EXHIBIT 10.1

 

PURCHASE AGREEMENT

 

PURCHASE AGREEMENT (the “Agreement”), dated as of January 21, 2014, by and
between AASTROM BIOSCIENCES, INC., a Michigan corporation (the “Company”), and
LINCOLN PARK CAPITAL FUND, LLC, an Illinois limited liability company (the
“Investor”).

 

WHEREAS:

 

Subject to the terms and conditions set forth in this Agreement, the Company
wishes to sell to the Investor, and the Investor wishes to buy from the Company,
up to Fifteen Million Dollars ($15,000,000) of the Company’s common stock, no
par value per share (the “Common Stock”).  The shares of Common Stock to be
purchased hereunder are referred to herein as the “Purchase Shares.”

 

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

 

1.                                      CERTAIN DEFINITIONS.

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

(a)                                 “Accelerated Purchase Share Amount” means,
with respect to any Accelerated Purchase made pursuant to Section 2(b) hereof,
the number of Purchase Shares directed by the Company to be purchased by the
Investor on an Accelerated Purchase Notice, which number of Purchase Shares
shall not exceed the lesser of (i) 300% of the number of Purchase Shares
directed by the Company to be purchased by the Investor pursuant to the
corresponding Regular Purchase Notice for the corresponding Regular Purchase
referred to in Section 2(b) hereof (subject to the Purchase Share limitations
contained in Section 2(a) hereof) and (ii) the Accelerated Purchase Share
Percentage multiplied by the trading volume of the Common Stock on the Principal
Market during normal trading hours on the Accelerated Purchase Date.

 

(b)                                 “Accelerated Purchase Date” means, with
respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, the
Business Day immediately following the applicable Purchase Date with respect to
the corresponding Regular Purchase referred to in Section 2(b) hereof.

 

(c)                                  “Accelerated Purchase Notice” means, with
respect to any Accelerated Purchase made pursuant to Section 2(b) hereof, an
irrevocable written notice from the Company to the Investor directing the
Investor to buy a specified Accelerated Purchase Share Amount on the applicable
Accelerated Purchase Date pursuant to Section 2(b) hereof at the applicable
Accelerated Purchase Price.

 

(d)                                 “Accelerated Purchase Share Percentage”
means, with respect to any Accelerated Purchase made pursuant to
Section 2(b) hereof, 0.30.

 

(e)                                  “Accelerated Purchase Price” means, with
respect to any particular Accelerated Purchase made pursuant to
Section 2(b) hereof, the lower of (i) ninety-seven percent (97%) of the VWAP
during (A) the entire trading day on the Accelerated Purchase Date, if the
volume of shares of Common Stock traded on the Principal Market on the
Accelerated Purchase Date has not exceeded the Accelerated Purchase Share Volume
Maximum, or (B) the portion of the trading day of the Accelerated Purchase Date
(calculated starting at the beginning of normal trading hours) until such time
at which the volume of shares of Common Stock traded on the Principal Market has
exceeded the Accelerated Purchase Share Volume Maximum or (ii) the Closing Sale
Price on the Accelerated Purchase Date (to be appropriately

 

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adjusted for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction).

 

(f)                                   “Accelerated Purchase Share Volume
Maximum” means the number of shares of Common Stock traded on the Principal
Market during normal trading hours on the Accelerated Purchase Date equal to
(i) the amount of shares of Common Stock properly directed by the Company to be
purchased on the Accelerated Purchase Notice, divided by (ii) the Accelerated
Purchase Share Percentage (to be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split, reverse stock split or other
similar transaction).

 

(g)                                  “Available Amount” means, initially,
Fifteen Million Dollars ($15,000,000) in the aggregate, which amount shall be
reduced by the Purchase Amount each time the Investor purchases shares of Common
Stock pursuant to Section 2 hereof.

 

(h)                                 “Average Price” means a price per Purchase
Share (rounded to the nearest tenth of a cent) equal to the quotient obtained by
dividing (i) the aggregate gross purchase price paid by the Investor for all
Purchase Shares purchased pursuant to this Agreement, by (ii) the aggregate
number of Purchase Shares issued pursuant to this Agreement.

 

(i)                                     “Bankruptcy Law” means Title 11, U.S.
Code, or any similar federal or state law for the relief of debtors.

 

(j)                                    “Base Price” means a price per Purchase
Share equal to the sum of (i) the Signing Market Price and (ii) $0.345 (subject
to adjustment for any reorganization, recapitalization, non-cash dividend, stock
split, reverse stock split or other similar transaction that occurs on or after
the date of this Agreement).

 

(k)                                 “Business Day” means any day on which the
Principal Market is open for trading, including any day on which the Principal
Market is open for trading for a period of time less than the customary time.

 

(l)                                     “Closing Sale Price” means, for any
security as of any date, the last closing sale price for such security on the
Principal Market as reported by the Principal Market.

 

(m)                             “Confidential Information” means any information
disclosed by either party to the other party, either directly or indirectly, in
writing, orally or by inspection of tangible objects (including, without
limitation, documents, prototypes, samples, plant and equipment), which is
designated as “Confidential,” “Proprietary” or some similar designation.
Information communicated orally shall be considered Confidential Information if
such information is confirmed in writing as being Confidential Information
within ten (10) Business Days after the initial disclosure. Confidential
Information may also include information disclosed to a disclosing party by
third parties. Confidential Information shall not, however, include any
information which (i) was publicly known and made generally available in the
public domain prior to the time of disclosure by the disclosing party;
(ii) becomes publicly known and made generally available after disclosure by the
disclosing party to the receiving party through no action or inaction of the
receiving party; (iii) is already in the possession of the receiving party at
the time of disclosure by the disclosing party as shown by the receiving party’s
files and records immediately prior to the time of disclosure; (iv) is obtained
by the receiving party from a third party without a breach of such third party’s
obligations of confidentiality; (v) is independently developed by the receiving
party without use of or reference to the disclosing party’s Confidential
Information, as shown by documents and other competent evidence in the receiving
party’s possession; or (vi) is required by law to be disclosed by the receiving
party, provided that the receiving party gives the disclosing party prompt
written notice of such

 

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requirement prior to such disclosure and assistance in obtaining an order
protecting the information from public disclosure.

 

(n)                                 “Custodian” means any receiver, trustee,
assignee, liquidator or similar official under any Bankruptcy Law.

 

(o)                                 “DTC” means The Depository Trust Company, or
any successor performing substantially the same function for the Company.

 

(p)                                 “DWAC Shares” means shares of Common Stock
that are (i) issued in electronic form, (ii) freely tradable and transferable
and without restriction on resale and (iii) timely credited by the Company to
the Investor’s or its designee’s specified Deposit/Withdrawal at Custodian
(DWAC) account with DTC under its Fast Automated Securities Transfer (FAST)
Program, or any similar program hereafter adopted by DTC performing
substantially the same function.

 

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

 

(r)                                    “Material Adverse Effect” means any
material adverse effect on (i) the enforceability of any Transaction Document,
(ii) the results of operations, assets, business or financial condition of the
Company and its Subsidiaries, taken as a whole, other than any material adverse
effect that resulted exclusively from (A) any change in the United States or
foreign economies or securities or financial markets in general that does not
have a disproportionate effect on the Company and its Subsidiaries, taken as a
whole, (B) any change that generally affects the industry in which the Company
and its Subsidiaries operate that does not have a disproportionate effect on the
Company and its Subsidiaries, taken as a whole, (C) any change arising in
connection with earthquakes, hostilities, acts of war, sabotage or terrorism or
military actions or any escalation or material worsening of any such
hostilities, acts of war, sabotage or terrorism or military actions existing as
of the date hereof, (D) any action taken by the Investor, its affiliates or its
or their successors and assigns with respect to the transactions contemplated by
this Agreement, (E) the effect of any change in applicable laws or accounting
rules that does not have a disproportionate effect on the Company and its
Subsidiaries, taken as a whole, or (F) any change resulting from compliance with
terms of this Agreement or the consummation of the transactions contemplated by
this Agreement, or (iii) the Company’s ability to perform in any material
respect on a timely basis its obligations under any Transaction Document to be
performed as of the date of determination.

 

(s)                                   “Maturity Date” means the first day of the
month immediately following the thirty (30) month anniversary of the
Commencement Date.

 

(t)                                    “PEA Period” means the period commencing
at 9:30 a.m., Eastern time, on the twentieth (20th) Business Day immediately
prior to, and ending at 9:30 a.m., Eastern time, on the Business Day immediately
following, the effective date of any post-effective amendment to the Initial
Registration Statement (as defined herein) or New Registration Statement (as
such term is defined in the Registration Rights Agreement).

 

(u)                                 “Person” means an individual or entity
including but not limited to any limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

 

(v)                                 “Principal Market” means The NASDAQ Capital
Market; provided, however, that in the event the Company’s Common Stock is ever
listed or traded on The NASDAQ Global Market, The

 

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NASDAQ Global Select Market, the New York Stock Exchange, the NYSE MKT, the NYSE
Arca or the OTC Bulletin Board (it being understood that as used herein “OTC
Bulletin Board” shall also mean any successor or comparable market quotation
system or exchange to the OTC Bulletin Board such as the OTCQB operated by the
OTC Markets Group, Inc.), then the “Principal Market” shall mean such other
market or exchange on which the Company’s Common Stock is then listed or traded.

 

(w)                               “Purchase Amount” means, with respect to any
Regular Purchase or any Accelerated Purchase made hereunder, the portion of the
Available Amount to be purchased by the Investor pursuant to Section 2 hereof.

 

(x)                                 “Purchase Date” means, with respect to any
Regular Purchase made pursuant to Section 2(a) hereof, the Business Day on which
the Investor receives by 5:00 p.m., Eastern time, of such Business Day a valid
Regular Purchase Notice that the Investor is to buy Purchase Shares pursuant to
Section 2(a) hereof.

 

(y)                                 “Purchase Price” means, with respect to any
Regular Purchase made pursuant to Section 2(a) hereof, the lower of: (i) the
lowest Sale Price on the applicable Purchase Date and (ii) the arithmetic
average of the three (3) lowest Closing Sale Prices for the Common Stock during
the ten (10) consecutive Business Days ending on the Business Day immediately
preceding such Purchase Date (in each case, to be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction that occurs on or after the date of this Agreement).

 

(z)                                  “Regular Purchase Notice” means, with
respect to any Regular Purchase pursuant to Section 2(a) hereof, an irrevocable
written notice from the Company to the Investor directing the Investor to buy
such applicable amount of Purchase Shares at the applicable Purchase Price as
specified by the Company therein on the Purchase Date.

 

(aa)                          “Sale Price” means any trade price for the shares
of Common Stock on the Principal Market as reported by the Principal Market.

 

(bb)                          “SEC” means the U.S. Securities and Exchange
Commission.

 

(cc)                            “Securities” means, collectively, the Purchase
Shares and the Commitment Shares.

 

(dd)                          “Securities Act” means the Securities Act of 1933,
as amended, and the rules and regulations promulgated thereunder.

 

(ee)                            “Signing Market Price” means $3.78, representing
the consolidated closing bid price of the Common Stock on The NASDAQ Capital
Market on the Business Day immediately preceding the date of this Agreement.

 

(ff)                              “Subsidiary” means any Person the Company
wholly-owns or controls, or in which the Company, directly or indirectly, owns a
majority of the voting stock or similar voting interest, in each case that would
be disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under
the Securities Act.

 

(gg)                            “Transaction Documents” means, collectively,
this Agreement and the schedules and exhibits hereto, the Registration Rights
Agreement and the schedules and exhibits thereto, and each of the other
agreements, documents, certificates and instruments entered into or furnished by
the parties hereto in connection with the transactions contemplated hereby and
thereby.

 

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(hh)        “Transfer Agent” means Continental Stock Transfer & Trust Company,
or such other Person who is then serving as the transfer agent for the Company
in respect of the Common Stock.

