Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

 

By and Among

 

AGILE THERAPEUTICS, INC.

 

and

 

THE PURCHASERS NAMED HEREIN

 

Dated as of January 19, 2015

 

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TABLE OF CONTENTS

 

 

 

Page

ARTICLE I

DEFINITIONS

1

1.1

Definitions

1

ARTICLE II

PURCHASE AND SALE

3

2.1

Closing

3

2.2

Payment

4

2.3

Closing Date

4

2.4

Closing Deliverables

4

2.5

Closing Conditions

5

ARTICLE III

REPRESENTATIONS AND WARRANTIES

6

3.1

Representations and Warranties of the Company

6

3.2

Representations and Warranties of the Purchasers

18

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

20

4.1

Transfer Restrictions

20

4.2

Furnishing of Information; Public Information

22

4.3

Acknowledgment of Dilution

23

4.4

Integration

23

4.5

Securities Laws Disclosure; Publicity

23

4.6

Shareholder Rights Plan

24

4.7

Non-Public Information

24

4.8

Use of Proceeds

24

4.9

Indemnification of Purchasers

24

4.10

Listing of Common Stock

25

4.11

Equal Treatment of Purchasers

25

4.12

Certain Transactions and Confidentiality

25

4.13

Form D; Blue Sky Filings

26

4.14

Participation in Future Financing

26

ARTICLE V

MISCELLANEOUS

28

5.1

Fees and Expenses

28

5.2

Entire Agreement

28

5.3

Notices

28

5.4

Amendments; Waivers

28

 

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TABLE OF CONTENTS

(continued)

 

 

 

Page

5.5

Headings

28

5.6

Successors and Assigns

28

5.7

No Third-Party Beneficiaries

29

5.8

Governing Law; Jurisdiction

29

5.9

Survival

29

5.10

Execution

29

5.11

Severability

29

5.12

Replacement of Shares

30

5.13

Remedies

30

5.14

Independent Nature of Purchasers’ Obligations and Rights

30

5.15

Construction

30

5.16

WAIVER OF JURY TRIAL

30

 

Exhibit A — Schedule of Purchasers

 

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STOCK PURCHASE AGREEMENT

 

This Stock Purchase Agreement (this “Agreement”) is dated as of January 19,
2015, among Agile Therapeutics, Inc., a Delaware corporation (the “Company”),
and each purchaser identified on the signature pages hereto and listed on the
Schedule of Purchasers attached hereto as Exhibit A (each, including its
successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated
thereunder, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Company, approximately $20,000,000 worth
of shares of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”), with an aggregate purchase price per Purchaser as set forth
opposite such Purchaser’s name on Exhibit A hereto under the heading
“Subscription Amount”, as more fully described in this Agreement.

 

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

 

ARTICLE I
DEFINITIONS

 

1.1          Definitions.  In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings set forth in this Section 1.1:

 

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

 

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

 

“Book Value Per Share” means the stockholders’ equity disclosed in the Company’s
most recent Form 10-Q filing divided by the total shares of Common Stock
outstanding disclosed in the Company’s most recent Quarterly Report on
Form 10-Q.

 

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

 

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

 

“Company Counsel” means Morgan, Lewis & Bockius LLP, with offices located at
502 Carnegie Center, Princeton, NJ 08540.

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to
employees, consultants, officers or directors of the Company pursuant to any
stock or option plan duly adopted for such purpose and in existence on the date
of this Agreement as such plan is constituted on the date of this Agreement, by
a majority of the non-employee members of the Board of Directors or a majority
of the members of a committee of non-employee directors established for such
purpose, unless otherwise agreed to by the non-employee members of the Board of
Directors, (b) securities upon the exercise or exchange of or conversion of any
Common Stock Equivalents issued and outstanding on the date of this Agreement,
provided that such securities have not been amended on or after the date of this
Agreement to increase the number of such securities or to decrease the exercise
price, exchange price or conversion price of such securities, and (c) securities
issued pursuant to acquisitions or strategic transactions approved by a majority
of the disinterested directors of the Company, provided that any such issuance
shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising capital or to an entity whose primary
business is investing in securities.

 

“FDA” means the U.S. Food and Drug Administration.

 

“FDCA” means the U.S. Federal Food, Drug and Cosmetic Act.

 

“Governmental Authority” means any foreign, domestic, federal, territorial,
state or local governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.

 

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

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Placement Agent” means William Blair & Company, L.L.C.

 

“Price Per Share” means the greater of the (i) Book Value Per Share or (ii) the
consolidated closing bid price per share of Common Stock as of the close of the
Trading Day immediately prior to the execution of this Agreement.

 

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

 

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

 

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

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for the Shares purchased hereunder as set forth opposite such Purchaser’s
name on Exhibit A attached hereto.

 

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

 

“Trading Market” means the NASDAQ Global Market.

 

“Transfer Agent” means Broadridge Corporate Issuer Solutions.

 

“VWAP” means, for any date, the dollar volume-weighted average price for such
security on the Trading Market (or, if the Trading Market is not the principal
trading market for such security, then on the principal securities exchange or
securities market on which such security is then traded) during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York
time, as reported by Bloomberg through its “Volume at Price” function or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the three highest closing bid prices and the
three lowest closing ask prices of all of the market makers for such security as
reported in the “pink sheets” by OTC Markets Group, Inc. If the VWAP cannot be
calculated for such security on such date on any of the foregoing bases, the
VWAP of such security on such date shall be the fair market value as mutually
determined by the Company and the Purchasers of a majority in interest of the
Shares then outstanding. If the Company and such Purchasers are unable to agree
upon the fair market value of such security, the fair market value shall be
determined by an independent appraiser selected in good faith by the Purchasers
of a majority in interest of the Shares then outstanding and reasonably
acceptable to the Company, the fees and expenses of which shall be paid by the
Company.

 

ARTICLE II

PURCHASE AND SALE

 

2.1          Closing.  On the Closing Date, upon the terms and subject to the
conditions set forth herein, the Company will issue and sell, and each
Purchaser, severally and not jointly, will purchase, the number of shares of
Common Stock (the “Shares”) set forth opposite the name of such Purchaser under
the heading “Number of Shares to be Purchased” on Exhibit A attached

 

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hereto, at the Price Per Share (the “Closing”).  Subject to the conditions set
forth in this Article II, the Closing will be held on the Closing Date (as
defined below) at the offices of Company Counsel, or at such other time and
place (including electronic exchange of signatures) as shall be agreed upon by
the Company and the Purchasers hereunder of a majority in interest of the
Shares.

 

2.2          Payment.  At the Closing, each Purchaser shall deliver to the
Company via wire transfer of immediately available funds, in accordance with
wire instructions provided to the Purchasers by the Company, an amount equal to
such Purchaser’s Subscription Amount set forth opposite its name on Exhibit A
attached hereto and the Company shall deliver to each Purchaser the number of
Shares purchased by such Purchaser, and the Company shall instruct the Transfer
Agent to register such issuance at the time of such issuance.

 

2.3          Closing Date.  The Closing will take place on the Trading Day on
which all of the documents to be delivered pursuant to Section 2.4 below have
been executed and delivered by the applicable parties thereto, and all
conditions precedent to the applicable parties’ obligations hereunder as set
forth in Section 2.5 below, have been satisfied or waived, but in no event later
than the third Trading Day following the date of this Agreement (the “Closing
Date”).

