EXHIBIT 10.44

SECURITIES PURCHASE AGREEMENT

     This Securities Purchase Agreement (this “Agreement”) is dated as of June
18, 2003 among Introgen Therapeutics, Inc., a Delaware corporation (the
“Company”), and the purchasers identified on the signature pages hereto (each a
“Purchaser” and collectively the “Purchasers”).

     WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), the Company desires to issue and sell to the Purchasers, and
the Purchasers, severally and not jointly, desire to purchase from the Company,
securities of the Company as more fully described in this Agreement.

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

            “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 144
under the Securities Act. With respect to a Purchaser, any investment fund or
managed account that is managed on a discretionary basis by the same investment
manager as such Purchaser will be deemed to be an Affiliate of such Purchaser.  
            “Bankruptcy Event” means any of the following events: (a) the
Company or any Subsidiary commences a case or other proceeding under any
bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
relating to the Company or any Subsidiary thereof; (b) there is commenced
against the Company or any Subsidiary any such case or proceeding that is not
dismissed within 60 days after commencement; (c) the Company or any Subsidiary
is adjudicated insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered; (d) the Company or any
Subsidiary suffers any appointment of any custodian or the like for it or any
substantial part of its property that is not discharged or stayed within
60 days; (e) the Company or any Subsidiary makes a general assignment for the
benefit of creditors; (f) the Company or any Subsidiary fails to pay, or states
that it is unable to pay or is unable to pay, its debts generally as they become
due; (g) the Company or any Subsidiary calls a meeting of its creditors with a
view to arranging a composition, adjustment or restructuring of its debts; or
(h) the Company or any Subsidiary, by any act or failure to act, expressly
indicates its consent to, approval of or acquiescence in any of the foregoing or
takes any corporate or other action for the purpose of effecting any of the
foregoing.

 

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

            “Closing Date” means the date of the Closing.               “Closing
Price” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on an
Eligible Market or any other national securities exchange, the closing price per
share of the Common Stock for such date (or the nearest preceding date) on the
primary Eligible Market or exchange on which the Common Stock is then listed or
quoted; (b) if prices for the Common Stock are then quoted on the OTC Bulletin
Board, the closing bid price per share of the Common Stock for such date (or the
nearest preceding date) so quoted; (c) if prices for the Common Stock are then
reported in the “Pink Sheets” published by the National Quotation Bureau
Incorporated (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so
reported; or (d) in all other cases, the fair market value of a share of Common
Stock as determined by an independent appraiser selected in good faith by
Purchasers holding a majority of the Securities.               “Commission”
means the Securities and Exchange Commission.               “Common Stock” means
the common stock of the Company, par value $0.001 per share.    
          “Company Counsel” means Wilson Sonsini Goodrich & Rosati, Professional
Corporation, counsel to the Company.               “Effective Date” means the
date that the Registration Statement is declared effective by the Commission.  
            “Eligible Market” means the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.    
          “Exchange Act” means the Securities Exchange Act of 1934, as amended.
              “Filing Date” means the 30th calendar day following the Closing
Date.               “Losses” means any and all losses, claims, damages,
liabilities, settlement costs and expenses, including without limitation costs
of preparation and reasonable attorneys’ fees.               “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.

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            “Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened in writing.  
            “Prospectus” means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, or any
amendment to the Registration Statement with respect to the terms of the
offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.    
          “Purchaser Counsel” means any counsel selected by Steelhead
Investments Ltd. hereunder.               “Registrable Securities” means any
Common Stock (including Underlying Shares) issued or issuable pursuant to the
Transaction Documents, together with any securities issued or issuable upon any
stock split, dividend or other distribution, recapitalization or similar event
with respect to the foregoing.               “Registration Statement” means each
registration statement required to be filed under Article VI, including (in each
case) the Prospectus, amendments and supplements to such registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be incorporated
by reference in such registration statement.               “Required
Effectiveness Date” means the 90th day following the Closing Date.    
          “Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the Commission pursuant to the Securities
Act, as such Rules 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.               “Securities” means the Shares, the Warrants
and the Underlying Shares.               “Shares” means an aggregate of up to
2,500,000 shares of Common Stock, which are being purchased by the Purchasers
pursuant to this Agreement, and any additional shares of Common Stock that are
issued pursuant to Section 4.9 below.               “Subsidiary” means any
Person in which the Company directly or indirectly owns at least 50% of the
outstanding capital stock or holds an equity or similar interest.

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            “Trading Day” means (a) any day on which the Common Stock is listed
or quoted and traded on its primary Trading Market, or (b) if the Common Stock
is not then listed or quoted and traded on any Eligible Market, then a day on
which trading occurs on the New York Stock Exchange (or any successor thereto).
              “Trading Market” means the Nasdaq National Market or any other
market or trading or quotation facility, or any national securities exchange on
which the Common Stock is then listed or quoted.               “Transaction
Documents” means this Agreement, the Warrants and any other documents or
agreements executed in connection with the transactions contemplated hereunder.
              “Underlying Shares” means the shares of Common Stock issuable upon
exercise of the Warrants.               “Warrant” means a Common Stock purchase
warrant, in the form of Exhibit A.

ARTICLE II
PURCHASE AND SALE

     2.1     Closing. Subject to the terms and conditions set forth in this
Agreement, at the Closing, the Company shall issue and sell to the Purchasers,
and the Purchasers shall, severally and not jointly, purchase from the Company,
the Shares and the Warrants for a purchase price per share of $5.75. The Closing
shall take place at the offices of Purchaser Counsel immediately following the
execution hereof, or at such other location or time as the parties may agree.

     2.2     Closing Deliveries.

          (a)     At (or in the case of clause (i) below, within three Trading
Days after) the Closing, the Company shall deliver or cause to be delivered to
each Purchaser the following:

            (i)     one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in Section 4.1(b)
hereof), evidencing the number of Shares indicated below such Purchaser’s name
on the signature page of this Agreement, registered in the name of such
Purchaser;               (ii)     a Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to acquire the
number of shares of Common Stock indicated below such Purchaser’s name on the
signature page of this Agreement, on the terms set forth therein;    
          (iii)     a legal opinion of Company Counsel, in the form of
Exhibit B, executed by such counsel and delivered to the Purchasers.

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          (b)     At the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the purchase price indicated below such Purchaser’s
name on the signature page of this Agreement, in United States dollars and in
immediately available funds, by wire transfer to an account designated in
writing by the Company for such purpose.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

     3.1     Representations and Warranties of the Company. The Company hereby
represents and warrants to each of the Purchasers as follows:

          (a)     Subsidiaries. The Company has no direct or indirect
Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in
Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital
stock of each Subsidiary free and clear of any lien, charge, claim, security
interest, encumbrance, right of first refusal or other restriction
(collectively, “Liens”), and all the issued and outstanding shares of capital
stock of each Subsidiary are validly issued and are fully paid, non-assessable
and free of preemptive and similar rights. If the Company has no subsidiaries,
then references in the Transaction Documents to the Subsidiaries will be
disregarded.

