Exhibit 10.1

INSERT THERAPEUTICS, INC.

SUBSCRIPTION AGREEMENT

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TABLE OF CONTENTS

 

SUBSCRIPTION AGREEMENT    1 1.    Purchase and Sale of Units    1    1.1   

Sale and Issuance of Units

   1    1.2   

Closing

   1 2.    Representations and Warranties of the Company    2    2.1   

Organization, Good Standing and Qualification

   2    2.2   

Capitalization and Voting Rights

   2    2.3   

Subsidiaries

   3    2.4   

Authorization

   3    2.5   

Valid Issuance of Preferred and Common Stock

   4    2.6   

Governmental Consents

   4    2.7   

Offering

   4    2.8   

Litigation

   4    2.9   

Proprietary Information Agreements

   5    2.10   

Patents and Trademarks

   5    2.11   

Compliance with Other Instruments

   5    2.12   

Agreements; Action

   5    2.13   

Related-Party Transactions

   6    2.14   

No Undisclosed Liabilities

   6    2.15   

Permits

   6    2.16   

Environmental and Safety Laws

   6    2.17   

Disclosure

   7    2.18   

Registration Rights

   7    2.19   

Title to Property and Assets

   7    2.20   

Labor Agreements and Actions

   7 3.    Representations and Warranties of each Investor    7    3.1   

Authorization

   7    3.2   

Purchase Entirely for Own Account

   8    3.3   

Disclosure of Information

   8    3.4   

Investment Experience

   8    3.5   

Accredited Investor

   8    3.6   

Restricted Securities

   8

 

i.

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   3.7   

Legends

   8 4.    Conditions of each Investor’s Obligations at Closing    9    4.1   

Representations and Warranties

   9    4.2   

Performance

   9    4.3   

Qualifications

   9    4.4   

Proceedings and Documents

   9    4.5   

Restated Certificate

   9    4.6   

Joinder Agreement

   9    4.7   

Investors’ Rights Agreement Amendment

   9    4.8   

Preemptive Rights Offer Waiver

   9 5.    Conditions of the Company’s Obligations    10    5.1   

Representations and Warranties

   10    5.2   

Payment of Purchase Price

   10    5.3   

Qualifications

   10    5.4   

Preemptive Rights Offer Waiver

   10 6.    Miscellaneous    10    6.1   

Survival

   10    6.2   

Successors and Assigns

   10    6.3   

Governing Law

   10    6.4   

Titles and Subtitles

   10    6.5   

Notices

   11    6.6   

Finder’s Fee

   11    6.7   

Aggregation of Stock

   11    6.8   

Amendments and Waivers

   11    6.9   

Severability

   11    6.10   

Entire Agreement

   11    6.11   

Counterparts; Facsimile Signatures

   12

 

  SCHEDULE A  

Schedule of Exceptions

  EXHIBIT A  

Amended and Restated Certificate of Incorporation

  EXHIBIT B  

Joinder Agreement

  EXHIBIT C  

Investors’ Rights Agreement Amendment

  EXHIBIT D  

Warrant Agreement

 

ii.

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SUBSCRIPTION AGREEMENT

THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is made on             , 2006,
among Insert Therapeutics, Inc., a Delaware corporation (the “Company”) and the
undersigned investors party hereto (the “Investors”).

RECITALS

WHEREAS, Investors wish to purchase, and the Company wishes to sell, units
(“Units”) at a purchase price of $1.00 per Unit, with each Unit shall consist of
one share of the Company’s Series C-2 Preferred Stock (the “Series C-2 Preferred
Stock”) and 40% warrant coverage (the “Warrant”) to purchase shares of the
Company’s Series D Preferred Stock (the “Series D Preferred Stock,” and,
together with the Units, the Series C-2 Preferred Stock and the Warrants, the
“Securities”).

NOW, THEREFORE BE IT RESOLVED, in consideration of the mutual covenants,
agreements and conditions, and upon acknowledgement of each of the parties of
the receipt of valuable consideration, the parties herein agree as follows:

1. Purchase and Sale of Units.

1.1 Sale and Issuance of Units.

(a) The Company shall adopt and file with the Secretary of State of the State of
Delaware on or before the Closing (as defined below) the Amended and Restated
Certificate of Incorporation in the form attached hereto as Exhibit A (the
“Restated Certificate”).

