EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of December
18, 2014 by and among MRI Interventions, Inc., a Delaware corporation (the
“Company”), and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser,” and collectively, the
“Purchasers”).

 

RECITALS

 

A.     The Company is offering for sale units (“Units”), with each Unit
consisting of (i) one share of the Company’s common stock, par value $0.01 per
share (the “Common Stock”), and (ii) a warrant to purchase 0.40 share of Common
Stock (the “Offering”).

 

B.      The Company has engaged one or more placement agents for the Offering on
a “best efforts” basis.

 

C.     Pursuant to this Agreement, each Purchaser, severally and not jointly,
wishes to purchase, and the Company wishes to sell, upon the terms and
conditions set forth herein, that aggregate number of Units set forth below such
Purchaser’s name on the signature page of this Agreement.

 

D.     The Company and each Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the
United States Securities and Exchange Commission (the “Commission”) under the
Securities Act.

 

E.      Contemporaneously with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement,
substantially in the form attached hereto as Exhibit A (the “Registration Rights
Agreement”), pursuant to which, among other things, the Company will agree to
provide certain registration rights with respect to the Shares (defined below)
and the Warrant Shares (as defined below) under the Securities Act and the rules
and regulations promulgated thereunder and applicable state securities laws.

 

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

 

ARTICLE I
DEFINITIONS

 

1.1     Definitions. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1:

 

“8-K Filing” has the meaning set forth in Section 4.5.

 

“Action” means any action, suit, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or, to the
knowledge of the Company, overtly threatened in writing against the Company, any
Subsidiary or any of their respective properties or any officer, director or
employee of the Company or any Subsidiary acting in his or her capacity as an
officer, director or employee, before or by any federal, state, county, local or
foreign court, arbitrator, governmental or administrative agency, regulatory
authority, stock market, stock exchange or trading facility.

 

“Affiliate” means, with respect to any Person, any other Person that, directly
or indirectly through one or more intermediaries, Controls, is controlled by or
is under common control with such Person, as such terms are used in and
construed under Rule 405 under the Securities Act.

 

“Agreement” has the meaning set forth in the Preamble.

 

“BHCA” has the meaning set forth in Section 3.1(rr).

 

 
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“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except Saturday, 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.

 

“Closing” means the closing of the purchase and sale of the Units pursuant to
this Agreement.

 

“Closing Date” means the Trading Day when all of the Transaction Documents have
been executed and delivered by the applicable parties thereto, and all of the
conditions set forth in Sections 2.1, 2.2, 5.1 and 5.2 hereof are satisfied or
waived, as the case may be, or such other date as the parties may agree.

 

“Commission” has the meaning set forth in the Recitals.

 

“Common Stock” has the meaning set forth in the Recitals, and also includes any
other class of securities into which the Common Stock may hereafter be
reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or any Subsidiary
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock or other securities that entitle the holder to receive, directly or
indirectly, Common Stock.

 

“Company” has the meaning set forth in the Preamble.

 

“Company Counsel” means Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, or
such other legal counsel as may be engaged by the Company.

 

“Company Deliverables” has the meaning set forth in Section 2.2(a).

 

“Control” (including the terms “controlling,” “controlled by” or “under common
control with”) means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

 

“Disclosure Materials” has the meaning set forth in Section 3.1(h).

 

“Effective Date” means the date on which the initial Registration Statement
required by Section 2(a) of the Registration Rights Agreement is first declared
effective by the Commission.

 

“Environmental Laws” has the meaning set forth in Section 3.1(dd).

 

“Evaluation Date” has the meaning set forth in Section 3.1(t).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

“FDA” has the meaning set forth in Section 3.1(pp).

 

“FDCA” has the meaning set forth in Section 3.1(pp).

 

“Federal Reserve” has the meaning set forth in Section 3.1(rr).

 

“GAAP” means U.S. generally accepted accounting principles, as applied by the
Company.

 

“Indebtedness” means (i) any liabilities for borrowed money in excess of $50,000
(which, for the avoidance of doubt, does not include trade accounts payable),
(ii) 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 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 (iii) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP.

 

 
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“Indemnified Person” has the meaning set forth in Section 4.10(b).

 

“Intellectual Property Rights” has the meaning set forth in Section 3.1(p).

 

“Lien” means any lien, charge, claim, encumbrance, security interest, right of
first refusal, preemptive right or other restriction of any kind.

 

“Major Purchaser” means a Purchaser, or group of Purchasers that are Affiliates
(including affiliated funds), that purchases $3 million or more of Securities,
in the aggregate, at the Closing.

 

“Material Adverse Effect” means a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, except that any of the
following, either alone or in combination, shall not be deemed a Material
Adverse Effect: (i) effects caused by changes or circumstances affecting general
market or other conditions in the U.S. economy or which are generally applicable
to the industry in which the Company operates, provided that such effects are
not borne to a materially disproportionate degree by the Company compared to
other companies operating in the same industry as the Company; (ii) effects
resulting from or relating to the announcement or disclosure of the sale of the
Securities or other transactions contemplated by this Agreement or the Offering;
or (iii) effects caused by any event, occurrence or condition resulting from or
relating to the taking of any action in accordance with this Agreement.

 

“Material Contract” means any contract of the Company that has been filed or was
required to have been filed as an exhibit to the SEC Reports pursuant to
Item 601(b)(4) or Item 601(b)(10) of Regulation S-K.

 

“Material Permits” has the meaning set forth in Section 3.1(n).

 

“Money Laundering Laws” has the meaning set forth in Section 3.1(ss).

 

“New York Courts” means the state and federal courts sitting in the City of New
York, Borough of Manhattan.

 

“OFAC” has the meaning set forth in Section 3.1(kk).

 

“Offering” has the meaning set forth in the Recitals.

 

“Person” means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.

 

“Placement Agent” means, collectively, any placement agent(s) engaged by the
Company for the Offering.

 

“Press Release” has the meaning set forth in Section 4.5.

 

“Principal Trading Market” means the Trading Market on which the Common Stock is
primarily listed on and/or quoted for trading, which, as of the date of this
Agreement and the Closing Date, shall be the OTCQB tiered marketplace organized
by OTC Markets Group.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or overtly threatened in writing.

 

“Product” has the meaning set forth in Section 3.1(pp).

 

“Purchase Price” means $0.6435 per Unit.

 

“Purchaser” or “Purchasers” has the meaning set forth in the Preamble.

 

 
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“Purchaser Deliverables” has the meaning set forth in Section 2.2(b).

 

“Purchaser Party” has the meaning set forth in Section 4.10(a).

 

“Registration Rights Agreement” has the meaning set forth in the Recitals.

 

“Registration Statement” means a registration statement meeting the requirements
set forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Registrable Securities (as defined in the Registration Rights
Agreement).

 

“Regulation D” has the meaning set forth in the Recitals.

 

“Required Approvals” has the meaning set forth in Section 3.1(e).

 

“Required Delivery Date” has the meaning set forth in Section 4.1(c).

 

“Required Purchasers” means Purchasers holding or having the right to acquire
66.66% of the Shares and the Warrant Shares, at the applicable time.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

 

“SEC Reports” has the meaning set forth in Section 3.1(h).

 

“Securities” means, collectively, the Units, the Shares, the Warrants and the
Warrant Shares.

 

“Securities Act” has the meaning set forth in the Recitals.

 

“Shares” means, as the context requires, (i) the shares of Common Stock being
acquired by a Purchaser pursuant to this Agreement, or (ii) the aggregate number
of shares of Common Stock being acquired by all Purchasers together pursuant to
this Agreement.

 

“Short Sales” include, without limitation (i) all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act, whether or not
against the box, and all types of direct and indirect stock pledges, forward
sale contracts, options, puts, calls, short sales, swaps, “put equivalent
positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar
arrangements (including on a total return basis), and (ii) sales and other
transactions through non-U.S. broker dealers or foreign regulated brokers (but
shall not be deemed to include the location and/or reservation of borrowable
shares of Common Stock).

 

“Subscription Amount” means, with respect to each Purchaser, the aggregate
amount paid by such Purchaser, and accepted by the Company, for the Units
purchased hereunder.

 

“Subsidiary” means any subsidiary of the Company as set forth on Schedule
3.1(a), and shall, where applicable, include any subsidiary of the Company
formed or acquired after the date hereof.

 

“Trading Day” means (i) a day on which the Common Stock is listed or quoted on
its Principal Trading Market, or (ii) if the Common Stock is not listed or
quoted on any Trading Market, a day on which the Common Stock is quoted in the
over the counter market as reported in the OTC Pink (also known as “Pink
Sheets”) by OTC Markets Group Inc. (or any similar organization or agency
succeeding to its functions of reporting prices); provided, that in the event
that the Common Stock is not listed or quoted as set forth in clause (i) or
(ii) above, then Trading Day shall mean a Business Day.

 

“Trading Market” means whichever of the New York Stock Exchange, the NYSE MKT,
the NASDAQ Stock Market (any market tier) or the OTCQX or OTCQB tiered
marketplace organized by OTC Markets Group, on which the Common Stock is listed
or quoted for trading on the date in question.

