Exhibit 10.1
PURCHASE AGREEMENT
     This Purchase Agreement (this “Agreement”), dated as of April 3, 2009, is
entered into by and between BioMimetic Therapeutics, Inc., a Delaware
corporation (the “Company”) and InterWest Partners X, LP, a California limited
partnership (the “Purchaser”).
     WHEREAS, the Company proposes to commence an offering to each of the
holders of its common stock, $0.001 par value (the “Common Stock”), of record as
of the close of business on the record date to be determined by the Company’s
Board of Directors (the “Record Date”), of non-transferable rights (the
“Rights”) to subscribe for and purchase additional shares of Common Stock (the
“New Shares”) at a subscription price of $8.50, for an aggregate offering amount
of approximately $17,000,000 (the “Subscription Price” and, such offering, the
“Rights Offering”);
     WHEREAS, in lieu of participation in the Rights Offering, the Purchaser
wishes to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, Shares (as defined below) of Common Stock
from the Company; and
     WHEREAS, the Company and the Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
Securities Act.
     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
contained in this Agreement, the Company and the Purchaser agree as follows:
     SECTION 1. Authorization of Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company has authorized the issuance and sale
of up to 941,177 shares (the “Shares”) of Common Stock of the Company.
     SECTION 2. Agreement to Sell and Purchase the Shares. At the Closing (as
defined in Section 3), the Company will, subject to the terms of this Agreement,
issue and sell to the Purchaser, and the Purchaser will buy from the Company,
upon the terms and conditions hereinafter set forth, 941,177 Shares of Common
Stock for a purchase price per Share equal to $8.50.
     SECTION 3. Delivery of the Shares at the Closing. The completion of the
purchase and sale of the Shares (the “Closing”) shall occur at the offices of
Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, New York 10104,
within one business day following the date on which the last of the conditions
for Closing set forth in this Section 3 shall have been satisfied or waived in
accordance with this Agreement, or on such later date or at such different
location or remotely by facsimile transmission or other electronic means as the
parties shall agree in writing (the “Closing Date”).
     At the Closing, the Purchaser shall deliver, in immediately available
funds, $8,000,004.50 by wire transfer to an account designated by the Company
and the Company shall deliver to the Purchaser one or more stock certificates
registered in the name of the Purchaser, or

 

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in such nominee name(s) as designated by the Purchaser in writing, representing,
in the aggregate, 941,177 shares of Common Stock, and bearing an appropriate
legend referring to the fact that the Shares were sold in reliance upon the
exemption from registration under the Securities Act provided by Section 4(2)
thereof and Rule 506 thereunder. The name(s) in which the stock certificates are
to be registered are set forth in the Stock Certificate Questionnaire attached
hereto as part of Appendix I.
     The Company’s obligation to complete the purchase and sale of the Shares
and deliver such stock certificate(s) to the Purchaser at the Closing shall be
subject to the following conditions, any one or more of which may be waived by
the Company: (a) receipt by the Company of same-day funds in the full amount of
the purchase price for the Shares being purchased hereunder; (b) the accuracy of
the representations and warranties made by the Purchaser in Section 5 hereof
shall be true and correct in all material respects as of such Closing, except
that any such representations and warranties shall be true and correct in all
respects where such representation and warranty is qualified with respect to
materiality; and (c) the fulfillment of those undertakings of the Purchaser
contained in this Agreement that are required to be performed or complied with
by the Purchaser on or before such Closing.
     The Purchaser’s obligation to accept delivery of such stock certificate(s)
and to pay for the Shares evidenced thereby shall be subject to the following
conditions: (a) the accuracy of the representations and warranties made by the
Company in Section 4 hereof shall be true and correct in all material respects
as of such Closing, except that any such representations and warranties shall be
true and correct in all respects where such representation and warranty is
qualified with respect to materiality; (b) delivery to the Purchaser by counsel
to the Company of a legal opinion of such counsel, dated as of the Closing Date
and in the form attached hereto as Exhibit B, executed by such counsel and
addressed to the Purchaser; (c) receipt by the Purchaser of a certificate
executed by the chief executive officer and the general counsel of the Company,
dated as of the Closing Date, to the effect that the representations and
warranties of the Company set forth herein are true and correct as of the date
of this Agreement and as of such Closing Date (except for representations and
warranties that speak as of a specific date, which representations and
warranties shall be true and correct as of such date) and that the Company has
complied with all the agreements and satisfied all the conditions herein on its
part to be performed or satisfied on or prior to such Closing Date; (d) the
fulfillment of those undertakings of the Company contained in this Agreement
that are required to be performed or complied with by the Company on or before
such Closing; and (e) receipt by the Purchaser of such other documents as the
Purchaser shall reasonably request. The Purchaser’s obligations hereunder are
expressly not conditioned on the purchase by any other persons or entities of
any securities of the Company.
     SECTION 4. Representations, Warranties and Covenants of the Company. The
Company hereby represents and warrants to, and covenants with, the Purchaser as
follows:
               4.1 Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation with corporate power and authority to own or lease
its properties and conduct its business as described in the SEC Reports (as
defined below) and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except

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where failure to so qualify would not have a Material Adverse Effect (as defined
herein). The Company’s subsidiaries (each a “Subsidiary” and collectively the
“Subsidiaries”) are listed on Exhibit A to this Agreement and are the only
subsidiaries, direct or indirect, of the Company. Each Subsidiary is a direct or
indirect wholly owned subsidiary of the Company. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with corporate power and authority to own or
lease its properties and conduct its business as currently carried out, and is
qualified to do business as a foreign corporation in each jurisdiction in which
qualification is required, except where failure to so qualify would not have a
Material Adverse Effect.
               4.2 Reporting Company; Form S-3. The Company is not an
“ineligible issuer” (as defined in Rule 405 promulgated under the Securities
Act) and is eligible to register the Shares for resale by the Purchaser on a
registration statement on Form S-3 under the Securities Act. The Company is
subject to the reporting requirements of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and has filed all reports required thereby.
Provided the Purchaser is not deemed to be an underwriter with respect to any
shares, to the Company’s knowledge, there exist no facts or circumstances
(including without limitation any required approvals or waivers or any
circumstances that may delay or prevent the obtaining of accountant’s consents)
that reasonably could be expected to prohibit or delay the preparation and
filing of a registration statement on Form S-3 (the “Registration Statement”)
that will be available for the resale of the Shares by the Purchaser.
               4.3 Authorized Capital Stock. As of the date hereof, the
authorized, issued and outstanding share capital of the Company is as set forth
on Schedule 4.3 hereto. The issued and outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, were not
issued in violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities. Other than employee stock options, 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. With respect to each of the Subsidiaries (i) all the issued and
outstanding shares of such Subsidiary’s capital stock have been duly authorized
and validly issued, are fully paid and nonassessable, have been issued in
compliance with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to subscribe
for or purchase securities, and are owned by the Company free and clear of all
liens, encumbrances and equities and claims, and (ii) there are no outstanding
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 such Subsidiary’s capital stock or
any such options, rights, convertible securities or obligations.
               4.4 Issuance, Sale and Delivery of the Shares. The Shares have
been duly authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, will be validly issued, fully paid and nonassessable.
No preemptive rights or other rights to subscribe for or purchase any shares of
Common Stock of the Company exist with respect to the issuance and sale of the
Shares by the Company pursuant to this Agreement.