          (b)     Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not, individually or in the aggregate, (i)
adversely affect the legality, validity or enforceability of any Transaction
Document, (ii) have or result in a material adverse effect on the results of
operations, assets, business or financial condition of the Company and the
Subsidiaries, taken as a whole, or (iii) adversely impair the Company’s ability
to perform fully on a timely basis its obligations under any of the Transaction
Documents (any of (i), (ii) or (iii), a “Material Adverse Effect”).

          (c)     Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each of the
Transaction Documents has been (or upon delivery will be) 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, subject to applicable bankruptcy, insolvency,
reorganization

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or similar laws affecting creditors’ rights generally, to general principles of
equity and to limitations on the rights to indemnity and contribution that exist
by virtue of public policy.

          (d)     No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt
or other instrument (evidencing a Company or Subsidiary debt or otherwise) or
other understanding to which the Company or any Subsidiary is a party or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (iii) 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 or a Subsidiary is subject (including federal and
state securities laws and regulations and the rules and regulations of any
self-regulatory organization to which the Company or its securities are
subject), or by which any property or asset of the Company or a Subsidiary is
bound or affected; except in the case of each of clauses (ii) and (iii), such as
could not, individually or in the aggregate, have or result in a Material
Adverse Effect.

          (e)     Issuance of the Securities. The Securities (including the
Underlying Shares) are duly authorized and, when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens (except for
restrictions under federal and state securities laws) and shall not be subject
to preemptive rights or similar rights of stockholders. The Company has reserved
from its duly authorized capital stock the maximum number of shares of Common
Stock issuable pursuant to this Agreement and the Securities (including the
Underlying Shares).

          (f)     Capitalization. Except as set forth in Schedule 3.1(f), the
number of shares and type of all authorized, issued and outstanding capital
stock, options and other securities of the Company (whether or not presently
convertible into or exercisable or exchangeable for shares of capital stock of
the Company) are set forth in the Company’s Annual Report on Form 10-K, as filed
with the SEC on March 31, 2003 (the “Annual Report”). All outstanding shares of
capital stock are duly authorized, validly issued, fully paid and nonassessable
and have been issued in compliance with all applicable securities laws. Except
as disclosed in Schedule 3.1(f), there are no outstanding options, warrants,
script rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exchangeable for, or giving any Person any right to subscribe for or acquire,
any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to
issue additional shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. There are no anti-dilution or price
adjustment provisions contained in any security issued by the Company (or in any
agreement providing rights to security holders), and the issue and sale of the
Securities (including the Underlying 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

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exercise, conversion, exchange or reset price under such securities. To the
knowledge of the Company, except as specifically disclosed in the Annual Report,
no Person or group of related Persons beneficially owns (as determined pursuant
to Rule 13d-3 under the Exchange Act), or has the right to acquire, by agreement
with or by obligation binding upon the Company, beneficial ownership of in
excess of 5% of the outstanding Common Stock, ignoring for such purposes any
limitation on the number of shares of Common Stock that may be owned at any
single time.

          (g)     SEC Reports; Financial Statements. The Company has filed all
reports required to be filed by it under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing reports being collectively referred to
herein as the “SEC Reports” and, together with this Agreement and the Schedules
to this Agreement, the “Disclosure Materials”) 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. The Company has delivered to each
Purchaser a copy of all SEC Reports filed within the 10 days preceding the date
hereof requested by each such Purchaser, if any. As of their respective dates,
the SEC Reports complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations of the
Commission promulgated thereunder, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the
time of filing. Such financial statements have been prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis during the periods involved (“GAAP”), except as may be otherwise specified
in such financial statements or the notes thereto, and fairly present in all
material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments and the absence of
footnotes. All material agreements to which the Company or any Subsidiary is a
party or to which the property or assets of the Company or any Subsidiary are
subject are included as part of or specifically identified in the SEC Reports.

          (h)     Material Changes. Since the date of the latest audited
financial statements included within the SEC Reports, except as specifically
disclosed in the SEC Reports, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or that would
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 required to be
disclosed in filings made with the Commission, (iii) the Company has not altered
its method of accounting or the identity of its auditors, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase or
redeem any shares of its capital stock, and (v) the Company has not issued

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any equity securities to any officer, director or Affiliate, except pursuant to
existing Company stock option plans.

          (i)     Compliance. Neither the Company nor any Subsidiary (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including without limitation all foreign, federal, state
and local laws relating to taxes, environmental protection, occupational health
and safety, product quality and safety and employment and labor matters, except
in each case as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect.

          (j)     Title to Assets. The Company and the Subsidiaries have good
and marketable title in fee simple to all real property owned by them that is
material to the business of the Company and the Subsidiaries and good and
marketable title in all personal property owned by them that is material to the
business of the Company and the Subsidiaries, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of
such property by the Company and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance.

          (k)     Certain Fees. Except for the fees described in
Schedule 3.1(k), all of which are payable to registered broker-dealers, no
brokerage or finder’s fees or commissions are or will be payable by the Company
to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement, and the Company has not taken any action that
would cause any Purchaser to be liable for any such fees or commissions.

          (l)     Private Placement. Neither the Company nor any Person acting
on the Company’s behalf has sold or offered to sell or solicited any offer to
buy the Securities by means of any form of general solicitation or advertising.
Neither the Company nor any of its Affiliates nor any person acting on the
Company’s behalf has, directly or indirectly, at any time within the past six
months, made any offer or sale of any security or solicitation of any offer to
buy any security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities Act
in connection with the offer and sale of the Securities as contemplated hereby
or (ii) cause the offering of the Securities pursuant to the Transaction
Documents to be integrated with prior offerings by the Company for purposes of
any applicable law, regulation or stockholder approval provisions, including
without limitation under the rules and regulations of any Trading Market. The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended. The Company

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is not a United States real property holding corporation within the meaning of
the Foreign Investment in Real Property Tax Act of 1980.

          (m)     Form S-3 Eligibility. The Company is eligible to register its
Common Stock for resale by the Purchasers under Form S-3 promulgated under the
Securities Act.

          (n)     Listing and Maintenance Requirements. The Company has not, in
the two years preceding the date hereof, received notice (written or oral) from
any Trading Market on which the Common Stock is or has been listed or quoted to
the effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

          (o)     Registration Rights. Except as described in Schedule 3.1(o),
the Company has not granted or agreed to grant to any Person any rights
(including “piggy-back” registration rights) to have any securities of the
Company registered with the Commission or any other governmental authority.

          (p)     Application of Takeover Protections. Except as described in
Schedule 3.1(p), there is no control share acquisition, business combination,
poison pill (including any distribution under a rights agreement) or other
similar anti-takeover provision under the Company’s charter documents 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 the Transaction Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Purchasers’ ownership of the Securities.