 

 
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“Transaction Documents” means this Agreement, the schedules and exhibits
attached hereto, the Warrants, the Registration Rights Agreement, the Transfer
Agent Instructions and any other documents or agreements explicitly contemplated
hereunder.

 

“Transfer Agent” means Continental Stock Transfer & Trust Co., the current
transfer agent of the Company, or any successor transfer agent for the Company.

 

“Transfer Agent Instructions” has the meaning set forth in Section 2.2(a)(iv).

 

“Unit” has the meaning set forth in the Recitals.

 

“Warrants” means, as the context requires, (i) the warrants being acquired by a
Purchaser pursuant to this Agreement, or (ii) the aggregate warrants being
acquired by all Purchasers together pursuant to this Agreement.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

 

ARTICLE II
PURCHASE AND SALE

 

2.1     Closing.

 

(a)     Amount. Subject to the terms and conditions set forth in this Agreement,
at the Closing, the Company shall issue and sell to each Purchaser, and each
Purchaser shall, severally and not jointly, purchase from the Company, such
number of shares of Common Stock equal to the quotient resulting from dividing
(i) the Subscription Amount for such Purchaser by (ii) the Purchase Price,
rounded down to the nearest whole share. In addition, each Purchaser shall
receive a Warrant to purchase a number of Warrant Shares equal to forty percent
(40%) of the number of Shares purchased by such Purchaser, rounded up to the
nearest whole share. The Warrants shall have an exercise price equal to $0.858
per Warrant Share.

 

(b)     Closing. The Closing of the purchase and sale of the Units pursuant to
hereto shall take place at the offices of Baker, Donelson, Bearman, Caldwell &
Berkowitz, PC on the Closing Date or at such other location or remotely by
facsimile transmission or other electronic means as determined by the Company.

 

(c)     Form of Payment. Unless otherwise agreed by the Company, on or before
the Closing Date, each Purchaser shall wire its Subscription Amount, in United
States dollars and in immediately available funds, in accordance with the
written wire transfer instructions provided by the Company. The Company shall,
within three Trading Days after the Closing, deliver or cause to be delivered to
each Purchaser (i) one or more original stock certificates evidencing the number
of Shares such Purchaser purchased, and (ii) one or more Warrants, substantially
in the form attached hereto as Exhibit B, evidencing the appropriate number of
Warrant Shares as provided in Section 2.1(a) above.

 

2.2     Closing Deliveries.

 

(a)     At or prior to the Closing, the Company shall issue, deliver or cause to
be delivered to the Purchasers or the Placement Agent, as applicable, the
following (the “Company Deliverables”):

 

(i)     this Agreement, duly executed by the Company;

 

(ii)     a customary legal opinion from Company Counsel, dated as of the Closing
Date, executed by such counsel and addressed to the Purchasers and the Placement
Agent;

 

(iii)     facsimile copies of the issued and duly executed Shares and Warrants
being purchased by such Purchaser at the Closing pursuant to this Agreement;

 

(iv)     a copy of the Irrevocable Transfer Agent Instructions, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent (the “Transfer Agent Instructions”);

 

 
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(v)     the Registration Rights Agreement, duly executed by the Company; and

 

(vi)     a certificate of the Secretary of the Company, dated as of the Closing
Date, (a) certifying the resolutions adopted by the Board of Directors or a duly
authorized committee thereof approving the transactions contemplated by this
Agreement and the other Transaction Documents and the issuance of the
Securities, and (b) certifying the current versions of the certificate of
incorporation and bylaws of the Company.

 

(b)     At or prior to the Closing, each Purchaser shall deliver or cause to be
delivered to the Company the following (the “Purchaser Deliverables”):

 

(i)     this Agreement, duly executed by such Purchaser;

 

(ii)     its Subscription Amount, in United States dollars and in immediately
available funds, in the amount indicated below such Purchaser’s name on the
applicable signature page hereto under the heading “Aggregate Purchase Price
(Subscription Amount)” by wire transfer in accordance with the Company’s written
instructions;

 

(iii)     the Registration Rights Agreement, duly executed by such Purchaser;
and

 

(iv)     a fully completed and duly executed Investor Questionnaire in the form
provided by the Company.

 

ARTICLE III
REPRESENTATIONS AND WARRANTIES

 

3.1     Representations and Warranties of the Company. The Company hereby
represents and warrants as of the date hereof and as of the Closing Date (except
for the representations and warranties that speak as of a specific date, which
shall be made as of such date), to each Purchaser:

 

(a)     Subsidiaries. The Company has no direct or indirect Subsidiaries other
than those listed in Schedule 3.1(a) hereto. Except as disclosed in Schedule
3.1(a) hereto, the Company owns, directly or indirectly, all of the capital
stock or comparable equity interests of each Subsidiary, if any, free and clear
of any and all Liens, and all the issued and outstanding shares of capital stock
or comparable equity interest of each Subsidiary, if any, are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.

 

(b)     Organization and Qualification. The Company and each of its Subsidiaries
is an entity duly incorporated or otherwise organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization (as applicable), with the requisite power and authority to own or
lease 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 of incorporation,
bylaws or other organizational or charter documents. The Company and each of its
Subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not have a Material Adverse Effect, and no Proceeding has
been instituted, is pending, or, to the knowledge of the Company, has been
threatened in writing in any such jurisdiction revoking, limiting or curtailing
or seeking to revoke, limit or curtail such power and authority or
qualification.

 

(c)     Authorization; Enforcement; Validity. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party and
otherwise to carry out its obligations hereunder and thereunder. The Company’s
execution and delivery of each of the Transaction Documents to which it is a
party and the consummation by it of the transactions contemplated hereby and
thereby (including, but not limited to, the sale and delivery of the Shares and
the Warrants and the reservation for issuance and the subsequent issuance of the
Warrant Shares upon exercise of the Warrants) have been duly authorized by all
necessary corporate action on the part of the Company, and no further corporate
action is required by the Company, its Board of Directors or its stockholders in
connection therewith other than in connection with the Required Approvals. Each
of the Transaction Documents to which the Company is a party has been (or upon
delivery will have been) duly executed by the Company and is, or when delivered
in accordance with the terms hereof, will constitute the legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors’ rights and
remedies or by other equitable principles of general application, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

 
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(d)     No Conflicts. The execution, delivery and performance by the Company of
the Transaction Documents to which it is a party and the consummation by the
Company of the transactions contemplated hereby or thereby (including, without
limitation, the issuance of the Shares and Warrants and the reservation for
issuance and issuance of the Warrant Shares) do not and will not (i) conflict
with or violate any provisions of the Company’s certificate of incorporation or
bylaws or otherwise result in a violation of the organizational documents of the
Company, (ii) conflict with, or constitute a default (or an event that with
notice or lapse of time or both would result in a default) under, result in the
creation of any Lien upon any of the properties or assets of the Company or give
to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time or both) of, any Material Contract, 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 is
subject (including federal and state securities laws, assuming the correctness
of the representations and warranties made by the Purchasers herein), or by
which any property or asset of the Company is bound or affected, except in the
case of clauses (ii) and (iii) such as would not, individually or in the
aggregate, have a Material Adverse Effect.

 

(e)     Filings, Consents and Approvals. Neither the Company nor any of its
Subsidiaries is 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, self-regulatory
organization (including the Principal Trading Market) or other Person in
connection with the execution, delivery and performance by the Company of the
Transaction Documents (including, without limitation, the issuance of the Shares
and Warrants and the reservation for issuance and issuance of the Warrant
Shares), other than (i) the filing with the Commission of one or more
Registration Statements in accordance with the requirements of the Registration
Rights Agreement, (ii) filings required by applicable state securities laws,
(iii) the filing of a Notice of Exempt Offering of Securities on Form D with the
Commission under Regulation D of the Securities Act, (iv) the filing of any
requisite notices and/or application(s) to the Principal Trading Market for the
issuance and sale of the Securities and the listing of the Shares and Warrant
Shares for trading or quotation, as the case may be, thereon in the time and
manner required thereby, (v) the filings contemplated in Section 4.5 of this
Agreement, and (vi) those that have been made or obtained prior to the date of
this Agreement (collectively, the “Required Approvals”).

 

(f)     Issuance of the Securities. The Shares have been duly authorized and,
when issued and paid for in accordance with the terms of the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable and
free and clear of all Liens, other than restrictions on transfer provided for in
the Transaction Documents or imposed by applicable securities laws, and shall
not be subject to preemptive or similar rights of stockholders. The Warrants
have been duly authorized and, when issued and paid for in accordance with the
terms of the Transaction Documents, will be duly and validly issued, free and
clear of all Liens, other than restrictions on transfer provided for in the
Transaction Documents or imposed by applicable securities laws, and shall not be
subject to preemptive or similar rights of stockholders. The Warrant Shares
issuable upon exercise of the Warrants have been duly authorized and, when
issued and paid for in accordance with the terms of the Transaction Documents
and the Warrants will be duly and validly issued, fully paid and nonassessable,
free and clear of all Liens, other than restrictions on transfer provided for in
the Transaction Documents or imposed by applicable securities laws, and shall
not be subject to preemptive or similar rights of stockholders. Assuming the
accuracy of the representations and warranties of the Purchasers in this
Agreement, the Securities will be issued in compliance with all applicable
federal and state securities laws. As of the Closing Date, the Company shall
have reserved from its duly authorized capital stock the number of shares of
Common Stock issuable upon exercise of the Warrants (without taking into account
any limitations on the exercise of the Warrants set forth in the Warrants). The
Company shall, so long as any of the Warrants are outstanding, take all action
necessary to reserve and keep available out of its authorized and unissued
capital stock, solely for the purpose of effecting the exercise of the Warrants,
the number of shares of Common Stock issuable upon exercise of the Warrants
(without taking into account any limitations on the exercise of the Warrants set
forth in the Warrants).