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               4.5 Due Execution, Delivery and Performance of the Agreements.
The Company has full legal right, corporate power and authority to enter into
this Agreement and perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Company. This Agreement
constitutes a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors’ rights and the application of equitable principles relating to the
availability of remedies, and except as rights to indemnity or contribution,
including but not limited to, indemnification provisions set forth in
Section 7.3 of this Agreement may be limited by federal or state securities law
or the public policy underlying such laws. The execution and performance of this
Agreement by the Company and the consummation of the transactions herein
contemplated will not violate any provision of the certificate of incorporation
or bylaws of the Company or the organizational documents of any Subsidiary and
will not result in the creation of any lien, charge, security interest or
encumbrance upon any assets of the Company or any Subsidiary pursuant to the
terms or provisions of, or will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which any of the
Company or any Subsidiary is a party or by which any of the Company or any
Subsidiary or their respective properties may be bound or affected and in each
case that would have a Material Adverse Effect or, to the Company’s knowledge,
any statute or any authorization, judgment, decree, order, rule or regulation of
any court or any regulatory body, administrative agency or other governmental
agency or body applicable to the Company or any Subsidiary or any of their
respective properties. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental agency or
body is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
compliance with the Blue Sky laws and federal securities laws applicable to the
offering of the Shares. For the purposes of this Agreement the term “Material
Adverse Effect” shall mean the occurrence, either individually or in the
aggregate, of any material adverse effect on the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company and of the Subsidiaries taken as a whole, except any of
the following, either alone or in combination, shall not be deemed a Material
Adverse Effect: (i) effects caused by changes or circumstances affecting general
market conditions in the U.S. economy or that are generally applicable to the
industry in which the Company operates, provided that such effects do not
adversely affect the Company in a disproportionate manner, (ii) effects
resulting from or relating to the announcement or disclosure of the sale of the
Shares or other transactions contemplated by this Agreement, or (iii) effects
caused by any event, occurrence or condition resulting from or relating to the
taking of any action in accordance with this Agreement.
               4.6 Accountants. Ernst & Young LLP, who has expressed its opinion
with respect to the consolidated financial statements contained in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2008, which will be
incorporated by reference into the Registration Statement and the Prospectus (as
defined herein) that forms a part thereof, are registered independent public
accountants as required by the Securities Act and the rules and regulations
promulgated thereunder (the “1933 Act Rules and Regulations”) and by the rules
of the Public Company Accounting Oversight Board.

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               4.7 No Defaults or Consents. Neither the execution, delivery and
performance of this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the issuance
and sale by the Company of the Shares) will give rise to a right to terminate or
accelerate the due date of any payment due under, or conflict with or result in
the breach of any term or provision of, or constitute a default (or an event
which with notice or lapse of time or both would constitute a default) under,
except such defaults that individually or in the aggregate would not cause a
Material Adverse Effect, or require any consent or waiver under, or result in
the execution or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company or its subsidiaries pursuant to the terms
of, any indenture, mortgage, deed of trust or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which either the
Company or its subsidiaries or any of their properties or businesses is bound,
or any franchise, license, permit, judgment, decree, order, statute, rule or
regulation applicable to the Company or any of its subsidiaries or violate any
provision of the charter or by-laws of the Company or any of its subsidiaries,
except for such consents or waivers which have already been obtained and are in
full force and effect.
               4.8 Contracts. The material contracts to which the Company is a
party that are filed pursuant to the Securities Act or the Exchange Act, with
the Commission by the Company have been duly and validly authorized, executed
and delivered by the Company and constitute the legal, valid and binding
agreements of the Company, enforceable by and against it in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to enforcement of creditors’ rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws.
               4.9 No Actions. There are no legal or governmental actions, suits
or proceedings pending or, to the Company’s knowledge, threatened against the
Company or any Subsidiary before or by any court, regulatory body or
administrative agency or any other governmental agency or body, domestic, or
foreign, which actions, suits or proceedings, individually or in the aggregate,
might reasonably be expected to have a Material Adverse Effect; and no labor
disturbance by the employees of the Company exists or, to the Company’s
knowledge, is imminent, that might reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Subsidiary is a party to or subject
to the provisions of any injunction, judgment, decree or order of any court,
regulatory body, administrative agency or other governmental agency or body that
might have a Material Adverse Effect.
               4.10 Properties. The Company and each Subsidiary has good and
marketable title to all the properties and assets described as owned by it in
the consolidated financial statements, free and clear of all liens, mortgages,
pledges, or encumbrances of any kind except (i) those, if any, reflected in such
consolidated financial statements, or (ii) those that are not material in amount
and do not adversely affect the use made and proposed to be made of such
property by the Company or its Subsidiaries. The Company and each Subsidiary
holds its leased properties under valid and binding leases. The Company and any
Subsidiary owns or leases all such properties as are necessary to its operations
as now conducted.

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               4.11 No Material Adverse Change. Except as set forth on
Schedule 4.11, since December 31, 2008, (i) the Company and its Subsidiaries
have not incurred any material liabilities or obligations, indirect, or
contingent, or entered into any material agreement or other transaction that is
not in the ordinary course of business or that could reasonably be expected to
result in a material reduction in the future earnings of the Company; (ii) the
Company and its Subsidiaries have not sustained any material loss or
interference with their businesses or properties from fire, flood, windstorm,
accident or other calamity not covered by insurance; (iii) the Company and its
Subsidiaries have not paid or declared any dividends or other distributions with
respect to their capital stock and none of the Company or any Subsidiary is in
default in the payment of principal or interest on any outstanding debt
obligations; (iv) there has not been any change in the capital stock of the
Company or its Subsidiaries other than the sale of the Shares hereunder and
shares or options issued pursuant to employee equity incentive plans or purchase
plans approved by the Company’s Board of Directors, or indebtedness material to
the Company or its Subsidiaries (other than in the ordinary course of business
and any required scheduled payments); and (v) there has not occurred any event
that has caused or could reasonably be expected to cause a Material Adverse
Effect.
               4.12 Intellectual Property. To the Company’s knowledge, the
Company owns, or has obtained valid and enforceable licenses for, or other legal
rights to use, the inventions, patent applications, patents, utility models,
industrial property, trademarks (both registered and unregistered), trade names,
service marks (both registered and unregistered), service names, copyrights,
trade secrets, customer lists, designs, manufacturing or other processes,
computer software, systems, data compilations, research results, know-how or
other proprietary rights and information owned or licensed by the Company, or
used in the Company’s business as presently conducted with respect to the
research, development, testing and marketing of Augment Bone Graft, Augment
Injectable Bone Graft, and the other product candidates (collectively, the
“Products”), except as set forth on Schedule 4.12 or where the failure to own,
license or otherwise enjoy such rights would not, individually or in the
aggregate, have a Material Adverse Effect (collectively, “Intellectual
Property”). To the Company’s knowledge, all of such patents, registered
trademarks and registered copyrights owned or licensed by the Company have been
duly registered in, filed in or issued by the United States Patent and Trademark
Office (the “USPTO”), the United States Copyright Office or the corresponding
offices of other jurisdictions and have been maintained and renewed in
accordance with all applicable provisions of law and administrative regulations
in the United States and all such other jurisdictions, except where the failure
to do so, individually or in the aggregate, would not have a Material Adverse
Effect. The Company has taken all steps required in accordance with sound
business practice and business judgment to establish and preserve its ownership
of or rights to all material Intellectual Property. Except as set forth on
Schedule 4.12, to the Company’s knowledge, there are no third parties who have
or will be able to establish rights to any Intellectual Property related to the
Products. To the Company’s knowledge, there is no infringement by third parties
of any of the Intellectual Property. Except as set forth on Schedule 4.12, to
the Company’s knowledge, there is no pending or threatened action, suit,
proceeding or claim by others challenging the Company’s rights in or to any
Intellectual Property, and the Company is unaware of any facts that could form a
reasonable basis for any such action, suit, proceeding or claim. Except as set
forth on Schedule 4.12, there is no pending, or to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging the validity,
enforceability or scope of any Intellectual Property, and the Company is unaware
of any