          (q)     Disclosure. 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 constitutes material, nonpublic
information. The Company understands and confirms that each of the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. No event or circumstance has occurred or information
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties, prospects, operations or financial conditions, which,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company, but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company’s reports filed under the
Exchange Act are being incorporated into an effective registration statement
filed by the Company under the Securities Act). The Company acknowledges and
agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Section 3.2.

          (r)     Absence of Litigation. There is no action, suit, claim,
proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries, which action, suit, claim, proceeding, inquiry or
investigation is required to

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be disclosed in the Company’s securities filings with the Commission and which
has not been so disclosed.

          (s)     Acknowledgment Regarding Purchasers’ Purchase of Securities.
The Company acknowledges and agrees that each of the Purchasers is acting solely
in the capacity of an arm’s length purchaser with respect to 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 Securities. 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.

          (t)     Patents and Trademarks. The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, copyrights, licenses and other similar
rights that are necessary for use in connection with their respective businesses
as described in the SEC Reports and which the failure to so have would
reasonably be expected to have a Material Adverse Effect (collectively, the
“Intellectual Property Rights”). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary violate or infringe upon the rights of any Person. To
the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights.

          (u)     Going Concern. The Company and the Subsidiaries have no
knowledge (upon receipt of the proceeds of this transaction) that the Company
will receive a “going concern” opinion from the Company’s independent public
accountants in the Company’s Annual Report.

          (v)     Insurance. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. Neither the Company nor any Subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.

          (w)     Regulatory Permits. The Company and the Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not, individually or in the aggregate, have or
result in a Material Adverse Effect (“Material Permits”), and neither the
Company nor any Subsidiary has received any notice of proceedings relating to
the revocation or modification of any Material Permit.

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          (x)     Transactions With Affiliates and Employees. Except as set
forth in SEC Reports filed at least ten days prior to the date hereof, none of
the officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any transaction
with the Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to 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.

          (y)     Solvency. Based on the financial condition of the Company as
of the Closing Date, (i) the Company’s fair saleable value of its assets exceeds
the amount that will be required to be paid on or in respect of the Company’s
existing debts and other liabilities (including known contingent liabilities) as
they mature; (ii) the Company’s assets do not constitute unreasonably small
capital to carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof; and (iii)
the current cash flow of the Company, together with the proceeds the Company
would receive were it to liquidate all of its assets, after taking into account
all anticipated uses of the cash, would be sufficient to pay all amounts on or
in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be payable on or
in respect of its debt).

          (z)     Internal Accounting Controls. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset 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.

     3.2     Representations and Warranties of the Purchasers. Each Purchaser
hereby, as to itself only and for no other Purchaser, represents and warrants to
the Company as follows:

          (a)     Organization; Authority. Such Purchaser is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The purchase by such Purchaser of the
Securities hereunder has been duly authorized by all necessary action on the
part of such Purchaser. This Agreement has been duly executed and delivered by
such Purchaser and constitutes the valid and binding obligation of such
Purchaser, enforceable against it in accordance with its terms.

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          (b)     Investment Intent. Such Purchaser is acquiring the Securities
as principal for its own account for investment purposes only and not with a
view to or for distributing or reselling such Securities or any part thereof,
without prejudice, however, to such Purchaser’s right, subject to the provisions
of this Agreement, at all times to sell or otherwise dispose of all or any part
of such Securities pursuant to an effective registration statement under the
Securities Act or under an exemption from such registration and in compliance
with applicable federal and state securities laws. Such Purchaser understands
and agrees that: (i) the offer and sale of the Securities have not been
registered under the Securities Act by reason of the exemption from the
registration provisions of the Securities Act provided by Section 4(2) thereof
and Rule 506 promulgated thereunder, the availability of which depends upon,
among other things, the bona fide nature of the investment intent and the
accuracy of such Purchaser’s representations, warranties and covenants as
expressed herein; (ii) the Company is relying on such Purchaser’s
representations, warranties and covenants in offering and selling the Securities
hereunder; and (iii) the Securities may not be transferred by such Purchaser
except pursuant to an effective registration statement under the Securities Act
or an available exemption from such registration and in compliance with all
applicable federal and state securities laws. Subject to compliance with the
foregoing, nothing contained herein shall be deemed a representation or warranty
by such Purchaser to hold Securities for any period of time. Such Purchaser does
not have any agreement or understanding, directly or indirectly, with any Person
to distribute any of the Securities.

          (c)     Purchaser Status. At the time such Purchaser was offered the
Securities, it was, and at the date hereof it is, and on each date on which it
exercises any Warrants, it will be an “accredited investor” as defined in Rule
501(a) under the Securities Act.

          (d)     Experience of such Purchaser. Such Purchaser has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the investment in the
Securities, and has so evaluated the merits and risks of such investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such investment.
The Purchaser understands that its investment in the Securities involves a high
degree of risk.

          (e)     Access to Information. Such Purchaser acknowledges that it has
reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from,
representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of such Purchaser or its representatives or counsel shall modify,
amend or affect such Purchaser’s right to rely on the truth, accuracy and
completeness of the Disclosure Materials and the Company’s representations and
warranties contained in the Transaction Documents. Such Purchaser acknowledges
and agrees that the fact that the Company is seeking to effect the offer and
sale of the Securities hereunder may constitute material non-public information

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and disclosure of such information or use of such information by such Purchaser
or anyone receiving such information from such Purchaser in connection with the
purchase, sale or trade of the Company’s securities, or any hedging, derivative
or similar transactions or activities involving the Company’s securities, may be
a violation of securities laws.

          (f)     Residency. Such Purchaser is domiciled in the jurisdiction set
forth immediately below such Purchaser’s name on the signature page hereof and
intends that the securities or blue sky laws of such jurisdiction only govern
the offer and sale of Securities hereunder.

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

     4.1     Transfer Restrictions.

          (a)     Securities may only be disposed of pursuant to an effective
registration statement under the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or to the Company, except as otherwise set forth herein, the
transferor shall provide to the Company an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act or applicable state securities laws.
Notwithstanding the foregoing, the Company hereby consents to and agrees to
register on the books of the Company and with its transfer agent, without any
such legal opinion, any transfer of Securities by a Purchaser to an Affiliate of
such Purchaser, provided that (i) the transferee certifies to the Company that
it is an “accredited investor” as defined in Rule 501(a) under the Securities
Act and (ii) that no value has been transferred by the transferee to transferor
in connection with such transfer.

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

    [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE] HAVE [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY [NOT] BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
NOTWITHSTANDING THE FOREGOING, THESE SECURITIES [AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE
MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY SUCH
SECURITIES.

