Exhibit 10.1

PURCHASE AGREEMENT

THIS AGREEMENT is made as of the 24 day of June, 2009, by and between Ophthalmic
Imaging Systems (the “Company”), a corporation organized under the laws of the
State of California, with its principal offices at 221 Lathrop Way, Suite I,
Sacramento, CA 95815 and the purchaser whose name and address is set forth on
the signature page hereof (the “Purchaser”).

IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:

SECTION 1.     Authorization of Sale of the Shares and Warrants. Subject to the
terms and conditions of this Agreement, the Company has authorized the issuance
and sale of up to 13,214,317 shares of common stock, no par value (the “Common
Stock”), of the Company, and warrants to purchase up to 4,404,772 shares of
Common Stock, in one or more transactions that are exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”),
provided by Section 4(2) thereof and Rule 506 of Regulation D thereunder.

 

SECTION 2.     Agreement to Sell and Purchase the Shares and the Warrants.

2.1       Closing. At the Closing (as defined in Section 3.1), the Company will,
subject to the terms of this Agreement, issue and sell to the Purchaser, and the
Purchaser will buy from the Company, upon the terms and conditions hereinafter
set forth:

(a)       9,633,228 shares of Common Stock (the “1st Installment Shares”) for a
purchase price per share equal to $0.41522 resulting in an aggregate purchase
price of $3,999,908.90 (the “1st Installment”), which reflects a pre-money
valuation of the Company of $7,200,000 as of the Closing Date, taking into
account all outstanding shares of the Company and assuming the conversion or
exercise of all outstanding notes and warrants (calculating their conversion at
the maximum number of underlying shares), options, convertible securities or
loans, which in any event, can only be exercised on a price per share lower than
$0.41522 (such calculation shall be referred as the “Fully Diluted Basis”); at
the Closing, the 1st Installment Shares shall represent 36.35% of the Company’s
issued and outstanding shares on a Fully Diluted Basis; and

(b)       a warrant to purchase up to 3,211,076 shares of Common Stock (i.e.,
33% of the 1st Installment Shares) (the “1st Installment Warrant Shares”)
exercisable at $1.00 per share for a period of three years commencing upon the
Closing Date (the “1st Installment Warrant”), which warrant shall be
substantially in the form set forth in Exhibit A-1 hereto.

2.2       Deferred Closing. At the Deferred Closing (as defined in Section 3.2),
the Company will, subject to the terms of this Agreement, issue and sell to the
Purchaser, and the Purchaser will buy from the Company, upon the terms and
conditions hereinafter set forth:

(a)       3,581,089 shares of Common Stock (the “2nd Installment Shares” and,
together with 1st Installment Shares, the “Shares”) for a purchase price per
share equal to $0.55848 (subject to adjustment for reverse and forward stock
splits and similar transactions) resulting in an aggregate purchase price of
$1,999,966.50 (the “2nd Installment”), which reflects

 

 

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a pre-money valuation of the Company of $10,800,000 as of the Deferred Closing
Date, on a Fully Diluted Basis; and

(b)       a warrant to purchase up to 1,193,696 shares of Common Stock (i.e.,
33% of the 2nd Installment Shares) (the “2nd Installment Warrant Shares” and,
together with the 2nd Installment Warrant Shares, the “Warrant Shares”)
exercisable at $1.00 per share, for a period of three years from the Closing
Date (the “2nd Installment Warrant” and, together with the 1st Installment
Warrant, the “Warrants”,and the Shares, the Warrants and the Warrant Shares
shall be collectively referred to as, the “Securities”), which warrant shall be
substantially in the form set forth in Exhibit A-2 hereto.

(c)       If at the time of the Deferred Closing Date, the Company’s Board of
Directors determines in good faith that the Company’s financial situation
requires the Company to raise additional funds in a capital raising transaction
(in addition to 2nd Installment), the Purchaser (in its capacity as a
shareholder in the Company) hereby agrees not to object to such capital raising
transaction and will agree to waive its participation right (as set forth in
Section 8.14 below) in connection therewith; provided, that such capital raising
transaction is with Persons who are shareholders of MediVision Medical Imaging
Ltd., the parent entity of the Company (“MediVision”), on the date hereof, in an
aggregate amount not to exceed $1,500,000, at a price per share not less than
$0.55848 (subject to adjustment for reverse and forward stock splits and similar
transactions), and without the provision of any special rights to such
investors. For avoidance of doubt, nothing herein shall be deemed as an
obligation of any Purchaser Director (as defined below) to vote in any manner at
any meeting of the Company’s Board of Directors (the “Board”) concerning this
matter and each such director shall serve his duties in accordance with
applicable law.

 

SECTION 3.

Delivery of the Shares at the Closing and at the Deferred Closing.

 

3.1

Closing

(a)       The completion of the purchase and sale of the 1st Installment Shares
(the “Closing”) shall occur at the offices of Troutman Sanders LLP, 405
Lexington Avenue, New York, New York 10174 as soon as practicable and as agreed
to by the parties hereto, within three business days following the execution of
this Agreement, or on such later date or at such different location as the
parties shall agree in writing, but not prior to the date that the conditions
for Closing set forth in Sections 3.1(b) and 3.1(c) below have been satisfied or
waived by the appropriate party (the “Closing Date”).

(b)       The Company’s obligation to complete the purchase and sale of the 1st
Installment Shares and deliver such stock certificate to the Purchaser at the
Closing shall be subject to the following conditions, any one or more of which
may be waived by the Company:

 

(i)

receipt by the Company of the 1st Installment; and

(ii)       each of the representations and warranties of the Purchaser made
herein shall be true and correct in all respects as of the date of this
Agreement and as of the Closing Date as though made at that time.

(c)       The Purchaser’s obligation to accept delivery of the 1st Installment
Shares, such stock certificate and the 1st Installment Warrant, and to pay the
1st Installment at the

 

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Closing shall be subject to the following conditions, any one or more of which
may be waived by the Purchaser:

(i)        the delivery to the Purchaser by counsel to the Company of a legal
opinion dated as of the Closing Date in the form set forth in Exhibit B;

(ii)       each of the representations and warranties of the Company set forth
herein are true and correct in all respects as of the date of this Agreement and
as of such Closing Date as though made at that time and that the Company shall
have complied in all respects with all the agreements and satisfied in all
respects all the conditions herein on its part to be performed or satisfied on
or prior to such Closing Date, and the Purchaser shall have received a
certificate executed by the chief executive officer and chief financial officer
of the Company, dated as of the Closing Date, to the foregoing effect, in the
form set forth in Exhibit C-1;

(iii)      the execution by the Company of a written agreement (copy of each
shall be delivered to the Purchaser at the Closing) with each of the Company’s
lenders, United Mizrachi Bank (“United Bank”) and The Tail Wind Fund Ltd. (“Tail
Wind”) which agreement is binding on the parties thereto, and pursuant to which
each of United Bank and Tail Wind agree to forgo any principal payments payable
by the Company (or any of its subsidiaries) under any United Bank or Tail Wind
indebtedness outstanding on the Closing Date until January 1, 2011, and in the
case of United Bank, the United Bank consents to and approves the MediVision
Assets Transaction (as defined below) and the transaction contemplated
thereunder. Notwithstanding the foregoing, if the Company makes a principal
payment to United Bank in 2010 in amount higher than the Company’s Earnings
Before Interest, Taxes and Amortization (“EBITDA”) for the year ended December
31, 2010, then within three business days after the filing with the SEC (as
defined below) of the Company’s audited financial statements for the year ended
December 31, 2010, the Company will issue shares of Common Stock to the
Purchaser free of charge and without payment of any consideration by the
Purchaser, in an amount equal to the amount of principal payments made to United
Bank minus EBITDA divided by 0.41522 (the “Additional Shares”); the provisions
of Section 7.1 shall apply, mutatis mutandis, to the Additional Shares, and the
Company shall take all required actions set forth in Section 7.1 in order to
register the Additional Shares;

(iv)      the execution by the Company and MediVision of a written agreement (a
copy of which shall be delivered to the Purchaser at the Closing) (the “Assets
Purchase Agreement”), which agreement is binding on the Company and the parties
thereto, for the purchase of certain assets of MediVision in a manner and under
terms reasonably satisfactory to the Purchaser (the “MediVision Assets
Transaction”);

(v)       the deposit by MediVision of 3,793,452 shares of Common Stock,
currently owned by MediVision, in escrow with Stephen L. Davis, Esq. and the
execution of the escrow agreement by all parties thereto (copy of which shall be
delivered to the Purchaser at the Closing), pursuant to the terms of Section
8.7(b) herein;

(vi)      the execution by MediVision and the receipt by the Purchaser at the
Closing of a copy of a binding and irrevocable proxy, substantially in the form
set forth in Exhibit D, appointing Gil Allon as its true and lawful
attorney-in-fact and proxy with respect to all shares of Common Stock owned by
MediVision (i.e, 9,380,843 shares) to vote FOR the Stockholder Approvals (as
defined below) at the Company’s 2010 Annual Meeting of

 

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Shareholders; provided that MediVision may transfer up to 2,000,000 shares of
Common Stock free and clear of this irrevocable proxy; and

(vii)     the execution by Agfa Gevaert N.V., Delta Trading and Services (1986)
Ltd, Gil Allon, Noam Allon, Ariel Shenhar and Yuval Shenhar (collectively, the
“Principal MV Shareholders,” and together with MediVision, the
“MediVision/Principal MV Shareholders Group”) and the receipt by the Purchaser
at the Closing of copies of binding and irrevocable proxies, substantially in
the form of set forth in Exhibit E, appointing Noam Allon as their true and
lawful attorney-in-fact and proxy with respect to all shares of MediVision owned
by such entities or persons to vote FOR the MediVision Assets Transaction and
any other matters for which MediVision’s shareholders are asked to grant their
vote or consent in connection with the consummation of the MediVision Assets
Transaction.

(viii)    the receipt by the Purchaser from the Company of a copy of resolutions
adopted by the Board approving the execution of the Transaction Documents, the
consummation of the transactions contemplated therein, the appointment of Uri
Geiger and Moshe Arkin to the Board as of the Closing and the delivery of a
director indemnification agreement to each of them.

(ix)      the delivery to the Purchaser of a duly executed secretary
certificate, dated as of the Closing Date, in the form of Exhibit F-1.

 

3.2

Deferred Closing.

(a)       The completion of the purchase and sale of the 2nd Installment Shares
(the “Deferred Closing”) shall occur at the offices of Troutman Sanders LLP, 405
Lexington Avenue, New York, New York 10174 as soon as practicable and as agreed
to by the parties hereto, within 14 days from the Company’s filing with the
United States Securities and Exchange Commission (the “SEC”) of its Form 10-Q
for the fiscal quarter ended March 31, 2010 (the “Q1 Financial Statements”), or
on such later date or at such different location as the parties shall agree in
writing, but not prior to the date that the conditions for Deferred Closing set
forth in Sections 3.2(b) and 3.2(c) below have been satisfied or waived by the
appropriate party (the “Deferred Closing Date”).