 

 
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(g)     Capitalization. The number of shares and type of all authorized, issued
and outstanding capital stock, options and other securities of the Company as of
October 31, 2014 (whether then convertible into or exercisable or exchangeable
for shares of capital stock of the Company) is set forth in Schedule 3.1(g)
hereto. Except as set forth in Schedule 3.1(g), 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 that
have not been effectively waived as of the Closing Date. Except as set forth in
Schedule 3.1(g), the issuance and sale of the Units will not obligate the
Company to issue shares of Common Stock or other securities to any Person (other
than the Purchasers and the Placement Agent) 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 validly issued, fully paid and nonassessable,
have been issued in compliance with all applicable 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.

 

(h)     SEC Reports; Disclosure Materials. The Company has filed with the
Commission all reports, schedules, forms, statements and other documents
required to be filed by the Company under the Exchange Act, including pursuant
to Section 13(a) or 15(d) thereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being
collectively referred to herein as the “SEC Reports,” and the SEC Reports, being
collectively referred to as the “Disclosure Materials”), on a timely basis or
has received a valid extension of such time of filing and has filed any such SEC
Reports prior to the expiration of any such extension. As of their respective
filing dates, or to the extent corrected or updated by a subsequent amendment or
restatement, the SEC Reports complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Reports, 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
light of the circumstances under which they were made, not misleading. Each of
the Material Contracts to which the Company or any Subsidiary is a party or to
which the property or assets of the Company or any of its Subsidiaries are
subject has been filed (or incorporated by reference) as an exhibit to the SEC
Reports.

 

(i)     Financial Statements. The financial statements of the Company included
in the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing (or to the extent corrected or
updated by a subsequent amendment or restatement). Such financial statements
have been prepared in accordance with GAAP, except as may be otherwise specified
in such financial statements or the notes thereto and except that unaudited
financial statements may not contain all footnotes required by GAAP, and fairly
present in all material respects the financial position of the Company and its
consolidated subsidiaries taken as a whole as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in
the case of unaudited statements, to normal year-end audit adjustments.

 

(j)     Material Changes. Since December 31, 2013, (i) there have been no
events, occurrences or developments that have had or would reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (ii) except as disclosed in the SEC Reports, the Company has not
incurred any material 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 materially its
method of accounting or the manner in which it keeps its accounting books and
records, (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, (v) except as
disclosed in the SEC Reports, there has not been any material change or
amendment to, or any waiver of any material right by the Company under, any
Material Contract under which the Company or any of its Subsidiaries is bound or
subject.

 

(k)     Litigation. There is no Action which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Transaction Documents or
the issuance of the Securities or (ii) except as disclosed in the SEC Reports,
would, if there were an unfavorable decision, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect.

 

 
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(l)     Employment Matters. No material labor dispute exists or, to the
knowledge of the Company, is imminent with respect to any of the employees of
the Company which would have a Material Adverse Effect. None of the Company’s or
any Subsidiary’s employees is a member of a union that relates to such
employee’s relationship with the Company or Subsidiary, and neither the Company
nor any of its Subsidiaries is a party to a collective bargaining agreement. The
Company and each Subsidiary believes that its relationship with its employees is
good. No current executive officer of the Company (as defined in Rule 501(f)
under the Securities Act) has notified the Company or any such Subsidiary that
such officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. To
the knowledge of the Company, no current executive officer is, or is now
expected to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement with the Company, or any other contract or agreement
or any restrictive covenant in favor of a third party, and to the knowledge of
the Company, the continued employment of each such executive officer does not
subject the Company or any Subsidiary to any liability with respect to any of
the foregoing matters. 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 would not,
individually or in the aggregate, have a Material Adverse Effect.

 

(m)     Compliance. Neither the Company nor any of its Subsidiaries (i) is in
default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any of its Subsidiaries under), nor has the Company or any of its
Subsidiaries received written notice of a claim that it is in default under or
that it is in violation of, any Material Contract (whether or not such default
or violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body having jurisdiction over the Company, its
Subsidiaries or their respective properties or assets, or (iii) is in violation
of, or in receipt of written notice that it is in violation of, any statute,
rule or regulation of any governmental authority or self-regulatory organization
(including the Principal Trading Market) applicable to the Company, except in
each case as would not, individually or in the aggregate, have a Material
Adverse Effect.

 

(n)     Regulatory Permits. The Company and each of its Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct its
respective business as currently conducted and as described in the SEC Reports,
except where the failure to possess such permits, individually or in the
aggregate, has not and would not have a Material Adverse Effect (“Material
Permits”). Neither the Company nor any of its Subsidiaries has received any
notice of Proceedings relating to the revocation or material adverse
modification of any such Material Permits.

 

(o)     Title to Assets. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property owned by them, if any. The
Company and its Subsidiaries have good and marketable title to all tangible
personal property owned by them that is material to the business of the Company
and its Subsidiaries, taken as whole, in each case free and clear of all Liens
except as disclosed in Schedule 3.1(o) or such as do not materially affect the
value of such property and do not interfere with the use made and proposed to be
made of such property by the Company and any of its Subsidiaries. Any real
property and facilities held under lease by the Company and any of its
Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and facilities by the Company and its
Subsidiaries.

 

(p)     Patents and Trademarks. To the knowledge of the Company, the Company and
its Subsidiaries own, possess, license or have other rights to use, all patents,
patent applications, trade and service marks, trade and service mark
applications and registrations, trade names, trade secrets, inventions,
copyrights, licenses, technology, know-how and other intellectual property
rights and similar rights necessary or material for use in connection with their
respective businesses as described in the SEC Reports and which the failure to
so have would have a Material Adverse Effect (collectively, the “Intellectual
Property Rights”). There is no pending or, to the knowledge of the Company,
threatened action, suit, proceeding or claim by any Person that the Company’s
business as now conducted infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of such Person. To the
knowledge of the Company, there is no existing infringement by another Person of
any of the Intellectual Property Rights that would have a Material Adverse
Effect. The Company and its Subsidiaries have taken reasonable security measures
to protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights, except where failure to do so would not, individually or in the
aggregate, have a Material Adverse Effect.

 

 
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(q)     Insurance. The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as the Company believes to be prudent and customary in the
businesses and locations in which the Company and the Subsidiaries are engaged.
Neither the Company nor any of its Subsidiaries has received any notice of
cancellation of any such insurance, nor, to the knowledge of the Company, will
it or any Subsidiary be unable to renew their respective 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.

 

(r)     Transactions With Affiliates and Employees. Except as set forth in the
SEC Reports, none of the executive officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company is presently
a party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), that would be required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated under the
Securities Act.

 

(s)     Internal Accounting Controls. The Company and its Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable
assurance 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
differences.

 

(t)     Sarbanes-Oxley; Disclosure Controls. The Company is in compliance in all
material respects with all of the provisions of the Sarbanes-Oxley Act of 2002
which are applicable to it as of the Closing Date. The Company has established
disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
and 15d-15(e) under the Exchange Act) for the Company and designed such
disclosure controls and procedures to ensure that information required to be
disclosed by the Company in the reports it files or submits under the Exchange
Act is recorded, processed, summarized and reported, within the time periods
specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the Company’s disclosure controls and
procedures as of the end of the period covered by the Company’s most recently
filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.

 

(u)     Certain Fees. No person or entity will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or a Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Company, other than placement agent, legal,
accounting and other fees and expenses customary in similar offerings that are
being paid by the Company. The Company shall indemnify, pay, and hold each
Purchaser harmless against, any liability, loss or expense (including, without
limitation, attorneys’ fees and out-of-pocket expenses) arising in connection
with any such right, interest or claim.

 

(v)     Private Placement. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2 of this Agreement and
the accuracy of the information disclosed in the Investor Questionnaires
provided by the Purchasers, no registration under the Securities Act is required
for the offer and sale of the Securities by the Company to the Purchasers under
the Transaction Documents. The issuance and sale of the Securities hereunder
does not contravene the rules and regulations of the Principal Trading Market.

 

 
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(w)     Investment Company. The Company is not, and immediately after receipt of
payment for the Shares and Warrants, will not be 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 subject to the
Investment Company Act of 1940, as amended.