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facts that could form a reasonable basis for any such action, suit, proceeding
or claim. To the Company’s knowledge, the Company has not formerly and presently
is not infringing or violating the Intellectual Property of any other person.
Except as set forth on Schedule 4.12, there is no pending, or to the Company’s
knowledge, threatened action, suit, proceeding or claim by another that the
Company infringes or otherwise violates any Intellectual Property, and the
Company is unaware of any facts that could form a reasonable basis for any such
action, suit, proceeding or claim. To the Company’s knowledge, the manufacture,
use, sale, offer for sale or import of any Product by the Company would not
infringe any claim of any patent of another, except that of a licensor who has
granted the Company a license under any such patent. No proceeding charging the
Company with infringement of any adversely held Intellectual Property has been
filed. The Company is in compliance with the terms of all agreements pursuant to
which Intellectual Property has been licensed to the Company. All such
agreements are in full force and effect and there is no default by the Company
thereto, and to the Company’s knowledge, no notice of default thereunder has
been threatened against the Company. To the Company’s knowledge, sublicenses
granted to others are now in compliance with the terms of all agreements
pursuant to which Intellectual Property has been sublicensed by the Company. To
the Company’s knowledge, all such agreements are in full force and effect and
there is no default by any sublicensee thereto. To the Company’s knowledge,
there is no patent or patent application containing claims that interfere with
the issued or pending claims of any patent owned by or licensed to the Company.
The Company is not aware of any fact from which it could reasonably be inferred
that an individual associated with the filing and prosecution of any patent
owned by or licensed to the Company failed to disclose to the USPTO all
information known to that individual to be material to patentability. The
Products fall within the scope of one or more claims of one or more patents
owned by or licensed to the Company. Upon the making, selling, offering for sale
or importing into the United States of any product covered by one or more claims
of a United States patent owned or licensed by the Company, the Company will
comply with the marking and notice requirements of 35 U.S.C. § 287(a).
               4.13 Compliance. The Company has all necessary licenses,
authorizations, consents and approvals and has made all necessary filings
required under any federal, state, local or foreign law, regulation or rule, and
has obtained all necessary licenses, authorizations, consents and approvals from
other persons, in order to conduct its business, except where the absence of
such license, authorization, consent, approval or filing would not, individually
or in the aggregate, have a Material Adverse Effect. The Company is not in
violation of, or in default under, and has not received notice of any
proceedings relating to revocation or modification of, any such license,
authorization, consent or approval or any federal, state, local or foreign law,
regulation or rule or any decree, order or judgment applicable to the Company,
except where such violation, default, revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect. None of the
Company nor its Subsidiaries has been advised, nor do any of them have any
reason to believe, that it is not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local, state
and federal environmental laws and regulations, except where failure to be so in
compliance would not have a Material Adverse Effect.
               4.14 Taxes. The Company and each Subsidiary has filed on a timely
basis (giving effect to extensions) all required federal, state and foreign
income and franchise tax

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returns and has paid or accrued all taxes shown as due thereon, and none of the
Company or any subsidiary has knowledge of a tax deficiency that has been or
might be asserted or threatened against it that could have a Material Adverse
Effect. All tax liabilities accrued through the date hereof have been adequately
provided for on the books of the Company.
               4.15 Transfer Taxes. On the Closing Date, all stock transfer or
other taxes (other than income taxes) that are required to be paid in connection
with the sale and transfer of the Shares to be sold to the Purchaser hereunder
will have been, fully paid or provided for by the Company and all laws imposing
such taxes will have been fully complied with.
               4.16 Investment Company. The Company is not an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for an investment company, within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission promulgated
thereunder.
               4.17 Offering Materials. Each of the Company, its directors and
officers has not distributed and will not distribute prior to the Closing Date
any offering material, including any “free writing prospectus” (as defined in
Rule 405 promulgated under the Securities Act), in connection with the offering
and sale of the Shares.
               4.18 Insurance. The Company maintains insurance underwritten by
insurers of recognized financial responsibility, of the types and in the amounts
that the Company reasonably believes is adequate for its business, including,
but not limited to, insurance covering all real and personal property owned or
leased by the Company against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, with such deductibles as are
customary for companies in the same or similar business, all of which insurance
is in full force and effect.
               4.19 Price of Common Stock. Neither the Company nor any
Subsidiary, nor, to the Company’s knowledge, any of their respective directors,
officers, affiliates or controlling persons, has taken, and will not take,
directly or indirectly, any action designed to cause or result in, or that has
constituted or that might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of the Common Stock to
facilitate the sale or resale of the Shares.
               4.20 Non-Public Information. The Company has not disclosed to the
Purchaser information that would constitute material non-public information as
of the Closing Date other than the existence of the transaction contemplated
hereby and the Rights Offering.
               4.21 Off-Balance Sheet Arrangements. There is no transaction,
arrangement or other relationship between the Company 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 or that otherwise would be
reasonably likely to have a Material Adverse Effect. There are no such
transactions, arrangements or other relationships with the Company that may
create contingencies or liabilities that are not otherwise disclosed by the
Company in its Exchange Act filings.

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               4.22 Governmental Permits, Etc. The Company and each Subsidiary
has all franchises, licenses, certificates and other authorizations from such
federal, state or local government or governmental agency, department or body
that are currently necessary for the operation of the business of the Company as
currently conducted, except where the failure to possess currently such
franchises, licenses, certificates and other authorizations is not reasonably
expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such permit that, if the subject of an unfavorable decision,
ruling or finding, could reasonably be expected to have a Material Adverse
Effect.
               4.23 Financial Statements. The consolidated financial statements
of the Company and the related notes and schedules thereto included in its
Exchange Act filings fairly present the financial position, results of
operations, stockholders’ equity and cash flows of the Company and its
consolidated Subsidiaries at the dates and for the periods specified therein.
Such financial statements and the related notes and schedules thereto have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as otherwise noted
therein) and all adjustments necessary for a fair presentation of results for
such periods have been made; provided, however, that the unaudited financial
statements are subject to normal year-end audit adjustments (which are not
expected to be material) and do not contain all footnotes required under
generally accepted accounting principles.
               4.24 Listing Compliance. The Company is in compliance with the
requirements of the NASDAQ Global Market for continued listing of the Common
Stock thereon. The Company has taken no action designed to, or likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or the listing of the Common Stock on the NASDAQ Global Market, nor
has the Company received any notification that the Commission or the NASDAQ
Global Market is contemplating terminating such registration or listing. The
transactions contemplated by this Agreement will not contravene the rules and
regulations of the NASDAQ Global Market. The Company will comply with all
requirements of the NASDAQ Global Market with respect to the issuance of the
Shares and shall cause the Shares to be listed on the NASDAQ Global Market and
listed on any other exchange on which the Company’s common stock is listed on or
before the Closing Date.
               4.25 Internal Accounting Controls. The Company maintains a system
of internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has disclosure controls and procedures
(as defined in Rules 13a-14 and 15d-14 under the Exchange Act) that are designed
to ensure that material information relating to the Company is made known to the
Company’s principal executive officer and the Company’s principal financial
officer or persons performing similar functions. The Company is otherwise in
compliance in all material respects