(b)       The Company’s obligation to complete the purchase and sale of the 2nd
Installment Shares and the 2nd Installment Warrant, and deliver the stock
certificate and the 2nd Installment Warrant to the Purchaser at the Deferred
Closing shall be subject to the following conditions, any one or more of which
may be waived by the Company:

 

(i)

receipt by the Company of the 2nd Installment; and

(ii)       each of the representations and warranties of the Purchaser made
herein shall be true and correct in all material respects (except for those
representations and warranties that are qualified by Material Adverse Effect,
which shall be true and correct in all respects) as of the Deferred Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such specific
date.

(c)       The Purchaser’s obligation to accept delivery of the 2nd Installment
Shares, the stock certificate and the 2nd Installment Warrant, and to pay the
2nd Installment at the Deferred Closing, shall be subject to the completion of
the Closing in all respects, and to the following conditions, any one or more of
which may be waived by the Purchaser:

 

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(i)        The Company shall have generated, for the period from January 1, 2009
to March 31, 2010, consolidated aggregate revenues (calculated in accordance
with “generally accepted accounting principles” as shall be defined in the Q1
Financial Statements) of at least $2,000,000 from the sale of EMR Products (as
defined below), of which at least $1,000,000 is generated (as shall be evidenced
in writing to the Purchaser prior to the Deferred Closing Date) from sales of
the Company (excluding sales by Abraxas Medical Solutions Ltd., a subsidiary of
the Company (“Abraxas Medical”)) to the ophthalmology segment (the “Milestone”).
If the Milestone shall not be achieved in full, the Purchaser shall not be
obligated to invest any portion of the 2nd Installment; provided, that the
Purchaser shall be entitled at its sole discretion to invest all or any portion
of the 2nd Installment on the terms set forth herein. For the purpose of this
Section 3.2, “EMR Product” shall mean all software, installation training,
service and maintenance of the Electronic Medical Records and Practice
Management;

(ii)       the delivery to the Purchaser by counsel to the Company of a legal
opinion dated as of the Deferred Closing Date in the form set forth in Exhibit
B; and

(iii)      each of the representations and warranties of the Company set forth
herein shall be true and correct in all material respects (except for those
representations and warranties that are qualified by Material Adverse Effect,
which shall be true and correct in all respects) as of the Deferred Closing Date
as though made at that time (except for representations and warranties that
speak as of a specific date, which shall be true and correct as of such specific
date) and that the Company has complied in all respects with all the agreements
and satisfied in all respects all the conditions herein on its part to be
performed or satisfied on or prior to such Deferred Closing Date, and the
Purchaser shall have received a certificate executed by the chief executive
officer and chief financial officer of the Company, dated as of the Deferred
Closing Date, to the foregoing effect in the form set forth in Exhibit C-2.

(iv)      the delivery to the Purchaser of a duly executed secretary
certificate, dated as of the Deferred Closing Date, in the form of Exhibit F-2.

3.3       At each of the Closing and the Deferred Closing, the Purchaser shall
deliver, in immediately available funds, the full amount of the purchase price
for the Shares being purchased hereunder by wire transfer to an account
designated by the Company, and the Company shall deliver to the Purchaser one or
more stock certificates and Warrants registered in the name of the Purchaser, or
in such nominee name(s) as designated by the Purchaser in writing, representing
the number of Shares and the number of the Warrant Shares set forth in Section 2
above and bearing an appropriate legend referring to the fact that the Shares
and the Warrants were sold in reliance upon the exemption from registration
under the Securities Act provided by Section 4(2) thereof and Rule 506 of
Regulation D promulgated thereunder. The name(s) in which the stock certificates
are to be registered are set forth in the Stock Certificate Questionnaire
attached hereto as part of Appendix I.

SECTION 4.   Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:

 

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4.1       Organization and Qualification. The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation with corporate power and authority to own or lease
its properties and conduct its business in all material respects as described in
the SEC Reports (as defined below) and the Company is qualified to do business
as a foreign corporation in each jurisdiction in which qualification is
required, except where failure to so qualify would not have a Material Adverse
Effect (as defined herein). The Company’s subsidiaries (each a “Subsidiary” and
collectively the “Subsidiaries”) are listed on Exhibit G to this Agreement and
are the only subsidiaries, direct or indirect, of the Company. Each Subsidiary
is a direct or indirect wholly owned subsidiary of the Company (except as
otherwise set forth in Exhibit G). Each Subsidiary is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to own or lease its properties
and conduct its business, and is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where failure to so qualify would not have a Material Adverse Effect.

4.2       Reporting Company; Registration Statement. The Company is not an
“ineligible issuer” (as defined in Rule 405 promulgated under the Securities
Act) and is eligible to register the Shares and the Warrant Shares for resale by
the Purchaser on a registration statement under the Securities Act.

4.3       Authorized Capital Stock. The Company has the authorized and the
issued and outstanding capitalization as set forth on Schedule 4.3(i); all of
the issued and outstanding securities of the Company have been duly authorized
and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, and were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and conform in all material respects to the
description thereof contained in the SEC Reports. Except as set forth on
Schedule 4.3(ii), the Company does not have outstanding any options to purchase,
or any preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of its capital stock or any such options, rights,
convertible securities or obligations. With respect to each of the Subsidiaries
(i) all the issued and outstanding shares of such Subsidiary’s capital stock is
owned and held by the Company, and have been duly authorized and validly issued,
are fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and were not issued in violation of or
subject to any preemptive rights or other rights to subscribe for or purchase
securities, and (ii) there are no outstanding options to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, shares of such Subsidiary’s capital stock or any such options,
rights, convertible securities or obligations.

4.4       Issuance, Sale and Delivery of the Shares. The Shares and the Warrants
issuable on each of the Closing Date and the Deferred Closing Date, as the case
may be, have been duly authorized and, when issued, delivered and paid for in
the manner set forth in this Agreement, will be validly issued, fully paid and
nonassessable, and will conform in all material respects to the description of
the Common Stock set forth in the Company’s Form 8-A filed with the Commission
on May 13, 1993 (the “Form 8-A”). No preemptive rights or other rights to
subscribe for or purchase any shares of Common Stock of the Company exist with
respect to the

 

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issuance and sale of the Shares and Warrant Shares by the Company pursuant to
this Agreement. The Warrant Shares have been duly authorized and, upon exercise
in accordance with the applicable Warrants, the Warrant Shares will be validly
issued, fully paid and nonassessable, and will conform in all material respects
to the description of the Common Stock set forth in the Form 8-A. No stockholder
of the Company has any right (which has not been waived or has not expired by
reason of lapse of time following notification of the Company’s intention to
file the Registration Statement (as hereinafter defined)) to require the Company
to register the sale of any capital stock owned by such stockholder under the
Registration Statement (other than rights granted to the Tail Wind Fund, Ltd.
and Solomon Strategic Holdings, Inc.).

4.5       Due Execution, Delivery and Performance of the Agreements; No
Conflicts; No Consents. The Company has the requisite corporate power and
authority to enter into this Agreement, the Voting Agreement and the Warrants
(collectively, the “Transaction Documents”) and to consummate the transactions
contemplated hereby and thereby. The Transaction Documents have been duly
authorized and when delivered in accordance with the terms of this Agreement,
will be duly executed and delivered by the Company, and will constitute legal,
valid and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other laws
of general application relating to or affecting the enforcement of creditors’
rights and the application of equitable principles relating to the availability
of remedies, and except as rights to indemnity or contribution, including but
not limited to, indemnification provisions set forth in Sections 7.4 and 8.7
below, this Agreement may be limited by federal or state securities law or the
public policy underlying such laws. The execution and performance of the
Transaction Documents by the Company and the consummation of the transactions
herein and therein contemplated (including the issuance of the Shares, the
Warrants and the Warrant Shares) will not: (i) violate any provision of the
articles of incorporation or bylaws of the Company or the organizational
documents of any Subsidiary; (ii) result in the creation of any lien, charge,
security interest or encumbrance upon any assets of the Company or any
Subsidiary pursuant to the terms or provisions of, or will not conflict with,
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any agreement, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which any of the Company or any Subsidiary is a party or by which any of the
Company or any Subsidiary or their respective properties may be bound; or (iii)
result in a violation of any statute or any authorization, judgment, decree,
order, rule or regulation of any court or any regulatory body, administrative
agency or other governmental agency or body applicable to the Company or any
Subsidiary or any of their respective properties, except in the case of (ii) and
(iii), such as could not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental agency or body is required for the execution and
delivery of the Transaction Documents or the consummation of the transactions
contemplated herein or therein, except for compliance with the Blue Sky laws and
federal securities laws applicable to the offering of the Securities. For the
purposes of this Agreement, the term “Material Adverse Effect” shall mean a
material adverse effect on the condition (financial or otherwise), properties,
business, prospects or results of operations of the Company and/or its
Subsidiaries, individually or taken as a whole.

 

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4.6       Accountants. Perry-Smith LLP, who has expressed its opinion with
respect to the consolidated financial statements contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008, which will be
incorporated by reference into the Registration Statement and the Prospectus (as
defined herein) that forms a part thereof, are registered independent public
accountants as required by the Securities Act and the rules and regulations
promulgated thereunder (the “1933 Act Rules and Regulations”) and by the rules
of the Public Accounting Oversight Board.

4.7       Contracts. The material contracts to which the Company is a party that
are filed with, or incorporated by reference to, the Company’s Annual Report on
Form 10-K or and Exchange Act report filed by the Company with the Commission
after December 31, 2008 have been duly and validly authorized, executed and
delivered by the Company and constitute the legal, valid and binding agreements
of the Company, enforceable by and against the Company in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
enforcement of creditors’ rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws.

4.8       No Actions. Except as disclosed in the SEC Reports, there are no legal
or governmental actions, suits or proceedings pending or, to the Company’s
knowledge, threatened against the Company or any Subsidiary before or by any
court, regulatory body or administrative agency or any other governmental agency
or body, domestic, or foreign, which actions, suits or proceedings, individually
or in the aggregate, might reasonably be expected to have a Material Adverse
Effect; and no labor disturbance by the employees of the Company exists or is
imminent, that might reasonably be expected to have a Material Adverse Effect.
Neither the Company nor any Subsidiary is a party to or subject to the
provisions of any injunction, judgment, decree or order of any court, regulatory
body, administrative agency or other governmental agency or body that might have
a Material Adverse Effect.

4.9       Properties. Except as disclosed in the SEC Reports, the Company and
each Subsidiary have good and marketable title to all the properties and assets
described as owned by it in the consolidated financial statements included in
the SEC Reports, free and clear of all liens, mortgages, pledges, or
encumbrances of any kind except (i) those, if any, reflected in such
consolidated financial statements, or (ii) those that are not material in amount
and do not adversely affect the use made and proposed to be made of such
property by the Company or its Subsidiaries. Except as disclosed in the SEC
Reports, the Company and each Subsidiary holds its leased properties under valid
and binding leases. The Company and any Subsidiary owns or leases all such
properties as are necessary to their respective operations as described in the
SEC Reports.