 

(ii)                                  “VWAP” means in respect of an applicable
Accelerated Purchase Date, the volume weighted average price of the Common Stock
on the Principal Market, as reported on the Principal Market.

 

2.  PURCHASE OF COMMON STOCK.

 

Subject to the terms and conditions set forth in this Agreement, the Company has
the right to sell to the Investor, and the Investor has the obligation to
purchase from the Company, Purchase Shares as follows:

 

(a)                                 Commencement of Regular Sales of Common
Stock. Upon the satisfaction of the conditions set forth in Sections 7 and 8
hereof (the “Commencement” and the date of satisfaction of such conditions the
“Commencement Date”) and thereafter, the Company shall have the right, but not
the obligation, to direct the Investor, by its delivery to the Investor of a
Regular Purchase Notice from time to time, to purchase up to Fifty Thousand
(50,000) Purchase Shares (each such purchase a “Regular Purchase”), at the
Purchase Price on the Purchase Date; provided, however, that (i) the Regular
Purchase may be increased to up to Seventy-Five Thousand (75,000) Purchase
Shares, provided that the Closing Sale Price of the Common Stock is not below
$4.50 on the Purchase Date and (ii) the Regular Purchase may be increased to up
to One Hundred Thousand (100,000) Purchase Shares, provided that the Closing
Sale Price of the Common Stock is not below $6.00 on the Purchase Date (all of
which share amounts shall be appropriately adjusted for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction);
and provided, further, that the Investor’s committed obligation under any single
Regular Purchase shall not exceed One Million Dollars ($1,000,000).  If the
Company delivers any Regular Purchase Notice for a Purchase Amount in excess of
the limitations contained in the immediately preceding sentence, such Regular
Purchase Notice shall be void ab initio to the extent of the amount by which the
number of Purchase Shares set forth in such Regular Purchase Notice exceeds the
number of Purchase Shares which the Company is permitted to include in such
Purchase Notice in accordance herewith, and the Investor shall have no
obligation to purchase such excess Purchase Shares in respect of such Regular
Purchase Notice; provided that the Investor shall remain obligated to purchase
the number of Purchase Shares which the Company is permitted to include in such
Regular Purchase Notice. The Company may deliver multiple Regular Purchase
Notices to the Investor so long as at least one (1) Business Day has passed
since the most recent Regular Purchase was completed. Notwithstanding the
foregoing, the Company shall not deliver any Regular Purchase Notices during the
PEA Period.

 

(b)                                 Accelerated Purchases.  Subject to the terms
and conditions of this Agreement, in addition to purchases of Purchase Shares as
described in Section 2(a) above, the Company shall also have the right, but not
the obligation, to direct the Investor by the Company’s delivery to the Investor
of an Accelerated Purchase Notice from time to time, and the Investor thereupon
shall have the obligation, to buy Purchase Shares at the Accelerated Purchase
Price on the Accelerated Purchase Date in an amount equal to the Accelerated
Purchase Share Amount (each such purchase, an “Accelerated Purchase”). The
Company may deliver an Accelerated Purchase Notice to the Investor only on a
Purchase Date on which the Company also properly submitted a Regular Purchase
Notice for a Regular Purchase and the Closing Sale Price is not below $3.00 (to
be appropriately adjusted for any reorganization, recapitalization, non-cash
dividend, stock split or other similar transaction). If the Company delivers any
Accelerated Purchase Notice for an Accelerated Purchase Share Amount in excess
of the limitations contained in the definition of Accelerated Purchase Share
Amount, such Accelerated Purchase Notice shall be void ab initio to the extent
of the amount by which the number of Purchase Shares set forth in such
Accelerated Purchase Notice exceeds the Accelerated Purchase Share Amount which
the Company is permitted to include in

 

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such Accelerated Purchase Notice in accordance herewith (which shall be
confirmed in an Accelerated Purchase Confirmation (defined below)), and the
Investor shall have no obligation to purchase such excess Purchase Shares in
respect of such Accelerated Purchase Notice; provided that the Investor shall
remain obligated to purchase the Accelerated Purchase Share Amount which the
Company is permitted to include in such Accelerated Purchase Notice. Upon
completion of each Accelerated Purchase Date, the Accelerated Purchase Share
Amount and the applicable Accelerated Purchase Price shall be set forth on a
confirmation of the Accelerated Purchase to be provided to the Company by the
Investor (an “Accelerated Purchase Confirmation”).

 

(c)                                  Payment for Purchase Shares.   For each
Regular Purchase, the Investor shall pay to the Company an amount equal to the
Purchase Amount with respect to such Regular Purchase as full payment for such
Purchase Shares via wire transfer of immediately available funds on the same
Business Day that the Investor receives such Purchase Shares, if such Purchase
Shares are received by the Investor before 1:00 p.m., Eastern time, or, if such
Purchase Shares are received by the Investor after 1:00 p.m., Eastern time, the
next Business Day.  For each Accelerated Purchase, the Investor shall pay to the
Company an amount equal to the Purchase Amount with respect to such Accelerated
Purchase as full payment for such Purchase Shares via wire transfer of
immediately available funds on the third Business Day following the date that
the Investor receives such Purchase Shares.  If the Company or the Transfer
Agent shall fail for any reason or for no reason to electronically transfer any
Purchase Shares as DWAC Shares in respect of a Regular Purchase or Accelerated
Purchase (as applicable) within three (3) Business Days following the receipt by
the Company of the Purchase Price or Accelerated Purchase Price, respectively,
therefor in compliance with this Section 2(c), and if on or after such Business
Day the Investor purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the Investor of such
Purchase Shares that the Investor anticipated receiving from the Company in
respect of such Regular Purchase or Accelerated Purchase (as applicable), then
the Company shall, within three (3) Business Days after the Investor’s request,
either (i) pay cash to the Investor in an amount equal to the Investor’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased (the “Cover Price”), at which point the Company’s
obligation to deliver such Purchase Shares as DWAC Shares shall terminate, or
(ii) promptly honor its obligation to deliver to the Investor such Purchase
Shares as DWAC Shares and pay cash to the Investor in an amount equal to the
excess (if any) of the Cover Price over the total Purchase Price for such
Regular Purchase plus the total Accelerated Purchase Price for such Accelerated
Purchase (as applicable).  The Company shall not issue any fraction of a share
of Common Stock upon any Regular Purchase or Accelerated Purchase.  If the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up or down to
the nearest whole share. All payments made under this Agreement shall be made in
lawful money of the United States of America or wire transfer of immediately
available funds to such account as the Company may from time to time designate
by written notice in accordance with the provisions of this Agreement. Whenever
any amount expressed to be due by the terms of this Agreement is due on any day
that is not a Business Day, the same shall instead be due on the next succeeding
day that is a Business Day.

 

(d)                                 Purchase Price Floor.   The Company and the
Investor shall not effect any Regular Purchase under this Agreement on any
Purchase Date that the Closing Sale Price is less than the Floor Price. “Floor
Price” means $2.50, which shall be appropriately adjusted for any
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction and, effective upon the consummation of any such
reorganization, recapitalization, non-cash dividend, stock split or other
similar transaction, the Floor Price shall mean the lower of (i) the adjusted
price and (ii) $2.50.

 

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(e)                                  Compliance with Rules of Principal Market.

 

(i)                                                 Exchange Cap.  Subject to
Section 2(e)(ii) below, the Company shall not issue or sell any shares of Common
Stock pursuant to this Agreement, and the Investor shall not purchase or acquire
any shares of Common Stock pursuant to this Agreement, to the extent that after
giving effect thereto, the aggregate number of shares of Common Stock that would
be issued pursuant to this Agreement would exceed the maximum number of shares
of Common Stock that the Company may issue pursuant to this Agreement and the
transactions contemplated hereby (taking into account all shares of Common Stock
issued or issuable pursuant to any transaction or series of transactions that
may be aggregated with the transactions contemplated by this Agreement under
applicable rules of The NASDAQ Stock Market) without (1) breaching the Company’s
obligations under the applicable rules of The NASDAQ Stock Market or
(2) obtaining stockholder approval under the applicable rules of The NASDAQ
Stock Market (the “Exchange Cap”), unless and until the Company elects to
solicit stockholder approval of the issuance of Common Stock as contemplated by
this Agreement and the stockholders of the Company have in fact approved the
issuance of Common Stock as contemplated by this Agreement in accordance with
the applicable rules and regulations of The NASDAQ Stock Market, and the
Articles of Incorporation and Bylaws of the Company.  For the avoidance of
doubt, the Company may, but shall be under no obligation to, request its
stockholders to approve the issuance of Common Stock as contemplated by this
Agreement; provided, that if stockholder approval is not obtained in accordance
with this Section 2(e)(i), the Exchange Cap shall be applicable for all purposes
of this Agreement and the transactions contemplated hereby at all times during
the term of this Agreement (except as set forth in Section 2(e)(ii) below).

 

(ii)                                              At-Market Transaction. 
Notwithstanding Section 2(e)(i) above, the Exchange Cap shall not be applicable
for any purposes of this Agreement and the transactions contemplated hereby,
solely to the extent that (and only for so long as) the Average Price shall
equal or exceed the Base Price (it being hereby acknowledged and agreed that the
Exchange Cap shall be applicable for all purposes of this Agreement and the
transactions contemplated hereby at all other times during the term of this
Agreement, unless the stockholder approval referred to in Section 2(e)(i) is
obtained).

 

(iii)                                           General.  The Company shall not
issue any shares of Common Stock pursuant to this Agreement if such issuance
would reasonably be expected to result in (A) a violation of the Securities Act
or (B) a breach of the rules and regulations of The NASDAQ Stock Market. The
provisions of this Section 2(e) shall be implemented in a manner otherwise than
in strict conformity with the terms hereof only if necessary to ensure
compliance with the Securities Act and the rules and regulations of The NASDAQ
Stock Market.

 

(f)                                   Beneficial Ownership Limitation. 
Notwithstanding anything to the contrary contained in this Agreement, the
Company shall not issue or sell, and the Investor shall not purchase or acquire,
any shares of Common Stock under this Agreement which, when aggregated with all
other shares of Common Stock then beneficially owned by the Investor and its
affiliates (as calculated pursuant to Section 13(d) of the Exchange Act and
Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by
the Investor and its affiliates of more than 9.99% of the then issued and
outstanding shares of Common Stock (the “Beneficial Ownership Limitation”). Upon
the written or oral request of the Investor, the Company shall promptly (but not
later than one (1) Business Day) confirm orally or in writing to the Investor
the number of shares of Common Stock then outstanding. The Investor and the
Company shall each cooperate in good faith in the determinations required hereby
and the application hereof. The Investor’s written certification to the Company
of the applicability of the Beneficial Ownership Limitation, and the resulting
effect thereof hereunder at any time, shall be conclusive with respect to the
applicability thereof and such result absent manifest error.

 

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3.                                      INVESTOR’S REPRESENTATIONS AND
WARRANTIES.

 

The Investor represents and warrants to the Company that as of the date hereof
and as of the Commencement Date:

 

(a)                                 Investment Purpose.   The Investor is
acquiring the Securities as principal for its own account and not with a view to
or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities law, has no
present intention of distributing any of such Securities in violation of the
Securities Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other Persons to distribute or
regarding the distribution of such Securities in violation of the Securities Act
or any applicable state securities law (this representation and warranty not
limiting the Investor’s right to sell the Securities at any time pursuant to the
Initial Registration Statement or New Registration Statement described herein or
otherwise in compliance with applicable federal and state securities laws).  The
Investor is acquiring the Securities hereunder in the ordinary course of its
business.

 

(b)                                 Accredited Investor Status.  The Investor is
an “accredited investor” as that term is defined in Rule 501(a)(3) of Regulation
D promulgated under the Securities Act.

 

(c)                                  Reliance on Exemptions.  The Investor
understands that the Securities may be offered and sold to it in reliance on
specific exemptions from the registration requirements of United States federal
and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and the Investor’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Investor set
forth herein in order to determine the availability of such exemptions and the
eligibility of the Investor to acquire the Securities.