(b) Subject to the terms and conditions of this Agreement, Investors agree to
purchase at the Closing (as defined herein), and the Company agrees to sell and
issue to Investors at the Closing such number of Units listed on such Investor’s
signature page hereto.

1.2 Closing. The purchase and sale of the Units hereunder shall take place at
the offices of Arrowhead Research Corporation, at 1:00 P.M. on September     ,
2006, or at such other time and place as the Company and Investors mutually
agree upon orally or in writing (which time and place are designated as the
“Closing”). At the Closing, the Company shall deliver to each Investor a
certificate representing the Series C-2 Preferred Stock and a Warrant that such
Investor is purchasing against payment of the purchase price therefor by wire
transfer or certified or cashier’s check or checks (and in any event
representing immediately available funds) or cancellation of indebtedness.

 

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2. Representations and Warranties of the Company. The Company hereby represents
and warrants to Investors that, except as set forth on the Schedule of
Exceptions (the “Schedule of Exceptions”) furnished to Investors prior to
execution hereof and attached hereto as Schedule A, which exceptions shall be
deemed to be representations and warranties as if made hereunder:

2.1 Organization, Good Standing and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Company is duly qualified to transact business and is in
good standing in each jurisdiction in which the failure to so qualify would have
a material adverse effect on its business or properties.

2.2 Capitalization and Voting Rights

(a) Authorized Stock. Immediately prior to the Closing, the authorized capital
of the Company consists, or will consist, of:

(i) Preferred Stock. Fifty Million (50,000,000) shares of Preferred Stock, par
value $0.0001 (the “Preferred Stock”), including:

Series A Preferred Stock, all of which has been fully converted into Common
Stock and no shares remain outstanding. No shares of Series A Preferred Stock
may be reissued by the Corporation.

Series B Preferred Stock, of which Twenty-One Million Seven Hundred Twenty-One
Thousand Three Hundred Eighty-One (21,721,381) shares are the issued and
outstanding. The rights, preferences, powers, privileges and restrictions,
qualifications and limitations of the Series B Preferred Stock are set forth in
the Restated Certificate.

Series C Preferred Stock, of which Four Million (4,000,000) shares are the
issued and outstanding. The rights, preferences, powers, privileges and
restrictions, qualifications and limitations of the Series C Preferred Stock are
set forth in the Restated Certificate.

(ii) Common Stock. One Hundred Million (100,000,000) shares of Common Stock, par
value $0.0001 (“Common Stock”), of which Seventeen Million Sixty Two Thousand
Seven Hundred Two (17,062,702) shares are issued and outstanding.

(b) Valid Issuance. The outstanding shares of Preferred Stock and Common Stock
are all duly and validly authorized and issued, fully paid and nonassessable,
and were issued in compliance with all applicable state and federal laws
concerning the issuance of securities.

(c) Rights to Acquire. Except for (i) the conversion privileges of the Series
C-2 Preferred Stock to be issued under this Agreement, (ii) the rights provided
in Section 4 of that certain Investors’ Rights Agreement previously entered into
as of June 4, 2004

 

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by and among the Company, certain Investors and the other parties, thereto (as
amended to date, the “Investors’ Rights Agreement”), (iii) the conversion
privileges of the Series B Preferred Stock, the Series C Preferred Stock and the
Series D Preferred Stock, (iv) currently outstanding options to purchase Three
Million Three Hundred Eighty Four Thousand Twenty Eight (3,384,028) shares of
Common Stock granted to employees, consultants and/or directors pursuant to the
Company’s 2000 Stock Option/Stock Issuance Plan (the “Option Plan”) and
(v) Warrants issued under this Agreement, there are not outstanding any options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of its capital stock.
The Company has reserved an additional Two Million Seven Hundred Sixty Four
Thousand Seven Hundred Ninety Two (2,764,792) shares of its Common Stock for
issuance under the Option Plan.

(d) Voting of Shares. Other than the Voting Agreement previously entered into as
of June 4, 2004 by and among the Company, certain Investors and other parties
thereto (as amended to date, the “Voting Agreement”), the Company is not a party
or subject to any agreement or understanding and, to the Company’s knowledge,
there is no agreement or understanding between any persons and/or entities which
affects or relates to the voting or giving of written consents with respect to
any security or by a director of the Company.