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with all applicable provisions of the Sarbanes-Oxley Act of 2002, as amended and
the rules and regulations promulgated thereunder.
               4.26 Foreign Corrupt Practices. Neither the Company, nor any
Subsidiary, nor, to the knowledge of the Company, any director, officer, agent,
employee or other Person acting on behalf of the Company or any Subsidiary has,
in the course of its actions for, or on behalf of, the Company (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
candidate for any federal, state or foreign office in violation of any law;
(iii) violated or is in violation of 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.
               4.27 Employee Relations. Neither the Company nor any Subsidiary
is a party to any collective bargaining agreement or employs any member of a
union. The Company and each Subsidiary believe that their relations with their
employees are good. The Company is not engaged in any unfair labor practice
except for matters which would not, individually or in the aggregate, have a
Material Adverse Effect, (i) there is (A) no unfair labor practice complaint
pending or, to the Company’s knowledge, threatened against the Company before
the National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or
threatened, (B) no strike, labor dispute, slowdown or stoppage pending or, to
the Company’s knowledge, threatened against the Company and (C) no union
representation dispute currently existing concerning the employees of the
Company, and (ii) to the Company’s knowledge, (A) no union organizing activities
are currently taking place concerning the employees of the Company and (B) there
has been no violation of any federal, state, local or foreign law relating to
discrimination in the hiring, promotion or pay of employees or any applicable
wage or hour laws. No executive officer of the Company (as defined in
Rule 501(f) promulgated under the Securities Act) has notified the Company that
such officer intends to leave the Company or otherwise terminate such officer’s
employment with the Company. No executive officer of the Company, to the
knowledge of the Company, is, or is now expected to be, in violation of any
material term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
agreement or any restrictive covenant, and the continued employment of each such
executive officer does not subject the Company or any Subsidiary to any
liability with respect to any of the foregoing matters.
               4.28 Environmental Matters. The Company and its properties,
assets and operations is and has been in compliance with, and holds all permits,
authorizations and approvals required under, Environmental Laws (as defined
below), except to the extent that failure to so comply or to hold such permits,
authorizations or approvals would not, individually or in the aggregate, have a
Material Adverse Effect; there are no past, present or, to the Company’s
knowledge, reasonably anticipated future events, conditions, circumstances,
activities, practices, actions, omissions or plans that could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect or
to interfere with or prevent material compliance by the Company with
Environmental Laws; except as would not, individually or in the aggregate, have
a Material Adverse Effect, the Company (i) to the

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Company’s knowledge is not the subject of any investigation, (ii) has not
received any notice or claim, (iii) is not a party to or affected by any pending
or to the Company’s knowledge threatened action, suit or proceeding, nor, to the
best of the Company’s knowledge, is there any basis for any such suit or
proceeding, (iv) is not bound by any judgment, decree or order, (v) has not
entered into any agreement, in each case relating to any alleged violation of
any Environmental Law or any actual or alleged release or threatened release or
cleanup at any location of any Hazardous Materials (as defined below), (vi) has
not arranged for the disposal of any Hazardous Material at, or transported any
Hazardous Material to, any site for which the Company is or may be liable except
by a licensed contractor in accordance with applicable laws, (vii) is not bound
by any lien, nor is any lien reasonably expected to be recorded on the property
or (viii) to the Company’s knowledge, it does not currently own or lease or has
not previously owned or leased any property that contains or contained or
includes or included any asbestos, polychlorinated biphenyls, or any underground
storage tanks, piping, or sumps (or other underground structures) which contain
or contained Hazardous Materials or contains or contained any environmental
conditions (other than resulting from the fact that the property is located on a
cemetery), including, without limitation, any wetlands or endangered species,
that will impede use or redevelopment of such property (as used herein,
“Environmental Law” means any federal, state, local or foreign law, statute,
ordinance, rule, regulation, order, decree, judgment, injunction, permit,
license, authorization or other binding requirement, or common law, relating to
health, safety or the protection, cleanup or restoration of the environment or
natural resources, including but not limited to those relating to the
distribution, processing, generation, treatment, storage, disposal,
transportation, other handling or release or threatened release of Hazardous
Materials, and “Hazardous Materials” means any material (including, without
limitation, pollutants, contaminants, hazardous or toxic substances, wastes,
asbestos, silica, mixed dust, bacteria, mold or fungi) that is regulated by or
may give rise to liability under any Environmental Law); other than as set forth
on Schedule 4.28, there have been no environmental studies, investigations,
reports or assessments concerning the Company or any currently or previously
owned or leased properties within its possession or control.
               4.29 Money Laundering Laws. The operations of the Company and the
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the Company’s knowledge, threatened.
               4.30 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
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

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               4.31 ERISA. The Company and each Subsidiary 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 (“ERISA”); neither the Company nor any
Subsidiary has ever maintained any “defined benefit plan” (as defined in
Section 3(35) of ERISA).
               4.32 Integration; Other Issuances of Shares. Neither the Company
nor its subsidiaries or any affiliates, nor any Person acting on its or their
behalf, has issued any shares of Common Stock or shares of any series of
preferred stock or other securities or instruments convertible into,
exchangeable for or otherwise entitling the holder thereof to acquire shares of
Common Stock which would be integrated with the sale of the Shares to the
Purchaser for purposes of the Securities Act or of any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Company are listed or designated, nor will the Company or its
subsidiaries or affiliates take any action or steps that would require
registration of any of the Shares under the Securities Act or cause the offering
of the Shares to be integrated with other offerings. Assuming the accuracy of
the representations and warranties of the Purchaser, the offer and sale of the
Shares by the Company to the Purchaser pursuant to this Agreement will be exempt
from the registration requirements of the Securities Act.
               4.33 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 Shares by any form of general solicitation or general
advertising.
               4.34 Acknowledgment Regarding Purchaser’s Purchase of Shares. The
Company acknowledges and agrees that the Purchaser is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents
and the transactions contemplated hereby and thereby.  The Company further
acknowledges that the Purchaser is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Transaction Documents and the transactions contemplated thereby and any advice
given by the Purchaser or any of its respective representatives or agents in
connection with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Purchaser’s purchase of the Shares.  The
Company further represents to the Purchaser that the Company’s decision to enter
into this Agreement and the other Transaction Documents has been based solely on
the independent evaluation of the transactions contemplated hereby by the
Company and its representatives.
               4.35 No Additional Agreements. The Company does not have any
agreement or understanding with the Purchaser with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
               4.36 No Brokers’ Fees. The Company has not incurred any liability
for any finder’s or broker’s fee or agent’s commission in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
               4.37 Clinical Trials. The preclinical tests, clinical trials and
other studies, tests and research conducted by or on behalf of or sponsored by
the Company that are

