Corindus Vascular Robotics, Inc. 8-K [cvrs-8k_091214.htm]

 

Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT, dated as of September 11, 2014 (this
“Agreement”), is made by and among Corindus Vascular Robotics, Inc., a Nevada
corporation (the “Company”), and the Purchasers listed on Exhibit A hereto,
together with their permitted transferees (each, a “Purchaser” and collectively,
the “Purchasers”).

RECITALS:

A. The Company and the Purchasers are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act, including Rule 506 of Regulation D promulgated
thereunder.

B. The Purchasers, severally and not jointly, desire to purchase and the Company
desires to sell, upon the terms and conditions stated in this Agreement, up to a
maximum of $27,000,000 of Common Stock.

C. The capitalized terms used herein and not otherwise defined have the meanings
given them in Article 8.

AGREEMENT

In consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and the Purchasers (severally and not jointly)
hereby agree as follows:

ARTICLE 1

PURCHASE AND SALE OF SECURITIES

1.1              Purchase and Sale of Securities. Subject to the terms and
conditions set forth in this Agreement, at the Closing, the Company will issue
and sell to each Purchaser, and each Purchaser will, severally and not jointly,
purchase from the Company the number of shares of Common Stock (the “Shares”),
as set forth opposite such Purchaser’s name on Exhibit A hereto (the Shares are
sometimes referred to herein as the “Securities”). The purchase price for each
Share shall be $2.50 (the “Purchase Price”).

1.2              Payment. On or prior to the Closing Date, (i) the Company shall
deliver to each Purchaser certificates (the “Certificates”) representing such
aggregate number of Shares as set forth opposite such Purchaser’s name on
Exhibit A to the address and in the manner as is set forth on such Purchaser’s
signature page hereto (or as otherwise set forth in such Purchaser’s delivery
instructions), duly executed on behalf of the Company and registered in the name
of such Purchaser (or its nominee per its instructions) in the manner as is set
forth on such Purchaser’s signature page hereto and (ii) at the Closing, upon
confirmation that the Certificates have been received by each Purchaser’s
respective custodian, each Purchaser shall pay its respective aggregate Purchase
Price to the Company for the Shares to be issued and sold to such Purchaser at
the Closing, by wire transfer of immediately available funds in accordance with
the Company’s written wire instructions.

 

 

1.3              Closing Date. The closing of the transaction contemplated by
this Agreement will take place on or before September 17, 2014 (the “Closing
Date”) and the closing (the “Closing”) will be held at the offices of the
Company or at such other time and place (including by electronic exchange of
facsimile signatures) as shall be agreed upon by the Company and the Purchasers
hereunder of a majority in interest of the Securities.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as specifically contemplated by this Agreement, the Company hereby
represents and warrants to the Purchasers and the Placement Agents that:

2.1              Organization and Qualification; Subsidiaries. The Company is
duly incorporated, validly existing and in good standing under the laws of the
state of Nevada, with the corporate power and authority to conduct its business
as currently conducted or proposed to be conducted as disclosed in the SEC
Documents. The Company is duly qualified to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, would not
reasonably be expected to have a Material Adverse Effect.

As of the date hereof, the Company does not own or control, and as of the
Closing Date, the Company will not own or control, directly or indirectly, any
corporation, association or other entity other than (i) the Subsidiaries listed
in Exhibit 21.1 to the Company’s Current Report on Form 8-K/A, Amendment No. 1,
filed with the SEC on August 15, 2014 and (ii) such other entities omitted from
Exhibit 21.1 which, when such omitted entities are considered in the aggregate
as a single entity, would not constitute a “significant subsidiary” within the
meaning of Rule 1-02(w) of Regulation S-X.

The Company owns, directly or indirectly, all of the capital stock or comparable
equity interests of the Subsidiaries free and clear of any and all liens or
other encumbrances, and all the issued and outstanding shares of capital stock
or comparable equity interest of the Subsidiaries are validly issued and are
fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

The Subsidiaries are duly organized, validly existing and in good standing under
the laws of the state of Delaware, with the requisite power and authority to
conduct its business as currently conducted or proposed to be conducted as
disclosed in the SEC Documents. The Subsidiaries are duly qualified to do
business and are in good standing in every jurisdiction in which the nature of
the business conducted by such subsidiary or property owned by such subsidiary
makes such qualification necessary, except where the failure to be so qualified
or in good standing, as the case may be, would not reasonably be expected to
have a Material Adverse Effect.

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2.2              Authorization; Enforcement. The Company has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement, to consummate the transactions contemplated hereby and to issue
the Securities in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby (including the issuance of the Securities) have
been duly authorized by the Company’s Board of Directors and no further consent
or authorization of the Company, its Board of Directors, or its stockholders is
required. This Agreement has been duly executed by the Company and constitutes a
legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, or moratorium or similar laws
affecting creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity and except as
rights to indemnity and contribution may be limited by state or federal
securities laws or public policy underlying such laws.

2.3              Capitalization. As of September 8, 2014, the authorized capital
stock of the Company consisted of 250,000,000 shares of Common Stock, $0.0001
par value per share, of which 95,216,587 shares were issued and outstanding, and
10,000,000 shares of Preferred Stock, $0.0001 par value per share, of which
there were zero shares issued and outstanding. All of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued, fully paid,
and nonassessable. As of August 15, 2014, options to purchase an aggregate of
9,035,016 shares of Common Stock were outstanding and warrants to purchase an
aggregate of 5,029,865 shares of Common Stock were outstanding. Except as
disclosed in or contemplated by the SEC Documents, the Company does not have
outstanding any options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities or obligations other than
options granted under the Company’s stock option plan. The issuance and sale of
the Shares will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. 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 Company’s Knowledge, between or among any of the Company’s stockholders
(except for joint filing agreements and other similar arrangements disclosed in
any beneficial ownership reports filed with the SEC by the Company’s
stockholders). The Company’s Amended and Restated Articles of Incorporation (the
“Articles of Incorporation”), as in effect on the date hereof, and the Company’s
Bylaws (the “Bylaws”) as in effect on the date hereof, are each filed as
exhibits to the SEC Documents.

2.4              Issuance of Shares. The Shares are duly authorized and, upon
issuance in accordance with the terms of this Agreement, will be validly issued,
fully paid and non-assessable and free and clear of all liens and other
encumbrances, other than restrictions on transfer imposed by applicable
securities laws, and will not be subject to preemptive rights or other similar
rights of stockholders of the Company. Assuming the accuracy of the
representations and warranties of the Purchasers in this Agreement, the
Securities will be issued in compliance in all material respects with all
applicable federal and state securities laws.

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2.5              No Conflicts; Government Consents and Permits.

(a)                The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby (including the issuance of the Securities) will not (i) conflict with or
result in a violation of any provision of its Articles of Incorporation or
Bylaws or require the approval of the Company’s stockholders, (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default under, any agreement, indenture, or instrument to which the Company or
its Subsidiaries are a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and state
securities laws and rules and regulations of any self-regulatory organizations
to which the Company or its Subsidiaries or the Company’s securities are
subject) applicable to the Company or its Subsidiaries, except in the case of
clauses (ii) and (iii) only, for such conflicts, breaches, defaults, and
violations as would not reasonably be expected to have a Material Adverse
Effect.

(b)               Neither the Company nor its Subsidiaries are required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency or any regulatory or
self-regulatory agency in order for the Company to execute, deliver or perform
any of its obligations under this Agreement in accordance with the terms hereof,
or to issue and sell the Securities in accordance with the terms hereof, other
than such as have been made or obtained, except for (i) the registration of the
Shares under the Securities Act pursuant to Article 6 hereof, (ii) any filings
required to be made under federal or state securities laws, (iii) any required
filings or notifications regarding the sale, issuance or listing of additional
shares with the OTC Market (“OTCQB”) or FINRA and (iv) the filings required in
accordance with Section 4.4 of this Agreement. The Company is unaware of any
facts or circumstances relating to the Company or its Subsidiaries which would
be likely to prevent the Company from effecting any of the foregoing.

(c)                The Company and its Subsidiaries each have all franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted by it and as currently proposed to be conducted
as disclosed in the SEC Documents, except for such franchise, permit, license or
similar authority, the lack of which would not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor the Subsidiaries have received
any actual notice of any proceeding relating to revocation or modification of
any such franchise, permit, license, or similar authority except where such
revocation or modification would not reasonably be expected to have a Material
Adverse Effect.

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2.6              SEC Documents, Financial Statements. The Company has timely
filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC from January 1, 2013 through the date hereof,
pursuant to the reporting requirements of the Exchange Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements and schedules thereto and documents (other than exhibits)
incorporated by reference therein, being hereinafter referred to herein as the
“SEC Documents”). Each Purchaser has had access to true and complete copies of
the SEC Documents via the SEC’s EDGAR system. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. As of their respective dates, the Financial
Statements and the related notes complied in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto. The Financial Statements and the related notes
have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”), consistently applied, during the periods involved
(except (i) as may be otherwise indicated in the Financial Statements or the
notes thereto, or (ii) in the case of unaudited interim statements, to the
extent they may not include footnotes, may be condensed or summary statements or
may conform to the SEC’s rules and instructions for Reports on Form 10-Q) and
fairly present in all material respects the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring year-end
audit adjustments). All material agreements that were required to be filed as
exhibits to the SEC Documents under Item 601 of Regulation S-K (collectively,
the “Material Agreements”) to which the Company or its Subsidiaries are a party,
or the property or assets of the Company or its Subsidiaries are subject, have
been filed as exhibits to the SEC Documents. There is no transaction,
arrangement, or other relationship between the Company (or any Subsidiary) and
an unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its Exchange Act filings and is not so disclosed.
All Material Agreements are valid and enforceable against the Company and its
Subsidiaries in accordance with their respective terms, except (i) as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally, and (ii) as enforceability may be subject
to general principles of equity and except as rights to indemnity and
contribution may be limited by state or federal securities laws or public policy
underlying such laws. Neither the Company nor its Subsidiaries are in breach of
or default under any of the Material Agreements, and to the Company’s Knowledge,
no other party to a Material Agreement is in breach of or default under such
Material Agreement. Neither the Company nor its Subsidiaries have received a
notice of termination nor is the Company or its Subsidiaries otherwise aware of
any threats to terminate any of the Material Agreements.

2.7              Disclosure Controls and Procedures. Except as disclosed in the
SEC Documents, the Company has established and maintains disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are
effective to ensure that information required to be disclosed by the issuer in
the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms. The Company’s certifying officers evaluated the
effectiveness of the Company’s disclosure controls and procedures as of the end
of the period covered by the most recently filed quarterly or annual periodic
report under the Exchange Act (such date, the “Evaluation Date”). The Company
presented in its most recently filed quarterly or annual periodic report under
the Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have
been no changes in the Company’s internal control over financial reporting (as
such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.

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2.8              Accounting Controls. Except as disclosed in the SEC Documents,
the Company maintains internal control over financial reporting that is
effective to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with GAAP and includes those policies and procedures that: (i)
pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with GAAP, and that
receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the issuer; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.

