EXHIBIT 10.1

SECURITIES PURCHASE AGREEMENT
 
THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”) is made as of the 27th day
of August, 2013, by and among WaferGen Bio-systems, Inc., a Nevada corporation
(the “Company”), and the investors listed on the Schedule of Investors attached
hereto and the additional investors who become parties to this Agreement as
provided below (each an “Investor” and collectively, the “Investors”).
 
W I T N E S S E T H:
 
WHEREAS, the Company and each Investor is executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(2) of the Securities Act and Rule 506 of Regulation D (“Regulation
D”) as promulgated by the Commission under the Securities Act; and
 
WHEREAS, the Company desires to issue and sell to the Investors (the
“Offering”), and the Investors desire to purchase from the Company units (the
“Units”) consisting of shares (the “Shares”) of the Company’s common stock, par
value $.001 per share (“Common Stock”), and warrants (the “Warrants”) to
purchase shares of Common Stock (the “Warrant Shares”), with a Warrant to
purchase one-half share of Common Stock being included for every one Share sold
in the Offering and included within the Units; and
 
WHEREAS, the Company is currently conducting the Offering pursuant to a
Confidential Private Placement Memorandum dated July 31st, 2013 (the
“Memorandum”).
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties do hereby
agree as follows:
 
1           Purchase and Sale of Units.
 
1.1             Issuance and Sale of Units. Subject to the terms and conditions
of this Agreement, the Investors severally and not jointly agree to purchase in
one or more Closings (as defined below), and the Company agrees to issue and
sell to the Investors, the amount of Units set forth opposite each Investor’s
name on the Signature Page hereto (sometimes collectively referred to herein as
the “Securities”) at a purchase price of Fifty Thousand Dollars ($50,000) per
Unit, for an aggregate purchase price of a minimum of Ten Million ($10,000,000)
Dollars (the “Minimum Amount”) and up to a maximum of Fifteen Million
($15,000,000) Dollars plus up to an aggregate of Two Million Two Hundred Fifty
Thousand Dollars ($2,250,000) to cover over-allotments, if any, of Units (such
aggregate purchase price, the “Offering Amount”).  The Closing of the initial
purchase and sale of Units to the investors listed on the Schedule of Investors,
attached hereto, which shall be for at least the Minimum Amount, will occur at
the “Initial Closing.”  After the Initial Closing, the Company may sell at one
or more additional closings (each, an “Additional Closing” and together with the
Initial Closing, the “Closings”), on the same terms and conditions as those
contained in this Agreement, additional Units up to the Offering Amount, to one
or more investors (“Additional Investors”), provided that each Additional
Purchaser, to the extent not a party hereto, shall become a party to this
Agreement as an “Investor” by signing a joinder to this Agreement in form and
substance acceptable to the Company (a “Joinder”) and shall become a
 

 
 

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party to the Registration Rights Agreement, by executing and delivering a
joinder as provided therein.
 
1.2             Payment.  The Investor is enclosing with its delivery of its
Signature Page hereto a check payable to, or will promptly make a wire transfer
payment to, “Signature Bank, as Escrow Agent for WaferGen Bio-systems, Inc.” in
the full amount of the purchase price of the Units being subscribed for (the
“Purchase Price”).  Wire instructions are as follows:
 
Bank Name: Signature Bank
ABA Number: 026013576
A/C Name: Signature Bank, as Agent for WaferGen Bio-systems, Inc.
A/C Number: 1502036609
FBO: Investor Name
Social Security Number
Address

All payments made by check as provided in this Section 1.2 shall be promptly
deposited by the Company or [__________] (in its capacity as the “Placement
Agent”) with Signature Bank (the “Escrow Agent”), and all payments hereunder
shall be held in a non-interest-bearing escrow account (the “Escrow Account”)
until the earliest to occur of (a) the Closing (as defined below), (b) the
rejection of such proposed investment by the Company or the Placement Agent and
(c) the termination of the Offering by the Company or the Placement Agent.
 
1.3             Closings.
 
(a)           Each Closing of the purchase and sale of Units under this
Agreement shall be held at the offices of Duane Morris LLP, counsel to the
Placement Agent, at One Riverfront Plaza, 1037 Raymond Boulevard, Suite 1800,
Newark, NJ 07102-5429 (or remotely via the exchange of documents and
signatures), on or before August 31, 2013, which period may be extended by the
Company and the Placement Agent until October 31, 2013.
 
(b)           At each Closing, the Company shall deliver the Units to the
Investors against payment of the Purchase Price to the Company as described
above, along with delivery by the Investors of an Accredited Investor
Certification and Investor Profile to the Placement Agent. The Accredited
Investor Certification and Investor Profile are included in the Investor
Instructions booklet provided to Investors separately.
 
(c)           The Initial Closing is expressly conditioned upon the Company
receiving subscriptions to the Offering for at least the Minimum Amount.
 
1.4             Additional Definitions.  For purposes of this Agreement, certain
capitalized terms are defined under Appendix A.
 

 
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2           Representations and Warranties of the Company.  The Company has
delivered to each Investor concurrently herewith a Disclosure Schedule (the
“Disclosure Schedule”) that corresponds to the section numbers of the following
representations and warranties.  The Company hereby represents and warrants to
each Investor that:
 
2.1             Subsidiaries.  All of the direct and indirect subsidiaries of
the Company are set forth on Section 2.1 of the Disclosure Schedule.  The
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all of the issued
and outstanding shares of capital stock of each Subsidiary are validly issued
and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
 
2.2             Organization and Qualification.  The Company and each of the
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 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 Subsidiary 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 the 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: (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
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.
 
2.3             Authorization; Enforcement.  The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder.  The execution
and delivery of each of this Agreement and the other Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals (as defined below).  This Agreement and
each other Transaction Document to which it is a party has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific
 

 
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performance, injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable law.
 
2.4             No Conflicts.  The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents to which it is a
party, the issuance and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not: (i) conflict
with or violate any provision of the Company’s or any Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or charter
documents, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or any
Subsidiary, or give to others any rights of termination, amendment, acceleration
or cancellation (with or without notice, lapse of time or both) of, any
agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any
Subsidiary is a party or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or governmental
authority to which the Company or a Subsidiary is subject (including federal and
state securities laws and regulations), or by which any property or asset of the
Company or a Subsidiary is bound or affected.
 
2.5             Filings, Consents and Approvals.  The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to this Agreement and the other
Transaction Documents and (ii) the filing of Form D with the Commission and such
filings as are required to be made under applicable state and federal securities
laws (collectively, the “Required Approvals”).
 
2.6             Issuance of the Securities.  The Units, Shares and Warrants are
duly authorized and, when issued and paid for in accordance with the applicable
Transaction Documents at each Closing, will be duly and validly issued, fully
paid and non-assessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction
Documents.  The Warrant Shares are duly authorized and, upon exercise of the
Warrants in accordance with their terms, the Warrant Shares, when issued, will
be validly issued, fully paid and non-assessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents, with the holders of the Warrant Shares being entitled to
all rights accorded to a holder of Common Stock.  The Company has reserved from
its duly authorized capital stock not less than 100% of the maximum number of
Warrant Shares issuable upon exercise of the Warrants.
 
