Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of March 23,
2009, between Pharmathene, 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”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”), the Company desires to issue and sell
to each Purchaser, and each Purchaser, severally and not jointly, desires to
purchase from the Company, securities of the Company 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 each Purchaser 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 have the
meanings set forth in this Section 1.1:

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

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

 

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

 

“Business Day” means any day except any Saturday, any 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.

 

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

 

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the  Shares and Warrants,
in each case, have been satisfied or waived.

 

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

 

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“Common Stock” means the common stock of the Company, no par value 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, rights,
options, warrants 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 Counsel” means Sonnenschein Nath & Rosenthal, LLP.

 

“Evaluation Date” shall have the meaning ascribed to such term in
Section 3.1(r).

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, officers or directors of (or, commencing 45 days after the Closing
Date, consultants to) 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, including, but not limited to, the
Company’s 2007 Long-Term Incentive Compensation Plan (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities issued and outstanding on the date of this Agreement that are
exercisable or exchangeable for or convertible into shares of Common Stock,
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, 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 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.

 

 “FWS” means Feldman Weinstein & Smith LLP with offices located at 420 Lexington
Avenue, Suite 2620, New York, New York 10170-0002.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(z).

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

 

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“Liens” means a lien, charge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in
Section 3.1(m).

 

“Per Share Purchase Price” equals $2.60, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind, including without limitation, any Trading Market.

 

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

 

“Prospectus” means the prospectus filed with the Registration Statement.

 

“Prospectus Supplement” means any preliminary prospectus supplement relating to
the offer and sale of the  Shares, Warrants (and upon exercise of any Warrant,
the Warrant Shares), any free writing prospectus complying with Rule 433 under
the Securities Act that is filed with the Commission and the final supplement to
the Prospectus complying with Rule 424(b) of the Securities Act that is filed
with the Commission and delivered by the Company to each Purchaser at the
Closing.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

 

“Registration Statement” means the effective registration statement with
Commission file No. 333-156997 which registers the sale of the Shares, the
Warrants and the Warrant Shares to the Purchasers.

 

“Required Approvals” shall have the meaning ascribed to such term in
Section 3.1(e).

 

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

 

“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

 

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similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Shares, the Warrants and the Warrant Shares.

 

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

 

“Shares” means the shares of Common Stock issued or issuable to each Purchaser
pursuant to this Agreement.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO
under the Exchange Act (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock).

 

 “Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Shares and Warrants purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available
funds.

 

“Time of Sale Prospectus” means the Prospectus together with any Prospectus
Supplement that is filed with the Commission, and any document incorporated by
reference into the Prospectus and any Prospectus Supplement, used in connection
with the sale of the Shares and Warrants.

 

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

 

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
Amex, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any
successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Warrants and any other
documents or agreements executed in connection with the transactions
contemplated hereunder.

 

“Transfer Agent” means Continental Stock Transfer & Trust Company, the current
transfer agent of the Company, with a mailing address of 17 Battery Place, New
York, NY 10004, and any successor transfer agent of the Company.

 

“Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable beginning six (6) months after the Closing Date
and have a term of exercise equal to five and one-half (5-1/2) years, in the
form of Exhibit A attached hereto.

 

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“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1           Closing.  Upon the terms and subject to the conditions set forth
herein, the Company agrees to sell, and the Purchasers, severally and not
jointly, agree to purchase, on the Closing Date, up to an aggregate of
[         ] Shares and Warrants.  Each Purchaser shall deliver to the Company,
via wire transfer or a certified check, immediately available funds equal to
such Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser and the Company shall deliver to each Purchaser its
respective Shares and a Warrant as determined pursuant to Section 2.2(a), and
the Company and each Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and
conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the
offices of FWS or such other location as the parties shall mutually agree.

 

2.2           Deliveries.

 

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

 

(I)            A LEGAL OPINION OF COMPANY COUNSEL, SUBSTANTIALLY IN THE FORM
AGREED TO BY THE PARTIES;

 

(II)           THIS AGREEMENT DULY EXECUTED AND DELIVERED BY THE PARTIES HERETO;

 

(III)          A COPY OF THE IRREVOCABLE INSTRUCTIONS TO THE COMPANY’S TRANSFER
AGENT, DULY EXECUTED AND DELIVERED BY THE COMPANY, INSTRUCTING THE TRANSFER
AGENT TO DELIVER VIA THE DEPOSITORY TRUST COMPANY DEPOSIT WITHDRAWAL AGENT
COMMISSION SYSTEM (“DWAC”) SHARES EQUAL TO SUCH PURCHASER’S SUBSCRIPTION AMOUNT
DIVIDED BY THE PER SHARE PURCHASE PRICE, REGISTERED IN THE NAME OF SUCH
PURCHASER;

 

(IV)          A WARRANT, DULY EXECUTED BY THE COMPANY, REGISTERED IN THE NAME OF
SUCH PURCHASER TO PURCHASE UP TO A NUMBER OF SHARES OF COMMON STOCK EQUAL TO
ONE-THIRD (1/3) OF THE NUMBER OF SHARES PURCHASED BY SUCH PURCHASER, WITH AN
EXERCISE PRICE EQUAL TO $3.00, SUBJECT TO ADJUSTMENT THEREIN (SUCH WARRANT
CERTIFICATE MAY BE DELIVERED WITHIN THREE TRADING DAYS OF THE CLOSING DATE); AND

 

(V)           THE FINAL PROSPECTUS SUPPLEMENT (WHICH MAY BE DELIVERED IN
ACCORDANCE WITH RULE 172 UNDER THE SECURITIES ACT) IF REQUIRED UNDER THE
SECURITIES ACT.

 

(B)           ON OR PRIOR TO THE CLOSING DATE, EACH PURCHASER SHALL DELIVER OR
CAUSE TO BE DELIVERED TO THE COMPANY THE FOLLOWING:

 

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(I)            SUCH PURCHASER’S SUBSCRIPTION AMOUNT (LESS, IN THE CASE OF EMPERY
ASSET MASTER LTD. (A PURCHASER), THE AMOUNT WITHHELD PURSUANT TO SECTION 5.2) BY
WIRE TRANSFER TO THE ACCOUNT AS SPECIFIED IN WRITING BY THE COMPANY; AND

 

2.3           Closing Conditions.

 

(a)           The obligations of the Company hereunder in connection with the
Closing are subject to the following conditions being met:

 

(I)            ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF EACH PURCHASER
REQUIRED TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN
PERFORMED; AND

 

(II)           THE DELIVERY BY EACH PURCHASER OF THE ITEMS SET FORTH IN
SECTION 2.2(B) OF THIS AGREEMENT.

 

(B)           THE RESPECTIVE OBLIGATIONS OF THE PURCHASERS HEREUNDER IN
CONNECTION WITH THE CLOSING ARE SUBJECT TO THE FOLLOWING CONDITIONS BEING MET:

 

(I)            ALL OBLIGATIONS, COVENANTS AND AGREEMENTS OF THE COMPANY REQUIRED
TO BE PERFORMED AT OR PRIOR TO THE CLOSING DATE SHALL HAVE BEEN PERFORMED; AND

 

(II)           THE DELIVERY BY THE COMPANY OF THE ITEMS SET FORTH IN
SECTION 2.2(A) OF THIS AGREEMENT.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations and Warranties of the Company.  Except as set
forth in the Registration Statement, the Prospectus, the Prospectus Supplements
or any documents incorporated by reference therein, which such filings, writings
and documents shall qualify such representations and warranties to the extent of
the disclosures contained therein, the Company hereby makes the following
representations and warranties to each Purchaser:

 

(a)           Subsidiaries.  The Company owns, directly or indirectly, all of
the capital stock or other equity interests of each of its direct and indirect
subsidiaries free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each such subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities, except as set forth on Schedule 3.1(a) hereto.  If the
Company has no subsidiaries, all other references to subsidiaries in the
Transaction Documents shall be disregarded.

 

(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, WITH THE REQUISITE POWER AND AUTHORITY TO OWN AND
USE ITS PROPERTIES AND ASSETS AND TO CARRY ON ITS BUSINESS AS CURRENTLY
CONDUCTED.  NEITHER THE COMPANY NOR ANY SUBSIDIARY IS IN VIOLATION NOR DEFAULT
OF ANY OF THE PROVISIONS OF ITS RESPECTIVE CERTIFICATE OR ARTICLES OF

 

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INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS.  EACH OF THE
COMPANY AND THE 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, COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT
IN: (I) A MATERIAL ADVERSE EFFECT ON THE LEGALITY, VALIDITY OR ENFORCEABILITY OF
ANY TRANSACTION DOCUMENT, (II) A MATERIAL ADVERSE EFFECT ON THE RESULTS OF
OPERATIONS, ASSETS, BUSINESS, PROSPECTS OR CONDITION (FINANCIAL OR OTHERWISE) OF
THE COMPANY AND THE SUBSIDIARIES, TAKEN AS A WHOLE, OR (III) A MATERIAL ADVERSE
EFFECT ON THE COMPANY’S ABILITY TO PERFORM IN ANY MATERIAL RESPECT ON A TIMELY
BASIS ITS OBLIGATIONS UNDER ANY TRANSACTION DOCUMENT (ANY OF (I), (II) OR (III),
A “MATERIAL ADVERSE EFFECT”) AND NO PROCEEDING HAS BEEN INSTITUTED IN ANY SUCH
JURISDICTION REVOKING, LIMITING OR CURTAILING OR SEEKING TO REVOKE, LIMIT OR
CURTAIL SUCH POWER AND AUTHORITY OR QUALIFICATION.