 

2.4          Closing Deliverables.

 

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

 

(i)            this Agreement duly executed by the Company;

 

(ii)           a legal opinion of Company Counsel, dated the Closing Date, in
form and substance reasonably satisfactory to counsel for the Purchasers;

 

(iii)          a copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to deliver, on an expedited basis, via book entry
to the applicable balance account, a number of Shares equal to such Purchaser’s
Subscription Amount divided by the Price Per Share, registered in the name of
such Purchaser;

 

(iv)          a compliance certificate, executed by the Chief Executive Officer
and Chief Financial Officer of the Company, dated as of the Closing Date, to the
effect that the conditions specified in subsections (i), (ii), and (iv) of
Section 2.5(b) have been satisfied;

 

(v)           a certificate of the Company’s Secretary certifying as to (A) the
Company’s certificate of incorporation and bylaws, (B) the resolutions of the
Board approving this Agreement and the transactions contemplated hereby, and
(C) good standing certificates with respect to the Company from the applicable
authority(ies) in Delaware and any other jurisdiction in which the Company is
qualified to do business, dated a recent date before the Closing; and

 

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(vi)          such other information, certificates and documents as the
Purchasers may reasonably request.

 

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

 

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

 

(ii)           such Purchaser’s Subscription Amount by wire transfer to the
account specified by the Company.

 

2.5          Closing Conditions.

 

(a)           Conditions Precedent to each Party’s Obligations.  The obligations
of the Company and each Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:

 

(i)            no temporary restraining order, preliminary or permanent
injunction or other order or decree, and no other legal restraint or
prohibition, shall exist which questions the validity of this Agreement or the
right of the Company or any Purchaser, as the case may be, to enter into this
Agreement or prevents or could reasonably be expected to prevent the
consummation of the transactions contemplated by this Agreement, nor shall any
litigation or court or administrative proceeding have been commenced or
threatened with respect to the foregoing.

 

(b)           Conditions Precedent to each Purchaser’s Obligations.  The
obligations of each Purchaser hereunder in connection with the Closing are
subject to the following conditions being met:

 

(i)            the accuracy in all material respects when made and on the
Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein);

 

(ii)           all obligations, covenants and agreements of the Company required
to be performed at or prior to the Closing Date shall have been performed in all
material respects;

 

(iii)          the delivery by the Company of the items set forth in
Section 2.4(a) of this Agreement;

 

(iv)          there shall have been no Material Adverse Effect with respect to
the Company since the date hereof; and

 

(v)           from the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission or the Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by

 

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Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any market or exchange, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of such Purchaser, makes it impracticable or inadvisable to
purchase the Shares at the Closing.

 

(c)           Conditions Precedent to the Company’s Obligations.  The
obligations of the Company hereunder in connection with the Closing are subject
to the following conditions being met:

 

(i)            the accuracy in all material respects on the Closing Date of the
representations and warranties of each Purchaser contained herein (unless as of
a specific date therein in which case they shall be accurate as of such date);

 

(ii)           all obligations, covenants and agreements of each Purchaser
required to be performed at or prior to the Closing Date shall have been
performed in all material respects; and

 

(iii)          the delivery by each Purchaser of the items set forth in
Section 2.4(b) of this Agreement.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1          Representations and Warranties of the Company.  Except as set forth
in the SEC Filings, the Company hereby makes the following representations and
warranties to each Purchaser:

 

(a)           Organization and Qualification.  The Company is an entity duly
incorporated, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, with the requisite power and authority to own
and use its properties and assets and to carry on its business as currently
conducted and as described in the SEC Filings.  The Company is not in violation
nor default of any of the provisions of its certificate of incorporation or
bylaws.  The Company is duly qualified to conduct business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a
material adverse effect on the legality, validity or enforceability of this
Agreement, (ii) a material adverse effect on the results of operations, assets
(including intangible assets), business, prospects or condition (financial or
otherwise) of the Company, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis
its obligations under this Agreement (any of (i), (ii) or (iii), a “Material
Adverse

 

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Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.  The Company has no subsidiaries.

 

(b)           Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations
hereunder.  The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company, the Board of Directors or the Company’s
stockholders.  This Agreement has been duly executed by the Company and, when
delivered in accordance with the terms hereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.

 

(c)           No Conflicts.  The execution, delivery and performance by the
Company of this Agreement, the issuance and sale of the Shares and the
consummation by it of the transactions contemplated hereby do not and will not:
(i) conflict with or violate any provision of the Company’s certificate of
incorporation or bylaws, (ii) conflict with, or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
result in the creation of any Lien upon any of the properties or assets of the
Company, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company debt or
otherwise) or other understanding to which the Company is a party or by which
any property or asset of the Company is bound or affected, or (iii) conflict
with or result in a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or governmental authority
to which the Company is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company is bound or
affected; except in the case of each of clauses (ii) and (iii), such as could
not have or reasonably be expected to result in a Material Adverse Effect.

 

(d)           Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of this Agreement, other
than: (i) the filings required pursuant to Section 4.4 of this Agreement,
(ii) the notice and/or application(s) to the Trading Market for the issuance and
sale of the Shares and the listing of the Shares for trading thereon in the time
and manner required thereby, (iii) the filing of Form D with the Commission and
such filings as are required to be made under applicable state securities laws
(collectively, the “Required Approvals”).

 

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(e)           Issuance of the Shares.  The Shares are duly authorized and, when
issued and paid for in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable, free and clear of all Liens other than
restrictions on transfer provided for in this Agreement.

 

(f)            Capitalization.  The authorized capital of the Company as of the
date hereof consists of: (i) 150,000,000 shares of Common Stock of which, as of
the date of this Agreement, (x) 18,684,495 shares are issued and outstanding and
(y) 2,908,918 shares are reserved for issuance pursuant to the Company’s stock
incentive plans, of which 1,767,925 shares are issuable upon the exercise of
stock options outstanding on the date hereof and (ii) 10,000,000 shares of
preferred stock, par value $0.0001 per share, of which no shares are issued and
outstanding as of the date of this Agreement.  No Person has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by this Agreement.  Except as a
result of the purchase and sale of the Shares or as set forth in the SEC
Filings, there are no outstanding options, warrants, scrip rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company is or may become bound to issue additional shares of Common Stock or
Common Stock Equivalents.  The issuance and sale of the Shares will not obligate
the Company to issue shares of Common Stock or other securities to any Person
(other than the Purchasers) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under any of such securities.  All of the outstanding shares of capital stock of
the Company are validly issued, fully paid and nonassessable, have been issued
in compliance with all federal and state securities laws, and none of such
outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities.  No further approval or
authorization of any stockholder, the Board of Directors or others is required
for the issuance and sale of the Shares.  Except as set forth in the SEC
Filings, there are no stockholders agreements, voting agreements or other
agreements with respect to the Company’s capital stock to which the Company is a
party or, to the knowledge of the Company, between or among any of the Company’s
stockholders.