 

(d)                                 Information.  The Investor understands that
its investment in the Securities involves a high degree of risk.  The Investor
(i) is able to bear the economic risk of an investment in the Securities
including a total loss thereof, (ii) has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of the proposed investment in the Securities and (iii) has had an
opportunity to ask questions of and receive answers from the officers of the
Company concerning the financial condition and business of the Company and
others matters related to an investment in the Securities.  Neither such
inquiries nor any other due diligence investigations conducted by the Investor
or its representatives shall modify, amend or affect the Investor’s right to
rely on the Company’s representations and warranties contained in Section 4
below.  The Investor has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

 

(e)                                  No Governmental Review.  The Investor
understands that no U.S. federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement of
the Securities or the fairness or suitability of an investment in the Securities
nor have such authorities passed upon or endorsed the merits of the offering of
the Securities.

 

(f)                                   Transfer or Sale.  The Investor
understands that (i) the Securities may not be offered for sale, sold, assigned
or transferred unless (A) registered pursuant to the Securities Act or (B) an
exemption exists permitting such Securities to be sold, assigned or transferred
without such registration; (ii) any sale of the Securities made in reliance on
Rule 144 may be made only in accordance with the terms of Rule 144 and further,
if Rule 144 is not applicable, any resale of the  Securities under circumstances
in which the seller (or the Person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder.

 

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(g)                                  Validity; Enforcement.  This Agreement has
been duly and validly authorized, executed and delivered on behalf of the
Investor and is a valid and binding agreement of the Investor enforceable
against the Investor in accordance with its terms, subject as to enforceability
to general principles of equity and to applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.

 

(h)                                 Residency.  The Investor is a resident of
the State of Illinois.

 

(i)                                     No Short Selling.  The Investor
represents and warrants to the Company that at no time prior to the date of this
Agreement has any of the Investor, its agents, representatives or affiliates
engaged in or effected, in any manner whatsoever, directly or indirectly, any
(i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the
Exchange Act) of the Common Stock or (ii) hedging transaction, which establishes
a net short position with respect to the Common Stock.

 

4.                                      REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.

 

The Company represents and warrants to the Investor that as of the date hereof
and as of the Commencement Date:

 

(a)                                 Organization and Qualification. The Company
and each of its Subsidiaries is an entity duly incorporated or otherwise
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, with the requisite corporate
power and authority to own and use its properties and assets and to carry on its
business as currently conducted.  Neither the Company nor any of its
Subsidiaries is in violation or default of any of the provisions of its
respective certificate or articles of incorporation, bylaws or other
organizational or charter documents.  Each of the Company and its Subsidiaries
is duly qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification necessary,
except where the failure to be so qualified or in good standing, as the case may
be, could not have or reasonably be expected to result in a Material Adverse
Effect and no proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.  The Company has no Subsidiaries except as set forth
on Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2012.

 

(b)                                 Authorization; Enforcement; Validity. 
(i) The Company has the requisite corporate power and authority to enter into
and perform its obligations under this Agreement and each of the other
Transaction Documents, and to issue the Securities in accordance with the terms
hereof and thereof, (ii) the execution and delivery of the Transaction Documents
by the Company and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation, the issuance of the Commitment
Shares (as defined below in Section 5(e)) and the reservation for issuance and
the issuance of the Purchase Shares issuable under this Agreement, have been
duly authorized by the Company’s Board of Directors and no further consent or
authorization is required by the Company, its Board of Directors or its
stockholders, (iii) this Agreement has been, and each other Transaction Document
shall be on the Commencement Date, duly executed and delivered by the Company
and (iv) this Agreement constitutes, and each other Transaction Document upon
its execution on behalf of the Company, shall constitute, the valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles
of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors’ rights and remedies. The Board of Directors of the Company has
approved the resolutions (the “Signing Resolutions”) substantially in the form
as set forth as Exhibit C attached hereto to authorize this Agreement and the
transactions contemplated hereby.  The

 

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Signing Resolutions are valid, in full force and effect and have not been
modified or supplemented in any respect.  The Company has delivered to the
Investor a true and correct copy of the minutes of a meeting of the Board of the
Company adopting the Signing Resolutions.  Except as set forth in this
Agreement, no other approvals or consents of the Company’s Board of Directors,
any authorized committee thereof, and/or stockholders is necessary under
applicable laws and the Company’s Restated Articles of Incorporation and/or
Bylaws to authorize the execution and delivery of this Agreement or any of the
transactions contemplated hereby, including, but not limited to, the issuance of
the Commitment Shares and the issuance of the Purchase Shares.

 

(c)                                  Capitalization.  As of the date hereof, the
authorized capital stock of the Company is set forth in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2012.  Except as disclosed
in the SEC Documents (as defined below), (i) no shares of the Company’s capital
stock are subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company, (ii) there are no
outstanding debt securities, (iii) there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its Subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of their securities under the Securities Act (except the
Registration Rights Agreement), (v) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries, (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement and (vii) the Company does not
have any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement.  The Company has furnished to the Investor true and
correct copies of the Company’s Restated Articles of Incorporation, as amended
and as in effect on the date hereof (the “Articles of Incorporation”), and the
Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”),
and summaries of the terms of all securities convertible into or exercisable for
Common Stock, if any, and copies of any documents containing the material rights
of the holders thereof in respect thereto.

 

(d)                                 Issuance of Securities.  Upon issuance and
payment therefor in accordance with the terms and conditions of this Agreement,
the Purchase Shares shall be validly issued, fully paid and nonassessable and
free from all taxes, liens, charges, restrictions, rights of first refusal and
preemptive rights with respect to the issue thereof, with the holders being
entitled to all rights accorded to a holder of Common Stock.  Upon issuance in
accordance with the terms and conditions of this Agreement, the Commitment
Shares (as defined below in Section 5(e)) shall be validly issued, fully paid
and nonassessable and free from all taxes, liens, charges, restrictions, rights
of first refusal and preemptive rights with respect to the issue thereof, with
the holders being entitled to all rights accorded to a holder of Common Stock. 
1,700,000 shares of Common Stock have been duly authorized and reserved for
issuance upon purchase under this Agreement as Purchase Shares.  48,063 shares
of Common Stock (subject to equitable adjustment for any reorganization,
recapitalization, non-cash dividend, stock split or other similar transaction)
have been duly authorized and reserved for issuance as Additional Commitment
Shares in accordance with this Agreement.

 

(e)                                  No Conflicts.  The execution, delivery and
performance of the Transaction Documents by the Company and the consummation by
the Company of the transactions contemplated hereby and

 

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thereby (including, without limitation, the reservation for issuance and
issuance of the Purchase Shares and the Commitment Shares) will not (i) result
in a violation of the Articles of Incorporation, any Certificate of
Designations, Preferences and Rights of any outstanding series of preferred
stock of the Company or the Bylaws or (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 Company or any of its Subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and the rules and regulations of the
Principal Market applicable to the Company or any of its Subsidiaries) or by
which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except in the case of conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations under clause (ii), which
could not reasonably be expected to result in a Material Adverse Effect. 
Neither the Company nor its Subsidiaries is in violation of any term of or in
default under its Articles of Incorporation, any Certificate of Designation,
Preferences and Rights of any outstanding series of preferred stock of the
Company or Bylaws or their organizational charter or bylaws, respectively. 
Neither the Company nor any of its Subsidiaries is in violation of any term of
or is in default under any material contract, agreement, mortgage, indebtedness,
indenture, instrument, judgment, decree or order or any statute, rule or
regulation applicable to the Company or its Subsidiaries, except for possible
conflicts, defaults, terminations or amendments that could not reasonably be
expected to have a Material Adverse Effect.  The business of the Company and its
Subsidiaries is not being conducted, and shall not be conducted, in violation of
any law, ordinance, regulation of any governmental entity, except for possible
violations, the sanctions for which either individually or in the aggregate
could not reasonably be expected to have a Material Adverse Effect.  Except as
specifically contemplated by this Agreement and as required under the Securities
Act or applicable state securities laws and the rules and regulations of the
Principal Market, the Company is not required to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self-regulatory agency in order for it
to execute, deliver or perform any of its obligations under or contemplated by
the Transaction Documents in accordance with the terms hereof or thereof. 
Except as set forth elsewhere in this Agreement, all consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence shall be obtained or effected on or prior to
the Commencement Date.  Since one year prior to the date hereof,  the Company
has not received nor delivered any notices or correspondence from or to the
Principal Market.  The Principal Market has not commenced any delisting
proceedings against the Company.

 

(f)                                   SEC Documents; Financial Statements. The
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Securities Act and the Exchange
Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months
preceding the date hereof (or such shorter period as the Company was required by
law or regulation to file such material) (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Documents”) on a timely basis or has
received a valid extension of such time of filing and has filed any such SEC
Documents prior to the expiration of any such extension.  As of their respective
dates, and to the best of the Company’s knowledge, the SEC Documents complied in
all material respects with the requirements of the Securities Act and the
Exchange Act, as applicable.   None of the SEC Documents, when filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing.  Such financial statements have been prepared in
accordance with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”), except as may be
otherwise specified in such financial statements

 

11

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or the notes thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.  Except as set forth in the SEC
Documents, the Company has received no notices or correspondence from the SEC
for the one year preceding the date hereof.  The SEC has not commenced any
enforcement proceedings against the Company or any of its Subsidiaries.

 

(g)                                  Absence of Certain Changes.  Except as
disclosed in the SEC Documents, since December 31, 2012, there has been no
material adverse change in the business, properties, operations, financial
condition or results of operations of the Company or its Subsidiaries.  The
Company has not taken any steps, and does not currently expect to take any
steps, to seek protection pursuant to any Bankruptcy Law nor does the Company or
any of its Subsidiaries have any knowledge or reason to believe that its
creditors intend to initiate involuntary bankruptcy or insolvency proceedings.
The Company is financially solvent and is generally able to pay its debts as
they become due.

 

(h)                                 Absence of Litigation. There is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the Company or any of its Subsidiaries, threatened against or
affecting the Company, the Common Stock or any of the Company’s or its
Subsidiaries’ officers or directors in their capacities as such, which could
reasonably be expected to have a Material Adverse Effect.

 

(i)                                     Acknowledgment Regarding Investor’s
Status.  The Company acknowledges and agrees that the Investor is acting solely
in the capacity of arm’s length purchaser with respect to the Transaction
Documents and the transactions contemplated hereby and thereby.  The Company
further acknowledges that the Investor 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 hereby and thereby and
any advice given by the Investor or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to the Investor’s purchase of the
Securities.  The Company further represents to the Investor that the Company’s
decision to enter into the Transaction Documents has been based solely on the
independent evaluation by the Company and its representatives and advisors.

 

(j)                                    No General Solicitation; No Integrated
Offering.  Neither the Company, nor any of its affiliates, nor any Person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Securities. Neither the
Company, nor or any of its affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of the offer and sale of any of the Securities under the Securities
Act, whether through integration with prior offerings or otherwise, or cause
this offering of the Securities to be integrated with prior offerings by the
Company in a manner that would require stockholder approval pursuant to the
rules of the Principal Market on which any of the securities of the Company are
listed or designated. The issuance and sale of the Securities hereunder does not
contravene the rules and regulations of the Principal Market.

 

(k)                             Intellectual Property Rights.  The Company and
its Subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted.  None of the Company’s material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
government

 

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authorizations, trade secrets or other intellectual property rights have expired
or terminated, or, by the terms and conditions thereof, could expire or
terminate within two years from the date of this Agreement.  The Company and its
Subsidiaries do not have any knowledge of any infringement by the Company or its
Subsidiaries of any material trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service
mark registrations, trade secret or other similar rights of others, or of any
such development of similar or identical trade secrets or technical information
by others, and there is no claim, action or proceeding being made or brought
against, or to the Company’s knowledge, being threatened against, the Company or
its Subsidiaries regarding trademark, trade name, patents, patent rights,
invention, copyright, license, service names, service marks, service mark
registrations, trade secret or other infringement, which could reasonably be
expected to have a Material Adverse Effect.

