lead Purchaser to transfer the Shares pursuant to Rule 144. The
payments to which the Lead Purchaser shall be entitled pursuant to this Section
4.2 are referred to herein as “Public Information Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (i) the last day of
the calendar month during which such Public Information Failure Payments are
incurred and (ii) the third (3rd) Business Day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the event the
Company fails to make Public Information Failure Payments in a timely manner,
such Public Information Failure Payments shall bear interest at the rate of 1.5%
per month (prorated for partial months) until paid in full. Nothing herein shall
limit the Lead Purchaser’s right to pursue actual damages for the Public
Information Failure, and the Lead Purchaser shall have the right to pursue all
remedies available to it at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief.

 

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

 

4.4       Securities Laws Disclosure; Publicity. The Company shall issue a press
release disclosing the material terms of the transactions contemplated hereby
(the “Press Release”) no later than 9:00 A.M., New York City time, on the
Trading Day immediately following the date of this Agreement. In addition, the
Company shall file a Current Report on Form 8-K (the “8-K Filing”) with the
Commission describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K this Agreement) on or before the
fourth Business Day following the date hereof. The Company shall submit drafts
of the Press Release and the 8-K Filing to the Lead Purchaser prior to issuing
or filing, as applicable, allowing a reasonable amount of time for the Lead
Purchaser’s to review and comment on such drafts. From and after the issuance of
the Press Release, no Purchaser shall be in possession of any material,
non-public information received from the Company, any Subsidiary or any of their
respective officers, directors, employees or agents, that is not disclosed in
the Press Release unless a Purchaser shall have executed a written agreement
regarding the confidentiality and use of such information, which written
agreement shall survive the execution of this Agreement and the Closing. The
Company and the Lead Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated hereby, and
neither the Company nor the Purchasers shall issue any such press release nor
otherwise make any such public statement without the prior written consent of
the Company, with respect to any press release of the Purchasers, or without the
prior written consent of the Lead Purchaser, with respect to any press release
of the Company, which consent shall not unreasonably be withheld or delayed,
except if such disclosure is required by law, in which case the disclosing party
shall promptly provide the other party with prior notice of such public
statement or communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Purchasers, or include the name of the
Purchasers in any filing with the Commission or any regulatory agency or Trading
Market, without the prior written consent of such Purchasers, except: (a) as
required by federal securities law in connection with the filing of final
Transaction Documents with the Commission or (b) to the extent such disclosure
is required by law or Trading Market regulations, in which case the Company
shall provide such Purchasers with prior notice of such disclosure permitted
under this clause (b).

 

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4.5       Confidentiality.

 

(a)       Transaction Documents. Each Purchaser, severally and not jointly with
the other Purchasers, covenants that, until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in Section 4.4, (i) such Purchaser shall maintain the confidentiality
of all disclosures made to it in connection with this transaction, including the
existence and terms of this transaction and the information included in the
Transaction Documents, and (ii) neither such Purchaser nor any Person acting on
its behalf or pursuant to any understanding with it shall engage in any purchase
or sale of securities of the Company (including Short Sales). Notwithstanding
the preceding clause (ii), in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth above shall apply
only with respect to the portion of assets managed by the portfolio manager that
has knowledge about the financing transaction contemplated by this Agreement.

 

(b)       Confidential Information. Each Purchaser shall (i) retain all
Confidential Information in strict confidence; (ii) not release or disclose
Confidential Information in any manner to any other person (other than
disclosures to its affiliates or to any of its or their representatives who (A)
have a need to know such information; and (B) are informed of its confidential
nature); and (iii) use the Confidential Information solely in connection with
such Purchaser’s rights hereunder or for purposes of evaluating such Purchaser’s
continued investment in the Company or any ongoing relationship with the Company
and not for any other purpose; provided, however, that the foregoing shall not
apply to the extent such Purchaser, its affiliates, any of its or their
representatives or the Purchaser Director is compelled to disclose Confidential
Information by judicial or administrative process, pursuant to the advice of its
outside counsel, or by requirements of law; provided further that, if legally
permissible, prior written notice of such disclosure shall be given to the
Company so that the Company may take action, at its expense, to prevent such
disclosure and any such disclosure is limited only to that portion of the
Confidential Information which such person is compelled to disclose.

 

Each Purchaser acknowledges that the Confidential Information is proprietary to
the Company and may include trade secrets or other business information the
disclosure of which could harm the Company. None of the Purchasers, any of their
affiliates or their representatives shall, by virtue of the Company’s disclosure
of, or such person’s use of any Confidential Information, acquire any rights
with respect thereto, all of which rights (including intellectual property
rights) shall remain exclusively with the Company.

 

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Each Purchaser agrees that, upon the request of the Company (with respect to the
Lead Purchaser, not earlier than five (5) Business Days following the Board
Rights Termination Date), it will (and will cause its affiliates and its and
their representatives to) promptly (i) return all physical materials containing
or consisting of Confidential Information and all hard copies thereof in their
possession or control; and (ii) destroy all electronically stored Confidential
Information in their possession or control; provided, however, that each of the
Purchasers, their affiliates, and its and their representatives may retain any
electronic or written copies of Confidential Information as may be (A) stored on
its electronic records or storage system resulting from automated back-up
systems; (B) required by law, other regulatory requirements, or internal
document retention policies; or (C) contained in board presentations or minutes
of board meetings of the Lead Purchaser or its affiliates; provided further that
any such retained Confidential Information shall remain subject to this Section
4.5(b). In addition, the Lead Purchaser’s legal counsel may retain one copy of
any Confidential Information for archival purposes only.

 

4.6       Shareholder Rights Plan. No claim shall be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “acquiring person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, in either case solely by virtue of receiving
Shares under the Transaction Documents or under any other written agreement
between the Company and the Purchasers.

 

4.7       Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents,
including this Agreement, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf, will provide any Purchaser or its agents
or counsel with any information regarding the Company that the Company
reasonably believes constitutes material non-public information without the
express written consent of such Purchaser, unless prior thereto such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. To the extent that the Company delivers any material,
non-public information to any Purchaser without the such Purchaser’s consent,
the Company hereby covenants and agrees that such Purchaser shall not have any
duty of confidentiality to Company, any of its Subsidiaries, or any of their
respective officers, directors, agents, employees or Affiliates, or a duty to
the Company, and of its Subsidiaries or any of their respective officers,
directors, agents, employees or Affiliates not to trade on the basis of, such
material, non-public information, provided that the such Purchaser shall remain
subject to applicable law. To the extent that any notice provided pursuant to
any Transaction Document constitutes, or contains, material, non-public
information regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenants in effecting transactions in securities of
the Company.

 

4.8       Use of Proceeds. The Company shall use the net proceeds from the sale
of the Shares hereunder for working capital and general corporate purposes and
shall not use such proceeds for: (a) the redemption of any equity securities of
the Company, or (b) the settlement of any outstanding litigation.