4.10     No Material Adverse Change. Since December 31, 2008: (i) the Company
and its Subsidiaries have not incurred any material liabilities or obligations,
indirect, or contingent, or entered into any material agreement or other
transaction that is not in the ordinary course of business or that could
reasonably be expected to result in a material reduction in the future earnings
of the Company; (ii) the Company and its Subsidiaries have not sustained any
material loss or interference with their businesses or properties from fire,
flood, windstorm, accident or other calamity not covered by insurance; (iii) the
Company and its Subsidiaries have

 

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not paid or declared any dividends or other distributions with respect to their
capital stock and none of the Company or any Subsidiary is in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock of the Company or its Subsidiaries
other than the sale of the Shares hereunder and shares or options issued
pursuant to employee equity incentive plans or purchase plans approved by the
Company’s Board of Directors, or indebtedness material to the Company or its
Subsidiaries (other than in the ordinary course of business and any required
scheduled payments); and (v) there has not occurred any event that has caused or
could reasonably be expected to cause a Material Adverse Effect.

4.11     Intellectual Property. Except as disclosed in the SEC Reports, (i) the
Company and each Subsidiary owns or has obtained valid and enforceable licenses
or options for the inventions, patent applications, patents, trademarks (both
registered and unregistered), trade names, copyrights and trade secrets
necessary for the conduct of its respective business as described in the SEC
Reports (collectively, the “Intellectual Property”); and (ii) (a) there are no
third parties who have any ownership rights to any Intellectual Property that is
owned by, or has been licensed to, the Company or each Subsidiary for the
products described in the SEC Reports that would preclude the Company or any
Subsidiary from conducting its business as currently conducted and have a
Material Adverse Effect, except for the ownership rights of the owners of the
Intellectual Property licensed or optioned by the Company or any Subsidiary;
(b) to the Company’s knowledge, there are currently no sales of any products
that would constitute an infringement by third parties of any Intellectual
Property owned, licensed or optioned by the Company or any Subsidiary, which
infringement would have a Material Adverse Effect; (c) there is no pending or,
to the Company’s knowledge, threatened action, suit, proceeding or claim by
others challenging the rights of the Company or any Subsidiary in or to any
Intellectual Property owned, licensed or optioned by the Company or any
Subsidiary, other than claims which could not reasonably be expected to have a
Material Adverse Effect; (d) there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any Intellectual Property owned, licensed or optioned by the Company
or any Subsidiary, other than non-material actions, suits, proceedings and
claims; and (e) there is no pending or, to the Company’s knowledge, threatened
action, suit, proceeding or claim by others that the Company or any of any
Subsidiaries infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary right of others, other than non-material
actions, suits, proceedings and claims.

4.12     Compliance. None of the Company nor its Subsidiaries has been advised,
nor do any of them have any reason to believe, that it is not conducting
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, including, without limitation,
all applicable local, state and federal environmental laws and regulations,
except where failure to be so in compliance would not have a Material Adverse
Effect.

4.13     Taxes. The Company and each Subsidiary has filed on a timely basis
(giving effect to extensions) all federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes that shown as due
thereon, and the Company has no knowledge of a tax deficiency that has been or
might be asserted or threatened against it that could have a Material Adverse
Effect. All tax liabilities accrued through the date hereof have been adequately
provided for on the books of the Company.

 

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4.14     Transfer Taxes. On the Closing Date, all stock transfer or other taxes
(other than income taxes) that are required to be paid in connection with the
sale and transfer of the Shares to be sold to the Purchaser hereunder will have
been, fully paid or provided for by the Company and all laws imposing such taxes
will have been fully complied with.

4.15     Investment Company. The Company is not an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission promulgated thereunder.

4.16     Insurance. The Company maintains insurance underwritten by insurers of
recognized financial responsibility, of the types and in the amounts that the
Company reasonably believes is adequate for its business, including, but not
limited to, insurance covering all real and personal property owned or leased by
the Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against, with such deductibles as are customary for
companies in the same or similar business, all of which insurance is in full
force and effect.

4.17     Additional Information. In the past 12 calendar months, the Company has
filed all documents required to be filed by it prior to the date hereof with the
Commission pursuant to the reporting requirements of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”) (all of the foregoing filed prior to
the Closing Date and all exhibits included therein and financial statements,
notes and schedules thereto and documents incorporated by reference therein
being hereinafter referred to as the “SEC Reports”). The Company has made
available to the Purchaser or its representatives true, correct and complete
copies of the SEC Reports not available on the SEC’s EDGAR system, if any. As of
their respective filing dates, the SEC Reports complied in all material respects
with the requirements of the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder (the “1934 Act Rules and Regulations”
and, together with the 1933 Act Rule and Regulations, the “Rules and
Regulations”) applicable to the SEC Reports, and none of the SEC Reports, at the
time they were filed with the Commission, 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.

4.18     Price of Common Stock. The Company has not taken, and will not take,
directly or indirectly, any action designed to cause or result in, or that has
constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common Stock to
facilitate the sale or resale of the Securities.

4.19     Use of Proceeds. The Company shall use the proceeds from the sale of
the Securities pursuant to the Company’s budget and a strategic work plan in the
form attached on Schedule 4.19.

4.20     Non-Public Information. The Company has not disclosed to the Purchaser
information that would constitute material non-public information as of the
Closing Date other than the existence of the transaction contemplated hereby.

4.21     Use of Purchaser Name. Except as otherwise required by applicable law
or regulation, the Company shall not use the Purchaser’s name or the name of any
of its affiliates in any advertisement, announcement, press release or other
similar public communication unless it

 

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has received the prior written consent of the Purchaser for the specific use
contemplated which consent shall not be unreasonably withheld.

4.22     Related Party Transactions. No transaction has occurred between or
among the Company, on the one hand, and its affiliates, officers or directors on
the other hand, that is required to have been described under applicable
securities laws in its SEC Reports and is not so described in such reports.

4.23     Off-Balance Sheet Arrangements. There is no transaction, arrangement or
other relationship between the Company 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 or that otherwise would be reasonably likely
to have a Material Adverse Effect. There are no such transactions, arrangements
or other relationships with the Company that may create contingencies or
liabilities that are not otherwise disclosed by the Company in its SEC Reports.

4.24     Governmental Permits, Etc. The Company and each Subsidiary has all
franchises, licenses, certificates and other authorizations from such federal,
state or local government or governmental agency, department or body that are
currently necessary for the operation of the business of the Company as
described in the SEC Reports, except where the failure to posses currently such
franchises, licenses, certificates and other authorizations is not reasonably
expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such permit that, if the subject of an unfavorable decision,
ruling or finding, could reasonably be expected to have a Material Adverse
Effect.

4.25     Financial Statements. The consolidated financial statements of the
Company and the related notes and schedules thereto included in the SEC Reports
fairly present the financial position, results of operations, stockholders’
equity and cash flows of the Company and its consolidated Subsidiaries at the
dates and for the periods specified therein. Such financial statements and the
related notes and schedules thereto have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved (except as otherwise noted therein) and all adjustments
necessary for a fair presentation of results for such periods have been made;
provided, however, that the unaudited financial statements are subject to normal
year-end audit adjustments (which are not expected to be material) and do not
contain all footnotes required under generally accepted accounting principles.

4.26     Internal Accounting Controls. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has disclosure controls and procedures
(as defined in Rules 13a-14 and 15d-14 under the Exchange Act) that are designed
to ensure that material information relating to the Company is made known to the
Company’s principal executive officer and the Company’s principal financial
officer or persons performing similar functions. The Company is otherwise in
compliance in all material respects

 

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with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended and
the rules and regulations promulgated thereunder.

4.27     Foreign Corrupt Practices. Neither the Company, nor any Subsidiary,
nor, to the knowledge of the Company, any director, officer, agent, employee or
other Person acting on behalf of the Company or any Subsidiary has, in the
course of its actions for, or on behalf of, the Company: (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee from
corporate funds; (iii) violated or is in violation of any provision of the U.S.
Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.

4.28     Employee Relations. Neither the Company nor any Subsidiary is a party
to any collective bargaining agreement or employs any member of a union. The
Company and each Subsidiary believe that their relations with their employees
are good. The Company is not engaged in any unfair labor practice except for
matters which would not, individually or in the aggregate, have a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or,
to the Company’s knowledge, threatened against the Company before the National
Labor Relations Board, and no grievance or arbitration proceeding arising out of
or under collective bargaining agreements is pending or threatened, (B) no
strike, labor dispute, slowdown or stoppage pending or, to the Company’s
knowledge, threatened against the Company and (C) no union representation
dispute currently existing concerning the employees of the Company, and (ii) to
the Company’s knowledge, (A) no union organizing activities are currently taking
place concerning the employees of the Company and (B) there has been no
violation of any federal, state, local or foreign law relating to discrimination
in the hiring, promotion or pay of employees or any applicable wage or hour
laws. No executive officer of the Company (as defined in Rule 501(f) promulgated
under the Securities Act) has notified the Company that such officer intends to
leave the Company or otherwise terminate such officer’s employment with the
Company. No executive officer 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, non-competition agreement, or
any other agreement or any restrictive covenant, and 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.

4.29     ERISA. The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder (herein called “ERISA”); no “reportable event” (as defined in ERISA)
has occurred with respect to any “pension plan” (as defined in ERISA) for which
the Company would have any liability; the Company has not incurred and does not
expect to incur liability under: (i) Title IV of ERISA with respect to
termination of, or withdrawal from, any “pension plan”; or (ii) Sections 412 or
4971 of the Internal Revenue Code of 1986, as amended, including the regulations
and published interpretations thereunder (the “Code”); and each “Pension Plan”
for which the Company would have liability that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.

 

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4.30     Environmental Matters. There has been no storage, disposal, generation,
manufacture, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances by the Company or to its knowledge, any
Subsidiary (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or any Subsidiary in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or that would require
remedial action under any applicable law, ordinance, rule, regulation, order,
judgment, decree or permit; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind into such property
or into the environment surrounding such property of any toxic wastes, medical
wastes, solid wastes, hazardous wastes or hazardous substances due to or caused
by the Company or any Subsidiary or with respect to which the Company or any
Subsidiary have knowledge; the terms “hazardous wastes,” “toxic wastes,”
“hazardous substances,” and “medical wastes” shall have the meanings specified
in any applicable local, state, federal and foreign laws or regulations with
respect to environmental protection.

4.31     Integration; Other Issuances of Shares. Neither the Company nor its
subsidiaries or any affiliates, nor any person acting on its or their behalf,
has issued any shares of Common Stock or shares of any series of preferred stock
or other securities or instruments convertible into, exchangeable for or
otherwise entitling the holder thereof to acquire shares of Common Stock which
would be integrated with the sale of the Securities to the Purchaser for
purposes of the Securities Act or of any applicable stockholder approval
provisions, including, without limitation, under the rules and regulations of
any exchange or automated quotation system on which any of the securities of the
Company are listed or designated, nor will the Company or its subsidiaries or
affiliates take any action or steps that would require registration of any of
the Securities under the Securities Act or cause the offering of the Securities
to be integrated with other offerings. Assuming the accuracy of the
representations and warranties of the Purchaser, the offer and sale of the
Securities by the Company to the Purchaser pursuant to this Agreement will be
exempt from the registration requirements of the Securities Act.

