Exhibit 10.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of
November 22, 2020, between Baudax Bio, Inc., a Pennsylvania corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser” and collectively the
“Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act” or “Act”) and the rules and regulations
(the “Rules and Regulations”) of the Securities and Exchange Commission (the
“Commission”) thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this
Agreement.

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

ARTICLE I.

DEFINITIONS

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

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.

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

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

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close; provided, however, for clarification, commercial
banks shall not be deemed to be authorized or required by law to remain closed
due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other
similar orders or restrictions or the closure of any physical branch locations
at the direction of any governmental authority so long as the electronic funds
transfer systems (including for wire transfers) of commercial banks in The City
of New York generally are open for use by customers on such day.

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

 

1

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

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Securities, in each
case, have been satisfied or waived, but in no event later than the second (2nd)
Trading Day following the date hereof.

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

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

“Company Counsel” means Troutman Pepper Hamilton Sanders LLP, with offices
located at 3000 Two Logan Square, Eighteenth and Arch Streets, Philadelphia, PA
19103.

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

“Disclosure Time” means, (i) if this Agreement is signed on a day that is not a
Trading Day or after 9:00 a.m. (New York City time) and before midnight (New
York City time) on any Trading Day, 9:01 a.m. (New York City time) on the
Trading Day immediately following the date hereof, unless otherwise instructed
as to an earlier time by the Placement Agent, and (ii) if this Agreement is
signed between midnight (New York City time) and 9:00 a.m. (New York City time)
on any Trading Day, no later than 9:01 a.m. (New York City time) on the date
hereof, unless otherwise instructed as to an earlier time by the Placement
Agent.

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

“Exempt Issuance” means (i) the issuance of securities to directors, officers,
employees and consultants of the Company pursuant to employee benefit plans,
equity incentive plans or other employee compensation plans existing on the date
hereof and as described in the Prospectus or pursuant to Nasdaq Rule 5635(c)(4),
(ii) securities pursuant to the exercise, exchange or conversion of any options,
warrants, restricted stock units, rights or convertible securities outstanding
on the date hereof, provided that such options, warrants, restricted stock
units, rights or convertible securities have not been amended since the date of
this Agreement to increase the number of such securities or to decrease the
exercise price, exchange price or conversion price of such securities or to
extend the term of such securities, (iii) securities issued in connection with
any joint venture, commercial or collaborative relationship, or the acquisition
or license by the Company of the securities, businesses, property or other
assets of another person, provided that such issuance is approved by the
majority of the disinterested directors of

 

2

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

the Company and provided that such securities are issued as “restricted
securities” (as defined in Rule 144) and carry no registration rights that
require or permit the filing of any registration statement in connection
therewith during the prohibition period in Section 4.12(a) herein, and
(iv) issuances to one or more lenders in connection with the Company’s entry
into a debt financing transaction, provided that such issuances shall only be in
the form of warrants to purchase shares of Common Stock.

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

“Per Share Purchase Price” equals $1.185, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other similar
transactions of the Common Stock that occur after the date of this Agreement and
prior to the Closing Date, provided that the purchase price per Series B Warrant
shall be the Per Share Purchase Price minus $0.01.

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

“Placement Agent” means H.C. Wainwright & Co., LLC.

“Prospectus” means the final base prospectus filed for the Registration
Statement, including all information, documents and exhibits filed with or
incorporated by reference into such base prospectus.

“Prospectus Supplement” means the supplement to the Prospectus complying with
Rule 424(b) of the Securities Act that is filed with the Commission and
delivered by the Company to each Purchaser at the Closing, including all
information, documents and exhibits filed with or incorporated by reference into
such supplement to the Prospectus.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.8.

“Registration Statement” means the effective registration statement with
Commission (File No. 333-243488), including all information, documents and
exhibits filed with or incorporated by reference into such registration
statement, which registers the sale of the Shares, the Warrants and the Warrant
Shares to the Purchasers.

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

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

 

3

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

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

“Series A Warrants” means, collectively, the Series A Common Stock purchase
warrants delivered to the Purchasers at the Closing in accordance with
Section 2.2(a) hereof, which Series A Warrants shall be exercisable immediately
upon issuance and have a term of exercise equal to five (5) years, in the form
of Exhibit A-1 attached hereto.

“Series B Warrants” means, collectively, the Series B Prefunded Common Stock
purchase warrants delivered to the Purchasers at the Closing in accordance with
Section 2.2(a) hereof, which Series B Warrants shall be exercisable immediately
and shall expire when exercised in full, in the form of Exhibit A-2 attached
hereto.

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

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

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be
paid for Shares and Warrants purchased hereunder as specified below such
Purchaser’s name on the signature page of this Agreement and next to the heading
“Subscription Amount,” in United States dollars and in immediately available
funds (minus, if applicable, a Purchaser’s aggregate exercise price of the
Series B Warrants, which amounts shall be paid as and when such Series B
Warrants are exercised).

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

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

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

“Transfer Agent” means Broadridge Corporate Issuer Solutions, Inc., the current
transfer agent of the Company, with a mailing address of 2 Gateway Center,
283-299 Market Street, 15th Floor, Newark, New Jersey 07102, and any successor
transfer agent of the Company.

“Variable Rate Transaction” shall have the meaning ascribed to such term in
Section 4.12(b).

 

4

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

“Warrants” means, collectively, the Series A Warrants and the Series B Warrants.

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

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. On the Closing Date, upon the terms and subject to the conditions
set forth herein, the Company agrees to sell, and the Purchasers, severally and
not jointly, agree to purchase, up to an aggregate of $12,000,001 of Shares and
Warrants; provided, however, that, to the extent that a Purchaser determines, in
its sole discretion, that such Purchaser (together with such Purchaser’s
Affiliates, and any Person acting as a group together with such purchaser or any
of such Purchaser’s Affiliates) would beneficially own in excess of the
Beneficial Ownership Limitation, or as such Purchaser may otherwise choose, in
lieu of purchasing Shares such Purchaser may elect to purchase Series B Warrants
in lieu of Shares in such manner to result in the same aggregate purchase price
being paid by such Purchaser to the Company. The “Beneficial Ownership
Limitation” shall be 4.99% (or, at the election of the Purchaser at Closing,
9.99%) of the number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of the Securities on the Closing Date. Each
Purchaser’s Subscription Amount as set forth on the signature page hereto
executed by such Purchaser shall be made available for “Delivery Versus Payment”
(“DVP”) settlement with the Company or its designees. The Company shall deliver
to each Purchaser its respective Shares and a Warrant as determined pursuant to
Section 2.2(a), and the Company and each Purchaser shall deliver the other items
set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall
occur at the offices of the Placement Agent or such other location as the
parties shall mutually agree. Unless otherwise directed by the Placement Agent,
settlement of the Shares shall occur via DVP (i.e., on the Closing Date, the
Company shall issue the Shares registered in the Purchasers’ names and addresses
and released by the Transfer Agent directly to the account(s) at the Placement
Agent identified by each Purchaser; upon receipt of such Shares, the Placement
Agent shall promptly electronically deliver such Shares to the applicable
Purchaser, and payment therefor shall be made by the Placement Agent (or its
clearing firm) by wire transfer to the Company). Notwithstanding the foregoing,
with respect to any Notice(s) of Exercise (as defined in the Warrants) delivered
on or prior to 4:00 p.m. (New York City time) on the Trading Day prior to the
Closing Date, which may be delivered at any time after the time of execution of
the this Agreement, the Company agrees to deliver the Warrant Shares subject to
such notice(s) by 4:00 p.m. (New York City time) on the Closing Date and the
Closing Date shall be the Warrant Share Delivery Date (as defined in the
Warrants) for purposes hereunder, provided that payment of the aggregate
Exercise Price (as defined in the Warrants) (other than in the case of a
cashless exercise) is received by such Warrant Share Delivery Date.