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described in, or the results of which are referred to in, the SEC Reports were
and, if still pending, are to the Company’s knowledge being conducted in all
material respects in accordance with protocols filed with the appropriate
regulatory authorities for each such test or trial and in accordance with all
statutes, laws, rules and regulations, as the case may be, and with standard
medical and scientific research procedures except where such failure to comply
would not have a Material Adverse Effect; the Company has not received any
notices or other correspondence from the FDA or any committee thereof or from
any other U.S. or foreign government or drug or medical device regulatory agency
requiring the termination or suspension of any product or clinical trials that
are described or referred to in the SEC Reports; the Company has not notified
the FDA of any “unanticipated adverse device effects” as defined in 21 CFR
812.3(s) with respect to any product, clinical or pre-clinical studies, tests or
research that are described in the SEC Reports or the results of which are
referred to in the SEC Reports, and the Company has operated and currently is in
compliance in all material respects with all applicable rules and regulations of
the FDA and comparable foreign drug or medical device regulatory agencies
outside of the United States except where such failure to comply would not have
a Material Adverse Effect.
     SECTION 5. Representations, Warranties and Covenants of the Purchaser. The
Purchaser represents and warrants to, and covenants with, the Company that:
               5.1 Experience. (i) The Purchaser, either alone or with its
representatives, is knowledgeable, sophisticated and experienced in financial
and business maters, in making, and is qualified to make, decisions with respect
to investments in shares representing an investment decision like that involved
in the purchase of the Shares, including investments in securities issued by the
Company and comparable entities, has the ability to bear the economic risks of
an investment in the Shares and has requested, received, reviewed and considered
all information it deems relevant in making an informed decision to purchase the
Shares; (ii) the Purchaser is acquiring the Shares in the ordinary course of its
business and for its own account for investment only and with no present
intention of distributing any of such Shares or any arrangement or understanding
with any other persons regarding the distribution of such Shares (this
representation and warranty not limiting the Purchaser’s right to sell pursuant
to the Registration Statement or in compliance with the Securities Act and the
Rules and Regulations, or, other than with respect to any claims arising out of
a breach of this representation and warranty, the Purchaser’s right to
indemnification under Section 7.3); (iii) 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
Shares, nor will the Purchaser engage in any short sale that results in a
disposition of any of the Shares by the Purchaser, except in compliance with the
Securities Act and the Rules and Regulations and any applicable state securities
laws; (iv) the Purchaser has completed or caused to be completed the
Registration Statement Questionnaire attached hereto as part of Appendix I, for
use in preparation of the Registration Statement, and the answers thereto are
true and correct as of the date hereof and will be true and correct as of the
effective date of the Registration Statement and the Purchaser will notify the
Company immediately of any material change in any such information provided in
the Registration Statement Questionnaire until such time as the Purchaser has
sold all of its Shares or until the Company is no longer required to keep the
Registration Statement effective; (v) the Purchaser has, in connection with its
decision to purchase the Shares, relied solely upon the representations and
warranties of the Company contained herein; (vi) the Purchaser has had an

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opportunity to discuss this investment with representatives of the Company and
ask questions of them; and (vii) the Purchaser is an “accredited investor”
within the meaning of Rule 501(a) of Regulation D promulgated under the
Securities Act.
               5.2 Reliance on Exemptions. The Purchaser understands that the
Shares are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of the Securities Act, the Rules and
Regulations and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Purchaser to acquire the Shares.
               5.3 Confidentiality. For the benefit of the Company, the
Purchaser previously agreed with the Company to keep confidential all
information concerning this private placement. The Purchaser acknowledges that
it is prohibited from reproducing or distributing this Agreement or any other
offering materials or other information provided by the Company in connection
with the Purchaser’s consideration of its investment in the Company, in whole or
in part, or divulging or discussing any of their contents, except to its
financial, investment or legal advisors in connection with its proposed
investment in the Shares. Further, the Purchaser understands that the existence
and nature of all conversations and presentations, if any, regarding the Company
and this offering must be kept strictly confidential. The Purchaser understands
that the federal securities laws impose restrictions on trading based on
information regarding this offering. In addition, the Purchaser hereby
acknowledges that unauthorized disclosure of information regarding this offering
may result in a violation of Regulation FD. This obligation will terminate upon
the filing by the Company of a press release or press releases in accordance
with Section 7.6 hereof describing this offering. In addition to the above, the
Purchaser shall maintain in confidence the receipt and content of any notice of
a Suspension (as defined in Section 5.9 below). The foregoing agreements shall
not apply to any information that is or becomes publicly available through no
fault of the Purchaser, or that the Purchaser is legally required to disclose;
provided, however, that if the Purchaser is requested or ordered to disclose any
such information pursuant to any court or other government order or any other
applicable legal procedure, it shall provide the Company with prompt notice of
any such request or order in time sufficient to enable the Company to seek an
appropriate protective order.
               5.4 Investment Decision. The Purchaser understands that nothing
in the Agreement or any other materials presented to the Purchaser in connection
with the purchase and sale of the Shares constitutes legal, tax or investment
advice. The Purchaser has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Shares.
               5.5 Risk of Loss. The Purchaser understands that its investment
in the Shares involves a significant degree of risk, including a risk of total
loss of the Purchaser’s investment, and the Purchaser has full cognizance of and
understands all of the risk factors related to the Purchaser’s purchase of the
Shares. The Purchaser understands that the market price of the Common Stock has
been volatile and that no representation is being made as to the future value of
the Common Stock.

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               5.6 Legend. The Purchaser understands that, subject to
Section 5.7, the Shares will bear a restrictive legend in substantially the
following form:
“THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION. THE SHARES MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED (A) EXCEPT (1) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH
ALL APPLICABLE STATE SECURITIES LAWS AND THE SECURITIES LAWS OF OTHER
JURISDICTIONS, AND IN THE CASE OF A TRANSACTION EXEMPT FROM REGISTRATION, UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT
THAT SUCH TRANSACTION DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT AND
SUCH OTHER APPLICABLE LAWS, OR (B) UNLESS SOLD PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.”
               5.7 Removal of Legend; Transfer Agent Instructions. The Company
hereby covenants with the Purchaser to, no later than three trading days
following the delivery by the Purchaser to the Company of a legended certificate
representing Shares (endorsed or with stock powers attached, signatures
guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer), and either (i) Purchaser’s Certificate of Subsequent Sale (A) in the
form of Appendix II hereto, (B) executed by an officer of, or other authorized
person designated by, the Purchaser, and (C) to the effect that the Shares have
been sold in accordance with the Registration Statement or in a transaction
exempt from the registration requirements of the Securities Act and any
applicable state securities or Blue Sky laws or (ii) an opinion of counsel
reasonably satisfactory to the Company that the Shares are freely transferable
and that the legend is no longer required on such stock certificate, deliver or
cause the Company’s transfer agent to deliver to the transferee of the Shares or
to the Purchaser, as applicable, a new stock certificate representing such
Shares that is free from all restrictive and other legends. The Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5.7 may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section 5.7, that the Purchaser
shall be entitled, in addition to all other available remedies, to an order
and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or
other security being required.