4.32     Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, 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, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened, except, in each case, as would not
reasonably be expected to have a Material Adverse Effect.

4.33     Foreign Assets Controls. Neither the Company nor any of its
Subsidiaries nor, to the knowledge of the Company, any director, officer, agent,
employee or affiliate 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”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

 

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4.34     Shareholders Rights Plan. No claim will be made or enforced by the
Company that the Purchaser is an “Acquiring Person” under any shareholders
rights plan or similar 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 the Securities.

4.35     No General Solicitation; Offering Materials. Neither the Company nor,
to the Company’s knowledge, any person acting on behalf of the Company, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Securities.
Each of the Company, its directors and officers has not distributed and will not
distribute prior to the Closing Date or the Deferred Closing Dates any offering
material, including any “free writing prospectus” (as defined in Rule 405
promulgated under the Securities Act), in connection with the offering and sale
of the Shares other than the SEC Reports or any amendment or supplement thereto.

SECTION 5.   Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to, and covenants with, the Company that:

5.1       Investment Experience. The Purchaser can bear the economic risk and
complete loss of its investment in the Securities and is knowledgeable,
sophisticated and experienced in financial and business maters, in making, and
is qualified to make, decisions with respect to investments representing an
investment decision like that involved in the purchase of the Securities.

5.2       Investment Intent. The Purchaser is acquiring the Securities in the
ordinary course of its business and for its own account for investment only not
with a view to distribution (within the meaning of Section 2(11) of the
Securities Act) (this representation and warranty not limiting the Purchaser’s
right to sell pursuant to the Registration Statement or in compliance with the
Securities Act and the Rules and Regulations, or, other than with respect to any
claims arising out of a breach of this representation and warranty, the
Purchaser’s right to indemnification under Section 7.4). Prior to the Closing,
the Purchaser was not an affiliate of the Company. Neither the Purchaser nor any
of its affiliates is a registered broker dealer or an entity engaged in the
business of being a broker dealer. The Purchaser does not have any agreement or
understanding, directly or indirectly, with any person to distribute the
Securities.

5.3       Shareholder Questionnaire. The Purchaser has completed or caused to be
completed the Registration Statement Questionnaire attached hereto as part of
Appendix I, for use in preparation of the Initial Registration Statement (as
defined below), and the answers thereto are true and correct as of the date
hereof and will be true and correct as of the effective date of the Registration
Statement and the Purchaser will notify the Company immediately of any material
change in any such information provided in the Registration Statement
Questionnaire until such time as the Purchaser has sold all of its Shares and
Warrant Shares or until the Company is no longer required to keep the Initial
Registration Statement effective.

5.4       Disclosure of Information. The Purchaser has had an opportunity to
receive documents related to the Company and to ask questions of and receive
answers from the Company regarding the Company, its business, finances and
operations and the terms and conditions of the offering of the Securities.
Neither such inquiries nor any other due diligence investigation conducted by
the Purchaser (or on its behalf) shall modify, amend, limit or affect

 

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the Purchaser’s right to rely on the Company’s representations and warranties
contained in this Agreement or made pursuant to this Agreement or the Company’s
obligation to indemnify the Purchaser indemnitees pursuant to Section 8.7
herein. The Purchaser has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

5.5       Accredited Investor. At the time the Purchaser was offered the Shares
and Warrants it was, at the date hereof it is, on each of the Closing Date and
Deferred Closing Date it will be, and on each date on which it exercises
Warrants it will be, either (i) an “accredited investor” within the meaning of
Rule 501(a) of Regulation D promulgated under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A promulgated under the
Securities Act.

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

5.7       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 Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

5.8       Brokers and Finders. The Purchaser has not retained any finder, broker
or like agent in connection with the transactions contemplated by this
Agreement.

5.9       Reliance on Exemptions. The Purchaser understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the Securities Act, the Rules and Regulations and
state securities laws and that the Company is relying upon the truth and
accuracy of, and the Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Securities.

5.10     Confidentiality. For the benefit of the Company, the Purchaser
previously agreed with the Company to keep confidential all information
concerning this private placement. The Purchaser acknowledges that it is
prohibited from reproducing or distributing this Agreement or any other offering
materials or other information provided by the Company in connection with the
Purchaser’s consideration of its investment in the Company, in whole or in part,
or divulging or discussing any of their contents, except to its partners,
officers, directors, or financial, investment, business or legal advisors in
connection with its proposed investment in the Securities. Further, the
Purchaser understands that the existence and nature of all conversations and
presentations, if any, regarding the Company and this offering must be kept
strictly confidential. The Purchaser understands that the federal securities
laws impose restrictions on trading based on information regarding this
offering. In addition, the Purchaser hereby acknowledges that unauthorized
disclosure of information regarding this offering may result in a violation of
Regulation D. This obligation will terminate upon the filing by the Company of a
Current Report on Form 8-K in accordance with Section 7.1 hereof describing this

 

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offering. In addition to the above, the Purchaser shall maintain in confidence
the receipt and content of any notice of a Suspension (as defined in
Section 5.17 below). The foregoing agreements shall not apply to any information
that is or becomes publicly available through no fault of the Purchaser, or that
the Purchaser is legally required to disclose; provided, however, that if the
Purchaser is requested or ordered to disclose any such information pursuant to
any court or other government order or any other applicable legal procedure, it
shall use commercially reasonable efforts to provide the Company with prompt
notice of any such request or order in time sufficient to enable the Company to
seek an appropriate protective order.

5.11     Investment Decision. The Purchaser understands that nothing in the
Agreement or any other materials presented to the Purchaser in connection with
the purchase and sale of the Securities 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 Securities.

5.12     Restricted Securities. The Purchaser understands that the Securities
are “restricted securities” under the U.S. federal securities laws inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable state laws and regulations such
securities may be resold without registration under the Securities Act only in
certain limited circumstances. The Purchaser understands that the Securities
have not been and, except as contemplated in Section 7 hereof, are not required
to be, registered for resale under the Securities Act or any state securities
laws, and may not be offered for resale, assigned or transferred unless (A)
subsequently registered thereunder or (B) pursuant to an exemption from such
registration, to the extent reasonably requested, including pursuant to Section
4(1) under the Securities Act or Rule 144 promulgated under the Securities Act,
as amended, or a successor rule thereto (“Rule 144”).

5.13     Legend. The Purchaser understands that, except as set forth in Section
5.14, the certificates representing the Shares or Warrant Shares will bear a
restrictive legend in substantially the following form:

“[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. 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.” 

 

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The Purchaser understands that the Warrants will bear a restrictive legend in
substantially the same form.

5.14     Removal of Legend; Transfer Agent Instructions. The Company hereby
covenants with the Purchaser to, no later than three trading days following the
delivery by the Purchaser to the Company of a legended certificate representing
Shares or Warrant Shares (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer), and either (i) Purchaser’s Certificate of Subsequent Sale (A) in the
form of Appendix II hereto, (B) executed by an officer of, or other authorized
person designated by, the Purchaser, and (C) to the effect that the Shares or
Warrant Shares have been sold in accordance with a Registration Statement or in
a transaction exempt from the registration requirements of the Securities Act
and any applicable state securities or Blue Sky laws or (ii) an opinion of
counsel reasonably satisfactory to the Company that the Shares or Warrant Shares
are freely transferable and that the legend is no longer required on such stock
certificate, deliver or cause the Company’s transfer agent to deliver to the
transferee of the Shares or Warrant Shares or to the Purchaser, as applicable, a
new stock certificate representing such Shares or Warrant Shares that is free
from all restrictive and other legends. The Company acknowledges that the remedy
at law for a breach of its obligations under this Section 5.14 may be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Section 5.14, that the Purchaser shall be entitled, in
addition to all other available remedies, to an order and/or injunction
restraining any breach and requiring immediate issuance and transfer, without
the necessity of showing economic loss and without any bond or other security
being required.

5.15     Stop Transfer. The certificates representing the Shares and Warrant
Share will be subject to a stop transfer order with the Company’s transfer agent
that restricts the transfer of such shares except upon receipt by the transfer
agent of a written confirmation from the Purchaser to the effect that the
Purchaser has satisfied its prospectus delivery requirements, in the form
attached as Appendix II hereto.

5.16     Residency. The Purchaser’s principal executive offices are in the
jurisdiction set forth immediately below the Purchaser’s name on the signature
pages hereto.

5.17     Public Sale or Distribution. The Purchaser hereby covenants with the
Company not to make any sale of the Shares or Warrant Shares under any
Registration Statement without complying with the provisions of this Agreement
and without effectively causing the prospectus delivery requirement under the
Securities Act to be satisfied (whether physically or through compliance with
Rule 172 under the Securities Act or any similar rule), and the Purchaser
acknowledges and agrees that such Shares or Warrant Shares are not transferable
on the books of the Company unless the certificate submitted to the transfer
agent evidencing the Shares is accompanied by a separate Purchaser’s Certificate
of Subsequent Sale: (i) in the form of Appendix II hereto, (ii) executed by an
officer of, or other authorized person designated by, the Purchaser, and
(iii) to the effect that (A) the Shares or Warrant Shares have been sold in
accordance with the Registration Statement, the Securities Act and any
applicable state securities or Blue Sky laws and (B) the prospectus delivery
requirement effectively has been satisfied. The

 

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Purchaser acknowledges that there may occasionally be times when the Company
must suspend the use of the prospectus (the “Prospectus”) forming a part of the
Registration Statement (a “Suspension”) until such time as an amendment to the
Registration Statement has been filed by the Company and declared effective by
the Commission, or until such time as the Company has filed an appropriate
report with the Commission pursuant to the Exchange Act. Without the Company’s
prior written consent, which consent shall not be unreasonably withheld or
delayed, the Purchaser shall not use any written materials to offer the Shares
for resale other than the Prospectus, including any “free writing prospectus” as
defined in Rule 405 under the Securities Act. The Purchaser covenants that it
will not sell any Shares or Warrant Shares pursuant to said Prospectus during
the period commencing at the time when Company gives the Purchaser written
notice of the suspension of the use of said Prospectus and ending at the time
when the Company gives the Purchaser written notice that the Purchaser may
thereafter effect sales pursuant to said Prospectus. Notwithstanding the
foregoing, the Company agrees that no Suspension shall be for a period of longer
than 60 consecutive days, and no Suspension shall be for a period longer than 90
days in the aggregate in any 365 day period. The Purchaser further covenants to
notify the Company promptly of the sale of all of its Shares or Warrant Shares.