 

(l)                                     Environmental Laws.  The Company and its
Subsidiaries (i) are in compliance with any and all applicable foreign, federal,
state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where, in each of the three foregoing clauses, the failure to
so comply could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

 

(m)                             Title.  The Company and its Subsidiaries have
good and marketable title in fee simple to all real property owned by them and
good and marketable title in all personal property owned by them that is
material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects (“Liens”) and, except for Liens
as do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its Subsidiaries and Liens for the payment of federal, state or
other taxes, the payment of which is neither delinquent nor subject to
penalties.  Any real property and facilities held under lease by the Company and
its Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and its Subsidiaries are in compliance with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the Company and its
Subsidiaries.

 

(n)                                 Insurance.  The Company and each of its
Subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company and
its Subsidiaries are engaged.  Neither the Company nor any such Subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such Subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations
of the Company and its Subsidiaries, taken as a whole.

 

(o)                                 Regulatory Permits.  The Company and its
Subsidiaries possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the Company nor
any such Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit.

 

(p)                                 Tax Status.  The Company and each of its
Subsidiaries has made or filed all federal and state income and all other
material tax returns, reports and declarations required by any jurisdiction to

 

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which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for
the payment of all unpaid and unreported taxes) and has paid all taxes and other
governmental assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply.  There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company know of no basis for any such
claim.

 

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

 

(r)                                    Application of Takeover Protections.  The
Company and its board of directors have taken or will take prior to the
Commencement Date all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision
under the Articles of Incorporation or the laws of the state of its
incorporation which is or could become applicable to the Investor as a result of
the transactions contemplated by this Agreement, including, without limitation,
the Company’s issuance of the Securities and the Investor’s ownership of the
Securities.

 

(s)                                   Disclosure.  Except with respect to the
material terms and conditions of the transactions contemplated by the
Transaction Documents that will be timely publicly disclosed by the Company, the
Company confirms that neither it nor any other Person acting on its behalf has
provided the Investor or its agents or counsel with any information that it
believes constitutes or might constitute material, non-public information which
is not otherwise disclosed in the Initial Registration Statement or the SEC
Documents.   The Company understands and confirms that the Investor will rely on
the foregoing representation in effecting purchases and sales of securities of
the Company.  All of the disclosure furnished by or on behalf of the Company to
the Investor regarding the Company, its business and the transactions
contemplated hereby, including the disclosure schedules to this Agreement, is
true and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading.  The Company acknowledges and agrees that the
Investor neither makes nor has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3 hereof.

 

(t)                                    Foreign Corrupt Practices.   Neither the
Company, nor to the knowledge of the Company, any agent or other Person acting
on behalf of the Company, has (i) directly or indirectly, used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses related
to foreign or

 

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domestic political activity, (ii) made any unlawful payment to foreign or
domestic government officials or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any Person acting on its
behalf of which the Company is aware) which is in violation of law, or
(iv) violated in any material respect any provision of the Foreign Corrupt
Practices Act of 1977, as amended.

 

(u)                                 DTC Eligibility.  The Company, through the
Transfer Agent, currently participates in the DTC Fast Automated Securities
Transfer (FAST) Program and the Common Stock can be transferred electronically
to third parties via the DTC Fast Automated Securities Transfer (FAST) Program.

 

(v)                                 Sarbanes-Oxley. The Company is in compliance
with all provisions of the Sarbanes-Oxley Act of 2002, as amended, which are
applicable to it as of the date hereof, except where the failure to be in
compliance is not reasonably likely to result in a Material Adverse Effect.

 

(w)                               Certain Fees. Except as disclosed on Schedule
4(w), no brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. Except as disclosed on Schedule 4(w),
the Investor shall have no obligation with respect to any fees or with respect
to any claims made by or on behalf of other Persons for fees of a type
contemplated in this Section 4(w) that may be due in connection with the
transactions contemplated by the Transaction Documents.

 

(x)                                 Investment Company. The Company is not, and
immediately after receipt of payment for the Securities will not be, an
“investment company” within the meaning of the Investment Company Act of 1940,
as amended.

 

(y)                                 Listing and Maintenance Requirements. The
Common Stock is registered pursuant to Section 12(b) of the Exchange Act, and
the Company has taken no action designed to, or which to its knowledge is likely
to have the effect of, terminating the registration of the Common Stock pursuant
to the Exchange Act nor has the Company received any notification that the SEC
is currently contemplating terminating such registration. Except as set forth in
the SEC Documents, the Company has not, in the twelve (12) months preceding the
date hereof, received any notice from any Person to the effect that the Company
is not in compliance with the listing or maintenance requirements of the
Principal Market. The Company is, and has no reason to believe that it will not
in the foreseeable future continue to be, in compliance with all such listing
and maintenance requirements.

 

(z)                                  Accountants.  The Company’s accountants are
set forth in the SEC Documents and, to the knowledge of the Company, such
accountants are an independent registered public accounting firm as required by
the Securities Act.

 

(aa)                          No Market Manipulation. The Company has not, and
to its knowledge no Person acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any Person any compensation for soliciting another to
purchase any other securities of the Company.

 

(bb)                          Shell Company Status. The Company is not
currently, and within the past three years has not been, an issuer identified in
Rule 144(i)(1) under the Securities Act.

 

(cc)                            No Disqualification Events.  None of the
Company, any of its predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering

 

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contemplated hereby, any beneficial owner of 20% or more of the Company’s
outstanding voting equity securities, calculated on the basis of voting power,
nor any promoter (as that term is defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person”) is subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a
“Disqualification Event”), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised
reasonable care to determine whether any Issuer Covered Person is subject to a
Disqualification Event.

 

5.                                      COVENANTS.

 

(a)                                 Filing of Current Report and Registration
Statement.  The Company agrees that it shall, within the time required under the
Exchange Act, file with the SEC a report on Form 8-K relating to the
transactions contemplated by, and describing the material terms and conditions
of, the Transaction Documents (the “Current Report”). The Company shall also
file within twenty (20) days from the date hereof an initial registration
statement (“Initial Registration Statement”) covering only the resale of the
Purchase Shares and the Initial Commitment Shares, in accordance with the terms
of the Registration Rights Agreement between the Company and the Investor, dated
as of the date hereof (“Registration Rights Agreement”).  The Company shall
permit the Investor to review and comment upon the final pre-filing draft
version of the Current Report at least two (2) Business Days prior to its filing
with the SEC, and the Company shall give due consideration to all such comments.
The Investor shall use its reasonable best efforts to comment upon the final
pre-filing draft version of the Current Report within one (1) Business Day from
the date the Investor receives it from the Company.

 

(b)                                 Blue Sky. The Company shall take all such
action, if any, as is reasonably necessary in order to obtain an exemption for
or to register or qualify (i) the issuance of the Commitment Shares and the sale
of the Purchase Shares to the Investor under this Agreement and (ii) any
subsequent resale of all Commitment Shares and all Purchase Shares by the
Investor, in each case, under applicable securities or “Blue Sky” laws of the
states of the United States in such states as is reasonably requested by the
Investor from time to time, and shall provide evidence of any such action so
taken to the Investor.

 

(c)                                  Listing/DTC.  The Company shall promptly
secure the listing of all of the Purchase Shares and Commitment Shares to be
issued to the Investor hereunder on the Principal Market (subject to official
notice of issuance) and upon each other national securities exchange or
automated quotation system, if any, upon which the Common Stock is then listed,
and shall use reasonable best efforts to maintain, so long as any shares of
Common Stock shall be so listed, such listing of all such Securities from time
to time issuable hereunder. The Company shall use commercially reasonable
efforts to maintain the listing of the Common Stock on the Principal Market and
shall comply in all respects with the Company’s reporting, filing and other
obligations under the bylaws or rules and regulations of the Principal Market.
Neither the Company nor any of its Subsidiaries shall take any action that would
reasonably be expected to result in the delisting or suspension of the Common
Stock on the Principal Market.  The Company shall promptly, and in no event
later than the following Business Day, provide to the Investor copies of any
notices it receives from any Person regarding the continued eligibility of the
Common Stock for listing on the Principal Market. The Company shall pay all fees
and expenses in connection with satisfying its obligations under this
Section 5(c).  The Company shall take all action necessary to ensure that its
Common Stock can be transferred electronically as DWAC Shares.

 

(d)                                 Prohibition of Short Sales and Hedging
Transactions.  The Investor agrees that beginning on the date of this Agreement
and ending on the date of termination of this Agreement as provided in
Section 11, the Investor and its agents, representatives and affiliates shall
not in any manner whatsoever enter into or effect, directly or indirectly, any
(i) “short sale” (as such term is defined in Rule 200 of

 

16

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Regulation SHO of the Exchange Act) of the Common Stock or (ii) hedging
transaction, which establishes a net short position with respect to the Common
Stock.

 

(e)                                  Issuance of Commitment Shares.  In
consideration for the Investor’s execution and delivery of this Agreement, the
Company shall cause to be issued to the Investor a total of 96,126 shares of
Common Stock as follows: (i) 48,063 shares of Common Stock (the “Initial
Commitment Shares”) shall be issued to the Investor immediately upon the
execution of this Agreement; and (ii) 48,063 shares of Common Stock (the
“Additional Commitment Shares”) shall be issued to the Investor immediately upon
the filing with the SEC of a New Registration Statement (as such term is defined
in the Registration Rights Agreement) covering Purchase Shares and the
Additional Commitment Shares.  The Initial Commitment Shares and the Additional
Commitment Shares are collectively referred to herein as the “Commitment
Shares”.  On the date of this Agreement, the Company shall deliver to the
Transfer Agent the Initial Irrevocable Transfer Agent Instructions with respect
to the issuance of the Initial Commitment Shares.  On the date a New
Registration Statement covering Purchase Shares and the Additional Commitment
Shares is filed with the SEC, the Company shall deliver to the Transfer Agent
the Subsequent Irrevocable Transfer Agent Instructions with respect to the
issuance of the Additional Commitment Shares.  For the avoidance of doubt,
(1) all of the Initial Commitment Shares shall be fully earned as of the date of
this Agreement, whether or not the Commencement shall occur or any Purchase
Shares are purchased by the Investor under this Agreement and irrespective of
any subsequent termination of this Agreement and (2) all of the Additional
Commitment Shares shall be fully earned as of the date of their issuance
pursuant to this Agreement, whether or not any additional Purchase Shares are
purchased by the Investor under this Agreement and irrespective of any
subsequent termination of this Agreement.

 

(f)                                   Due Diligence; Non-Public Information. 
The Investor shall have the right, from time to time as the Investor may
reasonably deem appropriate, to perform reasonable due diligence on the Company
during normal business hours.  The Company and its officers and employees shall
provide information and reasonably cooperate with the Investor in connection
with any reasonable request by the Investor related to the Investor’s due
diligence of the Company.  Each party hereto agrees not to disclose any
Confidential Information of the other party to any third party and shall not use
the Confidential Information for any purpose other than in connection with, or
in furtherance of, the transactions contemplated hereby.  Each party hereto
acknowledges that the Confidential Information shall remain the property of the
disclosing party and agrees that it shall take all reasonable measures to
protect the secrecy of any Confidential Information disclosed by the other
party. The Company confirms that neither it nor any other Person acting on its
behalf shall provide the Investor or its agents or counsel with any information
that constitutes or might constitute material, non-public information, unless a
simultaneous public announcement thereof is made by the Company in the manner
contemplated by Regulation FD. In the event of a breach of the foregoing
covenant by the Company or any Person acting on its behalf (as determined in the
reasonable good faith judgment of the Investor), in addition to any other remedy
provided herein or in the other Transaction Documents, the Investor shall have
the right to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, non-public information without the
prior approval by the Company; provided the Investor shall have first provided
notice to the Company that it believes it has received information that
constitutes material, non-public information, the Company shall have at least 24
hours to publicly disclose such material, non-public information prior to any
such disclosure by the Investor, and the Company shall have failed to publicly
disclose such material, non-public information within such time period. The
Investor shall not have any liability to the Company, any of its Subsidiaries,
or any of their respective directors, officers, employees, stockholders or
agents, for any such disclosure. The Company understands and confirms that the
Investor shall be relying on the foregoing covenants in effecting transactions
in securities of the Company.