 

(C)           AUTHORIZATION; ENFORCEMENT.  THE COMPANY HAS THE REQUISITE
CORPORATE POWER AND AUTHORITY TO ENTER INTO AND TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY EACH OF THE TRANSACTION DOCUMENTS AND OTHERWISE TO CARRY OUT ITS
OBLIGATIONS HEREUNDER AND THEREUNDER.  THE EXECUTION AND DELIVERY OF EACH OF THE
TRANSACTION DOCUMENTS BY THE COMPANY AND THE CONSUMMATION BY IT OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY HAVE BEEN DULY AUTHORIZED BY ALL
NECESSARY ACTION ON THE PART OF THE COMPANY AND NO FURTHER ACTION IS REQUIRED BY
THE COMPANY, THE BOARD OF DIRECTORS OR THE COMPANY’S STOCKHOLDERS IN CONNECTION
THEREWITH OTHER THAN IN CONNECTION WITH THE REQUIRED APPROVALS.  EACH
TRANSACTION DOCUMENT TO WHICH IT IS A PARTY HAS BEEN (OR UPON DELIVERY WILL HAVE
BEEN) DULY EXECUTED BY THE COMPANY AND, WHEN DELIVERED IN ACCORDANCE WITH THE
TERMS HEREOF AND THEREOF, WILL CONSTITUTE THE VALID AND BINDING OBLIGATION OF
THE COMPANY ENFORCEABLE AGAINST THE COMPANY IN ACCORDANCE WITH ITS TERMS, EXCEPT
(I) AS LIMITED BY GENERAL EQUITABLE PRINCIPLES AND APPLICABLE BANKRUPTCY,
INSOLVENCY, REORGANIZATION, MORATORIUM AND OTHER LAWS OF GENERAL APPLICATION
AFFECTING ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY, (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, THE ISSUANCE AND SALE OF THE  SHARES AND
WARRANTS AND THE CONSUMMATION BY IT OF THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY TO WHICH IT IS A PARTY DO NOT AND WILL NOT (I) CONFLICT WITH OR VIOLATE
ANY PROVISION OF THE COMPANY’S OR ANY SUBSIDIARY’S CERTIFICATE OR ARTICLES OF
INCORPORATION, BYLAWS OR OTHER ORGANIZATIONAL OR CHARTER DOCUMENTS, OR
(II) RESULT IN THE CREATION OF ANY LIEN UPON ANY OF THE PROPERTIES OR ASSETS OF
THE COMPANY OR ANY SUBSIDIARY, OR GIVE TO OTHERS ANY RIGHTS OF TERMINATION,
AMENDMENT, ACCELERATION OR CANCELLATION (WITH OR WITHOUT NOTICE, LAPSE OF TIME
OR BOTH) OF OR CONFLICT WITH, OR CONSTITUTE A DEFAULT (OR AN EVENT THAT WITH
NOTICE OR LAPSE OF TIME OR BOTH WOULD BECOME A DEFAULT) UNDER, ANY AGREEMENT,
CREDIT FACILITY, DEBT OR OTHER INSTRUMENT (EVIDENCING A COMPANY OR SUBSIDIARY
DEBT OR OTHERWISE) OR OTHER UNDERSTANDING TO WHICH THE COMPANY OR ANY SUBSIDIARY
IS A PARTY OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR ANY SUBSIDIARY IS
BOUND OR AFFECTED, OR (III) SUBJECT TO THE REQUIRED APPROVALS, CONFLICT WITH OR
RESULT IN A VIOLATION OF ANY LAW, RULE, REGULATION,

 

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ORDER, JUDGMENT, INJUNCTION, DECREE OR OTHER RESTRICTION OF ANY TRADING MARKET,
COURT OR GOVERNMENTAL AUTHORITY TO WHICH THE COMPANY OR A SUBSIDIARY IS SUBJECT
(INCLUDING FEDERAL AND STATE SECURITIES LAWS AND REGULATIONS AND THE REGULATIONS
OF ANY TRADING MARKET), OR BY WHICH ANY PROPERTY OR ASSET OF THE COMPANY OR A
SUBSIDIARY IS BOUND OR AFFECTED; EXCEPT IN THE CASE OF EACH OF CLAUSES (II) AND
(III), SUCH AS COULD NOT HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT.

 

(E)           FILINGS, CONSENTS AND APPROVALS.  THE COMPANY IS NOT REQUIRED TO
OBTAIN ANY CONSENT, WAIVER, AUTHORIZATION OR ORDER OF, GIVE ANY NOTICE TO, OR
MAKE ANY FILING OR REGISTRATION WITH, ANY COURT OR OTHER FEDERAL, STATE, LOCAL
OR OTHER GOVERNMENTAL AUTHORITY OR OTHER PERSON IN CONNECTION WITH THE
EXECUTION, DELIVERY AND PERFORMANCE BY THE COMPANY OF THE TRANSACTION DOCUMENTS,
OTHER THAN: (I) THE FILINGS REQUIRED PURSUANT TO SECTION 4.3 OF THIS AGREEMENT,
(II) THE FILING WITH THE COMMISSION OF THE PROSPECTUS SUPPLEMENT,
(III) APPLICATION(S) TO EACH APPLICABLE TRADING MARKET FOR THE LISTING OF THE
SHARES FOR TRADING THEREON IN THE TIME AND MANNER REQUIRED THEREBY AND (IV) SUCH
FILINGS AS ARE REQUIRED TO BE MADE UNDER APPLICABLE STATE SECURITIES LAWS
(COLLECTIVELY, THE “REQUIRED APPROVALS”).

 

(F)            ISSUANCE OF THE SECURITIES; REGISTRATION.  THE SHARES AND
WARRANTS ARE DULY AUTHORIZED AND, WHEN ISSUED AND PAID FOR IN ACCORDANCE WITH
THE APPLICABLE TRANSACTION DOCUMENTS (I) THE SHARES WILL BE DULY AND VALIDLY
ISSUED, FULLY PAID AND NONASSESSABLE, FREE AND CLEAR OF ALL LIENS IMPOSED BY THE
COMPANY AND (II) THE WARRANTS WILL BE DULY AND VALIDLY ISSUED, FREE AND CLEAR OF
ALL LIENS IMPOSED BY THE COMPANY .  THE WARRANT SHARES, WHEN ISSUED IN
ACCORDANCE WITH THE TERMS OF THE WARRANTS, WILL BE VALIDLY ISSUED, FULLY PAID
AND NONASSESSABLE, FREE AND CLEAR OF ALL LIENS IMPOSED BY THE COMPANY.  THE
COMPANY HAS RESERVED FROM ITS DULY AUTHORIZED CAPITAL STOCK THE MAXIMUM NUMBER
OF SHARES OF COMMON STOCK ISSUABLE PURSUANT TO THIS AGREEMENT AND THE WARRANTS.
THE COMPANY HAS PREPARED AND FILED THE REGISTRATION STATEMENT IN CONFORMITY WITH
THE REQUIREMENTS OF THE SECURITIES ACT, WHICH BECAME EFFECTIVE ON FEBRUARY 12,
2009 (THE “EFFECTIVE DATE”), INCLUDING THE PROSPECTUS, AND SUCH AMENDMENTS AND
SUPPLEMENTS THERETO AS MAY HAVE BEEN REQUIRED TO THE DATE OF THIS AGREEMENT. 
THE REGISTRATION STATEMENT IS EFFECTIVE UNDER THE SECURITIES ACT AND NO STOP
ORDER PREVENTING OR SUSPENDING THE EFFECTIVENESS OF THE REGISTRATION STATEMENT
OR SUSPENDING OR PREVENTING THE USE OF THE PROSPECTUS HAS BEEN ISSUED BY THE
COMMISSION AND NO PROCEEDINGS FOR THAT PURPOSE HAVE BEEN INSTITUTED OR, TO THE
KNOWLEDGE OF THE COMPANY, ARE THREATENED BY THE COMMISSION.  THE COMPANY, IF
REQUIRED BY THE RULES AND REGULATIONS OF THE COMMISSION, PROPOSES TO FILE THE
FINAL PROSPECTUS SUPPLEMENT, WITH THE COMMISSION PURSUANT TO RULE 424(B).  AT
THE TIME THE REGISTRATION STATEMENT AND ANY AMENDMENTS THERETO BECAME EFFECTIVE,
AT THE DATE OF THIS AGREEMENT AND AT THE CLOSING DATE, THE REGISTRATION
STATEMENT AND ANY AMENDMENTS THERETO CONFORMED AND WILL CONFORM IN ALL MATERIAL
RESPECTS TO THE REQUIREMENTS OF THE SECURITIES ACT AND DID NOT AND 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
NOT MISLEADING; PROVIDED, HOWEVER, THAT THIS REPRESENTATION AND WARRANTY SHALL
NOT APPLY TO ANY STATEMENTS OR OMISSIONS MADE IN RELIANCE UPON INFORMATION
FURNISHED TO THE COMPANY BY THE PURCHASERS; AND THE PROSPECTUS AND ANY
AMENDMENTS OR SUPPLEMENTS THERETO, AT TIME THE PROSPECTUS OR ANY AMENDMENT OR
SUPPLEMENT THERETO WAS ISSUED AND AT THE CLOSING DATE, CONFORMED AND

 

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WILL CONFORM IN ALL MATERIAL RESPECTS TO THE REQUIREMENTS OF THE SECURITIES ACT
AND DID NOT AND WILL NOT CONTAIN AN UNTRUE STATEMENT OF A MATERIAL FACT OR OMIT
TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING; PROVIDED,
HOWEVER, THAT THIS REPRESENTATION AND WARRANTY SHALL NOT APPLY TO ANY STATEMENTS
OR OMISSIONS MADE IN RELIANCE UPON INFORMATION FURNISHED TO THE COMPANY BY THE
PURCHASERS.

 

(G)           CAPITALIZATION.  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 STOCK OPTIONS UNDER THE COMPANY’S STOCK OPTION
PLANS, THE ISSUANCE OF SHARES OF COMMON STOCK TO EMPLOYEES PURSUANT TO THE
COMPANY’S EMPLOYEE STOCK PURCHASE 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.  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. 
EXCEPT AS DESCRIBED IN THE COMPANY’S SEC REPORTS, THERE ARE NO OUTSTANDING
OPTIONS, WARRANTS, SCRIP RIGHTS TO SUBSCRIBE TO, CALLS OR COMMITMENTS OF ANY
CHARACTER WHATSOEVER RELATING TO, OR SECURITIES, RIGHTS OR OBLIGATIONS
CONVERTIBLE INTO OR EXERCISABLE OR EXCHANGEABLE FOR, OR GIVING ANY PERSON ANY
RIGHT TO SUBSCRIBE FOR OR ACQUIRE, ANY SHARES OF COMMON STOCK, OR CONTRACTS,
COMMITMENTS, UNDERSTANDINGS OR ARRANGEMENTS BY WHICH THE COMPANY OR ANY
SUBSIDIARY IS OR MAY BECOME BOUND TO ISSUE ADDITIONAL SHARES OF COMMON STOCK OR
COMMON STOCK EQUIVALENTS, OTHER THAN AS A RESULT OF THE PURCHASE AND SALE OF
THE  SHARES AND WARRANTS.  THE ISSUANCE AND SALE OF THE SHARES AND WARRANTS, AND
THE ISSUANCE OF WARRANT SHARES UPON EXERCISE OF THE WARRANTS, WILL NOT OBLIGATE
THE COMPANY TO ISSUE SHARES OF COMMON STOCK OR OTHER SECURITIES TO ANY PERSON
(OTHER THAN THE PURCHASERS) AND WILL NOT RESULT IN A RIGHT OF ANY HOLDER OF
COMPANY SECURITIES TO ADJUST THE EXERCISE, CONVERSION, EXCHANGE OR RESET PRICE
UNDER ANY OF SUCH SECURITIES. ALL OF THE OUTSTANDING SHARES OF CAPITAL STOCK OF
THE COMPANY ARE VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE.  NO FURTHER
APPROVAL OR AUTHORIZATION OF ANY STOCKHOLDER, THE BOARD OF DIRECTORS OR OTHERS
IS REQUIRED FOR THE ISSUANCE AND SALE OF THE SECURITIES.  THERE ARE NO
STOCKHOLDERS AGREEMENTS, VOTING AGREEMENTS OR OTHER SIMILAR AGREEMENTS WITH
RESPECT TO THE COMPANY’S CAPITAL STOCK TO WHICH THE COMPANY IS A PARTY OR, TO
THE KNOWLEDGE OF THE COMPANY, BETWEEN OR AMONG ANY OF THE COMPANY’S STOCKHOLDERS
THAT ARE NOT DESCRIBED IN THE SEC REPORTS.