 

(x)     Registration Rights. Except in connection with the Offering, and except
as set forth in Schedule 3.1(x) hereto, no Person has any right to cause the
Company to effect the registration under the Securities Act of any securities of
the Company.

 

(y)     Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate the registration of the Common Stock under
the Exchange Act, nor has the Company received any notification that the
Commission is contemplating terminating such registration. The Company has not,
in the twelve (12) months preceding the date hereof, received written notice
from the Principal Trading Market to the effect that the Company is not in
compliance with the listing or maintenance requirements of the Principal Trading
Market. The Company is in compliance with all listing and maintenance
requirements of the Principal Trading Market on the date hereof.

 

(z)     Rights Agreements. The Company has not adopted any stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
Common Stock or a change in control of the Company.

 

(aa)     Disclosure. The Company confirms that it has not provided, and to the
knowledge of the Company, none of its executive officers or directors nor any
other Person acting on its or their behalf has provided, and it has not
authorized the Placement Agent to provide, any Purchaser or its respective
agents or counsel with any information that it believes constitutes material,
non-public information (i) except insofar as the existence, provisions and terms
of the Transaction Documents and the proposed transactions hereunder may
constitute such information, all of which will be disclosed by the Company in
the manner contemplated by Section 4.5 hereof, or (ii) unless such Purchaser
shall have executed a written agreement regarding the confidentiality and use of
such information. The Company understands and confirms that the Purchasers will
rely on the foregoing representations in effecting transactions in securities of
the Company.

 

(bb)     No Integrated Offering. Assuming the accuracy of the Purchasers’
representations and warranties set forth in Section 3.2, neither the Company
nor, to the knowledge of the Company, any Person acting on its behalf has,
directly or indirectly, at any time within the past six (6) months, made any
offers or sales of any Company security or solicited any offers to buy any
Company security under circumstances that would (i) eliminate the availability
of the exemption from registration under Regulation D under the Securities Act
in connection with the offer and sale by the Company of the Units as
contemplated hereby or (ii) cause the Offering to be integrated with prior
offerings by the Company for purposes of any stockholder approval provisions,
including, without limitation, under the rules and regulations of any Trading
Market on which any of the securities of the Company are listed or quoted.

 

(cc)     Tax Matters. The Company and each of its Subsidiaries (i) has prepared
and filed (or has requested valid extensions for) all foreign, federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject, and (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, except those
being contested in good faith, with respect to which adequate reserves have been
set aside on the books of the Company, except in either case where the failure
to prepare, file or pay would not have a Material Adverse Effect. There are no
unpaid taxes in any material amount claimed to be due by the Company or any of
its Subsidiaries by the taxing authority of any jurisdiction.

 

(dd)     Environmental Matters. To the knowledge of the Company, neither the
Company nor any of its Subsidiaries (i) is in violation of any statute, rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, “Environmental
Laws”), (ii) owns or operates any real property contaminated with any substance
that is in violation of any Environmental Laws, (iii) is liable for any off-site
disposal or contamination pursuant to any Environmental Laws, or (iv) is subject
to any claim relating to any Environmental Laws, which violation, contamination,
liability or claim has had or would have, individually or in the aggregate, a
Material Adverse Effect; and, to the knowledge of the Company, there is no
pending investigation or investigation threatened in writing that could
reasonably be expected to lead to such a claim.

 

 
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(ee)     No General Solicitation. Neither the Company nor, to the knowledge of
the Company, any Person acting on behalf of the Company has offered or sold any
of the Units by any form of general solicitation or general advertising (within
the meaning of Regulation D).

 

(ff)     Unlawful Payments. To the knowledge of the Company, none of the
Company, any of its Subsidiaries, nor any directors, executive officers,
employees, agents or other Persons acting at the direction of or on behalf of
the Company or any of its Subsidiaries, has, in the course of its actions for or
on behalf of the Company: (a) used any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses relating to
foreign or domestic political activity; (b) made any unlawful payments to any
foreign or domestic governmental officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds; (c) violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (d) made
any other unlawful bribe, rebate, payoff, influence payment, kickback or other
material unlawful payment to any foreign or domestic government official or
employee.

 

(gg)     Off Balance Sheet Arrangements. There is no transaction, arrangement,
or other relationship between the Company (or any Subsidiary) and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its SEC Reports and is not so disclosed and would
have a Material Adverse Effect.

 

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

 

(ii)     Regulation M Compliance. The Company has not, and to its knowledge no
one acting on its behalf (other than the Placement Agent, with respect to which
no representation is made) has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, or (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities in violation of Regulation M
under the Exchange Act, other than, in the case of clause (ii), compensation
paid to the Placement Agent in connection with the placement of the Securities.

 

(jj)     PFIC. Neither the Company nor any of its Subsidiaries is or intends to
become a “passive foreign investment company” within the meaning of Section 1297
of the U.S. Internal Revenue Code of 1986, as amended.

 

(kk)     OFAC. Neither the Company nor any of its Subsidiaries is, and, to the
knowledge of the Company, no director, executive officer, agent, employee,
Affiliate or other Person acting for or on behalf of the Company or any of its
Subsidiaries is, currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”). The
Company will not knowingly use the proceeds of the sale of the Securities, or
lend, contribute or otherwise make available such proceeds to any Subsidiary,
joint venture partner or other Person or entity, towards any sales or operations
in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or
for the purpose of financing the activities of any Person currently subject to
any U.S. sanctions administered by OFAC.

 

 
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(ll)     No Additional Agreements. The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by the Transaction Documents other than as specified in the Transaction
Documents.

 

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

 

(nn)     Application of Takeover Protections. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will not
impose any restriction on any Purchaser, or create in any party (including any
current stockholder of the Company) any rights, under any share acquisition,
business combination, poison pill (including any distribution under a rights
agreement), or other similar anti-takeover provisions under the Company’s
charter documents or the laws of its state of incorporation.

 

(oo)     Solvency. Based on the financial condition of the Company as of the
Closing Date, and except as described in the SEC Reports, immediately after
giving effect to the receipt by the Company of the proceeds from the sale of the
Securities hereunder: (i) the fair saleable value of the Company’s assets
exceeds the amount that will be required to be paid on or in respect of the
Company’s existing debts and other liabilities (including known contingent
liabilities) as they mature; and (ii) the Company’s assets do not constitute
unreasonably small capital to carry on its business as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company,
consolidated and projected capital requirements and capital availability
thereof. The Company has no knowledge of any facts or circumstances which lead
it to believe that it will file for reorganization or liquidation under the
bankruptcy or reorganization laws of any jurisdiction within one year from the
Closing Date. The SEC Reports set forth as of the date hereof all outstanding
secured and unsecured Indebtedness of the Company, or for which the Company has
commitments. The Company is not in default with respect to any Indebtedness.

 

(pp)     FDA. As to each product subject to the jurisdiction of the U.S. Food
and Drug Administration (the “FDA”) under the Federal Food, Drug and Cosmetic
Act, as amended, and the regulations thereunder (the “FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company (each such product, a “Product”), such Product is being
manufactured, packaged, labeled, tested, distributed, sold and/or marketed by
the Company in compliance with all applicable requirements under the FDCA and
similar laws, rules and regulations relating to registration, investigational
use, premarket clearance, licensure, or application approval, good manufacturing
practices, good laboratory practices, good clinical practices, product listing,
quotas, labeling, advertising, record keeping and filing of reports, except
where the failure to be in compliance would not have a Material Adverse Effect.
There is no pending, completed or, to the knowledge of the Company, threatened,
Action against the Company, and the Company has not received any notice, warning
letter or other communication from the FDA or any other governmental entity,
which (i) contests the premarket clearance, licensure, registration, or approval
of, the uses of, the distribution of, the manufacturing or packaging of, the
testing of, the sale of, or the labeling and promotion of any Product, (ii)
withdraws its approval of, requests the recall, suspension, or seizure of, or
withdraws or orders the withdrawal of advertising or sales promotional materials
relating to, any Product, (iii) imposes a clinical hold on any clinical
investigation by the Company, (iv) enjoins production at any facility of the
Company, (v) enters or proposes to enter into a consent decree of permanent
injunction with the Company, or (vi) otherwise alleges any violation of any such
laws, rules or regulations by the Company, and which, either individually or in
the aggregate, would have a Material Adverse Effect. The properties, business
and operations of the Company have been and are being conducted in all material
respects in accordance with all applicable laws, rules and regulations of the
FDA. The Company has not been informed by the FDA that the FDA will prohibit the
marketing, sale, license or use in the United States of any product proposed to
be developed, produced or marketed by the Company nor has the FDA expressed any
concern as to approving or clearing for marketing any product being developed or
proposed to be developed by the Company.

 

(qq)     Real Property Holding Corporation. The Company is not and has never
been a U.S. real property holding corporation within the meaning of Section 897
of the Internal Revenue Code of 1986, as amended, and the Company shall so
certify upon any Purchaser’s reasonable request.