 

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4.9       Indemnification.

 

(a)       Indemnification of Purchasers and Holders. Subject to the provisions
of this Section 4.9, the Company, will notwithstanding any termination of this
Agreement, indemnify and hold harmless each Purchaser, Holder, the officers,
directors, members, shareholders, partners, agents, brokers (including brokers
who offer and sell Registrable Securities as principal as a result of a pledge
or any failure to perform under a margin call of Common Stock), investment
advisors and employees (and any other Persons with a functionally equivalent
role of a Person holding such titles, notwithstanding a lack of such title or
any other title) of each of them, each Person who controls such Purchaser or any
Holder (within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, members, shareholders, partners,
agents, brokers, investment advisors and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles, notwithstanding a
lack of such title or any other title) of each such controlling Person (each, a
“Purchaser Party”), to the fullest extent permitted by applicable law, from and
against any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in
settlements, court costs and reasonable attorneys’ fees and costs of
investigation that any Purchaser Party may suffer or incur as a result of or
relating to (i) any breach of any of the representations, warranties, covenants
or agreements made by the Company in this Agreement or in the other Transaction
Documents, (ii) any Proceeding instituted against such Purchaser or Holder in
any capacity, or any other Purchaser Party, by any stockholder of the Company
who is not an Affiliate of such Purchaser or Holder, with respect to any of the
transactions contemplated by the Transaction Documents (unless such Proceeding
is based upon a breach of such Purchaser’s representations, warranties or
covenants under any of the Transaction Documents or any agreements or
understandings such Purchaser or Holder may have with any such stockholder or
any violations by such Purchaser or Holder of any applicable laws or any conduct
by such Purchaser or Holder which constitutes fraud, gross negligence, willful
misconduct or malfeasance) or (iii) (1) any untrue or alleged untrue statement
of a material fact contained in a Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading or (2) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any state securities law, or any rule or regulation thereunder,
in connection with the performance of its obligations under this Agreement,
except to the extent, but only to the extent, that (x) such untrue statements or
omissions are based solely upon information regarding such Purchaser or Holder
furnished in writing to the Company by such Purchaser or Holder expressly for
use therein, or to the extent that such information relates to such Purchaser or
Holder or such Purchaser’s or Holder’s proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Purchaser or Holder expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto or (y) in the case of an
occurrence of an event of the type specified in Section 6.3(c)(iii)-(vi), the
use by such Purchaser or Holder of an outdated, defective or otherwise
unavailable Prospectus after the Company has notified such Purchaser or Holder
in writing that the Prospectus is outdated, defective or otherwise unavailable
for use by such Purchaser or Holder and prior to the receipt by such Purchaser
or Holder of the Advice contemplated in Section 6.5(b). The Company shall notify
the Purchasers and Holders promptly of the institution, threat or assertion of
any Proceeding arising from or in connection with the transactions contemplated
by this Agreement of which the Company is aware. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
such indemnified person and shall survive the transfer of any Registrable
Securities by any of the Purchasers or Holders.

 

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(b)       Indemnification by Purchasers or Holders. Each Purchaser or Holder
shall, severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all losses, liabilities, obligations, claims, contingencies, damages,
costs and expenses, including all judgments, amounts paid in settlements, court
costs and reasonable attorneys’ fees and costs of investigation to the extent
arising out of or based solely upon: any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, any Prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein (in the case of
any Prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading (i) to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished
in writing by such Purchaser or Holder to the Company expressly for inclusion in
such Registration Statement or such Prospectus or (ii) to the extent, but only
to the extent, that such information relates to such Purchaser’s or Holder’s
information provided in writing by the Purchaser or Holder to the Company in
connection with the preparation of the Registration Statement or Prospectus or
information regarding the proposed method of distribution of Registrable
Securities, in each case that was reviewed and expressly approved in writing by
such Purchaser or Holder expressly for use in a Registration Statement, such
Prospectus or in any amendment or supplement thereto. In no event shall the
liability of a selling Purchaser or Holder be greater in amount than the dollar
amount of the proceeds (net of all expenses paid by such Purchaser or Holder in
connection with any claim relating to this Section 4.9 and the amount of any
damages such Purchaser or Holder has otherwise been required to pay by reason of
such untrue statement or omission) received by such Purchaser or Holder upon the
sale of the Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.

 

(c)       Procedures. Promptly after receipt by the party seeking
indemnification (the “Indemnified Person”) of notice of any demand, claim or
circumstances which would or might give rise to a claim or the commencement of
any Proceeding in respect of which indemnity may be sought pursuant to this
Section 4.9, such Indemnified Person shall promptly notify the Person from whom
indemnity is sought (the “Indemnifying Person”) in writing and the Indemnifying
Person shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Person, and shall assume the payment
of all fees and expenses relating to such Proceeding; provided, however, that
the failure of any Indemnified Person so to notify the Indemnifying Person shall
not relieve the Indemnifying Person of its obligations hereunder except to the
extent that the Indemnifying Person is actually and materially prejudiced by
such failure to notify. In any such Proceeding, any Indemnified Person shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless: (i) the
Indemnifying Person and the Indemnified Person shall have mutually agreed to the
retention of such counsel; (ii) the Indemnifying Person shall have failed
promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Person in such Proceeding; (iii) the
Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those
available to the Indemnifying Person or (iv) in the reasonable judgment of
counsel to such Indemnified Person, representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them, in which case the Indemnifying Person shall be responsible for the
reasonable fees and expenses of no more than one such separate counsel. The
Indemnifying Person shall not be liable for any settlement of any Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. Without the prior written consent of the
Indemnified Person, which consent shall not be unreasonably withheld, delayed or
conditioned, the Indemnifying Person shall not effect any settlement of any
pending or threatened Proceeding in respect of which any Indemnified Person is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability arising out of such
Proceeding. The indemnity and contribution agreements contained in this Section
4.9 are in addition to any liability that the Indemnifying Person may have to
the Indemnified Persons.

 

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(d)       Contribution. If the indemnification under Section 4.9(a) or (b) is
unavailable to an Indemnified Person or insufficient to hold an Indemnified
Person harmless for any losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, then each Indemnifying Person shall contribute to
the amount paid or payable by such Indemnified Person, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Person and
Indemnified Person in connection with the actions, statements or omissions that
resulted in such losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Person and Indemnified
Person shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Person or
Indemnified Person, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any losses,
liabilities, obligations, claims, contingencies, damages, costs or expenses
shall be deemed to include, subject to the limitations set forth in this
Agreement, any reasonable attorneys’ or other fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
this Section 4.9(d) was available to such party in accordance with its terms.
The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 4.9(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. In no event
shall the contribution obligation of a Purchaser or Holder of Registrable
Securities be greater in amount than the dollar amount of the proceeds (net of
all expenses paid by such Purchaser or Holder in connection with any claim
relating to this Section 4.9 and the amount of any damages such Purchaser or
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission) received by it upon the sale
of the Registrable Securities giving rise to such contribution obligation.