5.18     Organization; Validity; Enforcements. The Purchaser further represents
and warrants to, and covenants with, the Company that: (i) the Purchaser has
full right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement;
(ii) the making and performance of this Agreement by the Purchaser and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Purchaser or conflict with,
result in the breach or violation of, or constitute, either by itself or upon
notice or the passage of time or both, a default under any material agreement,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which the Purchaser is a party or, any statute or any
authorization, judgment, decree, order, rule or regulation of any court or any
regulatory body, administrative agency or other governmental agency or body
applicable to the Purchaser; (iii) no consent, approval, authorization or other
order of any court, regulatory body, administrative agency or other governmental
agency or body is required on the part of the Purchaser for the execution and
delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement; (iv) upon the execution and delivery of this Agreement, this
Agreement shall constitute a legal, valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
the enforcement of creditor’s rights and the application of equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution, including, but not limited to, the indemnification provisions set
forth in Section 7.3 and 8.7 of this Agreement, may be limited by federal or
state securities laws or the public policy underlying such laws; and (v) there
is not in effect any order enjoining or restraining the Purchaser from entering
into or engaging in any of the transactions contemplated by this Agreement.

5.19     Short Sales. Prior to the date hereof, the Purchaser has not taken, and
prior to the public announcement of the transaction after the Closing the
Purchaser shall not take, any action that has caused or will cause the Purchaser
to have, directly or indirectly, sold or agreed to sell any shares of Common
Stock, effected any short sale, whether or not against the box,  established any
“put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act
with respect to the Common Stock, granted any other right (including, without
limitation, any put or call option) with respect to the Common Stock or with
respect to any security that includes, relates to or derived any significant
part of its value from the Common Stock.

 

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SECTION 6.   Survival of Agreements; Survival of Company Representations and
Warranties. Notwithstanding any investigation made by any party to this
Agreement, all covenants and agreements made by the Company and the Purchaser
herein and in the certificates for the Shares and the Warrants delivered
pursuant hereto shall survive the execution of this Agreement, the Closing and
the Deferred Closing (as the case may be), the delivery to the Purchaser of the
Shares and Warrants being purchased and the payment therefor. All
representations and warranties, made by the Company and the Purchaser herein and
in the certificates for the Shares and Warrants delivered pursuant hereto shall
survive (a) with respect to the transaction consummated at the Closing - for a
period of two years following the later of the execution of this Agreement, the
delivery to the Purchaser of the 1st Installment Shares and 1st Installment
Warrant being purchased at the Closing and the payment therefor, and (b) with
respect to the transaction consummated at the Deferred Closing - for a period of
two years following the later of the Deferred Closing, the delivery to the
Purchaser of the 2nd Installment Shares and 2nd Installment Warrant being
purchased at the Deferred Closing and the payment therefor.

 

SECTION 7.

Registration of the Shares; Compliance with the Securities Act.

 

7.1

Registration Procedures and Expenses. The Company shall:

(a)       as soon as practicable, but in no event later than 60 days following
the Closing Date (the “Initial Registration Statement Filing Deadline”), prepare
and file with the Commission a Registration Statement on Form S-1 or Form S-3
(or such other form appropriate for such purpose) (the “Initial Registration
Statement”), relating to the resale of the 1st Installment Shares, the 1st
Installment Warrant Shares and any shares of Common Stock issued or issuable,
directly or indirectly upon any stock split, dividend or other distribution,
recapitalization or similar event with respect to the foregoing by the Purchaser
from time to time.

(b)       as soon as practicable, but in no event later than 60 days following
the Deferred Closing Date (the “Deferred Closing Filing Deadline”), prepare and
file with the Commission a Registration Statement on Form S-1 or Form S-3 (or
such other form appropriate for such purpose) (the “Deferred Closing
Registration Statement”), relating to the resale of the 2nd Installment Shares,
the 2nd Installment Warrant Shares and any shares of Common Stock issued or
issuable, directly or indirectly upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the foregoing by
the Purchaser from time to time. For purposes of this Agreement, the term,
“Registration Statement” shall include each of the Initial Registration
Statement, the Deferred Closing Registration Statement and any registration
Statement filed pursuant to Section 7.2 and the term “Registrable Securities”
shall mean, collectively, 1st Installment Shares, the 1st Installment Warrant
Shares, 2nd Installment Shares, the 2nd Installment Warrant Shares and any
shares of Common Stock issued or issuable, directly or indirectly upon any stock
split, dividend or other distribution, recapitalization or similar event with
respect to the foregoing.

 

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(c)       use its commercially reasonable efforts, subject to receipt of
necessary information from the Purchaser, to cause the Commission to declare
each of the Initial Registration Statement and the Deferred Closing Registration
Statement effective within 180 days after the Closing Date or the Deferred
Closing Date (as the case may be) (the “Effectiveness Deadline”);

(d)       promptly prepare and file with the Commission such amendments and
supplements to each Registration Statement and the prospectus used in connection
therewith as may be necessary to keep each Registration Statement effective
until such time as all of the Registrable Securities covered by the Registration
Statement become eligible for resale by the Purchaser without any volume or
other restrictions under Rule 144 or any other rule of similar effect; provided,
that for the avoidance of doubt, in no event shall the Company have any
obligation to keep any Registration Statement effective after such time as all
of the Registrable Securities covered by such Registration Statement have been
sold pursuant to the Registration Statement or Rule 144;

(e)       furnish to the Purchaser with respect to the Registrable Securities
registered under any Registration Statement (and to each underwriter, if any),
such number of copies of prospectuses and such other documents as the Purchaser
may reasonably request, in order to facilitate the public sale or other
disposition of all Registrable Securities under such Registration Statement by
the Purchaser (or its valid transferees);

(f)        file documents required of the Company for normal Blue Sky clearance
in states specified in writing by the Purchaser; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented;

(g)       bear all expenses in connection with the procedures in paragraphs
(a) through (f) of this Section 7.1 and the registration of the Registrable
Securities pursuant to any Registration Statement, other than fees and expenses,
if any, of counsel or other advisers to the Purchaser or underwriting discounts,
brokerage fees and commissions incurred by the Purchaser, if any, in connection
with the offering of the Registrable Securities pursuant to any Registration
Statement;

(h)       file a Form D with respect to the 1st Installment Shares and the 1st
Warrants and the 2nd Installment Shares and the 2nd Installment Warrants (as the
case may be) as required under Regulation D;

(i)        file a Current Report on Form 8-K with the Commission describing the
transactions contemplated by this Agreement on each of the Closing Date and the
Deferred Closing Date (as the case may be); and

(j)        in order to enable the Purchaser to sell the Registrable Securities
under Rule 144 under the Securities Act, use its commercially reasonable efforts
to comply with the requirements of Rule 144, including without limitation, use
its commercially reasonable efforts to comply with the requirements of
Rule 144(c)(1) with respect to current public information about the Company and
to timely file all reports required to be filed by the Company under the
Exchange Act until the Purchaser is no longer an affiliate of the Company, but
in any

 

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event for at least one year from the Closing Date or the Deferred Closing Date
(as the case may be).

The Company understands that the Purchaser disclaims being an underwriter, but
the Purchaser being deemed an underwriter shall not relieve the Company of any
obligations it has hereunder. A draft of the proposed Registration Statement
Questionnaire to be completed by the Purchaser is attached hereto as Appendix I.

 

7.2

Commission Comments.

(a)       If the Commission informs the Company that all of the Registrable
Securities required to be registered under any Registration Statement cannot be
included in such Registration Statement due to Commission Comments (as defined
below), then the Company shall, from, time to time, (i) inform the Purchaser of
the receipt of the Commission Comments and use its commercially reasonable
efforts to file amendments to such Registration Statement as required by the
Commission and/or (ii) withdraw such Registration Statement and file a new
registration statement (a “New Registration Statement”), in either case covering
the maximum number of Registrable Securities permitted to be registered by the
Commission, on Form S-1 or S-3 or such other form available to register for
resale the Registrable Securities as a secondary offering; provided, however,
that prior to filing such amendment or New Registration Statement, the Company
shall be obligated to use its commercially reasonable efforts to advocate with
the Commission for the registration of all of the Registrable Securities in
accordance with the Commission Comments. Notwithstanding any other provision of
this Agreement, if any Commission Comments sets forth a limitation of 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 Commission for the
registration of all or a greater number of Registrable Securities), unless
otherwise directed in writing by the Purchaser as to its Registrable Securities,
the number of Registrable Securities to be registered on such Registration
Statement will first be reduced by Warrant Shares. In the event the Company
amends a Registration Statement or files a New Registration Statement, as the
case may be, under clauses (i) or (ii) above, the Company will use its
commercially reasonable efforts to file with the Commission, as promptly as
allowed by the Commission or Commission Comments provided to the Company or to
registrants of securities in general, one or more registration statements on
Form S-1 or 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, or the New Registration Statement.

(b)       For purposes of this Agreement, “Commission Comments” means written
comments pertaining solely to Rule 415 under the Securities Act which are
received by the Company from the Commission with respect to a filed Registration
Statement which requires the Company to limit the amount of Registrable
Securities which may be included therein to a number of shares which is less
than such amount sought to be registered under such Registration Statement.

(c)       For purposes of this Agreement, the Filing Deadline of any
Registration Statement filed pursuant to this Section 7.2, shall be 30 days
after the receipt of the Commission Comments which required the filing of such
Registration Statement.

 

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(d)       For purposes of this Agreement, the Effectiveness Deadline of any
Registration Statement filed pursuant to this Section 7.2, shall be 90 days
after the receipt of the Commission Comments which required the filing of such
Registration Statement.

(e)       The Company agrees that it will, subject to receipt of necessary
information from the Purchaser, file each New Registration Statement as soon as
practicable after it becomes aware that the filing of such New Registration
Statement will be required, but in any event by its Filing Deadline, and it will
use commercially reasonable efforts to cause the Commission to declare each New
Registration Statement effective within by its respective Effectiveness
Deadline.

(f)        The Company agrees that it will use commercially reasonable efforts
to respond to any comments received from the SEC with respect to any
Registration Statement, including but not limited to Commission Comments, as
soon as practical but in any event within 14 business days (United States) from
the receipt thereof.

 

7.3

Transfer of Shares After Registration.

(a)       The Purchaser agrees that it will not effect any disposition of the
Shares or Warrant Shares or its right to purchase the Shares or Warrant Shares
that would constitute a sale within the meaning of the Securities Act or
pursuant to any applicable state securities laws, except as contemplated in the
Registration Statement referred to in Section 7.1 or as otherwise permitted by
law, and that it will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding the Purchaser or
its plan of distribution.

(b)       The Company acknowledges and agrees that the Purchaser may from time
to time pledge, and/or grant a security interest in, some or all of the legended
Shares and Warrant 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 the Purchaser transferee of the pledge. No notice shall be required
of such pledge, but Purchaser’s transferee shall promptly notify the Company of
any such subsequent transfer or foreclosure. The 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 Warrant Shares or for any
agreement, understanding or arrangement between the Purchaser and its pledgee or
secured party. At the Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of Shares or Warrant
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)(3) of 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 5.17 and in this Section 7.3, any Shares or
Warrant Shares subject to a pledge or security interest as contemplated by this
Section 7.3(b) shall continue to bear the legend set forth in Section 5.13 and
be subject to the restrictions on transfer set forth in Section 5.17 and in this
Section 7.3.