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Certificates evidencing Securities shall not be required to contain such legend
or any other legend (i) while a Registration Statement covering the resale of
such Securities is effective under the Securities Act, or (ii) following any
sale of such Securities pursuant to Rule 144, or (iii) if such Securities are
eligible for sale under Rule 144(k), or (iv) if such legend is not required
under applicable requirements of the Securities Act. Following the Effective
Date or at such earlier time as a legend is no longer required for certain
Securities, the Company will, no later than three Trading Days following the
delivery by a Purchaser to the Company or the Company’s transfer agent of a
legended certificate representing such Securities, deliver or cause to be
delivered to such Purchaser a certificate representing such Securities that is
free from all restrictive and other legends. The Company may not make any
notation on its records or give instructions to any transfer agent of the
Company that enlarge the restrictions on transfer set forth in this Section. For
so long as any Purchaser owns Securities, the Company will not effect or
publicly announce its intention to effect any exchange, recapitalization or
other transaction that effectively requires or rewards physical delivery of
certificates evidencing the Common Stock without prior notice to the Purchaser.

          (c)     The Company acknowledges and agrees that a Purchaser may from
time to time pledge or grant a security interest in some or all of the
Securities in connection with a bona fide margin agreement or other loan or
financing arrangement secured by the Securities and, if required under the terms
of such agreement, loan or arrangement, such Purchaser may transfer pledged or
secured Securities to the pledgees or secured parties. At the appropriate
Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request
in connection with a pledge or transfer of the Securities, including the
preparation and filing of any required prospectus supplement under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling stockholders in the
Prospectus.

     4.2     Furnishing of Information. As long as any Purchaser owns
Securities, the Company covenants to use its best 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. Upon the request of any Purchaser, the Company
shall deliver to such Purchaser a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence. As long as
any Purchaser owns Securities, if the Company is not required to file reports
pursuant to such laws, it will prepare and furnish to the Purchasers and make
publicly available in accordance with paragraph (c) of Rule 144 such information
as is required for the Purchasers to sell the Securities under Rule 144.

     4.3     Integration. The Company shall not, and shall use its best efforts
to ensure that no Affiliate of the Company shall, sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that it knows or should know would
be integrated with the offer or sale of the Securities in a manner that would
require the registration under the Securities Act of the sale of the Securities
to the Purchasers, or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market.

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     4.4     Reservation of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to the
Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that, at any
time, the then authorized shares of Common Stock are insufficient for the
Company to satisfy its obligations in full under the Transaction Documents, the
Company shall promptly take such actions as may be required to increase the
number of authorized shares.

     4.5     Subsequent Placements.

               (a)     From the date hereof until the Effective Date, the
Company will not, directly or indirectly, offer, sell, grant any option to
purchase, or otherwise dispose of (or announce any offer, sale, grant or any
option to purchase or other disposition of) any of its or the Subsidiaries’
equity or equity equivalent securities, including without limitation any debt,
preferred stock or other instrument or security that is, at any time during its
life and under any circumstances, convertible into or exchangeable for Common
Stock (any such offer, sale, grant, disposition or announcement being referred
to as a “Subsequent Placement”), unless (i) the Company delivers to each of the
Purchasers a written notice (the “Subsequent Placement Notice”) of its intention
to effect such Subsequent Placement, which Subsequent Placement Notice shall
describe in reasonable detail the proposed terms of such Subsequent Placement,
the amount of proceeds intended to be raised thereunder, the Person with whom
such Subsequent Placement is proposed to be effected, and attached to which
shall be a term sheet or similar document relating thereto and (ii) such
Purchaser shall not have notified the Company by 6:30 p.m. (New York City time)
on the second Trading Day after its receipt of the Subsequent Placement Notice
of its willingness to provide (or to cause its designee to provide), subject to
completion of mutually acceptable documentation, all or part of such financing
to the Company on the same terms set forth in the Subsequent Placement Notice.
If the Purchasers shall fail to so notify the Company of their willingness to
participate in the full Subsequent Placement, the Company may effect the
remaining portion of such Subsequent Placement on the terms and to the Persons
set forth in the Subsequent Placement Notice; provided that the Company must
provide the Purchasers with a second Subsequent Placement Notice, and the
Purchasers will again have the right of first refusal set forth above in this
paragraph (a), if the Subsequent Placement subject to the initial Subsequent
Placement Notice is not consummated for any reason on the terms set forth in
such Subsequent Placement Notice within 30 Trading Days after the date of the
initial Subsequent Placement Notice with the Persons identified in the
Subsequent Placement Notice. If the Purchasers indicate a willingness to provide
financing in excess of the amount set forth in the Subsequent Placement Notice,
then each Purchaser will be entitled to provide financing pursuant to such
Subsequent Placement Notice up to an amount equal to such Purchaser’s pro rata
portion of the aggregate purchase price paid for the Securities under this
Agreement, but the Company shall not be required to accept financing from the
Purchasers in an amount in excess of the amount set forth in the Subsequent
Placement Notice.

               (b)     The restrictions contained in paragraph (a) of this
Section shall not apply to (i) any issuance of Common Stock or grant of options
to employees, officers, directors of or consultants or advisors to the Company,
in each case, pursuant to a stock-based plan duly approved by the Company’s
board of directors, (ii) upon exercise, conversion or exchange of any Common
Stock Equivalents (as defined herein) referenced in Section 3.1(f) or
Schedule 3.1(f) (provided that

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such exercise or conversion occurs in accordance with the terms thereof, without
amendment or modification), (iii) the issuance of securities pursuant to the
Company’s bona fide acquisition of another corporation, or all or a portion of
its assets, by merger, purchase of assets or other corporate reorganization in
each case, as approved by the Company’s board of directors and not for the
principal purpose of raising cash, (iv) the issuance of securities to banks or
equipment lessors, provided such issuance is approved by the Company’s board of
directors and is not for the principal purpose of raising equity capital,
(v) the issuance of securities in connection with a sponsored research,
collaboration, technology license, OEM, marketing, joint venture or development
agreement or strategic partnership or similar agreement approved by the
Company’s board of directors, a primary purpose of which is not to raise equity
capital, or (vi) the issuance of Common Stock pursuant to Section 4.9 hereof.

     4.6     Securities Laws Disclosure; Publicity. The Company shall,
immediately following the Closing on the Closing Date, issue a press release
reasonably acceptable to the Purchasers disclosing all material terms of the
transactions contemplated hereby. On or before 8:30 a.m., Eastern time, the
second Trading Day following the Closing Date, the Company shall file a Current
Report on Form 8-K with the Commission describing the terms of the transactions
contemplated by the Transaction Documents and including, to the extent required
under the Exchange Act, as exhibits to such Current Report on Form 8-K this
Agreement and the form of Warrants, in the form required by the Exchange Act.
Thereafter, the Company shall use its best efforts to timely file any filings
and notices required by the Commission or applicable law with respect to the
transactions contemplated hereby. The Company and the Purchasers shall consult
with each other in issuing any press releases or otherwise making public
statements or filings and other communications with the Commission or any
regulatory agency or Trading Market with respect to the transactions
contemplated hereby, and neither party shall issue any such press release or
otherwise make any such public statement, filing or other communication without
the prior consent of the other, 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, filing or other 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 (but not any
disclosure as to the controlling Persons thereof) is required by law or Trading
Market regulations, in which case the Company shall provide the Purchasers with
prior notice of such disclosure. Neither the Company nor any Person acting on
its behalf will provide any Purchaser with material, nonpublic information about
the Company unless such Purchaser consents to receive such information in
writing in advance.