 

4.10       Form D; Blue Sky; Required Approvals. The Company agrees to timely
file a Form D with respect to the Shares as required under Regulation D and to
provide a copy thereof to any Purchaser, promptly upon such Purchaser’s written
request. The Company shall take such action as the Company shall reasonably
determine is necessary in order to qualify the Shares for sale at the Closing to
the Purchasers, or to obtain an exemption from such qualification, under
applicable state securities or “blue sky” laws, and the Company shall provide
evidence of such actions promptly upon the written request of any Purchaser. The
Company shall promptly obtain all outstanding Required Approvals.

 

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

 

4.12       Delivery of Shares After Closing. The Company shall deliver, or cause
to be delivered, to each Purchaser the certificates evidencing Shares purchased
by such Purchaser within three Trading Days following the Closing Date.

 

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4.13     Participation in Future Financing.

 

(a)       At any time prior to the later of (i) the date that is the twenty four
(24) month anniversary of the Closing Date and (ii) the date as of which the
Lead Purchaser beneficially owns less than 500,000 shares of Common Stock, upon
any issuance by the Company or any of its Subsidiaries of Common Stock, Common
Stock Equivalents for cash consideration, Indebtedness or a combination of such
instruments (a “Subsequent Financing”), the Lead Purchaser shall have the right
to participate in the Subsequent Financing, on the same terms, conditions and
price provided for in the Subsequent Financing, in an amount of the Subsequent
Financing equal to up to the Participation Maximum. The “Participation Maximum”
shall mean the greater of (x) such portion of the Subsequent Financing that is
equal to the number of shares of Common Stock deemed to be beneficially owned by
the Lead Purchaser immediately prior to the closing of the Subsequent Financing
(based upon documentation or written representation reasonably satisfactory to
the Company), divided by the total number of shares of Common Stock outstanding
(including any shares of Common Stock issuable upon conversion or exercise of
outstanding Common Stock Equivalents deemed to be beneficially owned by the Lead
Purchaser and included in the numerator) immediately prior to the closing of the
Subsequent Financing or (y) 10.5% of the Subsequent Financing. At least five (5)
Trading Days prior to the closing of the Subsequent Financing, the Company shall
deliver to the Lead Purchaser a written notice of its intention to effect a
Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Lead
Purchaser if it wants to review the details of such financing (such additional
notice, a “Subsequent Financing Notice”). Upon the request of the Lead
Purchaser, and only upon a request by the Lead Purchaser, for a Subsequent
Financing Notice, the Company shall promptly, but no later than one (1) Trading
Day after such request, deliver a Subsequent Financing Notice to the Lead
Purchaser. The Subsequent Financing Notice shall describe in reasonable detail
the proposed terms of such Subsequent Financing, the amount of proceeds intended
to be raised thereunder and the Person or Persons through or with whom such
Subsequent Financing is proposed to be effected and shall include a term sheet
or similar document relating thereto as an attachment.

 

(b)       In the event the Lead Purchaser desires to participate in such
Subsequent Financing, the Lead Purchaser must provide written notice to the
Company by not later than 5:30 p.m. (New York City time) on the third (3rd)
Trading Day after the Company has delivered the Pre-Notice that the Lead
Purchaser is willing to participate in the Subsequent Financing, the amount of
the Lead Purchaser’s participation, and representing and warranting that the
Lead Purchaser has such funds ready, willing, and available for investment on
the terms set forth in the Subsequent Financing Notice. If the Company receives
no such notice from the Lead Purchaser as of such third (3rd) Trading Day, the
Lead Purchaser shall be deemed to have notified the Company that it does not
elect to participate.

 

(c)       If by 5:30 p.m. (New York City time) on the third (3rd) Trading Day
after the Company has delivered the Pre-Notice, notifications by the Lead
Purchaser of its willingness to participate in the Subsequent Financing (or to
cause their designees to participate) is, in the aggregate, less than the total
amount of the Subsequent Financing, then the Company may effect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth
in the Subsequent Financing Notice; provided, that for the avoidance of doubt,
the Lead Purchaser shall not be entitled, without the consent of the Company, to
participate in a Subsequent Financing in an amount more than the Participation
Maximum.

 

(d)       The Company must provide the Lead Purchaser with a second Subsequent
Financing Notice, and the Lead Purchaser will again have the right of
participation set forth above in this Section 4.13, if the Subsequent Financing
subject to the initial Subsequent Financing Notice is not consummated for any
reason on the terms set forth in such Subsequent Financing Notice within thirty
(30) Trading Days after the date of the initial Subsequent Financing Notice.

 

(e)       The Company and the Lead Purchaser agree that if the Lead Purchaser
elects to participate in the Subsequent Financing, the transaction documents
related to the Subsequent Financing shall not include any term or provision
whereby the Lead Purchaser shall be required to agree to any restrictions on
trading as to any of the Shares purchased hereunder or be required to consent to
any amendment to or termination of, or grant any waiver, release or the like
under or in connection with, this Agreement, without the prior written consent
of the Lead Purchaser.

 

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(f)       Notwithstanding anything to the contrary in this Section 4.13 and
unless otherwise agreed to by the Lead Purchaser, the Company shall either
confirm in writing to the Lead Purchaser that the transaction with respect to
the Subsequent Financing has been abandoned or shall publicly disclose its
intention to issue the securities in the Subsequent Financing, in either case in
such a manner such that the Lead Purchaser will not be in possession of any
material, non-public information, by the tenth (10th) Business Day following
delivery of the Subsequent Financing Notice. If by such tenth (10th) Business
Day, no public disclosure regarding a transaction with respect to the Subsequent
Financing has been made, and no notice regarding the abandonment of such
transaction has been received by the Lead Purchaser, such transaction shall be
deemed to have been abandoned and the Lead Purchaser shall not be deemed to be
in possession of any material, non-public information with respect to the
Company or any of its Subsidiaries.

 

(g)       Notwithstanding the foregoing, this Section 4.13 shall not apply in
respect of an Exempt Issuance.

 

Article V
Corporate Governance

 

5.1       Board Matters; Director Designation Rights.

 

(a)       Effective as of the Closing Date, the Company will (i) increase the
size of the Board of Directors to seven directors, (ii) fill the vacancy created
by virtue of such increase in the size of the Board of Directors with an
individual (Y) designated by the Lead Purchaser and (Z) reasonably acceptable to
the Board of Directors, and (iii) take any and all actions necessary to include
such individual in the Company’s slate of nominees for the election of directors
at the Company’s 2019 annual stockholders meeting.