 

(H)           SEC REPORTS; FINANCIAL STATEMENTS.  THE COMPANY HAS FILED 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, FOR THE TWO YEARS PRECEDING THE DATE HEREOF (OR SUCH SHORTER
PERIOD AS THE COMPANY WAS REQUIRED BY LAW OR REGULATION TO FILE SUCH MATERIAL)
(THE FOREGOING MATERIALS, INCLUDING THE EXHIBITS THERETO AND DOCUMENTS
INCORPORATED BY REFERENCE THEREIN, TOGETHER WITH THE PROSPECTUS AND ANY
PROSPECTUS SUPPLEMENT, BEING COLLECTIVELY REFERRED TO HEREIN AS THE “SEC
REPORTS”) 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 DATES, THE SEC REPORTS COMPLIED IN ALL
MATERIAL RESPECTS WITH THE REQUIREMENTS OF THE EXCHANGE ACT, AS APPLICABLE, 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

 

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STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE STATEMENTS THEREIN, IN THE
LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING; PROVIDED,
HOWEVER, THAT THIS REPRESENTATION AND WARRANTY SHALL NOT APPLY TO ANY STATEMENTS
OR OMISSIONS MADE IN RELIANCE UPON INFORMATION FURNISHED TO THE COMPANY BY THE
PURCHASERS. 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
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES APPLIED ON A CONSISTENT
BASIS DURING THE PERIODS INVOLVED (“GAAP”), EXCEPT AS MAY BE OTHERWISE SPECIFIED
IN SUCH FINANCIAL STATEMENTS OR THE NOTES THERETO AND EXCEPT TO THE EXTENT THAT
UNAUDITED FINANCIAL STATEMENTS MAY NOT CONTAIN ALL FOOTNOTES REQUIRED BY GAAP,
AND SUCH STATEMENTS FAIRLY PRESENT IN ALL MATERIAL RESPECTS THE FINANCIAL
POSITION OF THE COMPANY AND ITS CONSOLIDATED SUBSIDIARIES AS OF AND FOR THE
DATES THEREOF AND THE RESULTS OF OPERATIONS AND CASH FLOWS FOR THE PERIODS THEN
ENDED, SUBJECT, IN THE CASE OF UNAUDITED STATEMENTS, TO NORMAL, IMMATERIAL,
YEAR-END AUDIT ADJUSTMENTS.

 

(I)            MATERIAL CHANGES; UNDISCLOSED EVENTS, LIABILITIES OR
DEVELOPMENTS.  SINCE THE DATE OF THE LATEST AUDITED FINANCIAL STATEMENTS
INCLUDED WITHIN THE SEC REPORTS, EXCEPT AS SPECIFICALLY DISCLOSED IN A
SUBSEQUENT SEC REPORT FILED PRIOR TO THE DATE HEREOF, (I) THERE HAS BEEN NO
EVENT, OCCURRENCE OR DEVELOPMENT THAT HAS HAD OR THAT COULD REASONABLY BE
EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT, (II) THE COMPANY HAS NOT
INCURRED ANY 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, (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 AND (V) THE COMPANY HAS NOT
ISSUED ANY EQUITY SECURITIES TO ANY OFFICER, DIRECTOR OR AFFILIATE, EXCEPT
PURSUANT TO EXISTING COMPANY STOCK OPTION PLANS.  THE COMPANY DOES NOT HAVE
PENDING BEFORE THE COMMISSION ANY REQUEST FOR CONFIDENTIAL TREATMENT OF
INFORMATION.  EXCEPT FOR THE ISSUANCE OF THE  SHARES AND WARRANTS CONTEMPLATED
BY THIS AGREEMENT, 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 BUSINESS,
PROSPECTS, 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 1 TRADING DAY PRIOR TO THE DATE THAT THIS REPRESENTATION IS
MADE.

 

(J)            LITIGATION.  THERE IS NO ACTION, SUIT, INQUIRY, NOTICE OF
VIOLATION, PROCEEDING OR INVESTIGATION PENDING OR, TO THE KNOWLEDGE OF THE
COMPANY, THREATENED AGAINST OR AFFECTING THE COMPANY, ANY SUBSIDIARY OR ANY OF
THEIR RESPECTIVE PROPERTIES BEFORE OR BY ANY COURT, ARBITRATOR, GOVERNMENTAL OR
ADMINISTRATIVE AGENCY OR REGULATORY AUTHORITY (FEDERAL, STATE, COUNTY, LOCAL OR
FOREIGN) (COLLECTIVELY, AN “ACTION”) WHICH (I) ADVERSELY AFFECTS OR CHALLENGES
THE LEGALITY, VALIDITY OR ENFORCEABILITY OF ANY OF THE TRANSACTION DOCUMENTS OR
THE SECURITIES OR (II) COULD, IF THERE WERE AN UNFAVORABLE DECISION, HAVE OR

 

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REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.  NEITHER THE
COMPANY NOR ANY SUBSIDIARY, NOR ANY DIRECTOR OR OFFICER THEREOF, IS OR HAS BEEN
THE SUBJECT OF ANY ACTION INVOLVING A CLAIM OF VIOLATION OF OR LIABILITY UNDER
FEDERAL OR STATE SECURITIES LAWS OR A CLAIM OF BREACH OF FIDUCIARY DUTY.  THERE
HAS NOT BEEN, AND TO THE KNOWLEDGE OF THE COMPANY, THERE IS NOT PENDING OR
CONTEMPLATED, ANY INVESTIGATION BY THE COMMISSION INVOLVING THE COMPANY OR ANY
CURRENT OR FORMER DIRECTOR OR OFFICER OF THE COMPANY.

 

(K)           LABOR RELATIONS.  NO MATERIAL LABOR DISPUTE EXISTS OR, TO THE
KNOWLEDGE OF THE COMPANY, IS IMMINENT WITH RESPECT TO ANY OF THE EMPLOYEES OF
THE COMPANY THAT COULD REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT.  NONE OF THE COMPANY’S OR ITS SUBSIDIARIES’ EMPLOYEES IS A MEMBER OF A
UNION THAT RELATES TO SUCH EMPLOYEE’S RELATIONSHIP WITH THE COMPANY OR SUCH
SUBSIDIARY, AND NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARIES IS A PARTY TO A
COLLECTIVE BARGAINING AGREEMENT, AND THE COMPANY AND ITS SUBSIDIARIES BELIEVE
THAT THEIR RELATIONSHIPS WITH THEIR EMPLOYEES ARE GOOD.  NO EXECUTIVE OFFICER,
TO THE KNOWLEDGE OF THE COMPANY, IS, OR IS NOW EXPECTED TO BE, IN VIOLATION OF
ANY MATERIAL TERM OF ANY EMPLOYMENT CONTRACT, CONFIDENTIALITY, DISCLOSURE OR
PROPRIETARY INFORMATION AGREEMENT OR NON-COMPETITION AGREEMENT, OR ANY OTHER
CONTRACT OR AGREEMENT OR ANY RESTRICTIVE COVENANT IN FAVOR OF ANY THIRD PARTY,
AND THE CONTINUED EMPLOYMENT OF EACH SUCH EXECUTIVE OFFICER DOES NOT SUBJECT THE
COMPANY OR ANY OF ITS SUBSIDIARIES TO ANY LIABILITY WITH RESPECT TO ANY OF THE
FOREGOING MATTERS.  THE COMPANY AND ITS SUBSIDIARIES ARE IN COMPLIANCE WITH ALL
U.S. FEDERAL, STATE, LOCAL AND FOREIGN LAWS AND REGULATIONS RELATING TO
EMPLOYMENT AND EMPLOYMENT PRACTICES, TERMS AND CONDITIONS OF EMPLOYMENT AND
WAGES AND HOURS, EXCEPT WHERE THE FAILURE TO BE IN COMPLIANCE COULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.

 

(L)            COMPLIANCE.  NEITHER THE COMPANY NOR ANY SUBSIDIARY: (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 SUBSIDIARY UNDER), NOR HAS THE COMPANY OR ANY SUBSIDIARY
RECEIVED NOTICE OF A CLAIM THAT IT IS IN DEFAULT UNDER OR THAT IT IS IN
VIOLATION OF, ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER AGREEMENT OR
INSTRUMENT TO WHICH IT IS A PARTY OR BY WHICH IT OR ANY OF ITS PROPERTIES IS
BOUND (WHETHER OR NOT SUCH DEFAULT OR VIOLATION HAS BEEN WAIVED), (II) IS IN
VIOLATION OF ANY JUDGMENT, DECREE OR ORDER OF ANY COURT, ARBITRATOR OR
GOVERNMENTAL BODY OR (III) IS OR HAS BEEN IN VIOLATION OF ANY STATUTE, RULE,
ORDINANCE OR REGULATION OF ANY GOVERNMENTAL AUTHORITY, INCLUDING WITHOUT
LIMITATION ALL FOREIGN, FEDERAL, STATE AND LOCAL LAWS APPLICABLE TO ITS BUSINESS
AND ALL SUCH LAWS THAT AFFECT THE ENVIRONMENT, EXCEPT IN EACH CASE AS COULD NOT
REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE EFFECT.

 

(M)          REGULATORY PERMITS.  THE COMPANY AND THE SUBSIDIARIES POSSESS ALL
CERTIFICATES, AUTHORIZATIONS AND PERMITS ISSUED BY THE APPROPRIATE FEDERAL,
STATE, LOCAL OR FOREIGN REGULATORY AUTHORITIES NECESSARY TO CONDUCT THEIR
RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS, EXCEPT WHERE THE FAILURE
TO POSSESS SUCH PERMITS COULD NOT REASONABLY BE EXPECTED TO RESULT IN A MATERIAL
ADVERSE EFFECT (“MATERIAL PERMITS”), AND NEITHER THE COMPANY NOR ANY SUBSIDIARY
HAS RECEIVED ANY NOTICE OF PROCEEDINGS RELATING TO THE REVOCATION OR
MODIFICATION OF ANY MATERIAL PERMIT.