 

(g)           SEC Filings; Financial Statements.  The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof, for the one (1) year preceding the date
hereof (or such shorter period as the Company was required by law or regulation
to file such material) (the foregoing materials, including the exhibits thereto
and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension
of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension.  As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the

 

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circumstances under which they were made, not misleading.  Each registration
statement and any amendment thereto filed by the Company pursuant to the
Securities Act and the rules and regulations thereunder, as of the date such
statement or amendment became effective, complied in all material respects with
the requirements of the Securities Act and did not, when filed, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading;
and each prospectus filed pursuant to Rule 424(b) under the Securities Act, as
of its issue date and as of the closing of any sale of securities pursuant
thereto, did not, when filed, contain any untrue statement of a material fact or
omit to state any material fact required to be stated herein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (the registration statements,
amendments and prospectuses referred to in this section, together with the SEC
Reports, the “SEC Filings”).  The Company has never been an issuer subject to
Rule 144(i) under the Securities Act.  The financial statements of the Company
included in the SEC Filings comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing.  Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by GAAP, and fairly present in all material respects the
financial position of the Company as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(h)           Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included within the
SEC Filings, except as specifically set forth in a subsequent SEC Report filed
at least one (1) Trading Day prior to the date hereof: (i) there has been no
event, occurrence or development that has had or that could reasonably be
expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (a) trade payables
and accrued expenses incurred in the ordinary course of business consistent with
past practice and (b) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting, (iv) the
Company has not declared or made any dividend or distribution of cash or other
property to the holders of its Common Stock or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and (v) the
Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company stock option plans.  The Company
does not have pending before the Commission any request for confidential
treatment of information.  Except for the issuance of the Shares contemplated by
this Agreement, no event, liability, fact, circumstance, occurrence or
development has occurred or exists or is reasonably expected to occur or exist
with respect to the Company or its business, properties, operations, assets or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws if the Company

 

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were publicly offering securities pursuant to an effective registration
statement under the Securities Act at the time this representation is made or
deemed made that has not been publicly disclosed at least one (1) Trading Day
prior to the date that this representation is made.

 

(i)            Litigation.  There is no action, suit, inquiry, notice of
violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its properties
before or by any court, arbitrator, governmental or administrative agency or
regulatory authority (federal, state, county, local or foreign) (collectively,
an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of this Agreement or (ii) could, if there were an unfavorable
decision, have or reasonably be expected to result in a Material Adverse
Effect.  Neither the Company, nor any director or officer of the Company, is or
has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty.  There has not been, and to the knowledge of the Company, there
is not pending or contemplated, any investigation by the Commission involving
the Company or any current or former director or officer of the Company.  The
Commission has not issued any stop order or other order suspending the
effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act.

 

(j)            Labor Relations.  No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s employees is a member of a union that relates to
such employee’s relationship with the Company, the Company is not a party to any
collective bargaining agreement, and the Company believes that its relationships
with its employees are good.  No executive officer, to the knowledge of the
Company, is, or is now expected to be, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company to any
liability with respect to any of the foregoing matters.  The Company is in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(k)           Compliance.  The Company is not (i) in default under or in
violation of (and no event has occurred that has not been waived that, with
notice or lapse of time or both, would result in a default by the Company
under), nor has the Company received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan or credit agreement or
any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been
waived), (ii) in violation of any judgment, decree or order of any court,
arbitrator or governmental body or (iii) in violation of any statute, rule,
ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local

 

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laws relating to taxes, environmental protection, occupational health and
safety, product quality and safety and employment and labor matters, except in
each case as could not have or reasonably be expected to result in a Material
Adverse Effect.

 

(l)            Regulatory Permits.  The Company possesses all certificates,
authorizations and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business as described in
the SEC Filings, except where the failure to possess such permits could not
reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and the Company has not received any notice of proceedings relating
to the revocation or modification of any Material Permit.

 

(m)          Environmental Matters.  The Company is in compliance with all
foreign, federal, state and local rules, laws and regulations relating to the
use, treatment, storage and disposal of hazardous or toxic substances or waste
and protection of health and safety or the environment which are applicable to
its business.  To the Company’s knowledge, there has been no storage,
generation, transportation, handling, treatment, disposal, discharge, emission,
or other release of any kind of toxic or other wastes or other hazardous
substances by, due to, or caused by the Company (or, to the Company’s knowledge,
any other entity for whose acts or omissions the Company is or may be liable)
upon any of the property now or previously owned or leased by the Company, or
upon any other property, in violation of any statute or any ordinance, rule,
regulation, order, judgment, decree or permit or which would, under any statute
or any ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability.  There has been no
disposal, discharge, emission or other release of any kind onto such property or
into the environment surrounding such property of any toxic or other wastes or
other hazardous substances with respect to which the Company has knowledge.

 

(n)           Title to Assets.  Except as set forth in the SEC Filings, the
Company has good and marketable title in all personal property owned by the
Company that is material to the business of the Company, in each case free and
clear of all Liens, except for Liens as do not materially affect the value of
such property and do not materially interfere with the use made and proposed to
be made of such property by the Company and Liens for the payment of federal,
state or other taxes, the payment of which is neither delinquent nor subject to
penalties.  Any real property and facilities held under lease by the Company are
held by it under valid, subsisting and enforceable leases with which the Company
are in compliance.

 

(o)           Patents and Trademarks.  The Company has, or has rights to use,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights as necessary or material for use
in connection with its business as described in the SEC Filings and which the
failure to so have could have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”).  None of, and the Company has not received a
notice (written or otherwise) that any of, the Intellectual Property Rights has
expired, terminated or been abandoned, or is expected to expire or

 

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terminate or be abandoned, within two (2) years from the date of this
Agreement.  The Company has not received, since the date of the latest audited
financial statements included within the SEC Filings, a written notice of a
claim or otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as would not have a
Material Adverse Effect.  To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights.  The Company has taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of its intellectual properties, except where failure to do so could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

 

(p)           FDA and Regulatory Matters.  Except as set forth in the SEC
Filings,

 

(i)            The Company has no knowledge of any actual or threatened material
enforcement action or investigation by the FDA or any other Governmental
Authority.  The Company has no knowledge or reason to believe that the FDA or
any Governmental Authority is considering such action.  The operation of the
business of the Company, including the manufacture, import, export, testing,
development, processing, packaging, labeling, storage, marketing, sales, and
distribution of the company’s product candidates is, and at all times has been,
in material compliance with all applicable laws and permits, or within the FDA’s
exercise of enforcement discretion.

 

(ii)           All material reports, documents, claims, permits and notices
required to be filed with, maintained for or furnished to the FDA or any
Governmental Authority have been so filed, maintained or furnished by the
Company.  All such reports, documents, claims and notices were complete and
accurate in all material respects on the date filed or furnished (or were
corrected in or supplemented by a subsequent filing), such that no liability
exists with respect to such filing, and remain complete and accurate.

 

(iii)          The Company has not received any FDA Form 483, notice of adverse
finding, warning letters, untitled letters or other correspondence or notice
from the FDA or any Governmental Authority (i) alleging or asserting material
noncompliance with any applicable laws or permits and the Company has no
knowledge or reason to believe that the FDA or any Governmental Authority is
considering such action or (ii) materially contesting the pre-market clearance
or approval of, the uses of or the labeling or promotion of any of the Company’s
product candidates.

 

(iv)          Each of the Company’s product candidates subject to the FDCA that
has been developed, manufactured, tested or distributed by or on behalf of the
Company is being or has been developed, manufactured, tested or distributed in
compliance with all material applicable requirements under the FDCA and
comparable laws in any non-U.S. jurisdiction, including those relating to
investigational use, pre-market clearance or approval, biologics licensing,

 

12

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registration and listing, good manufacturing practices, labeling, advertising,
record keeping and filing of required reports.