2.9              Absence of Litigation. Except as disclosed in the SEC
Documents, as of the date hereof, there is no action, suit, proceeding or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the Company’s Knowledge,
threatened against the Company or its Subsidiaries that if determined adversely
to the Company or its Subsidiaries would reasonably be expected to have a
Material Adverse Effect or would reasonably be expected to impair the ability of
the Company to perform its obligations under this Agreement. Neither the Company
nor its Subsidiaries nor to the Company’s Knowledge, any director or officer
thereof, is or has been the subject of any action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of
fiduciary duty relating to the Company or its Subsidiaries. The Company has not
received any stop order or other order suspending the effectiveness of any
registration statement filed by the Company under the Exchange Act and, to the
Company’s Knowledge, the SEC has not issued any such order.

2.10          Intellectual Property Rights. Each of the Company and its
Subsidiaries owns, possesses, licenses or has other sufficient rights to use all
patents, patent applications, patent rights, inventions, know-how, trade
secrets, trademarks, trademark applications, service marks, service names, trade
names and copyrights necessary to enable it to conduct its business as conducted
as of the date hereof and, to the Company’s Knowledge, as proposed to be
conducted as described in the SEC Documents (the “Intellectual Property”);
except to the extent failure to own, possess or license such Intellectual
Property would not result in a Material Adverse Effect. To the Company’s
Knowledge, neither the Company nor its Subsidiaries have infringed the
intellectual property rights of third parties and no third party, to the
Company’s Knowledge, is infringing the Intellectual Property, in each case,
which could reasonably be expected to result in a Material Adverse Effect. There
is no pending or, to the Company’s Knowledge, threatened action, suit or
proceeding by a third party that the Company’s or its Subsidiaries’ business as
now conducted infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of another. Except as disclosed in the
SEC Documents, there are no material options, licenses or agreements relating to
the Intellectual Property, nor is the Company or its Subsidiaries bound by or a
party to any material options, licenses or agreements relating to the patents,
patent applications, patent rights, inventions, know-how, trade secrets,
trademarks, trademark applications, service marks, service names, trade names or
copyrights of any other Person. To the Company’s Knowledge, all patent
applications and patents within the Intellectual Property have been prosecuted
with a duty of candor, and there is no material fact known by the Company or its
Subsidiaries that would preclude the issuance of patents with respect to said
patent applications or that would render any issued patents invalid or
unenforceable. There is no material claim or action or proceeding pending or, to
the Company’s Knowledge, threatened that challenges any of the rights of the
Company or the Subsidiaries in or to, or otherwise with respect to, any
Intellectual Property. Each of the Company and its Subsidiaries has taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of its Intellectual Property, except where failure to do so would not
reasonably be expected to result in a Material Adverse Effect.

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2.11          Placement Agents. Neither the Company, nor any of its affiliates,
nor any person acting on its behalf, has taken any action that would give rise
to any claim by any Person for brokerage commissions, placement agent’s fees or
similar payments relating to this Agreement or the transactions contemplated
hereby, except for dealings with the Placement Agents, whose commissions and
fees will be paid by the Company.

2.12          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 (the
“Investment Company Act”). The Company shall conduct its business in a manner so
that it will not become subject to the Investment Company Act.

2.13          No Material Adverse Change. Since March 31, 2014, except as
described or referred to in the SEC Documents filed on or after August 15, 2014
and except for cash expenditures in the ordinary course of business consistent
with past practice, there has not been any change in the assets, business,
properties, financial condition or results of operations of the Company or its
Subsidiaries that would reasonably be expected to have a Material Adverse
Effect. Since March 31, 2014, other than as described in the SEC Documents filed
on or after August 15, 2014, (i) there has not been any dividend or distribution
of any kind declared, set aside for payment, paid or made by the Company or its
Subsidiaries on any class of capital stock, (ii) the Company has not purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock (other than in connection with repurchases of unvested stock issued to
employees of the Company), (iii) the Company has not issued any equity
securities to any officer, director or Affiliate, except issued pursuant to
existing Company stock option or stock purchase plans or executive and director
compensation arrangements disclosed in the SEC Documents, (iv) neither the
Company nor its Subsidiaries have sustained any material loss or interference
with its respective business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor disturbance or dispute or
any action, order or decree of any court or arbitrator or governmental or
regulatory authority, (v) neither the Company nor its Subsidiaries have incurred
any material liabilities except in the ordinary course of business and (vi) the
Company has not altered materially its method of accounting or the manner in
which it keeps its accounting books and records. Except for the issuance of the
Shares contemplated by this Agreement, no event, liability or development has
occurred or exists with respect to the Company, its Subsidiaries or their
respective business, properties, operations or financial condition, that would
be required to be disclosed by the Company under applicable securities laws at
the time this representation is made that has not been publicly disclosed at
least one Trading Day prior to the date that this representation is made.

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

2.15          Accountants. Ernst & Young, LLP, who will express their opinion
with respect to the audited financial statements and schedules to be included as
a part of any Registration Statement prior to the filing of any such
Registration Statement, are independent accountants as required by the
Securities Act.

2.16          Sarbanes-Oxley Act. The Company is in compliance in all material
respects with any and all applicable requirements of the Sarbanes-Oxley Act of
2002 that are effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the SEC thereunder that are effective as of the
date hereof and as of the Closing Date.

2.17          Insurance. Each of the Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes are prudent and customary for a
company (i) in the businesses and location in which the Company and its
Subsidiaries are engaged, (ii) with the resources of the Company and its
Subsidiaries, and (iii) at a similar stage of development as the Company and its
Subsidiaries, including directors and officers insurance coverage. Neither the
Company nor its Subsidiaries have received any written notice of cancellation of
any such insurance, or that the Company or its Subsidiaries will not be able to
renew its existing insurance coverage as and when such coverage expires. The
Company believes it and its Subsidiaries will be able to obtain similar coverage
at reasonable cost from similar insurers as may be necessary to continue its
business.

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2.18          Foreign Corrupt Practices. Since September 1, 2009, neither the
Company nor its Subsidiaries, nor to the Company’s Knowledge, any director,
officer, agent, employee or other Person acting on behalf of the Company or its
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or its Subsidiaries (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expenses relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of in any material respect any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

2.19          Private Placement. 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 any circumstances that would (i) require registration of the Securities
under the Securities Act or (ii) cause the offering of the Securities pursuant
to this Agreement to be integrated with prior offerings by the Company for
purposes of any applicable law, regulation or stockholder approval provisions.
Assuming the accuracy of the representations and warranties of the Purchasers
contained in Articles 3 and 7 hereof, the issuance of the Shares is exempt from
registration under the Securities Act.

2.20          No Registration Rights. No Person has the right to (i) prohibit
the Company from filing a Registration Statement or (ii) other than as disclosed
in the SEC Documents, require the Company to register any securities for sale
under the Securities Act by reason of the filing of a Registration Statement
except in the case of clause (ii) for rights which have been properly waived.
The granting and performance of the registration rights under this Agreement
will not violate or conflict with, or result in a breach of any provision of, or
constitute a default under, any agreement, indenture, or instrument to which the
Company or its Subsidiaries are a party.

2.21          Taxes. Since September 1, 2009, each of the Company and its
Subsidiaries have (i) accurately and timely filed (or has obtained an extension
of time within which to file) all necessary federal, state and foreign income
and franchise tax returns, (ii) paid all taxes shown as due on such tax returns
and (iii) set aside on its books provision reasonably adequate for the payment
of all material taxes for periods subsequent to the periods to which such
returns apply, except where the failure to so file, the failure to so pay or the
failure to so set aside would not reasonably be expected to have a Material
Adverse Effect. There are no unpaid taxes in any material amount claimed by the
taxing authority of any jurisdiction to be due by the Company or its
Subsidiaries, and, to the Company’s Knowledge, there is no basis for any such
claim.

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2.22          Real and Personal Property. Each of the Company and its
Subsidiaries have good and marketable title to, or has valid rights to lease or
otherwise use, all items of real and personal property that are material to the
business of the Company and its Subsidiaries free and clear of all liens,
encumbrances, claims and defects and imperfections of title except those that
(i) do not materially interfere with the use of such property by the Company or
its Subsidiaries, (ii) are described in the SEC Documents or (iii) would not
reasonably be expected to have a Material Adverse Effect.

2.23          Application of Takeover Protections. The Company has not adopted
any stockholder rights plan or similar arrangement relating to accumulations of
beneficial ownership of Common Stock or a change in control of the Company. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not impose any restriction on any
Purchaser, or create in any party (including any current stockholder of the
Company) any rights, under any share acquisition, business combination, poison
pill (including any distribution under a rights agreement), or other similar
anti-takeover provisions under the Company’s charter documents or the laws of
its state of incorporation.

2.24          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 in violation of Regulation M
under the Exchange Act, 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 clause (iii), compensation paid to the
Placement Agents in connection with the placement of the Securities.

2.25          Related Party Transactions. Except with respect to the
transactions that are not required to be disclosed in the SEC Documents, all
transactions that have occurred between or among the Company, on the one hand,
and any of its officers or directors, or any affiliate or affiliates of any such
officer or director, on the other hand, prior to the date hereof have been
disclosed in the SEC Documents.

2.26          Transactions With Executive Officers, Employees and Directors.
Except as set forth in the SEC Documents, none of the executive officers or
directors of the Company, and, to the Company's Knowledge, none of the employees
of the Company is presently a party to any transaction with the Company or its
Subsidiaries (other than for services as employees, executive officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, providing for the borrowing of money from or lending of
money to or otherwise requiring payments to or from any executive officer,
director or such employee or, to the Company's Knowledge, any entity in which
any executive officer, director, or any such employee has a substantial interest
or is an officer, director, trustee, stockholder, member or partner, in each
case in excess of $120,000 other than for: (i) payment of salary or consulting
fees for services rendered, (ii) reimbursement for expenses incurred on behalf
of the Company and (iii) other employee benefits, including stock option
agreements under any stock option plan of the Company.

10

 

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

2.28          No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and the Company is current with respect to
any fees owed to its accountants and lawyers, in either case which could affect
the Company’s ability to perform any of its obligations under this Agreement.

2.29          Use of Proceeds. The Company shall use the net proceeds of the
sale of the Securities hereunder for sales and marketing, research and
development, and general corporate purposes.

2.30          Labor Relations. No labor dispute exists or, to the Knowledge of
the Company, is imminent with respect to any of the employees of the Company or
its Subsidiaries, which could reasonably be expected to result in a Material
Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member
of a union that relates to such employee’s relationship with the Company or its
Subsidiaries, and neither the Company nor its Subsidiaries are a party to a
collective bargaining agreement. To the Knowledge of the Company, no executive
officer of the Company or its Subsidiaries are, or is now expected to be, in
violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or
any other contract or agreement or any restrictive covenant in favor of any
third party, and the continued employment of each such executive officer does
not subject the Company or its Subsidiaries to any liability with respect to any
of the foregoing matters. Each of the Company and its Subsidiaries are in
compliance with all U.S. federal, state, local and foreign laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in compliance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

2.31          Disclosure. The Company confirms that neither it, nor, to its
Knowledge, any other Person acting on its behalf has provided, and the Company
has not authorized the Placement Agents to provide, any Purchaser or its
respective agents or counsel with any information that the Company believes
constitutes material, non-public information except insofar as the existence,
provisions and terms of the Placement may constitute such information, all of
which will be disclosed by the Company in the Press Release as contemplated by
Section 4.4 hereof. The Company understands and confirms that the Purchasers
will rely on the foregoing representations in effecting transactions in
securities of the Company. None of the disclosure furnished by or on behalf of
the Company to the Purchasers regarding the Company, its business and the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. Each press release issued by the Company during the twelve
months preceding the date of this Agreement did not, at the time of release,
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 are 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 Articles 3 and 7
hereto.