 

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(N)           TITLE TO ASSETS.  THE COMPANY AND THE SUBSIDIARIES HAVE GOOD AND
MARKETABLE TITLE IN FEE SIMPLE TO ALL REAL PROPERTY OWNED BY THEM AND GOOD AND
MARKETABLE TITLE TO ALL PERSONAL PROPERTY OWNED BY THEM THAT IS MATERIAL TO THE
BUSINESS OF THE COMPANY AND THE SUBSIDIARIES, IN EACH CASE FREE AND CLEAR OF ALL
LIENS, EXCEPT FOR LIENS AS DO NOT MATERIALLY AFFECT THE VALUE OF SUCH PROPERTY
AND DO NOT MATERIALLY INTERFERE WITH THE USE MADE AND PROPOSED TO BE MADE OF
SUCH PROPERTY BY THE COMPANY AND THE SUBSIDIARIES AND LIENS FOR THE PAYMENT OF
FEDERAL, STATE OR OTHER TAXES, THE PAYMENT OF WHICH IS NEITHER DELINQUENT NOR
SUBJECT TO PENALTIES.  ANY REAL PROPERTY AND FACILITIES HELD UNDER LEASE BY THE
COMPANY AND THE SUBSIDIARIES ARE HELD BY THEM UNDER VALID, SUBSISTING AND
ENFORCEABLE LEASES WITH WHICH THE COMPANY AND THE SUBSIDIARIES ARE IN COMPLIANCE
WITH SUCH EXCEPTIONS AS ARE NOT MATERIAL AND DO NOT MATERIALLY INTERFERE WITH
THE USE MADE AND PROPOSED TO BE MADE OF SUCH PROPERTY AND FACILITIES BY THE
COMPANY AND ITS SUBSIDIARIES.

 

(O)           PATENTS AND TRADEMARKS.  EXCEPT AS SET FORTH ON SCHEDULE
3.1(O) HERETO, THE COMPANY AND THE SUBSIDIARIES HAVE, OR HAVE RIGHTS TO USE, ALL
PATENTS, PATENT APPLICATIONS, TRADEMARKS, TRADEMARK APPLICATIONS, SERVICE MARKS,
TRADE NAMES, TRADE SECRETS, INVENTIONS, COPYRIGHTS, LICENSES AND OTHER
INTELLECTUAL PROPERTY RIGHTS AND SIMILAR RIGHTS NECESSARY OR MATERIAL FOR USE IN
CONNECTION WITH THEIR RESPECTIVE BUSINESSES AS DESCRIBED IN THE SEC REPORTS AND
WHICH THE FAILURE TO SO HAVE COULD REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT (COLLECTIVELY, THE “INTELLECTUAL PROPERTY RIGHTS”).  NEITHER THE
COMPANY NOR ANY SUBSIDIARY HAS RECEIVED A NOTICE (WRITTEN OR OTHERWISE) THAT ANY
OF THE INTELLECTUAL PROPERTY RIGHTS USED BY THE COMPANY OR ANY SUBSIDIARY
VIOLATES OR INFRINGES UPON THE RIGHTS OF ANY PERSON.  TO THE KNOWLEDGE OF THE
COMPANY, ALL SUCH INTELLECTUAL PROPERTY RIGHTS ARE ENFORCEABLE AND THERE IS NO
EXISTING INFRINGEMENT BY ANOTHER PERSON OF ANY OF THE INTELLECTUAL PROPERTY
RIGHTS.  THE COMPANY AND ITS SUBSIDIARIES HAVE TAKEN REASONABLE SECURITY
MEASURES TO PROTECT THE SECRECY, CONFIDENTIALITY AND VALUE OF ALL OF THEIR
INTELLECTUAL PROPERTIES, EXCEPT WHERE THE FAILURE TO DO SO COULD NOT,
INDIVIDUALLY OR IN THE AGGREGATE, REASONABLY BE EXPECTED TO HAVE A MATERIAL
ADVERSE EFFECT.

 

(P)           INSURANCE.  THE COMPANY AND THE SUBSIDIARIES ARE INSURED BY
INSURERS OF RECOGNIZED FINANCIAL RESPONSIBILITY AGAINST SUCH LOSSES AND RISKS
AND IN SUCH AMOUNTS AS ARE PRUDENT AND CUSTOMARY IN THE BUSINESSES IN WHICH THE
COMPANY AND THE SUBSIDIARIES ARE ENGAGED, INCLUDING, BUT NOT LIMITED TO,
DIRECTORS AND OFFICERS INSURANCE COVERAGE AT LEAST EQUAL TO THE AGGREGATE
SUBSCRIPTION AMOUNT.  NEITHER THE COMPANY NOR ANY SUBSIDIARY HAS ANY REASON TO
BELIEVE THAT IT WILL NOT BE ABLE TO RENEW ITS EXISTING INSURANCE COVERAGE AS AND
WHEN SUCH COVERAGE EXPIRES OR TO OBTAIN SIMILAR COVERAGE FROM SIMILAR INSURERS
AS MAY BE NECESSARY TO CONTINUE ITS BUSINESS WITHOUT A SIGNIFICANT INCREASE IN
COST.

 

(Q)           TRANSACTIONS WITH AFFILIATES AND EMPLOYEES.  EXCEPT AS SET FORTH
IN THE SEC REPORTS, NONE OF THE 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), INCLUDING ANY CONTRACT,
AGREEMENT OR OTHER ARRANGEMENT PROVIDING FOR THE FURNISHING OF SERVICES TO OR
BY, PROVIDING FOR RENTAL OF REAL OR PERSONAL PROPERTY TO

 

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OR FROM, OR OTHERWISE REQUIRING PAYMENTS TO OR FROM ANY OFFICER, DIRECTOR OR
SUCH EMPLOYEE OR, TO THE KNOWLEDGE OF THE COMPANY, ANY ENTITY IN WHICH ANY
OFFICER, DIRECTOR, OR ANY SUCH EMPLOYEE HAS A SUBSTANTIAL INTEREST OR IS AN
OFFICER, DIRECTOR, TRUSTEE OR PARTNER, IN EACH CASE IN EXCESS OF $120,000 OTHER
THAN FOR (I) PAYMENT OF SALARY OR CONSULTING FEES FOR SERVICES RENDERED,
(II) REIMBURSEMENT FOR EXPENSES INCURRED ON BEHALF OF THE COMPANY AND
(III) OTHER EMPLOYEE BENEFITS, INCLUDING STOCK OPTION AGREEMENTS UNDER ANY STOCK
OPTION PLAN OF THE COMPANY.

 

(R)            SARBANES-OXLEY.  THE COMPANY IS IN MATERIAL COMPLIANCE WITH ALL
PROVISIONS OF THE SARBANES-OXLEY ACT OF 2002 THAT ARE APPLICABLE TO IT AS OF THE
CLOSING DATE.

 

(S)           CERTAIN FEES.  EXCEPT AS SET FORTH IN THE PROSPECTUS SUPPLEMENT,
NO BROKERAGE OR FINDER’S FEES OR COMMISSIONS ARE OR WILL BE PAYABLE BY THE
COMPANY TO ANY BROKER, FINANCIAL ADVISOR OR CONSULTANT, FINDER, PLACEMENT AGENT,
INVESTMENT BANKER, BANK OR OTHER PERSON WITH RESPECT TO THE TRANSACTIONS
CONTEMPLATED BY THE TRANSACTION DOCUMENTS.  THE PURCHASERS SHALL HAVE NO
OBLIGATION WITH RESPECT TO ANY FEES OR WITH RESPECT TO ANY CLAIMS MADE BY OR ON
BEHALF OF OTHER PERSONS FOR FEES OF A TYPE CONTEMPLATED IN THIS SECTION THAT MAY
BE DUE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION
DOCUMENTS.

 

(T)            INVESTMENT COMPANY. THE COMPANY IS NOT, AND IS NOT AN AFFILIATE
OF, AND IMMEDIATELY AFTER RECEIPT OF PAYMENT FOR THE SHARES AND WARRANTS, WILL
NOT BE OR BE AN AFFILIATE OF, AN “INVESTMENT COMPANY” WITHIN THE MEANING OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED.

 

(U)           REGISTRATION RIGHTS.  NO PERSON HAS ANY RIGHT TO CAUSE THE COMPANY
TO EFFECT THE REGISTRATION UNDER THE SECURITIES ACT OF ANY SECURITIES OF THE
COMPANY AS A RESULT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

 

(V)           LISTING AND MAINTENANCE REQUIREMENTS.  THE COMMON STOCK IS
REGISTERED PURSUANT TO SECTION 12(B) OR 12(G) OF THE EXCHANGE ACT, AND THE
COMPANY HAS TAKEN NO ACTION DESIGNED TO, OR THAT TO ITS KNOWLEDGE IS LIKELY TO
HAVE THE EFFECT OF, TERMINATING THE REGISTRATION OF THE COMMON STOCK UNDER THE
EXCHANGE ACT NOR HAS THE COMPANY RECEIVED ANY NOTIFICATION THAT THE COMMISSION
IS CONTEMPLATING TERMINATING SUCH REGISTRATION.  THE COMPANY HAS NOT, IN THE 12
MONTHS PRECEDING THE DATE HEREOF, RECEIVED NOTICE FROM ANY TRADING MARKET ON
WHICH THE COMMON STOCK IS OR HAS BEEN LISTED OR QUOTED TO THE EFFECT THAT THE
COMPANY IS NOT IN COMPLIANCE WITH THE LISTING OR MAINTENANCE REQUIREMENTS OF
SUCH TRADING MARKET. THE COMPANY IS IN COMPLIANCE WITH ALL SUCH LISTING AND
MAINTENANCE REQUIREMENTS.

 

(W)          APPLICATION OF TAKEOVER PROTECTIONS.  THE COMPANY AND THE BOARD OF
DIRECTORS HAVE TAKEN ALL NECESSARY ACTION, IF ANY, IN ORDER TO RENDER
INAPPLICABLE ANY CONTROL SHARE ACQUISITION, BUSINESS COMBINATION, POISON PILL
(INCLUDING ANY DISTRIBUTION UNDER A RIGHTS AGREEMENT) OR OTHER SIMILAR
ANTI-TAKEOVER PROVISION UNDER THE COMPANY’S CERTIFICATE OF INCORPORATION (OR
SIMILAR CHARTER DOCUMENTS) OR THE LAWS OF ITS STATE OF INCORPORATION THAT IS OR
COULD BECOME APPLICABLE TO THE PURCHASERS AS A RESULT OF THE

 

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PURCHASERS AND THE COMPANY FULFILLING THEIR OBLIGATIONS OR EXERCISING THEIR
RIGHTS UNDER THE TRANSACTION DOCUMENTS, INCLUDING WITHOUT LIMITATION AS A RESULT
OF THE COMPANY’S ISSUANCE OF THE SHARES AND WARRANTS AND THE PURCHASERS’
OWNERSHIP OF THE SHARES AND WARRANTS.