     4.7     Use of Proceeds. The Company shall use the net proceeds from the
sale of the Securities hereunder for working capital purposes and not for the
satisfaction of any portion of the Company’s debt (other than payment of trade
payables and accrued expenses in the ordinary course of the Company’s business
and prior practices), to redeem any Company equity or equity-equivalent
securities or to settle any outstanding litigation.

     4.8     Reimbursement. If any Purchaser or any of its Affiliates or any
officer, director, partner, controlling person, employee or agent of a Purchaser
or any of its Affiliates (a “Related

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Person”) becomes involved in any capacity in any Proceeding brought by or
against any Person in connection with or as a result of the transactions
contemplated by the Transaction Documents other than relating to the
Registration Statement, Prospectus or other matter contemplated by Article VI
hereof, the Company will indemnify and hold harmless such Purchaser or Related
Person for its reasonable legal and other expenses (including the costs of any
investigation, preparation and travel) and for any Losses incurred in connection
therewith, as such expenses or Losses are incurred, excluding only Losses to the
extent that they result directly from such Purchaser’s or Related Person’s gross
negligence or willful misconduct. In addition, the Company shall indemnify and
hold harmless each Purchaser and Related Person from and against any and all
Losses, as incurred, arising out of or relating to any breach by the Company of
any of the representations, warranties or covenants made by the Company in this
Agreement or any other Transaction Document, or any allegation by a third party
that, if true, would constitute such a breach. The conduct of any Proceedings
for which indemnification is available under this paragraph shall be governed by
Section 6.4(c) below. The indemnification obligations of the Company under this
paragraph and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Purchasers and any such
Related Persons. The Company also agrees that neither the Purchasers nor any
Related Persons shall have any liability to the Company or any Person asserting
claims on behalf of or in right of the Company in connection with or as a result
of the transactions contemplated by the Transaction Documents, except to the
extent that any losses, claims, damages, liabilities or expenses incurred by the
Company arise out of or result directly from the bad faith, gross negligence or
willful misconduct of the applicable Purchaser or Related Person in connection
with such transactions or arise out of or relate to any breach by a Purchaser of
any of the representations, warranties or covenants made by a Purchaser in this
Agreement or any other Transaction Document. If the Company breaches its
obligations under any Transaction Document, then, in addition to any other
liabilities the Company may have under any Transaction Document or applicable
law, the Company shall pay or reimburse the Purchasers on demand for all costs
of collection and enforcement (including reasonable attorneys fees and
expenses). Without limiting the generality of the foregoing, the Company
specifically agrees to reimburse the Purchasers on demand for all costs of
enforcing the indemnification obligations in this paragraph.

     4.9     Additional Issuance of Shares.

         (a)     For purposes of this Section 4.9, the following definitions
shall apply:

                     (i)     “Common Stock Equivalents” shall mean,
collectively, shares of Common Stock and Convertible Securities.

                     (ii)     “Convertible Securities” shall mean any evidence
of indebtedness, shares, options, warrants or other securities directly or
indirectly convertible into or exercisable or exchangeable for shares of Common
Stock.

                     (iii)     “Eligible Shares” shall mean, for each Purchaser,
at the time of an issuance of Common Stock Equivalents, the sum of (x) the
lesser of (A) the number of shares of Common Stock then held by such Purchaser
(other than shares of Common Stock acquired by such Purchaser upon exercise of a
Warrant or issued to such Purchaser pursuant to this

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       Section 4.9) and (B) the number of shares of Common Stock purchased by
such Purchaser hereunder and (y) the number of shares of Common Stock acquired
by such Purchaser upon exercise of a Warrant or issued to such Purchaser
pursuant to this Section 4.9.

                     (iv)     “Excluded Stock” shall mean any shares of Common
Stock issued or issuable (A) to employees, officers, directors of or consultants
or advisors to the Company, in each case, pursuant to a stock-based plan duly
approved by the Company’s board of directors, (B) upon exercise, conversion or
exchange of any Common Stock Equivalents described in Schedule 3.1(f) (provided
that such exercise or conversion occurs in accordance with the terms thereof,
without amendment or modification), (C) pursuant to the Company’s bona fide
acquisition of another corporation, or all or a portion of its assets, by
merger, purchase of assets or other corporate reorganization in each case, as
approved by the Company’s board of directors and not for the principal purpose
of raising cash, (D) to banks or equipment lessors, provided such issuance is
approved by the Company’s board of directors and is not for the principal
purpose of raising equity capital, (E) in connection with a sponsored research,
collaboration, technology license, OEM, marketing, joint venture or development
agreement or strategic partnership or similar agreement approved by the
Company’s board of directors, a primary purpose of which is not to raise equity
capital, or (F) pursuant to this Section 4.9.

                     (v)     “Reference Price” shall initially be the Purchase
Price and, at any time after additional shares of Common Stock are issued to a
Purchaser pursuant to this Section 4.9, shall be equal to the lowest Issuance
Price (as defined below).

          (b)         In the event that after the date hereof and prior to the
Effective Date the Company issues or agrees to issue any Common Stock
Equivalents, other than shares of Excluded Stock, for a net consideration to the
Company per share less than the Reference Price (the “Issuance Price”), each
Purchaser shall be entitled to receive such number of additional shares of
Common Stock (upon payment to the Company of an amount per share equal to the
par value of such additional shares of Common Stock), equal to the amount
obtained by subtracting (A) the number of Eligible Shares then held by such
Purchaser from (B) the quotient obtained by dividing the aggregate purchase
price paid by such Purchaser for such Purchaser’s Eligible Shares divided by the
Issuance Price.

          (c)         For purposes of any issuances of additional shares of
Common Stock to a Purchaser under Section 4.9(b) above, the following provisions
shall be applicable:

                        (i)     In connection with any issuance of any Common
Stock Equivalents, (x) the maximum number of shares of Common Stock potentially
issuable at any time upon conversion, exercise or exchange of such Common Stock
Equivalents (the “Deemed Number”) shall be deemed to be outstanding upon
issuance of such Common Stock Equivalents, and (y) the price per share
applicable to such Common Stock Equivalents shall be deemed to equal the minimum
dollar value of consideration payable to the Company to purchase such Common
Stock Equivalents and to convert, exercise or exchange them into Common Stock,
divided by the Deemed Number.

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                          (ii)     In the case of the issuance of Common Stock
Equivalents for cash, the amount of the consideration received by the Company
shall be deemed to be the aggregate amount of cash received by the Company for
such Common Stock Equivalents.                             (iii)     In the case
of the issuance of Common Stock Equivalents for a consideration in whole or in
part other than cash, including securities acquired in exchange therefor (other
than securities by their terms so exchangeable), the consideration other than
cash shall be deemed to be the fair market value thereof as determined in good
faith by the Board of Directors of the Company, irrespective of any accounting
treatment.