 

(rr)     Bank Holding Company Act. The Company is not subject to the Bank
Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the
Board of Governors of the Federal Reserve System (the “Federal Reserve”). The
Company does not own or control, directly or indirectly, five percent (5%) or
more of the outstanding shares of any class of voting securities or twenty-five
percent (25%) or more of the total equity of a bank or any entity that is
subject to the BHCA and to regulation by the Federal Reserve. The Company does
not exercise a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal
Reserve.

 

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

 

3.2     Representations and Warranties of the Purchasers. Each Purchaser hereby,
for itself and for no other Purchaser, represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows:

 

(a)     Authority. The Purchaser is either an individual or an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the applicable
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. If the Purchaser is not an individual, the execution and delivery of
this Agreement by such Purchaser and performance by such Purchaser of the
transactions contemplated by this Agreement have been duly authorized by all
necessary action on the part of such Purchaser. Each Transaction Document to
which the Purchaser is a party has been duly executed by such Purchaser, and
when delivered by such Purchaser in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Purchaser,
enforceable against it in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by
other equitable principles of general application, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

 

(b)     No Conflicts. The execution, delivery and performance by the Purchaser
of this Agreement and the other Transaction Documents to which it is a party,
and the consummation by such Purchaser of the transactions contemplated hereby
and thereby, will not (i) if applicable, result in a violation of the
organizational documents of such Purchaser, (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
such Purchaser is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to such Purchaser, except in the case of clauses (ii) and
(iii) above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, have a material adverse effect on the ability
of such Purchaser to perform its obligations hereunder or any of the other
Transaction Documents to which such Purchaser is a party.

 

(c)     Investment Intent. The Purchaser understands that the Securities are
“restricted securities” and have not been registered under the Securities Act or
any applicable state securities law, and the Purchaser is acquiring the Units
and, upon exercise of the Warrants, will acquire the Warrant Shares issuable
upon exercise thereof, as principal for its own account and not with a view to,
or for distributing or reselling such Securities or any part thereof in
violation of the Securities Act or any applicable state securities laws,
provided, however, that by making the representations herein, such Purchaser
does not agree to hold any of the Securities for any minimum period of time and
reserves the right, subject to the provisions of this Agreement, the Warrant and
the Registration Rights Agreement, at all times to sell or otherwise dispose of
all or any part of such Securities pursuant to an effective registration
statement under the Securities Act or under an exemption from such registration
and in compliance with applicable federal and state securities laws. Such
Purchaser is acquiring the Securities hereunder in the ordinary course of its
business. Such Purchaser does not presently have any agreement, plan or
understanding, directly or indirectly, with any Person to distribute or effect
any distribution of any of the Securities (or any securities which are
derivatives thereof) to or through any person or entity. The Purchaser is not a
registered broker-dealer under Section 15 of the Exchange Act or an entity
engaged in a business that would require it to be so registered as a
broker-dealer.

 

 
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(d)     Purchaser Status. At the time the Purchaser was offered the Units, it
was, and at the date hereof it is, and on each date on which it exercises any
Warrant it will be, an “accredited investor” as defined in Rule 501(a) under the
Securities Act. The Investor Questionnaire delivered by the Purchaser in
connection with this Agreement is complete and accurate in all respects as of
the date of this Agreement and the Closing Date and will be accurate in all
respects as of the effective date of the Registration Statement; provided, that
the Purchaser shall be entitled to update such information by providing written
notice thereof to the Company.

 

(e)     General Solicitation. The Purchaser 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 at any seminar or any other
general advertisement.

 

(f)     Experience. The Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. The Purchaser 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.

 

(g)     Access to Information. The Purchaser acknowledges that it has had the
opportunity to review the Disclosure Materials and has been afforded (i) the
opportunity to ask such questions as it has deemed necessary of, and to receive
answers from, representatives of the Company concerning the terms and conditions
of the Offering and the merits and risks of investing in the Securities,
(ii) access to information about the Company and its Subsidiaries and their
respective financial condition, results of operations, business, properties,
management and prospects sufficient to enable it to evaluate its investment, and
(iii) the opportunity to obtain such additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to make an informed investment decision with respect to the
investment. Neither such inquiries nor any other investigation conducted by or
on behalf of the Purchaser or its representatives shall modify, amend or affect
such Purchaser’s right to rely on the truth, accuracy and completeness of the
Disclosure Materials and the Company’s representations and warranties contained
in the Transaction Documents. The Purchaser has sought such accounting, legal
and tax advice as it has considered necessary to make an informed decision with
respect to its acquisition of the Securities. The Purchaser has received no
representations or warranties from the Company, its employees, agents or
attorneys in making this investment decision other than as set forth in this
Agreement.

 

(h)     Certain Trading Activities. Other than consummating the transactions
contemplated hereunder, the Purchaser has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in any transactions in the securities of the Company
(including, without limitation, any Short Sales involving the Company’s
securities) since the time that such Purchaser was first contacted by the
Company, the Placement Agent or any other Person regarding the specific
investment contemplated hereby. Other than to other Persons party to this
Agreement, such Purchaser has maintained the confidentiality of all disclosures
made to it in connection with this transaction, including the existence and
terms of this transaction. Notwithstanding the foregoing, in the case of a
Purchaser that is a multi-managed investment vehicle whereby separate portfolio
managers manage separate portions of such Purchaser's assets and the portfolio
managers have no direct knowledge of the investment decisions made by the
portfolio managers managing other portions of such Purchaser's assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Securities covered by this Agreement. Other than to other Persons
party to this Agreement, such Purchaser has maintained the confidentiality of
all disclosures made to it in connection with this transaction (including the
existence and terms of this transaction).

 

(i)     Brokers and Finders. No Person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon the Company or any Purchaser for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Purchaser.

 

 
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(j)     Independent Investment Decision. The Purchaser has independently
evaluated the merits of its decision to purchase Securities pursuant to the
Transaction Documents, and such Purchaser confirms that it has not relied on the
advice of any other Purchaser’s business and/or legal counsel in making such
decision. The Purchaser understands that nothing in this Agreement or any other
materials presented by or on behalf of the Company to the Purchaser in
connection with the purchase of the Securities constitutes legal, tax or
investment advice. The Purchaser has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its purchase of the Securities. The Purchaser understands that
the Placement Agent has acted solely as the agent of the Company in this
placement of the Shares and Warrants and such Purchaser has not relied on the
business or legal advice of the Placement Agent or its respective agents,
counsel or Affiliates in making its investment decision hereunder, and the
Purchaser confirms that none of such Persons has made any representations or
warranties to such Purchaser in connection with the transactions contemplated by
the Transaction Documents.

 

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

 

(l)     Transfer or Resale. The Purchaser understands that except as provided in
the Registration Rights Agreement and Section 4.1(b) hereof: (i) the Securities
have not been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, or (B) such Purchaser shall have
delivered to the Company (if requested by the Company) an opinion of counsel to
such Purchaser, in a form reasonably acceptable to the Company, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration; (ii) any sale of
the Securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of
the Securities under circumstances in which the seller (or the Person through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the SEC promulgated
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the Securities Act or any state
securities laws or to comply with the terms and conditions of any exemption
thereunder.

 

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

 

(n)     Regulation M. The Purchaser is aware that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of Common Stock and other
activities with respect to the Common Stock by the Purchasers.

 

(o)     Residency. The Purchaser’s residence (if an individual) or offices in
which its investment decision with respect to the Securities was made (if an
entity) are located at the address immediately below such Purchaser’s name on
its signature page hereto.

 

ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES

 

4.1     Transfer Restrictions.

 

(a)     Compliance with Laws. Notwithstanding any other provision of this
Article IV, each Purchaser covenants that the Securities may be disposed of only
pursuant to an effective registration statement under, and in compliance with
the requirements of, the Securities Act, or pursuant to an available exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act, and in compliance with any applicable state and federal
securities laws. In connection with any transfer of the Securities other than
(i) pursuant to an effective registration statement, (ii) to the Company,
(iii) pursuant to Rule 144 (provided that the Purchaser provides the Company
with reasonable assurances (in the form of seller and, if applicable, broker
representation letters) that the securities may be sold pursuant to such rule)
or (iv) in connection with a bona fide pledge as contemplated in Section 4.1(b),
the Company may require the transferor thereof to provide to the Company an
opinion of counsel selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act. As a
condition of such transfer, any such transferee shall agree in writing to be
bound by the terms of this Agreement and the Registration Rights Agreement and
shall have the rights of a Purchaser under this Agreement and the Registration
Rights Agreement with respect to such transferred Securities.