 

(X)            DISCLOSURE.  EXCEPT WITH RESPECT TO THE MATERIAL TERMS AND
CONDITIONS OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS, THE
COMPANY CONFIRMS THAT NEITHER IT NOR ANY OTHER PERSON ACTING ON ITS BEHALF HAS
PROVIDED ANY OF THE PURCHASERS OR THEIR AGENTS OR COUNSEL WITH ANY INFORMATION
THAT IT BELIEVES CONSTITUTES OR MIGHT CONSTITUTE MATERIAL, NON-PUBLIC
INFORMATION WHICH IS NOT OTHERWISE DISCLOSED IN THE PROSPECTUS SUPPLEMENT.   THE
COMPANY UNDERSTANDS AND CONFIRMS THAT THE PURCHASERS WILL RELY ON THE FOREGOING
REPRESENTATION IN EFFECTING TRANSACTIONS IN SECURITIES OF THE COMPANY. 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.

 

(Y)           TAX STATUS.  EXCEPT FOR MATTERS THAT WOULD NOT, INDIVIDUALLY OR IN
THE AGGREGATE, HAVE OR REASONABLY BE EXPECTED TO RESULT IN A MATERIAL ADVERSE
EFFECT, THE COMPANY AND EACH SUBSIDIARY HAS FILED ALL NECESSARY FEDERAL, STATE
AND FOREIGN INCOME AND FRANCHISE TAX RETURNS AND HAS PAID OR ACCRUED ALL TAXES
SHOWN AS DUE THEREON, AND THE COMPANY HAS NO KNOWLEDGE OF A TAX DEFICIENCY WHICH
HAS BEEN ASSERTED OR THREATENED AGAINST THE COMPANY OR ANY SUBSIDIARY.

 

(Z)            FOREIGN CORRUPT PRACTICES.  NEITHER THE COMPANY, NOR TO THE
KNOWLEDGE OF THE COMPANY, ANY AGENT OR OTHER PERSON ACTING ON BEHALF OF THE
COMPANY, HAS (I) DIRECTLY OR INDIRECTLY, USED ANY FUNDS FOR UNLAWFUL
CONTRIBUTIONS, GIFTS, ENTERTAINMENT OR OTHER UNLAWFUL EXPENSES RELATED TO
FOREIGN OR DOMESTIC POLITICAL ACTIVITY, (II) MADE ANY UNLAWFUL PAYMENT TO
FOREIGN OR DOMESTIC GOVERNMENT OFFICIALS OR EMPLOYEES OR TO ANY FOREIGN OR
DOMESTIC POLITICAL PARTIES OR CAMPAIGNS FROM CORPORATE FUNDS, (III) FAILED TO
DISCLOSE FULLY ANY CONTRIBUTION MADE BY THE COMPANY (OR MADE BY ANY PERSON
ACTING ON ITS BEHALF OF WHICH THE COMPANY IS AWARE) WHICH IS IN VIOLATION OF
LAW, OR (IV) VIOLATED IN ANY MATERIAL RESPECT ANY PROVISION OF THE FOREIGN
CORRUPT PRACTICES ACT OF 1977, AS AMENDED.

 

(AA)         ACCOUNTANTS.  THE COMPANY’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM IS IDENTIFIED IN THE PROSPECTUS AND SUCH ACCOUNTING FIRM IS A
REGISTERED PUBLIC ACCOUNTING FIRM AS REQUIRED BY THE EXCHANGE ACT.

 

(BB)         ACKNOWLEDGMENT REGARDING PURCHASERS’ PURCHASE OF SECURITIES.  THE
COMPANY ACKNOWLEDGES AND AGREES THAT EACH OF THE PURCHASERS IS ACTING SOLELY IN
THE CAPACITY OF AN ARM’S LENGTH PURCHASER WITH RESPECT TO THE TRANSACTION
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED THEREBY.  THE COMPANY FURTHER
ACKNOWLEDGES THAT NO PURCHASER IS ACTING AS A FINANCIAL ADVISOR OR FIDUCIARY OF
THE COMPANY (OR IN ANY SIMILAR CAPACITY) WITH RESPECT TO THE TRANSACTION
DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED THEREBY AND ANY ADVICE GIVEN BY ANY
PURCHASER OR ANY OF THEIR RESPECTIVE REPRESENTATIVES OR AGENTS IN CONNECTION
WITH THE TRANSACTION DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED THEREBY IS
MERELY INCIDENTAL TO THE PURCHASERS’ PURCHASE OF THE SECURITIES.  THE COMPANY
FURTHER REPRESENTS TO EACH PURCHASER THAT THE COMPANY’S DECISION TO ENTER

 

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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.

 

(CC)         ACKNOWLEDGEMENT REGARDING PURCHASER’S TRADING ACTIVITY.  ANYTHING
IN THIS AGREEMENT OR ELSEWHERE HEREIN TO THE CONTRARY NOTWITHSTANDING (EXCEPT
FOR SECTIONS 3.2(E) AND 4.12 HEREOF), IT IS UNDERSTOOD AND ACKNOWLEDGED BY THE
COMPANY THAT: (I) NONE OF THE PURCHASERS HAVE BEEN ASKED BY THE COMPANY TO
AGREE, NOR HAS ANY PURCHASER AGREED, TO DESIST FROM PURCHASING OR SELLING, LONG
AND/OR SHORT, SECURITIES OF THE COMPANY, OR “DERIVATIVE” SECURITIES BASED ON
SECURITIES ISSUED BY THE COMPANY OR TO HOLD THE SECURITIES FOR ANY SPECIFIED
TERM; (II) PAST OR FUTURE OPEN MARKET OR OTHER TRANSACTIONS BY ANY PURCHASER,
SPECIFICALLY INCLUDING, WITHOUT LIMITATION, SHORT SALES OR “DERIVATIVE”
TRANSACTIONS, BEFORE OR AFTER THE CLOSING OF THIS OR FUTURE PRIVATE PLACEMENT
TRANSACTIONS, MAY NEGATIVELY IMPACT THE MARKET PRICE OF THE COMPANY’S
PUBLICLY-TRADED SECURITIES; (III) ANY PURCHASER, AND COUNTER-PARTIES IN
“DERIVATIVE” TRANSACTIONS TO WHICH ANY SUCH PURCHASER IS A PARTY, DIRECTLY OR
INDIRECTLY, PRESENTLY MAY HAVE A “SHORT” POSITION IN THE COMMON STOCK, AND
(IV) EACH PURCHASER SHALL NOT BE DEEMED TO HAVE ANY AFFILIATION WITH OR CONTROL
OVER ANY ARM’S LENGTH COUNTER-PARTY IN ANY “DERIVATIVE” TRANSACTION.  THE
COMPANY FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT (Y) ONE OR MORE PURCHASERS MAY
ENGAGE IN HEDGING ACTIVITIES AT VARIOUS TIMES DURING THE PERIOD THAT THE
SECURITIES ARE OUTSTANDING, INCLUDING, WITHOUT LIMITATION, DURING THE PERIODS
THAT THE VALUE OF THE WARRANT SHARES DELIVERABLE WITH RESPECT TO SECURITIES ARE
BEING DETERMINED, AND (Z) SUCH HEDGING ACTIVITIES (IF ANY) COULD REDUCE THE
VALUE OF THE EXISTING STOCKHOLDERS’ EQUITY INTERESTS IN THE COMPANY AT AND AFTER
THE TIME THAT THE HEDGING ACTIVITIES ARE BEING CONDUCTED.  THE COMPANY
ACKNOWLEDGES THAT SUCH AFOREMENTIONED HEDGING ACTIVITIES DO NOT CONSTITUTE A
BREACH OF ANY OF THE TRANSACTION DOCUMENTS.

 

(DD)         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
SECURITIES, (II) SOLD, BID FOR, PURCHASED, OR, PAID ANY COMPENSATION FOR
SOLICITING PURCHASES OF, ANY OF THE SECURITIES, OR (III) PAID OR AGREED TO PAY
TO ANY PERSON ANY COMPENSATION FOR SOLICITING ANOTHER TO PURCHASE ANY OTHER
SECURITIES OF THE COMPANY, OTHER THAN, IN THE CASE OF CLAUSES (II) AND (III),
COMPENSATION PAID TO THE COMPANY’S PLACEMENT AGENT IN CONNECTION WITH THE
PLACEMENT OF THE SECURITIES.

 

3.2           Representations and Warranties of the Purchasers.  Each Purchaser,
for itself and for no other Purchaser, hereby represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein):

 

(a)           Organization; Authority.  Such 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 full right, corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement and
performance by such Purchaser of the transactions contemplated by this Agreement

 

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have been duly authorized by all necessary corporate, partnership, limited
liability company or similar action, as applicable, on the part of such
Purchaser.  Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (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.

 

(b)           Certain Transactions and Confidentiality.  Other than consummating
the transactions contemplated hereunder, such Purchaser has not, nor has any
Person acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly executed any purchases or sales, including Short
Sales, of the securities of the Company during the period commencing as of the
time that such Purchaser first became aware of by (written or oral)
communication the specific transaction involving the offer and sale of such
Securities and ending immediately prior to the execution hereof. 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 Securities covered by this Agreement. 
Other than to other Persons party to this Agreement, such Purchaser has
maintained the confidentiality of all disclosures made to it in connection with
this transaction (including the existence and terms of this transaction).
Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein
shall constitute a representation or warranty, or preclude any actions, with
respect to the identification of the availability of, or securing of, available
shares to borrow in order to effect Short Sales or similar transactions in the
future.

 

(c)           Each Purchaser hereby acknowledges and agrees that, while the
Company has submitted a proposal to the U.S. Department of Health and Human
Services (the “DHHS”) in response to a formal Request for Proposal
(RFP-BARDA-08-15) for an “Anthrax Recombinant Protective Antigen (rPA) Vaccine
for the Strategic National Stockpile,” there are no assurances that the Company
will receive an award for its rPA anthrax vaccine and that, if it fails to
receive such award, it could be forced to abandon or severely curtail its
efforts with respect to its lead product candidate, SparVaxT, which, in turn,
could lead to a substantial decline in its operations.  Each Purchaser
furthermore represents and warrants that neither the Company nor any other
offering participant has provided it with any information inconsistent with the
foregoing.