 

(g)                                  Purchase Records. The Investor and the
Company shall each maintain records showing the remaining Available Amount at
any given time and the dates and Purchase Amounts for each Regular

 

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Purchase and Accelerated Purchase or shall use such other method, reasonably
satisfactory to the Investor and the Company.

 

(h)                                 Taxes.   The Company shall pay any and all
transfer, stamp or similar taxes that may be payable with respect to the
issuance and delivery of any shares of Common Stock to the Investor made under
this Agreement.

 

(i)                                     Use of Proceeds. The Company will use
the net proceeds from the offering as described in the Initial Registration
Statement or New Registration Statement (as applicable) or the SEC Documents.

 

(j)                                    Other Transactions. The Company shall not
enter into, announce or recommend to its stockholders any agreement, plan,
arrangement or transaction in or of which the terms thereof would restrict,
materially delay, conflict with or impair the ability or right of the Company to
perform its obligations under the Transaction Documents, including, without
limitation, the obligation of the Company to deliver the Purchase Shares and the
Commitment Shares to the Investor in accordance with the terms of the
Transaction Documents.

 

(k)                                 Integration.  From and after the date of
this Agreement, neither the Company, nor or any of its affiliates will, and the
Company shall use its reasonable best efforts to ensure that no Person acting on
their behalf will, directly or indirectly, make any offers or sales of any
security or solicit any offers to buy any security, under circumstances that
would (i) require registration of the offer and sale of any of the Securities
under the Securities Act, or (ii) cause this offering of the Securities to be
integrated with other offerings by the Company in a manner that would require
stockholder approval pursuant to the rules of the Principal Market on which any
of the securities of the Company are listed or designated, unless in the case of
this clause (ii), stockholder approval is obtained before the closing of such
subsequent transaction in accordance with the rules of such Principal Market.

 

6.                                      TRANSFER AGENT INSTRUCTIONS.

 

(a)                               On the date of this Agreement, the Company
shall issue irrevocable instructions to the Transfer Agent substantially in the
form attached hereto as Exhibit D to issue the Initial Commitment Shares in
accordance with the terms of this Agreement (the “Initial Irrevocable Transfer
Agent Instructions”). On the date a New Registration Statement covering Purchase
Shares and the Additional Commitment Shares is filed with the SEC, the Company
shall issue irrevocable instructions to the Transfer Agent substantially in the
form attached hereto as Exhibit E to issue the Additional Commitment Shares in
accordance with the terms of this Agreement (the “Subsequent Irrevocable
Transfer Agent Instructions”). The certificate(s) representing the Commitment
Shares, except as set forth below, shall bear the following restrictive legend
(the “Restrictive Legend”):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S
COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS

 

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NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

 

(b)                               On the earlier of (i) the Commencement Date
and (ii) such time that the Investor shall request, provided all conditions of
Rule 144 under the Securities Act are met, the Company shall, no later than one
(1) Business Day following the delivery by the Investor to the Company or the
Transfer Agent of one or more legended certificates representing the Initial
Commitment Shares (which certificates the Investor shall promptly deliver on or
prior to the first to occur of the events described in clauses (i) and (ii) of
this sentence), as directed by the Investor, issue and deliver (or cause to be
issued and delivered) to the Investor, as requested by the Investor, either:
(A) a certificate representing such Initial Commitment Shares that is free from
all restrictive and other legends or (B) a number of shares of Common Stock
equal to the number of Initial Commitment Shares represented by the
certificate(s) so delivered by the Investor as DWAC Shares.  The Company shall
take all actions to carry out the intent and accomplish the purposes of the
immediately preceding sentence, including, without limitation, delivering all
such legal opinions, consents, certificates, resolutions and instructions to the
Transfer Agent, and any successor transfer agent of the Company, as may be
requested from time to time by the Investor or necessary or desirable to carry
out the intent and accomplish the purposes of the immediately preceding
sentence. On the Commencement Date, the Company shall issue to the Transfer
Agent, and any subsequent transfer agent, (i) irrevocable instructions in the
form substantially similar to those used by the Investor in substantially
similar transactions (the “Commencement Irrevocable Transfer Agent
Instructions”) and (ii) the notice of effectiveness of the Initial Registration
Statement in the form attached as an exhibit to the Registration Rights
Agreement (the “Notice of Effectiveness of Initial Registration Statement”), in
each case to issue the Initial Commitment Shares and the Purchase Shares in
accordance with the terms of this Agreement and the Registration Rights
Agreement. All Purchase Shares to be issued from and after Commencement to or
for the benefit of the Investor pursuant to this Agreement shall be issued only
as DWAC Shares. The Company represents and warrants to the Investor that, while
this Agreement is effective, no instruction other than the Commencement
Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of
Initial Registration Statement referred to in this Section 6(b) will be given by
the Company to the Transfer Agent with respect to the Initial Commitment Shares
or the Purchase Shares from and after Commencement and prior to the effective
date of a New Registration Statement covering Purchase Shares and Additional
Commitment Shares, and the Initial Commitment Shares and the Purchase Shares
covered by the Initial Registration Statement shall otherwise be freely
transferable on the books and records of the Company. The Company agrees that if
the Company fails to fully comply with the provisions of this
Section 6(b) within five (5) Business Days of the Investor providing the
deliveries referred to above, the Company shall, at the Investor’s written
instruction, purchase such shares of Common Stock containing the Restrictive
Legend from the Investor at the greater of the (i) Purchase Price or Accelerated
Purchase Price paid for such shares of Common Stock (as applicable) and (ii) the
Closing Sale Price of the Common Stock on the date of the Investor’s written
instruction.

 

(c)                                On the earlier of (i) the effective date of a
New Registration Statement covering Purchase Shares and Additional Commitment
Shares and (ii) such time that the Investor shall request, provided all
conditions of Rule 144 under the Securities Act are met, the Company shall, no
later than one (1) Business Day following the delivery by the Investor to the
Company or the Transfer Agent of one or more legended certificates representing
the Additional Commitment Shares (which certificates the Investor shall promptly
deliver on or prior to the first to occur of the events described in clauses
(i) and (ii) of this sentence), as directed by the Investor, issue and deliver
(or cause to be issued and delivered) to the Investor, as requested by the
Investor, either: (A) a certificate representing such Additional Commitment
Shares that is free from all restrictive and other legends or (B) a number of
shares of Common Stock equal to the number of Additional Commitment Shares
represented by the certificate(s) so delivered by the Investor as DWAC Shares. 
The Company shall take all actions to carry out the intent and accomplish the
purposes of the immediately preceding sentence, including, without limitation,
delivering all such

 

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legal opinions, consents, certificates, resolutions and instructions to the
Transfer Agent, and any successor transfer agent of the Company, as may be
requested from time to time by the Investor or necessary or desirable to carry
out the intent and accomplish the purposes of the immediately preceding
sentence. On the effective date of a New Registration Statement covering
Purchase Shares and Additional Commitment Shares, the Company shall issue to the
Transfer Agent, and any subsequent transfer agent, (i) irrevocable instructions
in the form substantially similar to those used by the Investor in substantially
similar transactions (the “New Registration Statement Irrevocable Transfer Agent
Instructions”) and (ii) the notice of effectiveness of the New Registration
Statement in the form attached as an exhibit to the Registration Rights
Agreement (the “Notice of Effectiveness of New Registration Statement”), in each
case to issue the Additional Commitment Shares and the Purchase Shares in
accordance with the terms of this Agreement and the Registration Rights
Agreement. All Purchase Shares to be issued from and after Commencement to or
for the benefit of the Investor pursuant to this Agreement shall be issued only
as DWAC Shares. The Company represents and warrants to the Investor that, while
this Agreement is effective and from and after the effective date of any New
Registration Statement covering Purchase Shares and Additional Commitment
Shares, no instruction other than (1) the Commencement Irrevocable Transfer
Agent Instructions and the Notice of Effectiveness of Initial Registration
Statement referred to in Section 6(b) and (2) the New Registration Statement
Irrevocable Transfer Agent Instructions and the Notice of Effectiveness of New
Registration Statement referred to in this Section 6(c) will be given by the
Company to the Transfer Agent with respect to the Commitment Shares or the
Purchase Shares, and the Commitment Shares and the Purchase Shares shall
otherwise be freely transferable on the books and records of the Company. The
Company agrees that if the Company fails to fully comply with the provisions of
this Section 6(c) within five (5) Business Days of the Investor providing the
deliveries referred to above, the Company shall, at the Investor’s written
instruction, purchase such shares of Common Stock containing the Restrictive
Legend from the Investor at the greater of the (i) Purchase Price or Accelerated
Purchase Price paid for such shares of Common Stock (as applicable) and (ii) the
Closing Sale Price of the Common Stock on the date of the Investor’s written
instruction.

 

7.                                      CONDITIONS TO THE COMPANY’S RIGHT TO
COMMENCE SALES OF SHARES OF COMMON STOCK.

 

The right of the Company hereunder to commence sales of the Purchase Shares on
the Commencement Date is subject to the satisfaction of each of the following
conditions:

 

(a)                                 The Investor shall have executed each of the
Transaction Documents and delivered the same to the Company;

 

(b)                                 The Initial Registration Statement covering
the resale of the Initial Commitment Shares and Purchase Shares shall have been
declared effective under the Securities Act by the SEC and no stop order with
respect to the Initial Registration Statement shall be pending or threatened by
the SEC; and

 

(c)                                  The representations and warranties of the
Investor shall be true and correct in all material respects as of the date
hereof and as of the Commencement Date as though made at that time.

 

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8.                                      CONDITIONS TO THE INVESTOR’S OBLIGATION
TO PURCHASE SHARES OF COMMON STOCK.