                 (d)     Notwithstanding anything to the contrary contained in
this Section 4.9, the number of shares of Common Stock that shall be issued to a
Purchaser pursuant hereto shall be limited to the extent necessary to insure
that, following such issuance, the total number of shares of Common Stock then
beneficially owned by such Purchaser and its Affiliates and any other Persons
whose beneficial ownership of Common Stock would be aggregated with the
Purchaser’s for purposes of Sections 13(d) and 16 of the Exchange Act, does not
exceed 9.999% (the “Maximum Percentage”) of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon exercise of all Warrants and other Convertible
Securities held by such Purchaser and its Affiliates and any other Persons whose
beneficial ownership of Common Stock would be so aggregated). For such purposes,
beneficial ownership shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder. The Company
shall, instead of issuing shares of Common Stock in excess of the limitation
referred to in this Section 4.9(d), pay to such Purchaser an amount in cash
equal to the fair market value of the number of shares of Common Stock in excess
of such limitation; provided, however, that the Purchaser may, at its option,
elect to waive the requirement to deliver such cash and the Company’s obligation
to issue shares in excess of the foregoing limitation shall be suspended until
such time, if any, as such shares of Common Stock may be issued in compliance
with such limitation. Additionally, by written notice to the Company, the
Purchaser may waive the provisions of this Section or increase or decrease the
Maximum Percentage to any other percentage specified in such notice, but (i) any
such waiver or increase will not be effective until the 61st day after such
notice is delivered to the Company, and (ii) any such waiver or increase or
decrease will apply only to the Purchaser and not to any other Purchaser.

                 (e)     All shares to be issued pursuant to this Section 4.9,
upon issuance, shall be duly authorized, validly issued, fully paid and
non-assessable and free of any Liens or preemptive or similar rights. Upon the
issuance of any shares of Common Stock pursuant to this Section 4.9, such shares
shall be “Shares” and “Registrable Securities” for all purposes hereunder.
Without limiting the generality of the foregoing, the Purchasers shall have all
of the rights provided in Article VI below with respect to such additional
Shares, mutatis mutandis.

     4.10     Shareholders Rights Plan. In the event that a shareholders rights
plan is adopted by the Company, no claim will be made or enforced by the Company
or any other Person that any Purchaser is an “Acquiring Person” under any such
plan or in any way could be deemed to trigger the provisions of such plan by
virtue of receiving Securities under the Transaction Documents.

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ARTICLE V
CONDITIONS

     5.1     Conditions Precedent to the Obligations of the Purchasers. The
obligation of each Purchaser to acquire Securities at the Closing is subject to
the satisfaction by the Company (or waiver by such Purchaser), at or before the
Closing, of each of the following conditions:

               (a)     Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing as though made
on and as of such date; and

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

     5.2     Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell Securities at the Closing is subject to the
satisfaction by the Purchasers (or waiver by the Company), at or before the
Closing, of each of the following conditions:

               (a)     Representations and Warranties. The representations and
warranties of the Purchasers contained herein shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made on and as of such date; and

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

ARTICLE VI
REGISTRATION RIGHTS

     6.1     Shelf Registration

               (a)     As promptly as reasonably practicable, and in any event
on or prior to the Filing Date, the Company shall prepare and file with the
Commission a “Shelf” Registration Statement covering the resale of all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415. The Registration Statement shall be on Form S-3 (except if the
Company is not then eligible to register for resale the Registrable Securities
on Form S-3, in which case such registration shall be on another appropriate
form in accordance herewith as the Purchasers holding a majority in interest of
the Registrable Securities may consent) and shall contain (except if otherwise
directed by the Purchasers) the “Plan of Distribution” attached hereto as
Exhibit C.

               (b)     The Company shall use its reasonable best efforts to
cause the Registration Statement to be declared effective by the Commission as
promptly as possible after the filing thereof,

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but in any event prior to the Required Effectiveness Date, and shall use its
best efforts to keep the Registration Statement continuously effective under the
Securities Act until the second anniversary of the Effective Date or such
earlier date when all Registrable Securities covered by such Registration
Statement have been sold (the “Effectiveness Period”).

          (c)     The Company shall notify each Purchaser promptly (and in any
event within one business day) after receiving notification from the Commission
that the Registration Statement has been declared effective.

          (d)     Upon the occurrence of any Event (as defined below) and on
every monthly anniversary thereof until the applicable Event is cured, as relief
for the damages suffered therefrom by the Purchasers, the Company shall pay to
each Purchaser an amount in cash, as liquidated damages and not as a penalty,
equal to 1.0%, upon the occurrence of the Event, and 1.0%, upon each monthly
anniversary thereafter, of the aggregate purchase price paid by such Purchaser
hereunder. The liquidated damages payable pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of an
Event. In the event the Company fails to make a liquidated damages payment in a
timely manner, such payment until paid in full shall bear interest at the rate
of 1.5% per month or such lesser maximum rate that is permitted to be paid by
applicable law. For such purposes, each of the following shall constitute an
“Event”:

              (i)     the Registration Statement is not filed on or prior to the
Filing Date or is not declared effective on or prior to the Required
Effectiveness Date;     or                 (ii)     the Company fails to have
available a sufficient number of authorized but unissued and otherwise
unreserved shares of Common Stock available to issue Underlying Shares upon any
exercise of the Warrants or to satisfy its obligations under Section 4.9 above
or, at any time following the Effective Date, any Shares or Underlying Shares
are not listed on an Eligible Market.

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

               (a)     Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), (i) furnish to the Purchasers and Purchaser
Counsel copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference) will
be subject to the review of such Purchasers and Purchaser Counsel, and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, in the
reasonable opinion of respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act. The Company shall not file a
Registration Statement or any such Prospectus or any amendments or supplements
thereto to which Purchasers holding a majority of the Registrable Securities
shall reasonably object.

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          (b)     (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to each Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep the
Registration Statement continuously effective as to the applicable Registrable
Securities for the Effectiveness Period; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as
promptly as reasonably possible, and in any event within ten days, to any
comments received from the Commission with respect to the Registration Statement
or any amendment thereto and as promptly as reasonably possible provide the
Purchasers true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement.

          (c)     Notify the Purchasers of Registrable Securities to be sold
under the Registration Statement and Purchaser Counsel as promptly as reasonably
possible, and (if requested by any such Person) confirm such notice in writing
no later than one Trading Day thereafter, of any of the following events: (i)
the Commission notifies the Company whether there will be a “review” of the
Registration Statement; (ii) the Commission comments in writing on the
Registration Statement (in which case the Company shall deliver to each
Purchaser a copy of such comments); (iii) the Commission or any other Federal or
state governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information related
thereto; (iv) the Commission issues any stop order suspending the effectiveness
of any Registration Statement or initiates any Proceedings for that purpose;
(v) the Company receives notice of any suspension of the qualification or
exemption from qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for such purpose;
(vi) the financial statements included in any Registration Statement become
ineligible for inclusion therein or the Company has actual knowledge that any
statement made in any Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference is untrue in any
material respect or any revision to a Registration Statement, Prospectus or
other document is required so that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; or (vii) any Registration Statement or any
post-effective amendment is declared effective.