2.2 Deliveries.

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

 

5

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

(i) this Agreement duly executed by the Company;

(ii) a legal opinion of Company Counsel, directed to the Placement Agent and the
Purchasers, in a form reasonably acceptable to the Placement Agent and
Purchasers;

(iii) the Company shall have provided each Purchaser with the Company’s wire
instructions, on Company letterhead and executed by the Chief Executive Officer
or Chief Financial Officer;

(iv) subject to the last sentence of Section 2.1, a copy of the irrevocable
instructions to the Transfer Agent instructing the Transfer Agent to deliver on
an expedited basis via The Depository Trust Company Deposit or Withdrawal at
Custodian system (“DWAC”) Shares equal to such Purchaser’s Subscription Amount
divided by the Per Share Purchase Price, registered in the name of such
Purchaser;

(v) a Series A Warrant registered in the name of such Purchaser to purchase up
to a number of shares of Common Stock equal to 100% of the sum of such
Purchaser’s Shares and, if applicable, the Warrant Shares underlying such
Purchaser’s Series B Warrants, with an exercise price equal to $1.20, subject to
adjustment therein;

(vi) for each Purchaser of Series B Warrants pursuant to Section 2.1, a Series B
Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to the portion of such Purchaser’s Subscription
Amount applicable to the Series B Warrants divided by the Per Share Purchase
Price minus $0.01, with an exercise price equal to $0.01, subject to adjustment
therein; and

(vii) the Prospectus and Prospectus Supplement (which may be delivered in
accordance with Rule 172 under the Securities Act).

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

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

(ii) such Purchaser’s Subscription Amount (less the aggregate exercise price of
the Series B Warrants issuable to such Purchaser hereunder, if applicable),
which shall be made available for DVP settlement with the Company or its
designees.

2.3 Closing Conditions.

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

 

6

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

(i) the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations and
warranties of the Purchasers contained herein (unless as of a specific date
therein in which case they shall be accurate as of such date);

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

(iii) the delivery by each Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

(b) The respective obligations of the Purchasers hereunder in connection with
the Closing are subject to the following conditions being met:

(i) the accuracy in all material respects (or, to the extent representations or
warranties are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations and
warranties of the Company contained herein (unless as of a specific date therein
in which case they shall be accurate as of such date);

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

(iii) the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

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

(v) from the date hereof to the Closing Date, trading in the Common Stock shall
not have been suspended by the Commission or the Company’s principal Trading
Market, and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on securities whose
trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Purchaser, makes
it impracticable or inadvisable to purchase the Securities at the Closing.

 

7

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

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof
and shall qualify any representation or otherwise made herein to the extent of
the disclosure contained in the corresponding section of the Disclosure
Schedules, the Company hereby makes the following representations and warranties
to each Purchaser:

(a) Organization and Good Standing. Each of the subsidiaries of the Company are
set forth on Schedule 3.1(a). Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries has full corporate power and authority to own its properties and
conduct its business as currently being carried on and as described in the
Registration Statement, the Prospectus and the Prospectus Supplement, and is
duly qualified to do business as a foreign corporation in good standing in each
jurisdiction in which it owns or leases real property or in which the conduct of
its business makes such qualification necessary and in which the failure to so
qualify would have (a) a material adverse effect upon the business, management,
properties, operations, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole, or (b) a
material adverse effect on the Company’s ability to perform in any material
respect on a timely basis its obligations under the Transaction Documents
(“Material Adverse Effect”). All of the issued and outstanding shares of capital
stock of each of the Company’s subsidiaries have been duly and validly
authorized and issued and are fully paid and nonassessable, and, except as
otherwise described in the Registration Statement, the Prospectus and the
Prospectus Supplement, the Company owns of record and beneficially, free and
clear of any security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such stock.

(b) No Violations or Defaults. Neither the Company nor any of its subsidiaries
(A) is in violation of its respective charters, bylaws or other organizational
documents, (B) is in breach of or otherwise in default and no event has occurred
which, with notice or lapse of time or both, would constitute such a default, in
the performance or observance of any term, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it is bound or to
which any of its material property or assets is subject, (C) is in violation in
any respect of any law, ordinance, governmental rule, regulation or court order,
decree or judgment to which it or its property or assets may be subject,
including the Sarbanes–Oxley Act; or (D) is in violation of any applicable
requirements set forth in the rules of the Exchange Act; except, in the case of
clauses (B), (C) and (D) of this paragraph (b), for any breaches, violations or
defaults which, singularly or in the aggregate, would not have a Material
Adverse Effect.

 

8

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

(c) Authorization; No Conflicts; Authority. This Agreement has been duly
authorized, executed and delivered by the Company, and constitutes a valid,
legal and binding obligation of the Company, enforceable in accordance with its
terms, except as rights to indemnity hereunder may be limited by federal or
state securities laws and except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. Warrants have
been duly authorized, and when executed and delivered by the Company, shall
constitute a valid, legal and binding obligation of the Company, enforceable in
accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The execution,
delivery and performance of the Transaction Documents and the consummation of
the transactions herein and therein contemplated will not (A) conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, (B) result in any violation of the provisions of the Company’s charter
or by-laws or (C) result in the violation of any law or statute or any judgment,
order, rule, regulation or decree of any court or arbitrator or federal, state,
local or foreign governmental agency or regulatory authority having jurisdiction
over the Company or any of its subsidiaries or any of their properties or assets
(each, a “Governmental Authority”), except in the case of clause (A) or (C) as
would not result in a Material Adverse Effect. No consent, approval,
authorization or order of, or registration or filing with any Governmental
Authority is required for the execution, delivery and performance of this
Agreement or for the consummation of the transactions contemplated hereby,
including the issuance or sale of the Shares by the Company, except such as may
be required under the Act, the rules of the Financial Industry Regulatory
Authority (“FINRA”) or state securities or blue sky laws; and the Company has
full power and authority to enter into this the Transaction Documents and to
consummate the transactions contemplated hereby and thereby, including the
authorization, issuance and sale of the Securities as contemplated by this
Agreement.

(d) Issuance of the Securities; Registration. The Shares are duly authorized
and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company. When paid for and issued in
accordance with this Agreement, the Warrants will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity. The Warrant
Shares, when issued in accordance with the terms of the Warrants, will be
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to
this Agreement and the Warrants. The Company has prepared and filed the
Registration Statement in conformity with the requirements of the Securities
Act, which became effective on October 2, 2020, including the Prospectus, and
such amendments and supplements thereto as may have been required to the date of
this Agreement. The Company was at

 

9

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

the time of the filing of the Registration Statement eligible to use Form S-3.
The Registration Statement is effective under the Securities Act and no stop
order preventing or suspending the effectiveness of the Registration Statement
or suspending or preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted or, to the
knowledge of the Company, are threatened by the Commission. The Company, if
required by the rules and regulations of the Commission, shall file the
Prospectus Supplement with the Commission pursuant to Rule 424(b). At the time
the Registration Statement and any amendments thereto became effective, at the
date of this Agreement and at the Closing Date, the Registration Statement and
any amendments thereto conformed and will conform in all material respects to
the requirements of the Securities Act and did not and will not contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading;
and the Prospectus and any amendments or supplements thereto, at the time the
Prospectus or any amendment or supplement thereto was issued and at the Closing
Date, conformed and will conform in all material respects to the requirements of
the Securities Act and did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