 

The obligation of the Investor to buy Purchase Shares under this Agreement is
subject to the satisfaction of each of the following conditions on or prior to
the Commencement Date and, once such conditions have been initially satisfied,
there shall not be any ongoing obligation to satisfy such conditions after the
Commencement has occurred:

 

(a)                                 The Company shall have executed each of the
Transaction Documents and delivered the same to the Investor;

 

(b)                                 The Company shall have issued or caused to
be issued to the Investor (i) one or more certificates representing the Initial
Commitment Shares free from all restrictive and other legends or (ii) a number
of shares of Common Stock equal to the number of Initial Commitment Shares as
DWAC Shares, in each case in accordance with Section 6(b);

 

(d)                                 The Common Stock shall be listed or quoted
on the Principal Market, trading in the Common Stock shall not have been within
the last 365 days suspended by the SEC or the Principal Market, and all
Securities to be issued by the Company to the Investor pursuant to this
Agreement shall have been approved for listing or quotation on the Principal
Market in accordance with the applicable rules and regulations of the Principal
Market, subject only to official notice of issuance;

 

(d)                                 The Investor shall have received the
opinions of the Company’s legal counsel dated as of the Commencement Date
substantially in the forms heretofore agreed by the Company and the Investor;

 

(e)                                  The representations and warranties of the
Company shall be true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 4 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the
date hereof and as of the Commencement Date as though made at that time (except
for representations and warranties that speak as of a specific date, which shall
be true and correct as of such date) and the Company shall have performed,
satisfied and complied with the covenants, agreements and conditions required by
the Transaction Documents to be performed, satisfied or complied with by the
Company at or prior to the Commencement Date.  The Investor shall have received
a certificate, executed by the CEO, President or CFO of the Company, dated as of
the Commencement Date, to the foregoing effect in the form attached hereto as
Exhibit A;

 

(f)                                   The Board of Directors of the Company
shall have adopted resolutions in the form attached hereto as Exhibit B which
shall be in full force and effect without any amendment or supplement thereto as
of the Commencement Date;

 

(g)                                  As of the Commencement Date, the Company
shall have reserved out of its authorized and unissued Common Stock, (i) solely
for the purpose of effecting purchases of Purchase Shares hereunder, 1,700,000
shares of Common Stock (provided, however, that the Company may at any time upon
written notice to the Investor increase or decrease the number of shares
reserved for the purpose of effecting purchases of Purchase Shares hereunder,
provided, further, that sufficient shares of Common Stock are reserved with
respect to any pending Regular Purchases or Accelerated Purchases to enable the
full settlement thereof in accordance with Section 2 hereof), and (ii) solely
for the purpose of effecting the issuance of Additional Commitment Shares
hereunder, 48,063 shares of Common Stock;

 

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(h)                                 The Commencement Irrevocable Transfer Agent
Instructions and the Notice of Effectiveness of Initial Registration Statement
each shall have been delivered to and acknowledged in writing by the Company and
the Company’s Transfer Agent (or any successor transfer agent);

 

(i)                                     The Company shall have delivered to the
Investor a certificate evidencing the incorporation and good standing of the
Company in the State of Michigan issued by the Secretary of State of the State
of Michigan as of a date within ten (10) Business Days of the Commencement Date;

 

(j)                                    The Company shall have delivered to the
Investor a certified copy of the Articles of Incorporation as certified by the
Secretary of State of the State of Michigan within ten (10) Business Days of the
Commencement Date;

 

(k)                                 The Company shall have delivered to the
Investor a secretary’s certificate executed by the Secretary of the Company,
dated as of the Commencement Date, in the form attached hereto as Exhibit C;

 

(l)                                     The Initial Registration Statement
covering the resale of the Initial Commitment Shares and Purchase Shares shall
have been declared effective under the Securities Act by the SEC and no stop
order with respect to the Initial Registration Statement shall be pending or
threatened by the SEC. The Company shall have prepared and filed with the SEC,
not later than one (1) Business Day after the effective date of the Initial
Registration Statement, a final and complete prospectus (the preliminary form of
which shall be included in the Initial Registration Statement) and shall have
delivered to the Investor a true and complete copy thereof. Such prospectus
shall be current and available for the resale by the Investor of all of the
Securities covered thereby. The Current Report shall have been filed with the
SEC, as required pursuant to Section 5(a). All reports, schedules,
registrations, forms, statements, information and other documents required to
have been filed by the Company with the SEC at or prior to the Commencement Date
pursuant to the reporting requirements of the Exchange Act shall have been filed
with the SEC within the applicable time periods prescribed for such filings
under the Exchange Act;

 

(m)                             No Event of Default has occurred, or any event
which, after notice and/or lapse of time, would become an Event of Default has
occurred;

 

(n)                                 All federal, state and local governmental
laws, rules and regulations applicable to the transactions contemplated by the
Transaction Documents and necessary for the execution, delivery and performance
of the Transaction Documents and the consummation of the transactions
contemplated thereby in accordance with the terms thereof shall have been
complied with, and all consents, authorizations and orders of, and all filings
and registrations with, all federal, state and local courts or governmental
agencies and all federal, state and local regulatory or self-regulatory agencies
necessary for the execution, delivery and performance of the Transaction
Documents and the consummation of the transactions contemplated thereby in
accordance with the terms thereof shall have been obtained or made, including,
without limitation, in each case those required under the Securities Act, the
Exchange Act, applicable state securities or “Blue Sky” laws or applicable
rules and regulations of the Principal Market, or otherwise required by the SEC,
the Principal Market or any state securities regulators;

 

(o)                                 No statute, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any federal, state, local or foreign court or governmental
authority of competent jurisdiction which prohibits the consummation of or which
would materially modify or delay any of the transactions contemplated by the
Transaction Documents; and

 

(p)                                 No action, suit or proceeding before any
federal, state, local or foreign arbitrator or any court or governmental
authority of competent jurisdiction shall have been commenced or threatened, and

 

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no inquiry or investigation by any federal, state, local or foreign governmental
authority of competent jurisdiction shall have been commenced or threatened,
against the Company, or any of the officers, directors or affiliates of the
Company, seeking to restrain, prevent or change the transactions contemplated by
the Transaction Documents, or seeking material damages in connection with such
transactions.

 

9.                                      INDEMNIFICATION.

 

In consideration of the Investor’s execution and delivery of the Transaction
Documents and acquiring the Securities hereunder and in addition to all of the
Company’s other obligations under the Transaction Documents, the Company shall
defend, protect, indemnify and hold harmless the Investor and all of its
affiliates, stockholders, officers, directors, employees and direct or indirect
investors and any of the foregoing Person’s agents or other representatives
(including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action
for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by
any Indemnitee as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Company in the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any covenant,
agreement or obligation of the Company contained in the Transaction Documents or
any other certificate, instrument or document contemplated hereby or thereby, or
(c) any cause of action, suit or claim brought or made against such Indemnitee
and arising out of or resulting from the execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument
or  document contemplated hereby or thereby, other than, in the case of clause
(c), with respect to Indemnified Liabilities which directly and primarily result
from the fraud, gross negligence or willful misconduct of an Indemnitee. The
indemnity in this Section 9 shall not apply to amounts paid in settlement of any
claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld, conditioned or
delayed. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to
the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.  Payment under this indemnification shall be
made within thirty (30) days from the date Investor makes written request for
it. A certificate containing reasonable detail as to the amount of such
indemnification submitted to the Company by Investor shall be conclusive
evidence, absent manifest error, of the amount due from the Company to Investor.
If any action shall be brought against any Indemnitee in respect of which
indemnity may be sought pursuant to this Agreement, such Indemnitee shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing reasonably
acceptable to the Indemnitee. Any Indemnitee shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnitee, except to the extent that (i) the employment thereof has been
specifically authorized by the Company in writing, (ii) the Company has failed
after a reasonable period of time to assume such defense and to employ counsel
or (iii) in such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the position of the
Company and the position of such Indemnitee, in which case the Company shall be
responsible for the reasonable fees and expenses of no more than one such
separate counsel.

 

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10.                               EVENTS OF DEFAULT.

 

An “Event of Default” shall be deemed to have occurred at any time as any of the
following events occurs:

 

(a)                                 the effectiveness of a registration
statement registering the resale of the Securities lapses for any reason
(including, without limitation, the issuance of a stop order or similar order)
or such registration statement (or the prospectus forming a part thereof) is
unavailable to the Investor for resale of any or all of the Securities to be
issued to the Investor under the Transaction Documents, and such lapse or
unavailability continues for a period of ten (10) consecutive Business Days or
for more than an aggregate of thirty (30) Business Days in any 365-day period,
but excluding a lapse or unavailability where (i) the Company terminates a
registration statement after the Investor has confirmed in writing that all of
the Securities covered thereby have been resold or (ii) the Company supersedes
one registration statement with another registration statement, including
(without limitation) by terminating a prior registration statement when it is
effectively replaced with a new registration statement covering Securities
(provided in the case of this clause (ii) that all of the Securities covered by
the superseded (or terminated) registration statement that have not theretofore
been resold are included in the superseding (or new) registration statement);

 

(b)                                 the suspension of the Common Stock from
trading or the failure of the Common Stock to be listed on the Principal Market
for a period of one (1) Business Day, provided that the Company may not direct
the Investor to purchase any shares of Common Stock during any such suspension;

 

(c)                                  the delisting of the Common Stock from The
NASDAQ Capital Market, provided, however, that the Common Stock is not
immediately thereafter trading on the New York Stock Exchange, The NASDAQ Global
Market, The NASDAQ Global Select Market, the NYSE MKT, the NYSE Arca, the OTC
Bulletin Board or OTC Markets (or nationally recognized successor to any of the
foregoing);

 

(d)                                 the failure for any reason by the Transfer
Agent to issue (i) the Additional Commitment Shares to the Investor within three
(3) Business Days after the date on which the Investor is entitled to receive
such Additional Commitment Shares pursuant to Section 5(e) hereof and
(ii) Purchase Shares to the Investor within three (3) Business Days after the
applicable Purchase Date or Accelerated Purchase Date (as applicable) on which
the Investor is entitled to receive such Purchase Shares;

 

(e)                                  the Company breaches any representation,
warranty, covenant or other term or condition under any Transaction Document if
such breach could have a Material Adverse Effect and except, in the case of a
breach of a covenant which is reasonably curable, only if such breach continues
for a period of at least five (5) Business Days;

 

(f)                                   if any Person commences a proceeding
against the Company pursuant to or within the meaning of any Bankruptcy Law,
which is not discharged within 90 days;

 

(g)                                  if the Company, pursuant to or within the
meaning of any Bankruptcy Law, (i) commences a voluntary case, (ii) consents to
the entry of an order for relief against it in an involuntary case,
(iii) consents to the appointment of a Custodian of it or for all or
substantially all of its property, or (iv) makes a general assignment for the
benefit of its creditors or is generally unable to pay its debts as the same
become due;

 

(h)                                 a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that (i) is for relief against the
Company in an involuntary case, (ii) appoints a Custodian of the Company

 

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or for all or substantially all of its property, or (iii) orders the liquidation
of the Company or any Subsidiary;

 

(i)                                     if at any time the Company is not
eligible to transfer its Common Stock electronically as DWAC Shares; or

 

(j)                                    if at any time after the Commencement
Date, the Exchange Cap is reached (to the extent such Exchange Cap is applicable
pursuant to Section 2(e) hereof).

 

In addition to any other rights and remedies under applicable law and this
Agreement, so long as an Event of Default has occurred and is continuing, or if
any event which, after notice and/or lapse of time, would become an Event of
Default, has occurred and is continuing, or so long as the Closing Sale Price is
below the Floor Price, the Company shall not deliver to the Investor any Regular
Purchase Notice or Accelerated Purchase Notice.

 

11.                               TERMINATION

 

This Agreement may be terminated only as follows:

 

(a)                                 If pursuant to or within the meaning of any
Bankruptcy Law, the Company commences a voluntary case or any Person commences a
proceeding against the Company, which is not discharged within 90 days, a
Custodian is appointed for the Company or for all or substantially all of its
property, or the Company makes a general assignment for the benefit of its
creditors (any of which would be an Event of Default as described in Sections
10(f), 10(g) and 10(h) hereof), this Agreement shall automatically terminate
without any liability or payment to the Company (except as set forth below)
without further action or notice by any Person.

 

(b)                                 In the event that the Commencement shall not
have occurred on or before March 31, 2014, due to the failure to satisfy the
conditions set forth in Sections 7 and 8 above with respect to the Commencement,
either the Company or the Investor shall have the option to terminate this
Agreement at the close of business on such date or thereafter without liability
of any party to any other party (except as set forth below); provided, however,
that the right to terminate this Agreement under this Section 11(b) shall not be
available to any party if such party is then in breach of any covenant or
agreement contained in this Agreement or any representation or warranty of such
party contained in this Agreement fails to be true and correct such that the
conditions set forth in Section 7(c) or Section 8(e), as applicable, could not
then be satisfied.

 

(c)                                  At any time after the Commencement Date,
the Company shall have the option to terminate this Agreement for any reason or
for no reason by delivering notice (a “Company Termination Notice”) to the
Investor electing to terminate this Agreement without any liability whatsoever
of any party to any other party under this Agreement (except as set forth
below).  The Company Termination Notice shall not be effective until one
(1) Business Day after it has been received by the Investor.

 

(d)                                 This Agreement shall automatically terminate
on the date that the Company sells and the Investor purchases the full Available
Amount as provided herein, without any action or notice on the part of any party
and without any liability whatsoever of any party to any other party under this
Agreement (except as set forth below).