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

          (e)     Furnish to each Purchaser and Purchaser Counsel, without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all documents
incorporated or deemed to be incorporated therein by reference, and all exhibits
to the extent requested by such Person (including those previously furnished or
incorporated by reference) promptly after the receipt of the request of such
Purchaser or Purchaser’s Counsel for a copy of the filing of such documents with
the Commission.

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          (f)     Promptly deliver to each Purchaser and Purchaser Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably request. Subject to the terms hereof, the Company hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Purchasers in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto.

          (g)     (i) In the time and manner required by each Trading Market, if
at all, prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all steps
reasonably necessary to cause such Registrable Securities to be approved for
listing on each Trading Market as soon as possible thereafter; (iii) provide to
the Purchasers evidence of such listing; and (iv) maintain the listing of such
Registrable Securities on each such Trading Market or another Eligible Market.

          (h)     Prior to any public offering of Registrable Securities, use
its best efforts to register or qualify or cooperate with the selling Purchasers
and Purchaser Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Purchaser requests in writing, to
keep each such registration or qualification (or exemption therefrom) effective
during the Effectiveness Period and to do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Registrable Securities covered by a Registration Statement.

          (i)     Upon the occurrence of any event described in
Section 6.2(c)(vi), as promptly as reasonably practicable, prepare a supplement
or amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, neither the Registration Statement
nor such Prospectus will contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

          (j)     Comply with all applicable rules and regulations of the
Commission.

          (k)     Cooperate with the Purchasers to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement
consistent with applicable laws, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names
as any such Purchasers may request.

          (l)     Cooperate with any due diligence investigation undertaken by
the Purchasers in connection with the sale of Registrable Securities, including
without limitation by making available any documents and information; provided
that the Company will not deliver or make

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available to any Purchaser material, nonpublic information unless such Purchaser
specifically requests in writing in advance to receive material, nonpublic
information.

     6.3     Registration Expenses. The Company shall pay (or reimburse the
Purchasers for) all fees and expenses incident to the performance of or
compliance with this Agreement by the Company, including without limitation (a)
all registration and filing fees and expenses, including without limitation
those related to filings with the Commission, any Trading Market and in
connection with applicable state securities or Blue Sky laws, (b) printing
expenses (including without limitation expenses of printing certificates for
Registrable Securities and of printing prospectuses requested by the
Purchasers), (c) messenger, telephone and delivery expenses, (d) fees and
disbursements of counsel for the Company and up to $10,000 in the aggregate for
Purchaser Counsel for the Purchasers, and (e) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. Notwithstanding the foregoing, each
Purchaser shall pay all selling commissions, brokerage fees and stock transfer
taxes, if any, applicable to the Registrable Securities sold by such Purchaser.

     6.4     Indemnification

               (a)     Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Purchaser, the officers, directors, partners, members, agents, investment
advisors and employees of each of them, each Person who controls any such
Purchaser (within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, partners, members, agents and
employees of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all Losses (as determined by a court of
competent jurisdiction in a final judgment not subject to appeal or review), as
incurred, arising out of or relating to any untrue or alleged untrue statement
of a material fact contained in the Registration Statement, any Prospectus or
any form of prospectus or in any amendment or supplement thereto, or arising out
of or relating to any omission or alleged omission of a material fact required
to be stated therein or necessary to make the statements therein in light of the
circumstances under which they were made not misleading, except to the extent,
but only to the extent, that (i) such untrue statements, alleged untrue
statements, omissions or alleged omissions are based upon information regarding
such Purchaser furnished in writing to the Company by such Purchaser expressly
for use therein, or (ii) in the case of an occurrence of an event of the type
specified in Section 6.2(c)(iv)-(vi), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in Section 6.5. The Company shall notify
the Purchasers promptly of the institution or actual threat or assertion of any
Proceeding of which the Company is aware in connection with the transactions
contemplated by this Agreement.

                    (b)     Indemnification by Purchasers. Each Purchaser shall,
severally and not jointly, indemnify and hold harmless the Company, its
directors, officers, partners, members, agents and employees, each Person who
controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or
employees of such controlling Persons, to the fullest extent permitted by
applicable law, from and against all

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Losses (as determined by a court of competent jurisdiction in a final judgment
not subject to appeal or review) arising solely out of or based solely upon any
untrue statement of a material fact contained in any Registration Statement, any
Prospectus, or any form of prospectus, or in any amendment or supplement
thereto, or arising solely out of or based solely upon any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Purchaser to the Company specifically for inclusion
in such Registration Statement or such Prospectus or to the extent that (i) such
untrue statements or omissions are based solely upon information regarding such
Purchaser furnished in writing to the Company by such Purchaser expressly for
use therein, or (ii) in the case of an occurrence of an event of the type
specified in Section 6.2(c)(iv)-(vi), the use by such Purchaser of an outdated
or defective Prospectus after the Company has notified such Purchaser in writing
that the Prospectus is outdated or defective and prior to the receipt by such
Purchaser of the Advice contemplated in Section 6.5. In no event shall the
liability of any selling Purchaser hereunder be greater in amount than the
dollar amount of the net proceeds received by such Purchaser upon the sale of
the Registrable Securities giving rise to such indemnification obligation.

          (c)     Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an “Indemnified Party”), such Indemnified Party shall promptly notify the
Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, that the failure of any Indemnified Party to give such notice shall
not relieve the Indemnifying Party of its obligations or liabilities pursuant to
this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal or further review) that such failure shall have materially
prejudiced the Indemnifying Party.

          An Indemnified Party shall have the right to employ separate counsel
in any such Proceeding and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such
fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding; or (iii) the
named parties to any such Proceeding (including any impleaded parties) include
both such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the
Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless

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such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

               All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party ; provided, that the Indemnifying Party shall reimburse all such fees and
expenses to the extent it is finally judicially determined that such Indemnified
Party is not entitled to indemnification hereunder.

               (d)     Contribution. If a claim for indemnification under
Section 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of
public policy or otherwise), then each Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or
other reasonable fees or expenses incurred by such party in connection with any
Proceeding to the extent such party would have been indemnified for such fees or
expenses if the indemnification provided for in this Section was available to
such party in accordance with its terms.

               The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6.4(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 6.4(d), no Purchaser shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Purchaser from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Purchaser has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

     6.5     Dispositions. Each Purchaser agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it in
connection with sales of Registrable Securities pursuant to the Registration
Statement. Each Purchaser further agrees that, upon receipt of a notice from the
Company of the occurrence of any event of the kind described in Sections
6.2(c)(iv), (v) or (vi), such Purchaser will discontinue disposition of such
Registrable Securities

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under the Registration Statement until such Purchaser’s receipt of the copies of
the supplemented Prospectus and/or amended Registration Statement contemplated
by Section 6.2(i), or until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.