 

(v)                                 The preclinical tests and clinical trials
conducted by the Company, and to the knowledge of the Company the clinical
trials conducted by third parties, in each case described in, or the results of
which are referred to in, the SEC Filings were and, if still pending, are being
conducted in all material respects in accordance with protocols and procedures
filed with the appropriate regulatory authorities for each such trial; each
description of the results of such preclinical tests and clinical trials
contained in the SEC Filings is accurate and complete in all material respects
and fairly presents the data derived from such preclinical tests and clinical
trials, and the Company has no knowledge of any other studies or tests the
results of which are inconsistent with, or otherwise call into question, the
results described or referred to in the SEC Filings.

 

(q)                                 Insurance.  The Company is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the business in which the
Company is engaged, including, but not limited to, directors and officers
insurance coverage at least equal to the aggregate Subscription Amount.  The
Company does not have any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business without a significant increase in cost.

 

(r)                                    Transactions With Affiliates and
Employees.  Except as set forth in the SEC Filings or as contemplated by this
Agreement, none of the officers or directors of the Company and, to the
knowledge of the Company, none of the employees of the Company, is presently a
party to any transaction with the Company (other than for services as employees,
consultants, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $120,000 other than for: (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.

 

(s)                                   Sarbanes-Oxley; Internal Accounting
Controls.  The Company is in compliance with any and all applicable requirements
of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and
any and all applicable rules and regulations promulgated by the Commission
thereunder that are effective as of the date hereof.  The Company qualifies as
an “emerging growth company” as defined in the Jumpstart Our Business Startups
Act of 2012 (the “JOBS Act”), and has taken advantage of relief from certain
reporting requirements and other burdens that are otherwise applicable generally
to public companies. The Company has taken the exemption from auditor
attestation on

 

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the effectiveness of its internal controls over financial reporting as permitted
under the JOBS Act. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i) transactions are
executed in accordance with management’s general or specific authorizations,
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability,
(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 the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Commission’s
rules and forms.

 

(t)                                    Placement Agent.  The Company has taken
no action that would give rise to any claim by any person for brokerage
commissions, placement agent’s fees or similar payments relating to this
Agreement or the transactions contemplated hereby, except for dealings with the
Placement Agent, whose commissions and fees will be paid by the Company.

 

(u)                                 Private Placement. Assuming the accuracy of
the Purchasers’ representations and warranties set forth in Section 3.2, no
registration under the Securities Act is required for the offer and sale of the
Shares by the Company to the Purchasers as contemplated hereby.  The issuance
and sale of the Shares hereunder does not contravene the rules and regulations
of the Trading Market.

 

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

 

(w)                               Registration Rights.  Except as set forth in
the SEC Filings, no Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company.

 

(x)                                 Listing and Maintenance Requirements.  The
Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange
Act, and the Company has taken no action designed to, or which to its knowledge
is likely to have the effect of, terminating the registration of the Common
Stock under the Exchange Act nor has the Company received any notification that
the Commission is contemplating terminating such registration.  The Company has
not received notice from the Trading Market to the effect that the Company is
not in compliance with the listing or maintenance requirements of the Trading
Market.  The Company is, and has no reason to believe that it will not upon
issuance of the Shares and for the foreseeable future continue to be, in
compliance with

 

14

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all such listing and maintenance requirements.  The issuance of the Shares
hereunder does not contravene the rules of the Trading Market.

 

(y)                                 Application of Takeover Protections.  The
Company and the Board of Directors have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of
incorporation or the laws of its state of incorporation that is or could become
applicable to the Purchasers as a result of the Purchasers and the Company
fulfilling their obligations or exercising their rights under this Agreement,
including without limitation as a result of the Company’s issuance of the Shares
and the Purchasers’ ownership of the Shares.

 

(z)                                  No Integrated Offering. Assuming the
accuracy of the Purchasers’ representations and warranties set forth in
Section 3.2, neither the Company, nor any Person acting on its behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Shares to be integrated with prior offerings by the Company for
purposes of (i) the Securities Act which would require the registration of any
such securities under the Securities Act, or (ii) any applicable stockholder
approval provisions of the Trading Market.

 

(aa)                          Tax Status.  Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company (i) has made or filed all United States
federal and state income and all foreign income and franchise tax returns,
reports and declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and charges that are
material in amount, shown or determined to be due on such returns, reports and
declarations and (iii) has set aside on its books provision reasonably adequate
for the payment of all material taxes for periods subsequent to the periods to
which such returns, reports or declarations apply.  There are no unpaid taxes in
any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company know of no basis for any such
claim.

 

(bb)                          No General Solicitation.  Neither the Company nor
any person acting on behalf of the Company has offered or sold any of the Shares
by any form of general solicitation or general advertising.  The Company has
offered the Shares for sale only to the Purchasers and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.

 

(cc)                            Compliance with Rule 506.  None of the Company,
any of its predecessors, any affiliated issuer, any director, executive officer,
other officer of the Company participating in the offering contemplated hereby,
any beneficial owner of 20% or more of the Company’s outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the Securities Act) connected with the Company
in any capacity at the time of sale is disqualified from relying on Rule 506 of
Regulation D under the Securities Act (“Rule 506”) for any of the

 

15

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reasons stated in Rule 506(d) in connection with the issuance and sale of the
Shares to the Purchasers pursuant to this Agreement.  The Company has exercised
reasonable care, including without limitation, conducting a factual inquiry that
is appropriate in light of the circumstances, into whether any such
disqualification under Rule 506(d) exists, but has assumed the accuracy of the
Purchaser’s representations and warranties.  The Company has furnished to each
Purchaser, a reasonable time prior to the date hereof, a description in writing
of any matters that would have triggered disqualification under Rule 506(d) but
which occurred before September 23, 2013, in each case, in compliance with the
disclosure requirements of Rule 506(e).  The Company has exercised reasonable
care, including without limitation, conducting a factual inquiry that is
appropriate in light of the circumstances, into whether any such
disqualification under Rule 506(d) would have existed and whether any disclosure
is required to be made to the Purchasers under Rule 506(e).  Any outstanding
securities of the Company (of any kind or nature) that were issued in reliance
on Rule 506 at any time on or after September 23, 2013 have been issued in
compliance with Rule 506(d) and (e) and no party has any reasonable basis for
challenging any such reliance on Rule 506 in connection therewith.

 

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

 

(ee)                            Accountants.  The Company’s independent
registered public accounting firm is Ernst & Young LLP.  To the knowledge and
belief of the Company, such accounting firm: (i) is a registered public
accounting firm as required by the Exchange Act and (ii) shall express its
opinion with respect to the financial statements to be included in the Company’s
Annual Report for the year ending December 31, 2014.

 

(ff)                              Regulation M Compliance.  The Company has not,
and to its knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Shares, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Shares, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Placement Agent in connection with the placement
of the Shares.