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2.32          Solvency. Based on the consolidated financial condition of the
Company and its Subsidiaries as of the Closing Date, immediately 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 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.
The SEC Documents and Schedule 2.32 hereof set forth as of the date hereof all
outstanding secured and unsecured Indebtedness of the Company and its
Subsidiaries, or for which the Company or its Subsidiaries have 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), 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 GAAP. Neither the Company nor its Subsidiaries in
default with respect to any Indebtedness.

2.33          FDA. As to each medical device subject to the jurisdiction of the
U.S. Food and Drug Administration (the “FDA”) under the Federal Food, Drug and
Cosmetic Act, as amended, and the regulations thereunder (the “FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or its Subsidiaries (each such product, a “Medical Device”), such
Medical Device is being manufactured, packaged, labeled, tested, distributed,
sold and/or marketed by the Company or its Subsidiaries in compliance with all
applicable requirements under the FDCA and applicable similar foreign laws,
rules and regulations relating to registration, investigational use, premarket
clearance, licensure, or application approval, good manufacturing practices,
good laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have or reasonably be expected to result
in a Material Adverse Effect. Except as disclosed in the SEC Documents, there is
no pending, completed or, to the Company’s Knowledge, threatened, action
(including any lawsuit, arbitration, or legal or administrative or regulatory
proceeding, charge, complaint, or investigation) against the Company or its
Subsidiaries, and neither the Company nor its Subsidiaries has received any
notice, warning letter or other communication from the FDA or any other
governmental entity, which (i) contests the premarket clearance, licensure,
registration, or approval of, the uses of, the distribution of, the
manufacturing or packaging of, the testing of, the sale of, or the labeling and
promotion of any Medical Device, (ii) withdraws its approval of, requests the
recall, suspension, or seizure of, or withdraws or orders the withdrawal of
advertising or sales promotional materials relating to, any Medical Device,
(iii) imposes a clinical hold on any clinical investigation by the Company or
its Subsidiaries, (iv) enjoins production of a Medical Device at any facility of
the Company or its Subsidiaries, (v) enters or proposes to enter into a consent
decree of permanent injunction with the Company or its Subsidiaries, or (vi)
otherwise alleges any violation of any such laws, rules or regulations by the
Company or its Subsidiaries, and which, either individually or in the aggregate,
would have or reasonably be expected to result in a Material Adverse Effect. The
properties, business and operations of the Company and its Subsidiaries have
been and are being conducted in all material respects in accordance with all
applicable laws, rules and regulations of the FDA. Except as disclosed in the
SEC Documents, neither the Company nor its Subsidiaries has been informed by the
FDA that the FDA will prohibit the marketing, sale, license or use in the United
States of any product proposed to be developed, produced or marketed by the
Company or its Subsidiaries nor has the FDA expressed any concern as to
approving or clearing for marketing any product being developed or proposed to
be developed by the Company or its Subsidiaries.

12

 

2.34          OFAC. Neither the Company nor, to the Company’s Knowledge, any
director, officer, agent, employee or affiliate of the Company is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
knowingly, directly or indirectly, use the proceeds of the sale of the Shares,
or lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person or entity, towards any sales or operations
in any country sanctioned by OFAC or for the purpose of financing the activities
of any Person currently subject to any U.S. sanctions administered by OFAC.

2.35          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 any Purchaser’s reasonable request.

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

2.37          Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance in all
material respects with applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, the money laundering statutes of all jurisdictions where the Company or
its Subsidiaries conducts its business, the rules and regulations thereunder and
any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or its Subsidiaries
with respect to the Money Laundering Laws is pending, or to the Knowledge of the
Company, threatened.

2.38          No General Solicitation. Neither the Company nor, to the Company’s
Knowledge, any Person acting on behalf of the Company has offered or sold any of
the Securities by means of any form of general solicitation or general
advertising.

2.39          No Additional Agreements. The Company has no other agreements or
understandings (including, without limitation, side letters) with any Purchaser
or other Person to purchase Shares on terms more favorable to such Person than
as set forth herein.

2.40          Shell Company Status. The Company is not, and has never been, an
issuer identified in Rule 144(i)(1).

2.41          Change in Control. The issuance of the Shares to the Purchasers as
contemplated by this Agreement will not trigger any rights under any “change of
control” provision in any of the agreements to which the Company or any of its
Subsidiaries is a party, including any employment, “change in control,”
severance or other compensatory agreements and any benefit plan, which results
in payments to the counterparty or the acceleration of vesting of benefits.

13

 

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

2.43          No “Bad Actor” Disqualification.  The Company has exercised
reasonable care, in accordance with SEC rules and guidance, and has conducted a
factual inquiry including the procurement of relevant questionnaires from each
Covered Person (as defined below) or other means, the nature and scope of which
reflect reasonable care under the relevant facts and circumstances, to determine
whether any Covered Person (as defined below) is subject to any of the “bad
actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the
Securities Act (“Disqualification Events”). To the Company’s knowledge, after
conducting such sufficiently diligent factual inquiries, no Covered Person is
subject to a Disqualification Event, except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has complied,
to the extent applicable, with any disclosure obligations under Rule 506(e)
under the Securities Act. “Covered Persons” are those persons specified in
Rule 506(d)(1) under the Securities Act, including the Company; any predecessor
or affiliate of the Company; any director, executive officer, other officer
participating in the offering, general partner or managing member of the
Company; any beneficial owner of 20% or more of the Company’s outstanding voting
equity securities, calculated on the basis of voting power; any promoter (as
defined in Rule 405 under the Securities Act) connected with the Company in any
capacity at the time of the sale of the Securities; and any person that has been
or will be paid (directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of the Securities (a “Solicitor”), any
general partner or managing member of any Solicitor, and any director, executive
officer or other officer participating in the offering of any Solicitor or
general partner or managing member of any Solicitor.

14

 

ARTICLE 3

PURCHASER’S REPRESENTATIONS AND WARRANTIES

Each Purchaser represents and warrants to the Company, severally and not
jointly, with respect to itself and its purchase hereunder, that:

3.1              Investment Purpose. The Purchaser is purchasing the Securities
for its own account and not with a present view toward, or for resale in
connection with, the public sale or distribution thereof and has no intention of
selling or distributing any of such Securities or any arrangement or
understanding with any other Persons regarding the sale or distribution of such
Securities except in accordance with the provisions of Article 6 and except as
would not result in a violation of the Securities Act. The Purchaser will not,
directly or indirectly, offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Securities except in accordance with the provisions of Article 6
or pursuant to and in accordance with the Securities Act. The Purchaser is
acquiring the Securities hereunder in the ordinary course of its business. The
Purchaser does not presently have any agreement or understanding, directly or
indirectly, with any Person to distribute any of the Securities.

3.2              Information. The Purchaser has been furnished with all relevant
materials relating to the business, finances and operations of the Company
necessary to make an investment decision, and materials relating to the offer
and sale of the Securities, that have been requested by the Purchaser,
including, without limitation, the SEC Documents, and the Purchaser has had the
opportunity to review such materials and the SEC Documents. The Purchaser has
been afforded the opportunity to ask questions of the Company regarding the
Company, including without limitation, all aspects of the Company’s business,
operations, financial condition, prospects, intellectual property and pending
disputes. Neither such inquiries nor any other investigation conducted by or on
behalf of such Purchaser or its representatives or counsel shall modify, amend
or affect such Purchaser’s right to rely on the truth, accuracy and completeness
of the SEC Documents and the Company’s representations and warranties contained
in the Agreement, it being agreed that the Company has made and does not make
any representations or warranties to any Purchaser expect as expressly set forth
herein.

3.3              Acknowledgement of Risk.

(a)                The Purchaser acknowledges and understands that its
investment in the Securities involves a significant degree of risk, including,
without limitation, (i) the Company remains an early stage business with limited
operating history that has yet to establish profitable operations and requires
substantial funds in addition to the proceeds from the sale of the Securities;
(ii) an investment in the Company is speculative, and only Purchasers who can
afford the loss of their entire investment should consider investing in the
Company and the Securities; (iii) the Purchaser may not be able to liquidate its
investment; (iv) transferability of the Securities is extremely limited; (v) in
the event of a disposition of the Securities, the Purchaser could sustain the
loss of its entire investment; and (vi) the Company has not paid any dividends
on its Common Stock since inception and does not anticipate the payment of
dividends in the foreseeable future. The Purchaser acknowledges that risk
factors related to the Company and an investment in the Company are more fully
set forth in the SEC Documents and that Purchaser has reviewed such risk
factors;

15

 

(b)               The Purchaser is able to bear the economic risk of holding the
Securities for an indefinite period, and has knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of the investment in the Securities and has sought such accounting,
legal and tax advice as it has considered necessary to make an informed
investment decision with respect to its acquisition of the Securities; and

(c)                The Purchaser has, in connection with the Purchaser’s
decision to purchase Securities, not relied upon any representations, warranties
or other information (whether oral or written) of or related to the Company
other than (i) those representations and warranties of the Company specifically
set forth herein and (ii) the information contained in the SEC Documents, and
the Purchaser has, with respect to all matters relating to this Agreement and
the offer and sale of the Securities, relied solely upon the advice of such
Purchaser’s own counsel and has not relied upon or consulted any counsel to the
Placement Agent or counsel to the Company.

3.4              Governmental Review. The Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

3.5              Transfer or Resale. The Purchaser understands that:

(a)                the Securities have not been and are not being registered
under the Securities Act (other than as contemplated in Article 6) or any
applicable state securities laws and, consequently, the Purchaser may have to
bear the risk of owning the Securities for an indefinite period of time because
the Securities may not be transferred unless (i) the resale of the Securities is
registered pursuant to an effective registration statement under the Securities
Act, as contemplated in Article 6; (ii) the Purchaser has delivered to the
Company an opinion of counsel (in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (iii) the Securities are sold or transferred
pursuant to Rule 144; or (iv) the Purchaser is a partnership transferring to its
partners or former partners in accordance with partnership interests or a
limited liability company transferring to its members or former members in
accordance with their interest in the limited liability company;

(b)               any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the Securities Act) may require compliance with some
other exemption under the Securities Act or the rules and regulations of the SEC
thereunder; and

16

 

(c)                except as set forth in Article 6, neither the Company nor any
other Person is under any obligation to register for resale Shares under the
Securities Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

3.6              Legends.

(a)                The Purchaser understands the certificates representing the
Securities will bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for such Securities):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR
UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. THE
COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT SUCH OPINION
IS REQUIRED PURSUANT TO THAT CERTAIN SECURITIES PURCHASE AGREEMENT UNDER WHICH
THE SECURITIES WERE ISSUED.