(e) Capitalization. The capitalization of the Company as of the date hereof is
as set forth on Schedule 3.1(e). All of the issued and outstanding shares of
capital stock of the Company, including the outstanding shares of Common Stock,
are duly authorized and validly issued, fully paid and nonassessable, have been
issued in compliance with all federal and state and foreign securities laws,
were not issued in violation of or subject to any preemptive rights or other
rights to subscribe for or purchase securities that have not been waived in
writing, and the holders thereof are not subject to personal liability by reason
of being such holders; the capital stock of the Company, including the Common
Stock and the Warrants, conforms in all material respects to the description
thereof in the Registration Statement, the Prospectus and the Prospectus
Supplement. Except as set forth on Schedule 3.1(e), (A) there are no preemptive
rights or other rights to subscribe for or to purchase, or any restriction upon
the voting or transfer of, any shares of Common Stock pursuant to the Company’s
charter, by-laws or any agreement or other instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound; and (B) neither the filing of the Registration Statement
nor the offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights for or relating to the registration of any shares of
Common Stock or other securities of the Company (collectively “Registration
Rights”). Except as a result of the purchase and sale of the Securities or as
set forth on Schedule 3.1(e), there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common Stock or the capital stock of any subsidiary,
or contracts, commitments, understandings or arrangements by which the Company
or any Subsidiary is or may become bound to issue additional shares of Common
Stock or Common Stock Equivalents or capital stock of any Subsidiary. Except as
set forth on Schedule 3.1(e), there are no outstanding securities or instruments
of the Company or any subsidiary with

 

10

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

any provision that adjusts the exercise, conversion, exchange or reset price of
such security or instrument upon an issuance of securities by the Company or any
subsidiary. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.

(f) SEC Reports. The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Securities Act
and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for
the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, together with the Prospectus and the Prospectus Supplement,
being collectively referred to herein as the “SEC Reports”) on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
dates, the SEC Reports complied in all material respects with the requirements
of the Securities Act and the Exchange Act, as applicable, and none of the SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Company has never been an issuer
subject to Rule 144(i) under the Securities Act.

(g) Financial Statements. The financial statements of the Company, together with
the related notes, set forth or incorporated by reference in the Registration
Statement, the Prospectus and the Prospectus Supplement comply in all material
respects with the requirements of the Securities Act and the Exchange Act and
fairly present the financial condition of the Company and its consolidated
subsidiaries as of the dates indicated and the results of operations and changes
in cash flows for the periods therein specified in conformity with generally
accepted accounting principles in the United States consistently applied
throughout the periods involved; the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein; all non-GAAP financial information included in the Registration
Statement, the Prospectus and the Prospectus Supplement complies with the
requirements of Regulation G and Item 10 of Regulation S-K under the Act; and,
except as disclosed in the Registration Statement, the Prospectus and the
Prospectus Supplement, there are no material off-balance sheet arrangements (as
defined in Regulation S-K under the Act, Item 303(a)(4)(ii)) or any other
relationships with unconsolidated entities or other persons, that may have a
material current effect or, to the Company’s knowledge, material future effect
on the Company’s financial condition, results of operations, liquidity, capital
expenditures, capital resources or significant components of revenue or
expenses. No other financial statements or schedules are required to be included
in the Registration Statement, the Prospectus or the Prospectus Supplement. To
the Company’s knowledge, KPMG LLP, which has expressed its opinion with respect
to the financial statements and schedules filed as a part of the Registration
Statement and included in the Registration Statement, the Prospectus and the
Prospectus Supplement is (x) an independent public accounting firm within the
meaning of the Act and the Rules and Regulations, (y) a registered public
accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”)) and (z) not in violation of the auditor
independence requirements of the Sarbanes-Oxley Act.

 

11

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

(h) Absence of Certain Events; Undisclosed Events, Liabilities or Developments.
Except as set forth on Schedule 3.1(h), subsequent to the respective dates as of
which information is given in the Prospectus and the Prospectus Supplement,
neither the Company nor any of its subsidiaries has incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any distribution of any
kind with respect to its capital stock; and there has not been any change in the
capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants, settlement of restricted stock units or conversion of convertible
securities), or any material change in the short-term or long-term debt (other
than as a result of the conversion of convertible securities), or any issuance
of options, warrants, restricted stock units, convertible securities or other
rights to purchase the capital stock, of the Company or any of its subsidiaries,
or any event or development that has had a Material Adverse Effect or any
development which could reasonably be expected to result in any Material Adverse
Effect. Except for the issuance of the Securities contemplated by this Agreement
or as set forth on Schedule 3.1(h), no event, liability, fact, circumstance,
occurrence or development has occurred or exists or is reasonably expected to
occur or exist with respect to the Company or its Subsidiaries or their
respective businesses, prospects, properties, operations, assets or financial
condition that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made or deemed made that has
not been publicly disclosed at least one (1) Trading Day prior to the date that
this representation is made

(i) Absence of Proceedings. Except as set forth on Schedule 3.1(i), there is not
pending or, to the knowledge of the Company, threatened or contemplated, any
action, suit or proceeding (a) to which the Company or any of its subsidiaries
is a party or (b) which has as the subject thereof any officer or director of
the Company or any subsidiary, any employee benefit plan sponsored by the
Company or any subsidiary or any property or assets owned or leased by the
Company or any subsidiary before or by any court or Governmental Authority, or
any arbitrator, which, individually or in the aggregate, might result in any
Material Adverse Effect, or would materially and adversely affect the ability of
the Company to perform its obligations under the Transaction Documents or which
are otherwise material in the context of the sale of the Securities. There are
no current or, to the knowledge of the Company, pending, legal, governmental or
regulatory actions, suits or proceedings (x) to which the Company or any of its
subsidiaries is subject or (y) which has as the subject thereof any officer or
director of the Company or any subsidiary, any employee plan sponsored by the
Company or any subsidiary or any property or assets owned or leased by the
Company or any subsidiary, that are required to be described in the Registration
Statement, Prospectus and the Prospectus Supplement by the Securities Act or by
the Rules and Regulations and that have not been so described.

(j) Labor Relations. No labor dispute with the employees of the Company or any
of its subsidiaries exists or, to the Company’s knowledge, is threatened or
imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or its subsidiaries’ principal
suppliers, contractors or customers, that could have a Material Adverse Effect.

 

12

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

(k) Compliance with Laws. The Company and each of its subsidiaries holds, and is
operating in compliance in all material respects with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates and orders
of any Governmental Authority or self-regulatory body required for the conduct
of its business and all such franchises, grants, authorizations, licenses,
permits, easements, consents, certifications and orders are valid and in full
force and effect; and neither the Company nor any of its subsidiaries has
received notice of any revocation or modification of any such franchise, grant,
authorization, license, permit, easement, consent, certification or order or has
reason to believe that any such franchise, grant, authorization, license,
permit, easement, consent, certification or order will not be renewed in the
ordinary course; and the Company and each of its subsidiaries is in compliance
in all material respects with all applicable federal, state, local and foreign
laws, regulations, orders and decrees.

(l) Compliance with Environmental Laws. Except as disclosed in the Prospectus
and the Prospectus Supplement, neither the Company nor any of its subsidiaries
is in violation of any statute, any rule, regulation, decision or order of any
Governmental Authority or any court, domestic or foreign, relating to the use,
disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, “Environmental Laws”), owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
Environmental Laws, or is subject to any claim relating to any Environmental
Laws, which violation, contamination, liability or claim would individually or
in the aggregate, have a Material Adverse Effect; and the Company is not aware
of any pending investigation which might lead to such a claim. Neither the
Company nor any of its subsidiaries anticipates incurring any material capital
expenditures relating to compliance with Environmental Laws.