 

THE COMPANY ACKNOWLEDGES AND AGREES THAT THE REPRESENTATIONS CONTAINED IN
SECTION 3.2 SHALL NOT MODIFY, AMEND OR AFFECT SUCH PURCHASER’S RIGHT TO RELY ON
THE COMPANY’S REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT OR ANY
REPRESENTATIONS AND WARRANTIES CONTAINED IN ANY

 

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OTHER TRANSACTION DOCUMENT OR ANY OTHER DOCUMENT OR INSTRUMENT EXECUTED AND/OR
DELIVERED IN CONNECTION WITH THIS AGREEMENT OR THE CONSUMMATION OF THE
TRANSACTION CONTEMPLATED HEREBY.

 

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1           Warrant Shares.  If all or any portion of a Warrant is exercised
at a time when there is an effective registration statement to cover the
issuance or resale of the Warrant Shares or if the Warrant is exercised via
cashless exercise, the Warrant Shares issued pursuant to any such exercise shall
be issued free of all legends.  If at any time following the date hereof the
Registration Statement (or any subsequent registration statement registering the
sale or resale of the Warrant Shares) is not effective or is not otherwise
available for the sale or resale of the Warrant Shares, the Company shall
immediately notify the holders of the Warrants in writing that such registration
statement is not then effective and thereafter shall promptly notify such
holders when the registration statement is effective again and available for the
sale or resale of the Warrant Shares (it being understood and agreed that the
foregoing shall not limit the ability of the Company to issue, or any Purchaser
to sell, any of the Warrant Shares in compliance with applicable federal and
state securities laws). The Company shall use its best efforts to keep a
registration statement (including the Registration Statement) registering the
issuance or resale of the Warrant Shares effective during the term of the
Warrants. Upon a cashless exercise of a Warrant, the holding period for purposes
of Rule 144 shall tack back to the original date of issuance of such Warrant, if
then permitted by Rule 144 or any successor rule, law, or policy.

 

4.2           Furnishing of Information.  Until the earliest of the time that
(i) no Purchaser owns Securities, or (ii) the Warrants have expired, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act.  As long
as any Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities, including without
limitation, under Rule 144. The Company further covenants that it will take such
further action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act, including without limitation, within the
requirements of the exemption provided by Rule 144.

 

4.3           Integration.  The Company shall not 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 would be integrated with the
offer or sale of the Securities for purposes of the rules and regulations of any
Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.

 

4.4           Securities Laws Disclosure; Publicity.  The Company shall (i) by
8:30 a.m. (New York City time) on the Trading Day immediately following the date
hereof, issue a press release disclosing the material terms of the transactions
contemplated hereby, and (ii) within the time

 

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PRESCRIBED UNDER THE EXCHANGE ACT FILE A CURRENT REPORT ON FORM 8-K DISCLOSING
THE MATERIAL TERMS OF THE TRANSACTION AND INCLUDING THE TRANSACTION DOCUMENTS AS
EXHIBITS THERETO.  FROM AND AFTER THE ISSUANCE OF SUCH PRESS RELEASE, THE
COMPANY SHALL HAVE PUBLICLY DISCLOSED ALL MATERIAL, NON-PUBLIC INFORMATION
DELIVERED TO ANY OF THE PURCHASERS BY THE COMPANY OR ANY OF ITS SUBSIDIARIES, OR
ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS.  THE COMPANY
AND EACH PURCHASER SHALL CONSULT WITH EACH OTHER IN ISSUING ANY OTHER PRESS
RELEASES WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY, AND NEITHER THE
COMPANY NOR ANY PURCHASER SHALL ISSUE ANY SUCH PRESS RELEASE NOR OTHERWISE MAKE
ANY SUCH PUBLIC STATEMENT WITHOUT THE PRIOR CONSENT OF THE COMPANY, WITH RESPECT
TO ANY PRESS RELEASE OF ANY PURCHASER, OR WITHOUT THE PRIOR CONSENT OF EACH
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 ANY PURCHASER, OR INCLUDE THE NAME OF ANY PURCHASER IN ANY FILING WITH THE
COMMISSION OR ANY REGULATORY AGENCY OR TRADING MARKET, WITHOUT THE PRIOR WRITTEN
CONSENT OF SUCH PURCHASER, EXCEPT (A) AS REQUIRED BY FEDERAL SECURITIES LAW IN
CONNECTION WITH THE FILING OF FINAL TRANSACTION DOCUMENTS (INCLUDING SIGNATURE
PAGES THERETO) WITH THE COMMISSION AND (B) TO THE EXTENT SUCH DISCLOSURE IS
REQUIRED BY LAW OR TRADING MARKET REGULATIONS, IN WHICH CASE THE COMPANY SHALL
PROVIDE THE PURCHASERS WITH PRIOR NOTICE OF SUCH DISCLOSURE PERMITTED UNDER THIS
CLAUSE (B).  ON OR PRIOR TO 8:30 AM ON THE BUSINESS DAY FOLLOWING THE CLOSING
DATE, THE COMPANY SHALL FILE THE PROSPECTUS SUPPLEMENT WITH THE COMMISSION IN
ACCORDANCE WITH RULE 424 UNDER THE 1933 ACT.

 

4.5           Shareholder Rights Plan.  No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution 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, by virtue of receiving  Shares and Warrants under
the Transaction Documents or under any other agreement between the Company and
the Purchasers.

 

4.6           Non-Public Information.  Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
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 that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have executed a written
agreement with the Company regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

4.7           Use of Proceeds.  The Company shall use the net proceeds from the
sale of the Securities as described in the Prospectus and Prospectus
Supplements.

 

4.8           Indemnification of Purchasers.   Subject to the provisions of this
Section 4.8, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent

 

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role of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of any of
the representations, warranties, covenants or agreements made by the Company in
this Agreement or in the other Transaction Documents or (b) any action
instituted against a Purchaser in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any
such stockholder or any violations by such Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance).  If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period of time to
assume such defense and to employ counsel or (iii) in such action there is, in
the reasonable opinion of counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party, in
which case the Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel.  The Company will not be liable to
any Purchaser Party under this Agreement (y) for any settlement by a Purchaser
Party effected without the Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to the extent
that a loss, claim, damage or liability is attributable to any Purchaser Party’s
breach of any of the representations, warranties, covenants or agreements made
by such Purchaser Party in this Agreement or in the other Transaction Documents.

 

4.9           Reservation of Common Stock. As of the date hereof, the Company
has reserved and the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of Common Stock
for the purpose of enabling the Company to issue Shares pursuant to this
Agreement and Warrant Shares pursuant to any exercise of the Warrants.

 

4.10         Listing of Common Stock. The Company hereby agrees to use best
efforts to maintain the listing or quotation of the Common Stock on the Trading
Market on which it is currently listed, and concurrently with the Closing, the
Company shall apply to list or quote all of the Shares and the Warrant Shares on
such Trading Market and promptly secure the listing of all of the Shares and the
Warrant Shares on such Trading Market. The Company further agrees, if

 

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THE COMPANY APPLIES TO HAVE THE COMMON STOCK TRADED ON ANY OTHER TRADING MARKET,
IT WILL THEN INCLUDE IN SUCH APPLICATION ALL OF THE SHARES AND WARRANT SHARES,
AND WILL TAKE SUCH OTHER ACTION AS IS NECESSARY TO CAUSE ALL OF THE SHARES AND
THE WARRANT SHARES TO BE LISTED OR QUOTED ON SUCH OTHER TRADING MARKET AS
PROMPTLY AS POSSIBLE.  THE COMPANY WILL THEN TAKE ALL ACTION REASONABLY
NECESSARY TO CONTINUE THE LISTING AND TRADING OF ITS COMMON STOCK ON A TRADING
MARKET AND WILL COMPLY IN ALL RESPECTS WITH THE COMPANY’S REPORTING, FILING AND
OTHER OBLIGATIONS UNDER THE BYLAWS OR RULES OF THE TRADING MARKET.

 

4.11         Subsequent Equity Sales.

 

(A)           FROM THE DATE HEREOF UNTIL 45 DAYS AFTER THE CLOSING DATE, NEITHER
THE COMPANY NOR ANY SUBSIDIARY SHALL ISSUE, ENTER INTO ANY AGREEMENT TO ISSUE OR
ANNOUNCE THE ISSUANCE OR PROPOSED ISSUANCE OF ANY SHARES OF COMMON STOCK OR
COMMON STOCK EQUIVALENTS.

 

(B)           FROM THE DATE HEREOF UNTIL THREE (3) YEARS FROM THE CLOSING DATE,
THE COMPANY SHALL BE PROHIBITED FROM EFFECTING OR ENTERING INTO AN AGREEMENT TO
EFFECT ANY ISSUANCE BY THE COMPANY OR ANY OF ITS SUBSIDIARIES OF COMMON STOCK OR
COMMON STOCK EQUIVALENTS FOR CASH CONSIDERATION (OR A COMBINATION OF UNITS
HEREOF) INVOLVING A VARIABLE RATE TRANSACTION.  “VARIABLE RATE TRANSACTION”
MEANS A TRANSACTION IN WHICH THE COMPANY (I) ISSUES OR SELLS ANY DEBT OR EQUITY
SECURITIES THAT ARE CONVERTIBLE INTO, EXCHANGEABLE OR EXERCISABLE FOR, OR
INCLUDE THE RIGHT TO RECEIVE ADDITIONAL SHARES OF COMMON STOCK EITHER (A) AT A
CONVERSION PRICE, EXERCISE PRICE OR EXCHANGE RATE OR OTHER PRICE THAT IS BASED
UPON AND/OR VARIES WITH THE TRADING PRICES OF OR QUOTATIONS FOR THE SHARES OF
COMMON STOCK AT ANY TIME AFTER THE INITIAL ISSUANCE OF SUCH DEBT OR EQUITY
SECURITIES, OR (B) WITH A CONVERSION, EXERCISE OR EXCHANGE PRICE THAT IS SUBJECT
TO BEING RESET AT SOME FUTURE DATE AFTER THE INITIAL ISSUANCE OF SUCH DEBT OR
EQUITY SECURITY OR UPON THE OCCURRENCE OF SPECIFIED OR CONTINGENT EVENTS
DIRECTLY OR INDIRECTLY RELATED TO THE BUSINESS OF THE COMPANY OR THE MARKET FOR
THE COMMON STOCK (BUT NOT INCLUDING ANY ROUTINE ANTI-DILUTION PROTECTIONS IN ANY
WARRANT OR CONVERTIBLE SECURITY) OR (II) ENTERS INTO ANY AGREEMENT, INCLUDING,
BUT NOT LIMITED TO, AN EQUITY LINE OF CREDIT, WHEREBY THE COMPANY MAY SELL
SECURITIES AT A FUTURE DETERMINED PRICE.  ANY PURCHASER SHALL BE ENTITLED TO
OBTAIN INJUNCTIVE RELIEF AGAINST THE COMPANY TO PRECLUDE ANY SUCH ISSUANCE,
WHICH REMEDY SHALL BE IN ADDITION TO ANY RIGHT TO COLLECT DAMAGES.