2.7             Capitalization.  The capitalization of the Company is as set
forth in Section 2.7 of the Disclosure Schedule, which Section 2.7 of the
Disclosure Schedule shall also include the number of shares of Common Stock
owned beneficially, and of record, by Affiliates of the Company as of the date
hereof.  Except as set forth in Section 2.7 of the Disclosure Schedule or in the
SEC Documents (as defined in Section 2.8) or as contemplated by the Memorandum,
the Company has not issued any capital stock since June 30, 2013, other than
pursuant to the exercise
 

 
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of employee stock options under the Company’s stock option plans, the issuance
of shares of Common Stock to employees pursuant to the Company’s employee stock
purchase plans and pursuant to the conversion and/or exercise of Common Stock
Equivalents outstanding as of the date of the most recently filed periodic
report under the Exchange Act.  Except as set forth in Section 2.7 of the
Disclosure Schedule and pursuant to this Agreement no Person has any right of
first refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by the Transaction
Documents.  Except as a result of the purchase and sale of the Securities, there
are no outstanding options, warrants, scrip rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common Stock
or Common Stock Equivalents.  Except as set forth in Section 2.7 of the
Disclosure Schedule, the issuance and sale of the Securities will not obligate
the Company to issue shares of Common Stock or other securities to any Person
(other than the Investors) and will not result in a right of any holder of
Company securities to adjust the exercise, conversion, exchange or reset price
under any of such securities. All of the outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid and non-assessable,
have been issued in compliance with all federal and state securities laws, and
none of such outstanding shares was issued in violation of any preemptive rights
or similar rights to subscribe for or purchase securities.  No further approval
or authorization of any stockholder, the Board of Directors or others is
required for the issuance and sale of the Securities.  Except as set forth in
Section 2.7 of the Disclosure Schedule or the SEC Documents, there are no
stockholders agreements, voting agreements or other similar agreements with
respect to the Company’s capital stock to which the Company is a party or, to
the knowledge of the Company, between or among any of the Company’s stockholders
other than the Registration Rights Agreement.
 
2.8             SEC Documents; Financial Statements.  Since December 31, 2012,
the Company has filed when due (including any applicable extensions) all
reports, schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the Exchange
Act (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements, notes and schedules thereto and
documents incorporated by reference therein being hereinafter referred to as the
“SEC Documents”).  Except to the extent that any SEC Document has been revised
or superseded by a later-filed SEC Document, as of their respective dates: (i)
the SEC Documents complied in all material respects with the requirements of the
Exchange Act; (ii) 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; and (iii)
the financial statements of the Company included in the SEC Documents complied
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto as in
effect as of the time of filing.  The financial statements of the Company
included in the SEC Documents have been prepared in accordance with U.S.
generally accepted accounting principles, consistently applied, during the
periods involved (except (x) as may be otherwise indicated in such financial
statements or the notes thereto, or (y) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of
 

 
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the dates thereof and the results of its operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments which will not be material, either individually or in
the aggregate).
 
2.9             Material Changes; Undisclosed Events, Liabilities or
Developments.  Since the date of the latest audited financial statements
included in the SEC Documents, except as specifically disclosed in Section 2.9
of the Disclosure Schedule or a subsequent SEC Document filed prior to the date
hereof:  (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect, (ii)
the Company has not incurred any liabilities (contingent or otherwise) other
than (A) trade payables and accrued expenses incurred in the ordinary course of
business consistent with past practice and (B) liabilities not required to be
reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (iii) the Company has not altered its method
of accounting, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its stockholders or purchased,
redeemed or made any agreements to purchase or redeem any shares of its capital
stock and (v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option
plans.  Except for the issuance of the Securities contemplated by this Agreement
or as set forth in Section 2.9 of the Disclosure Schedule and the matters to be
disclosed pursuant to Section 4.2, no event, liability, fact, circumstance,
occurrence or development has occurred or exists, or is reasonably expected to
occur or exist, with respect to the Company or its Subsidiaries or their
respective businesses, properties, operations, assets or financial condition,
that would be required to be disclosed by the Company under applicable
securities laws at the time this representation is made.
 
2.10             Litigation.  Except as set forth in the SEC Documents or in
Section 2.10 of the Disclosure Schedule, there is no action, suit, inquiry,
notice of violation, proceeding or investigation pending or, to the knowledge of
the Company, threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator, governmental
or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”) which (i) adversely affects or
challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, if there were an unfavorable
decision, reasonably be expected to result in a Material Adverse Effect.  Except
as set forth in Section 2.10 of the Disclosure Schedule, neither the Company nor
any Subsidiary, nor any director or officer thereof, is or has been the subject
of any Action involving a claim of violation of or liability under federal or
state securities laws or a claim of breach of fiduciary duty which could, if
there were an unfavorable decision, reasonably be expected to result in a
Material Adverse Effect.
 
2.11                      Labor Relations.  No labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse
Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a
union that relates to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a
collective bargaining agreement, and the Company and its Subsidiaries believe
that their relationships with their employees are good.  To the knowledge of the
Company, no executive officer of the Company or any Subsidiary is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement
 
 
 
 

 
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or non-competition agreement, or any other contract or agreement or any
restrictive covenant in favor of any third party, and the continued employment
of each such executive officer does not subject the Company or any of its
Subsidiaries to any liability with respect to any of the foregoing matters.  The
Company and its Subsidiaries are in compliance with all U.S. federal, state,
local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
 
2.12             Dilutive Effect.  The Company understands and acknowledges that
the number of Warrant Shares may increase in certain circumstances. The Company
further acknowledges that its obligation to issue the Warrant Shares upon
exercise of the Warrants in accordance with this Agreement and the Warrants is
absolute and unconditional, regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.
 
2.13             Conduct of Business; Regulatory Permits. The Company is not in
material violation of (a) any term of or in default under its Organizational
Documents or (b) any Applicable Laws. Since June 30, 2013, (i) the Common Stock
has been listed or designated for quotation on the Principal Market, (ii)
trading in the Common Stock has not been suspended by the Commission or the
Principal Market and (iii) the Company has received neither any written
communication nor, to the Company’s knowledge, oral communication from the
Commission or the Principal Market regarding the suspension or delisting of the
Common Stock from the Principal Market.  The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the Memorandum, except where the
failure to possess such permits could not reasonably be expected to result in a
Material Adverse Effect (“Material Permits”), and neither the Company nor any
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any Material Permit.
 
2.14             Title to Assets.  The Company and the 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 the Subsidiaries, in each case free and clear of
all Liens, except for (i) 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 the Subsidiaries and (ii) Liens for the
payment of federal, state or other taxes, for which appropriate reserves have
been made therefor in accordance with GAAP and the payment of which is neither
delinquent nor subject to penalties.  Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases with which the Company and the Subsidiaries
are in compliance.
 
2.15             Intellectual Property.  The Company and the Subsidiaries have,
or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights as described
in the Memorandum as necessary or required for use in connection with their
respective businesses and which the failure to so have could have a Material
Adverse Effect (collectively, the “Intellectual Property Rights”).  None of, and
neither the Company nor
 

 
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any Subsidiary has received a notice (written or otherwise) that any of, the
Intellectual Property Rights has expired, terminated or been abandoned, or is
expected to expire or terminate or be abandoned, within two (2) years from the
date of this Agreement.  Neither the Company nor any Subsidiary has received,
since the date of the latest audited financial statements included within the
Memorandum, a written notice of a claim or otherwise has any knowledge that the
Intellectual Property Rights violate or infringe upon the rights of any Person,
except as could not have or reasonably be expected to not have a Material
Adverse Effect.  To the knowledge of the Company, all such Intellectual Property
Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights.  The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality
and value of all of their intellectual properties, except where failure to do so
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
 
2.16             Insurance.  The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged, including, but not limited to,
directors and officers insurance coverage at least equal to the Offering
Amount.  Neither the Company nor any 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 without a significant increase in cost.
 