 

(b)       From and after the Closing Date and ending on the date that the Lead
Purchaser no longer beneficially owns at least 500,000 shares of Common Stock,
as adjusted for any stock split, stock dividend, combination or other
recapitalization or reclassification effected after the date hereof (the “Board
Rights Termination Date”), the manner of selecting nominees for the Board of
Directors will be as follows: in connection with each meeting of stockholders of
the Company at which directors are to be elected, the Lead Purchaser will have
the right (but not an obligation) to designate for nomination (it being
understood that such nomination will include any nomination of any incumbent
Purchaser Director for reelection to the Board of Directors) by the Corporate
Governance and Nominating Committee of the Board of Directors (the “Corporate
Governance and Nominating Committee”) a Purchaser Director (such designee, an
“Purchaser Nominee”). The Lead Purchaser shall provide written notice to the
Corporate Governance and Nominating Committee of the Purchaser Nominee no later
than the date that is sixty (60) days prior to the anniversary of the date that
the Company’s annual proxy statement for the prior year’s annual meeting was
mailed to stockholders; provided, however, that if the Lead Purchaser fails to
provide such notice in a timely manner, then the Lead Purchaser shall be deemed
to have nominated the incumbent Purchaser Director in a timely manner.

 

(c)       Subject to Section 5.1(d), the Company and the Board of Directors,
including the Corporate Governance and Nominating Committee, shall cause the
Purchaser Nominee designated in accordance with Section 5.1(b) to be included in
the Company’s slate of nominees for such stockholders’ meeting at which
directors are elected, shall take all actions necessary or advisable to
recommend such Person for election to the Board of Directors and to solicit
proxies in favor of the Purchaser Nominee at any such meeting and shall not
submit to the Company’s stockholders a greater number of director nominees for
election at such meeting than positions to be filled by election at such
meeting. In the event that the Purchaser Nominee is not elected at the meeting
of stockholders, the Lead Purchaser will have the right to designate an
alternate Purchaser Director to fill the vacancy on the Board of Directors and
the Company and the Board of Directors, including the Corporate Governance and
Nominating Committee will, subject to Section 5.1(d), within five (5) Business
Days nominate for election or appoint, as applicable, such Person so designated.

 

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(d)       Notwithstanding anything to the contrary in this Agreement, neither
the Corporate Governance and Nominating Committee, the Company nor the Board of
Directors shall be under any obligation to nominate and recommend a Purchaser
Nominee if, as determined in good faith by the other directors of the Board of
Directors based on advice of outside counsel, service by such nominee as a
director would reasonably be expected to violate applicable law, the rules or
regulations of the primary stock exchange or quotation system on which the
Common Stock is listed or quoted, in which case the Lead Purchaser will be
entitled to designate an alternate Purchaser Nominee within ten (10) Business
Days.

 

(e)       Upon the death, resignation, retirement, incapacity, disqualification
or removal from office for any other reason of a Purchaser Director, the Lead
Purchaser will have the right to designate the replacement for the Purchaser
Director and the Company and the Board of Directors, including the Corporate
Governance and Nominating Committee, will, subject to Section 5.1(d), within
five (5) Business Days nominate for election or appoint, as applicable, such
Person so designated in accordance with this Section 5.1(e).

 

(f)       The Purchaser Director and Lead Purchaser acknowledge and agree that
the Purchaser Director will not be entitled to any compensation, cash or
otherwise, from the Company in connection with the Purchaser Director’s service
on the Board of Directors; provided that the Purchaser Director shall be
entitled to the benefits of the same insurance, indemnification, reimbursement
and other policies generally applicable to non-employee directors of the Board
of Directors.

 

(g)       At any time there is not a Purchaser Director serving on the Board of
Directors, the Company shall provide to the Lead Purchaser copies of all
notices, minutes, consents and other materials that it provides to the Board of
Directors (collectively, “Board Materials”), including any draft versions,
proposed written consents, and exhibits and annexes to any such materials, at
the same time and in the same manner as such information is delivered to the
Board of Directors. The Lead Purchaser may examine the books and records of the
Company and inspect its facilities and may request information at reasonable
times and intervals concerning the general status of the Company’s financial
condition and operations, provided that access to highly confidential
proprietary information and facilities need not be provided. Notwithstanding
anything herein to the contrary, the Company may exclude the Lead Purchaser from
access to any Board Materials if the Board of Directors concludes, acting in
good faith, that (i) such exclusion is reasonably necessary to preserve the
attorney-client or work product privilege between the Company or its affiliates
and its counsel (provided, however, that any such exclusion shall only apply to
such portion of such material which would be required to preserve such
privilege); (ii) such Board Materials relate to the Company’s or its affiliates’
relationship, contractual or otherwise, with the Lead Purchaser or its
affiliates or any actual or potential transactions between or involving the
Company or its affiliates and the Lead Purchaser or its affiliates; or (iii)
such exclusion is necessary to avoid a conflict of interest or disclosure that
is restricted by any agreement to which the Company or any of its affiliates is
a party or otherwise bound. To the extent that any information obtained by the
Lead Purchaser from the Company (or any director, officer, employee or agent
thereof) is Confidential Information, the Lead Purchaser shall treat any such
Confidential Information as confidential in accordance with the terms and
conditions set out in Section 4.5.

 

(h)       At any time there is not a Purchaser Director serving on the Board of
Directors, the Lead Purchaser shall be entitled to consult with and advise
management of the Company on significant business issues, including management’s
proposed annual operating plans, and management will meet with the Lead
Purchaser regularly during each year at the Company’s facilities at mutually
agreeable times for such consultation and advice and to review progress in
achieving said plans. In addition, at any time there is not a Purchaser Director
serving on the Board of Directors, upon reasonable notice and at a scheduled
meeting of the Board of Directors or such other time, if any, as the Board of
Directors may determine in its sole discretion, the Lead Purchaser may address
the Board of Directors with respect to the Lead Purchaser’s concerns regarding
significant business issues facing the Company.

 

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(i)       Notwithstanding anything in this Agreement to the contrary, the
Purchaser Director may share with, and otherwise make available to, the Lead
Purchaser any information and materials it receives, in its capacity as a
Purchaser Director, from or on behalf of the Company and its Subsidiaries,
provided, that any such information and materials shared shall be subject to
Section 4.5.