(b)               To the extent the Shares are registered for resale under the
Securities Act pursuant to an effective Registration Statement, the Company
agrees to promptly (i) authorize the removal of the legend set forth in Section
3.6(a) and any other legend not required by applicable law from such Shares and
(ii) cause its transfer agent to issue such Shares without such legends to the
holders thereof by electronic delivery at the applicable balance account at the
Depository Trust Company (“DTC”) upon surrender of any stock certificates
evidencing such Shares. With respect to any Shares for which restrictive legends
are removed pursuant to this Section 3.6(b), the holder thereof agrees to only
sell such Shares when and as permitted by the effective Registration Statement
covering such resale and in accordance with applicable securities laws and
regulations. Any fees (with respect to the Company’s transfer agent and counsel)
associated with the removal of such legend(s) shall be borne by the Company.

17

 

(c)                The Purchaser may request that the Company remove, and the
Company agrees to authorize the removal of any legend from the Shares (i)
following any sale of the Shares pursuant to Rule 144, or (ii) if such Shares
are eligible for sale under Rule 144 following the expiration of the one-year
holding requirement under subparagraphs (b)(1)(i) and (d) thereof. Following the
time a legend is no longer required for the Shares under this Section 3.6(c),
the Company will, no later than three Business Days following the delivery by a
Purchaser to the Company or the Company’s transfer agent of a legended
certificate representing such securities, (A) deliver or cause to be delivered
to such Purchaser a certificate representing such securities that is free from
all restrictive and other legends or (B) at the request of the Purchaser, cause
its transfer agent to issue such Shares without such legends to the holders
thereof by electronic delivery at the applicable balance account at the DTC.
Certificates for the Shares subject to legend removal hereunder may be
transmitted by the Company’s transfer agent to a Purchaser by crediting the
account of the Purchaser’s prime broker with DTC as directed by such Purchaser.

(d)               If the Company shall fail for any reason or for no reason to
issue to a Purchaser unlegended certificates within three Business Days after
receipt of all documents necessary for the removal of the legend set forth above
(the “Deadline Date”), then, in addition to all other remedies available to such
Purchaser, if on or after the Business Day immediately following such three
Business Day period, such Purchaser purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
holder of shares of Common Stock that such Purchaser anticipated receiving from
the Company without any restrictive legend (a “Buy-In”), then the Company shall,
within two Business Days after such Purchaser’s request and in such Purchaser’s
sole discretion, either (i) pay cash to the Purchaser in an amount equal to such
Purchaser’s total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such shares of
Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver
to such Purchaser a certificate or certificates representing such shares of
Common Stock and pay cash to the Purchaser in an amount equal to the excess (if
any) of the Buy-In Price over the product of (a) such number of shares of Common
Stock, times (b) the closing bid price of the Common Stock on the Deadline Date.

3.7              Authorization; Enforcement. The Purchaser has the requisite
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The Purchaser has taken all necessary action
to authorize the execution, delivery and performance of this Agreement. Upon the
execution and delivery of this Agreement, this Agreement shall constitute a
valid and binding obligation of the Purchaser enforceable in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity and except as rights to indemnity and
contribution may be limited by state or federal securities laws or public policy
underlying such laws.

18

 

3.8              Residency. The Purchaser is a resident of the jurisdiction set
forth immediately below such Purchaser’s name on the signature pages hereto.

3.9              Purchaser Status. The Purchaser represents that (A) it is an
“accredited investor” as defined in Rule 501 of Regulation D under the
Securities Act and/or meets the definition of “qualified institutional buyers”
as defined in Rule 144A(a)(1) under the Securities Act and (B) is not an entity
formed for the sole purpose of acquiring the Securities.

3.10          No General Solicitation or Advertising. The Purchaser acknowledges
that it is not purchasing the Securities as a result of any “general
solicitation” or “general advertising,” as such terms are used in Regulation D
under the Securities Act, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar media or
broadcast over radio or television, or any seminar or meeting whose attendees
have been invited by general solicitation or general advertising.

ARTICLE 4

COVENANTS

4.1              Reporting Status. The Company is a fully reporting company
pursuant to Section 15(d) of the Exchange Act and is current in its filings.
From the date hereof until the end of the Registration Period, the Company will
timely file all documents required to be filed by it under the Exchange Act with
the SEC.

4.2              Expenses. The Company shall pay the reasonable legal fees and
expenses of Greenberg Traurig, LLP, counsel to certain of the Purchasers, in
connection with the transactions contemplated by this Agreement in an amount not
to exceed $20,000, upon the Closing, which amount shall be paid by the Company
at Closing or paid by the Company to the Purchasers upon termination of this
Agreement so long as such termination did not occur as a result of a material
breach by such Purchaser of any of its obligations hereunder (as the case may
be). Except as set forth above and elsewhere in this Agreement, the parties
hereto shall be responsible for the payment of all expenses incurred by them in
connection with the preparation and negotiation of this Agreement and the
consummation of the transactions contemplated hereby.

4.3              Financial Information. The financial statements of the Company
to be included in any documents filed with the SEC will be prepared in
accordance with GAAP, consistently applied (except (i) as may be otherwise
indicated in such financial statements or the notes thereto, or (ii) in the case
of unaudited interim statements, to the extent they may not include footnotes,
may be condensed or summary statements or may conform to the SEC’s rules and
instructions for Reports on Form 10-Q), and will fairly present in all material
respects the consolidated financial position of the Company and consolidated
results of its operations and cash flows as of, and for the periods covered by,
such financial statements (subject, in the case of unaudited statements, to
normal and recurring year-end audit adjustments).

19

 

4.4              Securities Laws Disclosure; Publicity. On or before 8:30 a.m.,
New York local time, on the Business Day immediately following the date hereof,
the Company shall issue a press release (the “Press Release”) announcing the
signing of this Agreement and describing the terms of the transactions
contemplated by this Agreement and any other material, nonpublic information
that the Company may have provided any Purchaser at any time prior to the
issuance of the Press Release. From and after the issuance of the Press Release,
no Purchaser shall be in possession of any material, non-public information
received from the Company or any of its officers, directors, employees or
agents, that is not disclosed in the Press Release. On or before the fourth
Business Day following the date hereof, the Company shall file a Current Report
on Form 8-K with the SEC describing the terms of the transactions contemplated
by this Agreement, and including as an exhibit to such Current Report on Form
8-K this Agreement, in the form required by the Exchange Act. The Company shall
not otherwise publicly disclose the name of any Purchaser or any Affiliate or
investment adviser of any Purchaser, or include the name of any Purchaser or any
Affiliate or investment adviser of any Purchaser in any press release or filing
with the SEC (other than in a Registration Statement and any exhibits to filings
made in respect of this transaction in accordance with periodic report or
current report filing requirements under the Exchange Act) or any regulatory
agency, without the prior written consent of such Purchaser, except to the
extent such disclosure is required by law or regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.

4.5              Variable Rate Transactions. Prior to the date that is six
months following the Closing Date, the Company shall be prohibited from
effecting or entering into an agreement to effect any Variable Rate 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, shares of Common Stock
either (A) at a conversion price, exercise price, 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 (but excluding customary anti-dilution provisions) or (ii)
enters into any agreement, including, but not limited to, an equity line of
credit, whereby the Company may issue securities at a future determined price.
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.

4.6              Capital Changes. Until the date that is six months after 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 a
majority of the Holders, provided, however, that no consent of the Holders shall
be required for a reverse stock split of the Common Stock that the Board of
Directors of the Company, in the good faith exercise of its business judgment,
determines to be necessary or advisable to list the Common Stock on the NYSE MKT
or another trading market.

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4.7              [Intentionally Omitted]

4.8              Sales by Purchasers. Each Purchaser will sell any Securities
held by it in compliance with applicable prospectus delivery requirements, if
any, or otherwise in compliance with the requirements for an exemption from
registration under the Securities Act and the rules and regulations promulgated
thereunder. No Purchaser will make any sale, transfer or other disposition of
the Securities in violation of federal or state securities laws.

4.9              Preemptive Rights.

(a)                If, at any time during a period of three (3) years commencing
on the Closing Date, the Company offers to sell Covered Securities (as defined
below) in a public or private offering of Covered Securities for cash (a
“Qualified Offering”), each Purchaser shall be afforded the opportunity to
acquire from the Company, for the same price and on the same terms as such
Covered Securities are offered, in the aggregate up to the amount of Covered
Securities required to enable it to maintain its Qualified Purchaser Percentage
Interest (measured immediately prior to such offering); provided, however, that
the preemptive rights provided in this Section 4.9 shall not apply to any public
offering of Covered Securities that occurs within 12 months of the Closing.
“Qualified Purchaser Percentage Interest” means, as of any date of
determination, the percentage equal to (i) the number of shares of Common Stock
then held by such Purchaser as of the date of determination, divided by (ii) the
total number of outstanding shares of Common Stock as of such date. “Covered
Securities” means Common Stock and any rights, options or warrants to purchase
or securities convertible into or exercisable or exchangeable for Common Stock,
other than securities that are (A) issuable upon the exercise or conversion of
any securities of the Company issued and outstanding as of the date hereof; or
(B) issued by the Company pursuant to any employment contract, employee
incentive or benefit plan, stock purchase plan, stock ownership plan, stock
option or equity compensation plan or other similar plan approved by the
Company’s board of directors where stock is being issued or offered to a trust,
other entity to or for the benefit of any employees, consultants, officers or
directors of the Company.

(b)               Prior to making any Qualified Offering of Covered Securities,
the Company shall give each Purchaser written notice of its intention to make
such an offering, describing, to the extent then known, the anticipated amount
of securities, and other material terms then known to the Company upon which the
Company proposes to offer the same (such notice, a “Qualified Offering Notice”).
The Company shall deliver such notice only to the individuals identified on such
Purchaser’s signature page hereto, and shall not communicate the information to
anyone else acting on behalf of the Purchaser without the consent of one of the
designated individuals. Each Purchaser shall then have 10 days after receipt of
the Qualified Offering Notice (the “Offer Period”) to notify the Company in
writing that it intends to exercise such preemptive right and as to the amount
of Covered Securities the Purchaser desires to purchase, up to the maximum
amount calculated pursuant to Section 4.9(a) (the “Designated Securities”). Such
notice constitutes a non-binding indication of interest of such Purchaser to
purchase the amount of Designated Securities specified by such Purchaser (or a
proportionately lesser amount if the amount of Covered Securities to be offered
in such Qualified Offering is subsequently reduced) at the price (or range of
prices) established in the Qualified Offering and other terms set forth in the
Company’s notice to it. The failure to respond during the Offer Period
constitutes a waiver of such Purchaser’s preemptive right in respect of such
offering. The sale of the Covered Securities in the Qualified Offering,
including any Designated Securities, shall be closed not later than 30 days
after the end of the Offer Period. The Covered Securities to be sold to other
investors in such Qualified Offering shall be sold at a price not less than, and
upon terms no more favorable to such other investors than, those specified in
the Qualified Offering Notice. If the Company does not consummate the sale of
Covered Securities to other investors within such 30-day period, the right
provided hereunder shall be revived and such securities shall not be offered
unless first reoffered to the Purchasers in accordance herewith. Notwithstanding
anything to the contrary set forth herein and unless otherwise agreed by the
Purchasers, by not later than the end of such 30-day period, the Company shall
either confirm in writing to the Purchasers that the Qualified Offering has been
abandoned or shall publicly disclose its intention to issue the Covered
Securities in the Qualified Offering, in either case in such a manner that the
Purchasers will not be in possession of any material, non-public information
thereafter.