     6.6     No Piggyback on Registrations. Except as and to the extent
specified in Schedule 3.1(o), neither the Company nor any of its security
holders (other than the Purchasers in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders.

     6.7     Piggy-Back Registrations. If at any time during the Effectiveness
Period there is not an effective Registration Statement covering all of the
Registrable Securities and the Company shall determine to prepare and file with
the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, then the Company shall send to each Purchaser written notice of
such determination and if, within fifteen days after receipt of such notice, any
such Purchaser shall so request in writing, the Company shall include in such
registration statement all or any part of such Registrable Securities such
Purchaser requests to be registered.

ARTICLE VII
MISCELLANEOUS

     7.1     Termination. This Agreement may be terminated by the Company or any
Purchaser, by written notice to the other parties, if the Closing has not been
consummated by the third business day following the date of this Agreement;
provided that no such termination will affect the right of any party to sue for
any breach by the other party (or parties).

     7.2     Fees and Expenses. At the Closing, the Company shall pay the
Purchasers, in proportion to their respective purchase prices, an amount
actually incurred in connection with the preparation and negotiation of the
Transaction Documents, such amount not to exceed $50,000. In lieu of the
foregoing payment, the Purchasers may retain such amount at the Closing or
require the Company to pay such amount directly to Purchaser Counsel. Except as
expressly set forth in the Transaction Documents to the contrary, each party
shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the
negotiation, preparation, execution, delivery and performance of this Agreement.
The Company shall pay all transfer agent fees, stamp taxes and other taxes and
duties levied in connection with the issuance of the Securities.

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     7.3     Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules hereto and thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof 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. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver such
further documents as may be reasonably requested in order to give practical
effect to the intention of the parties under the Transaction Documents.

     7.4     Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to 6:30 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 specified in
this Section on a day that is not a Trading Day or later than 6:30 p.m. (New
York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or
(d) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such notices and communications are those set forth on
the signature pages hereof, or such other address as may be designated in
writing hereafter, in the same manner, by such Person.

     7.5     Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company and the Purchasers holding or committed to hold a majority in
interest of the Securities or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Purchasers under Article VI and
that does not directly or indirectly affect the rights of other Purchasers may
be given by Purchasers holding at least a majority of the Registrable Securities
to which such waiver or consent relates.

     7.6     Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

     7.7     Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers. Any Purchaser may assign
its rights under this Agreement to any Person to whom such Purchaser assigns or
transfers any Securities, provided such transferee agrees in writing to be
bound, with respect to the transferred Securities, by the provisions hereof that
apply to the “Purchasers.”

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     7.8     No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except that each Related Person is an intended third party
beneficiary of Section 4.8 and each Indemnified Party is an intended third party
beneficiary of Section 6.4 and (in each case) may enforce the provisions of such
Sections directly against the parties with obligations thereunder.

     7.9     GOVERNING LAW; VENUE; WAIVER OF JURY TRAIL. THE CORPORATE LAWS OF
THE STATE OF DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF
THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
EACH PARTY HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
STATE AND FEDERAL COURTS SITTING IN THE CITY OF DALLAS, FOR THE ADJUDICATION OF
ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES,
AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT,
ACTION OR PROCEEDING IS IMPROPER. 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 MANNER PERMITTED BY LAW. THE COMPANY HEREBY WAIVES ALL RIGHTS TO A TRIAL
BY JURY.

     7.10     Survival. The representations, warranties, agreements and
covenants contained herein shall survive the Closing and the delivery, exercise
and/or conversion of the Securities, as applicable, for a period of two years,
except that the provisions of Article VI shall apply for the periods set forth
therein.

     7.11     Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, 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 signature page
were an original thereof.

     7.12     Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree

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upon a valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this
Agreement.

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

     7.14     Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, 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 and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement certificate or instrument.

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

     7.16     Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or of any Subsidiary that may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser or any of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein or in any Transaction Document, and no action taken by any Purchaser
pursuant thereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Document. Each Purchaser acknowledges that no other Purchaser has
acted as agent for such Purchaser in connection with making its investment
hereunder and that no other Purchaser will be acting as agent of such Purchaser
in connection with monitoring its investment hereunder. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation the rights arising

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out of this Agreement or out of the other Transaction Documents, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW]

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

              INTROGEN THERAPEUTICS, INC.                   By: /s/ David G.
Nance        

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    Name:
Title: David G. Nance
Chief Executive Officer               Address for Notice:                   301
Congress Avenue, Suite 1850
Austin, Texas 78701
Facsimile No.: (512) 708-9311
Telephone No.: (512) 708-9310
Attn: David G. Nance               With a copy to:   Wilson Sonsini Goodrich &
Rosati
8911 Capital of Texas Highway North
Westech 360, Suite 3350
Austin, Texas 78759-8497
Attn: Christopher J. Ozburn, Esq.    

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]

Securities Purchase Agreement

 

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              STEELHEAD INVESTMENTS LTD.           By: /s/ William E. Rose      
 

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    Name:
Title: William E. Rose
Authorized Signatory               Jurisdiction of domicile: Cayman Islands    
          Purchase Price:     $7,762,500               Number of Shares to be
acquired:     1,350,000               Underlying Shares subject to Warrant:    
270,000               Address for Notice:                   c/o HBK Investments
L.P.
300 Crescent Court, Suite 700
Dallas, Texas 75201
Facsimile No.: 214-758-1207
Telephone No.: 214-758-6107
Attn:  General Counsel    

Securities Purchase Agreement

 

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              CRANSHIRE CAPITAL, L.P.                   By: /s/ Mitchell P.
Kopin        

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    Name:
Title: Mitchell P. Kopin
President               Jurisdiction of domicile: Illinois              
Purchase Price:   $2,300,000               Number of Shares to be acquired:  
400,000               Underlying Shares subject to Warrant: 80,000              
Address for Notice:                   666 Dundee Road, Suite 1901
Northbrook, IL 60062
Attn: Mitchell P. Kopin
Phone: 847-562-9030
Fax: 847-562-9031    

Securities Purchase Agreement

 

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              SMITHFIELD FIDUCIARY LLC                   By: /s/ Adam J. Chill  
     

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    Name:
Title: Adam J. Chill
Authorized Signatory               Jurisdiction of domicile: Cayman Islands    
          Purchase Price:   $1,437,500               Number of Shares to be
acquired:   250,000               Underlying Shares subject to Warrant: 50,000  
            Address for Notice:                   c/o Highbridge Capital
Management, LLC
9 West 57th Street, 27th Floor
New York, New York 10019
Facsimile: (212) 751-0755
Facsimile: (212) 751-0755
Attn: Ari J. Storch / Adam J. Chill    

Securities Purchase Agreement