 

(gg)                            Stock Option Plans. Each stock option granted by
the Company under the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii) with an exercise
price at least equal to the fair

 

16

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market value of the Common Stock on the date such stock option would be
considered granted under GAAP and applicable law.  No stock option granted under
the Company’s stock option plan has been backdated.  The Company has not
knowingly granted, and there is no and has been no Company policy or practice to
knowingly grant, stock options prior to, or otherwise knowingly coordinate the
grant of stock options with, the release or other public announcement of
material information regarding the Company or its financial results or
prospects.

 

(hh)                          Office of Foreign Assets Control.  Neither the
Company nor, to the Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”).

 

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

 

(jj)                                Money Laundering.  The operations of the
Company are and have been conducted at all times in compliance with applicable
financial record-keeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, applicable money laundering
statutes and applicable rules and regulations thereunder (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 with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened.

 

(kk)                          Disclosure.  Except with respect to the material
terms and conditions of the transactions contemplated by this Agreement or such
information that will be publicly disclosed no later than 9:00 a.m. (New York
City time) on the Trading Day immediately following the date hereof, the Company
confirms that neither it nor any other Person acting on its behalf has provided
any of the Purchasers or their agents or counsel with any information that it
believes constitutes or might constitute material, non-public information.  The
Company understands and confirms that the Purchasers will rely on the foregoing
representation in effecting transactions in securities of the Company.  All of
the disclosure furnished by or on behalf of the Company to the Purchasers
regarding the Company, its business and the transactions contemplated hereby, is
true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Company acknowledges and agrees that no Purchaser makes or has
made any representations or warranties with respect to the

 

17

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transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.

 

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

 

3.2                               Representations and Warranties of the
Purchasers.  Each Purchaser, for itself and for no other Purchaser, severally
and not jointly, hereby represents and warrants as of the Closing Date to the
Company as follows (unless as of a specific date therein):

 

(a)                                 Organization; Authority.  Such Purchaser is
either an individual or an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry out its
obligations hereunder. The execution and delivery of this Agreement and
performance by such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate, partnership, limited
liability company or similar action, as applicable, on the part of such
Purchaser.  This Agreement has been duly executed by such Purchaser, and when
delivered by such Purchaser in accordance with the terms hereof, will constitute
the valid and legally binding obligation of such Purchaser, enforceable against
it in accordance with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law. 
If the Purchaser(s) is a corporation, trust, partnership or other entity that is
not an individual person, it has not been organized for the specific purpose of
purchasing the Shares and is not prohibited from doing so.

 

(b)                                 Own Account.  Such Purchaser understands
that the Shares are “restricted securities” and have not been registered under
the Securities Act or any applicable state securities law and is acquiring the
Shares as principal for its own account and not with a view to or for
distributing or reselling such Shares or any part thereof in violation of the
Securities Act or any applicable state securities law, has no present intention
of distributing any of such Shares in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of such Shares in violation of the

 

18

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Securities Act or any applicable state securities law (this representation and
warranty not limiting such Purchaser’s right to sell the Shares in compliance
with applicable federal and state securities laws).  Such Purchaser is acquiring
the Shares hereunder in the ordinary course of its business.

 

(c)                                  Purchaser Status.  At the time such
Purchaser was offered the Shares, it was, and as of the date hereof it is
either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified
institutional buyer” as defined in Rule 144A(a) under the Securities Act.  Such
Purchaser is not required to be registered as a broker-dealer under Section 15
of the Exchange Act.

 

(d)                                 Experience of Such Purchaser.  Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Shares, and has so evaluated the merits and risks of such investment. 
Such Purchaser acknowledges that one or more other Purchasers are Affiliates of
the Company or Affiliates of members of the Board of Directors.  Such Purchaser
is able to bear the economic risk of an investment in the Shares and, at the
present time, is able to afford a complete loss of such investment.

 

(e)                                  Reliance on Exemptions.  Such Purchaser
understands that the Shares are being offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of such Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of such Purchaser to acquire the Shares.  Such Purchaser understands
that no United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Shares, or the fairness or suitability of the investment in the Shares, nor
have such authorities passed upon or endorsed the merits of the offering of the
Shares.

 

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

 

(g)                                  Certain Transactions and Confidentiality. 
Other than consummating the transactions contemplated hereunder, such Purchaser
has not directly or indirectly, nor has any Person acting on behalf of or
pursuant to any understanding with such Purchaser, executed any purchases or
sales, including Short Sales, of the securities of the Company during the period
commencing as of the time that such Purchaser first received a term sheet
(written or oral) from the Company or any other Person representing the Company
setting forth the material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof.  Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio

 

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managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Shares covered by this Agreement.  Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).  Notwithstanding the foregoing, for
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to the identification of the
availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.

 

(h)                                 No Legal Advice From the Company.  Such
Purchaser acknowledges, that it had the opportunity to review this Agreement and
the transactions contemplated by this Agreement with his or its own legal
counsel and investment and tax advisors.  Such Purchaser is relying solely on
such counsel and advisors and not on any statements or representations of the
Company or any of its representatives or agents for legal, tax or investment
advice with respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.

 

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

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1                               Transfer Restrictions.

 

(a)                                 The Shares may only be disposed of in
compliance with state and federal securities laws.  In connection with any
transfer of Shares other than pursuant to an effective registration statement or
Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with
a pledge as contemplated in Section 4.1(b), the Company may require the
transferor thereof to provide to the Company an opinion of counsel selected by
the transferor and reasonably acceptable to the Company, the form and substance
of which opinion shall be reasonably satisfactory to the Company, to the effect
that such transfer does not require registration of such transferred Shares
under the Securities Act.

 

(b)                                 The Purchasers agree to the imprinting, so
long as is required by this Section 4.1, of a legend on any certificate
evidencing the Shares in the following form:

 

THIS SECURITY HAS 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,

 

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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 AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge pursuant to a bona fide margin agreement with a registered broker-dealer
or grant a security interest in some or all of the Shares to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Purchaser may
transfer pledged or secured Shares to the pledgees or secured parties.  Such a
pledge or transfer would not be subject to approval of the Company and no legal
opinion of legal counsel of the pledgee, secured party or pledgor shall be
required in connection therewith.  Further, no notice shall be required of such
pledge.  At the appropriate Purchaser’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Shares
may reasonably request in connection with a pledge or transfer of the Shares.

 

(c)                                  Certificates evidencing the Shares shall
not be required to contain any legend (including the legend set forth in
Section 4.1(b) hereof): (i) following a sale of the Shares pursuant to a
registration statement covering the resale of such Shares, while such
registration statement is effective under the Securities Act, (ii) following any
sale of such Shares pursuant to Rule 144, (iii) if such Shares are eligible for
sale under Rule 144, without the requirement for the Company to be in compliance
with the current public information required under Rule 144 as to such Shares
and without volume or manner-of-sale restrictions or (iv) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission).