2.17             Transactions With Affiliates and Employees.  Except as set
forth in the SEC Reports or Section 2.17 of the Disclosure Schedule, none of the
officers or directors of the Company or any Subsidiary and, to the knowledge of
the Company, none of the employees of the Company or any Subsidiary 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, providing for
the borrowing of money from or lending of money to 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, stockholder,
member or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company and (iii) other employee
benefits, including stock option agreements under any stock option plan of the
Company.
 
2.18             Environmental Matters. The Company has not ever caused, or to
the knowledge of the Company permitted, any material quantities of Hazardous
Materials to be disposed of on or under any Real Property, and no Real Property
has ever been used (by the Company or, to the knowledge of the Company, by any
other Person) as a disposal site or storage site for any Hazardous
Materials.  The Company has been issued and is in material compliance with all
material operating licenses relating to environmental matters and necessary or
desirable for its business, and has filed all material notifications and reports
relating to chemical substances, air emissions, underground storage tanks,
effluent discharges and Hazardous Materials waste storage, treatment and
disposal required in connection with the operation of its businesses.  To the
knowledge of the Company, all Hazardous Materials used or generated by the
Company or any
 

 
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business merged into or otherwise acquired by the Company has been generated,
accumulated, stored, transported, treated, recycled and disposed of in material
compliance with all Environmental Laws.  To the knowledge of the Company, no
facts or circumstances exist which could give rise to any material liabilities
with respect to the violation (whether by the Company or any other Person) of
any Environmental Laws.
 
2.19             Certain Fees.  Other than the fees payable to the Placement
Agent pursuant to the Placement Agent Agreement as disclosed under Section 8.7,
the fees payable to Roth Capital Partners, LLC (“Roth”) under a separate
placement agent agreement between the Company and Roth as disclosed in Section
2.19 of the Disclosure Schedule (the “Roth Placement Fees”) and fees payable to
certain FINRA member firms as set forth in Section 2.19 of the Disclosure
Schedule, no brokerage or finder’s fees or commissions are or will be payable by
the Company or any Subsidiary to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by the Transaction Documents.  The Investors shall
have no obligation with respect to any fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by the
Transaction Documents.
 
2.20             Investment Company. The Company is not, and is not an Affiliate
of, and immediately after receipt of payment for the Securities, will not be or
be an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.  The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.
 
2.21             Acknowledgement Regarding Investors’ Trading Activity.  It is
understood and acknowledged by the Company that (i) following the public
disclosure of the transactions contemplated by the Transaction Documents in
accordance with the terms thereof, none of the Investors have been asked by the
Company to agree, nor has any Investor agreed with the Company, to desist from
effecting any transactions in or with respect to (including, without limitation,
purchasing or selling, long and/or short) any securities of the Company, or
“derivative” securities based on securities issued by the Company or to hold any
of the Securities for any specified term; (ii) any Investor, and counterparties
in “derivative” transactions to which any such Investor is a party, directly or
indirectly, presently may have a “short” position in the Common Stock which was
established prior to such Investor’s knowledge of the transactions contemplated
by the Transaction Documents; and (iii) each Investor shall not be deemed to
have any affiliation with or control over any arm’s length counterparty in any
“derivative” transaction.  The Company further understands and acknowledges that
following the public disclosure of the transactions contemplated by the
Transaction Documents pursuant to a press release one or more Investors may
engage in hedging and/or trading activities at various times during the period
that the Securities are outstanding, including, without limitation, during the
periods that the value and/or number of Warrant Shares deliverable with respect
to the Securities are being determined and such hedging and/or trading
activities, if any, can reduce the value of the existing stockholders’ equity
interest in the Company both at and after the time the hedging and/or trading
activities are being conducted. The Company acknowledges that such
aforementioned hedging and/or trading activities do not constitute a breach of
this Agreement or any other Transaction Document or any of the documents
executed in connection herewith or therewith.
 

 
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2.22             Manipulation of Price.  Neither the Company nor, to the
knowledge of the Company, any Person acting on its behalf has, directly or
indirectly, (i) taken 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 (other than the Placement Agent or Roth), or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company.
 
2.23             No Additional Agreements. The Company does not have any
agreement or understanding with any Investor with respect to the transactions
contemplated by the Transaction Documents other than as specified in the
Transaction Documents.
 
2.24             Off Balance Sheet Arrangements.  There is no transaction,
arrangement, or other relationship between the Company and an unconsolidated or
other off balance sheet entity that is required to be disclosed by the Company
in its Exchange Act filings and is not so disclosed and could be reasonably
likely to have a Material Adverse Effect.
 
2.25             Internal Accounting and Disclosure Controls. The Company
maintains internal control over financial reporting (as such term is defined in
Rule 13a-15(f) under the Exchange Act) that is effective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with GAAP, including
that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset and liability accountability, (iii) access to assets or incurrence of
liabilities is permitted only in accordance with management’s general or
specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable
intervals and appropriate action is taken with respect to any difference.  The
Company maintains disclosure controls and procedures (as such term is defined in
Rule 13a-15(e) under the Exchange Act) that are effective in ensuring that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the rules and forms of the
Commission, including, without limitation, controls and procedures designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Exchange Act is accumulated and communicated
to the Company’s management, including its principal executive officer or
officers and its principal financial officer or officers, as appropriate, to
allow timely decisions regarding required disclosure.
 
2.26             Application of Takeover Protections.  The Company and the Board
of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Organizational Documents or the laws
of its state of incorporation that is or could become applicable to the
Investors as a result of the Investors and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation as a result of the Company’s issuance of the
Securities and the Investors’ ownership of the Securities.
 

 
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2.27             No Integrated Offering. Assuming the accuracy of the Investors’
representations and warranties set forth in Section 3, neither the Company, nor
any of its Affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of the Securities Act which would require the registration of any
such securities under the Securities Act.
 
2.28             Solvency.  Based on the consolidated financial condition of the
Company as of the date of each Closing, after giving effect to the receipt by
the Company of the proceeds from the sale of the Securities hereunder: (i) the
fair saleable value of the Company’s assets exceeds the amount that will be
required to be paid on or in respect of the Company’s existing debts and other
liabilities (including known contingent liabilities) as they mature, (ii) the
Company’s assets do not constitute unreasonably small capital to carry on its
business as now conducted and as proposed to be conducted, including its capital
needs taking into account the particular capital requirements of the business
conducted by the Company, and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its liabilities when such
amounts are required to be paid.  The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its debt).  The
Company has no knowledge of any facts or circumstances which lead it to believe
that it will file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the date of the
Initial Closing.  Section 2.28 of the Disclosure Schedule sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the Company or
any Subsidiary, or for which the Company or any Subsidiary has commitments.  For
the purposes of this Agreement, “Indebtedness” means (x) any liabilities for
borrowed money or amounts owed in excess of $50,000 (other than trade accounts
payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company’s
consolidated balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is
in default with respect to any Indebtedness.
 
2.29             Tax Status.  Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United
States federal, state and local income and all foreign income and franchise tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) 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 and (iii) has set aside on its books provision
reasonably adequate for the payment of all material taxes for periods subsequent
to the periods to which such returns, 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 or of any Subsidiary know
of no basis for any such claim.
 