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               5.8 Residency. The Purchaser’s offices in which its investment
decision with respect to the Shares was made are in the jurisdiction set forth
immediately below the Purchaser’s name on the signature pages hereto.
               5.9 Public Sale or Distribution.
               (a) The Purchaser hereby covenants with the Company not to make
any sale of the Shares under the Registration Statement without complying with
the provisions of this Agreement and without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied (whether
physically or through compliance with Rule 172 under the Securities Act or any
similar rule). The Purchaser acknowledges and agrees that such Shares are not
transferable unless (i) the Purchaser delivers to the Company an opinion of
counsel reasonably satisfactory to the Company that the Shares have been
transferred in accordance with the Registration Statement or in a transaction
exempt from the registration requirements of the Securities Act and any
applicable state securities or Blue Sky laws or (ii) the certificate submitted
to the transfer agent evidencing the Shares is accompanied by a separate
Purchaser’s Certificate of Subsequent Sale: (A) in the form of Appendix II
hereto, (B) executed by an officer of, or other authorized person designated by,
the Purchaser, and (C) to the effect that the Shares have been sold in
accordance with the Registration Statement or in a transaction exempt from the
registration requirements of the Securities Act and any applicable state
securities or Blue Sky laws. The Purchaser acknowledges that there may
occasionally be times when the Company must suspend the use of the prospectus
(the “Prospectus”) forming a part of the Registration Statement (a “Suspension”)
until such time as an amendment to the Registration Statement has been filed by
the Company and declared effective by the Commission, or until such time as the
Company has filed an appropriate report with the Commission pursuant to the
Exchange Act. Without the Company’s prior written consent, which consent shall
not unreasonably be withheld or delayed, the Purchaser shall not use any written
materials to offer the Shares for resale other than the Prospectus, including
any “free writing prospectus” as defined in Rule 405 under the Securities Act.
The Purchaser covenants that it will not sell any Shares pursuant to said
Prospectus during the period commencing at the time when Company gives the
Purchaser written notice of the suspension of the use of said Prospectus and
ending at the time when the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said Prospectus.
               (b) At any time that the Purchaser is an affiliate of the
Company, any resale of the Shares that purports to be effected under Rule 144
shall comply with all of the requirements of such rule, including the “manner of
sale” requirements set forth in Rule 144(f).
               5.10 Organization; Validity; Enforcements. The Purchaser is an
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with the requisite partnership power and
authority to enter into and to consummate the transactions contemplated by the
applicable Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The execution and delivery of this Agreement by the
Purchaser and performance by the Purchaser of the transactions contemplated by
this Agreement have been duly authorized by all necessary partnership actions on
the part of such Purchaser. Each Transaction document to which it is a party has
been duly executed by the Purchaser, and when delivered by such Purchaser in
accordance with the terms hereof, will

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constitute the valid and legally binding obligation of the Purchaser,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application. The execution, delivery and
performance by the Purchaser of this Agreement and the consummation by such
Purchaser of the transactions contemplated hereby will not (i) result in a
violation of the organizational documents of the Purchaser, (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Purchaser is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to the Purchaser, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of the Purchaser to perform its
obligations hereunder.
          5.11 Short Sales. Prior to the date hereof, the Purchaser has not
taken, and prior to the public announcement of the transaction after the Closing
the Purchaser shall not take, any action that has caused or will cause the
Purchaser to have, directly or indirectly, sold or agreed to sell any shares of
Common Stock, effected any short sale, whether or not against the box,
established any “put equivalent position” (as defined in Rule 16a-1(h) under the
Exchange Act with respect to the Common Stock, granted any other right
(including, without limitation, any put or call option) with respect to the
Common Stock or with respect to any security that includes, relates to or
derived any significant part of its value from the Common Stock.
     SECTION 6. Survival of Agreements; Non-Survival of Company Representations
and Warranties. Subject to applicable statutes of limitations, all covenants and
agreements made by the Company and the Purchaser shall survive the execution of
this Agreement, the delivery to the Purchaser of the Shares being purchased and
the payment therefor.
     SECTION 7. Registration of the Shares; Compliance with the Securities Act.
          7.1 Registration Procedures and Expenses. The Company shall:
               (a) as soon as practicable, but in no event later than 30 days
following the closing date of the Rights Offering, prepare and file with the
Commission the Registration Statement on Form S-3 relating to the resale of,
among other securities, the Shares and any other shares of Common Stock held by
the Purchaser or its affiliates as of the date hereof, including but not limited
to, InterWest Management Partners VIII, LLC, InterWest Management Partners X,
LLC, InterWest Partners VIII, LP, InterWest Investors VIII, LP, InterWest
Investors Q VIII, LP, which such affiliates’ shares are subject to the
Registration Rights Agreement (as defined below) (collectively, the “Registrable
Securities”), by the Purchaser from time to time on the NASDAQ Global Market, or
the facilities of any national securities exchange on which the Common Stock is
then traded or in privately-negotiated transactions, which registration
statement shall contain (except if otherwise required pursuant to written
comments received from the Commission upon a review of such Registration
Statement) a plan of distribution substantially similar to the “Plan of
Distribution” section attached hereto as

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Exhibit C (which may be modified to respond to comments, if any, provided by the
Commission);
               (b) use its best efforts, subject to receipt of necessary
information from the Purchaser, to cause the Commission to declare the
Registration Statement effective not later than September 30, 2009;
               (c) promptly prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective until the earliest of (i) three years after the effective date of the
Registration Statement or (ii) such time as the Registrable Securities become
eligible for resale by the Purchaser without any volume limitations or other
restrictions pursuant to Rule 144 under the Securities Act or any other rule of
similar effect; provided, that for the avoidance of doubt, in no event shall the
Company have any obligation to keep the Registration Statement effective after
such time as all of the Registrable Securities have been sold pursuant to the
Registration Statement or Rule 144;
               (d) furnish to the Purchaser with respect to the Registrable
Securities registered under the Registration Statement (and to each underwriter,
if any, of such Registrable Securities) such number of copies of prospectuses
and such other documents as the Purchaser may reasonably request, in order to
facilitate the public sale or other disposition of all or any of the Registrable
Securities by the Purchaser;
               (e) file documents required of the Company for normal Blue Sky
clearance in states specified in writing by the Purchaser; provided, however,
that the Company shall not be required to qualify to do business or consent to
service of process in any jurisdiction in which it is not now so qualified or
has not so consented;
               (f) bear all expenses in connection with the procedures in
paragraphs (a) through (e) of this Section 7.1 and the registration of the
Registrable Securities pursuant to the Registration Statement, other than fees
and expenses, if any, of counsel or other advisers to the Purchaser or
underwriting discounts, brokerage fees and commissions incurred by the
Purchaser, if any, in connection with the offering of the Registrable Securities
pursuant to the Registration Statement; and
               (g) in order to enable the Purchaser to sell the Registrable
Securities under Rule 144 under the Securities Act, for a period of three years
from Closing, use best efforts to comply with the requirements of Rule 144,
including without limitation, its best efforts to comply with the requirements
of Rule 144(c)(1) with respect to public information about the Company and to
timely file all reports required to be filed by the Company under the Exchange
Act.
     The Company understands that the Purchaser disclaims being an underwriter,
but the Purchaser being deemed an underwriter shall not relieve the Company of
any obligations it has hereunder. A draft of the proposed form of the
questionnaire related to the Registration Statement to be completed by the
Purchaser is attached hereto as Appendix I.