 

(d)                                 The Company agrees that following such time
as the legend is no longer required under Section 4.1(c), it will, no later than
three Trading Days following the delivery by a Purchaser to the Transfer Agent
of a (i) certificate representing Shares issued with a restrictive legend if
such Shares are certificated, or (ii) written notice requesting the removal of
any restrictive legend from the entry in the applicable balance account
evidencing such Shares, as the case may be, (such third Trading Day, the “Legend
Removal Date”), deliver or cause to be delivered to such Purchaser such Shares,
free from all restrictive and other legends, by crediting the account of the
Purchaser’s prime broker with the Depository Trust Company System as directed by
such Purchaser.  The Company may not make any notation on its records or give
instructions

 

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to the Transfer Agent that enlarge the restrictions on transfer set forth in
this Section 4.  In addition to such Purchaser’s other available remedies, the
Company shall pay to a Purchaser, in cash, as partial liquidated damages and not
as a penalty, for each $1,000 of Shares (based on the VWAP of the Common Stock
on the date such Shares are submitted to the Transfer Agent) delivered for
removal of the restrictive legend, $5 per Trading Day for each Trading Day after
the Legend Removal Date until such Shares are delivered without a legend.  The
payments to which a Purchaser shall be entitled pursuant to this
Section 4.1(d) are referred to herein as “Legend Removal Failure Payments.” 
Nothing herein shall limit such Purchaser’s right to pursue actual damages for
the Company’s failure to deliver any Shares as required by this Section 4.1, and
such Purchaser shall have the right to pursue all remedies available to it at
law or in equity including, without limitation, a decree of specific performance
and/or injunctive relief.

 

(e)                                  Each Purchaser, severally and not jointly
with the other Purchasers, agrees with the Company that such Purchaser will sell
any Shares pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Shares are sold pursuant to a registration statement,
they will be sold in compliance with the plan of distribution set forth therein,
and acknowledges that the removal of the restrictive legend from certificates
representing Shares as set forth in this Section 4.1 is predicated upon the
Company’s reliance upon this understanding.

 

4.2                               Furnishing of Information; Public Information.

 

(a)                                 Until the time that no Purchaser owns
Shares, the Company covenants to use commercially reasonable efforts to timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by the Company after the date
hereof pursuant to the Exchange Act even if the Company is not then subject to
the reporting requirements of the Exchange Act.

 

(b)                                 At any time during the period commencing
from the six (6) month anniversary of the date hereof and ending at such time
that all of the Shares may be sold by a purchaser without the requirement for
the Company to be in compliance with Rule 144(c)(1) and otherwise without
restriction or limitation pursuant to Rule 144, if the Company shall fail for
any reason to satisfy the current public information requirement under
Rule 144(c) (a “Public Information Failure”) then, in addition to such
Purchaser’s other available remedies, the Company shall pay to a Purchaser, in
cash, as partial liquidated damages and not as a penalty, by reason of any such
delay in or reduction of its ability to sell the Shares, an amount in cash equal
to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s
Shares on the day of a Public Information Failure and on every thirtieth (30th)
day (pro-rated for periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required for such Purchaser to
transfer the Shares pursuant to Rule 144.  The payments to which a Purchaser
shall be entitled pursuant to this Section 4.2(b) are referred to herein as
“Public Information Failure Payments.”  Public Information Failure Payments
shall be paid on the earlier of (i) the last day of the calendar month during
which such Public

 

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Information Failure Payments are incurred and (ii) the third (3rd) Trading Day
after the event or failure giving rise to the Public Information Failure
Payments is cured.  Nothing herein shall limit such Purchaser’s right to pursue
actual damages for the Public Information Failure, and such Purchaser shall have
the right to pursue all remedies available to it at law or in equity including,
without limitation, a decree of specific performance and/or injunctive relief.

 

(c)                                  Notwithstanding anything to the contrary
herein, the aggregate amount of Public Information Payments and Legend Removal
Failure payments due hereunder to any particular Purchaser shall not exceed six
percent (6.0%) of the aggregate Subscription Amount of such Purchaser’s Shares.

 

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

 

4.4                               Integration.  Each Purchaser understands that
the Company may issue additional securities after the date hereof; provided,
however, that the Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Shares in a manner that would require the registration under the Securities Act
of the sale of the Shares or that would be integrated with the offer or sale of
the Shares for purposes of the rules and regulations of the Trading Market such
that it would require stockholder approval prior to the closing of such other
transaction unless stockholder approval is obtained before the closing of such
subsequent transaction.

 

4.5                               Securities Laws Disclosure; Publicity.  The
Company shall, by 9:00 a.m. (New York City time) on the Trading Day immediately
following the date hereof, issue a press release disclosing the material terms
of the transactions contemplated hereby, and shall, within four (4) Trading Days
following the date hereof, file a Current Report on Form 8-K disclosing the
material terms of the transactions contemplated hereby and including this
Agreement as an exhibit thereto.  The Company and each Purchaser shall consult
with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release nor otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication.  Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Purchaser, or include the
name of any Purchaser in any filing with the Commission or any regulatory agency
or Trading Market, without the prior written consent of such Purchaser, except
to the extent such disclosure

 

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is required by law or Trading Market regulations, in which case the Company
shall provide the Purchasers with prior notice of such disclosure.

 

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

 

4.7                               Non-Public Information.  Except with respect
to the material terms and conditions of the transactions contemplated by this
Agreement, the Company covenants and agrees that neither it, nor any other
Person acting on its behalf, will provide any Purchaser that is not affiliated
with a member of the Board of Directors, or such Purchaser’s agents or counsel,
with any information that the Company believes constitutes material non-public
information, unless prior thereto such Purchaser shall have entered into a
written agreement with the Company regarding the confidentiality and use of such
information.  The Company understands and confirms that each Purchaser that is
not affiliated with a member of the Board of Directors shall be relying on the
foregoing covenant in effecting transactions in securities of the Company.

 

4.8                               Use of Proceeds.  The Company shall use the
net proceeds from the sale of the Shares hereunder for working capital and
general corporate purposes, which may include scheduled payments of principal
and interest on an outstanding loan, and shall not use such proceeds for:
(a) the redemption of any Common Stock or Common Stock Equivalents, (b) the
settlement of any outstanding litigation or (c) in violation of the Money
Laundering Laws or OFAC regulations.

 

4.9                               Indemnification of Purchasers.  Subject to the
provisions of this Section 4.9, the Company will indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser Party”) harmless from any and all
losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur due to a claim by a third party as a result of or
relating to any action instituted against the Purchaser Parties in any capacity,
or any of them or their respective Affiliates, by any stockholder of the Company
who is not an Affiliate of such Purchaser Parties, with respect to any of the
transactions contemplated by this Agreement (unless such action is based upon a
breach of such Purchaser Party’s representations, warranties or covenants under
this Agreement or any agreements or understandings such Purchaser Parties may
have with any such stockholder or any violations by such Purchaser Parties of
state or federal securities laws or any conduct by such Purchaser Parties which
constitutes fraud, gross negligence, willful

 

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misconduct or malfeasance).  If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser
Party shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of counsel, a material conflict on any material issue between
the position of the Company and the position of such Purchaser Party, in which
case the Company shall be responsible for the reasonable fees and expenses of no
more than one such separate counsel for all Purchaser Parties entitled to
indemnification hereunder.  The Company will not be liable to any Purchaser
Party under this Agreement (y) for any settlement by a Purchaser Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (z) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Purchaser Party’s breach of
any of the representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement.  The indemnity agreements contained herein
shall be in addition to any cause of action or similar right of any Purchaser
Party against the Company and any liabilities that the Company may be subject to
pursuant to law.  The Company will have the exclusive right to settle any claim
or proceeding, provided that the Company will not settle any such claim, action
or proceeding without the prior written consent of the Purchaser Party, which
will not be unreasonably withheld or delayed; provided, however, that such
consent shall not be required if the settlement includes a full and
unconditional release satisfactory to the Purchaser Party from all liability
arising or that may arise out of such claim or proceeding and does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any Purchaser Party.