(m) Ownership of Assets. The Company and its subsidiaries have good and
marketable title to all property (whether real or personal) described in the
Registration Statement, the Prospectus and the Prospectus Supplement as being
owned by them, in each case free and clear of all liens, claims, security
interests, other encumbrances or defects except such as are described in the
Registration Statement, the Prospectus and the Prospectus Supplement or as would
not, individually or in the aggregate, result in a Material Adverse Effect. The
property held under lease by the Company and its subsidiaries is held by them
under valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material respect with
the conduct of the business of the Company or its subsidiaries.

(n) Intellectual Property The Company and each of its subsidiaries owns,
possesses, or can acquire on reasonable terms, all Intellectual Property (as
defined below) necessary for the conduct of the Company’s and it subsidiaries’
business as now conducted or as described in the Registration Statement, the
Prospectus and the Prospectus Supplement to be conducted, except as such failure
to own, possess, or acquire such rights

 

13

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

would not result in a Material Adverse Effect. Furthermore, except as described
in the Registration Statement, the Prospectus and the Prospectus Supplement,
(A) to the Knowledge (as defined herein) of the Company, there is no
infringement, misappropriation or violation by third parties of any such
Intellectual Property, except as such infringement, misappropriation or
violation would not result in a Material Adverse Effect; (B) there is no pending
or, to the Knowledge of the Company, threatened, action, suit, proceeding or
claim by others challenging the Company’s or any of its subsidiaries’ rights in
or to any such Intellectual Property, and the Company is unaware of any
objective facts which would form a reasonable basis for any such claim; (C) the
Intellectual Property owned by the Company and its subsidiaries, and to the
Knowledge of the Company, the Intellectual Property licensed to the Company and
its subsidiaries, has not been adjudged invalid or unenforceable, in whole or in
part, and there is no pending or, to the Knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the validity or scope of
any such Intellectual Property; (D) there is no pending or, to the Knowledge of
the Company, threatened action, suit, proceeding or claim by others that the
Company or any of its subsidiaries infringes, misappropriates or otherwise
violates any Intellectual Property or other proprietary rights of others, and
neither the Company or any of its subsidiaries has received any written notice
of such claim; and (E) to the Company’s knowledge, no employee of the Company or
any of its subsidiaries is in or has ever been in violation of any term of any
employment contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement, nondisclosure
agreement or any restrictive covenant to or with a former employer where the
basis of such violation relates to such employee’s employment with the Company
or any of its subsidiaries or actions undertaken by the employee while employed
with the Company or any of its subsidiaries, except as such violation would not
result in a Material Adverse Effect. “Intellectual Property” shall mean all
patents, patent applications, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights, copyright
registrations, licenses, inventions, trade secrets, Internet domain names,
Internet domain name registrations, technology, registrations, trade secret
rights, know-how and other intellectual property.

(o) Insurance. The Company and each of its subsidiaries carries, or is covered
by, insurance from reputable insurers in such amounts and covering such risks as
is adequate for the conduct of its business and the value of its properties and
the properties of its subsidiaries and as is customary for companies engaged in
similar businesses in similar industries; all policies of insurance and any
fidelity or surety bonds insuring the Company or any of its subsidiaries or its
business, assets, employees, officers and directors are in full force and
effect; the Company and its subsidiaries are in compliance with the terms of
such policies and instruments in all material respects; there are no claims by
the Company or any of its subsidiaries under any such policy or instrument as to
which any insurance company is denying liability or defending under a
reservation of rights clause; neither the Company nor any of its subsidiaries
has been refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries has 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 at a cost that would not have a Material Adverse Effect.

 

14

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

(p) Internal Accounting Controls. The Company and its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management’s
general or specific authorization; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles in the United States and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as disclosed in the Registration Statement, the Prospectus
and the Prospectus Supplement, the Company’s internal control over financial
reporting is effective and none of the Company, its board of directors and audit
committee is aware of any “significant deficiencies” or “material weaknesses”
(each as defined by the Public Company Accounting Oversight Board) in its
internal control over financial reporting, or any fraud, whether or not
material, that involves management or other employees of the Company and its
subsidiaries who have a significant role in the Company’s internal controls; and
since the end of the latest audited fiscal year, there has been no change in the
Company’s internal control over financial reporting (whether or not remediated)
that has materially affected, or is reasonably likely to materially affect, the
Company’s internal control over financial reporting. The Company’s board of
directors has, subject to the exceptions, cure periods and the phase in periods
specified in the applicable stock exchange rules (“Exchange Rules”), validly
appointed an audit committee to oversee internal accounting controls whose
composition satisfies the applicable requirements of the Exchange Rules and the
Company’s board of directors and/or the audit committee has adopted a charter
that satisfies the requirements of the Exchange Rules.

(q) Certain Fees. Except as set forth in the Prospectus Supplement, no brokerage
or finder’s fees or commissions are or will be payable by the Company or any
subsidiary to any broker, financial advisor or consultant, finder, placement
agent, investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents.

(r) Investment Company. The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an “investment company,” as
such term is defined in the Investment Company Act of 1940, as amended.

(s) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to, or which to its knowledge is likely to have the
effect of, terminating the registration of the Common Stock under the Exchange
Act nor has the Company received any notification that the Commission is
contemplating terminating such registration. The Company has not, in the 12
months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. The Company is, and has no reason

 

15

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

to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements. The Common Stock
is currently eligible for electronic transfer through the Depository Trust
Company or another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such other
established clearing corporation) in connection with such electronic transfer.

(t) Application of Takeover Protections. The Company and the Board of Directors
have taken all necessary action, if any, in order to render inapplicable any
control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to
the Purchasers as a result of the 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.

(u) Disclosure. Except with respect to the material terms and conditions of the
transactions contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has provided any of
the Purchasers or their agents or counsel with any information that it believes
constitutes or might constitute material, non-public information which is not
otherwise disclosed in the Prospectus Supplement. The Company understands and
confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company. All of the disclosure
furnished by or on behalf of the Company to the Purchasers regarding the Company
and its subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this Agreement, when
taken together as a whole, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. The press releases disseminated by
the Company during the twelve months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made and when made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.

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

 

16

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

(w) Solvency. Based on the consolidated financial condition of the Company as of
the Closing Date, after giving effect to the receipt by the Company of the
proceeds from the sale of the Securities hereunder, (i) the fair saleable value
of the Company’s assets exceeds the amount that will be required to be paid on
or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
consolidated and projected capital requirements and capital availability
thereof, 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 liabilities 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). The Company has no
knowledge of any facts or circumstances which lead it to believe that it will
file for reorganization or liquidation under the bankruptcy or reorganization
laws of any jurisdiction within one year from the Closing Date. SEC Reports set
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company or any subsidiary, or for which the Company or any subsidiary has
commitments. For the purposes of this Agreement, “Indebtedness” means (x) any
liabilities for borrowed money or amounts owed in excess of $50,000 (other than
trade accounts payable incurred in the ordinary course of business), (y) all
guaranties, endorsements and other contingent obligations in respect of
indebtedness of others, whether or not the same are or should be reflected in
the Company’s consolidated balance sheet (or the notes thereto) or disclosed the
SEC Reports, except guaranties by endorsement of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business; and (z) the present value of any lease payments in excess of $50,000
due under leases required to be capitalized in accordance with United States
generally accepted accounting principles. Neither the Company nor any subsidiary
is in default with respect to any Indebtedness.