 

 
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(b)     Legends. Certificates evidencing the Securities shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in
substantially the following form, until such time as they are not required under
Section 4.1(c):

 

[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR (B) AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS OR BLUE SKY LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY AND ITS TRANSFER AGENT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

The Company acknowledges and agrees that a Purchaser may from time to time
pledge, and/or grant a security interest in, some or all of the legended
Securities in connection with applicable securities laws, pursuant to a bona
fide margin agreement in compliance with a bona fide margin loan. Such a pledge
would not be subject to approval or consent of the Company and no legal opinion
of legal counsel to the pledgee, secured party or pledgor shall be required in
connection with the pledge, but such legal opinion shall be required in
connection with a subsequent transfer or foreclosure following default by the
Purchaser transferee of the pledge. No notice shall be required of such pledge,
but Purchaser’s transferee shall promptly notify the Company of any such
subsequent transfer or foreclosure. Each Purchaser acknowledges that the Company
shall not be responsible for any pledges relating to, or the grant of any
security interest in, any of the Securities or for any agreement, understanding
or arrangement between any Purchaser and its pledgee or secured party. At the
applicable Purchaser’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including the preparation and filing of any required prospectus supplement under
Rule 424(b)(3) under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder. Each Purchaser acknowledges and agrees that, except as otherwise
provided in Section 4.1(c), any Securities subject to a pledge or security
interest as contemplated by this Section 4.1(b) shall continue to bear the
legend set forth in this Section 4.1(b) and be subject to the restrictions on
transfer set forth in Section 4.1(a).

 

 
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(c)     Removal of Legends. The legend set forth in Section 4.1(b) above shall
be removed and the Company shall issue or caused to be issued a certificate
without such legend or any other legend to the holder of the applicable
Securities upon which it is stamped, if (i) such Securities are registered for
resale under the Securities Act (provided that, if the Purchaser is selling
pursuant to the Registration Statement, the Purchaser agrees to only sell such
Securities during such time that such registration statement is effective and
not withdrawn or suspended, and only as permitted by such registration
statement), (ii) such Securities are sold or transferred pursuant to Rule 144
(if the transferor is not an Affiliate of the Company), (iii) if such Securities
are eligible to be sold, assigned or transferred under Rule 144 (provided that a
Purchaser provides the Company with reasonable assurances that such Securities
are eligible for sale, assignment or transfer under Rule 144 which shall not
include an opinion of counsel), (iv) in connection with a sale, assignment or
other transfer (other than under Rule 144), provided that such Purchaser
provides the Company with an opinion of counsel to such Purchaser, in a form
reasonably acceptable to the Company, to the effect that such sale, assignment
or transfer of the Securities may be made without registration under the
applicable requirements of the Securities Act or (v) if such legend is not
required under applicable requirements of the Securities Act (including, without
limitation, controlling judicial interpretations and pronouncements issued by
the Commission). The Company shall cause its counsel to issue any legal opinion
(including, without limitation, the opinion referred to in the Transfer Agent
Instructions) to the Company’s transfer agent on each Effective Date and in
connection with any sale or transfer pursuant to Rule 144 in compliance with
this Section 4.1(c). Any fees (with respect to the Transfer Agent, Company
Counsel or otherwise) associated with the removal of such legend shall be borne
by the Company. Following the Effective Date, or at such earlier time as a
legend is no longer required for certain Securities, the Company will no later
than three Trading Days following the delivery by a Purchaser (i) to the
Transfer Agent (with notice to the Company) of a legended certificate
representing Shares or Warrant Shares (endorsed or with stock powers attached,
signatures guaranteed, and otherwise in form necessary to affect the reissuance
and/or transfer) or (ii) to the Company of an Exercise Notice in the manner
stated in the Warrants to effect the exercise of such Warrant in accordance with
its terms, and any other documents required by Section 4.1(a), deliver or cause
to be delivered to such Purchaser either: (A) provided that the Transfer Agent
is participating in the DTC Fast Automated Securities Transfer Program, credit
the aggregate number of shares of Common Stock to which such Purchaser shall be
entitled to such Purchaser’s or its designee’s balance account with DTC through
its Deposit/Withdrawal at Custodian system or (B) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver (via reputable overnight courier) to such Purchaser, a certificate
representing such Securities that is free from all restrictive and other
legends, registered in the name of such Purchaser or its designee (the date by
which such credit is so required to be made to the balance account of such
Purchaser’s or such Purchaser’s nominee with DTC or such certificate is required
to be delivered to such Purchaser pursuant to the foregoing is referred to
herein as the “Required Delivery Date”). The Company may not make any notation
on its records or give instructions to the Transfer Agent that enlarge the
restrictions on transfer set forth in this Section 4.1. Notwithstanding any of
the foregoing to the contrary, certificates for Shares or Warrant Shares subject
to legend removal hereunder shall, upon Purchaser’s request, be transmitted by
the Transfer Agent to a Purchaser by crediting the applicable balance account at
the Depository Trust Company as directed by such Purchaser.

 

(d)     Acknowledgement. Each Purchaser hereunder acknowledges its primary
responsibilities under the Securities Act and accordingly will not sell or
otherwise transfer the Securities or any interest therein without complying with
the requirements of the Securities Act. While the Registration Statement remains
effective, each Purchaser hereunder may sell the Shares and Warrant Shares in
accordance with the plan of distribution contained in the Registration Statement
and if it does so it will comply therewith and with the related prospectus
delivery requirements unless an exemption therefrom is available or unless the
Securities are sold pursuant to Rule 144. Each Purchaser, severally and not
jointly with the other Purchasers, agrees that if it is notified by the Company
in writing at any time that the Registration Statement registering the resale of
the Shares or the Warrant Shares is not effective or that the prospectus
included in such Registration Statement no longer complies with the requirements
of Section 10 of the Securities Act, the Purchaser will refrain from selling
such Shares and Warrant Shares until such time as the Purchaser is notified by
the Company that such Registration Statement is effective or such prospectus is
compliant with Section 10 of the Securities Act, unless such Purchaser is able
to, and does, sell such Shares or Warrant Shares pursuant to an available
exemption from the registration requirements of Section 5 of the Securities Act.
Both the Company and its Transfer Agent, and their respective directors,
officers, employees and agents, may rely on this Section 4.1(d) and each
Purchaser hereunder will indemnify and hold harmless each of such persons from
any breaches or violations of this Section 4.1(d).

 

4.2     Reservation of Common Stock. The Company shall take all action necessary
to at all times have authorized, and reserved for the purpose of issuance from
and after the Closing Date, the number of shares of Common Stock issuable upon
exercise of the Warrants issued at the Closing (without taking into account any
limitations on exercise of the Warrants set forth in the Warrants).

 

 
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4.3     Furnishing of Information. In order to enable the Purchasers to sell the
Securities under Rule 144, until the earlier of (i) one year from the Closing
Date or (ii) the occurrence of a Fundamental Transaction (as defined in the
Warrant) pursuant to which the Company is no longer a reporting company under
the Exchange Act, the Company shall use its commercially reasonable efforts to
timely file (or obtain extensions in respect thereof and file within the
applicable grace period) all reports required to be filed by the Company after
the date hereof pursuant to the Exchange Act. Except as set forth in clause (ii)
above, during such period, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144.

 

4.4     No Integration. The Company shall not, and shall use its reasonable best
efforts to ensure that no Affiliate of the Company shall, sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security (as
defined in Section 2 of the Securities Act) that will be integrated with the
offer or sale of the Securities in a manner that would require the registration
under the Securities Act of the sale of the Securities to the Purchasers, or
that will be integrated with the offer or sale of the Securities for purposes of
the rules and regulations of any Trading Market such that it would require
stockholder approval prior to the closing of such other transaction unless
stockholder approval is obtained before the closing of such subsequent
transaction.

 

4.5     Securities Laws Disclosure; Publicity. The Company shall issue a press
release disclosing the material terms of the transactions contemplated hereby
(the “Press Release”) no later than 9:00 A.M., New York City time, on the
Trading Day immediately following the date of this Agreement. In addition, the
Company shall file a Current Report on Form 8-K (the “8-K Filing”) with the
Commission describing the terms of the Transaction Documents (and including as
exhibits to such Current Report on Form 8-K this Agreement, the form of Warrant
and the Registration Rights Agreement) on or before the fourth Business Day
following the date hereof. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of any Purchaser or any Affiliate or investment
adviser of any Purchaser, or include the name of any Purchaser or any Affiliate
or investment adviser of any Purchaser in any press release or filing with the
Commission (other than the Registration Statement) or any regulatory agency or
Trading Market without the prior written consent of such Purchaser, except
(i) as required by federal securities law in connection with (A) any
registration statement contemplated by the Registration Rights Agreement or
(B) the filing of Transaction Documents (including signature pages thereto) with
the Commission or (ii) to the extent such disclosure is otherwise required by
law, request of the Staff of the Commission or Trading Market regulations. From
and after the issuance of the Press Release, no Purchaser shall be in possession
of any material, non-public information received from the Company, any
Subsidiary or any of their respective officers, directors, employees or agents,
that is not disclosed in the Press Release unless a Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information, which written agreement shall survive the execution of this
Agreement and the Closing.

 

4.6     Confidentiality. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that, until such time as the transactions
contemplated by this Agreement are publicly disclosed by the Company as
described in Section 4.5, (i) such Purchaser shall maintain the confidentiality
of all disclosures made to it in connection with this transaction, including the
existence and terms of this transaction and the information included in the
Transaction Documents, and (ii) neither such Purchaser nor any Person acting on
its behalf or pursuant to any understanding with it shall engage in any purchase
or sale of securities of the Company (including Short Sales). Notwithstanding
the preceding clause (ii), in the case of a Purchaser that is a multi-managed
investment vehicle whereby separate portfolio managers manage separate portions
of such Purchaser’s assets and the portfolio managers have no direct knowledge
of the investment decisions made by the portfolio managers managing other
portions of such Purchaser’s assets, the covenant set forth above shall apply
only with respect to the portion of assets managed by the portfolio manager that
has knowledge about the financing transaction contemplated by this Agreement.