 
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2.30             No General Solicitation.  Neither the Company nor any person
acting on behalf of the Company has offered or sold any of the Securities by any
form of general solicitation or general advertising.  The Company has offered
the Securities for sale only to the Investors and certain other “accredited
investors” within the meaning of Rule 501 under the Securities Act.
 
2.31             Foreign Corrupt Practices.  Neither the Company nor any
Subsidiary, to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary, has: (i)
directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or 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 any Subsidiary (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.
 
2.32             Accountants.  The Company’s accounting firm is set forth on
Section 2.32 of the Disclosure Schedule.  To the knowledge and belief of the
Company, such accounting firm is a registered public accounting firm as required
by the Exchange Act.
 
2.33             No Disagreements with Accountants and Lawyers.  There are no
disagreements of any kind presently existing, or reasonably anticipated by the
Company to arise, between the Company and the accountants and lawyers formerly
or presently employed by the Company and, except as set forth in Section 2.33 of
the Disclosure Schedule, the Company is current with respect to any fees owed to
its accountants and lawyers which could affect the Company’s ability to perform
any of its obligations under any of the Transaction Documents.
 
2.34             Acknowledgment Regarding Investors’ Purchase of
Securities.  The Company acknowledges and agrees that to its knowledge each of
the Investors is acting solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated thereby.
The Company further acknowledges that no Investor is acting as a financial
advisor or fiduciary of the Company (or in any similar capacity) with respect to
the Transaction Documents and the transactions contemplated thereby and any
advice given by any Investor or any of their respective representatives or
agents in connection with the Transaction Documents and the transactions
contemplated thereby is merely incidental to the Investors’ purchase of the
Securities.  The Company further represents to each Investor that the Company’s
decision to enter into this Agreement and the other Transaction Documents has
been based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.
 
2.35             Stock Option Plans. Each stock option granted by the Company
under the Company’s stock option plan was granted (i) in accordance with the
terms of the Company’s stock option plan and (ii) with an exercise price at
least equal to the fair market value of the Common Stock on the date such stock
option would be considered granted under GAAP and applicable law. No stock
option granted under the Company’s stock option plan has been backdated.  The
Company has not knowingly granted, and there is no and has been no Company
policy or practice to knowingly grant, stock options prior to, or otherwise
knowingly coordinate
 

 
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the grant of stock options with, the release or other public announcement of
material information regarding the Company or its Subsidiaries or their
financial results or prospects.
 
2.36             Office of Foreign Assets Control.  Neither the Company nor any
Subsidiary  nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to
any U.S. sanctions administered by the Office of Foreign Assets Control of the
U.S. Treasury Department (“OFAC”).
 
2.37             U.S. Real Property Holding Corporation.  The Company is not and
has never been a U.S. real property holding corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended, and the Company
shall so certify upon Purchaser’s request.
 
2.38             Bank Holding Company Act.  Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the
Federal Reserve System (the “Federal Reserve”).  Neither the Company nor any of
its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities
or twenty-five percent or more of the total equity of a bank or any entity that
is subject to the BHCA and to regulation by the Federal Reserve.  Neither the
Company nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve.
 
2.39             Money Laundering.  The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with
applicable financial record-keeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any Subsidiary with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.
 
2.40             Disclosure.  All of the disclosure furnished by or on behalf of
the Company to the Investors regarding the Company and its Subsidiaries, their
respective businesses and the transactions contemplated hereby, including each
of the Transaction Documents and the Disclosure Schedule 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 no Investor
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3 hereof.
 

 
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3           Representations and Warranties of the Investors.  Each of the
Investors, severally and not jointly, hereby represents and warrants that:
 
3.1             Authorization.  Investor (i) if a natural person, represents
that Investor has reached the age of 21 and has full power and authority to
execute and deliver this Agreement and all other Transaction Documents and to
carry out the provisions hereof and thereof; (ii) if a corporation, partnership,
or limited liability company or partnership, or association, joint stock
company, trust, unincorporated organization or other entity, represents that
such entity was not formed for the specific purpose of acquiring the Securities,
such entity is duly organized, validly existing and in good standing under the
laws of the state of its organization, the consummation of the transactions
contemplated hereby is authorized by, and will not result in a violation of
state law or its charter or other organizational documents, such entity has full
power and authority to execute and deliver this Agreement and all other
Transaction Documents and to carry out the provisions hereof and thereof and to
purchase and hold the Securities the execution and delivery of this Agreement
has been duly authorized by all necessary action, this Agreement has been duly
executed and delivered on behalf of such entity and is a legal, valid and
binding obligation of such entity; or (iii) if executing this Agreement in a
representative or fiduciary capacity, represents that it has full power and
authority to execute and deliver this Agreement in such capacity and on behalf
of the subscribing individual, ward, partnership, trust, estate, corporation, or
limited liability company or partnership, or other entity for whom Investor is
executing this Agreement, and such individual, partnership, ward, trust, estate,
corporation, or limited liability company or partnership, or other entity has
full right and power to perform pursuant to this Agreement and make an
investment in the Company, and represents that this Agreement constitutes a
legal, valid and binding obligation of such entity.  The execution and delivery
of this Agreement will not violate or be in conflict with any order, judgment,
injunction, agreement or controlling document to which Investor is a party or by
which it is bound.
 
3.2             Purchase Entirely for Own Account.  The Securities to be
purchased by the Investor will be acquired for investment for the Investor’s own
account and not with a view to the resale or distribution of any part thereof,
and such Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same.  Such Investor does not
have any contract, undertaking, agreement, or arrangement with any person to
sell, transfer, or grant participation to any person with respect to any of the
Securities.
 
3.3             Disclosure of Information.  The Investor acknowledges that it
has received all the information that it has requested relating to the Company
and the purchase of the Securities.  The Investor further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the Offering of the Securities.  The
Investor acknowledges receipt of the Company’s Memorandum.  The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of the Investor to rely
thereon.
 
3.4             Investment Experience.  Investor is an investor in securities of
companies in the development stage and acknowledges that it is able to fend for
itself, and has such knowledge and experience in financial or business matters
that it is capable of evaluating the merits and risks of the investment in the
Securities.  Investor is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of such
investment.
 

 
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3.5             Accredited Investor.  The Investor meets the requirements of at
least one of the suitability standards for an “accredited investor” within the
meaning of Rule 501 of Regulation D and as set forth on the Accredited Investor
Certification.
 
3.6             Restricted Securities.  Investor understands that the Securities
that it is purchasing are characterized as “restricted securities” under the
federal securities laws inasmuch as they are being acquired from the Company in
a transaction not involving a public offering, and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances.  In this connection, the
Investor represents that it is familiar with Commission Rule 144, as presently
in effect, and understands the resale limitations imposed thereby and by the
Act.
 
3.7             High Risk and Speculative Investment.  Investor recognizes that
the purchase of the Securities involves a high degree of risk including, but not
limited to, the risk factors set forth in the Memorandum and the following: (a)
the Company requires funds in addition to the proceeds of the Offering; (b) an
investment in the Company is highly speculative, and only investors who can
afford the loss of their entire investment should consider investing in the
Company and the Securities; (c) the Investor may not be able to liquidate its
investment; (d) transferability of the Securities is extremely limited; (e) the
Company may issue additional securities in the future which have rights and
preferences that are senior to those of the Common Stock; and (f) that the
Common Stock may not successfully become actively traded.  Investor has reviewed
the Risk Factors which are set forth in the Memorandum under the section titled
“Risk Factors”  and in the SEC Documents.
 