(x) Tax Status. The Company and its subsidiaries (A) have timely filed all
federal, state, local and foreign income and franchise tax returns required to
be filed and (B) are not in default in the payment of any taxes which were
payable pursuant to said returns or any assessments with respect thereto, other
than any which the Company or any of its subsidiaries is contesting in good
faith; except those, in each of the cases described in clauses (A) and (B) of
this paragraph (x), that would not, singularly or in the aggregate, have a
Material Adverse Effect. There is no pending dispute with any taxing authority
relating to any of such returns, and the Company has no knowledge of any
proposed liability for any tax to be imposed upon the properties or assets of
the Company for which there is not an adequate reserve reflected in the
Company’s financial statements included in the Registration Statement, the
Prospectus and the Prospectus Supplement.

(y) Anti-Bribery and Anti-Money Laundering Laws. Each of the Company, its
subsidiaries, its affiliates and any of their respective officers, directors,
supervisors, managers, agents, or employees, each in their respective roles with
the Company, has not violated, its participation in the offering will not
violate, and the Company and each of its

 

17

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

subsidiaries has instituted and maintains policies and procedures designed to
ensure continued compliance with, each of the following laws: anti-bribery laws,
including but not limited to, any applicable law, rule, or regulation of any
locality in which the Company does business, including but not limited to any
applicable law, rule, or regulation promulgated to implement the OECD Convention
on Combating Bribery of Foreign Public Officials in International Business
Transactions, signed December 17, 1997, including the U.S. Foreign Corrupt
Practices Act of 1977 (the “FCPA”), as amended, the U.K. Bribery Act 2010 (to
the extent applicable), or any other applicable law, rule or regulation of
similar purposes and scope, or anti-money laundering laws, including but not
limited to, applicable federal, state, international, foreign or other laws,
regulations or government guidance regarding anti-money laundering, including,
without limitation, Title 18 US. Code section 1956 and 1957, the Patriot Act,
the Bank Secrecy Act, and international anti-money laundering principles or
procedures by an intergovernmental group or organization, such as the Financial
Action Task Force on Money Laundering, of which the United States is a member
and with which designation the United States representative to the group or
organization continues to concur, all as amended, and any executive order,
directive, or regulation pursuant to the authority of any of the foregoing, or
any orders or licenses issued thereunder.

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

(aa) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this
Agreement or elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the
Company that: (i) none of the Purchasers has been asked by the Company to agree,
nor has any Purchaser agreed, to desist from purchasing or selling, long and/or
short, securities of the Company, or “derivative” securities based on securities
issued by the Company or to hold the Securities for any specified term;
(ii) past or future open market or other transactions by any Purchaser,
specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement
transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) any Purchaser, and counter-parties in
“derivative” transactions to which any such Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock, and
(iv) each Purchaser shall not be deemed to have any affiliation with or control
over any arm’s length counter-party in any “derivative” transaction. The Company
further understands and acknowledges that (y) one or more Purchasers may

 

18

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

engage in hedging activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value of the Warrant Shares deliverable with respect to Securities are
being determined, and (z) such hedging activities (if any) could reduce the
value of the existing stockholders’ equity interests in the Company at and after
the time that the hedging activities are being conducted. The Company
acknowledges that such aforementioned hedging activities do not constitute a
breach of any of the Transaction Documents.

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

(cc) FDA and Regulatory Matters. Except as set forth in the Prospectus and the
Prospectus Supplement, there is no legal or governmental proceeding to which the
Company or any of its subsidiaries is a party or of which any property or assets
of the Company or any of its subsidiaries or any officer or director of the
Company, in their roles as such, or any employee benefit plan sponsored by the
Company, is the subject, including any proceeding before the United States Food
and Drug Administration of the U.S. Department of Health and Human Services (the
“FDA”) or comparable federal, state, local or foreign governmental
authorities (it being understood that the interaction between the Company and
the FDA and such comparable governmental bodies relating to the clinical
development and product approval process shall not be deemed proceedings for
purposes of this representation), which is required to be described in the
Registration Statement, the Prospectus or the Prospectus Supplement or a
document incorporated by reference therein and is not described therein, or
which, singularly or in the aggregate, if determined adversely to the Company or
any of its subsidiaries, could reasonably be expected to have a Material Adverse
Effect; and to the Company’s knowledge after reasonable investigation
(“Knowledge”), no such proceedings are threatened by governmental authorities.
The Company is in compliance with all applicable federal, state, local and
foreign laws, regulations, orders and decrees governing its business as
prescribed by the FDA, or any other federal, state or foreign agencies or bodies
engaged in the regulation of pharmaceuticals or biohazardous substances or
materials, except where noncompliance would not, singly or in the aggregate,
have a Material Adverse Effect. All preclinical and clinical studies conducted
by or on behalf of the Company to support approval for commercialization of the
Company’s products have been conducted by the Company, or to the Company’s
Knowledge by third parties, in compliance with all applicable federal, state or
foreign laws, rules, orders and regulations, except for such failure or failures
to be in compliance as could not reasonably be expected to have, singularly or
in the aggregate, a Material Adverse Effect.

 

19

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

The Company and each of its subsidiaries possess all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings
with, the appropriate local, state, federal or foreign governmental or
regulatory agencies or bodies (including, without limitation, those administered
by the FDA or by any foreign, federal, state or local governmental or regulatory
authority performing functions similar to those performed by the FDA) that are
necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration
Statement, the Prospectus and the Prospectus Supplement (collectively, the
“Governmental Permits”), except where any failures to possess or make the same
would not, singularly or in the aggregate, have a Material Adverse Effect. The
Company and its subsidiaries are in compliance with all such Governmental
Permits and all such Governmental Permits are valid and in full force and
effect, except where the noncompliance, validity or failure to be in full force
and effect would not, singularly or in the aggregate, have a Material Adverse
Effect. Neither the Company nor any subsidiary has received notification of any
revocation, modification, suspension, termination or invalidation (or
proceedings related thereto) of any such Governmental Permit and to the
Knowledge of the Company, no event has occurred that allows or results in, or
after notice or lapse of time or both would allow or result in, revocation,
modification, suspension, termination or invalidation (or proceedings related
thereto) of any such Governmental Permit and the Company has no reason to
believe that any such Governmental Permit will not be renewed, except where such
revocation, modification, suspension, termination, invalidation or nonrenewal
would not, singularly or in the aggregate, have a Material Adverse Effect.

The Company and its subsidiaries, and to the Company’s Knowledge, its directors,
officers, employees or agents, each in their respective roles with the Company,
are and have been in compliance in all material respects with applicable
federal, state, local and foreign health care regulatory laws, including without
limitation, laws related to fraud and abuse, payment transparency, and privacy
and security of protected health information (collectively, “Health Care
Laws”). The Company and its subsidiaries have not received written notice of any
claim, action, suit, proceeding, hearing, enforcement, investigation,
arbitration or other action from any court, arbitrator or governmental or
regulatory authority or third party alleging that the Company, its subsidiaries
or its personnel have violated any applicable Health Care Law, nor, to the
Company’s Knowledge, has any such claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action been threatened, which,
individually or in the aggregate, might result in any Material Adverse Effect.

The studies, tests and preclinical or clinical trials conducted by or on behalf
of the Company that are described in the Prospectus and the Prospectus
Supplement (the “Company Studies and Trials”) were and, if still pending, are
being conducted in all material respects in accordance with experimental
protocols, procedures and controls pursuant to, where applicable, accepted
professional scientific standards; the descriptions of the results of the
Company Studies and Trials contained or incorporated by reference in the
Registration Statement, the Prospectus and the Prospectus Supplement are
accurate in all material respects; the Company has no knowledge of any other
studies or trials not described in the Prospectus and the Prospectus Supplement,
the results of which are

 

20

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

inconsistent with or call in question the results described or referred to in
the Registration Statement, the Prospectus and the Prospectus Supplement; and
the Company has not received any notices or correspondence from the FDA or any
foreign, state or local governmental authority exercising comparable authority
requiring the termination, suspension or material modification of any Company
Studies and Trials that termination, suspension or material modification would
reasonably be expected to have a Material Adverse Effect and, to the Company’s
Knowledge, there are no reasonable grounds for the same.