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(c)                If a Purchaser exercises its preemptive right provided in
this Section 4.9 with respect to a Qualified Offering, the Company shall offer
and sell such Purchaser, if any such offering is consummated, the Designated
Securities (as adjusted, upward to reflect the actual size of such offering when
priced) at the same price as the Covered Securities are offered to third persons
(not including the underwriters or the initial purchasers in a Rule 144A
offering that is being reoffered by the initial purchasers) in such offering and
shall provide written notice of such price upon the determination of such price.

(d)               In addition to the pricing provision of Section 4.9(c), the
Company will offer and sell the Designated Securities to each Purchaser upon
terms and conditions not less favorable than the most favorable terms and
conditions offered to other persons or entities in a Qualified Offering.

4.10          Most Favored Nation. The Company shall not enter into any
additional, or modify any existing, agreements with any Purchaser or any other
Person acquiring securities of the Company in connection with the Placement that
has the effect of establishing rights or otherwise benefiting such Purchaser or
other Person in a manner more favorable in any material respect to such
Purchaser than the rights and benefits established in favor of the other
Purchasers by this Agreement, unless, in any such case, the other Purchasers
have been provided with such rights and benefits.

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4.11          Limitation on Beneficial Ownership. The Purchaser (and its
Affiliates or any other persons with which it is acting in concert) shall not be
entitled to purchase, and the Company shall not, from and after the date of this
Agreement, without the prior written consent of the Purchaser, cause such
Purchaser to own or control, such number of shares of capital stock that would
result in such Purchaser becoming, directly or indirectly, the beneficial owner
of more than 9.9% of a class of voting securities of the Company for purposes of
beneficial ownership under the Exchange Act.

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

4.13          Indemnification of Purchasers. Subject to the provisions of this
Section 4.13 and Section 6.6 with respect to indemnification under such Section,
the Company will indemnify and hold each Purchaser and its directors, executive
officers, shareholders, members, partners, employees, agents and investment
advisers (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, executive
officers, shareholders, agents, members, partners, employees or investment
advisers (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 (b) any action instituted against a Purchaser in any capacity,
or any Purchaser Party or their respective Affiliates, by any stockholder of the
Company who is not an Affiliate of such Purchaser Parties, with respect to any
of the transactions contemplated by this Agreement (unless such action is based
upon a breach of such Purchaser’s representations, warranties or covenants under
this Agreement or any agreements or understandings such Purchaser Parties may
have with any such stockholder or any violations by such Purchaser Parties of
state or federal securities laws or any conduct by such Purchaser Parties which
constitutes fraud, gross negligence, willful misconduct or malfeasance).
Promptly after receipt by any Person (the “Section 4.13 Indemnified Person”) of
notice of any demand, claim or circumstances which would or might give rise to a
claim or the commencement of any action, proceeding or investigation in respect
of which indemnity may be sought pursuant to this Section 4.13, such Section
4.13 Indemnified Person shall promptly notify the Company in writing and the
Company shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Section 4.13 Indemnified Person, and shall
assume the payment of all reasonable fees and expenses; provided, however, that
the failure of any Section 4.13 Indemnified Person so to notify the Company
shall not relieve the Company of its obligations hereunder except to the extent
that the Company is actually and materially prejudiced by such failure to
notify. In any such proceeding, any Section 4.13 Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Section 4.13 Indemnified Person unless: (i) the
Company and the Section 4.13 Indemnified Person shall have mutually agreed to
the retention of such counsel; (ii) the Company shall have failed promptly to
assume the defense of such proceeding and to employ counsel reasonably
satisfactory to such Section 4.13 Indemnified Person in such proceeding; or
(iii) in the reasonable judgment of counsel to such Section 4.13 Indemnified
Person, representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The
Company shall not be liable for any settlement of any proceeding effected
without its written consent, which consent shall not be unreasonably withheld,
delayed or conditioned. Without the prior written consent of the Section 4.13
Indemnified Person, the Company shall not effect any settlement of any pending
or threatened proceeding in respect of which any Section 4.13 Indemnified Person
is or could have been a party and indemnity could have been sought hereunder by
such Section 4.13 Indemnified Party, unless such settlement includes an
unconditional release of such Section 4.13 Indemnified Person from all liability
arising out of such proceeding.

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ARTICLE 5

CONDITIONS TO CLOSING; TERMINATION

5.1              Conditions to Obligations of the Company. The Company’s
obligation to complete the purchase and sale of the Securities and deliver such
Shares to each Purchaser is subject to the waiver by the Company or fulfillment
as of the Closing Date of the following conditions:

(a)                Receipt of Funds. Following such Purchaser’s receipt of the
Certificates, the Company shall have received immediately available funds in the
full amount of the aggregate Purchase Price for the Securities being purchased
hereunder as set forth opposite such Purchaser’s name on Exhibit A hereto.

(b)               Representations and Warranties. The representations and
warranties made by each Purchaser in Articles 3 and 7 shall be true and correct
when made and as of the Closing Date.

(c)                Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the Closing
Date shall have been performed or complied with in all material respects.

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(d)               Absence of Litigation. No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit,
alter, prevent or materially delay the Closing, shall have been instituted or be
pending before any court, arbitrator, governmental body, agency or official.

(e)                No Governmental Prohibition. The sale of the Securities by
the Company shall not be prohibited by any law or governmental order or
regulation.

5.2              Conditions to Purchasers’ Obligations at the Closing. Each
Purchaser’s obligation to complete the purchase and sale of the Securities is
subject to the waiver by such Purchaser (as to itself only) or fulfillment as of
the Closing Date of the following conditions:

(a)                Representations and Warranties. The representations and
warranties made by the Company in Article 2 shall be true and correct as of the
date when made and as of the Closing Date, and the Purchasers shall have
received a certificate of an authorized officer of the Company, dated as of the
Closing Date, certifying to that fact.

(b)               Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the Closing Date
shall have been performed or complied with in all material respects, and the
Purchasers shall have received a certificate of an authorized officer of the
Company, dated as of the Closing Date, certifying to that fact.

(c)                Blue Sky. The Company shall have agreed to file a Form D with
the SEC and comply with all blue sky requirements in each state where investors
reside.

(d)               Delivery of Shares. The Purchasers shall have received one or
more stock certificates evidencing the Shares subscribed for by such Purchasers
hereunder.

(e)                Absence of Litigation. No proceeding challenging this
Agreement or the transactions contemplated hereby, or seeking to prohibit,
alter, prevent or materially delay the Closing, shall have been instituted or be
pending before any court, arbitrator, governmental body, agency or official.

(f)                No Governmental Prohibition. The sale of the Securities by
the Company shall not be prohibited by any law or governmental order or
regulation.

(g)               Minimum Aggregate Investment. The Company shall have received
at the Closing at least $25 million of aggregate gross proceeds from the sale of
Securities hereunder.

(h)               Consents. The Company shall have obtained in a timely fashion
any and all consents, permits, approvals, registrations and waivers necessary
for consummation of the purchase and sale of the Securities, all of which shall
be and remain so long as necessary in full force and effect.

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(i)                 Beneficial Ownership Limitation. The purchase by the
Purchasers of the Shares issuable at the Closing will not result in any
Purchaser (individually or together with any other person with whom such
Purchaser has identified, or will have identified, itself as part of a “group”
in a public filing made with the SEC involving the Company’s securities)
acquiring, or obtaining the right to acquire, in excess of 9.99% of the
outstanding shares of Common Stock or the voting power of the Company on a post
transaction basis that assumes that such Closing shall have occurred.

(j)                 Opinion of Counsel. The Purchasers and the Placement Agents
shall have received an opinion addressed to the Purchasers and the Placement
Agents in the form attached as Exhibit B, dated the Closing Date, from McDermott
Will & Emery LLP, as counsel to the Company, and an opinion as to Nevada
corporate law matters from Emmel & Klegerman PC, as Nevada law counsel to the
Company.

(k)               Termination. This Agreement shall not have been terminated as
to such Purchaser in accordance with Section 5.3 herein.

(l)                 Material Adverse Effect. No Material Adverse Effect shall
have occurred since the date of this Agreement.

(m)             No Suspensions of Trading in Common Stock; Listing. The Common
Stock (i) shall be designated for listing and quotation on the OTCQB and
(ii) shall not have been suspended, as of the Closing Date, by the SEC or the
OTCQB from trading on the OTCQB nor shall suspension by the SEC or the OTCQB
have been threatened, as of the Closing Date, either (A) in writing by the SEC
or the OTCQB or (B) by falling below the minimum listing maintenance
requirements of the OTCQB. If required, the Company shall have obtained approval
of the OTCQB to list the Shares.

(n)               Additional Closing Deliverables. The Company shall have
delivered to such Purchaser:

(i)                 a certificate of the Secretary of the Company (the
“Secretary’s Certificate”), dated as of the Closing Date, (a) certifying the
resolutions adopted by the Board of Directors of the Company or a duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the issuance of the Shares, (b) certifying the current versions of
the Articles of Incorporation and Bylaws and (c) certifying as to the signatures
and authority of persons signing this Agreement and related documents on behalf
of the Company;

(ii)               a Certificate of Good Standing for the Company from the
Nevada Secretary of State as of a recent date; and

26

 

 

(iii)               a Certificate of Good Standing for each Subsidiary from the
Delaware Secretary of State as of a recent date.

 

5.3 Termination. This Agreement may be terminated and the sale and purchase of
the Shares abandoned at any time prior to the Closing by either the Company or a
Purchaser upon written notice to the other, if the Closing has not been
consummated on or prior to 5:00 p.m., New York City time, on the fifteenth
(15th) day following the date of this Agreement; provided, however, that the
right to terminate this Agreement under this Section 5.3 shall not be available
to any person whose failure to comply with its obligations under this Agreement
has been the cause of or resulted in the failure of the Closing to occur on or
before such time.

ARTICLE 6

REGISTRATION RIGHTS

6.1           (a)               No later than 45 days from the Closing Date (the
“Filing Date”), the Company shall file a registration statement covering the
resale of the Registrable Securities with the SEC for an offering to be made on
a continuous basis pursuant to Rule 415, or if Rule 415 is not available for
offers and sales of the Registrable Securities, by such other means of
distribution of Registrable Securities as the Holders of a majority of the
Registrable Securities may reasonably specify (the “Initial Registration
Statement”). The Initial Registration Statement shall be on Form S-3 (except if
the Company is ineligible to register for resale the Registrable Securities on
Form S-3, in which case such registration shall be on another appropriate form).

(b)               The Company shall use its best efforts to effect the
registration (including a declaration of effectiveness thereof by the SEC) and
applicable qualifications or compliances (including, without limitation, the
execution of any required undertaking to file post-effective amendments,
appropriate qualifications or exemptions under applicable blue sky or other
state securities laws and appropriate compliance with applicable securities
laws, requirements or regulations) no later than the earlier of (i) 90 days from
the Closing Date (120 days if reviewed by SEC) and (ii) the 5th Business Day
after the date the Company is notified (orally or in writing, whichever is
earlier) by the SEC that such registration will not be reviewed or will not be
subject to further review (such earlier date, the “Effectiveness Date”). For
purposes of clarification, any failure by the Company to file the Initial
Registration Statement by the Filing Date or to effect such Registration
Statement by the Effectiveness Date shall not otherwise relieve the Company of
its obligations to file or effect the Initial Registration Statement as set
forth above in this Section 6.1.