 

7.4

Indemnification. For the purpose of this Section 7.4:

 

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(i)        the term “Purchaser/Affiliate” shall mean any affiliate of the
Purchaser, including a transferee who is an affiliate of the Purchaser, and any
person who controls the Purchaser or any affiliate of the Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act;
and

(ii)       the term “Registration Statement” shall include any preliminary
prospectus, final prospectus, free writing prospectus, exhibit, supplement or
amendment included in or relating to, and any document incorporated by reference
in, any Registration Statement referred to in Section 7.1 and 7.2.

(a)       The Company agrees to indemnify and hold harmless the Purchaser and
each Purchaser/Affiliate, against any losses, claims, damages, liabilities or
expenses, joint or several, to which the Purchaser or Purchaser/Affiliates may
become subject, under the Securities Act, the Exchange Act, or any other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rules 430B,
430C or 434, of the Rules and Regulations, or the Prospectus, in the form first
filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed
as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) filing is required or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state in any of
them a material fact required to be stated therein or necessary to make the
statements in the Registration Statement or any amendment or supplement thereto
not misleading or in the Prospectus or any amendment or supplement thereto not
misleading in light of the circumstances under which they were made, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
and will promptly reimburse the Purchaser and each Purchaser/Affiliate for any
legal and other expenses as such expenses are reasonably incurred by the
Purchaser or such Purchaser/Affiliate in connection with investigating,
defending or preparing to defend, settling, compromising or paying any such
loss, claim, damage, liability, expense or action; provided, however, that the
Company will not be liable for amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, and
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon (i) an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Registration Statement, the Prospectus or any amendment or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use
therein, or (ii) the failure of such Purchaser to comply with the covenants and
agreements contained in Sections 5.17 or 7.3 hereof respecting the sale of the
Shares or Warrant Shares, or (iii) the inaccuracy of any representation or
warranty made by such Purchaser herein or (iv) any statement or omission in any
Prospectus that is corrected in any subsequent Prospectus that was delivered to
the Purchaser prior to the pertinent sale or sales by the Purchaser.

 

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(b)       Each Purchaser will indemnify and hold harmless the Company, each of
its directors, each of its officers who signed the Registration Statement and
each person, if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act, against any losses,
claims, damages, liabilities or expenses to which the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, but only if such
settlement is effected with the written consent of such Purchaser) insofar as
such losses, claims, damages, liabilities or expenses (or actions in respect
thereof as contemplated below) arise out of or are based upon: (i) any failure
to comply with the covenants and agreements contained in Sections 5.10 or 7.2
hereof respecting the sale of the Shares; (ii) the inaccuracy of any
representation or warranty made by such Purchaser herein; or (iii) any untrue or
alleged untrue statement of any material fact contained in the Registration
Statement, the Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
in the Registration Statement or any amendment or supplement thereto not
misleading or in the Prospectus or any amendment or supplement thereto not
misleading in the light of the circumstances under which they were made, in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Purchaser expressly for use therein; and will
reimburse the Company, each of its directors, each of its officers who signed
the Registration Statement or controlling person for any legal and other expense
reasonably incurred by the Company, each of its directors, each of its officers
who signed the Registration Statement or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that each Purchaser’s
aggregate liability under this Section 7 shall not exceed the amount of proceeds
received by such Purchaser on the sale of the Shares pursuant to the
Registration Statement.

(c)       Promptly after receipt by an indemnified party under this Section 7.4
of notice of the threat or commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section 7.4 promptly notify the indemnifying party in writing
thereof, but the omission to notify the indemnifying party will not relieve it
from any liability that it may have to any indemnified party for contribution or
otherwise under the indemnity agreement contained in this Section 7.4 to the
extent it is not prejudiced as a result of such failure. In case any such action
is brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party, and the indemnifying party and the indemnified party shall
have reasonably concluded, based on an opinion of counsel reasonably
satisfactory to the indemnifying party, that there may be a conflict

 

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of interest between the positions of the indemnifying party and the indemnified
party in conducting the defense of any such action or that there may be legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel to assume such
legal defenses and to otherwise participate in the defense of such action on
behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election to assume the
defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7.4 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless: (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the preceding
sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel, reasonably
satisfactory to such indemnifying party, representing all of the indemnified
parties who are parties to such action); or (ii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of action, in each of which cases the reasonable fees and expenses
of counsel shall be at the expense of the indemnifying party. The indemnifying
party shall not be liable for any settlement of any action without its written
consent. In no event shall any indemnifying party be liable in respect of any
amounts paid in settlement of any action unless the indemnifying party shall
have approved in writing the terms of such settlement; provided, that such
consent shall not be unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnification could have been sought hereunder by
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

(d)       If the indemnification provided for in this Section 7.4 is required by
its terms but is for any reason held to be unavailable to or otherwise
insufficient to hold harmless an indemnified party under paragraphs (a), (b) or
(c) of this Section 7.4 in respect to any losses, claims, damages, liabilities
or expenses referred to herein, then each applicable indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of any losses, claims, damages, liabilities or expenses referred to herein:
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the private placement of Common
Stock hereunder; or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but the relative
fault of the Company and the Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties in this
Agreement and/or the Registration Statement that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by the Purchaser to the Company pursuant to this
Agreement for the Shares purchased by the Purchaser that were sold pursuant to
the Registration Statement bears to the difference (the “Difference”) between
the amount the Purchaser paid for the Shares that were sold pursuant to the
Registration Statement and the amount received by such Purchaser from such sale.
The relative fault of the Company on the one hand and the Purchaser on the other
shall

 

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be determined by reference to, among other things, whether the untrue or alleged
statement of a material fact or the omission or alleged omission to state a
material fact or the inaccurate or the alleged inaccurate representation and/or
warranty relates to information supplied by the Company or by the Purchaser and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in paragraph (c) of this Section 7.4, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (c) of this
Section 7.4 with respect to the notice of the threat or commencement of any
threat or action shall apply if a claim for contribution is to be made under
this paragraph (d); provided, however, that no additional notice shall be
required with respect to any threat or action for which notice has been given
under paragraph (c) for purposes of indemnification. The Company and the
Purchaser agree that it would not be just and equitable if contribution pursuant
to this Section 7.4 were determined solely by pro rata allocation (even if the
Purchaser were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred
to in this paragraph. Notwithstanding the provisions of this Section 7.4, the
Purchaser shall not be required to contribute any amount in excess of the amount
by which the Difference exceeds the amount of any damages that the Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

7.5       Information Available. The Company, upon the reasonable request of the
Purchaser, shall make available for inspection during normal business hours by
the Purchaser, any underwriter participating in any disposition pursuant to any
Registration Statement and any attorney, accountant or other agent retained by
the Purchaser or any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company’s officers, employees and independent accountants to supply all
information reasonably requested by the Purchaser or any such underwriter,
attorney, accountant or agent in connection with any Registration Statement.

7.6       Assignment of Registration Rights. The right to cause the Company to
register Registrable Securities granted to the Purchaser by the Company under
this Agreement may be assigned in full by the Purchaser (or a subsequent holder
of any Registrable Securities (a “Holder”)) in connection with a transfer by the
Purchaser or a Holder of its Registrable Securities, but only if: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws; (ii) the Purchaser or the Holder gives written notice of the proposed
transfer to the Company including the name and address of such transferee and a
copy of the transfer documents and agreements; and (iii) such transfer is
otherwise in compliance with this Agreement.

 

SECTION 8.

Covenants.

 

8.1

Proxy Statement.

(a)       In connection with (i) the Company’s 2010 Annual Meeting of
Shareholders or (ii) or any other special meeting of the Company’s shareholders
duly convened prior to the Company’s 2010 Annual Meeting of Shareholders, the
Company shall prepare and file with the Commission a proxy statement

 

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meeting in accordance with the requirements of Section 14 of the Exchange Act
and the related rules and regulations thereunder promulgated by the Commission
(the “Proxy Statement”) to solicit the approval by stockholders holding a
majority of the outstanding voting stock of the Company present, in person or by
proxy, at the Stockholders’ Meeting (as defined below) of an amendment to the
Company’s articles of incorporation providing for an increase in the amount of
authorized Common Stock equal to 100,000,000 shares or in any greater amount
such that in any event, the Company shall have at the Deferred Closing
sufficient amount of authorized Common Stock to enable it to perform its
obligations under this Agreement (the “Stockholder Approval[s]”). The Company
shall use its best efforts to (i) file the Company’s Annual Report on Form 10-K
for the year ended December 31, 2009 (the “2009 10-K”) as soon as possible after
such date, (ii) file the Proxy Statement immediately after it files the 2009
10-K, (iii) cause the Proxy Statement to be declared effective under the
Exchange Act as soon as possible promptly as reasonably practicable after such
filing (if the first filing is a preliminary proxy statement) and (iv) mail the
Proxy Statement to the stockholders of the Company as soon as practicable.

(b)       The Company shall keep the Purchaser apprised of the status of matters
relating to the Proxy Statement and the Stockholders’ Meeting, including
promptly furnishing the Purchaser and its counsel with copies of notices or
other communications related to the Proxy Statement and the Stockholders’
Meeting received by the Company from the Commission or any other third party.

8.2       Stockholders’ Meeting. The Company shall, in accordance with the laws
of the State of California and the Company’s articles of incorporation and
bylaws, use its commercially reasonable efforts to convene a meeting of holders
of Common Stock to consider and vote upon giving the Stockholder Approval (the
“Stockholders’ Meeting”) as soon as practicable after the filing of a definitive
proxy statement in connection with the Stockholders’ Meeting, but in any event
by May 15, 2010. Subject to fiduciary obligations under applicable law, the
Board shall recommend such Stockholder Approval, shall not withdraw or modify
such recommendation and shall solicit such Stockholder Approval. Without
limiting the generality of the foregoing, if the Board withdraws or modifies its
recommendation, the Company shall nonetheless cause the Stockholders’ Meeting to
be convened and a vote to be taken, and the Board may communicate to the
Company’s stockholders its basis for such withdrawal or modification.