(e) Market Stand-Off / Right of First Refusal. To the Company’s best knowledge,
all outstanding securities of the Company, including, without limitation, all
outstanding shares of the capital stock of the Company, all shares of the
capital stock of the Company issuable upon the conversion or exercise of all
convertible or exercisable securities and all other securities that the Company
is obligated to issue, are subject to (i) a one hundred eighty (180) day “market
stand-off” restriction upon an initial public offering of the Company’s
securities pursuant to a registration statement filed with the Securities and
Exchange Commission (“SEC”) pursuant to the Securities Act of 1933, as amended
(the “Act”) and (ii) a right of first refusal in favor of the Company with
respect to any transfer of such securities.

2.3 Subsidiaries. Except for the ownership of 480,000 shares of Calando
Pharmaceuticals, Inc., the Company does not presently own or control, directly
or indirectly, any interest in any other corporation, association, or other
business entity. The Company is not a participant in any joint venture,
partnership, or similar arrangement.

2.4 Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery of this Agreement, the Joinder Agreement, in the form attached
hereto as Exhibit B (the “Joinder Agreement”) and Amendment No. 2 to the
Investors’ Rights Agreement, in the form attached hereto as Exhibit C (the
“Investors’ Rights Agreement Amendment”) (collectively the “Related Agreements”)
the performance of all obligations of the Company hereunder and thereunder, and
the authorization, sale and issuance of the Series C-2 Preferred Stock and
Warrants being sold hereunder, the Series D Preferred Stock issuable upon
exercise of the Warrants and the Common Stock issuable upon conversion of the
Series C-2 Preferred Stock and Series D Preferred Stock (upon issuance after
exercise of the Warrants), has been taken or will be taken prior to the Closing.
This Agreement and the Related Agreements constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of

 

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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) to the extent the
indemnification provisions contained in the Related Agreements may be limited by
applicable federal or state securities laws.

2.5 Valid Issuance of Preferred and Common Stock. The Series C-2 Preferred Stock
that is being purchased by Investors hereunder, when issued, sold and delivered
in accordance with the terms of this Agreement for the consideration expressed
herein, and the Series D Preferred Stock when issued upon exercise of the
Warrants will be duly and validly issued, fully paid and nonassessable and will
be free of restrictions on transfer, other than restrictions on transfer
(i) under this Agreement, the Investor’s Rights Agreement, the Voting Agreement
and the Co-Sale and Right of First Refusal Agreement (each as amended),
(ii) under applicable state and federal securities laws and (iii) otherwise
imposed as a result of actions taken by Investors. The Common Stock issuable
upon conversion of the Series C-2 Preferred Stock and Series D Preferred Stock
(upon issuance after exercise of the Warrants) purchased under this Agreement
has been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Restated Certificate, will be duly and validly issued,
fully paid and nonassessable and will be free of restrictions on transfer, other
than restrictions on transfer (i) under this Agreement, the Investor’s Rights
Agreement and the Voting Agreement (each as amended), (ii) under applicable
state and federal securities laws and (iii) otherwise imposed as a result of
actions taken by Investors.

2.6 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement and the Related Agreements, except for such consents, approvals,
orders, authorizations, registrations, qualifications, designations,
declarations or filings which are not required to be obtained prior to the
Closing, and such filings as are required pursuant to applicable federal and
state securities laws and blue sky laws, which filings will be effected within
the required statutory period.

2.7 Offering. Subject in part to the truth and accuracy of each Investor’s
representations set forth in Section 3 of this Agreement, the offer, sale and
issuance of the Units as contemplated by this Agreement are exempt from the
registration requirements of the Act, and the qualification or registration
requirements of applicable state blue sky laws, as such registration
requirements and laws currently exist.

2.8 Litigation. There is no action, suit, proceeding or investigation pending
or, to the Company’s knowledge, currently threatened against the Company that
questions the validity of this Agreement or the Related Agreements, or the right
of the Company to enter into such agreements or to consummate the transactions
contemplated hereby and thereby, or that might result, either individually or in
the aggregate, in any material adverse changes in the business, assets or
condition of the Company, financially or otherwise, or any change in the current
equity ownership of the Company. The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or that the Company intends to
initiate.