 

Article VI
REGISTRATION RIGHTS

 

6.1       Demand Registration Statement.

 

(a)       If, at any time after the earlier of (A) the date that is the twenty
four (24) month anniversary of the Closing Date and (B) the Board Rights
Termination Date, there is not an effective Registration Statement covering the
resale of all of the Registrable Securities, the Lead Purchaser may provide a
notice (the “Demand Notice”) to the Company requesting that the Company file a
Registration Statement with respect to all or a portion of its Registrable
Securities as specified in such notice (a “Demand Registration Statement”). The
Company shall use its best efforts to expeditiously effect the registration of
all Registrable Securities for an offering to be made on a delayed or continuous
basis pursuant to Rule 415 as requested by the Lead Purchaser by the Filing
Date. The Registration Statement shall be on Form S-3 (except if the Company is
not then eligible to register for resale the Registrable Securities on Form S-3,
in which case such registration shall be, at the election of the Lead Purchaser,
on Form S-1 or another appropriate form for such purpose) and shall contain a
plan of distribution description and selling stockholder information description
as mutually agreed by the Company and the Lead Purchaser; provided, however,
that no Holder shall be required to be named as an “underwriter” without such
Holder’s express prior written consent. If the Company is a “well known seasoned
issuer” (as defined in Rule 405) as of the date the Registration Statement is
filed with the Commission, such Registration Statement shall be an “automatic
shelf registration statement” (as defined under Rule 405 under the Securities
Act). Subject to the terms of this Agreement, the Company shall use its best
efforts to cause a Registration Statement filed under this Agreement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event no later than the applicable Effectiveness
Date, and shall use its best efforts to keep such Registration Statement
continuously effective under the Securities Act until the date that all
Registrable Securities covered by such Registration Statement (i) have been
sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or
manner-of-sale restrictions pursuant to Rule 144 and without the requirement for
the Company to be in compliance with the current public information requirement
under Rule 144, as determined by the counsel to the Company pursuant to a
written opinion letter to such effect, addressed and acceptable to the Transfer
Agent and the affected Holders (the “Effectiveness Period”). The Company shall
request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time
on a Trading Day. The Company shall notify the Holders via facsimile or by
e-mail of the effectiveness of a Demand Registration Statement by 9:00 a.m.
Eastern Time on the Trading Day immediately following the effective date of such
Demand Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on
the Trading Day after the effective date of such Registration Statement, file a
final Prospectus with the Commission as required by Rule 424. Failure to so
notify the Holders within one (1) Trading Day of such notification of
effectiveness or failure to file a final Prospectus as foresaid shall be deemed
an Event under Section 6.1(h). The Lead Purchaser shall be entitled to an
unlimited number of Demand Registration Statements until such time as the Lead
Purchaser beneficially owns less than a Registrable Amount.

 

(b)       Notwithstanding the registration obligations set forth in Section
6.1(a), if the staff of the Commission informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single registration
statement, the Company shall promptly inform each of the Holders thereof and use
its commercially reasonable efforts to file amendments to the Registration
Statement as required by the staff of the Commission, covering the maximum
number of Registrable Securities permitted to be registered by the Commission,
on Form S-3 or such other form available to register for resale the Registrable
Securities as a secondary offering, subject to the provisions of Section 6.2;
provided, however, that prior to filing such amendment, the Company shall use
diligent efforts to advocate with the staff of the Commission for the
registration of all of the Registrable Securities in accordance with SEC
Guidance, including without limitation, Compliance and Disclosure Interpretation
612.09.

 

 35

 

 

(c)       The Company shall not include in any Demand Registration Statement any
securities which are not Registrable Securities without the prior written
consent of the Lead Purchaser.

 

(d)       Notwithstanding any other provision of this Agreement and subject to
the payment of liquidated damages pursuant to Section 6.1(h), if the staff of
the Commission or any SEC Guidance sets forth a limitation on the number of
Registrable Securities permitted to be registered on a particular Registration
Statement as a secondary offering (and notwithstanding that the Company used
diligent efforts to advocate with the staff of the Commission for the
registration of all or a greater portion of Registrable Securities), unless
otherwise directed in writing by a Holder as to its Registrable Securities, the
number of Registrable Securities to be registered on such Registration Statement
will be reduced as follows: (i) first, the Company shall reduce or eliminate any
securities to be included other than Registrable Securities; and (ii) second,
the Company shall reduce the Registrable Securities by removing such portion of
the Registrable Securities and/or agreeing to such restrictions and limitations
on the registration and resale of the Registrable Securities, in each case as
the Commission may require to assure the Company’s compliance with the
requirements of Rule 415.

 

In the event of a cutback hereunder, the Company shall give the applicable
Holders at least five (5) Trading Days prior written notice along with the
calculations as to such Holders’ allotment. In the event the Company amends the
Registration Statement in accordance with the foregoing, the Company will use
its best efforts to file with the Commission, as promptly as allowed by the
staff of the Commission or SEC Guidance provided to the Company or to
registrants of securities in general, one or more registration statements on
Form S-3 or such other form available to register for resale those Registrable
Securities that were not registered for resale on the Registration Statement, as
amended.

 

(e)       The Company may not cause any other registration of securities for
sale for its own account (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 promulgated by the
Commission pursuant to the Securities Act is applicable) to become effective
within one hundred twenty (120) days following the effective date of any
Registration Statement required pursuant to this Section 6.1.

 

(f)       If Form S-3 is not available for the registration of the resale of
Registrable Securities hereunder, the Company shall (i) register the resale of
the Registrable Securities on another appropriate form and (ii) undertake to
register the Registrable Securities on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a Registration
Statement on Form S-3 covering the Registrable Securities has been declared
effective by the Commission.

 

(g)       Notwithstanding anything to the contrary contained herein, in no event
shall the Company be permitted to name any Holder or an Affiliate of any Holder
as any “underwriter” without the prior written consent of such Holder.

 

 36

 

 

(h)       If: (i) a Registration Statement subject to Section 6.1(a) is not
filed on or prior to the applicable Filing Date (if the Company files the
Registration Statement without affording the Holders the opportunity to review
and comment on the same as required by Section 6.3(a) herein, the Company shall
be deemed to have not satisfied this clause (i)), or (ii) the Company fails to
file with the Commission a request for acceleration of a Registration Statement
in accordance with Rule 461 promulgated by the Commission pursuant to the
Securities Act, within five (5) Trading Days of the date that the Company is
notified (orally or in writing, whichever is earlier) by the Commission that
such Registration Statement will not be “reviewed” or will not be subject to
further review, or (iii) prior to the effective date of a Registration
Statement, the Company fails to file a pre-effective amendment and otherwise
respond in writing to comments made by the Commission in respect of such
Registration Statement within ten (10) calendar days after the receipt of
comments by or notice from the Commission that such amendment is required in
order for such Registration Statement to be declared effective, or (iv) a
Registration Statement registering for resale all of the Registrable Securities
is not declared effective by the Commission by the Effectiveness Date of the
Registration Statement, or (v) after the effective date of a Registration
Statement, such Registration Statement ceases for any reason to remain
continuously effective as to all Registrable Securities included in such
Registration Statement, or the Holders are otherwise not permitted to utilize
the Prospectus therein to resell such Registrable Securities, for more than ten
(10) consecutive calendar days or more than an aggregate of fifteen (15)
calendar days (which need not be consecutive calendar days) during any 12-month
period (any such failure or breach being referred to as an “Event”, and for
purposes of clauses (i) and (iv), the date on which such Event occurs, and for
purpose of clause (ii) the date on which such five (5) Trading Day period is
exceeded, and for purpose of clause (iii) the date which such ten (10) calendar
day period is exceeded, and for purpose of clause (v) the date on which such ten
(10) or fifteen (15) calendar day period, as applicable, is exceeded being
referred to as “Event Date”), then, in addition to any other rights the Lead
Purchaser may have hereunder or under applicable law, on each such Event Date
and on each monthly anniversary of each such Event Date (if the applicable Event
shall not have been cured by such date) until the applicable Event is cured, the
Company shall pay to the Lead Purchaser an amount in cash, as partial liquidated
damages and not as a penalty, equal to the product of two percent (2.0%)
multiplied by the aggregate Subscription Amount paid by the Lead Purchaser
pursuant to this Agreement. If the Company fails to pay any partial liquidated
damages pursuant to this Section 6.1(h) in full within seven days after the date
payable, the Company will pay interest thereon at a rate of eighteen percent
(18%) per year (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Lead Purchaser, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro rata basis for any portion of a month prior to the
cure of an Event. Notwithstanding anything to the contrary contained herein, any
partial liquidated damages under this Section 6.1(h) shall cease to accrue on
the six month anniversary or such later date as of which all Registrable
Securities may be transferred without volume or manner-of-sale restrictions
pursuant to Rule 144 and without the requirement for the Company to be in
compliance with the current public information requirement under Rule 144, and
provided, further, that partial liquidated damages under this Section 6.1(h)
shall only be calculated based on the amount of Registrable Securities not
otherwise included in an effective Registration Statement as of any applicable
Event Date and any applicable monthly anniversary thereafter. The Company hereby
acknowledges and agrees that the provisions of the immediately preceding
sentence shall not limit any liquidated damages provisions contained elsewhere
in this Agreement or in any other Transaction Document.