8.3       Election of Directors.

(a)       The Company shall take all necessary actions (including, if necessary,
amend its by-laws) following the Closing to adjust the size of the Board to nine
members, to elected as follows:

(i)        two “Independent Directors” as defined under the listing standards of
The Nasdaq Capital Market, regardless of whether the Common Stock is then listed
on the Nasdaq Capital Market, the identity of one shall be nominated by the
Purchaser, and the identity of the other shall be nominated by the
MediVision/Principal MV Shareholders Group (which two directors are currently
Mr. William Greer and Mr. Jonathan R. Phillips);

(ii)       three directors to be nominated by the Purchaser (the “Purchaser
Directors”). One of the Purchaser Directors shall be appointed as the Chairman
of  the Company’s Audit Committee. The Company shall ensure the appointment of
the Purchaser Directors at the Closing, and shall use its commercially
reasonable efforts to cause (i) the Purchaser Directors to be nominated and
elected to the Board in each election of directors and (ii) if any Purchaser
Director who has been so elected to the Board shall cease for any reason to be a
member of the Board during such person’s term as a director, the Company shall
use its best efforts, subject to applicable laws and regulations, to cause such
vacancy to be filled by a replacement designated by the Purchaser;

 

27

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(iii)      three directors to be nominated by MediVision or the Principal MV
Shareholders (the “MediVision Directors”); and

(iv)     one director to be nominated by the Purchaser and MediVision or the
Principal MV Shareholders who shall be a reputable individual from the Company’s
industry, and who shall act as the Chairman of the Board;

provided, that at the first annual meeting of the Company’s shareholders
following the execution of this Agreement, (1) the Purchaser shall nominate
Mr. Ariel Shenhar, pursuant to Section 8.3(a)(ii), to serve as a director until
the next annual meeting, subject to his continuance service as the Company’s
chief financial officer during such period and (ii) MediVision or the Principal
MV Shareholders shall nominate Mr. Gill Allon, pursuant to Section 8.2(a)(iii),
to serve as a director until the next annual meeting, subject to his continuance
service as the Company’s chief executive officer during such period.

In addition, Noam Allon, in the sole discretion of the Board of Directors of the
Company, shall attend all meetings of the Board of Directors as an observer (the
“Representative”) and, in this respect, the Company shall give the
Representative copies of all notices, minutes, consents, and other materials
that it provides to its directors; provided, however, that such representative
shall agree to hold in confidence and trust and to act in a fiduciary manner
with respect to all information so provided; and provided further, that the
Company reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof if access to such information
or attendance at such meeting could adversely affect the attorney-client
privilege between the Company and its counsel or result in disclosure of trade
secrets or a conflict of interest.

8.4       D&O Insurance. Promptly following the date hereof and prior to the
applicable appointment, the Company shall cause each director appointed or
elected to the Board pursuant to Section 8.3 to be fully covered by the
Company’s existing directors’ and officers’ liability insurance, in an amount
reasonably acceptable to the Purchaser to be not less than $10,000,000. The
Company shall provide the Purchaser with a written approval of its insurance
agent to the foregoing effect. The Company shall maintain such insurance valid
and in place in all times thereafter during which the Purchaser is entitled to
elect members of the Board.

8.5       Indemnification Agreements. At the Closing, the Company shall execute
and deliver indemnification agreements substantially in the form attached hereto
as Exhibit H (the “Indemnification Agreements”) with each of the Purchaser
Directors.

8.6       Board of Directors; Powers; Committees. As of the Closing Date, the
bylaws of the Company will have been amended in accordance with its terms, to
provide the following:

 

28

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(a)       The Board will have nine members.

(b)       The Board shall have an audit committee, the composition and duties of
which shall be in compliance with all applicable federal and state securities
laws and the rules of the OTC Bulletin Board, and which shall consist of at
least three members of the Board. One of the Purchaser Directors shall be
appointed as the Chairman of the Company’s Audit Committee.

(c)       The Board shall have a compensation committee, the composition and
duties of which shall be in compliance with all applicable federal and state
securities laws and rules of the OTC Bulletin Board, and which shall consist of
three members of the Board. The duties of the compensation committee will
include (i) authorizing the compensation of any executive officer, (ii) setting
number of shares reserved under the Company’s option pool, and (iii) setting
employee compensation guidelines. The Purchaser Director shall have a veto right
with respect to any resolution adopted by the compensation committee with
regards to any issuance of Abraxas options (as set forth in Section 8.17 below).

(d)       The Purchaser and MediVision shall have the right, but not the
obligation, to cause one Purchaser Director and one MediVision Director to serve
on each of the Audit Committee, the Compensation Committee and any other
committee of the Board or any other committee of the Board of any subsidiary of
the Company (if any).

 

8.7

Indemnification.

(a)       Indemnification for breach representations, warranties or covenants.
The Company will, to the fullest extent permitted by law, defend the Purchaser,
and each of its Affiliates, directors, officers, agents and employees (the
“Purchaser Indemnitees”) or settle (provided that the Company will not agree to
any settlement without the applicable Purchaser Indemnitee’s prior written
consent, which consent shall not be unreasonably withheld or delayed) at the
Company’s expense any Action or Proceeding and indemnify them for all Losses and
Expenses (both as defined below) arising out of or in connection with a breach
of any representations, warranties or covenants of the Company in this
Agreement. The Company will indemnify and hold harmless the Purchaser
Indemnitees from and against any and all damages, costs, liabilities and
attorneys’ fees, incurred in defending and/or resolving such Action or
Proceeding; provided, that (i) the Company is promptly notified in writing of
such Action or Proceeding (provided, that any failure to deliver such notice
will not relieve the Company of liability under this Section 8.7), (ii) the
Company will have the sole control of the defense and/or settlement thereof
(provided, that if representation of the Purchaser Indemnitees by counsel
retained by the Company would be inappropriate due to any actual or potential
differing interest between the Purchaser Indemnitee and the Company or any third
party represented by such counsel, the Purchaser Indemnitees will have the right
to retain one separate counsel, with reasonable fees and expenses to be paid by
the Company), (iii) the Purchaser Indemnitees furnish to the Company, on
request, information available to the Purchaser Indemnitees for such defense,
and (iv) the Purchaser Indemnitees reasonably cooperate in any defense and/or
settlement thereof as long as the Company pays all of the Purchaser Indemnitees’
reasonable out of pocket expenses and attorneys’ fees. The Purchaser Indemnitees
will not admit any such Action or Proceeding or any allegations made in such
Action or Proceeding without, to the extent practicable, the prior written
consent of the Company (which will not be unreasonably withheld or delayed). For
purposes of this Agreement, an “Action or Proceeding” means any claim,

 

29

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action, suit, judgments, settlements, litigation, proceeding, mediation,
arbitration or investigation or audit by any Person, and “Losses and Expenses,”
means damages, expenses, losses, costs, liabilities (including without
limitation, incident to any Action or Proceeding.

(b)       Special Indemnification for the MediVision Assets Transaction. The
Company will, to the fullest extent permitted by law, defend the Purchaser
Indemnitees or settle (provided that the Company will not agree to any
settlement without the applicable Purchaser Indemnitee’s prior written consent,
which consent shall not be unreasonably withheld or delayed) at the Company’s
expense any Action or Proceeding and indemnify them for all Losses and Expenses
(both as defined below) arising out of or in connection with any liability,
indebtedness, restriction or obligation imposed on the Company or any subsidiary
of the Company or any Material Adverse Effect suffered by the Company or any
subsidiary of the Company as a result of or in connection with the MediVision
Assets Transaction (including without limitation, any liability related to the
obligations of MediVision to the Israeli Office of the Chief Scientist (the “OCS
Claims”) or any approval required to be provided by it in connection with such
transaction (the “OCS Approval”). In order to secure certain obligations of
MediVision to the Company under the Asset Purchase Agreement and to secure the
indemnification obligation of the Company to the Purchaser set forth in this
Section 8.7(b), MediVision shall comply with the escrow provisions set forth in
Section 10.5 of the Asset Purchase Agreement. The Company hereby undertakes to
take all required actions and to enforce any and all rights and remedies granted
to it or to which it is entitled under the Assets Purchase Agreement, by
applicable law, or otherwise, in order to perform its indemnification obligation
set forth in this Section 8.7(b), including without limitation, (i) Company’s
right to purchase and sell certain shares of Common Stock for the repayment of
the Elop Debt (as such term is defined and as further described Section 8.14 of
the Asset Purchase Agreement), (ii) Company’s right to purchase and cancel
and/or reclassify certain shares of Common Stock into treasury shares entitling
their holder to no rights, in connection with the Untied Mizrachi Bank Loan (as
such term is defined and as further described in Section 8.15 of the Asset
Purchase Agreement); The Board of the Company shall adopt, on or prior to the
Closing Date, a resolution (a copy of which shall be delivered to the Purchaser
at the Closing) approving such cancellation and/or reclassification, subject to
the occurrence of the relevant conditions, and (iii) Company’s rights purchase
and sell certain shares of Common Stock for the repayment of the OCS Debt and
Obligations (as such term is defined and as further described Section 8.16 of
the Asset Purchase Agreement).

8.8       Voting Agreement. At the Closing, MediVision and certain of its
stockholders shall execute a voting agreement with the Purchaser pursuant to
which they will undertake to vote all their shares in the Company for the
appointment of the Purchasers Directors (as defined above) and will agree on
other terms customary in such agreements.

8.9       Management Fee. In consideration for the Purchaser’s service on the
Board (through its Purchasers Directors) and strategic consulting services, the
Company shall pay the Purchaser an annual management fee of $20,000 plus VAT (to
the extent applicable) per each director appointed by it which is not an
employee of the Company.

8.10     Operation of Business. The Company agrees that, between the date of
this Agreement and the earlier of the termination of this Agreement and the
Closing Date, except as expressly contemplated by any provision of this
Agreement, (i) the business of the Company

 

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shall be conducted only in, and the Company shall not take any action except in,
the ordinary course of business consistent with past practice, and (ii) the
Company shall use its commercially reasonable efforts to preserve its business
organization intact, to keep available the services of its current officers and
employees, and to maintain its existing relations with suppliers, creditors,
business partners and others having business dealings with the Company, to the
end that the Company’s goodwill and ongoing business shall be unimpaired at the
Closing.

8.11     Exclusivity; Break-Up Fee. Until the Closing Date, the Company shall
not, directly or indirectly, and shall direct its directors, officers,
employees, representatives, Affiliates and agents, including investment bankers,
financial advisors, attorneys and accountants (collectively, the
“Representatives”) not to, directly or indirectly, solicit or encourage any
offers, engage in any discussions (other than to inform any initiating party
that it is subject to this provision) or enter into any agreements or
commitments with respect to the purchase of, or the sale or transfer or issuance
(whether by merger, consolidation or otherwise) of, (i) any shares of capital
stock of the Company or another entity organized by affiliates or any securities
convertible into or exchangeable for any such stock for the primary purpose of
raising capital or (ii) all or substantially all of the assets, or any material
assets, of the Company or any subsidiary thereof (“Acquisition Proposals”);
provided, however, that nothing contained in this Section 8.11 shall prohibit
the Board from providing information in connection with, and negotiating,
another unsolicited, bona fide written proposal regarding an Acquisition
Proposal that the Board shall have determined in good faith, after considering
applicable law, and after consulting with independent outside counsel, that such
action is required in order for the Board to comply with its fiduciary duties to
the Company’s stockholders under applicable law; provided, further, that if (a)
the Board determines to enter into an Acquisition Proposal prior to the Closing,
(b) the Stockholder Approvals are not obtained prior to the Deferred Closing
Date, the Closing is not consummated due to failure to obtain any consent of any
third party on part of the Company (including any governmental approvals), (c)
the Stockholder Approvals are not obtained prior to the Deferred Closing Date,
or (d) the Company breaches its exclusivity undertaking above, the Company shall
pay to the Purchaser a break-up fee equal to $100,000 within seven days of the
Purchaser’s written request. The Company shall notify the Purchaser promptly if
any proposal or offer, or any inquiry or contact with any Person with respect
thereto, regarding an Acquisition Proposal is made, such notice to include the
identity of the Person making such proposal, offer, inquiry or contact, and the
terms of such Acquisition Proposal. In addition, if the Company receives an
Acquisition Proposal that would require the Board, in exercising its fiduciary
duties as described above, to determine not to consummate the transactions
contemplated hereby prior to the Closing, the Company shall endeavor to
negotiate with the Purchaser, for a period not to exceed 10 days, a new
transaction with the Purchaser that is comparable to such Acquisition Proposal.