 

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2.9 Proprietary Information Agreements. Each employee of the Company has
executed a Proprietary Information and Inventions Agreement in substantially the
form provided to Investors. The Company is not aware that any such employee is
in violation thereof.

2.10 Patents and Trademarks. To its knowledge (but without having conducted any
special investigation or search), the Company possesses all patents, patent
rights, trademarks, trademark rights, service marks, service mark rights, trade
names, trade name rights, copyrights, trade secrets, licenses, information and
other proprietary rights and processes necessary for its business, as now
conducted and as presently proposed to be conducted (collectively, the
“Intellectual Property”), without any conflict with or infringement of the valid
rights of others, except for Intellectual Property that the Company does not now
possess, but that the Company reasonably believes can be acquired on
commercially reasonable terms. The Company has not received any notice of
infringement upon or conflict with the asserted rights of others with respect to
Intellectual Property. To the Company’s knowledge, all of the issued patents to
which the Company has an exclusive license or right to use are valid and
enforceable.

2.11 Compliance with Other Instruments. The Company is not in violation of any
material provision of its Restated Certificate or Bylaws nor, to its knowledge,
of any instrument, judgment, order, writ, decree or contract, statute, rule or
regulation to which the Company is subject and a violation of which would have a
material adverse effect on the condition, financial or otherwise, or operations
of the Company. The execution, delivery and performance of this Agreement and
the Related Agreements, and the consummation of the transactions contemplated
hereby and thereby will not result in any such violation, or be in conflict with
or constitute, with or without the passage of time and giving of notice, either
a default under any such provision or an event that results in the creation of
any lien, charge or encumbrance upon any assets of the Company or the
suspension, revocation, impairment, forfeiture or nonrenewal of any material
permit, license, authorization or approval applicable to the Company, its
business or operations or any of its assets or properties.

2.12 Agreements; Action.

(a) Except for agreements explicitly contemplated hereby, there are no
agreements or understandings between the Company and any of its officers,
directors, affiliates or any affiliate thereof.

(b) There are no agreements, understandings, instruments, contracts, judgments,
orders, writs or decrees to which the Company is a party or by which it is bound
that may involve (i) obligations (contingent or otherwise) of, or payments to
the Company, in excess of $10,000, other than obligations of, or payments to,
the Company arising from purchase or sale agreements entered into in the
ordinary course of business, or (ii) provisions materially restricting the
development, manufacture or distribution of the Company’s products or services.

(c) The Company has not (i) declared or paid any dividends or authorized or made
any distribution upon or with respect to any class or series of its capital
stock, (ii) incurred any indebtedness for money borrowed or any other
liabilities individually in

 

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excess of $10,000 or, in the case of indebtedness and/or liabilities
individually less than $10,000, in excess of $25,000 in the aggregate,
(iii) made any loans or advances to any person, other than ordinary advances for
travel expenses, or (iv) sold, exchanged or otherwise disposed of any of its
assets or rights.

(d) For the purposes of subsections (b) and (c) above, all indebtedness,
liabilities, agreements, understandings, instruments and contracts involving the
same person or entity (including persons or entities the Company has reason to
believe are affiliated therewith) shall be aggregated for the purpose of meeting
the individual minimum dollar amounts of such subsections.

2.13 Related-Party Transactions. No employee, officer or director of the Company
or member of his or her immediate family is indebted to the Company, nor is the
Company indebted (or committed to make loans or extend or guarantee credit) to
any of them. To the best of the Company’s knowledge, other than in Arrowhead or
in any of Arrowhead’s subsidiaries, none of such persons has any direct or
indirect ownership interest in any firm or corporation with which the Company is
affiliated or with which the Company has a business relationship, or any firm or
corporation that competes with the Company, except that employees, officers or
directors of the Company and members of their immediate families may own stock
in publicly traded companies that may compete with the Company. No member of the
immediate family of any officer or director of the Company is directly or
indirectly interested in any material contract with the Company.