 

 37

 

 

6.2       Piggy-Back Registrations. If, at any time there is not an effective
Registration Statement covering all of the Registrable Securities and the
Company determines to prepare and file with the Commission a registration
statement relating to the sale of securities of the Company or proposes or is
required to effect an underwritten offering of equity securities, in each case
for its own account or the account of others, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with the Company’s stock option or other employee benefit plans, then
the Company shall deliver to each Holder a written notice of such determination
and, if within fifteen (15) days after the date of the delivery of such notice,
any such Holder shall so request in writing, the Company shall include in such
registration statement or in such offering, as the case may be, all or any part
of such Registrable Securities such Holder requests to be registered or included
in such offering; provided, however, that the Company shall not be required to
register or include in such offering any Registrable Securities pursuant to this
Section 6.2 that are the subject of a then effective Registration Statement that
is available for resales or other dispositions by such Holder.

 

6.3       Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

 

(a)       Not less than five (5) Trading Days prior to the filing of each
Registration Statement and not less than one (1) Trading Day prior to the filing
of any related Prospectus or any amendment or supplement thereto (except for
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K and any similar or successor reports), the Company shall (i) furnish
to each Holder copies of all such documents proposed to be filed, which
documents (other than those incorporated or deemed to be incorporated by
reference) will be subject to the review of such Holders, and (ii) cause its
officers and directors, counsel and independent registered public accountants to
respond to such inquiries as shall be necessary, in the reasonable opinion of
respective counsel to each Holder, to conduct a reasonable investigation within
the meaning of the Securities Act. The Company shall not file a Registration
Statement or any such Prospectus or any amendments or supplements thereto to
which any Holder shall reasonably object in good faith, provided that, the
Company is notified of such objection in writing no later than five (5) Trading
Days after the Holders have been so furnished copies of a Registration Statement
or one (1) Trading Day after the Holders have been so furnished copies of any
related Prospectus or amendments or supplements thereto (except for Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K and any similar or successor reports). Each Holder agrees to furnish to the
Company a completed questionnaire in a form mutually agreed by the Company and
the Holder on a date that is not less than two (2) Trading Days prior to the
Filing Date or by the end of the fourth (4th) Trading Day following the date on
which such Holder receives draft materials in accordance with this Section
6.3(a).

 

(b)       (i) Prepare and file with the Commission such amendments, including
post-effective amendments, to a Registration Statement and the Prospectus used
in connection therewith as may be necessary to keep a Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period and prepare and file with the Commission such additional
Registration Statements in order to register for resale under the Securities Act
all of the Registrable Securities, (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement (subject to the
terms of this Agreement), and, as so supplemented or amended, to be filed
pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any
comments received from the staff of the Commission with respect to a
Registration Statement or any amendment thereto and provide as promptly as
reasonably possible to the Holders true and complete copies of all
correspondence from and to the staff of the Commission relating to a
Registration Statement (provided that, the Company shall excise any information
contained therein which would constitute material non-public information
regarding the Company or any of its Subsidiaries), and (iv) comply in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act with respect to the disposition of all Registrable Securities
covered by a Registration Statement during the applicable period in accordance
(subject to the terms of this Agreement) with the intended methods of
disposition by the Holders thereof set forth in such Registration Statement as
so amended or in such Prospectus as so supplemented.

 

 38

 

 

(c)       Notify the Holders of Registrable Securities to be sold (which notice
shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an
instruction to suspend the use of the Prospectus until the requisite changes
have been made) as promptly as reasonably possible (and, in the case of (i)(A)
below, not less than one (1) Trading Day prior to such filing) and (if requested
by any such Person) confirm such notice in writing no later than one (1) Trading
Day following the day (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment to a Registration Statement is proposed to be filed,
(B) when the Commission notifies the Company whether there will be a “review” of
such Registration Statement and whenever the Commission comments in writing on
such Registration Statement, and (C) with respect to a Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information, (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of a Registration Statement covering any or all of the Registrable
Securities or the initiation of any Proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
Proceeding for such purpose, (v) of the occurrence of any event or passage of
time that makes the financial statements included in a Registration Statement
ineligible for inclusion therein or any statement made in a Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to a Registration Statement, Prospectus or other
documents so that, in the case of a Registration Statement or the Prospectus, as
the case may be, it will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (vi) of the occurrence or existence of any pending
corporate development with respect to the Company that the Company believes may
be material and that, in the determination of the Company, makes it not in the
best interest of the Company to allow continued availability of a Registration
Statement or Prospectus, provided, however, in no event shall any such notice
contain any information which would constitute material, non-public information
regarding the Company or any of its Subsidiaries.

 

(d)       Use its best efforts to avoid the issuance of, or, if issued, obtain
the withdrawal of (i) any order stopping or suspending the effectiveness of a
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.

 

(e)       Furnish to each Holder, without charge, at least one conformed copy of
each such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system (or successor thereto) need not be furnished in physical
form.

 

(f)       Furnish to the selling Holders such number of copies of a prospectus,
including a preliminary prospectus, as required by the Securities Act, and such
other documents as the Holders may reasonably request in order to facilitate
their disposition of their Registrable Securities.

 

(g)       Subject to the terms of this Agreement, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto,
except after the giving of any notice pursuant to Section 6.3(c).