(c)                In the event the SEC informs the Company that all of the
Registrable Securities cannot, as a result of the application of Rule 415, be
registered for resale as a secondary offering on a single registration
statement, the Company agrees to promptly (i) inform each of the Holders
thereof, (ii) use its reasonable efforts to file amendments to the Initial
Registration Statement as required by the SEC and/or (iii) withdraw the Initial
Registration Statement and file a new registration statement (a “New
Registration Statement”), in either case covering the maximum number of
Registrable Securities permitted to be registered by the SEC, on Form S-3 or, if
the Company is ineligible to register for resale the Registrable Securities on
Form S-3, such other form available to register for resale the Registrable
Securities as a secondary offering; provided, however, that prior to filing such
amendment or New Registration Statement, the Company shall be obligated to use
its reasonable efforts to advocate with the SEC for the registration of all of
the Registrable Securities on the Initial Registration Statement. In the event
the Company amends the Initial Registration Statement or files a New
Registration Statement, as the case may be, under clauses (ii) or (iii) above,
the Company will use its reasonable efforts to file with the SEC, as promptly as
allowed by the SEC, one or more registration statements on Form S-3 or, if the
Company is ineligible to register for resale the Registrable Securities on Form
S-3, such other form available to register for resale those Registrable
Securities that were not registered for resale on the Initial Registration
Statement, as amended, or the New Registration Statement (the “Remainder
Registration Statements”). Notwithstanding any other provision of this Agreement
and subject to the payment of damages in Section 6.3, if the SEC limits the
number of Registrable Securities permitted to be registered on a particular
Registration Statement (and notwithstanding that the Company used reasonable
efforts to advocate with the SEC for the registration of all or a greater number
of Registrable Securities), any required cutback of Registrable Securities shall
be applied first to shares of Common Stock not acquired pursuant to this
Agreement, and then to the Holders pro rata in accordance with the number of
such Registrable Securities sought to be included in such Registration Statement
by reference to the amount of Registrable Securities set forth opposite such
Holder’s name on Exhibit A (and in the case of a subsequent transfer, the
initial Holder’s) relative to the aggregate amount of all Registrable
Securities. No Holder shall be named as an “underwriter” in any Registration
Statement without such Holder’s prior written consent.

27

 

6.2              All Registration Expenses incurred in connection with any
registration, qualification, exemption or compliance pursuant to Section 6.1
shall be borne by the Company. All Selling Expenses relating to the sale of
securities registered by or on behalf of Holders shall be borne by such Holders
pro rata on the basis of the number of securities so registered; provided,
however, that, with respect to Selling Expenses that constitute fees and
expenses of legal counsel, each Holder shall be responsible only for the fees
and expenses of such Holder’s legal counsel.

6.3              The Company further agrees that, in the event that (i) the
Initial Registration Statement is not filed with the SEC on or prior to the
Filing date, (ii) the Initial Registration Statement or the New Registration
Statement, as applicable, has not been declared effective by the SEC by the
Effectiveness Date, (iii) after such Registration Statement is declared
effective by the SEC, (A) such Registration Statement ceases for any reason
(including without limitation by reason of a stop order, or the Company’s
failure to update the Registration Statement), to remain continuously effective
as to all Registrable Securities for which it is required to be effective or (B)
the Holders are not permitted to utilize the Prospectus therein to resell such
Registrable Securities (in each case of (A) and (B), other than within the time
period(s) permitted by Section 6.7(b)) or (iv) after the date six months
following the Closing Date, and only in the event a Registration Statement is
not effective or available to sell all Registrable Securities, the Company fails
to file with the SEC any required reports under Section 13 or 15(d) of the
Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule
144(i)(2), if applicable), as a result of which the Holders who are not
affiliates are unable to sell Registrable Securities without restriction under
Rule 144 (or any successor thereto) (each such event referred to in clauses (i)
through (iv), a “Registration Default” and, for purposes of such clauses, the
date on which such Registration Default occurs, a “Default Date”), then in
addition to any other rights the Holders may have hereunder or under applicable
law, on each such Default Date and on each monthly anniversary of each such
Default Date (if the applicable Registration Default shall not have been cured
by such date) until the applicable Registration Default is cured, the Company
shall pay to each Holder an amount in cash, as partial liquidated damages and
not as a penalty (“Liquidated Damages”), equal to 1.0% of the aggregate Purchase
Price paid by such Holder pursuant to this Agreement for any Registrable
Securities held by such Holder on the Default Date; provided, however, that if a
Holder fails to provide the Company with any information requested by the
Company that is required to be provided in such Registration Statement with
respect to such Holder as set forth herein, then, for purposes of this Section
6.3, the Filing Date or Effectiveness Date, as applicable, for a Registration
Statement with respect to such Holder shall be extended until two Business Days
following the date of receipt by the Company of such required information from
such Holder; and in no event shall the Company be required hereunder to pay to
any Holder pursuant to this Agreement an aggregate amount that exceeds 8.0 % of
the aggregate Purchase Price paid by such Holder for such Holder’s Securities.
The Liquidated Damages pursuant to the terms hereof shall apply on a daily
pro-rata basis for any portion of a month prior to the cure of a Registration
Default, except in the case of the first Default Date. For purposes of
clarification, and solely for purposes of calculating the Liquidated Damages
pursuant to this Section 6.3, each Holder’s Purchase Price for each Share shall
be deemed to be the Purchase Price set forth in Section 1.1. The Company shall
deliver said cash payment to the Holder by the fifth Business Day after the date
payable. If the Company fails to pay said cash payment to any Holder in full by
the fifth Business Day after the date payable, the Company will pay interest
thereon at a rate of 10.0% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law, and calculated on the basis of a year
consisting of 360 days) to such Holder, accruing daily from the date such
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. Notwithstanding the foregoing, nothing shall preclude any
Holder from pursuing or obtaining any available remedies at law, specific
performance or other equitable relief with respect to this Section 6.3 in
accordance with applicable law. The parties agree that notwithstanding anything
to the contrary herein, no Liquidated Damages shall be payable to a Holder with
respect to any period during which all of such Holder’s Registrable Securities
may be sold by such Holder without volume or manner of sale restrictions under
Rule 144 and the Company is in compliance with the current public information
requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

28

 

6.4              In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Agreement, the Company
shall, upon reasonable request, inform each Holder as to the status of such
registration, qualification, exemption and compliance. At its expense the
Company shall:

(a)                except for such times as the Company is permitted hereunder
to suspend the use of the prospectus forming part of a Registration Statement,
use its commercially reasonable efforts to keep such registration, and any
qualification, exemption or compliance under state securities laws which the
Company determines to obtain, continuously effective with respect to a Holder,
and to keep the applicable Registration Statement free of any material
misstatements or omissions, until the earlier of the following: (i) the
Purchaser ceases to hold any Registrable Securities or (ii) the date all Shares
held by such Holder may be sold without restriction under Rule 144, including
without limitation, any volume and manner of sale restrictions which may be
applicable to affiliates under Rule 144 and without the requirement for the
Company to be in compliance with the current public information required under
Rule 144(c)(1) (or Rule 144(i)(2), if applicable). The period of time during
which the Company is required hereunder to keep a Registration Statement
effective is referred to herein as the “Registration Period.”

(b)               advise the Holders within five Business Days:

(i)                 when a Registration Statement or any amendment thereto has
been filed with the SEC and when such Registration Statement or any
post-effective amendment thereto has become effective;

(ii)               of any request by the SEC for amendments or supplements to
any Registration Statement or the prospectus included therein or for additional
information;

(iii)             of the issuance by the SEC of any stop order suspending the
effectiveness of any Registration Statement or the initiation of any proceedings
for such purpose;

(iv)             of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Registrable Securities included
therein for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and

(v)               subject to the provisions this Agreement, of the occurrence of
any event that requires the making of any changes in any Registration Statement
or prospectus so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to be stated
therein or necessary to make the statements therein (in the case of a
prospectus, in the light of the circumstances under which they were made) not
misleading;

Notwithstanding anything to the contrary set forth herein, the Company shall
not, when so advising the Holders of such events, provide the Holders with any
material, nonpublic information regarding the Company.

(c)                use its commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement as soon as reasonably practicable;

29

 

(d)               if a Holder so requests in writing, promptly furnish to each
such Holder, without charge, at least one copy of each Registration Statement
and each post-effective amendment thereto, including financial statements and
schedules, and, if explicitly requested, all exhibits in the form filed with the
SEC;

(e)                during the Registration Period, promptly deliver to each such
Holder, without charge, as many copies of each prospectus included in a
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request in writing; and the Company consents to the use,
consistent with the provisions hereof, of the prospectus or any amendment or
supplement thereto by each of the selling Holders of Registrable Securities in
connection with the offering and sale of the Registrable Securities covered by a
prospectus or any amendment or supplement thereto;

(f)                during the Registration Period, if a Holder so requests in
writing, deliver to each Holder, without charge, (i) one copy of the following
documents, other than those documents available via the SEC’s EDGAR system: (A)
its annual report to its stockholders, if any (which annual report shall contain
financial statements audited in accordance with GAAP by a firm of certified
public accountants of recognized standing), (B) if not included in substance in
its annual report to stockholders, its annual report on Form 10-K (or similar
form), (C) its definitive proxy statement with respect to its annual meeting of
stockholders, (D) each of its quarterly reports to its stockholders, and, if not
included in substance in its quarterly reports to stockholders, its quarterly
report on Form 10-Q (or similar form), and (E) a copy of each full Registration
Statement (the foregoing, in each case, excluding exhibits); and (ii) if
explicitly requested, all exhibits excluded by the parenthetical to the
immediately preceding clause (E);

(g)               prior to any public offering of Registrable Securities
pursuant to any Registration Statement, promptly take such actions as may be
necessary to register or qualify or obtain an exemption for offer and sale under
the securities or blue sky laws of such United States jurisdictions as any such
Holders reasonably request in writing, provided that the Company shall not for
any such purpose be required to qualify generally to transact business as a
foreign corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction, and do any and
all other acts or things reasonably necessary or advisable to enable the offer
and sale in such jurisdictions of the Registrable Securities covered by any such
Registration Statement;

(h)               upon the occurrence of any event contemplated by Section
6.4(b)(v) above, except for such times as the Company is permitted hereunder to
suspend, and has suspended, the use of a prospectus forming part of a
Registration Statement, the Company shall use its commercially reasonable
efforts to as soon as reasonably practicable prepare a post-effective amendment
to such Registration Statement or a supplement to the related prospectus, or
file any other required document so that, as thereafter delivered to purchasers
of the Registrable Securities included therein, such prospectus will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;

30

 

(i)                 otherwise use its commercially reasonable efforts to comply
in all material respects with all applicable rules and regulations of the SEC
which could affect the sale of the Registrable Securities;

(j)                 use its commercially reasonable efforts to cause all
Registrable Securities to be listed on each securities exchange or market, if
any, on which equity securities issued by the Company have been listed;

(k)               use its commercially reasonable efforts to take all other
steps necessary to effect the registration of the Registrable Securities
contemplated hereby and to enable the Holders to sell Registrable Securities
under Rule 144;

(l)                 provide to each Holder and its representatives, if
requested, the opportunity (under cover of a confidentiality agreement, if
requested by the Company) to conduct a reasonable inquiry of the Company’s
financial and other records during normal business hours and make available its
officers, directors and employees for questions regarding information which such
Holder may reasonably request in order to fulfill any required due diligence
obligation on its part;

(m)             permit a single counsel for the Holders to review any
Registration Statement and all amendments and supplements thereto, within two
Business Days prior to the filing thereof with the SEC; provided that, in the
case of clause (l) above, the Company shall not be required (A) to delay the
filing of any Registration Statement or any amendment or supplement thereto as a
result of any ongoing diligence inquiry by or on behalf of a Holder or to
incorporate any comments to any Registration Statement or any amendment or
supplement thereto by or on behalf of a Holder if such inquiry or comments would
require a delay in the filing of such Registration Statement, amendment or
supplement, as the case may be, or (B) to provide, and shall not provide, any
Holder or its representatives with material, non-public information unless such
Holder agrees to receive such information and enters into a written
confidentiality agreement with the Company in a form reasonably acceptable to
the Company; provided that each Holder shall be entitled to review information
regarding such Holder contained in any Registration Statement or any amendments
or supplements thereto prior to the filing thereof; and

(n)               if requested by a Holder, cooperate with such Holder to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be delivered to a transferee pursuant to the
Registration Statement, which certificates shall be free, to the extent
permitted by this Agreement and under law, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holders may reasonably request.