3.8             Use of Proceeds.  Investor acknowledges and understands that the
proceeds from the sale of the Securities are expected to be used by the Company
in the manner set forth in the Memorandum under the section titled “Use of
Proceeds.”
 
3.9             General Solicitation. Investor is not purchasing the Securities
as a result of any advertisement, article, notice, or other communication
regarding the Securities published in any newspaper, magazine or similar media
or broadcast over television or radio or presented in any seminar or any other
general solicitation or general advertisement.
 
3.10             Fees.  Other than the fees payable to the Placement Agent as
described in Section 8.7 below or the fees set forth on Section 2.19 of the
Disclosure Schedule, including the Roth Placement Fees, no brokerage or finder’s
fees or commissions are or will be payable by the Company or  any Subsidiary to
any broker, financial advisor or consultant, finder, placement agent, investment
banker, bank or other person with respect to the transactions contemplated by
the Transaction Documents.   The Investors shall have no obligation with respect
to any fees or with respect to any claims made by or on behalf of other persons
for fees of a type contemplated in this Section that may be due in connection
with the transactions contemplated by the Transaction Documents.
 
3.11             Legends.  It is understood that the certificates evidencing the
Securities (and the equity securities issuable upon conversion and exercise
thereof, respectively) may bear one or all of the following legends:
 
 
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE

 
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NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AS SET FORTH IN THIS
CERTIFICATE.  THE SECURITIES REPRESENTED HEREBY MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN OPINION OF COUNSEL, REASONABLY ACCEPTABLE TO COUNSEL FOR THE
COMPANY, TO THE EFFECT THAT THE PROPOSED SALE, TRANSFER, OR DISPOSITION MAY BE
EFFECTUATED WITHOUT REGISTRATION UNDER THE ACT.”

3.12             For ERISA plans only.  The fiduciary of the ERISA plan (the
“Plan”) represents that such fiduciary has been informed of and understands the
Company’s investment objectives, policies and strategies, and that the decision
to invest “plan assets” (as such term is defined in ERISA) in the Company is
consistent with the provisions of ERISA that require diversification of plan
assets and impose other fiduciary responsibilities.  Investor fiduciary or Plan
(a) is responsible for the decision to invest in the Company; (b) is independent
of the Company or any of its affiliates; (c) is qualified to make such
investment decision; and (d) in making such decision, Investor fiduciary or Plan
has not relied primarily on any advice or recommendation of the Company or any
of its affiliates
 
3.13             OFAC.
 
(a)           Investor should check the Office of Foreign Assets Control
(“OFAC”) website at http://www.treas.gov/ofac before making the following
representations. Investor represents that the amounts invested by it in the
Company in the Offering were not and are not directly or indirectly derived from
activities that contravene federal, state or international laws and regulations,
including anti-money laundering laws and regulations. Federal regulations and
Executive Orders administered by OFAC prohibit, among other things, the
engagement in transactions with, and the provision of services to, certain
foreign countries, territories, entities and individuals.  The lists of OFAC
prohibited countries, territories, persons and entities can be found on the OFAC
website at http://www.treas.gov/ofac.  In addition, the programs administered by
OFAC (the “OFAC Programs”) prohibit dealing with individuals1 or entities in
certain countries regardless of whether such individuals or entities appear on
the OFAC lists;
 
(b)           To the Investor’s knowledge, none of: (1) Investor; (2) any person
controlling or controlled by Investor; (3) if Investor is a privately-held
entity, any person having a beneficial interest in Investor; or (4) any person
for whom Investor is acting as agent or nominee in connection with this
investment is a country, territory, individual or entity named on an OFAC list,
or a person or entity prohibited under the OFAC Programs.  Please be advised
that the Company may not accept any amounts from a prospective investor if such
prospective investor cannot make the representation set forth in the preceding
paragraph.  Investor agrees to promptly notify the Company and the Placement
Agent should Investor become aware of any
 

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1 These individuals include specially designated nationals, specially designated
narcotics traffickers and other parties subject to OFAC sanctions and embargo
programs.

 
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change in the information set forth in these representations.  Investor
understands and acknowledges that, by law, the Company may be obligated to
“freeze the account” of Investor, either by prohibiting additional subscriptions
from Investor, declining any redemption requests and/or segregating the assets
in the account in compliance with governmental regulations, and the Placement
Agent may also be required to report such action and to disclose Investor’s
identity to OFAC.  Investor further acknowledges that the Company may, by
written notice to Investor, suspend the redemption rights, if any, of Investor
if the Company reasonably deems it necessary to do so to comply with anti-money
laundering regulations applicable to the Company and the Placement Agent or any
of the Company’s other service providers.  These individuals include specially
designated nationals, specially designated narcotics traffickers and other
parties subject to OFAC sanctions and embargo programs.
 
(c)           To the Investor’s knowledge, none of: (1) Investor; (2) any person
controlling or controlled by Investor; (3) if Investor is a privately-held
entity, any person having a beneficial interest in Investor; or (4) any person
for whom Investor  is  acting  as  agent or  nominee  in connection with this
investment is a senior foreign political figure,2 or any immediate family3
member or close associate4 of a senior foreign political figure, as such terms
are defined in the footnotes below.
 
(d)           If Investor is affiliated with a non-U.S. banking institution (a
“Foreign Bank”), or if Investor receives deposits from, makes payments on behalf
of, or handles other financial transactions related to a Foreign Bank, Investor
represents and warrants to the Company that: (1) the Foreign Bank has a fixed
address, other than solely an electronic address, in a country in which the
Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank
maintains operating records related to its banking activities; (3) the Foreign
Bank is subject to inspection by the banking authority that licensed the Foreign
Bank to conduct banking activities; and (4) the Foreign Bank does not provide
banking services to any other Foreign Bank that does not have a physical
presence in any country and that is not a regulated affiliate.
 
4           Covenants.
 
4.1             Reporting Status. Until the later of (i) such date as the
Investors have sold all Warrant Shares issued to the Investors or (ii) the
Warrants no longer remain outstanding, the Company shall timely file with the
Commission all Company SEC Documents as are specified in the Securities Act or
the Exchange Act and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would no longer require or otherwise permit
such termination.  Each SEC
 

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2 A “senior foreign political figure” is defined as a senior official in the
executive, legislative, administrative, military or judicial branches of a
foreign government (whether elected or not), a senior official of a major
foreign political party, or a senior executive of a foreign government-owned
corporation. In addition, a “senior foreign political figure” includes any
corporation, business or other entity that has been formed by, or for the
benefit of, a senior foreign political figure.
 
3 “Immediate family” of a senior foreign political figure typically includes the
figure’s parents, siblings, spouse, children and in-laws.
 
4 A “close associate” of a senior foreign political figure is a person who is
widely and publicly known to maintain an unusually close relationship with the
senior foreign political figure, and includes a person who is in a position to
conduct substantial domestic and international financial transactions on behalf
of the senior foreign political figure.

 
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Document to be filed by the Company, when filed with the Commission, will comply
with all applicable requirements of the Securities Act or the Exchange Act and
will 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,
not misleading.  The financial statements of the Company to be included in each
SEC Document to be filed by the Company will comply as to form, as of the date
of its filing with the Commission, with applicable accounting requirements and
the published rules and regulations of the Commission with respect thereto, will
be prepared in accordance with GAAP (except, in the case of unaudited
statements, as permitted by the Commission) and will fairly present in all
material respects the consolidated financial position of the Company as of the
dates thereof and the consolidated results of its operations and cash flows for
the periods then ended, subject, in the case of unaudited statements, to normal
year-end audit adjustments, which will not be material, consistent with past
practices and consistently applied.
 