8.12     Reasonable Efforts; Notification; Representations. Subject to the other
terms and conditions of this Agreement, each of the parties to this Agreement
shall use reasonable efforts to take promptly, or cause to be taken, all
actions, and to do promptly, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, including the
issuance of Warrant Shares upon the exercise of Warrants. Each party to this
Agreement shall give prompt notice to each other party to this Agreement upon
becoming aware that any representation or warranty made by such party in this
Agreement has become untrue or

 

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inaccurate or that such party has failed to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by such party under this Agreement, in each case such that the
conditions set forth in this Agreement would not be satisfied. No party to this
Agreement shall take any action that would cause any representation or warranty
made by such party in this Agreement to be untrue if made at Closing.

8.13     Approval Rights. For so long as the Purchaser owns more than 20% of the
issued and outstanding shares of Common Stock (giving effect to the Warrant
Shares underlying the Warrants held by the Purchaser) the Company must obtain
prior written approval from the Purchaser to:

(i)        Merge into or consolidate with any other person or entity or permit
any other person or entity to merge or consolidate with it; sell all or
substantially all of the assets of the Company; liquidate, dissolve or wind-up
the Company; acquire any interest in any business from any person or entity;
sell, transfer, lease or otherwise dispose of (in one or more transactions) any
of its material assets; purchase, lease or otherwise acquire (in one or more
transactions) any material asset or more;

(ii)       Authorize, offer, sell or issue any (a) security or security
converted into equity for a purchase price or exercise price, as the case may
be, lower than the average purchase price to be paid by the Purchaser for the
two installments (or lower than the 1st Installment purchase price, if the 2nd
Installment was not paid), and (b) debt security, provided that following two
years from the Closing, the Company may issue debt security in an aggregate
amount lower than $2,000,000 per year without the Purchaser’s consent, and in
any event, excluding the issuance of options to employees, including directors;

(iii)      Incur indebtedness for borrowed money or guarantee or act as a surety
for any debt from financial institutions in excess of $100,000 other then in the
ordinary course of business;

(iv)      Grant a security interest in an asset or combination of assets of the
Company valued individually or in the aggregate at $250,000 or more;

(v)       Sell, lease, sublease, license or otherwise transfer any of the
rights, title and interest in any Company intellectual property valued
individually or in the aggregate at $250,000 or more;

(vi)      Purchase, license or otherwise acquire any of the rights, title or
interest in any intellectual property of any third party valued individually or
in the aggregate at $250,000 or more;

(vii)     Any deviation of $250,000 or more from the Company’s budget for 2009
and 2010 as disclosed to the Purchaser prior to the Closing (the 2010 budget can
only be approved with the Purchaser’s consent); or

(viii)    Hire or terminate any executive officer of the Company, including the
Chief Executive Officer and Chief Financial Officer; or

(ix)      Approval of interested parties transaction(s) (excluding grant of
options), to include without limitation, transactions, directly or indirectly,
between the

 

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Company and any of its directors and officers and any transaction with
MediVision (including its directors and officers).

8.14     Participation Rights. The Purchaser, for so long as it holds a number
of shares of Common Stock equal to 15% or more of the 1st Installment Shares it
purchased pursuant to this Agreement, will have the right to purchase its pro
rata share (based on the Purchaser’s beneficial ownership of the Company’s
outstanding shares of Common Stock on a fully diluted basis, including the
Warrant(s) or the Warrant(s) Shares (as the case may be) of any future equity
offering by the Company.

8.15     Most Favorite Nation. In the event that any current or future investor
in the Company shall be granted more favorable rights than or in preference over
the Purchaser (including but not limited to issuance of superior type of shares
or rights for liquidation preference, anti dilution protection, board
nomination, voting, registration of securities, approval rights, participation
rights, or management fee), the purchaser shall receive rights or parity with
such rights and the terms applicable to the Securities shall be amended
accordingly, only for so long as the Purchaser beneficially owns at least 20% of
the Company’s issued and outstanding Common Stock on a fully diluted basis
(including the Warrant Shares). This Section 8.15 will not apply if the terms
granted to a future investor were agreed by the Purchaser in its capacity as a
stockholder, and the Purchaser waived its Most Favorite Nation right in
connection therewith.

8.16     Access Rights. From the date hereof until the Closing, the Company will
permit access to, and will make available to the Purchaser’s representatives,
consultants and their respective counsels for inspection, such information and
documents as the Purchaser reasonably request, and will make available at
reasonable times and to a reasonable extent officers and employees of the
Company to discuss the business and affairs of the Company.

8.17     Abraxas Options. All options promised to Gil Allon and/or Ariel Shenhar
for shares of Abraxas shall be re-discussed at the compensation committee of the
Board of Directors of the Company at its first meeting of the compensation
committee following the Closing and in any event no later than thirty days
following the Closing Date, with the participation of the Purchaser Directors.
It is agreed that the Purchaser shall have a veto right with regards to any such
issuance of Abraxas options.

8.18     Company’s Auditors. The Company shall appoint, no later than thirty
days following the Closing Date, Ernst & Young (Israel office) as channel II
accountant for the Company and its subsidiaries.

SECTION 9.   Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or
certified airmail, e-mail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:

 

 

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(a)

if to the Company, to:

 

Ophthalmic Imaging Systems
221 Lathrop Way, Suite 1
Sacramento, CA 95815
Attention: Gil Allon
Facsimile: 916-646-0207
Email: Info@oisi.com

with a copy to:

Troutman Sanders LLP

405 Lexington Avenue

New York, New York 10174

Attention: Henry I. Rothman

Facsimile: 212-704-5950

E-mail: Henry.rothman@troutmansanders.com

 

or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and

(b)       if to the Purchaser, at its address as set forth at the end of this
Agreement, or at such other address or addresses as may have been furnished to
the Company in writing.

SECTION 10. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser.
Any amendment or waiver effected in accordance with this Section 10 shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.

SECTION 11. Headings. The headings of the various sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed to
be part of this Agreement.

SECTION 12. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

SECTION 13. Governing Law; Venue. This Agreement is to be construed in
accordance with and governed by the federal law of the United States of America
and the internal laws of the State of California without giving effect to any
choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of California to the
rights and duties of the parties. Each of the Company and the Purchaser submits
to the exclusive jurisdiction of the state and federal courts sitting in the
city of Sacramento, State of California, for purposes of all legal proceedings
arising out of or relating to this Agreement and the transactions contemplated
hereby. Each of the Company and the Purchaser irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.

 

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SECTION 14. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which, when taken together,
shall constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the other
parties. Facsimile signatures shall be deemed original signatures.

SECTION 15. Entire Agreement. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. Each party
expressly represents and warrants that it is not relying on any oral or written
representations, warranties, covenants or agreements outside of this Agreement.

SECTION 16. Fees and Expenses. The Company shall reimburse the Purchaser, at the
Closing Date, for all expenses incurred by the Purchaser in connection with this
Agreement, including financial and legal due diligence and negotiation of the
transaction, financial and legal due diligence and negotiation of the MediVision
Assets Transaction, and other professional services retained by the Purchaser,
in an aggregate amount equal to $100,000 plus VAT (to the extent applicable);
provided, however, that the Purchaser hereby acknowledges that as of the date of
this Agreement, the Company has reimbursed the Purchaser $40,000 pursuant to
this Section 16 and at the Closing Date, the Company is only required to
reimburse the Purchaser $60,000 plus VAT (to the extent applicable) for all
expenses incurred by the Purchaser in connection with this Agreement.

SECTION 17. Parties. This Agreement is made solely for the benefit of and is
binding upon the Purchaser and the Company and to the extent provided in
Section 7.4, any person controlling the Company or the Purchaser, the officers
and directors of the Company, and their respective executors, administrators,
successors and assigns and subject to the provisions of Section 7.4, no other
person shall acquire or have any right under or by virtue of this Agreement. The
term “successor and assigns” shall not include any subsequent purchaser, as such
purchaser, of the Shares sold to the Purchaser pursuant to this Agreement.
Notwithstanding the foregoing, the obligation of the Company to register the
Shares and the Warrant Shares granted to the Purchaser under this Agreement may
be assigned in full by the Purchaser in connection with a valid transfer by the
Purchaser of its Shares and the Company agrees to promptly file any required
prospectus supplement electing such transfer and naming the transferee as a
selling stockholder therein, if applicable, enabling the transferee to sell all
Shares required by it; provided, however, that (i) such transfer may otherwise
be expected in accordance with applicable securities laws; (ii) such Holder
gives prior written notice to the Company; and (iii) such transferee agrees to
comply with the terms and provisions of this Agreement to the extent applicable,
and such transfer is otherwise in compliance with this Agreement.

SECTION 18. Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and agreements
and to give such further written assurance as may be reasonably requested by any
other party to evidence and reflect the transactions described herein and
contemplated hereby and to carry into effect the intents and purposes of this
Agreement.

 

[Remainder of Page Left Intentionally Blank]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives as of the day and year first above
written.

 

OPHTHALMIC IMAGING SYSTEMS

By:

/s/ Gil Allon

 

Name:

Gil Allon

 

Title:

Chief Executive Officer

 

 

By:

/s/ Ariel Shenhar

 

Name:

Ariel Shenhar

 

Title:

Chief Financial Officer

 

U. M. ACCELMED, LIMITED PARTNERSHIP

 

by A.M ACCELMED MANAGEMENT G(2009) LTD.,
its General Partner

By:

/s/ Uri Geiger

 

Name:

Uri Geiger

 

Title:

Chairman

 

6 Hachoshlim St.
Herzliya Pituach

46120, Israel
P.O.Box 12006

Attention: Dr. Uri Geiger
Facsimile: 972-9-9588594

E-mail: Uri@accelmed.co.il

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

Shenhav & Co. Law Offices

4 Ha’nechoshet St., Ramat Ha’chayal, Tel Aviv 69710, Israel

Attention: Dr. Ayal Shenhav, Adv.

Facsimile: 972-3-6110788

E-mail: ayal@shenhavlaw.co.il

 

 

Signature Page to Purchase Agreement