6.5              The Holders shall have no right to take any action to restrain,
enjoin or otherwise delay any registration pursuant to Section 6.1 hereof as a
result of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.

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6.6           (a)               To the extent permitted by law, the Company
shall indemnify each Holder and its directors, executive officers, shareholders,
members, partners, employees, agents and investment advisers (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) and each Person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which any registration that has been effected pursuant to this
Agreement, against all claims, losses, damages and liabilities (or action in
respect thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 6.6(c) below), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any Registration Statement, prospectus, any amendment
or supplement thereof, or other document prepared by the Company and incident to
any such registration, qualification or compliance or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in light of the
circumstances in which they were made, or any violation by the Company of any
rule or regulation promulgated by the Securities Act applicable to the Company
and relating to any action or inaction required of the Company in connection
with any such registration, qualification or compliance, and will reimburse each
Holder and its directors, executive officers, shareholders, members, partners,
employees, agents and investment advisers (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) and each Person controlling such Holder,
for reasonable legal and other out-of-pocket expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action as incurred; provided that the Company will not be liable in
any such case to the extent that any untrue statement or omission or allegation
thereof is made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of such Holder expressly for use in
preparation of any Registration Statement, prospectus, amendment or supplement;
provided however, that the Company will not be liable in any such case where the
claim, loss, damage or liability arises out of or is related to the failure of
such Holder to comply with the covenants and agreements contained in this
Article 6 respecting sales of Registrable Securities, and except that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus but eliminated or remedied
in the amended prospectus on file with the SEC at the time any Registration
Statement becomes effective or in an amended prospectus filed with the SEC
pursuant to Rule 424(b) which meets the requirements of Section 10(a) of the
Securities Act (each, a “Final Prospectus”), such indemnity shall not inure to
the benefit of any such Holder or any such controlling Person, if a copy of a
Final Prospectus furnished by the Company to the Holder for delivery was not
furnished to the Person asserting the loss, liability, claim or damage at or
prior to the time such furnishing is required by the Securities Act and a Final
Prospectus would have cured the defect giving rise to such loss, liability,
claim or damage;

(b)               Each Holder will severally, and not jointly, indemnify the
Company, each of its directors and officers, and each Person who controls the
Company within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 6.6(c) below), arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any Registration Statement, prospectus, or any amendment or
supplement thereof, incident to any such registration, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in light of
the circumstances in which they were made, and will reimburse the Company, such
directors and officers, and each Person controlling the Company for reasonable
legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action as
incurred, in each case to the extent, but only to the extent, that such untrue
statement or omission or allegation thereof is made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Holder expressly for use in preparation of any Registration Statement,
prospectus, amendment or supplement; provided that the indemnity shall not apply
to the extent that such claim, loss, damage or liability results from the fact
that a current copy of a prospectus was not made available to the Person
asserting the loss, liability, claim or damage at or prior to the time such
furnishing is required by the Securities Act and a Final Prospectus would have
cured the defect giving rise to such loss, claim, damage or liability.
Notwithstanding the foregoing, a Holder’s aggregate liability pursuant to this
subsection (b) and subsection (d) shall be limited to the net amount received by
the Holder from the sale of the Registrable Securities.

32

 

(c)                Each party entitled to indemnification under this Section 6.6
(the “Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party (at its expense) to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such Indemnified Party’s expense, and provided further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Agreement, unless
such failure is materially prejudicial to the Indemnifying Party in defending
such claim or litigation. An Indemnifying Party shall not be liable for any
settlement of an action or claim effected without its written consent (which
consent will not be unreasonably withheld). No Indemnifying Party, in its
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.

(d)               If the indemnification provided for in this Section 6.6 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.

33

 

6.7          (a)               Each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event requiring the preparation
of a supplement or amendment to a prospectus relating to Registrable Securities
so that, as thereafter delivered to the Holders, such prospectus shall not
contain an 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, each Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement and prospectus
contemplated by Section 6.1 until its receipt of copies of the supplemented or
amended prospectus from the Company and, if so directed by the Company, each
Holder shall deliver to the Company all copies, other than permanent file copies
then in such Holder’s possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice.

(b)               Each Holder shall suspend, upon request of the Company, any
disposition of Registrable Securities pursuant to any Registration Statement and
prospectus contemplated by Section 6.1 during no more than two periods of no
more than 30 calendar days each during any 12-month period to the extent that
the Board of Directors of the Company determines in good faith that the sale of
Registrable Securities under any such Registration Statement would be reasonably
likely to cause a violation of the Securities Act or Exchange Act.

(c)                As a condition to the inclusion of its Registrable
Securities, each Holder shall furnish to the Company such information regarding
such Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing, including completing a Registration Statement
Questionnaire in the form provided by the Company or in a mutually agreeable
form, or as shall be required in connection with any registration referred to in
this Article 6.

(d)               Each Holder hereby covenants with the Company (i) not to make
any sale of the Registrable Securities pursuant to a Registration Statement
without effectively causing the prospectus delivery requirements under the
Securities Act to be satisfied, and (ii) if such Registrable Securities are to
be sold by any method or in any transaction other than on a national securities
exchange or in the OTC Market, in privately negotiated transactions, or in a
combination of such methods, to notify the Company at least three Business Days
prior to the date on which the Holder first offers to sell any such Registrable
Securities.

34

 

(e)                Each Holder agrees not to take any action with respect to any
distribution deemed to be made pursuant to a Registration Statement which would
constitute a violation of Regulation M under the Exchange Act or any other
applicable rule, regulation or law.

(f)                At the end of the Registration Period the Holders shall
discontinue sales of securities pursuant to any Registration Statement upon
receipt of notice from the Company of its intention to remove from registration
the securities covered by any such Registration Statement which remain unsold,
and such Holders shall notify the Company of the number of securities registered
which remain unsold immediately upon receipt of such notice from the Company.

6.8              With a view to making available to the Holders the benefits of
certain rules and regulations of the SEC which at any time permit the sale of
the Registrable Securities to the public without registration, so long as the
Holders still own Registrable Securities, the Company shall use its reasonable
best efforts to:

(a)                make and keep adequate current public information available
with respect to the Company, as those terms are understood and defined in Rule
144 under the Securities Act, at all times;

(b)               file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and

(c)               so long as a Holder owns any Registrable Securities, furnish
to such Holder, upon any reasonable request, a written statement by the Company
as to its compliance with Rule 144 under the Securities Act, and of the Exchange
Act, a copy of the most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as such Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing a
Holder to sell any such securities without registration.

6.9              The rights to cause the Company to register Registrable
Securities granted to the Holders by the Company under Section 6.1 may be
assigned by a Holder in connection with a private transfer by such Holder of all
or a portion of its Registrable Securities in which the restrictive legends with
respect thereto remain on such securities upon the consummation of such
transfer, provided that (i) such transfer may otherwise be effected in
accordance with applicable securities laws; (ii) such transferee agrees to
comply with the terms and provisions of this Agreement, and (iii) such transfer
is otherwise in compliance with this Agreement. Except as specifically permitted
by this Section 6.9, the rights of a Holder with respect to Registrable
Securities as set out herein shall not be transferable to any other Person, and
any attempted transfer shall cause all rights of such Holder therein to be
forfeited.

6.10          Prior to the time that Registration Statement(s) covering the
resale of all Registrable Securities have been declared effective by the SEC,
the Company shall not file with the SEC a registration statement under the
Securities Act of any of its equity securities other than a registration
statement required to be filed pursuant to this Agreement, a registration
statement on Form S-8 or, in connection with an acquisition, a registration
statement on Form S-4; provided, however, that the foregoing restrictions in
this Section 6.10 shall terminate upon such time as all of the Registrable
Securities (i) have been publicly sold by the Holders or (ii) may be sold under
Rule 144 during any 90-day period without volume or manner of sale restrictions
and without the requirement that the Company be in compliance with the current
public information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if
applicable).

35

 

6.11          The rights of any Holder under any provision of this Article 6 may
be waived (either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely) or
amended by an instrument in writing signed by such Holder.

ARTICLE 7

PLACEMENT AGENT

7.1              Basis of Engagement. The Purchaser acknowledges that the
Placement Agents are acting as the exclusive placement agents on a “best
efforts” basis for the Securities being offered hereby and will be compensated
by the Company for acting in such capacity.

7.2              Independent Evaluation. The Purchaser confirms and agrees that
(i) it has independently evaluated the merits of its decision to purchase the
Securities, (ii) it has not relied on the advice of, or any representations by,
the Placement Agents or any affiliate thereof or any representative of the
Placement Agents or their affiliates in making such decision, and (iii) neither
the Placement Agents nor any of their representatives has any responsibility
with respect to the completeness or accuracy of any information or materials
furnished to such Purchaser in connection with the transactions contemplated
hereby, including of any Registration Statement, prospectus, amendment or
supplement.

ARTICLE 8

DEFINITIONS

8.1              “Agreement” has the meaning set forth in the preamble.

8.2              “Affiliate” means, with respect to any Person (as defined
below), any other Person controlling, controlled by or under direct or indirect
common control with such Person (for the purposes of this definition “control, ”
when used with respect to any specified Person, shall mean the power to direct
the management and policies of such Person, directly or indirectly, whether
through ownership of voting securities, by contract or otherwise; and the terms
“controlling” and “controlled” shall have meanings correlative to the
foregoing).

8.3              “Articles of Incorporation” has the meaning set forth in
Section 2.3.

36

 

8.4              “Business Day” means a day Monday through Friday on which banks
are generally open for business in New York City.

8.5              “Buy-In” has the meaning set forth in Section 3.6(d).