 

(C)           NOTWITHSTANDING THE FOREGOING, SECTION 4.11(A) SHALL NOT APPLY IN
RESPECT OF AN EXEMPT ISSUANCE AND NO VARIABLE RATE TRANSACTION SHALL BE AN
EXEMPT ISSUANCE.

 

4.12         Equal Treatment of Purchasers.  No consideration (including any
modification of any Transaction Document) shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents.  For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Shares or otherwise.

 

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4.13         CERTAIN TRANSACTIONS AND CONFIDENTIALITY. EACH PURCHASER, SEVERALLY
AND NOT JOINTLY WITH THE OTHER PURCHASERS, COVENANTS THAT NEITHER IT NOR ANY
AFFILIATE ACTING ON ITS BEHALF OR PURSUANT TO ANY UNDERSTANDING WITH IT WILL
EXECUTE ANY PURCHASES OR SALES, INCLUDING SHORT SALES OF ANY OF THE COMPANY’S
SECURITIES DURING THE PERIOD COMMENCING WITH THE EXECUTION OF THIS AGREEMENT AND
ENDING AT SUCH TIME THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE
FIRST PUBLICLY ANNOUNCED PURSUANT TO THE INITIAL PRESS RELEASE AS DESCRIBED IN
SECTION 4.3.  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 PURSUANT TO THE INITIAL
PRESS RELEASE AS DESCRIBED IN SECTION 4.3, SUCH PURCHASER WILL MAINTAIN THE
CONFIDENTIALITY OF THE EXISTENCE AND TERMS OF THIS TRANSACTION AND THE
INFORMATION INCLUDED IN THE DISCLOSURE SCHEDULES.  NOTWITHSTANDING THE
FOREGOING, AND NOTWITHSTANDING ANYTHING CONTAINED IN THIS AGREEMENT TO THE
CONTRARY, THE COMPANY EXPRESSLY ACKNOWLEDGES AND AGREES THAT (I) NO PURCHASER
MAKES ANY REPRESENTATION, WARRANTY OR COVENANT HEREBY THAT IT WILL NOT ENGAGE IN
EFFECTING TRANSACTIONS IN ANY SECURITIES OF THE COMPANY AFTER THE TIME THAT THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE FIRST PUBLICLY ANNOUNCED
PURSUANT TO THE INITIAL PRESS RELEASE AS DESCRIBED IN SECTION 4.3, (II) NO
PURCHASER SHALL BE RESTRICTED OR PROHIBITED FROM EFFECTING ANY TRANSACTIONS IN
ANY SECURITIES OF THE COMPANY IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS FROM
AND AFTER THE TIME THAT THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT ARE
FIRST PUBLICLY ANNOUNCED PURSUANT TO THE INITIAL PRESS RELEASE AS DESCRIBED IN
SECTION 4.3 AND (III) NO PURCHASER SHALL HAVE ANY DUTY OF CONFIDENTIALITY TO THE
COMPANY OR ITS SUBSIDIARIES AFTER THE ISSUANCE OF THE INITIAL PRESS RELEASE AS
DESCRIBED IN SECTION 4.3.  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
COVENANT 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 SECURITIES COVERED BY THIS AGREEMENT.

 

ARTICLE V.

MISCELLANEOUS

 

5.1           TERMINATION.  THIS AGREEMENT MAY BE TERMINATED BY ANY PURCHASER,
AS TO SUCH PURCHASER’S OBLIGATIONS HEREUNDER ONLY AND WITHOUT ANY EFFECT
WHATSOEVER ON THE OBLIGATIONS BETWEEN THE COMPANY AND THE OTHER PURCHASERS, BY
WRITTEN NOTICE TO THE OTHER PARTIES, IF THE CLOSING HAS NOT BEEN CONSUMMATED ON
OR BEFORE MARCH 31, 2009; PROVIDED, HOWEVER, THAT NO SUCH TERMINATION WILL
AFFECT THE RIGHT OF ANY PARTY TO SUE FOR ANY BREACH BY THE OTHER PARTY (OR
PARTIES).

 

5.2           FEES AND EXPENSES.  EXCEPT AS EXPRESSLY SET FORTH IN THE
TRANSACTION DOCUMENTS TO THE CONTRARY, EACH PARTY SHALL PAY THE FEES AND
EXPENSES OF ITS ADVISERS, COUNSEL, ACCOUNTANTS AND OTHER EXPERTS, IF ANY, AND
ALL OTHER EXPENSES INCURRED BY SUCH PARTY INCIDENT TO 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 DELIVERY OF ANY SECURITIES TO THE PURCHASERS.  THE
COMPANY SHALL REIMBURSE EMPERY ASSET MASTER LTD. (A PURCHASER) OR ITS
DESIGNEE(S) FOR ALL REASONABLE COSTS AND EXPENSES, INCURRED IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS (INCLUDING ALL
REASONABLE LEGAL FEES AND DISBURSEMENTS IN CONNECTION THEREWITH, DOCUMENTATION
AND

 

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IMPLEMENTATION OF THE TRANSACTIONS CONTEMPLATED BY THE TRANSACTION DOCUMENTS AND
DUE DILIGENCE IN CONNECTION THEREWITH) UP TO A MAXIMUM REIMBURSEMENT OF $10,000,
WHICH AMOUNT MAY BE WITHHELD BY SUCH PURCHASER FROM ITS SUBSCRIPTION AMOUNT AT
THE CLOSING.

 

5.3           ENTIRE AGREEMENT.  THE TRANSACTION DOCUMENTS, TOGETHER WITH THE
EXHIBITS AND SCHEDULES THERETO, THE PROSPECTUS AND THE PROSPECTUS SUPPLEMENT,
CONTAIN THE ENTIRE UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS, ORAL OR
WRITTEN, WITH RESPECT TO SUCH MATTERS, WHICH THE PARTIES ACKNOWLEDGE HAVE BEEN
MERGED INTO SUCH DOCUMENTS, EXHIBITS AND SCHEDULES.

 

5.4           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 AT THE
FACSIMILE NUMBER SET FORTH ON THE SIGNATURE PAGES ATTACHED HERETO PRIOR TO
5:30 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 SET FORTH ON THE SIGNATURE PAGES ATTACHED
HERETO ON A DAY THAT IS NOT A TRADING DAY OR LATER THAN 5:30 P.M. (NEW YORK CITY
TIME) ON ANY TRADING DAY, (C) THE SECOND (2ND)TRADING DAY FOLLOWING THE DATE OF
MAILING, IF SENT BY U.S. NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE OR
(D) UPON ACTUAL RECEIPT BY THE PARTY TO WHOM SUCH NOTICE IS REQUIRED TO BE
GIVEN.  THE ADDRESS FOR SUCH NOTICES AND COMMUNICATIONS SHALL BE AS SET FORTH ON
THE SIGNATURE PAGES ATTACHED HERETO.

 

5.5           AMENDMENTS; WAIVERS.  NO PROVISION OF THIS AGREEMENT MAY BE
WAIVED, MODIFIED, SUPPLEMENTED OR AMENDED EXCEPT IN A WRITTEN INSTRUMENT SIGNED,
IN THE CASE OF AN AMENDMENT, BY THE COMPANY AND THE PURCHASERS HOLDING AT LEAST
67% IN INTEREST OF THE SHARES THEN OUTSTANDING OR, IN THE CASE OF A WAIVER, BY
THE PARTY AGAINST WHOM ENFORCEMENT OF ANY SUCH WAIVED 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 ANY PARTY TO EXERCISE
ANY RIGHT HEREUNDER IN ANY MANNER IMPAIR THE EXERCISE OF ANY SUCH RIGHT.

 

5.6           HEADINGS.  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.

 

5.7           SUCCESSORS AND ASSIGNS.  THIS AGREEMENT SHALL BE BINDING UPON AND
INURE TO THE BENEFIT OF THE PARTIES AND THEIR SUCCESSORS AND PERMITTED ASSIGNS. 
THE COMPANY MAY NOT ASSIGN THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER
WITHOUT THE PRIOR WRITTEN CONSENT OF EACH PURCHASER (OTHER THAN BY MERGER).  ANY
PURCHASER MAY ASSIGN ANY OR ALL OF ITS RIGHTS UNDER THIS AGREEMENT TO ANY PERSON
TO WHOM SUCH PURCHASER ASSIGNS OR TRANSFERS ANY SECURITIES, IN WHICH EVENT SUCH
ASSIGNEE SHALL BE DEEMED TO BE A PURCHASER HEREUNDER WITH RESPECT TO SUCH
ASSIGNED RIGHTS.

 

5.8           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 AS OTHERWISE SET FORTH IN SECTION 4.7.

 

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5.9           GOVERNING LAW.  ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THE TRANSACTION DOCUMENTS SHALL BE
GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW
THEREOF.  EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS CONCERNING THE
INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT AND ANY OTHER TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A
PARTY HERETO OR ITS RESPECTIVE AFFILIATES, DIRECTORS, OFFICERS, SHAREHOLDERS,
EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK. EACH PARTY HEREBY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY
OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR
DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE
TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT
IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER OR IS AN INCONVENIENT VENUE FOR SUCH PROCEEDING.  EACH PARTY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA
REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY)
TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT
AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF
PROCESS AND NOTICE THEREOF.  NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.  IF
EITHER PARTY SHALL COMMENCE AN ACTION OR PROCEEDING TO ENFORCE ANY PROVISIONS OF
THE TRANSACTION DOCUMENTS, THEN, IN ADDITION TO THE OBLIGATIONS OF THE COMPANY
UNDER SECTION 4.7, THE PREVAILING PARTY IN SUCH ACTION OR PROCEEDING SHALL BE
REIMBURSED BY THE OTHER PARTY FOR ITS REASONABLE ATTORNEYS’ FEES AND OTHER COSTS
AND EXPENSES INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF
SUCH ACTION OR PROCEEDING.

 

5.10         SURVIVAL.  THE REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN
SHALL SURVIVE THE CLOSING AND THE DELIVERY OF THE  SHARES AND WARRANTS.