 

(e)                                  If, for any reason or for no reason, the
full Available Amount has not been purchased in accordance with Section 2 of
this Agreement by the Maturity Date, this Agreement shall automatically

 

25

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terminate on the Maturity Date, without any action or notice on the part of any
party and without any liability whatsoever of any party to any other party under
this Agreement (except as set forth below).

 

Except as set forth in Sections 11(a) (in respect of an Event of Default under
Sections 10(f), 10(g) and 10(h)), 11(d) and 11(e), any termination of this
Agreement pursuant to this Section 11 shall be effected by written notice from
the Company to the Investor, or the Investor to the Company, as the case may be,
setting forth the basis for the termination hereof.  The representations and
warranties and covenants of the Company and the Investor contained in Sections
3, 4, 5, and 6 hereof, the indemnification provisions set forth in Section 9
hereof and the agreements and covenants set forth in Sections 10, 11 and 12
shall survive the Commencement and any termination of this Agreement.  No
termination of this Agreement shall (i) affect the Company’s or the Investor’s
rights or obligations under (A) this Agreement with respect to pending Regular
Purchases and Accelerated Purchases and the Company and the Investor shall
complete their respective obligations with respect to any pending Regular
Purchases and Accelerated Purchases under this Agreement and (B) the
Registration Rights Agreement, which shall survive any such termination, or
(ii) be deemed to release the Company or the Investor from any liability for
intentional misrepresentation or willful breach of any of the Transaction
Documents.

 

12.                               MISCELLANEOUS.

 

(a)                                 Governing Law; Jurisdiction; Jury Trial. 
The corporate laws of the State of Michigan shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the other Transaction Documents shall be governed by the internal
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York.  Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in the State of
New York, County of New York, for the adjudication of any dispute hereunder or
under the other Transaction Documents or in connection herewith or therewith, or
with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum
or that the venue of such suit, action or proceeding is improper.  Each party
hereby irrevocably waives personal service of process and consents to process
being served in any such suit, action or proceeding by mailing a copy thereof to
such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof.  Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.  EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)                                 Counterparts.  This Agreement may be
executed in two or more identical counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party; provided that a
facsimile signature or signature delivered by e-mail in a “.pdf” format data
file shall be considered due execution and shall be binding upon the signatory
thereto with the same force and effect as if the signature were an original
signature.

 

(c)                                  Headings.  The headings of this Agreement
are for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement.

 

26

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(d)                                 Severability.  If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

 

(e)                                  Entire Agreement.  The Transaction
Documents supersede all other prior oral or written agreements between the
Investor, the Company, their affiliates and Persons acting on their behalf with
respect to the subject matter thereof, and this Agreement, the other Transaction
Documents 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
Investor makes any representation, warranty, covenant or undertaking with
respect to such matters.  The Company acknowledges and agrees that is has not
relied on, in any manner whatsoever, any representations or statements, written
or oral, other than as expressly set forth in the Transaction Documents.

 

(f)                                   Notices.  Any notices, consents or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt when delivered personally; (ii) upon receipt when sent by facsimile or
email (provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one Business Day
after deposit with a nationally recognized overnight delivery service, in each
case properly addressed to the party to receive the same. The addresses for such
communications shall be:

 

If to the Company:

 

Aastrom Biosciences, Inc.

 

24 Frank Lloyd Wright Drive, Lobby K

 

Ann Arbor, MI 48106

 

Telephone:

(800) 556-0311

 

Facsimile:

 

E-mail:

 

Attention:

 

 

With a copy to (which shall not constitute notice or service of process):

 

Goodwin Procter LLP

 

Exchange Place

 

Boston, Massachusetts 02109

 

Telephone:

(617) 570-1000

 

Facsimile:

(617) 523-1231

 

E-mail:

mbloom@goodwinprocter.com

 

Attention:

Mitchell S. Bloom, Esq.

 

 

If to the Investor:

 

Lincoln Park Capital Fund, LLC

 

440 North Wells, Suite 410

 

Chicago, IL 60654

 

Telephone:

312-822-9300

 

Facsimile:

312-822-9301

 

E-mail:

jscheinfeld@lpcfunds.com/jcope@lpcfunds.com

 

Attention:

Josh Scheinfeld/Jonathan Cope

 

 

With a copy to (which shall not constitute notice or service of process):

 

27

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Greenberg Traurig, LLP

 

The MetLife Building

 

200 Park Avenue

 

New York, NY 10166

 

Telephone:

(212) 801-9200

 

Facsimile:

(212) 801-6400

 

E-mail:

mariscoa@gtlaw.com

 

Attention:

Anthony J. Marsico, Esq.

 

 

 

If to the Transfer Agent:

 

Continental Stock Transfer & Trust Company

 

17 Battery Place, 8th Floor

 

New York, NY 10004

 

Telephone:

(800) 509-5586

 

Attention:

Administrations Department

 

or at such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party three (3) Business Days prior to the effectiveness of such
change.  Written confirmation of receipt (A) given by the recipient of such
notice, consent or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine or email account containing the
time, date, and recipient facsimile number or email address, as applicable, and
an image of the first page of such transmission or (C) provided by a nationally
recognized overnight delivery service, shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g)                                  Successors and Assigns.  This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and assigns.  The Company shall not assign this Agreement
or any rights or obligations hereunder without the prior written consent of the
Investor, including by merger or consolidation.  The Investor may not assign its
rights or obligations under this Agreement.

 

(h)                                 No Third Party Beneficiaries.  This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

 

(i)                                     Publicity.  The Company shall afford the
Investor and its counsel with the opportunity to review and comment upon, shall
consult with the Investor and its counsel on the form and substance of, and
shall give due consideration to all such comments from the Investor or its
counsel on, any press release, SEC filing or any other public disclosure by or
on behalf of the Company relating to the Investor, its purchases hereunder or
any aspect of the Transaction Documents or the transactions contemplated
thereby, not less than 24 hours prior to the issuance, filing or public
disclosure thereof. The Investor must be provided with a final version of any
such press release, SEC filing or other public disclosure at least 24 hours
prior to any release, filing or use by the Company thereof. The Company agrees
and acknowledges that its failure to fully comply with this provision
constitutes a Material Adverse Effect.

 

(j)                                    Further Assurances.  Each party shall do
and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request in order to
consummate and make effective, as soon as reasonably possible, the Commencement,
and to carry out the intent and accomplish the purposes of this Agreement and
the consummation of the transactions contemplated hereby.

 

28

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(k)                                 No Financial Advisor, Placement Agent,
Broker or Finder.    The Company represents and warrants to the Investor that,
except as disclosed in Schedule 4(w), it has not engaged any financial advisor,
placement agent, broker or finder in connection with the transactions
contemplated hereby.  The Investor represents and warrants to the Company that
it has not engaged any financial advisor, placement agent, broker or finder in
connection with the transactions contemplated hereby.  The Company shall be
responsible for the payment of any fees or commissions, if any, of any financial
advisor, placement agent, broker or finder relating to or arising out of the
transactions contemplated hereby.  The Company shall pay, and hold the Investor
harmless against, any liability, loss or expense (including, without limitation,
attorneys’ fees and out of pocket expenses) arising in connection with any such
claim.

 

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

 

(m)                             Remedies, Other Obligations, Breaches and
Injunctive Relief.  The Investor’s remedies provided in this Agreement,
including, without limitation, the Investor’s remedies provided in Section 9,
shall be cumulative and in addition to all other remedies available to the
Investor under this Agreement, at law or in equity (including a decree of
specific performance and/or other injunctive relief), no remedy of the Investor
contained herein shall be deemed a waiver of compliance with the provisions
giving rise to such remedy and nothing herein shall limit the Investor’s right
to pursue actual damages for any failure by the Company to comply with the terms
of this Agreement.  The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Investor and that the
remedy at law for any such breach may be inadequate.  The Company therefore
agrees that, in the event of any such breach or threatened breach, the Investor
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

 

(n)                                 Enforcement Costs.  If: (i) this Agreement
is placed by the Investor in the hands of an attorney for enforcement or is
enforced by the Investor through any legal proceeding; (ii) an attorney is
retained to represent the Investor in any bankruptcy, reorganization,
receivership or other proceedings affecting creditors’ rights and involving a
claim under this Agreement; or (iii) an attorney is retained to represent the
Investor in any other proceedings whatsoever in connection with this Agreement,
then the Company shall pay to the Investor, as incurred by the Investor, all
reasonable costs and expenses including attorneys’ fees incurred in connection
therewith, in addition to all other amounts due hereunder.

 

(o)                                 Amendment and Waiver; Failure or Indulgence
Not Waiver.  No provision of this Agreement may be amended or waived by the
parties from and after the date that is one (1) Business Day immediately
preceding the filing of the Initial Registration Statement with the SEC. Subject
to the immediately preceding sentence, (i) no provision of this Agreement may be
amended other than by a written instrument signed by both parties hereto and
(ii) no provision of this Agreement may be waived other than in a written
instrument signed by the party against whom enforcement of such waiver is
sought. No failure or delay in the exercise of any power, right or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.

 

*     *     *     *     *

 

29

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IN WITNESS WHEREOF, the Investor and the Company have caused this Purchase
Agreement to be duly executed as of the date first written above.

 

 

 

THE COMPANY:

 

 

 

AASTROM BIOSCIENCES, INC.

 

 

 

 

 

 

By:

/s/ Dominick C. Colangelo

 

Name: Dominick C. Colangelo

 

Title: President and Chief Executive Officer

 

 

 

 

 

INVESTOR:

 

 

 

LINCOLN PARK CAPITAL FUND, LLC

 

BY: LINCOLN PARK CAPITAL, LLC

 

BY: ALEX NOAH INVESTORS, INC.

 

 

 

 

 

By:

/s/ Jonathan Cope

 

Name: Jonathan Cope

 

Title: President

 

30

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SCHEDULES

 

Schedule 4(w)                                                                   
Agent’s Fees

 

EXHIBITS

 

Exhibit A                                                                                            
Form of Officer’s Certificate

Exhibit B                                                                                            
Form of Resolutions of Board of Directors of the Company

Exhibit C                                                                                            
Form of Secretary’s Certificate

Exhibit D                                                                                            
Form of Letter to Transfer Agent

 

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DISCLOSURE SCHEDULES

 

Schedule 4(w) — Agent’s Fees

 

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EXHIBIT A

 

FORM OF OFFICER’S CERTIFICATE

 

This Officer’s Certificate (“Certificate”) is being delivered pursuant to
Section 8(e) of that certain Purchase Agreement dated as of January 21, 2014,
(“Purchase Agreement”), by and between AASTROM BIOSCIENCES, INC., a Michigan
corporation (the “Company”), and LINCOLN PARK CAPITAL FUND, LLC (the
“Investor”).  Terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Purchase Agreement.

 

The undersigned,                       ,                              of the
Company, hereby certifies as follows:

 

1.                                      I am the                            of
the Company and make the statements contained in this Certificate;

 

2.                                      The representations and warranties of
the Company are true and correct in all material respects (except to the extent
that any of such representations and warranties is already qualified as to
materiality in Section 4 of the Purchase Agreement, in which case, such
representations and warranties are true and correct without further
qualification) as of the date when made and as of the Commencement Date as
though made at that time (except for representations and warranties that speak
as of a specific date, in which case such representations and warranties are
true and correct as of such date);

 

3.                                      The Company has performed, satisfied and
complied in all material respects with covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by the Company at or prior to the Commencement Date.

 

4.                                      The Company has not taken any steps, and
does not currently expect to take any steps, to seek protection pursuant to any
Bankruptcy Law nor does the Company or any of its Subsidiaries have any
knowledge or reason to believe that its creditors intend to initiate involuntary
bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

 

IN WITNESS WHEREOF, I have hereunder signed my name on this        day of
                      .