Except as disclosed in the Registration Statement, the Prospectus and the
Prospectus Supplement, the Company has not granted rights to develop,
manufacture, produce, assemble, distribute, license, market or sell its products
or product candidates to any other person and is not bound by any agreement that
affects the exclusive right of the Company to develop, manufacture, produce,
assemble, distribute, license, market or sell its products or product
candidates.

(dd) Stock Option Plans. Except as described in the Registration Statement, the
Prospectus and the Prospectus Supplement, there are no options, warrants,
restricted stock units, agreements, contracts or other rights in existence to
purchase or acquire from the Company or any subsidiary of the Company any shares
of the capital stock of the Company or any subsidiary of the Company. The
description of the Company’s stock option, stock bonus and other stock plans or
arrangements (the “Company Stock Plans”), and the options (the “Options”) or
other rights granted thereunder, set forth in the Registration Statement, the
Prospectus and the Prospectus Supplement accurately and fairly presents the
information required to be shown with respect to such plans, arrangements,
options and rights. Each grant of an Option (A) was duly authorized no later
than the date on which the grant of such Option was by its terms to be effective
by all necessary corporate action, including, as applicable, approval by the
board of directors of the Company (or a duly constituted and authorized
committee thereof) and any required shareholder approval by the necessary number
of votes or written consents, and the award agreement governing such grant (if
any) was duly executed and delivered by each party thereto and (B) was made in
accordance with the terms of the applicable Company Stock Plan, and all
applicable laws and regulatory rules or requirements, including all applicable
federal securities laws.

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

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

 

21

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

(gg) Bank Holding Company Act. Neither the Company nor any of its subsidiaries
or Affiliates is subject to the Bank Holding Company Act of 1956, as amended
(the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve
System (the “Federal Reserve”). Neither the Company nor any of its subsidiaries
or Affiliates owns or controls, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. Neither the
Company nor any of its subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.

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

(a) Organization; Authority. Such Purchaser is either an individual or an entity
duly incorporated or formed, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar 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 execution and delivery of the Transaction Documents and performance by such
Purchaser of the transactions contemplated by the Transaction Documents have
been duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of such Purchaser. Each
Transaction Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms, except: (i) as
limited by general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

(b) Understandings or Arrangements. Such Purchaser is acquiring the Securities
as principal for its own account and has no direct or indirect arrangement or
understandings with any other persons to distribute or regarding the
distribution of such Securities (this representation and warranty not limiting
such Purchaser’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state
securities laws). Such Purchaser is acquiring the Securities hereunder in the
ordinary course of its business.

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it
was, and as of the date hereof it is, and on each date on which it exercises any
Warrants, it will be either: (i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a
“qualified institutional buyer” as defined in Rule 144A(a) under the Securities
Act.

 

22

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

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with
its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the 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.

(e) Access to Information. Such Purchaser acknowledges that it has had the
opportunity to review the Transaction Documents (including all exhibits and
schedules thereto) and the SEC Reports 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 its 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. Such Purchaser acknowledges
and agrees that neither the Placement Agent nor any Affiliate of the Placement
Agent has provided such Purchaser with any information or advice with respect to
the Securities nor is such information or advice necessary or desired. Neither
the Placement Agent nor any Affiliate has made or makes any representation as to
the Company or the quality of the Securities and the Placement Agent and any
Affiliate may have acquired non-public information with respect to the Company
which such Purchaser agrees need not be provided to it. In connection with the
issuance of the Securities to such Purchaser, neither the Placement Agent nor
any of its Affiliates has acted as a financial advisor or fiduciary to such
Purchaser.

(f) Certain Transactions and Confidentiality. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly executed any purchases or sales, including Short
Sales, of the securities of the Company during the period commencing as of the
time that such Purchaser first received a term sheet (written or oral) from the
Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to
the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser
that is a multi-managed investment vehicle whereby separate portfolio managers
manage separate portions of such Purchaser’s assets and the portfolio managers
have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of such Purchaser’s assets, the representation
set forth above shall only apply with respect to the portion of assets managed
by the portfolio manager that made the investment decision to purchase the
Securities covered by this Agreement. Other than to other Persons party to this
Agreement or to such Purchaser’s representatives, including, without limitation,
its officers, directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the
existence and terms of this transaction). Notwithstanding the foregoing, for the
avoidance of doubt, nothing contained herein shall constitute a representation
or warranty, or preclude any actions, with respect to locating or borrowing
shares in order to effect Short Sales or similar transactions in the future.

 

23

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

The Company acknowledges and agrees that the representations contained in this
Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on
the Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transactions contemplated hereby.
Notwithstanding the foregoing, for the avoidance of doubt, nothing contained
herein shall constitute a representation or warranty, or preclude any actions,
with respect to locating or borrowing shares in order to effect Short Sales or
similar transactions in the future.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

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

4.2 Furnishing of Information. Until the earlier of the time that (i) no
Purchaser owns Securities and (ii) the Warrants have expired, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act.

4.3 Integration. The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of such other
transaction unless shareholder approval is obtained before the closing of such
subsequent transaction.

 

24

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

4.4 Securities Laws Disclosure; Publicity. The Company shall (a) by the
Disclosure Time, issue a press release disclosing the material terms of the
transactions contemplated hereby, and (b) file a Current Report on Form 8-K,
including the Transaction Documents as exhibits thereto, with the Commission
within the time required by the Exchange Act. From and after the issuance of
such press release, the Company represents to the Purchasers that it shall have
publicly disclosed all material, non-public information delivered to any of the
Purchasers by the Company or any of its subsidiaries, or any of their respective
officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents. In addition, effective upon the
issuance of such press release, the Company acknowledges and agrees that any and
all confidentiality or similar obligations under any agreement, whether written
or oral, between the Company, any of its subsidiaries or any of their respective
officers, directors, agents, employees or Affiliates on the one hand, and any of
the Purchasers or any of their Affiliates on the other hand, shall terminate.
The Company and each Purchaser shall consult with each other in issuing any
other press releases with respect to the transactions contemplated hereby, and
neither the Company nor any Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent of the
Company, with respect to any press release of any Purchaser, or without the
prior consent of each Purchaser, with respect to any press release of the
Company, which consent shall not unreasonably be withheld or delayed, except if
such disclosure is required by law, in which case the disclosing party shall
promptly provide the other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the Commission or any regulatory agency or Trading Market, without
the prior written consent of such Purchaser, except (a) as required by federal
securities law in connection with the filing of final Transaction Documents with
the Commission and (b) to the extent such disclosure is required by law or
Trading Market regulations, in which case the Company shall provide the
Purchasers with prior notice of such disclosure permitted under this clause (b).

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

4.6 Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, which
shall be disclosed pursuant to Section 4.4, the Company covenants and agrees
that neither it, nor any other Person acting on its behalf will provide any
Purchaser or its agents or counsel with any information that constitutes, or the
Company reasonably believes constitutes, material non-public information, unless
prior thereto such Purchaser shall have consented to the receipt of such
information and agreed with the Company to keep such information confidential.
The Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company. To
the extent that the Company delivers any material, non-public information to a
Purchaser without such Purchaser’s consent, the Company hereby covenants and
agrees that such Purchaser shall not have any duty of confidentiality to the
Company, any of its subsidiaries, or any of their respective officers,
directors, agents, employees or Affiliates, or a duty to the Company, any of its
subsidiaries or any of their respective officers, directors, agents, employees
or Affiliates not to trade on the basis of, such material, non-public
information,

 

25

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

provided that the Purchaser shall remain subject to applicable law. To the
extent that any notice provided pursuant to any Transaction Document
constitutes, or contains, material, non-public information regarding the Company
or any subsidiaries, the Company shall simultaneously file such notice with the
Commission pursuant to a Current Report on Form 8-K. The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

4.7 Use of Proceeds. The Company will apply the net proceeds from the sale of
the Securities to be sold by it hereunder for the purposes set forth in the
Prospectus Supplement and shall not use such proceeds: (a) for the satisfaction
of any portion of the Company’s debt (other than payment of trade payables in
the ordinary course of the Company’s business and prior practices), (b) for the
redemption of any Common Stock or Common Stock Equivalents, (c) for the
settlement of any outstanding litigation or (d) in violation of FCPA or OFAC
regulations.