4.2             Disclosure of Transactions and Other Material Information.  The
Company shall, on or before 8:30 a.m., California time, on the second (2nd)
Business Day after the date of this Agreement, (x) issue a press release (the
“Press Release” ) disclosing all the material terms of the transactions
contemplated by the Transaction Documents and (y) file a Current Report on Form
8-K (the “8-K Filing”) describing all the material terms of the transactions
contemplated by the Transaction Documents in the form and to the extent required
by the Exchange Act and attaching all the material Transaction Documents
(including, without limitation, this Agreement, the form of the Registration
Rights Agreement and the form of the Warrants).  From and after the issuance of
the Press Release, the Company shall have disclosed all material, non-public
information (if any) delivered to any of the Investors by the Company, or any of
its officers, directors, employees or agents in connection with the transactions
contemplated by the Transaction Documents.  The Company shall not, and the
Company shall cause each of its officers, directors, employees and agents not
to, provide any Investor with any material, non-public information regarding the
Company from and after the issuance of the Press Release without the express
prior written consent of such Investor.  Neither the Company nor any Investor
shall issue any other press releases or any other public statements with respect
to the transactions contemplated hereby; provided, however, the Company shall be
entitled, without the prior approval of any Investor, to make any press release
or other public disclosure with respect to such transactions (i) in substantial
conformity with the 8-K Filing and contemporaneously therewith and (ii) as is
required by Applicable Law and regulations (provided that in the case of clause
(i) each Investor shall be consulted by the Company in connection with any such
press release or other public disclosure prior to its release).  Without the
prior written consent of the applicable Investor, the Company shall not disclose
the name of such Investor in any filing (other than the 8-K Filing or as
otherwise required by Applicable Law), announcement, release or otherwise.
 
4.3              Form D and Blue Sky.  The Company shall file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Investor promptly after such filing. The Company shall, on or
before the date of each Closing, take such action as the Company shall
reasonably determine is necessary in order to obtain an exemption for, or to,
qualify the applicable number of Securities for sale to the Investors at such
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Investors on or prior to the date of such Closing.  Without limiting
 

 
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any other obligation of the Company under this Agreement, the Company shall
timely make all filings and reports relating to the offer and sale of the
Securities required under all applicable securities laws (including, without
limitation, all applicable federal securities laws and all applicable “Blue Sky”
laws), and the Company shall comply with all applicable federal, foreign, state
and local laws, statutes, rules, regulations and the like relating to the
offering and sale of the Securities to the Investors.
 
4.4             Reservation of Shares. From and after the date hereof until the
date the Warrants are no longer outstanding, the Company shall take all action
necessary to at all times have authorized, and reserved for the purpose of
issuance, no less than 100% of the maximum number of shares of Common Stock
issuable upon exercise of all the Warrants (without regard to any limitations on
the exercise of the Warrants set forth therein).
 
5           Conditions of the Investors’ Obligations at Closings.  The
obligations of the Investors under subsection 1.2 of this Agreement are subject
to the fulfillment on or before the applicable Closing of each of the following
conditions:
 
5.1             Representations and Warranties.  The representations and
warranties of the Company contained in Section 2, as qualified by the Disclosure
Schedule (as the same may be updated by the Company prior the applicable
Closing), shall be true and correct as of such applicable Closing with the same
effect as though such representations and warranties had been made on and as of
the date of such Closing.
 
5.2             Performance.  The Company shall have performed and complied with
all agreements, obligations, and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the applicable
Closing.
 
5.3             Suspension of Offering.  No order suspending or enjoining the
Offering or sale of the Securities has been issued, and no proceedings for that
purpose or a similar purpose have been initiated or are pending, or, to the
Company’s knowledge, are contemplated or threatened.
 
5.4             No Material Adverse Effect.  There shall have been no Material
Adverse Effect with respect to the Company since the date hereof.
 
5.5             Compliance Certificate.  The President or Chief Executive
Officer of the Company shall deliver to the Placement Agent on behalf of the
Investors, at the applicable Closing, a certificate certifying that the
conditions specified in Sections 5.1, 5.2, 5.3 and 5.4 have been fulfilled.
 
5.6             Closing Documents. The Company shall have duly executed and
delivered to such Investor each of the Transaction Documents to which it is a
party and the Company shall have duly executed and delivered to such Investor a
Warrant (for the appropriate number of Warrant Shares based upon the amount of
Units purchased by such Investor hereunder, as set forth on the signature page
hereto) being purchased by such Investor at the applicable Closing pursuant to
this Agreement.
 

 
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5.7             Opinion of Counsel. Such Investor shall have received an opinion
or opinions of K&L Gates (“Transaction Counsel”) and McDonald Carano Wilson LLP
(“Nevada Counsel”), dated as of the date of each Closing, which opinions shall
be in form and substance reasonably acceptable to Transaction Counsel, Nevada
Counsel, the Company and Placement Agent, but which shall include those opinion
paragraphs set forth in Appendix B, attached hereto.
 
5.8             Good Standing. The Company shall have delivered to such Investor
a certificate evidencing the incorporation and good standing of the Company in
such entity’s jurisdiction of formation issued by the Secretary of State (or
comparable office) of such jurisdiction of formation as of a date within thirty
(30) days of the date of the applicable Closing.
 
5.9             Foreign Qualification. The Company shall have delivered to such
Investor a certificate evidencing the Company’s qualification as a foreign
corporation and good standing issued by the Secretary of State of California, as
of a date within thirty (30) days of the date of the applicable Closing.
 
5.10             Articles of Incorporation. The Company shall have delivered to
such Investor a certified copy of the Articles of Incorporation as certified by
the Secretary of State of the Company’s jurisdiction of incorporation within
thirty (30) days of the date of the applicable Closing.
 
5.11             Secretary’s Certificate. The Company shall have delivered to
such Investor a certificate, in a form reasonably acceptable to such Investor,
executed by the Secretary of the Company and dated as of the date of the
applicable Closing, as to (i) the resolutions consistent with Section 2.3 as
adopted by the Company’s board of directors in a form reasonably acceptable to
such Investor, (ii) the Articles of Incorporation of the Company and (iii) the
Bylaws of the Company, each as in effect at such Closing.
 
5.12             Minimum Amount.  The Company shall have received subscriptions
to the Offering for at least the Minimum Amount.
 
5.13             Delivery of Securities. The Company shall have delivered the
certificates representing the Shares and Warrants to the Investors, as specified
in Section 1.
 
6           Conditions of the Company’s Obligations at Closings.  The
obligations of the Company to the Investors under this Agreement are subject to
the fulfillment on or before the applicable Closing of each of the following
conditions by the Investors:
 
6.1             Representations and Warranties.  The representations and
warranties of the Investors contained in Section 3 shall be true and correct as
of such applicable Closing with the same effect as though such representations
and warranties had been made on and as of such Closing.
 
6.2             Payment of Purchase Price.  The Investors shall have delivered
the purchase price specified in Section 1.2.
 
6.3             Minimum Amount.  The Company shall have received subscriptions
to the Offering for at least the Minimum Amount.
 