2.14 No Undisclosed Liabilities. Except as set forth in the consolidated
financial statements of Arrowhead Research Corporation at June 30, 2006 and for
the three months then ended, the Company does not have any liabilities (whether
accrued, absolute, unliquidated, contingent or otherwise, whether or not known
to the Company, whether due or to become due and regardless of when asserted)
arising out of transactions entered into at or prior to the Closing, or any
action or inaction at or prior to the Closing or any state of facts existing at
or prior to the Closing other than (i) liabilities and obligations that have
arisen after June 30, 2006 in the ordinary course of business (none of which is
material and none of which is a liability resulting from breach of contract,
breach of warranty, tort, infringement, claim or lawsuit), and (ii) obligations
under contracts and commitments incurred in the ordinary course of business that
would not be required to be reflected in financial statements prepared in
accordance with generally accepted accounting principles. The Company is not a
guarantor or indemnitor of any indebtedness of any other person, firm or
corporation.

2.15 Permits. The Company has all franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being conducted by
it, the lack of which could materially and adversely affect the business,
properties or financial condition of the Company, and the Company believes it
can obtain, without undue burden or expense, any similar authority for the
conduct of its business as proposed to be conducted. The Company is not in
default in any material respect under any of such franchises, permits, licenses
or other similar authority.

2.16 Environmental and Safety Laws. To its knowledge, the Company is not in
violation of any applicable statute, law or regulation relating to the
environment or

 

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occupational health and safety, and to its knowledge, no material expenditures
are or will be required in order to comply with any such existing statute, law
or regulation.

2.17 Disclosure. The Company has fully provided Investors with all the
information that such Investors have requested for deciding whether to purchase
the Units. Neither this Agreement (including all the exhibits and schedules
hereto) nor any other statements or certificates made or delivered in connection
herewith contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements herein or therein not misleading
in light of the circumstances under which they were made.

2.18 Registration Rights. Except as provided in the Investors’ Rights Agreement,
the Company has not granted or agreed to grant any registration rights,
including piggyback rights, to any person or entity.

2.19 Title to Property and Assets. The property and assets used by the Company
in its business are owned by the Company free and clear of all mortgages, liens,
loans and encumbrances, except for (i) statutory liens for the payment of
current taxes that are not yet delinquent, and (ii) for liens, encumbrances and
security interests that arise in the ordinary course of business and minor
defects in title, none of which, individually or in the aggregate, materially
impair the Company’s ownership or use of such property or assets. With respect
to the property and assets it leases, the Company is in material compliance with
such leases and, to its knowledge, holds a valid leasehold interest free of any
liens, claims or encumbrances, subject to clauses (i)-(ii).

2.20 Labor Agreements and Actions. The Company is not bound by or subject to any
contract, commitment or arrangement with any labor union, and no labor union has
requested or, to the Company’s knowledge, has sought to represent any of the
employees, representatives or agents of the Company. There is no strike or other
labor dispute involving the Company pending, or to the Company’s knowledge,
threatened, that could have a material adverse effect on the assets, properties,
financial condition, operating results or business of the Company, nor is the
Company aware of any labor organization activity involving its employees. The
Company is not aware that any officer or key employee, or that any group of key
employees, intends to terminate their employment with the Company, nor does the
Company have a present intention to terminate the employment of any of the
foregoing. The employment of each officer and employee of the Company is
terminable at the will of the Company. The Company is not a party to or bound by
any currently effective employment contract, deferred compensation agreement,
bonus plan, incentive plan, profit sharing plan, retirement agreement or other
employee compensation agreement. To its knowledge, the Company has complied in
all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.

3. Representations and Warranties of each Investor. Each Investor hereby
represents, warrants and covenants that:

3.1 Authorization. Such Investor has full power and authority to enter into this
Agreement and the Related Agreements to which it is a party, and each such
agreement constitutes its valid and legally binding obligation, enforceable in
accordance with its terms

 

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except (i) as limited by 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) to the extent the indemnification provisions contained in
the Related Agreements may be limited by applicable federal or state securities
laws.

3.2 Purchase Entirely for Own Account. This Agreement is made with such Investor
in reliance upon such Investor’s representation to the Company, which by such
Investor’s execution of this Agreement, such Investor hereby confirms that the
Securities will be acquired for investment for such Investor’s own account, not
as a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and that such Investor has no present intention of selling,
granting any participation in or otherwise distributing the same. By executing
this Agreement, such Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities.