 

 39

 

 

(h)       Prior to any resale of Registrable Securities by a Holder, use its
commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the registration or qualification) of such Registrable Securities
for the resale by the Holder under the securities or “blue sky” laws of such
jurisdictions within the United States as any Holder reasonably requests in
writing, to keep each registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and to do any and all other acts or
things reasonably necessary to enable the disposition in such jurisdictions of
the Registrable Securities covered by each Registration Statement; provided,
that, the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.

 

(i)       In connection with a Demand Registration Statement, enter into
customary agreements and use commercially reasonable efforts to take such other
actions as are reasonably requested by the Lead Purchaser in order to expedite
or facilitate the disposition of such Registrable Securities in such Demand
Registration Statement, including preparing for and participating in a road show
and all such other customary selling efforts as the underwriters, if any,
reasonably request in order to expedite or facilitate such disposition.

 

(j)       In connection with a Demand Registration Statement, (i) make available
for inspection by the Holders’ representatives, any underwriter participating in
any disposition of such Registrable Securities, and any attorney for the Holders
or such underwriter and any accountant or other agent retained by the Holders or
such underwriter, all financial and other records, pertinent corporate documents
and properties of the Company and its Subsidiaries as will be reasonably
necessary to enable them to conduct customary due diligence with respect to the
Company and its Subsidiaries and the related Registration Statement and
prospectus, and cause the representatives of the Company and its Subsidiaries to
be made available to the Holders and their representatives for such diligence
and supply all information reasonably requested by them; provided, however, that
(x) records and information obtained hereunder will be used by such Person only
to conduct such due diligence and (y) records or information that the Company
determines, in good faith, to be confidential will not be disclosed by such
Person unless (A) the disclosure of such records or information is necessary to
avoid or correct a material misstatement or omission in a Registration Statement
or related Prospectus, (B) the release of such records or information is ordered
pursuant to a subpoena or other order from a court or governmental authority of
competent jurisdiction or (C) necessary for defense in a legal action and (ii)
as soon as practicable shall amend or supplement the Registration Statement and
the related Prospectus as necessary and provide the Holders’ representatives and
its counsel with the opportunity to participate in the preparation of such
Registration Statement and the related Prospectus.

 

(k)       RESERVED.

 

(l)       In connection with a Demand Registration Statement, use its
commercially reasonable efforts to obtain and deliver to any underwriter and the
Holders a comfort letter from the independent registered public accounting firm
for the Company (and additional comfort letters from the independent registered
public accounting firm for any company acquired by the Company whose financial
statements are included or incorporated by reference in the Registration
Statement) in customary form and covering such matters as are customarily
covered by comfort letters or as such underwriter and the Lead Purchaser may
reasonably request, including (x) that the financial statements included or
incorporated by reference in the Registration Statement or the prospectus, or
any amendment or supplement thereof, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (y) as to
certain other financial information for the period ending no more than five (5)
Business Days prior to the date of such letter.

 

 40

 

 

(m)       In connection with a Demand Registration Statement, use its
commercially reasonable efforts to obtain and deliver to any underwriter and the
Lead Purchaser a 10b-5 statement and legal opinion from the Company’s counsel in
customary form and covering such matters as are customarily covered by 10b-5
statements and legal opinions as such underwriter and the Holders may reasonably
request.

 

(n)       In connection with a Demand Registration Statement, enter into a
written agreement with any underwriter selected by the Holders in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such underwriter and companies of the Company’s size and
investment stature and, to the extent practicable, on terms consistent with
underwriting agreements entered into by the Company (it being understood that,
unless required otherwise by the Securities Act or any other law, the Company
will not require any Holder to make any representation, warranty or agreement in
such agreement other than with respect to such Holder, the ownership of such
Holder’s securities being registered and such Holder’s intended method of
disposition).

 

(o)       If requested by a Holder, cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration Statement,
which certificates shall be free, to the extent permitted by this Agreement, of
all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Holder may request.

 

(p)       Upon the occurrence of any event contemplated by Section 6.3(c), as
promptly as reasonably possible under the circumstances taking into account the
Company’s good faith assessment of any adverse consequences to the Company and
its stockholders of the premature disclosure of such event, prepare a supplement
or amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or deemed
to be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with clauses
(iii) through (vi) of Section 6.3(c) above to suspend the use of any Prospectus
until the requisite changes to such Prospectus have been made, then the Holders
shall suspend use of such Prospectus. The Company will use its best efforts to
ensure that the use of the Prospectus may be resumed as promptly as is
practicable. The Company shall be entitled to exercise its right under this
Section 6.3(n) to suspend the availability of a Registration Statement and
Prospectus, subject to the payment of partial liquidated damages otherwise
required pursuant to Section 6.1(h), for a period not to exceed sixty (60)
calendar days (which need not be consecutive days) in any 12-month period.

 

(q)       Otherwise use commercially reasonable efforts to comply with all
applicable rules and regulations of the Commission under the Securities Act and
the Exchange Act, including, without limitation, Rule 172, file any final
Prospectus, including any supplement or amendment thereof, with the Commission
pursuant to Rule 424, promptly inform the Holders in writing if, at any time
during the Effectiveness Period, the Company does not satisfy the conditions
specified in Rule 172 and, as a result thereof, the Holders are required to
deliver a Prospectus in connection with any disposition of Registrable
Securities and take such other actions as may be reasonably necessary to
facilitate the registration of the Registrable Securities hereunder.

 

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(r)       Use its commercially reasonable efforts to cause all such Registrable
Securities covered by a Registration Statement to be listed on a national
securities exchange or trading system and each securities exchange and trading
system (if any) on which similar securities issued by the Company are then
listed.

 

(s)       Provide a transfer agent and registrar for all Registrable Securities
registered pursuant to this Agreement and provide a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.

 

(t)       The Company may require each selling Holder to furnish to the Company
a certified statement as to the number of shares of Common Stock beneficially
owned by such Holder and, if required by the Commission, the natural persons
thereof that have voting and dispositive control over the shares. During any
periods that the Company is unable to meet its obligations hereunder with
respect to the registration of the Registrable Securities solely because any
Holder fails to furnish such information within three (3) Trading Days of the
Company’s request, any liquidated damages that are accruing at such time as to
such Holder only shall be tolled and any Event that may otherwise occur solely
because of such delay shall be suspended as to such Holder only, until such
information is delivered to the Company.

 

6.4       Registration Expenses. All fees and expenses incident to the
performance of or compliance with, this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company’s counsel and
independent registered public accountants) (A) with respect to filings made with
the Commission, (B) with respect to filings required to be made with any Trading
Market on which the Common Stock is then listed for trading, and (C) in
compliance with applicable state securities or “blue sky” laws reasonably agreed
to by the Company in writing (including, without limitation, fees and
disbursements of counsel for the Company in connection with “blue sky”
qualifications or exemptions of the Registrable Securities), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and expenses
of all other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement. In addition, the Company
shall be responsible for all of its internal expenses incurred in connection
with the consummation of the transactions contemplated by this Agreement
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit and the fees and expenses incurred in connection with the listing of the
Registrable Securities on any securities exchange as required hereunder. In no
event shall the Company be responsible for any broker or similar commissions of
any Holder (including any underwriting discounts or commissions and fees of
underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities) or, except to the
extent provided for in the Transaction Documents, any legal fees or other costs
of the Holders.