8.6              “Buy-In Price” has the meaning set forth in Section 3.6(d).

8.7              “Bylaws” has the meaning set forth in Section 2.3.

8.8              “Closing” has the meaning set forth in Section 1.3.

8.9              “Closing Date” has the meaning set forth in Section 1.3.

8.10          “Common Stock” means the common stock, par value $0.0001 per
share, of the Company.

8.11          “Company” means Corindus Vascular Robotics, Inc., a Nevada
corporation.

8.12          “Deadline Date” has the meaning set forth in Section 3.6(d).

8.13          “Effectiveness Date” has the meaning set forth in Section 6.1(b).

8.14          “Evaluation Date” has the meaning set forth in Section 2.7.

8.15          “Exchange Act” means the Securities Exchange Act of 1934, as
amended.

8.16          “Filing Date” has the meaning set forth in Section 6.1(a).

8.17          “Final Prospectus” has the meaning set forth in Section 6.6(a).

8.18          “Financial Statements” means the financial statements of the
Company included in the SEC Documents.

8.19          “Holders” means any Person holding Registrable Securities or any
Person to whom the rights under Article 6 have been transferred in accordance
with Section 6.9 hereof.

8.20          “Indemnified Party” has the meaning set forth in Section 6.6(c).

8.21          “Indemnifying Party” has the meaning set forth in Section 6.6(c).

8.22          “Initial Registration Statement” has the meaning set forth in
Section 6.1(a).

37

 

8.23          “Intellectual Property” has the meaning set forth in Section 2.10.

8.24          “Investment Company Act” has the meaning set forth in Section
2.12.

8.25          “Knowledge” means, with respect to a specified Person, the actual
knowledge of such specified Person; and as to the Company and its Subsidiaries
will mean the actual knowledge of the Company’s executive officers.

8.26          “Material Adverse Effect” means a material adverse effect on (a)
the business, operations, prospects, assets or condition (financial or
otherwise) of the Company, or (b) the ability of the Company to perform in any
material respect on a timely basis its obligations pursuant to the transactions
contemplated by this Agreement.

8.27          “Material Agreements” has the meaning set forth in Section 2.6.

8.28          “New Registration Statement” has the meaning set forth in Section
6.1(c).

8.29          “Person” means any person, individual, corporation, limited
liability company, partnership, trust or other nongovernmental entity or any
governmental agency, court, authority or other body (whether foreign, federal,
state, local or otherwise).

8.30          “Placement” means the private placement of the Company’s
Securities contemplated by this Agreement.

8.31          “Placement Agents” mean Stifel, Nicolaus & Company, Incorporated
and Cowen and Company, LLC.

8.32          “Purchasers” has the meaning set forth in the preamble to this
Agreement.

8.33          “Purchase Price” has the meaning set forth in Section 1.1.

8.34          The terms “register,” “registered” and “registration” refer to the
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

8.35          “Registrable Securities” means the Shares; provided, however, that
securities shall only be treated as Registrable Securities if and only for so
long as they (A) have not been disposed of pursuant to a registration statement
declared effective by the SEC, (B) have not been sold in a transaction exempt
from the registration and prospectus delivery requirements of the Securities Act
so that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale and (C) are held by a Holder or a
permitted transferee pursuant to Section 6.9.

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8.36          “Registration Default” has the meaning set forth in Section 6.3.

8.37          “Registration Expenses” means all expenses incurred by the Company
in complying with Section 6.1 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and expenses of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding the fees of legal counsel for any Holder).

8.38          “Registration Statement” means any one or more registration
statements of the Company filed under the Securities Act that covers the resale
of any of the Registrable Securities pursuant to the provisions of this
Agreement (including without limitation the Initial Registration Statement, the
New Registration Statement and any Remainder Registration Statements) and
amendments and supplements to such Registration Statements, including
post-effective amendments.

8.39          “Registration Period” has the meaning set forth in Section 6.4(a).

8.40          “Remainder Registration Statement” has the meaning set forth in
Section 6.1(c).

8.41          “Rule 144” means Rule 144 promulgated under the Securities Act, or
any successor rule.

8.42          “Rule 415” means Rule 415 promulgated under the Securities Act, or
any successor rule.

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

8.44          “Securities” has the meaning set forth in Section 1.1.

8.45          “SEC Documents” has the meaning set forth in Section 2.6.

8.46          “Securities Act” means the Securities Act of 1933, as amended, and
the rules and regulations thereunder, or any similar successor statute.

8.47          “Selling Expenses” means all selling commissions applicable to the
sale of Registrable Securities and all fees and expenses of legal counsel for
any Holder.

8.48          “Shares” has the meaning set forth in Section 1.1.

8.49          “Subsidiaries” means Corindus, Inc. and Corindus Security
Corporation, both Delaware corporations.

8.50          “Trading Day” means any day on which the Common Stock is traded on
the OTCQB, or, if the OTCQB is not the principal trading market for the Common
Stock, then on the principal securities exchange or securities market on which
the Common Stock is then traded; provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time).

39

 

ARTICLE 9

GOVERNING LAW; MISCELLANEOUS

9.1              Governing Law; Jurisdiction. This Agreement will be governed by
and interpreted in accordance with the laws of the State of New York. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.

9.2              Counterparts; Signatures by Facsimile. This Agreement may be
executed in two or more counterparts, all of which are considered one and the
same agreement and will become effective when counterparts have been signed by
each party and delivered to the other parties. This Agreement, once executed by
a party, may be delivered to the other parties hereto by facsimile or e-mail
transmission of a copy of this Agreement bearing the signature of the party so
delivering this Agreement.

9.3              Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.

9.4              Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified in order to conform with such statute or rule of law.
Any provision hereof that may prove invalid or unenforceable under any law will
not affect the validity or enforceability of any other provision hereof.

9.5              Entire Agreement; Amendments. This Agreement (including all
schedules and exhibits hereto) constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are
no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein or therein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof. No provision of this Agreement may be waived or amended
other than by an instrument in writing signed by the Company and the Purchasers
holding at least a majority in interest of the Shares then outstanding or, in
the case of a waiver, by the party against whom enforcement of any such waived
provision is sought. Any amendment or waiver by a party effected in accordance
with this Section 9.5 shall be binding upon such party, including with respect
to any Securities purchased under this Agreement at the time outstanding and
held by such party (including securities into which such Securities are
convertible and for which such Securities are exercisable) and each future
holder of all such securities.

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9.6              Notices. All notices required or permitted hereunder shall be
in writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed email or facsimile
transmission if sent during normal business hours of the recipient, if not, then
on the next Business Day, (c) five days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one Business
Day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. The addresses for such
communications are:

If to the Company:

Corindus Vascular Robotics, Inc.
309 Waverley Oaks Rd., Suite 105

Waltham, MA 024252

Facsimile: (508) 653-3353

Attn: David M. Handler, Chief Executive Officer

 

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

McDermott Will & Emery LLP

 

28 State Street

Boston, MA 02109

Facsimile: 617-321-4697

Attention: Richard B. Smith

 

If to a Purchaser: To the address set forth immediately below such Purchaser’s
name on the signature pages hereto.

Each party will provide ten days' advance written notice to the other parties of
any change in its address.

9.7              Successors and Assigns. This Agreement is binding upon and
inures to the benefit of the parties and their successors and assigns. The
Company will not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Purchasers who purchased a majority of
the Securities sold pursuant to this Agreement; provided, however, that no such
consent shall be required in connection with any acquisition of the Company or a
majority of the outstanding shares of Common Stock or a sale of all or
substantially all of the assets of the Company, in each case in a single or
series of related transactions, or in the case of any other assignment by
operation of law. No Purchaser or Holder may assign this Agreement or any rights
or obligations hereunder without the prior written consent of the Company,
except as permitted in accordance with Section 6.9 hereof.

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9.8              Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto, their respective permitted successors and assigns
and is not for the benefit of, nor may any provision hereof be enforced by, any
other Person.

9.9              Further Assurances. Each party will do and perform, or cause to
be done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

9.10          No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

9.11          Equitable Relief. The Company recognizes that, if it fails to
perform or discharge any of its obligations under this Agreement, any remedy at
law may prove to be inadequate relief to the Purchasers and Holders. The Company
therefore agrees that the Purchasers and Holders are entitled to seek temporary
and permanent injunctive relief in any such case. Each Purchaser and each Holder
also recognizes that, if it fails to perform or discharge any of its obligations
under this Agreement, any remedy at law may prove to be inadequate relief to the
Company. Each Purchaser and each Holder therefore agrees that the Company is
entitled to seek temporary and permanent injunctive relief in any such case.

9.12          Survival of Representations and Warranties. Notwithstanding any
investigation made by any party to this Agreement, all representations and
warranties made by the Company and the Purchasers herein shall survive for a
period of one year following the date hereof.

9.13          Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to purchase
Shares pursuant to this Agreement has been made by such Purchaser independently
of any other Purchaser and independently of any information, materials,
statements or opinions as to the business, affairs, operations, assets,
properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company or any Subsidiary which may have been
made or given by any other Purchaser or by any agent or employee of any other
Purchaser, and no Purchaser and none of its agents or employees shall have any
liability to any other Purchaser (or any other Person) relating to or arising
from any such information, materials, statements or opinions. Nothing contained
herein and no action taken by any Purchaser pursuant thereto, shall be deemed to
constitute the Purchasers as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Purchasers are in any
way acting in concert or as a group, or are deemed affiliates with respect to
such obligations or the transactions contemplated by this Agreement. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for any other Purchaser to be joined as an additional
party in any proceeding for such purpose. It is expressly understood and agreed
that each provision contained in this Agreement is between the Company and a
Purchaser, solely, and not between the Company and the Purchasers collectively
and not between and among the Purchasers.

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9.14          Adjustments in Share Numbers and Prices. In the event of any stock
split, subdivision, dividend or distribution payable in shares of Common Stock
(or other securities or rights convertible into, or entitling the holder thereof
to receive directly or indirectly shares of Common Stock), combination or other
similar recapitalization or event occurring after the date hereof and prior to
the Closing, each reference in this Agreement to a number of shares or a price
per share shall be deemed to be amended to appropriately account for such event.

[Signature Page Follows]

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

 

  CORINDUS VASCULAR ROBOTICS, INC.         By:     Name: David M. Handler  
Title: Chief Executive Officer

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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        (Name of Purchaser)           By:     Name:     Title:          
Aggregate Purchase Price: $     Number of Shares to be Acquired:     Tax ID No.:
          Address for Notice:                       Telephone No.:     Facsimile
No.:     E-mail Address:     Attention:  

 

Delivery Instructions: (if different than above) c/o     Street:    
City/State/Zip:     Attention:     Telephone No.:    

  

45

 

EXHIBIT A

SCHEDULE OF PURCHASERS

 

Purchaser Shares Aggregate Purchase Price                                      
                                  Total:    

 

 

 

EXHIBIT B

FORM OF LEGAL OPINION

 

 

 

 

Schedule 2.32

The Company has agreed to join, as a direct obligor thereunder, that certain
Loan and Security Agreement between Steward Capital Partners, L.P. and the
Company’s wholly-owned subsidiaries, Corindus, Inc. and Corindus Security
Corporation, pursuant to which such subsidiaries are entitled to borrow up to
$10,000,000.00.