3.3 Disclosure of Information. Such Investor believes it has received all the
information it considers necessary or appropriate for deciding whether to
purchase the Units. Such Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Units and the business, properties,
prospects and financial condition of the Company. The foregoing, however, does
not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of such Investor to rely thereon.

3.4 Investment Experience. Such Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, can bear the economic risk of its investment, and has such knowledge and
experience in financial or business matters that it is capable of evaluating the
merits and risks of the investment in the Units. If other than an individual,
such Investor also represents it has not been organized for the purpose of
acquiring the Units.

3.5 Accredited Investor. Such Investor is an “accredited investor” within the
meaning of SEC Rule 501 of Regulation D, as presently in effect.

3.6 Restricted Securities. Such Investor understands that the Securities it is
purchasing are characterized as “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering, and that under such laws and
applicable regulations, such Securities may be resold without registration under
the Act only in certain limited circumstances. In the absence of an effective
registration statement covering the Securities or an available exemption from
registration under the Act, the Series C-2 Preferred Stock, the Warrants, the
Series D Preferred Stock issued upon exercise of the Warrants (and any Common
Stock issued on conversion of the Preferred Stock) must be held indefinitely.

3.7 Legends. It is understood that the certificates evidencing the Securities
may bear one or all of the following legends:

 

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(a) “These securities have not been registered under the Securities Act of 1933,
as amended. They may not be sold, offered for sale, pledged or hypothecated in
the absence of a registration statement in effect with respect to the securities
under such Act or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144 of such Act.”

(b) Any legend required by applicable laws.

4. Conditions of each Investor’s Obligations at Closing. The obligations of each
Investor under Section 1.1(b) of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions:

4.1 Representations and Warranties. The representations and warranties of the
Company contained in Section 2 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the date of such Closing.

4.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.

4.3 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities in the Closing pursuant to this Agreement shall be duly obtained and
effective as of the Closing, other than such authorizations, approvals or
permits or other filings which may be timely made after the Closing.

4.4 Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to Investors, and
it shall have received all such counterpart original and certified or other
copies of such documents as it may reasonably request.

4.5 Restated Certificate. The Restated Certificate shall have been filed with
the Secretary of State of the State of Delaware and shall continue to be in full
force and effect as of the Closing.

4.6 Joinder Agreement. The Company, Investors and any other required parties
shall have entered into the Joinder Agreement.

4.7 Investors’ Rights Agreement Amendment. The Company, certain Investors and
any other required parties shall have entered into the Investors’ Rights
Agreement Amendment.

4.8 Preemptive Rights Offer Waiver. The California Institute of Technology, and
any other “Major Investors” (as defined in the Investors’ Rights Agreement),
shall have waived their right of first offer under Section 4 of the Investors’
Rights Agreement, in

 

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connection with the transactions contemplated by this Agreement, in a form and
manner satisfactory to Investors.

5. Conditions of the Company’s Obligations. The obligations of the Company to
Investors under this Agreement are subject to the fulfillment on or before the
Closing of each of the following conditions:

5.1 Representations and Warranties. The representations and warranties of each
Investor contained in Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the date of such Closing.

5.2 Payment of Purchase Price. Each Investor shall have delivered to the Company
the purchase price specified in Section 1.1(b).

5.3 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities in the Closing pursuant to this Agreement shall be duly obtained and
effective as of the Closing, other than such authorizations, approvals or
permits or other filings which may be timely made after the Closing.

5.4 Preemptive Rights Offer Waiver. The California Institute of Technology, and
any other “Major Investors” (as defined in the Investors’ Rights Agreement),
shall have waived their right of first offer under Section 4 of the Investors’
Rights Agreement, in connection with the transactions contemplated by this
Agreement, in a form and manner satisfactory to the Company.

6. Miscellaneous.

6.1 Survival. The warranties, representations and covenants of the Company and
each Investor contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of any Investor or the Company.

6.2 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of, and be binding upon,
the respective successors and assigns of the parties (including transferees of
any Securities). Nothing in this Agreement, express or implied, is intended to
confer upon any party, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.