 

4.7     Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any
Purchaser is an “acquiring person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Purchaser could be deemed to trigger the provisions of
any such plan or arrangement, in either case solely by virtue of receiving
Securities under the Transaction Documents or under any other written agreement
between the Company and the Purchasers.

 

 
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4.8     Non-Public Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents,
including this Agreement, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf, will provide any Purchaser or its agents
or counsel with any information regarding the Company that the Company believes
constitutes material non-public information without the express written consent
of such Purchaser, unless prior thereto such Purchaser shall have executed a
written agreement regarding the confidentiality and use of such information. The
Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the Company.

 

4.9     Use of Proceeds. The Company shall use the net proceeds from the sale of
the Units hereunder for working capital and general corporate purposes and shall
not use such proceeds for: (a) the satisfaction of any portion of the Company’s
debt (which, for the avoidance of any doubt, does not include trade payables and
other accrued expenses, which may be paid using such proceeds), (b) the
redemption of any securities of the Company or (c) the settlement of any
outstanding litigation.

 

4.10     Indemnification of Purchasers.

 

(a)     Subject to the provisions of this Section 4.10, the Company will
indemnify and hold each Purchaser, such Purchaser’s directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser Party”), harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a Purchaser
in any capacity, or any other Purchaser Party, by any stockholder of the Company
who is not an Affiliate of such Purchaser, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is
based upon a breach of such Purchaser’s representations, warranties or covenants
under any of the Transaction Documents or any agreements or understandings such
Purchaser may have with any such stockholder or any violations by the Purchaser
of any applicable laws or any conduct by such Purchaser which constitutes fraud,
gross negligence, willful misconduct or malfeasance).

 

(b)     Promptly after receipt by any Purchaser Party (the “Indemnified Person”)
of notice of any demand, claim or circumstances which would or might give rise
to a claim or the commencement of any action, proceeding or investigation in
respect of which indemnity may be sought pursuant to this Section 4.10, such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses relating to such action, proceeding or investigation;
provided, however, that the failure of any Indemnified Person so to notify the
Company shall not relieve the Company of its obligations hereunder except to the
extent that the Company is actually and materially prejudiced by such failure to
notify. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless: (i) the Company and the
Indemnified Person shall have mutually agreed to the retention of such counsel;
(ii) the Company shall have failed promptly to assume the defense of such
proceeding and to employ counsel reasonably satisfactory to such Indemnified
Person in such proceeding; or (iii) in the reasonable judgment of counsel to
such Indemnified Person, representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them, in which case the Company shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel. The Company shall not be
liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, delayed or
conditioned. Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, delayed or conditioned, the Company
shall not effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Person
from all liability arising out of such proceeding.

 

 
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4.11     Principal Trading Market Listing. If necessary, the Company shall
prepare and file with the Principal Trading Market, in the time and manner
required by such Principal Trading Market, an additional shares listing
application covering all of the Shares and Warrant Shares and shall use its
commercially reasonable efforts to take all steps necessary to cause all of the
Shares and Warrant Shares to be approved for listing or quotation on the
Principal Trading Market as promptly as possible thereafter.

 

4.12     Form D; Blue Sky. The Company agrees to timely file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to any Purchaser, promptly upon such Purchaser’s written request. The
Company shall take such action as the Company shall reasonably determine is
necessary in order to qualify the Securities for sale at the Closing to the
Purchasers, or to obtain an exemption from such qualification, under applicable
state securities or “blue sky” laws, and the Company shall provide evidence of
such actions promptly upon the written request of any Purchaser.

 

4.13     Delivery of Shares and Warrants After Closing. The Company shall
deliver, or cause to be delivered, to each Purchaser the respective Shares and
Warrants purchased by such Purchaser within three Trading Days following the
Closing Date.

 

ARTICLE V
CONDITIONS PRECEDENT TO CLOSING

 

5.1     Conditions Precedent to the Obligations of the Purchasers to Purchase
Securities. The obligation of each Purchaser to acquire Units at the Closing is
subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived by such Purchaser (as to itself
only):

 

(a)     Representations and Warranties. The representations and warranties of
the Company contained herein shall be true and correct in all material respects
(except for those representations and warranties which are qualified as to
materiality, in which case such representations and warranties shall be true and
correct in all respects) as of the date when made and as of the Closing Date, as
though made on and as of such date, except for such representations and
warranties that speak as of a specific date.

 

(b)     Performance. The Company shall have performed, satisfied and complied in
all material respects with any and all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by it at or prior to the Closing.

 

(c)     No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents.

 

(d)     No Material Adverse Change. Since the date of execution of this
Agreement, no event or series of events shall have occurred that has had a
Material Adverse Effect.

 

(e)     No Suspensions of Trading in Common Stock. The Common Stock (i) shall be
designated for listing or quotation on the Principal Trading Market and
(ii) shall not have been suspended, as of the Closing Date, by the Commission or
the Principal Trading Market from trading on the Principal Trading Market nor
shall suspension by the Commission or the Principal Trading Market have been
threatened, as of the Closing Date, either (A) in writing by the Commission or
the Principal Trading Market or (B) by falling below any minimum listing
maintenance requirements of the Principal Trading Market.

 

(f)     Company Deliverables. The Company shall have delivered the Company
Deliverables in accordance with Section 2.2(a).

 

 
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5.2     Conditions Precedent to the Obligations of the Company to Sell
Securities. The Company’s obligation to sell and issue the Units at the Closing
to each Purchaser is subject to the fulfillment on or prior to the Closing Date
of the following conditions, any of which may be waived by the Company:

 

(a)     Representations and Warranties. The representations and warranties made
by the Purchaser in Section 3.2 hereof shall be true and correct in all material
respects (except for those representations and warranties which are qualified as
to materiality, in which case such representations and warranties shall be true
and correct in all respects) as of the date when made, and as of the Closing
Date as though made on and as of such date, except for representations and
warranties that speak as of a specific date.

 

(b)     Performance. The Purchaser shall have performed, satisfied and complied
in all material respects with any and all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied
with by such Purchaser at or prior to the Closing Date.

 

(c)     No Injunction. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent jurisdiction that prohibits
the consummation of any of the transactions contemplated by the Transaction
Documents.

 

(d)     Purchaser Deliverables. The Purchaser shall have delivered its Purchaser
Deliverables in accordance with Section 2.2(b).

 

ARTICLE VI
MISCELLANEOUS

 

6.1     Fees and Expenses. The Company and the Purchasers shall each pay the
fees and expenses of their respective advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party in connection
with the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied in connection with the sale and issuance of the Units to
the Purchasers.

 

6.2     Entire Agreement. The Transaction Documents, together with the exhibits
and schedules thereto, contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements,
understandings, discussions and representations, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules. At or after the Closing, and without further
consideration, the Company and the Purchasers will execute and deliver to the
other such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction
Documents.

 

6.3     Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile (provided the sender
receives a machine-generated confirmation of successful transmission) at the
facsimile number specified in this Section 6.3 prior to 5:00 P.M., New York City
time, on a Trading Day, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section 6.3 on a day that is not a Trading Day or later
than 5:00 P.M., New York City time, on any Trading Day, (c) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service with next day delivery specified, or (d) upon actual receipt by
the party to whom such notice is required to be given, if such notice or
communication is delivered via electronic mail or any other method not
identified in the preceding clauses (a) – (c). The address for such notices and
communications shall be as follows:

 

  If to the Company: MRI Interventions, Inc.     One Commerce Square, Suite 2550
    Memphis, TN 38103     Telephone No.: (901) 522-9300     Facsimile No.: (901)
522-9400     Attention: Chief Financial Officer

 

 
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  With a copy to: Baker, Donelson, Bearman, Caldwell & Berkowitz, PC    

165 Madison Avenue, Suite 2000

   

Memphis, TN 38103

   

Telephone No.: (901) 526-2000

   

Facsimile No.: (901) 577-4234

   

Attention: Richard F. Mattern

       

If to a Purchaser:

To the address set forth under such Purchaser’s name on the signature page
hereof;

 

or such other address as may be designated in writing hereafter, in the same
manner, by such Person.

 

6.4     Amendments; Waivers; No Additional Consideration. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Company and Required
Purchasers (which, for this purpose, must include all Major Purchasers) at the
time of the amendment (which amendment shall be binding on all Purchasers) or,
in the case of a waiver, by the party against whom enforcement of any such
waiver provision is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right. No consideration (including any
modification of any Transaction Document) shall be offered or paid to any
Purchaser to amend or consent to a waiver or modification of any provision of
any Transaction Document unless the same consideration is also offered to all of
the Purchasers who are then parties to this Agreement. For clarification
purposes, the preceding sentence constitutes a separate right granted to each
Purchaser by the Company and negotiated separately by each Purchaser, and is
intended for the Company to treat the Purchasers as a class and shall not in any
way be construed as the Purchasers acting in concert or as a group with respect
to the purchase, disposition or voting of Securities or otherwise.