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          7.2 Transfer of Shares After Registration; Pledges.
               (a) The Purchaser agrees that it will not effect any disposition
of the Shares or its right to purchase the Shares that would constitute a sale
within the meaning of the Securities Act or pursuant to any applicable state
securities laws, except as contemplated in the Registration Statement referred
to in Section 7.1 or as otherwise permitted by law, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of distribution.
               (b) The Company acknowledges and agrees that the Purchaser may
from time to time pledge, and/or grant a security interest in, some or all of
the legended Shares in connection with applicable securities laws, pursuant to a
bona fide margin agreement in compliance with a bona fide margin loan. Such a
pledge would not be subject to approval or consent of the Company and no legal
opinion of legal counsel to the pledgee, secured party or pledgor shall be
required in connection with the pledge, but such legal opinion shall be required
in connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge. No notice shall be required of such pledge,
but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. The Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Shares or for any agreement, understanding or
arrangement between the Purchaser and its pledgee or secured party. At the
Purchaser’s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Shares may reasonably request in
connection with a pledge or transfer of the Shares, including the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) of the
Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder. Each Purchaser
acknowledges and agrees that, except as otherwise provided in Section 5.9 and in
this Section 7.3, any Shares subject to a pledge or security interest as
contemplated by this Section 7.3(b) shall continue to bear the legend set forth
in Section 5.6 and be subject to the restrictions on transfer set forth in
Section 5.9 and in this Section 7.3.
          7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term “Purchaser/Affiliate” shall mean any affiliate of the Purchaser,
including a transferee who is an affiliate of the Purchaser, and any person who
controls the Purchaser or any affiliate of the Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act; and
(ii) the term “Registration Statement” shall include any preliminary prospectus,
final prospectus, free writing prospectus, exhibit, supplement or amendment
included in or relating to, and any document incorporated by reference in, the
Registration Statement referred to in Section 7.1.
               (a) The Company agrees to indemnify and hold harmless the
Purchaser and each Purchaser/Affiliate, against any losses, claims, damages,
liabilities or

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expenses, joint or several, to which the Purchaser or Purchaser/Affiliates may
become subject, under the Securities Act, the Exchange Act, or any other federal
or state statutory law or regulation, or at common law or otherwise (including
in settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities or
expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, including the Prospectus,
financial statements and schedules, and all other documents filed as a part
thereof, as amended at the time of effectiveness of the Registration Statement,
including any information deemed to be a part thereof as of the time of
effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to Rules 430B,
430C or 434, of the Rules and Regulations, or the Prospectus, in the form first
filed with the Commission pursuant to Rule 424(b) of the Regulations, or filed
as part of the Registration Statement at the time of effectiveness if no Rule
424(b) filing is required or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state in any of them a
material fact required to be stated therein or necessary to make the statements
in the Registration Statement or any amendment or supplement thereto not
misleading or in the Prospectus or any amendment or supplement thereto not
misleading in light of the circumstances under which they were made, or arise
out of or are based in whole or in part on any inaccuracy in the representations
or warranties of the Company contained in this Agreement, or any failure of the
Company to perform its obligations hereunder or under law, and will promptly
reimburse the Purchaser and the Purchaser/Affiliate for any legal and other
expenses as such expenses are reasonably incurred by the Purchaser or such
Purchaser/Affiliate in connection with investigating, defending or preparing to
defend, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the Company will not be
liable for amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, and the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Purchaser expressly for use therein, or (ii) the
failure of the Purchaser to comply with the covenants and agreements contained
in Sections 5.9 or 7.2 hereof respecting the sale of the Registrable Securities,
or (iii) the inaccuracy of any representation or warranty made by the Purchaser
herein or (iv) any statement or omission in any Prospectus that is corrected in
any subsequent Prospectus that was delivered to the Purchaser prior to the
pertinent sale or sales by the Purchaser.
               (b) The Purchaser will indemnify and hold harmless the Company,
each of its directors, each of its officers who signed the Registration
Statement and each person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act, against
any losses, claims, damages, liabilities or expenses to which the Company, each
of its directors, each of its officers who signed the Registration Statement or
controlling person may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, but only if such
settlement is effected with the written consent of the Purchaser) insofar as
such losses, claims, damages, liabilities or

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expenses (or actions in respect thereof as contemplated below) arise out of or
are based upon (i) any failure to comply with the covenants and agreements
contained in Sections 5.9 or 7.2 hereof respecting the sale of the Registrable
Securities or (ii) the inaccuracy of any representation or warranty made by the
Purchaser herein or (iii) any untrue or alleged untrue statement of any material
fact contained in the Registration Statement, the Prospectus, or any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements in the Registration Statement or any amendment
or supplement thereto not misleading or in the Prospectus or any amendment or
supplement thereto not misleading in the light of the circumstances under which
they were made, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, the Prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written information
furnished to the Company by or on behalf of the Purchaser expressly for use
therein; and will reimburse the Company, each of its directors, each of its
officers who signed the Registration Statement or controlling person for any
legal and other expense reasonably incurred by the Company, each of its
directors, each of its officers who signed the Registration Statement or
controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Purchaser’s aggregate liability under this
Section 7 shall not exceed the amount of proceeds received by the Purchaser on
the sale of the Registrable Securities pursuant to the Registration Statement.
               (c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3 promptly notify the indemnifying party
in writing thereof, but the omission to notify the indemnifying party will not
relieve it from any liability that it may have to any indemnified party for
contribution or otherwise under the indemnity agreement contained in this
Section 7.3 to the extent it is not prejudiced as a result of such failure. In
case any such action is brought against any indemnified party and such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it may wish, jointly with all other indemnifying parties similarly
notified, to assume the defense thereof with counsel reasonably satisfactory to
such indemnified party; provided, however, if the defendants in any such action
include both the indemnified party, and the indemnifying party and the
indemnified party shall have reasonably concluded, based on an opinion of
counsel reasonably satisfactory to the indemnifying party, that there may be a
conflict of interest between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that there may
be legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election to assume
the defense of such action and approval by the indemnified party of counsel, the
indemnifying party will not be liable to such indemnified party under this
Section 7.3 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed such counsel in connection with the
assumption of legal defenses in

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accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, reasonably satisfactory to such indemnifying
party, representing all of the indemnified parties who are parties to such
action) or (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of action, in each
of which cases the reasonable fees and expenses of counsel shall be at the
expense of the indemnifying party. The indemnifying party shall not be liable
for any settlement of any action without its written consent. In no event shall
any indemnifying party be liable in respect of any amounts paid in settlement of
any action unless the indemnifying party shall have approved in writing the
terms of such settlement; provided, that such consent shall not be unreasonably
withheld. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnification could have been sought hereunder by such indemnified party from
all liability on claims that are the subject matter of such proceeding.
               (d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a), (b) or (c) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein, then each applicable indemnifying
party shall contribute to the amount paid or payable by the indemnified party as
a result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the private placement of Common
Stock hereunder or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but the relative
fault of the Company and the Purchaser in connection with the statements or
omissions or inaccuracies in the representations and warranties in this
Agreement and/or the Registration Statement that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Purchaser on the other shall be deemed to be in the same
proportion as the amount paid by the Purchaser to the Company pursuant to this
Agreement for the Registrable Securities purchased by the Purchaser that were
sold pursuant to the Registration Statement bears to the difference (the
“Difference”) between the amount the Purchaser paid for the Registrable
Securities that were sold pursuant to the Registration Statement and the amount
received by the Purchaser from such sale. The relative fault of the Company on
the one hand and the Purchaser on the other shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the Purchaser and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in paragraph (c) of this
Section 7.3, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim. The
provisions set forth in paragraph (c) of this Section 7.3 with respect to the
notice of the threat or commencement of any threat or action shall apply if a
claim for contribution is to be made under this paragraph (d);