6.3 Governing Law. This Agreement shall be governed by and construed under the
laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.

6.4 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

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6.5 Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to be
notified, (ii) when sent by confirmed telex or facsimile if sent during normal
business hours of the recipient, if not, then on the next business day;
(iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
address as set forth on the signature page hereof or at such other address as
such party may designate by ten (10) days’ advance written notice to the other
parties hereto.

6.6 Finder’s Fee. Each party represents that it neither is nor will be obligated
for any finders’ fee or commission in connection with this transaction, except
that the Company may pay third party finders or advisors up to an 8% finder’s
fee for Units placed by such third party, with such fee paid in cash or in
Units, in the Company’s sole and absolute discretion. Each Investor agrees to
indemnify and to hold harmless the Company from any liability for any commission
or compensation in the nature of a finders’ fee (and the costs and expenses of
defending against such liability or asserted liability) for which such Investor
or any of its officers, partners, employees or representatives is responsible.
The Company agrees to indemnify and hold harmless each Investor from any
liability for any commission or compensation in the nature of a finders’ fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

6.7 Aggregation of Stock. All issued and outstanding shares of the Series C-2
Preferred Stock, Series D Preferred Stock and Common Stock issued upon
conversion thereof held or acquired by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Agreement.

6.8 Amendments and Waivers. Any term of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Common Stock
that is issuable or issued upon conversion of the issues and outstanding Series
C-2 Preferred Stock and Series D Preferred Stock. Any amendment or waiver
effected in accordance with this Section 6.7 shall be binding upon each holder
of any Securities purchased under this Agreement at the time outstanding
(including Securities into which such Securities are convertible), each future
holder of all such Securities and the Company.

6.9 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

6.10 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties, and this Agreement supersedes
all prior written and oral agreements, and all contemporaneous oral agreements,
relating to the subject matter hereof.

 

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6.11 Counterparts; Facsimile Signatures. This Agreement may be executed in two
or more counterparts, and by facsimile signatures, each of which shall be deemed
an original, but all of which together shall constitute one and the same
instrument.

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

COMPANY:

INSERT THERAPEUTICS, INC.

a Delaware corporation

By:

 

/s/ John G. Petrovich

 

John G. Petrovich

 

President

Address:

 

129 North Hill Ave.

Pasadena, CA 91106

[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT]

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[Purchaser Signature Page to Subscription and Purchase Agreement]

I HEREBY REPRESENT THAT I HAVE READ AND UNDERSTOOD THE SUBSCRIPTION AGREEMENT.

Subscription: I hereby subscribe for the following number of Units at the
Purchase Price indicated:

Dated:             , 2006

Total Purchase Price:             

Total Units ($1.00/Unit):

_____________________________________________________

Please print the exact name(s) in which the shares should be held:

Print Name:

    

Signature:

    

Social Security # or Tax Id#:

    

Address:

         

City, State & Zip:

    

Phone:

    

Facsimile:

    

Email:

    

[SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT]

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SCHEDULE A

SCHEDULE OF EXCEPTIONS

The following are the exceptions of Insert Therapeutics, Inc. (the “Company”) to
the representations and warranties as set forth in that certain Subscription
Agreement (the “Agreement”) dated as of September     , 2006. The section
numbers in this Schedule of Exceptions correspond to section numbers in the
Agreement. Disclosure of any matters in this Schedule of Exceptions does not
constitute an admission that such matter is necessarily required to be disclosed
in order for any representation or warranty in the Agreement to be true and
correct to the extent required in the Agreement. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.

Section 2.12(b)

Convertible Promissory Notes, dated as of April 28, 2006, May 26, 2006, July 20,
2006, August 2, 2006 and Aug 24, 2006, issued to Arrowhead Research Corporation
in the aggregate principal amount of $2,000,000.

Section 2.12(b)

License Agreement with Calando Pharmaceuticals, Inc. dated as of March 14, 2005,
as amended.

Section 2.12(c)

License Agreement with Calando Pharmaceuticals, Inc. dated as of March 14, 2005,
as amended.

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EXHIBIT A

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

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EXHIBIT B

JOINDER AGREEMENT

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EXHIBIT C

INVESTORS’ RIGHTS AGREEMENT AMENDMENT