 

6.5     Construction. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any other Transaction
Documents.

 

6.6     Successors and Assigns. The provisions of this Agreement shall inure to
the benefit of and be binding upon the parties and their successors and
permitted assigns. This Agreement, or any rights or obligations hereunder, may
not be assigned by the Company without the prior written consent of the Required
Purchasers at that time, except in the event of a merger or in connection with
another entity acquiring all or substantially all of the Company’s assets. Any
Purchaser may assign its rights hereunder in whole or in part to any Person to
whom such Purchaser assigns or transfers any Securities in compliance with the
Transaction Documents and applicable law, provided such transferee shall agree
in writing to be bound, with respect to the transferred Securities, by the terms
and conditions of this Agreement that apply to the “Purchasers.”

 

6.7     No Third-Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective successors and permitted assigns and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except each Purchaser Party is an intended third party beneficiary
of Section 4.10.

 

 
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6.8     Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretation, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the New York
Courts. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

  

6.9     Survival. Subject to applicable statute of limitations, the
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities pursuant to the Closing.

 

6.10     Execution. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that the parties need not sign
the same counterpart. In the event that any signature is delivered by facsimile
transmission, or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.

 

6.11     Severability. If any provision of this Agreement is held to be invalid
or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

 

6.12     Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligation within the period therein provided, then such
Purchaser may, in its sole discretion, rescind or withdraw any such notice,
demand or election in whole or in part, without prejudice to its future actions
and rights, upon written notice to the Company prior to the Company’s
performance of the related obligation.

 

6.13     Replacement of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company shall issue
or cause to be issued in exchange and substitution for and upon cancellation
thereof, or in lieu of and substitution therefor, a new certificate or
instrument, but only upon receipt of evidence reasonably satisfactory to the
Company and the Transfer Agent of such loss, theft or destruction and the
execution by the holder thereof of a customary lost certificate affidavit of
that fact and an agreement to indemnify and hold harmless the Company and the
Transfer Agent for any losses in connection therewith or, if required by the
Transfer Agent, a bond in such form and amount as is required by the Transfer
Agent. The applicants for a new certificate or instrument under such
circumstances shall also pay any reasonable third-party costs associated with
the issuance of such replacement Securities. If a replacement certificate or
instrument evidencing any Securities is requested due to a mutilation thereof,
the Company may require delivery of such mutilated certificate or instrument as
a condition precedent to any issuance of a replacement.

 

6.14     Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, each of the Purchasers
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agree to waive in any action for
specific performance of any such obligation (other than in connection with any
action for a temporary restraining order) the defense that a remedy at law would
be adequate.

 

 
24

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6.15     Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

 

6.16     Additional Closings. Each Purchaser acknowledges that, in addition to
the Closing, the Company may hold one or more other closings for the purchase
and sale of Units in the Offering, whether before and/or after the Closing Date.

 

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

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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

 

 

 

MRI Interventions, Inc.

 

 

By:

   

Name:

   

Title:

   

 

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 
 

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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

 

Aggregate Purchase Price (Subscription Amount):

 

 

If Purchaser is an INDIVIDUAL, or if purchased as JOINT TENANTS, as TENANTS IN
COMMON or as COMMUNITY PROPERTY:

 

           

Print Name(s)

   

Social Security Number(s)

               

Signature(s) of Purchaser(s)

 

Signature(s) of Purchaser(s)

 

 

Address for Notice:   Delivery Instructions (if different than Notice Address):
 

     

 

                          Telephone:           Fax:       Street   Email:      
              With a copy to:     City/State/Zip                     Attention:
                Telephone:       Telephone:     Fax:           Email:          

 

 

If Purchaser is a CORPORATION, LIMITED LIABILITY COMPANY, PARTNERSHIP or TRUST:

 

 

            Name of Entity   Federal Taxpayer ID Number               By:      
      Name:             Title:       State of Organization  

 

Address for Notice:   Delivery Instructions (if different than Notice Address):
 

     

 

                          Telephone:           Fax:       Street   Email:      
              With a copy to:     City/State/Zip                     Attention:
                Telephone:       Telephone:     Fax:           Email:          

 

 
 

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Schedule 3.1(a)

 

Subsidiaries

 

 

Name of Subsidiary

Jurisdiction of Formation

   

MRI Interventions (Canada) Inc.

Canada (New Brunswick)

 

 
Schedule 3.1(a) 

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Schedule 3.1(g)

 

Capitalization

 

 

The authorized capital stock of the Company consists of: (i) 100,000,000 shares
of Common Stock; and (ii) 25,000,000 shares of preferred stock, par value $0.01
per share.

 

As of October 31, 2014, there were: (i) 58,986,797 shares of Common Stock
outstanding, (ii) no shares of preferred stock outstanding; (iii) 9,947,225
shares of Common Stock subject to outstanding options issued by the Company; and
(iv) 13,327,115 shares of Common Stock subject to outstanding warrants issued by
the Company. Holders of outstanding options and warrants with respect to at
least 8,791,250 shares of Common Stock (collectively, the “Restricted Derivative
Shares”) have irrevocably agreed not to exercise such options and warrants until
such time as the Company’s certificate of incorporation has been amended to
provide a number of authorized shares of Common Stock available for issuance by
the Company that is sufficient to permit the Company to reserve the Restricted
Derivative Shares for issuance. Because those options and warrants cannot be
exercised for shares of Common Stock absent such amendment, the Restricted
Derivative Shares are not reserved for issuance, and the holders of such options
and warrants have irrevocably waived any and all requirements for the Company to
reserve the Restricted Derivative Shares for issuance until the Company’s
certificate of incorporation has been amended as provided in the preceding
sentence.

 

In January 2013, the Company sold 9,201,684 shares of Common Stock, together
with warrants to purchase 4,600,842 shares of Common Stock, to various
purchasers in a private placement. The exercise price of such warrants is
subject to “full-ratchet” anti‐dilution protection, such that the exercise price
will be adjusted downward to the extent the Company issues Common Stock or
Common Stock Equivalents in a financing transaction at a price below the then
current warrant exercise price. Such warrants currently have an exercise price
of $1.75 per share. Since the Purchase Price is less than such exercise price,
the exercise price will be adjusted pursuant to the terms of the warrants.

 

In July 2012, the Company sold 5,454,523 shares of Common Stock, together with
warrants to purchase 2,727,274 shares of Common Stock, to various purchasers in
a private placement. The exercise price of such warrants is subject to “weighted
average” anti‐dilution protection, such that the exercise price will be adjusted
downward (on a weighted average basis) to the extent the Company issues Common
Stock or Common Stock Equivalents in a financing transaction at a price below
the then prevailing warrant exercise price. Such warrants currently have an
exercise price of $1.41 per share. Since the Purchase Price is less than such
exercise price, the exercise price will be adjusted pursuant to the terms of the
warrants.

 

 
Schedule 3.1(g) 

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Schedule 3.1(o)

 

Liens

 

 

In March 2013, the Company issued an amended and restated subordinated secured
note in the principal amount of $4,289,444 to Brainlab AG. The note matures in
April 2016, and principal and accrued interest under the note are payable in a
single installment upon maturity. The note is secured by a security interest in
the assets of the Company.

 

In March 2014, the Company issued 12% second-priority secured non-convertible
promissory notes due 2019 in the aggregate principal amount of $3,725,000 to
various purchasers in a private placement. The notes mature in March 2019.
Interest under the notes is payable semi-annually, in arrears, on each six-month
and one-year anniversary of the issuance date. The notes are secured by a
security interest in the assets of the Company, which security interest is
junior and subordinate to the security interest that secures the Brainlab note
described in the preceding paragraph.

 

In November 2010, the Company issued junior secured notes in the aggregate
principal amount of $3,000,000 to various purchasers in a private placement. The
notes mature in November 2020, and principal and accrued interest under the
notes are payable in a single installment upon maturity. The notes are secured
by a security interest in the assets of the Company, which security interest is
junior and subordinate to the security interest that secures the notes described
in the preceding two paragraphs.

 

 

Schedule 3.1(o) 

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Schedule 3.1(x)

 

Registration Rights

 

 

The Company is a party to that certain Third Amended and Restated Investor
Rights’ Agreement dated as of September 20, 2006, with certain of the Company’s
stockholders. That agreement provided for certain demand and piggyback
registration rights. However, given the passage of time since the agreement was
entered into, all stockholders who were parties to the agreement and who are not
presently affiliates of the Company may sell their shares pursuant to Rule 144
without restrictions (i.e., without the requirement for the Company to be in
compliance with the current public information required under Rule 144 and
without volume or manner-of-sale restrictions).

 

 

Schedule 3.1(x) 

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EXHIBIT A

 

Registration Rights Agreement

 

 

 

Please see attached.

 

 
 

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EXHIBIT B

 

Warrant

 

 

 

Please see attached.