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provided, however, that no additional notice shall be required with respect to
any threat or action for which notice has been given under paragraph (c) for
purposes of indemnification. The Company and the Purchaser agree that it would
not be just and equitable if contribution pursuant to this Section 7.3 were
determined solely by pro rata allocation (even if the Purchaser were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this paragraph.
Notwithstanding the provisions of this Section 7.3, the Purchaser shall not be
required to contribute any amount in excess of the amount by which the
Difference exceeds the amount of any damages that the Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
          7.4 Termination of Conditions and Obligations. The restrictions
imposed by Section 5.9 or Section 7.2 upon the transferability of the Shares
shall cease and terminate as to any particular number of the Shares upon the
earlier of (i) the passage of two years from the effective date of the
Registration Statement covering such Shares and (ii) at such time as an opinion
of counsel satisfactory in form and substance to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.
          7.5 Information Available. The Company, upon the reasonable request of
the Purchaser, shall make available for inspection by the Purchaser, any
underwriter participating in any disposition pursuant to the Registration
Statement and any attorney, accountant or other agent retained by the Purchaser
or any such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company’s officers,
employees and independent accountants to supply all information reasonably
requested by the Purchaser or any such underwriter, attorney, accountant or
agent in connection with the Registration Statement.
          7.6 Securities Laws Disclosure; Publicity. After the close of trading
on the NASDAQ Global Market on the trading day immediately following the date
hereof, the Company shall issue a press release (the “Press Release”) reasonably
acceptable to the Purchaser disclosing all material terms of the transactions
contemplated hereby. On or before 9:00 A.M., New York City time, on the second
trading day immediately following the execution of this Agreement, the Company
will file a Current Report on Form 8-K with the Commission describing the terms
of the Transaction Documents (and including as exhibits to such Current Report
on Form 8-K the material Transaction Documents (including, without limitation,
this Agreement)).
          7.7 Form D; Blue Sky. The Company agrees to timely file a Form D with
respect to the Shares as required under Regulation D and to provide a copy
thereof to the Purchaser (provided that the posting of the Form D on the
Commission’s EDGAR system shall be deemed delivery of the Form D for purposes of
this Agreement). The Company, on or before the Closing Date, shall take such
action as the Company shall reasonably determine is necessary, if any, in order
to obtain an exemption for or to qualify the Shares for sale to the Purchaser
under applicable securities or “Blue Sky” laws of the states of the United
States (or to obtain an

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exemption from such qualification) and shall provide evidence of such actions
promptly to the Purchaser.
          7.8 Waiver of Registration Rights. Solely with respect to any
registration statement to be filed in connection with the Rights Offering, the
Purchaser hereby waives (on behalf of its affiliates), under the Second Amended
and Restated Information and Registration Rights Agreement, dated as of
October 21, 2004, as amended (the “Registration Rights Agreement”), by and among
the Company, the Purchaser and the other parties named therein, (i) any demand,
piggyback or other registration rights to which the Purchaser may be entitled
and (ii) any and all notice requirements under the Registration Rights Agreement
in connection with the Rights Offering, except as expressly set forth herein.
          SECTION 8. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, e-mail, confirmed facsimile or nationally
recognized overnight express courier postage prepaid, and shall be deemed given
when so mailed and shall be delivered as addressed as follows:
               (a) if to the Company, to:
BioMimetic Therapeutics, Inc.
389 Nichol Mill Lane
Franklin, Tennessee 37067
Attention: General Counsel
Facsimile: 615-844-1281
with a copy to:
Morrison & Foerster LLP
1290 Avenue of the Americas
New York, New York 10104
Attention: Anna T. Pinedo, Esq.
Facsimile: 212-469-7900
or to such other person at such other place as the Company shall designate to
the Purchaser in writing; and
               (b) if to the Purchaser, at its address as set forth at the end
of this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
     SECTION 9. Changes. This Agreement may not be modified or amended except
pursuant to an instrument in writing signed by the Company and the Purchaser.
Any amendment or waiver effected in accordance with this Section 9 shall be
binding upon each holder of any securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.
     SECTION 10. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.

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     SECTION 11. Severability. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
     SECTION 12. Governing Law; Venue. This Agreement is to be construed in
accordance with and governed by the federal law of the United States of America
and the internal laws of the State of New York without giving effect to any
choice of law rule that would cause the application of the laws of any
jurisdiction other than the internal laws of the State of New York to the rights
and duties of the parties. Each of the Company and the Purchaser submits to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York City
for purposes of all legal proceedings arising out of or relating to this
Agreement and the transactions contemplated hereby. Each of the Company and the
Purchaser irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any such proceeding
brought in such a court has been brought in an inconvenient forum.
     SECTION 13. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one instrument, and shall become effective when
one or more counterparts have been signed by each party hereto and delivered to
the other parties. Facsimile signatures shall be deemed original signatures.
     SECTION 14. Entire Agreement. This Agreement and the instruments referenced
herein contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set forth herein
or therein, neither the Company nor the Purchaser makes any representation,
warranty, covenant or undertaking with respect to such matters. Each party
expressly represents and warrants that it is not relying on any oral or written
representations, warranties, covenants or agreements outside of this Agreement.
     SECTION 15. Fees and Expenses. Except as set forth herein, each of the
Company and the Purchaser shall pay its respective fees and expenses related to
the transactions contemplated by this Agreement; provided, however, that,
subject to the Closing, the Company shall pay the reasonable fees and expenses
of Goodwin Procter LLP, counsel for the Purchaser, in an amount not to exceed
$15,000.
     SECTION 16. Parties. This Agreement is made solely for the benefit of and
is binding upon the Purchaser and the Company and to the extent provided in
Section 7.3, any person controlling the Company or the Purchaser, the officers
and directors of the Company, and their respective executors, administrators,
successors and assigns and subject to the provisions of Section 7.3, no other
person shall acquire or have any right under or by virtue of this Agreement. The
term “successor and assigns” shall not include any subsequent purchaser, as such
purchaser, of the Shares sold to the Purchaser pursuant to this Agreement.
     SECTION 17. Further Assurances. Each party agrees to cooperate fully with
the other parties and to execute such further instruments, documents and
agreements and to give such further written assurance as may be reasonably
requested by any other party to evidence and

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reflect the transactions described herein and contemplated hereby and to carry
into effect the intents and purposes of this Agreement.
[Remainder of Page Left Intentionally Blank]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives as of the day and year first above
written.

            BIOMIMETIC THERAPEUTICS, INC.
      By:   /s/ Samuel E. Lynch         Name:   Samuel E. Lynch        Title:  
President & CEO     

Signature Page to Purchase Agreement

 

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Print or Type:

                  InterWest Partners X, LP                   Name of Purchaser  
 
 
                By: InterWest Management Partners X, LLC, its general partner  
 
 
                /s/ Christopher Ehrlich              
 
                Christopher B. Ehrlich                   Name of Individual
Representing Signatory    
 
                Managing Director                   Title of Individual
Representing Signatory    
 
                California                   Jurisdiction of Purchaser’s
Executive Offices    
 
           
 
     Address:   2710 Sand Hill Road, Second Floor
Menlo Park, CA 94025    
 
           
 
     Telephone:   650-854-8585    
 
           
 
     Facsimile:   650-854-4706    
 
           
 
     E-mail:        
 
           
 
            Copy to:   Stephen M. Davis and Jocelyn M. Arel         Goodwin
Procter LLP         The New York Times Building         620 Eighth Avenue      
  New York, NY 10018-1405         Attention: Stephen M. Davis         Tel:
(212) 813-7410         Fax: (212) 355-3333         Email:
sdavis@goodwinprocter.com    

Signature Page to Purchase Agreement