 
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7           Indemnification.  The Investors, severally and not jointly, agree to
indemnify and hold harmless the Company, the Placement Agent, and their
respective officers, directors, employees, agents, control persons and
affiliates from and against all losses, liabilities, claims, damages, costs,
fees and expenses whatsoever (including, but not limited to, any and all
expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of any actual or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Investor of any covenant
or agreement made by the Investor herein or in any other document delivered in
connection with this Agreement.
 
The Company agrees to indemnify and hold harmless the Investors and any of
Investors’ general partners, employees, officers, directors, members, agents and
other representatives from and against all losses, liabilities, claims, damages,
costs, fees and expenses whatsoever (including, but not limited to, any and all
expenses incurred in investigating, preparing or defending against any
litigation commenced or threatened) based upon or arising out of any actual or
alleged false acknowledgment, representation or warranty, or misrepresentation
or omission to state a material fact, or breach by the Company of any covenant
or agreement made by the Company herein or in any other document delivered in
connection with this Agreement.
 
8           Miscellaneous.
 
8.1             Survival of Warranties.  All of the representations and
warranties made herein shall survive the execution and delivery of this
Agreement for a period of one year.  The Investors are entitled to rely, and the
parties hereby acknowledge that the Investors have so relied, upon the truth,
accuracy and completeness of each of the representations and warranties of the
Company contained herein, irrespective of any independent investigation made by
Investors.  The Company is entitled to rely, and the parties hereby acknowledge
that the Company has so relied, upon the truth, accuracy and completeness of
each of the representations and warranties of the Investors contained herein,
irrespective of any independent investigation made by the Company.
 
8.2             Successors and Assigns.  Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities sold hereunder.  Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
 
8.3             Governing Law.  This Agreement shall be governed by and
construed under the laws of the State of Nevada.  The parties hereto (1) agree
that any legal suit, action or proceeding arising out of or relating to this
Agreement shall be instituted exclusively within the federal courts located in
the State of Nevada or the courts of the State of Nevada, (2) waives any
objection which the Company may have now or hereafter to the venue of any such
suit, action or proceeding, and (3) irrevocably consents to the jurisdiction of
such federal or state court, as the case may be, located within the State of
Nevada in any such suit, action or proceeding.  The Company further agrees to
accept and acknowledge service of any and all process which may be served in any
such suit, action or proceeding in the federal courts located in the State of
Nevada or the courts of the State of Nevada and agrees that service of process
upon the Company mailed by certified mail to the Company's address shall be
deemed in every respect effective service of
 

 
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process upon the Company, in any such suit, action or proceeding.  THE PARTIES
HERETO AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DOCUMENT OR
AGREEMENT CONTEMPLATED HEREBY.
 
8.4             Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile or by e-mail delivery of a “.pdf” format data file,
either of which shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) this Agreement with
the same force and effect as if such facsimile or “.pdf” signature page were an
original thereof.
 
8.5             Titles and Subtitles.  The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
 
8.6             Notices.  Unless otherwise provided, any notice, authorization,
request or demand required or permitted to be given under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified or three (3) days following deposit with the United
States Post Office, by registered or certified mail, postage prepaid, or two
days after it is sent by an overnight delivery service, or when sent by
facsimile with machine confirmation of delivery addressed as follows:
 
If to the Investors to:
 
The addresses sent forth on the signature pages attached.
 
  With a copy to:
 
[________________]
[________________]
[________________]
Fax: [____________]
Tel:  [____________]
Attention: [________________]

If to Company, to:
 
WaferGen Bio-systems, Inc.
7400 Paseo Padre Parkway
Fremont, CA 94555
Email:  ivan.trifunovich@wafergen.com
Fax:  (510) 793-8992
Tel:  (908) 442-2297
Attention:  Ivan Trifunovich
 

 
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  With a copy to:
 
K&L Gates
4350 Lassiter at North Hills Avenue, Suite 300
Raleigh, NC 27609
Fax: (919) 516-2028
Tel: (919) 743-7328
Attention:  D. Scott Coward, Esq.
 
If to the Placement Agent, to:
 
[________________]
[________________]
[________________]
Fax: [____________]
Tel:  [____________]
Attention: [________________]

  With a copy to:
 
[________________]
[________________]
[________________]
Fax: [____________]
Tel:  [____________]
Attention: [________________]

Any party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
 
8.7             Compensation of Placement Agent.  Excluding those Investors
which were first introduced to the Company by Roth, each Investor acknowledges
that it is aware that the Placement Agent will receive from the Company, in
consideration of its services as Placement Agent in respect of the transactions
contemplated hereby, (a) selling commissions aggregating 10% of the Purchase
Price of the Securities sold at each Closing to Investors first introduced to
the Company by the Placement Agent, payable in cash (the “Cash Commissions”),
(b) reimbursement of all reasonable and documented expenses incurred by the
Placement Agent in connection with this offering, provided that Placement
Agent’s legal expenses shall not exceed $40,000.00 and (c) five-year unit
purchase warrants (the “Placement Agent Warrants”) to purchase 10% of the number
of units sold by the Company at each Closing to Investors first introduced to
the Company by the Placement Agent; provided, however, that in the event that
Investors first introduced by the Placement Agent subscribe to at least five
million ($5,000,000) of the Offering, the Placement Agent shall also be entitled
to receive additional Cash Commissions and Placement Agent Warrants to purchase
5% of the number of units sold by the Company at each Closing to existing
Investors, their affiliates and insiders of the Company.
 

 
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8.8             Transaction Expenses; Enforcement of Transaction Documents.  The
Company and each Investor shall pay their respective costs and expenses incurred
with respect to the negotiation, execution, delivery and performance of this
Agreement.  If any action at law or in equity is necessary to enforce or
interpret the terms of the Transaction Documents, the prevailing party shall be
entitled to reasonable attorney’s fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
 
8.9             Amendments and Waivers.  This Agreement may be amended or
terminated and the observance of any term of this Agreement may be waived with
respect to all parties to this Agreement (either generally or in a particular
instance and either retroactively or prospectively), with the written consent of
the Company and the Common Stock Requisite Holders (as defined
below).  Notwithstanding the foregoing, this Agreement may not be amended or
terminated and the observance of any term hereunder may not be waived with
respect to any Investor without the written consent of such Investor unless such
amendment, termination or waiver applies to all Investors in the same
fashion.  The Company shall give prompt written notice of any amendment or
termination hereof or waiver hereunder to any party hereto that did not consent
in writing to such amendment, termination or waiver.  Any amendment, termination
or waiver effected in accordance with this Section 8.9 shall be binding on all
parties hereto, even if they do not execute such consent.  No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.  Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any Securities purchased under this Agreement at the time outstanding each
future holder of all such Securities, and the Company. For purposes hereof,
“Common Stock Requisite Holder(s)” shall mean holders of Common Stock
representing at least 66% of the then outstanding number of shares of Common
Stock held by the Investors.
 