 

4.10                        Listing of Common Stock.  The Company hereby agrees
to use commercially reasonable efforts to maintain the listing or quotation of
the Common Stock on the Trading Market on which it is currently listed.

 

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

 

4.12                        Certain Transactions and Confidentiality.  Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
neither it, nor any Affiliate acting on its behalf or pursuant to any
understanding with it will execute any purchases or sales, including Short
Sales, of any of the Company’s securities during the period commencing with the
execution of this Agreement and ending at such time that the transactions
contemplated by this Agreement are first publicly announced pursuant to the
initial press release as described in Section 4.5.  Each

 

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Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company pursuant to the initial press release as described in
Section 4.5, such Purchaser will maintain the confidentiality of the existence
and terms of this transaction and the information included in this Agreement.
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the covenant set forth above
shall only apply with respect to the portion of assets managed by the portfolio
manager that made the investment decision to purchase the Shares covered by this
Agreement. Notwithstanding the foregoing, and notwithstanding anything contained
in this Agreement to the contrary, the Company expressly acknowledges and agrees
that (i) no Purchaser makes any representation, warranty or covenant hereby that
it will not engage in effecting transactions in any securities of the Company
after the time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in
Section 4.5, (ii) no Purchaser shall be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.5 and (iii) no Purchaser shall have any duty
of confidentiality to the Company after the issuance of the initial press
release as described in Section 4.5.  Notwithstanding the foregoing, in the case
of a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Shares covered by this Agreement.

 

4.13                        Form D; Blue Sky Filings.  The Company agrees to
timely file a Form D with respect to the Shares as required under Regulation D
and to provide a copy thereof, promptly upon request of any Purchaser. The
Company shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the Shares for,
sale to the Purchasers at the Closing under applicable securities or “Blue Sky”
laws of the states of the United States, and shall provide evidence of such
actions promptly upon request of any Purchaser.

 

4.14                        Participation in Future Financing.

 

(a)                                 Subject to compliance with applicable
securities laws, from the date hereof until the date that is the nine (9) month
anniversary of the Closing Date, upon any issuance by the Company of Common
Stock or Common Stock Equivalents for cash consideration, indebtedness or a
combination thereof (a “Subsequent Financing”), each Purchaser shall have the
right to participate in an amount of the Subsequent Financing up to such
Purchaser’s Pro-Rata Share (as defined below) on the same terms, conditions and
price provided for in the Subsequent Financing.  For purposes of this Agreement,
each Purchaser’s “Pro-Rata Share” shall be equal to the number of shares of
Common Stock deemed to be beneficially owned by such Purchaser immediately prior
to the closing of

 

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the Subsequent Financing (based upon documentation or written representation
reasonably satisfactory to the Company), divided by the total number of shares
of Common Stock outstanding (including any shares of Common Stock issuable upon
conversion or exercise of outstanding Common Stock Equivalents deemed to be
beneficially owned by such Purchaser and included in the numerator) immediately
prior to the closing of the Subsequent Financing.

 

(b)                                 At least three (3) Trading Days prior to the
closing of the Subsequent Financing, the Company shall deliver to each Purchaser
a written notice of its intention to effect a Subsequent Financing (the
“Subsequent Financing Notice”).  Each Purchaser hereby agrees to keep the
information contained in the Subsequent Financing Notice confidential.  The
Subsequent Financing Notice shall describe in reasonable detail the proposed
terms of such Subsequent Financing, the amount of proceeds intended to be raised
thereunder and the Person or Persons through or with whom such Subsequent
Financing is proposed to be effected and shall include a term sheet or similar
document relating thereto as an attachment.

 

(c)                                  Any Purchaser desiring to participate in
such Subsequent Financing must provide written notice to the Company by not
later than 5:30 p.m. (New York City time) on the second (2nd) Trading Day after
such Purchaser has received the Subsequent Financing Notice , that the Purchaser
is willing to participate in the Subsequent Financing, the amount of the
Purchaser’s elected participation, and representing and warranting that the
Purchaser has such funds ready, willing, and available for investment on the
terms set forth in the Subsequent Financing Notice. If the Company receives no
such notice from a Purchaser as of such second (2nd) Trading Day, such Purchaser
shall be deemed to have notified the Company that it does not elect to
participate in the Subsequent Financing.

 

(d)                                 Notwithstanding anything to the contrary in
this Section 4.14 and unless otherwise agreed to by all Purchasers, the Company
shall either confirm in writing to each Purchaser that the transaction with
respect to the Subsequent Financing has been abandoned or shall publicly
disclose its intention to effect the Subsequent Financing, in either case, in
such a manner such that a Purchaser will not be in possession of any material,
non-public information, by the fifth (5th) Trading Day following delivery of the
Subsequent Financing Notice. If by such fifth (5th) Trading Day, no public
disclosure regarding a transaction with respect to the Subsequent Financing has
been made, and no notice regarding the abandonment of such transaction has been
received by a Purchaser, such transaction shall be deemed to have been abandoned
and the Purchaser shall not be in possession of any material, non-public
information with respect to the Company.

 

(e)                                  Notwithstanding the foregoing, this
Section 4.14 shall not apply in respect of an (i) Exempt Issuance or (ii) an
underwritten public offering of Common Stock (but only to the extent that the
lead underwriter in such offering has advised the Company in writing that
compliance with this Section 4.14 could reasonably be expected to jeopardize the
ability of the Company to consummate such Subsequent Financing).

 

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ARTICLE V
MISCELLANEOUS

 

5.1                               Fees and Expenses.  Except as expressly set
forth in this Agreement to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement provided,
however, the Company shall reimburse (a) RA Capital for its expenses for counsel
in an amount not to exceed $25,000 and (b) Aisling Capital for its expenses for
counsel in an amount not to exceed $5,000.  The Company shall pay all Transfer
Agent fees, stamp taxes and other taxes and duties levied in connection with the
delivery of any Shares to the Purchasers, and any fees due to the Placement
Agent and any other person who successfully claims it is entitled to any
brokerage commissions, placement agents’ fees or similar fees in connection with
the sale of the Shares.

 

5.2                               Entire Agreement.  This Agreement, together
with the exhibits and schedules hereto, contain the entire understanding of the
parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.

 

5.3                               Notices.  Any and all notices or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of:
(a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next
Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number set forth on the signature
pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m.
(New York City time) on any Trading Day, (c) the second (2nd)  Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service or (d) upon actual receipt by the party to whom such notice is
required to be given.  The address for such notices and communications shall be
as set forth on the signature pages attached hereto.

 

5.4                               Amendments; Waivers.  No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers holding a majority in interest of the Shares then outstanding or, in
the case of a waiver, by the party against whom enforcement of any such waived
provision is sought.  No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

 

5.5                               Headings.  The headings herein are for
convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.

 

5.6                               Successors and Assigns.  This Agreement shall
be binding upon and inure to the benefit of the parties and their successors and
permitted assigns.  The Company may not assign

 

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this Agreement or any rights or obligations hereunder without the prior written
consent of each Purchaser (other than by merger).  Any Purchaser may assign any
or all of its rights under this Agreement to any Person to whom such Purchaser
assigns or transfers any Shares, provided that such transferee agrees in writing
to be bound, with respect to the transferred Shares, by the provisions of this
Agreement that apply to the “Purchasers.”