 

5.11         EXECUTION.  THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE
COUNTERPARTS, ALL OF WHICH WHEN TAKEN TOGETHER SHALL BE CONSIDERED ONE AND THE
SAME AGREEMENT AND SHALL BECOME EFFECTIVE WHEN COUNTERPARTS HAVE BEEN SIGNED BY
EACH PARTY AND DELIVERED TO THE OTHER PARTY, IT BEING UNDERSTOOD THAT BOTH
PARTIES NEED NOT SIGN THE SAME COUNTERPART.  IN THE EVENT THAT ANY SIGNATURE IS
DELIVERED BY FACSIMILE TRANSMISSION OR BY E-MAIL DELIVERY OF A “.PDF” FORMAT
DATA FILE, SUCH SIGNATURE SHALL CREATE A VALID AND BINDING OBLIGATION OF THE
PARTY EXECUTING (OR ON WHOSE BEHALF SUCH SIGNATURE IS EXECUTED) WITH THE SAME
FORCE AND EFFECT AS IF SUCH FACSIMILE OR “.PDF” SIGNATURE PAGE WERE AN ORIGINAL
THEREOF.

 

5.12         SEVERABILITY.  IF ANY TERM, PROVISION, COVENANT OR RESTRICTION OF
THIS AGREEMENT IS HELD BY A COURT OF COMPETENT JURISDICTION TO BE INVALID,
ILLEGAL, VOID OR UNENFORCEABLE, THE REMAINDER OF THE TERMS, PROVISIONS,
COVENANTS AND RESTRICTIONS SET FORTH HEREIN SHALL REMAIN IN FULL FORCE AND
EFFECT AND SHALL IN NO WAY BE AFFECTED, IMPAIRED OR INVALIDATED, AND THE PARTIES
HERETO SHALL USE THEIR COMMERCIALLY REASONABLE EFFORTS TO FIND AND EMPLOY AN
ALTERNATIVE MEANS TO ACHIEVE THE SAME OR SUBSTANTIALLY THE SAME RESULT AS THAT
CONTEMPLATED BY SUCH TERM, PROVISION, COVENANT OR RESTRICTION. IT IS HEREBY
STIPULATED AND DECLARED TO BE THE INTENTION OF THE PARTIES THAT THEY WOULD HAVE
EXECUTED THE REMAINING TERMS, PROVISIONS, COVENANTS AND RESTRICTIONS WITHOUT
INCLUDING ANY OF SUCH THAT MAY BE HEREAFTER DECLARED INVALID, ILLEGAL, VOID OR
UNENFORCEABLE.

 

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5.13         RESCISSION AND WITHDRAWAL RIGHT.  NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN (AND WITHOUT LIMITING ANY SIMILAR PROVISIONS OF) ANY OF
THE OTHER TRANSACTION DOCUMENTS, WHENEVER ANY PURCHASER EXERCISES A RIGHT,
ELECTION, DEMAND OR OPTION UNDER A TRANSACTION DOCUMENT AND THE COMPANY DOES NOT
TIMELY PERFORM ITS RELATED OBLIGATIONS WITHIN THE PERIODS THEREIN PROVIDED, THEN
SUCH PURCHASER MAY RESCIND OR WITHDRAW, IN ITS SOLE DISCRETION FROM TIME TO TIME
UPON WRITTEN NOTICE TO THE COMPANY, ANY RELEVANT NOTICE, DEMAND OR ELECTION IN
WHOLE OR IN PART WITHOUT PREJUDICE TO ITS FUTURE ACTIONS AND RIGHTS.

 

5.14         REPLACEMENT OF SECURITIES.  IF ANY CERTIFICATE OR INSTRUMENT
EVIDENCING ANY SECURITIES IS MUTILATED, LOST, STOLEN OR DESTROYED, THE COMPANY
SHALL ISSUE OR CAUSE TO BE ISSUED IN EXCHANGE AND SUBSTITUTION FOR AND UPON
CANCELLATION THEREOF (IN THE CASE OF MUTILATION), OR IN LIEU OF AND SUBSTITUTION
THEREFOR, A NEW CERTIFICATE OR INSTRUMENT, BUT ONLY UPON RECEIPT OF EVIDENCE
REASONABLY SATISFACTORY TO THE COMPANY OF SUCH LOSS, THEFT OR DESTRUCTION.  THE
APPLICANT FOR A NEW CERTIFICATE OR INSTRUMENT UNDER SUCH CIRCUMSTANCES SHALL
ALSO PAY ANY REASONABLE THIRD-PARTY COSTS (INCLUDING CUSTOMARY INDEMNITY)
ASSOCIATED WITH THE ISSUANCE OF SUCH REPLACEMENT SECURITIES.

 

5.15         REMEDIES.  IN ADDITION TO BEING ENTITLED TO EXERCISE ALL RIGHTS
PROVIDED HEREIN OR GRANTED BY LAW, INCLUDING RECOVERY OF DAMAGES, EACH OF THE
PURCHASERS AND THE COMPANY WILL BE ENTITLED TO SPECIFIC PERFORMANCE UNDER THE
TRANSACTION DOCUMENTS.  THE PARTIES AGREE THAT MONETARY DAMAGES MAY NOT BE
ADEQUATE COMPENSATION FOR ANY LOSS INCURRED BY REASON OF ANY BREACH OF
OBLIGATIONS CONTAINED IN THE TRANSACTION DOCUMENTS AND HEREBY AGREE TO WAIVE AND
NOT TO ASSERT IN ANY ACTION FOR SPECIFIC PERFORMANCE OF ANY SUCH OBLIGATION THE
DEFENSE THAT A REMEDY AT LAW WOULD BE ADEQUATE.

 

5.16         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.

 

5.17         INDEPENDENT NATURE OF PURCHASERS’ OBLIGATIONS AND RIGHTS.  THE
OBLIGATIONS OF EACH PURCHASER UNDER ANY TRANSACTION DOCUMENT ARE SEVERAL AND NOT
JOINT WITH THE OBLIGATIONS OF ANY OTHER PURCHASER, AND NO PURCHASER SHALL BE
RESPONSIBLE IN ANY WAY FOR THE PERFORMANCE OR NON-PERFORMANCE OF THE OBLIGATIONS
OF ANY OTHER PURCHASER UNDER ANY TRANSACTION DOCUMENT.  NOTHING CONTAINED HEREIN
OR IN ANY OTHER TRANSACTION DOCUMENT, AND NO ACTION TAKEN BY ANY PURCHASER
PURSUANT THERETO, SHALL BE DEEMED TO CONSTITUTE THE PURCHASERS AS A PARTNERSHIP,
AN ASSOCIATION, A JOINT VENTURE OR ANY OTHER KIND OF ENTITY, OR CREATE A
PRESUMPTION THAT THE PURCHASERS ARE IN ANY WAY ACTING IN CONCERT OR AS A GROUP
WITH RESPECT TO SUCH OBLIGATIONS OR THE TRANSACTIONS CONTEMPLATED BY THE
TRANSACTION DOCUMENTS.  EACH PURCHASER SHALL BE ENTITLED TO INDEPENDENTLY
PROTECT AND ENFORCE ITS RIGHTS INCLUDING, WITHOUT LIMITATION, THE RIGHTS ARISING
OUT OF THIS AGREEMENT OR OUT OF THE OTHER TRANSACTION DOCUMENTS, AND IT SHALL
NOT BE NECESSARY FOR ANY

 

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OTHER PURCHASER TO BE JOINED AS AN ADDITIONAL PARTY IN ANY PROCEEDING FOR SUCH
PURPOSE.  EACH PURCHASER HAS BEEN REPRESENTED BY ITS OWN SEPARATE LEGAL COUNSEL
IN THEIR REVIEW AND NEGOTIATION OF THE TRANSACTION DOCUMENTS.  FOR REASONS OF
ADMINISTRATIVE CONVENIENCE ONLY, EACH PURCHASER AND ITS RESPECTIVE COUNSEL HAVE
CHOSEN TO COMMUNICATE WITH THE COMPANY THROUGH FWS.  FWS DOES NOT REPRESENT ANY
OF THE PURCHASERS AND ONLY REPRESENTS RODMAN & RENSHAW, LLC, AS PLACEMENT
AGENT.  THE COMPANY HAS ELECTED TO PROVIDE ALL PURCHASERS WITH THE SAME TERMS
AND TRANSACTION DOCUMENTS FOR THE CONVENIENCE OF THE COMPANY AND NOT BECAUSE IT
WAS REQUIRED OR REQUESTED TO DO SO BY ANY OF THE PURCHASERS.

 

5.18         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.

 

5.19         SATURDAYS, SUNDAYS, HOLIDAYS, ETC.  IF THE LAST OR APPOINTED DAY
FOR THE TAKING OF ANY ACTION OR THE EXPIRATION OF ANY RIGHT REQUIRED OR GRANTED
HEREIN SHALL NOT BE A BUSINESS DAY, THEN SUCH ACTION MAY BE TAKEN OR SUCH RIGHT
MAY BE EXERCISED ON THE NEXT SUCCEEDING BUSINESS DAY.

 

5.20         CONSTRUCTION. THE PARTIES AGREE THAT EACH OF THEM AND/OR THEIR
RESPECTIVE COUNSEL HAS REVIEWED AND HAD AN OPPORTUNITY TO REVISE THE TRANSACTION
DOCUMENTS AND, THEREFORE, THE NORMAL RULE OF CONSTRUCTION TO THE EFFECT THAT ANY
AMBIGUITIES ARE TO BE RESOLVED AGAINST THE DRAFTING PARTY SHALL NOT BE EMPLOYED
IN THE INTERPRETATION OF THE TRANSACTION DOCUMENTS OR ANY AMENDMENTS HERETO. IN
ADDITION, EACH AND EVERY REFERENCE TO SHARE PRICES AND SHARES OF COMMON STOCK IN
ANY TRANSACTION DOCUMENT SHALL BE SUBJECT TO ADJUSTMENT FOR REVERSE AND FORWARD
STOCK SPLITS, STOCK DIVIDENDS, STOCK COMBINATIONS AND OTHER SIMILAR TRANSACTIONS
OF THE COMMON STOCK THAT OCCUR AFTER THE DATE OF THIS AGREEMENT.

 

5.21         WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

(Signature Pages Follow)

 

25

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

 

PHARMATHENE, INC.

 

Address for Notice:

 

 

 

 

 

 

 

 

 

By:

 

 

Fax:

 

 

Name:

 

 

 

 

Title:

 

 

 

With a copy to (which shall not constitute notice):

 

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

26

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[PURCHASER SIGNATURE PAGES TO PIP 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 date first indicated above.

 

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:

 

 

 

Address for Notice of Purchaser:

 

 

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

 

Subscription Amount:

$

 

 

Shares:

 

 

 

Warrants:

 

 

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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