8.10             Severability.  If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
 
8.11             Entire Agreement.  This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
 
8.12             Independent Nature of Investors.  The obligations of each
Investor under this Agreement or other transaction document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under this Agreement or any other transaction document.  Each Investor
shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.  The decision of each Investor to purchase Securities
pursuant to this Agreement has been made by such Investor independently of any
other Investor and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other Investor
or by any agent or employee of any other Investor, and no Investor or any of its
agents or employees shall
 

 
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have any liability to any other Investor (or any other person) relating to or
arising from any such information, materials, statements or opinions.  Nothing
contained herein or in any other transaction document, and no action taken by
any Investor pursuant hereto or thereto, shall be deemed to constitute the
Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement.  Except as otherwise provided in this Agreement
or any other transaction document, each Investor shall be entitled to
independently protect and enforce its rights arising out of this Agreement or
out of the other transaction documents, and it shall not be necessary for any
other Investor to be joined as an additional party in any proceeding for such
purpose.  Each Investor represents and warrants that it has been represented by
its own separate legal counsel in connection with the transactions contemplated
hereby and acknowledges and understands that K&L Gates LLP has served as counsel
to the Company only, and the Investors cannot rely upon K&L Gates LLP in any
manner with regard to their decision to participate in the transactions
contemplated hereby.  Each Investor also acknowledges and understands that Duane
Morris LLP has served as counsel to the Placement Agent only and the Investors
cannot rely upon Duane Morris LLP in any manner with regard to their decision to
participate in the transactions contemplated hereby.
 
8.13             Side Letter Terms.  The terms and provisions contained in the
two side letters attached hereto as Annexes 1 and 2 (the “Side Letters”) are
hereby incorporated by reference herein.  Notwithstanding anything herein to the
contrary, including, without limitation, Sections 2.23 and 8.11 hereof and any
additional provisions referenced in the Side Letters, in the event of any
conflict between the terms of the Side Letters and any other Transaction
Document, the terms of the Side Letters shall control.
 

 

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

WAFERGEN BIO-SYSTEMS, INC., a Nevada corporation

By:           
Name:
Title:

Investors:

[TO SIGN AND COMPLETE SIGNATURE PAGE ANNEXED HERETO]

 
 

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SIGNATURE PAGE
 
By execution and delivery of this signature page, you hereby: (i) agree to
become (A) an Investor, as defined in that certain Securities Purchase Agreement
(the “Purchase Agreement”), by and among WaferGen Bio-systems, Inc., a Nevada
corporation (the “Company”), and the Investors (as defined in the Purchase
Agreement), and (B) a Holder, as defined in that certain Registration Rights
Agreement (the “Registration Rights Agreement”), by and among the Company and
the Holders (as defined in the Registration Rights Agreement), and, in the case
of the Purchase Agreement and Registration Rights Agreement, are each dated as
of__________5__, 2013, (ii) acknowledge that you have read the entire Purchase
Agreement, the entire Registration Rights Agreement and the entire Confidential
Private Placement Memorandum dated July 31, 2013 referenced in the Purchase
Agreement and that you agree to be bound by each of the Purchase Agreement and
the Registration Rights Agreement; and (iii) acknowledge that you have reviewed
the representations in Section 3 of the Purchase Agreement entitled
“Representations and Warranties of the Investors,” and represent that the
statements contained in Section 3 of the Purchase Agreement are complete and
accurate with respect to the undersigned as an Investor.

INVESTOR/HOLDER:
 
Print Name: ________________________________
 
Signature:__________________________________
 
Print Name (if joint investment):___________________
 
Signature:__________________________________
 
Title (if entity) _______________________________
 
Telephone No. ______________________________
 
E-mail Address: _____________________________
 
Social Security # or Fed ID #___________________
 
___________________________________________
Street Address
___________________________________________
Street Address – 2nd line
___________________________________________
City, State, Zip
 
NUMBER OF UNITS PURCHASED: ___________
 
AGGREGATE PURCHASE PRICE
($50,000 PER UNIT): $_______________________
 
Date: _____________________________________
 
 
 
 

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5  To be completed to reflect date of initial closing.  Investors should not
complete this.

 
2

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SCHEDULE OF INVESTORS

[TO BE INSERTED]
 

 
 

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APPENDIX A
 
Additional Definitions
 
For purposes of this Agreement, the following additional capitalized terms shall
have the respective definitions set forth below:
 
“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.
 
“Applicable Laws” means all applicable provisions of all (i) constitutions,
treaties, statutes, laws, rules, regulations and ordinances of any Governmental
Authority and all common law duties, (ii) Consents of any Governmental Authority
and (iii) orders, writs, decisions, rulings, judgments or decrees of any
Governmental Authority binding upon, or applicable to, the Company or Investor,
as the case may be.
 
“Board of Directors” means the board of directors of the Company.
 
“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
 
“Commission” means the United States Securities and Exchange Commission.
 
“Consents” means all consents, approvals, authorizations, waivers, permits,
grants, franchises, licenses, findings of suitability, exemptions or orders of,
or any registrations, certificates, qualifications, declarations or filings
with, or any notices to, any Governmental Authority or other Person.
 
“Eligible Market” means The New York Stock Exchange, the NYSE Amex, the Nasdaq
Global Select Market, the Nasdaq Global Market, the Nasdaq Capital Market, the
OTC Bulletin Board, or OTCQX.
 
“Environmental Laws” means all Applicable Laws relating to Hazardous Materials
or the protection of human health or safety or the environment, including all
requirements pertaining to reporting, permitting, investigating or remediating
Releases or threatened Releases of Hazardous Materials into the environment, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
 
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
 
“GAAP” means U.S. generally accepted accounting principles and practices set
forth in the opinions and pronouncements of the Accounting Principles Board and
the
 

 
 

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American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, all as in effect on the date in question, applied on
a basis consistent with prior periods.
 
“Governmental Authority” means any nation or government, and any state or
political subdivision thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
(including the Commission and any court, tribunal or arbitrator(s) of competent
jurisdiction, and any other stock exchange or self-regulatory organization,
including the OTC Bulletin Board, OTC Markets Inc. and the Pink OTC Markets,
Inc.).
 
“Hazardous Materials” means any substance (i) which is regulated or governed
under any Environmental Laws; (ii) that is defined or becomes defined as a
“hazardous waste” or “hazardous substance” under any Environmental Laws;  (iii)
that is otherwise, to the extent not included in clause (i) or (ii)  above,
toxic, explosive, corrosive, inflammable, infectious, radioactive, carcinogenic
or mutagenic; or (iv) that contains gasoline or other petroleum hydrocarbons,
polychlorinated biphenyls or asbestos.
 
“Liens” means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.
 
“Organizational Documents” means, collectively, with respect to any Person that
is an entity, the articles of incorporation, certificate of incorporation,
certificate of formation, articles of organization, bylaws, limited liability
company agreement, operating agreement, partnership agreement and similar
organizational documents of such Person, as applicable.
 
“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
 
“Principal Market” means the Eligible Market on which the Common Stock is
primarily listed on or quoted for trading, which, as of the date of this
Agreement and the date of each Closing, shall be the OTC Bulletin Board.
 
“Real Property” means any real property or facility currently or formerly owned,
operated, leased or occupied by the Company.
 
“Release” means any release (whether threatened or actual), migration, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
seeping, leaching, dumping or disposing into the environment or the workplace of
any Hazardous Materials, and otherwise as defined in any Environmental Laws.
 
“Registration Rights Agreement” means the Registration Rights Agreement, dated
as of August 27, 2013, by and among the Company and the Investors.
 

 
 

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“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
 
“Subsidiary” means any subsidiary of the Company as set forth on Section 2.1  of
the Disclosure Schedule and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the date hereof.
 
“Trading Day” means a day on which the principal Trading Market is open for
trading.
 
“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, the OTC Bulletin Board, the OTCQX,
OTCQB or OTC Pink (or any successors to any of the foregoing).
 
“Transaction Documents” means this Agreement, the Warrants, the Placement Agent
Warrant and the Registration Rights Agreement, together with all exhibits and
schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.
 
 

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