 

6.5       Miscellaneous.

 

(a)       No Piggy-back by other Persons. Neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in any Registration Statements.

 

(b)      Discontinued Disposition. By its acquisition of Registrable Securities,
each Holder agrees that, upon receipt of a notice from the Company of the
occurrence of any event of the kind described in Section 6.3(c)(iii) through
(vi), such Holder will forthwith discontinue disposition of such Registrable
Securities under a Registration Statement until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus (as it may
have been supplemented or amended) may be resumed. The Company will use its best
efforts to ensure that the use of the Prospectus may be resumed as promptly as
is practicable. The Company agrees and acknowledges that any periods during
which the Holder is required to discontinue the disposition of the Registrable
Securities hereunder shall be subject to the provisions of Section 6.1(h).

 

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Article VII
CONDITIONS PRECEDENT TO CLOSING

 

7.1       Conditions Precedent to the Obligations of the Purchasers to Purchase
Shares. The obligation of each Purchaser to acquire Shares at the Closing is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by such Purchaser:

 

(a)       Representations and Warranties. The representations and warranties of
the Company contained in clauses (a) through (k) of Section 3.1 or that are
qualified as to materiality shall be true and correct in all respects on the
date hereof and as of the Closing Date, as though made on and as of such date,
except for such representations and warranties that speak as of a specific date.
All other representations and warranties of the Company contained herein shall
be true and correct in all material respects on the date hereof and as of the
Closing Date, as though made on and as of such date, except for such
representations and warranties that speak as of a specific date.

 

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

 

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

 

(d)       No Material Adverse Change. Since the date hereof, no event or series
of events shall have occurred that has had a Material Adverse Effect.

 

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

 

(f)       Principal Trading Market Listing. The Company shall have filed with
the Principal Trading Market, in the time and manner required by such Principal
Trading Market, any additional shares listing application covering all of the
Shares and the Shares shall be listed on and/or quoted for trading on the
Principal Trading Market.

 

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

 

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

 

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

 

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

 

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

 

(d)       Purchaser Deliverables. The Purchaser shall have delivered its
Purchaser Deliverables in accordance with Section 2.2(b).

 

Article VIII
MISCELLANEOUS

 

8.1       Fees and Expenses. Except as otherwise provided for in Section 6.4,
the Company and each Purchaser shall each pay the fees and expenses of their
respective advisers, counsel, accountants and other experts, if any, and all
other expenses incurred by such party in connection with the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied
in connection with the sale and issuance of the Shares to the Purchasers.

 

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

 

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8.3       Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section 8.3 prior to 5:00 P.M., New York City
time, on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section 8.3 on a day that is not a Trading Day or later
than 5:00 P.M., New York City time, on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service with next day delivery specified, or (d) upon actual receipt by
the party to whom such notice is required to be given, if such notice or
communication is delivered via electronic mail or any other method not
identified in the preceding clauses (a) – (c). The address for such notices and
communications shall be as follows:

 

  If to the Company:

MRI Interventions, Inc. 

    5 Musick     Irvine, CA 92618     Telephone No.: (949) 900-6833    
Facsimile No.: (949) 900-6834     Attention: Harold A. Hurwitz, Chief Financial
Officer         With a copy to: Bass, Berry & Sims PLC     100 Peabody Place,
Suite 1300     Memphis, TN 38103     Telephone No.: (901) 543-5933     Facsimile
No.: (901) 543-5999     Attention: Richard F. Mattern, Esq.         If to a
Purchaser: To the address set forth under such Purchaser’s name on the signature
page hereof;

 

or such other address as may be designated in writing hereafter, in the same
manner, by such Person. Any notice or other communication or delivery provided
on behalf of the Lead Purchaser shall be effective only to the extent that such
notice or other communication or delivery was provided by or delivered to the
Lead Purchaser Representative.

 

8.4       Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the Lead
Purchaser at the time of the amendment (which amendment shall be binding on all
Purchasers) or, in the case of a waiver, by the party against whom enforcement
of any such waiver provision is sought. No waiver of any default with respect to
any provision, condition or requirement of this Agreement shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

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

 

8.6       Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of each
Purchaser at that time, except in the event of a merger or in connection with
another entity acquiring all or substantially all of the Company’s assets. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers any Shares in compliance with the
Transaction Documents and applicable law, provided such transferee shall agree
in writing to be bound, with respect to the transferred Shares, by the terms and
conditions of this Agreement that apply to the “Purchasers.”

 

 45

 

 

8.7       No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except each Purchaser Party is an intended third party
beneficiary of Section 4.10.

 

8.8       Governing Law. This Agreement and the agreements, instruments, and
documents contemplated hereby, shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without regard to any applicable
principles of conflicts of law that might require the application of the laws of
any other jurisdiction. In any Action or Proceeding between any of the parties
arising out of or relating to this Agreement or any of the actions contemplated
hereby, each party: (a) irrevocably and unconditionally consents and submits to
the exclusive jurisdiction and venue of the Court of Chancery of the State of
Delaware or to the extent such court does not have subject matter jurisdiction,
the Superior Court of the State of Delaware or the United States District Court
for the District of Delaware, (b) agrees that all claims in respect of such
Action or Proceeding shall be heard and determined exclusively in accordance
with the preceding clause (b), (c) waives any objection to laying venue in any
such Action or Proceeding in such courts, (d) waives any objection that such
courts are an inconvenient forum or do not have jurisdiction over any party, and
(e) agrees that service of process upon such party in any such action or
proceeding shall be effective if such process is given as a notice in accordance
with Section 8.3 of this Agreement. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

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

 

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

 

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

 

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

 

 46

 

 

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

 

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

 

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

 

8.16       Liquidated Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

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

 

MRI Interventions, Inc.      By:   Name:   Title: 

  

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

 

 

 

 

 

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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the Execution Date.

 

Subscription Amount: $_____________________________________________________

 

Name of Purchaser: ________________________________________________________

 

Signature of Authorized Signatory of Purchaser:
_________________________________

 

Name of Authorized Signatory: _______________________________________________

 

Title of Authorized Signatory: ________________________________________________

 

Email Address of Authorized Signatory: _________________________________________

 

Facsimile Number of Authorized Signatory: ______________________________________

 

EIN of Purchaser:___________________________________________________________

 

Address for Notice to Purchaser: 

_______________________
_______________________
_______________________

 

With a copy to:  

_______________________
_______________________
_______________________  

 

Address for Delivery of Securities to Purchaser (if not same as address for
notice): 

_______________________
_______________________
_______________________

 

 

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