 

 

 

 

Name:

 

Title:

 

The undersigned as Secretary of AASTROM BIOSCIENCES, INC., a Michigan
corporation, hereby certifies that                        is the duly elected,
appointed, qualified and acting                  of                    and that
the signature appearing above is his genuine signature.

 

 

 

 

Secretary

 

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EXHIBIT B

 

FORM OF COMPANY RESOLUTIONS

FOR SIGNING PURCHASE AGREEMENT

 

UNANIMOUS WRITTEN CONSENT OF

AASTROM BIOSCIENCES, INC.

 

In accordance with the corporate laws of the state of Michigan, the undersigned,
being all of the directors of AASTROM BIOSCIENCES, INC., a Michigan corporation
(the “Corporation”) do hereby consent to and adopt the following resolutions as
the action of the Board of Directors for and on behalf of the Corporation and
hereby direct that this Consent be filed with the minutes of the proceedings of
the Board of Directors:

 

WHEREAS, there has been presented to the Board of Directors of the Corporation a
draft of the Purchase Agreement (the “Purchase Agreement”) by and between the
Corporation and Lincoln Park Capital Fund, LLC (“Lincoln Park”), providing for
the purchase by Lincoln Park of up to Fifteen Million Dollars ($15,000,000) of
the Corporation’s common stock, no par value per share (the “Common Stock”); and

 

WHEREAS, after careful consideration of the Purchase Agreement, the documents
incident thereto and other factors deemed relevant by the Board of Directors,
the Board of Directors has determined that it is advisable and in the best
interests of the Corporation to engage in the transactions contemplated by the
Purchase Agreement, including, but not limited to, the issuance of up to 96,126
shares of Common Stock to Lincoln Park as a commitment fee (the “Commitment
Shares”) and the sale of shares of Common Stock to Lincoln Park up to the
available amount under the Purchase Agreement (the “Purchase Shares”).

 

Transaction Documents

 

NOW, THEREFORE, BE IT RESOLVED, that the transactions described in the Purchase
Agreement are hereby approved and
                                                                                
(the “Authorized Officers”) are severally authorized to execute and deliver the
Purchase Agreement, and any other agreements or documents contemplated thereby
including, without limitation, a registration rights agreement (the
“Registration Rights Agreement”) providing for the registration of the shares of
the Company’s Common Stock issuable in respect of the Purchase Agreement on
behalf of the Corporation, with such amendments, changes, additions and
deletions as the Authorized Officers may deem to be appropriate and approve on
behalf of, the Corporation, such approval to be conclusively evidenced by the
signature of an Authorized Officer thereon; and

 

FURTHER RESOLVED, that the terms and provisions of the Registration Rights
Agreement by and among the Corporation and Lincoln Park are hereby approved and
the Authorized Officers are authorized to execute and deliver the Registration
Rights Agreement (pursuant to the terms of the Purchase Agreement), with such
amendments, changes, additions and deletions as the Authorized Officer may deem
appropriate and approve on behalf of, the Corporation, such approval to be
conclusively evidenced by the signature of an Authorized Officer thereon; and

 

FURTHER RESOLVED, that the terms and provisions of the forms of Commencement
Irrevocable Transfer Agent Instructions and Notice of Effectiveness of Initial
Registration Statement (collectively, the “Instructions”) are hereby approved
and the Authorized Officers are authorized to execute and deliver the
Instructions on behalf of the Company in accordance with the Purchase

 

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

 

Agreement, with such amendments, changes, additions and deletions as the
Authorized Officers may deem appropriate and approve on behalf of, the
Corporation, such approval to be conclusively evidenced by the signature of an
Authorized Officer thereon; and

 

Execution of Purchase Agreement

 

FURTHER RESOLVED, that the Corporation be and it hereby is authorized to execute
the Purchase Agreement providing for the purchase of up to Fifteen Million
Dollars ($15,000,000) of the Corporation’s common stock; and

 

Issuance of Common Stock

 

FURTHER RESOLVED, that the Corporation is hereby authorized to issue to Lincoln
Park Capital Fund, LLC, 48,063 shares of Common Stock as Initial Commitment
Shares and that upon issuance of the Initial Commitment Shares pursuant to the
Purchase Agreement the Initial Commitment Shares shall be duly authorized,
validly issued, fully paid and nonassessable with no personal liability
attaching to the ownership thereof; and

 

FURTHER RESOLVED, that the Corporation is hereby authorized to issue 48,063
shares of Common Stock as Additional Commitment Shares under the Purchase
Agreement in accordance with the terms of the Purchase Agreement and that, upon
issuance of the Additional Commitment Shares pursuant to the Purchase Agreement,
the Additional Commitment Shares will be duly authorized, validly issued, fully
paid and nonassessable with no personal liability attaching to the ownership
thereof; and

 

FURTHER RESOLVED, that the Corporation shall reserve 48,063 shares of Common
Stock for issuance as Additional Commitment Shares under the Purchase Agreement;
and

 

FURTHER RESOLVED, that the Corporation is hereby authorized to issue shares of
Common Stock upon the purchase of Purchase Shares up to the Available Amount
under the Purchase Agreement in accordance with the terms of the Purchase
Agreement and that, upon issuance of the Purchase Shares pursuant to the
Purchase Agreement, the Purchase Shares will be duly authorized, validly issued,
fully paid and nonassessable with no personal liability attaching to the
ownership thereof; and

 

FURTHER RESOLVED, that the Corporation shall initially reserve 1,700,000 shares
of Common Stock for issuance as Purchase Shares under the Purchase Agreement.

 

Approval of Actions

 

FURTHER RESOLVED, that, without limiting the foregoing, the Authorized Officers
are, and each of them hereby is, authorized and directed to proceed on behalf of
the Corporation and to take all such steps as deemed necessary or appropriate,
with the advice and assistance of counsel, to cause the Corporation to
consummate the agreements referred to herein and to perform its obligations
under such agreements; and

 

FURTHER RESOLVED, that the Authorized Officers be, and each of them hereby is,
authorized, empowered and directed on behalf of and in the name of the
Corporation, to take or cause to be taken all such further actions and to
execute and deliver or cause to be executed and delivered all such further
agreements, amendments, documents, certificates, reports, schedules,
applications, notices, letters and undertakings and to incur and pay all such
fees and expenses as in their judgment shall be necessary, proper or desirable
to carry into effect the purpose and intent of any and all of the foregoing
resolutions, and that all actions heretofore taken by any officer or director of
the Corporation in connection with the

 

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transactions contemplated by the agreements described herein are hereby
approved, ratified and confirmed in all respects.

 

IN WITNESS WHEREOF, the Board of Directors has executed and delivered this
Consent effective as of                     , 2014.

 

 

 

 

 

 

 

 

 

 

being all of the directors of AASTROM BIOSCIENCES, INC.

 

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EXHIBIT C

 

FORM OF SECRETARY’S CERTIFICATE

 

This Secretary’s Certificate (“Certificate”) is being delivered pursuant to
Section 8(k) of that certain Purchase Agreement dated as of January 21, 2014
(“Purchase Agreement”), by and between AASTROM BIOSCIENCES, INC., a Michigan
corporation (the “Company”) and LINCOLN PARK CAPITAL FUND, LLC (the “Investor”),
pursuant to which the Company may sell to the Investor up to Fifteen Million
Dollars ($15,000,000) of the Company’s Common Stock, no par value per share (the
“Common Stock”).  Terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Purchase Agreement.

 

The undersigned,                         , Secretary of the Company, hereby
certifies as follows:

 

1.             I am the Secretary of the Company and make the statements
contained in this Secretary’s Certificate.

 

2.             Attached hereto as Exhibit A and Exhibit B are true, correct and
complete copies of the Company’s bylaws (“Bylaws”) and Restated Articles of
Incorporation (“Charter”), in each case, as amended through the date hereof, and
no action has been taken by the Company, its directors, officers or
stockholders, in contemplation of the filing of any further amendment relating
to or affecting the Bylaws or Charter.

 

3.             Attached hereto as Exhibit C are true, correct and complete
copies of the resolutions duly adopted by the Board of Directors of the Company
on                           , at which a quorum was present and acting
throughout.  Such resolutions have not been amended, modified or rescinded and
remain in full force and effect and such resolutions are the only resolutions
adopted by the Company’s Board of Directors, or any committee thereof, or the
stockholders of the Company relating to or affecting (i) the entering into and
performance of the Purchase Agreement, or the issuance, offering and sale of the
Purchase Shares and the Commitment Shares and (ii) and the performance of the
Company of its obligation under the Transaction Documents as contemplated
therein.

 

4.               As of the date hereof, the authorized, issued and reserved
capital stock of the Company is as set forth on Exhibit D hereto.

 

IN WITNESS WHEREOF, I have hereunder signed my name on this        day of
                        .

 

 

 

 

Secretary

 

The undersigned as                        of AASTROM BIOSCIENCES, INC., a
Michigan corporation, hereby certifies that                          is the duly
elected, appointed, qualified and acting Secretary of                   , and
that the signature appearing above is his genuine signature.

 

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EXHIBIT D

 

FORM OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE INITIAL COMMITMENTS
SHARES AT SIGNING OF THE PURCHASE AGREEMENT

 

[COMPANY LETTERHEAD]

 

[DATE]

 

 

 

[TRANSFER AGENT]

 

 

 

 

 

 

 

 

Re: Issuance of Common Stock to Lincoln Park Capital Fund, LLC

 

Dear                 ,

 

On behalf of AASTROM BIOSCIENCES, INC., (the “Company”), you are hereby
instructed to issue as soon as possible a share certificate representing an
aggregate of 48,063 shares of our common stock in the name of Lincoln Park
Capital Fund, LLC.  The share certificate should be dated [DATE OF THE PURCHASE
AGREEMENT].  I have included a true and correct copy of a unanimous written
consent executed by all of the members of the Board of Directors of the Company
adopting resolutions approving the issuance of these shares.  The share
certificate should bear the following restrictive legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S
COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS.

 

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

 

The share certificate should be sent as soon as possible via overnight mail to
the following address:

 

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Attention: Josh Scheinfeld/Jonathan Cope

 

Thank you very much for your help.  Please call me at
                             if you have any questions or need anything further.

 

AASTROM BIOSCIENCES, INC.

 

 

 

 

 

BY:

 

 

 

[name]

 

 

[title]

 

 

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

 

EXHIBIT E

 

FORM OF LETTER TO THE TRANSFER AGENT FOR THE ISSUANCE OF THE ADDITIONAL
COMMITMENTS SHARES AT FILING OF NEW REGISTRATION STATEMENT

 

[COMPANY LETTERHEAD]

 

[DATE]

 

 

 

[TRANSFER AGENT]

 

 

 

 

 

 

 

 

Re: Issuance of Common Stock to Lincoln Park Capital Fund, LLC

 

Dear                 ,

 

On behalf of AASTROM BIOSCIENCES, INC., (the “Company”), you are hereby
instructed to issue as soon as possible a share certificate representing an
aggregate of 48,063 shares of our common stock in the name of Lincoln Park
Capital Fund, LLC.  The share certificate should be dated [DATE OF THE FILING OF
NEW REGISTRATION STATEMENT].  I have included a true and correct copy of a
unanimous written consent executed by all of the members of the Board of
Directors of the Company adopting resolutions approving the issuance of these
shares.  The share certificate should bear the following restrictive legend:

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, UNLESS SOLD PURSUANT TO: (1) RULE 144 UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) AN OPINION OF HOLDER’S
COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR APPLICABLE STATE SECURITIES LAWS.

 

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

 

The share certificate should be sent as soon as possible via overnight mail to
the following address:

 

Lincoln Park Capital Fund, LLC

440 North Wells, Suite 410

Chicago, IL 60654

Attention: Josh Scheinfeld/Jonathan Cope

 

Thank you very much for your help.  Please call me at
                             if you have any questions or need anything further.

 

AASTROM BIOSCIENCES, INC.

 

 

 

 

BY:

 

 

 

[name]

 

 

[title]

 

 

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