4.8 Indemnification of Purchasers. Subject to the provisions of this
Section 4.8, the Company will indemnify and hold each Purchaser and its
directors, officers, shareholders, members, partners, employees and agents (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against the
Purchaser Parties in any capacity, or any of them or their respective
Affiliates, by any stockholder of the Company who is not an Affiliate of such
Purchaser Party, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is solely based upon a material breach
of such Purchaser Party’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser Party
may have with any such stockholder or any violations by such Purchaser Party of
state or federal securities laws or any conduct by such Purchaser Party which is
finally judicially determined to constitute fraud, gross negligence or willful
misconduct). If any action shall be brought against any Purchaser Party in
respect of which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and the Company
shall have the right to assume the defense thereof with counsel of its own
choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Purchaser Party except to the extent that (x) the employment
thereof has been specifically authorized by the Company in writing, (y) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (z) in such action there is, in the reasonable opinion of
counsel, a material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the Company
shall be responsible for the reasonable fees and expenses of no more than one
such separate counsel. The

 

26

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

Company will not be liable to any Purchaser Party under this Agreement (1) for
any settlement by a Purchaser Party effected without the Company’s prior written
consent, which shall not be unreasonably withheld or delayed; or (2) to the
extent, but only to the extent that a loss, claim, damage or liability is
attributable to any Purchaser Party’s breach of any of the representations,
warranties, covenants or agreements made by such Purchaser Party in this
Agreement or in the other Transaction Documents. The indemnification required by
this Section 4.8 shall be made by periodic payments of the amount thereof during
the course of the investigation or defense, as and when bills are received or
are incurred. The indemnity agreements contained herein shall be in addition to
any cause of action or similar right of any Purchaser Party against the Company
or others and any liabilities the Company may be subject to pursuant to law.

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

4.10 Listing of Common Stock. The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on the Trading Market on
which it is currently listed, and concurrently with the Closing, the Company
shall apply to list or quote all of the Shares and Warrant Shares on such
Trading Market and promptly secure the listing of all of the Shares and Warrant
Shares on such Trading Market. The Company further agrees, if the Company
applies to have the Common Stock traded on any other Trading Market, it will
then include in such application all of the Shares and Warrant Shares, and will
take such other action as is necessary to cause all of the Shares and Warrant
Shares to be listed or quoted on such other Trading Market as promptly as
possible. The Company will then take all action reasonably necessary to continue
the listing and trading of its Common Stock on a Trading Market and will comply
in all respects with the Company’s reporting, filing and other obligations under
the bylaws or rules of the Trading Market. The Company agrees to maintain the
eligibility of the Common Stock for electronic transfer through the Depository
Trust Company or another established clearing corporation, including, without
limitation, by timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such electronic
transfer.

4.11 Reserved.

4.12 Subsequent Equity Sales.

(a) From the date hereof until thirty (30) days after the Closing Date, neither
the Company nor any subsidiary shall issue, enter into any agreement to issue or
announce the issuance or proposed issuance of any shares of Common Stock or
Common Stock Equivalents.

(b) From the date hereof until the one (1) year anniversary of the Closing Date,
the Company shall be prohibited from effecting or entering into an agreement to
effect any issuance by the Company or any of its Subsidiaries of Common Stock or
Common Stock Equivalents (or a combination of units thereof) involving a
Variable Rate

 

27

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

Transaction. “Variable Rate Transaction” means a transaction in which the
Company (i) issues or sells any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to receive
additional shares of Common Stock either (A) at a conversion price, exercise
price or exchange rate or other price that is based upon and/or varies with the
trading prices of or quotations for the shares of Common Stock at any time after
the initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being reset at some
future date after the initial issuance of such debt or equity security or upon
the occurrence of specified or contingent events directly or indirectly related
to the business of the Company or the market for the Common Stock or (ii) enters
into, or effects a transaction under, any agreement, including, but not limited
to, an equity line of credit, whereby the Company may issue securities at a
future determined price; provided, however, that, after thirty (30) days
following the Closing Date, the issuance of shares of Common Stock in an “at the
market” offering with H.C. Wainwright & Co., LLC as sales agent shall not be
deemed a Variable Rate Transaction. Any Purchaser shall be entitled to obtain
injunctive relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.

(c) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect
of an Exempt Issuance, except that no Variable Rate Transaction shall be an
Exempt Issuance.

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

4.14 Certain Transactions and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any
purchases or sales, including Short Sales of any of the Company’s securities
during the period commencing with the execution of this Agreement and ending at
such time that the transactions contemplated by this Agreement are first
publicly announced pursuant to the initial press release as described in
Section 4.4. Each Purchaser, severally and not jointly with the other
Purchasers, covenants that until such time as the transactions contemplated by
this Agreement are publicly disclosed by the Company pursuant to the initial
press release as described in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules. Notwithstanding the foregoing,
and notwithstanding anything contained in this Agreement to the contrary, the
Company expressly acknowledges and agrees that (i) no Purchaser makes any
representation, warranty or covenant hereby that it will not engage in effecting
transactions in any securities of the Company after the time that the
transactions contemplated by this Agreement are first publicly announced
pursuant to the initial press release as described in Section 4.4, (ii) no
Purchaser shall be restricted or prohibited from effecting any

 

28

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

transactions in any securities of the Company in accordance with applicable
securities laws from and after the time that the transactions contemplated by
this Agreement are first publicly announced pursuant to the initial press
release as described in Section 4.4 and (iii) no Purchaser shall have any duty
of confidentiality or duty not to trade in the securities of the Company to the
Company or its subsidiaries after the issuance of the initial press release as
described in Section 4.4. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser’s assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser’s assets, the
covenant set forth above shall only apply with respect to the portion of assets
managed by the portfolio manager that made the investment decision to purchase
the Securities covered by this Agreement.

4.15 Capital Changes. Until the one year anniversary of the Closing Date, the
Company shall not undertake a reverse or forward stock split or reclassification
of the Common Stock without the prior written consent of the Purchasers holding
a majority in interest of the Shares.

4.16 Exercise Procedures. The form of Notice of Exercise included in the
Warrants set forth the totality of the procedures required of the Purchasers in
order to exercise the Warrants. No additional legal opinion, other information
or instructions shall be required of the Purchasers to exercise their Warrants.
Without limiting the preceding sentences, no ink-original Notice of Exercise
shall be required, nor shall any medallion guarantee (or other type of guarantee
or notarization) of any Notice of Exercise form be required in order to exercise
the Warrants. The Company shall honor exercises of the Warrants and shall
deliver Warrant Shares in accordance with the terms, conditions and time periods
set forth in the Transaction Documents.