 

5.7                               No Third-Party Beneficiaries.  This Agreement
is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

5.8                               Governing Law; Jurisdiction.  All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the principles of
conflicts of law thereof.  Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated by this Agreement (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York.  Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or is an inconvenient venue for such proceeding.  Each party hereby irrevocably
waives personal service of process and consents to process being served in any
such suit, action or proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.

 

5.9                               Survival.  Notwithstanding any investigation
made by any party to this Agreement, the representations and warranties
contained herein shall survive the Closing and the delivery of the Shares.

 

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

 

5.11                        Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full

 

29

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force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

 

5.12                        Replacement of Shares.  If any certificate or
instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation thereof (in the case of mutilation), or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or
destruction.  The applicant for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs (including
customary indemnity) associated with the issuance of such replacement Shares.

 

5.13                        Remedies.  In addition to being entitled to exercise
all rights provided herein or granted by law, including recovery of damages,
each of the Purchasers and the Company will be entitled to specific performance
under this Agreement.  The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in this Agreement and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.

 

5.14                        Independent Nature of Purchasers’ Obligations and
Rights.  The obligations of each Purchaser under this Agreement are several and
not joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance or non-performance of the obligations
of any other Purchaser under this Agreement.  Nothing contained herein, and no
action taken by any Purchaser pursuant hereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement.  Each Purchaser shall be entitled to
independently protect and enforce its rights, including, without limitation, the
rights arising out of this Agreement, and it shall not be necessary for any
other Purchaser to be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of this Agreement.  The Company has elected to
provide all Purchasers with the same terms for the convenience of the Company
and not because it was required or requested to do so by any of the Purchasers.

 

5.15                        Construction.  The parties agree that each of them
and/or their respective counsel has reviewed and had an opportunity to revise
this Agreement and, therefore, the normal rule of construction to the effect
that any ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments hereto.  In
addition, each and every reference to share prices and shares of Common Stock in
this Agreement shall be subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.

 

5.16                        WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR
PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER

 

30

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PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT
PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND
EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

(Signature Pages Follow)

 

31

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

 

AGILE THERAPEUTICS, INC.

Address for Notice:
101 Poor Farm Road
Princeton, New Jersey 08540

By:

/s/ Al Altomari

 

Fax: (609) 683-1855

 

Name: Al Altomari

 

 

Title: President and Chief Executive Officer

 

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

 

Morgan, Lewis & Bockius LLP
502 Carnegie Center
Princeton, New Jersey 08540
Attn: Emilio Ragosa
Fax: (609) 919-6701

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

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[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: RA Capital Healthcare Fund, LP

 

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Peter Kolchinsky

 

 

Name of Authorized Signatory: Peter Kolchinsky

 

 

Title of Authorized Signatory: Manager

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $6,885,005.40

 

NUMBER OF SHARES:  1,176,924

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: Blackwell Partners, LLC Series A

 

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Abajomi Adigun    /s/ Gregory A. Hudgins

 

 

Name of Authorized Signatory: Abayomi Adigun / Gregory A. Hudgins

 

 

Title of Authorized Signatory:

Investment Manager, DUMAC, Inc. as authorized agent /

 

 

 

Head of Operations, DUMAC, Inc. as authorized agent /

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $1,614,997.80

 

NUMBER OF SHARES:  276,068

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: Aisling Capital III, L.P.

 

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Robert Wenzel

 

 

Name of Authorized Signatory: Robert Wenzel

 

 

Title of Authorized Signatory: Controller

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $4,750,001.10

 

NUMBER OF SHARES:  811,966

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: ProQuest Investments III, L.P.

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Pasquale DeAngelis

 

 

Name of Authorized Signatory: Pasquale DeAngelis

 

 

Title of Authorized Signatory: Managing Member of the General Partner

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $2,490,005.70

 

NUMBER OF SHARES:  425,642

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: ProQuest Investments IV, L.P.

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Pasquale DeAngelis

 

 

Name of Authorized Signatory: Pasquale DeAngelis

 

 

Title of Authorized Signatory: Managing Member of the General Partner

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $2,259,995.40

 

NUMBER OF SHARES:  386,324

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: Adage Capital Partners, L.P.

 

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Dan Lemon

 

 

Name of Authorized Signatory: Dan Lemon

 

 

Title of Authorized Signatory: COO

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $1,151,748

 

NUMBER OF SHARES:  196,880

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: CDK Associates, L.L.C.

 

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Karen Cross

 

 

Name of Authorized Signatory: Karen Cross

 

 

Title of Authorized Signatory: Treasurer

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $585,000

 

NUMBER OF SHARES:  100,000

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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

 

[PURCHASER SIGNATURE PAGES TO AGRX STOCK PURCHASE AGREEMENT]

 

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

 

Name of Purchaser: Cormorant Global Healthcare Master Fund, LP

 

 

Signature of Authorized Signatory of Purchaser:

/s/ Bihua Chen

 

 

Name of Authorized Signatory: Bihua Chen

 

 

Title of Authorized Signatory: Managing Member of the General Partner

 

 

Email Address of Authorized Signatory:

 

 

 

Facsimile Number of Authorized Signatory:

 

 

 

Address for Notice of Purchaser:

 

 

Address for Delivery of Direct Registration System statement for Purchaser (if
not same as address for notice):

 

SUBSCRIPTION AMOUNT:  $263,250

 

NUMBER OF SHARES:  45,000

 

EIN Number:  [PROVIDE THIS UNDER SEPARATE COVER]

 

[SIGNATURE PAGES CONTINUE]

 

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EXHIBIT A

 

SCHEDULE OF PURCHASERS

 

Name and Address of Purchaser

 

Number of Shares
Purchased

 

Subscription Amount

 

RA Capital Healthcare Fund, LP
20 Park Plaza, Suite 1200
Boston, MA 02116

 

1,176,924

 

$

6,885,005.40

 

 

 

 

 

 

 

Blackwell Partners, LLC Series A
280 South Mangum Street, Suite 210
Durham, NC 27701

 

276,068

 

$

1,614,997.80

 

 

 

 

 

 

 

Aisling Capital III, LP
888 Seventh Avenue, 30th Floor
New York, NY 10106

 

811,966

 

$

4,750,001.10

 

 

 

 

 

 

 

ProQuest Investments III, LP
PO Box 406
Buckingham, PA 18912

 

425,642

 

$

2,490,005.70

 

 

 

 

 

 

 

ProQuest Investments IV, LP
PO Box 406
Buckingham, PA 18912

 

386,324

 

$

2,259,995.40

 

 

 

 

 

 

 

Adage Capital Partners, LP
200 Clarendon Street
Boston, MA 02116

 

196,880

 

$

1,151,748.00

 

 

 

 

 

 

 

CDK Associates, LLC
731 Alexander Road, Bldg 2
Princeton, NJ 08540

 

100,000

 

$

585,000.00

 

 

 

 

 

 

 

Cormorant Global Healthcare Master Fund, LP
100 High Street, Suite 1105
Boston, MA 02110

 

45,000

 

$

263,250.00

 

 

 

 

 

 

 

TOTAL

 

3,418,804

 

$

20,000,003.40

 

 

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