4.17 Sales During Pre-Settlement Period. Notwithstanding anything herein to the
contrary, if at any time on or after the time of execution of this Agreement by
the Company and an applicable Purchaser, through, and including the time
immediately prior to the Closing (the “Pre-Settlement Period”), such Purchaser
sells to any Person all, or any portion, of any shares of Common Stock to be
issued hereunder to such Purchaser at the Closing (collectively, the
“Pre-Settlement Shares”), such Purchaser shall, automatically hereunder (without
any additional required actions by such Purchaser or the Company), be deemed to
be unconditionally bound to purchase, and the Company shall be deemed
unconditionally bound to sell, such Pre-Settlement Shares to such Purchaser at
the Closing; provided, that the Company shall not be required to deliver any
Pre-Settlement Shares to such Purchaser prior to the Company’s receipt of the
purchase price of such Pre-Settlement Shares hereunder; and provided further
that the Company hereby acknowledges and agrees that the forgoing shall not
constitute a representation or covenant by such Purchaser as to whether or not
during the Pre-Settlement Period such Purchaser shall sell any shares of Common
Stock to any Person and that any such decision to sell any shares of Common
Stock by such Purchaser shall solely be made at the time such Purchaser elects
to effect any such sale, if any.

 

29

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

ARTICLE V.

MISCELLANEOUS

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations hereunder only and without any effect whatsoever on the
obligations between the Company and the other Purchasers, by written notice to
the other parties, if the Closing has not been consummated on or before the
fifth (5th) Trading Day following the date hereof; provided, however, that no
such termination will affect the right of any party to sue for any breach by any
other party (or parties).

5.2 Fees and Expenses. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution,
delivery and performance of this Agreement. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and any exercise
notice delivered by a Purchaser), stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities to the Purchasers.

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, the Prospectus and the Prospectus Supplement, contain the
entire understanding of the parties with respect to the subject matter hereof
and 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.

5.4 Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earliest of: (a) the time of transmission, if such
notice or communication is delivered via facsimile at the facsimile number or
email attachment at the email address as set forth on the signature pages
attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day,
(b) the next Trading Day after the time of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or email
attachment at the email address as set forth on the signature pages attached
hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City
time) on any Trading Day, (c) the second (2nd)Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service or
(d) upon actual receipt by the party to whom such notice is required to be
given. The address for such notices and communications shall be as set forth on
the signature pages attached hereto. To the extent that any notice provided
pursuant to any Transaction Document constitutes, or contains, material,
non-public information regarding the Company or any subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current
Report on Form 8-K.

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified,
supplemented or amended except in a written instrument signed, in the case of an
amendment, by the Company and Purchasers which purchased at least 50.1% in
interest of the Shares and Series B Warrants, in the aggregate, based on the
initial Subscription Amounts hereunder or, in the case of a waiver, by the party
against whom enforcement of any such waived provision is sought, provided that
if any amendment, modification or waiver disproportionately and adversely

 

30

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

impacts a Purchaser (or group of Purchasers), the consent of at least 50.1% in
interest of such disproportionately impacted Purchaser (or group of Purchasers)
shall also be required. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right. Any proposed amendment or waiver that
disproportionately, materially and adversely affects the rights and obligations
of any Purchaser relative to the comparable rights and obligations of the other
Purchasers shall require the prior written consent of such adversely affected
Purchaser. Any amendment effected in accordance with this Section 5.5 shall be
binding upon each Purchaser and holder of Securities and the Company.

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

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

5.8 No Third-Party Beneficiaries. The Placement Agent shall be the third party
beneficiary of the representations and warranties of the Company in Section 3.1
and the representations and warranties of the Purchasers in Section 3.2. This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set forth
in Section 4.8 and this Section 5.8.

5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal Proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Action or Proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such Action or Proceeding is improper or is
an inconvenient venue for such Proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
Action or Proceeding by mailing a copy thereof via registered or certified mail
or overnight delivery (with

 

31

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

evidence of delivery) to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner
permitted by law. If any party shall commence an Action or Proceeding to enforce
any provisions of the Transaction Documents, then, in addition to the
obligations of the Company under Section 4.8, the prevailing party in such
Action or Proceeding shall be reimbursed by the non-prevailing party for its
reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Action or Proceeding.

5.10 Survival. The representations and warranties contained herein shall survive
the Closing and the delivery of the Securities.

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

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

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) any of the other
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of an exercise of a Warrant, the
applicable Purchaser shall be required to return any shares of Common Stock
subject to any such rescinded exercise notice concurrently with the return to
such Purchaser of the aggregate exercise price paid to the Company for such
shares and the restoration of such Purchaser’s right to acquire such shares
pursuant to such Purchaser’s Warrant (including, issuance of a replacement
warrant certificate evidencing such restored right).

 

32

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

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

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

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

5.17 Independent Nature of Purchasers’ Obligations and Rights. The obligations
of each Purchaser under any Transaction Document are several and not joint with
the obligations of any other Purchaser, and no Purchaser shall be responsible in
any way for the performance or non-performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
other Transaction Document, and no action taken by any Purchaser pursuant hereto
or thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents. Each Purchaser shall be entitled to independently protect
and enforce its rights including, without limitation, the rights arising out of
this Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
Proceeding for such purpose. Each Purchaser has been represented by its own
separate legal counsel in its review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, each Purchaser and
its respective counsel have chosen to communicate with the Company through the
legal counsel of the Placement Agent. The legal counsel of the Placement Agent
does not represent any of the Purchasers and only represents the Placement
Agent. The Company has elected to provide all Purchasers with the same terms and
Transaction Documents for the convenience of the Company and not because it was
required or requested to do so by any of the Purchasers. It is expressly
understood and agreed that each provision contained in this Agreement and in
each other Transaction Document is between the Company and a Purchaser, solely,
and not between the Company and the Purchasers collectively and not between and
among the Purchasers.

 

33

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

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

5.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Business Day, then such action may be taken or such right may be
exercised on the next succeeding Business Day.

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

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

(Signature Pages Follow)

 

34

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

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.

 

BAUDAX BIO, INC.       Address for Notice: By:  

                                                                           

             Fax:   Name:       E-mail:   Title:       With a copy to (which
shall not constitute notice):      

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

35

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

[PURCHASER SIGNATURE PAGES TO BXRX SECURITIES PURCHASE AGREEMENT]

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

Name of Purchaser: ______________________________________________________

Signature of Authorized Signatory of Purchaser:
_________________________________

Name of Authorized Signatory: _______________________________________________

Title of Authorized Signatory: ________________________________________________

Email Address of Authorized Signatory: _________________________________________

Facsimile Number of Authorized Signatory:
__________________________________________

Address for Notice to Purchaser:

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

Subscription Amount: $_________________

Shares: _________________

Series A Warrant Shares: __________________ Beneficial Ownership Blocker ☐ 4.99%
or ☐ 9.99%

Series B Warrant Shares (Prefunded Warrants): __________________ Beneficial
Ownership Blocker ☐ 4.99% or ☐ 9.99%

EIN Number: ____________________

☐ Notwithstanding anything contained in this Agreement to the contrary, by
checking this box (i) the obligations of the above-signed to purchase the
securities set forth in this Agreement to be purchased from the Company by the
above-signed, and the obligations of the Company to sell such securities to the
above-signed, shall be unconditional and all conditions to Closing shall be
disregarded, (ii) the Closing shall occur by the second (2nd) Trading Day
following the date of this Agreement and (iii) any condition to Closing
contemplated by this Agreement (but prior to being disregarded by clause
(i) above) that required delivery by the Company or the above-signed of any
agreement, instrument, certificate or the like or purchase price (as applicable)
shall no longer be a condition and shall instead be an unconditional obligation
of the Company or the above-signed (as applicable) to deliver such agreement,
instrument, certificate or the like or purchase price (as applicable) to such
other party on the Closing Date.

[SIGNATURE PAGES CONTINUE]

 

36